The Colorado Division of Insurance has adopted a comprehensive revision of its regulations with respect to finite reinsurance transactions. The revisions include the repeal of existing regulations regarding Ceding Reinsurance Agreements, new regulations for Credit for Reinsurance, new regulations for Life and Health Reinsurance Agreements, and new regulations for Property and Casualty Reinsurance Agreements. Separately, the Division also adopted regulations establishing standards regarding the placement of insurance by producers and the qualification of insurers pursuant to the Colorado Nonadmitted Insurance Act.
Pennsylvania court rules on letter of credit posted by cedent
A Pennsylvania court has ruled in a dispute over the sufficiency of a letter of credit posted by a cedent and draws on that instrument. The state court's opinion is available through Mealey's. Eastern Atlantic Ins. Co. v. Swiss Reinsurance America Corp., No. 2004 cv 5514 (Pa. Comm. Pls. Dauphin Co.). There had been a parallel action in federal court, in which the Court abstained to permit the state court to adjudicate the disputes. Eastern Atlantic Ins. Co. v. Swiss Reinsurance America Corp., Case No. 04-1555 (M.D. Pa. Dec. 16, 2004).
UK court rejects claims against reinsurance broker relating to film financing and production
The UK Commercial Court has rejected a claim against a reinsurance broker which placed reinsurance for coverage of risks relating to the financing and production of motion pictures. When the reinsurers successfully contested claims, the reinsured sued the broker, alleging negligence in the placement of the reinsurance. The Court rejected the claims, holding that the reinsured had failed to prove, inter alia, that the loss for which it sought compensation had been caused by a breach of duty by the reinsurance broker. HIH Cas. and General Ins. Ltd. v. JLT Risk Solutions Ltd., [2006] EWHC 485 (Comm. Ct. Mar. 15, 2006).
SEC files civil action against RenRe executives relating to finite reinsurance transactions
The SEC has filed a civil action against three former executives of Renaissance Reinsurance Ltd., alleging that they were involved in fraudulent finite reinsurance transactions to improve the company's financial statements and earnings. The case was filed in the Southern District of New York. SEC v. Stanard, Merritt and Cash, Case No. 06-7736 (Sept. 27, 2006).
Court applies follow the fortunes doctrine and rejects late notice claim
In a summary judgment posture, a New York state court has rejected a reinsurer's late notice claim, finding that under New York law a reinsurer must prove prejudice due to late notice in order for late notice to constitute a defense to failure to pay claims. The Court found that no evidence of prejudice had been proffered. The Court then enforced a follow the fortunes clause as to the majority of the reinsurance claims at issue, finding that the reinsurer had not developed evidence in extensive discovery that the reinsured had acted fraudulently or in bad faith in paying the claims. The Court denied summary judgment as to claims relating to one underlying insured, based upon limited evidence that suggested possible bad faith in the payment of claims submitted by that party. Granite State Insur. Co. v. Ace American Reinsur. Co., Index No. 604347/04, in the Supreme Court of the State of New York, County of New York (Aug. 4, 2006).