Representations and Warranties Insurance

What is Representations and Warranties (R&W) insurance?

The use of representations and warranties (also known as warranties and indemnities insurance) can bridge the gap by protecting buyers from losses resulting from a breach of the seller’s or target company’s representations in a purchase agreement, thereby eliminating the need for a robust indemnity or enhancing a limited seller indemnity.

Since 2014, Aon's Representation and Warranties Solutions practice has placed almost $296 billion in total limits counting for almost 7,550 total policies, including many providing more than $200 million in limits.

Why is R&W Insurance Important?

From financial statement errors to potential environmental issues or undisclosed regulatory exposures, unknown risks are inherent in acquisitions. Because of this uncertainty, sellers typically are required to indemnify buyers, tying up a portion of their sale proceeds for a considerable period of time. Conversely, buyers are looking for certainty to protect against losses should a breach occur.

The use of representations and warranties insurance can bridge that gap by protecting buyers from losses resulting from a breach of sellers’ representations in a purchase agreement and eliminating the need for a robust indemnity.

Using this approach, sellers can walk away with all of the sale proceeds at closing and buyers start their ownership with the peace of mind that the value of the deal will not be eroded after the close.

What Does R&W Cover?

R&W insurance is used in mergers and acquisitions to protect against covered losses arising due to the seller’s breach of certain of its representations and warranties in the acquisition agreement.

Innovations

We invest in innovation and have a number of proprietary solutions and offerings exclusive to Aon

• Interim Breach Coverage (IBEX) for Representations and Warranties: Interim Breach and Retention Reimbursement coverage for Representation and Warranties insurance. IBEX Plus is with A+ AM Best protection, exclusively via Aon.
• Discounted Excess Coverage (Sidecar): For larger transactions, Aon Sidecar platform offers follow-form excess coverage with a built-in premium discount, maximizing cost-savings with minimal additional underwriting requirements.
• FLEX Property Excess Coverage: Aon’s FLEXCar solution provides clients buying representations and warranties insurance with follow-form excess cat-coverage at attractive, pre-agreed pricing within an Aon-managed and streamlined facility.

Claims Handling

Aon has experienced tremendous growth in M&A insurance over the past several years. Along with the increase in number of policies written has come a proportionate uptick in the number of claims against those policies where damages occurred.

Aon is committed to providing clients with the industry’s largest dedicated M&A claims team. This highly experienced team of claims advocates supports clients throughout the entire claims process, from the filing of an initial notice to ultimate resolution with the insurer.

Why Choose Aon?

Aon is the leading M&A insurance broker across all industries by the limits placed and number of policies written. Our Transaction Solutions team has deep experience and understanding of the complexities and nuances related to financial sponsor M&A, allowing us to provide solutions specifically tailored to the unique requirements of these transactions.The Aon team delivers a boutique service experience from seasoned former practicing M&A, tax and litigation attorneys and deal professionals who have the depth and experience within a leading global organization to address your deal’s financial uncertainty and unlock greater opportunities.