May 15, 2003 2 min read

PORTSMOUTH, N.H. (AP) – Tyco International Ltd. has paid $92 million to continue liability insurance coverage for most of its officers and directors. A unit of the Chubb Corp., Tyco’s main provider of such coverage, is suing to rescind coverage for 15 former or current Tyco officers and directors. Chubb said the coverage was provided based on misleading information from Tyco.

The payment restored and expanded liability coverage for the two years that ended March 15, 2003, Tyco spokesman Gary Holmes said Wednesday. A Chubb spokesman did not immediately return a call seeking comment.

Chubb did not agree to honor policies covering four officials facing criminal charges: former chief executive Dennis Kozlowski, former chief financial officer Mark Swartz, former general counsel Mark Belnick, and former director Frank Walsh. All but Walsh have pleaded innocent.

Tyco disclosed the payment in an earnings release two weeks ago, but did not elaborate. Tyco and its former directors are facing several shareholder suits claiming, among other things, violations of securities laws and waste of corporate assets.

Like many companies, Tyco indemnifies its officers and directors against claims arising from their official duties, so Holmes said maintaining their insurance made economic sense for the company. He said the coverage applies to hundreds of directors, officers and managers. The company has been working at restoring investor trust by continuing to restructure itself, shedding property and factories and cutting jobs. Tyco has been rocked in the past year by repeatedly taking accounting-related charges and by criminal charges against two former top executives, accused of looting $600 million from the company through unauthorized compensation and illicit stock sales.

Both have pleaded not guilty.

Tyco, which has about $36 billion in annual revenues, makes electronics, medical supplies and owns the ADT home security business. It is based in Bermuda but has its operations in Portsmouth, N.H.