Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

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John Pitblado

COURT LIMITS DISCOVERY OF INSURER’S POLICIES WITH OTHER INSUREDS, COMPELS PRODUCTION OF PRIOR ARBITRATION TESTIMONY

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Utica Mutual Insurance Company (“Utica”) sued R&Q Reinsurance Company (“R&Q) in New York federal court for payment under reinsurance certificates R&Q issued to Utica covering umbrella policies Utica issued to its insured, Goulds Pumps, Inc. (“Goulds”) from 1979 to 1981. Some of the policies Utica issued to Goulds did not state the aggregate limits under the policies, but a settlement between Utica and Goulds in an earlier coverage dispute acknowledged that each of the primary policies at issue contained aggregate limits.

In connection with the reinsurance dispute, R&Q sought to compel the production of (1) documents concerning primary insurance policies issued by Utica to other insureds and correspondence reflecting the aggregate limits, and (2) deposition and hearing transcripts from a prior arbitration between Utica and R&Q.

The court declined to compel production of other insureds’ policies, noting that the aggregate limit issue had been litigated and resolved in prior litigation. However, it ordered that the transcripts be produced, but acknowledged that whether the testimony set forth in them would be admissible in the present Utica-R&Q dispute is a different issue. Utica Mut. Ins. Co. v. R & Q Reinsurance Co., Case No. 6:14-CV-00700 (USDC N.D.N.Y. June 2, 2015)

This post written by John A. Camp.

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CENTURY INDEMNITY ENTERS STIPULATED JUDGMENT PRESERVING RIGHT TO APPEAL DECLARATORY JUDGMENT IN FAVOR OF REINSURER

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A New York federal court entered a stipulated judgment in favor of the plaintiff reinsurer that prevailed on its declaratory claim in a summary judgment previously ordered, which judgment capped its exposure to the dollar amount stated in the “Reinsurance Accepted” portion of the reinsurance contracts at issue.  The litigation had remained ongoing due to the cedant’s remaining counterclaims, but it agreed to forego pursuing those claims in favor of a strategy allowing it to pursue appeal of the prior summary judgment order.

Global Reinsurance Corporation of America v. Century Indemnity Company, No. 1:13-cv-6577, (USDC S.D.N.Y. June 3, 2015).

This post written by Zach Ludens.

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LOUISIANA AND NORTH DAKOTA ADOPT AMENDMENTS RELATED TO NONADMITTED AND REINSURANCE REFORM ACT OF 2010

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Louisiana and North Dakota amended their surplus lines statutes in line with the Nonadmitted and Reinsurance Reform Act of 2010 (the “NRRA”), which was included in the Dodd-Frank Wall Street Reform and Consumer Protection Act (“DFA”), signed into law in July 2010. Under the North Dakota amendment (HB 1146), definitions of “reciprocal state” were removed from the statute, and portions of the statute applying to taxes on out-of-state surplus lines insurance were removed. Under the Louisiana amendment (HB 259), portions of its statute were removed that dealt with collecting premiums based on risks located in Louisiana but insured by out of state surplus lines insurers.  The Louisiana bill repeals the authority for the Louisiana Insurance Commissioner to enter into NIMA, the Nonadmitted Insurance Multi-state Agreement compact, as to which we have posted, reducing the efficacy of the compact in achieving the premium tax provisions of the DFA.

This post written by Zach Ludens.

See our disclaimer.

DISTRICT COURT DENIES PRELIMINARY RELIEF IN REINSURANCE DISPUTE OVER RELATED LITIGATION

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Plaintiff Excalibur Reinsurance Corporation (“Excalibur”) sought a preliminary injunction in the Eastern District of Pennsylvania to enjoin Defendants Select Insurance Company and the Travelers Indemnity Company from proceeding with litigation on the same issues in the District of Connecticut. Excalibur argued that without the injunction, it would need to post security in the Connecticut action, an action that would deplete its corporate assets and seriously affect its liquidity. The district court, however, denied Excalibur’s preliminary injunction because it found that Excalibur would not be “irreparably harmed” if the request were denied. The court found that Excalibur would recover posted funds in Connecticut if it prevailed. It also noted that a sworn statement by its Assistant Vice President was insufficient evidence to demonstrate the potential injury the company faced from posting security in two different matters.

Excalibur Reinsurance Corp. v. Select Ins. Comp., No. 15-2522 (USDC E.D. PA. June 2, 2015)

This post written by Whitney Fore, a law clerk at Carlton Fields in Washington, DC.

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