Suit Challenging ACE's Runoff Structure Dismissed
By Michael Ha
NU Online News Service, March 10, 5:19 p.m. EST?A lawsuit brought by Chubb and American International Group challenging the runoff structure of ACE Limited companies in the U.S. marketplace was dismissed this week by a California court.[@@]
California Superior Court Judge James Warren's decision involves several ACE companies, including Insurance Company of North America, INA Financial Corporation, ACE Property and Casualty Insurance Company and Century Indemnity Company.
The case was a dispute over the separation of some ACE entities, which have a heavy burden of asbestos claims, into a runoff operation.
ACE purchased a portion of Cigna property-casualty company in 1999 and some Cigna entities were legally separated into an entity called Brandywine holdings. "The question on the table was: were the policyholders of Brandywine unfairly separated into a runoff operation and therefore not able to be supported by ACE's continuing operations?" S&P credit analyst Damien Magarelli noted.
The judge dismissed the case, which was filed by member companies of AIG and The Chubb group, saying he believed policyholders have not been harmed by the separation in ACE business entities.
California's Proposition 64, passed in Nov. 2004, stipulates these types of lawsuits can only be brought by plaintiffs who have suffered harm as a result of allegedly unfair business practices.
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