Numb to the Numbers?October 13th, 2020
Is anyone else overwhelmed with the COVID business-related numbers and statistics we see every day? Add to that the fact that this is an election year in which we are being bombarded with sliced and diced poll numbers, and it is easy to see why many are becoming “numb” to the numbers. Oh, and is it just me? Or do a number of the numbers contradict with other numbers that prove to be even more mind-numbing?
The original purpose of this blog was to “stay on top of” COVID-related insurance issues. Every week, however, it appears harder to do this as those issues have exploded. I have recently found that when I sit down to focus on this blog, I am bombarded with facts and figures that don’t always make sense. So for the next few weeks, we are going to take a deep breath, back up and zero in on small sets of numbers so that we can make better sense of the whole.
This week, we are starting with COVID-related D&O insurance issues. As I took the time to filter out the noise and focus in on D&O specific numbers (which, ironically, are relatively small) as well as commentary from the experts in this field, the picture in this space became a whole lot clearer and easier to understand.
The noise over the past six and half months has justifiably been around the stock market (during the early days of the pandemic, the DJIA fell a total of 10,377.44 points from its all-time February high, but it has almost completely recovered); the terrible human impacts resulting from layoffs, furloughs and unemployment numbers (30M out of work at one point…how many have gone back to work…how many are still out of work……800k+ new filings this week…food lines…stimulus or no stimulus?); and U.S corporate bankruptcies (close to 500 as of last S&O Global Market Intelligence update), etc. This type of noise is usually the precursor to a flood (or at least a swift running stream) of D&O-related litigation and enforcement actions…think the fall-out from the housing crisis in 2008-2009 and, even further back, the dot.com bust in 2001.
Interestingly, and maybe because it is still early, we have only seen a trickle of litigation and enforcement activity in the D&O space. Specifically, according to D&O experts, only 21 COVID-related securities class actions have been filed to date. 5 COVID-related derivative actions and 5 SEC enforcement actions have also been filed since the outbreak of the pandemic.
It is important to keep a few things in mind when looking at these numbers. Even though the COVID-related stock market drop was precipitous (which usually leads to D&O claims), the market dropped as a whole. Virtually every public company was hit in some way. As a result, proving up a specific securities class action without more is difficult.
Second, unlike the D&O claims emanating from the housing crisis and the dot-com bust, the COVID-19 financial crisis was not caused by overly opportunistic (and sometimes fraudulent) human behavior (one could argue about the virus and its’ transmission, but that’s not the point of this blog…wear your masks, people!) that ultimately caught up with us.
Third, as mentioned above, it is still early. D&O claims take time to develop. While the first claims we saw were directly related to the virus and, in a number of instances, companies in the medical/pharma space attempting to take advantage of the situation, experts are expecting future claims to develop as a result of the fallout of the virus and the restrictions it is putting on our lives (e.g. hospitality industry).
We will keep you posted on the D&O side of the house. And stay tuned for next week, when we are on to the much larger claim numbers that we are seeing from a property insurance perspective.
Although I was not raised in a movie-going household (the first movie I remember my dad taking me to was an Eddie Murphy movie…and it was age appropriate), I absolutely love movies. Sunday night’s Wonderful World of Disney on TV was magical. I remember how Tinkerbell would wave her wand and the drawing of the Disney castle would light up and sparkle.
My kids were raised on Disney movies. My oldest was almost one when Nemo was first released on DVD. If I have any say in it, the music from the first scene (after the mama fish is eaten by the scary bigger fish (I have no idea why Disney always has the mama die!)) will be one of the songs played at her wedding…not because of the scene, but because of the music’s beauty and the memories that come with it.
As a family, we progressed through the High School Musical phase (Troy and Gabriella forever!…every word of every song etched in my mind…where precious space is needed for more important things for sure), and into the “but Mom, please! It IS PG-13 (or R, the horror!) rated, but it is not that bad…and all my friends have seen it” phase. Most recently, we have reverted to an 80s and 90s theme, like When Harry Met Sally, Sixteen Candles (the birthday cake on the dining room table scene slays me every time), the Breakfast Club, Dazed and Confused (don’t judge, my kids are all in high school…and Matthew McConaughey? Come on!) and Dirty Dancing.
