So far, manager liability insurance has had to pay the highest sums for the lawyers of the long-standing Wirecard boss.
(Photo: dpa)
Cologne A three-liner by the US insurer Chubb caused a stir among many lawyers and consultants by former Wirecard managers. “For the sake of good order, we would like to inform you that currently around 13.5 million of the basic insurance sum of 15 million euros of the D&O insurance maintained by Wirecard AG (DEFIIA34180) have been exhausted,” says an E -Mail.
For the defenders and advisors of many former Wirecard managers, this means: Soon there will be no more money from Chubb. The insurer left questions unanswered.
The abbreviation D&O stands for Directors and Officers Liability, the industry standard designation for manager liability insurance. Companies use it to protect their management and supervisory boards against claims from third parties or from their own company in the event of damage. They also pay the often high legal fees for defending executives.
In connection with the collapse of the payment service provider Wirecard, three former managers have been charged and others accused. CEO Markus Braun is currently in custody and testified in the trial at the Munich Regional Court earlier this week.
The former Asia board member Jan Marsalek fled in the summer of 2020 and has been wanted internationally ever since. In addition, Oliver Bellenhaus, Wirecard’s deputy in Dubai, and ex-chief accountant Stephan von Erffa are accused. A verdict is not expected until 2024.
As Wirecard’s basic insurer, Chubb is faced with horrendous costs as a result of the processes. According to the contracts Insurers will bear the first 15 million euros, which is mainly caused by legal advice to former Wirecard managers.
The court forced Chubb to pay
The US insurer had already attempted in court not to have to pay for Markus Braun’s lawyers and consultants. Reason: Braun would have known that the payment service provider was only faking transactions and falsifying its balance sheets. As a rule, insurance companies do not have to pay for intentional crimes.
But the Frankfurt Higher Regional Court agreed with Braun. He argued that without the payment of the D&O insurance, he would be deprived of his right to defense and a fair hearing. The judges ruled that Chubb could not refuse performance because of fraudulent misrepresentation.
“The insurance cover does not apply according to the contract conditions only when an intentional or knowing breach of duty is established“, says the judgment from the end of 2021. Therefore, Chubb even had to bear the costs for Braun’s PR consultants. Depending on the judgment against Braun, however, it is conceivable that insurers will later reclaim the amounts paid. The Wirecard insurance companies do not have to pay for Bellenhaus because he has already confessed to his crimes.
Legal disputes are often very expensive for companies and their insurance companies. At Wirecard, the coverage of the D&O insurance is 150 million euros, it is borne by a consortium of several insurers. These include Swiss Re Corporate Solutions, R+V and AGCS, Allianz’s industrial insurer. Also involved are ANV, Dual, AIG, Liberty, HCC and QBE.
Now other insurers are responsible
Because the damage at Wirecard exceeds the sum agreed with the basic insurer, according to Chubb, the other insurers involved now have to pay. They are divided into eight shifts, each shift covers between ten and 25 million euros of the coverage.
According to information from the Handelsblatt, Swiss Re may be next in line. You could also legally challenge having to pay in the Wirecard case. The Swiss insurance company did not answer any questions.
150 million
Euro
is the coverage of Wirecard’s D&O insurance.
Although Chubb was unsuccessful in court, other insurers could manage to avert the payments. Because they have their own conditions. In addition, new findings from the criminal trial against Braun could play a role. In addition, different courts may have jurisdiction than in the Chubb case.
The biggest demand on the insurance consortium is likely to come from Michael Jaffé. Wirecard’s insolvency administrator has sued the company’s former board members and two former supervisory board members for possible breaches of duty when granting loans in the hundreds of millions. The oral hearing is scheduled to begin in autumn 2023. The procedure covers more than 1000 pages.
Jaffé’s lawsuit is directed against Braun, Marsalek and the two former board members Susanne Steidl and Alexander von Knoop. The public prosecutor’s office also lists Steidl and von Knoop as suspects in their investigations. In addition, the former supervisory board member Stefan Klestil is being sued. Klestil is not accused, and an exclusion from insurance for intentional criminal offenses should not be an option.
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