CFC, the specialist insurance provider, pioneer in emerging risk and market leader in cyber, today announced the launch of a groundbreaking excess insurance solution specifically designed for secondary transactions.
In a first for the secondary transaction market, CFC’s new solution provides up to $150 million in excess limit and means CFC now has capacity of up to $200 million to deploy on GP-led and LP-led transactions in the US, Canada, the UK, Europe and other select international territories.
"CFC was the first to develop an insurance solution for secondary transactions and we have subsequently underwritten over 200 policies and insured over $3 billion of deal value," said Angus Marshall, Head of Transaction Liability at CFC.
A previously uninsured sector of the market, our adaptation of representations and warranties insurance to better suit these transactions has created a whole new branch of transaction liability insurance with a target addressable market of over USD 100 billion. Angus Marshall, Head of Transaction Liability at CFC
CFC’s new solution provides excess coverage for fundamental representations and warranties, along with the excluded obligations indemnity customarily seen on secondary transactions.
Fundamental representations are critical legal statements made by an investment fund in a sale and purchase agreement relating to the core aspects of the fund’s legal and operational status, and the interests being sold. Excluded obligations are a set of specific liabilities relating to matters such as tax or fiduciary duties that would ordinarily be a liability retained by the selling investor.
Typically involving lengthy negotiations between investors allocating the risk of the investment, secondaries transactions were previously uninsured with selling investors remaining liable for certain risks relating to their interest in the investment fund, including loss relating to a breach of a representation or indemnification claim for excluded obligations.
"We're excited to introduce this comprehensive solution for secondary transactions, which further augments our leadership in this important, emerging part of the transaction liability market,” added Marshall.
“At CFC, we understand the unique challenges and risks involved in these deals and with an increased limit size, we continue to provide innovative, relevant and dynamic solutions for investors undertaking secondary transactions."
Information on CFC’s full suite of transaction liability insurance solutions is available here.
