Insurer Settles Reinsurance Dispute

Continental Casualty Co. v. AXA Global Risks (UK) Ltd. (W.D. Mo. November 18, 2010)

Continental Casualty Co. issued an insurance policy to Black & Veatch Corp. in connection with the construction of a Pleasant Hill, Missouri power plant. The insurer also obtained a reinsurance contract from AXA Global Risks (UK) Ltd. (now Portman Insurance Co. Ltd.) and Assicurazioni Generali SpA (collectively referred to as “the reinsurers”). In 2000, parts for the plant were damaged when the ship carrying them from Japan encountered a tropical storm. The insurer denied Black & Veatch Corp.’s on the basis that losses stemming from “ocean transit” were not covered. Black & Veatch Corp. sued and the insurer was held liable for $23 million by a Missouri jury.

While an appeal was pending, the insurer sought reimbursement for its expenses from the reinsurers. The reinsurers rejected the claim on the basis that the insurer did not notify them of the claim in a timely manner. The reinsurers filed a declaratory judgment action in England and the insurer filed a declaratory judgment action in Missouri.

In March 2010, the Missouri Supreme Court denied the insurer’s appeal from the jury’s decision. The reinsurers moved to dismiss the declaratory action in federal court because their case was pending in the United Kingdom. In April 2010, the United States District Court for the Western District of Missouri denied the reinsurers’ motion. At the same time, the court denied the insurer’s motion for a preliminary injunction staying the case filed in England. In July 2010, the insurer settled its claims against Assicurazioni Generali SpA.

On November 18, 2010, Continental Casualty Co. settled its claims against AXA Global Risks (UK) Ltd. and the declaratory judgment action was dismissed. The settlement terms are confidential, but for the provision that each party will bear its own costs.

For a copy of the decision click here

Toni Frain and Dan Gerber

http://www.goldbergsegalla.com/attorneys/Frain.html

http://www.goldbergsegalla.com/attorneys/Gerber.html