Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

You are here: Home / Archives for Reinsurance Regulation / Reorganization and Liquidation

Reorganization and Liquidation

SETTLEMENT REACHED IN DISPUTE OVER REINSURANCE ALLEGEDLY OWED TO LIQUIDATING INSURER

by

The New Hampshire Insurance Commissioner, as liquidator for The Home Insurance Company, recently settled a breach of contract suit to collect reinsurance payment from reinsurer, Repwest Insurance Company. The commissioner had alleged that Repwest waived any defenses to payment by failing to timely object to the commissioner’s notice of claim made in liquidation under a reinsured Home insurance policy. In its answer, Repwest had denied that it had received proper notice, and had asserted, among other defenses, that Repwest was entitled to setoff certain claims it had against another reinsurer against its obligations to Home. Sevigny v. Repwest Insurance Co., Case No. 1:11-cv-00405 (USDC D.N.H. Apr. 23, 2012).

This post written by Michael Wolgin.

See our disclaimer.

REHABILITATION PLAN DISAPPROVED FOR FAILURE TO INCLUDE SURETY BOND LIABILITIES IN PRIORITY CLASS OF “CLAIMS UNDER POLICIES”

by

On July 22, 2009 and November 2, 2011, we reported on certain disputes involving long-time rehabilitating insurer, Frontier Insurance Company. Frontier’s rehabilitator recently submitted to the supervising court a plan of rehabilitation that included a runoff of Frontier’s liabilities, with additional protection for liabilities deemed “claims under policies.” Frontier’s plan defined such claims as those made under policies of insurance, but excluded claims under its significant book of surety bonds, fidelity bonds, and similar instruments. Based on this definition, the rehabilitator contended that Frontier’s surety liabilities were entitled to low priority and could be discounted. The court rejected the proposal and disapproved the plan, siding with objectors who contended that the proposed definition of “claims under policies” unlawfully discriminated within a single priority class of Frontier’s liabilities. Surety claims fall within the same class as insurance claims, and must be paid to the same extent as all other traditional insurance claims. The court ordered the rehabilitator to either propose a revised plan or apply for an order of liquidation. In re Frontier Insurance Co., Index No. 97-06 (N.Y. Sup. Ct. May 23, 2012).

This post written by Michael Wolgin.

See our disclaimer.

COURT OVERTURNS DENIAL OF REQUEST FOR REINSURANCE-RELATED RECORDS FOR JURISDICTIONAL REASONS

by

The Commonwealth Court of Pennsylvania issued an opinion vacating Pennsylvania’s Office of Open Records’ denial of a request for documents under the state’s Right-to-Know Law. Plaintiff sought records related to Reinsurance Offset Guidelines from the Pennsylvania Department of Insurance and Reliance Insurance Company, which has been in liquidation since 2001. The OOR denied the request on the basis that the documents were “internal, pre-decisional deliberations.” The court vacated the denial because the OOR did not have jurisdiction to hear this matter as Reliance’s Statutory Liquidator. The court further explained that the Pennsylvania Insurance Department, when aiding the Statutory Liquidator, and Reliance are acting pursuant to a judicial order and under the supervision of the Commonwealth Court. Because the court had appointed the state Insurance Commissioner as Statutory Liquidator, it retained general supervision over the Statutory Liquidator and the insolvent estate. Thus, all complaints regarding how the insolvency is being administered must be directed to the court, and any records can only be obtained through court order. Greenberger v. Pennsylvania Ins. Dept., No. 931 C.D. 2011 (Pa. Commw. Ct. Mar. 7, 2012).

This post written by John Black.

See our disclaimer.

“RIGHT TO KNOW” LAW INAPPLICABLE TO RECORDS SOUGHT IN INSURER’S LIQUIDATION PROCEEDINGS

by

A court vacated an order of the Pennsylvania Office of Open Records that denied a request for documents in the possession of the department of insurance related to the drafting of the reinsurance offset guidelines of a liquidating insurer. The OOR had found that the documents were exempt from disclosure as “internal predecisional deliberations” in the possession of the department, which was serving as the insurer’s statutory liquidator. On appeal, while the court tended to agree with the OOR’s reasoning, it found that the state disclosure law was “inapplicable to rehabilitation or liquidation proceedings because [the records] are solely within the control of the court under the Insurance Act.” As a result, the court held that it, and not the OOR, had jurisdiction over the documents relating to the drafting of the guidelines. Greenberger v. Pennsylvania Insurance Department, Case No. 931 C.D. 2011 (Pa. Commw. Ct. March 7, 2012).

This post written by Michael Wolgin.

See our disclaimer.

REINSURANCE MARKET UPDATE

by

This time of year the major reinsurance brokers publish various market-related reports. Among the interesting recent reports are:

This post written by Rollie Goss.

See our disclaimer.