Markel Corp. fired back Monday against two former executives suing the insurer seeking more than $70 million in incentive payments withheld after they were fired for allegedly having an undisclosed romantic relationship.

In a response to the February suit filed by Anthony Belisle, former CEO of Markel CATCo Investment Management Ltd., the insurer’s troubled Bermuda alternative reinsurance unit, Markel alleges that Mr. Belisle breached the conflict of interest provisions in his employment agreement by recommending steep pay rises and millions in bonus payments to his direct report Alissa Fredricks after he began a secret relationship with her.

In the original suit, Mr. Belisle alleged that Markel amended his employment agreement to bar undisclosed personal relationships shortly before terminating him and Ms. Fredricks in January 2019 and used the alleged breach of the agreement to withhold $66 million in agreed incentive payments to Mr. Belisle and a further $7.5 million in incentives to Ms. Fredricks. Markel issued a public statement announcing the terminations on Jan. 18.

In addition, Mr. Belisle alleged invasion of privacy related to searches of his phone during the course of an investigation into shortfalls in Markel CATCo’s loss reserves, which was triggered after U.S. and Bermuda authorities made “inquires” about the insurance-linked securities specialist’s reserves following big catastrophe losses in 2017.

The investigation found Markel staff did not act in bad faith when setting the reserves.

In its response to Mr. Belisle’s suit, filed in U.S. District Court in Concord, New Hampshire, Markel alleges that Mr. Belisle’s phone was registered as a work device and during the loss reserve investigation it discovered the romantic relationship between Mr. Belisle and Ms. Fredericks after reviewing email messages between the executives. Mr. Belisle initially denied the relationship, court documents say.

According to the court filing, Ms. Fredricks, who joined Markel CATCo in its Wellesley, Massachusetts, office in 2016, received several raises and increases in housing allowances after she transferred to Markel CATCo’s Bermuda operations in April 2017. The executives began a romantic relationship “no later than October 2017” that was “concealed” from the insurer, and in November 2017 Mr. Belisle recommended that Ms. Fredricks should be paid a further bonus and promoted to CEO, Bermuda of Markel CATCo.

Ms. Fredricks was later paid a $50,000 bonus and on her promotion received a $171,00 pay raise, court documents say. In June, 2018, Mr. Belisle recommended that Ms. Fredricks be paid a $7 million retention bonus, according to the filing.

In his suit filed earlier, Mr. Belisle alleged that Ms. Fredricks had been identified as his potential successor in 2016 and that her promotions were “in process” before their relationship began.

According to the Markel court filing, Markel CATCo placed confidence in Mr. Belisle to act in the company’s best interests and he “betrayed this confidence” by maintaining an undisclosed romantic relationship with a subordinate and “lying to (Markel CATCo) until he was confronted with documentary evidence to the contrary.”

In a series of counterclaims, Markel alleges among other things that Mr. Belisle breached his fiduciary duty to the company, engaged in intentional misrepresentation and violated the Trade Secrets Act by keeping proprietary Markel information after he was terminated. Markel is seeking compensatory, exemplary and punitive damages.

In a separate response to a suit filed by Ms. Fredricks in federal court in Massachusetts, which makes similar allegations to Mr. Belisle’s suit, Markel says her employment contract stipulates that any contractual disputes should be litigated in Bermuda.

A Markel spokeswoman declined to comment. An attorney for Mr. Belisle and Ms. Fredricks did not immediately return calls seeking comment.