1. 2010 PLUS International Conference HOW D&O INSURANCE TRANSFORMS SHAREHOLDER LITIGATION

2. 2010 PLUS International Conference The Round-Up… MODERATOR: Timothy W. Burns, Esq., Partner, Perkins Coie LLP PANELISTS: Tom Baker Ph.D., William Maul Measey Professor of Law and Health Sciences, University of Pennsylvania and the Wharton School Sean M. Fitzpatrick, Esq., Lecturer, University of Connecticut School of Law Stuart M. Grant, Esq., Managing Partner, Grant & Eisenhofer P.A. Kim D. Hogrefe, Esq., Senior Vice President, Senior Specialty Claims Officer, Chubb & Son Anne R. Myers, Esq., Partner, Kaufman Dolowich Voluck & Gonzo LLP

3. 2010 PLUS International Conference Median Ratio of Settlement to Investor Losses 0% 1% 2% 3% 4% 5% 6% 7% 8% 199619971998199920002001200220032004200520062007200820092010 Settlement Year January 1, 1996–June 30, 2010 It’s really just pocket shifting! And such small Portions!

4. 2010 PLUS International Conference Insurance Undermines Deterrence Premium differences are too small to change behavior. Underwriters don’t (can’t?) prevent bad acts. Thanks, but gotta go … NetJet is waiting

5. 2010 PLUS International Conference INSURING CORPORATE MISCONDUCT

6. 2010 PLUS International Conference Now the Good News! D&O insurance is priced to risk The merits matter We have a deterrence fix Uh, oh!

7. 2010 PLUS International Conference Our Reform Proposal DISCLOSURE: D&O program details and who pays what in settlement  M A G N I F Y the pricing signal  IDENTIFY the insurance effect on settlement COINSURANCE: Sides B &C  Keep the corporation’s skin in the game  Control costs and reduce collusion

8. 2010 PLUS International Conference How D&O Insurance Transforms Shareholder Litigation Typical Shareholder Litigation How it works: Derivative Litigation Securities Litigation

9. 2010 PLUS International Conference How D&O Insurance Transforms Shareholder Litigation The Purpose of Shareholder Litigation Victim Compensation? Deterrence?

10. 2010 PLUS International Conference How D&O Insurance Transforms Shareholder Litigation Does D&O Insurance Impact Deterrence?

11. 2010 PLUS International Conference How D&O Insurance Transforms Shareholder Litigation Do D&O Insurers Deter Wrongful Conduct?

12. 2010 PLUS International Conference How D&O Insurance Transforms Shareholder Litigation Reform SEC Mandated Disclosure of D&O Insurance Details Mitigating Moral Hazard by Reducing Corporate Coverage Making Merits Matter Through Settlement Disclosures

13. 2010 PLUS International Conference Questions & Answers

14. 2010 PLUS International Conference Many Thanks To… Tim Burns Sean Fitzpatrick Stuart Grant Tom Baker Kim Hogrefe Anne Myers