April 2025

Global insurance broker Marsh USA filed suit against competitor Aon and a former Marsh team leader for allegedly poaching key members of Marsh’s construction surety team who resigned and moved to Aon last month. A complaint filed by Marsh in federal court in New York accuses Aon and its former construction and surety team leader, Robert McDonough, of a “brazen taking” of its construction surety business, including its confidential information, employees and clients. According to the lawsuit, the scheme culminated with the “coordinated resignation of 20 employees in the span of just 38 minutes” on March 10, 2025. As a result of the alleged raid, Marsh said it lost numerous clients representing millions of dollars in revenue annually and has suffered harm to its client relationships and its reputation and goodwill in the brokerage industry. “Aon could not execute the plan to raid Marsh alone—it needed an inside man and enlisted McDonough, a senior leader in Marsh’s construction surety business unit, to use his knowledge of Marsh’s confidential information and his relationships with Marsh’s employees and clients to advance an unlawful scheme and raid Marsh’s construction surety business,” according to the complaint. Aon declined to comment on the lawsuit when contacted by Insurance Journal. Aon Lost Own Team The lawsuit contends that the scheme began before McDonough and the others left Marsh, soon after Aon lost a team of its own surety employees to another competitor in January. “Rather than invest the time and money to rebuild its surety practice piece by piece, Aon opted for a quicker, unlawful fix: simply pluck a significant portion of Marsh’s construction surety business unit to fill its need,” the lawsuit says. McDonough joined the Marsh construction surety team in New York in March 2016 as the practice leader and he maintained that senior leadership role for nearly a decade. According to Marsh, McDonough was privy to its highly confidential information and trade secrets, including information about Marsh’s workforce and clients. McDonough is accused of leading the mass resignation on March 10 when he submitted his resignation at 10:45 a.m. and 19 others followed his lead, including 70% of McDonough’s direct reports. On March 17, the suit contends, McDonough assumed a comparable role at Aon, as CEO of its North American construction, infrastructure, and surety group. The 19 other Marsh departing employees also assumed similar roles at Aon—”essentially mirroring the structure and roles of Marsh’s construction surety business,” the complaint says. In a March 10 press release, Aon touted new leadership for its construction and surety practice, with the hiring of McDonough and another key Marsh employee, Brian Hodges. Marsh contends that McDonough has breached non-solicitation, confidentiality and other agreements he signed prior to beginning his employment at Marsh in 2016. The agreements establish that McDonough’s violation of their restrictive covenants would result in irreparable injury to Marsh and they set forth penalties should he violate them. The non-solicitation agreement acknowledges that the restrictions are necessary to protect the legitimate business interests of the company and are reasonable in view of the consideration and benefits, including access to bonus plans, he has received from the company. ‘Irreparable Harm’ Additionally, in his confidentiality agreement, McDonough is said to have agreed that “irreparable injury will result” to Marsh and that, in the event of a breach, Marsh shall be entitled to specific performance and temporary and permanent injunctive relief, recovery of reasonable sums and costs, including attorneys’ fees, and any other legal remedies and damages available. In addition, Marsh says McDonough signed a liquidated damages agreement that covers situations where a client either reduces the amount of business or cancels business with Marsh due to violations by him. This provision calls for him to pay Marsh an amount equal to the total fees and commissions received by the company for such business during the two years prior to the breach. That would be in addition to all other damages and remedies, according to the lawsuit. According to the complaint, as part of the collusion, Aon worked with McDonough to recruit the 19 employees to Aon, drawing upon his knowledge of Marsh’s confidential personnel data related to compensation and client contacts. Further, Marsh alleges that McDonough worked with Aon to identify Marsh clients— “particularly ones with which McDonough had strong relationships—to move their business to Aon.” This drew upon Marsh’s confidential information about the clients’ current contracts with Marsh, Marsh’s pricing, Marsh’s business development strategies, and client preferences, the complaint says. Marsh personnel spoke with many of the departing employees after they resigned. Marsh says these interviews “confirmed McDonough and Aon’s plot to steal Marsh employees as a group.” One of the departing employees reported that the raid was “all orchestrated by Rob McDonough,” who, the employee said, “selected the best 20 people in the practice to leave together” and told him he had the choice to either “take life changing money and stay with us or be left behind and clean up the puke.” Marsh Cllients According to Marsh, the scheme also targeted both established and potential Marsh clients, including one with a major infrastructure project and another with a transportation facility construction project, allegedly using Marsh’s confidential information to get them to move their business to Aon. Marsh also contends that McDonough and another Aon employee recently attended an industry conference in San Deigo where Marsh maintains they “actively targeted” Marsh employees and clients “in what could only be an effort to solicit them on behalf of Aon.” Among the complaint’s counts are unfair competition; breaches of contract, fiduciary duty and common law duties of loyalty, absolute candor, and good faith; tortious interference with business relationships; aiding and abetting a breach of fiduciary duty; and conspiracy. In addition to liquidated damages, Marsh is seeking punitive damages, actual damages, attorneys fees, and preliminary and permanent injunctive relief. https://www.insurancejournal.com/news/national/2025/04/22/820698.htm

