PRODUCT HIGHLIGHTS

Primary underwriting focus is on appeals in the United Kingdom, European Union, Asias, Dubai and Hong Kong

Appeals pending in other jurisdictions are also considered

Policy limit capacity of at least:

  • €175,000,000
  • €175,000,000
  • €175,000,000

Designed to be sold to liquidating private investment funds but can be modified to respond to liquidations of other entities

Policy can be put in place during the final stages of liquidation or termination of the fund

Coverage available for a wide variety of unidentified or identified contingent exposures such as:

  • tax exposures
  • indemnification obligations
  • existing claims

Coverage can include typical run-off Management Liability exposures

Coverage available on both a primary or an excess basis

Policy form designed to address specific characteristics and exposures of a liquidating fund or entity:

  • coverage extended to include heirs, assigns, estates, spouses and domestic partners of the fund managers
  • built in run-off available upon termination of the liquidating fund
  • multi-year (single aggregate) policies with policy terms of up to seven years addresses single purpose nature of fund

INFORMATION

Many private investment funds are nearing or have reached the end of their intended investment lifespan. Heybridge’s HEYINS Contingency Insurance can facilitate the accelerated wind-up or liquidation of a private investment fund by providing insurance for either identified or unidentified contingent obligations that the fund managers believe must prudently be provided for by way of reserves or hold backs.

Once a private investment fund has concluded its investment program and sold its investment portfolio, generally all parties have an interest in maximizing the amount of the final distribution and making such distribution as quickly as possible. However, general partners face a decision whether or not they need to maintain cash on hand to cover contingent liabilities — no matter how remote — and what the amount of holdback should be. There is an incentive to distribute as much as possible and thereby maximize investment returns for its members, however this exposes the fund and the general partner to potential liabilities, which if they crystallized would be difficult to recover from the fund members.

In addition, the ongoing operation of the fund to provide for identified or unidentified contingencies will involve the added need to holdback continued administrative and reporting costs that will further reduce amounts available for final distribution to investors. Such reserves or holdbacks are an inefficient use of capital, precluding the private investment fund investors and managers from generating the type of returns that they expect.

Frequently Asked Questions

When in a fund’s life-cycle can HEYINS Insurance Policy for Private Investment Funds be most effectively utilized?

HEYINS Insurance Policy for Private Investment Funds is intended to be sold at a time when the fund’s investment program has been completed, the proceeds of that investment program have been realized and there are minimal outstanding trailing liabilities under either sale agreements or identified liabilities.

Can HEYINS Insurance Policy for Private Investment Funds be used to cover exposures to which the fund might become liable under specific indemnities that it has given on a scheduled basis?

Yes. In fact, scheduling the specific exposures that are covered under a HEYINS policy is often a more cost and time-effective manner for the fund to purchase coverage.

The fund’s manager/advisor purchases fund D&O/E&O coverage. Would the purchase of HEYINS Insurance Policy for Private Investment Funds be duplicative?

Most fund manager D&O/E&O policies do not provide coverage for contractual exposures. Many of the trailing liabilities of the liquidating fund could relate to liabilities assumed under sale purchase exclusions. As such, coverage for these exposures may not be covered under fund D&O/E&O policies. In addition, a HEYINS policy has the ability to cover identified contingency known or potential exposures of the liquidating fund. These exposures may or may not be covered under the Fund Manager D&OIE&O program. Finally, HEYINS Insurance Policy for Private Investment Funds is designed to provide fund managers with the peace of mind necessary to make a final distribution to the fund’s partners or interest holders without any concern about needing to “claw-back” distributions already made to a partner or the holder of an interest in that fund.

There appear to be elements of D&O and E&O cover already provided for the fund’s manager or advisor. Is HEYINS Insurance Policy for Private Investment Funds intended to be primary or excess of this coverage?

To the extent that there is D&O and E&O coverage for the fund manager and advisors, coverage is excess of that provided under the general D&O/E&O program. Of course, if you are satisfied that the fund’s D&O/E&O coverage requirements have been fully met, deleting the D&O/E&O coverages provided in the HEYINS policy can be a more cost effective solution for your client.

How long does it take to underwrite a HEYINS policy?

Generally we can provide preliminary terms within 24 to 48 hours. Completion of full underwriting is dependent on how quickly detailed information is provided to Heybridge. Heybridge frequently can offer bindable terms within several days after receipt of the initial submission.

Potential Uses of the product include:

Financing & Investments
Licensing Agreements
Liquidations
Mergers & Acquisitions
Restructurings & Workouts