A wealth manager is suing Chubb, alleging the insurer wrongly split related claims and left it paying a second $1 million retention.
Mercer Global Advisors, an SEC-registered investment adviser based in Denver, sued Federal Insurance Company - referred to in the complaint as "Chubb" - in Colorado federal court on July 22, 2026, according to the complaint.
The dispute centers on a phrase familiar to every claims professional: "Related Claims." Mercer's Asset Management Protector policy carried a $5 million aggregate limit and a $1 million self-insured retention on its professional liability coverage, the filing states. Under the policy, related claims are treated as a single claim, which means one retention applies rather than several.
The policy defines "Related Claims" broadly, as claims "based upon, arising from, directly or indirectly resulting from, in consequence of, or in any way involving the same or related facts, circumstances, situations, transactions or events." That definition matters because, under the policy, defense costs "are a part of, and not in addition to, the Limits of Liability" and "shall be applied against the applicable Retention(s)." In practice, the complaint says, each additional retention is money Mercer had to spend before coverage responded.
The underlying matters trace to December 2021, when Mercer acquired assets from another advisory firm, according to the complaint. Two former clients of that firm later brought arbitration claims through FINRA, the Financial Industry Regulatory Authority. The first alleged that, before the acquisition, her adviser at the acquired firm "inappropriately recommended that she invest substantial funds into a high-risk, options-based hedge fund" that the adviser "created and managed." About seven months later, a second client - suing individually and on behalf of her husband's estate - filed what the complaint calls a "substantially similar" claim. A related subpoena followed in late 2024. Mercer denied the claims and says the allegations were not based on advice it provided.
Mercer says Chubb initially agreed the two arbitration claims were related, confirming that position in letters in April 2024. In August 2024, according to the complaint, Chubb reversed and separated the second client's claim, applying a second $1 million retention. Mercer says Chubb then treated the subpoena as a third claim with its own retention before agreeing, in June 2025, to group the subpoena with the first arbitration. What Chubb has not done, the complaint alleges, is treat the second client's claim as related to the others - leaving Mercer, it says, to pay a second retention exceeding $1 million.
Mercer brings claims for breach of contract, common-law bad faith and statutory unreasonable delay or denial under Colorado law, and it asks the court to declare all the matters "Related Claims." It seeks reimbursement of more than $1 million and, under Colorado's insurance statute, up to two times the covered benefits, plus attorneys' fees and interest.
For claims professionals, the case turns on relatedness - whether separate matters share enough common ground to sit under a single retention. The complaint alleges Chubb changed its position more than once and argues that a reversal made "without adequate explanation or new facts justifying such reversal" shows a position that "lacks a reasonable basis."
The allegations have not been tested in court, and no judge has ruled on Mercer's claims.
