BP Plc (BP)

[fredman]

BP Sued by Transocean’s Excess Insurers Over Spill (Correct)

Lloyd’s of London asked a U.S. judge to declare that Transocean Ltd.’s excess-insurance carriers have no obligation to cover BP Plc against cleanup costs or damage claims resulting from the Gulf of Mexico oil spill.

BP, which is self-insured against such losses, asked Lloyd’s on May 14 for coverage under policies owned by Transocean Ltd., lawyers for the underwriters said in papers filed in Houston federal court. Transocean owned the Deepwater Horizon drilling rig that was under contract to BP at the time of the accident.
Lloyd’s claims that BP in its contract with Transocean agreed the rig-owner would be held harmless for excess coverage of pollution originating below “the surface of the land or water from spill, leaks or discharges,” according to the insurers’ complaint. Transocean’s excess carriers asked the Houston court to declare that they had “no additional-insured obligation to BP.”
“Because liabilities BP faces for pollution emanating from BP’s well are from below the surface and from BP’s well, those liabilities are not within the scope of the additional insured protection,” Lloyds said in the May 21 filing.
Underwater Lease

BP, which owns the underwater lease, and Transocean, which owned the rig, face more than 130 lawsuits filed by thousands of commercial fishermen, property owners and tourist businesses harmed by oil leaking from a damaged subsea well since the Deepwater Horizon exploded and sank off the Louisiana coast last month.

The underwriters said Transocean’s excess coverage is $700 million.

BP spokesman Scott Dean said in an e-mail May 19 that the London-based energy company is self-insured against losses and damage claims resulting from the spill.

Guy Cantwell, Transocean spokesman, and George Gilly, Lloyd’s lawyer in the lawsuit, didn’t immediately respond to calls for comment.

The lawsuit is Certain Underwriters at Lloyd’s London v. BP Plc, 4:10-cv-01823, U.S. District Court, Southern District of Texas (Houston).

Source: http://www.businessweek.com/news/2010-05-24/bp-sued-by-transocean-s-excess-insurers-over-spill-correct-.html
STRONG SELL