Mergers and Acquisitions (M&A) is a corporate strategy dealing with buying, selling and combining of different companies with the intent of improving financial performance without having to create and develop a new entity from the ground up. These deals are usually considered successful when the parties involved (or companies merging) emerge from the negotiations having fully taken into account the price paid, created value for their shareholders, and the realizable benefits of the potential risks.
Warranties and Indemnities Insurance (W&I Insurance) is designed for M&A-related transactions. It covers breaches in representations and warranties given as part of the sale of a business. Buyers can ensure the warranties have real value, even if the seller is unable to pay a warranty claim which arises sometime in the future. And, sellers can cover themselves to prevent sale proceeds being tied up in escrow accounts.
Local presence and experience
AIG has a dedicated local underwriting and claims teams across the globe, including in Southeast Asia, Australia, and London. This makes AIG uniquely positioned to underwrite transactions quickly and efficiently, and to remove logistical risks in placing the insurance.
Ease of reimbursement
Buyers are not required to file a suit against sellers before the claims are paid.
Large capacity and geographical reach
AIG can provide coverage of up to USD$50 million and is able to insure from domestic to large multi-jurisdictional acquisitions.
AIG is able to match the policy period to the duration of the representations and warranties made in a sale. This allows buyers to have more time to detect and report problems that may exist with the acquired business.
Who is if for?
Warranty and Indemnity Insurance covers both buyers and sellers by providing coverage for inaccuracies of representations and warranties given in the sale of a business. This coverage allows buyers and sellers to safeguard key relationships as they enhance their due diligence and disclosure process, leading to favorable post-sale environment for both parties.
What is covered?
A seller-side policy covers the seller for its own innocent misrepresentations; a buyer-side policy covers the buyer against the seller’s misrepresentations (innocent or otherwise). The buyer claims directly against the insurance policy and does not have to seek recourse against the seller.
The named insured under a W&I policy can be the seller or buyer of a business, or other interested parties, including a new company, special purpose vehicle or a guarantor.
Representations and Warranties made on Sale of Assets can also be covered.
How to make a claim?
When you buy insurance from AIG, you can have confidence that we stand ready to help you recover quickly when the unexpected happens. The claims operation that underpins every AIG policy is one of our greatest strengths, with a strong local claims team backed by our global network of expertise to support you when you face a loss.
For claims associated with Warranty & Indemnity Insurance, please reach out to your insurance broker to assist you. The client must report in writing to AIG as soon as practicable and within the Policy Period. Potential facts or circumstances that may lead to a claim should be reported prior to the expiry of the Policy Period.
You may also contact us at:
Landline: +63 2 8 878 5456
Email: phlweserve_CML@aig.com and email@example.com