Paul Ferrillo, Fred Cooper, Mark Curley, Koji Fukumura and Anthony Fowler talk D&O claims trends with moderator Rob Yellen
NEW YORK—Claims against directors and officer may, in the paraphrased words of one panelist here at Advisen’s Executive Risk Insights Conference, be percolating at a relatively low level, but there is no reason to rest.
In fact, in may be time to batten down the hatches. Panelists talking about claims trends at the conference Sept. 17 said they expect the next 18 months to be volatile.
Mark Curley, global head of D&O claims at AIG, said there were 117 securities class-actions filed during the first three quarters of this year. The pace may be off in comparison to past years but “that’s still a lot,” he said. Plus, there have been some very high settlements, Curley added.
As recent examples, Duke Energy announced reached an agreement to pay $146.25 million to settle a consolidated lawsuit filed after its $26 billion merger with Progress Energy in 2012. Late last year Activision announced a $275 million settlement of a shareholder derivative lawsuit.
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“At the end of the day there is a lot going on even if it feels benign today,” said Fred Cooper, executive vice president and head of financial institutions at Endurance. Cooper said he sees a overvalued market. Within the next year and a half, he predicts a drop in IPO valuations. The possible ramifications are “terrifying for a D&O underwriter,” he said.
The M&A markets are busy, leading to immediate merger objection litigation. In addition, according to Paul Ferrillo, counsel at Weil, high stock prices are currently covering up accounting blunders and misappropriations.
And then there is the oil and gas-based US economy, added Ferrillo.
“Be careful what you wish for,” he said of all-time low oil prices. There could be “significant bankruptcies” as a result of the drop, he said.
Anthony Fowler, assistant vice president of commercial D&O and international claims at The Hartford, said the insurance industry is “not in a position to be relieved” by current D&O filing trends. The likelihood of being sued will go up and the “appetite for larger settlements has increased,” he said.
Koji Fukumura, partner at Cooley said there has been “no shortage of cases filed against my clients.” He said he deals mostly on the West Coast, in Silicon Valley.
Chad Hemenway is Managing Editor of Advisen News. He has more than 15 years of journalist experience at a variety of online, daily, and weekly publications. He has covered P&C insurance news since 2007, and he has experience writing about all P&C lines as well as regulation and litigation. Chad won a Jesse H. Neal Award for Best Single Article in 2014 for his coverage of the insurance implications of traumatic brain injuries and Best News Coverage in 2013 for coverage of Superstorm Sandy. Contact Chad at 212.897.4824 or [email protected].
