Embattled VW looks to cut costs; directors and officers cover targetedPosted On: Oct. 1, 2015 12:00 AM CST
Volkswagen A.G., hit hard by an emissions scandal affecting millions of diesel VW and Audi cars, is seeking ways to cut its costs amid a flood of litigation, some of which looks to target its directors and officers insurance.
In addition, the U.S. Environmental Protection Agency said Thursday that it may issue a recall for affected vehicles, Reuters reported.
The German-based automaker is seeking ways to cut costs and boost cash flow and could sell more shares if the cost of addressing the scandal over software that created deceptive fuel emission test results on its diesel engines puts its credit rating at risk, Reuters reported.
Litigation and regulatory actions have already been taken in the U.S. and abroad.
While there are some discrepancies, sources in the U.S. and London markets have told Business Insurance that VW has €500 million ($560 million) in D&O coverage, with Zurich Financial Group Zurich Insurance Group Ltd. being the lead insurer on a $25 million primary layer of the coverage.
A Zurich spokeswoman declined comment.
Others insurers that sources said participated in the risk include Dublin-based XL Group P.L.C. and Munich-based Allianz S.E.
An XL spokeswoman had no comment.
In a statement, Allianz said that while it cannot provide details on VW's coverage, “as a leading provider of D&O for blue chip companies in Europe, we are also part of the D&O consortium for Volkswagen, but not in the lead.”
Some 11 million VW and Audi diesel cars are affected by the scandal, which could result in Volkswagen facing up to $18 billion in U.S. fines. VW has already set aside €6.5 billion ($7.28 billion) to address the issue.
Volkswagen shares have fallen by more than one-third since the scandal broke Sept. 18 and led to the resignation of CEO Martin Winterkorn.