This document discusses private equity liability insurance and the risks faced by private equity firms. It notes that private equity firms face litigation risks from various stakeholders in their many activities related to fundraising, deals, management, and exits. These include shareholders, portfolio companies, limited partners, creditors, and regulatory bodies. The document then outlines insurance products that can help private equity firms transfer these risks, including professional liability, directors liability, and fraud insurance. It promotes Aon's ability to provide customized insurance solutions given its global network and experience in this industry.

1. Risk. Reinsurance. Human Resources.
Aon Risk Solutions
Financial Services & Professions Group | Mergers & Acquisitions Solutions
Private Equity Liability Insurance
With the activities undertaken by a private
equity firm ranging from fund raising, deal
sourcing, evaluation, investment, financing,
executive recruitment, portfolio management
and exit execution, there are numerous different
stakeholders whose interests change and
evolve and any failure to serve these interests
could lead to disputes and ultimately litigation.
With a broader risk profile than any other
asset management class, the importance of
understanding, managing and protecting your
risks is greater than ever.
Risk of litigation comes from many
sources, including:
• Shareholders
• Minority shareholders alleging dilution of
interests in a portfolio company
• Buying shareholders in an IPO, alleging
securities violations
• Pre-acquisition shareholders alleging conduct
that devalued the bid price
• Portfolio companies
• Allegations of improper stewardship on the part
of the private equity manager
• Director and executive employment related or
unfair dismissal disputes
• In the case of aborted bids, allegations by
the previous target company, of breach of
contract or privacy on matters such as
intellectual property
• Limited Partners
• Fund raising misrepresentations
• Allegations of conflicts or preferment of interest
• Mismanagement of funds, particularly at time
of closing
• Court appointed administrations or liquidators
alleging statutory breaches on the part of the
private equity manager or its
appointed representatives
• Creditors who allege the private equity manager
or its appointed representatives incurred debts
when the company was insolvent
• Regulatory actions including tax or anti-
competitive (anti-trust) prosecutions.
A common risk mitigation strategy is to rely
upon indemnification agreements from Limited
Partnership Agreements (or similar) using
fund assets for the benefit of the private equity
manager, the general partner, investment
adviser and management. Limitations with this
strategy include:
• The ability of the fund to satisfy the indemnity
call (the liability may arise subsequent to the
closure of the fund)
• The impact the indemnity call would have
on the investment rate of return of the fund
and the manager.
Key Insurance Features
Insurance is an alternative risk transfer strategy
and is effective in addressing the risks of litigation
against the private equity manager, general
partner, investment adviser and management
committee members.
There are a number of insurance products
available to the private equity, venture capital and
broader asset management sector. Typically, these
insurance products cover risks associated with:
• Professional liability
• Directors liability including outside directorships
• Fund indemnification
• Internal and external fraud
In today’s increasingly complex business
environment it is critically important to establish
insurance solutions most closely aligned with
your company’s risk profile. Through our country,
regional and global network of offices, Aon is
uniquely positioned to offer risk solutions that
respond to these challenges.
We’re here to
empower results
To learn more about
how we can create
custom solutions for
your organisation,
please contact:
Justin McCarthy
+852.2862.4175
justin.mccarthy@aon.com

2. Risk. Reinsurance. Human Resources.
Aon Risk Solutions
Financial Services & Professions Group | Mergers & Acquisitions Solutions
© Aon plc 2015. All rights reserved.
Disclaimer: This risk and insurance description is a general summary for information purposes only. This
does not purport to be insurance, legal or professional advice. For further advice on this or related insurance
needs, please contact a representative of Aon Risk Solutions.
Aon Mergers and Acquisitions Solutions
Aon’s Mergers & Acquisitions Solutions provides
bespoke insurance solutions designed to facilitate
and support M&A transactions, including Warranty
& Indemnity Insurance, Tax Liability Insurance,
Environmental Insurance, Litigation Insurance and
Contingent Liability Insurance. We also provide
insurance due diligence services, placement of
general insurances (including Directors’ & Officers
Liability Insurance) and, with Aon Hewitt; people
risk solutions in the context of M&A transactions.
Aon Financial Services &
Professions Group
Aon is the leading provider of specialty liability
insurances and risk solutions in Asia. Within Aon,
the Financial Services & Professions Group (FSPG)
has dedicated teams serving various industry
sectors including financial institutions, professions,
construction, media, technology, healthcare and
specialist product groups including Directors &
Officers Liability, Professional Indemnity, Crime,
Warranty & Indemnity and Tax Liability insurances.
Our regional FSPG team is based in Singapore and
Hong Kong, supporting in-country FSPG teams in
13 countries across Asia.
Why Aon Financial Services &
Professions Group?
Through our country, regional and global network
of insurance experts, we:
• Deliver to our clients the most competitively
priced and structured risk transfer solutions
through the Aon Broking Centre in Singapore
with a dedicated FSPG team accessing regional
and global insurance markets
• Focus on successful and expeditious claim
resolutions even on the most complex or
contentious claim scenarios through our regional
FSPG claims advocacy team employing qualified
legal practitioners
• Design superior risk transfer solutions through
the use of our proprietary products, enhanced
endorsements and manuscript policy wordings
• Adopt a client service philosophy based on the
Aon Client Promise model
• Develop innovative insurance solutions
customised to meet our clients’ risks, rather than
standardised “off the shelf” insurance policies
• Provide unequalled market leverage aligned with
our global FSPG businesses managing in excess of
US$ 5B in global premium volume
About Aon
Aon plc (NYSE:AON) is the leading global
provider of risk management, insurance and
reinsurance brokerage, and human resources
solutions and outsourcing services. Through its
more than 69,000 colleagues worldwide, Aon
unites to empower results for clients in over 120
countries via innovative and effective risk and
people solutions and through industry-leading
global resources and technical expertise. Aon
has been named repeatedly as the world’s
best broker, best insurance intermediary, best
reinsurance intermediary, best captives manager,
and best employee benefits consulting firm
by multiple industry sources. Visit aon.com
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Beauty in Numbers
• #1 Rated risk services broker, reinsurance
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