fbpx See's Candies sues insurers over pandemic financial losses
The Votes Are In!
2023 Readers' Choice is back, bigger and better than ever!
View Winners →
Vote for your favorite business!
2023 Readers' Choice is back, bigger and better than ever!
Start voting →
Subscribeto our newsletter to stay informed
  • Enter your phone number to be notified if you win
  • This field is for validation purposes and should be left unchanged.

Home / News / Business / See’s Candies sues insurers over pandemic financial losses

See’s Candies sues insurers over pandemic financial losses

see's candies
by City News Service
share with

By BILL HETHERMAN

See’s Candies Inc. is suing two insurance companies for allegedly breaching their contracts with the plaintiff by refusing to compensate it for tens of millions of dollars lost during the coronavirus pandemic, money lost when the retailer was temporarily forced to close its store’s doors and destroy large amounts of unused goods.

The Los Angeles Superior Court lawsuit names as defendants Swiss Re Corporate Solutions America Insurance Corp. and Lloyd’s of London. Along with unspecified damages, the suit seeks a court order directing the insurers to pay the money they allegedly owe under the policies.

“In the wake of the COVID-19 pandemic, See’s Candies suffered substantial losses when their retail stores were shut down by government orders across the country,” the suit states. “See’s Candies was delayed in its ability to sell its inventory and was denied access to the same, causing covered losses.”

See’s Candies is entitled to compensation from both its primary insurer, Swiss Re, and its excess insurer, Lloyd’s, according to the suit.

See’s Candies notified Swiss Re of its claims in April 2020 and the insurer waited more than eight months to issue its denial, while Lloyd’s has failed to take a position about the candy maker’s entitlement to coverage, according to the suit.

A Swiss Re representative did not reply to a request for comment on the suit brought Thursday.

Founded in Pasadena in 1921 and now headquartered in South San Francisco, See’s Candies manufactures and distributes candies and makes more than 26 million pounds of confectionaries each year while operating nearly 250 retail shops and another 130 seasonal stores, the suit states.

See’s Candies’ offerings are different from other national candy makers’ products because its sweets are made with fresh ingredients, including fresh milk, cream, fruit purees and nuts, and many of its items are handmade, the suit states. The candies have a shelf life of only a few months because See’s Candies adds no preservatives, according to the suit.

To protect its perishable inventory, See’s Candies purchased a “stock throughput policy” because the plaintiff’s inventory carries a unique risk due to its perishable nature and limited time window for sales, the suit states. Taken together, the Swiss Re and Lloyd’s policies “provide extensive coverage for See’s Candies’ products,” according to the suit.

But when the pandemic commenced in March 2020, See’s Candies — according to a quote from its CEO, Pat Egan, cited in the lawsuit — “went from full retail operation to no retail operation.”

The government shutdowns cost See’s Candies tens of millions of dollars and came at a time when the company was manufacturing candy and stocking up for two of its most profitable holidays, Easter and Mother’s Day, the suit states.

“Given the government orders that delayed See’s Candies’ ability to sell its products before they expired, See’s Candies had no choice but to destroy or to donate large quantities of goods that had deteriorated over time and were no longer salable,” the suit states.

The Swiss Re policy provides that if goods, merchandise or property must be destroyed, any expenses incurred in connection with such destruction shall be borne by Swiss Re, the suit alleges.

The Lloyd’s policy provides coverage for losses to goods located at two of See’s Candies’ warehouses when those losses exceed the primary liability of $10 million per facility, which happened in this case, the suit states.

More from Business

Skip to content