Hunton Andrews Kurth’s insurance coverage team recently published a client alert discussing a D&O coverage dispute arising from a credit union’s post-acquisition fraud claims.

Everest National Insurance Company has filed a lawsuit denying any obligation to cover a post-acquisition lawsuit by a credit union alleging fraud against two banks and their executives. The seller paid additional premium for an extended reporting period to report claims based on pre-acquisition wrongful conduct, but the insurer denied coverage on the ground that any claims asserted by the buyer are excluded under the D&O policy’s “insured vs. insured” exclusion. The decision underscores the importance of not only ensuring continuity of D&O coverage before and after a transaction but also evaluating all possible claim scenarios arising out of a deal to ensure that all stakeholders are adequately protected.


Continue Reading Insurer Denies Coverage for Deal Litigation Despite Bank Purchasing Runoff Coverage for Pre-Acquisition Alleged Wrongful Acts

A case decided last week by the Sixth Circuit illustrates the importance of seeking bankruptcy claim policy amendments when placing D&O coverage. Indian Harbor Ins. Co. v. Zucker (6th Cir. Jun. 20, 2017) involved the application of the insured-vs.-insured exclusion and specifically, whether the policy’s insured-vs.-insured exclusion precluded coverage for a claim brought by a company’s liquidating trust, to which the company’s claims had been assigned by the company as debtor-in-possession after the company filed for bankruptcy. After the company’s claims were assigned to the liquidating trust, the trustee sued several of the company’s former executives for breach of fiduciary duty.
Continue Reading Sixth Circuit Rules That Insured-vs.-Insured Exclusion Bars Coverage for Liquidation Trustee’s Claim

The United States Court of Appeals for the Ninth Circuit recently held in Federal Deposit Insurance Corporation v. BancInsure, Inc., that an action by the FDIC against a failed bank’s former directors and officers was excluded by a D&O policy’s “insured vs. insured” exclusion. Against the backdrop of recent decisions finding similar exclusions to be ambiguous as to FDIC actions, such as St. Paul Mercury Ins. Co. v. Federal Deposit Ins. Corp., No. 14-56830 (9th Cir. Oct. 19, 2016) (previously discussed in this client alert), this decision shows how insurers continue to proactively adjust policy language to fit evolving and new exposures.  Policyholders should be doing the same.

Continue Reading FDIC Action Excluded By Revised Insured vs. Insured Exclusion