Directors & Officers Liability Survey 1999 Results and Historical Trends

1. Directors & Officers Liability Survey1999 Results and Historical Trends Casualty Actuaries in ReinsuranceJune 15, 2000 Mark W. Larsen

2. Directors & Officers Liability SurveyBackground • Formerly conducted by Watson Wyatt.Conducted by Tillinghast as of 1998 Survey. • Self-selecting nonprobability sample of claim and insurance purchasing patterns. • Responses submitted primarily in second half of calendar year. • Not every participant answers every question, even though there is substantial follow-up. • Over 1,400 usable responses in 1999 Survey, including Canadian responses.

3. Directors & Officers Liability SurveyChanges for 1999 • Education reintroduced, after Healthcare in 1998. • More high technology firms (again). • More small firms (again). • More Canadian firms. • Much more detail about coverage features.

4. Directors & Officers Liability SurveyParticipation by Business Class

5. Directors & Officers Liability SurveyClaim Frequency by Business Class

6. Directors & Officers Liability SurveyClaim Frequency by Asset Size - For-Profit

7. Directors & Officers Liability SurveyClaim Frequency by Ownership

8. Directors & Officers Liability SurveyClaim Frequency by Merger/Acq./Div. - For-Profit

9. Directors & Officers Liability SurveyClaim Frequency by After-Tax Losses - For-Profit

10. Directors & Officers Liability SurveyClaimant Distribution - For-Profit * Adjusted

11. Directors & Officers Liability SurveyClaimant Distribution Source: 1999 D&O Liability Survey

12. Directors & Officers Liability Survey Average Severity for Closed D&O Claims Note: Excludes claims closed w/o payment

13. Directors & Officers Liability Survey Average Indemnity Severity by Business Class Note: Excludes claims closed w/o payment

14. Directors & Officers Liability Survey Average Defense Severity by Business Class Note: Excludes claims closed w/o payment

15. Directors & Officers Liability Survey Average Indemnity Severity by Asset Size Note: Excludes claims closed w/o payment

16. Directors & Officers Liability Survey Average Defense Severity by Asset Size Note: Excludes claims closed w/o payment

17. Directors & Officers Liability Survey Average Indemnity Severity by Claimant Note: Excludes claims closed w/o payment

18. Directors & Officers Liability Survey Average Defense Severity by Claimant Note: Excludes claims closed w/o payment

19. Directors & Officers Liability Survey Indemnification by Firm for D&O Claims Source: 1999 D&O Liability Survey Claims with some non-entity defendant only.

20. Directors & Officers Liability SurveyInsurance Coverage of D&O Claims - Closed

21. Directors & Officers Liability SurveyPrevalence by Business Class

22. Directors & Officers Liability SurveyPrevalence by Asset Size

23. Directors & Officers Liability SurveyPrevalence by Ownership

24. Directors & Officers Liability SurveyEntity Coverage Prevalence by Asset Size

25. Directors & Officers Liability SurveyMain Reason for Not Purchasing D&O Insurance

26. Directors & Officers Liability SurveyD&O Premium Index - U.S.

27. Directors & Officers Liability SurveyFull D&O Limits Capacity (Millions)

28. Directors & Officers Liability SurveyAverage Total Limit by Asset Size

29. Directors & Officers Liability SurveyAverage Corporate Deductible by Asset Size