SHAREHOLDER AGREEMENT – INTERPRETATION OF INDEMNITY PROVISION – PAYMENT OF INSURANCE LOSSES
The Plaintiff sought damages in the amount of US$165,703 plus interest as monies due from the Defendant under a shareholder agreement. The Plaintiff’s case was that the shareholder agreement was concluded as one aspect of the Defendant’s participation in an Insurance Profit Centre “rent-a-captive” programme (“the Programme”), offered by the Plaintiff and its affiliate Mutual Indemnity (Bermuda) Limited (“Mutual Indemnity”). The Shareholder Agreement entitled the Defendant to a dividend if the Programme was profitable, but obliged the Defendant to indemnify the Plaintiff in respect of any losses suffered by Mutual Indemnity in respect of the insurance risks relating to the Defendant’s clients.
The issues in controversy substantially turned on the interpretation of dividend and indemnity provisions of the Shareholder Agreement. Mutual Indemnity had paid out US$165,703 in respect of losses on the Programme. As such, the Plaintiff argued that the Defendant was obliged to indemnify the Plaintiff in this amount pursuant to clause 3A of the Shareholder Agreement.