Shareholders of Defunct MGA May Sue Insurers for Recovery of $92 Million LMX Spiral Judgment, N.J. Court Rules

TRENTON, N.J. — Former shareholders of an insurance holding company may sue the insurers of a now defunct managing general agent for indemnification of a $92 million judgment arising from the holding company’s involvement in the troubled LMX reinsurance program.

On Aug. 4, the Appellate Division of the New Jersey Superior Court found New Jersey’s “direct action” statute does not bar the shareholders from proceeding against the insurers for collection under a primary and excess policy issued to Raydon Underwriting Management Company Ltd.

Robert D. Ferguson, Kansa International Corporation, Ltd., Bankruptcy Estate, Milo Family Limited Partnership, Imipolex LLC and Omphalos …