Endurance Specialty Insurance Ltd. (“Endurance”) has acquired $235 million of protection for California earthquake and U.S. hurricane risks, financed through a risk-linked securities program. Endurance, a unit of Bermuda-based Endurance Specialty Holdings Ltd., bought the coverage from Cayman Islands-based Shackleton Re Ltd. Shackleton Re financed the reinsurance through the issuance of a $125 million catastrophe bond and a $110 million multi-year risk-linked credit facility. Endurance’s new reinsurance program has three separate layers of coverage, including: $125 million of reinsurance to cover California earthquake risk for 18 months; $60 million of coverage for U.S. hurricanes in the North Atlantic, Gulf Coast, and certain inland regions for two years; and $50 million of reinsurance for California earthquake or U.S. hurricane losses, occurring within a year of a similar catastrophe, for two years.
Court of Appeal addresses jurisdictional issues regarding arbitration-related matters
The United States Court of Appeals for the Fifth Circuit has dismissed an appeal of decisions to grant summary judgment to Lloyd's and remand to state court a case filed by Lloyd's against an insured to recover $39 million in claims paid to an insurer/ reinsured pursuant to a confirmed arbitration award rendered under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This opinion addresses the reviewability of remand decisions and whether the District Court should have retained jurisdiction over state law-based counterclaims. Certain Underwriters at Lloyd’s, London v. Warrantech Corp., Case No. 04-11168 (5th Cir. Aug. 17, 2006).
Renaissance Re offers to settle probe by SEC
RenaissanceRe Holdings Ltd. (“RenRe”) has offered to pay $15 million to settle Securities and Exchange Commission (“SEC”) probes into the company’s three-year restatement of earnings. Under the proposed settlement—under which RenRe will not admit or deny any wrongdoing—the reinsurer will pay the SEC $15 million in civil penalties and will disgorge $1. In addition, RenRe will hire an outside consultant to review the reinsurer’s internal controls and policies, among other things. The settlement would not resolve an ongoing investigation by the U.S. Attorney’s office for the Southern District of New York, or a consolidated securities class action lawsuit pending against the company and certain current and former officers.
RenRe acknowledged in its 2004 10-K filing that two transactions that were accounted for as insurance failed to transfer enough risk to meet accounting standards. One was an aggregate excess-of-loss reinsurance agreement under which RenRe ceded business to Inter-Ocean; the other, an agreement to sell reinsurance recoverables to Inter-Ocean. The effect of the restatement was to boost RenRe’s 2001 and 2003 net income by $20.6 million and $1.3 million, respectively, and reduce its 2002 net income by $21.9 million.
Half day reinsurance update seminar in New York City
The New York City Bar Center for CLE and the Insurance Federation of New York are co-sponsoring a half day program titled Current Developments in Reinsurance Law, Tuesday morning, September 19, 2006 at the New York City Bar facility.
Party loses right to appoint arbitrator due to untimely appointment
An arbitration provision required that both parties appoint an arbitrator within 30 days of receipt of written notice from the other party requesting that it do so. Lloyd's appointed an arbitrator timely. The 30th day after receiving such notification for Argonaut fell on the Sunday before Labor Day, and when the appointment was not made by the end of Sunday, Lloyd's appointed a second arbitrtator on Labor Day. Argonaut appointed an arbitrator the following day, claiming that the time for its appointment was extended since its deadline fell on a Sunday, followed by a holiday. The Court disagreed, holding that the agreement to appoint within 30 days was binding, and upheld Lloyd's appointment of two arbitrators. Certain Underwriters at Lloyd's v. Argonaut Insurance. Co., Case No. 04-5852 (N.D. Ill. Aug. 8, 2006).