Liberty Global Transaction Solutions (GTS), part of Liberty Mutual Insurance, has launched Contingent Legal Risk Insurance within its global portfolio of transactional risk products and services.
Aude Bonnemaison, a representations and warranties/warranty and indemnity insurance underwriter within Liberty GTS with prior experience with this product, is now Liberty GTS’ first underwriter dedicated to the Contingent Legal Risk Insurance product. She will report to Liberty GTS Chief Underwriting Officer Gareth Rees, who will also head this new division.
Contingent Legal Risk Insurance policies can cover a range of liability risks, with the common theme that they must be capable of legal evaluation and analysis. Such risks may, and often do, arise in the context of an M&A transaction but they may also be stand-alone risks with no connection to a deal. Where used on a deal, Contingent Legal Risk Insurance may be used in conjunction with R&W/W&I policies and are often used to cover a known risk that has been excluded from cover under the R&W/W&I policy, and which may otherwise block a deal if neither the buyer nor the seller is willing to bear that risk.
Contingent Legal Risk Insurance policies, like Tax Liability Insurance policies, cover known legal risks, whereas R&W/W&I policies cover unknown risks. Liberty GTS’ capacity for Contingent Legal Risk Insurance will be up to a limit of $165 million per policy.
Liberty said the risks covered by Contingent Legal Risk Insurance policies are typically low probability but high severity in nature. Examples of the risks that may be covered by Contingent Legal Risk Insurance policies include: the risk of a court judgement being overturned on appeal, the risk of a regulatory permit or consent being revoked, the risk of an identified diligence finding crystalizing into a financial loss for the target business and the risk of creditor claims preventing either cash being released from an escrow or from investment funds winding-up and liquidating closed portfolio company holding vehicles.
Liberty GTS operates as a global, stand-alone business, providing brokers and clients with centralized M&A insurance capabilities across its international network of offices, backed by a dedicated claims management team.
Liberty GTS underwrites M&A lines of business on behalf of Liberty Mutual’s Lloyd’s of London Syndicate 4472 and Liberty company platforms.
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