Innovation Insurance Group

  • Home
  • About
    • Company Profile
      • Annual Reports
        • 2014 Annual Report
        • 2013 Annual Report
    • Ty R. Sagalow
    • Lisa Vivori
  • Our Services
    • Expert Witness
    • InsurTech
    • Product Development
      • Product Development Case Studies
    • Directors and Officers Insurance
    • Cyber Risk Insurance
    • Bitcoin Insurance Agency
      • BitCoin 101
      • Bitcoins FAQ
      • Bitcoin Video Series
      • Publications and Interviews
  • News
    • Speaking Engagements
    • IIG in the News
    • Bitcoin Industry News
    • Events
    • World Risk and Insurance News
      • Web Series Hosted
        by Ty Sagalow
        • What’s New in Insurance?
        • Innovations in Insurance
      • Interviews of
        Ty Sagalow
    • Gallery
  • Leadership
    • Publications and Interviews
      • Innovation and Product Development
      • D&O Insurance
      • Cyber Risk Insurance
      • Reputation Risk
      • Bitcoin
    • Innovation
    • Emerging Risks
      • InsurTech
      • Reputation Risk
      • Crowdfunding
      • Bitcoin Risk
      • Cyber Risk
    • Thoughts from Industry Leaders
  • Clients
    • Clients
    • Testimonials
    • Partners
      • Advisen, Ltd.
      • Hanover Stone Partners, LLC
      • CLM Advisors
  • Lemonade Book
    • Book Store – Buy the Book
    • Book Overiew
    • Interviews with the Author
    • Book Signing Gallagy
  • Contact Us
You are here: Home / Northrop Grumman Innovation Systems v. Zurich American Insurance et al

Northrop Grumman Innovation Systems v. Zurich American Insurance et al

Law360 (February 2, 2021, 10:59 PM EST) — A Delaware judge on Tuesday bolstered Northrop Grumman Innovation Systems Inc.’s bid to tap into directors and officers insurance to cover its costs in a proposed class action accusing its predecessor of misleading investors about its financial health, rejecting insurers’ efforts to invoke a pair of policy exclusions.

Bump-Up Exclusion

Holding for the policyholder, the Delaware Superior court in a major ruling held that AIG’s 22 year old standard bump-up exclusion did not have the breadth argued by the carrier.  Among the court’s rulings were that the bump-up provision found in the definition of Loss was to be treated as an exclusion even though it was not found in the exclusion section of the policy, AIG’s particular exclusion only applies to acquisitions and not to mergers (even if the merger transaction corporately “involved” acquisitions) and that the exclusion did not apply to the particular case as a “bump-down” claim (as opposed to a “bump-up” claim), a phrase first discussed by policyholder Ty Sagalow in his expert report. 

Mr. Sagalow also argued that the underwriting intent and particular language of the AIG provision did not apply to merger transactions in contrast with other bump-up exclusions in the market, including those he wrote for other carriers, and generally he believed that the exclusion, which he wrote for AIG 22 yrs earlier, should be “retired” by AIG as being now hopelessly vague and ambiguous.  

Mr. Sagalow was also the policyholder expert witness in the Tower Watson case in which the court also held in favor of the policyholder in respect to the same AIG bump-up provision.  That case is discussed here.

 

Prior Acts Exclusion

The Court also found against the carriers on the prior acts exclusion  saying that, for the prior acts exclusion to apply, the alleged wrongful acts predating the policy period must have been taken by either Orbital ATK or its management. The Section 14(a) claim, however, concerned purported wrongdoing by “Alliant and Orbital Sciences personnel in their capacities as directors and executives of those firms,” he said.

Furthermore, the judge found, the prior acts exclusion does not apply in this situation because Delaware law requires that a claim falling within the D&O policy period be “fundamentally identical” to the related claim predating the policy period. But here, he said, while the Section 10(b) and Section 14(a) claims against Orbital ATK overlap somewhat, they are not sufficiently similar to meet this standard.

Mr. Sagalow, the policyholder’s expert, had argued these points in his expert report and his deposition from a point of view of insurance industry custom and practice.

 

Complaint

 

Share

Expert Witness

Ty Sagalow head shotTy Sagalow's unique background in legal, underwriting, policy drafting and claims – and his designation as a “qualified insurance expert” by the United States District Court for the Southern District of California – offers attorneys an unparalleled resource in D&O, E&O and Cyber insurance coverage disputes. He was also named "Most Helpful Expert" in a recent $8.7M coverage decision.

