Current U.S. Reinsurance Claim Issues

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Current U.S. Reinsurance Claim IssuesMay 2016, Volume 17

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Reinsurance PracticeFor decades, the Reinsurance industry has turned to Tressler’s attorneys for advice and representation. Tressler’s attorneys

have extensive experience representing international and domestic reinsurers, cedents, intermediaries or brokers,

managing general agencies and pools, and retrocessionaires in a wide range of reinsurance matters. We routinely

arbitrate and litigate reinsurance disputes in various forums including mediation, arbitration, and state and federal

courts throughout the nation. We also counsel and represent insurers and reinsurers regarding regulatory matters.

Tressler attorneys are not only well versed on reinsurance matters but also understand the underlying insurance claim

and coverage issues.

Among those issues Tressler attorneys have addressed are the following:

» Late Notice

» Aggregation and Allocation

» Rescission

» Premium Disputes

» Extra-Contractual Liability

» Follow the Fortunes

» Misrepresentation of Placement of Reinsurance

» Accountability of Insurance Companies as Fronting Companies

Our depth of industry knowledge, resources and creativeness allows us to achieve favorable business resolution for

clients. Tressler provides timely and practical advice with efficient staffing on all matters.

Tressler attorneys also draw on the firm’s eDiscovery experience to minimize the expenses and risks associated with

managing electronically stored information. Each stage of discovery is accomplished in a defensible and cost-effective

manner. Tressler attorneys consult with in-house counsel and qualified technicians to defensibly collect only necessary

and reasonably accessible electronically stored information, to minimize the impact to internal resources.

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Bruce M. Engel, Partner, Chicago | 312.627.4141 | [email protected]

Bruce Engel represents insurers and reinsurers worldwide in insurance coverage analysis, litigation and arbitration. He is experienced in addressing issues related to the underwriting, placement and claims handling of facultative and treaty reinsurance contracts. Bruce routinely represents parties in arbitrations concerning multi-million dollar reinsurance claims and underwriting disputes such as misrepresentation, allocation, late notice, coverage for expenses, and application of follow the fortunes. Bruce has also litigated reinsurance disputes when the reinsurance contract did not contain arbitration clauses.

Royce F. Cohen, Partner, New York | 646.833.0875 | [email protected]

Royce Cohen represents both cedents and reinsurers in a variety of matters, including misrepresentations in connection with the placement of reinsurance, disputes as to the coverage provided by treaties and policies, standards of accountability of cedents as fronting companies, standards of conduct applicable to ceding companies in their dealings with reinsurers and disputes involving program managers. Royce also has extensive experience with eDiscovery issues and regularly helps clients address the costs and risks associated with managing electronically stored information. She also actively monitors state and federal developments of the laws governing eDiscovery.

Michael Conlon, Partner, Chicago | 312.627.4208 | [email protected]

Michael Conlon represents cedents, reinsurers and insurers in complex coverage and reinsurance disputes. With extensive experience in both arbitration and litigation, Michael has successfully represented his reinsurance clients, under both facultative and treaty arrangements, involving a wide array of issues including allocation, aggregation, duty of utmost good faith, follow the fortunes, late notice, expense handling, insolvency and extra-contractual obligations. He has appeared before numerous arbitration panels, and represented clients in federal and state courts throughout the United States.

Laura Pfeiffer Irk, Associate, Chicago | 312.627.4150 | [email protected]

Laura Pfeiffer Irk regularly represents cedents and reinsurers in arbitration and litigation disputes involving a range of facultative and treaty reinsurance contracts addressing issues, such as follow the fortunes, follow the settlements, duty of utmost good faith, misrepresentation, notice and allocation which arise in connection with coverage and contract interpretation disputes as well as underwriting and placement of reinsurance.

Abigail E. Rocap, Associate, Chicago | 312.627.4152 | [email protected]

Abigail Rocap has experience representing both cedents and reinsurers in arbitration and litigation disputes involving a wide array of issues including allocation, aggregation, duty of utmost good faith, follow the fortunes, late notice and extra-contractual obligations.

Stevi A. Siber-Sanderowitz, Associate, New York | 646.833.0870 | [email protected]

Stevi Siber-Sanderowitz represents reinsurers and cedents in complex reinsurance and insurance coverage disputes in arbitration and state and federal courts nationwide. She manages reinsurance and insurance litigation and arbitration from inception through all aspects of pleadings, discovery, depositions, witness preparation, court conferences, dispositive motions, oral argument, hearings, mediation, and appeals.

Reinsurance Attorneys

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© 2016 Tressler LLP | Current U.S. Reinsurance Claim Issues i

TABLE OF CONTENTS

I. The Duty of Utmost Good Faith .......................................................................................... 1

A. At the Time of Reinsurance Contracting ..................................................................... 1

B. At the Time of Resolution of Underlying Claim .......................................................... 6

C. At the Time of Presentation of Reinsurance Claim..................................................... 7

II. Follow-the-Fortunes/Follow-the-Settlements .................................................................... 9

III. Extra Contractual Obligations ........................................................................................... 24

IV. Insolvency of Reinsurer ..................................................................................................... 27

V. Insolvency of Ceding Company and Set-offs .................................................................... 30

VI. Cut-Through ...................................................................................................................... 35

VII. Late Notice ........................................................................................................................ 39

VIII. Limit of Liability (Treatment of Expenses) ........................................................................ 46

IX. Allocation .......................................................................................................................... 48

A. The Number of Occurrences Issue ............................................................................ 49

B. The Allocation of Losses Among Reinsurance Treaties ............................................ 51

X. Arbitration ......................................................................................................................... 53

A. Enforceability of Arbitration Provisions .................................................................... 53

B. Motion to Compel or Stay Arbitration ...................................................................... 53

C. Choosing a Qualified Arbitrator ................................................................................ 71

D. Authority of Arbitrators ............................................................................................ 83

E. Consolidation of Arbitrations .................................................................................... 94

F. Motion to Confirm, Vacate, or Modify Arbitration Award ....................................... 97

G. Posting of Security .................................................................................................. 112

XI. Discovery of Reinsurance Information ........................................................................... 115

XII. Reinsurance Claim Issues Arising From September 11, 2001 ......................................... 135

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© 2016 Tressler LLP | Current U.S. Reinsurance Claim Issues 1

I. The Duty of Utmost Good Faith

The cedent/reinsurer relationship is often considered to be based on utmost good faithand “uberrimae fidei.” Indeed, the reinsurance contract may contain such a provision or it may be implied by custom and practice. The conduct of the parties will be “measured” or “judged” by this standard.

A. At the Time of Reinsurance Contracting

Generally, the cedent must disclose to its reinsurer all known facts relevant tothe reinsured risk.

Munich Reinsurance Am., Inc. v. Am. Nat’l Ins. Co., 999 F. Supp. 2d 690, 740, 743-744 (D. N.J. February 27, 2014), aff’d, 601 Fed. App’x 122 (3d Cir. 2015) (applying New York law). Finding that the retrocessionaire failed to demonstrate that the undisclosed information was material to the underwriting process in connection with its claim for rescission.

Granite State Ins. Co., et al. v. Transatlantic Reinsurance Co., 2013 N.Y. Misc. LEXIS 6142 (N.Y. Supr. Ct. December 23, 2013), aff’d, 599 Fed. App’x 16 (2nd Cir. 2015) (applying Illinois law). Court denied cedent’s motion to dismiss certain reinsurer affirmative defenses based on breach of contract stating that the cedent has a duty to disclose anything material affecting the risk to the reinsurer.

United States Life Ins. Co. v. Sup. Nat’l Ins. Co., 160 Fed. App’x 559 (9th Cir. 2005). Court upheld arbitration panel’s finding that reinsured “should have acted in more open and forthright manner” regarding information about its subsidiaries’ business and thus granted reinsurer 10 percent reduction of its obligation under quota share reinsurance contract.

AXA Corporate Solutions v. Underwriters Reinsurance Co., No 02 C 3016, 2004 U.S. Dist. LEXIS 22609 (N.D. Ill. 2004). Duty of utmost good faith exists between reinsured and reinsurer in both formation and performance of reinsurance agreement in order to maintain incentive for insurers to give full and prompt disclosure to reinsurers.

Gerling Global Reinsur. Corp. v. ACE Prop. & Cas. Ins. Co., No. 01 Civ. 7825 (S.D.N.Y. 2003); reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 14, No. 2 (5/22/03). Reinsurer was entitled to rescission when the reinsured’s managing general agent did not disclose that the original insured was defending various asbestos-related lawsuits at time reinsurance was placed.

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2 Current U.S. Reinsurance Claim Issues | © 2016 Tressler LLP

George Nichols III v. Am. Risk Management Inc., et al., 2002 U.S. Dist. LEXIS 22221 (S.D.N.Y. 2002). Reinsurer entitled to rescission because there was abundant evidence that management knew or should have known that the company had inadequate reserves.

Michigan Nat’l Bank-Oakland v. Am. Centennial Ins. Co. et al., 89 N.Y.2d 94, 674 N.E.2d 313, 651 N.Y.S.2d 383 (N.Y. 1996).

Compagnie de Reassurance d’Ile de France v. New England Reinsurance Corp., 944 F. Supp. 986 (D.Mass. 1996). Retrocedent owes fiduciary duty to retrocessionaires.

Int’l Surplus Lines Ins. Co. v. Fireman’s Fund Ins. Co., 1989 WL 99771 (N.D.Ill. 1989), on reconsideration, 1989 WL 165045. No fiduciary duty needed.

Mutuelle Generale Francaise Vie v. Life Assur. Co. of Pennsylvania, 688 F. Supp. 386 (N.D.Ill. 1988).

Cf. Am. Re-Ins. Co. v. MGIC Investment Corp., No. 77 CH 1457 (Cir.Ct. Cook Cty., Ill. Oct. 20, 1987). Treaty situation; fiduciary duty found.

Calvert Fire Ins. Co. v. Unigard Mut. Ins. Co., 526 F. Supp. 623 (D.Neb. 1980) aff’d, 676 F.2d 707 (8th Cir. 1982).

A/S Ivarans Rederei v. Puerto Rico Ports Authority, 617 F.2d 903 (1st Cir. 1980).

Security Mut. Cas. Co. v. Transport Indem. Co., 66 Cal.App.3d 1009, 136 Cal.Rptr. 365 (1977).

Extrinsic evidence is admissible to demonstrate parties’ intent when reinsuranceagreement is ambiguous.

Physicians Prof’l Services Organization Inc. v. Combined Ins. Co. of Am., et al., 345 F. Supp.2d 214 (D. R.I. 2004). Where new terms incorporated into final copy of reinsurance policy are ambiguous and significantly change coverage under body of policy, extrinsic evidence is appropriate to determine whether duty of good faith was breached and parties’ intent at onset of the contract.

Cedent provided false information in response to specific inquiry or applicationquestion.

Gen. Reinsurance Corp. v. Southern Sur. Co., 27 F.2d 265 (8th Cir. 1928).

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Reinsurance contract voided based on fraud in the inducement.

In re Liquidation of Union Indem., 234 A.D.2d 120, 651 N.Y.S.2d 436 (N.Y. App. Div. 1996).

Curiale v. AIG Multi Line Syndicate Inc., 204 A.D.2d 237, 613 N.Y.S.2d 360 (N.Y. App. Div. 1994).

If misrepresentation, rescission is probable remedy.

Gulf Ins. Co. v. Transatlantic Reinsurance Co., et al. Index No. 601602/03 (Supreme Court of New York, County of New York, November 21, 2007). Unresolved issues of fact as to whether reinsured had undervalued its loss ratio and failed to disclose increased loss frequencies warranted denying reinsured’s motion for summary judgment on the reinsurer’s rescission claim.

Houston Cas. Co. v. Certain Underwriters at Lloyd’s London, 51 F. Supp. 2d 789 (S.D.Tex. 1999), aff’d, 252 F.3d 1357 (5th Cir. 2001). Reinsurance broker’s misstatement, made without any intent to mislead or defraud.

Mercantile Gen. Reinsurance Co. v. Colonial Assurance Co., et al., 82 N.Y.2d 248 (N.Y. 1993).

Reinsurance broker may be subject to intermediary liability for negligentlyproviding material misinformation.

United Nat’l Ins. Co. v. Aon Ltd., No. 04-539, 2008 U.S. Dist. LEXIS 28249 (E.D. Pa. April 7, 2008). Motion for judgment as a matter of law denied, at 2008 U.S. Dist. LEXIS 98747 (E.D. Pa. Dec. 4, 2008) stating record evidence existed to preclude a finding as a matter of law.

Claim that reinsurance intermediary breached fiduciary duty by failing to securemost favorable reinsurance terms properly denied where plaintiff could notproperly support such an assertion.

Workmen’s Auto Ins. Co. v. Guy Carpenter & Co., Inc, No. B211660 c/w B213853, 2012 Cal. App. Unpub. LEXIS 1601 (Cal. App. 2d Dist. 2012).

Reinsurer stated a plausible claim for negligence based on the reinsurancerelationship, which is governed by the duty of utmost good faith.

Old Republic Nat.’l Title Ins. Co. v. First Am. Title Ins. Co., 2015 WL 1349817, *2 (M.D. Fla. March 25, 2015) (applying West Virginia law). The court denied the reinsured’s motion to dismiss the reinsurer’s negligence claim related to the reinsured’s alleged duty to underwrite

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the underlying policies “in a reasonably prudent manner [which] created a special relationship” between the reinsurer and the insurer.

Reinsurance contract voided insofar as intermediary failed to get specialapproval from reinsurer.

Scottsdale Ins. Co v. Am. Re-Insurance Co., No. 06-cv-00016, 2008 WL 2001750 (D. Neb. May 6, 2008). Where contract limited the ability of wholesale insurance intermediary to bind reinsurer to coverage for certain activities without special acceptance from reinsurer, intermediary’s failure to get such permission voided the reinsurance contract.

Reinsured’s fraud in the inducement warranted punitive damages.

AXA Versicherung AG v. N.H. Ins. Co., No. 05-cv-10180, 2008 WL 1849312 (S.D.N.Y. April 22, 2008), remanded, at 2009 U.S. App. LEXIS 21923 (2d Cir. Oct. 6, 2009). Second Circuit remands matter back to district court to establish record relevant to its “fraudulent inducement” finding, and whether insurer had waived its right to arbitrate. On remand, 708 F. Supp. 2d 423 (S.D.N.Y 2010). The district court found the fraudulent inducement claim was not within the scope of the arbitration clause because it did not “‘aris[e] out of the interpretation’ of the contracts”, and that AIG had waived its arbitral rights. Aff’d in part, 391 Fed. App’x 25 (2nd Cir. 2010). Second Circuit affirmed the district court’s finding that AXA’s allegations sounded in fraud, but vacated the judgment against AIG because AXA’s fraudulent inducement claims were barred by the statute of limitations.

No duty of good faith if cedent specifically contracted to avoid such a duty.

PXRE Reinsurance Co. v. Lumbermens Mut. Cas. Co., No. 03 C 5155, 2004 WL 1166631 (N.D. Ill. 2004), motion for reconsideration denied, 330 F. Supp.2d 981 (N.D. Ill. 2004). Utmost good faith standard does not override express contractual limitations.

Harleysville Mut. Ins. Co. v. GE Reinsur. Corp., 2002 U.S. Dist. LEXIS 8064 (E.D. Pa. May 6, 2002).

If cedent shows it disclosed all available information, no materialmisrepresentation.

Am. Special Risk Ins. Co. v. Greyhound Dial Corp., 1996 WL 551659 (S.D.N.Y. 1996), motion to amend denied, 1997 WL 115637 (S.D.N.Y. 1997).

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Christiania Gen. Ins. Corp. v. Great Am. Ins. Co., 745 F. Supp. 150 (S.D.N.Y. l990), aff’d in part, rev’d in part, remanded, 979 F.2d 268 (2nd Cir. 1992). The relationship between an insurer and a facultative reinsurer does not rise to the fiduciary level.

New Hampshire Ins. Co. v. Philadelphia Reinsurance Corp., Nos. 90-15588 and 90-15858 (9th Cir. 1990).

