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Westlaw News

9th Circuit sides with Northrop, nixing excess insurer’s ‘improper erosion’ theory

AXIS Reinsurance Co cannot seek reimbursement from Northrop Grumman for part of a $16.7 million settlement of a class action by participants in Northrop’s 401(k) plans, a federal appeals court held Monday, overturning a win for the insurer in a case of first impression.

The 9th U.S. Circuit Court of Appeals flatly rejected AXIS’ “improper erosion of coverage” theory, under which it alleged that Northrop’s other insurers had prematurely triggered its excess coverage tier by improperly paying for a confidential settlement between Northrop and the U.S. Labor Department.

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