This briefing note has been prepared jointly by Smith, Gambrell & Russell, LLP and Sterling Seacrest Pritchard to provide an overview of End of Fund Life (EOFL) Insurance and related considerations for private funds approaching wind-down.

Executive Summary

As investment funds and other closed-ended vehicles approach the end of their lifecycle, managers face the dual challenge of returning capital promptly while managing residual liabilities. Traditional mechanisms such as holdbacks and escrows tie up capital and create uncertainty for both managers and investors. End of Fund Life (EOFL) Insurance has emerged as a solution to accelerate distributions, provide investor certainty, reduce administration costs, and mitigate risk for the fund and its investors post wind-down.

Certain insurance providers, such as CFC Underwriting, have tailored a unique type of EOFL insurance product which is designed to wrap the fund in a comprehensive insurance layer once the vehicle enters its wind-down phase. This means the policy effectively steps into the shoes of the fund, providing a protective shield against residual transactional and contingent liabilities arising from third party claims against the fund that could otherwise linger for years after liquidation.

This article outlines the purpose, structure, and benefits of EOFL insurance, along with key considerations for fund managers and stakeholders across private markets.

What is EOFL Insurance?

EOFL insurance is a bespoke policy designed to protect investment vehicles, their investors and managers, against unknown or residual liabilities after the fund has wound down. Coverage includes:

• Transactional Liabilities: EOFL acts as a wrapper for historic disposals, covering unknown risks tied to representations, warranties, and indemnities given by the fund.
• Non-Contractual Liabilities: For exposures that fall outside contractual obligations such as fund tax exposures or regulatory investigations.
• Clawback and Fiduciary Claims: Cover for third party claims that would have otherwise triggered LP clawback or giveback provisions protecting LPs, it also covers claims by LPs of the fund, such as breach of fiduciary duty claims.

Policies are generally structured to wrap around the fund, with coverage extending for 3–7 years post-liquidation.

Why It Matters

• Accelerated Distributions: Insurance replaces reserves and holdbacks, enabling earlier capital returns to investors.
• Certainty for Stakeholders: Investors gain confidence that residual risks are managed, reducing disputes and the risk of future clawback.
• Preservation of Performance Fees: Managers avoid third party claims that could result in clawbacks eroding carried interest or incentive allocations.
• Operational Efficiency: Eliminates the need to maintain dormant entities and the associated administration, in turn reducing internal and third-party professional fees.

Interaction with GPL Insurance – and How EOFL Wraps the Fund

As EOFL insurance wraps the fund, the policy provides protection beyond that reserved for representations and warranties insurance (RWI) or General Partnership Liability (GPL). GPL policies typically terminate or run off when the fund winds up and offer coverage that is limited in nature, e.g. no cover for contractual claims.

EOFL bridges this gap by extending protection for the tail period in respect of contractual and non-contractual third-party claims against the fund, such as tax or regulatory claims ensuring continuity and avoiding coverage gaps, delivering an additional layer of protection for the investors, manager and fund.

Structuring EOFL Insurance

• Named Insured: The fund manager; liquidators can be added as loss payees.
• Term: Matches liability tail, commonly 3–7 years.
• Premium: One-off, usually 2–4% of the insured limit.
• Insured Limit: Determined by the fund; typically, equivalent to any Fund Limited Partnership Agreement (LPA) mandated holdback of distributions or a larger sum based on the value of past disposals to provide comfort to the fund and its investors.
• Insured Risk: A third-party claim against the fund.
• Additional Cover: Standalone tax insurance, contingent liability insurance and title insurance may be layered for specific identified exposures.

Why Now?

• Growing adoption across private equity, credit, infrastructure, real estate, and other closed-ended investment vehicles.
• Increased interest from secondary buyers seeking clean entry into continuation fund structures.
• Underwriting models are now streamlined, CFC, have designed a process and policy that can be placed within days rather than weeks.

Commercial Impact

EOFL insurance is not merely a risk transfer tool—it is a value creation mechanism:

• Enhances internal rate of return (IRR) or equivalent performance metrics by accelerating distributions.
• Supports restructurings and secondary transactions.
• Provides competitive differentiation for managers offering certainty and earlier distributions to investors.

Conclusion

EOFL insurance is becoming a mainstream solution for investment vehicles approaching termination.  As regulatory scrutiny and investor demand for liquidity intensify, EOFL insurance offers a practical, commercially attractive route to achieve greater investor protection, earlier distributions and cleaner fund closures.

If you have questions about End of Fund Life (EOFL) insurance or would like to discuss how it may support fund wind-down planning and distributions, please contact Alon Harnoy, Head of Smith, Gambrell & Russell, LLP’s Fund Formation Practice or Tray Traynor, PE/M&A Practice Leader at Sterling Seacrest Pritchard.

*             *             *

CFC Underwriting Limited

London, January 2026