The Chubb Corp. in Warren, N.J., disclosed it has been hit by claims from companies' targeted legal action over alleged improper granting of stock options.
The insurer said in a regulatory filing that it has already received claims related to the practice of companies back-dating stock options to ensure they are profitable for the grantees, an activity that has resulted in state and federal investigations.
"We cannot predict at this time the impact that such claims may have on results of our operations," the company said in a Form 10-Q filed with the Securities and Exchange Commission.
The company said the exposure to these claims remains uncertain.
"It is subject to resolution of several issues, including the scope of coverage, policy exclusions and coverage defenses," the company said. "We cannot predict at this time the number of claims that we may receive or the impact these claims may have."
Late last month, Chubb Chief Administrative Officer John Degnan said during a conference call with analysts that the entire issue has been overblown. He compared it to the mutual fund timing scandal that also created a lot of headlines but few insurance claims.
Also last month, a New York-based credit research firm, CreditSights, said Chubb remains unusually vulnerable to claims against businesses involved in back-dating of options. It estimated about 25 percent of the carrier's net written premium is derived from directors and officers liability coverage.
Last week, the Securities and Exchange Commission for the first time detailed rules for companies to follow in disclosing their stock option granting policies.
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