(Refiles adding dropped word to name of court)
By Julia Payne
LONDON May 22 U.S. private equity firm Carlyle
Group is suing a group of its insurers over $400 million
worth of oil it claims it lost when Morocco's sole refinery went
bankrupt two years ago, court documents show.
Carlyle claims in a suit filed in the United States District
Court for the Southern District of New York that insurance
underwriters led by Mitsui Sumitomo Insurance Underwriting (now
known as MS Amlin) have reneged on their obligations when
refusing to cover the losses, according to documents on the
Insurers have said in response to the suit that the nature
of Carlyle's dealings with Samir, the refinery's operator, mean
that its losses are not covered by the type of insurance it had.
They also say Carlyle did not alert them early enough about
the plant's financial troubles.
The rare public case provides an insight into dealings
between insurers and commodity trading firms, which take big
risks when supplying raw materials to clients in financial
The case also sheds more light on the collapse of Samir,
which became the biggest casualty of the oil price crash of
2014-2015, leaving some of the world's biggest trading firms
including Carlyle with unpaid debts of over $1 billion.
Carlyle declined to comment on the position of the insurers.
Samir and the Moroccan state-appointed liquidator for the
refinery declined to comment when contacted by Reuters.
Carlyle Commodity Management, a subsidiary of Carlyle Group
formerly called Vermillion Asset Management, said in the court
filing it had about 7 million barrels of crude and oil products
stored at Morocco's 200,000 barrel per day refinery in
Mohammedia in 2015 prior to its stoppage.
The refinery was shut down in August 2015 after the Moroccan
government imposed a $1.35 billion unpaid tax bill on Samir and
froze its accounts.
The crisis at the refinery unfolded as oil prices crashed
from the middle of 2014, drastically reducing the value of oil
Samir bought and held in its tanks for refining purposes.
Carlyle says that during 2015 Samir emptied the tanks
without its consent.
Carlyle filed the first request for cover to its insurers in
January 2016 concluding that the oil could not be recovered.
In late February this year, Carlyle's insurers denied any
cover, leading Carlyle to launch a lawsuit against the
underwriters in early March, according to the court documents.
The litigation is still ongoing.
In their answer to the claim, the underwriters said
Carlyle's position in relation to Samir was as a lender and not
as an oil supplier since the group never actually owned the oil
it claims was stolen.
Therefore, insurance cover for physical loss did not apply,
the insurers argued, according to documents.
"As the transactions were financings rather than true sales
of the commodities and Carlyle did not take title to the
commodities, the loss or losses allegedly suffered by Carlyle
was an uninsured credit loss," the insurers said in a response
filed at end-April to the court in New York.
The insurers also allege that Carlyle breached its contract
by not notifying the underwriters of payment problems.
"Carlyle has breached its contractual duties ... by failing
to take any steps to mitigate the alleged loss or losses upon
becoming aware that Samir had been processing the commodities,"
the counterclaim said.
"To the contrary, Carlyle entered into numerous additional
transactions with Samir, thereby exacerbating the size of the
alleged loss or losses by hundreds of millions of dollars."
(Additional reporting to Samia Errazzouki in Rabat; Editing by