Vermont’s $182.9 Million Judgment on Behalf of Claimants and Creditors of Ambassador Insurance Co. Upheld on Appeal

Peter F. Young, Assistant General Counsel, 802-828-3301
09/10/2008 (All day)

 Montpelier, Vermont—upholding a judgment of $182.9 million against PriceWaterhouseCoopers in favor of the courtappointedReceiver for Ambassador Insurance Co., Paulette J. Thabault, Commissioner of theVermont Department of Banking, Insurance, Securities and Health Care Administration(BISHCA). Ambassador Insurance Co. (a Vermont domiciled surplus lines insurance companywith headquarters in New Jersey) was seized in 1983 and placed into court-supervisedrehabilitation and subsequent liquidation as a result of its insolvency. Since that time, theprincipal obligation of the Commissioner as Receiver has been to collect and distribute assetsunder court supervision in order to pay the rightful claims of persons insured and owed moneyby Ambassador.In the accounting malpractice lawsuit filed in 1985 against PriceWaterhouseCoopers,Ambassador’s outside accountants were charged with negligence in connection with audits ofAmbassador’s financial statements that served to conceal from regulators the insurancecompany’s financial weakness and near insolvency. A nine week trial in federal court in Newark,NJ, resulted in a jury verdict against Defendants PriceWaterhouseCoopers and the estate ofArnold Chait, Ambassador’s former President. Yesterday’s opinion upholds the 2005 verdictand PriceWaterhouseCooper’s obligation to pay all of the resultant damages, and confirmsjudgment for the full $182.9 million.Commissioner Thabault is pleased with the result and considers the outcome to beanother success for state-based regulation of insurance companies, noting that Ambassadorpolicyholders and claimants will finally have the opportunity to receive the insurance proceedsthey were due under Ambassador insurance policies as a result of these proceedings. “It’s been alengthy process, to say the least, and I am gratified that the Court upheld the jury verdict and theDistrict Court judgment,” Thabault said. “As a Department, we’re committed to protecting theinterests of policyholders, and pleased that the years of work in connection with thesereceivership proceedings should allow us to make full payment to all policyholders,” Thabaultsaid.The U.S. Third Circuit Court of Appeals issued an opinion yesterday (fnl)--30--