Title Insurance (International)
Title insurance provides security for owners of shares and real estate assets. The main products are title to shares, title to loans, title to real estate and known legal risks (often known as legal indemnities).
Each policy protects against any challenge to the title on a no-fault basis and is not dependent on any warranties or indemnities provided under the M&A transactional documents. The insurance cover supplements due diligence carried out during an acquisition, restructuring or financing, and can also respond to any known risks identified during the transaction.
Reason for Title Insurance
Ryan Transactional Risk helps to facilitate hundreds of M&A transactions each year where ownership and use of assets can become a hinderance to successful closing. Complementing W&I cover, but able to act independently of it, Title insurance is used by the owners of assets to secure a sale, and by buyers and their lenders to protect their investment and ensure returns. Some of the key drivers for Title insurance that Ryan Transactional Risk frequently sees are:
- Quick exit for the Seller: early availability of terms enables a buyer to proceed without delay to the transaction;
- Clean exit for the Seller: liability for any warranties or indemnities may be limited or removed, enabling sale proceeds to be distributed immediately;
- Concerns over Seller capacity and / or ability to discharge obligations: stand-alone cover outside the transaction documents gives the buyer full confidence;
- Bid differentiator for the Buyer: reducing the time needed for due diligence or limiting any post completion seller obligations can make the bid more attractive;
- Full ownership security for the Buyer: comprehensive ownership protection against any challenge to title of the asset;
- Full Real Estate use security for the Buyer: comprehensive use protection against any challenge to the property or its use.
- Finance party or investor requirements: ability to claim directly against the insurance for specified coverage ensures that all parties to the investment are covered.
Reason for Title Insurance
Ryan Transactional Risk helps to facilitate hundreds of M&A transactions each year where ownership and use of assets can become a hinderance to successful closing. Complementing W&I cover, but able to act independently of it, Title insurance is used by the owners of assets to secure a sale, and by buyers and their lenders to protect their investment and ensure returns. Some of the key drivers for Title insurance that Ryan Transactional Risk frequently sees are:
- Quick exit for the Seller: early availability of terms enables a buyer to proceed without delay to the transaction;
- Clean exit for the Seller: liability for any warranties or indemnities may be limited or removed, enabling sale proceeds to be distributed immediately;
- Concerns over Seller capacity and / or ability to discharge obligations: stand-alone cover outside the transaction documents gives the buyer full confidence;
- Bid differentiator for the Buyer: reducing the time needed for due diligence or limiting any post completion seller obligations can make the bid more attractive;
- Full ownership security for the Buyer: comprehensive ownership protection against any challenge to title of the asset;
- Full Real Estate use security for the Buyer: comprehensive use protection against any challenge to the property or its use.
- Finance party or investor requirements: ability to claim directly against the insurance for specified coverage ensures that all parties to the investment are covered.
Title Insurance Coverage
Ryan Transactional Risk’s Title insurance policy provides comprehensive coverage for losses stemming from any challenge to the title of the asset (including share ownership for both operational and real
estate transactions), and use of any real estate. The policy is not tied to the Share Purchase Agreement, and the insured events are designed to cover a wide range of scenarios where the insured could suffer a financial loss, such as:
- Ownership: the seller not holding a complete interest in the shares or asset;
- Authority: the seller being unable to dispose of the shares or asset;
- Procedure: the necessary incorporation, registration, returns or filings have not been validly completed;
- Fraud: fraud, undue influence or duress;
- Solvency: the seller being insolvent at the time of the transaction;
- Encumbrances: the asset is subject to options, pre-emptions, finance debt, or existing litigation;
- Real Estate use: the title to the property is defective or not marketable because it does not have the correct planning, building or zoning permissions, is subject to legal restrictions or obligations, or it does not have the necessary easements for its use.
Title Insurance Coverage
Ryan Transactional Risk’s Title insurance policy provides comprehensive coverage for losses stemming from any challenge to the title of the asset (including share ownership for both operational and real
estate transactions), and use of any real estate. The policy is not tied to the Share Purchase Agreement, and the insured events are designed to cover a wide range of scenarios where the insured could suffer a financial loss, such as:
- Ownership: the seller not holding a complete interest in the shares or asset;
- Authority: the seller being unable to dispose of the shares or asset;
- Procedure: the necessary incorporation, registration, returns or filings have not been validly completed;
- Fraud: fraud, undue influence or duress;
- Solvency: the seller being insolvent at the time of the transaction;
- Encumbrances: the asset is subject to options, pre-emptions, finance debt, or existing litigation;
- Real Estate use: the title to the property is defective or not marketable because it does not have the correct planning, building or zoning permissions, is subject to legal restrictions or obligations, or it does not have the necessary easements for its use.
