Procrastination has cost French
insurer Axa’s Axa Versicherung unit dearly and saved American
International Group (AIG) a much-needed $34.4m.
This follows US Court of Appeals
for the Second Circuit in New York overturning of a judgment by the
Southern District of New York in April.
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In the April judgement, a jury
found that AIG was liable for $34.4m on claims of fraudulent
inducement relating to reinsurance facilities entered with the Axa
Versicherung’s predecessor, reinsurer Albignia, in 1996.
The crux of Axa’s fraudulent
inducement claims was that AIG, primarily through its Brokers,
misled Albignia about the nature of the reinsurance contracts and
offloaded bad risks onto Albignia.
In its ruling the Court of Appeals
agreed with the findings of the lower court but ruled that under
the Statute of Limitations Axa had left its claim against AIG too
long.
The Court of Appeal noted: “A claim
for fraud must be commenced either within six years from the
commission of the fraud or within two years from the date that the
fraud was discovered, or could reasonably have been discovered,
whichever is later.”
