Hanover Group Holdings has lost a Court of Appeal case against AIG NZ over directors’ and officers’ cover for prospectus information.

The New Zealand court has dismissed Hanover’s appeal and ordered it to pay costs after ruling AIG’s conduct was not misleading or deceptive.

Hanover took action after AIG in 2008 disputed cover for a claim related to an investigation into a possible breach of the Fair Trading Act regarding misleading representations.

Last year the New Zealand High Court rejected Hanover’s argument that AIG should pay the claim because the insurer had failed to amend the policy in line with previous discussions.

“We do not accept that AIG committed itself to providing full prospectus cover and then withdrew from that commitment without notice,” the Court of Appeal ruling says.

“Undoubtedly, there was a discussion concerning prospectus cover. But as we see the evidence, AIG did not commit itself to doing any more than in fact it did.”

The judgement says those involved in the discussions were sophisticated professionals who could be expected to carefully record their positions and any subsequent agreements.

“The matters not specifically addressed should have been checked to ensure they had been given effect in the renewed policy.”

New Zealand’s Financial Markets Authority last year filed civil proceedings against directors and promoters of Hanover Group concerning prospectus information and advertising.