In a matter involving the reinsurance of asbestos-related risks, a District Court has followed what it considered to be both the majority rule, and the better reasoned path, declining to imply the follow the fortunes doctrine into reinsurance agreements, where the facultative reinsurance agreements did not contain such a provision. The Court then denied summary judgment to the reinsured, finding that there were disputed issues of material fact as to whether certain excess insurance had been exhausted, a requirement for the applicability of the reinsurance, and whether an exclusion applied. The American Ins. Co. v. American Re-Ins. Co., Case No. 05-01218 (USDC N.D. Cal. Nov. 27, 2006). Shortly after this opinion was entered, the parties notified the Court that they had reached a settlement of their disputes.
Court upholds settlement of claims affecting reinsurance in liquidation of The Home
The New Hampshire Supreme Court has upheld a settlement of disputes and claims involving insureds and reinsureds of The Home Insurance Company, which was placed in liquidation by the New Hampshire Commissioner of Insurance. Some of The Home's reinsurers opposed the settlement. The Court upheld the settlement as within the authority of the liquidator and the Court, and fair and reasonable. This process is interesting in part because the settlement had to be approved by creditors of The Home, by a Court in the UK and by the UK's insurance regulatory body, the Financial Services Agency. In the Matter of the Liquidation of The Home Ins. Co., Case No. 2005-740 (N.H. Dec. 5, 2006).
Court interprets policy in direct action against reinsurer
A truck leased from Ryder TRS was involved in an accident, and Frontier Insurance Company provided coverage for the truck. After Frontier was declared insolvent, a party to the accident pursued claims under the policy against Clarendon Insurance Company, which had provided reinsurance to Frontier. The New Hampshire Supreme Court upheld an interpretation of the insurance policy proposed by Clarendon, which limited Clarendon's liability. This opinion discusses some of the general principles of policy interpretation. Warner v. Clarendon Ins. Co., Case No. 2005-415 (N.H. Nov. 2, 2006).
Fourth Circuit vacates Order dismissing policy rescission claim
The financial collapse of Reciprocal of America, an insurer and reinsurer, resulted in a number of lawsuits, including a series of lawsuits by policyholders and state Insurance Commissioners in Alabama and in other states against the company's officers and directors. When two officers pleaded guilty to criminal charges relating to the operation of the company, the company's D&O insurer filed a declaratory judgment action, seeking rescission of the policies it had issued. While the actions filed by the policyholders and Insurance Commissioners were granted MDL status, the MDL Panel declined to add the D&O insurer's action to that proceeding. The District Court dismissed the D&O insurer's action, on the basis that it would abstain from hearing the claims in deference to the parallel state court actions. The Fourth Circuit reversed, vacating the decision, finding that the requirements for abstention were not present, and that the rescission action should go forward. Great American Ins. Co. v. Gross, Case No. 05-2069 (4th Cir. Oct. 30, 2006).
UK Court construes jurisdiction reference in reinsurance slip
The UK Court of Appeals has interpreted a provision in a reinsurance slip that simply said “Jurisdiction Clause” as being essentially meaningless, evidencing an intention to agree upon a jurisdiction clause, where such an agreement was never reached. The Court considered extrinsic evidence, and declined to import a clause from underlying insurance that provided for jurisdiction in Mauritius. The effect of the decision was to permit the courts to apply UK law to the dispute. Dornoch Ltd. v. Mauritius Union Assur. Co., [2005] EWHC 1887 (Comm.) (April 10, 2006).