Why representations and warranties insurance now fits continuation-fund transactions — the market, the economics, and the policy mechanics counsel should know.
The secondaries market is setting records: roughly $220–240 billion of global transaction volume in 2025, with GP-led transactions contributing about $110–116 billion — nearly half the market. Until recently, representations and warranties insurance played almost no role in these deals. Insurers have since rebuilt the product around the way GP-led transactions actually work — narrower “fundamental plus” reps, coverage for Excluded Obligations, and diligence expectations aligned to secondary-investor practice. This paper explains the market, the economics, and the policy mechanics for counsel advising sponsors, lead investors, and LPs.
Coverage is “fundamental plus.” Fundamental reps, plus a pared-down set of knowledge-qualified reps about portfolio companies (or borrowers, in a credit secondary).
Premium typically runs 1.50–2.00% of the limit — below standard M&A pricing — on limits of 5–10% of purchased NAV or new money.
Retention is typically 0.25%, dropping to 0.10% after 12 months, of NAV or new money — and is typically borne by the buyer. Certain insurers offer zero retention for ~7.5% additional premium.
Excluded Obligations are now insurable at no additional premium. On a no-indemnity deal, a synthetic Excluded Obligations indemnity costs roughly 10 bps of the limit.
Today’s policies usually cover new money only. The GP is listed as an Additional Insured, retention is tied to new money, and recovery is pro rata via a co-insurance construct.
Protect the fraud recourse. A lead investor signs the No Claims Declaration; the GP’s underwriting participation stays limited and separate.
A GP-led secondary transaction occurs when a private equity sponsor (a “GP”) transfers all or a portion of the assets managed by an existing fund into a “continuation” fund managed by the same sponsor. The existing fund’s GP (or an affiliate) typically manages the continuation fund on behalf of the new investors and rolling LPs, and receives an economic interest in the continuation fund.
Fifteen years ago, the Institutional Limited Partners Association (“ILPA”) opposed GP-led secondary transactions, arguing they benefited the GP without necessarily maximizing pricing. ILPA now supports GP-led secondary transactions where existing LPs have an opportunity to roll into the continuation fund — any LP that considers the price insufficient can roll its equity instead of selling.
Tradition also worked against the structure: GP-led secondaries were associated with “zombie funds” that could not find suitable exits for their portfolio companies. Over the past five years, several high-quality sponsors have completed GP-led secondary transactions that their LPs received favorably, eliminating that stigma. The result is a material rise in GP-led volume — a trend that is changing the long-standard 10-year private equity fund term and creating liquidity at multiple points in a fund’s life cycle.
A GP-led secondary transaction can take several forms:
RWI can also be feasible on “cross-fund” transactions, where a sponsor sells an investment, or part of one, from one existing fund to another. These are less common — GPs typically set up a new fund to facilitate the transaction.
Single-asset lift-outs remain the most common insured transaction, though carriers now see more multi-asset deals than in the past. In a lift-out, the sponsor selects one or two portfolio companies it believes can create more value with more time or follow-on capital — locking in gains and returning capital to LPs while capturing a growth trajectory that additional capital could accelerate. Concentration increases risk for secondary buyers, but it also lets them be more selective and, ultimately, build a higher-returning portfolio.
Lead investors often require the GP’s investment professionals to participate economically in the continuation fund. The GP is sometimes required to roll a portion of its interest in the existing fund into the continuation fund and, in certain cases, to make a material additional cash investment in the transaction.
Secondaries fundraising has grown dramatically over the past five years, breaking multiple records and driving activity across the market. Several high-profile fund managers not traditionally in the secondaries space have hired experienced secondaries executives to build operations. Secondaries funds, under significant pressure to deploy capital, are presenting GPs with long-dated funds with generous liquidity offers.
Full-year 2025 global secondaries volume — roughly $220–240B across major PCA reports, about 45–50% above 2024.
GP-led / continuation-vehicle volume in 2025 — roughly half the market and up ~50%+ year over year.
2024 total secondaries volume was about $152–162B (the prior peak), with GP-led roughly $75B before the 2025 surge.
LP-led volume remained roughly half the market in 2025, with LP and GP-led activity nearly evenly split.
Available capital for secondaries hit a record in H1 2025, up from $288 billion at the end of 2024.
Raised by the top 50 secondaries firms from 2020–2024 — 10% more than the prior five-year period.
