Reinsurance Focus Blog

COURTS CONTINUE CONFIRMATION OF ARBITRATION AWARDS

December 24, 2008 by Carlton Fields

Since our last post on arbitration award confirmation/vacation, eight opinions of some note have been entered, all of which confirmed or declined to vacate arbitration awards. Many parties challenging awards continue to argue that they are in manifest disregard of law. The courts issuing the opinions reported in this post were reluctant to address the issue of whether the doctrine is viable after Hall Street Associates, and instead reviewed the awards and found that they were not in manifest disregard of law.

Convergia Networks, Inc. v. Huawei Technologies Co., Case No. 06-6191 (USDC SD N.Y. Oct. 29, 2008) (award not in excess of the authority of the arbitrators; award not in manifest disregard of law, should that doctrine still be viable)

Acuna v. Aerofreeze, Inc., Case No. 06-432 (USDC ED Tex. Oct. 29, 2008) (award not in manifest disregard of law, if that doctrine is viable)

Carlisle v. Citimortgage, Inc., Case No. 06-677 (USDC ED Mo. Nov. 10, 2008) (award not irrational or in manifest disregard of law, without any discussion of the viability of the doctrine)

Su Zhou Tian Lu Steel Co. v. Sherman Int’l. Corp., Case No. 08-883 (USDC WD Pa. Oct. 27, 2008) (rejecting five challenges to the award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards relating to an arbitration hearing held in Sweden)

EMO Energy Solutions, LLC v. Acre Consultants, LLC, Case No. 08-4365 (USDC ED La. Nov. 25, 2008) (award confirmed by default due to lack of opposition to motion to confirm)

O’Leary v. Salomon Smith Barney Inc., Case No. 05-6016 (USDC D N.J. Dec. 5, 2008) (motion to vacate award denied – no manifest disregard of law (the court noted that it was unclear whether the doctrine was still viable))

Legacy Trading Co. v. Hoffman, Case No. 07-1383 (USDC WD Okla. Dec. 8, 2008) (motion to reconsider confirmation of award denied – no valid basis for reconsideration)

Raymond Management Services, Inc. v. William A. Pope Co., Case No. 07-A-00137 (Bank. Ct. ND Ill. Nov. 19, 2008) (award not in excess of arbitrators’ powers and not procured by undue means)

This post written by Rollie Goss.

CONVICTED FORMER EXECUTIVE OF GEN RE SENTENCED TO TWO YEARS IN PRISON IN FINITE REINSURANCE PROSECUTION

December 23, 2008 by Carlton Fields

The Court hearing the criminal finite reinsurance case reported on previously has sentenced a former Gen Re executive to 2 years in prison, followed by 2 years of supervised probation, and a $200,000 fine. This sentence is substantially below federal sentencing guidelines. The Court had entered a ruling on loss calculation, victim enhancement and restitution, finding that 36 levels of enhancement are appropriate under federal sentencing guidelines, but not ordering restitution, despite finding that more than 250 investors had sustained losses aggregating $544-597 million. A sentence imposed in accordance with such a finding might be a life sentence for many, if not all, of the convicted executives. The convicted executives have submitted Supplemental Sentencing memoranda. The supplemental sentencing memorandum submitted by the recently sentenced defendant may be read here.

This post written by Rollie Goss.

SEC SETTLES FINITE REINSURANCE ALLEGATIONS WITH ZURICH AND CONVERIUM

December 23, 2008 by Carlton Fields

Continuing a series of consent agreements, the Securities and Exchange Commission has resolved claims relating to the writing of finite reinsurance, entering into agreed Cease-and-Desist Orders with Zurich Financial Services and SCOR Holding (Switzerland) Ltd., f/k/a Converium Holding AG. The Orders detail the reinsurance transactions and side agreements that underlie the SEC’s allegations. The SEC released information about the agreements in a press release and a Litigation Release. In remediation, Zurich has agreed to pay a $25 million penalty and $1 in disgorgement. In re Zurich Financial Services, Admin. Pro. File no. 3-13306 (Dec. 11, 2008); In re SCOR Holding (Switzerland) Ltd., f/k/a Converium Holding AG, Admin. Pro. File no. 3-13307 (Dec. 11, 2008).

This post written by Rollie Goss.

MERRY CHRISTMAS AND HAPPY HOLIDAYS FROM THE REINSURANCE FOCUS BLOG STAFF

December 22, 2008 by Carlton Fields

The staff of Reinsurance Focus wishes our readers a very Merry Christmas, Happy New Year and Happy Holidays. We hope that our blog has been of interest to you this past year, and we look forward to another year of interesting developments. Lynn Hawkins, Brian Perryman, Dan Crisp, John Black, John Pitblado, Rollie Goss and Tony Cicchetti.

NAIC CONSIDERING LIFE INSURANCE RESERVE AND REQUIRED CAPITAL CHANGES DUE TO MARKET TURMOIL

December 22, 2008 by Carlton Fields

The American Council of Life Insurers (ACLI) has submitted a proposal to the NAIC for immediate reforms to reserve and required capital standards for life insurance companies. One of the suggestions is to “facilitate Commissioners’ use of their existing discretionary authority under the Model Law and Regulation on Credit for Reinsurance to provide immediate relief to ceding insurers.” The ACLI proposes that the changes that it is suggesting take effect December 31, 2008, for the current calendar year. More information is available in a press release issued by the ACLI, a short summary of the proposals prepared by the ACLI and the ACLI’s letter to the NAIC, which categorizes the proposals as affecting the areas of life insurance, variable annuities, reinsurance, investments and accounting. The NAIC has assigned this proposal to the Capital and Surplus Relief (EX) Working Group of the Executive Committee. The Working Group is accepting comments on the ACLI’s proposal to the close of business December 26, 2008. Responses and comments from various areas of the NAIC are available. The NAIC also has created a “Grid of Information Relative to Each ACLI Request,” which may be of interest to those wishing to explore these suggestions.

This post written by Rollie Goss.