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The Berman Buzz

EP10 - Fiduciary Insurance for ESOPs - discussion with Jeff Gelburd with Murray Insurance

[0:10] Welcome this is the ESOP guy and we are on a journey to an ESOP, thank you so much for joining today and as always I wanted to just explain this podcast is a resource for those that are thinking that they might want to use an employee stock ownership plan, in their business that could be strategically for the succession and exit plan that could be really working through growth strategies a lot of different ways you can use an ESOP. [0:35] And this whole focus of this podcast is to help people to understand the process of going through Aesop's and so we take a lot of times we'll take topics and we'll just break it down and really explain some things that I think are, are very helpful so if you have an interest in the podcast please go to our website at journey to an and you can find all of the episodes for the podcast, so periodically we do get some opportunities to interview some folks and today I'm excited, to interview Jeff gelburd with Murray Insurance we're going to talk today about fiduciary insurance and one of the things about this topic I will say that. It's not the first thing that people talk about when we talk about esops in the company's thinking hey I want to, I want to go through an ESOP process it's not the first thing that we get to talk about but it's a very important topic and, I did I wanted to do it justice in really give it some some space here to just explain what what is fiduciary Insurance how does it work, some of this is really the long-term ongoing cost that in an ongoing ESOP companies going to Bear through the insurance costs part of it is is the trends that we see in the ESOP Community as insurance goes up for ESOP transaction trustees, that certainly is going to impact the cost of Aesop's oh so I think it's very important topic and I appreciate Jeff coming on the podcast today Jeff thank you so much for joining. [2:04] Thank you Phil appreciate the being here, great so real quick Jeff so geography wise where are you housed out of mostly I know you have clients all over the country but where are you where do you cook in south central Pennsylvania really Mechanicsburg which is just a it's across the river from the capital of Pennsylvania Harrisburg okay great and so it's still pretty cold up there. [2:31] Especially this morning it was in the low 20s now wow that is cold well great well we're all inside anyway so why don't we start with this Jeff can you give us kind of a little bit of your background in terms of I know you do insurance work but also relative to Aesop's in the ESOP industry, yeah so I first got involved with Aesop's back in the early 1980s I was working, actually for the well the largest Dental manufacturers in the world that was located in York Pennsylvania they were publicly held. On the New York Stock Exchange and in the early 80s they really they were a target for a takeover so, they took themselves private and initiated the Esau in the early 80s and, and I just become aware or known of esops. [3:31] From a conference I had attended but so I was involved initially with the with this initial transaction and they this company had operations across the globe. And they eventually set up Aesop's in various countries where they could work from a tax standpoint. You can set up an ESOP and they were pretty much like Switzerland Australia Canada the UK UK back at that time, the Inland Revenue Service couldn't invest more than 10% of the plan assets employer stock. So that was that didn't come about until after I'd left but so part of my responsibilities in the finance department was to administer the abuse up, and and get the plan statements out and so on so forth so that was my first. Entree into Aesop's and then. [4:29] We had company I was with they had difficulty getting dno and fiduciary Insurance because there was litigation the they published public shareholders, as sue the company and so once the ESOP owes announcements they took cells private they felt the stock value wasn't High Enough, to pay them off when they did go private so that got me into part of my responsibilities at this company was the insurance aspect risk management insurance, and so I had a hard time getting insurance for the for the company at subsequent renewals. But I less than I left that company and it went to the insurance brokerage side again staying local in south central Pennsylvania I went to work for a national insurance broker. [5:18] And they had a lot of affinity group program so I went to the ESOP Association in Washington d.c. I had already formed a relationship with the association, while I was at this Manufacturing Company because we were we were members, figure out a lot of information from the association and about Communications and that type of thing, so I went to the ESOP Association and said you know would you be interested in a fiduciary liability program, for your membership and they said sure if you put something together so I went up to AIG the headquarters there in New York and talk to the pension fiduciary people at AIG. Presenting everything about Aesop's to them. [6:09] They would want to know from an underwriting standpoint and they were willing to underwrite a program, they would individually underwrite each piece off account that I bring to them as insurance program so the ESOP Association this is back this is like more like 1989. [6:29] The association then endorse the program and it started out as a fiduciary only type of offering, but then after about five years we