Sep 20, 2010 - United States Fidelity & Guaranty v. American Reinsurance
In 1948, United States Fidelity & Guaranty insured Western Asbestos Co. In 1993, Western Asbestos brought suit against USF&G and two other insurers. In 2002, USF&G reached a settlement with Western MacArthur which had also filed for Federal Bankruptcy protection. The settlement and resulting bankruptcy led to the creation and funding of the Wester MacArthur Asbestos Trust which provides funds for the victims of asbestos disease and their families.
The same year USF&G, now owned by Travelers Insurance, sought indemnification through its reinsurance policies. One reinsurer, American Re-Insurance Co. (Munich Re America) who was ordered to pay over $202 million, costs and interest.
One of the main issues during the prolonged litigation was whether each “individual asbestos claim” would be treated as a separate accident or occurrence which would kick in the reinsurance versus just one aggregate event of Western MacArthur deciding to sell asbestos back in the 1940s. An appeal of the $260 million dollar settlement is expected.
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