|AIG'S AMERICAN INTERNATIONAL COMPANIES INTRODUCE NEW LIABILTY COVERAGE DEDICATED TO INDEPENDENT BOARD MEMBER RISKS|
NEW YORK, Sep 18, 2002 --
Coverage Helps Corporations Attract and Retain Independent Directors
Calls for Compliance with NYSE and Nasdaq Corporate Governance Standards American International Group, Inc. (AIG) has announced that the American International Companies(R) have introduced Independent Directors Liability Insurance (IDL PremierSM), a stand-alone policy designed to provide independent board members with protection for their personal assets in the event corporate wrongdoing prevents them from being covered by traditional directors and officers (D&O) liability insurance. The IDL Premier policy is one of three new coverages developed by the American International Companies to strengthen insurance options available to individual directors and officers.*
"With escalating securities litigation, heightened scrutiny of directors actions in the wake of high profile corporate wrongdoing, and new regulations that increase board members' liability exposures, corporations require effective insurance protection to attract and retain successful, highly skilled individuals as corporate directors," said John Keogh, AIG Vice President, Domestic General Insurance and President, National Union Fire Insurance Company of Pittsburgh, Pa. "IDL Premier will help independent directors act in the best interests of shareholders with the knowledge that their insurance coverage and personal assets won't be jeopardized by the actions of insiders."
IDL Premier provides non-rescindable coverage for independent (non-employee) directors only. Limits of liability, which are available up to $25 million, are not shared with inside directors and officers or the corporate entity. IDL Premier provides coverage if the primary and excess D&O policies do not respond as the result of a recision, when a claim is excluded, or the breach of a non-severable warranty. IDL Premier is a separate and distinct policy with separate limits, it does not sit excess, and is only available if the primary D&O policy is underwritten by an AIG member company.
The IDL Premier application process supports many new corporate governance standards proposed by the New York Stock Exchange and the Nasdaq Stock Market aimed at restoring investor confidence, while reinforcing the important role independent directors play in representing investor interests. To obtain IDL Premier coverage, the corporation is expected to meet a number of corporate governance guidelines, including maintaining a board of directors with at least half its members are not company officers; audit, compensation and nominating committees must solely be comprised of non-employee directors; and the insured company must be in compliance with corporate governance listing standards of the exchange on which its securities trade.
Additionally, each insured independent director must warrant they will follow a number of "Best Practices" guidelines, including a requirement to attend two-thirds of board and committee meetings; review corporate financials while maintaining the authority to retain and consult with independent legal and accounting experts; and ensure that director's material relationships, if any, must be reviewed and approved by the Board of Directors.
The American International Companies' have also introduced ExecSecure(SM), a non-rescindable, excess D&O coverage for non-indemnifiable claims against all directors and officers, that protects all directors and officers. Limits of liability are available up to $25 million. ExecSecure provides coverage when the underlying D&O coverage does not respond as the result of the policy(ies) being rescinded, a restatement claim is excluded, or if the limits of the underlying D&O coverage is exhausted. ExecSecure is available only if the primary D&O policy is underwritten by an AIG member company.
Corporations and independent directors insured by ExecSecure coverage are expected to follow the same corporate governance guidelines as IDL Premier insureds.
Additionally, the American International Companies have introduced a new primary D&O policy for public companies (D&O FirstSM). D&O First features a negotiated pre-set allocation for claims against both the corporate entity and the directors and officers. Unlike primary D&O policies that include entity coverage, D&O First helps ensure the policy limits exist exclusively for the company's directors and officers and will not be eroded by the corporation's liability, effectively extending more coverage to individual directors and officers. Additionally, D&O First's negotiated pre-set allocation helps ensure coverage is provided for the individual directors and officers in the event of the corporation's bankruptcy. Coverage is available with limits of liability of up to $50 million.
"More than ever, it is critical to provide individual directors and officers with the certainty that the D&O policy exists for their exclusive benefit, aligns the interests of the directors, officers and the corporation to collectively defend a claim, and is provided by a carrier with the financial strength to be there for the insured at the time of a claim. These new D&O coverages respond to the exposures that threaten the personal assets of individual directors and officers and reinforce the American International Companies' record of leadership in the management liability marketplace," said Keogh.
The American International Companies have developed a white paper that addresses the inherent risks to board members in today's business environment. The white paper "Understanding Board Member Risks" can be found at http://www.aig.com/boardmember.
For more information on the American International Companies' IDL Premier, ExecSecure, and D&O First, contact a broker, a local American International Companies' office or email at email@example.com.
AIG is the world's leading U.S.-based international insurance and financial services organization, the largest underwriter of commercial and industrial insurance in the United States, and among the top-ranked U.S. life insurers. Its member companies write a wide range of general insurance and life insurance products for commercial, institutional and individual customers through a variety of distribution channels in approximately 130 countries and jurisdictions throughout the world. AIG's global businesses also include financial services, retirement savings and asset management. AIG's financial services businesses include aircraft leasing, financial products, trading and market making, and consumer finance. AIG has one of the largest retirement savings businesses in the United States and is a leader in asset management for the individual and institutional markets, with specialized investment management capabilities in equities, fixed income, alternative investments and real estate. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in London, Paris, Switzerland and Tokyo.
* The above described coverage may not be available in all states, and the above description thereof is neither a complete description nor a complete list of all terms, conditions and exclusions. Note that certain terms used above are defined in the policy. Please see the policy for a complete description of its scope and limitations of coverage. Issuance of coverage is subject to underwriting. Insurance is underwritten by member companies of American International Group, Inc.
CONTACT: American International Group, Inc. (AIG) Ned Burke Manager, Public Relations 212/770-3141