merge it with dno insurance directors and officers liability insurance and about the same time. Employment Practices liability was another line of insurance that was coming about. [6:56] In the mid-1990s and and that insurance is to cover claims against the ESOP company against any company alleging wrongful termination and discrimination that type of thing. So we were merging all three of these coverages into one package policy. The only thing with AIG was that about the same time they wanted to put on a seesaw fluctuation exclusion which basically would exclude any claim that was brought. Because of the stock value fluctuated and I you know I couldn't live with that so. We went out to some insurance companies to see if they do the same thing with someone else and lo and behold. We were able to convince Great American Insurance company to underwrite the program and. [7:49] They were the perfect fit in my opinion they like these shops they gave us an exclusive so that any insurance broker that winter Great American with. With a with a submission from a member of the ESOP Association would have to come through me to get a quote so that protected me and Great American did a marvelous job in terms of competitive. Price and and Broad coverage and so that went on for several years and you know I would always invite Great American the underwriters. To these esof Association meetings this so they could learn more about Aesop's and be more intelligent about underwriting esops. That underwriting group is headquartered out of Schaumburg Illinois so they were members they wanted to Illinois chapter meetings and Midwest chapter Regional meetings as well. So became a good relationship and they're still involved today we still have the exclusive with the ESOP Association and. [8:53] So the program is now we've got at least 350 companies across the country that we ensure, we have branched out a little bit to other insurance companies as well because some of these ESOP companies they want to buy higher limits of liability. So we will go to another insurance company in that instance too. Attack on another three or five million dollars on what they already by with great American and the big selling part about this program, really fill up is the fact that I work with the local insurance agent or or wholesaler okay so someone out in California for example who doesn't know who Gary insurance is, they can have their broker or Asian contact me and I can include them in the transaction so, the majority of the transactions that were covering today will include, the the local agent or broker and you know Insurance like anything else in business is local so having a local connection really help grow the program yeah I mean people definitely want to keep dealing with the same people they dealt with in their relationships they had. So you're kind of are you like The Godfather of ESOP Insurance because it sounds like you you've word like the Forerunner of going to AIG first and then yeah and then kind of Paving the way with the Great American with the ESOP associated with that's pretty pioneering right. [10:15] Well you know I got the idea back when I was with this manufacturing company this Dental manufacturer and that you know they were having a hard time getting insurance and, and the VP of Finance who are reported to the time said you know why don't you go to the ESOP Association see if they have a program for fiduciary and you know. And I did at the time and they did not so that I kept that thought in my head. A couple years later when I when I did go over to the insurance broker role. [10:45] Well so let me let's kind of bring it to the basic element because I know a lot of people that listen to the podcast, there and they're not ESOP so they're kind of wondering like what is what is this whole thing about when when we think about insurance we just think the the basics that hey we're protecting against some potential risk, what are the risks that were protecting the the ESOP company from or the, do you like what we'd say the fiduciary folks from yeah what should they be concerned about. So the biggest the biggest risk for these stop company is is really the new SRI side is it's the Department of Labor who in the last maybe half a dozen years at least. Has taken a very aggressive approach to. [11:29] Job investigating some painting ESOP companies especially in the first couple three years after they form. And their main concern the deal well is mainly concerned with. How the valuation firm was selected to Value the stock at the time of transaction. They felt that the ol perhaps rights itself felt that if the. [11:53] Owner of the business of selling the business the ISA selected the valuation firm. [12:00] He was a she was going to select someone that they felt. [12:06] Would develop a higher stock value to be beneficial for the selling owner yeah so the lack of a dependence on the on the valuation side. [12:16] Yeah and so what the DOL became more comfortable with his is where when the transaction is being done that the company that was, considering to go you saw. I would hire a outside trustee right with in turn hire the valuation firm so they're more comfortable with that situation but. Like I said the deal well still pretty active in their litigation and that's the biggest risk to an ESOP. I would say the second maybe biggest risk is that particular plan participant themselves we're going to get clean. And that could that would happen Navy in a stock drop case where they felt that this the e-stop wasn't formed in front wizard was it for me. Improperly at the value was way too high for the ESOP goodbye and