Directors and Officers Liability Survey Summary of Results

Transcription

1 Directors and Officers Liability Survey 2015 Summary of Results

2 Introduction We are pleased to present the 2015 JLT Specialty US Directors and Officers (D&O) Liability survey. This year s survey builds upon 35 years of studies conducted by both Towers Watson (TW) and JLT PARK Ltd. (JLT PARK). We are honored to take up the survey and continue this exemplary tradition. JLT Specialty US is the retail brokerage unit of JLT Group in North America. Our Specialty focus includes Financial Lines, Private Equity, Environmental, Construction, Energy, Aerospace, Cyber, Technology, and Credit, Political Risk and Security. We have deep expertise and resources in directors and officers liability insurance and are appreciative of the data and insight coming from this year s survey. The 2015 survey was conducted from December 15 th, 2014 to January 19 th, A total of 157 organizations that purchase D&O liability insurance participated in the survey. The industry trend of abundant capacity is helping to maintain competitive pricing while satiating the increased demand for broader coverage. Concerns over regulatory claims continue to increase and have overtaken both direct shareholder and derivative shareholder suits as the top D&O liability concern. This report is provided with our gratitude for your participation. We hope you find it to be of interest and value and welcome further dialogue around the results. Thank you for working with JLT. Colin Daly Executive Vice President Financial Lines Practice Leader JLT Specialty US 2

3 Directors and Officers Liability Survey 2015 Summary of Results TABLE OF CONTENTS 2015 Survey Highlights 5 Policy Limits 6 Fig 1: Total Limits by Asset Size 7 Fig 2: Total Limits by Asset Size - Private Organizations only 7 Fig 3: Total Limits by Asset Size - Public Organizations only 8 Fig 4: Total Limits by Market Cap Public Organizations only 8 Fig 5: Total Limits by Business Class 9 Fig 6: Change in Limit of Liability 10 Fig 7: Change in Type of Limit of Liability 10 Primary D&O Program Structure 11 Figs 8 & 9: Primary D&O Insurance Program Structure 12 Fig 10: Increase/Decrease in D&O premium 13 Fig 11: Change in Premium Paid 14 Figs 12 & 13: Change in Retention for D&O 15 Fig 14: Retention Related to M&A 16 Fig 15: D&O Insurer Capability Raking 16 Excess Limits 17 Fig 16: Excess Insurer Capability Rating 18 Premium Paid and Amount of D&O Program 19 Figs 17 & 18: Amount of Increase/Decrease in the D&O Program 20 3

4 Directors and Officers Liability Survey 2015 Summary of Results Excess Side A Coverage 21 Fig 19: Excess Side A Coverage 22 Fig 20: Total Limits of Liability of a Side A Program 22 Fig 21: Change in Premium Paid for Side A 23 Fig 22: Rate of Change in Premium Paid 23 Fig 23: Independent Directorship Liability 23 Fig 24: Excess Side A Coverage by Market Cap - Public Organizations only 24 Fig 25: Amount of Excess Side A Purchased by Asset size 24 Fig 26: Amount of Excess Side A Purchased by Market Cap - Public Organizations only 25 Claims 26 Fig 27: D&O Claims in the Last Five Years 27 Figs 28 & 29: Type of Claims 27 Fig 30: Type of Claims in Last Four Years 28 Fig 31: Type of Claims by Ownership 29 Fig 32: Satisfaction with Handling of D&O Claim 29 Fig 33:Top D&O Liability Concerns 30 Appendix A 31 Fig 34: Participation by Business Class 32 Fig 35: Participation by Ownership 32 Fig 36: Participation by Size 33 Fig 37: Number of Respondents 34 Fig 38: International Operations by Ownership 34 Fig 39: International Local Policy Purchases 34 Fig 40: D&O Inquiries 35 Fig 41: Prevalence of Independent Policy Review 35 Appendix B 36 4

