Fortress Re ordered to pay $1.12 billion in damages to Sompo Japan.
A court has ordered insurer Fortress Re Inc. to pay Sompo Japan Insurance Inc. $1.12 billion (about 120 billion yen) in compensation for huge losses incurred by a Sompo Japan predecessor, informed sources said Tuesday.
The damages suit was filed in 2002 with a U.S. federal district court by Nissan Fire & Marine Insurance Co. claiming Fortress Re, based in North Carolina, had defrauded it over sales of reinsurance contracts.
Nissan Fire sustained 112.9 billion yen in losses due to its obligations linked to reinsurance contracts it concluded with Fortress Re acting as an agent. The reinsurance claims include ones stemming from the Sept. 11, 2001, terror attacks on the United States.
In July 2002, Nissan Fire merged with Yasuda Fire & Marine Insurance Co. to create Sompo Japan, which ranks second in Japan's property and casualty insurance industry after Millea Holdings Inc.
According to the sources, the court's finding that Fortress Re had defrauded Nissan Fire will not immediately lead to a payout as the U.S. reinsurance company itself is incapable of paying such a huge sum.
Whether Sompo Japan will actually receive the compensation will hinge on the results of damages suits filed against Fortress Re executives and the company's auditor over the Nissan Fire losses, they said.
Fortress Re had also acted as an agent in selling reinsurance contracts for Japanese insurers Aioi Insurance Co. and Taisei Fire & Marine Insurance Co.
Aioi and Taisei have separately sued Fortress Re in the United States. Taisei went bankrupt due to heavy losses from the Fortress Re deal, and its domestic operations were taken over by Sompo Japan.
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|Publication:||Japan Weekly Monitor|
|Date:||Dec 29, 2003|
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