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Mergers & Acquisitions

A deep understanding of organisations, their people,
culture and risk profile.

Contingent Risk Insurance

What is Contingent Risk Insurance?

Contingent Risk insurance for Mergers & Acquisitions and other investment or financing transactions offers insurance for a broad range of contingent risks for which neither party to the transaction will accept financial responsibility.

The insurance transfers a known or uncertain contingent liability from (usually) a buyer’s balance sheet to an insurance company.

Such risks can cover a very broad range of contingent risks, which may be identified during due diligence conducted as part of the transaction process.

Contingent Risk Insurance typically offers cover for known identified legal risks such as:

  • Litigation insurance
  • Shareholder disputes
  • TUPE risk transfer
  • Liquidation insurance / Successor liability
  • Legal interpretation risk for identified litigation/arbitration (particularly appeal risks of favourable first instance decisions)
  • Intellectual property or employment disputes
  • Specific accounting treatment
  • Contingent environmental risks
  • Other regulatory exposures
  • Complex title risks.

A Contingent Risk insurance policy is tailored to the specific circumstances of the transaction.

Who should buy Contingent Risk Insurance?

Cover is usually purchased by a buyer in an M&A transaction as the party who would primarily suffer loss if the contingent risk arose.

In the event that the risk in question is contractually transferred to another party, for example the seller, then cover can be structured to insure that party.

Investors or financers may require such contingent risk cover to be taken out by the company, in order to protect the valuation of the business and their investment / financial position.