then in subsequent years. The valuation dropped and that happens sometimes because of the amount of. I guess liability and and. The the kind of banking that you that they do to set up there with the ESOP the transaction itself. [13:34] You know kind of submerges the ESOP company in terms of debt and I think that's the initial debt that, that the stock maybe valuation would would drop subsequent years that kind of tips off the DOL tips off the plan for disciplines. As you can imagine there's a plaintiff attorneys that go after this type of thing sure yeah it's an active area that they get to practice it, I think that for a couple things on the on the risk side I know that. [14:02] You know and I've seen this in our transactions that I haven't done but I've seen it where there's a lot of motivation in some transactions to just get the highest value. The deal L like you've mentioned the Department of Labor issued that process agreement I think it was in 2014. But I don't believe it's still I mean I still think you're you have the risk of in like an investment banking firm trying to make a lot of money on a deal yeah that convinces their client to submit a. Basically a projection that is unrealistic and that projections going to it's going to equate to a discounted cash flow value, that gets negotiated between the trustee and the valuation firm but at the end of the day if they buy off on it it could put it severe amount of debt on the company so I think it's part of this is to say I think part of it is is how you as a guy ESOP. Or a company that's going to set up an ESOP how you select your advisers and make sure that you're as you're working through the beginning steps you're doing it the right way but the other side of it is is to also understand that they're this kind of risk exists so if we bring it back to the, tear no matter what happens you're still going to have this this sense of risk to it yeah. I still get it's interesting I still get some insurance submissions today. [15:18] Do not involve an outside trustee and that really throws up a red flag yeah that seems crazy to me considering all the all the court cases. So do you have any like I mean all the plans that you guys have done Insurance wise, what would you say percentage-wise to testicle e you guys see our claims that against that type of insurance claims that we see are not as frequent we may see one or two fiduciary Lively type claims, but when you get them. They're going to be expensive so and the thing to keep in mind about this insurance policy is that the limits of liability that you purchase defense cost the cost to defend yourself in these in these claims. Willow Road the limit of liability so unlike automobile liability or general liability insurance for defense costs are paid. Outside of that limit liability. [16:15] This type of insurance the defense costs are inside the limits and that therefore a road the limits so you're you're. [16:25] They can be very costly the more frequent type of planes Believe It or Not aren't necessarily because they're an ESOP but because they have employees and that's the Employment Practices liability risk Okay so. That's that's the kind of claim that any company you saw or not can get involved in where an employee feels that they were wrongfully discharged or discriminated against. And and so we see more of those kinds of claims they can be expensive but generally. If it's involving the the average employee with the with a sort of average salary. It could be maybe a hundred couple hundred thousand dollars include defense costs that are paid but you're seeing more of them as being frequent the other aspect that we haven't talked about is directors and officers liability insurance. So the DNR Insurance dovetails very nicely with the fiduciary liability because I have seen claims where they've sued the fiduciary and then they they've also brought in and directors and officers, so the directors and officers of the corporation who may not be acting as an internal fiduciary internal trustee. [17:35] To be brought in and that would be covered under the dno portion of the policy, yeah and so you're seeing the majority of plans for insurance or Insurance programs include the three merge together like you guys have yes, bundled those together and that's right yeah do you and the limits on that are generally what do you seeing like. [17:57] Is like far as the coverage limits. So generally a new it depends on the size of the transaction and the limits of liability that are that are. Available start at about a million dollars and you can buy those limits shared or separate so if you buy those three coverages. That million dollars can be separate a million dollars for dno million from fiduciary million for E PL or they could be shared by the three coverages it's less expensive that they share, that limit but newer transactions you know we're seeing at least three to five million dollars of limit being requested you know we do a article about every once every three or four years. Because we get asked this question a lot we did an article on the limits of liability that you saw companies are buying today and we just basically. [18:51] Look at the data that we have in our own program and no 300 or so ESOP companies, is enough data to come up with an opinion and we do the comparison based on plan asset size corporate asset size and stubborn, and number of employees and that kind of gives he stopped companies and ideas to what limits may be appropriate for them so finally in our transaction they mailing need and million dollar limit, but if it's it's a much brighter, transaction that maybe 20 25 