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📋 '''Seller warranty''' is a contractual statement of fact or assurance made by the seller in an insurance [[Definition:Mergers and acquisitions (M&A) | M&A]] [[Definition:Purchase agreement | purchase agreement]], affirming that specific conditions about the target business are true as of a given date. In insurance transactions — whether involving a [[Definition:Insurance carrier | carrier]], a [[Definition:Managing general agent (MGA) | managing general agent]], or a [[Definition:Reinsurance | reinsurance]] company — seller warranties cover a broad range of topics uniquely material to the sector, including the adequacy of [[Definition:Loss reserve | loss reserves]], the validity and enforceability of [[Definition:Insurance policy | policies in force]], the standing of [[Definition:Licensing | regulatory licenses]], compliance with [[Definition:Solvency II | Solvency II]] or other applicable [[Definition:Capital adequacy | capital frameworks]], and the completeness of [[Definition:Reinsurance program | reinsurance]] arrangements. These warranties form the factual foundation upon which the buyer relies when pricing the transaction and structuring its post-closing protections.

⚙️ Seller warranties in insurance deals are typically organized into categories: fundamental warranties (covering corporate existence, ownership of shares, and authority to sell), general business warranties (covering financial statements, material contracts, employment, and tax), and insurance-specific warranties (covering reserves, [[Definition:Underwriting | underwriting]] practices, [[Definition:Claims | claims]] handling, regulatory compliance, and [[Definition:Reinsurance | reinsurance]] recoverables). The seller qualifies these warranties through a [[Definition:Seller's disclosure schedule | disclosure schedule]] or [[Definition:Schedule of exceptions | schedule of exceptions]], which carves out known deviations. Breach of a warranty entitles the buyer to seek [[Definition:Indemnification | indemnification]], subject to any [[Definition:Seller protection clause | seller protection clauses]] such as liability caps, baskets, and survival periods. In practice, the scope and specificity of insurance-related warranties are often the most heavily negotiated provisions in the agreement, with actuarial and regulatory advisors directly involved in drafting the warranty language around reserves and solvency.

📊 The significance of seller warranties extends well beyond the bilateral relationship between buyer and seller. [[Definition:Warranty and indemnity insurance (W&I) | Warranty and indemnity insurers]] underwrite their policies based on the scope, precision, and qualification of the seller's warranties — vague or overly broad warranties may be excluded from coverage, while well-defined warranties with clear disclosure schedules are more readily insurable. In insurance deals, W&I underwriters pay particular attention to reserve warranties: a warranty that reserves have been established "in accordance with [[Definition:Actuarial standards | actuarial standards]] consistently applied" provides a more underwritable risk than a blanket assertion that reserves are "adequate." Across jurisdictions, the legal consequences of warranty breaches differ — in England, damages for warranty breach follow contractual principles, while in many U.S. states the interplay with [[Definition:Representation and warranty | representations]] introduces questions of reliance and potential tort remedies — making careful drafting essential in cross-border insurance transactions.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Representation and warranty]]
* [[Definition:Seller's disclosure schedule]]
* [[Definition:Warranty and indemnity insurance (W&I)]]
* [[Definition:Indemnification]]
* [[Definition:Seller protection clause]]
* [[Definition:Seller's closing certificate]]
{{Div col end}}

Definition:Seller warranty - Revision history

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