N.Y. High Court Sends Allocation Questions to Trial in USF&G Asbestos Reinsurance Case

NEW YORK — New York’s highest court has sent to trial the issue of whether United States Fidelity & Guaranty Insurance Co. should have allocated a portion of its $975 million asbestos settlement with Western MacArthur Co. to bad faith claims, thereby reducing its reinsurers’ $420.4 million payment obligation.

On Feb. 7, the New York Court of Appeals also found issues of fact as to whether USF&G priced the underlying claims for cancer-related claims at an unreasonably high level, inflating the reinsurers’ liability.

In the 1950s and 1960s, Western Asbestos distributed asbestos products. Western Asbestos dissolved in 1967 and its …