Conservative approach helps Bermuda captive write representations and warranties insurance

Constellation Software has successfully integrated representations and warranties (R&W) insurance into its captive programme, Captive Review reports from Bermuda.

Crescent Insurance, the captive of Constellation formed in 2022 in Bermuda, is understood to be one of the first captives to write R&W insurance, which is often needed in M&A transactions.

Toronto-based Constellation consists of many hundreds of decentralised small software companies, totalling around 60,000 employees, and is involved in many acquisition deals.

Speaking at the Bermuda Captive Conference general counsel at Constellation, and director of Crescent, Mark Dennison said that the idea of captive insurance had first been considered in response to gradual rising premiums and increased exclusions other many years.

“It took a couple of years for it to percolate. For us to think about it enough and for us to understand that there was an economic case to be made,” Dennison said. “We felt like we were paying more and getting less, so it was an interesting business case for us to explore whereby we could bring some of that risk in house.”

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