Northorp Grumman v. Factory Mutual Ins.

I. FACTS AND PROCEEDINGS BELOW

A. The parties and the insurance policies at issue

Northrop Grumman is a global defense contractor with approximately 120,000 employees worldwide. Its Mississippi subsidiary, Northrop Grumman Ship Systems, is head- quartered in Pascagoula, Mississippi and has operations throughout the Gulf area. Northrop maintains a risk manage- ment department, and is represented by Aon Risk Services in the insurance marketplace.

Aon was responsible for brokering Northrop’s property insurance for April 2005 to April 2006. In February 2005, Aon prepared and submitted an Underwriting Detail to pro- NORTHROP GRUMMAN v. FACTORY MUTUAL INS. 10667 spective insurers. The Underwriting Detail explained that Northrop sought blanket insurance for $19.8 billion in proper- ties, and proposed that the insurance be layered. The primary layer, termed “All Risk including Earthquake, Flood, Boiler & Machinery,” would provide comprehensive property insur- ance with a general limit of $500 million, and certain sub- limits, such as a $400 million sublimit per flood occurrence. The excess layer, described as “All Risk including Boiler & Machinery (Excluding Earthquake…