Posted on 26 Aug 2010
Travelers Cos has won a 17-year-old reinsurance case involving asbestos coverage, and been awarded $252.3 million plus interest by a New York state Supreme Court Judge.
Jennifer Wislocki, a spokesperson for Travelers, said the insurer was pleased with the ruling, which she said requires insurers to pay "the full amount of their obligations to Travelers, plus interest."
In this case, Jude Richard Lowe ordered Munich Re America Inc., a division of Munich Re, to pay $202.5 million and the Excess Casualty Reinsurance Association (ECRA) insurance pool to pay $59.8 million.
While the reinsurance lawsuit took some 17 years to settle, the case actually dates back to the late 1940s, a time when asbestos was often used for fireproofing and insulation. Asbetos use was discontinued by the mid-1970s after discovery that it was linked to cancer and other diseases. Because asbestos exposure's after-effects can take years or even decades to become apparent, lawsuits often can take years to settle.
Back in 1948, United States Fidelity & Guaranty, which Travelers now owns, wrote a liability insurance policy for Western Asbestos Co.
Fast-forward 30 years, when people harmed by asbestos began to file suit against Western Asbestos Co.'s successor company Western MacArthur, which in 1993 sued USF&G and two other insurers seeking indemnification.
USF&G obtained a $987.4 million settlement in 2002, which resulted in Western MacArthur going into bankruptcy.
USF&G then sought indemnification for some of that amount from reinsurers including American Re-Insurance Co, as Munich Re America was then known.
"We expect to appeal," said Michael Carlinsky, a partner at Quinn Emanuel Urquhart & Sullivan LLP representing ECRA. "We respectfully disagree with the lower court's decision and expect the appellate court to view the merits differently."