IronPro Private Sentinel IronPro combines deep underwriting expertise and financial strength when crafting comprehensive, tailored solutions that protect private companies from the unanticipated risks which have the potential to cost an entity hundreds of thousands to millions of dollars. Today, more than ever, privately-held companies face a wave of costly threats that can severely hinder operations and financial stability, not the least of which is the threat of litigation against one s board members and officers. Not having the right Directors and Officers (D&O) Liability Insurance can be a devastating blow both to the company s bottom line and its ability to attract the best leadership. As if that weren t enough, add the potential threat to personal assets. According to an Advisen, Ltd. study, sources that trigger private D&O policies are customers (43%), government/regulators (29%), vendors (17%) and shareholders (11%), dispelling a common misconception that private company directors and officers do not need this level of protection. Another erroneous assumption shared by private firms is that their directors and officers are already covered under an existing policy. Unfortunately, D&O liability exposures are only half the story. Private companies are finding it increasingly difficult to manage their employment practices liability. All forms of Title VII discrimination cases rose in 2007, increasing on average 13% and sky-rocketing as high as 18%. Monetary rewards for EEOC suits in 2007 jumped 26% over 2006. With greater awareness of the law, changing economic conditions and increased diversity and demographic shifts in the labor force seen as contributing factors, the surge in job bias charge filings may signal the beginning of a trend that won t likely reverse any time soon. Resurface quickly and controllably with combined coverage 1
Thoughtful Solutions to the Unthinkable The IronPro Private Sentinel Directors and Officers / Employment Practices Liability Insurance combines coverage to help protect the personal assets of a privately held company s directors and officers, as well as the financial well-being of the company itself. With the ability to aggregate limits for Fiduciary and add Crime insurance by endorsement, our flexible solution provides even broader protection. Our forward thinking approach matched with financial strength, means increased stability for insureds. As part of Ironshore Inc, our expansive coverage is backed by the financial strength of Ironshore Insurance Ltd., rated (Excellent) by A.M. Best Company their highest new company rating with a Financial Size Category of Class XIV. Every risk has its unique conditions. Our deep experience in professional liability solutions and strong problem-solving capabilities enable IronPro to offer comprehensive coverage with increased customization and high quality risk management services. When you weigh the cost of the premium against the exposure, it s just good business sense. Directors and Officers Liability a high-profile exposure The source of litigation threats knows no bounds: Employees Vendors Creditors Customers Investors Competitors Shareholders Federal Regulators 30% Percentage of civil litigation in the United States involving employment related issues The risk of exposure is further defined by the company s: Ownership structure, whether ESOP, closely held, or private equity. Business environment, including prevalent areas of risk for the particular organization / industry as well as complex risks associated with a global marketplace. Financing, whether capitalized through bank debt or private placement. Fact is, even when exempt from registering with he Securities Exchange Commission, the company can still be sued for misrepresentation or other securities violations. $67.7million Monetary benefits recovered for victims of race discrimination, the leading EEOC charge in 2007. Retaliation charges, the second most common claim, were up 18% last year and recovered $124 million. Lawsuits against a privately held company and its directors and officers for alleged wrongdoing are wide-ranging but commonly include: Mismanagement of operations or assets Conflicts of interest Breach of fiduciary duties Violation of state or federal laws Misrepresentation in a private placement prospectus Wrongful acts beyond authority granted in by-laws $441 thousand Median loss from fraud incurred by manufacturing firms, the leader among industries with at least 50 cases Employment Practices Liability a high-cost exposure Employment Practice Liability insurance protects businesses from the costs associated with lawsuits arising from allegations that an employee s rights were violated. The EEOC collected record monetary relief $345 million for victims of discrimination in 2007. Various conditions suggest a trend in the making. Employers face a growing collection of federal, state and local employment laws, such as the ADA, Civil Rights Act of 1991, the Age Discrimination in Employment Act, and Title VII of the Civil Rights Act of 1964. The EEOC is showing signs of becoming increasingly activist in its litigation filings, and the surge in charges over the prior year the largest annual increase in over a decade suggests poor economic conditions translate into more discrimination claims. 2
D & O / EPL Combined Coverage Highlights Full entity coverage Broad definition of Claim including civil, criminal, governmental, regulatory administrative and arbitration proceedings Limits available up to $15 million Notice for all claims made during the policy period permitted until 30 days after policy expiration Coverage for claims brought anywhere in the world Coverage for private placements and SEC exempt IPO s Automatic Outside Entity coverage for any not for-profit entity Automatic subsidiary coverage with 25% asset vs threshold and management control Coverage for a lawful spouse or domestic partner for a Wrongful Act of an insured person Coverage for estates and legal representatives in the event of death, incapacity or bankruptcy of an insured person Coverage for Debtor in Possession Protection from claims brought by bankruptcy trustee, former directors of four years and whistleblowers Broad definition of loss including coverage for punitive or exemplary damages and the multiplied portion of multiplied damages, where permitted Full severability among Directors and Officers with respect to both conduct exclusions and application Enhanced Dispute Resolution Ability to settle within the Retention without prior consent of Insurer Expansive EPL coverage - Employment Practices Coverage for the company and insured persons - Coverage for 24 enumerated Employment Practices Acts - Expansive definition of employee including leased and contract employees - No panel counsel requirement - Coverage for discrimination, harassment and civil rights claims brought by clients or customers - Coverage for mental anguish, emotional distress invasion of privacy, wrongful entry, eviction, false imprisonment, malicious prosecution, libel or slander in Employment Practices Claims - Whistleblower protection Additional features - Automatic conversion to run-off coverage if there is a change in control of the corporation - A single retention for Related Wrongful Acts - Bilateral discovery provision - Insurer may not cancel policy except for nonpayment of premium - Priority of Payments provision - No Hammer Clause Loss definition includes pre- and post-judgment interest Conduct exclusions subject to final adjudication 3
