The California Insurance Commissioner has adopted broad revisions to California's regulations covering reinsurance accounting, credit for reinsurance, reinsurance agreements and oversight. The Department's Internet site includes the final regulations, a version that is redlined against the former regulations, statements of reasons for the revisions and a digest summarizing the changes. Comments submitted by various companies and organizations are also posted.
Reinsurance Transactions
RICO claims against Gen Re dismissed in ROA case
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).
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.
SEC files civil action against RenRe executives relating to finite reinsurance transactions
The SEC has filed a civil action against three former executives of Renaissance Reinsurance Ltd., alleging that they were involved in fraudulent finite reinsurance transactions to improve the company's financial statements and earnings. The case was filed in the Southern District of New York. SEC v. Stanard, Merritt and Cash, Case No. 06-7736 (Sept. 27, 2006).
District Court denies motion to dismiss claims against auditors
A Court has denied a motion to dismiss claims alleging that KPMG Bermuda had failed to perform adequate audits of Annuity & Life Re (Holdings), Ltd. since the company had failed properly to account for certain retrocessional insurance. Schnall v. Annuity & Life Re, Case No. 02-2133 (D. CT. Aug. 30, 2006). The Court had previously dismissed similar claims asserted against KPMG US, since the audits were performed by KPMG Bermuda.