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REINSURERS CONSIDER POSITION AFTER US COURT RULES ON ASBESTOS CASE
Friday 27 August 2010
Author: Russell Group
 

Munich Re has said it is to look at the chances of an appeal after a New York court ruled against it and several other reinsurers over a long running asbestos compensation case.

Under the ruling the panel of reinsurers will have to pay Travelers Insurance $262 million judgment after a dispute over the payment of $1 billion in asbestos claims paid out by the insurer eight years ago.

The vast majority of the award will be faced by Munich Re America and a spokesman has told the media that the underwriter will look at the potential to appeal the decision by the New York Supreme Court.

If the appeal is not pursued it will end a long running legal battle which had seen Travelers settle with a number of other reinsurers with just Munich Re, Ace, Century Indemnity and OneBeacon left as part of the current case.

The policies involved were enacted in the 1940s by the United States Fidelity & Guaranty Co. (USF&G) for California-based Western Asbestos Co. That company, a distributor of asbestos-containing materials and products, was acquired in 1967 by MacArthur Co. and renamed Western MacArthur.

However in the 1990s Western MacArthur sued USF&G, contesting it was obligated to provide full coverage.

After a protracted discussion lasting nine year then owner of USF&G, St. Paul settled for $987 million.

USF&G then sought to claim the figure from the reinsurers who refused prompting the court action which was finally settled in New York.

Travelers said it very pleased with the result and delighted that it will be paid the full amount plus interest.

Munich Re America however expressed its disappointment.

"We are currently evaluating the ruling to assess all of the issues, which will form the substance of an appeal," said Munich Re spokeswoman ThereseRosenthal.