Jeremy Cooke, QC, said managers of Feltrim Underwriting Agencies created a gap between the losses to which they exposed names and the reinsurance they bought to protect those names.
The names were on three Feltrim syndicates between 1987 and 1989 when disasters such as Piper Alpha in the North Sea and Hurricane Hugo in the United States cost insurers around the world billions of pounds.
Syndicate managers 'deliberately and specifically assumed a liability for certain sums which were not available to the business should certain events happen . . . No competent underwriter would have left unreinsured an exposure beyond that which names could bear . . . The losses were simply beyond the pale.'
Two weeks ago the judge, Mr Justice Phillips, ruled in favour of 3,000 Gooda Walker names who claimed pounds 629m. He has yet to decide on damages in that case, but names' lawyers expect the award to be about pounds 500m.
Mr Cooke said Feltrim could not argue that the syndicates were obviously high-risk and that names were aware of this, because information published by the syndicates, such as reports and accounts, gave the impression there was enough reinsurance cover available.
Nor could syndicate managers claim that catastrophes such as wind storms were unforeseeable. Mr Cooke said: 'In some parts of the world they occur with regularity. There is a wind-storm season in the USA. The only question is, will the storms hit populated areas?'
The case was adjourned until Monday to allow the judge to consider technical submissions from the Feltrim lawyers.Reuse content