Insurer group could appeal Commercial Court ruling
A group of insurers led by Ace European Group and Liberty Mutual Insurance Europe are on the hook for a £102m professional indemnity (PI) claim made by Standard Life.
The Commercial Court in London yesterday backed Standard Life and ordered the 11 insurers to pay out on the £102m PI claim.
The insurers and reinsurers include Aspen Insurance UK, Axis Speciality Europe (trading as Axis Speciality London), Catlin Insurance Company UK and Chartis Insurance UK (formerly AIG UK), as well as Timothy Carroll, Philip Foley and John Neal – individuals who are leading various syndicates, The Scotsman reports.
The dispute arose over Standard Life’s Pension Sterling Fund which lost 5% of its value due to its holdings in risky asset-backed securities which tanked after the Lehman Brothers downfall in September 2008.
The fund was meant to be a safe “cash fund” and therefore Standard Life had to pump in £102m to protect its 97,000 policyholders who may not have been aware of the nature of the fund and not expected such a dramatic drop.
Standard Life then attempted to claim the bulk of the money back through a professional indemnity policy which was backed by a group of 11 re-insurers based in London and Barbados.
The FSA later fined Standard and Life for “serious systems and controls failings” that resulted in the production of “misleading marketing material” for the fund.
Lawyers for the insurers said they were considering an appeal.