5 2015 Survey Highlights Participants in the D&O survey are primarily large public companies (70%). As well, 84% of participants have revenues in excess of $1 Bn and 73% have assets in excess of $1 Bn. Compared to the previous two years, the D&O marketplace began to stabilize in A majority of the participants that reported a pricing increase experienced just less than a ten percent change. Individual company underwriting metrics combined with the overall increase in activity from derivative lawsuits are the drivers of those increases. Forty three percent of all companies experienced a decrease in their premiums. Breadth of coverage and financial strength of insurers were primary considerations when selecting Primary and Excess D&O insurers Public companies considered Excess Side A coverage an integral component of their overall D&O purchase (80% purchased such policies). Forty-nine percent of the respondents stated that the premium paid for their Side A D&O policy remained the same. The remainder indicated that the premium increase/decrease was less than 5% Concerns over regulatory and direct shareholder/investor suits increased in 2014 Half of all respondents indicated that they do not have their D&O programs independently reviewed 5

6 POLICY LIMITS

7 Policy Limits Year over Year Change 21% increase on average limits across all respondents Fig 1: Total Limits by Asset Size (in Mn)* Firms with total assets greater than $10 Bn reported average limits of $185.3 Mn and median limits of $175 Mn (Fig 1). Private organizations reported average limits of $98 Mn for groups of all size measured by total assets compared with $169.6 Mn for public companies (Fig 2 and 3). <$250 Mn $250 Mn-$999 Mn Reporting Participants First Quartile Median Third Quartile Average $1 Bn-$4.9 Bn $5 Bn-$9.9 Bn >$10 Bn All-size groups excluding Non- Profits All Groups (Total Respondents) Fig 2: Total Limits by Asset Size (in Mn)* Private Organizations only Note: Due to the small base size Under $250 Mn and $250 Mn-$999 Mn and $1 Bn-$4.9 Bn and $5 Bn- $9.9 Bn were combined Reporting Participants First Quartile Median Third Quartile Average <$999 Mn $1 Bn-$9.9 Bn >$10 Bn All-size groups Private Organizations only NA NA * While calculating the quartiles for all-size groups, respondents who did not mention the total amount of limits purchased have not been taken into consideration 7

8 The average total limits for public companies with asset sizes of >$10 Bn and $5 Bn-$9.9 Bn were $201 Mn and $203.1 Mn respectively (Fig 3). Fig 3: Total Limits by Asset Size (in Mn)* Public Organizations only Note: Due to the small base size Under <$250 Mn and $250 Mn -$999 Mn were combined Reporting Participants First Quartile Median Third Quartile Average < $999 Mn 2 NA 62.5 NA 62.5 $1-$4.9 Bn $5-$9.9 Bn >$10 Bn All-size groups Public organizations only The average total limits for public companies with market capitalization > $10 Bn and $5 Bn-$9.9 Bn were $216 Mn and $130.5 Mn, respectively (Fig 4). Fig 4: Total Limits by Market Capitalization (in Mn)* Public Organizations only Note: Due to the small base size Under <$250 Mn and $250 Mn-$999 Mn were combined Reporting Participants First Quartile Median Third Quartile Average <$999 Mn $1-$4.9 Bn $5-$9.9 Bn >$10 Bn All-size groups Public organizations only * While calculating the quartiles for all-size groups, respondents who did not mention the total amount of limits purchased have not been taken into consideration 8

9 Fig 5: Total Limits by Business Class (in Mn)* First Quartile Median Third Quartile Average Aerospace & Defense NA NA Automobiles & Transport Equipment NA NA Communications Energy & Utilities Financial Services, excluding Insurance Financial Services Insurance Food & Beverage Government & Education Healthcare, excluding Pharmaceuticals High-Technology Manufacturing Natural Resources NA NA Professional & Business Services Retail & Wholesale NA 62.5 NA 62.5 Transportation NA NA Other All Business Classes * While calculating the quartiles for all-size groups and business classes, respondents who did not mention the total amount of limits purchased have not been taken into consideration. Further, Motorsports and Entertainment has been included in the Other category 9

