A US District Court has dismissed RICO claims asserted in a Second Amended Complaint against Gen Re (with leave to amend) arising out of the insolvency of Reciprocal of America, and Gen Re's provision of “accommodation reinsurance” that involved an undisclosed side agreement. The Court found a failure to appropriately plead proximate cause and reliance. State law claims were dismissed without prejudice since the only federal law claims were dismissed. In re Reciprocal of America Sales Practices Lit., MDL 1551 (USDC W. D. Ten. Sept. 29, 2006).
Reinsurance Regulation
New York AG pressuring companies not to pay employees’ attorneys fees
New York AG (now Governor-elect) Eliot Spitzer has been obtaining provisions in settlement agreements with financial institutions that have been targets of investigations by his office prohibiting the organizations from paying the attorneys fees of employees who face criminal charges. A September 26 post in this blog reported on the criticism by a US District Judge of a similar practice by the Justice Department in criminal proceedings against former partners and employees of KPMG. It will be interesting to see whether this practice spreads to finite reinsurance investigations.
New York AG pressuring companies not to pay employees' attorneys fees
New York AG (now Governor-elect) Eliot Spitzer has been obtaining provisions in settlement agreements with financial institutions that have been targets of investigations by his office prohibiting the organizations from paying the attorneys fees of employees who face criminal charges. A September 26 post in this blog reported on the criticism by a US District Judge of a similar practice by the Justice Department in criminal proceedings against former partners and employees of KPMG. It will be interesting to see whether this practice spreads to finite reinsurance investigations.
Florida Department adopts new regulations for financing of Hurricane Catastrophe Fund
The Florida Office of Insurance has adopted new regulations providing for the issuance of bonds to help finance the Florida Hurricane Catastrophe Fund.
Colorado revamps reinsurance regulations in response to finite reinsurance concerns and adopts regs for nonadmitted insurers
The Colorado Division of Insurance has adopted a comprehensive revision of its regulations with respect to finite reinsurance transactions. The revisions include the repeal of existing regulations regarding Ceding Reinsurance Agreements, new regulations for Credit for Reinsurance, new regulations for Life and Health Reinsurance Agreements, and new regulations for Property and Casualty Reinsurance Agreements. Separately, the Division also adopted regulations establishing standards regarding the placement of insurance by producers and the qualification of insurers pursuant to the Colorado Nonadmitted Insurance Act.