University awarded $10 million in insurance dispute

The decision requires the National Union Fire Insurance Company of Pittsburgh, Pa., to honor the full amount of the policy, which was purchased the same year in which two University-appointed Robertson Foundation trustees suggested the changes in the management of the Foundation’s endowment that eventually led the Robertson family to sue the University.

The company had previously only been willing to pay up to a $5 million sublimit on the $15 million policy.

The Appellate Division, First Department of New York’s Supreme Court unanimously denied an appeal by the company and upheld a September 2007 decision by Supreme Court Justice Helen Freedman that awarded Princeton just over $9.6 million.

The company argued that the University wanted the funds to fight claims not covered under the insurance policy, but Freedman ruled that National Union had to advance costs for both covered and non-covered claims.

National Union is a wholly owned subsidiary of insurance giant American International Group, whose spokesman, Joe Norton, declined to comment on the ruling.

University spokeswoman Emily Aronson said in an e-mail that the University was pleased with the ruling but added that the policy will cover only a fraction of the costs the University has incurred in the Robertson litigation.

“The plaintiffs’ lawsuit and scorched earth tactics are part of an attempt to seize control of funds their parents chose to give to Princeton, rather than leave to them,” she said.

Aronson declined to specify how much the University has spent so far on legal fees in its suit against National Union. The University and the Robertson family have spent a combined total of $50 million in legal fees since the suit was filed in July 2002.

When asked why the University purchased the policy in 1998, the year in which the University began to consider managing the Robertson funds under the Princeton Investment Company, Aronson said, “The University routinely buys and renews a myriad of insurance policies.”

On July 1, 1998, National Union issued the insurance policy to the University. That same year, University-appointed trustees Jay Sherrerd ’52 and John Beck ’53 expressed concern over the Robertson Foundation’s reliance on part-time volunteers to manage the ever-growing endowment. They suggested an arrangement in which the Princeton Investment Company (PRINCO) would manage the Foundation’s endowment alongside the University’s endowment, with continued oversight by the Foundation’s investment committee.

William Robertson ’72, the family’s single representative on that committee, opposed PRINCO’s involvement in the management of the Foundation’s assets. Robertson threatened to sue and finally did so in July 2002, a few weeks after the Foundation’s board voted to authorize the investment committee’s consideration of outside management of assets.