Survey: Market Volatility and Economic Crisis Leads to Rising Executive Liability Insurance Costs

-- 2008 Carpenter Moore Benchmarking Study Shows 24% Rise in Director and
Officer Insurance Premiums for Financial Services Companies; Premiums for all
other industry groups Decline    -- 


New York, NY Feb 24 2009 - Financial services companies now pay the highest
average premiums for directors and officers (D&O) liability insurance,
surpassing rates paid by life sciences and technology firms, according to a
forthcoming report from Carpenter Moore, a NASDAQ OMX company.  This shift in
D&O pricing trends accelerated in the fourth quarter of 2008 as the financial
and economic crisis deepened. 

Carpenter Moore's 2008 Directors & Officers Liability Insurance Peer
Benchmarking Report, which allows senior executives to compare executive
liability insurance pricing against their peers, identified another notable
pricing shift brought on by the credit crisis and increased financial market
volatility.  In the 2008 fourth quarter, only 64 percent of companies saw a
decrease in their pricing, down from an average of 77 percent in the first
three quarters of 2008.  This marks a departure from the dominant pricing trend
- steady decreases in premiums across all industries - that has characterized
the D&O market. 

“Our data show that the D&O insurance market is clearly hardening for financial
services companies, which have been at the center of the economic crisis,” said
Lauri Floresca, Senior Managing Director and author of the Carpenter Moore D&O
Benchmarking Report.  “Given the historic correlation between market volatility
and the filing of class action lawsuits, it is not surprising that this
industry has faced rising premiums.” 

Floresca added, “If the emerging executive liability insurance pricing trends
continue, we can expect D&O rates to rise for other industries, especially if
we see a reduction in insurer capacity due to consolidation or insolvency. 
After several straight years of declining premiums, many companies may not be
prepared for cost increases.  In this environment, companies will need to take
a much more active role in their insurance renewal to get the best outcomes.” 

The Carpenter Moore report compiles and assesses vital data for D & O policy
renewals. In 2008, more than 500 publicly traded companies representing diverse
industry groups participated in the study, up nearly 30 percent from 2007. 


Carpenter Moore studies the cost for the first $5 million of D&O coverage, as
the vast majority of public companies buy at least that level of insurance.  In
2008, financial services companies paid an average premium of $147,187 for the
first $5M, up 24 percent from 2007.  Technology companies, which were the
highest of the six broad industry sector groups surveyed in 2007, saw average
premiums fall nearly 13 percent to $128,175 in 2008.  The average price for the
first $5 million of coverage for life sciences declined 21 percent over the
past year. 

Other industries tracked by Carpenter Moore are energy,
commercial/manufacturing, and services, all of which saw average premiums
decline in 2008.  “The industries facing the greatest risk of federal
securities class action lawsuits have historically paid the highest D&O
premiums,” Floresca concluded.  “Executive liability insurance costs for life
sciences and technology companies, among the highest in last year's study,
remain above the average for all industries in 2008. But they have declined on
both a relative and absolute basis compared to financial services providers.” 

About Carpenter Moore:
As a top-ten executive liability risk management services provider, Carpenter
Moore, a NASDAQ OMX company, offers services to public and private companies,
both directly and through a premier network of regional co-brokerage partners.
Through a consultative, customized, competitive and transparent approach using
a team of brokers with a wide range of expertise, Carpenter Moore identifies
cost-efficient insurance and risk management solutions for the board and
executive teams.  Earlier this year, Carpenter Moore released its first global
D&O Benchmarking Report that offers unique data on the true cost of D&O
insurance for public companies in different industries.  For more information,
visit www.nasdaq.net/dobenchmarking. 


NASDAQ OMX MEDIA CONTACTS:

Jolene Libretto
+ 646 441 5220
Jolene.Libretto@nasdaqomx.com

Kristin Johannsdottir
+354 525 2844
kristin.johannsdottir@nasdaqomx.com


NDAQG
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