Millions even a hundred million dollar transaction they're looking at least you know 5 million or so yeah but it's also based on really what they can afford. As the overall cost is a big factor as to what limits they do they do in fact purchase, yeah I mean some of this I mean it comes back to again planning because I mean when we do a forecast. [19:45] We have to plan some of the we have to plan the ESOP compliance costs so we have to kind of think forward a little bit and say well yeah based on the transaction size we think that you're going to need a million dollar policy and right now that costs X, you know and build that in so I think that that you know because cash flow for especially for the next couple of years is key, because you've had all this acquisition debt and so right the bank wants to get their money back the sellers want to get moving on their payments and so, that's that's not like that's frequently what I hear from these new transactions is that they didn't have a really good strong ideas that the amount of fees are involved in doing a transaction but yeah the million-dollar, the million-dollar policy for this coverage generally starts at less than a thousand dollars. So it kind of gives you an idea as to what the costs are yeah that's that's kind of my experience. Most of it we negotiate with the trustee so that the trustee kind of says hey this is what I want you to have right and so part of that is to get a sense for, early on again what you think that's going to that's going to look like but I but I appreciate like you breaking it down into sizes because I certainly a hundred million dollar deal versus, five million dollar Baylor are not the same risk profiles at all well we just got a submission in a week ago with a 250 million dollar risk transaction. [21:09] And yet they were having a hard time getting Insurance because of some prior litigation. But they're just happy to get a million dollars at this point but it's something to build on. [21:21] That's another part right yeah so if you have other lawsuits or whatever going on right it's not like you're going to be able to ensure everybody yeah you're not a very good risks to, as seen by other Insurance Underwriters right yeah and I think that's a point I want to make like and I'm kind of making the point of planning it early as, better than later so you probably, like I had mentioned the very beginning nobody's really thinking about insurance the very beginning of talking about Aesop's we think about taxes we think about cash flow the, right when I what the warrants might look like but it may make sense for your company if they're if they have had some issues prior to this with employee lawsuits or whatever take, to get a quote prior to it or just get an idea if you can even get insurance placed because if it's a requirement of the ESOP deal then you're kind of in well part rock and a hard place, we also tend to get the submissions or the interest of my insurance, right at the last minute it is the last minute thought of getting Insurance it is and it's much better if you can go earlier the East the under the insurance company they want to put on an ESOP exclusion until, ESOP is informed and then they'll take off the exclusion once the once they've seen the valuation okay yeah and then everything gets official at that point. [22:39] Yeah right is there is there a problem where you have a brand-new ESOP that, we get it we agree to get insurance but we don't really get the insurance placed for six months and now we have this six-month we have an ESOP that six months old has zero insurance. [22:54] You know and then right and then you're like a put it on afterwards or whatever it is there an issue with that or is that well no not really I mean the issue more lies with the ESOP company in the outside trustee you know they'll help. But they typically the outside trustee will, will have it on their checklist to get the insurance but we have seen where it's been six months a year post transaction that they're getting insurance for the for the first time. And that's fine that's fine but it what key what is key to the insurance company, Underwriters is going to be the applications of course we developed our own estopped questionnaire and this is something that I'm going back to my to the AIG days they were very, I think I think I only want insurance company back then the Aetna was doing a specific Isa. Questionnaire a one-page thing and. [23:50] So I took that to AIG and they were happy to see that made them feel better about he stops and we're still using it today and it's a questionnaire, if it goes through you know the how live Lynn of the transaction. [24:06] Do they have an outside trustee who is that who's doing the evaluation plan Administration. Jack is a lot more information to the underwriter than the normal standard dno fiduciary application and the valuation is going to be key and so what happens is that you know we can't get the valuation, the initial transaction until after the transaction and they want the coverage bound at the data transaction so what we've worked out with the insurance company is that. Well hold the effective date being the date of transaction. But it could be a couple weeks later until the they get the valuation and the insurance company signs off on it and says it looks good. That we could then get a binder but at least a transaction date is still you know the initial. Defected days initial transaction day so it's just that they have to be a little patient to get waited waited a couple weeks before they can get the coverage. Well and I think when you get the valuation you have to get it