New reinsurance-related and arbitration developments from Carlton Fields
The Florida Hurricane Catastrophe Fund has agreed to a creative way to fund potential hurricane losses, and create liquidity, agreeing to pay Berkshire Hathaway $244 million for its agreement to buy $4 billion in 30-year tax-exempt bonds if the Cat Fund suffers insured hurricane losses in excess of $25 billion this year. Press reports state that the Cat Fund is looking to this mechanism to enable it to act quickly to reimburse insurers for incurred losses.
This post written by Rollie Goss.
As reported in a March 3, 2008 post, the Court had scheduled sentencing in the finite reinsurance matter in US District Court in Connecticut for May 15, but sentencing has been continued pending the submission of certain expert reports. The court has ruled upon motions for acquittal or a new trial filed by the defendants, denying the motions. United States v. Ferguson, Case No. 06-cr-137 (USDC D. Conn. May 15, 2008).
This post written by Rollie Goss.
Those interested in alternative risk transfer mechanisms, including captives, cat reinsurance, and weather risks may be interested in a web site dealing with such issues, Artemis. Artemis has been updated to include new headlines and other information. The home page features news headlines, and the site also includes sections with background information on covered topics, a deal directory listing alternative risk transfer transactions and an events calendar. The site also sponsors a blog relating to alternative risk transfer topics, which we are adding to the links section of Reinsurance Focus.
This post written by Rollie Goss.
AIG has settled issues with the Pennsylvania Department of Insurance arising out of finite reinsurance and bid-rigging allegations, agreeing to pay over $9 million in penalties and costs. This is the largest penalty ever levied upon an insurer by the department. The finite reinsurance issues arose out of one of the transactions included in the recent criminal conviction in Connecticut. New compliance measures are included to ensure accurate financial reporting and increased transparency of commission payments to agents and brokers. Details of the settlement are generally set out in a press release issued by the Department, and in a detailed settlement agreement.
This post written by Rollie Goss.
A New York district court judge partially granted and partially denied a motion to certify the class in the SCOR Holding AG litigation. The judge certified a class that included: (1) US residents who purchased Converium shares on the Swiss Exchange; and (2) any person who purchased Converium American Depository Shares on the NYSE. The court specifically denied certification as to non-US investors that purchased shares of Converium on a non-US exchange.
Converium Holding AG (“Converium”), now known as SCOR Holding (Switzerland) AG, was a multinational reinsurer with offices in Switzerland, Germany and New York. This securities litigation was filed in September 2004 following the collapse of Converium North America. Plaintiffs alleged that, between Converium’s initial public offering in December 2001 and September 2004, the defendants misrepresented the sufficiency of Converium North America’s loss reserves, resulting in a representation to the public that Converium’s financial position was far stronger than it actually was during the relevant period. In re Scor Holding (Switzerland) AG Litigation, Case No. 04 Civ. 7897 (S.D.N.Y. March 6, 2008).
This post written by Lynn Hawkins.