Deal Point: A prospective investor in a distressed entity seeks a personal indemnification agreement from the largest shareholder, relative to certain representations and warranties given on behalf of the target company. While the shareholder is quite familiar with the business and has significant financial stake in the company, because he has not been active in the company’s operations for 12 months, he is unwilling to provide a personal indemnity to support this litigation.

Transactional Insurance Solution: A Reps & Warranties Insurance policy is purchased by the major shareholder insuring his any indemnification that he is required to make as a result of breaches of the specific representations and warranties involved, provided that he had no knowledge of such breach(es).