from the trustee with an NDA because we nobody can get that valuation except for you guys and maybe a bank and but it has to have an NDA attached to it and me as a broker I don't need to see it get so I just have the insurance company signed the NDA, and send that back to the outside trustee I don't need to see the. Now for sure on the beneficiary side so let's just say you had a claim what I'm what I'm. [25:32] Used to understanding it benefits the trustee primarily, if there's if there's an issue with now we bump now we've got a bundle we've got a DNA we've got the employee practice limit like liability insurance plus the right fiduciary, how does that work with you know say it was a million-dollar policy and obviously the trustee is going to benefit first but then you have other people being sued. [25:55] Yeah so the the fiduciary coverage, fiduciary portion of policy will cover the ESOP itself the plan sponsor and the individual internal trustees are fiduciaries basically it covers the Arisa definition of who a fiduciary is. So that's you know so the insurance policy doesn't have its own definition as to who a fiduciary is per se but it will also cover the employee and they have this what we call them. It says on the policy definition of Ensure person will include. A natural person and that natural person really. [26:37] Can include the outside trustee so if you have an individual servings outside trustee he or she would be covered on this policy. They this policy and however would not cover an Institutional trustee so they still have to rely on. Their own coverage institutional trustee does but so why doesn't it say why doesn't it cover an Institutional trustee. [27:03] It's the it's the Feeling by the insurance companies that they don't want to cover. [27:09] Institutional trustee because a they are more prone maybe to litigation and be. They don't the insurance company feels they may be liable to pick up other transactions the. Institutional trustee may be working on which I don't agree with but at this point in juncture. Right now we're kind of happy just to get the outside trustee covered if the if that's the desire of the ESOP companies I mean these stock companies the named insured it's really up to them if they want to have the policy extended to the outside trustee, most cases they do yeah but they got to realize that they're sharing their policy limits with an outside trustee. And they in turn should be looking at the outside trustee to see what kind of insurance they have well yeah for sure well it with an image with an individual trustee. They already have insurance to so this other part is just part of like each transaction or each ESOP client they have how do they go, like they would if they get through that first level of insurance with the company's Insurance then they need to go to there's second after that is that how it works yeah prominent both the outside trustee and the ESOP company are named in litigation. There is what they call the other insurance clause in a. [28:29] Insurance policy so each policy would have that trustees policy would have that other insurance clause and so at the plan sponsor and basically what happens is, they do a pro-rata okay so limits the car covered so it could be 50/50 could be thirty seventy something like that. [28:47] As far as what's paid yep that's good yeah because otherwise well I'm just assuming this is Works however I'll insurance work so if they get a claim. Their insurance is going to go up premium wise right after that right right yeah more than likely but I will say Great American been pretty fair with the increase after a claims and file okay, don't try and get back all the money one time so you know if you're willing to work with the insurance company it's not going to be that difficult. It's going to be hard to move insurance after they had to claim to a lot of insurance companies want to underwrite the account if there's been other litigation, yeah yeah jumping into a bat potentially a bad situation it could have been just completely Innocent but you never know I guess with with that kind of stuff. So right so the trends what are the trends are like I know that costs have been going up for trustees Insurance yeah and we you know can Intuit that, there's a lot of high it might be heavy claims going on in the industry what are you seeing on the trend side. [29:54] So for the plan sponsor buying if you stop coming by nice coverage. Back before covid the rates are going up you know five percent maybe at a clip when covid hit insurance companies decided not to underwrite not to cover certain. [30:14] Industries like the hotel industry the restaurant industry any industry associated with travel they were not going to underwrite. And writing became more involved there was a separate covid questionnaire. So rates are going to be going up 10 to 15 percent plus a lot more underwriting going on. [30:38] Now that will kind of through the covid situation. Rates are coming back down so we're seeing anywhere zero to five percent in the way of increases there's more. Availability today will spur seeing more insurance companies underwriting Aesop's which is a plus it's become more of a, it's become more of a buyer's market than it ever has been and for buying the insurance. But not to say you know you can still have difficulty. Getting insurance if the financials aren't a strong vision for some prior litigation. You know you can still have run into some difficulty the outside trustees that's another that's a whole other. [31:24] Situation where they're having a lot more difficulty getting Insurance the outside trustee and and