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Mergers & Acquisitions

As a single carrier with significant capacity and multiple product lines, AIG brings a rich heritage of excellence to our tailored M&A solutions.

Why Choose AIG for Mergers & Acquistions Insurance?

In the ever-changing M&A landscape, navigating complexities and meeting due diligence and compliance requirements can be challenging. AIG’s deep knowledge and decades of experience in M&A enable us to create bespoke insurance solutions for client needs that include Warranties and Indemnities, Tax Liability and Litigation Buyout.

AIG has helped buyers and sellers close more than 4,000 deals. With the largest global presence of specialized M&A underwriters in the industry, we collaborate closely with negotiating parties to measure and mitigate transactional risks, help reduce uncertainty and quickly close deals. 

The AIG Advantage

AIG M&A Insurance Solutions

AIG’s highly specialised M&A insurance products are underwritten by an international team of skilled insurance and M&A professionals who integrate closely with negotiating parties and their advisers to create tailored solutions that can facilitate commercial objectives whilst minimising deal risk.

A tailored product for companies considering a merger or acquisition, which covers either the buyer or the seller for loss arising from breach of the warranties and indemnities given in an acquisition agreement (SPA). 

Sellers can obtain a clean exit by using W&I insurance to ensure that the sale proceeds can be returned to investors and avoid the need of an escrow account. Buyers can procure warranty protection on transactions where the seller is reluctant to give warranties or where there is doubt over the seller’s ability to satisfy a claim.

W&I Insurance enables a buyer to:

  • Supplement their protection for breach of warranty both in terms of quantum and certainty of payment.

  • Extend the duration of warranties, giving them additional time to detect and report warranty breaches.

  • Distinguish their bid in a competitive auction by negotiating more limited recourse against the seller by supplementing the contractual recourse with W&I insurance.

  • Protect their relationship with the sellers who may become their key employees or business partners upon completion of the transaction.

W&I Insurance enables a seller to:

  • Reduce the risk of contingent liabilities arising from claims, allowing them to exit a business or investment cleanly.

  • Distribute all or most of the proceeds of sale to their investors or service their existing indebtedness as there is a reduced need for an escrow account.

  • Protect themselves where they have not been actively involved in the management of the target business from unintentional non-disclosure or other breaches of the terms of the SPA.

  • Expedite a sale and potentially increase the purchase price by eliminating obstacles to closing, such as protracted indemnity negotiations.

Tax Liability Insurance can reduce or eliminate a loss arising from the successful challenge by a tax authority of a taxpayer’s position.  Potential tax risks are typically identified during due diligence pursuant to a potential acquisition of a company and may have lied dormant within a target for many years. A buyer may have to proceed with a transaction or investment where there is uncertainty in the application of tax law or inadequate time to obtain an advance tax ruling. The risk for the buyer is that the tax position of the target could be challenged by a tax authority, which could lead to a material reassessment of their liability to tax and could include interest, fines and penalties. Similar issues could arise where a group is rationalising its or its target’s corporate structure either pre or post an M&A transaction.

  • Transfers an uncertain liability from the insured to the insurer.

  • Reduces the insured’s concerns about a potentially adverse challenge from a tax authority.

  • Transforms contingent and inherently uncertain claims into a quantifiable insurance cost allowing for balance sheet certainty.

  • Has potential application for pre and post M&A restructurings allowing for rationalisation of corporate structures.

  • Facilitates M&A transactions by providing increased fiscal certainty and helping manage negative financial impact.

  • Can also address expenses that may be incurred by the insured in engaging specialised legal and/or accounting advisors in connection with the tax risk.

  • Can also address interest and insurable fines and penalties as well as additional tax which may fall due.

A tailored insurance product that quarantines a client from the uncertainties inherent in outstanding litigation whether those uncertainties relate to the outcome or to the eventual amount of damages awarded. LBI will either cap an insured’s financial exposure or remove it altogether and will be designed to meet the particular needs of the insured and the specific characteristics of the dispute.

LBI enables clients to ring-fence liabilities which may arise from any current or anticipated litigation, arbitration or other dispute. This may be particular useful in an M&A context where an unresolved dispute would otherwise prevent an acquisition proceeding or would have a significant impact on the purchase price. An LBI policy can transform the inherently uncertain liability of litigation into a quantifiable insurance cost which can enable the parties to the transaction to focus on the business being acquired.

Underwriting and cover are tailored to each case, allowing the policy to be adapted to a dispute, regardless of its subject matter. As such, LBI can be adapted to cover proceedings ranging from a simple breach of a supply contract, a more complicated employment issue through to highly complex securities litigation and intellectual property disputes.

  • Covers settlement costs, legal costs, experts’ costs, damages and other potential liabilities arising in the context of a particular dispute.

  • Transfers an uncertain liability from the insured to the insurer.

  • Transforms contingent and inherently uncertain claims into a quantifiable insurance cost allowing for balance sheet certainty.

  • Caps future financial risk for the insured.

  • Releases business opportunities previously blocked by claims or disputes.

  • Eliminates potential obstacles to successful M&A transactions.

  • May enable favourable public disclosures, subject to the insurer’s agreement.

Our M&A leadership team

View contact information for AIG UK’s M&A leaders.