Deal Point: The prospective purchaser and the seller in a merger cannot come to terms on a price due to the differing values that should be accorded to a royalty stream that the entity being sold receives. This royalty stream flows from entitlements under a unique local law. The buyer is concerned that this law will be repealed, and is unwilling to increase its purchase price to reflect any value to the income stream. Absent an indemnity for a change in the law, the purchaser will not agree to the price the seller requires.

Transactional Insurance Solution: A $12,000,000 insurance policy is issued which will reimburse the buyer the amount allocated to the income stream if the buyer loses the income stream solely as a result of a change in the law.