One of America?s largest retail supermarket chains has filed suit against XL Insurance America Inc. for indemnification for property damage sustained from four hurricanes that swept through the south-eastern United States last year.

Winn-Dixie Stores Inc., which is demanding a trial by jury, filed last Friday in the United States District Court for the Northern District of Georgia Atlanta Division.

XL is accused of ?improperly refusing to pay Winn-Dixie the millions of dollars it owes for losses covered under the excess commercial property insurance policy that XL sold to Winn-Dixie,? the complaint said.

The dispute dates back to spring, 2004 when XL agreed to insure the Florida-based corporation as part of a comprehensive, multiple-layer property insurance programme in which all insurers were to provide coverage to Winn-Dixie on substantially similar terms.

The complaint said that of the many insurers participating whose policies have been implicated by Winn-Dixie?s hurricane losses, all except XL have paid in full or have at least acknowledged their duty to pay in full for losses in line with the coverage for which Winn-Dixie contracted.

The corporation accused XL of seeking to limits its obligations based on an ?incorrect interpretation of its policy?.

Winn-Dixie said that since many of its 1,334 stores along with other facilities are located along the Atlantic coastline in Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Texas and Virginia, adequate property insurance against hurricane losses was of the ?utmost importance?.

As part of a comprehensive, multiple-layer property insurance program, Marsh USA procured commercial excess property insurance from XL.

XL bound coverage on April 27, 2004 and issued an excess commercial insurance property policy ?in return for substantial premium? effective for April 30, 2004 to April 30, 2005. The policy was for direct physical loss or direct physical damage to first-party property and directly resulting effect on income and expense, the complaint said.

Under the policy, XL must indemnify Winn-Dixie for a 30 percent share of the $50 million layer in excess of a $50 million annual aggregate retention for Windstorm losses, such as the damage and resulting business interruptions caused by hurricanes.

Approximately three-and-a-half months after the inception of the policy, Winn-Dixie suffered through a hurricane season that Marsh described as ?the worst in history.?

The southeastern United States was ravaged by Hurricanes Charley, Frances, Ivan and Jeanne resulting in Winn-Dixie suffering extensive property damage and other losses. Its aggregated losses for the 2004 hurricane season amounts to at least $85 million.

Winn-Dixie said that because all of the underlying insurers are solvent and all have agreed to pay their respective policy limits ? limits to which XL was privy at the time it agreed to attach above them ? XL?s duty has attached.

The complaint said that ?notwithstanding that Winn-Dixie?s losses are squarely covered by the policy, and that when properly aggregated those losses far exceed the $50 million threshold necessary to trigger the policy, XL has unlawfully refused to indemnify Winn-Dixie. XL incorrectly contends the Policy does not allow the aggregation of annual windstorm loss for purposes of exhausting underlying limits.?

The complainant wants a declaration that XL shall be liable for its 30 percent shares of the losses Winn-Dixie suffered in excess of the $50 million annual aggregate underlying retention for named windstorm losses as a result of the Hurricanes, an award of costs including attorneys fees an any appropriate additional relieve.

Winn-Dixie said XL?s breach of contract forced it to incur the substantial burden, expense and disruption in bringing the court action and it wants the court to grant an award of the actual and consequential damages that Winn-Dixie has sustained as a result of XL?s contractual breach and other actionable conduct, in an amount to be proven at trial, an ward of costs including attorneys fees and any additional relief.

As an alternative, Winn Dixie wants the policy reformed to reflect both party?s actual contemporaneous agreement at the time of procurement, a declaration under the policy as reformed that XL shall be liable for its 30 percent share of the losses Winn-Dixie has suffered in excess of the $50 million annual aggregate underlying retention for named windstorm losses as a result of the hurricanes and an award of costs.

XL did not respond to calls by press time.