10 While the majority of respondents maintained the same amount of limits at renewal, only 24% of public companies and 17% of private companies reported that they increased their limits of liability. Fig 6: Change in Limit of Liability Compared to your previous D&O program, has the limit of liability in your D&O program increased, decreased or remained the same? Private/Non-profit 3% 17% 3% Public 1% 24% Increased Decreased 77% 73% 1% Remained the same Not sure Fig 7: Change in Type of Limit of Liability Which type of limit of liability increased in your D&O program? A significant proportion of respondents identified the traditional D&O policy, ABC limits, as the main area of limit increase/decrease in their D&O program. Further, 36% of respondents stated that Side A limit increased. Not surprising, none of our respondents identified reducing Side A limits. Not sure 7% 25% ABC Limits 57% 75% Decrease your D&O program Side A Limits 0% 36% Increase your D&O program 0% 10% 20% 30% 40% 50% 60% 70% 80% 10

11 PRIMARY D&O PROGRAM STRUCTURE

12 Primary D&O Program Structure The majority of the participants reported a primary program structure inclusive of traditional Side ABC coverage, while 20% preferred to share or blend their Primary D&O insurance with Employment Practices Liability and/or Fiduciary coverage. For large public companies, it is common to separate D&O and EPL exposures whereas the majority of private organizations prefer to bundle such coverages. Further, 6% purchased a Side A only program (Fig 8). An interesting finding evident in the current survey was that 11% of private organizations reported that they were unsure of the structure of their program. This could possibly indicate a need of more education for companies around the nuances of D&O coverage (Fig 9). Fig 8: Primary D&O Insurance Program Structure How is your Primary D&O insurance program structured? 9% 10% 6% Side A only Side A/B/C 20% 54% Combined with EPL and/or Fiduciary Not sure Other (please specify) Fig 9: Primary D&O Insurance Program Structure by Ownership Reporting Participants Side A/B/C Combined with EPL and/or Fiduciary Side A only Others Not sure Non-profits 12 17% 67% 0% 8% 8% Private 18 39% 44% 6% 0% 11% Public 70 63% 9% 7% 14% 7% All Groups (Total respondents) % 20% 6% 10% 9% 12

13 Regardless of ownership, 2013 appears to have been the peak for the number of companies experiencing an increase in their primary layer premium. The number of companies experiencing a decrease on their primary has reached a three year high. The Chart below (fig 10) identifies that more of the Private/Non-Profit companies have experienced increases than those in the public area. The reason here is as a result of the rise in bankruptcies due to the difficult economic environment over the last few years combined with the claims activity on the combined D&O/EPL policies. Fig 10: Increase/Decrease in Primary D&O Premium Compared to your previous D&O policy, did the premium paid for your Primary D&O policy increase, decrease or stay the same? Private/Non-profits % 2012 Decreased 30% 17% 39% 44% 12% Increased 7% 46% 2% 55% 3% 41% Not sure Remained the same Public Decreased 36% 40% 37% 19% 41% 29% Increased Not sure 1% 23% 0% 44% 1% 29% Remained the same 13

14 Fig 11: Change in Premium Paid for Primary D&O Policy* How much did the primary premium increase or decrease compared to your previous Primary D&O policy? Greater than 20% 10% 11% 10%-20% 0% 0% 5%-10% 34% 39% Less than 5% 46% 54% 0% 10% 20% 30% 40% 50% 60% Decrease Increase Majority of the respondents that reported a pricing increase or decrease were in the less than 5% and 5-10% categories. On an overall perspective, the pricing environment of primary D&O was flat to slightly up. * While calculating the Change in Premium Paid for Primary D&O Policy figures, all those that marked Not Sure were excluded from the graphic and thus the total percentages do not add up to 100%. 14

