When Mergers Create D&O Insurance Complications

By Sam Ballingrud (February 18, 2021, 5:37 PM EST) -- On Feb. 2, the Superior Court of Delaware issued a lengthy and complex decision in Northrop Grumman Innovation Systems Inc. v. Zurich American Insurance Co.[1]

This decision illustrates some common complexities and potential pitfalls for both insurers and policyholders in the context of a merger where companies with competing directors and officers insurance policies — typically referred to as towers as full coverage is achieved through laying primary and excess policies — merge into one new company with one new tower.

The merger extinguishes the old towers and both the acquired and acquiring entities, but when disappointed shareholders bring a class...

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