Value for Buyers:

• Enhances a buyer’s bid in a competitive auction process
• Provides recourse for a buyer in acquisitions without seller indemnity (i.e. public company sales or bankruptcy)
• Protects key relationships with employees, share holders, continuing management team

Our Underwriting Process:

• Our M&A Team is comprised of experienced underwriting specialists with extensive legal, financial and tax backgrounds, essential when offering tailored transactional solutions. We understand that many accounts are subject to specific deal deadlines. As such, we are structured in a manner that allows for real-time decision making, enabled through an efficient and scalable underwriting process. Our underwriting and secondary due diligence review is typically completed within 4-5 business days of receiving all deal documents, and our policies are drafted and bound concurrently with signing

Capacity:

• Up to $60M in capacity is available
• Secured by a consortium of Syndicates at Lloyd’s of London which currently enjoys an A+ rating from Standard & Poor’s, AA- from Fitch and A from A.M. Best; and reputable domestic carriers with strong ratings

Value for Sellers:

• Allows seller to walk away cleanly from a deal without any contingent liabilities
• Protects passive investors
• Eases reputational risk by avoiding extended lawsuits and litigation

Key Highlights:

Ethos Specialty offers commercial terms and pricing coupled with responsive service. Policies are tailored to each unique transaction and work “back to back” with the M&A agreement.

• Risks located in the U.S. or Canada
• Retentions typically of 1.0% of the transaction value
• Premium typically between 3.0% and 5.0% of the total limits purchased
• Coverage for a pre-closing tax indemnity
• Following materiality scrapes in the transaction agreement
• On buyer-side policies, survival periods extend beyond those in the M&A agreement
• Broad appetite across industry classes including healthcare and technology transactions

Benefits of the 363 Sale process:

• Upon completion, it ensures the Debtor has fulfilled its fiduciary duty to maximize the value of the assets for its Creditor
• The Buyer acquires the assets free and clear of liens or other claims and obtains certain other protections including a determination that the sale was in good faith
• Often, the Buyer is able to purchase the assets at a discount

Capacity:

• Although the coverage offered in a R&W Policy for in a 363 Sale would closely resemble that of a R&W Policy for a non-bankruptcy sale, Buyers should expect potential increases in underwriting fees, premium or retention (which likely would be borne entirely by the Buyer) to address potential complications in underwriting associated with the bankruptcy process and to account for the Insurers lack of subrogation rights (similar to the Buyer’s lack of recourse in a traditional 363 Sale)

R&W Insurance In a 363 Sale:

Offering a R&W Policy in a 363 Sale would likely create certain additional benefits to the traditional 363 Sale process including:

• The Buyer would be able to seek recourse against a R&W Policy in the event of a breach of any Debtor representation or warranty that results in loss to the Buyer. In contrast, in a traditional 363 Sale, the Buyer typically is left with limited recourse, if any
• The inclusion of such a remedy for the Buyer, likely would embolden the Buyer (and other potential bidders) resulting in better and higher bids and increased proceeds to the Creditors of the Debtor
• The ability to seek recourse in the event of a breach and increased proceeds, may provide an opportunity for bidders to seek broader representations and warranties that they would have in a traditional 363 Sale. It should be noted that a Bankruptcy Court may view an over-expansion of representations and warranties unfavorably (as a deterrent to the sale process)

Claims Data:

• Since its inception, Ethos Specialty Insurance has received notice of over 150 transactional liability claims and to date has effectively managed and resolved to completion a significant percentage of the reported matters. We have recovered for our Insureds a substantial number of first- and third-party payments totaling in excess of $100M on various financial statement and material customer claims, as well as on a number of third-party consumer litigation, condition of asset, tax and other reported claims. We have achieved five eight-figure settlements in financial statement/material customer claims and a fair number of low to mid seven figure claims. We partner with our Insureds and their counsel towards the common goal of fair and efficient commercial resolutions