Seventh Circuit Finds That Plaintiff Was Not A Third-Party Beneficiary of Underlying Agreements, Affirms Dismissal of Claims

The plaintiffs in Ferguson v. Aon Risk Services Companies Inc. are the former shareholders of the parent company of reinsurance provider Clarendon America Insurance Co. and Clarendon National Insurance Co. In the late 1990s, the defendant Aon companies procured a professional liability insurance policy for another insurance broker, Stirling Cooke Brown Holdings Ltd. (SCB) which, at that time, provided insurance brokerage services to insurance and reinsurance providers. SCB’s subsidiary, Raydon Underwriting Management Co. Ltd., served as Clarendon’s “outside program manager and agent” for evaluating business opportunities.

Raydon advised Clarendon to participate in a reinsurance program that collapsed, which deprived Clarendon of its reinsurance protections and exposed Clarendon to significant liability. Clarendon then sought indemnification from Raydon, SCB, and SCB’s professional liability carriers. Thereafter, the plaintiffs acquired Clarendon’s right to pursue claims against the parties responsible for Clarendon’s reinsurance-related losses. As noted in the court’s opinion, in 2005, the plaintiffs initiated a legal campaign against various parties in an effort to recoup its losses related to the failed reinsurance program, including the current action that was filed in Illinois state court and removed to the U.S. District Court for the Northern District of Illinois. The plaintiffs’ complaint alleged professional negligence and breach of contract “based on Aon’s failure to report Clarendon’s claims against Raydon to all of SCB’s [insurance] carriers.” 

The district court granted the defendants’ motion to dismiss the professional negligence claim and thereafter granted summary judgment to the Aon defendants as to the plaintiffs’ breach of contract claim. In affirming the district court’s dismissal of the plaintiffs’ complaint, the Fourth Circuit found that Clarendon was “not a third-party beneficiary of the 1996 or 1999 Agreements between Aon and SCB and that Aon owed Clarendon no duty to notify SCB’s carriers of Clarendon’s claims.” The court noted that because Clarendon had “no legal interest” in the underlying agreements, its breach of contract action failed as a matter of law, and the district court’s dismissal of the breach of contract claim was proper. With regard to the professional negligence claim, the court rejected the plaintiffs’ claim that Aon owed Clarendon a duty to provide notice to SCB’s insurers about Clarendon’s claims against Raydon, concluding that the plaintiffs failed to state a claim for professional negligence. Finally, the court concluded that the plaintiffs’ claims, even if viable, were time-barred under the applicable statute of limitations, and affirmed the judgment of the district court.

Ferguson v. Aon Risk Services Companies Inc., No. 24-2017 (7th Cir. Aug. 13, 2026).