15 Fig 12: Change in Retention for Primary D&O Policy Compared to your previous Primary D&O policy, did the retention (or deductible) in your Primary D&O policy increase, decrease or remain the same? 2% 10% 2% In the survey, most of the respondents stated stability in retentions. 86% Increased Remained the same Decreased Not sure Fig 13: Change in Retention for Primary D&O Policy (Public and Private Organizations Split) Private Public 6% 1% 13% 1% 94% 85% Decreased Increased Not sure Remained the same 15

16 M&A activity has been a key contributor to public company D&O litigation. In some cases, carriers have therefore focused on specific retentions for M&A activity. Seventy-three percent of the respondents indicated that they do not maintain a separate retention/deductible for claims pertaining to mergers and acquisitions. Fig 14: Change in Retention for Primary D&O Policy Does your D&O program maintain a separate retention/deductible for claims related to mergers and acquisitions? 11% 73% 16% Yes No Not sure Fig 15: D&O Insurer Capability Ranking Please rank the following aspects of your Primary D&O insurer on a scale of 1 to 7, where 1 is the most important and 7 is the least important. (Top three rankings) Year over Year Change 3% increase in competitive pricing as #1 ranking, 5% decrease in breadth of coverage offered as #1 ranking Breadth of coverage offered 37% 18% 16% Financial Strength/A.M Best Rating 26% 15% 24% Competitive pricing 13% 16% 25% Claim-paying reputation 11% 24% 16% Knowledge/Understanding of your business 7% 13% 13% Ability to support a local international program 6% 9% 1% Volume of D&O premium written 4% 7% 0% 10% 20% 30% 40% 50% 60% 70% 80% Ranked 1st Ranked 2nd Ranked 3rd When asked to rank the importance of various characteristics of Primary D&O insurers, the breadth of coverage (37%) ranked first from a primary standpoint. Further, financial strength of insurers constituted an important characteristic when purchasing a D&O insurance. Lastly, many respondents were more inclined to purchase Primary D&O insurance on the basis of price (13% in 2014). 16

17 EXCESS LIMITS PREMIUM AND PROGRAM COMPOSITION

18 Excess Limits When asked to rank the importance of various characteristics of Excess D&O insurers, respondents cited breadth of coverage as the main impetus when selecting an Excess insurer (33%). Further, many respondents were inclined to base the purchase of Excess insurance on competitive pricing. Lastly, financial strength of the Excess insurers also played a pivotal role when considering an Excess D&O insurance program (Fig 16). Fig 16: Excess Insurer Capability Rating Please rank the following aspects of your Excess insurer on a scale of 1 to 7, where 1 is the most important and 7 is the least important. (Top three rankings) Financial Strength/A.M Best Rating 30% 21% 21% Breadth of coverage offered 33% 22% 15% Competitive pricing 23% 19% 26% Claim-paying reputation 8% 25% 21% Knowledge/Understanding of your business 7% 11% 7% Volume of D&O premium written 2% 10% 0% 10% 20% 30% 40% 50% 60% 70% 80% Ranked 1st Ranked 2nd Ranked 3rd 18

19 Premium Paid and Amount of D&O Program 19

20 Premium Paid in D&O Program When asked if their Primary and Excess D&O premiums had risen, only 24% of the respondents maintained that their premiums had increased. Further, 43% indicated that their premiums decreased, while 31% indicated that pricing remained the same. The relative stability in premiums is due to the ample capacity available to purchasers combined with the profitability experienced in the excess layers. For those that experienced an increase or a decrease in their entire D&O program, the change was typically within +/-10% (Figs 17 and 18). Fig 17: Amount of Increase in the D&O Program What was the amount of the entire D&O program increase? 4% 21% 8% 0% 67% <5% 5%-10% 10%-20% > 20% Not sure Fig 18: Amount of Decrease in the D&O Program What was the amount of the entire D&O program decrease? 3% 2% 2% 44% 49% < 5% 5%-10% 10%-20% >20% Not sure 20

