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This case is unusual. The primary defendants in this case were directors of a

publicly listed insurance holding company. All but one of the eleven directors was an

independent director. The other director was the chief executive officer of the holding


In 1998, the holding company embarked on a strategy of growth by acquisition.

Within a span of two years, the holding company acquired three other unaffiliated

insurance companies in arms-length transactions. The two transactions at issue in this

case involved the acquisition of publicly-traded entities and were approved by a vote of

the holding company’s stockholders. The holding company’s stockholder base was

diverse and the company had nothing close to a controlling stockholder.

In connection with the last acquisition, the holding company redomiciled to

Bermuda, for the disclosed reason that tax advantages would flow from that move.

Consistent with the objective of reducing its tax burden, the holding company

reorganized its subsidiaries by national line, creating lines of United States, United

Kingdom, and Bermudan subsidiaries. As a result of that reorganization, the holding

company’s top U.S. subsidiary came to be the intermediate parent of all of the holding

company’s U.S. operations. The top U.S. subsidiary also continued and deepened its role

as a guarantor of the holding company’s overall debt, including becoming a primary

guarantor of $260 million of a $490 million line of credit, a secondary guarantor of the

remainder of that debt, and assuming the holding company’s responsibility for

approximately $190 million worth of various debt securities. Nonetheless, after that


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