Up from 34 in 2023, as billion-dollar secondaries surged.
2025 made $200B+ secondaries years the expectation; survey outlooks for 2026 cluster around $250B total volume.
Until recently, parties rarely used RWI on GP-led secondary transactions, for two main reasons. First, insurers required due diligence akin to an M&A portfolio-company deal — which is not customary on GP-led secondaries. Second, transaction agreements traditionally required the existing fund to indemnify for “Excluded Obligations,” and that indemnity could not be incorporated into the policy.
Transaction parties therefore viewed RWI as inefficient: likely exclusions arising from insufficient diligence, plus a residual existing-fund indemnity for Excluded Obligations, made the insurance only a partial solution to the existing fund’s post-closing obligations.
Insurers rebuilt the product around the way GP-led transactions actually work — and the two historical objections fell away.
Five changes drove the shift:
Every RWI policy placed on a GP-led secondary transaction is unique — shaped by investment type, geographic focus, level of unfunded commitments, GP quality, and vintage year. Before approaching markets, the broker should:
Throughout, the broker must balance the interests of the GP (and often the portfolio companies), lead investors, selling LPs, rolling LPs, third-party diligence advisors, bankers, lawyers, and other advisors — while retaining an ultimate fiduciary duty to the post-closing Named Insured.
Of the liability limit — below a standard M&A deal, reflecting the narrower “fundamental plus” reps.
Of the continuation fund’s purchased NAV (rolling-LP coverage, less common today) or of the new-money amount (common today).
Excess coverage for breaches of fundamental and tax reps above the standard policy limit, reducing the need for higher indemnification caps.
Possibly lower. Excess coverage for breaches of true fundamental reps.
| Other cost items | Typical terms |
|---|---|
| Excluded Obligations coverage | Included for no additional cost. On a no-indemnity deal, a synthetic Excluded Obligations indemnity typically adds premium of roughly 10 bps of the coverage limit. |
| Underwriting fee | $40,000–$80,000 based on the transaction’s complexity and size, plus $5,000 per excess insurer. Requires specialist underwriting counsel to review the underlying fund documents in the data room. Underwriters require tax, lien, and litigation searches if the buyer does not provide them. |
| Surplus-lines taxes and fees | Generally two to five percent of premium. |
| Brokerage / placement fee | The RWI broker may charge a brokerage placement fee in addition to the fully disclosed brokerage commission. |
The reps are typically called “fundamental plus”: fundamental R&Ws, plus a pared-down set of knowledge-qualified R&Ws about the portfolio companies (or borrowers, in a credit secondary).
Regardless of the survival periods in the transaction agreement, coverage typically survives three years for general R&Ws and six to seven years for fundamental and tax R&Ws. Excluded Obligations coverage survives six or seven years.
The retention is the loss the insureds must incur before coverage attaches. On GP-led secondaries it is typically 0.25 percent, dropping after 12 months to 0.10 percent, of either:
The buyer typically bears the full retention. A recent development: certain insurers will offer no retention for all R&Ws for approximately 7.5% additional premium.
Where the retention is tied to new money, the policy’s “Loss” definition includes a co-insurance component: the insureds recover only the new money’s pro rata ownership percentage of the continuation fund.
The retention is generally bracketed at signing and adjusted downward based on the final subscription amount and closing transaction value.
One of the lead investors signs a No Claims Declaration (a “Lead Investor NCD”) at signing and at closing, stating that it has no “Actual Knowledge” of any breaches. Losses resulting from information that should have been disclosed in the Lead Investor NCD are excluded — if the failure to disclose prejudices the insurer.
“Actual Knowledge” is typically defined as an actual conscious awareness that an underlying fact, event, or condition constituted a breach. It generally does not include constructive, implied, or imputed knowledge, any duty of inquiry, or the knowledge of advisors.
If the GP has a material direct or indirect beneficial ownership in the purchased portfolio assets, or coverage extends to rolling LPs, insurers sometimes request that the GP sign its own No Claims Declaration (a “GP NCD”) at signing and closing. Most GPs and their brokers push back heavily on this request — and often succeed in avoiding it.
Where a GP NCD is given and the insurer demonstrates prejudice from an incorrect declaration, the insureds cannot recover the GP’s direct or indirect portion of the loss, calculated by the GP’s pro rata aggregate beneficial ownership in the purchased portfolio assets immediately after closing.
