The United States District Court for the District of Oregon, applying Oregon law, has held that an anti-assignment clause in a D&O policy precluded the assignment of rights under the policy after the insured entered into a settlement agreement without the insurer's consent. Alexander Mfg., Inc., Employee Stock Ownership & Trust v. Ill. Union Ins. Co., 2007 WL 2462644 (D. Or. Aug. 27, 2007).

In the underlying litigation against three insured directors, the insurance company provided a defense but declined the plaintiff's settlement offer. The insured corporation then settled directly with the plaintiff and assigned its rights under the policy to the plaintiff. The assignee brought an action against the insurer for breach of contract and bad faith.

The insurer moved for summary judgment on the grounds that the assignment was not valid. The policy contained the following anti-assignment clause: "Assignment of interest under this Policy shall not bind Insurer unless their consent is endorsed hereon." The policy contained no endorsement allowing assignment. The assignee argued that the anti-assignment clause applied only to pre-loss assignments. Because the policy did not define the term "interest," as found in the anti-assignment clause, the court interpreted it according to its plain meaning. The court granted summary judgment for the insurer, concluding that the policy precluded assignment of the insured's interest, "regardless of whether that interest accrues pre-loss or post-loss."