Hanover Group Holdings has lost its High Court fight with insurance giant AIG over a policy worth up to $20 million.
The insurance wrangle centred on a directors and officers liability (D&O) policy Hanover took out in November 2007 with AIG and whether cover is provided for claims associated with certain Hanover prospectuses.
The cover would be used for legal costs associated with the upcoming civil stoush between former Hanover directors and the Financial Markets Authority (FMA) or any damages that may be payable in that case.
AIG (at time of the case legally known as Chartis Insurance New Zealand) did not accept that two prospectuses released by Hanover Finance Limited and United Finance Limited were covered by the policy.
The actual policy issued by the insurance giant fell far short of complete prospectus cover but Hanover's lawyer, Nathan Gedye, argued that its broker and AIG had agreed in 2007 there would be D&O cover for all prospectuses issued by the finance firm during the policy period.