Study: D&O Underwriters Need to Adapt to Changes

Rapidly unfolding legal, economic and regulatory events are transforming securities litigation, forcing directors and officers liability (D&O) underwriters to react quickly to a changing environment, according to a new report from Advisen Ltd.

Traditional securities class action suits still are the most significant type of securities litigation for public companies, but a growing number of suits, filed in state courts, allege common law torts and breach of fiduciary duty. Combined with likely regulatory changes under the Obama administration, D&O insurers are faced with a broad array of new challenges. Players in the D&O market must “adapt or die off,” in the words of one leading attorney.

Advisen’s Securities Litigation in 2008: It’s Impact on the D&O Market in 2009 and Beyond examines all forms of securities litigation that might trigger D&O coverage, not only securities class action suits. Drawing from Advisen’s MSCAd™ large loss database, the report profiles the full array of 2008 securities lawsuits, including shareholder derivative suits, securities fraud suits filed by regulators and law enforcement agencies, and so-called “Section 11” securities class action suits filed in state courts.

The report also examines suits triggered by the alleged $50 billion Ponzi scheme perpetrated by Bernard Madoff and the alleged $8 billion investor fraud scheme linked to R. Allen Stanford. These schemes have already spawned more than 120 lawsuits in 2008 and 2009.

The report also explores the legal, economic, political and regulatory forces shaping the D&O insurance market, and examines shortcomings in D&O claims management that are contributing to higher defense costs. Additionally, it looks into the impact of skyrocketing bankruptcies on securities suits, and assesses further changes in the litigation landscape likely to come about under the Obama administration. Experts in securities litigation and D&O insurance offer their insights into recent developments and their implications for the future.

To help readers track potential exposure by company, Advisen's report includes a list of companies facing securities lawsuits in 2008 and a list of companies facing multiple lawsuits over the past 13 years.

Interested parties purchase the complete report for $249 at http://corner.advisen.com/reports_topical_Securities_Litigation_2008_DO_Market.html.