21 EXCESS SIDE A COVERAGE

22 Excess Side A Coverage Public companies continue to consider Excess Side A difference-in-conditions (DIC) policies an integral component of their D&O programs as evidenced by 80% of the respondents who purchased such a policy. However, in 2014, only 28% of the private organizations indicated that they purchased Excess Side A (DIC) (down slightly from 33% in 2013). Side A coverage remains a pivotal component of an organization s D&O program (Fig 19). Further, 75% of the respondents stated that the total limit of liability of Side A insurance program has remained the same in 2014 (Fig 20). Fig 19: Excess Side A Coverage Did your organization purchase an Excess Side A or Side A difference-in-conditions (DIC) policy? Private Public 11% 28% No 9% No 17% 55% Not sure Yes 80% Not sure Yes Fig 20: Total Limits of Liability of a Side A Program Not sure 1% Remained the same 75% Decreased 9% Increased 15% 0% 10% 20% 30% 40% 50% 60% 70% 80% 22

23 When asked about the cost of their Side A coverage, 49% of respondents indicated that premiums had remained the same. Further, 34% of Excess Side A purchasers stated that the premiums have decreased. This is evidence of a very competitive environment for Side A coverage. Of those reporting a decrease, 46% stated that it was in the range of 5%-10%. Moreover, 37% reported a decrease of less than 5%, while 13% reported decreases of 10%-20% (Figs 21 & 22). Fig 21: Change in Premium Paid for Side A D&O Policy Compared to your previous Side A insurance program, has the premium paid for your Side A program increased, decreased or stayed the same? 1% As in previous years, the vast majority of D&O buyers reported that they do not buy Independent Directorship Liability (IDL) insurance which extends coverage solely to independent/outside directors. Among public companies only 6% of respondents purchased IDL. Among private/non-profits, 10% indicated that they bought the product, a decrease from 12% in Another 3% stated that they were considering it (Fig 23). Fig 23: Independent Directorship Liability (IDL) Does your organization purchase D&O liability insurance that covers only independent/outside directors (excluding inside directors)? Private/Non-profit 3% 13% 10% 16% Increase Yes Decrease 49% 34% Stay the same Not sure 74% No, and no such coverage is being considered Fig 22: Amount of Change in Premium Paid for Side A D&O Policy What was the amount of the increase and decrease? Increase 27% 0% 45% 13% Decrease 4% 0% Less than 5% 37% 5%-10% 10%-20% 6% Public 4% 6% 84% No, but this coverage is being considered Not sure 9% 18% 46% Greater than 20% Not sure 23

24 Generally, the larger the organization, the more likely it is to purchase Side A coverage. The data affirms that a vast majority of public company buyers greatly value the benefits offered by a dedicated Side A program. Companies with assets greater than $10 Bn averaged Side A limits of $83 Mn, while the average limit for all groups was $53 Mn (Fig 25). Further, companies with market capitalization of $10 Bn or more purchased Side A limits averaging $92.6 Mn, while the average for all groups reporting (public companies only) were $58.9 Mn (Fig 26). Fig 24: Excess Side A Coverage by Market Capitalization Public Organizations only Participants Reporting Yes No Not Sure < $999 Mn $1 Bn-$4.9 Bn $5 Bn-$9.9 Bn > $ % 0% 25.0% % 6.0% 6.0% % 14.0% 0% % 17.0% 7.0% Fig 25: Amount of Excess Side A Limits Purchased by Asset Size (in Mn)* Reporting Participants First Quartile Median Third Quartile Average < $999 Mn $1 Bn-$4.9 Bn $5 Bn-$9.9 Bn > $10 Bn All-size groups excluding non-profits All Groups (Total Respondents) * While calculating the quartiles for all-size groups, respondents who did not mention about the total amount of Side A limits purchased (0 value) have not been taken into consideration 24

