Covisint excess D&O insurer wants out of covering shareholder settlement

A Fairfax Financial Holdings Ltd. unit told a federal judge in Detroit Wednesday that it is not obligated under its excess directors and officers liability policy to cover a $9 million shareholder class-action settlement related to OpenText Corp.’s  2017 acquisition of automotive supplier exchange Covisint Corp.

Allied World National Assurance Co. said the settlement was not a covered loss because its policy had a “bump-up” exclusion that relieved it from covering an inadequately or unfairly increased settlement amount. The case is Allied World National Assurance Co. v. Berkley Insurance Co.

Waterloo, Ontario-based OpenText purchased Covisint for $103 million in July 2017. Shareholders led by Leslie Murphy sued the Detroit-based IT company’s directors and officers in Michigan state court, saying the purchase price of Covisint was “fundamentally unfair” to shareholders and that they breached their fiduciary duties. The lawsuit was settled in April 2024.

Wesco Insurance Co. issued Covisint’s primary D&O policy, and Allied provided a follow-form excess D&O coverage. Each policy contained a bump-up exclusion. The following excess policy provided by Berkley Insurance Co. did not have the exclusion. Berkley agreed to fund the settlement but sought contribution from Allied, which rejected the request.

Allied seeks an order saying it is not required to cover the settlement.

Representatives for the parties did not respond to requests for comment.