The Eighth Circuit has affirmed that Liberty Mutual’s bond obligation did not extend to a subcontractorIn a dispute arising from a federal power infrastructure project, the Eighth Circuit Court of Appeals ruled in favor of Liberty Mutual Insurance Company, finding that the insurer was not liable under a performance bond for payments sought by a subcontractor that lacked contractual privity. The April 2025 decision affirms a lower court ruling and reinforces the enforceability of assignment restrictions and formal contractual obligations in surety arrangements. The litigation originated from the construction of the VT Hanlon Substation in Montrose, South Dakota, contracted by the US government through the Western Area Power Administration (WAPA). The original contractor, Isolux, failed to complete the project by the required deadline, prompting WAPA to terminate the contract. At the time, Liberty Mutual and the Insurance Company of the State of Pennsylvania (ISOP) had jointly issued both performance and payment bonds to secure Isolux’s obligations. Following the termination, Liberty and ISOP, acting as sureties, engaged Professional Construction Consulting (PC2) to evaluate the site and identify a new contractor. Jeff Bruce—owner of two distinct entities, E&I Global Energy Services, Inc. and E&C Global, LLC—entered discussions with PC2. Ultimately, E&C was named in a March 2017 tender agreement and in the subsequent completion contract as the contractor responsible for finishing the project. E&I was listed in the contract as a subcontractor. Though E&I performed the bulk of the work due to E&C’s inability to obtain a necessary bond, Liberty Mutual refused to pay E&I directly for certain items excluded from the base completion price. E&I and E&C jointly filed suit in February 2020, asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, fraud, deceit, and negligent misrepresentation. The US District Court for the District of South Dakota granted summary judgment to Liberty Mutual on the unjust enrichment claim, finding that the plaintiffs had acknowledged a valid and enforceable contract, thereby precluding equitable remedies. Following a bench trial, the court ruled in favor of Liberty on all remaining claims. It held that Liberty’s payment obligation ran solely to E&C under the completion contract, and that there was no evidence of a valid assignment of contractual rights from E&C to E&I. The completion contract contained a non-assignment clause, barring the transfer of rights without prior written consent from both WAPA and the sureties. No such consent was ever provided. The court further concluded that the plaintiffs’ fraud and misrepresentation claims failed due to lack of intent to deceive and the absence of justifiable reliance. Although Liberty’s agent had mistakenly indicated that certain project documents included all revisions, the court credited his testimony that he believed Bruce had access to the missing materials. Bruce acknowledged knowing he lacked complete documentation at the time of his bid but chose to proceed under WAPA’s direction. The court found that such awareness undermined any claim of reasonable reliance. The district court also excluded a supplemental expert report that estimated an additional $3.69 million in “loss of enterprise value” damages. The court deemed the report untimely and not a proper supplement, emphasizing that the information it contained had been available earlier. The plaintiffs’ request for lesser sanctions, such as reopening discovery, was denied to avoid delaying the proceedings. On appeal, the Eighth Circuit affirmed the district court’s rulings in their entirety. The appellate court held that the plaintiffs failed to timely request a jury trial and that the exclusion of the expert report was not an abuse of discretion. It also upheld the trial court’s findings that Liberty Mutual had no contractual obligation to E&I, that no valid assignment had been established, and that the fraud and misrepresentation claims lacked merit. While the case did not interpret insurance policy language per se, it turned on obligations under a performance bond and a completion contract—core instruments in construction insurance. The decision reaffirms the legal significance of non-assignment clauses and strict adherence to formal contracting procedures in limiting surety liability. For insurers and surety providers, the ruling provides a clear illustration of how courts enforce the boundaries of liability based on documented contractual relationships and express consent requirements. https://www.insurancebusinessmag.com/us/news/construction/liberty-mutual-avoids-liability-in-performance-bond-dispute-with-subcontractor-532202.aspx

