AIG unit gets partial win in defense cost fight

A Delaware judge ruled Monday that an American International Group Inc. unit does not have to reimburse Clear Channel Outdoor Holdings Inc. for costs it incurred in responding to a tolling agreement with the U.S. Securities and Exchange Commission.

The tolling agreement was not a covered securities claim under the D&O policies issued to the outdoor advertising company, New Castle County Superior Court Judge Patricia A. Winston said in Clear Channel Outdoor Holdings Inc. v. Illinois National Insurance Co. et al. The judge also said that even if the agreement was a securities claim, it “does not seek redress in response to any corporate act.”

Clear Channel had moved for partial summary judgment.

From August 2018 to May 2019, AIG issued a $20 million-limit D&O policy to iHeart Media Inc. that covered San Antonio-based Clear Channel. In January 2018, Clear Channel discovered that an employee of its majority-owned subsidiary had misappropriated money. Clear Channel informed the SEC in March 2018 that an ongoing internal investigation would delay its annual report, court records show.

The SEC initiated its own investigation in August 2018, and the parties entered into an agreement that tolled the statute of limitations for any enforcement action. Clear Channel later settled with the SEC but admitted no liability.

Clear Channel submitted a claim to AIG unit Illinois National in November 2018 to recover the roughly $26 million it spent in connection with the SEC settlement. AIG denied the claim, saying the matter was “only an investigation” and not a securities claim, court records show.

Clear Channel sued the AIG unit and its other D&O insurers in February 2024, seeking a declaration that they were required to cover its defense costs. The judge’s ruling addressed only the AIG unit.

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