Representations and warranties insurance has become a default mechanism in private M&A and commercial real estate transactions. It is now expanding rapidly into a third domain: GP-led secondaries. The structural features of a continuation-vehicle transaction, however, are fundamentally different from a standard M&A deal — and a policy placed as "M&A RWI with a different named insured" does not cover the risks secondary LPs actually care about.
Named insureds must be the incoming secondary LPs individually — not the continuation vehicle itself.
Reps are GP-level, not target-level. Valuation methodology, conflicts disclosure, fund document integrity, books and records.
Retention flows per-LP in proportion to commitment — not a single pooled deductible.
The knowledge qualifier cannot be scraped as aggressively as in M&A. This is where the policy lives or dies.
Typical coverage: $25M–$250M. Premium 3.0%–4.5% ROL, reflecting underwriting complexity.
LPA, valuation workpapers, fairness opinion, conflicts letters, and LPAC consent materials — diligence that doesn't touch these isn't secondary diligence.
Secondary market volume has reached record levels, with GP-led continuation vehicles representing an increasing share of transactions. Secondary buyers — principally institutional LPs, sovereign wealth funds, and dedicated secondary funds — have become more sophisticated about the risks of inheriting a GP-negotiated asset at a GP-negotiated price. The due diligence they run on a CV is more rigorous than on a primary fund commitment; the indemnification they want from the GP approaches what a strategic buyer would demand from a seller in a direct asset sale.
RWI solves the resulting impasse. It lets the GP decline to provide an open-ended post-closing indemnity — preserving carry economics and waterfall mechanics — while giving incoming secondaries insurer-backed recourse for rep breaches. Placed correctly, the policy meaningfully reduces negotiation friction on the transaction agreement and closes what would otherwise be a liability-allocation gridlock.
Placed incorrectly — using an M&A template with the CV substituted as named insured — the policy is worth considerably less than the premium spent on it.
The named insureds are wrong. The reps are scoped to the wrong entity. The retention mechanics concentrate risk on the largest commitment. And the knowledge qualifier scraping that makes M&A RWI valuable does not translate cleanly to GP-level reps about portfolio holdings the GP has been managing for years.
Continuation vehicles evolved from a niche end-of-life solution into a primary portfolio-management tool over roughly 2018–2024. The structures that once handled tail-end assets of aging funds now handle trophy assets GPs want to hold beyond the primary fund's term.
Secondary buyers have become more discerning — less willing to inherit GP-negotiated valuations on trust alone, and more insistent on indemnification for material rep breaches. The GP, for its part, cannot practically provide open-ended indemnity: the sponsor's balance sheet is not structured to absorb post-closing claims, and the incoming LPs' claims would clash with continuing LPs' economics on the predecessor fund.
The escrow alternative — holding back a portion of roll-up proceeds — is commercially unattractive to continuing LPs being rolled and to incoming secondaries funding the transaction.
RWI resolves the mismatch. The GP provides the reps; the insurer stands behind them; the LPs get recourse; the transaction closes without a multi-month indemnity negotiation.
In M&A RWI, the named insured is the buyer — typically one acquisition vehicle controlled by one sponsor. In a CV transaction, the buying entity is the CV itself, but the capital exposed to rep breach belongs to the incoming secondary LPs.
Naming the CV alone as insured creates two problems. First, the CV may be partially owned by rolling (predecessor-fund) LPs who were not intended to benefit from the insurance — they already accepted the GP's valuation when electing to roll. Second, any claim proceeds paid to the CV are distributed pro-rata to all LPs in the CV, diluting the recovery of the secondary LPs the policy was meant to protect.
The correct structure names the incoming secondary LPs as insureds in proportion to their CV commitments.
The reps in a standard M&A RWI policy cover the target's operating condition: financial statements, contracts, employees, IP, regulatory compliance. In a CV transaction, the reps cover the GP's management of the portfolio, not the portfolio companies themselves.
| GP-level rep | What it covers |
|---|---|
| Valuation methodology | Marks used to price the CV were calculated consistently with prior valuation policy and applicable accounting guidance. |
| Portfolio company condition | To the GP's knowledge, no portfolio company has suffered a material adverse change not disclosed. |
| Conflicts disclosure | All material conflicts were disclosed to the LPAC in connection with the transaction. |
| Fund document integrity | LPA, side letters, and MFN elections have been accurately characterized in the CV documentation. |
| Books & records | GP's books, records, and financial reporting for the predecessor fund are accurate in all material respects. |
| Compliance & litigation | GP and affiliates are not subject to undisclosed regulatory proceedings or litigation materially affecting the CV assets. |
| Taxes | Fund-level and portfolio-level tax reporting is accurate and consistent with prior filings. |
What these reps do not cover is equally important. Portfolio company operating reps are typically outside the GP's knowledge at the granularity M&A RWI assumes.
Standard M&A RWI retention is a single dollar amount applied to the entire policy. If there is one buyer, this is clean. If there are multiple LPs, applying a single pooled retention means the largest LP absorbs a disproportionate share of the first-dollar loss — commercially unacceptable to smaller commitments.
Claim flows through proportionally, but first-dollar loss stays at the CV level — and largest LP absorbs it disproportionately.
Each LP's recovery is computed against its own retention. Losses do not cross-subsidize.
