Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

PRINCETON INSURANCE AND COVERIUM RE SETTLE

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In what may be the final development in the ongoing saga between Princeton Insurance and Coverium Reinsurance, the parties agreed to settle their lawsuit in its entirety. The court dismissed the action without prejudice to reopen if the settlement between the parties is not consummated. The dispute had centered on liability limit of an employers’ liability reinsurance agreement. Please see our prior posts on April 7, 2008, August 6, 2008, and September 21, 2009 for more detail. Princeton Insurance Company v. Coverium Reinsurance (NA), Inc., No. 06-599 (USDC D.N.J. Sept. 14, 2011).

This post written by John Black.

LLOYD’S PERMITTED TO OPERATE IN FLORIDA WITH REDUCED COLLATERAL AS “ELIGIBLE REINSURER”

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Underwriters at Lloyd’s, London was approved by Consent Order of the Florida Office of Insurance Regulation to become the seventeenth reinsurer admitted under Florida’s law allowing foreign reinsurers to post reduced collateral, upon demonstration that it is financially sound and highly rated by eligible ratings institutions. As set forth in the Consent Order, Lloyd’s reported capital and surplus of $29.9 billion, well-exceeding Florida’s $250 million requirement. In re Underwriters at Lloyd’s, London (Fla. O.I.R. Oct. 6, 2011).

This post written by Michael Wolgin.

COURT CONSIDERS PRIVILEGE ASSERTIONS IN DISPUTE INVOLVING ASBESTOS TRUST, EXCESS LIABILITY INSURER, AND REINSURANCE

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In a suit between a bankruptcy trust established to resolve a defunct corporation’s asbestos-related personal injury liabilities and the corporation’s excess liability insurer that had denied coverage to the trust in connection with the asbestos claims, a court resolved various attorney client privilege and work product protection issues. The insurer had sought various documents related to the handling of the underlying asbestos claims by the trust, among others. Many of these documents included communications between counsel and the corporation or between counsel and the bankruptcy creditors’ committee. No privilege existed over documents addressing the handling of the underlying asbestos claims because (1) a common interest exists between the trust and the insurer related to the asbestos claims, and (2) the trust had a duty to cooperate with the insurer based on the primary policy. In contrast, the court held the privilege did exist for a number of documents related to the reinsurance procured by the insurer. Whereas the insurer’s discovery requests were related to the handling of the asbestos claims, the trust’s requests were for the purpose of learning the insurer’s “admissions regarding the matter in dispute.” The court also found a common interest existed between the insurer and its reinsurer regarding the trust’s claims, such that any communications with counsel that may have been shared by the insurer with its reinsurer would not be considered a waiver of privilege. ARTRA 524(g) Asbestos Trust v. Transport Insurance Co., Case No. 09-458 (N.D. Ill. Sept. 28, 2011).

This post written by Michael Wolgin.

AMICO DISPUTES CASH HOLDINGS IN MANHATTAN RE REHABILITATION

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In response to a rehabilitation plan for Delaware insurance company Manhattan Re proposed by its receiver, American Motorists Insurance Company (a reinsurer of Manhattan Re) filed objections with the Delaware Court of Chancery. AMICO argued that the plan should be rejected because the receiver improperly intended to dispose of certain cash holdings that AMICO claimed constituted cash collateral under its reinsurance agreements with the company. Additionally, AMICO moved to have the parties’ dispute referred to arbitration, and for a preliminary injunction to preserve the disputed cash until arbitration is resolved. The court found that Delaware law permits enforcement of the arbitration clause in the reinsurance agreement which compelled the parties to arbitrate their dispute over the cash. Additionally, the court issued a partial stay of the proceedings pending resolution of the arbitration. In re Rehabilitation of Manhattan Reinsurance Co., No. 2844 (Del. Ct. Ch. Oct. 4, 2011).

This post written by John Black.

COURT REFUSES TO COMPEL ARBITRATION ABSENT SUFFICIENT PROOF THAT PLAINTIFF WAS BOUND BY ARBITRATION CLAUSE

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Plaintiff brought a putative class action lawsuit alleging violations of the Telephone Consumer Protection Act of 1991. Plaintiff claimed that she received numerous debt collection calls to her cell phone, notwithstanding that she never owned a credit card issued by Citibank. Citibank moved to compel arbitration, arguing that plaintiff held a ConocoPhilips branded credit card it had issued and that plaintiff’s written card agreement contained a governing arbitration clause. The court denied Citibank’s motion to compel, holding that Citibank had produced only representative samples of card agreements in support of its motion, and insufficient information to link such a card agreement to an account held by plaintiff. Gonzalez v. Citigroup, Inc., Case No. 2:11-00795 (USDC E.D. Cal. Sept. 19, 2011).

This post written by Ben Seessel.