Chubb CEO Evan Greenberg, recognizing the criticism swirling around his company’s involvement in recently providing Donald Trump with a $91.6 million appeal bond, penned a letter to explain.
“When Chubb issues an appeal bond, it isn’t making judgements about the claims, even when the claims involve reprehensible conduct,” Greenberg said in the letter to brokers, clients, and investors.
“I realize how polarizing and emotional this case and the defendant are and how easy it would be for Chubb to just say no,” Greenberg added. “However, we support the rule of law and our role in it. We considered this the right thing to do and we frankly left our personal feelings aside.”
The surety bond contract was issued by Chubb’s Federal Insurance Co. and signed by Trump early last week. It allows the former president to appeal the $83.3 million verdict against him in the E. Jean Carroll defamation case. In January, a federal jury in Manhattan awarded the sum of a $65 million punitive award and $18.3 million in compensatory damages to Carroll after the trial.
Federal will pay if Trump loses the appeal or fails to pay. Greenberg said Carroll—as the plaintiff typically does—approved the terms of the bond before the court accepted it, and she now gets the “peace of mind that payment is certain if the judgement is upheld.”
The bond, Greenberg added, “serves the important purpose of facilitating the legal process, providing the certainty that court and plaintiffs require after an adverse trial court decision.”
Providing a bond “has nothing to do with the underlying merits or with favoring any of the parties in the case,” Greenberg said. “As a surety, we don’t take sides, it would be wrong for us to do so, and we are in no way supporting the defendant.”
Greenberg said the bond is fully collateralized—corroborating comments from Nick Newton, senior vice president at Assured Partners and immediate past president of the National Association of Surety Bond Producers, in an earlier report. Newton added that premium is typically 1-2%.
The chief executive said that if the bond is called, “Chubb takes the collateral, which is intended to make us whole.”
“We hardly support or subsidize defendants or take ‘one for the team,'” he said, addressing criticism that in some way the bond was a favor for Greenberg getting appointed by Trump in 2018 to the Advisory Committee for Trade Policy and Negotiations. Greenberg continued to hold the position until about a year ago. After rioters stormed the Capitol in January 2020, Greenberg said citizens had “a responsibility to speak out against and condemn in the strongest terms the violence and display of demagoguery we witnessed.”
JD Weisbrot, president and chief underwriting officer at JW Surety Bonds, told Insurance Journal that Trump, other than providing 100% collateral in liquid assets, may have provided a letter of credit from an approved bank.
“The insurance company would not be willing to take a $90 million risk simply because he is an ex-president,” Weisbrot said. “They most likely received 100% collateral in the form of cash or an irrevocable letter of credit.”
Trump may have also had to provide personal guarantees to Chubb’s Federal Insurance.
“If an individual person and not a corporation has been sued and lost an appeal, they would need to post collateral, and they would need to provide personal indemnification holding the surety company who issued the bond harmless from all losses and expenses whatsoever,” Weisbrot said. “We can presume that Donald Trump also needed to provide a similar personal guarantee as well as the collateral to secure this bond security.”
Topics Chubb
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