Financial Crisis

March 11.2010

Kemper Finally Close to Liquidation?

Kemper has been on the brink of insolvency for years. It may have finally reached the end of its runway. Last week, Kemper disclosed its most recent financials, which show that very little cash is left in its two major member companies, raising the specter that it may finally be placed into a liquidation proceeding. Policyholders should be aware of the ramifications of a Kemper liquidation and take steps, if possible, to mitigate the impact a Kemper liquidation could have on their businesses. Kemper has been operating under a run-off plan administered by the Illinois Department of Insurance since 2004....

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September 18.2009

AIG Policyholders Seek Coverage for Maddoff Losses

The litigation fallout from the Bernard Madoff investment scandal recently entered the realm of insurance when two individuals brought a class action suit against American International Group Inc. (“AIG”) in US District Court in the Southern District of NY, alleging the wrongful denial of coverage for losses suffered as a result of Madoff’s scheme. The Plaintiffs, Robert and Harlene Horowitz, are Los Angeles residents who held investments with Bernard Madoff Investment Securities L.L.C. (“BMIS”). The complaint alleges that they had a balance of over $8.5 million with BMIS in the fall of 2008. After learning that their investment was lost...

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January 21.2009

Identical Financial Advice Can Constitute Separate Claims

These days, putting your money in the stock market isn’t for the faint of heart. Even before the recent economic downturn, many individuals were turning to financial advisors to give them the inside scoop on the best stocks, funds, and bonds. But what happens when those investments perform poorly? Or when it comes to light that a particular advisor has been giving the same bad advice to his clients for years? For insurance purposes, does giving the same advice to two different investors count as one act or two? One recent Ninth Circuit decision sheds light on the increasingly important...

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January 12.2009

All May Not Be Lost In The Financial Crisis: Bankrupt Defendants’ D&O Insurance

The current financial crisis has led to a number of corporate bankruptcies. Lehman’s filing in September 2008 – the largest bankruptcy case the U.S.has ever seen – is one obvious example. There are bound to be many more bankruptcies in 2009 as the financial crisis chew up more struggling businesses. As the Lehman bankruptcy shows, corporate bankruptcies can give rise to numerous claims for mismanagement, waste and inaccurate financial disclosures. Plaintiffs may assume that all, or nearly all, the money available to satisfy their claims has either evaporated or will be divided among thousands of creditors. But, plaintiffs might be...

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