Tolliday could bag $5.4m in the form of a termination payout
Omega Insurance Holdings is being sued by former chief executive Richard Tolliday, who was sacked last year in a bitter boardroom battle.
Tolliday's lawyers have filed a writ at the High Court, although the full details are yet to be released.
Bermudian-based Omega sacked Tolliday in March last year and replaced him with Richard Pexton, previously chief executive of Heritage Underwriting.
Tolliday, who took home $1.1m (£680,000) in salary and bonuses in 2009, had been negotiating with Omega for a settlement following his departure.
Tolliday left as part of a boardroom overhaul that led to the appointment of six new directors, backed by the Lloyd's insurer's biggest shareholder, Invesco.
Lloyd's largest private insurer, Canopius, made a bid for Omega last month, although that now appears to have stalled.
Both Invesco and Omega refused to comment.
Tolliday was entitled to a termination payout of at least $5.4m, according to the 2009 annual report.