Massachusetts Mutual Life Insurance Company and some of its financial units are suing casualty insurers in connection with allegations that the insurers failed to cover legal costs stemming from the Bernard Madoff fraud.
MassMutual, Springfield, Mass., its Tremont Group Holdings Inc. subsidiary and other company units were hit by class-action lawsuits in December 2008. The plaintiffs — investors in funds managed by Tremont — are seeking to recover investments they claim to have lost as a result of the Ponzi scheme run by Madoff and his company, Bernard L. Madoff Investment Securities L.L.C., New York.
Tremont and related funds, including Rye Select Broad Market Prime Fund, fed some of the investors’ assets into the Madoff scheme, according to the investors’ suits.
MassMutual and subsidiaries charge in their own suit, which was filed in Chancery Court in Delaware, that 13 insurers that provided it with surety bonds and executive and officers coverage have failed to meet their obligations to cover the legal cost of defending against the lawsuits..
The insurers named in the suit include several underwriters at Lloyd’s of London; Continental Casualty Company, a division of CNA Financial Corp., Chicago; and Federal Insurance Company, part of the Chubb Group Inc., Warren, N.J.
“The goal of this action is to enforce rights to coverage under insurance policies that protect against exactly the kind of theft Madoff perpetrated,” a MassMutual spokesman says.
Representatives of CNA and Chubb declined to comment on the MassMutual suit. Lloyds has not yet replied to a request for comment.