Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

Denial of pre-pleading security is appealable in Connecticut

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The Connecticut Supreme Court, reversing a decision of the Connecticut Appellate Court that found the issue not to be appealable, has found that the denial of a motion for pre-pleading security in a case brought by Hartford against unauthorized reinsurance companies was an appealable final judgment. The Supreme Court remanded the case for consideration of the merits of the appeal by the Court of Appeal. Hartford Accident and Indemnity Co. v. Ace American Reinsurance Co., – A.2d -, 2006 WL 1982910 (Ct. July 25, 2006) (slip opinion).

Arbitration award confirmed over disputes as to discovery and arbitrator bias

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A District Court confirmed an arbitration award in a non-reinsurance context in Lebeau v. Oppenheimer & Co., rejecting contentions that the award should be vacated because, inter alia, the arbitrators did not allow sufficient discovery, did not adequately disclose conflicts and demonstrated bias. One interesting finding is that under the Federal Arbitration Act, one may waive such objections by raising them for the first time in the context of motions to confirm or vacate a later award, rather than raising them in the arbitration, at the time of the alleged misconduct. Lebeau v. Oppenheimer & Co., Case No. 05-5876 (USDC E.D. Pa. June 23, 2006).

Reinsurance offset dispute must be arbitrated

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In Aegis Security Insurance Co. v. Harco National Insurance Company, Case No. 06-0606 (USDC M.D. Pa. June 22, 2006), there was a dispute as to whether one party to two reinsurance agreements could offset an amount under one treaty against a liability owed under the other treaty. The reinsurance agreements contained an offset provision. The District Court compelled arbitration, holding that the dispute involved the interpretation of the offset provision, bringing the dispute within the arbitration provision, which required the arbitration of “any dispute arising out of the interpretation, performance or breach of this Agreement.”