Professor Sean Griffith was quoted in The American Lawyer where he provides historical context for the use of representations and warranties insurance in merger and acquisition practices.
Insuring Against Failure
Representations and warranties insurance has been around for about 20 years, but it has become increasingly popular within the past five, according to Sean Griffith, a professor of corporate and securities law at Fordham University School of Law, who has studied and written about its use. In the United Kingdom and Australia, where the policies were first introduced, it is called warranty and indemnity insurance.
“It really takes off in 2015 and has been used aggressively in the private deal market in the last five years, with targets that are nonpublic companies,” Griffith said. Buyers in private deals and take-private deals used RWI policies in 30% to 50% of deals last year, he found, but less often in deals involving publicly traded companies, where information about companies is more readily available.
More than 20 insurers provided coverage insuring deals from $50 million to over $1 billion, according to Griffith’s research. AIG, AXA XL, Beazley and QBE are some insurers issuing the policies.