Gulf Insurance Company sued Gerling Global Reinsurance Corporation of America (“Gerling”) and others who participated in reinsurance treaties covering a portfolio of Gulf’s automobile residual value insurance. Gerling denied Gulf’s claims for its portion of payments Gulf made in connection with underlying coverage litigation which settled for $266 million. Gulf sued Gerling, and Gerling countersued, seeking rescission of the treaties on the basis of nondisclosures and misrepresentations made by or on behalf of Gulf. The issues turned in part on the interpretation under the treaties of the percentage of the reinsurers’ participation. That interpretation was impacted by a further determination as to the amount of premium paid, but Gerling argued, and the trial court agreed, that the amount of premium was miscalculated by its bookkeeping department, and that Gulf improperly based its premium payment on those miscalculations. The premium payments were also not made until after formation of the treaties, and thus, the trial court found, did not affect interpretation of the treaties. After addressing a number of other contract interpretation issues, the Appellate Court essentially affirmed, with partial modification, the trial court’s decisions granting partial summary judgment to Gerling, and denying partial summary judgment to Gulf. Gulf Insurance Company v. Transatlantic Reinsurance Company, Nos. 6016023/03 and 601077/04 (N.Y. App. Div., Oct. 1, 2009)
This post written by John Pitblado.