Mr. Sagalow served as Chief Underwriting Officer and General Counsel for AIG Executive Liability (formerly National Union Fire Insurance Company of Pittsburgh, PA), the world’s largest carrier of Directors and Officers Liability and Professional Liability Insurance. As General Counsel, Mr. Sagalow personally wrote or led teams that wrote all the D&O policies and many of the professional liability policies that AIG produced between 1988 and 2000 – policies which continue to serve as the foundational wording for the D&O and professional liability policies in the market today. As AIG Executive Liability’s Chief Underwriting Officer, Mr. Sagalow was charged with all underwriting interpretations and decisions for AIG D&O/E&O policies. In 2009, Mr. Sagalow headed up the team that rewrote all D&O policies for Zurich North America.

Ty is a cum laude graduate of Georgetown University Law Center and holds a LLM from New York University School of Law.

Company Profile

Innovation Insurance Group is an insurance consulting firm and insurance brokerage founded by 30-year insurance executive, Ty R. Sagalow, former Chief Underwriting Officer, General Counsel and Chief Innovation Officer at AIG, and former Chief Innovation Officer at Zurich, NA and Tower Group. IIG focuses on three core practice groups: product development, expert witness services (primarily in the Management and Professional Liability areas), and bitcoin industry brokerage services.

Learn more about Ty R. Sagalow
Learn more about Innovation Insurance Group
Learn more about InsurTech Consulting
Learn more about Bitcoin Insurance Agency

Innovation Insurance Group, LLC BBB Business Review

Featured Topics

  • InsurTech
  • Innovation and Product Development
  • Directors & Officers Liability Insurance
  • Cyber Risk Insurance
  • Reputation Risk
  • Bitcoin Risk and Insurance
  • Emerging Risks
  • Interviews of Ty Sagalow
  • Gallery
  • Testimonials
  • Speaking Engagements

Featured Video Series

  • "What’s New in Insurance with Ty Sagalow"
  • "Innovations in Insurance hosted by
    Ty Sagalow"

Recent Speaking Events

  • CIIA Conference: Innovation, Culture and Technology
    May 13, 2021, Chili (Virtual)
  • Latin American Conference New Perspectives and Innovations for the Future of Insurance
    Nov 4, 2019, Mendoza, Argentina
  • Reactions North America Re/Insurance Conference
    Sept 26, 2019, New York
  • Global InsuTech Conference
    June 18, 2019, New York
  • InsideTech
    June 13, 2019, New York
  • Latin America Reactions Conference, InsurTech
    May 23 2019, Miami
  • AIMU/MICA Marine Insurance - A Global Perspective: The Future of Insurance
    June 21, 2018, New York
  • 12th Property Innovation Summit: InsureTech and the Lemonade Way of Claims
    May 2, 2018, St. Petersburg, FL
  • Italy Insurance Forum
    April 11, 2018, Milan, Italy
  • FST: The Future of Insurance
    March 6, 2018, Sydney, Australia
  • Artificial Intelligence Conference
    January 29 - 30 - Miami Beach
  • Kennedys leadership summit: What Law Firms Can Learn from InsurTech
    January 20, London
  • All Speaking Engagements
    • 2016 Insurance Consultants Award
      2016 Insurance Consultants Award
    • 2017 Insurance Consultants Award
      2017 Insurance Consultants Award
    • 2017 Insurance Expert Witness of the Year
      2017 Insurance Expert Witness of the Year
    • AI 2017 InsurTech Consultant of the Year Award
      2017 InsurTech Consultant of the Year Award - AI International
    • 2018 Best Advisor Award – M&A Today
      2018 Best Advisor of the Year - M&A Today
    • 2018 Best Consulting Firm – Lawyers International
      2018 Best Consulting Firm - Lawyers International
    • 2018 Best Advisor of the Year - Corporate USA Today
      2018 Best Advisor of the Year - Corporate USA Today
    • 2018 Insuretech Consultant of the Year - Business Excellence
      2018 Insuretech Consultant of the Year - Business Excellence
    • 2019 50th Fasting Growing Company
      2019 50th Fasting Growing Company

    Copyright © 2023 Innovation Insurance Group · Offices at Short Hills · 51 John F. Kennedy Parkway, First Floor West · Short Hills, NJ 07078 | Site Map | Log in