Hunton Insurance Recovery Blog

Aon released a recent report titled “Rep & Warranties Payouts Set Records In 2024, Aon Says.” That report described over $300 million in representation and warranties insurance claim payouts for North American clients, a record annual total. Aon also reported that the median payment size was $5.5 million, indicating significant recovery on noticed claims. Hunton partner Syed Ahmad was recently quoted in a Law360 article, commenting that the market for M&A insurance is largely driven by the underlying deal activity. He added that “[r]ecoveries at this rate can also influence perceptions and increase the demand for these products by repeat players in the marketplace.”

A software company—Zywave, Inc. (“Zywave”)—recently filed a lawsuit in California federal court that may provide rare insight into how courts will resolve representations and warranties (“R&W”) insurance coverage disputes. Zywave purchased a buyer-side R&W policy in connection with its acquisition of an insurance product-distribution software company. Zywave alleged that, post-close, it learned that the seller had knowledge of “serious material performance issues with certain customers that it failed to disclose,” amounting to breaches of various sections of the acquisition agreement. The software company further alleged that if the seller had disclosed the performance issues, the software company would have either walked away from the transaction or paid a lower purchase price.

In the complex world of mergers and acquisitions, it is more important than ever for businesses to consider insurance issues early and often. In a recent Bloomberg Law article, Hunton attorneys Syed S. Ahmad, Adam Lyons and Alex D. Pappas outline why businesses must fulsomely evaluate the insurance implications of proposed corporate transactions. The article describes the specific pitfalls businesses may face if they overlook insurance issues. The article then discusses the legal and practical effects of anti-transfer provisions, which could be used by insurers to deny or limit ...