Public Offering Liability
Chubb Specialty Insurance

Many dream of taking their company public.  Talent and drive transforms the dream into reality.  But the reality is fraught with risk.  Suddenly, company performance and decisions are subject to external scrutiny.  Investors who helped to achieve the dream can turn it into a testing reality. Directors of newly floated companies run the ever increasing risk of being sued or investigated if investor expectations are not met.

The road to a public offering is hazardous. Investors and their advisers must be presented with detailed information with which to judge the financial position and prospects of the company being floated. Directors and others face a difficult task in ensuring that all relevant information and material facts regarding the company are presented accurately. Is it ever possible to be fully confident of total accuracy? Investors experiencing a loss in the value of their shares will seize upon any mistakes and may claim that they relied upon it when investing in the company.

Traditionally, Directors' and Officers' Liability insurance policies have helped protect companies and their executives from some of the exposures that accompany a public offering. However, Chubb Insurance's Public Offering insurance includes features specifically designed to cover the added risks of engaging in this type of transaction.

Key Features:

  • The Company making the offer is covered.
  • In addition to claims based on the disclosure document, cover extends to negotiations, discussions and presentations made during the offering process.
  • Fraud exclusion does not deprive innocent insureds of defence costs cover.
  • Sub-limit for public relations and crisis management expenses.
  • Defence costs are advanced.
  • Insured Person definition is extended to include natural person's and family holding companies selling their shares in the public offering.

Who is Covered?

  • Insured Organisation - the policyholder and its subsidiaries.
  • Insured Persons include company directors, company secretaries, officers and employees of the insured organisation.

What is Covered?

  • Loss resulting from covered claims against organisations or insured persons alleging an error or omission, misrepresentation, breach of duty based upon a disclosure document, negotiations, discussions, decisions or presentations connected to the public offer or sale of shares of an insured organisation.
  • Public relations and crisis management expenses incurred to minimise or prevent negative publicity following a public announcement which may cause a fall of 10% in an insured organisation's share value.