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Chubb’s Department of Financial Institutions

Chubb’s Department of Financial Institutions. “DFI for DBU” April 7, 2010. On the Call …. Tim Usher-Jones Underwriting Officer, Department of Financial Institutions. Presentation Overview. Reasons to Pursue F.I.’s Classification of Financial Institutions The Products

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Chubb’s Department of Financial Institutions

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  1. Chubb’s Department of Financial Institutions “DFI for DBU” April 7, 2010

  2. On theCall … • Tim Usher-Jones Underwriting Officer, Department of Financial Institutions CanChubbQuote@chubb.com

  3. Presentation Overview • Reasons to Pursue F.I.’s • Classification of Financial Institutions • The Products • Underwriting Criteria • Asset Manager Focus • Topical Industry Trends and Regulation • Questions CanChubbQuote@chubb.com

  4. CHUBB SPECIALTY INSURANCE (CSI) STRUCTURE CanChubbQuote@chubb.com

  5. Why Pursue Financial Institutions? • Growth Industry • Cross-Selling Opportunities • Few Competitors • DFI Quotes 80% of New Submissions • Knowledgeable Partner CanChubbQuote@chubb.com

  6. Classification of FinancialInstitutions 1. Depository Institutions • Banks, Finance Companies, Credit Unions, Trust Companies, Mortgage Companies, Leasing Companies 2. Financial Management Firms • Investment Advisors, Stockbrokers, REITs, Mutual Funds, Wealth Managers, Venture Capital Firms, Investment Bankers 3. Insurance Providers • Insurance Companies, Reinsurance Companies 4. Service Organizations • Exchanges, Financial Intermediaries, Funds Transfer Organizations, SRO’s CanChubbQuote@chubb.com

  7. DFI Product Overview • Employee Practices Liability • Fidelity Bonds • Automobile • Boiler & Machinery • Kidnap & Ransom • Mail Insurance • Umbrella & Excess • Computer Crime • Integrated Risks • Alternative Risk • CyberSecurity • Venture Capital Asset Protection • Trust Company E&O • Insurance Company Professional Liability • Forefront by Chubb for Insurance Co’s • Excess Policy • Mutual Fund Professional Liability • Not For Profit D & O • Directors & Officers Liability • Fiduciary Liability • General Liability • Business Income • Errors and Omissions Liability • Property • Workers’ Compensation • Builders Risk • Wrap -up Liability • Captives • Banker’s Professional Liability • BrokerEdge • Family Office Pak • ForeFront By Chubb • ForeFront By Chubb For Investment Advisors CanChubbQuote@chubb.com

  8. DFI Product Overview • Employee Practices Liability • Fidelity Bonds • Automobile • Boiler & Machinery • Kidnap & Ransom • Mail Insurance • Umbrella & Excess • Computer Crime • Integrated Risks • Alternative Risk • CyberSecurity • Venture Capital Asset Protection • Trust Company E&O • Insurance Company Professional Liability • Forefront by Chubb for Insurance Co’s • Excess Policy • Mutual Fund Professional Liability • Not For Profit D & O • Directors & Officers Liability • Fiduciary Liability • General Liability • Business Income • Errors and Omissions Liability • Property • Workers’ Compensation • Builders Risk • Wrap -up Liability • Captives • Banker’s Professional Liability • BrokerEdge • Family Office Pak • ForeFront By Chubb • ForeFront By Chubb For Investment Advisors CanChubbQuote@chubb.com

  9. DFI Underwriting Criteria • Targeted Financial Institutions must possess the following characteristics: • Desired nature of Operations • High quality of management • Proven track record • Minimum equity of $1M • Profitable operating history • Proven risk management procedures • Favourable Litigation/ Loss History CanChubbQuote@chubb.com

  10. The Opportunity • The business of managing investments is riskier and more complex than ever: • Varied business models such as Mutual Fund Managers that own distribution, stand-alone Investment Advisory firms and finally Investment funds that are structured as trusts versus corporations • Outside the Canadian Banks, very few large independent asset managers left, but many small private firms • Dynamic regulatory environment, increased scrutiny • National Instrument 81-107 - November 2006 - Independent Review Committee • National Instrument 31-103 - September 28, 2009 - national registration regime for financial management firms and individuals CanChubbQuote@chubb.com

  11. The Opportunity (cont’d) • Rapidly evolving products, structures and distribution channels of the asset management industry • Mergers and acquisitions activity has meant several mid-sized firms are gone and we are left with a handful of large asset managers that manufacture and distribute investment product • Global marketplace means clients can be non-Canadian, firms often own subsidiaries in foreign jurisdictions as well as set up off-shore funds • Asset management firms and their investment funds need proven insurance coverage that can easily adapt. CanChubbQuote@chubb.com

  12. ForeFront for Investment Advisors Insuring Agreements: • Employment Practices Liability • Fiduciary Liability • Directors and Officers Liability • Investment Advisors E & O Liability • Outside Directorship Liability Sources of Loss Include: • Statutory Liabilities • Wrongful Termination • Breach of Fiduciary Duty • Breach of Investment Objectives CanChubbQuote@chubb.com