Old Reliable Fire Ins. Co. v. Castle Reinsurance Co., 665 F.2d 239 (8th Cir. 1981).

Whether non-disclosure of information is material is a question of fact.

Compagnie De Reassurance v. New England Reinsurance Corp., 57 F.3d 56 (1st Cir.) cert. denied, 516 U.S. 1009, 116 S.Ct. 564, 133 L.Ed.2d 490 (1995), on remand to 944 F. Supp. 986 (D.Mass. 1996).

Reliance Ins. Co. v. Certain Member Cos., 886 F. Supp. 1147 (S.D.N.Y. 1995), aff’d, 99 F.3d 402 (2d Cir. 1995).

Am. Home Assurance Co. v. Fremont Indem. Co., 745 F. Supp. 974 (S.D.N.Y. 1990).

Reinsurance relationship not fiduciary.

Employers Reinsurance Corp. v. Massachusetts Mut. Life Ins. Co., 654 F.3d 782 (W.D. Mo. 2007), later proceeding at 2008 US Dist. LEXIS 69756(W.D. Mo. June 6, 2008), summary judgment granted by, partial summaryjudgment granted by, motion denied by as moot, motion to strike deniedby 2008 US Dist. LEXIS 63420 (W.D. Mo. August 19, 2008), Court foundthat the reinsurance contract contained a follow-the-settlementsprovision, and the reinsurer was obligated to follow the settlementdecisions of the reinsured. Aff’d, 654 F.3d 782 (8th Cir. 2011), the EighthCircuit, discerning no ambiguity in the reinsurance contract, concludedthat it contained a follow-the-settlements provision. Later proceeding onother issues at 2010 U.S. Dist. LEXIS 85326 (W.D. Mo. Aug. 19, 2010).

PXRE Reinsurance Co. v. Lumbermens Mut. Cas. Co., No. 03 C 5155, 2004 WL 1166631 (N.D. Ill. 2004), motion for reconsideration denied, 330 F. Supp.2d 981 (N.D. Ill. 2004).

United States v. Brennan, 938 F. Supp. 1111 (E.D.N.Y. 1996), rev’d on other grounds, 183 F.3d 139 (2d Cir. 1999). In dicta, stated that there is substantial reason to conclude that the reinsurance relationship at issue was not fiduciary.

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Contractual relationship between parties for the creation of an offshorereinsurance program known as a “Rent-A-Captive” may give rise to a fiduciaryrelationship between the parties.

WEB Mgmt. LLC v. Arrowood Indem. Co., No. 3:07-cv-424, 2008 WL 619310 (D. Conn. 2008).

Cedent’s managing general underwriter has no duty of disclosure to reinsurer.

Odyssey Re (London) Ltd. v. Stirling Cook Brown Holdings, Ltd., 85 F. Supp. 2d 282 (S.D.N.Y. 2000), aff’d, 242 F.3d 366 (2d Cir. 2001).

B. At the Time of Resolution of Underlying Claim

Granite State Ins. Co. v. Clearwater Ins. Co., 2014 U.S. Dist. LEXIS 44573 (S.D.N.Y. March 31, 2014), aff’d, 599 Fed. App’x 16 (2nd Cir. 2015) (applying Illinois law). Finding that the cedent breached its duty of utmost good faith as inter alia it “willfully disregarded an obvious risk of increased liability to [Clearwater]” in negotiating and entering into various settlement agreements.”

Munich Reinsurance Am., Inc. v. Am. Nat’l Ins. Co., 999 F. Supp. 2d 690, 740, 743-744 (D. N.J. 2014), aff’d, 601 Fed. App’x 122 (3d Cir. 2015) (applying New York law). Finding that New York does not recognize an independent cause of action for breach of the duty of utmost good faith premised on improper claims handling in the reinsurance context. Accordingly, the court found that the retrocessionaire’s claim for rescission based upon improper claim handling was “no more than a claim for rescission based upon breach of the Retrocession Agreements” and that the facts did not support rescission based upon the retrocedent’s claims handling.

Suter v. Gen. Accident Ins. Co. of Am., 2006 U.S. Dist. LEXIS 48209 (D.N.J. 2006), vacated pursuant to settlement by, Goldman v. Gen. Acc. Ins. Co. of Am., 2007 WL 2781935 (D.N.J. May 24, 2007). Reinsured did not undertake a reasonable, businesslike investigation nor make a reasonable determination about whether the underlying claims were covered under its excess policies, thus, reinsured’s allowance of underlying claims was grossly negligent, amounted to bad faith, and reinsurer was not obligated to pay.

Am. Employers’ Ins. Co. v. Swiss Reinsurance Am. Corp., 413 F.3d 129 (1st Cir. 2005). Cedent’s settlement of underlying pollution claims based on only subset of those claims is consistent with modern practice in similar cases and does not demonstrate lack of good faith.

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Unigard Security Ins. Co. v. North River Ins. Co., 4 F.3d 1049 (2nd Cir. 1993).

C. At the Time of Presentation of Reinsurance Claim

The follow-the-fortunes clause only binds the reinsurer where “the insurers haveacted honestly and have taken all proper and businesslike steps in making thesettlements.”

Allstate Ins. Co. v. Am. Home Assurance Co., 43 A.D. 3d 113 (N.Y. App. Div. 1st Dept. 2007). Cedent’s inconsistent positions in regard with the number of occurrences showed that it was not acting in good faith in its post settlement allocation of loss with its reinsurer.

Am. Marine Ins. Group v. Neptunia Ins. Co., 775 F. Supp. 703 (S.D.N.Y. 1991), aff’d, 961 F.2d 372 (2d Cir. 1992).

Employers Reinsurance Corp. v. Ins. Co. of the State of Pennsylvania, No. 96 Civ. 9458 (S.D.N.Y. 1996).

If cedent operates treaty in manner inconsistent with treaty’s terms butreinsurer cannot show any damages, duty is not breached.

Unigard Security Ins. Co. v. Kansa Gen. Ins. Co., 42 F.3d 1402 (9th Cir. 1994).

Cedent’s knowledge of third-parties’ alleged misconduct irrelevant if theagreement clearly entitled cedent to payment for its claim.

Mariah Re. Ltd. v. Am. Family Mut. Ins. Co., 52 F. Supp. 3d 601 (S.D.N.Y. 2014), aff’d, 607 Fed. App’x 123 (2d Cir. 2015).

A reinsurer owes neither a fiduciary duty to its cedent, nor may be liable for badfaith or extracontractual liability.

Brand v. AXA Equitable Life Ins. Co., No. 08-2859, 2008 U.S. Dist. LEXIS 69661 (E.D. Pa. Sept. 16, 2008). Court granted reinsurer’s motion to dismiss bad faith claim brought by original insured finding that the reinsurer did not qualify as an insurer for purposes of assessing liability under Pennsylvania’s bad faith statute.

Cal. Joint Powers Ins. Auth. v. Munich Reinsurance Am., Inc., No. cv-08-956, 2008 WL 1885754 (C.D. Cal. 2008). California courts do not permit recovery in tort in the reinsurance context. Thus, claims against reinsurer for breach of the covenant of good faith and fair dealing are unsustainable.

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Gaffer Ins. Co., Ltd. v. Discover Reinsurance Co., et al., 2007 WL 2972580 (M.D. Pa. 2007). Pennsylvania’s bad faith statute, 42 Pa. Cons. Stat. Ann. § 8371, does not apply to reinsurance agreement. Additionally,Pennsylvania’s limited “insurance exception” to the general prohibitionagainst an independent cause of action for breach of the duty of goodfaith and fair dealing does not apply in the reinsurance context.

Houston Cas. Co. v. Lexington Ins. Co., No. 4:05-CV-01804 (S.D. Tx. 2007). Magistrate Judge concluded that Texas Insurance Code article 21.55 does not apply to a reinsurance claim. While the Magistrate concluded that reinsurance did qualify as a “policy of insurance” under the statute, a claim for reinsurance did not qualify as “a first party claim” under article 21.55.

Stonewall Ins. Co. v. Argonaut Ins. Co., 75 F. Supp. 2d 893 (N.D.Ill. 1999).

A claim for breach of the utmost duty of good faith against a reinsurer does notexist apart from a breach of contract claim.

Old Republic Nat. Title Ins. Co. v. First Am. Title Ins. Co., 2015 WL 3605192 (M.D. Fla. June 8, 2015) (applying West Virginia law). The court determined that any claim against the reinsurer for breach of the utmost duty of good faith must be premised on or relate to a breach of the reinsurance agreement. As such, only those allegations with a sufficient connection to the breach of contract were allowed to proceed.

Reinsurer may be held liable for bad faith damages through conduct rising to thelevel of unfair or deceptive business practices.

Commercial Union Ins. Co. v. Seven Provinces Ins. Co. Ltd., 217 F.3d 33 (1st Cir. 2000), cert. denied, 121 S.Ct. 1084 (2001). In affirming a judgment awarding bad faith damages, the court found that a reinsurer’s conduct of raising multiple, shifting defenses and engaging in a “lengthy pattern of foot-dragging and stringing [the cedent] along,” with the intent to pressure settlement was “extortionate” in nature, and sufficient to warrant double damages, plus attorneys’ fees and costs under M.G.L. ch. 93A, §11.

Trenwick Am. Re. Corp., et al. v. IRC Inc., et al., 764 F. Supp. 2d 274 (D. Mass. 2011). Retrocessionaire’s “outrageous” conduct results in imposition of double damages, plus attorney fees and costs under Massachusetts General Laws c. 93A § 2(a). Awarding fees under chapter 93A at 2011 U.S. Dist. LEXIS 54857 (D. Mass. May 23, 2011).

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Reinsurer may be fiduciary under ERISA.

Vescom Corporation v. Merrion Reinsurance Co., No. 01-CV-146-b-s (D. Maine 2003), 2003 U.S. Dist. LEXIS 17287. Following a default judgment, attorney’s fees were awarded against a reinsurer who allegedly breached its ERISA fiduciary duties by failing to process and pay the claims it received as the reinsurance carrier for the insured’s employee health benefit plan.

Captive reinsurer may be liable for fraud, false promises and misrepresentationin the face of allegations that insured purposely under-capitalized captivereinsurer so as to make it unable to comply with financial obligations.

Mills v. Ramona Tire Co., No. 07-cv-0052, 2007 US Dist. LEXIS 89438 (S.D. Cal. Dec. 5, 2007), defendant’s motion for summary judgment granted by 2009 U.S. Dist. LEXIS 43525 (S.D. Cal. May 22, 2009). Court held that the plaintiff’s fraud based claims were time-barred and the remaining claims presented no genuine issue of material fact.

Illinois law does not recognize an independent cause of action for breach of dutyof utmost good faith.

Guarantee Trust Life Ins. Co. v. Insurers Administrative Corp., et al., 2010 U.S. Dist. LEXIS 101088 (N.D. Ill. Sept. 23, 2010).

II. Follow‐the‐Fortunes/Follow‐the‐Settlements

The follow-the-fortunes doctrine generally describes the obligation of the reinsurer tofollow the cedent’s underwriting fortunes. The follow-the-settlements doctrine characterizes the duty of the reinsurer to follow the cedent’s claim handling. Although courts sometimes confuse the two (as discussed herein), they are actually two separate doctrines.

Whether follow-the-settlements may be implied based on custom and usage is aquestion of fact.

Trenwick Am. Re. Corp., et al. v. IRC Inc., et al., 764 F. Supp. 2d 274 (D. Mass. 2011). Follow-the-fortunes doctrine can be established through expert testimony regarding industry custom and practice.

North River Ins. Co. v. Employers Reinsurance Corp., 197 F. Supp. 2d 972 (S.D. Ohio 2002). It is a question of fact whether the follow-the-settlements clause can be implied by custom and practice.

Nat’l Am. Ins. Co. v. Certain Underwriters at Lloyd’s London, 93 F.3d 529 (9th Cir. 1996). Custom and usage can be basis for implying follow-the-

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settlements clause in policy; question of fact precluded summary judgment as to whether custom or usage to follow settlements existed when certificates were made.

Reinsurer is not obligated by the reinsured’s settlement decisions where there isno follow-the-settlements clause in the reinsurance agreement.

Employer Reinsurance Corp. v. Laurier Indem. Co., No. 8:03cv1650; 2006 U.S. Dist. LEXIS 40451 (M.D. Fla. June 25, 2007).

Am. Motorists Ins. Co. v. Am. Re-Insurance Co., 2007 U.S. Dist. LEXIS 41257 (N.D. Cal. May 29, 2007). Follow-the-settlements provision cannot be read into a certificate of facultative reinsurance contract as a matter of law.

North River Ins. Co. v. Employers Reinsurance Corp., 2002 U.S. Dist. LEXIS 11711 (S.D. Ohio June 3, 2002). Court found there was no reinsurance custom or practice implying a duty on behalf of the reinsurer to follow the settlements of the reinsured in the absence of an express clause.

North River Ins. Co. v. Employers Reinsurance Corp., 197 F. Supp. 2d 972 (S.D. Ohio 2002). Finding no sound basis for implying the follow-the-settlements clause as a matter of law.

Village of Thompsonville v. Fed. Ins. Co., 592 N.W.2d 760 (Mich. App. 1999).

Michigan Millers Mut. Ins. Co. v. North Am. Reinsurance Corp., 452 N.W.2d 841 (Mich. App. 1990). “Although it is true that parties may agree to such terms in reinsurance as will bind the reinsurer to the settlement or adjustment of loss made between the parties to the original insurance, we will not impose liability on the reinsurer for a settlement contribution absent such an agreement.” (internal citation omitted).

Follow-the-settlements language can vary such that the court may construemultiple contractual provisions taken collectively to create an express follow-the-settlement provision.

Employers Reinsurance Co. v Mass. Mut. Life Ins. Co., 654 F.3d 782 (8th Cir. 2011) (applying Connecticut law).

Where reinsurer was not required to follow the settlements, the cedent bearsthe burden of establishing that the underlying claim was covered by thereinsured certificate of insurance.

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Am. Motorists Ins. Co., as successor in interest to Specialty Nat’l Ins. Co. and subsidiary of Lumbermen’s Mut. Cas. Co. v. Am. Re-Insurance Co., 2007 WL 4197427 (N.D. Cal. 2007).

Follow-the-settlements doctrine inapplicable as between reinsurer of excessinsurer and primary insurer.

Texas Farmers Ins. Co. v. Lexington Ins. Co., 380 Fed. App’x 604 (9th Cir. May 21, 2010) (applying California law).

Where facultative certificate is silent as to a definition for "loss" and/or"expense," such terms will be defined pursuant to the underlying policies andthe reinsurer’s liability follows that of the cedent.

ACE Prop. & Cas. Ins. Co., et al. v. R&Q Reinsurance Co., 2012 Phila. Ct. Com. Pl. LEXIS 128 (Pa. C.P. May 15, 2012).

The duty to follow-the-settlements can be implied in the reinsurance agreement.

Trenwick Am. Re. Corp., et al. v. IRC Inc., et al., 764 F. Supp. 2d 274 (D. Mass. 2011). Follow-the-fortunes doctrine can be established through expert testimony regarding industry custom and practice.

Aetna Cas. & Sur. Co. v. Home Ins. Co., 882 F. Supp. 1328 (S.D.N.Y. 1995). It is custom and practice to follow-the-settlement decisions of the ceding company even in the absence of an explicit loss settlement clause.

Int’l Surplus Lines Ins. Co. v. Certain Underwriters & Underwriting Syndicates at Lloyd’s of London, 868 F. Supp. 917 (S.D. Ohio 1994). “It is commonly understood that the reinsurers must follow-the-fortunes of their insured. This fact may be formally expressed in an agreement of reinsurance. Even if it is not, the follow-the-fortunes doctrine applied to all reinsurance contracts.”

ReliaStar Life Ins. Co. v. IOA Re, Inc., 303 F.3d 874 (8th Cir. 2002). Follow-the-fortunes implied where reinsurer and retrocessionaire’s experts agreed follow-the-fortunes customarily applies in reinsurance business, and retrocession contract did not incorporate terms of reinsurance contract requiring strict proof of coverage.

Follow-the-settlements requires payment where the cedent’s good faithpayment is arguably covered.

