2nd Circuit Reverses Award of Summary Judgment to Munich on Unpaid Expenses Issue

NEW YORK — A reinsurance certificate issued by Munich Reinsurance America Inc. is ambiguous as to whether its $5 million limit of liability applies to the cedent’s expenses incurred in the settlement of underlying asbestos claims, a federal appeals court has ruled.

In a Dec. 4 summary order, the 2nd Circuit U.S. Court of Appeals held that extrinsic evidence must be considered in interpreting the certificate because it defines “loss expenses” separately, so it is possible that settlements are “losses or damages” while expenses are not.

Munich issued Utica a facultative reinsurance certificate, which covered an umbrella policy issued by …