Average cost of a settled merger-objection claim has increased 63% to $4.5 million over four years, with little benefit to shareholders
New York – July 10, 2018 – New proprietary data disclosed by Chubb shows a dramatic increase in the cost of insurance claims for merger-objection litigation in recent years. Between 2012 and 2016, the average cost of settled merger-objection claims grew 63% to $4.5 million in 2016 from $2.8 million in 2012. The average for the four-year period was $3.6 million. The portion of total claims payments going to shareholders – 39% – was far less than the 61% that flowed to plaintiffs and defense attorneys for fees and expenses. For dismissed merger-objection claims, the average total cost increased 162% to $2.3 million in 2016 from $880,000 in 2012. The average total direct cost was approximately $912,000 for the period.
The data from Chubb, which is the global leader in financial lines including directors and officers (D&O) insurance, was revealed in a recent panel discussion featuring four distinguished litigators during the company’s annual Preferred Securities Panel Counsel Conference, which was held June 11-12. The panel, entitled From Nuisance to Menace: The Rising Tide of Securities Class Action Litigation, was moderated by Chubb’s Scott Meyer, Division President, North America Financial Lines.