Tax Insurance

Tax Insurance shifts the risk — and potential cost — of an identified tax position or transaction from the taxpayer to an A-rated insurer, locking in financial certainty. …Specifically, Tax Insurance is a customizable insurance solution that transfers an identified or potential tax exposure — whether arising from an M&A deal, a restructuring, an audit, a reserve or day-to-day tax-risk mitigation — from the taxpayer to an A-rated insurer, thereby locking in economic certainty and protecting balance sheets. Priced attractively — often just pennies on the dollar — the availability of Tax Insurance across diverse geographies and tax regimes significantly broadens its applicability, allowing taxpayers to operate confidently across multiple jurisdictions. Tax Insurance indemnifies the insured for the full amount of any assessed tax, interest, and penalties, plus the professional fees required to defend the position and a “gross-up” to make the insured whole after any tax on the insurance proceeds. In the context of an M&A transaction, it allows sellers to distribute deal proceeds immediately, frees buyers from indemnity escrows, and enables corporates or funds to remove contingent liabilities from their balance sheets — accelerating closings, simplifying negotiations, and preserving post-deal relationships. For businesses, Tax Insurance provides strategic flexibility by facilitating complex restructurings, mitigating risks in cross-border transactions, and alleviating uncertainty around tax positions, whether in federal, state & local, or international jurisdictions.

Representations & Warranties Insurance

Representations & Warranties Insurance (RWI) (Warranty & Indemnity Insurance outside of the U.S.) is a specialized insurance solution designed to protect buyers and sellers in mergers and acquisitions from financial loss arising from breaches of representations and warranties made in the acquisition agreement. …RWI provides critical coverage if a statement made about the business—such as those concerning the accuracy of financial information, regulatory compliance, or ownership—turns out to be inaccurate. For buyers, it offers strong protection from credit-worthy insurance companies against unforeseen liabilities, extends the survival period in which to make an indemnity claim, and often broadens the scope of the representations themselves. For sellers, it significantly limits or eliminates entirely the need for large indemnity holdbacks and escrows. For both parties to a transaction, RWI serves as a powerful deal facilitation tool, eliminating the need for costly indemnification negotiations, bridging certain valuation gaps and preserving key relationships post-closing.

Litigation Insurance

Litigation Insurance is a bespoke solution that shifts an identified legal exposure—whether a threatened claim, active lawsuit, or final judgment on appeal—from the balance sheet of a company, fund, deal party, or litigation financier to an A-rated insurer, converting an open-ended liability into a fixed, one-time premium. …Depending on structure (before-the-event (BTE), after-the-event (ATE), Contingent Risk, Adverse Judgment, Judgment Preservation, or Capital Protection), the policy can be structured to reimburse an insured for adverse damages, settlements, defense costs, or the loss of a favorable award, and may serve as collateral for funding or acquisition financing. In M&A transactions, where the buyer has concerns regarding pending or threatened litigation, Litigation Insurance can serve as an effective tool to remove these risks from the negotiating table. This not only facilitates deal execution but also helps maximize proceeds to the sellers by eliminating the need for a special indemnity or escrow holdback. For lenders and investors, it protects IRRs and covenant compliance. For plaintiffs, it monetizes claims without ceding control. Coverage limits can range from $10 million to $500+ million and, although priced higher than other transactional risk insurance coverages, Litigation Insurance typically costs as little as high single to low double-digit percentage points of the amount insured.

Contingent Risk Insurance

Contingent Risk Insurance is Castle Harbour’s surplus-lines solution that mitigates esoteric, high-severity exposures with a custom-tailored policy backed by A-rated carriers, replacing uncertain liabilities with fixed, finance-ready certainty. …Specifically, Contingent Risk Insurance is a catch-all solution that converts hard-to-place, non-standard exposures into custom-tailored policies backed by credit-worthy insurers. Whether the risk is a credit-default on a borrower collapse, a parametric payout tied to a rainfall trigger, turbine under-performance at a solar farm, an adverse algorithmic output under an artificial-intelligence warranty, or revenue loss from supply-chain disruption, the coverage indemnifies the insured for a defined financial loss and associated costs, typically for a one-time premium equal to a single-digit percentage of the exposure. By offering bespoke indemnities from A-rated insurers, this solution can transform contingent liabilities into balance-sheet certainty, unlock debt financing, smooth M&A negotiations, and protect operating cash-flows across domestic and international jurisdictions. Policy sizes range from mid-eight to nine figures, and exposures can be creatively syndicated to minimize pricing while satisfying lenders’, sponsors’, and managements’ risk appetites.