Transcript Chubb International Insurance

Chubb’s Department
of Financial
Institutions
“DFI for DBU”
April 7, 2010
On the Call …
•
Tim Usher-Jones
Underwriting Officer, Department of
Financial Institutions
[email protected]
Presentation Overview
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Reasons to Pursue F.I.’s
Classification of Financial Institutions
The Products
Underwriting Criteria
Asset Manager Focus
Topical Industry Trends and
Regulation
Questions
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CHUBB SPECIALTY INSURANCE
(CSI) STRUCTURE
Executive
Protection
Executive
ChubbPro
Department of
Financial
Institutions
[email protected]
Why Pursue Financial
Institutions?
Growth Industry
 Cross-Selling Opportunities
 Few Competitors
 DFI Quotes 80% of New
Submissions
 Knowledgeable Partner
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[email protected]
Classification of Financial
Institutions
1. Depository
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2. Financial
Banks, Finance Companies, Credit Unions, Trust
Companies, Mortgage Companies, Leasing
Companies
Management Firms
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3. Insurance
Investment Advisors, Stockbrokers, REITs, Mutual
Funds, Wealth Managers, Venture Capital Firms,
Investment Bankers
Providers
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4. Service
Institutions
Insurance Companies, Reinsurance Companies
Organizations
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Exchanges, Financial Intermediaries, Funds
Transfer Organizations, SRO’s
[email protected]
DFI Product
Overview
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Directors & Officers Liability
Fiduciary Liability
General Liability
Business Income
Errors and Omissions Liability
Property
Workers’ Compensation
Builders Risk
Wrap -up Liability
Captives
Banker’s Professional Liability
BrokerEdge
Family Office Pak
ForeFront By Chubb
ForeFront By Chubb For Investment
Advisors
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Employee Practices Liability
Fidelity Bonds
Automobile
Boiler & Machinery
Kidnap & Ransom
Mail Insurance
Umbrella & Excess
Computer Crime
Integrated Risks
Alternative Risk
CyberSecurity
Venture Capital Asset Protection
Trust Company E&O
Insurance Company Professional Liability
Forefront by Chubb for Insurance Co’s
Excess Policy
Mutual Fund Professional Liability
Not For Profit D & O
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DFI Product
Overview
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Directors & Officers Liability Employee Practices Liability
 Fidelity Bonds
Fiduciary Liability
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Automobile
General Liability
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Business Income
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Errors and Omissions
Property
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Workers’ Compensation
Builders Risk
Wrap -up Liability
Captives
Banker’s Professional Liability
BrokerEdge
Family Office Pak
ForeFront By Chubb
ForeFront By
Investment
Advisors
Boiler & Machinery
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Kidnap & Ransom
Liability
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Mail Insurance
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Umbrella & Excess
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Computer Crime
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Integrated Risks
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Alternative Risk
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CyberSecurity
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Venture Capital Asset
Protection
Trust Company E&O
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Insurance Company Professional Liability
Chubb For
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Forefront by Chubb for Insurance Co’s
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Excess Policy
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Mutual Fund Professional Liability
[email protected]
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Not For Profit D & O
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DFI Underwriting
Criteria
Targeted Financial Institutions must possess the following
characteristics:
•Desired nature of Operations
•High quality of management
•Proven track record
•Minimum equity of $1M
•Profitable operating history
•Proven risk management procedures
•Favourable Litigation/ Loss History
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The Opportunity
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The business of managing investments is riskier and more
complex than ever:
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Varied business models such as Mutual Fund Managers that
own distribution, stand-alone Investment Advisory firms and
finally Investment funds that are structured as trusts versus
corporations
Outside the Canadian Banks, very few large independent asset
managers left, but many small private firms
Dynamic regulatory environment, increased scrutiny
National Instrument 81-107 - November 2006 - Independent
Review Committee
National Instrument 31-103 - September 28, 2009 - national
registration regime for financial management firms and
individuals
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The Opportunity
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(cont’d)
Rapidly evolving products, structures and distribution channels
of the asset management industry
Mergers and acquisitions activity has meant several mid-sized
firms are gone and we are left with a handful of large asset
managers that manufacture and distribute investment product
Global marketplace means clients can be non-Canadian, firms
often own subsidiaries in foreign jurisdictions as well as set up
off-shore funds
Asset management firms and their investment
funds need proven insurance coverage that can
easily adapt.
