Missouri Judge Authorizes Final Payment of Claim

A Jefferson City, Mo. Circuit Court judge authorized a final 2001 payment of $280 million to claim holders of the defunct Transit Casualty Insurance Co. The tenth partial payment, ordered by Cole County Circuit Court Judge Byron L. Kinder on Dec. 7, kicks the total payments to be made by the insolvent company to date over the $1 billion mark.

The Transit case, CV185-1206CC, is the largest insurance insolvency case in Missouri history. The anticipated final payout of more than $1.2 billion quadruples the initial recovery estimates in the case.

“The receivership will have collected almost $1.6 billion and paid out more than $1.2 billion when it ends,” wrote Judge Kinder in the ruling. “The expenses will have totaled approximately $350 million. All of the experts whom the court consulted in 1985 estimated that this receivership would not collect more than $300 million and pay out considerably less than that. Since the receivership has collected almost $1.6 billion, it has exceeded those expectations by more than $1.2 billion.”

According to a St. Louis-area law firm that handled the case-McCarthy, Leonard, Kaemmerer, Owen, Lamkin & McGovern L.C.-Judge Kinder’s order hiked payments to 70 cents on the dollar to Transit’s claimants.

Special Deputy Receiver Burleigh Arnold, who is supervising the receivership, estimated that the total cost of liquidating the company will be approximately $350 million. That represents about 22 percent of the nearly $1.6 billion that will be collected by the receivership staff and attorneys from U.S. and foreign reinsurance companies. Those reinsurers include Lloyd’s of London and Munich Reinsurance – firms that were recently hit with massive claims from the terrorist attack on the World Trade Center in New York.

Judge Kinder noted that the complex case required intense, ongoing legal negotiations with Transit, its creditors and reinsurers in 30 different countries. “The unparalleled success is primarily due to Mr. Arnold and the staff he has employed as well as the attorneys and consultants he has contracted with, all of whom have stayed together over fourteens years,” wrote Judge Kinder.