Armonk-based Swiss Reinsurance America Corp. has refused to pay its portion of a settlement with Duke Energy for a $5 billion environmental cleanup, according to two companies that Swiss Re insured.
TIG Insurance Co. and Associated Electric and Gas Insurance Services Ltd. (AEGIS) did not specify how much Swiss Re owes, in a complaint filed Nov. 2 in U.S. District Court, White Plains, but a year ago they notified the company that the “possible exposure” was between $556 million and $623.1 million.
Swiss Re’s media relations office did not respond to an email request for its side of the story.
Swiss Re America is part of Swiss Re AG, headquartered in Zurich, Switzerland. The $26 billion company, by market capitalization, sells reinsurance ”” insurance for insurers ”” to spread the risk of large claims.
In the 1980s, a TIG predecessor company and AEGIS bought reinsurance from Swiss Re to back up general liability policies with Duke.
Duke had been storing coal ash, a byproduct of burning coal, in unlined basins at 15 power plants in the Carolinas. In 2014, toxic coal ash spilled from a basin and contaminated the Dan River.
Duke pleaded guilty to criminal violations of the federal Clean Water Act, and it began closing the basins and cleaning up the messes. Duke has estimated that the cleanup will take 20 years and cost $5 billion, according to news accounts.
Duke sued its insurers in 2017, arguing that general liability policies from the 1980s should cover some of the cleanup costs.
AEGIS hired a defense attorney to represent itself, TIG and Berkshire Hathaway insurance.
Swiss Re representatives monitored the defense, according to the complaint, were kept apprised of settlement negotiations and were aware of its liability.
In January 2020, for instance, an attorney working for Swiss Re allegedly told an AEGIS attorney, “We’re sort of on the hook for a lot of money on these claims” and “it’s 100% our money.”
Last August, the insurers and Duke settled. Swiss Re was responsible for 57% of the total, which has not been publicly disclosed, and more than $8.8 million for legal expenses.
Swiss Re was given a copy of the settlement, according to the complaint, and acknowledged receiving it but did not respond or comment on the deal.
On Sept. 30, AEGIS paid Duke on behalf of itself, TIG and Berkshire Hathaway. On Oct. 1, the complaint states, AEGIS billed Swiss Re for its portion of the deal.
“To date,” the Nov. 2 complaint states, “Swiss Re has not paid anything.”
The insurers accused Swiss Re of breach of contract and are demanding full payment plus interest.
TIG and AEGIS are represented by Manhattan attorneys John A. Basinger and Stephanie L. Denker.
