Q. What is a public company?

A. Public companies are those that trade on an exchange and whose stock (equity) and/or debt are available for sale to the general public. The securities traded can be stock (preferred and/or common), ADRs or units. Being for sale on an exchange- NYSE, American, "Pink Sheets" or a foreign exchange creates the market.

Q. How is being "public" risky for directors and officers of corporations?

A. Public companies fall under various securities laws, both federal and state. The three main federal securities legislation are: Securities Act of 1933, Securities Act of 1934, and the Private Securities Reform Act of 1995.

Q. What are the differences between these three acts of legislation?

A. The Securities Act of 1933 addresses among other things the rules and regulation of capital raising activities of companies. The Act requires certain rules to be followed when seeking capital, either through an Initial Public Offering (IPO), or secondary events.

Q. The Securities Act of 1934 addresses many of the requirements a public company must compile with to disclose information so the investing public has adequate information to make an informed decision. The annual, quarterly and special event requirements fall under this Act.

A. The Private Reform Act of 1995 redefined and expanded the requirements of corporations and plaintiffs in litigation arising out of securities' violations.

Q. How many insurance companies offer D&O insurance?

A. There are a core of approximately 20 markets that offer this type of insurance. Some have been writing D&O insurance for over 20 years and often during 'hard markets' new companies with enter the market while other leave.

Q. What are the main items one should evaluate when reviewing D&O proposals?

A. Other then basic difference such as price, retentions, financial strength, we would emphasize the longevity, quality of underwriting and contractual wording. Please keep in mind that each policy is a legal contract that differs. The application becomes part of the policy and application requirements and language is as important as the policy itself. Claims approach is a significant aspect that is often overlooked when choosing a D&O provider.

Q. What can a 'wholesaler' provide that an insurance company cannot?

A. A wholesaler who only offers expertise should have excellent relationships with underwriters (senior relationships) access to all markets, experience on sophisticated claims settlement, proven marketing approach, contractual knowledge and ability to articulate the different policy wordings, ability to provide corporate governance suggestions, quality service and be a 'student' of the rapidly changing market and laws.