Associated Industries Ins. Co., Inc. v. Excalibur Reinsurance Corp., 2014 U.S. Dist. LEXIS 169163 (S.D.N.Y. November 26, 2014). Confirmed an

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arbitration award and denied a petition to partially vacate an award holding that the Arbitration “Panel did not ‘manifestly’ disregard the follow-the-fortunes doctrine or exceed its authority.” The court held that parties should not be “heard to complain when the arbitrators do what arbitrators so often do – reach compromise verdicts that can easily be justified by taking a particular view of the evidence.”

Employers Ins. Co. of Wausau v. R&Q Reinsurance Co., 2014 U.S. Dist. LEXIS 67473 (W.D. Wis. May 16, 2014) (applying Illinois law). In order to preclude application of the follow-the-settlements doctrine a party must articulate an actual basis to prevent its application.

Ace Prop. & Cas. Ins. Co. v. Global Reinsurance Corp. of Am., 2013 WL 8642779 (E.D. Pa. March 31, 2013). Reinsurer’s ex gratia defense implicated the follow-the-fortunes doctrine, however, the reinsurer failed to satisfy its burden to show that the reinsured’s payment of defense costs was “not even arguably covered.”

United States Fid. & Guar. Co., et al. v. Am. Re-Ins. Co., et al., 93 A.D. 3d 14 (N.Y. App. Div. 2012), aff’d as modified at 985 N.E. 2d 876 (N.Y. App. Div. 2013). Reinsurers were required to accept the cedent’s $262 million asbestos reinsurance presentation under the follow-the-fortunes doctrine, including the reinsured’s allocation decisions.

Trenwick Am. Re. Corp., et al. v. IRC Inc., et al., 764 F. Supp. 2d 274 (D. Mass. 2011). “Doctrine does not allow a reinsurer to raise defenses that the reinsured has already decided to waive in good faith.”

Global Reinsurance Corp. v. Argonaut Ins. Co., 634 F. Supp. 2d 342 (S.D.N.Y. 2009). Holding that there was no “manifest disregard of the law” because the Panel found that the claims at issue were covered by the original reinsurance contracts, and thus, the panel properly applied the follow-the-fortunes/follow-the-settlements doctrines to the scope of the retrocession agreements.

Employers Reinsurance Corp. v. Mass. Mut. Life Ins. Co., No. 06-0188-cv-w-fjg, 2008 WL 3890358 (W.D. Mo. Aug. 19, 2008), aff’d 654 F.3d 782 (8th Cir. 2011). The court interpreted a contract containing an express follow-the-settlements provision, and held that an excess disability income reinsurer may not question the claims handling practices of its reinsured.

Columbia Cas. Co. v. TransFin Ins. Ltd., No. 2:05-CV-199 (D. Vt. April 27, 2007). Court finds that cedent properly settled underlying claims against insured, thereby triggering reinsurer’s duty to follow-the-settlements.

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Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Am. Re-Insurance Co., 441 F. Supp. 2d 646 (S.D.N.Y. 2006). Reinsured’s payment in settlement of claims against insured were at least arguably within scope of reinsured policy, thus, reinsurer was required to follow the fortunes of the reinsured.

Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Am. Re-Insurance Co., No. 03-6999 (S.D.N.Y.), 2005 U.S. LEXIS 37, reprinted in Mealey’s LitigationReport: Reinsurance, Vol. 15, No. 18 (01/20/05); upheld, 2005 U.S. Dist.LEXIS 927. Court found that pollution exclusion in reinsurance certificatewas overbroad and thus ambiguous, and since there was arguablycoverage for the underlying claims under the reinsured policy, reinsurerwas required to follow the fortunes of the reinsured.

Commercial Union Ins. Co. v. Swiss Reinsur. Am. Corp., 413 F.3d 121 (1st Cir. 2005). Follow-the-fortunes bound reinsurer to cedent’s annualization of occurrence limits in underlying settlement.

Am. Employers’ Ins. Co. v. Reinsurance Am. Corp., 413 F.3d 129 (1st Cir. 2005). Follow-the-fortunes bound reinsurer to cedent’s annualization of occurrence limits in underlying settlement.

Travelers Cas. & Sur. Co. v. Gerling Global Reinsurance Corp. of Am., 419 F.3d 181 (2d Cir. 2005). Reinsurer is obligated to follow the fortunes ofcedent’s post-settlement single occurrence allocation regardless ofwhether the allocation reflects a position initially taken by the cedent.

Riunione Adriatica di Sicurta v. Atlanta Int’l Ins. Co., 264 A.D.2d 959 (N.Y. App. Div. 1998). Reinsurer required to indemnify for payments reasonably within the terms of the original policy even if not technically covered by it.

North River Ins. Co. v. CIGNA Reinsurance Co., 52 F.3d 1194 (3d Cir. 1995). “‘[F]ollow the fortunes’ doctrine… requires indemnification for all payments made in good faith that are reasonably within the scope of the policy’s coverage.”

Aetna Cas. & Sur. Co. v. Home Ins. Co., 882 F. Supp. 1328 (S.D.N.Y. 1995). “[T]he court’s review is limited to deciding whether the ceding company, through a reasonable and businesslike inquiry, concluded that the claim was arguably covered, and hence properly one to be settled. It is only when the ceding company pays a claim that is manifestly outside the scope of the cedent’s policy coverage that the reinsurer may successfully challenge the ceding company’s interpretation and avoid the obligation to follow its settlement fortunes.”

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Int’l Surplus Lines Ins. Co. v. Certain Underwriters & Underwriting Syndicates at Lloyd’s of London, 868 F. Supp. 917 (S.D. Ohio 1994). Follow-the-settlements requires the reinsurer to reimburse the reinsured for payment of a settled claim so long as the settlement was made reasonably and in good faith.

Mentor Ins. Co. (U.K.) Ltd. v. Brannkasse, 996 F.2d 506 (2nd Cir. 1993). “The follow-the-fortunes principle does not change the reinsurance contract; it simply requires payment where the cedent’s good-faith payment is at least arguably within the scope of the insurance coverage that was reinsured.”

Christiania Gen. Ins. Corp. v. Great Am. Ins. Co., 979 F.2d 268 (2d Cir. 1992). “Under the ‘follow-the-fortunes’ doctrine, a reinsurer is required to indemnify for payments reasonably within the terms of the original policy, even if not technically covered by it. A reinsurer cannot second guess the good faith liability decisions made by its reinsured, or the reinsured’s good faith decisions to waive defenses to which it may be entitled.”

Unigard Security Ins. Co. Inc. v. North River Ins. Co., 762 F. Supp. 566 (S.D.N.Y. 1991), aff’d and rev’d in part, 4 F.3d 1049 (2d Cir. 1993). Follow-the-settlements requires the reinsurer to indemnify payments reasonably within the terms of the original policy, even if not technically covered by it.

Royal Ins. Co. v. Caledonian Ins. Co., 182 Cal. 219, 187 P. 748 (1920). Pursuant to follow-the-settlements clause, the reinsurer was “in no position to object” to its cedent’s settlement decisions absent fraud or bad faith.

Under follow-the-settlements, the standard for determining whether thecedent’s payment was made in bad faith is more than mere negligence.

Arrowood Indem. Co. v. Assurecare Corp., 2012 U.S. Dist. LEXIS 134368 (N.D. Ill. Sept. 19, 2012) (applying Connecticut law). Absent a showing of bad faith, collusion, or fraud on the cedent’s part in entering into the settlement, a cedent’s decision to settle a claim regarding a coverage dispute may not be second-guessed by the reinsurer.

Lexington Ins. Co. v. Clearwater Ins. Co., No. 116324, 28 Mass. L. Rep. 519 (Mass. Sup. Ct. July 26, 2011). Mere inconsistencies in pre-settlement damage analyses is insufficient to avoid the binding principles of the follow-the-settlements doctrine, rather gross negligence must be present.

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Travelers Cas. & Sur. Co. v. Ins. Co. of N. Am., 609 F.3d 143 (3d Cir. 2010) (applying New York law). In the post-settlement allocation context, in order to avoid the application of follow-the-fortunes, the reinsurer “must either provide direct evidence that the insurer was motivated primarily by reinsurance considerations, or show that the after-the-fact rationales offered by the insurer are not credible.”

Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Am. Re-Insurance Co., 441 F. Supp. 2d 646 (S.D.N.Y. 2006). Reinsurer who seeks to avoid application of follow-the-fortunes by claiming bad faith must make an “extraordinary showing of a disingenuous or dishonest failure.”

ReliaStar Life Ins. Co. v. IOA Re, Inc., 303 F.3d 874 (8th Cir. 2002).

Am. Bankers Ins. Co. v. Northwestern Nat’l Ins. Co., 198 F.3d 1332 (11th Cir. 1999). Minimum standard for bad faith is deliberate deception, gross negligence or recklessness.

North River Ins. Co. v. CIGNA Reinsurance Co., 52 F.3d 1194 (3d Cir. 1995). “[B]ad faith requires an extraordinary showing of a disingenuous or dishonest failure to carry out a contract. The standard is not mere negligence, but gross negligence or recklessness.”

Unigard Security Ins. Co. v. North River Ins. Co., 4 F.3d 1049 (2d Cir. 1993). “[T]he proper minimum standard for bad faith should be gross negligence or recklessness.”

Even under follow-the-fortunes and follow-the-settlements, the loss must comewithin both the original policy and the reinsurance agreement before thereinsurer’s indemnity obligation arises.

Arrowood Surplus Lines Ins. Co. v. Westport Ins. Corp., 2010 U.S. Dist. LEXIS 426 (D. Conn. Jan 5, 2010). Reinsurer is not obligated to follow the fortunes of the cedent in connection with the cedent’s settlement on an underlying policy spanning three years where the reinsurance agreement terminated after one year. aff’d at 395 Fed. App’x (2d Cir. 2010), reh’g denied (Dec. 16, 2010). Court found that a follow-the-fortunes provision cannot expand coverage beyond the express time limitations imposed by the reinsurance agreement.

Am. Home Assurance, et al. v. Everest Reinsurance Co., et al., No. 602485/06 (N.Y. Sup. Ct. May 27, 2010). Follow-the-settlements does not apply when cedent does not make a reasonable investigation into whether the underlying policies covered the claims that were settled, and the claims fell outside the scope of coverage afforded. Rev’d, judgment

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vacated, reinstated complaint regarding question of fact whether insurer settled in good faith at 90 A.D.3d 580 (N.Y. App. Ct. Dec. 27, 2011).

City of Renton, et al. v. Lexington Ins. Co., et al., 2007 WL 2751356 (W.D. Wash. 2007). As the underlying loss did not fall within the scope of the original policy, the reinsurer was not required to follow the settlement of the reinsured.

Nat’l Union Fire Ins. Co. v. Clearwater Ins. Co., 2007 WL 2106098 (S.D.N.Y. 2007). Reinsurer provided sufficient evidence to demonstrate a genuine issue of material fact as to whether a portion of the underlying settlement was for claims that were not covered under the reinsurance certificates.

Affiliated FM Ins. Co. v. Employers Reinsurance Corp., 369 F. Supp. 2d 217 (D. R.I. 2005). Defense costs are not “losses” under the reinsurance certificate, and thus reinsurer not obligated to reimburse these costs. In addition, claims incurred by cedent outside certificate period cannot be used to satisfy retention.

United Fire & Cas. Co. v. Arkwright Mut. Ins. Co., 53 F. Supp. 2d 632 (S.D.N.Y. 1999). Facultative reinsurance certificate did not extend to coverages added by endorsement to reinsured policy and not disclosed to reinsurer.

Village of Thompsonville v. Fed. Ins. Co., 233 Mich. App. 422, 592 N.W.2d 760 (1999). “The extent of the liability of the reinsurer is determined by the language of the reinsurance contract, and the reinsurer cannot be held liable beyond the terms of its contract merely because the original insurer has sustained a loss.”

North River Ins. Co. v. CIGNA Reinsurance Co., 52 F.3d 1194 (3d Cir. 1995). “While a follow-the-fortunes clause limits a reinsurer’s defenses, it does not make a reinsurer liable for risks beyond what was agreed upon in the reinsurance certificate.” A loss is unreinsured if it “was not contemplated by the original insurance policy or if it was expressly excluded by terms of the certificate of reinsurance.”

Unigard Security Ins. Co. Inc. v. North River Ins. Co., 762 F.Supp. 566 (S.D.N.Y. 1991), aff’d and rev’d in part, 4 F.3d 1049 (2d Cir. 1993).

State Auto. Mut. Ins. Co. v. Am. Re-Insurance Co., 748 F. Supp. 556 (S.D. Ohio 1990). A follow-the-settlements clause does not obligate the reinsurer beyond the terms of the reinsurance agreement.

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Michigan Millers Mut. Ins. Co. v. North Am. Reinsurance Corp., 182 Mich. App. 410, 452 N.W.2d 841 (Ct.App. 1990).

Central Nat’l Ins. Co. v. Prudential Reinsurance Co., 196 Cal.App.3d 342, 241 Cal.Rptr. 773 (1987), reh’g denied (Feb. 4, 1988), opinion withdrawn (May 5, 1988).

Independence Ins. Co. of California v. Republic Nat’l Life Ins. Co., 447 S.W.2d 462 (Tex. Ct. App. 1969).

Follow-the-settlements cannot bind the reinsurer to the cedent’s ex gratia orvoluntary settlement that is outside the scope of the underlying policy.

Suter v. Gen. Accident Ins. Co. of Am., 2006 U.S. Dist. LEXIS 48209 (D.N.J. 2006), vacated pursuant to settlement by, Goldman v. Gen. Acc. Ins. Co. of Am., 2007 WL 2781935 (D.N.J. May 24, 2007). Reinsurer not obligated to pay toward cedent’s settlement of faulty heart valve claims under follow-the-settlements provision because cedent’s payments were clearly beyond the scope of its excess policies, as most of the injuries occurred after the policy period. In addition, cedent did not undertake a reasonable, businesslike investigation and make a reasonable determination about whether the claims were covered under its excess policies.

Lexington Ins. Co. v. Prudential Reinsurance Co. of Am., No. 95-4083, (Mass. Super., Suffolk Co.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 8, No. 1 (5/14/98).

Commercial Union Assurance Co. v. NRG Victory Reinsurance Ltd., 1996 Folio No. 1350 and Skandia Int’l Ins. Corp. v. NRG Victory Reinsurance Ltd., 1997 Folio No. 1042, Eng.App. [1998] 2 Lloyd’s Rep. 600.

Am. Ins. Co. v. North Am. Co. for Prop. & Cas. Inc., 697 F.2d 79 (2d Cir. 1982).

Ins. Co. of North Am. v. United States Fire Ins. Co., 322 N.Y.S.2d 520 (Sup. Ct. 1971), aff’d, 42 A.D.2d 1056, 348 N.Y.S.2d 122 (1st Dep’t 1973).

Issues of fact as to whether bad faith or ex gratia payment exceptions to thefollow-the-fortunes doctrine preclude summary judgment in favor of reinsurer.

OneBeacon Ins. Co. v. Aviva Ins. Ltd., 2013 U.S. Dist. LEXIS 70212 (E.D. Pa. May 17, 2013). Denying the reinsured’s motion for summary judgment finding that although payments were made in good faith, a genuine issue

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of material fact existed as to whether certain claims were “beyond the scope” of the policy.

Granite State Ins. Co. v. ACE Reins. Co., 46 A.D.3d 436 (1st Dep’t 2007).

Follow-the-fortunes does not obligate the reinsurer to reimburse the reinsuredfor declaratory judgment expenses.

British Int’l Ins. Co. v. Seguros La Republica, S.A., 2001 U.S. Dist. LEXIS 11453 (S.D.N.Y. 2001), aff’d, 342 F.3d 78 (2d Cir. 2003). Follow-the-fortunes does not obligate the reinsurer to reimburse declaratory judgment expenses since such costs are not for coverage owed to the insured or a claim against the reinsurer.

Follow-the-fortunes and follow-the-settlements do not override the limitation onliability. Therefore, a reinsurer is not liable for expenses in excess of policylimits.

