Maybe D&O means Duck Out.
It seems The Royal Insurance Co. of America and St. Paul Mercury Insurance Co. are seeking to walk away from policies they wrote for Enron’s directors and officers. Their reasoning? The two say (in court filings) that Enron misled them.
Of course, if the two indemnifiers are successful, the nine other insurance companies providing D&O policies to Enron will no doubt take the same tack. Reportedly, Enron management is carrying around $350 million in coverage.
In a related story, management at former Enron auditor Arthur Andersen is trying to cap its potential liability to Enron shareholders, former workers, and creditors, by making a settlement offer. Andersen upped its total offer from $600 million this week, and now is in a range somewhere between $700 and $800 million, The Wall Street Journal reports.
Of that $600 million figure, $340 million was said to come from Andersen’s insurers. Lawyers for claimants had rejected the initial offer as “premature.” No word yet on whether claimants feel the $800 million is any more mature.
Meanwhile, Financial Executives International named a 10-member task force to study issues arising from Enron’s accounting scandal. The panel will make recommendations to Congress and the SEC.
The task force roster reads like a Who’s Who of corporate finance. The panel includes Phil Ameen, GE’s controller; Fred Corrado, CFO of Great A&P Tea Co.; Colgate-Palmolve finance chief Stephen Patrick; Cisco Systems controller Dennis Powell; Dow Chemical CFO Pedro Reinhard; Harris Corp. finance chief Bryan Roub; Pfizer CFO David Shedlarz; J.P. Morgan Chase investment-bank CFO David Sidwell; and Marsh & McLennan Cos. senior advisor Frank Borelli.
At its first meeting, the panel settled on four areas of inquiry: ethical conduct in financial management; audit committee effectiveness; rebuilding confidence in the accounting industry; and modernizing the reporting system and reforming accounting standard-setting. Recommendations are expected with 60 days.