Hunton Insurance Recovery Blog

Aon released a recent report titled “2025 Transaction Solutions Global Claims Study: Managing Deal Risk to Secure Investments and Enhance Returns.” That report described over $300 million in representation and warranties insurance claim payouts for North American clients, a record annual total. Aon also reported that the median payment size was $5.5 million, indicating significant recovery on noticed claims. Hunton partner Syed Ahmad was recently quoted in a Law360 article, commenting that the market for M&A insurance is largely driven by the underlying deal activity. He added that “[r]ecoveries at this rate can also influence perceptions and increase the demand for these products by repeat players in the marketplace.”

The trend of Delaware court decisions favoring policyholders continues with a favorable ruling in AMC Entertainment Holdings, Inc. v. XL Specialty Insurance Company, et al. The Delaware trial court found that AMC’s settlement payment, made in the form of AMC shares valued at $99.3 million, qualified as a covered “Loss” under its directors and officers (D&O) liability insurance policy. This ruling is noteworthy for a variety of reasons, particularly because it establishes that non-traditional forms of currency, like stock, can be a covered “Loss” under D&O policies.

Novolex Holdings, LLC v. Illinois Union Insurance Company is one of the few cases involving a claim under a Representation and Warranties (“R&W”) policy playing out in a public forum because most R&W cases are resolved before a formal dispute and often don’t reach litigation. In addition, most R&W policies provide the policyholder with the option to have the dispute resolved through arbitration, which many clients may prefer so as to avoid the public scrutiny of a court case. Novolex, however, is one of the few cases that has proceeded to litigation.

A software company—Zywave, Inc. (“Zywave”)—recently filed a lawsuit in California federal court that may provide rare insight into how courts will resolve representations and warranties (“R&W”) insurance coverage disputes. Zywave purchased a buyer-side R&W policy in connection with its acquisition of an insurance product-distribution software company. Zywave alleged that, post-close, it learned that the seller had knowledge of “serious material performance issues with certain customers that it failed to disclose,” amounting to breaches of various sections of the acquisition agreement. The software company further alleged that if the seller had disclosed the performance issues, the software company would have either walked away from the transaction or paid a lower purchase price.