While directors and officers (D&O) insurance rates have been trending steadily downward for the past three years, the easy ride that risk managers have had purchasing D&O policies may be coming to an end given the subprime mortgage meltdown. "There has been a baseline slide in D&O insurance costs of about 10% over the past few years," remarks Lance Ewing, vice president of risk management at Harrah's Entertainment, who attributes the softening in the D&O marketplace to the success of Sarbanes-Oxley and corporate executives looking at themselves in the mirror. "But then again just this past August, 20 class actions suits were filed," says Ewing. "The subprime mess will affect some of the homebuilders and financial institutions. It's whatever is the disaster du jour." Yet, it is still a D&O buyer's market, especially for mid-cap and small-cap companies, notes William Young, risk manager for D&E Communications Inc. of Ephrata, Penn., with $160 million in revenues. Says Young: "Small caps especially are very desirable because they fly under the radar of class action suits."

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.