1. Directors’ & Officers’ Liability Insurance Catherine Richmond, LLB, CRM Senior Vice President Aon Canada Catherine.Richmond@aon.ca May 2014 Directors’ and Officers’ Liability presented byAon Reed Stenhouse Inc. July 2009

2. D&O Litigation Trends

3. Canadian Securities Filings by Sector 2013Source: NERA Economic Consulting

4. US Filings against Canadian Companies 2013Source: NERA Economic Consulting Source: Trends in Canadian Securities Class Actions: 2013 Update, NERA Economic Consulting

5. Overview of D&O Insurance Program BROAD FORM (DIC)* EXCESS A-SIDE COVERAGE Annual, Aggregate Limit A-SIDE COVERAGE EXECUTIVES’ PERSONAL ASSETS PROTECTION B-SIDE COVERAGE CORPORATE BALANCE SHEET PROTECTION C-SIDE COVERAGE CORPORATE ENTITY PROTECTION (securities claims only) NO DEDUCTIBLE DEDUCTIBLE Broad Form A-Side DIC* Coverage • Drops down to primary if underlying insurance: • wrongfully refuses to indemnify • is financially unable to indemnify • is rescinded • is subject to bankruptcy/financial impairment • Is non-rescindable for any reason *DIC = Difference In Conditions

6. D&O Liability: Hot Topics • Purchasing decision changing – Directors and Officers engaged • Program structure • Who should be insured? • Adequacy of Limits • Side A—Difference in Conditions (“DIC”) • International Placements • M&A • Choice of Insurer • Indemnification • Northstar Decision – Environmental Remediation

7. Northstar Aerospace Case(Baker v. The Ministry of The Environment – Ontario)

8. Northstar: Background • 1981 – 2009 : Parts manufacturing facility operated in Cambridge, ON • 2004: Pollution remediation starts • 2012: Northstar Aerospace goes bankrupt • 2012: MOE takes over remediation efforts and files regulatory action against 12 former D&O’s • 2013: D&O’s settle with MOE for $4.75 million

9. Northstar and D&O Insurance • Pollution Matters: • D&O meant to cover defense costs and financial loss • Will not cover clean-up costs, property damage • Excess to other insurance policies (EIL, GL) • Coverage Issues: • Remove pollution exclusion • Side A Difference in Conditions • Aon is working on wording to address remediation liability to provide express protection to directors and officers

10. Northstar and EIL Insurance • Environmental Impairment Liability (EIL) • Covers pollution conditions that commence after inception date • Site-specific • Covers remediation expenses and bodily injury/property damage • Coverage Issues • Survives bankruptcy of the insured? • Directors and officers named? • Challenges insuring known problems • Specialized wordings

11. Thank You