War Emblem, North America's champion 3-year-old male of 2002 who was sold to Japan's Shadai Stallion Station for nearly $18 million in September, is having difficulties covering mares in his first year at stud and his owners are negotiating a settlement with an insurance company. The problem with War Emblem does not involve his fertility, sources close to Shadai said, but with his willingness or interest to breed mares. His first cover came on March 9 after he was not willing to cover mares when the breeding season opened. He successfully covered five mares by March 13, then regressed again. Shadai is said to have sent the son of Our Emblem various types of mares from among the 200 that were booked to him, from maidens to older, more experienced mares. The farm also tried mares that were gray, bay, chestnut, and nearly all black, similar to his coat, to no avail. War Emblem's breeding difficulty is the latest in a series of blows to the Yoshida family's operation, which lost three major stallions last year. Sunday Silence, the 1989 North American Horse of the Year who became the most successful stallion in Japanese history, died in August from an infection to his leg. One month earlier, the farm lost the promising El Condor Pasa, a group I-winning son of Kingmambo, due to colic. That same month, the dual hemisphere stallion End Sweep, who shuttled to Shadai from Australia's Arrowfield Stud, died at Shadai after he flipped over and suffered an injury. It is not known what would become of War Emblem if an insurance settlement is reached. The Kentucky Derby (gr. I) and Preakness (gr. I) winner retired sound after a disappointing eighth-place finish in the Breeders' Cup Classic (gr. I) for his owners, The Thoroughbred Corp. and Russell Reineman, and trainer Bob Baffert.