Northrop's Win Curbs Excess Insurers' Settlement Challenges

By Jeff Sistrunk (September 15, 2020, 8:40 PM EDT) -- The Ninth Circuit sharply limited excess insurers' ability to second-guess lower-level carriers' payment decisions on Monday when it rejected Axis Reinsurance Co.'s argument that it overpaid on Northrop Grumman Corp.'s settlement of a class action suit because the defense giant's other insurers prematurely exhausted their policies.

Ruling on an issue of first impression within the circuit, a three-judge appeals panel rebuffed Axis' "improper erosion" theory and nixed a California federal judge's order allowing Axis to recoup an undisclosed portion of the $9.7 million it shelled out toward Northrop's $16.75 million settlement of an Employee Retirement Income Security Act class action in...

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