Switzerland's largest insurance company was also working with investigators amid an ongoing investigation, and agreed to take "remedial" measures to ensure future compliance with U.S. tax law, prosecutors said.

The panel held that Philadelphia Indemnity Insurance Co.'s vague refusal to cover Yeshivat Beth Hillel of Krasna under a general liability insurance policy did not comport with New York law requiring a "high degree of specificity" regarding such determinations.

The ruling, from Justice Timothy S. Driscoll of the Supreme Court's Commercial Division, was the first written decision by a New York state court to address COVID-19 coverage in an insurance dispute, an attorney for one of the defendants said.

Jerome Block, a partner with Levy Konigsberg who represented the plaintiffs at trial, said Friday his clients were satisfied with the outcome and "look forward to moving this case toward completion." The adjustment took down the ratio of punitive damages to compensatory damages.

The IRS found that the insurer's financial products unit used complex transactions to generate bogus credits on foreign taxes that it did not pay.