Representations and Warranties Insurance Brokerage for Secondaries Transactions
GP-led secondaries are now nearly half of a record market.
A GP-led secondary transaction moves all or a portion of an existing fund’s assets into a “continuation” fund managed by the same sponsor — giving existing LPs the choice to cash out or roll, and giving the GP more time and capital for assets it knows well.
Once associated with “zombie funds,” the structure is now used by high-quality sponsors and supported by ILPA where existing LPs have the opportunity to roll. Single-asset lift-outs remain the most common insured transaction, though insurers now see more multi-asset deals than in the past.
Insurers rebuilt RWI around the way GP-led transactions actually work.
Until recently, RWI played almost no role in GP-led deals: insurers required M&A-style due diligence that is not customary on secondaries, and the existing fund’s indemnity for Excluded Obligations sat outside the policy. Five changes drove the shift.
01
Excluded Obligations coverage
RWI now covers standard Excluded Obligations for no additional premium. On a no-indemnity deal, a synthetic Excluded Obligations indemnity typically adds roughly 10 bps of the coverage limit.
02
Underwriting matches the reps
Underwriting standards now fit a GP-led transaction’s “fundamental plus” reps — fundamental R&Ws, plus a pared-down set of knowledge-qualified reps about portfolio companies (or borrowers, in a credit secondary).
03
The GP’s incentives run the right way
Insurers recognize the GP has a significant incentive to take the R&W exercise seriously: any allegation of dishonesty or carelessness would damage future fundraising.
04
No new, active owner
Unlike a typical M&A transaction, an indirect change in ownership does not introduce the risks of a new operator running the portfolio companies.
05
Compliance culture
GPs generally adhere to high compliance standards, given their duties to limited partners, applicable regulation, and access to sophisticated counsel.
Below standard M&A pricing, on narrower reps.
1.50–2.00%
Typical premium as a share of the liability limit — below standard M&A pricing, reflecting the narrower “fundamental plus” reps.
5–10%
Standard limit, as a share of purchased NAV (rolling-LP coverage, less common today) or of the new-money amount (common today).
0.25% → 0.10%
Typical retention of NAV or new money, dropping after 12 months — typically borne by the buyer. Certain insurers offer zero retention for ~7.5% additional premium.
3 / 6–7 yrs
Typical survival: three years for general R&Ws; six to seven years for fundamental and tax R&Ws and Excluded Obligations coverage.
Indicative ranges; terms vary by insurer, deal facts, and diligence. Underwriting fees typically run $40K–$80K based on complexity and size, plus $5K per excess insurer; surplus-lines taxes and fees generally add 2–5% of premium.
Go deeper: the WolfTRI white paper.
The market, the economics, and the policy mechanics counsel should know — written for sponsors, lead investors, and LPs.
WolfTRI’s founder brokered the first RWI placement on a GP-led secondary transaction for a major global insurance broker, and created that broker’s initial training materials on RWI in GP-led secondaries.
Experience described above reflects work at a prior organization before founding WolfTRI. Placement acts are performed by WolfTRI’s licensed producer.