An effort by insurers to disclaim more than $260 million in coverage stemming from settlements paid out in a 2006 securities fraud case by Bear Stearns was dealt a setback by the Appellate Division, First Department, Thursday.

But the unanimous panel kept alive an effort by the insurers to disclaim the coverage on public policy grounds.

Ruling for the second time in J.P. Morgan Securities v. Vigilant Insurance, 600979/09, the panel, upholding a ruling by Commercial Division Justice Charles Ramos (See Profile), found that the insurers were not entitled to rely on the policy's exclusion language barring indemnification for fraudulent acts where a “final adjudication shall establish” the claimants “were guilty of any deliberate, dishonest, fraudulent or criminal act or omission.”