Buyers have traditionally sought a specific indemnity for Excluded Obligations in GP-led secondary transactions. Insurers now incorporate an indemnity for Excluded Obligations directly into the RWI policy — eliminating the need for the buyer to seek one from the existing fund.
Excluded Obligations are obligations remaining with the existing funds or selling LPs, including:
To obtain the coverage, sponsors must have excellent compliance mechanisms, including the ability to provide:
Diligence on a GP-led secondary is a hybrid: part standard M&A portfolio-company diligence, part fund-level diligence of the kind performed for a capital commitment to a new blind-pool vehicle. Insurers have revised their expectations to align with the “fundamental plus” reps — and they recognize that PE funds are unlikely to commit fraud or act recklessly when making knowledge-qualified reps, given the potential damage to future fundraising.
For the existing fund and the continuation fund, insurers focus on the following, among other topics:
Breaches not disclosed in the Lead Investor NCD or, where applicable, a GP NCD (which, again, is not common in today’s market).
Breaches that first arise and are discovered during the interim period (Actual Knowledge standard). Interim-breach coverage — for new facts arising between signing and closing that would breach the closing reps but not the signing reps — may be available for additional premium, but is not typically requested or cost-effective.
Standard pollutant exclusions.
Pension-plan underfunding or withdrawal liability.
Fines and penalties uninsurable by law.
The amount, validity, or usability of tax attributes (e.g., net operating losses); transfer pricing; and transfer taxes.
Certain carriers also hesitate to cover reps tied to highly regulated industries — for example, government contractors, payment processing, healthcare, media, and industries with high FLSA/wage-and-hour risk — in GP-led secondary transactions. Where coverage is sought, diligence expectations may exceed those of a typical secondary transaction.
The right mix of insurance and traditional indemnity sources differs by transaction — for example, whether the existing fund retains material assets after the secondary closes, and the cost and scope of available insurance for the particular portfolio.
Lead investors should confirm what information the policy requires them to provide on a claim — and whether those requirements conflict with their rights or obligations under the purchase and sale agreement. Although the GP is often an insured under the policy, lead investors may wish to keep the exclusive right to control all administrative functions related to a claim, including directing how policy proceeds are paid and filing and receiving all claim notices.
Parties commonly bind coverage at signing, so the insureds are covered for pre-signing breaches discovered during the interim period. Binding at signing requires the insureds to contractually commit to 10% of the premium — a termination fee that applies if the deal fails to close for any reason (for example, if the minimum investment amount is not met). For administrative ease, insurers typically allow 100% of the premium, the underwriting fee, and surplus-lines taxes and fees to be paid at closing.
The secondary buyer will seek to ensure its coverage is fully protected from the GP’s fraud, misconduct, or knowledge — other than any inability to collect the GP’s pro rata ownership percentage of a loss due to an incorrect GP NCD, in the limited instances where a GP NCD is required. GPs, for their part, will seek to narrow the insurer’s ability to bring subrogation claims against them to situations involving a narrowly defined, actual, knowing, and intentional fraud.
The number of insured GP-led deals has grown significantly since 2020, driven by increased capital flowing into secondaries funds, the uptick in GP-led transactions, underwriting standards newly aligned with secondary-investor diligence, and the availability of Excluded Obligations coverage. Carriers have seen a meaningful uptick in GP-led “single asset” deals for high-quality assets.
For transaction parties, the case for the coverage now includes:
GP-led restructurings typically take five to seven months to complete, depending on structure. It is critical that the RWI brokerage team understands secondaries market dynamics and has deep experience working with private equity funds.
Write the firm with non-confidential or NDA-safe parameters. WolfTRI’s licensed producer will size structure, retention, and timing against your transaction.
Principal direct: scott@wolftri.com · +1 847.207.9956
Market figures reflect published secondaries market reviews for full-year 2025 (including Jefferies, Lazard, and William Blair PCA reports) and WolfTRI market experience as of July 2026. Figures are approximate and remain subject to underwriting, insurer appetite, diligence, and deal facts.
This white paper is for informational purposes only. It is not a quote, offer of insurance, or binding indication, and it does not constitute legal, tax, investment, accounting, or regulatory advice. Actual premiums, retentions, exclusions, and policy terms vary by transaction, insurer, jurisdiction, deal facts, and final policy documentation.