Insurance giant – and All Blacks jersey sponsor – AIG is blaming an insurance broker's misinterpretation for Hanover's "misconceived" court case.
Hanover Group has taken High Court action against AIG, known as Chartis Insurance New Zealand, over its $20 million policy for directors and officers (D&O).
Hanover claims it was misled by AIG into thinking it had full prospectus liability cover, which is crucial for the directors of three Hanover finance companies – Hanover Finance, United Finance and Hanover Capital – now facing civil claims from the Financial Markets Authority.
However, AIG lawyer Andrea Challis will tell the High Court today Hanover should be suing its broker, Apex Insurance Brokers, not AIG.
Its case is "misconcieved", she says.
In October 2007, she says AIG offered to include the latest Hanover Finance prospectus as an exception to a $400 million upper limit exclusion for prospectus capital raisings.
"Unfortunately, Hanover finds itself in the position it is in as a result of its broker and agent misinterpreting AIG's 25 October email," Ms Challis's submissions say.
"It was not AIG who misrepresented anything to Apex or Hanover. In this instance, Hanover's remedy is against the broker, not AIG."
She says there was no common intention between AIG and Hanover to provide unlimited prospectus cover in the 2007-08 year.
"Two commercially sophisticated parties were involved in arms-length negotiations which addressed the question of the extent of prospectus liability cover and cover generally.
"In the circumstances, it is difficult to see where or how any deception by AIG arises."
AIG plans to call four witnesses: Vince Barker, the underwriter at the time; Mr Barker's assistant, George Springhall; underwriter Ella Langdon; and Judith Schwarz, an expert underwriter/broker.
About 36,500 investors were affected when Hanover Finance froze $550 million of assets in July 2008.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- New lawyers not doing 'much better' than job at McDonald's – report surprises
- MARKET CLOSE: NZ shares gain as market bounce continues; Kathmandu, Fletcher rise
- Auditors warn of Seadragon's going concern ability as firm breaches covenant
- New hotel to go ahead in Auckland as govt looks to boost tourism investment
- Marlborough-based wine company lists on the NXT despite OIO hiccup
Most listened to
- Marlborough Wine Estates CEO Catherine Ma explains why the Chinese-owned company listed on the NXT
- National list MP Chris Bishop says Phil Twyford's accusation the government has made housing a 'race issue' is hypocritical
- Bond prices have fallen while oil prices have risen - Jason Walls explains why on Walls' Street
- NBR technology editor Chris Keall on hitting 4000 member subscribers
- In his Editor's Insight Nevil Gibson on the future of health information technology and medical devices industry