Risk Management, Discount Deal Offered To Investment Management Firms

Participants in the investment management business can decrease insurance premiums while managing operational risk and improving operations. Arthur Andersen and Frank Crystal & Co., a leading provider of insurance brokerage services, have teamed-up to provide this exclusive program to investment management firms, mutual funds, board members and industry service providers.

By engaging Arthur Andersen's Investment Management Business and Regulatory Consulting Group to provide one or more of the approved services, participating insurance carriers will discount the insurance premiums associated with a client's Directors & Officers or Errors & Omissions insurance policy. Participating insurance carriers will discount the premiums associated with a client's particular coverage at its next renewal, based on the following schedule: 5 percent for one service, 7 percent for two services and 10 percent for three or more services, during a rolling three-year period.

"We believe clients may reduce, and in certain cases eliminate, the financial and reputational consequences associated with errors, internal control weaknesses, poor operations, compliance violations, and even enforcement actions by being prepared," said George O. Martinez, national director of Arthur Andersen's Investment Management Business and Regulatory Consulting Group. "After receiving one of our services, client's are left with a lower premium on their insurance coverage and the peace of mind that comes from knowing they are better prepared." The approved Arthur Andersen services include:

• Mock Regulatory Agency Examination Program- a simulated SEC examination followed by a training session on how best to prepare for the SEC the next time they come calling.
• Investment Compliance Diagnostic and Training Program- an on-site diagnostic review of the client's investment compliance controls and procedures followed by a compliance training course.
• Mutual Fund Operations and Boardroom Best Practices Training Program- a training program tailored specifically for mutual fund board members, highlighting operational risks and "best practices" procedures for boards to adopt to monitor such risks.
• Mutual Fund Operational Audit Program- a risk-based operational audit for fund administration and compliance, fund accounting and transfer agency operations.

"The program is based on the philosophy that clients should receive credit for engaging third party experts to assist them in identifying, managing and reducing risk to an acceptable level. This type of program provides a financial incentive to industry participants to look more closely at operations and regulatory compliance. If participants know where the weak link is, they can fix it and ultimately decrease their risk," said Mark Freitas, senior managing director for Frank Crystal & Co. "An industry participant with lower risk is more attractive to an insurance provider, which translates into lower premiums for coverage."