While RWI has long been a fixture in private M&A, its use in GP-stakes transactions is a more recent trend. Over ten such deals have now been insured across the U.S. and U.K., and that number is expected to grow as general partners continue to seek liquidity and strategic flexibility, and investors seek to simplify negotiations and gain an edge in competitive processes. This note draws on Atlantic’s experience of insuring some of the largest and most complex GP-stakes deals and outlines key practices for optimizing RWI coverage.

GP-stakes deals are priced the same as regular buyout deals of equivalent transaction value (TV). Currently, rates-on-line (i.e., the premium as a percentage of the policy limit) are typically 2.75% - 3.25% for a base RWI policy limit that is 10% of the TV and 2.25 - 2.75% for a base RWI policy limit that is 20% of the TV. Retentions for GP-stakes deals are typically 0.5% of TV, dropping to 0.35% of TV a year after closing.

Based on the GP-stakes deals where Atlantic has brokered an RWI policy:

The key reps that investors want covered align with the key risks for underwriters on GP-stakes deals, namely:

Fulsome coverage is available for these areas, provided diligence is conducted at the GP level. Moreover, coverage can also extend to reps related to funds and portfolio companies (e.g., there is no litigation at the fund or portfolio company levels which would prevent the GP-stake investment from closing) if supported by corresponding diligence at the fund/portfolio company level.

Pre-closing tax liabilities of the GP are typically covered as standard. Some insurers also offer affirmative coverage for “Excluded Interests” (i.e., any specific identified GP assets/liabilities the investor excludes from post-closing exposure) within the RWI policy—even if an Excluded Interests indemnity is provided in the agreement.

The key market-standard exclusion on GP-stakes deals is for loss arising from inaccuracies in the fair value of the funds/portfolio companies of the GP set forth in the financial statements, and any associated accrued carried interest.

Atlantic makes sure that this exclusion is drafted narrowly to preserve cover for losses that might arise for other reasons (e.g., if management fee income is misstated due to double counting of fees in a certain period, rather than the management fees being based on an inaccurate valuation of a certain fund/portfolio company) as this should be covered by the RWI policy.

Given regulatory compliance is often viewed as the main risk on GP-stakes deals, the compliance with law reps are almost always treated as fundamental and covered for 6 years under the RWI policy instead of the typical 3 years. This extended cover is typically available for around 10% additional premium.

Similarly, investors often desire top-up compliance with law cover which sits excess of the base RWI policy (for which the pricing and cover is described above). This top-up compliance with law cover costs typically between 1% and 1.5% of the additional policy limit purchased. For example, $50m of compliance with law top-up cover sitting above a RWI policy with a 10% of TV limit costs approximately $500-750k.

The typical RWI considerations in a non-control/minority investment context are also relevant (e.g., it is critical that loss pro-ration only applies to loss suffered directly by the GP, rather than the insured, and to get insurers comfortable that the insured likely won’t have consent rights over third-party claim processes that may lead to loss being paid under the RWI policy, e.g., tax claims).

RWI is available for both US- and UK-law governed deals and Atlantic has experience in both jurisdictions. Where UK law governs the transaction agreement, US-based investors typically opt for US-style RWI (i.e., coverage terms and pricing remain consistent with those detailed above, though extended compliance with law cover typically runs for four years in the UK, rather than six years in the US). UK-style warranty and indemnity cover is also available for approximately half the price, however the cover is materially narrower (mainly due to the data room and due diligence being generally disclosed against the policy).

➡️ Interested in creating content with GP Stakes News? Just reach out!

© 2025 GP Stakes News. All rights reserved.
This article and its contents are the intellectual property of GP Stakes News. No part may be reproduced, distributed, or transmitted in any form or by any means without prior written permission. For licensing inquiries, contact [email protected] and visit GPStakesNews.com