What is Litigation Buyout Insurance?
Litigation Buyout (LBO) Insurance provides companies with the ability to successfully ring-fence litigation exposure and transfer the full financial risk of class action, anti-trust and non-class litigation. With LBO Insurance, the insurance carrier takes on the financial risks and liabilities for businesses – at any time before settlement and for a known, fixed cost. In the context of an M&A transaction or financing, LBO Insurance negates the requirement for the use of escrows or indemnities, providing certainty and finality to both parties to the transaction.
How LBO Insurance Works
Each policy is customized to meet a company’s specific business, financial, and legal objectives. For those cases where settlement is not an immediate option or business reasons make time of the essence, LBO Insurance provides a clear path.
In exchange for the insurance premium, the insurance carrier will:
- Take over the defense of the litigation.
- Take financial responsibility for defense costs.
- Cover any adverse judgment.
Why Businesses Choose LBO Insurance
- Provides risk transfer for known, threatened or pending litigation in exchange for a fixed premium.
- Covers the financial risk of litigation, defense costs and adverse judgment.
- Facilitates M&A and financing transactions by ring-fencing known litigation.
- Risk analysis provided at no cost or obligation.
- Achieves financial certainty so the company can get back to its core business.
What Makes LBO Insurance Secure
Underwritten on the paper of a leading national carrier which holds financial strength ratings of A++ from AM Best and AA+ from Standard & Poor’s, LBO Insurance provides companies with the ability to ring-fence litigation exposure by transferring financial risk to the insurer — at any time up to when the litigation is settled.
