XL Group Plc said it’s among the insurers of the railroad involved in Canada’s worst train disaster in 27 years.
XL “can confirm that we are an insurer of the Montreal, Maine & Atlantic Railway,” Christine Weirsky, a spokeswoman for the Dublin-based insurer, said in an e-mail yesterday.
A Montreal, Maine & Atlantic Railway Ltd. train carrying 72 carloads of crude oil exploded July 6 when it rolled from its parking spot and crashed in the Quebec town of Lac-Megantic. Local businesses were destroyed and about 50 people were left dead or missing, according to police.
Losses for insurers could include death benefits, business interruption costs for commercial clients and expenses tied to replacing damaged property. Edward Burkhardt, chairman of the railroad, said in a media appearance yesterday that he spent the weekend coordinating with insurance companies.
“We have a lot of insurance,” Burkhardt said. “I’m not going to advise at this point what our limits are. I think our limits are going to be tested.”
Weirsky declined to comment on the specifics of XL’s policy with Montreal Maine, a unit of closely held Rail World Inc.
“We are on the scene working closely with the company and authorities and our thoughts and prayers are with the community,” she said.
XL dropped 40 cents, or 1.3 percent, to $30.94 at the market close in New York yesterday. The company has advanced 23 percent this year.
The disaster may bankrupt the rail unit even if it has comprehensive insurance, according to Chris Damas, a Barrie, Ontario-based analyst at BCMI Research.
“No doubt the lawsuits will sink MM&A,” he said in an e- mail. “We have to know the limits of their insurance and deductibles. Would it cover an avoidable accident and subsequent negligence? Not sure.”
Burkhardt has denied full responsibility for the disaster. He said yesterday that the engineer responsible for the train failed to set the hand brakes properly.
The crash is the worst rail disaster in the country since a collision between a Canadian National Railway freight train and a VIA Rail passenger train near Hinton, Alberta, killed 23 people in February 1986.
Large publicly traded railways such as Union Pacific Corp. and CSX Corp. could purchase insurance plans with a liability limit of more than $1 billion, said Daniel Bancroft, senior vice president of transportation at broker Willis Group Holdings Plc’s North America unit. Lines that cover more concentrated regions “typically buy smaller limits,” he said in a phone interview on July 9 from New York.
Anne Morin, a spokeswoman for the Insurance Bureau of Canada in Quebec, said it’s too early to assess the cost of the damage in the crash this month in a town of about 6,000 people.
“There’s a section of the city that’s disappeared,” Morin said in a phone interview.
–With assistance from Andrew Mayeda in Ottawa and Zachary Tracer in New York. Editors: Dan Kraut, Dan Reichl