Global Reinsurance Corp. of Am. v. Century Indem. Co., 2014 WL 4054260 (S.D.N.Y. Aug. 15, 2014) (applying New York law). Reconsideration denied by 2015 WL 1782206 (S.D.N.Y. April 15, 2015), appeal docketed no. 15‐2164 (2d Cir. July 2, 2015). The reinsurer’s total liability for both loss and expenses was capped by the limits of liability. The court rejected the cedent’s argument that based on the follow-the-fortunes clause, because the underlying policies paid expenses above and beyond the limits for loss the reinsurer must also pay expenses beyond the limits.

Cont’l Cas. Co. v. Midstates Reins. Co., 24 N.E.3d 122 (Ill. App. Ct. Dec. 16, 2014). Applying the “four corners” approach, the court held that the certificates clearly and unambiguously provided for an aggregate policy limit that included both losses and expenses under the "reinsurance assumed" (even though the follow-the-fortunes clause addressed "losses" and "expenses" separately).

Pacific Employers Ins. Co. v. Global Reinsurance Corp. of Am., No. 09-cv-06055, 2010 U.S. Dist. LEXIS 40506 (E.D. Pa. April 23, 2010) reconsideration denied by 2010 U.S. Dist. LEXIS 56758 (E.D. Pa. June 9, 2010). Construing facultative certificate language stating “[the reinsurer] shall promptly pay its proportion of such loss [up to a $1 million cap] as set forth in the Declaration. In addition thereto, the Reinsurer shall pay its proportion of expenses. . . .” expenses were found to be included within limits. Later proceedings on other issues at 2011 U.S. Dist. LEXIS 41672 (E.D. Pa. Apr. 18, 2011) and at 2011 U.S. Dist. LEXIS 54825 (E.D. Pa. May 23, 2011), rev’d & remanded, 693 F.3d 417 (3d Cir. 2012).

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Excess Ins. Co. v. Factory Mut. Ins. Co., 769 N.Y.S.2d 487, 2003 N.Y. Slip Op. 19083 (App. Div. 2003), aff’d 2004 WL 2792537 (N.Y. 2004). Follow-the-settlements does not obligate reinsurer to reimburse declaratory judgment expenses in excess of policy limits.

Aetna Cas. & Sur. Co. v. Philadelphia Reinsurance Corp., 1995 WL 338488 (E.D. Pa. 1995). Collateral estoppel based on Bellefonte Reinsurance Co. v. Aetna Cas. & Sur. Co., 903 F.2d 910 (2d Cir. 1990) (see below)precluded reinsured from relitigating the issue of whether thereinsurance certificates included the reinsured’s costs to defend theunderlying insured.

Unigard Security Ins. Co. v. North River Ins. Co., 4 F.3d 1049 (2nd Cir. 1993). Binding arbitration context.

Bellefonte Reinsurance Co. v. Aetna Cas. & Sur. Co., 903 F.2d 910 (2nd Cir. 1990). Settlement context.

Application of follow-the-fortunes and follow-the-settlements to allocations.

Utica Mut. Ins. Co. v. Clearwater Ins. Co., No. 13‐cv‐1178, 2016 WL 254770 (N.D.N.Y. Jan. 20, 2016). The court granted summary judgment in favor of the cedent, finding that there was no evidence that the cedent’s settlement decision was unduly influenced by reinsurance considerations. The court noted that a cedent was not required to pick an allocation that minimized reinsurance recovery. Instead, a cedent’s reasonable settlement decision would be given deference under the follow‐the‐settlements doctrine. Given the uncertainty at the time of settlement as to the resolution of the issue of the aggregate limit in the primary policies, the cedent acted reasonably in negotiating a settlement that reduced its overall liability. Appeal filed Feb. 19, 2016.

Lexington Ins. Co. v. Sirius Am. Ins. Co., 2014 N.Y. Misc. LEXIS 4138 (N.Y. Sup. Ct. Sept. 15, 2014). Under a follow-the-settlements clause, a reinsurer is only bound by a cedent’s allocation if it is objectively reasonable. Therefore, a reinsurer is entitled to discovery regarding the cedent’s allocation decision.

New Hampshire Ins. Co. v Clearwater Ins. Co., 2013 N.Y. Misc. LEXIS 5117 (N.Y. Sup. Ct. Oct. 31, 2013). Cedent’s settlement allocation will only be binding if objectively reasonable. Summary judgment denied because evidence presented raised questions of reasonableness for the fact finder to decide. Aff’d and modified on other grounds 129 A.D. 3d 99 (N.Y. App. Div. 2015).

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United States Fid. & Guar. Co., et al. v. Am. Re-Ins. Co., et al., 985 N.E.2d 876 (N.Y. February 7, 2013). The New York Court of Appeals held that under a follow-the-settlements clause, a cedent’s allocation decisions are entitled to deference but they are not “immune from scrutiny” and established that “objective reasonableness” determines the validity of an allocation. Under the court’s pronouncement, “the reinsured’s allocation must be one that the parties to the settlement of the underlying insurance claims might reasonably have arrived at in arm’s length negotiations if the reinsurance did not exist.” Accordingly, the court found questions of fact with regard to whether making no allocation to bad faith claims and the amount allocated to lung cancer and other claims was reasonable. However, the court found that allocating all of the loss to a single policy year was reasonable. Aff’d, at 132 A.D. 3d 604 (N.Y. App. Div. 2015) finding that evidence on the reasonableness of all settlement dollars would have been contrary to the Court of Appeals decision.

Travelers Indem. Co. v. Excalibur Reinsurance Corp., 2013 U.S. Dist. LEXIS 50134 (D. Conn. April 8, 2013) (applying New York law). In a discovery dispute, the court ruled that follow-the-settlements does not preclude a reinsurer from challenging: (1) the reasonableness of the allocation under the circumstances; and (2) whether the liability imposed is contrary to the terms of the reinsurance contract.

Lexington Ins. Co. v. Clearwater Ins. Co., 2011 Mass. Super. LEXIS 127 (Mass. Sup. Ct. July 26, 2011). Follow-the-fortunes and follow-the-settlements binds a reinsurer to post-settlement allocations absent gross negligence or bad faith on the part of the cedent.

United States Fid. & Guaranty Co., et al. v. Am. Re-Insurance Co., et al., 2010 N.Y. Misc. LEXIS 4315 (N.Y. Sup. Aug. 20, 2010). Reinsurer’s request to determine the actual amount recovered by each claimant through trust distribution procedure would amount to the kind of re-litigation that the follow-the-fortunes doctrine seeks to preclude. Follow-the-settlements doctrine does not require a cedent to settle an underlying matter in such a way so as to have a lesser impact on its reinsurers. Aff’d at 2012 N.Y. App. Div. LEXIS 416 (N.Y. App. Div. Jan. 24, 2012) finding the follow-the-fortunes doctrine required reinsurer to accept cedent’s reinsurance presentation and, therefore, precluding from the court’s review the reinsurer’s efforts to second guess the cedent’s decision concerning allocation.

Travelers Cas. & Sur. Co. v. Ins. Co. of North Am., 609 F.3d 143 (3d Cir. 2010) (applying New York law). Follow-the-fortunes doctrine applies to

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post-settlement allocation unless the reinsurer can demonstrate that the insurer’s post settlement allocation was not in good faith, (i.e., motivated primarily by reinsurance considerations or no credible rationales for allocation). However, a cedent may not allocate amounts beyond the limits of the reinsurance contracts. “A reinsurer cannot be held liable for a kind of loss that is did not agree to cover.”

State of Oklahoma, et al. v. Employers Reinsurance Corp., 2007 WL 2703157 (W.D. Okla. 2007). Even if “follow of settlements” was implied, it did not permit the reinsured to re-allocate the risk among policy years in an effort to maximize its reinsurance recovery.

Allstate Ins. Co. v. Am. Home Assurance, 837 N.Y.S.2d 138 (N.Y. App. Div. June 12, 2007). Reinsurer was not bound by follow-the-fortunes doctrine when cedent treated number of occurrences issue differently than post-trial settlement with policyholder in order to trigger reinsurance.

The Hartford Accident & Indem. Co. v. ACE Am. Reinsurance Co. 2005 WL 3663930 (Conn. Super. December 14, 2005). Cedent may not present 12,000 workers’ asbestos claims as one occurrence, as meaning of “occurrence” is each individual claimant’s initial exposure to asbestos and follow-the-fortunes does not apply.

Travelers Ins. Co. v. ACE Am. Reinsurance Co., 392 F. Supp. 2d 659 (S.D.N.Y. 2005). Three year facultative reinsurance certificate covering losses on an “each occ.-agg.” basis must provide coverage for three annual aggregate limits where cedent provided such coverage and the reinsurance certificate contained a “follow the form” clause.



Travelers Cas. & Sur. Co. v. Constitution Reinsur. Corp., 2004 WL 2387313 (E.D. Mich. 2004), motion for reconsideration denied, reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 20, No. 5 (12/01/05). Per-occurrence limits of multi-year reinsurance contracts cannot be annualized, and follow-the-fortunes clause in reinsurance contracts does not override stated limits.

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North River Ins. Co. v. ACE Am. Reinsurance Co., 2002 U.S. Dist. LEXIS 5536 (S.D.N.Y. 2002), aff’d in relevant part, 361 F.3d 134 (2nd Cir. 2004). Under follow-the-fortunes, to allow reinsurers to second-guess good faith methods of allocation would make settlement impossible and reinsurance problematic, and thus reinsurer must follow cedent’s post-settlement allocation.

Travelers Cas. & Sur. Co. v. Certain Underwriters at Lloyd’s of London, 96 N.Y.2d 583, 760 N.E.2d 319 (N.Y. 2001). Losses arising from long-term environmental pollution at numerous sites may not be aggregated as a single event; a follow-the-settlements clause does not alter the terms or override the language of reinsurance policies.

Commercial Union Ins. Co. v. Seven Provinces Ins. Co. Ltd., 217 F.3d 33 (1st Cir. 2000), cert. denied, Seven Provinces Ins. Co. v. Commercial Union Ins. Co., 121 S.Ct. 1084 (2001). Doctrine of follow-the-settlements requires the reinsurer to follow the reinsured’s good faith and reasonable allocation of settlement dollars for environmental liability between different policies and sites.

Hartford Accident & Indem. Co. v. Columbia Cas. Co., 98 F. Supp. 2d 251 (D.Conn. 2000). Summary judgment denied based on issues of fact as to whether the cedent unreasonably settled and allocated an underlying environmental claim in order to maximize its reinsurance recovery.

Aetna Cas. & Sur. Co. v. Certain Underwriters at Lloyd’s [of] London, No. 118675/95 (N.Y.Sup.Ct.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 8, No. 4 (6/25/97).

Follow-the-settlement and/or follow-the-fortunes doctrine held to beinapplicable.

AmTrust NA v. Safebuilt, No. 14 Civ 09494 (CM), 2015 U.S. Dist. LEXIS 147628 (S.D.N.Y. Oct. 28, 2015). The court denied a third‐party claims administrator’s request to dismiss a case under the follow‐the‐fortunes doctrine as the administrator was not a party to the reinsurance contract. The court dismissed the case on other grounds.

Texas Farmers Ins. Co. v. Lexington Ins. Co., No. 06-cv-08220 (C.D. Cal. Apr. 21, 2008), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 19, No. 1 (5/2/2008). Although it was unclear whether reinsurance agreement contained express follow-the-settlements language, the doctrine did not bind reinsurer of an excess policy to follow the primary insurer’s settlement agreement. Aff’d at 2010 U.S. App. LEXIS 10427 (9th Cir. May 21, 2010). Ninth Circuit court agreed with district court that the

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doctrine did not apply since the excess carrier was not primary insurer’s reinsurer, and, therefore, could not incur liability under the follow-the-settlement doctrine.

Suter v. Gen. Accident Ins. Co. of Am., 2006 U.S. Dist. LEXIS 48209 (D.N.J. 2006). Reinsurer not obligated to pay toward cedent’s settlement of faulty heart valve claims under follow-the-settlements provision because cedent’s payments were clearly beyond the scope of its excess policies, as most of the injuries occurred after the policy period. In addition, cedent did not undertake a reasonable, businesslike investigation and make a reasonable determination about whether the claims were covered under its excess policies.

The Hartford Accident & Indem. Co. v. ACE Am. Reinsurance Co., 2005 WL 3663930 (Conn. Super. December 14, 2005). Cedent could not present 12,000 workers’ asbestos claims as one occurrence, as meaning of “occurrence” is each individual claimant’s initial exposure to asbestos and follow-the-fortunes does not apply.

Argonaut Ins. Co. v. Travelers Ins. Co., No. 124063/2000 (N.Y. Sup., New York Co.), 2005 N.Y. Misc. LEXIS 20, reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 15, No. 18 (01/20/05).

Affiliated FM Ins. Co. v. Employers Reinsurance Corp., 369 F. Supp. 2d 217 (D. R.I. 2005). Follow-the-fortunes does not create coverage where none exists.

Travelers Cas. & Sur. Co. v. Constitution Reinsur. Corp., 2004 WL 2387313 (E.D. Mich. 2004), motion for reconsideration denied, reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 20, No. 5 (12/01/05). Per occurrence limits of multi-year reinsurance contracts cannot be annualized, and follow-the-fortunes clause in reinsurance contracts does not override stated limits.

Employers Reinsur. Corp. v. NewCap Ins. Co., 209 F. Supp. 2d 1184 (D. Kan. 2002). Follow-the-settlements doctrine did not apply since there had never been a decision to allocate the loss to one or the other of the two policies (HPL or CGL).

Follow-the-fortunes doctrine does not bar reinsurers from requesting discoveryfrom insurer.

Lexington Ins. Co. v. Sirius Am. Ins. Co., 2014 N.Y. Misc. LEXIS 4138 (N.Y. Sup. Ct. Sept. 15, 2014). The follow-the-settlements doctrine provides that a reinsurer is only bound by a cedent’s allocation if it is objectively

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reasonable and only bound by a cedent’s settlement or compromise absent impropriety arriving at the settlement. Therefore, a reinsurer is entitled to discovery regarding the cedent’s settlement and allocation decisions.

Travelers Indem. Co. v. Excalibur Reinsurance Corp., 2013 U.S. Dist. LEXIS 50134 (D. Conn. April 8, 2013) (applying New York law). Reinsurer’s motion to compel discovery relating to its challenge of the reasonableness of the reinsured’s post settlement allocation and the economic consequence thereof granted.

Nat’l Union Fire Ins. Co. v. Clearwater Ins. Co., 2007 WL 2106098 (S.D.N.Y. 2007). Reinsurer was entitled to the reinsured’s communication with its other reinsurers regarding the cedent’s settlement of the same reinsured loss.

United States Fid. & Guaranty Co. v. Am. Re-Insurance Co., No. 02-604517 (N.Y. Sup. Ct. 2004), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 14, No. 23 (4/1/04), aff’d No. 6210 (N.Y. Sup. App. Div., 1st Dept. 2005), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 16, No. 4 (06/23/05).

III. Extra Contractual Obligations

Reinsurance agreements generally cover only the cedent’s contractual obligations underthe direct insurance policy. The treaty or certificate language may, however, modify the reinsurer’s undertaking. Reinsurance for bad faith, tortious infliction of emotional distress, punitive damages and declaratory judgment fees and expenses are some of the extra contractual issues discussed below.

Generally, damages arising out of the commission of torts are not covered. Forexample, reinsurance agreements routinely do not cover a cedent’s tortious,intentional or negligent infliction of emotional distress conduct.

Reliance Ins. Co. v. River Road Recycling, Inc., 2003 U.S. Dist. LEXIS 9400 (E.D. La. 2003).

Reliance Ins. Co. v. Gen. Reinsurance Corp., 506 F. Supp. 1042 (E.D. Pa. 1980).

Bad faith. Absent specific reinsurance agreement provisions, indemnification forsuch amounts is not required.

United States Fid. & Guar. Co., et al. v. Am. Re-Ins. Co., et al., 985 N.E.2d 876 (N.Y. February 7, 2013). Finding that the cedent’s failure to allocate a

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portion of the settlement to claims for bad faith operated to its advantage because the reinsurance treaty only covered “losses for which USF&G was liable under its policies—not losses for which it became liable by failing in bad faith to observe the policies’ terms.” Accordingly, the reasonableness of the allocation was left to be decided at trial based upon the existence of evidence from which a “factfinder could conclude that an allocation giving no value to the bad faith claims was unreasonable.”

