One of Bermuda-domiciled Wilton Re Holdings Ltd.'s US subsidiaries is being sued by a 47-year-old widow for refusing to pay out on a $150,000 life insurance policy for her late husband that was submitted - and automatically issued - on-line on the same day that he was diagnosed with brain cancer during a hospital stay.

Wilton Re claims the policy is void on the grounds that the application was not submitted by the husband and was not completed accurately. Rather than satisfy the claim, the insurer reimbursed the premium of $5,516, according to a report in KYC News' OffshoreAlert online newsletter.

Details are contained in a civil complaint that was filed by Ronia Gaye West, a resident of Cass County, Missouri, against Wilton Reassurance Life Co. of New York, f.k.a. American Life Insurance Company of New York, at the 17th Judicial Circuit Court, Cass County, Missouri on April 28, 2008 and transferred to the US District Court for the Western District of Missouri on June 6.

At the centre of the dispute is the validity of a life insurance policy that was taken out on Johnny Leroy West on January 24, 2005 and for which Mrs. West was the beneficiary.

The complaint said that Wilton Re made and issued its life insurance policy to Mr. West around January 24, 2005, with the insurer agreeing to pay $150,000 in the event of his death.

It said that when Mr. West died at the age of 58 on December 1, 2006, Mrs. West was the named beneficiary entitled to receive all proceeds and benefits payable under the terms of the insurance policy, with which Mrs. West complied, and on January 8, 2007, she produced proof of his death and demanded payment of the sum she was entitled to from Wilton Re.

But it concluded that the insurance company had failed and refused to pay the death benefits to Mrs. West.

Mrs. West is seeking damages of $150,000, plus interest at a rate of nine percent per annum from January 8, 2007 until the date of judgment; "vexatious penalties" of $15,150; attorney's fees of $60,000, and costs.

Wilton Re filed a motion for summary judgment on December 11 in which it stated that when Mr. West was hospitalised on January 24, 2005, an on-line application purportedly with his electronic signature was submitted to Wilton (then known as American Life Insurance Co. of New York) and because its pre-programmed underwriting criteria were satisfied by the answers on the application, a $150,000 life insurance policy was automatically issued upon receipt of the application.

The filing stated that Wilton Re would show at trial that the application was not submitted by Mr. West and the signature was not his, while the completed application falsely denied Mr. West had been diagnosed or treated for cancer in the past five years.

"This motion, however, seeks judgment on a narrower basis relating to application question four," it read. "That question asked in part if Mr. West had been hospitalised for five or more consecutive days in the past 12 months; the applicant said "no". In fact, at the time the application was submitted on January 24, 2005, Mr. West was at that very moment in the fifth consecutive day of an eight consecutive day hospitalisation."

It concluded that the policy, which was issued in reliance on this false representation, was void and Wilton Re claimed it would never have been issued if this question had been answered correctly.

Wilton Re sent a refund cheque of $5,516.40 of the premiums from the policy to Mrs. West April on 23, 2007.