Deal Point: An investor currently has a 30% equity interest in a foreign financial institution with an option to buy up to an additional 40% interest at a pre-determined price. The financial institution was recently sued under a theory of lender liability and, in the worst-case scenario analysis of the lawsuit shows potential damages to be significant. The investor's option to purchase the additional interest will expire in three months. While the investor would like to exercise its option to purchase the additional interest before it expires, it has a concern that the value of both its existing investment and any additional investment it will be impacted by the rendering of an adverse judgement in the litigation. As such, it is unwilling to proceed with the purchase of an additional 40% interest in the financial institution until after the litigation has been resolved. Unfortunately, the timeline of the litigation is such that it will not be resolved prior to the date the option expires.

Transactional Insurance Solution: An insurance policy is written to apply excess of existing insurance and an additional self-insured retention to protect the financial institution from the worst-case loss scenario for the litigation.