Northrop’s 401(k) Settlement Covered by Insurance, 9th Cir. Says

Northrop Grumman Corp. convinced the Ninth Circuit Monday to reverse a court order finding “improper policy erosion” and forcing the defense giant to reimburse one of its insurers in connection with settlements tied to the company’s retirement plans.

Axis Reinsurance Co. can’t make Northrop repay the money Axis contributed toward Northrop’s $16.8 million class settlement with participants in its 401(k) plan, the appeals court ruled.

Axis’s theory of policy erosion lacks legal support and would “introduce a host of inefficiencies into the insurance industry, with no obvious countervailing benefits,” the court said.

The decision resolved an issue of first impression ...