25 Fig 26: Amount of Excess Side A Limits Purchased by Market Capitalization (in Mn) Public Organizations only* Reporting Participants First Quartile Median Third Quartile Average < $999 Mn $1 Bn-$4.9 Bn $5 Bn-$9.9 Bn > $10 Bn All Groups (Total Respondents) * While calculating the quartiles for all-size groups, respondents who did not mention about the total amount of Side A limits purchased ( 0 value) have not been taken into consideration. Director & Officers Liability Survey: 2015 Summary of Results 25

26 CLAIMS

27 Claims Thirty-one percent of respondents reported claims against their D&O liability policies in the last five years, with non-profit companies reporting the highest proportion of claims (58%) (Fig 28). Fig 27: D&O Claims in the Last Five Years Has your organization had any claims against its D&O liability policy during the last 5 years? 3% Claims among non-profits has been significant and it contradicts the notion that D&O is primarily a public company risk. All firms face the risk of litigation. 66% 31% Yes No Not sure Fig 28: D&O Claims in the Last Five Years by Ownership All Groups (Total respondents) 31% Public 29% Private 22% Non-profit 58% 0% 10% 20% 30% 40% 50% 60% 70% Fig 29: D&O Claims in the Last Five Years by Asset Size > $10 Bn 44% $5 Bn-$9.9 Bn 31% $1 Bn-$4.9 Bn 23% $250 Mn-$999 Mn 57% Under < $250 Mn 0% 0% 10% 20% 30% 40% 50% 60% 27

28 Consistent with previous years ( ), among all types of claims, direct shareholder/investor suits coupled with derivative shareholder/investor suits constitute a significant proportion of total claims filed (Fig 30). Fig 30: Types of Claims in the Last Four Years Direct shareholder/investor suit 32% 33% 36% 45% Derivative shareholder/investor suit 35% 39% 40% 42% Employment related Regulatory 15% 12% 23% 19% 32% 31% 32% 32% Fiduciary (ERISA related) 9% 15% 18% 20% Other 15% 18% 17% 15% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 28

29 In the case of public company respondents, direct shareholder/investor suits and derivative shareholder/investor suits were the leading cause of claims in By contrast, employment-related claims constitute a significant proportion at non-profits firms (43%) (Fig 31). Among respondents who experienced claims in 2014, 21% were dissatisfied with the handling of their claim (Fig 32), which demonstrates that there is still a significant amount of failure in the product. Fig 31: Types of Claims by Ownership Direct shareholder/ investor suit Derivative shareholder/ investor suit Employment related Regulatory Fiduciary Other Non-profit 0% 0% 43% 0% 14% 43% Private 14% 29% 0% 29% 29% 0% Public 31% 31% 10% 7% 7% 14% All Groups (Total) 20% 22% 20% 9% 11% 18% Fig 32: Satisfaction with Handling of D&O Claim How satisfied were you with your D&O insurer's handling of the claim? 2014 Year % 56% 57% Very satisfied 20% 50 Satisfied 35% % 16% 23% 21% 29% 14% Neutral - Neither satisfied nor dissatisfied Dissatisfied 12% 23% Very dissatisfied 9% Satisfied Neutral Dissatisfied

30 Direct shareholder/investor suits still register as the greatest concern among survey respondents, but concerns over regulatory and direct shareholder/investor suits have trended upwards, ranking them as pivotal concerns. Fig 33: Top D&O Liability Concerns Rank the following types of claims on a scale of 1 to 5, where 1 is the greatest concern to your organization and 5 is the least concern. (Top three rankings) Direct Shareholder/Investor Suit % 34% 10% % 23% 14% Ranked 1st % 23% 14% Ranked 2nd Ranked 3rd % 19% 13% Regulatory % 23% 27% % 23% 32% Ranked 1st % 22% 35% Ranked 2nd Ranked 3rd % 24% 36%

