Anderson Kill successfully represented Terminix in a major insurance coverage litigation win against Swiss Re.  The U.S. Court of Appeals for the Ninth Circuit unanimously affirmed the U.S. District Court for the Central District of California’s ruling that Swiss Re must indemnify Terminix for Swiss Re’s share of an $8 million judgment in an underlying pesticide exposure lawsuit.  See Swiss Re Corp. Sols. Am. Ins. Corp. v. TMX Holdco, LLC, No. 24-5479, 2026 WL 594878 (9th Cir. Mar. 3, 2026).

The case is an example of the common, but entirely improper, practice of post-loss underwriting – where an insurance company asks a court to rewrite its insurance policy after a claim to exclude the coverage sold despite understanding the risk insured.  The courts agreed with Anderson Kill and rejected Swiss Re’s attempt to avoid its coverage obligations.

In the underlying lawsuit, the claimant alleged that he was injured by a pesticide that Terminix applied at a Los Angeles Starbucks through the wall of an adjoining beauty supply store where the claimant was located but Terminix was not treating.  The jury awarded an $8 million judgment.

Swiss Re denied coverage and sued Terminix for a declaration of no coverage.  At issue in the coverage litigation was the “Products-Completed Operations Hazard” coverage of Terminix’s commercial general liability insurance policy.  Swiss Re broadly defined the Products-Completed Operations Hazard as “all bodily injury … occurring away from premises you own or rent … and arising out of your product.”  With full knowledge of Terminix’s business as an extermination company, Swiss Re broadly defined the “product” prong as: “Any goods or products … manufactured, sold, handled, distributed or disposed of by” Terminix.

Asking the courts to rewrite its policy language, Swiss Re argued that the Products-Completed Operations Hazard applied only to claims “premised upon a product defect” – though no part of Swiss Re’s policy said that.  Swiss Re also argued that the alleged injurious pesticide was not Terminix’s “product” because Terminix did not manufacture or sell it, while disregarding that Swiss Re drafted the policy’s definition of “product” to include “any goods or products … handled” by Terminix and then sold that coverage to an extermination company.

Applying Swiss Re’s policy language, the Ninth Circuit sided with Anderson Kill, finding that the alleged pesticide was Terminix’s “product,” as defined by the policy, since the Terminix technician “handled” it when it was applied at the Starbucks.  The Ninth Circuit held that the District Court “correctly gave the term its plain meaning and determined that Terminix’s technician ‘handled’ the pesticide as he applied it.”  Swiss Re Corp. Sols., 2026 WL 594878, at *1.

The Ninth Circuit also rejected Swiss Re’s argument that the “physical possession” exception to the Products-Completed Operations Hazard precluded coverage.  Swiss Re argued that the “physical possession” exception applied because, at some point, Terminix physically possessed the alleged injurious pesticide – even though Swiss Re narrowly drafted the “physical possession” exception to apply only to injuries “arising out of … Products that are still in your physical possession.”

Once again applying Swiss Re’s policy language, the Ninth Circuit affirmed the District Court’s holding that the “physical possession exception did not apply because Terminix could not have ‘physically possessed’ the airborne pesticide particles after they migrated to the other side of a wall, in an area inaccessible to it.”  Id.

Finally, the Ninth Circuit also affirmed the District Court’s application of judicial estoppel, preventing Swiss Re from amending its complaint to assert an inconsistent position in response to losing summary judgment.

Ray Mascia argued the appeal on behalf of Terminix, as part of the Anderson Kill team also consisting of Bill Passannante and Regan Samson.

“This decision reinforces a fundamental principle of insurance law:  Insurance companies are not permitted to engage in post-loss underwriting,” said Mascia.  “Swiss Re asked the courts to rewrite the ‘product’ coverage to include exclusionary language limiting the coverage to products liability claims and to read out the words ‘still’ and ‘physical’ from the ‘physical possession’ exception and interpret it broadly, all in violation of insurance law.  Both courts understood Swiss Re’s game and correctly refused to become post hoc policy drafters.  By affirming the District Court, the Ninth Circuit preserved Terminix’s right to the coverage it purchased for precisely this risk.”