there's been some movement, with looking at alternatives for outside trustee such as captives or a risk retention group. And it's all a matter as to whether or not. [31:44] This massive outside trustees is large enough to do a captive or a risk retention room but. They're still going to through some difficulties getting coverage do you have any idea this is a hard question it how many trustees there are in the United States like something I always wonder. [32:02] Yeah, without not including the institutional trustee I always say it's a fair bet that there's less than 100 yeah that's right trustees I mean that's a huge I mean if people actually stop and think about that I mean and this is why, when I do ESOP transactions I do obviously when I'm working a lot of the same people you know each transaction I do an interview process so we're not picking the same one every time but but less than 100 you know and I think that the issue would be, that I just see you know I think it's obvious is. Costco up you know and there's a couple things I think happened with trustees it's like they get their plateful I mean at some point how many companies can you handle and now if you're going to be the ongoing SD and so you get some of them are that are individuals that are not building a you know like a deep bench you know with another person. Or whatever trustee then they're going to max out so you're going to have those guys be done with transactions at some point, and then the other side of it is continually the ink the cost increases for insurance make it you know more difficult for them to so. You know that's and that's a problem for our industry if we don't have enough trustee it is it's a catch-22 right yeah the deal once the outside trustee involved but on the other hand. [33:19] They're making it difficult for them to get insurance by what they're doing litigation side, yeah so so right now the trends for the outside trustees they're still you're still seeing increases on their insurance, yeah and difficulty getting good terms you know there may be exclusion or sometimes they're putting a supplement of maybe only a hundred thousand dollars of coverage for, for litigation involving a government agency I either the ol so it's it's become more difficult and its problems, for sure yeah for sure so so the reason why when covid made sense for the other the companies but for the outside trustees what is the just because there's a larger lawsuits is that why they're because they're being brought into lawsuit yeah okay, so they see that they're the dlls bringing them in and so these insurance company Underwriters. [34:13] They have an idea what's going on up there with these shops in the DOL so it's publicized the reading about it and. And so that's that's kind of the issue yeah I mean it wasn't like that. 15 20 years ago we would cover the outside trustee as sort of a professional courtesy to the trustee. And we're using Great American but all of a sudden the storm happened and there was all this litigation it's very American said you know what, we need to back off the outside trustee so then we went to the what we call the excess and surplus lines Marketplace so that's, these are insurance companies that right that they don't have to file their rates for their form with the individual State Insurance departments and. [35:04] So they're they're more apt to see it difficult or write a difficult risk than a standard admitted insurance company yep yes - that's pretty interesting. So yeah I mean and so as we go through the next phase of things obviously it's something to continue to watch hopefully the trustees, you know manage it I kind of always as I look at the issues. You know what the the main thing that we talked about the very beginning was why are they getting sued well it's because the valuations are too high. Bright for the most part you could have a plan you could have a participant that was you know frustrated about something that wasn't real so that can happen as well. [35:47] Yeah yeah but it's you know we've seen claims that trigger both the dno and the fiduciary part of the policy I had one that triggered the EPL all the same. Litigation so you know it was, you don't normally see that happen but it can happen and it happened because the CEO was was let go and he filed they need PL type claim. [36:18] And so we had all three coverages triggered with that one with that one claim. [36:25] You ever see him go after the other advisors at all like the like I said the sell-side advisor or the. ESOP attorney or anybody else know. [36:38] Because I guess from a fiduciary standpoint you know they're focusing on the breach of erisa fiduciary liability which of Orissa so, they're not focus on the other professionals that get involved with the transaction. Even the business valuation folks you know there was a time that Arisa was looking at. Naming them as plan fiduciaries but that has gone away fortunately but I don't even see the valuation folks brought in a lot of times. Yeah just makes it makes you wonder you know because there's a lot going on in this whole transaction you know and I, I would imagine that the trustees coming in one thing that people ask me and I'm sure they ask you this question is, you know because if they form these up should I be you know should they be the trustee or should they build a trustee committee and and yeah it's surprising how many companies I do meet that they have internal trustees, yeah but this is clearly one of the issues so I don't know if you've seen that in a lot of your clients that they're just taken on that role. Yeah I mean. [37:48] Generally it's going to