National American Insurance v. Certain Underwriters at Lloyd's London

The opinion filed June 30,1995 and amended August 24,1995 is withdrawn.

OPINION

In July 1991, National American Insurance Company of California (“National”) brought this diversity action in the district court to collect on two reinsurance policies issued in the early 1960’s by various underwriters at Lloyd’s, London (collectively the “Underwriters”). The Underwriters appeal from a summary judgment awarding National approximately $2,930,325, plus pre-judgment interest. 1 We affirm in part, and reverse in part.

I.

National is the successor in interest of the Stuyvesant Insurance Company (“Stuyvesant”). In the early 1960’s, Stuyvesant sold liability insurance to the Hughes Aircraft Company (“Hughes”), which "from 1951 until the mid 1970’s operated a manufacturing plant near the Tucson International Airport. This insurance was brokered by Haidinger-Hayes, Inc. (“Haidinger”), which also sold and serviced insurance and reinsurance for the Underwriters.

This insurance covered the years 1962, 1963 and 1964. In all three years, Hughes purchased $1 million in liability coverage from Haidinger. As originally structured, the first $500,000 of each year’s coverage was under a primary…