Duber Industrial Security. Inc. v. Allendale Mut. Ins. Co., 2nd Civ. No. 69133 (Cal. Ct.App. Feb. 16, 1984) (unpublished opinion).

Employers Reinsurance Corp. v. Am. Fid. & Cas. Co., 196 F. Supp. 553 (W.D. Mo. 1959).

Reinsurer liable for its portion of loss settlement payments related to bad faithclaims as well as loss adjustment expenses when such claims are “arguably”within the scope of the reinsurance contract.

Arrowood Indem. Co. v. Assurecare Corp., 2012 U.S. Dist. LEXIS 134368 (N.D. Ill. Sept. 19, 2012). Applying Connecticut law.

Reinsurers liable for bad faith judgments against their reinsureds where there isa follow-the-fortunes clause and the reinsurer was fully involved in the handlingof the claim.

Peerless Ins. Co. v. Inland Mut. Ins. Co., 251 F.2d 696 (4th Cir. 1958).

Reinsurer is subject to a direct action by the original claimant for the bad faithactions of the reinsured.

Ott v. All-Star Ins. Corp., 299 N.W.2d 839 (Wis. 1981).

Punitive damages. Generally reinsurance companies are not held liable beyondthe limits of liability as stated in the agreement.

Am. Ins. Co. v. North Am. Co. for Prop. & Cas. Ins., 697 F.2d 79 (2d Cir. 1982).

Reinsurer has no obligation to indemnify for punitive damages because acontract that indemnifies a party for its own wrongdoing is against public policy.

AIU North Am., Inc. v. Caisse Franco Neerlandaise de Cautionnements, 72 F. Supp. 2d 350 (S.D.N.Y. 1999).

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Reinsurance agreement covering punitive damages enforced under arbitrationagreement that allowed arbitrators to abstain from following strict rules of law.

Hartford Fire Ins. Co. v. Lloyd’s Syndicate 0056 Ash, 1997 U.S.Dist. LEXIS 10858 (D. Conn. 1997).

Reinsured’s settlement including punitive damages based on the insured’svicarious liability for the acts of another qualify as “loss” within the meaning ofthe reinsurance policy.

State of Oklahoma, ex rel. Kim Holland, Ins. Comm’r, as receiver of Hospital Cas. Co. v. Employers Reinsurance Corp., 2007 WL 2703157 (W.D. Okla. 2007).

Reinsurance for declaratory judgment action expenses.

Ace Prop. & Cas. Ins. Co. v. Global Reinsurance Corp. of Am., No. 11-2838 (E.D. Pa. March 31, 2013). Finding the presumption of concurrency required the court to interpret “loss” (an undefined term in the certificate) consistent with the underlying policy such that “loss” included defense costs, and “expenses” included declaratory judgment expenses that were not part of the reinsurance loss.

Arrowood Indem. Co. v. Assurecare Corp., 2012 U.S. Dist. LEXIS 134368 (N.D. Ill. Sept. 19, 2012). Applying Connecticut law, reinsurer liable for its portion of loss settlement payments related to bad faith claims as well as loss adjustment expenses when such claims are “arguably” within the scope of the reinsurance contract.

Fireman’s Fund Ins. Co. v. Gen. Reinsurance Corp., 2005 WL 1865424 (N.D.Cal. August 5, 2005). Reinsurer is liable for cedent’s underlying declaratory judgment expenses.

Folksamerica Reinsurance Co. v. Republic Ins. Co., No. 03 Civ. 0402 [HB], 2004 U.S. Dist. LEXIS 21703 (S.D.N.Y. 2004). Cedent is not entitled to recover attorney fees incurred in defending itself in a declaratory action brought against it by reinsurer seeking to settle its rights, unless reinsurer had a duty to defend under the contract.


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Employers Ins. Co. of Wausau v. Am. Re-Insurance Co., 256 F. Supp. 2d 923 (W.D. Wis. 2003). Reinsurer liable for 80% of cedent’s declaratory judgment defense costs because these costs were encompassed within definition of “allocated loss expenses” and contract did not exclude declaratory judgment expenses.

Employers Reinsurance Corp. v. Mid-Continent Cas. Co., 202 F. Supp. 2d 1221 (D. Kan. 2002), aff’d 358 F.3d 757 (10th Cir. 2004).

Reinsurer held liable for declaratory judgment expenses incurred by the cedentand its policyholders.

British Int’l Ins. Co. v. Seguros La Republica, S.A., 2001 U.S.Dist. LEXIS 11453 (S.D.N.Y. 2001), aff’d 342 F.3d 78 (2d Cir. 2003). Follow-the-fortunes does not obligate the reinsurer to reimburse the reinsured for declaratory judgment expenses.

Affiliated FM v. Constitution Reins. Corp., 416 Mass. 839, 626 N.E.2d 878 (1994). Holding that summary judgment was improper because a factual issue was raised as to whether an insurer was entitled to reimbursement from a reinsurer for legal expenses incurred in defending a declaratory action brought by an insured where the meaning of the word “expenses” was ambiguous.

Reinsurance for underlying defense costs.

Affiliated FM Ins. Co. v. Employers Reinsurance Corp., 369 F. Supp. 2d 217 (D. R.I. 2005). Defense costs are not “losses” under the reinsurance certificate, and thus reinsurer not obligated to reimburse these costs.

Reinsurers have no duty to ascertain existence of unknown assignees

Banco Ficohsa v. Aseguradora Hondurena S.A., 937 So. 2d 161 (Fla. App. 2006), reh’g denied, September 11, 2006. Where reinsurance contract is silent as to the obligation of a reinsurer to ascertain the existence of an assignee, reinsurers are under no duty to ascertain the existence of unknown assignees before settling a claim.

IV. Insolvency of Reinsurer

The insolvency of reinsurers continues to present challenges in the reinsurance industryand raise a number of issues including those involving setoffs and payouts as discussed below.

Court prohibits actions against insolvent reinsurer.

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Amcomp Preferred Ins. Co. v. Koken, 916 So. 2d 986 (Fla. App. 2005). Reinsurer’s liquidator not required to arbitrate against cedent to recover preferential payment.

Vesta Fire Ins. Corp. v. New Cap Reinsurance Corp., 244 B.R. 209 (S.D.N.Y. 2000), aff’d, In re McKenna, 238 F.3d 186 (2d Cir. 2001). Foreign receiver entitled to stay of ongoing arbitration by commencing ancillary bankruptcy proceedings.

In Re Petitions of Magnus Pousette, et al., Nos. 95-B-40385 and 95-B-40386 (S.D.N.Y.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 5, No. 20 (2/22/95).

In Re Petition of Philip J. Singer, et al., No. MI 93-00140 U.S. Bkcy. Ct. (C.D.Cal. Dec. 1, 1993).

Court prohibits action against insolvent reinsurer’s retrocessionaires in U.S.courts.

In Re Petition of the Board of Directors of Hopewell Int’l Ins. Ltd., 281 B.R. 200 (S.D.N.Y. 2002).

Set-offs permissible.

Stephens, Comm’r of Ins. v. Fed. Ins. Co., 1995 WL 702385 (S.D.N.Y. 1995), aff’d, Rich, Comm’r of Ins. v. Fed. Ins. Co., 113 F.3d 1230 (2d Cir. 1997).

Set-offs only allowed as to mutual debts and credits between companies.

In Re Mission Ins. Co., 41 Cal. App. 4th 828 (Cal. App. 2d Dist. 1995).

Set-offs not limited to claims arising from same transaction.

Harold T. Duryee v. The Am. Druggists’ Ins. Co., No. 86 CV 03-1381, (Ohio C.P.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 6, No. 17(1/17/96).

Liquidators of insolvent reinsurer permitted to question auditors regardingfinancial statements it prepared for reinsurer.

In Re Subpoenas to Mr. John Slusarski & Ms. Kristin Meehan, No. 01-16090 (S.D.N.Y. 2002), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 13, No. 7 (8/8/02).

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Solvent member of an insolvent casualty reinsurance must pay reinsurancerecoverables, less certain offsets, to a creditor of the pool.

B.D. Cooke & Partners Ltd. v. Nationwide Mut. Ins. Co., No. 600655/02,(N.Y. Sup. N.Y. Co. 2003), aff’d 16 A.D.3d 208 (N.Y. App. Div., 1st Dep’t2005).

Court compelled assignee of insolvent reinsurer’s estate to arbitrate.

B.D. Cooke & Partners Ltd. v. Certain Underwriters at Lloyd’s London, 606F. Supp. 2d 420 (S.D.N.Y. March 31, 2009). Court granted insurer’s motionto compel arbitration against the assignee of an insolvent reinsurer’sestate finding a material distinction between a liquidator and anassignee. Motion for stay denied at 2009 U.S. Dist. LEXIS 108436 (S.D.N.YNov. 19, 2009), Motion for reconsideration denied at 2010 U.S. Dist.LEXIS 21710 (S.D.N.Y March 9, 2010). Court concluded that while aliquidator, under New York law, could not be compelled to arbitrate, theliquidator’s assignee did not enjoy the same right of rejection.

Receiver not required to provide notice of proof of claim deadline topolicyholders of expired policies.

In Re Liquidation of Am. Mut. Liability, 802 N.E.2d 555 (Mass. 2004).

Guaranty association responsible for claims where assumption reinsuranceagreement was a novation so that the reinsurer became a direct insurer.

Bowles v. BCJ Trucking Services Inc., 615 S.E.2d 724 (N.C. App. 2005).

Compromise Agreements Between Liquidator and Creditors Permissible.

In re The Liquidation of the Home Ins. Co., No. 03-E-0106, N.H. Sup., reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 16, No. 11 (10/06/05).

Narrowly drafted reciprocal reinsurance arrangements do not allow for broaderinter-contractual setoffs.

Republic Western Ins. Co. v. Reliance Ins. Co. in Liquidation, No. 12 REL 2009 (Commw. Pa. October 3, 2012), aff’d at No. 96 MAP 2012 (Pa. October 30, 2013). Because the reinsurance contracts at issue were narrowly drafted, the cedent (RepWest) could not offset debts owed to the insolvent reinsurer (Reliance) against monies the insolvent reinsurer (Reliance) owed to the cedent (RepWest) under separate contracts. The court further rejected any reliance on statutory setoffs for entities in

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liquidation, stating that the applicable statute “confer[ed] no greater rights than the parties had agreed pre-liquidation” and the parties are “bound by the provisions in [the] contract.”

The effect of failing to submit a claim in reinsurer’s rehabilitation and liquidationaction.

Propak Logistics, Inc. v. Foundation Ins. Co., 2007 WL 2302466 (W.D. Ark. 2007). Plaintiff’s failure to submit a claim in the reinsurer’s rehabilitation and liquidation action resulted in the plaintiff being barred from obtaining relief from the reinsurer.

Court approved payment from an insolvent reinsurer to a number of claimants.

In the Matter of the Liquidation of Reinsurance Co. of Am., Inc., No. 10-CH-06207, Ill. Cir., Cook Co. (Nov. 5, 2014).

V. Insolvency of Ceding Company and Set‐offs

Ceding company insolvency, and a reinsurer’s attempts to offset loss payments bypremium owed, continues to generate arbitration and litigation.

Reinsurer allowed to offset.

Imagine Ins. Co. v. Florida Dept. of Fin. Serv., No. 1D07-6027, 2008 Fla. App. LEXIS 18834 (Dec. 16, 2008). Reinsurer properly offset the remaining premium installments from the loss payment made to insurance company. Reh’g denied, 2009 Fla. App. LEXIS 21244 (Jan. 26, 2009), rev denied 2009 Fla. LEXIS 1000 (June 16, 2009).

Angoff v. Marion A. Allen, Inc., 2000 Mo. App. LEXIS 832 (2000), rev’d on other grounds, 39 S.W.3d 483 (Mo. 2001), reh’g denied, (March 20, 2001).

State of Florida, Dept. of Ins. v. Nat’l Reinsurance Corp., et al., 755 So. 2d 677, 1999 WL 436830 (Fla. Ct.App. 1999).

Comm’r of Ins. v. Munich Am. Reinsurance Co., 429 Mass. 140, 706 N.E.2d 694 (1999).

Transit Cas. Co. v. Selective Ins. Co., 137 F.3d 540 (8th Cir. 1998), reh’g denied, 1998 U.S. App. LEXIS 8218 (8th Cir. 1998). Set offs allowed as to mutual obligations.

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Stephens, Comm’r of Ins. v. Fed. Ins. Co., 1995 WL 702385 (S.D.N.Y. 1995), aff’d, Rich, Comm’r of Ins. v. Fed. Ins. Co., 113 F.3d 1230 (2d Cir. 1997).

Chesapeake Ins. Co. v. Curiale, 210 A.D.2d 91 (N.Y. App. Div. 1994).

Stamp v. Ins. Co. of North Am., 908 F.2d 1375 (7th Cir. 1990).

Selcke v. New England Ins. Co., 995 F.2d 688 (7th Cir. 1993).

In re Liquidation of Midland Ins. Co., 79 N.Y.2d 253 (N.Y. Ct. App. 1992).

Prudential Reinsurance Co. v. Superior Court, 3 Cal.4th 1118 (Cal. App. 4th 1992).

Employers Ins. of Wausau v. Nat’l Fire Ins. Co., 933 F.2d 1481 (9th Cir. 1991).

Reinsurer not allowed to offset.

In re Liquidation of the Home Ins. Co., 158 N.H. 677 (N.H. 2009); 972 A.2d 1019. Reinsurer not permitted to offset debt against reinsurance claims asserted by liquidator of insolvent insurer.

Garamendi v. California Compensation Ins. Co., No. B177760, Cal.App., 2nd Dist., reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 16, No. 18 (01/19/06).

In Re: Liquidation of Am. Mut. Liability:, 434 Mass. 272, 747 N.E.2d 1215 (Mass. 2001).

Albany Ins. Co., et al. v. Stephens, et al., 926 S.W.2d 460 (Ky.Ct.App. 1995), rev. denied (Aug. 21, 1996).

Mission Ins. Co. v. Imperial Cas. & Indem. Co., 41 Cal.App.4th 828, 48 Cal.Rptr.2d 209 (1995).

Curiale v. Universal Reinsurance Corp., No. 40924/86 (N.Y.Sup.Ct.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 4, No. 11 (10/13/93).

Bluewater Ins. Ltd., et al. v. Balzano, 823 P.2d 1365 (Colo. 1992), modified, 1992 Colo. LEXIS 157 (Colo. Feb. 24, 1992). Right to offset excluded in reinsurance contract.

In re: Am. Mut. Reinsurance Co., 606 N.E.2d 32 (Ill. App. 1992).

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Allendale Mut. Ins. Co., et al. v. Melahn, 773 F. Supp. 1283 (W.D.Mo. 1991).

Albany Ins. Co. v. Stephens, 926 S.W.2d 460 (Ky.Ct.App. 1995).

Reinsurer not allowed to rescind policy with insolvent cedent where reinsurernever dealt with cedent but dealt with pool to whom it “blindly delegated”underwriting.

In the Matter of the Rehabilitation of Am. Mut. Reinsurance Co., 238 Ill.App.3d 1, 606 N.E.2d 32 (1992).

Garamendi v. Abeille-Paix Reassurances, No. 683233, Slip Op. (Sup.Ct. of Cal., County of L.A. 1991).

Contingent claims of insolvent insurer allowed in liquidation as well ascorresponding charges to reinsurers.

In re: Liquidation of Integrity Ins. Co., 691 A.2d 898, 299 N.J. Super. 677 (1996), aff’d. in part and rev’d in part, 165 N.J. 75, 754 A.2d 1177 (2000).

Angoff v. Holland-America Ins. Co. Trust, 937 S.W.2d 213 (Mo.Ct.App. 1996). Missouri statute.

Contingent claims of insolvent insurer not allowed in liquidation andcorresponding charges to reinsurer rejected.

