4 Insurance Companies Sued by Unocal

Unocal, fresh from its battle with Texas oilman T. Boone Pickens Jr., on Tuesday sued four insurance companies for allegedly canceling liability insurance policies on Unocal’s directors the day after Pickens disclosed his 7.9% interest in the Los Angeles-based oil company.

In a lawsuit filed in Los Angeles Superior Court, Unocal claims that the insurance companies’ actions were illegal and fraudulent. They intended all along to cancel the coverage “at the first sign of a hostile takeover attempt,” the suit alleges. None of the insurers, including lead insurer Harbor Insurance Co. of Los Angeles, could be reached immediately for comment.

To protect them against liability, including decisions made during a takeover fight, Unocal carried $100 million worth of insurance on its directors. The policies were to expire Sept. 25.

But on Feb. 15, the day after an investor group led by Pickens disclosed its Unocal holdings, Harbor Insurance notified Unocal that it was canceling the policy, the suit says. The other insurers soon followed, the lawsuit says, because their insurance was tied to the Harbor policy.

Unocal seeks reimbursement of its expenses in buying replacement insurance from four other insurance companies--$6.6 million in premiums and the $13 million it was required to put up as a loss reserve.

It also seeks unspecified punitive damages and reinstatement of its original policies.

Named as defendants are Harbor, Federal Insurance, First State Insurance and Royal Indemnity Co.