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Willis advises in D&O disputes on exclusion of "bump-up"



A federal district court ruled in favor of Willis Towers Watson PLC on Tuesday in board and civil litigation it brought against insurers, including an American International Group Inc. unit seeking coverage for two deals reached in Willis and Towers Watson – the merger. [19659002] The key issue in the decision of the U.S. District Court in Alexandria, Virginia, Towers Watson & Co. n / k / a / WTW Delaware Holdings LLC v. National Union Fire Insurance Co. in Pittsburgh, PA, et al . applied to the so-called “bump-up” exclusion in the coverage.

Bump-up exclusions, which are common in D&O policies, exclude judgments or settlements that effectively increase the price of an acquisition. They are designed to handle situations in which there is a concern the acquirers have deliberately agreed to pay too low a price with the idea that their insurers will pay later in response to subsequent shareholder disputes. was later filed in response in Virginia and Delaware. The suits were eventually satisfied with a total of 90 million dollars, according to the lawsuit.

Towers Watson had purchased $ 80 million in insurance coverage for the period January 201

5 to January 2016, which consisted of a primary policy insured by the AIG National Union and six layers of excess coverage coverage from other insurers, according to the ruling.

The insurance companies refused to finance the settlement based on the exclusion of the shock, and Willis applied, requesting a declaration that the settlements were within its scope.

"Disposable coverage issue" is whether the bump-up exclusion "unequivocally applies to the settlements", the judgment said, concluding that it does not.

Willis "has in fact never" acquired "any of the shares in the former Towers Watson shareholders," the ruling said. Instead, the two companies removed their outstanding listed shares and Towers Watson shareholders received a certificate entitling them to newly issued Willis shares, the ruling said. The Bump-Up Exclusion and is therefore reasonably seen as something other than the "acquisition" reference in the Bump-Up Exclusion, "the judgment said.

" In summary, the question is not whether Bump-Up Exclusion can be reasonably understood to include the business combination between Towers Watson and Willis, but if that's the only reasonable reading, the verdict says. , “There is a reasonable, narrow reading of the Bump-Up exclusion that excludes the merger; and according to Virgin's applicable principles for the interpretation of insurance contracts, the narrow construction prevails as the construction which provides wider coverage, ”it stated that Willis is entitled to coverage for the settlements.

Lawyers did not respond to requests for comment. [19659002]


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