In re: Liquidation of Am. Mut. Liab. Ins. Co., 747 N.E. 2d 1215 (Mass. 2001).

Quackenbush v. Mission Ins. Co., 62 Cal.App.4th 797 (2d Dist. 1998).

Failure to disclose insolvency voids reinsurance contracts.

Michigan Nat’l Bank v. Am. Centennial Ins. Co. (In re: Liquidation of Union Indem. Ins. Co.), 89 N.Y.2d 94, 674 N.E.2d 313, 651 N.Y.S.2d 383 (1996).

Liquidators entitled to recover premiums on rescinded reinsurance contract.

Curiale v. AIG Multi-Line Syndicate, 225 A.D.2d 409, 640 N.Y.S.2d 18 (N.Y. App. Div. 1996).

Liquidator’s claim for reinsurance not barred by the statute of limitations.

Ario, Ins. Comm’r of the Commonwealth of Pennsylvania, in his official capacity as Liquidator for Reliance v. The Underwriting Members of

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Syndicates 33, 205 and 506, 996 A.2d 588 (Pa. Commw. Ct., June 4, 2010). Pennsylvania’s four-year limitation period, 42 Pa. C.S. § 5525 (a)(8), did not apply to bar the Liquidator’s claim.

Liquidator's claim for reinsurance barred by the statute of limitations.

Superintendent of Fin. Servs. of State of N.Y. v Guar. Ins. Co., 2013 N.Y. Misc. LEXIS 2442 (N.Y. Sup. Ct. June 10, 2013). Under New York's six-year statute of limitation, NY CLS CPLR § 213, liquidator's claims relating to two billings were barred.

Insolvency of reinsured does not relieve reinsured of its obligation to payreinsurance premium.

In the matter of: Acceptance Ins. Cos. Inc., 383 B.R. 128 (8th Cir. BAP 2008) (applying Iowa law). Insolvent debtor was not relieved of obligation to make $9 million reinsurance premium payment, aff’d at 567 F.3d 369 (8th Cir. May 18, 2009). Reinsurer entitled to $15 million inpremium deposits from insolvent reinsured. Furthermore, the EighthCircuit confirmed that the fundamental purpose of the reinsurancecontract had not been “frustrated” by the reinsured being placed intoliquidation and ordered to stop writing insurance prior to the expirationof the reinsurance contract. Motion for entry of judgment granted, 2011Bankr. LEXIS 211 (Bankr. D. Neb. Jan. 19, 2011). Prejudgment awarded oneach of the three premium payments from each payment’s due date.Post-judgment interest on award also granted.

Liquidator not bound to arbitrate reinsurance dispute.

Mary Jo Hudson, Ohio Superintendent of Ins., et al. v. John Hancock Financial Services, Inc., 2007 WL 4532704 (Ohio App. 10th Dist. 2007).

Insolvent cedent's assignee not able to compel arbitration with reinsurer.

Pine Top Receivables of Ill., Inc. v. Banco, 771 F.3d 980 (7th Cir. 2014) (applying Illinois law). Purchase Agreement reached between the insolvent cedent and its assignee expressly provided that it was not a novation or assignment of the reinsurance policies. Therefore, since the Purchase Agreement did not convey the cedent's right to compel arbitration against the reinsurer to the assignee, the court dismissed assignee's attempt to do so.

Insolvent cedent’s assignee able to compel arbitration with reinsurer.

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Trenwick Am. Reinsurance Corp. v. Unionamerica Ins. Co., 2013 U.S. Dist. LEXIS 97518 (D. Conn. July 12, 2013). Where the reinsurance agreement contained a provision providing that in the event of the cedent’s insolvency, the reinsurer would pay another insurance company the “amount due under the Reinsurance Agreement subject to all terms and conditions of said Agreement[,]” the named insurance company was able to compel arbitration with the reinsurer for amounts owed.

Enforcement of arbitration provision against receiver allowed.

Matter of the Rehab. Of Manhattan Re-Ins. Co., 2011 Del. Ch. LEXIS 146 (Del. Ch. October 4, 2011). Appeal denied sub nom. Steward v. Am. Motorists Ins. Co., 44 A.3d 923 (Del. 2012).

Liquidator has broad discretion to administer an insolvent insurer’s estate, andwhile reinsurer maintains certain protections, reinsurer may not interfere withthe administration of the estate.

Matter of Liquidation of Midland Ins. Co. v. Wrynn, 929 N.Y.S.2d 116 (N.Y. App. Div. 2011). Overruled in part by 16 N.Y.3d 536 (N.Y. 2011).

Reinsurer’s petition to intervene in rehabilitation of insurer denied.

Koken v. Legion Ins. Co., No. 183 Md. 2002 (Pa. Cmwlth. 2003), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 13, No. 7 (8/8/02), aff’d, reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 14, No. 7 (8/07/03). Reinsurer’s challenge of propriety of insurer’s rehabilitation order was speculative until arbitration between the parties was resolved.

Reinsurer’s motion to stay lawsuit pending resolution of its rehabilitationproceeding denied.

Kimberly Lentz, in her capacity as interim trustee of the bankruptcy Estate of Gary E. Hale v. Claire W. Trinchard, et al., 730 F. Supp. 2d 567 (E.D. La. 2010). District Court refrains from abstaining, pursuant to Buford v. Sun Oil Co., 319 U.S. 315 (1943), insofar as resolution of the case wouldnot “substantially interfere” in the administration of reinsurer’s assets inthe state court rehabilitation proceeding.

A state security fund is authorized to impose an assessment on the reinsurer of atown mutual insurer in wake of the insurer’s insolvency.

Am. Eagle Ins. Co. v. Wisconsin Ins. Security Fund, 704 N.W.2d 44 (Wisc. App. 2005).

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Reinsurer’s default judgment cannot be enforced against insolvent insurer’sparent company.

Employers Reinsurance Corp. v. Guaranteed Financial Corp., et al., 2006 U.S. Dist. LEXIS 69428 (D. Ariz. 2006). Reinsurer’s default judgment cannot be enforced against insolvent insurer’s parent company when insurer’s provisional liquidator, not the parent company, had control over the relevant litigation and the ability to defend against judgment.

Incurred-but-not-reported claims against liquidated estate of insolvent insurerare not “cognizable” under New Jersey’s Insurer Liquidation Act, and thus cannotbe collected from reinsurers.

In re Liquidation of Integrity Ins. Co., 193 N.J. 86, 935 A.2d 1184 (N.J. 2007).

VI. Cut‐Through

Generally, a reinsurance contract creates privity between the insurer and the reinsureronly. Unless otherwise stated in the reinsurance contract no third-party rights exist. However, the underlying policyholder may obtain a direct right of action against the reinsurer pursuant to a provision in the reinsurance contract referred to as a cut-through endorsement, which allows the insured to proceed directly against the reinsurer for certain specified losses.

Original insured has direct access to reinsurer only if reinsurance contractspecifically creates such a right or if reinsurer voluntarily enters into a directcontract with the reinsured.

OneBeacon Am. Ins. Co. v. Colgate-Palmolive Co., et. al., 123 A.D.3d 222 (N.Y. App. Div. 1st Dep't 2014). The underlying insured lacks contractual privity and does not have rights against a reinsurer even when the reinsurer administers the insured’s claims under the policy.

Navistar, Inc v. Affiliate FM Ins. Co., et al., No. 2009 CH 20384, Cook Co. Cir., County Dept., Chanc. Div. (Feb. 29, 2012). Where an underlying insured has not been granted third-party beneficiary rights in a reinsurance contract and the reinsurance agreement does not contain a cut-through provision, no direct action is allowable.

Callon Petroleum Co. v. Nat’l Indem. Co., et al., 2012 U.S. App. LEXIS 13538 (2d Cir. July 3, 2012) (unpublished opinion) (applying New York law).

Canal Ins. Co. v. Montello, Inc., 822 F. Supp. 2d 1177 (N.D. Okla. 2011) (applying Indiana law). Policyholder cannot maintain a direct cause of

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action against the reinsurer of its direct insurer absent an express, or implied, cut-through provision present within the insurer-reinsurer reinsurance contract. Later proceedings on other issues at 2015 U.S. App. LEXIS 20625 (10th Cir. Nov. 27, 2015).

Callon Petroleum Co. v. Nat’l Indem. Co., 2010 U.S. Dist. LEXIS 136056 (E.D.N.Y. Dec. 23, 2010). Relying on Jurupa Valley Spectrum LLC v. Nat’l Indem. Co., 55 F.3d 87 (2d Cir. 2009), the district court concluded that the reinsurance agreement’s “no-third-party-rights” language prevented third-parties from having cut-through rights. Motion to reconsider denied at 2011 U.S. Dist. LEXIS 119355 (E.D.N.Y. Oct. 11, 2011), aff’d, 472 Fed. App’x 57 (2d Cir. 2012).

LaSalle Parish School Board v. Allianz Global Risks U.S. Ins. Co., No. 07-0399, 2008 WL 1859847 (W.D. La. 2008). Reinsurance agreement did not indicate the reinsurer would agree “to assume and carry out directly with” the insured policy obligations of the insurer, nor was the insured a third party beneficiary of the contract. Thus, the insured could not cut-through and directly pursue reinsurer. Nevertheless, there were factual issues as to whether the reinsurer could be liable based on detrimental reliance or negligent misrepresentation.

Jurupa Valley Spectrum v. Nat’l Indem. Co., et al., No. 06-4023; 2007 U.S. Dist. LEXIS 46876 (S.D.N.Y. June 29, 2007), aff’d by 555 F.3d 87 (2d Cir. NY 2009). Beneficiary under surety bond could not seek direct relief from reinsurer because the reinsurance agreement at issue did not contain cut-through provision and expressly prohibited non-parties from obtaining rights under the agreement.

Aftab v. New Jersey Prop.-Liability Ins. Guaranty Ass’n, 898 A.2d 1041 (N.J. Super. 2006).

Koken v. Reliance Ins. Co., 846 A.2d 167 (Pa. Cmwlth. 2004), vacated, No. 60 MAP 2004 (Pa. Nov. 23, 2005), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 16, No. 15 (12/01/05), concurring opinion issued, (Pa. Sup. Feb. 8, 2006), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 16, No. 21 (03/02/06).

Durgin v. Cresent Towing & Salvage, Inc., 2002 U.S. Dist. LEXIS 9650 (E.D. La. May 20, 2002).

Third party insurer allowed to cut-through and arbitrate with the reinsurer basedon the express language of the reinsurer’s contract.

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Trenwick Am. Reinsurance Corp. v. CX Reinsurance Co. Ltd., 2014 U.S. Dist. LEXIS 70823 (D. Conn. May 23, 2014) .

Trenwick Am. Reinsurance Corp. v. Unionamerica Ins. Co., 2013 U.S. Dist. LEXIS 97518 (D. Conn. July 12, 2013) .

Underlying claimant has no direct action against reinsurer where contract isclearly for reinsurance only.

Banco Ficohsa v. Aseguradora Hondurena, S.A., 937 So. 2d 161 (Fla.App. 2006), reh’g denied, September 11, 2006.

Carlson Holdings, Inc. v. NAFCO Ins. Co., Ltd., No. 00-2080 (D. Minn. Jan. 8, 2001) (unpublished opinion).

Gannon Trucking v. Aon Corp., No. BC-199481 (Cal. Super. Ct., L.A. County), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 10, No. 23 (4/13/00).

Donaldson v. United Community Ins. Co., 741 So. 2d 676 (La.Ct.App. 1999), writ of error denied, 740 So. 2d 1285 (La. 1999).

Litho Color Inc. v. Pacific Employers Ins. Co., 98 Wa. App. 286 (1999).

USX Corp. v. Adriatic Ins. Co., 64 F. Supp. 2d 469 (W.D.Pa. 1999).

General rule that an insured has no direct action against a reinsurer does notapply when a reinsurer has absolute control.

Aftab v. New Jersey Prop.-Liability Ins. Guaranty Ass’n, 898 A.2d 1041 (N.J.Super. 2006).

Koken v. Legion Ins. Co., No. 183 M.D. 2002, (Pa. Cmwlth. 2003), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 14, No. 5 (07/03/03); aff’d, reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 14, No. 7 (08/07/03). See also, Mealey’s Litigation Report: Reinsurance, Vol. 16, No. 6 (07/28/05).

World Omni Financial Corp. v. ACE Capital Re, Inc., 2002 U.S. Dist. LEXIS 16870 (S.D.N.Y. Sept. 6, 2002).

Unisys Corp. v. Ins. Co. of North Am., No. L-1434-94, (N.J. Super., Middlesex Co.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 10, No. 4 (6/24/99).

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Central Maine Power Co. v. Ernest A. Moore, No. CV-93-489, (Maine Super., Kennebec Co.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 10, No. 2 (5/27/99).

Employers Mut. Cas. Co. v. Owens Ins. Ltd., Nos. MRS-C-51-96, (N.J. Super., Morris Co.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 9, No. 24 (4/29/99).

Insured entitled to direct access to reinsurance proceeds where reinsurance wasa pure fronting arrangement, but not where arrangement was more liketraditional reinsurance.

Ario v. Reliance Ins. Co., 981 A.2d 950 (Pa. Cmwlth. Sept. 4, 2009). The totality of circumstances warranted treating the insured as a third-party beneficiary of the reinsurance agreements; thus permitting the insured direct access to reinsurance.

Ario v. Swiss Reinsurance Am. Corp., 940 A.2d 552 (Pa. Cmwlth. 12-28-2007).

If reinsurance policy contains a “cut-through,” then there is a question of fact asto whether the identity of the reinsured, or fronting company, is material andwhether mistake in reinsured’s identity relieves reinsurer of its obligations underpolicy.

Trans-Resources, Inc. v. Nausch, Hogan & Murray, 298 A.D.2d 27, 746 N.Y.S.2d 701 (N.Y. App. Div. 2002).

A cut-through clause in a reinsurance treaty must be explicit, not implied.

Kadouh d/b/a K&K v. Liberian Am. Ins. Corp. & St. Paul Reinsurance Management Corp., The Gen. Ins. Co. of Trieste & Venice, No. 12405/91, (Sup.Ct. of N.Y. 1991).

Cut-through only valid where beneficiary of cut-through is specified and named.

In re Bennett Funding Group, Inc. v. Ades Investor Group, 2003 U.S. App. LEXIS 4611 (S.D.N.Y. 2003). Even if reinsurance contract contained a cut-through provision, investors of a bankrupt insured company were not insured parties under the contract, and New York courts have not extended reinsurance contractual rights beyond original insured.

Eaken Comm. Indiana v. Allied Fid. Ins. Co., No. C86-0469, Ind. County Ct., Marion County (1987). See also, Mitchell v. State, 223 So. 2d 792 (Fla. Ct. App. 1969).

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Equitable subrogee of the cedent may sue reinsurers directly.

The Royal Administration Inc. v. Hannover Life Reassur. Co. of Am., 848 So. 2d 1244 (Fla. App. 2003).

Policyholder can sue reinsurer as alleged undisclosed principal to policies issuedby now insolvent insurer.

Law Offices of David J. Stern P.A., et al. v. SCOR Reinsurance Corp, et al., 354 F. Supp. 2d 1338 (S.D. Fla. 2005).

Cut-through provision in insurance policy entitles reinsurer to revise claimdeterminations of insolvent cedent and seek overpayments.

Lynn Olsen, d.b.a., Olsen Agriprises v. United States of Am., et al., Nos. 08-5012 and 08-5013, 2009 U.S. Dist. LEXIS 93614 (E.D. Wash. Sept. 30,2009).

VII. Late Notice

A cedent may lose its reinsurance benefits if it does not provide timely notice under thecontract. Whether a cedent’s notice is timely frequently depends upon the determination of whether the notice provision is a condition precedent and prejudice does not have to be shown or is a covenant in the contract and prejudice must be shown.

Must reinsurer show prejudice? No; notice provision is a condition precedent.

Granite State Ins. Co. v. Clearwater Ins. Co., 2014 U.S. Dist. LEXIS 44573 (S.D.N.Y. March 31, 2014). Finding that under either New York law requiring prejudice or Illinois no prejudice law, cedent’s claims were barred based on untimely notice and breach of duty of good faith. Aff’d, at 2015 U.S. App. LEXIS 5278 (2d Cir. Apr. 2, 2015) affirming the lower court’s opinion that cedent’s notice was untimely, but holding that Illinois law applied. Rehearing denied (June 30, 2015).

