Representations & Warranties Insurance Services Brochure

Representations and warranties insurance (“RWI”) has gained popularity in mergers and acquisitions as a way to shift potential liability stemming from breaches of the seller’s representations and warranties discovered post-transaction. Traditionally, the seller’s indemnity has been backed by a portion of the sale proceeds placed in escrow for a negotiated period after closing.

By choosing RWI, sellers can reduce indemnity obligations, streamline the bidding process and quickly exit the transaction. Buyers can use RWI to make their bid more attractive to a seller or extend the time allotted to discover any problems with the acquired business.

Insurance companies that sell RWI need specialized subject matter experts to evaluate the underwriting risk and respond to RWI claims, including underwriting and claims technicians, experts in financial due diligence, credentialed valuation professionals and industry specific accounting experts.

FTI Consulting combines professionals from its Global Insurance Services and Dispute Advisory Services to provide insurers and insureds with expertise in RWI risks, coverage theories and claim quantification.

Our CPAs and valuation professionals regularly evaluate M&A disputes across all industries, while working in tandem with our experienced practitioners in specialized industries such as telecommunications, pharmaceuticals, petrochemicals and banking. We can assist insurers and insureds alike in understanding the underlying business of the deal and its impact on potential coverage and claim valuation.