Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

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Reinsurance Regulation

PLATINUM UNDERWRITERS IS THE EIGHTEENTH FOREIGN REINSURER ALLOWED TO OPERATE UNDER FLORIDA’S REDUCED COLLATERAL REQUIREMENTS

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By Consent Order dated December 13, 2011, the Florida Office of Insurance Regulation approved the application of Bermuda reinsurer Platinum Underwriters Bermuda, Ltd. to operate in Florida with posting less than 100% collateral. The Order recites Platinum’s fulfillment of statutory criteria, and notes Platinum’s demonstration of $1.366 billion in capital and surplus and favorable ratings from two accepted agencies. According to the Office’s December 14, 2011 press release, Platinum is the sixteenth Bermuda reinsurer approved to use Florida as its port-of-entry state, in addition to a Germany company and a U.K. company. In the Matter of: Platinum Underwriters Bermuda, Ltd., Case No. 122414-11-CO (Fla. Office of Insurance Regulation Dec. 13, 2011).

This post written by John Pitblado.

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SPECIAL FOCUS: FEDERAL INSURANCE OFFICE CONFERENCE

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The Dodd-Frank Act requires that the Federal Insurance Office (“FIO”) submit a report to Congress regarding the “modernization” of the regulation of the business of insurance. The FIO recently held a conference as part of the preparation of that report. Our Special Focus article summarizes that conference.

This post written by Rollie Goss.

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IOWA INTRODUCES BILL CONCERNING NONADMITTED REINSURANCE REFORM ACT

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House Study Bill 181 has been introduced into the General Assembly of the State of Iowa. If the Bill is enacted, Iowa would join other states in signing on to the surplus lines insurance multistate compliance compact, stipulating to the provisions of the Nonadmitted Reinsurance Reform Act (the “Act”), which is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The stipulations in the Act provide, among other things, that placement of nonadmitted insurance will be subject to the statutes and regulations of the insured’s home state and, furthermore, that premium taxes on nonadmitted insurance will be paid only to the insured’s home state. The stipulations also contemplate the establishment of a multistate compliance compact commission that will have rulemaking and enforcement authority. H. Study B. 181 (IA 2011).

This post written by Ben Seessel.

ENGLISH COURT UPHOLDS ENFORCEMENT OF AUSTRALIAN JUDGMENT AGAINST INSOLVENT REINSURER

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An English appellate court permitted an Australian reinsurer in liquidation to enforce a judgment entered in Australian insolvency proceedings against a Lloyd’s syndicate, which had elected not to participate in the foreign proceedings. On appeal, the syndicate argued that England’s reciprocity act did not apply to foreign judgments made in insolvency proceedings, and that England’s insolvency act, which recognizes Australian courts, should be interpreted as strictly permitting only Australian choice of law, rather than the enforcement of Australian judgments. The court disagreed on both issues, relying on another English appellate decision (currently on appeal before the Supreme Court of the United Kingdom) that held that England would enforce a foreign insolvency judgment under the reciprocity act, and rejecting the syndicate’s narrow interpretation of the insolvency act. The court considered the respective laws’ legislative history, as well as the interplay between English common law, the reciprocity act, and the insolvent act’s jurisdictional provisions. In re New Cap Reinsurance Corp. Ltd. (In Liquidation), 2011 EWCA Civ 971 (Eng. Ct. App. August 9, 2011).

This post written by Michael Wolgin.

NAIC ADOPTS REINSURANCE COLLATERAL REDUCTION AMENDMENTS TO CREDIT FOR REINSURANCE MODEL LAW AND MODEL REGULATION

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On November 6, 2011, the NAIC Executive Committee-Plenary adopted revisions to the NAIC’s Credit for Reinsurance Model Law (#785) and Credit for Reinsurance Model Regulation (#786). The revisions, as finally adopted, are substantially in the form covered in our Special Focus analysis of the revisions adopted in September by the Financial Condition (E) Committee, with one notable addition. The Model Law, in new Section 2(J), now imposes certain notification requirements on a ceding company when its reinsurance recoverables from a single reinsurer (or group of assuming companies) exceed specified levels of the ceding company’s surplus or gross written premium. Note: The redlining in these documents is from the NAIC, and apparently shows the differences between the just adopted versions and the previously existing text of the model law and model regulation.

This post written by Anthony Cicchetti.