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The AIG unit must pay the security company's defense costs according to the D&O policy



An American International Group Inc. unit is required to pay defense costs under its board and officer liability insurance to executives of a U.S. security company whose Dutch mother was sold and subsequently sued, a New York federal court said. [19659002] AIG Unit National Union Fire Insurance Co. in Pittsburgh, Pa., provided D&O coverage to executives of McLean, Virginia-based Aegis Defense Services LLC, following Friday's decision by U.S. District Court Timothy Simon Spicer et al. . v. National Union Fire Insurance Co., Pittsburgh, PA

Coverage did not include Aegis's parent company, Hoofddorp, Netherlands-based Hestia BV The plaintiffs, who were executives of Aegis US, were also Hestia

The plaintiffs were involved in Hestia's sale in 201

5 to London-based GardaWorld Consulting (UK) Ltd. They sought defense cost recovery from AIG when GardaWorld sued them for alleged incorrect information in connection with the sale.

National Union refused to provide the coverage on the grounds that the plaintiffs had acted in their capacity as Hestia shareholders in their negotiations to sell that company rather than as Aegi's executives.

The insurer also claimed that "at least" the complainants had acted in duplicate, triggering a policy provision that excludes losses as a result of acts they have taken in any role other than as executives of Aegis U.S.

The court agreed with the policyholders. It stated that from the outset, the claims against the plaintiffs revealed "focus on the acquisition of the business that Aegis US conducts through a purchase of Hestia's shares."

The allegations "describe incorrect claims by the plaintiffs regarding the financial

They" do not expressly limit the liability of the plaintiffs to act in their roles as managers or shareholders in Hestia, "it stated when holding AIG has a contractual obligation to defend them

Kenneth Frenchman, chief partner at Cohen Ziffer Frenchman & McKenna LLP in New York, who represented policyholders, said in a statement, "Judge Woods' recognition of the broad obligation to defend board members and officials will hopefully encourage insurers to increase and defend this type of claim in the future instead of forcing policyholders to sue. ”

AIG's lawyers did not respond to a request for t.

A Delaware court ruled last month that National Union and Axa SA units were not liable to damage a solar energy company in D&O disputes during their claim.


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