[email protected]
ForeFront for Investment
Advisors
Insuring Agreements:
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Employment Practices Liability
Fiduciary Liability
Directors and Officers Liability
Investment Advisors E & O Liability
Outside Directorship Liability
Sources of Loss Include:
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Statutory Liabilities
Wrongful Termination
Breach of Fiduciary Duty
Breach of Investment Objectives
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VCAP
(Venture Capital Asset Protection)
Insuring Clauses:
 Management Liability Coverage (D&O)
 Management Indemnification Coverage (SIDE A)
 Errors and Omissions Coverage (E&O)
Sources of Loss Include:
 Breach of Contract
 Tortious Interference
 Oppressive Conduct
 Breach of Offering Memorandum
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CANCAP
(Canadian Capital Asset Protection
Professional Liability)
E&O Coverage For:
 Small to Mid-Sized Canadian Financial Institutions that offer a
variety of financial services
 All directors, officers and employees (past and present)
 Separate Tower of Insurance for Approved Persons
For claims arising out of Services such as:
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Fiduciary/Trust Dept
Investment Advisor/Fund Mgmt
Lending
Broker/Dealer Activities
Funds Transfer
Distribution of Life Insurance and Mutual Fund Products
Investment Banking
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Minimum Premium/Deductible
Thresholds
Line
Min Ded
Min Prem
D&O
E&O
Fidelity Bond
P&C
Fiduciary
EPL
K&R
Mail
$50,000
$50,000
$5,000
$1,000
$10,000
$10,000
Nil
Nil
$5,000
$10,000
$1,250
$5,000
$5,000
$5,000
$2,000
$2,500
[email protected]
Product Highlight: AMP
Asset Management ProtectorSM by Chubb
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Asset Managers need
insurance that is:
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Designed for their industry
Customizable to how they want to structure their
insurance coverage
Flexible enough to respond to their individual business
model
Able to address numerous combinations of asset
management structures and their foreign equivalents
Easily and seamlessly adaptable to operational changes
during the policy period
Easy to work with and easy to understand
Backed by a strong carrier with claims expertise in their
industry
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Target Markets
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Registered Investment Advisors
Portfolio Managers
Fund managers/sponsors
Mutual Funds
Pooled Funds
Private Funds/Hedge Funds
Investment companies and funds domiciled
outside Canada.
[email protected]
The Coverage Solution
A flexible, modular liability insurance policy that helps
protect firms and funds from their most critical
professional and management liability exposures:
• Professional Liability (Errors and Omissions Liability)
• Directors and Officers (D&O) Liability
• Employment Practices Liability
• Fiduciary Liability
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Coverage: Broad Definition of
Professional Services
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In Professional Liability Coverage Part,
definition includes:
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In addition to investment advisory and management
services, asset allocation services; fiduciary capacity as
respects third party plans; selection of outside
managers and service providers; publication of written
material
Insuring clauses include vicarious liability
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Coverage: Independent Review
Committee (IRC) – NI 81-107
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Automatic $1,000,000 additional
dedicated excess limit for
Independent Review Committee
(IRC) members, with option to
purchase further additional limit.
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Typical Claim Scenarios
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Claims by clients for breaches of investment guidelines
Prospectus liability claims against mutual fund directors,
advisers, and service providers
Formal regulatory investigations into alleged trading
violations
Claims alleging failure to disclose risks or conflicts of
interest
Claims for failure to perform due diligence in the selection
and oversight of sub-advisers or outside funds
Improper valuation of fund assets
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Asset Manager Relevant
Regulations
National Instrument 31-103
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NI 31-103 Categories of
Registration
Three general categories;
1. Dealers
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Investment (IIROC), Mutual Fund (MFDA),
Scholarship Plan, Exempt Market, &
Restricted Dealers
Portfolio Manager (Adviser)
Investment Fund Managers
[email protected]
Insurance
Requirements
• Minimum:
Investment Dealers
$500K or $200K for Type 1 (IIROC-400.4)
Mutual Fund Dealers
$50K per Approved Person up to $200K,
$500K for Level 4 (MFDA Rule 4.4)
Scholarship Plan, Exempt
Market, and Restricted Dealers
$50K per employee up to $200K
Portfolio Managers
$50K no access to client assets or $200K
Investment Fund Managers
$200K
• Maximum: Formula based on 1% of total assets
or assets under management, up to $25 Million.
[email protected]
Implementation Timeline
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September 28, 2009 - Registration
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March 28, 2010 – Meet Insurance
Requirements
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September 28, 2010 – New Categories
“Transition” and meet Insurance Requirements:
Investment Fund Manager, Exempt Market
Dealers and Scholarship Plan Dealers
[email protected]
Solution
This is an opportunity for client
introduction and to demonstrate
knowledge
 We can accommodate full $25M
limit requests
 Chubb is the #1 writer of fidelity
bonds in North America (SFAA)
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[email protected]
Why Chubb?
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Unprecedented Claims Philosophy
dedicated to superior claims services
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Chubb’s DFI team is comprised of more than
145 professionals in 46 branches worldwide
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Chubb’s superior Financial and Claims
Ratings:
• S&P- AAA
• Moody’s- Aa1
• A.M. Best- A++
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Brand recognition, Insuring asset managers
for more than 30 years
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How Do I Contact Chubb?
Email submissions or questions to:
[email protected]
General questions and enquiries:
1.866.821.6660
Product Information and Applications:
www.chubbinsurance.com
[email protected]
How Do I Submit Business?
1.Send your submission to:
[email protected]
2.Specify what coverage(s) you are looking
to place.
3.The submission will be reviewed and you
will be asked to confirm the following DBU
criteria…
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What Happens Next?
[email protected]
QUESTIONS?
CHUBB INSURANCE COMPANY OF
CANADA
Department of Financial Institutions
[email protected]
1.866.821.6660
[email protected]