Today’s buyer can’t count on protection through an “assets only” purchase...
An acquisition represents both untold opportunities and unknown liabilities.
The buyer of a company can be held responsible for the consequences of
events that occurred long before the acquisition. Standard liability insurance will
not offer protection for claims made against the buyer for loss events that predate
the deal. Today’s buyer can’t count on protection through an “assets only” purchase,
either. For instance, the new owner may be the only defendant available and able to
finance a large loss, despite a tight buy/sell agreement. At a minimum, defense expense
exposures are likely.
Some scary scenarios to consider:
IN A FRIENDLY TRANSACTION, A LARGE MANUFACTURER ACQUIRES
an electronic equipment leasing a chain of stores from a competitor.
firm through an “assets only” purchase agreement. Several years later, suit is
brought because the leasing firm’s equipment caused major property damage
prior to the transaction. The successor is found liable to pay the multimilliondollar
claim, as the predecessor firm had inadequate insurance and could not
finance the loss.
A LARGE RETAIL ESTABLISHMENT ACQUIRES
lawsuit is brought a year later claiming damages for bodily injury from defective
goods sold by the former competitor, the successor is found liable to the tune of $3
million — without insurance — as technically it was never an insured party under
the predecessor’s policies.
Fortunately, there is a solution to these dilemmas. Chubb’s Successor Liability
insurance, included in Continuum from ChubbSM, offers insurance protection for
companies whose current insurance policies may be inadequate to handle exposures
from the past. Some highlights:
• Extended claim-reporting periods, often up to 10 years
• Coverage is noncancellable
• Primary and follow-form Excess liability
• Worldwide protection available
• Significant capacity
Successor Liability is just one of the many insurance products available to address the
exposures arising out of mergers, acquisitions and business discontinuations. Chubb’s
The Great M&A Wave: Mergers, Acquisitions and Business Discontinuations Risk
and Insurance Management Handbook, available on chubb.com, provides a starting
point to help you understand how to control these types of risk.
Never before has the insurance profession seen so much uncertainty in litigation —
from escalating jury awards and liberal interpretations of the law to increased liability
imposed on manufacturers of even the most benign products. But these skeletons
shouldn’t rattle anyone. Count on Chubb to help design an insurance program that
offers insurance protection against liabilities from the past.
Chubb Group of Insurance Companies
Whitehouse Station, New Jersey 08889
www.chubb.com
Chubb refers to the insurers of the Chubb Group of Insurance Companies: Federal Insurance Company, Vigilant Insurance Company, Great Northern Insurance Company, Pacific Indemnity Company, Northwestern Pacific Indemnity Company, Texas Pacific Indemnity Company, Executive Risk Indemnity Inc., Executive Risk Specialty Insurance Company, Quadrant Indemnity Company, Chubb Custom Insurance Company, Chubb Indemnity Insurance Company, Chubb Insurance Company of New Jersey, Chubb National Insurance Company, Chubb Lloyds Insurance Company of Texas. Not all insurers do business in all jurisdictions.
This literature is descriptive only. Actual coverage is subject to the language of the policies as issued.
Form 07-01-0105 (Rev. 10/06)
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