Chubb Launches Initial Public Stock Offering Liability Policy

Chubb Group of Insurance Companiesf=http://www2.propertyandcasualty.com/storefronts/chubb.html><%=company%> announced at the annual <%=company%> Convention last week that it is introducing an insurance policy to help protect companies and their directors and officers from liabilities associated with an initial public stock offering (IPO). The policy is specifically tailored to address the unique exposures associated with an IPO, as well as any subsequent securities offering.

Chubb's Initial Public Offering Liability Insurance Policy responds on a worldwide basis to claims under both the Securities Act of 1933 and the Securities Exchange Act of 1934. Policy features include:

• Insurance for directors and officers;
• Insurance for the entity for securities claims;
• Indemnification for investment advisors;
• Insurance for selling shareholders;
• Investigation costs coverage for shareholder derivative demands;
• Up to $50 million in capacity;
  
• Spousal liability insurance;
  
• A bilateral extended reporting period; and
• Punitive damages coverage, where allowed by law.

"Research shows that nearly one in seven publicly traded companies will face a class action lawsuit alleging securities fraud. Close to a quarter of these cases emanate from public offerings, including a substantial portion of the more than 800 IPOs filed with the SEC each year," said Jack Kuhn, a vice president of Chubb & Son and an underwriting manager in its Executive Protection Practice. "Chubb's IPO policy will help address the potential liabilities customers face. After all, it takes only one shareholder to initiate a class action and a company must defend itself even when there is no basis for allegations made in a lawsuit."

The IPO liability policy is fully severable and defense costs are provided in advance, rather than after a case is settled or litigated. No deductible applies if a case is successfully defended. Also available are options for disclosure management coverage and employment practices liability coverage.