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What's up with Trump and Chubb? Insurance giant balks at underwriting fraud-case bond days after blowback from E. Jean Carroll bond

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President Donald TrumpEvan Vucci/AP Images
  • Ten days ago, Chubb underwrote Trump's $92 million bond for his E. Jean Carroll defamation appeal.

  • But Chubb declined to handle the far higher appeal bond Trump now needs in his NY civil fraud case.

  • The insurance giant had faced blowback after agreeing to the Carroll bond.

Days after underwriting the $92 million bond for former President Donald Trump's E. Jean Carroll defamation appeal, insurance giant Chubb has now declined to underwrite the half-billion-dollar appeal bond that the GOP frontrunner needs in his New York civil fraud case, defense lawyers revealed in a court filing Monday.

Chubb's decision leaves Trump empty-handed just one week before his March 25 deadline to either secure a bond or pay New York the more than $456 million he now owes in fraud penalties.

Chubb's "no, thanks" comes just five days after the company's CEO, Evan Greenberg, sent a letter to brokers, clients, and investors addressing widespread criticism over the Carroll bond.

In 2018, then-president Trump appointed Greenberg to a seat on a key trade advisory committee, a position he held until March 2023.

"When Chubb issues an appeal bond, it isn't making judgments about the claims, even when the claims involve reprehensible conduct," Greenberg said in the letter in reference to the Carroll bond, as first reported by Insurance Journal.

"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," he continued. "We considered this the right thing to do, and we frankly left our personal feelings aside."

A Chubb spokesman declined a request for comment from Business Insider. The Carroll bond was underwritten by Chubb subsidiary Federal Insurance Company.

Reputational damage is a risk factor that all surety carriers weigh before agreeing to underwrite a bond, said Nick Newton, the immediate past president of the National Association of Surety Bond Producers.

"They will ask not only do we trust this person, but is their character a public relations issue," said Newton, now senior vice president at AssuredPartners.

To secure a bond for the New York fraud trial, Trump would have to set aside "cash reserves approaching $1 billion," his lawyers wrote in Monday's filing.

It's unclear from the filing if Chubb had asked Trump to set $1 billion in cash aside as a condition for a bond.

Surety carriers more typically ask for collateral covering 110% to 120% before underwriting a bond — not 200%, as in the $1 billion cash reserve Trump's lawyers made mention of, experts have told BI.

Still, "a carrier can set whatever number they want," said Neil Pederson, owner of the surety bond agency Pedersen & Sons.

Before saying "no," Chubb had been the closest to saying "yes" out of some 30 insurance carriers the former president approached, Trump's lawyers said in Monday's filing.

Chubb had been the only carrier willing to even consider letting Trump post real estate before ultimately declining to do so, the filing said.

But insurance carriers virtually never accept real estate as collateral for an appeal bond, Newton said.

"If the appeal is lost, that judgment is immediately payable," said Newton.

"Accepting real estate is not only extra paperwork, but it's not immediately liquid," he said.

"No surety company wants to guarantee a bond where there may be only 10 days to turn commercial property into cash when the appeals run out."

Trump's lawyers are asking an appellate court in Manhattan to rely on the strength of his real estate holdings, rather than require he set the judgment aside in the form of a cash-backed bond.

Attorneys for New York Attorney General Letitia James, whose office sued Trump alleging widespread financial record fraud and won, have countered that he can't be trusted to merely promise to pay the state some time down the road after his appeals run out.

James has threatened to begin the process of seizing Trump's assets to cover the judgment if he defaults next week.

Trump Organization lawyer Alan Garten said in an affirmation included with Monday's filing that after coming close to underwriting the bond, "within the past week, Chubb notified Defendants that it could not accept real property as collateral."

Read the original article on Business Insider