  13. VCAP (Venture Capital Asset Protection) Insuring Clauses: • Management Liability Coverage (D&O) • Management Indemnification Coverage (SIDE A) • Errors and Omissions Coverage (E&O) Sources of Loss Include: • Breach of Contract • Tortious Interference • Oppressive Conduct • Breach of Offering Memorandum CanChubbQuote@chubb.com

  14. CANCAP (Canadian Capital Asset Protection Professional Liability) E&O Coverage For: • Small to Mid-Sized Canadian Financial Institutions that offer a variety of financial services • All directors, officers and employees (past and present) • Separate Tower of Insurance for Approved Persons For claims arising out of Services such as: • Fiduciary/Trust Dept • Investment Advisor/Fund Mgmt • Lending • Broker/Dealer Activities • Funds Transfer • Distribution of Life Insurance and Mutual Fund Products • Investment Banking CanChubbQuote@chubb.com

  15. Minimum Premium/Deductible Thresholds CanChubbQuote@chubb.com

  16. Product Highlight: AMP Asset Management ProtectorSM by Chubb CanChubbQuote@chubb.com

  17. Asset Managers need insurance that is: • Designed for their industry • Customizable to how they want to structure their insurance coverage • Flexible enough to respond to their individual business model • Able to address numerous combinations of asset management structures and their foreign equivalents • Easily and seamlessly adaptable to operational changes during the policy period • Easy to work with and easy to understand • Backed by a strong carrier with claims expertise in their industry CanChubbQuote@chubb.com

  18. Target Markets • Registered Investment Advisors • Portfolio Managers • Fund managers/sponsors • Mutual Funds • Pooled Funds • Private Funds/Hedge Funds • Investment companies and funds domiciled outside Canada. CanChubbQuote@chubb.com

  19. The Coverage Solution A flexible, modular liability insurance policy that helps protect firms and funds from their most critical professional and management liability exposures: • Professional Liability (Errors and Omissions Liability) • Directors and Officers (D&O) Liability • Employment Practices Liability • Fiduciary Liability CanChubbQuote@chubb.com

  20. Coverage: Broad Definition of Professional Services • In Professional Liability Coverage Part, definition includes: • In addition to investment advisory and management services, asset allocation services; fiduciary capacity as respects third party plans; selection of outside managers and service providers; publication of written material • Insuring clauses include vicarious liability CanChubbQuote@chubb.com

  21. Coverage: Independent Review Committee (IRC) – NI 81-107 • Automatic $1,000,000 additional dedicated excess limit for Independent Review Committee (IRC) members, with option to purchase further additional limit. CanChubbQuote@chubb.com

  22. Typical Claim Scenarios • Claims by clients for breaches of investment guidelines • Prospectus liability claims against mutual fund directors, advisers, and service providers • Formal regulatory investigations into alleged trading violations • Claims alleging failure to disclose risks or conflicts of interest • Claims for failure to perform due diligence in the selection and oversight of sub-advisers or outside funds • Improper valuation of fund assets CanChubbQuote@chubb.com

  23. Asset Manager Relevant Regulations National Instrument 31-103 CanChubbQuote@chubb.com

  24. NI 31-103 Categories of Registration Three general categories; • Dealers • Investment (IIROC), Mutual Fund (MFDA), Scholarship Plan, Exempt Market, & Restricted Dealers • Portfolio Manager (Adviser) • Investment Fund Managers CanChubbQuote@chubb.com

  25. Insurance Requirements • Minimum: • Maximum: Formula based on 1% of total assets or assets under management, up to $25 Million. CanChubbQuote@chubb.com

  26. Implementation Timeline • September 28, 2009 - Registration • March 28, 2010 – Meet Insurance Requirements • September 28, 2010 – New Categories “Transition” and meet Insurance Requirements: Investment Fund Manager, Exempt Market Dealers and Scholarship Plan Dealers CanChubbQuote@chubb.com

  27. Solution • This is an opportunity for client introduction and to demonstrate knowledge • We can accommodate full $25M limit requests • Chubb is the #1 writer of fidelity bonds in North America (SFAA) CanChubbQuote@chubb.com

  28. Why Chubb? • Unprecedented Claims Philosophy dedicated to superior claims services • Chubb’s DFI team is comprised of more than 145 professionals in 46 branches worldwide • Chubb’s superior Financial and Claims Ratings: • S&P- AAA • Moody’s- Aa1 • A.M. Best- A++ • Brand recognition, Insuring asset managers for more than 30 years CanChubbQuote@chubb.com

  29. How Do I Contact Chubb? • Email submissions or questions to: • CanChubbQuote@chubb.com • General questions and enquiries: • 1.866.821.6660 • Product Information and Applications: • www.chubbinsurance.com CanChubbQuote@chubb.com

  30. How Do I Submit Business? • 1.Send your submission to: CanChubbQuote@chubb.com • Specify what coverage(s) you are looking to place. • 3. The submission will be reviewed and you will be asked to confirm the following DBU criteria… CanChubbQuote@chubb.com

  31. What Happens Next? CanChubbQuote@chubb.com

  32. QUESTIONS? CHUBB INSURANCE COMPANY OF CANADA Department of Financial Institutions CanChubbQuote@chubb.com 1.866.821.6660 CanChubbQuote@chubb.com

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