Republic Western Insurance Company, Dba Oxford Property &casualty Insurance Company,plaintiff-counter-defendant-cross-defendant, v. C V Starr & Company; Granite State Ins. Co., a Newhampshire Corporation, Defendants-cross-defendants-appellees, v. Hoge, Fenton, Jones & Appel Inc., a Professionalcorporation; John B. Stohlton; Lewis L. Fenton,counter and Cross-claim Defendants-appellants.republic Western Insurance Company, Dba Oxford Property &casualty Insurance Company,plaintiff-counter-defendant-appellant, v. C V Starr & Company; Granite State Ins. Co., a Newhampshire Corporation, Defendants-appellees,andhoge, Fenton, Jones & Appel Inc., a Professionalcorporation; et al., Defendants-counter-claimants,, 5 F.3d 539 (9th Cir. 1993)

MEMORANDUM^** 

The wording of the Granite insurance policy does not require it to provide the coverage that Midland would have provided had it not become insolvent. California law, as stated in Reserve Ins. Co. v. Pisciotta, 640 P.2d 764 (Cal.1982), requires only that ambiguity be resolved in favor of the insured, not that the policy make specific provision for the insolvency of an underlying carrier. Span, Inc. v. Associated Int'l Ins. Co., 277 Cal. Rptr. 828, 835 (Cal.Ct.App.1991).

The phrase "as underwritten by" is not ambiguous with regard to the assumption of risk of an underlying insurer's insolvency, especially given the context in which the phrase is used in the excess policy. In the context of an insurance policy, Webster's Third New International Dictionary defines "underwrite" to mean:

2: to write one's name under or set one's name to (an insurance policy) for the purpose of thereby becoming answerable for a designated loss or damage on consideration of receiving a premium percent: insure on life or property; also: to assume (a sum or risk) by way of insurance [.]

Webster's Third New International Dictionary Unabridged at 2491 (1986). Only a strained interpretation of "as underwritten by" can convert this phrase into an agreement to provide for insolvency drop down.

"Disagreement concerning the meaning of a phrase does not automatically make the policy ambiguous. Ambiguity is not necessarily to be found in the fact that a word or phrase isolated from its context is susceptible of more than one meaning." Castro v. Fireman's Fund Am. Life Ins. Co., 253 Cal. Rptr. 833, 836 (Cal.Ct.App.1988) (footnote and internal quotation omitted). Nor does the mere absence of a policy definition of a phrase render it ambiguous as a matter of law. Id.

Unlike the terminology used in the policies in Reserve, Fageol Truck & Coach Co. v. Pacific Indemn. Co., 117 P.2d 669 (Cal.1941), and Coca Cola Bottling Co. of San Diego v. Columbia Casualty Ins. Co., 14 Cal. Rptr. 2d 643 (Cal.Ct.App.1992), the phrase "as underwritten by" as used in the Granite policy does not leave room for a reasonable interpretation of insolvency drop down. We "will not adopt a strained or absurd interpretation in order to create an ambiguity where none exists." Reserve, 640 P.2d at 767-68.

The Granite policy, "when read as a whole and without isolating parts thereof," Denny's Inc. v. Chicago Ins. Co., 286 Cal. Rptr. 507, 512 (Cal.Ct.App.1991), does not contemplate insolvency drop down by Granite. We therefore conclude that the Granite policy unambiguously does not include the risk of Midland's insolvency within the scope of its coverage.

In light of this conclusion, it is unnecessary to discuss the appellants' remaining arguments. The order of the district court granting summary judgment to Granite is AFFIRMED.