What is Insuring Agreements? how does it work? Insuring Agreements are the core of a Directors & Officers (D&O) insurance policy. This section outlines what the policy will cover, describing the types of protection it offers to the insured individuals. Here’s how it works in simple terms: 1. What It Covers: The insuring agreements state that the policy will cover losses if a claim is made against a director or officer for actions taken while managing the company. These losses can include legal defense costs, settlements, and judgments. 2. Types of Coverage: ○ Direct Protection (Side A): If directors or officers are sued and the company can’t legally or financially protect them, the policy steps in to cover personal costs. ○ Company Reimbursement (Side B): If the company pays for a director’s or officer's legal defense, the policy reimburses the company. ○ Entity Coverage (Side C): Protects the company itself when it is named in certain types of lawsuits, such as securities claims. 3. How It Works: When a claim or lawsuit is made against a director, officer, or the company, the policy provides financial protection based on the terms outlined in the insuring agreements. The insurer steps in to pay for legal expenses, settlements, or judgments up to the policy’s limits. In short, the insuring agreements define what the policy covers, who is protected, and the situations in which the insurance kicks in.

What is a Subsidiaries ? Subsidiaries in a D&O insurance policy refer to companies that are owned or controlled by the main policyholder. The policy can automatically extend its coverage to these subsidiaries, providing directors and officers of these entities with protection. How It Works: 1. Automatic Coverage: When a company (the policyholder) acquires or creates a new subsidiary, the policy typically includes an automatic extension of coverage to this new entity. This coverage is subject to certain conditions, like the size or nature of the subsidiary. If a subsidiary meets the criteria, its directors and officers are covered under the main policy. 2. Time Limit: The policy may specify that only wrongful acts occurring after the entity becomes a subsidiary are covered. This means the policy won't cover incidents that happened before the subsidiary was acquired or created. 3. Conditions: For certain large acquisitions or high-risk businesses, the insurer might require notification or additional underwriting to extend full coverage. This allows the insurer to assess any new risks the subsidiary might bring. What Is Covered: • Directors and Officers of Subsidiaries: The policy extends the same protection to the directors and officers of the subsidiary as it does to those of the main company. This includes covering legal costs, settlements, and judgments if they are sued for decisions made in their roles. • Specific Risks: This coverage helps manage risks that arise from managing different branches of the company, especially if those branches operate in different industries or regions. In simple terms, the subsidiaries section ensures that the D&O policy protects not just the main company but also its owned entities, safeguarding all associated directors and officers under one policy umbrella.

Employment Related Wrongful Act - Explanation and Coverage How it Works: Employment Related Wrongful Acts refer to a range of actions or behaviors by an employer that may be considered inappropriate, unfair, or illegal in an employment context. These acts can include a variety of claims brought by employees, former employees, or job applicants against the company or its directors and officers. What is Covered: Employment Related Wrongful Acts include but are not limited to the following: 1. Wrongful or Unfair Dismissal: Any claim involving the wrongful or unfair termination of an employee. 2. Discrimination: Claims of discrimination based on race, gender, age, disability, or other protected characteristics. 3. Harassment: Instances of workplace harassment, including sexual harassment. 4. Breach of Employment Contract: Allegations of breaching the terms of an employment contract. 5. Defamation: Any defamatory statement made against an employee. The coverage is designed to protect the company's directors and officers from the legal costs and potential damages resulting from these types of employment-related claims. Example for Easy Reference: Suppose a director of a company decides to terminate an employee due to poor performance. The employee feels that the dismissal was unfair and decides to file a lawsuit against the company, alleging wrongful termination and discrimination. In this case, the D&O policy would provide coverage for legal defense costs and potential settlements, protecting the directors and officers from personal financial loss.

