Claim freeze could mean 2010 loss for Eurotunnel

Channel tunnel operator Eurotunnel has warned that it will make a loss in 2010 if it cannot collect outstanding insurance payments relating to a fire in the tunnel in 2008.

"If our insurance payments remain blocked, we shall be unable to declare a profit this year," said Jacques Gounon, Eurotunnel's chairman and chief executive, in a statement accompanying the firm's first-half results.

The outstanding amount of €48m has been blocked since May 2009 as a result of legal action between Eurotunnel’s insurers and two railway companies that use the tunnel – Eurostar UK and SNCF.

Eurotunnel has a two-layer insurance policy protecting it against material damage and operating losses. The €200m primary layer is placed with the French insurance market, while the €700m secondary layer is placed in the London market. The lead insurer on the policy is XL Group plc.

Eurotunnel had collected €141m under the policy’s primary layer as of the end of last year as a result of the September 2008 fire. However the railway companies believe the insurers should also compensate them for their losses. Eurostar and SNCF obtained an order from the Paris Tribunal de Grand Instance (TGI) against the first-layer insurers on May 13 2009 ordering them to reserve €48m of the €200m primary layer in their accounts for the railway companies until a ruling can be made on their right to claim under the policy. The TGI also ordered the sequestration of a further €11m.

The insurers were notified of the order on 20 May 2009. Eurotunnel itself is not party to the action.

Eurotunnel said it is taking and will continue to take all appropriate measures to ensure it receives full compensation for the losses that it is entitled to under the policies.