A D&O liability policy protects key individuals in a corporate structure.  These individuals are likely targets for shareholder frustration if an entity is underperforming or suffering from other troubles.  In addition, they may be exposed to personal scrutiny from regulators if the corporation is investigated for any wrongdoing.  As previously discussed in this space, an insurance policy can provide more reliable protection for t

Corporate directors and officers may think indemnification provisions are sufficient to protect them from claims asserted against them by shareholders or regulators.  However, if a director or officer chooses to rely solely on indemnification in bylaws or contracts, and ignores the availability of directors & officers (“D&O”) liability insurance, he or she could be making a significant mistake.  In particular, a D&O policy can offer these individuals more reliable protection in times of financial distress.  When corporations are plagued by regulatory or other lega

November 10, 2014, is the deadline for filing proof of claims with the Office of the Special Deputy Receiver in Illinois regarding the estates of Lumbermens Mutual Casualty Company, American Manufacturers Mutual Insurance Company and American Motorists Insurance Company. Those insurance companies are all part of the Lumbermens Mutual Group and were formerly known as Kemper. They entered liquidation on May 10, 2013.

On September 4, 2014, the receivership court for the Reliance Insurance Company (“Reliance’) estate (the “Reliance Estate”) approved a settlement agreement allowing the Liquidator to terminate and commute the obligations between Odyssey and Reliance under the reinsurance agreements.

In July of this year, the State Corporation Commission of the Commonwealth of Virginia issued an Order declaring Southern Title Insurance Company insolvent and ordering its liquidation.

In Snyder v. California Insurance Guarantee Association, the California Court of Appeal, First Appellate District, considered when the three-year statute of limitations for a cause of action against the California Insurance Guarantee Association (CIGA) accrues.  The statute does not begin to run until a “covered claim” matures and is denied.  CIGA’s denial in an answer to a complaint for declaratory relief did not satisfy this requirement.

Why it matters

A Pennsylvania appellate court has affirmed the liquidator’s determination that a group excess insurance policy issued by Reliance is a reinsurance policy and thereby entitled to a low level of priority of payment from the now insolvent Reliance estate. At issue was a claim by the Alabama Insurance Guaranty Association for reimbursement from the estate for a claim it had paid to a general contractors fund.

Fourteen former MF Global executives, including Jon Corzine, the former chairman and chief executive officer, are entitled to access most of a US $200 million directors and officers liability insurance policy purchased by MF Global Holdings prior to the firm filing for bankruptcy in October 2011, under the decision of a US bankruptcy court in NYC last week. The executives had previously made a motion to access the insurance.

A recent pair of opinions from New York and Pennsylvania shows the importance of evaluating all parts of director and officer (D&O) insurance coverage, down to each definition.  These cases, one holding for the insured and one for the insurer, demonstrate that a policy’s terms can be absolutely critical if the insured seeks indemnification for defense costs.