A highly anticipated ruling from Delaware’s high court that units of American International Group Inc. and Chubb Ltd. may be on the hook for a settlement in post-M&A litigation won’t put an end to disputes over a controversial directors and officers insurance provision.

The heavily litigated “bump up” exclusion often shields insurers from having to cover costly settlements or judgments that effectively boost the transaction price of a corporate policyholder’s M&A deal.

...

Carriers have often reflexively asserted the bump-up exclusion in response to merger-related claims, said Ray Mascia, a policyholder-side lawyer at Anderson Kill PC.

“This decision is important because it highlights that the bump-up exclusion is not a total exclusion,” he
said.

Future fights over the exclusion will likely depend on the facts of each case—for example, the terms of the underlying settlement agreement—and the insurance policy language at issue.

...

To read this full article, click here (subscription required.)