In M&A RWI, brokers routinely "scrape" the knowledge qualifier — meaning the policy covers breaches regardless of whether the seller actually knew. This works because the seller, pre-transaction, genuinely had imperfect visibility into the target.
GP reps are different. The GP has been managing the portfolio for years. Carriers will resist a full knowledge scrape and will insist on some version of "to the actual knowledge of" language on portfolio-specific reps.
The scope of "whose knowledge counts" often moves effective coverage more than any other single policy term.
A policy capping knowledge at three named deal-team members with no inquiry obligation is meaningfully narrower than one capping knowledge at the deal team plus the CFO and finance controller after reasonable inquiry. Both are negotiable.
CV transactions almost always require LPAC consent in the predecessor fund. The consent process typically produces a written memorandum, fairness opinion, and sometimes independent price discovery — all of which are underwriting inputs for a secondary RWI placement. A transaction that closed without LPAC consent is typically uninsurable.
The policy should also be reviewed against the LPA's indemnification provisions. Most LPAs indemnify the GP for conduct in the ordinary course; this provision interacts with the subrogation waiver in the RWI policy and can, in poorly drafted form, create circular indemnity.
A GP moves a single trophy portfolio company from an aging fund into a new CV. Incoming secondaries fund the CV; the predecessor fund distributes the proceeds to rolling and selling LPs.
Several portfolio companies — sometimes all remaining holdings of a tail-end fund — moved into a single CV. Reps structured at portfolio level plus deal-specific reps per asset.
A portion of one or more portfolio companies sold to a secondary buyer while the GP continues to hold the balance. Economically similar to a multi-asset CV but structurally simpler.
GP-facilitated liquidity for existing LPs at a GP-negotiated price. Pure tenders rarely use RWI, but stapled tender-plus-CV structures increasingly do — the RWI policy covers the CV portion.
Single-asset CVs: $25M–$75M. Multi-asset: $75M–$250M. Large platforms: $500M+ via 3–5 carrier towers.
vs. 2.5%–3.5% for standard M&A RWI. Reflects higher underwriting complexity.
Of each LP's commitment. Minimum dollar floor $250K–$500K per LP. Typical step-down at 12 months.
General reps 3 yrs · Fundamentals 6 yrs · Tax 7 yrs. Matches standard M&A RWI.
Figures are market-typical ranges; actual terms reflect deal-specific structure, diligence depth, carrier relationships, and current capacity. Underwriting fees ($50K–$150K), surplus lines taxes (2%–5%), and carrier-specific variation all apply. Broker compensation is the embedded carrier commission — no additional retail broker fee at WolfTRI.
Matters disclosed in the data room, diligence memoranda, or LPAC consent materials are excluded. Not negotiable.
Covers reps about historical facts. Does not cover future performance, valuation decline not caused by rep breach, or market-driven NAV changes.
Coverage between signing and closing on pre-signing reps must be negotiated specifically. Without the scrape, a rep becoming untrue between signing and closing may be uninsured.
Carriers waive subrogation against the GP except for actual intentional fraud by the deal team. A clean walkaway on everything short of fraud.
Most carriers will exclude claims from conflicts the GP disclosed but the LPAC did not specifically approve in writing. Clean documentation materially expands effective coverage.
Available from a handful of carriers on single-asset CVs with deep portfolio-company diligence. Developing product; terms vary.
Indication of interest with 3–5 carriers. Delivery of LPA, transaction term sheet, preliminary valuation materials.
Buyer signs expense agreement. Fund documents, valuation workpapers, fairness opinion, conflicts letters, LPAC consent materials, portfolio summaries.
Carrier counsel review of LPA, transaction agreement, side letters. Underwriting calls with GP deal team, CFO, external fund counsel.
Named-insured schedule finalized. Per-LP retention confirmed. Knowledge qualifier negotiated. Interim-breach scrape if applicable.
Policy issued at go-hard or closing. 10% of premium plus underwriting fee at bind; balance at closing.
Current LPA with side letters · Transaction agreement · Valuation policy and current-quarter workpapers · Fairness opinion and supporting materials · Conflicts memos and LPAC approval documentation · Quarterly portfolio reports for prior 8 quarters · Audited financials for the predecessor fund · Schedule of material litigation, regulatory matters, and portfolio company MAEs over prior three years.
Underwriting secondary RWI in North America. Single-carrier capacity to $25M; tower capacity to $500M+.
Secondary RWI policy count (est.) — growing from a small base. Single-asset CVs leading the curve.
A handful of carriers now offer portfolio-company operating reps on single-asset CVs with deep diligence. Developing rapidly.
Attention turning to rolling LPs in the predecessor fund. RWI-adjacent products in development; not yet at scale.
GP-led secondaries have moved from an end-of-life workout tool to a core portfolio-management structure in under a decade. RWI has moved with them, solving the indemnity impasse that would otherwise slow or kill a large share of these transactions.
But the product only delivers on that promise when it is placed with attention to the structural differences that separate a continuation vehicle from a corporate M&A transaction. The named insureds, the scope of reps, the retention mechanics, and the knowledge qualifier all require deliberate negotiation — none of them transfer cleanly from an M&A RWI template.
We place RWI for GP-leds as a core part of the practice. Every placement reviewed at the principal level.