Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

UPDATE: LETTER OF CREDIT DISPUTE RESOLVED

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In a March 25, 2008 posting, we reported on the Order of a district court which denied a motion to dismiss claims arising out of the refusal to release letters of credit which had been posted as security for a rent-a-captive reinsurance program. Less than two weeks after the entry of that Order, the parties filed a stipulation for dismissal of the action with prejudice. The Order apparently facilitated the resolution of the issues. WEB Management LLC v. Arrowood Indemnity Co., Case No. 07-424 (USDC D. Conn. Mar. 17, 2008).

This post written by Rollie Goss.

DELAWARE AND SOUTH CAROLINA REVISE CAPTIVE INSURER REGULATIONS

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Regulators continue to pursue new regulatory efforts with respect to captive insurers. Delaware has proposed amended regulations governing financial reporting by captive insurance companies, while South Carolina has issued a bulletin addressing the requirements for the managers of captive insurers. The comment period for the proposed Delaware regulations closed May 5.

This post written by Rollie Goss.

UK COURT RULES ON SCOPE OF CONFIDENTIALITY OF ENGLISH ARBITRATIONS

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Due to the relationships between the UK and US insurance and reinsurance markets, and the fact that different reinsurance agreements in a reinsurance program may involve both UK and US arbitration provisions, there are frequent overlaps between the two jurisdictions when things go awry. In a lengthy opinion, the UK Court of Appeals has engaged in an extensive discussion of the basis for the confidentiality of UK arbitration materials, and the circumstances under which such materials may be disclosed in other proceedings. Noting the strong tradition of confidentiality, the Court noted that exceptions “are still in the process of development on a case-by-case basis,” but that the principal instances in which disclosure may be appropriate are: (1) where there is consent, express or implied; (2) by court order (with courts not having general discretion to waive confidentiality); (3) where reasonably necessary for the protection of the legitimate interests of an arbitrating party; and (4) where required in the interests of justice, and perhaps the public interest. This may become a very influential opinion in this area of English jurisprudence. Emmott v. Michael Wilson & Partners Limited [2008] EWCA Civ 184 (Mar. 12, 2008).

This post written by Rollie Goss.

U.S. SUPREME COURT FINDS FAA PREEMPTS CALIFORNIA STATE LAW

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The U.S. Supreme Court ruled that when parties agree to arbitrate all questions arising under a contract, the Federal Arbitration Act (“FAA”) supersedes state laws that refer certain state-law controversies to a judicial forum or administrative agency. This case arose out of a contract dispute between a former Florida trial court judge (currently appearing as “Judge Alex” on Fox television) and his attorney regarding the payment of certain fees. The Petitioner sought to arbitrate the dispute. In response, the Respondent, Ferrer, petitioned the California Labor Commissioner for a determination that the contract was invalid because if violated a California state law known as the Talent Agencies Act (“TAA”). Ferrer also filed a state court action seeking a stay of the arbitration proceeding. The lower courts held that the statutes vested exclusive jurisdiction of the dispute with the Labor Commissioner.

The Supreme Court reversed that decision. The Court stated that “the dispositive issue… is not whether the FAA violates the TAA wholesale. The FAA plainly has no such destructive aim or effect. Instead, the question is simply who decides whether Preston [violated the TAA].” The Court concluded that because the contract contained an arbitration provision, the FAA superseded California state law, lodging jurisdiction elsewhere. blank”>Preston v. Ferrer, No. 06-1463, 552 U.S. _ (Feb. 20, 2008).

This post written by Lynn Hawkins.

UPDATE: GEN RE/AIG FINITE REINSURANCE CRIMINAL ACTION

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As reported in a March 3, 2008 post, the Court had scheduled sentencing in the finite reinsurance matter in US District Court in Connecticut for May 15, but sentencing has been continued pending the submission of certain expert reports. The court has ruled upon motions for acquittal or a new trial filed by the defendants, denying the motions. United States v. Ferguson, Case No. 06-cr-137 (USDC D. Conn. May 15, 2008).

This post written by Rollie Goss.