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M&A insurance: a buyback clause under high tension
The American company Wing Group, well known in the world of boating safety, has found itself at the heart of a legal battle with Lloyd's of London Syndicates. At the root of the dispute: a "representations and warranties" insurance policy taken out at the time of an industrial takeover in 2019. This cover, used to protect against possible post-acquisition financial irregularities, was mobilized in 2020 following questionable accounting findings. The claim was rejected.
This refusal, interpreted as a delaying tactic, led Wing Group to take legal action for bad faith. However, this type of insurance is common in external growth operations, particularly in the nautical sector, where financial packages are often complex.
A court ruling that highlights the excesses of the insurance industry
The trial took place over three weeks in San Francisco Superior Court. The jury found in favor of Wing Group on all grievances. The result: more than $19 million in compensation, including $15 million in punitive damages.
This decision highlights the criticized practices of a historic player in marine insurance. Obstruction, negligence and lack of dialogue were cited as aggravating factors. While the ruling is subject to appeal, it sends a clear message to professionals in the marine sector: even brokerage giants are not above contractual commitments.
Legal costs under debate, and appeals still open
In parallel with the judgment, two appeals remain active. On the one hand, Lloyd's has appealed the award of punitive damages. On the other, Wing is contesting the refusal to reimburse its legal fees.
The case is of interest to yachting professionals for two reasons. Firstly, it raises questions about the reliability of specific insurance cover for mergers and acquisitions. Secondly, it highlights the legal and financial stakes involved when an insurer refuses to meet its obligations. These procedures can have serious repercussions on cash flow and operational activity.
A group active in yachting and professional equipment
The Wing Group is a major supplier of marine safety equipment: life jackets, life rafts, inflatable boats and waterproof clothing. Its structure federates several well-known entities: Mustang Survival, Wing Inflatables, Henshaw Inflatables and FabTek Industries.
This industrial diversity enables the Group to operate in a wide range of marine safety segments, from leisure to military applications. This vertical business model requires robust contractual guarantees for its acquisitions. The Lloyd's deal demonstrates the importance of solid insurance arrangements, even in a highly structured environment.
It also shows the growing interest in following litigation outside Europe, particularly in the United States, where case law can influence the practices of international reinsurers.
