Lloyd’s is hanging on $3 million in interest under the failed bank’s D&O policy

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Lloyd’s of London insurers are required to pay out directors’ and officers’ liability insurance from the Federal Deposit Insurance Corp., in addition to the $10 million already paid. will pay an additional $3 million in interest before the verdict, the court said Friday as it overturned a lower court and issued its second decision in the case.

Lloyd’s underwriters sold the D&O policy to Omni National Bank in 2008, according to the January 2018 first ruling of the 11th US Circuit Court of Appeals in Atlanta in the case now titled Federal Deposit Insurance Corp., as receiver of Omni National Bank v. Certain Underwriters at Lloyd’s of London.

The bank dealt with “unsound lending practices” that led to its closure in March 2009 and the FDIC as receiver. The FDIC filed a lawsuit against Lloyd’s to meet the $10 million limit of its D&O policy.

The US District Court ruled in favor of the FDIC and was upheld by the 11th Circuit Court of Appeals. Lloyd’s paid the $10 million after the Supreme Court denied certiorari for its appeal of the declaratory judgment in the case, as well as $115,000 in post-judgment interest, but refused to pay $3,004,287.67 Pay interest before the verdict, Friday’s verdict said.

The FDIC re-filed a lawsuit against Lloyd’s in US District Court in Atlanta to recover the prejudice interest. The court ruled in favor of Lloyd’s, finding that the interest was “untimely” under Georgian law because the FDIC made its claim after the declaratory judgment was issued and liability determined.

It was overturned by a unanimous three-judge Court of Appeals. The FDIC “argues that pre-judgment interest claims are timely under Georgian law as long as they are made prior to the issuance of a final compulsory judgment, which is not the case for declaratory judgments. We agree,” the panel said when the lower court overturned it.

The case was remanded to the lower court to determine when the prejudgment interest began accruing.

The FDIC said in a statement that it does not comment on litigation, while attorneys for Lloyd’s did not respond to a request for comment.

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