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Letter: Houston Casualty Company and the Hyatt Regency Grand Cayman Resort

Published on Wednesday, April 7, 2010 Email To Friend    Print Version

Dear Sir:

We act for the insurers of the Hyatt Regency Grand Cayman Resort ("the Hyatt") including Houston Casualty Company ("HCC"). It is well known that a dispute arose between our insurer clients and the owner of the Hyatt, Mr Asif Bhatia ("Mr Bhatia") and his Jersey investment company Embassy Investments Ltd ("Embassy") which is the subject of legal proceedings in the Grand Court.

The dispute has been the subject of a number of articles and letters published recently by Cayman Net News and Cayman News Service in which statements are reported to have been made on behalf of Mr Bhatia and Embassy by Mr Bill Powers in his capacity of General Manager of the Grand Cayman Beach Suites ("Mr Powers").

The relevant publications are entitled "Hyatt misses government ultimatum" (7 January 2010), "Grand Cayman Beach Resorts position statement' (27 January 2010), "Hyatt Regency repairs still on hold' (24 March 2010), all published by Cayman Net News; and "Hyatt dispute rolls on as hotel crumbles' (21 February 2010) and "Hotel dispute may be at final hurdle" (24 March 2010), both published by Cayman News Service. Also relevant is a letter from the Clerk of the Grand Court ("Courts Hyatt applications handled properly, promptly”, Cayman Net News 14 January 2010).

A number of the statements made on behalf of Mr Bhatia and Embassy are false or seriously misleading, both as to the Hyatt insurance dispute generally and the position of HCC in particular, most especially in the latest two reports published on 24 March.

Contrary to the impression being given to the media, the role of HCC in respect of the insurance dispute is and always has been minor. The US$50m of insurance on the Hyatt was (subject to a deductible of US$200,000) arranged in various layers in various markets, including the London insurance market. HCC's London branch wrote a small percentage (7.8%) of part of a US$15m excess layer. HCC's maximum share of the total sum insured of US$50m was therefore less than US$1.2m.

In common with its co-insurers and other excess insurers, HCC had a number of legitimate reasons to decline Embassy's policy claim, which is the subject of legal proceedings in the Grand Court commenced by Embassy in June 2005. In late 2005 the Grand Court refused Embassy's application for summary judgment and ruled that the case should proceed to trial.

Embassy still publicly criticises that ruling but did not appeal against it.

As confirmed by the letter from the Clerk of the Court, it is a fact that Embassy has made no effort to progress its policy claims to a conclusion through the Grand Court for years, the last step taken by Embassy in those proceedings being the relatively minor and insignificant one of filing a document in February 2008 (in compliance with an order made against it, in fact).

HCC now understands from the latest reports that Embassy has finally settled its claims with all of the other insurers. This being so, HCC assumes that Embassy must now have at its disposal a very substantial amount of insurance proceeds with which to reinstate or repair the Hyatt.

However Embassy now claims in the latest reports that "the hotel owner is still waiting for Houston Casualty Company to decide whether it will pay for the damage caused by Hurricane Ivan or, at its option, reinstate the hotel in accordance with the terms of the insurance policy”.

This appears to be a mere pretext, however, given the fact that HCC's maximum share of the total amount insured is only US$1.2m. If Embassy has now formed a definite plan to reinstate or repair the Hyatt and wishes HCC to indicate its view as to Embassy's preferred course of action, their lawyers should write to us and we will obtain instructions promptly.

Aside from the insurance policy dispute which remains pending between Embassy and HCC in the Grand Court, there is a further contractual dispute, which is subject to arbitration proceedings in London.

A final Award has recently been issued in those proceedings, which provides a clear picture of the course of the unresolved policy dispute between Embassy and HCC and casts light on why HCC has not been able to settle the dispute with Embassy. HCC would like to release the final arbitration Award so that the people of Cayman can benefit from this full picture.

However, Embassy has claimed that the Award is confidential and through its lawyers Embassy has made it made it very clear that it will not consent to its disclosure to anyone.

In that respect we note that, through Mr Powers, Mr Bhatia and his company have gone on record as stating that they wish "to provide the people of Cayman a proper context in the interest and openness and transparency' ("Grand Cayman Beach Resorts position statement”, 27 January 2010).

In accord with that view, HCC invites Mr Bhatia and Embassy to consent to the Award being published to the people of Cayman.

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