XL Insurance Ltd. has stated that it does not expect to have any payment obligations after a US court ordered it and another insurer to pay a $158 million award stemming from a 1994 explosion in Louisiana.

Business Insurance reported last week that XL and National Union Fire Insurance Ltd., a Pittsburgh based unit of American International Group, had been ordered to pay a $158 million award by a Louisiana district court jury.

BI said the suit was brought directly by two injured workers and the family of a worker killed in the blast.

The case arose from an explosion at a gas production plant in Plaquemine, Louisiana, owned by French company Air Liquide S.A. The plant manager was killed and two workers were badly burned.

BI said Louisiana allows punitive damages and is one of the few US states that lets plaintiffs bring direct actions against insurers. The award comprised $38 million in compensatory damages and $120 million in punitive damages.

Lawyer Donald Price, who represented one of the injured workers, said the judge will hear coverage issues before the final ruling.

Several issues remain to be resolved including the correct jurisdiction to hear disputes with XL, whose policies stipulate that coverage disputes be arbitrated in London, BI said.

"XL is confident that at the conclusion of the judicial proceedings and any necessary appeals, XL will be determined to have no payment obligations,'' an XL spokesman told BI.

The plaintiffs hold that Air Liquide had a $1 million retention, a $4 million umbrella policy written by Industrial Indemnity co., now part of Bermuda-based ACE Ltd., a $25 million excess layer written by National Union, a $70 million excess layer written by Air Liquide and a $50 million layer written by XL that retroactively covered Air Liquide for several years prior to the accident.