AIG Unit Handed Loss Over Insurance for Executive Fraud Dispute

A Nevada federal court must reconsider its decision siding with an American International Group Inc. unit in a dispute over directors and officers insurance coverage and conflicting state laws.

The US District Court for the District of Nevada erred in its assessment that Nevada state law governed whether the insurer was on the hook to cover defense costs in litigation alleging two holding companies and their directors fraudulently induced others to buy notes backed by an interest in long-term debt repayment, the US Court of Appeals for the Ninth Circuit said in a Monday decision.

The district court granted summary ...