Carlton Fields

SECOND REINSURER APPROVED FOR FLORIDA REDUCED COLLATERAL REGULATION

June 29, 2010 by Carlton Fields

The Florida Office of Insurance Regulation (“OIR”) has approved XL Re Ltd. as the second non-Florida reinsurer to operate in Florida without having to post 100 percent collateral. The approval is pursuant to a Florida regulation, 69O-144.007, which allows credit for reinsurance without full collateral for transactions involving reinsurers not domiciled in Florida, provided that certain requirements are satisfied. The requirements include, among other requirements:

the reinsurer must obtain financial ratings from no less than two approved rating agencies;
the percentage of collateral required is determined based upon the lowest rating;
the reinsurer must consent to service of process and jurisdiction;
the reinsurer and its regulator must provide periodic financial and other information to the OIR; and
the reinsurer must hold surplus in excess of $100 million.

Hannover Re was the first reinsurer approved for reduced collateral transactions under this regulation.

This post written by Rollie Goss.

SECOND CIRCUIT: CONVENING NEW ARBITRATION PANEL UNNECESSARY WHERE VACANCY IS CREATED BY RESIGNATION

June 28, 2010 by Carlton Fields

On August 3, 2009, we reported on a district court vacating its prior order that arbitration must commence anew and reappointing an arbitrator to the panel after the arbitrator’s health improved. Insurance Company of North America and INA Reinsurance (collectively, “INA”) appealed and also successfully moved for a stay pending the appeal in the Second Circuit, as we reported on April 15, 2010.

Now, the Second Circuit has issued its decision affirming the district court’s grant of Public Service Mutual Insurance Company’s motion for relief from the judgment based on newly discovered evidence that an arbitrator who had resigned was, in fact, able to rejoin the arbitration panel prior to the district court’s decision on whether to convene a new panel or order a replacement arbitrator. According to the Second Circuit, the general rule that a new panel should be convened if a vacancy arises on an arbitral panel due to the death of an arbitrator prior to the rendering of an award does not apply to a vacancy created by a resignation. The Second Circuit further found that the district court’s decision either to reappoint the arbitrator who had resigned, or, in the alternative, to direct INA to appoint a replacement was proper. Among other things, that decision avoided the waste entailed in convening a new panel after the remaining arbitrators had already engaged in significant proceedings in the case. Insurance Co. of North America v. Public Service Mutual Insurance Co., No. 09-3640 (2d Cir. June 23, 2010).

This post written by Brian Perryman.

COURT HOLDS NEW YORK CONVENTION COVERS DOMESTIC AWARDS THAT ARE “FOREIGN IN CHARACTER”

June 24, 2010 by Carlton Fields

A U.S. District Court has denied the Republic of Argentina’s motion to vacate a $185 million dollar arbitration award in favor of a British investor in Argentinean gas distribution. The award was made in an arbitration under the United Nations Commission on International Trade Law Rules, as provided in the Argentina-United Kingdom bilateral investment treaty.

As an initial matter, the court determined that it had proper subject matter jurisdiction over the matter under Chapter 2 of the FAA, also known as the Convention On The Recognition And Enforcement Of Foreign Arbitral Awards. Specifically, the court rejected Argentina’s arguments based on the Convention’s reciprocity clause, finding that an award made in the U.S. between a U.K. investor and a foreign state fell within the New York Convention as an award “not considered as domestic.” The court then rejected each of Argentina’s merits-based arguments, finding that the Court of International Arbitration did not exceed its powers in rejecting a challenge to one of the arbitrators based on bias, that the panel’s decisions were based on plausible constructions of the bilateral investment treaty, and that the panel did not otherwise abuse its powers. Republic of Argentina v. BG Group PLC, Case No. 08-485 (USDC D.D.C. June 7, 2010).

This post written by Michael Wolgin.

COURT ORDERS STIPULATED DISMISSAL IN REINSURANCE DISPUTE

June 23, 2010 by Carlton Fields

National Union Fire Insurance Company of Pittsburgh, Pa. sued Scottsdale Insurance Company in October 2009, alleging that Scottsdale breached the parties’ reinsurance agreement by failing to reimburse National Union for certain costs and expenses in connection with an underlying settlement National Union entered into with its insured, arising from damage to two gas turbines. National Union and Scottsdale have now pulled the matter out of court by joint stipulation of dismissal, which was recently entered and ordered by the court. National Union Fire Ins. Co. of Pittsburgh, Pa. v. Scottsdale Ins. Co., No. 09-8635 (USDC S.D.N.Y. May 17, 2010).

This post written by John Pitblado.

“PER CLAIM” HELD AMBIGUOUS IN COMMERCIAL LIABILITY POLICY

June 22, 2010 by Carlton Fields

A California appellate court reversed a grant of summary judgment for defendant on a claim for equitable contribution for sums expended in defending a construction defect action. Defendant North American contended that its duty to defend never arose because the underlying insured never paid the $25,000 “per claim” self-insured retention for each of the eight covered homes at issue. The plaintiff, Clarendon America, countered that “per claim” required only one $25,000 payment for the entire action. In an unpublished opinion, the appellate court held that the phrase “per claim” was ambiguous, and that North American failed to show that the developer did not have an “objectively reasonable expectation” that the $25,000 payment would apply only once to the construction defect action as a whole, rather than to each of the eight covered homes. Clarendon Am. Ins. Co. v. North Am. Capacity Ins. Co., No. CIVRS701868 (Cal. App. Ct. June 15, 2010).

This post written by Michael Wolgin.