I have a prospect whose structure is a bit convoluted (for reasons that make sense after he explained it) and I'm trying to determine the correct direction to proceed. I'll keep it simple and use "company A" and we'll use "widgets" as the product they are manufacturing so as to keep it confidental.
Company A - A limited partnership consisting of Company B and C
Company B - a Corporation with 51% stake in Company A
Company C - an LLC with 49% stake in Company A, and is International
Company D - a Company who principal is also principal of Company B and the entity that will actually make the widget
Managing members of C seeking insurance for A. B will want coverage for any liability related to A.
This is the initial structure. Other entities would eventually come in as partners, reducing the stake that company B has to less a majority.
The objective is to have the International company have a stake in the local company with some local players having a stake as well. Some of these companies have experience with the product and some have sales experience and thus the relationship.
He said he was making company B a majority partner since they have the experience with the product and thus would make obtaining insurance easier. But he said since this they are just now structuring A, they can do it another way if needed, including keeping B out of it entirely.
Anyone want to put their thinking cap on and postulate on the best way to present this to an underwriter and the best way to insure company A?
Insuring an LP consisting of several other entities
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Rob
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Re: Insuring an LP consisting of several other entities
Could it be as simple as making A the primary named insured and B and C additional named insureds excluding their other operations not related to entity A?
Re: Insuring an LP consisting of several other entities
If this a true LP - Limited Partnership, then based on what you describe, Company B would be the General Partner and Company C would be a Limited Partner. With LP's, the General Partner has all responsibility for managing the LP, and any limited partners only have financial responsibility. The named insured would read something like "Company A, a Limited Partnership, Company B, General Partner".
FWIW, Company D does not appear to have any direct interest or relationship to the LP.
FWIW, Company D does not appear to have any direct interest or relationship to the LP.