Insured Entities – How it Works and What is Covered? In the context of D&O Policy, "Insured Entities" refers to the companies and subsidiaries covered under the D&O policy. The coverage extends to protect these entities from claims related to wrongful acts committed by their directors, officers, or employees while performing their duties. This protection aims to safeguard the financial stability of the company and its assets. The term "Insured Entity" is generally includes the company specified in the policy schedule and its subsidiaries. It extends coverage to include legal entities directly linked to the business. How It Works: - When a claim is made against the "Insured Entity," such as the company or its subsidiaries, for a wrongful act committed by its directors or officers (e.g., financial mismanagement, regulatory violations), the D&O policy will: - Cover defense costs incurred by the entity. - Provide financial compensation for settlements or judgments related to the claim. - The policy typically excludes intentional misconduct, fraud, or criminal acts as covered offenses. Claims-Made Basis: Coverage under the policy applies to claims made during the policy period. Example to Illustrate: Scenario: ABC Pte Ltd, covered under a D&O policy, is accused of misrepresentation in a contract deal by a business partner. The lawsuit targets ABC Pte Ltd (the "Insured Entity") and its CEO (an "Insured Person"). - Coverage: The policy kicks in to cover the legal costs of defending both ABC Pte Ltd and the CEO. Suppose the court finds no intentional wrongdoing by the company. In that case, the policy will cover any settlements or damages awarded to the plaintiff, protecting ABC Pte Ltd's financial assets.

What is Outside Directorship? Coverage in a D&O insurance policy protects directors or officers when they serve on the board of an outside company (known as an "outside entity") at the request of the main policyholder. How It Works: 1. Appointment by the Main Company: If a director or officer from the policyholder’s company is appointed to serve on the board of another company (e.g., a joint venture, non-profit, or subsidiary) with the company's approval, this coverage kicks in. 2. Excess of Other Coverage: The outside directorship coverage usually acts as excess insurance. This means it comes into play only after any insurance that the outside company has (like its own D&O policy) has been exhausted or if that company cannot indemnify the director. 3. Automatic Coverage for New Positions: Often, the policy automatically provides coverage for directors who take up new board positions during the policy period. However, this might be limited to a specific timeframe (e.g., 60 days) until the insurer agrees to extend the coverage formally. What Is Covered: - Legal Costs: Covers legal defense costs if the director or officer is sued in their role as a board member of the outside company. - Settlements and Judgments: Pays for settlements or judgments made against the director while serving on the outside board. - Extension of Main Policy Benefits: Offers similar protection to what the director would have under the main company’s D&O policy, ensuring they aren’t left financially vulnerable when representing the company’s interests in another organization. In summary, Outside Directorship coverage protects company directors when they serve on the boards of other organizations at the request of the company, covering legal costs and liabilities that may arise in this extended role.

What is constituted as a claim? In the D&O Policy Wording, a "Claim" is defined as various types of proceedings or demands made against an Insured Person. The definition includes: 1. Written Demand – Any formal request made to the insured for compensation. 2. Legal Proceedings – Civil, statutory, or arbitration proceedings, including criminal prosecutions and formal administrative or regulatory processes. 3. Alternative Dispute Resolution – Processes such as mediation, arbitration, or conciliation. 4. Relief or Remedy – Any legal claim for monetary or non-monetary relief. 5. Derivative Suit – Legal action taken on behalf of the company against an individual director or officer. 6. Extradition Proceedings – Involving legal actions requesting extradition of the insured. This comprehensive definition ensures that various legal challenges faced by a director or officer in their capacity are included . Explain Claim - How it works and what is covered? When a claim is made against an insured individual under a Directors & Officers (D&O) policy, the policy is designed to cover various aspects, such as legal fees (defense costs), settlements, and judgments. The claim process typically follows these steps: 1. Notification: The insured must promptly notify the insurer about the claim. This enables the insurer to evaluate and potentially provide coverage. 2. Defense and Costs: If the claim falls within the policy's coverage, the insurer may provide defense costs and other expenses related to handling the claim. 3. Settlement or Judgment: The policy may cover any financial settlements or judgments, up to the policy's limit, subject to its terms and conditions. Example for Reference: Suppose a director is sued for alleged mismanagement of the company, resulting in financial losses. The director notifies the insurer about the lawsuit. The D&O policy then provides coverage for legal defense fees and, if necessary, settlements, up to the policy's limit.