The high-profile federal takeover of two mid-sized banks will create a ripple effect that could affect the cost and availability of directors and officers liability insurance in the financial sector, but how things will ultimately settle is unclear, experts say.
While D&O rates have softened over the past several months, the Federal Deposit Insurance Corp.’s takeover of Silicon Valley Bank in Santa Clara, California, and Signature Bank in New York earlier this month may lead to higher rates and reduced capacity, they say.
On Monday, the FDIC announced it would break up SVB Financial Group, the parent of Silicon Valley Bank, and hold auctions for two of its units.
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Despite the high-profile nature of the takeovers, they may not lead to a dramatic pricing change in the overall, softening D&O market.
“Sitting here today, this is an event that doesn’t seem severe enough” to have a significant effect on premiums, said William G. Passannante, a shareholder with Anderson Kill PC in New York.
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