Chubb seems to think loaning TSF $91M is a "sound investment"

[Ocelot II]

28. It isn't a loan. It's insurance. Doesn't anybody understand how this works?

The purpose of an appeal bond is to protect the winning party in a lawsuit if the losing party appeals. The bond allows the money to be paid out automatically if the appeal fails, and the court rule exists so the losing party is deterred from appealing just to delay having to pay the judgment. If TFG hadn't obtained the bond Carroll could have executed on the judgment immediately, but this isn't as easy as it sounds. It would be expensive, slow and difficult, and TFG would throw everything he had at avoiding or at least delaying paying, including hiding or transferring assets. An appeal bond makes all that unnecessary and she is assured of being paid the full amount.

During the appeal process (while post-judgment interest continues to accrue) the insurer isn't out any money, while the appealing party, in order for the insurer to write the bond, has had to either pay a stiff cash premium or collateralize assets in the amount of the judgment. Insurance companies aren't in business to lose money, as anyone who has ever dealt with one must know. They would have evaluated the risk of loss, which in this case is considerable, and priced the bond accordingly. They won't lose money no matter what happens, because the way all insurance works is by pooling risks. If there is a loss in this case it will be offset by premiums from the other cases where the insurer didn't have to pay out.

I don't understand why everybody has their undies in a bunch about this. Specialty insurers like this Chubb Group subsidiary are in the business of selling appeal bonds, and insuring large verdicts like this isn't unusual at all, especially in commercial litigation where most civil appeals occur. This is normal, people, even if the appellant isn't.

Also, the money isn't coming from Russia.