Coverage Protection
For Today’s Risks

Representations & Warranties (RWI)/Transactional Insurance (TI)

Environmental Remediation Cost Cap & Liability: Keeping Your Business Clean

Environmental or related  issues can threaten the feasibility of Mergers & Acquisitions, or make them less attractive to a buyer.

Several insurance solutions exist to help address both known and unknown issues, including:

  • Remediation Cost Cap Insurance
    These policies insure known conditions, and cost overruns of a specific remediation plan.
  • Environmental or Pollution Liability Insurance
    These policies provide coverage for remediation costs associated with unknown pollution conditions at specific sites, along with third-party bodily injury and property damage.

Owens Group has the expertise to help you assess existing and potential environmental risks, and provides comprehensive protection for your investment.

Fund Liability Insurance: Protection For Private Equity, Hedge and Asset Management Firms

Due to the nature of their organizational structure and operations, Private Equity, Venture Capital, Hedge Funds and other assets management firms face a unique set of risks that cross the traditional boundary between management and professional liability. In response to this situation, a select group of insurers have developed specialized insurance products that combine professional and management liability into a single, seamless policy. Furthermore, these policies can be customized to include coverages that are vital to Fund Managers, such as Employment Practices and Fiduciary Liability.

Policies are available to provide the following optional coverages:

  • Management Liability
  • Outside Directorship Liability
  • Professional / Errors & Omissions
  • Employment Practices Liability
  • Fiduciary Liability
  • Kidnap & Ransom

Owens Group has significant expertise in this area. We regularly work with Private Equity, Hedge and Asset Management firms to design insurance solutions that take into account each firm’s specific needs.

Litigation Buyout: Defending Your Business

Sometimes when the selling company in a transaction is involved in an ongoing litigation issue, a financial resolution of the issue between the buyer and seller is simply not enough. The buyer wants not only to be made whole in the event of an adverse ruling, but also wants a third party to take over the entire litigation process. This is where Litigation Buyout insurance can help. When an organization is covered by a Litigation Buyout policy, the insurance company steps in and takes over the defense, along with any financial impact associated with it.

Representations and Warranties: Honoring Your Agreements

The allocation of risks and liabilities between the parties in a merger or acquisition is one of the most basic and difficult aspects of any transaction. Traditionally, the accuracy of a seller’s representations and warranties has been secured by an escrow, which is often highly inefficient, and can unnecessarily tie up money and resources for years. The insurance industry has developed an alternative solution: Representations and Warranties Liability Insurance (R&W). R&W insurance protects the insured against unintentional and unknown breaches of a seller’s representations and warranties in a purchase agreement. It can also free up cash that previously languished in escrow.

Specific Contingency: Protecting Contingencies Against the Unknown

Specific Contingency Insurance (SCI) is designed to provide coverage for known and specific issues that arise between the buyer and the seller during negotiation of a merger or acquisition.

Often the buyer and the seller will take vastly different views on the likelihood and financial impact of the event. For example, the seller may be involved in a litigation dispute that will not be resolved until long after the closing of the contemplated transaction. This forces both parties to evaluate the likelihood of prevailing in the case, and the potential economic impact of a loss on the company. Naturally, the seller will seek to minimize potential losses, while the buyer will take a more risk-averse view of the situation. Resolution of the matter therefore becomes challenging.

This is where SCI can help facilitate a mutually acceptable solution. The purchase of an SCI policy indemnifies the buyer from the financial impact of a specific contingency, thereby converting a contingent liability into a certain (and often deductible) expense.

Examples of the types of issues covered by SCI are:

  • Litigation
  • Environmental Issues
  • Tax Disputes
  • Specific Indemnities
  • Successor Liability

Tax Indemnification: Audit Assurance

Tax Indemnification insurance is designed to reduce uncertainty relating to tax issues involved in Mergers & Acquisitions. A Tax Indemnification policy ensures that a specific tax issue, if challenged by a relevant authority, will be interpreted as intended by the parties engaged in the transaction.

In the event that the tax treatment is overturned upon review, the policy pays the difference between the expected and the actual tax liability, along with interests, penalties and certain other costs associated with the defense.

Examples of the types of issues that may be covered by Tax Indemnification insurance include:

  • 338(h)(10) elections
  • S-Corp Compliance Issues
  • Net Operating Loss Protection
  • Tax-Free Reorganizations
  • Eligibility for Long Term Capital Gains Treatment
  • Cancellation of Indebtedness

Owens Groups provides expertise in this arena; and with an assessment and a carefully crafted policy, can provide peace of mind.

Please contact us for a complimentary consultation and assessment.

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