My youngest has this thing about the true classics. She can sit and watch for hours. Her wall is covered with prints from movies like Gone with the Wind (we’ve had to have some serious conversations about race in connection with that movie), Breakfast at Tiffany’s, Mary Poppins, and the instant-classic, The Titanic. She is a hopeless romantic like her mom…and has traded in her visions of Troy and Gabriella for Rose and Jack.
She and her siblings also love holiday-themed movies. By September 15th of this year (and every year, for that matter) we had already seen Hocus Pocus and It’s the Great Pumpkin-Charlie Brown. Christmas movies? Don’t get me started. My favorite movie of all times is Love Actually….I have to force myself to wait until Thanksgiving to watch it. Then there are all of the others, It’s a Wonderful Life, A Christmas Carol, Elf (I’m cracking up just thinking about the elevator scene where Will Ferrell pushes all of the buttons to the dismay of the other passengers), Home Alone…all of them, more Charlie Brown, The Family Stone….the list goes on and on.
We watch tons of movies at home, but we are (were?) big fans of going to the movies. Living in Colorado has helped feed that joy. After a long day playing in the mountain sunshine, or during a snowy and cold spell, there was (will be again?) nothing better than a dark, cozy movie theater, popcorn, ridiculously priced pay-by-the-pound M&Ms, a cold Coke or hot chocolate (depending on the season) and a great film.
I have not been to the movies since probably Christmas, 2019. Although a few theaters have opened where I live, I personally don’t see the movie theater as “cozy” anymore. It is probably one of the cleanest places open, but this virus, and the lack of anything that looks GREAT to me, have kept me away. We have a promotion going in our town where a group can rent out a whole theater for a little more than $100. The theater will show almost any film you choose, and you can bring friends to enjoy. My youngest went (of course she did), and said it was tons of fun. Fun? Sure. Economically sustainable for the theater? Probably not.
Earlier this week, the owner of Regal Cinemas decided to temporarily close all of its 663 theaters in the US and Britain until further notice. The main reason given for the closure was the lack of product. Although a few “high profile” movies have been released recently, most have been delayed in their openings. Once screened, these films have not raked in nearly the numbers that they no doubt would have seen absent this virus. Additionally, the movies in the pipeline, including the highly anticipated new James Bond movie, No Time to Die, are being pushed out even farther.
If I let my mind go there, the job losses, be they temporary or not, look daunting. According to reports, Regal has 40,000 employees in the US. But it is not just the theaters. Think about all of the man-power that goes into making these movies. My fervent hope is that the silver lining of this is that writers don’t have “writers’ block” but rather the ability to pour their ideas and stories on their pages as this pandemic progresses through the fall and into the winter. Hopefully production houses are quickly reviewing and tweaking and planning and, where safe, filming. And hopefully, in whatever form emerges, movies continue to bring us the joy the have in the past. Maybe that means we have to widen our searches on Netflix or Amazon Prime during these leaner times. If you have any suggestions, I’m all ears.
Dow Highest Closing Records, thebalance.com, updated August 1, 2020
Tayyeba Irum, Chris Hudgins, US Corporate Bankruptcy Count in 2020 Nears 500 as Filings Continue to Climb, spglobal.com, September 8, 2020.
Kevin LaCroix, Royal Caribbean Hit with COVID-19-Related Securities Suit, dandodiary.com, October 8, 2020.
Kevin LaCroix, SEC Files COVID-19-Related Enforcement Action Against Biotech Company Exec, September 28, 2020.
Kevin LaCroix, Vaccine Company Hit with COVID-19-Related Derivative Lawsuit, danadodiary.com, September 23, 2020.
Regal Owner to Close Theaters, a Blow to the Movie Industry