• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

  • About
    • Events
  • Articles
    • Treaty Tips
    • Special Focus
    • Market
  • Contact
  • Exclusive Content
    • Blog Staff Picks
    • Cat Risks
    • Regulatory Modernization
    • Webinars
  • Subscribe
You are here: Home / Archives for Arbitration / Court Decisions / Contract Interpretation

Contract Interpretation

REINSURANCE CLAIMS REJECTED; COURT REFUSES TO SEAL CONFIRMATION

May 6, 2008 by Carlton Fields

Argonaut Insurance reinsured Global Reinsurance under excess of loss, quota share and facultative reinsurance agreements. A dispute arose as to whether certain commutation payments made by Global and ceded to the reinsurance agreements came within the scope of the reinsurance agreements, and arbitration was demanded. Background is found in the Petition to Confirm the arbitration award (which is redacted). An arbitration panel decided in favor of Argonaut, finding that the commutation payments were not “claims, losses or settlements within the terms, limits and conditions of the Retrocessional Contracts at issue ….” Copies of the reinsurance contracts and the arbitration award are found in a declaration filed in support of confirmation of the award. The award was confirmed with the agreement of all parties. The court denied a request to keep filings in the confirmation proceeding under seal, finding that there had not been a sufficient showing to overcome the presumption that filings in US District Courts are public. Global Reinsur. Corp. v. Argonaut Insur. Co., Case No. 07-8350 (USDC S.D.N.Y. 2008).

This post written by Rollie Goss.

Filed Under: Arbitration Process Issues, Contract Interpretation, Reinsurance Claims, Week's Best Posts

UNDERLYING INSURED LACKS STANDING TO SUE REINSURER

May 5, 2008 by Carlton Fields

An underlying insured lacks standing to maintain an action against a reinsurer under a contract to which it is not a party, according to a Louisiana district court. Plaintiff, LaSalle Parish School Board, was the insured on a policy of insurance issued by Property Casualty Alliance of Louisiana (“PCAL”). PCAL in turn entered into a contract of reinsurance with Allianz Global Risks. LaSalle Parish School Board filed a complaint against Allianz (and Eagle Adjustment Services) after Allianz failed to pay LaSalle more than $800,000 for tornado damage to LaSalle High School. The complaint alleged claims for breach of contract, detrimental reliance, and negligent misrepresentation. Allianz and Eagle moved to dismiss all claims.

The court granted Allianz's motion to dismiss the breach of contract claim, finding that “LaSalle has no standing to sue Allianz under the reinsurance contract, absent an intent to stipulate an advantage for LaSalle.” The Court also concluded that none of the state statutory exceptions allowing an insured to proceed directly against a reinsurer of its own insurer applied. The court denied the defendants’ motion to dismiss the detrimental reliance and negligent misrepresentation claims due to Allianz’s direct involvement in working with the insurance adjuster who dealt directly with the school system in adjusting the claim. LaSalle Parish School Board v. Allianz Global Risks U.S. Ins. Co., Case No. 1:07-cv-00399 (USDC W.D. La. April 24, 2008).

This post written by Lynn Hawkins.

Filed Under: Contract Interpretation, Reinsurance Claims, Week's Best Posts

CASE UPDATE: ENGLISH COURT OF APPEAL REVERSES DECISION DENYING REINSURANCE COVERAGE, MARKING DEPARTURE FROM TRADITIONAL FOLLOW THE SETTLEMENTS RULINGS

April 8, 2008 by Carlton Fields

In a May 23, 2007 post, we reported on a UK decision denying reinsurance coverage despite a follow the fortunes provision based on a finding that the damages occurred outside the coverage period of the reinsurance, despite the conclusion of a US court on the underlying claim finding liability for damage occurring outside the coverage period of the underlying policy. The UK Court of Appeals has allowed an appeal, finding that the coverage provision of the reinsurance should be interpreted in the same manner as the coverage provision in the underlying insurance.

