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Reinsurance Claims

FOLKSAMERICA GIVEN 60 DAYS TO PERFECT SERVICE AGAINST CONSTRUCTORA DEL LITORAL

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The US District Court for the Southern District of Florida recently issued an opinion on defendant Constructora del Litoral’s Motion to Dismiss for Insufficiency of Service of Process by plaintiff Folksamerica Reinsurance. The action arises out of defendants’ alleged failure to indemnify Folksamerica for sums paid in connection with reinsuring surety bonds issued for a construction project in Ecuador. Plaintiff served process pursuant to the Inter-American Convention on Letters Rogatory and Additional Protocol. Constructora alleged in its Motion to Dismiss that service was improper under both Ecuadorian law and under the Convention. The Court concluded that, although defendants had met the burden in establishing that service of process was insufficient, Folksamerica should be given 60 days to perfect service and file proof with the Court. Further background is available in the motion to dismiss, and the opposition to the motion to dismiss. Folksamerica Reinsurance Co. v. Constructora del Litoral, S.A., Case No. 10-20560 (S.D. Fla. June 18, 2010).

This post written by John Black.

LAWSUIT ALLEGING UNDERREPORTING OF WORKERS COMPENSATION PREMIUMS WILL PROCEED, IN PART

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Motions to dismiss a lawsuit brought by plaintiff American Insurance Group, Inc., and its affiliates and subsidiaries, has been dismissed in part, and granted in part. Some of what the court has described as a “long and tortured procedural history” of the case is reported in our posts of March 27, 2008 and April 6, 2009. Plaintiffs’ claims against defendants stemmed from five underlying allegations. First, plaintiffs alleged that the defendant insurance companies improperly underreported to the National Council on Compensation Insurance, administrator for the National Worker’s Compensation Reinsurance Pool, the amount of their voluntary market workers compensation premiums, which resulted in a decrease in their residual market obligations. Second, plaintiffs alleged that the Pool board members blocked participation in an AIG settlement fund established to compensate third parties allegedly injured by AIG. Third, plaintiffs contended that Pool board members suppressed investigations into premium underreporting. Fourth, plaintiffs alleged that certain of the defendants conspired to direct NCCI to issue false quarterly Pool statements. Finally, plaintiffs allege that the Pool board directed NCCI to ignore amended premium filings with the intent of further disabling the effectiveness of the AIG settlement fund. Several of the defendants also filed counterclaims, which AIG unsuccessfully moved to dismiss. American International Group, Inc. v. Ace INA Holdings, Inc., Case No. 07 CV 2898 (USDC N.D. Ill. June 30, 2010).

This post written by Brian Perryman.

DISTRICT COURT DENIES ERC’S § 1292(B) REQUEST FOR CERTIFICATION FOR INTERLOCUTORY APPEAL

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In the latest development in the ongoing dispute between Employers Reinsurance and its reinsured Mass Mutual, ERC asks the US District Court for the Western District of Missouri to amend its prior rulings to certify the “follow the settlements” and statutes of limitations issues for immediate interlocutory appeal under 28 U.S.C. § 1292(b). Noting the heavy burden required to certify a question for interlocutory appeal, the District Court incorporated its prior ruling on the “follow the settlements” issue and denied ERC’s request for certification as to that issue, since it had denied certification of that issue previously. The court also refused to certify the statute of limitations issue for interlocutory appeal finding that the issue was not a purely legal question as required by § 1292(b). Employers Reinsurance Corp. v. Massachusetts Mut. Life Ins. Co., Case No. 06-0188 (USDC W.D. Mo. June 16, 2010).

This post written by John Black.

SPECIAL FOCUS: ALLOCATION OF SETTLEMENT AMOUNT AMONG INSURANCE AND REINSURANCE POLICIES

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In a recent opinion, the United States Court of Appeal for the Third Circuit addressed the applicability of the follow-the-fortunes doctrine to the post-settlement allocation of a settlement amount to a multi-layer insurance program, upon a challenge to the allocation by a reinsurer. Rollie Goss offers an expanded analysis of this case. Travelers Cas. and Surety Co. v. Ins. Co. of North America, Nos. 06-4100 and 08-1032 (3d Cir. June 9, 2010).

This post written by Rollie Goss.

COURT ORDERS STIPULATED DISMISSAL IN REINSURANCE DISPUTE

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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.