Over the last approximately 20 years, more and more deal practitioners have begun to routinely use Representations and Warranties (R&W) insurance to help clients mitigate risks associated with the purchase and sale of both private and public companies. When R&W insurance products were first introduced into the marketplace and as the use of these policies initially started to increase, many noted that the real staying power of the products would be impacted by actual claims experience. Fast forward to today and that claims information is now available and product use continues to increase.
R&W insurance claims can arise, subject to policy-specific terms and exclusions, out of the breach of any representation made in a purchase agreement. Based on available data, the most frequent claims appear to arise out of breaches of representations concerning financial statements, tax, compliance with laws and material contracts. We thought it would be useful to our readers to describe some real-world R&W insurance claims and so we consulted with the experts at Euclid Transactional, who assisted us in preparing this column.
Euclid Claims Experience
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