The 2025 Credit and Surety Market Survey by Axa XL polled 31 senior professionals from 28 companies across the globe (File photograph) The global credit and surety insurance sector has shown steady growth despite ongoing economic and geopolitical uncertainty, according to the 2025 Credit and Surety Market Survey by Axa XL. The survey, based on interviews with 31 senior professionals from 28 companies across Europe, North and South America, the Middle East and Asia, found that 60 per cent of respondents had seen strong premium growth since the pandemic. Key drivers included inflation, renewed infrastructure investment and increased demand from banks. But while the market has expanded, challenges are mounting. Ninety per cent of respondents said they expected loss ratios to worsen in the near future, with notable stress in the political risk and contract frustration sectors, particularly in countries such as Ghana, Zambia, Niger, Russia and Ukraine. “After the 2007-08 financial crisis, the market enjoyed a long period of stability,” said Felix Winzap, Axa XL’s head of credit and surety in his foreword. “But a series of events ― Covid-19, the war in Ukraine, instability in the Middle East ― have brought back uncertainty. We felt it was time to analyse the impact of these developments on the sector.” In the surety market, most respondents also reported substantial premium growth, with inflation and Covid-era stimulus programmes contributing to the uptick. While half said loss ratios had deteriorated somewhat since the pandemic, all agreed that overall loss levels remain manageable. The report found that banks continue to increase their use of credit and surety products, particularly where insurance can provide capital relief under updated Basel IV banking regulations. Seventy-five per cent of respondents said bank-related business had grown since 2022 and was expected to continue on that path. Artificial intelligence is also making inroads. Forty-three per cent of surveyed companies said they are already using AI tools, mostly in underwriting and risk analysis. Another third are in the testing or planning phase, with most developments happening in partnership with outside providers. The report also looked at how insurers are responding to environmental, social and governance concerns. While a number of companies are supporting the energy transition, only a minority have made ESG a formal part of underwriting or risk evaluation. Just 23 per cent reported net-zero targets. https://www.royalgazette.com/international-business/business/article/20250408/credit-and-surety-market-grows-amid-uncertainty

US Fire’s attempt to compel $13.5M in collateral for three decommissioning bonds failed—New York court says no imminent loss or asset risk justifies injunction A New York Supreme Court judge has rejected efforts by Crum & Forster owned US Fire Insurance Company to compel affiliates of MLCJR, LLC to post $13.5 million in collateral tied to surety bonds issued for offshore oil and gas operations, ruling the insurer failed to demonstrate the kind of immediate harm required to obtain preliminary injunctive relief. Justice Margaret A. Chan denied two motions from US Fire, finding that the company had not met the “irreparable harm” standard necessary to justify forcing the plaintiffs to post security under a General Agreement of Indemnity (GAI). The dispute arises from three surety bonds issued by US Fire in favour of the Bureau of Ocean Energy Management (BOEM) and Union Oil Company of California (UNOCAL). The bonds, totalling $13.5 million, were issued to guarantee decommissioning obligations of three offshore operators—Energy XXI, EPL Oil & Gas, and Cox Oil Offshore—all of which filed for bankruptcy in 2023. Their cases were subsequently converted to Chapter 7 liquidation proceedings. Following those filings, both BOEM and UNOCAL issued claims under the bonds, prompting US Fire to demand collateral from the indemnitors, as permitted under Paragraph 3 of the indemnity agreement. That provision allows the insurer to demand irrevocable letters of credit or other forms of security, at its sole discretion, upon receipt of claims—even before paying out any losses. US Fire argued that the plaintiffs’ failure to post collateral risked undermining the contractual framework of the surety relationship. The GAI explicitly waives the indemnitors’ defences and states that specific performance is an appropriate remedy. But Justice Chan concluded that US Fire had not shown it was facing immediate financial exposure. The insurer acknowledged it had not yet paid any claims or established reserves related to the bonds, and offered no evidence that losses were imminent. “There has been no showing made on US Fire’s application that, beyond the existence of the BOEM, UNOCAL, and BOEM II claims and US Fire’s collateral demands, there is any risk of imminent—rather than remote or speculative—harm,” Justice Chan wrote. The court also distinguished the case from Atlantic Specialty Ins. Co. v. Landmark Unlimited, Inc., where injunctive relief was granted in part because the surety had set aside reserves and the indemnity agreement expressly stated that non-payment of collateral would constitute irreparable harm. US Fire’s GAI contained no such clause. While Justice Chan acknowledged that the insurer might ultimately be entitled to specific performance if it prevails on the merits, she emphasized that “the requirements for the grant of a preliminary injunction are more stringent” and demand a present, concrete threat of harm. With the motions denied, the underlying litigation – including US Fire’s counterclaims and demands for collateral – will proceed to a full hearing. https://www.insurancebusinessmag.com/us/news/claims/judge-denies-crum-and-forsters-us-fire-insurance-companys-13-5m-collateral-demand-in-bond-case-530526.aspx