£1.4m horse row climax

Lloyd's underwriters Hiscox, Brit and Catlin are locked in a £1.4m dispute over stallion infertility cover.

The claim relates to infertility cover provided by the underwriters to Florida-based company Oceanic Bloodstock for a stallion called Keltos.

Under the terms of the policy, the three underwriters agreed to indemnify Oceanic for up to 85% of the value of Keltos "in the event of the stallion proving infertile in the 2003 northern hemisphere breeding season".

The policy defined infertility as the "congenital inability of Keltos to breed mares or any congenital abnormality of its semen".

In 2003, Oceanic Bloodstock made a claim to the insurers under the terms of the policy.

But Hiscox, Brit and Catlin claim they are not liable because Keltos's infertility was caused by "accidental external injury", which was excluded by the policy.

The underwriters claim that Keltos's infertility was caused as a result of "injuries following an acute trauma accidentally caused to Keltos's engorged penis".

This resulted in a dorsal penis haematoma [internal bleeding] and swelling and inflammation to the scrotum and testicles.

Hiscox, Catlin and Brit have issued a claim against Oceanic demanding a declaration from the company that the underwriters are not liable under the terms of the policy.

But a source close to Oceanic said the company had issued a counterclaim in which it was "claiming the full amount for which the horse is insured".