A captive insurer for the Seventh-day Adventist Church has launched a high-stakes legal battle in Vermont federal court, alleging that two reinsurers failed to reimburse more than $55 million tied to abuse claims at a now-shuttered boarding school.
The lawsuit — the AIG insurance $55M Abuse Settlement suit — accuses AIG unit Lexington Insurance Co. and Swiss Re subsidiary Westport Insurance Corp. of refusing to honor facultative reinsurance agreements covering massive defense costs and settlements.
A Dispute Over $55.4 Million
In a complaint filed Tuesday, Gencon Insurance Co. of Vermont said the reinsurers declined to indemnify approximately $55.4 million in combined defense expenses and settlement payments.
Gencon contends Lexington is responsible for about $36.4 million, while Westport allegedly owes $19 million. The captive insurer argues the contracts required the reinsurers to “follow the settlements” it entered into.
“The reinsurance contracts obligate the reinsurers to follow the settlements entered into by Gencon,” the company said in its complaint, adding that it reasonably allocated the amounts it paid and that industry custom allows such allocation discretion.
Lexington and Westport have argued the underlying claims are not covered or have disputed how Gencon allocated the losses, according to the filing.
