The mess from the Deepwater Horizon disaster continues to spread, and the latest victim is D&O insurance for exploration & production (E&P) oil-services companies. According to a release from Dallas-based EWI Risk Services, a reinsurance intermediary and risk consultant, the catastrophe will have a significant impact on the availability of D&O coverages (corporate reimbursement insurance and Side-A insurance for non-indemnifiable loss assigned to individual directors and officers) for publicly traded E&P companies, their joint-venture partners. EWI also perceives a potential impact to publicly traded mutual funds, closed-end funds and related fund management companies subject to regulation under the Investment Advisers Act of 1940, due to their investment allocations.
The long-term potential insurance market impact of D&O actions is in the range of $250 million to $500 million, EWI says, which is spread across a variety of carriers and reinsurers in the United States, Bermuda and the U.K. The firm bases this estimate upon customary D&O program limits in the aggregate that may have been insuring the three publicly traded companies that have been subject to either federal and/or state securities litigation so far as a result of the Deepwater Horizon disaster: BP PLC, Transocean Ltd., and Halliburton Co. To date, EWI is not aware of any public disclosure of available D&O limits purchased and/or exposed by the three entities.
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