Three insurers are seeking $54 million from Frank B. Hall & Co. Inc. for damages resulting from the operations of a former subsidiary, Union Indemnity Insurance Co. of New York.
American Centennial Insurance Co., International Fidelity Insurance Co., and Ranger Insurance Co. are also seeking $25 million in punitive damages from the brokerage firm, which is based in Briarcliff Manor, N.Y.The suit, filed in New York State Supreme Court earlier this month, names Hall, two Hall subsidiaries, some current and former Hall officers and certain former officers and directors of Union Indemnity Insurance Co., as defendants.
The two former subsidiaries named in the suit are Frank B. Hall Re of New York Inc. and Frank B. Hall Underwriting Managers Ltd.
The complaint seeks reimbursement of alleged damages resulting from Union Indemnity's purported breach of obligations between 1980 and 1984 under its reinsurance agreements with the plaintiffs.
A company spokesman said the breach of obligations involves the plaintiffs' contention that Union Indemnity did not respond to its obligations under various reinsurance agreements with the three carriers.
The spokesman said the suit stems from actions taken before the firm's present management, including the chairman, president and several board members, took over in 1985. The spokesman added that the brokerage firm would defend itself against the suit, which the firm did not expect to adversely affect earnings.
In March, the New York insurance superintendent filed a $140 million suit against the brokerage firm and Union Indemnity's officers in connection with the subsidiary's insolvency two years ago.
The department suit, which also named other Hall subsidiaries and affiliates and Union Indemnity's auditor, Touche Ross & Co., alleged that Hall operated it without regard to its profitability or solvency.
The insurance department suit is slated to be heard before New York State Superior Court Judge Ira Gammerman on Oct. 14, according to a department spokesman.
Omaha Indemnity Insurance Co., a subsidiary of Mutual of Omaha Cos., Omaha, Neb., filed a $150 million suit against the firm in May 1986 in connection with the operations of Union Indemnity.