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The Private Paradox- Is Private DO a

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The Private Paradox- Is Private DO a

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    1. The Private Paradox- Is Private D&O a “No-Brainer” ? Lisa M. McGee- Moderator Chubb & Son David J. Hensler Hogan & Hartson LLP Brian Inselberg AIG - National Union Paul B. Nowak Alexander, Morford & Woo, Inc Eric Ross Specialty Lines, Beazley Group plc Robert Schueler Travelers Peter M.Trunfio Aon Risk Services, Inc.

    2. The Private Paradox 2 sec2 sec

    3. 2 sec2 sec

    4. Claim and Litigation Trends Private companies involving a majority or controlling shareholder and minority shareholders present serious risks of D&O exposure especially where there is a buyout of minority shareholders by majority shareholder (e.g., Level 3 case) a “freeze out” merger affecting minority shareholders (e.g., FTD case) a sale of company assets to entities controlled by majority shareholder (e.g., XO Communications litigation)

    5. Claim and Litigation Trends Private company bankruptcies or insolvencies also present a high risk of D&O claims – special problems multiple potential claimants – litigation trustees and creditors as well as shareholders limited company assets shift focus to potential claims against D&Os D&Os generally have no corporate indemnification because of the bankruptcy or insolvency

    6. Claim and Litigation Trends Family-owned businesses also present serious D&O litigation risks especially where certain family–member shareholders are involved in running the business and others are not certain family members become disaffected for either business or non-business reasons

    7. Claim and Litigation Trends Other common claims against private company D&Os include: theft of intellectual property or trade secrets tortious interference with contract employee pirating “going public” claims antitrust claims

    8. 2 sec2 sec

    9. Addressing Claims in the Underwriting Process: Bankruptcy M&A Family Private Equity

    10. 2 sec2 sec

    11. Typical Non-Buyers Exposures Quality of the product Value the coverage offers Flexibility of the process

    12. Why are Some Non-Buyers Changing Their Minds? Successful Product Broader Coverage Package Policies Carriers Process Efficient On-line Response Customized Limit Alternatives Pricing Agents and brokers

    13. What Can We Do Going Forward? Understand the underwriting appetites Continue to refine the process Educate the client on the value of duty to defend

    14. Questions?

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