Royal Bank of Scotland (RBS) is suing XL Insurance for failing to cover its £100m losses from WorldCom bonds.
The Bank would not confirm its total exposure to WorldCom, but according to a writ in the High Court, the bonds include the £701.6m senior bonds due to mature in 2007.
RBS had signed a credit swap agreement with XL to cover it for potential losses, but the insurer refused to meet RBS's losses due to a technical disagreement.
RBS is demanding that XL rectify the inaccuracy in the original agreement. The Bank is understood to be claiming further costs.
XL has already admitted that it was exposed to over £63.8m of WorldCom losses. The insurer has not clarified whether it has insured other institutions holding WorldCom bonds.
