According to Reuters, a number of U.S. insurers have gone forward in their legal duel with J.P. Morgan Chase & Co. Inc., claiming they do not have to pay up on $1.1 billion of surety bonds related to the fall of Houston-based Enron Corp.
The insurers have stated that J.P. Morgan did not properly represent the nature of the surety bonds – which were used in a manner of financial hedging instruments – rendering them void.
The insurers, including units of CNA Financial Corp., Citigroup’s Travelers Property Casualty Corp., St Paul Cos. and Liberty Mutual, won two more weeks to respond to J.P. Morgan’s claims in a federal court in New York. The insurers also asked the New York bankruptcy court handling the Enron case for permission to view Enron documents relating to the policies.
J.P. Morgan sued the insurers in December, stating the bank was due payments of approximately $965 million — from a total of $1.1 billion — on surety bonds, which pay out when companies are unable to complete projects or default on financial obligations.
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