Gallagher are unlike any other major broker – whilst we’re the world’s third largest insurance broking, risk and consulting firm and a Fortune 500 company, we’re still a family run business. We believe our customers and partners see the difference this brings in our approach to service.
We provide insurance solutions across a wide range of products, and help to support clients with risk management and consulting services.
As part of our extensive offering, we have dedicated professionals who can assist with your M&A activity advising on specific transactional insurance products and undertaking insurance due diligence. Please see below:
Warranty & Indemnity (W&I) Insurance
W&I insurance cover from Gallagher helps protect either buyers or sellers for breaches in representations and warranties given in a transaction agreement.
With W&I insurance in place, buyers can:
- Offer comfort to debt providers if concerns exist over the seller’s financial position;
- Use W&I insurance as a competitive advantage in an auction process (as they do not require a high liability cap when taking out insurance);
- Use their insurance policy directly rather than suing the seller; and
- Provide better certainty for their diligence through their insurer.
With W&I insurance in place, sellers can:
- Benefit from a clean exit, allowing the distribution or reinvestment of sale proceeds;
- Expedite a quicker release of funds by eliminating the need for escrow payments;
- Gain assistance if they are unable or unwilling to give financial support behind warranties;
- Protect the management retained with the new company; and
- Gain comfort should their buyer become litigious.
What is Tax Liability Insurance (TLI)?
- TLI covers tax risks arising within an M&A context or on a stand-alone basis from a variety of jurisdictions. Importantly, insurance cover is available for certain tax risks already under audit by a tax authority.
- It is a bespoke insurance product designed to provide cover for identified tax risks.
- Typically, there is a differing interpretation of specific tax law or regulation which has led to a tax exposure.
- It is used both in an M&A context where tax risks have been identified as part of the due diligence and outside of an M&A context, where stand-alone tax risks may have arisen as part of an internal reorganisation, debt restructure, operational activities, transfer pricing policies, and from activities undertaken in various jurisdictions outside of the taxpayer’s home jurisdiction.
Insurance Due Diligence (IDD)
IDD is an essential part of the transaction process, in order to review the target’s insurance programme and claims experience against its risk profile to help investors understand:
- If the business is insured against critical insurable threats;
- Red flags in relation to programme quality, claims data or pricing. Market conditions mean some businesses struggle to buy insurances such as cyber, property and professional indemnity. Investors need to know if this could impact the target, especially if there are contractual or regulatory needs to maintain existing cover levels;
- Pre-completion essential tasks and post-completion recommendations; and
- On change of ownership, insurance may not remain in force automatically. IDD identifies which insurances are impacted by the transaction and what needs to be done before completion.
We also have in-house specialist teams who focus on helping clients to find solutions in the following areas:
- Cyber Risk Management
- Real Estate – we can help with latent defects, legal indemnities and property valuations.
- Trade Credit – Protecting clients from bad debt
Speak to the team today – contact Andy Newby on andy_newby@ajg.com or telephone 07756 216272
