Law360 published insights from McGuireWoods insurance recovery attorneys pointing out a lesson from a recent federal court ruling about a bank, its parent, a forgery, and the Federal Deposit Insurance Corporation (FDIC).
The Sept. 4, 2026, article by associate Alexander M. Bein and partners Shelby S. Guilbert Jr. and Nicholas G. Hill addressed a decision favoring the FDIC over the parent company of a bank that failed in the wake of a $73 million forgery. The court held that the FDIC as the bank’s receiver — not the parent company, despite its designation on policies as insured and loss payee for insurance recoveries — was entitled to $30 million in coverage for forgery losses.
“The decision illustrates a significant limitation on the ability of parent companies to rely on first named insured or loss payee language to ensure the payment of insurance proceeds arising from a subsidiary financial institution’s covered losses when that subsidiary is in a receivership,” the McGuireWoods lawyers wrote. “The decision further demonstrates why parent companies of banks should carefully scrutinize such policy language at placement to minimize the risk that valuable insurance proceeds for covered losses end up in the hands of the FDIC, rather than the parent company — or shareholders — of a failed subsidiary.”
The trio’s Law360 article expanded on an Aug. 4, 2026, analysis they wrote for the Insurance Recovery Practice Group’s Pro Policyholder blog.