Specialty Management Liability Insurance
Information

Ambridge’s Specialty Management Liability Insurance products provide insurance for specific liability exposures faced by boards of directors, management teams, fiduciaries, liquidators, trustees and transaction related professionals in connection with a specific transaction or event. Our policies are flexibly designed to respond to a wide variety of legal organizational structures including corporations, limited liability companies, partnerships or trusts.

As with the other Ambridge Transaction Insurance products, Specialty Management Liability Insurance can be written with terms specifically tailored to your client’s needs, significant limits of liability and policy terms of up to seven (7) years.

Regardless of the situation that requires certainty with respect to a specific management or fiduciary liability, Ambridge’s experienced underwriting team will work with you to provide your clients with the Specialty Management Liability Insurance solution they require.

Uses by Deal Point

Some examples of where Specialty Management & Fiduciary Liability Insurance is responsive include:

  • Specific decisions by a board
    The independent directors of a private equity owned company have been asked to consider declaring a significant cash dividend. The directors have expressed concern about making a dividend before the final resolution of a well-publicized lawsuit currently made against a third party.

    The company is not named as a defendant in the litigation, but the lawsuit relates to business that briefly transacted through the company by its former owner. The company has a full indemnity from the former owner for any liabilities arising from the litigation, but the creditworthiness of the former owner is questionable. The litigation has been analyzed as being without merit, but the quantum of damages sought by plaintiffs is significant. An independent legal opinion has been provided to the board advising that the decision to make the distribution is prudent in light of all of the facts.

    Nevertheless, the directors are concerned that if the company is ultimately named in the litigation and found liable for damages, and the former owner cannot satisfy its indemnity obligation, the plaintiffs could attempt to hold the directors personally liable for the judgment because of their decision to distribute the cash that otherwise would have been available to satisfy the judgment. A Specialty Management Liability Insurance policy is purchased to respond to claims made by the plaintiffs relating to the decision to make the dividend.
  • Distribution by liquidators
    The liquidator of a United Kingdom based company that is undergoing a solvent liquidation has determined in good faith that all known liabilities have been satisfied. The liquidating entity is wholly owned by a United States based private equity fund. After it has received the proceeds of the liquidation, the fund intends to liquidate and make a final distribution to its partners. The liquidator is unwilling to make a distribution without an indemnity from the fund because of concerns about being held personally liable for unknown liabilities that may be discovered in the future. The private equity fund is unwilling to provide an indemnity because of its own imminent liquidation. A Specialty Management Liability Insurance policy is purchased by the fund on behalf of the United Kingdom company to respond to claims for unknown liabilities that may be discovered in the future.
  • Shareholders’ representative in a company sale
    A company owned primarily by management and private equity interests is in the process of being sold to a large publicly traded entity. Due to the fact that many of the private equity sellers are non-US based, the purchaser does not wish to negotiate with more than one party relating to any post-transaction adjustments or indemnification obligations under the sale agreement, and has insisted that all such negotiations be conducted with one party. The shareholders have agreed to appoint the former chairman of the company to act as the shareholders' representative but his D&O insurer is unwilling to cover him in this capacity. He is unwilling to serve without insurance coverage for any claims that may be made against him for his service in this capacity. A Specialty Management Liability Insurance policy is purchased by the company on behalf of the former chairman, and the transaction is able to close with the former chairman as the shareholder's representative.
  • Independent fiduciary
    After reviewing the facts and the likelihood of recovery from the former trustees for breaches of their fiduciary duty with respect to a multi-employer benefit plan, the new trustees of such plan believe that a decision to settle litigation against the former trustees for a modest amount is in the best interests of the plan. For prudence sake, the trustees retain an independent fiduciary to review their proposed decision. The independent fiduciary is unwilling to accept the assignment unless he is provided with an insurance policy covering any potential liability that she may have in connection with her services as an independent fiduciary of the plan. She is not prepared to accept coverage under the trustees' liability insurance policy for the plan. A Specialty Management Liability Insurance policy is purchased by the plan on behalf of the independent fiduciary solely for claims against her that relate to the specific assignment.
Uses by Transaction Type

Potential uses of the product include:

  • Financings & Investments
    Under construction / Coming soon
  • Licensing Agreements
    Under construction / Coming soon
  • Liquidations

    Liquidation of a company


    A team of executives is retained to liquidate an entity operating under bankruptcy protection. The executives require a policy that is separate from the D&O policy issued to the entity and its directors and officers. They also require a long-term policy that will span the time-period of their tenure. A six year Specialty Management & Fiduciary Liability Insurance policy is purchased by the company for the benefit of the newly retained executives that converts into "run-off" upon the liquidation of the company.

