Wasa International Insurance Company Ltd. v Lexington Insurance Co

Wasa International Insurance Company Ltd. v Lexington Insurance Co

Wasa and AGF are not liable to indemnify Lexington for the settlement with Alcoa under the reinsurance contract because the loss claimed does not fall within the period of cover specified in the reinsurance. The follow settlements clause does not extend liability beyond the contract's scope. The retention is per occurrence, and there is no implied term entitling Lexington to recover defence costs.

Parties
Claimant/part 20 Defendant: Wasa International Insurance Company Limited; Claimant/part 20 Defendant: AGF Insurance Limited; Defendant/part 20 Claimant: Lexington Insurance Company
Jurisdiction
England and Wales
Judgment Date
25 April 2007
Procedural Posture
Commercial Insurance/reinsurance Dispute / Judgment After Trial
Outcome
Declarations granted in favour of Wasa and AGF; Lexington's claims dismissed.
Legal Topics
Facultative Reinsurance, Follow Settlements Clause, Period of Cover, Indemnity, Implied Terms, Defence Costs
Insurance Law Reinsurance Law Contract Law Facultative Reinsurance Follow Settlements Clause Period of Cover Indemnity Implied Terms +1 more

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Parties

Wasa International Insurance Company Limited

Claimant/part 20 Defendant

AGF Insurance Limited

Claimant/part 20 Defendant

Lexington Insurance Company

Defendant/part 20 Claimant

Procedural Posture

Commercial Insurance/reinsurance Dispute / Judgment After Trial

Legal Issues

  1. 1 Whether Wasa and AGF are liable to indemnify Lexington under the reinsurance contract for settlement with Alcoa, including losses outside the reinsurance period
  2. 2 Whether the $1,675,000 retention is a one-off or per occurrence retention
  3. 3 Whether Lexington can recover defence costs under an implied term of the reinsurance contract

Ratio Decidendi

Wasa and AGF are not liable to indemnify Lexington for the settlement with Alcoa under the reinsurance contract because the loss claimed does not fall within the period of cover specified in the reinsurance. The follow settlements clause does not extend liability beyond the contract's scope. The retention is per occurrence, and there is no implied term entitling Lexington to recover defence costs.

Court Disposition

Declarations granted in favour of Wasa and AGF; Lexington's claims dismissed.

Orders

  • Wasa and AGF are not obliged to indemnify Lexington for the Alcoa settlement under the reinsurance contract.
  • The $1,675,000 retention is per occurrence.