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Member, Beacon International Group, Ltd.
Executives at public companies underestimate their exposures in mergers and acquisitions as well as anti-bribery laws, according to survey by Chubb Group of Insurance Cos.
The Chubb Public Company Risk Survey found that more than 80% of the respondents believe that lawsuits stemming from M&A activities against directors and officers are unlikely, the Warren, N.J.-based insurer said Monday in a statement.
“This general lack of concern is disconcerting especially in light of the fact that the directors and officers of nearly one in four (23%) of the public companies we surveyed already have been sued,” Evan Rosenberg, senior vp and global specialty lines manager for Chubb, said in the statement.
Of the companies surveyed, 64% were involved in an M&A or restructuring during the past two years, and 26% indicated that they do not have protocols to manage M&A risks or plans to develop them in the next 12 months.
“Companies that actively manage this exposure have a greater chance of receiving more favorable terms and pricing for their directors and officers liability insurance,” Mr. Rosenberg said in the statement.
Unconcerned about FCPA
The telephone survey of 145 decision-makers at U.S. and Canadian public companies found that 78% of the respondents were not worried about investigations due to a violation of the Foreign Corrupt Practices Act, and 13% have decreased resources allocated toward mitigating losses related to FCPA risks.
“An FCPA investigation can cost a company millions of dollars, and violators have faced enormous fines,” Mr. Rosenberg said. “D&O policies can cover directors and officers defense costs for an alleged FCPA violation and fines for nonwillful violations of the act.”