An excess insurer tried to push a defense-cost bill back to a policy year it never covered. A Delaware judge refused.
In a July 29, 2026 decision, the Superior Court of Delaware ruled that Ironshore Indemnity must cover a Financial Industry Regulatory Authority arbitration on behalf of its insured, StoneX Group, rejecting the insurer's attempt to shift the matter to an earlier policy period. The result was mixed: the court also dismissed StoneX's bad faith claim and left a key allocation question open.
Ironshore sat above a $10 million primary policy from XL Specialty, adding $5 million in excess coverage for the September 2022 to September 2023 period. The fight was over defense costs tied to claims by competitor BTIG, which had pursued StoneX and several StoneX employees who once worked at BTIG, LLC.
Ironshore argued it owed nothing, because the arbitration related back to a set of 2021 disputes - demand letters and a settlement - that fell under an earlier XL policy year Ironshore never insured. Its hook was the policy's "Interrelated Claims" provision, which treats claims arising from the same "Interrelated Wrongful Acts" as a single claim made at the earliest point. If it applied, Ironshore was off the hook.
Everything turned on one question: were the 2021 disputes brought against an employee for an "Employment Practices Wrongful Act"? Ironshore said yes, pointing to one item on the policy's list of eleven - "employment-related misrepresentations."
The court said no. Read in context, the eleven employment-practice wrongs all covered claims by employees against employers - wrongful termination, harassment, discrimination. They did not stretch to an employer's claim against a departing employee. So the arbitration did not relate back, and it landed in Ironshore's policy year.
On allocation, the court adopted the Larger Settlement Rule: the insurer pays the full loss unless it can show uncovered matters drove costs higher. But it declined to hand StoneX a 100% allocation on the record so far. Ironshore can still argue a related uncovered arbitration inflated the bill.
One point went the insurer's way. StoneX's bad faith claim was dismissed. The court disagreed with Ironshore's coverage stance but called it "at least colorable" - a losing argument, it noted, is not automatically a bad faith one.
