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RPLU 9 Public/Financial D&O Liability Insurance (Questions + Answers) Solved $7.99
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RPLU 9 Public/Financial D&O Liability Insurance (Questions + Answers) Solved
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What is the difference between retention and coinsurance? - ️️Retention is a specific amount that must be paid for each claim. Co-insurance is required for Side B and Side C claims and is a percent of the loss insureds must pay before the policy covers any loss. What type of D&O Liability d...

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  • November 4, 2024
  • 5
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

Subjects

  • rplu 9 publicfinancial do liability insurance

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  • RPLU 9 Public/Financial D&O Liability Insurance
  • RPLU 9 Public/Financial D&O Liability Insurance

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RPLU 9 Public/Financial D&O Liability
Insurance
What is the difference between retention and coinsurance? - ✔️✔️Retention is a
specific amount that must be paid for each claim. Co-insurance is required for Side B
and Side C claims and is a percent of the loss insureds must pay before the policy
covers any loss.

What type of D&O Liability do Disclosures Policies address? - ✔️✔️Disclosures
Policies can protect a Company against claims of misrepresentation or omission that
are filed when a Company selectively discloses information.

What is alleged in derivative lawsuits? - ✔️✔️Derivative lawsuits allege that directors
breached their duty to the Company and shareholders and somehow damaged the
Company.

How can the Board of Directors respond to a Derivative Demand? - ✔️✔️A Board can
(1) Ignore the Demand (2) Reject the Demand or (3) Convene an SLC to investigate the
allegations. After a thorough investigation, the SLC can then (1) Take Corrective Action
that may include filing litigation against a Director or Officer, or (2) Make a finding of no
wrongful conduct and close the investigation.

What is the demand requirement? Demand futility? - ✔️✔️The demand requirement is
a demand by shareholders that the Board take the action they request on the
Company's behalf. If there are no disinterested Directors, then the demand may be
futile. In this case, shareholders may skip the demand requirement and go to Court
claiming demand futility.

What types of problems in recording revenue may lead to the restatement of earnings? -
✔️✔️Early recording of revenue, false revenue, or not recognizing discounts or vendor
incentives in the correct amount over the time period can all result in a Company's
restatement of revenue.


What is the difference between a Section 10(b) or Section 11 securities lawsuit and a
derivative lawsuit? - ✔️✔️Section 10(b) and Section 11 lawsuits are brought by
shareholders for their own personal losses and damages. By contrast, a derivative
lawsuit is filed on the Company's behalf for losses the company suffered. In a derivative
lawsuit, the individual shareholder receives no award or damages if the lawsuit is
successful.

What can high operating margins indicate about a Company and its industry or sector? -
✔️✔️If a Company has much higher operating margins than other Companies in its

, industry or sector, then this may be due a lack of competition, or the Company may
have some type of Competitive advantage. Some industries typically have higher
operating margins than others.

Market Capitalization (market cap) - ✔️✔️Indicates both the Company's size and value

Large Cap - ✔️✔️>$5 Billion

Mid Cap - ✔️✔️$500 Million to <$5 Billion

Small Cap - ✔️✔️$150 Million to <$500 Million

Micro Cap - ✔️✔️<$150 Million


What is the importance of 10b5-1 Trading Plans? - ✔️✔️These Plans let Directors and
Officers sell their stock while limiting the liability they have and their exposure to claims
of insider trading.

How can Directors and Officers reduce their risk of D&O claims during Mergers and
Acquisitions? - ✔️✔️The risk of D&O claims can be reduced by using independent
advisors, increasing the time and attention taken to make decisions and showing the
required due care and good faith.

What are the three basic types of allocation? - ✔️✔️Best Efforts: The parties will use
their Best Efforts to agree on the Allocation.

Larger Settlement Rule: All amounts are presumed to be covered by the D&O policy
except the portion that can be shown to be based exclusively on uninsured claims or
parties.

Predetermined: The Policy may apply a different percent of allocation to defense costs
and indemnity payments. Predetermined allocation is applied mostly to securities
claims.

Defense and Settlement - ✔️✔️D&O Policies contain provisions that affect how a claim
is defended and settled.

Panel Counsel - ✔️✔️Some D&O Policies include Panel Counsel provision that
requires the Insureds to select their lawyers from the Insured's counsel list.

First Dollar - ✔️✔️Because the retention must be paid first, a D&O Policy does not
provide First Dollar defense.

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