AIG, Chubb Loss in Delaware Portends More Fights Over M&A Clause

A Delaware state court ruling on a controversial insurance clause limiting payouts for post-merger shareholder settlements marked a win for corporate policyholders, but more definitive court guidance will likely be needed to resolve a pileup of high-stakes cases.

The “bump-up” exclusion has become a sticking point as directors and officers insurers seek to deny coverage for settlements, in acquisition-related cases brought by shareholders seeking damages, that could be characterized as an increase in the purchase price for the target company.

Such claims are a fundamental part of what D&O policies are intended to cover, policyholder attorneys said.

A Delaware Superior ...