PHILADELPHIA--(BUSINESS WIRE)--In response to the skyrocketing rise in the cost of settlements resulting from securities litigation, corporate risk managers are taking a closer look at directors and officers liability insurance, reports ACE USA, the U.S.-based retail operating division of the ACE Group of Companies.
ACE recently released the white paper, “Trends in Securities Class Action Litigation and Directors and Officers Liability Insurance,” which examines the number of class actions pending in federal courts during 2002, 2003, 2004, and 2005; the allegations involved, including specific accounting allegations; securities judgments; types of plaintiffs; and, the industries targeted. In addition, the paper explores new approaches to minimizing and mitigating directors and officers liability.
According to the white paper’s author Carol Zacharias, Senior Vice President and Counsel, ACE Professional Risk, part of ACE USA, the amounts paid to resolve securities class actions suits—totaling $17.9 billion-- nearly tripled in 2005, up from $5.5 billion in 2004. These historic settlements may well be the tip of the iceberg.“Securities class action cases are more expensive to resolve and take longer to close than ever before; yet are by far the most common type of class action. Against this backdrop, corporate risk managers must take a proactive approach to minimizing and mitigating potential liability at the executive level,” said Ms. Zacharias.
According to Ms. Zacharias, corporate indemnification may not be available to protect executives in the event of derivative actions, corporate bankruptcy, securities judgments against individual directors, or violations of certain statutes. Directors and officers insurance policy terms and conditions, including an increasingly popular form of coverage known as “Side A” policies, permits corporations to define and extend the scope and level of coverage.
“With securities class actions trending toward increasingly costly litigation, settlements and regulatory proceedings, corporate risk managers are enhancing their directors and officers liability and related insurance coverages,” Ms. Zacharias commented.
Staffed by a team of innovative underwriters, ACE Professional Risk is the operating unit within ACE USA, which distributes management liability, professional liability and surety products through retail brokers throughout the U.S. and Canada. For more information about ACE USA Professional Risk and its range of products and services, please visit: www.aceprofessionalrisk.com. To obtain a copy of the white paper, please visit www.ace-ina.com.
ACE USA is the U.S.-based retail operating division of the ACE Group of Companies, headed by ACE Limited (NYSE: ACE), and is rated A+ (Superior) by A.M. Best Company and A+ (Strong) by Standard & Poor’s. ACE USA, through its underwriting companies, provides insurance products and services throughout the U.S. Additional information on ACE US and its products and services can be found at www.ace-ina.com. The ACE Group of Companies provides insurance and reinsurance for a diverse group of clients around the world.