AIU Ins. Co. v. TIG Ins. Co., 577 Fed. App’x 24 (2d Cir. 2014). Holding that Illinois law does not require a reinsurer to demonstrate prejudice and that the cedent’s three-year delay notifying its reinsurer, without any excuse, was outside the bounds of reasonable notice.

Munich Reinsurance Am., Inc. v. Am. Nat’l Ins. Co., 936 F. Supp. 2d 475 (D. N.J. March 28, 2013). Stating that under New York law, a reinsurer or retrocessionaire is not required to show prejudice as a result of the reinsured’s late notice when the reinsurance contract expressly requires a reinsured to provide prompt notice as a condition precedent to

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coverage. As the sunset provision expressly excluded “coverage for claims not noticed within seven years following the expiration of each retrocessional agreement,” the retrocessionaire was not required to demonstrate prejudice to deny payment for claims submitted outside the sunset period.

Arrowood Indem. Co. v. Assurecare Corp., 2012 U.S. Dist. LEXIS 134368 (N.D. Ill. Sept. 19, 2012). Under Connecticut law, as applied by the Northern District of Illinois, a cedent’s failure to provide prompt notice may entitle the reinsurer to relief without demonstrating prejudice, if the cedent acted in bad faith. However, as the court held, a cedent’s inadvertent failure to include certain claims in its routine report to the reinsurer does not amount to “gross negligence” for purposes of establishing bad faith.

Pacific Employers Ins. Co. v. Global Reinsurance Corp. of Am., 693 F.3d 417 (3d Cir. 2012) (applying New York law). Where contract made notice a condition precedent, the court found that no prejudice was required and held in favor of the reinsurer based upon the reinsured’s failure to comply with the “prompt” notice requirement in the certificate.

Allstate Ins. Co. v. Employers Reinsurance Corp., No. 01C1093 (N.D. Ill. 2005), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 15, No. 24 (04/28/05).

Constitution Reinsurance Corp. v. Stonewall Ins. Co., 980 F. Supp. 124 (S.D.N.Y. 1997), aff’d, 182 F.3d 899 (2d Cir. 1999). See also, Am. Home Assurance Co. v. Int’l Ins. Co., 90 N.Y.2d 433, 684 N.E.2d 14, 661 N.Y.S.2d 504 (1997).

Cas. Ins. Co. v. Constitution Reinsurance Corp., No. 91 L 14732, (Ill.Cir.Ct.); reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 6, No. 18 (1/31/96).

The Travelers Indem. Co. v. Scor Reinsurance Co., 62 F.3d 74 (2d Cir. 1995).

Travelers Ins. Co. v. Buffalo Reinsurance Co., 735 F. Supp. 492 (S.D.N.Y. 1990), vacated on other grounds, 739 F. Supp. 209 (S.D.N.Y. 1990).

Liberty Mut. Ins. Co. v. Gibbs, 773 F.2d 15 (1st Cir. 1985).

Fortress Reinsurance v. Jefferson Ins. Co., 465 F. Supp. 333 (E.D.N.C. 1978), aff’d, 628 F.2d 860 (4th Cir. 1980).

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Highlands Ins. Co. v. Employers’ Surplus Lines Ins. Co., 497 F. Supp. 169 (E.D. La. 1980).

Keehn v. Excess Ins. Co., 129 F.2d 503 (7th Cir. 1942).

Must reinsurer show prejudice? No, if record shows gross negligence.

Utica Mut. Ins. Co. v. Fireman’s Fund Ins. Co., 2015 WL 521024, *10 (N.D.N.Y. February 9, 2015). Stating that the reinsured’s claim for indemnification would be barred if the reinsurer can show “either that it was prejudiced by [the reinsured’s] failure to provide timely notice, or that [the reinsured] acted in bad faith” i.e. was grossly negligent or reckless in failing to provide timely notice.

Ins. Co. of the Pa. v. Argonaut Ins. Co., 2013 U.S. Dist. LEXIS 110597 (S.D.N.Y. Aug. 6, 2013). Under both California and New York law, bad faith exception to the notice-prejudice rule may be established by the reinsured’s failure to implement adequate practices and controls with respect to the provision of notice.

Arrowood Indem. Co. v. Assurecare Corp., 2012 U.S. Dist. LEXIS 134368 (N.D. Ill. Sept. 19, 2012). Under Connecticut law, as applied by the Northern District of Illinois, a cedent’s failure to provide prompt notice may entitle the reinsurer to relief without demonstrating prejudice, if the cedent acted in bad faith. However, as the court held, a cedent’s inadvertent failure to include certain claims in its routine report to the reinsurer does not amount to “gross negligence” for purposes of establishing bad faith.

Certain Underwriters at Lloyd’s of London, et al. v. The Home Ins. Co., 783 A.2d 238 (N.H. 2001).

Must reinsurer show prejudice? Yes; notice provision is a covenant.

Utica Mut. Ins. Co. v. Fireman’s Fund Ins. Co., 2015 WL 521024, *11 (N.D.N.Y. Feb. 9, 2015). Absent the record showing gross negligence, a reinsurer must demonstrate prejudice by the cedent under a late notice defense. A reinsurer may establish such prejudice through evidence that it suffered tangible economic injury, and an inability to commute an unreported claim(s) may establish such injury.

New Hampshire Ins. Co. v. Clearwater Ins. Co., 129 A.D.3d 99, 117 (N.Y. App. Div. 2015). Stating that in the event the reinsured’s notice to the reinsurer was late, “a triable issue also exists as to whether [the reinsurer] was prejudiced by such late notice.”

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Lexington Ins. Co. v. Sirius Am. Ins. Co., 2014 N.Y. Misc. LEXIS 4138 (N.Y. Sup. Ct. Sept. 15, 2014). Certain of the certificates provided that “[p]rompt notice shall be given by the Company to the Reinsurer of any occurrence or accident which appears likely to involve this reinsurance.” This was not a condition precedent and, therefore, the reinsurer had to show prejudice. Mere allegations that the reinsurer was unable to properly establish a claims file, without any tangible economic injury, was insufficient to demonstrate prejudice resulting from the late notice.

Munich Reinsurance Am., Inc. v. Am. Nat’l Ins. Co., 99 F. Supp. 2d 690, 740 (D. N.J. February 27, 2014). Where contract does not make notice a condition precedent, reinsurer must show prejudice to avoid claims. Holding that the retrocessionaire “failed to present sufficient evidence that it was prejudiced by [the retrocedent’s] late notice,” and thus, the retrocessionaire was not entitled to rely on the reinsured’s untimely reporting as a defense to payment. Motion to reconsider proceeding in Munich Reinsurance Am., Inc. v. Am. Nat’l Ins. Co., 936 F. Supp. 2d 475 (D. NJ. 2013) (affirming prior summary judgment ruling that reinsurer could not establish prejudice to avoid claims).

Ario v. Underwriting Members of Lloyd’s of London Syndicates 33, 205 and 506, 996 A.2d 588 (Pa. Commw. Ct. 2010). The “notice-prejudice” rule applies in both Pennsylvania and New York. However, the court denied the reinsurer’s motion for summary judgment based on late notice finding that “the question of prejudice is one of fact that cannot be determined on the record as it exists.”

Lexington Ins. Co. v. United Health Group Incorporated, 2011 WL 1467939 (D. Mass. April 18, 2011). Reinsurer did not receive proper notice because it was not informed until shortly before the cedent settled the underlying matter. Prejudice to the reinsurer stemmed from the fact that it was denied the ability to associate in the claims reaching its threshold.

Global Reinsurance Corp. v. Argonaut Ins. Co., 634 F. Supp. 2d 342 (S.D.N.Y. 2009); U.S. Dist. LEXIS 37460 (March 23, 2009). Holding that the arbitration panel had not manifestly disregarded the law insofar as nothing in the record suggested that the failure to give notice was material to the treaties or prejudicial to the retrocessionaire.

NewCap Ins. Co. v. Employers Reinsurance Corp., 295 F. Supp. 2d 1229 (D. Kansas 2003). District court predicted that Kansas Supreme Court would apply notice-prejudice rule in reinsurance context.

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British Ins. Co. of Cayman v. Safety Nat’l Cas. Corp., 335 F.3d 205 (3rd Cir. 2003). Prejudice is a condition precedent to forfeiting reinsurance benefits based upon late notice.

Zenith Ins. Co. v. Employers Ins. of Wausau, 141 F.3d 300 (7th Cir. 1998).

Nat’l Am. Ins. Co. v. Certain Underwriters at Lloyd’s, 93 F.3d 529 (9th Cir. 1996).

Ins. Co. of Ireland Ltd. v. Mead Reinsurance Corp., et al., 1994 WL 605987 (S.D.N.Y. 1994).

Unigard Security Ins. Co., Inc. v. North River Ins. Co., 762 F. Supp. 566 (S.D.N.Y. 1991), aff’d and rev’d, 4 F.3d 1049 (2d Cir. 1993). (See under II above).

Travelers Ins. Co. v. Central Nat’l Ins. Co., 733 F. Supp. 522 (D. Conn. 1990).

Ins. Co. of State of Pennsylvania v. Associated Int’l Ins. Co., 922 F.2d 516 (9th Cir. 1991).

Christiania Gen. Ins. Corp. v. Great Am. Ins. Co., 745 F. Supp. 150 (S.D.N.Y. 1990), aff’d in part, rev’d in part, remanded, 979 F.2d 268 (2d Cir. 1992). Remanded for trial on whether notice was late and, if so, whether the reinsurer suffered prejudice.

Gen. Ins. Co. of Trieste & Venice v. Nutmeg Ins. Co., 1987 N.Y. Misc. LEXIS 2840 (Sup.Ct. N.Y. 1987).

Security Mut. Cas. Co. v. Century Cas. Co., 531 F.2d 974 (10th Cir. 1976), cert. denied, 429 U.S. 860 (1976).

Stuyvesant Ins. Co. v. United Public Ins. Co., 139 Ind. App. 533, 221 N.E.2d 358 (1966).

Must reinsurer show prejudice? Yes, but must also show economic injury toprevail.

Utica Mut. Ins. Co. v. Fireman’s Fund Ins. Co., 2015 WL 521024, *11 (N.D.N.Y. February 9, 2015). Finding that a reinsurer who establishes tangible economic injury from the reinsured’s late notice “would be entitled to complete relief from its duty to indemnify, not merely the measure of damages for which it was harmed.”

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Munich Reinsurance Am., Inc. v. Am. Nat’l Ins. Co., 936 F. Supp. 2d 475 (D. N.J. March 28, 2013) (applying New York law). If a reinsurance contract does not expressly make prompt notice a condition precedent to coverage, the reinsurer or retrocessionaire must demonstrate prejudice in the form of tangible economic injury. Aff’d, 601 Fed. App’x 112 (3d Cir. 2015).

Unigard Security Ins. Co. v. North River Ins. Co., 4 F.3d 1049 (2nd Cir. 1993).

Prejudice may exist where a reinsured’s late notice caused a reinsurer to enterinto disadvantageous commutation agreement with retrocessionaires.

Utica Mut. Ins. Co. v. Fireman’s Fund Ins. Co., 2015 WL 521024, *7 (N.D.N.Y. February 9, 2015). Finding that the reinsurer may establish prejudice from the reinsured’s late notice through evidence related to lost commutations.

Ins. Co. of the State of Pa. v. Argonaut Ins. Co., 2013 U.S. Dist. LEXIS 110597 (S.D.N.Y. Aug. 6, 2013) (applying California law).

Munich Reinsurance Am., Inc. v. Am. Nat’l Ins. Co., 936 F. Supp. 2d 475 (D. N.J. 2013) (applying New York law). Finding that the retrocessionaire failed to present sufficient evidence to create a genuine issue of material fact as to whether Munich’s notice of the untimely claims under the Munich treaty would have affected ANICO’s decision to commute the Max Re treaty. Aff’d, 601 Fed. App’x 112 (3d Cir. 2015).

Inability of reinsurer to intervene or associate in the underlying lawsuit in orderto limit the costs of defense does not establish prejudice by itself under a latenotice analysis.

Ins. Co. of the Pa. v. Argonaut Ins. Co., 2013 U.S. Dist. LEXIS 110597 (S.D.N.Y. Aug. 6, 2013) (applying California law). Finding reinsurer unable to establish as a matter of law that it was prejudiced, but noting that it may establish as a matter of fact that its participation in the litigation would have resulted in not merely an earlier settlement, but a more advantageous one as well.

Arrowood Indem. Co. v. Assurecare Corp., 2012 U.S. Dist. LEXIS 134368 (N.D. Ill. Sept. 19, 2012) (applying Connecticut law).

Can be waived by failure to object to timing of notice and failing to respond toinsured’s communications.

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Lexington Ins. Co. v. Sirius Am. Ins. Co., 2014 N.Y. Misc. LEXIS 4138 (N.Y. Sup. Ct. Sept. 15, 2014). Even though certain of the certificates provided that prompt notice by the insured was a condition precedent, the reinsurer waived its contractual rights, including its right to prompt notice, for the first of three billings when it recognized that notice was late, yet made the decision to reimburse the insured. The certificate’s non-waiver provision did not preclude the contract from being effectively modified by actual performance and the parties course of conduct.

Nat’l Am. Ins. Co. of CA v. Certain Underwriters at Lloyd’s London, 93 F.3d 529 (9th Cir. 1996).

Cedent cannot avoid notice obligation because it did not read underlyingcomplaint.

Philadelphia Indem. Ins. Co. v. Fed. Ins. Co., 143 Fed. App’x 419 (3d Cir. 2005).

Notice requirement in treaty based upon judgment of the reinsured does notrequire that cedent report all claims immediately upon occurrence.

Allstate Ins. Co. v. Employers Reinsurance Corp., No. 01C1093 (N.D. Ill. 2005), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 15, No. 23 (04/07/05). Cedent’s reporting of claims more than 20 years after accidents was reasonable for claims that had not exceeded the retention, but was a violation of the notice provision for claims that had already exceeded the retention.

If prompt notice provision of reinsurance contract is ambiguous, parties maysubmit extrinsic evidence to aid construction.

Munich Reinsurance Am., Inc. v. Am. Nat’l Ins. Co., 936 F. Supp. 2d 475 (D. N.J. 2013) (applying New York law). Finding that the sunset provision in the retrocessional agreement was “ambiguous with respect to both the form of notice required and the precise contents that must be included in the notice” and turning to extrinsic evidence to evaluate the parties’ intent at the time of contracting. Aff’d, 601 Fed. App’x 112 (3d Cir. 2015).

Folksamerica Reinsurance Co. v. Republic Ins. Co., No. 04-2716-CV, 2006 WL 1476113 (2d Cir. May 26, 2006).

Plain reading of the reinsurance cover note did not reveal when the cedent wasrequired to provide notice.

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Ario, Ins. Comm’r of the Commonwealth of Pennsylvania, in his official capacity as Liquidator for Reliance v. The Underwriting Members of Syndicates 33, 205 and 506, 996 A.2d 588 (Pa. Commw. Ct., June 4, 2010). Material issue of fact existed as to when notice to the reinsurer was required and whether prejudice exists.

VIII. Limit of Liability (Treatment of Expenses)

A trending issue in reinsurance disputes is whether a reinsurer’s limit of liability isexclusive or inclusive of expenses. Although courts currently appear to be maintaining the “status quo” in ruling that expenses are included within limits, litigation on this issue is on the rise, and will likely lead to a growing body of case law.

A reinsurer is not liable for expenses in excess of policy limits.

Utica Mut. Ins. Co. v. Munich Reinsurance Am., Inc., 594 Fed. App’x. 700 (2d Cir. 2014). In a summary order, the Second Circuit vacated the district court ruling that expenses must be expressly excluded in a facultative certificate, otherwise they are considered within the limit of liability. According to the Second Circuit, any presumption of expense-inclusiveness can be rebutted only through express language or a separate limit for expenses. Where the certificate expressly made “losses or damages” “subject to” the limit of liability, but made no mention of expenses, the certificate was ambiguous as to whether the limit of liability was expense-inclusive. Therefore, the matter was remanded for consideration of extrinsic evidence. Reconsideration denied by 2015 U.S. Dist. LEXIS 95826 (N.D. N.Y. July 23, 2015).

