Reinsurance Claims

COURT AWARDS PREJUDGMENT INTEREST TO REINSURER ON PAST DUE BILLINGS

April 12, 2012 by Carlton Fields

Munich Reinsurance America, Inc. and Tower Insurance Co. of New York were parties to certain reinsurance and retrocessional agreements. A billing dispute arose and Munich Re brought suit. Tower had resisted payment of the billings due because it had not received sufficient information demonstrating its liability for the billed amounts. During the course of discovery the parties reconciled the billings, and determined and agreed that Tower owed Munich $3,287,597. They disputed how much interest Tower should be charged for its withholding, and moved for summary judgment on the issue, with Tower contending interest should be limited to $5,404.27, and Munich Re contending it was owed $673,806.00, based on differing views of the rate and accrual date. Citing its equitable powers, and with guidance from state civil procedure rules applicable to interest on contract debts, the Court split the baby, finding Tower owed Munich Re $168,093.61 in pre-judgment interest. Munich Reinsurance America, Inc. v. Tower Ins. Co. of New York, No. 09-2598 (USDC D.N.J. Mar. 26, 2012).

This post written by John Pitblado.

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INSURER THAT FILED JOINT COMPLAINT WITH FORMER AFFILIATE AGAINST REINSURER CANNOT SEVER ITS CLAIMS

March 28, 2012 by Carlton Fields

Seaton Insurance Company and Stonewall Insurance Company jointly filed a lawsuit against Clearwater Insurance Company asserting breach of contract claims based on Clearwater’s alleged failure to comply with the terms of certain facultative reinsurance certificates issued to the insurers in the 1970s. Seaton moved to sever its claims from Stonewall’s or for a separate trial. Seaton argued that, at the time the lawsuit was filed, Seaton and Stonewall were commonly owned and managed but had since parted ways and, furthermore, that the insurers’ claims were being brought under different reinsurance certificates reinsuring entirely different underlying policies. The federal district court denied Seaton’s request, holding that severing the claims or permitting a separate trial would not simplify or streamline the proceedings. Seaton Insurance Co. v. Clearwater Insurance Co., Case No. 09-516 (USDC D.R.I. Feb. 2, 2012).

This post written by Ben Seessel.

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TRAVELERS CASUALTY SETTLES CLAIMS AGAINST TWO REINSURERS

March 8, 2012 by Carlton Fields

Travelers Casualty agreed to settle its claims against two of a series of reinsurer defendants – Factory Mutual and Arkwright Insurance. Travelers had filed suit against Nationwide, National Casualty, Argonaut Insurance, Factory Mutual, and Arkwright Mutual alleging breaches of contracts and seeking a declaratory judgment related to a series of reinsurance contracts covering Travelers’ blanket excess of loss program. Travelers alleged that the reinsurers failed and refused to pay valid claims due under the reinsurance contracts and sought damages arising out of the alleged breaches. The claims against these reinsurers were dismissed with prejudice pursuant to the settlement. Travelers Casualty and Surety Co. v. Nationwide Mut. Ins. Co., No. 11-00063 (S.D. Ohio Jan. 11, 2012).

This post written by John Black.

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MISSISSIPPI SUPREME COURT ISSUES “TRUE-UP” DECISION IN KATRINA LITIGATION

March 6, 2012 by Carlton Fields

As a result of Hurricane Katrina, the Mississippi Windstorm Underwriting Association sustained losses well in excess of its reinsurance. The Association assessed its members to cover the loss based on their percentages of wind and hail insurance premiums written in the previous calendar year. Several companies then complained that the Association had incorrectly reported the previous year’s figures and were given a one-time opportunity to submit correct data (a true-up). Some members, most of whom did not submit corrected data, appealed the assessment following the true-up. The Mississippi Supreme Court reviewed the lower court’s grant of relief to the members. The Court affirmed the lower court’s decision on two issues: finding that grouping was permitted and that reinsurance was allocated properly. The Court, however, reversed and remanded on the following issues: whether MWUA had authority to set and enforce a true-up deadline, the mandatory nature of voluntary credits and farm-property exclusions, whether assessments are akin to privilege taxes, and the mobile-home reporting issue. Further, because the lower court lacked authority to order the Association to adopt new rules, the Court reversed and rendered that part of the judgment below. Mississippi Windstorm Underwriting Assoc. v. Union Nat’l Fire Ins. Co., No 10-00076 (Miss. Jan. 26, 2012).

This post written by John Black.

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WHITE MOUNTAIN RE VOLUNTARILY DISMISSES ASBESTOS REINSURANCE ACTION AGAINST TRAVELERS CASUALTY

February 21, 2012 by Carlton Fields

We last posted on a reinsurance dispute between White Mountains Re and Travelers Casualty on May 18, 2011. Since then, White Mountain Re agreed to voluntarily dismiss its claims with prejudice. The dispute arose out of several reinsurance agreements between the parties, notably regarding a series of blanket excess of loss reinsurance contracts entered into in the 1980s covering asbestos installations. White Mountains Re alleged claims for declaratory relief and breach of contract in New York state court. Travelers successfully removed the claims to federal court prior to the voluntary dismissal. White Mountains Reinsurance Co. of America v. Travelers Casualty and Surety Co., Case No. 11-390 (USDC S.D.N.Y. Jan. 3, 2012).

This post written by John Black.

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