Comprehensive Coverage Made Simple IronPro s deep understanding of the professional liability environment informs a comprehensive approach that benefits privately held companies as fiduciary liability comes under increasing scrutiny and fraud losses mount. Fiduciary Liability Under the Employee Retirement Income Security Act of 1974 (ERISA), fiduciaries can be held personally liable for losses to a benefit plan incurred as a result of their alleged errors, omissions or breach of their fiduciary duties. By aggregating limits for Fiduciary coverage, individuals exposed to this liability, including Human Resources employees, plan administrators and appointed fiduciaries, are protected. ERISA broadly defines employee benefit plans to include pension plans, profit-sharing plans, employee stock ownership plans and health and welfare plans, opening the door to litigation from a wide swath of constituents: plan participants and their legal estates, the Department of Labor, and the Pension Benefit Guaranty Corporation. IronPro offers privately held companies the ability to aggregate limits for Fiduciary liability coverage. Fiduciary Coverage Features Duty to defend form Coverage for HIPAA violations available Coverage for 502(i) and 502(l) penalties available Insured may settle within the Retention without the prior written consent of the insurer Coverage for a Covered Plan anywhere in the world Coverage for the Sponsor Organization, its subsidiaries, employees, fiduciaries and its Covered Plans Crime Insurance Relying on pre-hire background checks and untested internal controls, employers feel employee theft and fraud won t happen in their workplace or that misconduct will be spotted well before it becomes a costly problem. Statistics prove otherwise. It is estimated by the ACFE that American businesses lose 7% of their annual revenues to fraud. Applied to the projected 2008 U. S. Gross Domestic Product, this figure translates to approximately $994 billion in fraud losses. The basic types of occupational fraud asset misappropriation which might include check forgery, theft of money, inventory theft, payroll fraud or theft of services; bribery and corruption in the form of kickbacks, shell company schemes, bribes, manipulation of contracts or substitution of inferior goods; and financial statement fraud through the manipulation of financial statements in order to create financial opportunities for an individual or entity cost companies, on average, $175,000 to $2 million on a per fraud or per scheme basis. All these losses predicate another sobering statistic: employee theft is responsible for 33% of all business bankruptcies, as recorded by the Department of Commerce. IronPro offers their Private Company D&O/EPL insureds added protection with Crime insurance through endorsement. Crime Coverage Features Comprehensive coverage for: Employee theft Money and securities while on premises or in transit Forgery Funds transfer fraud Credit card fraud 4
About Ironshore Ironshore provides broker-sourced specialty commercial property and casualty coverages for risks located throughout the world. Through its platform in Bermuda, Ironshore writes property catastrophe and property all-risk coverage for small to midsized commercial risks. Ironshore s US operations consist of IronPro, IronHealth, IronBuilt and IronSelect, which serve the Professional Liability, Healthcare Liability, Construction and Excess Casualty specialty market sectors, respectively. Specialty coverages are underwritten at Lloyd s through Ironshore s Pembroke Syndicate 4000. The Ironshore group of insurance companies is rated A- (Excellent) by A.M. Best with a Financial Size Category of Class XIV. Syndicate 4000 operates within Lloyd s where the market rating is A (Excellent) by A.M. Best and A+ (Strong) from both Standard & Poor s and Fitch. This information is intended for distribution to licensed producers only. Please refer to the actual policy for exact coverage descriptions; exclusions and deductibles may apply. Coverages are subject to policy terms and conditions and may not be available in all states. Service Commitment We recognize that every time you recommend IronPro to one of your valued clients, you put your reputation on the line. In order to help you provide the best service possible, we offer you a team of underwriting and claims experts dedicated to professional liability. 6
Contacts If you would like more information, regarding our M&A insurance products, please contact: New York Michael Englert Senior Vice President, IronPro 646.826.6726 michael.englert@ironshore.com Richard Stevens Senior Vice President, IronPro 646.826.6614 rick.stevens@ironshore.com Thomas Leahy Executive Vice President, IronPro 646.826.6648 tom.leahy@ironshore.com Atlanta Scott Fitzmaurice Regional Executive 404.845.7547 scott.fitzmaurice@ironshore.com Chicago David Garrigus Vice President, IronPro 312.496.7512 david.garrigus@ironshore.com Cleveland Gretchen Dutko Assistant Vice President, IronPro 216.479.6883 gretchen.dutko@ironshore.com Dallas Kristi Janicek Vice President, IronPro 469.248.4336 kristi.janicek@ironshore.com Boston Eugene McDonough Regional Executive 617.502.5360 gene.mcdonough@ironshore.com Los Angeles Adam Witten Regional Executive 213.416.2320 adam.witten@ironshore.com Philadelphia Tom Winkelman Assistant Vice President, IronPro 267.443.2879 tom.winkelman@ironshore.com San Francisco Jeremy Frumkin Branch Executive 415.291.2708 jeremy.frumkin@ironshore.com This information is intended for distribution to licensed producers only. Please refer to the actual policy for exact coverage descriptions; exclusions and deductibles may apply. Coverages are subject to policy terms and conditions and may not be available in all states. 9