Posted on 16 Aug 2010
Spokespersons for the law firm Edwards, Angell, Palmer and Dodge (EAPD) say that the massive oil spill in the Gulf of Mexico arising from BP PLC's Deepwater Horizon oil rig explosion could mean several insurers providing many layers of D&O coverage for BP -- Chartis, Ace and Zurich, among others -- are finding themselves facing a disaster of their own, with significant claims exposure for the explosion in the Gulf.
Working through Jupiter Insurance, BP's captive insurer, BP provides about $700 million in self-insurance for much of its property and liability cover. However, according to media reports, Jupiter does not have reinsurance beyond the $700 million on hand to cover the massive claims associated with the Deepwater Horizon disaster.
EAPD says various media reports indicates that BP purchased $400 million in Side-A D&O liability coverage through brokerage firm Marsh, before the Deepwater Horizon explosion in April.
EAPD said BP's coverage is arranged in an eight-layered tower. Ace Bermuda International has the primary layer ($25 million), over which Zurich wrote $25 million in first-layer excess coverage. Other insurers participating in the program include Chartis, Ace European Group, Axis, Liberty Mutual, The Hartford, QBE, Arch, Great Lakes, and Beazley. The $155 million top-level excess layer is divided into shares, of which Chartis has the largest ($20 million).