In a recent ruling by the Delaware Supreme Court, Bentonville, AR-based Wal-Mart Stores Inc. may pursue its fraud claim against AIG Life Insurance Co. and Hartford Life Insurance Co.
The claim, previously dismissed by the Delaware Chancery Court, states that the retail giant suffered more than $100 million in losses due to sham insurance policies.
Between 1993 and 1995, Wal-Mart purchased the corporate-owned life insurance policies (COLI) for approximately 350,000 employees. However, Wal-Mart claims that the insurers did not inform them of certain flaws, including the fact that the policies would jeopardize the retailer's ability to take certain planned tax deductions.
Although several other claims were rejected, the Supreme Court decision to allow Wal-Mart to pursue the fraud claim is due in part to Justice Carolyn Berger's statement that the complaint adequately pled that the defendants knowingly sold a flawed product.
AIG Life is a unit of New York-based American International Group Inc. Hartford Life is a unit of Hartford Financial Services Group Inc., based in Hartford, CT.