31 Derivative Shareholder/Investor suit % 22% 28% % 25% 16% Ranked 1st % 25% 17% Ranked 2nd Ranked 3rd % 25% 19% Employment-Related Suit % 12% 11% % 15% 12% Ranked 1st % 15% 14% Ranked 2nd Ranked 3rd % 16% 9% Fiduciary (ERISA related) % 9% 23% % 14% 27% Ranked 1st % 15% 20% Ranked 2nd Ranked 3rd % 16% 23%

32 Appendix 32

33 Appendix A Participants in the JLT 2015 D&O Survey represent a wide range of business sectors with manufacturing (18%), financial services & insurance (16%), and utilities (10%) having the highest participation (Fig 34). 70% of respondents are public companies, while 18% are private and 12% are non-profits (Fig 35). Fig 34: Participation by Business Class Fig 35: Participation by Ownership Wholesale 1% Utilities Transportation 2% 10% 12% Tourism and Leisure Retail Property and Construction Professional and Business Services 1% 2% 1% 1% 18% 70% Public Private Non-profit Natural Resources 3% Manufacturing 18% High-Technology 5% Healthcare - Pharmaceuticals 0% Healthcare, excl. Pharmaceuticals 7% Government 1% Food and Beverage 4% Financial Services, excl. Insurance 5% Financial Services - Insurance 16% Energy 6% Education 4% Communications 4% Charities and Non-profit 1% Automobiles and Transportation Equipment 2% Aerospace and Defense 4% 0% 10% 20% 33

34 Appendix A Fig 36: Participation by Size Similar to studies conducted previously, 84% of respondents are large companies with revenues in excess of $1 Bn (Fig 36). In terms of revenue distribution, 40% of respondents fell in the $1 Bn-$4.9 Bn range, followed by 16% in the $5 Bn-$9.9 Bn range, 15% in the $10 Bn-$24.9 Bn range and 11% reporting revenues in excess of $25 Bn. Only 16% reported revenues of less than $999 Mn (Fig 36). When segmented by assets, 35% of respondents reported assets greater than $10 Bn, while 24% between $1 Bn-$4.9Bn, 14% between $5 Bn-$9.9 Bn and 12% reporting assets worth < $999 Mn (Fig 36). In terms of market capitalization, 39% reported market capitalization >$10 Bn, while 23%, 9% and 15% reported market capitalization worth $1 Bn-$4.9 Bn, $5 Bn- $9.9 Bn and < $999 Mn, respectively (Fig 36). Fig 3 Notes Base: Organizations excluding charities and Non-profits giving valid answer (percentages exclude Not sure/prefer not to say ) * Base: Public organizations only Total Revenues (n = 103) 0% 10% 20% 30% 40% 50% <$250 Mn $250 Mn-$999 Mn 7% 9% $1 Bn-$4.9 Bn 40% $5 Bn-$9.9 Bn $10 Bn-$24.9 Bn >$25 Bn 16% 15% 11% Not sure/prefer not to say 4% Total assets (n = 100) 0% 10% 20% 30% <$250 Mn $250 Mn-$999 Mn 5% 7% $1 Bn-$4.9 Bn 24% $5 Bn-$9.9 Bn $10 Bn-$24.9 Bn 14% 13% >$25 bn 22% Not sure/prefer not to say 15% Market Capitalization (n = 75)* 0% 5% 10% 15% 20% 25% <$999 Mn 15% $1 Bn-$4.9 Bn 23% $5 Bn-$ 9.9 Bn 9% $10 Bn-$24.9 Bn 23% >$25 Bn 16% *Participation figures rounded to the nearest whole percentage which may cause a total of greater than 100% 34

