NEW YORK--Two New York courts have handed defeats to AXA S.A. in its effort to avoid millions of dollars of claims under policies guaranteeing movie industry loans made by Chase Manhattan Bank.

A New York State Supreme Court judge earlier this month resolved several coverage issues in favor of Chase on policies written by AXA Reassurances S.A. covering Chase loans to the producer of the 2000 Burt Reynolds film, "The Crew."

AXA argued that the loan deals were structured in a way that guaranteed losses--making them "nonfortuitous" and uninsurable--and that its own underwriter and attorney did not understand the deals. Justice Ira Gammerman rejected both defenses.

Under New York law, losses are considered fortuitous when a policyholder and insurer contractually assume that a risk is "to a substantial extent beyond the control of either party," even if, in fact, it is not, the judge concluded. Chase and AXA made such an assumption in their contracts covering loans to the producer, Beverly Hills, Calif.-based George Litto Productions, the judge found.

Noting that AXA stood to collect a percentage of Litto's net profits as "deferred premiums," Justice Gammerman found that allowing AXA to rescind coverage for nonfortuity would mean that no coverage ever existed and that "AXA induced Chase to provide uncollateralized funding for an endeavor in which AXA had a risk-free investment. Public policy does not tolerate such a result."

"The insurers' complaint that their underwriter and attorney did not understand the transaction is not grounds for depriving Chase of the benefits of the bargain it made," Justice Gammerman added, referring to AXA and a fronting insurer, American International Group Inc.'s New Hampshire Insurance Co. unit.

The ruling follows a December 2001 jury verdict against AXA on other coverage issues and opens the way for Chase to pursue a claim for losses on "The Crew."

Meanwhile, an intermediate New York appeals court affirmed a ruling by Judge Gammerman dismissing claims by AXA Reinsurance UK P.L.C. and General Star International Indemnity Ltd., a Berkshire Hathaway Inc. unit, against London-based film producer J&M Entertainment Ltd. The insurers charged that J&M fraudulently failed to advise them of facts relating to their coverage of loans on two films, "History is Made at Night" and "A Texas Funeral."

Judge Gammerman had dismissed the claims on jurisdictional grounds.