Directors & Officers Liability Insurance Prepared By: Raj - - PowerPoint PPT Presentation

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Directors & Officers Liability Insurance Prepared By: Raj - - PowerPoint PPT Presentation

Dec 01, 2023 365 likes •548 views

Directors & Officers Liability Insurance Prepared By: Raj Aujla Jardine Lloyd Thompson Canada Inc. Distinctive. Choice. Disclaimer Please note that the content of this presentation is for information purposes only and is not intended to

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  • Distinctive. Choice.

Directors & Officers Liability Insurance

Prepared By:

Raj Aujla Jardine Lloyd Thompson Canada Inc.

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Disclaimer

Please note that the content of this presentation is for information purposes only and is not intended to constitute legal advice and no warranty or promise is made with respect to the correctness or accuracy of this

  • advice. Any opinion advanced by Jardine Lloyd

Thompson Canada should not be used as a substitute for the advice of a suitably qualified legal advisor.

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  • Distinctive. Choice.

D&O Liability Trends

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Who are claimants?

69% 21% 0% Direct Shareholder/ Investor Suit 18% 14% 23% Regulatory 17% 14% 13% Fiduciary 29% 36% 7% Private Company 6% 27% Other 15% 73% Employment Related 65% 3% Derivative Shareholder/ Investor Suit Public Company Non Profit Organizations

Source: Towers Watson – 2011 Directors & Officers Liability Survey

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  • Distinctive. Choice.

U.S. Perspective

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U.S. Perspective

  • Number of U.S. federal class action lawsuits filed

Source: PWC: 2011 Securities Litigation Study

116 2012 June 163 2007 209 2008 157 2009 174 2010 191 2011

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U.S. Perspective – allegation type

Source: PWC: 2011 Securities Litigation Study

39% 29% 25% 7% Accounting Non-Accounting: Disclosure Non-Accounting: M&A Non-Accounting: Other

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U.S. Perspective – accounting

  • Specific accounting issues

Source: PWC: 2011 Securities Litigation Study

14% 34% Estimates 16% 20% Understatement of liabilities & expenses 8% 0% Purchase accounting 26% 34% Overstatement of assets 27% 7% Other 32% 26% Revenue recognition 62% 66% Internal controls

2011 2010

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U.S. Perspective – industry

Source: PWC: 2011 Securities Litigation Study

25% 22% 13% 15% 19% Other 8% 3% 7% 6% 6% Manufacturing 11% 10% 3% 5% 2% Energy 12% 22% 41% 47% 21% Financial services 4% 2% 3% 1% 4% Retail 3% 3% 3% 1% 5% Business services 14% 21% 17% 11% 17% Health 23% 14% 11% 13% 25% High Tech 2011 2010 2009 2008 2007 INDUSTRY

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Settlement Statistics

Source: PWC - 2011 Securities Litigation Study

$8,000,000 $8,000,000 $7,500,000 $10,600,000 $8,900,000 Median Settlement Value $6,810,500,000 $29,400,000 2007 $4,639,100,000 $51,500,000 2008 $3,160,300,000 $34,000,000 2009 $2,944,300,000 $30,000,000 2010 $3,431,600,000 $51,200,000 2011 Total Settlement Value Average Settlement Value Year

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“The endangered public company – the big engine that couldn’t”

Source: The Economist, May 19, 2012

  • Public companies – difficult decade

– Battered by scandals – Tied up by regulations – Challenged by alternate corporate forms

  • Number of public companies - down 38%
  • IPO’s dropped from avg. 311/yr (1980-2000) to

81 (2011)

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  • Distinctive. Choice.

Canadian Securities Class Actions: 2011

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Canadian Class Action Trends

Source: NERA Economic Consulting – Trends in Canadian Securities Class Actions: 2011 Update

  • 2011 – 15 new securities class action cases filed
  • 9 or 60% are “Bill 198” cases
  • December 31, 2011 – 45 active cases ($24.5 billion in
  • utstanding claims)
  • 2 cases settled during the year
  • Since Bill 198 came into force in 2005 – 35 cases filed:

10 settlements – total payments by defendants $100 million 24 unresolved 1 dismissed

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2011 Bill 198 Cases Filed

Alange Energy Corp. Armtec Infrastructure BCE Inc. Canada Lithium Corporation Cathay Forest Products * Eastern Platinum Limited North American Palladium Sino-Forest Corporation * Zungui Haixi Corporation *

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Sino-Forest Corp.

  • Company came to Canada via RTO in 1994
  • Muddy Waters LLC – alleged the company

was “mutlibillion-dollar ponzi scheme”

  • Allegations of fraud, misleading statements

executives interests in suppliers

  • Thousands of documents requiring translations

$$

  • 3rd party litigation funding
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What does the future hold?

  • Industry:

– Dually listed risks: premium increases – Canadian only listed: strong competition remains – Capacity remains strong

  • Government influence

– M&A activity – Unified securities regulation (Securities Act) – rejected

  • Past ≠ Future
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Contact: Raj Aujla: raujla@jltcanada.com Tel: 403-537-9262 Mobile: 403-808-3009