Policy Features
- No fault insurance: cover responds without a requirement for there to have been a breach of any warranty or indemnity;
- Full Enterprise Value: losses can be covered up to the full Enterprise Value , up to maximum line, protecting all aspects of any investment. This can be structured on a per property basis to increase capacity deployment;
- Extended duration: policies are not time limited and exist for the lifetime of the buyer’s ownership of the asset, including any re-structuring;
- Core losses: legal defence costs, financial payments, and loss in value of the asset;
- Standard losses: contractual penalties to third parties, shortfalls in loan interest or fees, and redevelopment costs;
- Additional losses: business interruption, rental liability or receivable rent, delay costs or abortive costs (for development or change of use real estate).
Key Features
Ryan Transactional Risk’s Title underwriting typically has:
- No upfront underwriting fee;
- Nil retention;
- Ability to cover the full Enterprise Value up to maximum line;
- Unlimited policy duration for the length of the insured’s ownership of the asset;
- Flexibility to structure the policy alongside W&I coverage or for it to sit independently;
- Wide appetite for any known risks identified through due diligence.
Policy Features
- No fault insurance: cover responds without a requirement for there to have been a breach of any warranty or indemnity;
- Full Enterprise Value: losses can be covered up to the full Enterprise Value , up to maximum line, protecting all aspects of any investment. This can be structured on a per property basis to increase capacity deployment;
- Extended duration: policies are not time limited and exist for the lifetime of the buyer’s ownership of the asset, including any re-structuring;
- Core losses: legal defence costs, financial payments, and loss in value of the asset;
- Standard losses: contractual penalties to third parties, shortfalls in loan interest or fees, and redevelopment costs;
- Additional losses: business interruption, rental liability or receivable rent, delay costs or abortive costs (for development or change of use real estate).
Key Features
Ryan Transactional Risk’s Title underwriting typically has:
- No upfront underwriting fee;
- Nil retention;
- Ability to cover the full Enterprise Value up to maximum line;
- Unlimited policy duration for the length of the insured’s ownership of the asset;
- Flexibility to structure the policy alongside W&I coverage or for it to sit independently;
- Wide appetite for any known risks identified through due diligence.
Title to Loans Cover
Ryan Transactional Risk’s Title to loans product offers transfer of legal title risks associated with acquisition of portfolios or books of loans by banks, insurance companies or institutional lenders. This enables the insured to focus on underwriting the financial risk. Title to loans insurance offers cover for:
- Security of ownership: Lenders not being the sole legal owners of any loans, or legal restrictions against their title to loans;
- Security of property registration: Title registration defects of any legal mortgage or charge of the loans on the borrower’s property;
- Loan collection: Inability of the lender to collect receivables from the borrower resulting in a loss of income;
- Loan enforcement; Inability of the lender to enforce their legal right to repossess any property to recover capital losses.
Excess Fundamental Cover (International)
Title insurance can also be used to provide additional capacity to fundamental warranties cover. This can sit in excess of Ryan Transactional Risk’s W&I or also any wider market transaction structure. The product is focused on:
- Delivering quick and efficient deployment of capacity;
- Providing ‘light touch’ underwriting mirroring underlying cover;
- Increasing limits for breach of fundamental warranties to the full Enterprise Value up to maximum line.
Title to Loans Cover
Ryan Transactional Risk’s Title to loans product offers transfer of legal title risks associated with acquisition of portfolios or books of loans by banks, insurance companies or institutional lenders. This enables the insured to focus on underwriting the financial risk. Title to loans insurance offers cover for:
- Security of ownership: Lenders not being the sole legal owners of any loans, or legal restrictions against their title to loans;
- Security of property registration: Title registration defects of any legal mortgage or charge of the loans on the borrower’s property;
- Loan collection: Inability of the lender to collect receivables from the borrower resulting in a loss of income;
- Loan enforcement; Inability of the lender to enforce their legal right to repossess any property to recover capital losses.
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Excess Fundamental Cover (International)
Title insurance can also be used to provide additional capacity to fundamental warranties cover. This can sit in excess of Ryan Transactional Risk’s W&I or also any wider market transaction structure. The product is focused on:
- Delivering quick and efficient deployment of capacity;
- Providing ‘light touch’ underwriting mirroring underlying cover;
- Increasing limits for breach of fundamental warranties to the full Enterprise Value up to maximum line.