Marsh Introduces New D&O Enhancement for IPO Clients, Providing Additional Protection Against Financial Exposure.

Marsh announced new investment bank indemnification coverage for its directors and officers liability insurance to protect companies pursuing IPOs from potential financial exposure to investment banks. This coverage enhancement addresses the risk of IPO companies being named as additional defendants in lawsuits, potentially leaving them exposed to significant financial risk. Marsh's data shows that investment banks are named as defendants in about 20% of all IPO-related shareholder class action lawsuits.

Marsh & McLennan Companies, Inc. (NYSE: MMC) has announced a new enhancement to its directors and officers liability insurance, specifically designed to protect companies pursuing initial public offerings (IPOs) from potential financial exposure to investment banks. This coverage addresses the risk of IPO companies being named as additional defendants in lawsuits, which can leave them exposed to significant financial risk [1].

According to Marsh, investment banks are named as defendants in about 20% of all IPO-related shareholder class action lawsuits [2]. This new coverage aims to mitigate these risks by providing dedicated protection for the financial responsibility of IPO companies toward their underwriters. Unlike traditional directors and officers liability (D&O) policies, which primarily cover directors and officers against claims made by shareholders or regulators, this enhancement specifically addresses the indemnification obligations owed to investment banks.

Underwriter coverage can be tailored to an IPO company’s specific needs, offering a proactive approach to risk management. It not only helps mitigate the financial impact of potential shareholder litigation but also demonstrates the IPO company’s comprehensive risk management strategy to investors, regulators, and other stakeholders. As companies prepare to go public, this coverage can provide a vital layer of balance sheet protection, safeguarding against the potential financial consequences of shareholder litigation that also name their investment bank.

The first half of 2025 saw a surge in IPO activity, with 168 IPOs, including special purpose acquisition companies, raising close to US$29 billion. As companies continue to navigate the complex IPO process, this new coverage from Marsh can help them retain a resilient balance sheet and focus on their growth and strategic objectives [3].

References:
[1] https://news.bloomberglaw.com/insurance/view-sued-by-insurer-over-coverage-for-shareholder-spac-cases
[2] https://www.marsh.com/en/services/financial-professional-liability/insights/protecting-ipo-companies-investment-bank-indemnification-costs.html
[3] https://www.marketbeat.com/instant-alerts/filing-primecap-management-co-ca-reduces-stake-in-marsh-mclennan-companies-inc-nysemmc-2025-08-06/