D&O AND COMPANY LIABILITY INSURANCE FOR AIM-ADMITTED COMPANIES BROKER FACTSHEET MasterProtect AIM is a specialist policy for public companies that are admitted to the Alternative Investment Market of the London Stock Exchange. It protects executives against civil, criminal and regulatory proceedings arising from their role. It also protects the company against liabilities arising from the original offering and admission and any subsequent offerings (subject to some limits on amounts raised). It is rare to find this combination of cover. Why the need for this insurance? • It is not compulsory to purchase D&O insurance protection, but most publicly traded companies will do so. Shareholders, employees, customers, suppliers, competitors, creditors and government authorities can initiate proceedings against a publicly owned company and their directors and officers. • The personal liability of directors and officers is unlimited. When a claim arises, the individual’s personal assets are at risk. • A spectrum of risks is associated with the admission process, many of which attach to the company as opposed to the individual directors and officers. The consequences of these risks can be financially and reputationally damaging for the business. Policy Offering Comprehensive cover for the directors and officers of AIM admitted companies and the company itself against: • Wrongful acts • Errors and omissions • Breach of duty • Expenses arising from legal proceedings • Liability to the investment advisor (optional) • Liability arising from the admission, offering or prospectus documents (optional) • Liability of the selling shareholders, who are typically not covered under a D&O policy (optional) Limits • Up to £15 million Appetite We like to insure We are cautious of 4 All AIM listed companies on a case by case basis with a preference for well-managed, financially robust businesses 4 UK or European based businesses • • • • • Solar and biofuel companies Biotech companies Cash shell companies Heavily US exposed businesses Oil, gas and mining companies Why Choose Chubb? 4 Broad cover and limits. Chubb’s specialist cover for AIM companies is among the most comprehensive available, comprising covers that many other insurers do not include 4 One premium, one policy. Making it easier for executives and the company during the admission process 4 Free from warranties and basis of contract clauses. 4 Expertise. Chubb has more than 30 years’ experience of underwriting the exposures faced by executives and their companies in the UK. Chubb’s specialist underwriters understand the specific exposures faced by directors and officers running public companies admitted to AIM 4 Highest AM Best rating. This indicates Chubb’s financial strength and long-term ability to pay claims 4 Award winning claims service. Chubb’s claims team is consistently acknowledged as the best in the market Key Selling Points Cover/ Service Benefit One policy for two key areas of cover 4 Chubb offers the combined strength of a market-leading D&O policy and a marketleading public offering policy. It is rare to find this combination of D&O and Public Offering covers in a single contract. Public offering cover for the company 4 Standard D&O policies typically only cover claims against directors or officers. We can offer cover for the company itself for the risks associated with the admission on a single policy form for a single premium. Investment adviser liability 4 This policy can provide cover for the liability to the investment adviser for breach of warranty or indemnity in the investment adviser agreement. Selling shareholder cover 4 Selling shareholders are often not directors or officers but will still have an exposure when selling shares. This policy can pick up this risk which is not covered by standard D&O products. No basis of contract clause 4 This gives greater peace of mind to a client – knowing upfront that there are no basis clauses or warranties that may trip them up whilst making a claim. No avoidance of rescission for misrepresentation or non-disclosure 4 Not even if this was fraudulent; cover limited only in the event of fraudulent misrepresentation or fraudulent nondisclosure and then, for insured persons, only those who knew true position or non-disclosed facts and, for the policyholder and its subsidiaries, only if a key person knew such position or facts. Cover for emergency defence costs 4 Unlike many insurers, Chubb allows emergency defence costs to be incurred without consent, up to the policy limit. This enables the client to proceed where, due to the emergency, they cannot request immediate approval from Chubb. Cover for extradition proceedings 4 Chubb provides cover for defence costs, no matter what countries are involved. Cover for costs incurred by relatives 4 Chubb aims to minimise the impact of unforeseen expenses by providing travel and accommodation for an insured’s relative when a case is being heard abroad. Cover for directorships outside of the primary company 4 Chubb offers cover for directorships in companies outside the group if the position is taken up with the consent of a group company. And, unlike other insurers, even includes directorships of US entities (as long as they are not publicly traded). Broad acquisition cover 4 In many cases acquisitions will automatically be covered. New subsidiaries above certain thresholds should be reported to Chubb which will trigger an automatic 90 days of cover. Case Studies Multi agency investigation A company insured by Chubb conducted a placing of shares and admission to trading on AIM. Following admission, serious allegations were made about the accuracy of the disclosures during the process. The list of alleged wrongful acts was of considerable length and severity, and included: – conspiracy to defraud contrary to common law – false accounting – fraudulent trading – market abuse – insider trading – failure to maintain accurate accounting records The Chubb Advantage Some of the allegations were made against the individual directors and officers, some against the company, and some against both. Because of the breath of policy which insured both the executives and the company, there were no grey areas. The claims process was clearer and smoother than it would have been had the policy not been as comprehensive in coverage. Chubb paid in excess of £1,000,000 for defence costs. The vast majority of other D&O policies may only have responded on a limited number of aspects of the claim. It is rare to find a policy that covers both the executives and company liability in a single contract. UK lawsuit The Chubb Advantage A UK company engaged in mineral mining in Africa was admitted to trading on AIM. It subsequently became apparent that the “Competent Person Report” in the admission document for AIM may have been based on mineral samples containing “irregularities” and which may have been subjected to tampering. Under some of the provisions of the laws affecting offering of securities and admission to trading, it is the issuer, and not the directors or officers, that is held responsible. Due to the breath of cover provided by MasterProtect AIM, the company was covered to respond to the allegations. Chubb paid in excess of £500,000 in response to the claim. A standard D&O policy would not have covered the company in the same situation. Also available Chubb can also provide market-leading covers for the following (standalone or as a package): • Employment practices liability • Pension scheme and benefit plan liability • Crime insurance • Kidnap, ransom and extortion Chubb also offers comprehensive commercial and accident and health cover Contact us For more information or to obtain a quote please call your local underwriting or sales contact. For all contacts, visit www.chubb.com/uk/marketinglibrary/contact BEST FOR FINANCIAL STRENGTH A++ Superior AM Best’s highest rating for financial strength BEST OVERALL SERVICE Insurance Times Broker Survey Winner: 4 times in the last 5 years BEST QUALITY OF COVER Insurance Times Broker Survey Winner: 4 times in the last 5 years BEST CLAIM SERVICE Insurance Times Broker Survey Winner: 4 times in the last 5 years A quality approach for 130 years Chubb’s winning performance reflects the disciplined application of a clear long-term strategy, regardless of the business cycle: ... employ and empower top quality underwriters; ... focus on attractive specialisms; ... offer the best niche covers in the market. Post Magazine, 2012 chubb.com/uk 120 offices in 26 countries Choose certainty. Choose Chubb. Commercial | Financial Lines | Chubb 1882 at Lloyd’s | Accident & Health | Private Clients This information is descriptive only. The precise cover provided is subject to the terms and conditions of the policy as issued. For promotional purposes, ‘Chubb’ means member insurers of the Chubb Group of Insurance Companies. For the purposes of training and monitoring our service, some telephone calls may be recorded. CHUBB INSURANCE COMPANY OF EUROPE SE, a European company incorporated in England and Wales and registered under Company Number SE13. CHUBB MANAGING AGENT LTD, a company incorporated in England and Wales and registered under Company Number 7116876. Registered Offices: 106 Fenchurch Street, London EC3M 5NB, England. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. © Chubb Insurance Company of Europe SE 2013 F10 11/13