be the CFO maybe HR person the more the more I guess. Did you have some easy stuff companies that they get it and and so they want to involve the employees and the various roles they form an ESOP committee, I have one piece of company that they have a committee of seven people hmm these are people that offer the production line that serve as a sub trustees, that when it comes to reading the financial statements or reading the valuation and they can sense the valuation, there is the CFO on the committee or some of the financial background but it's. You know it's I see that as a positive thing where they bring in the employees to understand that you saw their 100% And they get it you know they act like a employee-owned company should, yeah do you see that normally when they're out of debt or is it you see that us also during the debt phase. Not really sure it's I don't know if that you sucked that has much. [38:57] Thus to say as far as whether they would or would not bring in these other employees as trustees but. [39:06] Still there are still a lot of ESOP companies out there that they've done transaction and not going to do another one and they don't have an outside trusty any longer, the company I work for today Murray hmm we were we were an ESOP company an ESOP Insurance Agency, and I was asked by our senior leadership should we have outside trustee and I. I said unless we're going to go through a transaction become a hundred percent I would say probably don't need to have an outside trustee but that's the situation was different for us, because of my background and just we were about 55 percent employee-owned before before we. [39:51] You sold out to a larger company right yeah and I think that's a case-by-case thing to and is why I hate to say well never do it or don't do it because people people want to just compartmentalize and make it into a. You know well you should never do that at all and and I'm making that point just because I think it's it's very relevant to insurance and fiduciary risk and. The idea behind all of that I think it's really the owner of the ceiling over that's going to be behind it as far as doing the sub transaction if they really feel that they want to, leave a legacy and have the employees and management that's they're taking ownership, they feel strongly about that they're going to do it regardless of the cost yeah for sure well it's great well I know we covered a lot of ground we're pretty much almost out of time anything anything last minute you wanted to kind of mention just, for people to be thinking about when it comes to insurance and what we've covered so far no we, no Phillip I guess the other two policies are coverages that this should be considered and nowadays is cyber Insurance the only machine that's the point yeah that's another, that's another type of insurance today that's going through a very difficult time, and so a lot of insurance companies that they offer cyber insurance they want to see the. [41:12] They want to have a ransom questionnaire filled out they want to make sure that the company's doing it nfa's and doing everything properly they're good they're underwriting the Cyber risk more so today, they were 10 years ago in this coverage became available so that's something that they need to consider crime coverage crime insurance is important. [41:33] But you know, I think with the DNA on the fiduciary coverage you know it is a it is a different looking insurance coverage its claims made its not occurrence defense costs are within the limits of liability, and if there's a change of ownership. [41:51] Then you'll want to purchase what they call runoff or Discovery to cover the the outgoing fiduciaries and board of directors of the company and soul. Yeah so now that's great that's very helpful I was I was thinking about that too like because that's come up a lot the Cyber coverage and I'm not sure what his crime insurance just real quick I'm not sure what that is it's really it's really important dishonesty coverage okay and so you can get other you can broaden that employee dishonesty covers through include things like forgery, fraud and transfer fraud yeah the other thing that they have is social media coverage so it's where someone inadvertently transferred money to what they think is a legitimate mmm and that kind of covered is on the crime policy okay you see it sometimes in the Cyber but you also but more so in this crime coverage talk about hard to underwrite I don't even know where you start you know history lies I guess but, well yeah you know that's I think insurance is such a huge topic honestly if there's so many things to get into but, um I think we did a good job of covering yeah you know the main stuff for ESOP so that's good questions Philip now I certainly appreciate your time today Jeff and all that you're doing and, you know so if you have any questions how people how should people get a hold of you if they wanted to contact you and ask you more questions my emails probably the best so it's my email address is Jeff je FF dot Gilbert GTL. [43:20] I'm sorry that I'm giving my personal email address don't do that my personal and my business email addresses J Gilbert so it's JG e lb urd, Murray mu are a lie, ins the first three letters of cool or telephone is would be 7176 2024, 76 cool but appreciate the opportunity Phillip yet thank you ITT I was great I think you're just a great wealth of information so appreciate it thank you, so with all that I wanted to say thanks so much for joining today and we'll see you guys on this next step on this journey to an ESOP.

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