INSURANCE
If an accounting scandal threatens to sink your IPO, you might want to call American International Group before testing the public waters.
AIG, a $33.3 billion insurance holding company, recently offered IPO Gold, a policy that hedges against corporate ills caused by "IPO and post-IPO exposures." Designed to protect clients against fraud allegations, financial inaccuracies, improper accounting practices, and other headaches, the policy - the only such product endorsed by Nasdaq - can be activated if management thinks a crisis will flatline its stock price.
"AIG's plan goes well beyond similar policies," says Carolynn Burns of the Coughlin Group, a professional liability insurance brokerage. Specifically, Burns likes AIG's CrisisFund, which provides $50,000 in the event a PR firm needs to be retained.
"The transition from private to public is probably the most exposing event imaginable," says Ty Sagalow, a chief underwriting officer for AIG. And although coverage is available for all types of companies, he concedes it might be especially appropriate for outfits that have "no revenues and no expectation of them in the near future."
AIG doesn't break out its sales numbers. Of Burns's clients, most of which are technology outfits, so far only one has gone public, and it hasn't needed to make a claim.
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