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Court rules for RSA USA in asbestos dispute


PONTIAC, Mich.--London-based Royal & SunAlliance Insurance Group scored a victory Tuesday when a state court in Michigan said General Motors Corp.'s efforts to seek coverage for its asbestos and environmental liabilities are time-barred.

Judge John J. McDonald of the 6th Circuit Court in Pontiac, Mich., granted a pretrial motion by Royal & SunAlliance USA, RSA's U.S. operation, for summary dismissal of the case. A coverage trial had been expected to be held within the next few months.

"The crux of Royal's motion is that there are no genuine issues of material fact that GM's claims are time-barred under the breach of contract limitations period of six years.... GM had six years in which to bring this suit for a determination of coverage under its policies," said the judge in his ruling. "GM failed to act within the prescribed time period, and thus its action is time-barred."

A spokeswoman said Detroit-based GM intends to appeal the decision but had no further comment.

The lawsuit, filed by GM two years ago, does not specify the amount GM sought to recover. However, it has been estimated that the GM claim could amount to $1 billion.

GM is seeking payment for claims it said were covered under primary, umbrella and excess comprehensive general liability and comprehensive products liability policies issued from 1954 through 1971.

Commenting on the Michigan court's decision, an RSA spokesman said the judge's ruling "supports our view that the GM case is without foundation."

RSA USA president and chief executive John Tighe said in a statement, "We have always been confident that GM's suit was without merit and should never have been brought before the court. Today's ruling validates our position, and we are pleased that the case has been dismissed."

Separately, GM, along with other major policyholders of RSA's U.S. operations, are protesting efforts by the RSA to sell those operations to Charlotte, N.C.-based Arrowpoint Capital Corp., a vehicle established by RSA USA's management team, for $300 million in a deferred compensation arrangement.

The policyholders have contended that RSA's U.S. operations could be left with nearly a $1 billion reserve shortfall if the insurer is successful in selling those operations.

That estimate, though, is based on the expectation of GM's success in the Michigan coverage litigation.

A recommendation by a hearing officer on the Arrowpoint deal, following a public hearing Friday by the Delaware Insurance Department on the issue, is expected to be submitted to Delaware Insurance Commissioner Matthew Denn in about a month. The commissioner is expected to subsequently issue a ruling on the matter.

The RSA spokesman said the insurer has always had the view that the Arrowpoint transaction "is the right transaction for policyholders, and the GM decision today doesn't change that."