New reinsurance-related and arbitration developments from Carlton Fields
The State of Florida has proposed a new rule permitting a ceding insurer to take credit, as an asset or deduction from reserves, for reinsurance ceded to an eligible reinsurer based not upon the posting of collateral, but rather upon the reinsurer holding surplus in excess of $100 million and a stand-alone financial strength rating from at least two rating agencies. The amount of the credit allowed varies depending upon the reinsurers' financial rating.
This post written by Rollie Goss.
The staff of Reinsurance Focus wishes all of our readers a very happy holiday season. We hope that you have a good time with your families and are able to forget all about reinsurance and arbitration for a while and enjoy the holidays.
Rollie Goss, Lynn Hawkins and our contributors
On September 24, 2007, we reported on a Connecticut Supreme Court decision addressing issues relating to a request for the posting of pre-pleading security in a case involving the interpretation of a reinsurance agreement covering losses on general liability insurance policies arising from claims for insuries resulting from the underlying insured's production and use of products containing asbestos. On remand, the principal issue on the merits of the dispute revolved around language in the reinsurance agreement relating to aggregation of losses and the definition of occurrence. The trial court granted summary judgment on that issue to the reinsurers. The Supreme Court has reversed, finding that there are disputed issues of material fact which preclude the determination of the interpretation issues in a summary judgment posture. Hartford Accident and Indemnity Co. v. Ace American Reinsurance Co., SC 17625 (officially released Dec. 25, 2007).
This post written by Rollie Goss.
By a vote of 360-53, the House has passed a seven year extension of the Terrorism Risk Insurance Act. The enacted version mirrors the version passed by the Senate, which does not include coverage for nuclear, biological and chemical attacks or credit life insurance. Although the Bush administration favors not renewing TRIA, there have been indications that the President would sign a bill such as the one passed by the House.
This case centers around the relationship between defendant, Ramona Tires (“Ramona”), Automotive Services Insurance Limited (“ASIL”), a captive reinsurance company created by Ramona, and Frontier Insurance Company (“Frontier”). Plaintiff Howard Mills, Superintendent of Insurance, as Rehabilitator of Frontier, filed suit against Ramona alleging that Ramona defrauded Frontier by purposefully undercapitalizing ASIL so as to make it unable to comply with its contractual obligations. Ramona filed a motion to dismiss for failure to plead its fraud claim with particularity under Rule 9(b) and for failure to state a claim under Rule 12(b)(6).
The Southern District of California denied Ramona’s motion to dismiss. Plaintiff’s complaint attributed the following two false statements to Ramona: (1) defendants allegedly promised that ASIL would reimburse Frontier for the first $250,000 of each claim made on the policy by Ramona; and (2) ASIL would remain adequately capitalized. The court found these averments satisfied the requirements of Rule 9(b). The court further held that plaintiff adequately pled claims for unjust enrichment, money had and received, and conspiracy. Howard Mills v. Ramona Tire, Inc., Case No. 07-CV-0052 (USDC S.D. Cal., Dec. 5, 2007).
This post written by Lynn Hawkins.