To be more precise, the settlement was (from what I read) for the total limits of Remington’s insurance. I am guessing that once the plaintiffs indicated they would accept that amount, Remington took the position that its insurers should give up their total limits or it would be “bad faith”, in which case the insurers could be legally on the hook for an eventual court award against Remington that far exceeded the policy limits. Pretty standard tactic in a case where a jury could make a truly massive award. So Remington did appear to have a valid defense based on the federal statute but the law be damned you know the lower courts were going to screw them and the insurers would not want to take on that risk even if an appellate court might someday reverse it. Just a guess.
How could the insurers end up liable in excess of the policy size?
Remington had nothing to do with this "settlement". It no longer exists as an organization. It was split up into components and sold off in bankruptcy.