Page 1 Recording of this session via any media type is strictly prohibited. Page 1 How to Pursue and Win the Complex Claim: A Guide for Corporate Policyholders RIMS 2014 Denver, Colorado April 28, 2014 Ty Childress Partner, Jones Day Los Angeles, CA (213) 243‐2422 Karen Golden Director, Risk Management & Real Estate Kraft Foods Group, Inc. Northfield, IL (847)

Page 2 Recording of this session via any media type is strictly prohibited. What to Expect Attendees should hopefully gain valuable insights into how to: (1)Develop a comprehensive claim strategy that maximizes insurance recoveries in conjunction with a defense of underlying claims; (2)Manage claims that may implicate multiple parties, coverage years, and types of policies; and (3)Identify and avoid common pitfalls during the claims process that hamper or delay recovery of insurance benefits.

Page 3 Recording of this session via any media type is strictly prohibited. FIRST STEPS AFTER RECEIPT OF A COMPLAINT Who are the actual defendant(s)? – How does this correlate with insureds listed on the policy and the named insured definition? Basic risk transfer analysis – Has this risk been transferred via insurance or contractual indemnity? Are there reasons complicating the risk transfer? – Sensitive contractual relationship with other parties involved? – Policy renewal issues? – Fronting policy issues?

Page 4 Recording of this session via any media type is strictly prohibited. IDENTIFICATION AND REVIEW OF POTENTIALLY APPLICABLE POLICIES/CONTRACTS Often multiple policies implicated Additional insured coverage Are there prior, potentially related, claims? Exposure periods (multiple policy years potentially implicated) Exposure size (primary, umbrella, excess analysis) Predecessor entities involved? Are indemnification obligations implicated?

Page 5 Recording of this session via any media type is strictly prohibited. NOTICE ISSUES Which insurers should be notified? – Notice prejudice/no prejudice jurisdictions Active versus precautionary notice – Does notice include demand for defense? Targeted tender issues What level of information/detail to provide – Characterization of allegations – Information is potentially discoverable in underlying litigation

Page 6 Recording of this session via any media type is strictly prohibited. THE INSURERS’ INITIAL RESPONSE Insurers have statutory obligations regarding timeliness of responses Adjusters’ good faith obligations – Lay out your expectations Not all “reservation of rights” are created equal Insurers with defense obligations have particular obligations Has the insurer responded for each insured and each policy?

Page 7 Recording of this session via any media type is strictly prohibited. DEFENSE ISSUES Denial of coverage – Likely triggers statute of limitations – Insured is free to protect its own interests Defense without reservation – Insurer has broad discretion with handling of claim Defending under reservation of rights – What rights are reserved? – Is potential conflict raised? – Right to independent counsel?

Page 8 Recording of this session via any media type is strictly prohibited. DEFENSE COUNSEL ISSUES Does policy have terms governing selection of counsel? If potential conflict, can the insured select counsel irrespective of insurer’s views? What if one implicated policy requires panel counsel and another policy does not? Hourly rate dispute Privilege issues

Page 9 Recording of this session via any media type is strictly prohibited. UNDERLYING LITIGATION COORDINATION Coordinate underlying defense with coverage implications – Coverage implications associated with different causes of action – Allegation dates versus coverage dates – Identity of named versus unnamed entities involved Disclosure of insurance in underlying litigation Presentations to insurers – Consider scope of use in subsequent proceedings Privilege issues – Laws vary dramatically by jurisdiction – Is insurer actually “defending” Budget discussions

Page 10 Recording of this session via any media type is strictly prohibited. UNDERLYING SETTLEMENT ISSUES Notify insurer early and often of settlement status and expectations of participation Consider pros and cons of insurer attendance at a mediation – What message do you want to send the opposing party? “Demand within limits” considerations Settling without the insurer and related consent issues

Page 11 Recording of this session via any media type is strictly prohibited. PREPARING FOR COVERAGE LITIGATION Need to ensure adjusters’ files have all the information you want as evidence All meetings, communications, efforts thoroughly documented Show pattern and practice of insurer Document actual and consequential damages

Page 12 Recording of this session via any media type is strictly prohibited. COVERAGE LITIGATION Procedural/policy requirements Forum selection issues Potential stay of litigation – Is underlying case still pending? – Is there a risk of prejudice to the underlying defense? What relief to seek – Declaratory relief – Breach of contract – Bad faith Multiple insurers?

Page 13 Recording of this session via any media type is strictly prohibited. COVERAGE LITIGATION (cont’d) Early dispositive motions – Duty to defend usually requires no, or very limited, discovery Early expert involvement Critical document discovery – Underlying claims files – Electronic note files – Privilege issues/insurer counsel – Reserves – Reinsurance Preparing the jury story

Page 14 Recording of this session via any media type is strictly prohibited. SETTLING THE COVERAGE CLAIM Maximizing settlement leverage while underlying claim is still pending Settlement structures vary dramatically – Claim release – Policy release – Coverage-in-place agreements – Interim funding arrangements – Indemnification – Assignment of claim to underlying plaintiff – Subrogation issues Primary exhaustion/excess trigger issues

Page 15 Recording of this session via any media type is strictly prohibited. AFTER THE CLAIM Review policy terms and provisions – Problematic endorsements/exclusions – Panel counsel issues – Renewal terms Review insurer relationship generally Review contractual relationships with indemnitors/vendors Review internal performance of team

Page 16 Recording of this session via any media type is strictly prohibited. QUESTIONS? THANK YOU!

Page 17 Recording of this session via any media type is strictly prohibited. Contact Information Ty Childress Partner, Jones Day Los Angeles, CA (213) 243‐2422 Karen Golden Director, Risk Management & Real Estate Kraft Foods Group, Inc. Northfield, IL (847)