Opinion ID: 148187
Heading Depth: 1
Heading Rank: 6

Heading: The Allocation of the Chemical Products Claims Settlement

Text: INA's second challenge focuses on Travelers' handling of the $20 million of the settlement dedicated to the chemical products claims. INA makes two arguments here. One of those arguments essentially reprises the one considered in the previous section, only this time directed toward Travelers' decision to bypass the XS layer of coverage in allocating the settlement dollars dedicated to the chemical products claims. The response is basically the samethe XS policies, although they provided coverage for products claims and attached at lower points than the XN policies, were subject to near-total reinsurance from Acme subsidiaries. Accordingly, it was not unreasonable for Travelers to view those policies as exhausted in virtue of the net settlement and skip straight to the XN layer. INA's other challenge to the handling of the chemical products claims is new, however. It points out that there is nothing in the record to indicate that Travelers ever conducted a detailed analysis of the chemical products claims being brought against Acme before agreeing to allocate $20 million of the settlement to them. Thus, INA argues, Travelers' handling of these claims could not have been professionally reasonable, as it was not based on an analysis of either Acme's possible exposure under those claims or how those claims potentially matched up with the specific coverage available. Instead, Travelers began with a number$20 millionand worked backward from there. We agree with the District Court that, under the circumstances, this approach was not unreasonable. Yessman testified that his main focus was on settling the breast implant claims for an amount Travelers could live with. Prior to the acquisition of Aetna CS by Travelers, Aetna CS had offered Acme a $300 million coverage-in-place deal just for the breast implant claims, which Acme rejected. [26] When Travelers took over Aetna CS's policies, it set up initial reserves of $100 million for the breast implant claims. [27] Given that, we cannot say that the decision to dedicate $20 million to the chemical products claims, in order to resolve the breast implant claims for only $80 million, was unreasonable, even if it were not grounded in the kind of analysis of the chemical products claims that one expects to see.