National Union Fire Insurance Company of Pittsburgh, Pa., a member company of American International Group, Inc., is offering Hedge Fund Protector, a new insurance policy designed to protect hedge fund managers, directors and officers against liability exposures and potential litigation.
Hedge Fund Protector includes directors and officers liability, partnership liability, managing member liability and professional liability insurance specifically tailored for hedge funds.
According to The Hedge Fund Association, hedge fund assets have grown at an average rate of 20 percent each year over the last five years and represent an $875 billion industry. Ongoing growth combined with a number of recent high-profile fraud cases involving hedge funds has led to greater industry-wide scrutiny of hedge fund managers. Moreover, in February of 2006, the majority of hedge fund managers will be required to register as investment advisors with the
Securities and Exchange Commission.
“In the past three years, interest in D&O and E&O coverage for hedge funds and fund managers has increased tremendously. However, we estimate that less than 30 percent of hedge funds are protected by this type of coverage,” said Scott A. Meyer, president, National Union’s Financial Institutions Group.
The Hedge Fund Protector coverage includes:
Directors and officers partnership liability insurance to protect the fund, partners, managing members and insured persons (including the chief compliance officer);
Protection for claims arising from allegations of errors and omissions in fund management;
Defense costs coverage for regulatory investigations;
Automatic coverage for newly formed hedge funds that have the same investment personnel as the existing funds; and
Severability of the application for all individual insureds.
Source:AIG/ National Union
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