35 Appendix A Sixty-four percent of all respondents reported international operations: 74% public companies, 61% private companies, and 17% non-profits (Fig 38). Among public companies, 51% indicated that they purchased foreign locally issued policies, while 23% stated they did not purchase local policies, 26% reported no international operations. Among private companies, 28% indicated that they purchased foreign local policies, while 33% stated they did not purchase foreign local policies and 39% reported no international operations. Fig 37: Number of Respondents Fig 38: International Operations by Ownership >$25 Bn $10 Bn-$24.9 Bn $5 Bn-$9.9 Bn $1 Bn-$4.9 Bn Yes (%) No (%) Non-profit Private Public $250 Mn-$999 Mn 7 9 <$250 Mn Assets Revenue Fig 39: International Local Policy Purchases Does your organization have international operations? Do you purchase local policies in foreign jurisdictions? 39% Private 33% 28% 26% 23% Public Year over Year Change 17% increase in public companies purchasing local policies 51% Yes and purchase local policies Yes, but do not purchase local policies No international operations 35

36 Appendix A A significant number of respondents purchased their D&O domestically and did not engage London or Bermuda markets. Fig 40: D&O Inquiries Do you buy D&O insurance from Lloyd s or Bermuda? Bermuda marketplace 8% 31% 61% Not sure Lloyd's marketplace 7% 26% 67% No Yes 0% 10% 20% 30% 40% 50% 60% 70% 80% Companies that conducted independent reviews of their D&O liability policies decreased from 51% in 2013 to 44% in Respondents in 2014, were more likely to use law firms (26%) for a review compared to a broker (12%) (Fig 41). Additionally, half of the survey respondents did not have their policies reviewed at all. Fig 41: Prevalence of Independent Policy Review In the past two years, have you conducted an independent review (other than by your current insurance broker) of your D&O liability policy? Year over Year Change 7% decrease in companies performing independent policy review % 1% % 49% 22% 56% 26% 9% 6% Yes through a third party Yes through another broker Yes through a law firm Yes through a consultant No 36

37 Appendix B Jardine Lloyd Thompson Group (JLT.L) is one of the world s largest providers of insurance, reinsurance and employee benefits-related advice, brokerage, risk management advisory and associated services. Our 10,000 experts worldwide are focused on our client industries and are supported by the largest international placement network with unparalleled capabilities and resources. JLT is a division of Jardine Matheson, founded in 1832 with current revenues of 61B USD. JLT Specialty Insurance Services is the US platform of the leading specialty business advisory firm. Our experts have deep industry and product experience serving the leading US and global firms. Our client proposition is built upon our specialist knowledge, client advocacy, tailored advice and service excellence. Together, we place our clients first, champion independent thinking and expect to be judged on the results we deliver. Our culture reinforces the value of our people with teamwork and collaboration. We are working together to create value for our clients and enable a rewarding and challenging environment to attract and develop the best talent in the industry. JLT Specialty US Senior Management Jim Pierce Chairman Direct: jim.pierce@jltus.com Michael Rice Chief Executive Officer Direct: michael.rice@jltus.com Pat Donnelly President Direct: patrick.donnelly@jltus.com Mark Wiemold Chief Financial officer Direct: mark.wiemold@jltus.com Paul Graziano Chief Sales Officer Direct: paul.graziano@jltus.com David Payne Chief Revenue Officer Direct: david.payne@jltus.com Doug Turk Chief Marketing Officer Direct: douglas.turk@jltus.com Steve Shappell Chief Legal Officer Direct: steve.shappell@jltus.com 37

38 Appendix B Andrew Love Chief Operating Officer Direct: andrew.love@jltholdings.com Colin Daly Executive Vice President Financial Lines Group Practice Leader Direct: colin.daly@jltus.com Brad McDonald Senior Vice President Deputy Financial Lines Group Practice Leader Direct: brad.mcdonald@jltus.com Mike Giacobbe Executive Vice President / Analytics Leader Direct: mike.giacobbe@jltus.com 38