Intel Files Lawsuit Against American Guarantee and Liability Insurance Co.

February 4, 2009

Intel Corp., based in Santa Clara, Calif., has filed a $50 million lawsuit against its insurer, New York-based American Guarantee and Liability Insurance Co. (AGLI), for failing to cover litigation costs it believes it purchased coverage for.

According to its complaint Intel Corp. v. American Guarantee and Liability Insurance Co., filed in U.S. District Court, Northern District of California, San Jose Division, Intel said it has been a defendant in lawsuits since June 2005, brought by Advanced Micro Devices, a competitor, and consumers, alleging that “Intel engaged in unfair business practices and anticompetitive conducte in its sale, promotion and marketing of its microprocessors.” A group of consumers also filed lawsuits alleging Intel’s actions have hurt consumers.

Intel said it tendered the AMD litigation to AGLI via insurance broker Marsh, “in accordance with relevant policy requirements for coverage.” From April 2001 to April 2002, Intel purchsed via Marsh several layers of comprehensive liability insurance from a variety of insurance companies. Old Republic Insurance Co. provided $16 million in occurrence-based comprehensive liability insurance as the first line of defense. Then, XL Insurance America Inc. provided the next layer of coverage for defense at $50 million. The AGLI policy was to provide $50 million in total defense and/or indemnity coverage in excess of the initial $66 million, which Intel said it already has exhausted.

However, “AGLI has failed and refused to provide a defense, ignored the clear potential for coverage of the AMD litigation, and repudiated its policy obligations by denying coverage,” Intel said. The chip-maker has thus been using its own funds to cover litigation costs.

Based on those events, Intel is asking the court to enforce its rights to defense and indemnity coverage for the AMD litigation under the “advertising liability” provisions of the Following Form Excess Liability Policy issued by AGLI. The company also is seeking additional damages from the insurance company.

AGLI is owned by Zurich North America.

Source: http://i.i.com.com/cnwk.1d/i/ne/pg/fd_2009/INTEL_Insurance_lawsuit.pdf?tag=mncol;txt

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