Representations and Warranties Insurance Policies on the Rise as M&A Activity Gains Momentum in 2024

As M&A activity picks up in 2024, the number of Representations and Warranties Insurance (“RWI”) policies placed in the market has increased in tandem. The uptick in activity is driven by the expectation that interest rates are to remain steady or even drop over the course of the year, freeing up financing for more and even larger deals. The outlook for deal volume in 2024 continues to be cautiously optimistic.

While RWI rates hit all-time lows in 2023 that persisted into Q1 2024, we don’t expect the rates to remain as low as they currently are in the medium to long term. We anticipate that insurance rates will begin to rise over the course of the year. The continued rate of claims in the market is also putting upward pressure on RWI rates, as insurers need to maintain profitability. The takeaway? Enjoy the buyer-friendly rates now because they may not be around for too long.