The English appellate court agreed that the insurance and reinsurance contracts were not entirely “back to back” in terms of the coverage periods, but concluded that although there were some differences in the contracts, the parties intended that they should have the same effect and therefore, the reinsured’s settlement of the insurance claim did fall within the terms of the reinsurance contract. Despite the fact that the reinsurance appeared only to cover damage that occurred during the period of the reinsurance, and the trigger of coverage used by the US court permitted a broader recovery from the insurer, the Court of Appeals accepted the proposition that “the same or equivalent [coverage] wordings should be given the same meaning in the reinsurance contract as in the insurance contract.”

Explaining that the UK reinsurer had taken certain known risks in reinsuring a US insurer, the Court concluded that although the judgment against the insured was not one which the reinsurers expected, nevertheless it was one which was a possibility that they agreed to cover. This decision marks a departure from previous ‘follow the settlement’ cases involving differences in the insurance and reinsurance contracts, which have typically been resolved in favor of the reinsurers. Wasa International Ins. Co. v. Lexington Ins. Co., [2008] EWCA Civ 150 (Feb. 29, 2008).

This post written by Lynn Hawkins.

Filed Under: Contract Interpretation, Follow the Fortunes Doctrine, Reinsurance Claims, UK Court Opinions, Week's Best Posts

COURT INTERPRETS REINSURANCE AGREEMENT LIABILITY LIMIT IN SUMMARY JUDGMENT SETTING

April 7, 2008 by Carlton Fields

A district court has interpreted the liability limit of a reinsurance agreement in a summary judgment setting, finding the language to be unambiguous, and finding in favor of the position advanced by the reinsured. The opinion contains a good discussion of the rules for interpreting reinsurance agreements. Princeton Ins. Co. v. Converium Reinsurance (North America) Inc., Case No. 06-599 (USDC D. N.J. Mar. 27, 2008).

This post written by Rollie Goss.

Filed Under: Contract Interpretation, Reinsurance Claims, Week's Best Posts

MULTI-YEAR REINSURANCE AGREEMENT REMAINS IN FORCE DESPITE LIQUIDATION OF CEDENT

March 17, 2008 by Carlton Fields

A reinsurance agreement reinsured crop insurance risks from two related cedents over a five year period, with an initial premium amount for the first two years, followed by annual premium payments thereafter. After paying the premium for the first two years, one cedent was placed in liquidation and the other was placed under supervision. Their parent filed for bankruptcy protection. The issue arose as to whether the reinsurance agreement was enforceable for the remaining three years, since the cedents had ceased writing crop insurance. While bankruptcy court ruled in favor of the cedents, a bankruptcy appellate panel of the US Court of Appeals for the Eighth Circuit reversed, finding that the reinsurance agreement was an enforceable five year agreement, allowing a claim by the reinsurer for the remaining $9 million of premium. The court of appeals based its decision on accepted principles of contract interpretation, rejecting the contention that there was a frustration of purpose when the companies stopped issuing crop insurance. The court reasoned that the cessation of writing crop insurance was foreseeable in the event that the companies did not maintain sufficient capital, and did not amount to frustration of purpose. In re Acceptance insurance Companies, No. 07-6027/6029 (8th Cir. Mar. 12, 2008).

This post written by Rollie Goss.

Filed Under: Contract Interpretation, Reorganization and Liquidation, Week's Best Posts

  • « Go to Previous Page
  • Page 1
  • Interim pages omitted …
  • Page 87
  • Page 88
  • Page 89
  • Page 90
  • Page 91
  • Interim pages omitted …
  • Page 95
  • Go to Next Page »

Primary Sidebar

Carlton Fields Logo

A blog focused on reinsurance and arbitration law and practice by the attorneys of Carlton Fields.

Focused Topics

Hot Topics

Read the results of Artemis’ latest survey of reinsurance market professionals concerning the state of the market and their intentions for 2019.

Recent Updates

Market (1/27/2019)
Articles (1/2/2019)

See our advanced search tips.

Subscribe

If you would like to receive updates to Reinsurance Focus® by email, visit our Subscription page.
© 2008–2025 Carlton Fields, P.A. · Carlton Fields practices law in California as Carlton Fields, LLP · Disclaimers and Conditions of Use

Reinsurance Focus® is a registered service mark of Carlton Fields. All Rights Reserved.

Please send comments and questions to the Reinsurance Focus Administrators

Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please contact us. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites. This site may be considered attorney advertising in some jurisdictions.