Nearly 14 percent of AIG’s global M&A policies have resulted in a claim. This according to a study by the insurer of its own global representations and warranties (R&W) claims data between 2011 and 2014.
“More and more, M&A insurance is becoming part of the transaction process worldwide,” said Mary Duffy, global head of M&A insurance at AIG. “Companies see it as a better alternative to closing a deal than contentious negotiations to allocate potential risks and unknowns.”
Representation and warranties insurance policies can be purchased by either the buyer or seller in a transaction.
Buyers use the insurance to protect against breaches of representations and warranties made by a seller during the deal process. Sellers purchase the insurance to protect against buyers claiming they breached a representation or warranty made at the time of closing.
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