    Insolvent multi-employer defined benefit plan


    An insolvent multi-employer defined benefit plan has been terminated and as the plan no longer has sufficient assets to pay benefits, the sole role of the trustees is to administer minimum benefits received from the Pension Benefit Guaranty Corporation (the "PBGC") to be paid to beneficiaries. The trustees are not prepared to serve unless a dedicated policy (not shared with former trustees who are being sued by the PBGC) can be provided to them. A Specialty Management & Fiduciary Liability Insurance policy is purchased by the plan for the benefit of the current trustees only.
  • Mergers & Acquisitions

    Shareholders' representative in a company sale


    A company owned primarily by management and private equity interests is in the process of being sold to a large publicly traded entity. Due to the fact that many of the private equity sellers are non-US based, the purchaser does not wish to negotiate with more than one party relating to any post-transaction adjustments or indemnification obligations under the sale agreement, and has insisted that all such negotiation be conducted with one party. The shareholders have agreed to appoint the former chairman of the company to act as the shareholders' representative but his D&O insurer is unwilling to cover him in this capacity. He is unwilling to serve without insurance coverage for any claims that may be made against him for his service in this capacity. A Specialty Management & Fiduciary Liability Insurance Policy is purchased by the company on behalf of the former chairman, and the transaction is able to close with the former chairman as the shareholder's representative.
  • Restructurings & Workouts

    Restructuring of a company


    A crisis management team has been brought in to restructure and turn around a distressed entity. This team of executives requires separate coverage from the incumbent directors and officers that will span their tenure at the entity. A six year Specialty Management & Fiduciary Liability Insurance Policy is purchased by the company for the benefit of the newly retained executives that automatically converts into "run-off" upon the change in control of the company.
FAQs

FAQs:

  • Is Ambridge’s Specialty Management Liability Insurance available for D&O and fiduciary exposures of publicly traded companies?
    While our product can be offered for "one-off" management and fiduciary liability exposures faced by publicly traded companies, in general, we are not a market for renewable D&O and Fiduciary Liability policies for publicly traded companies. We can, however, offer a wide variety of management and fiduciary liability solutions for publicly traded companies that are in liquidation.
  • What type of underwriting submission does Ambridge need in order to consider a Specialty Management Liability Insurance risk?
    Please provide us with specifics about:
    ● the background of the situation that has given rise to the need for coverage;
    ● as much information as possible about the entity(ies) and transaction(s) involved.
  • Will Ambridge consider Specialty Management Liability Insurance risks in any jurisdiction in which the potential risk might arise?
    Ambridge's primary focus is on Specialty Management Liability Insurance risks that are based or may arise in the United States, European Union, Australia, New Zealand and Canada. In some jurisdictions, there may be practical considerations that preclude the offering of Ambridge's Management & Fiduciary Liability Insurance product. If the risk is based in another jurisdiction, please contact us.
  • How long does it take Ambridge to perform a preliminary review of a Specialty Management Liability Insurance policy submission?
    That depends on the nature and complexity of the risk for which insurance is sought. Generally we can provide preliminary terms within 24 to 48 hours. Completion of full underwriting is dependent on how quickly detailed information is provided to Ambridge. Ambridge frequently can offer binding terms within several days after receipt of the initial submission.
  • Certain provisions of Ambridge’s template Specialty Management Liability Insurance policy are not applicable to my client’s circumstances. Can the template policy be amended to remove or modify these provisions?
    Each Ambridge Specialty Management Liability Insurance policy will be tailored to the specifics of the risk to be insured and an insured's specific circumstances. Once an initial proposal has been provided to you, please contact us with any provisions that your client wishes to have removed or amended so that we can consider your request.