Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

ROUND-UP OF RECENT ARBITRATION AWARD CHALLENGES

by

Awards upheld

TIG Ins. Co. v. Global Int’l Reinsurance Co. Ltd., 09-Civ-1289 (USDC S.D.N.Y. Aug. 7, 2009) (arbitration award confirmed, no manifest disregard of law)

UTGR Inc. d/b/a Twin River v. Mutuel/Gaming Clerks of Rhode Island, Local 334, No. 09-046-S (USDC D.R.I. Aug. 6, 2009) (arbitrator’s award in CBA dispute confirmed)

Waddell v. Holiday Isle, LLC, No., CV-09-0040 (USDC S.D. Ala. Aug. 4, 2009) (several motions to vacate arbitration award denied, no manifest disregard, one motion to vacate granted as beyond the submission)

WellPoint, Inc. v. John Hancock Life Ins. Co., No. 07 C 943 (7th Cir. Aug. 7, 2009) (affirming district court’s denial of motion to vacate arbitration award)

Parsons, Brinckerhoff, Quade & Douglas, Inc. v. Palmetto Bridge Constructors, No. RDB-09-633 (USDC D. Md. Aug. 25, 2009) (motion to confirm arbitration award granted) .

Award reversed

Globe Newspaper Co. v. Int’l Assoc. of Machinists, Local 264, District 15, No. 08-cv-11945 (USDC D. Mass. Aug. 5, 2009) (vacating arbitrator’s award in CBA dispute as against public policy)

This post written by John Pitblado.

PERSONAL ACCIDENT REINSURANCE DISPUTE SETTLES FOR $130 MILLION

by

On July 29, 2009, we reported on Willis Limited (“Willis”) settling a dispute with American Reliable Insurance Company and Assurant General Insurance Limited over alleged irregularities in Willis’ placement of personal accident reinsurance. Willis has now settled a similar placement dispute with CNA Financial Corporation for $130 million. The settlement includes a release and waiver of all claims and no admission of wrongdoing. Willis has filed a Form 8-K relating to this settlement.

This post written by Dan Crisp.

REINSURANCE EXECUTIVES FORM GLOBAL REINSURANCE FORUM

by

In response to the financial crisis, eleven chief executive officers have formed the Global Reinsurance Forum (the “Forum”), which seeks to, among other things, represent industry positions before regulatory and supervisory organizations and advocate for a global, reasonable framework for the growth of reinsurance markets. Membership to the Forum will be limited to the chief executive officers, and business issues, such as prices, terms, and conditions, will not be discussed. A press release describes this new organization.

This post written by Dan Crisp.

District Court Finds “Attorney Fees and Court Costs” Ambiguous: Upholds Arbitration Panel

by

Following a dispute over eight reinsurance agreements, Century Indemnity moved to confirm in part and vacate in part an arbitration award ordering Fencourt Reinsurance to pay a certain sum owed under the agreements. The paragraph at issue stated that “all other claim for relief are denied,” meaning that Century could not recover interest, attorneys’ fees and court costs under the agreement. The District Court for the Eastern District of Pennsylvania denied Century’s motion to vacate, finding the portion of the agreement concerning interest, fees and costs was ambiguous as it did not explicitly specify whether it applied before or after arbitration proceedings. Accordingly, the arbitration panel’s interpretation was not “completely irrational” nor did the panel exhibit a “manifest disregard” for the agreement. Century Indem. Co. v. Fencourt Reinsurance, Case No. 09-MC-53 (E.D. Pa. July 22, 2009).

This post written by John Black.

ARBITRATORS’ DISREGARD OF CUBAN ASSETS CONTROL REGULATIONS IS GROUND FOR SETTING ASIDE AWARD

by

A court has vacated a FINRA arbitration award on the ground that the arbitrators exhibited manifest disregard of controlling law. Plaintiff moved to vacate the arbitration award denying its claims in FINRA proceedings that the defendant sold it Cuban bearer bonds that had been defaulted on in the wake of the 1959 communist revolution. After a two-day evidentiary hearing, the arbitators denied all of plaintiff’s claims. Plaintiff sought to vacate the defendant’s award on the ground that the arbitrators exceeded their powers, urging that they ignored the Cuban Assets Control Regulations, which prohibits transactions involving Cuban assets. The arbitration decision recognized the Regulations as applicable, but made no other mention of them, and made no findings of fact or conclusions of law regarding them. The court therefore awarded plaintiff its principal, compounded at the legal rate of interest. See More Light Investments v. Morgan Stanley DW Inc., Case No. CV 08-580 (USDC D. Ariz. July 29, 2009).

This post written by Brian Perryman.