Sharp rise in claims for merger-objection litigation
The cost of insurance claims for merger-objection litigation has risen “dramatically” in recent years, according to Chubb.
Between 2012 and 2016, the average cost of settled merger-objection claims grew 63 percent to $4.5 million in 2016 from $2.8 million in 2012. The average for the four-year period was $3.6 million.
For dismissed merger-objection claims, the average total cost increased 162 percent to $2.3 million in 2016 from $880,000 in 2012.
"In the world of securities litigation, it seems like common sense and practicality are no longer prevalent when you take into consideration the combined proliferation of class action and merger-objection lawsuits and their associated costs," said Scott Meyer, division president, North America financial lines.
"This proliferation is not only impacting businesses but is also manifesting as a total tax on society. In the current environment, businesses are not necessarily better managed, shareholders are not necessarily safer, and the economy as a whole is not necessarily less exposed," Meyer added.
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