A New York trial court
recently granted summary judgment to a group of excess D&O insurers seeking a declaration that their policies do not cover settlements and consent judgments the defendants paid in connection with underlying securities actions. The decision emphasizes the insured capacity limitation in the D&O policy definition of a “wrongful act” and also reinforces that amounts paid as disgorgement are uninsurable as a matter of New York law.
Continental Casualty Co., Argonaut Insurance Co., Freedom Specialty Insurance Co., and QBE Insurance Co. were part of a tower of D&O coverage issued to AR Capital LLC. AR Capital and other defendants — Bellevue Capital Partners, Nicholas Schorsch, Edward Weil, William Kahane, and Peter Budko — sought coverage from the insurers for their share of amounts paid to settle multiple consolidated securities class actions, a derivative litigation, and an SEC enforcement action.