Reinsurance pool isn't deep enough to cover 9/11 losses.

• Author: Maley, Frank
• Position: Tar Heeltattler

For 29 years, Fortress Re Inc. has sold reinsurance--lots of it. It operates from a drab, two-story building two blocks off Main Street in Burlington. Between 1982 and 2001, it netted an estimated $528 million, largely by helping airlines get coverage for disasters. Yet it managed to fly under the radar in North Carolina. Even the N.C. Department of Insurance was unaware of it until January.

Fortress Re's profile started rising the day the World Trade Center towers fell. All four hijacked planes were covered by an insurance pool Fortress Re managed for three Japanese reinsurers and Carolina Re, a Bermuda-based reinsurer affiliated with Fortress Re.

Now, pool members are reeling. One, Tokyo-based Nissan Fire & Marine Insurance, estimates the pool owes $843 million in Sept. 11 claims. Carolina Re is in liquidation. Taisei Fire & Marine Insurance is bankrupt. And Nissan has sued Fortress Re, claiming it cooked its books to drive up commissions and trick Nissan into staying in a pool it shouldn't have. Nissan wants restitution and punitive damages.

The reinsurance pool was supposed to spread the risk of insuring aviation losses so that no one disaster would fall too heavily on a single insurer. Fortress Re, Nissan contends in a suit filed in federal court in Greensboro, was supposed to buy reinsurance to limit Nissan's risk to $40,000 per policy...