A New York state judge has awarded Travelers Cos. $262.3 million plus interest in a 17-year-old reinsurance case over asbestos coverage whose facts date back to the late 1940s, Reuters reports.
In a 28-page ruling dated Friday, New York State Supreme Court Justice Richard Lowe ordered Munich Re’s Munich Re America Inc unit to pay $202.5 million and the Excess Casualty Reinsurance Association (ECRA) insurance pool to pay $59.8 million.
Many companies stopped using asbestos for fireproofing and insulation by the mid-1970s after it was linked to cancer and other diseases. Litigation persists because the after-effects from exposure can take decades to surface, and lawsuits often take many years to resolve.
“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.”
A lawyer for Munich Re did not immediately return a call seeking comment.
Travelers spokeswoman Jennifer Wislocki said the St. Paul, Minnesota-based property and casualty insurer with major operations in Hartford, was pleased with the ruling, which she said requires insurers to pay “the full amount of their obligations to Travelers, plus interest.”
The ruling was reported earlier by The American Lawyer.
The Travelers case dates to 1948, when United States Fidelity & Guaranty, which Travelers now owns, first wrote a liability insurance policy for Western Asbestos Co.
By the late 1970s, people harmed by asbestos began to sue successor company Western MacArthur, which in 1993 sued USF&G and two other insurers seeking indemnification.
In 2002, USF&G reached a $987.4 million settlement, 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.
Lowe concluded that the settlement treated each individual asbestos claim as a separate accident or occurrence, rather than aggregate asbestos-related injuries into a single event — the decision of Western Asbestos to use asbestos in the first place — and thus limit any possible reinsurance payout.
He also rejected Munich Re America’s argument that Travelers had to prove that each reimbursable claim involved asbestos from Western Asbestos, and not two other companies that it did not insure but for which it had paid claims.
USF&G was acquired in 1998 by St. Paul Cos, which later merged with Travelers.
Travelers shares were down 14 cents at $49.12 in morning trading on the New York Stock Exchange.
The case is United States Fidelity & Guaranty v. American Reinsurance, New York State Supreme Court, New York County, No. 604517/2002.
