A New York state appellate court has affirmed a stay of an action involving Lloyd's in deference to a pending federal court action concerning coverage and indemnity for asbestos-related claims. In a perfunctory opinion, the court noted that the plaintiffs in the underlying action had “remained inactive for 20 years ….” While the state court action had been filed three years before the action was filed in federal court, the appellate court based its decision on “the familiarity of the federal court with the issues, the substantial identy of the parties, and the interdependence of the issues involving primary and excess insurers ….” Certain Underwriters at Lloyd's London v. Pneumo Abex Corp., Index 602493/02 (App. Div. Jan. 9, 2007).
New York adopts new regulations for insurance reserves
The New York Department of Insurance has adopted revised regulations governing the valuation of individual and group accident and health insurance reserves and emergency regulations governing the valuation of life insurance reserves. The complete re-writing of the reserve requirements relating to accident and health insurance was the first revision of the regulations in that area since 1971. The changes include a change from the use of the 1964 Commissioners' Disability Tables to the 1986 tables, and the adoption, for the first time, of regulations for group insurance. The emergency regulations for life insurance were adopted due to the Department becoming aware that “some insurers have designed certain life insurance products with the clear intent of circumventing existing reserve standards.”
Court remands case to new arbitration panel for further proceedings
After partially vacating an arbitration award as being in manifest disregard of law, a District Court has remanded the case to a new arbitration panel for further proceedings. The Court found it inappropriate to remand the case to the same arbitration panel for further proceedings relating to the issue as to which it had found that the panel had manifestly disregarded Pennsylvania law. Koken v. Cologne Reinsurance (Barbados) Ltd., Case No. 98-0678 (USDC MD Pa Dec. 5, 2006).
District Judge files appellate brief in KPMG criminal tax case
In a highly unusual event, United States District Judge Lewis Kaplan has filed a brief with the United States Court of Appeals for the Second Circuit, defending his opinion relating to the arbitrability of issues relating to KPMG paying attorneys fees for defendants in a criminal tax action, which was the subject of a post on this blog on September 26, 2006. This brief was invited by the Second Circuit in an Order entered December 13, 2006, which provided in part: “Pursuant to Fed. R. App. P. 21(b)(4), we now invite the District Court to address, if it so chooses, the motion for leave to file a mandamus petition.” Stein v. KPMG, LLP, Case No. 06-4358 (2d Cir. Jan. 8, 2007).
Court stays enforcement of arbitral award pending ruling by liquidation court on set off claim
LDG Re reinsured workers' compensation and employers' liability risks retained by Legion Insurance and a related company under two quota share reinsurance agreements. LDG Re booked the reinsurance into a pool facility in which a number of companies participated, including Chartwell Reinsurance (which was later purchased by Trenwick America Reinsurance). When LDG failed to make timely payments under the quota share agreements, Legion demanded arbitration. A settlement was reached. When LDG allegedly failed to make payments required by the settlement agreement, Legion sought to reactivate the arbitration. LDG objected, contending that the dispute was not arbitrable and that the pool members were entitled to set off other debts owed to them by Legion. The panel entered an award purporting to enforce the settlement agreement, requiring a payment by LDG of over $5 million, not mentioning the set off request. Legion moved to confirm the award, and Trenwick moved to intervene in both the District Court action and in Legion's liquidation proceeding in Pennsylvania state court, seeking to assert a set off. In a Memorandum Opinion, followed by an Order and Judgment, the District Court confirmed the arbitration award, but stayed execution pending the submission by Legion or Trenwick of a motion in the liquidation proceeding seeking a ruling as to whether the claimed set off should be allowed. Koken v. LDG Re Corp., Case No. 06-81 (USDC ED Pa. Dec. 29, 2006).