Litigation Buyout and Special Situation Insurance

Comprehensive, flexible protection against financial loss following a wide range of events that could prevent the successful completion of Mergers and Acquisitions (M&A).

Australia has strong market conditions for people looking to sell their business. With lower regulatory hurdles than some other countries and a stable political and legal environment, Australia can also be an attractive environment for offshore investors. These factors support the current M&A activity in Australia.

As in all markets, however, there are a number of risk factors that can hinder the successful implementation of a merger, acquisition or restructure. These may include product liability disputes, breaches of legislation or regulations, employment, contractual or intellectual property disputes and those relating to the operational or trading history of an organisation.

Litigation Buyout Insurance from AIG can be used to facilitate an M&A transaction by ‘ring-fencing’ liabilities, potentially removing a deal-breaking obstacle. It can also negate the requirement for the use of escrows or indemnities, providing certainty and finality to both parties to the transaction.

Product highlights

Large capacity

Highly customised coverage for a range of special situations and their potential outcomes with large associated limits also possible.

Flexible coverage

Underwriting and cover are customised to each policy, providing a tailored solution to meet the requirements of any situation or dispute, regardless of the subject matter.

Ease of reimbursement

Buyers can recover losses directly from the insurer without needing to locate and pursue a seller and its assets.

'Ring fenced' liabilities

Provides security to businesses engaged in M&A activity by quantifying and separating potential liabilities arising from litigation or other event insured.

Exceptional claims handling

Access to our outstanding team of claims professionals who are experienced and expert in litigation relating to complex transactions, ensuring that your claim will be resolved in a professional and efficient manner.

For any enquiries about purchasing, renewing or making a claim on an AIG business policy, please contact your insurance broker or find a broker here.

Litigation Buyout Insurance coverage allows you to ‘de-risk’ your business by removing or reducing the contingent liability arising out of litigation, which may otherwise represent an unquantifiable liability.

The insurance provides certainty to an insured business as the potential liability arising out of the litigation is quantified and ‘ring-fenced’.

Coverage is usually for a specific known risk, lawsuit or claim, but may also allow for threatened litigation or an anticipated claim. It can also be written to cover a portfolio of claims arising out of the same facts or circumstances.

You may choose to include defence costs in the insurance program limit, or may choose to only cover the amount of any award of damages.

Businesses that have incurred a contingent liability, most commonly a dispute or litigation, that wish to ring-fence any associated liabilities, often in anticipation of a sale or divestment.