Heresy, Drugs And The Bermuda Form

In AstraZeneca Insurance Company Limited v XL Insurance (Bermuda) Ltd & Anor¹, XL Insurance and Ace Bermuda obtained judgment against AstraZeneca Insurance Company(AZ), AstraZeneca Group’s captive insurer. The case is notable for two reasons: the English court analyses in detail the Bermuda Form and also resolves the question as to whether liability policies respond to actual or alleged legal liability.

Background

The case concerned AstraZeneca’s drug “Seroquel”, an antipsychotic drug approved for the treatment of schizophrenia and bipolar disorder, which had been sold in the US and Canada since 1997. Litigation ensued in the US alleging that Seroquel was defective and caused personal injury. The majority of AstraZeneca’s losses represented defence costs (US$786 million) as opposed to settlements (US$63.7 million). AZ indemnified AstraZeneca and then sought to recover defence costs of £83.5 million from reinsurers.