AIG unit sues to recoup defense costs

HARTFORD, Conn.—A unit of American International Group Inc. has sued Admiral Insurance Co. over the costs of defending two firearms trade groups in liability lawsuits filed by more than a dozen municipalities across the United States.

AIG's New Hampshire Insurance Co. filed suit Tuesday against Admiral, a W.R. Berkley Corp. subsidiary, in U.S. District Court in Hartford, Conn.

New Hampshire Insurance wrote a liability policy with a $1 million per occurrence and aggregate limit covering gun shows sponsored by the National Shooting Sports Foundation Inc., a gun industry trade group. Admiral, meanwhile, wrote a policy with a $1 million per occurrence and $2 million aggregate limit for the Sporting Arms & Ammunition Manufacturing Institute Inc., another firearms trade group.

NSSF and SAAMI share the same Newtown, Conn., office and have the same directors and officers, according to court filings. Both have been named as defendants in 15 lawsuits in which governmental entities from New York to California have charged that shooting deaths and injuries resulted from gunmaker negligence.

New Hampshire Insurance agreed to defend NSSF and SAAMI under a reservation of rights, even though SAAMI is not named as an additional insured in the policy that covers only NSSF-sponsored shooting events, the insurer's complaint says.

The AIG unit also entered into a defense cost-sharing arrangement with other insurers that issued policies to the trade groups at various times, including Acceptance Insurance Co., Continental Insurance Co., Hartford Insurance Co. and Scottsdale Insurance Co., the complaint says.

Although Admiral's policy for SAAMI included NSSF as a named insured--and Admiral officials promised to contribute to the defense costs--Admiral so far has not covered any of the $509,675 in costs incurred to date, New Hampshire Insurance alleges.

The suit seeks a ruling that Admiral must reimburse New Hampshire Insurance for all costs of defending SAAMI.

A spokeswoman for W.R. Berkley declined to comment.