Secondaries Investor Publishes Akin Gump Article on Use of W&I Insurance in Secondaries Transactions
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Secondaries Investor has published the article “W&I insurance: why it has a role to play in secondaries,” written by Akin Gump investment management partners Aleks Bakic and John Daghlian, along with Laurence Dace and George Apperly, vice presidents at Lockton. The article looks at how the growth of general partner-led deals has highlighted the importance of liability protection, thereby bringing warranty and indemnity (W&I) insurance into the secondary market.
The authors begin by describing what W&I insurance is and how it is typically used. They also discuss when they first saw it being used in secondaries transactions and how common it now is.
W&I insurance is not suitable for every transaction, the authors write, noting that the need for it “will rest on the potential misalignment between protection desired by incoming investors and the seller’s reluctance to take on liability.” There must also be information available, they say, “to ensure that insurers have the necessary understanding and analysis to underwrite the deal.”
The article concludes by looking at how W&I insurance compares in cost to other possible alternatives, observing that prices will always vary “but will typically range between 1.5-3 percent of the purchase limit.”
To read the article in its entirety, please click here.
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