Trenwick, Swiss Re In Arbitration
NU Online News Service, July 2, 4:01 p.m. EST?Bermuda-based Trenwick Group Ltd. said it has begun arbitration proceedings to recover $55 million in damages from European Reinsurance Co., a Swiss Reinsurance Co. subsidiary.
According to Trenwick, European Re reneged on its obligations under a "Catastrophe Equity Securities Issuance Option Agreement."
The agreement, Trenwick said, entitled it to place 550,000 convertible perpetual preferred shares of European Re at a purchase price of $100 per share.
The unwillingness of Swiss Re to "honor its clear cut obligations" under the agreement "forces us to demand arbitration," said James F. Billett, J., chairman, president and chief executive officer of Trenwick.
Trenwick is a specialty insurance and reinsurance underwriter operating through subsidiaries in the United States, the United Kingdom and Bermuda.
In a prepared statement, Swiss Re replied that "European Re is the process of exercising its contractual right to determine whether Trenwick is entitled to exercise the CatEPut at this time."
European Re is also analyzing information compiled during its due diligence of Trenwick, Swiss Re said.
The company added that European Re believes its findings will facilitate the making of an objective decision about any obligations it may have to Trenwick under the terms of the agreement.
"We welcome the arbitration process as a means to lay out all relevant facts and to achieve a prompt determination of questions that have arisen in this matter," Swiss Re said.
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