Utica Mut. Ins. Co. v. Clearwater Ins. Co., 2014 U.S. Dist. LEXIS 162645 (N.D.N.Y. November 20, 2014). Granting the reinsurer’s motion for summary judgment on the basis that liability clauses in the facultative certificates (which were silent on the issue of expenses) include expenses and thus capped the reinsurer’s liability at the stated limit. Reconsideration denied at 2015 U.S. Dist. LEXIS 95826 (N.D. N.Y. July 23, 2015) finding that (1) the motion was untimely; (2) because the motion was untimely, Utica Mut. Ins. Co. v. Munich Reinsurance Am. Inc., 594 F. App’x 700 (2d Cir. 2014) (see above) did not constitute an intervening change in controlling law; and (3) even if Utica v. Munich Re was considered, the court determined it was distinguishable. The court found that the “subject to” provision at issue made reinsurance subject to the “Terms and General Conditions” of the certificates, which included limits of liability capping the total amount a reinsurer may be liable. Appeal filed (March 3, 2016).

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A reinsurer is not liable for expenses in excess of policy limits under the follow-the-fortunes or follow-the-settlements doctrines.

Global Reinsurance Corp. of Am. v. Century Indem. Co., 2014 U.S. Dist. LEXIS 113793, 2014 WL 4054260 (S.D.N.Y. Aug. 15, 2014). Reconsideration denied 2015 WL 1782206 (S.D.N.Y. April 15, 2015), appeal docketed no. 15‐2164 (2nd Cir. July 2, 2015). The reinsurer’s total liability for both loss and expenses was capped by the limits of liability. The court rejected the cedent’s argument that based on the follow-the-fortunes clause, because the underlying policies paid expenses above and beyond the limits for loss the reinsurer must also pay expenses beyond the limits.

Cont’l Cas. Co. v. Midstates Reins. Co., 2014 IL App (1st) 133090, 24 N.E.3d 122 (Ill. App. Ct. Dec. 16, 2014). Applying the “four corners” approach, the court held that the certificates clearly and unambiguously provided for an aggregate policy limit that included both losses and expenses under the "reinsurance assumed" (even though the follow-the-fortunes clause addressed "losses" and "expenses" separately).

Pacific Employers Ins. Co. v. Global Reinsurance Corp. of Am., No. 09-cv-06055, 2010 U.S. Dist. LEXIS 40506 (E.D. Pa. April 23, 2010) reconsideration denied by 2010 U.S. Dist. LEXIS 56758 (E.D. Pa. June 9, 2010). Construing facultative certificate language stating “[the reinsurer] shall promptly pay its proportion of such loss [up to a $1 million cap] as set forth in the Declaration. In addition thereto, the Reinsurer shall pay its proportion of expenses . . .”, expenses were found to be included within limits. Later proceedings on other issues at 2011 U.S. Dist. LEXIS 41672 (E.D. Pa. Apr. 18, 2011) and at 2011 U.S. Dist. LEXIS 54825 (E.D. Pa. May 23, 2011), rev’d & remanded, 693 F.3d 417 (3d Cir. 2012).


Allendale Mut. Ins. Co. v. Excess Ins. Co., Ltd, et al., 992 F. Supp. 271 (S.D.N.Y. 1997). The follow-the-settlements clause did not provide a basis for the cedent to recover loss adjustment expenses in excess of the $7 million cap contained in the limit clause.

Aetna Cas. & Sur. Co. v. Philadelphia Reinsurance Corp., 1995 WL 338488 (E.D. Pa. 1995). Collateral estoppel based on Bellefonte Reinsurance Co. v. Aetna Cas. & Sur. Co., 903 F.2d 910 (2d Cir. 1990) (see below)precluded reinsured from relitigating the issue of whether the

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reinsurance certificates included the reinsured’s costs to defend the underlying insured.

Unigard Security Ins. Co. v. North River Ins. Co., 4 F.3d 1049 (2nd Cir. 1993). Finding that Unigard was not liable for expenses in excess of the limit of liability.

Bellefonte Reinsurance Co. v. Aetna Cas. & Sur. Co., 903 F.2d 910, 913-914 (2nd Cir. 1990). Holding that the follow-the-fortunes clauses in the certificates “coexist with, rather than supplant, the liability cap” such that defense costs were “’subject to’ the express cap on liability set forth in each certificate.”

Extrinsic evidence may be considered to give effect to the parties’ intentionwith respect to the limit of liability.

Utica Mut. Ins. Co. v. R&Q Reinsurance Co., 2015 WL 4254074 (N.D.N.Y. June 4, 2015). Denying R&Q’s motion for summary judgment which sought a declaration that its liability cannot exceed $1 million on the basis that the language in the certificate is ambiguous as to whether expenses are included within the limit of liability.

Century Indem. Co. v. OneBeacon Ins. Co., 2015 Phila. Ct. Com. Pl. LEXIS 25, *5, 11 (March 27, 2015). Denying OneBeacon’s motion for summary judgment on the issue of whether it was liable for payments in excess of the reinsurance accepted limit in the facultative certificate (which was an issue of first impression for Pennsylvania courts) and allowing extrinsic evidence to construe the terms of the contract.

Utica Mut. Ins. Co. v. Munich Reinsurance Am., Inc., 594 Fed. App’x. 700 (2d Cir. 2014). Where the certificate expressly made “losses or damages” “subject to” the limit of liability, but made no mention of expenses, the certificate was ambiguous as to whether the limit of liability was expense-inclusive. Matter was remanded for consideration of extrinsic evidence. Reconsideration denied by 2015 U.S. Dist. LEXIS 95826 (N.D. N.Y. July 23, 2015).

IX. Allocation

The issue of allocation, particularly in the toxic tort and environmental claim context,has resulted in numerous arbitrations and a significant body of case law.

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A. The Number of Occurrences Issue

Amerisure Mut. Ins. Co. v. Everest Reinsurance Co., 109 F. Supp. 3d 969 (E.D. Mich. 2015). Declining to disturb the arbitration panel’s ruling that Amerisure could aggregate the individual asbestos bodily injury claims into a single occurrence to satisfy the treaty’s $500,000 “per occurrence” retention.

Aioi Nissay Dowa Ins. Co. Ltd. v. Prosight Specialty Mgmt. Co., Inc., et al., 2012 U.S. Dist. LEXIS 118233 (S.D.N.Y. August 21, 2012). Court confirmed arbitration panel award providing that the World Trade Center losses constituted “one event,” subject to a single retention and one limit under the relevant reinsurance contracts, because the losses “occurred within one 24 hour period and within a 10 mile radius…” Subsequent findings of fact and conclusions of law proceeding in Aioi Nissay Dowa Ins. Co. v. Prosight Specialty Mgmt. Co., 11 Civ. 1330, 2013 U.S. Dist. LEXIS 87050 (S.D.N.Y. June 20, 2013), aff’d, 563 Fed. App’x 68 (2d. Cir 2014).

Hartford Accident & Indem. Co., et al. v. ACE Am. Reinsurance Co., et al., 284 Conn. 744, 936 A.2d 224 (2007). The language in the “arising out of products” portion of the common cause provision of the reinsurance treaties was ambiguous and thus whether the language would allow for an aggregation of the asbestos claims against the insured for purposes of a reinsurance recovery was to be determined by the trial court.

Travelers Cas. & Sur. Co. v. ACE Am. Reinsurance Co., 201 Fed. App’x 40 (2nd Cir. 2006). Unless the reinsurance contract otherwise provides, the aggregate liability of a reinsurance certificate will be the same as the underlying policy where the reinsurance contract has a follow the form clause.

Prof’l Consultants Ins. Co. v. Employers Reinsurance Corp., No. 1:03-CV-216, 2006 WL 751244 (D. Vt. March 8, 2006). Judge denied motion for partial summary judgment ruling that the language of the reinsurance contract was ambiguous as to whether it provided a single limit for the life of the treaty or an annual aggregate limit.

Travelers Ins. Co. v. ACE Am. Reinsurance Co., 392 F. Supp. 2d 659 (S.D.N.Y. 2005). Three-year facultative reinsurance certificate covering losses on an “each occ.-agg.” basis must provide coverage for three annual aggregate limits where cedent provided such coverage and the reinsurance certificate contained a “follow the form” clause.

Argonaut Ins. Co. v. Travelers Ins. Co., No. 124063/2000 (N.Y. Sup., New York Co.), 2005 N.Y. Misc. LEXIS 20, reprinted in Mealey’s Litigation

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Report: Reinsurance, Vol. 15, No. 18 (01/20/05). Court rejected cedent’s theory that environmental claims at 140 sites throughout the U.S. arose from “common origin” and thus constituted a single occurrence, but also denied reinsurers’ summary judgment motion for failure to prove that if settlement was allocated on a multiple-occurrence basis, cedent would be unable to satisfy per-occurrence, per-year retentions to be entitled to reimbursement.


Am. Employers’ Ins. Co. v. Swiss Reinsurance Am. Corp., 413 F.3d 129 (1st Cir. 2005). Follow-the-fortunes bound reinsurer to cedent’s annualization of occurrence limits in underlying settlement.

Travelers Cas. & Sur. Co. v. Constitution Reinsur. Corp., 2004 WL 2387313 (E.D. Mich. 2004), motion for reconsideration denied, reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 20, No. 5 (12/01/05). Per occurrence limits of multi-year reinsurance contracts cannot be annualized, and follow-the-fortunes clause in reinsurance contracts does not override stated limits.

Scott v. The Copenhagen Reinsur. Co. Ltd., 2003 EWCA Civ 688, Eng. App., reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 14, No. 2 (5/22/03). Loss of a British Airways 747 jet in the Gulf War cannot be aggregated into one excess of loss reinsurance claim with Iraq’s plundering of aircraft and spares belonging to the Kuwait Airways Corp.

Travelers Cas. & Sur. Co. v. Certain Underwriters at Lloyd’s of London, et al., 96 N.Y.2d 583, 760 N.E.2d 319 (2001). Losses arising from long-term environmental pollution at numerous sites may not be aggregated as a single event; a follow-the-settlements clause does not alter the terms or override the language of reinsurance policies.

Mann & Holt v. Lexington Ins. Co., Eng. App., reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 11, No. 12 (10/26/00). Damage resulting from riots occurring in various locations at different times constitutes more than one occurrence for the purpose of retrocessional coverage.

Am. Bankers Ins. Co. of Florida v. Northwestern Nat’l Ins. Co., 198 F.3d 1332 (11th Cir. 1999). Retrocessionaire asserted that cedent paid insured for multiple claims under its aggregate policy, but treated all of the claims as a single occurrence for purposes of presenting them to the

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retrocedent; court found that whether billing was improper was irrelevant so long as retrocedent acted in good faith.

Int’l Surplus Lines Ins. Co. v. Certain Underwriters at Lloyd’s, 868 F. Supp. 917 (S.D. Ohio 1994).

B. The Allocation of Losses Among Reinsurance Treaties

Lexington Ins. Co. v. Sirius Am. Ins. Co., 2014 N.Y. Misc. LEXIS 4138 (N.Y. Sup. Ct. Sept. 15, 2014). Under a follow-the-settlements clause, a reinsurer is only bound by a cedent’s allocation if it is objectively reasonable. Therefore, a reinsurer is entitled to discovery regarding the cedent’s allocation decision.

New Hampshire Ins. Co. v Clearwater Ins. Co., 2013 N.Y. Misc. LEXIS 5117 (N.Y. Sup. Ct. Oct. 31, 2013). Reinsured’s allocation of settlement may not be reasonable where the settlement is a global settlement reached between member companies and may have allocated to the reinsurer losses outside of the scope and limits of the reinsured policy. The court found that there were issues of fact. Aff’d and modified on other grounds at 129 A.D. 3d 99 (N.Y. App. Div. 2015).

United States Fid. & Guar. Co., et al. v. Am. Re-Ins. Co., et al., 985 N.E.2d 876 (N.Y. 2013). The cedent’s allocation assumed that California courts would adopt the “’continuous trigger,’ ‘all sums’ and ‘no stacking’” rules. The court, however, expressly rejected the reinsurers’ opposition to all three rules for allocation purposes. Although to the disadvantage of the reinsurers, there was no evidence in the record that the cedent’s allocation of all the losses subject to the settlement to a single insurance policy was objectively unreasonable.

Travelers Cas. & Sur. Co. v. Ins. Co. of North Am., 609 F.3d 143 (3d Cir. 2010) (applying New York law). Follow-the-fortunes doctrine applies to post settlement allocation unless the reinsurer can demonstrate that the insurer’s post settlement allocation was not in good faith, (i.e., motivated primarily by reinsurance considerations or no credible rationales for allocation). However, a cedent may not allocate amounts beyond the limits of the reinsurance contracts. “A reinsurer cannot be held liable for a kind of loss that it did not agree to cover.”

State of Oklahoma, ex rel. Kim Holland, Ins. Comm’r, as receiver of Hospital Cas. Co. v. Employers Reinsurance Corp., 2007 WL 2703157 (W.D. Okla. 2007). Even if “follow of settlements” was implied, it did not permit the reinsured to re-allocate the risk among policy years in an effort to maximize its reinsurance recovery.

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Hartford Accident & Indem. Co. v. Ace Am. Reinsurance Co., 2003 WL 22245421 (Conn. Super. 2003). Court dismissed reinsured’s declaratory judgment action seeking propriety of allocation on single versus multi-year billing method because dispute was not ripe for adjudication.

North River Ins. Co. v. ACE Am. Reinsurance Co., 2002 U.S. Dist. LEXIS 5536 (S.D.N.Y. 2002), aff’d in relevant part, 361 F.3d 134 (2nd Cir. 2004). Under follow-the-fortunes, to allow reinsurers to second-guess good-faith methods of allocation would make settlement impossible and reinsurance problematic.

Commercial Union Ins. Co. v. Seven Provinces Ins. Co., aff’d, 217 F.3d 33 (1st Cir. 2000), cert. denied, 121 S.Ct. 1084 (2001). Doctrine of follow-the -settlements requires the reinsurer to follow the reinsured’s good faithand reasonable allocation of settlement dollars for environmental liabilitybetween different policies and sites.

Hartford Accident & Indem. Co. v. Columbia Cas. Co., 98 F. Supp. 2d 251 (D. Conn. 2000). Summary judgment denied based on issues of fact as to whether the cedent unreasonably settled and allocated an underlying environmental claim in order to maximize its reinsurance recovery.

United States v. Brennan, 938 F. Supp. 1111 (E.D.N.Y. 1996), rev’d on other grounds, 183 F.3d 139 (2d Cir. 1999).

North River Ins. Co. v. CIGNA Reinsurance Co., et al., 52 F.3d 1194 (3d Cir. 1995). Coverage for defense costs under cedent’s excess policy was reasonably within the terms of the policy and cedent’s entry into the Wellington Agreement was in good faith and therefore, the reinsurer must follow the fortunes of the cedent’s allocation pursuant to the Agreement.

Unigard Security Ins. Co. v. North River Ins. Co., 4 F.3d 1049 (2nd Cir. 1993). Reinsurer failed to show that it suffered prejudice from the late notice of the signing of the Wellington Agreement, and was therefore obligated to follow the fortunes of the cedent’s allocation pursuant to the Agreement.

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X. Arbitration

Most reinsurance contracts, particularly treaties, provide for cedent/reinsurer disputesto be decided by a panel of three arbitrators, who are usually required to have industry experience. New rules, however, are being promoted which provide for the submission of a cedent/reinsurer dispute to a single arbitrator, and encourage procedural parameters to make arbitrations even more efficient. Streamlined arbitrations are also becoming increasingly more common as an alternative to traditional arbitrations, particularly for disputes where the cost of arbitration outweighs the amount at issue. While the industry has seen a decline in arbitrations in recent years, arbitration is still a preferred method of resolution, and with the new rules and streamlined arbitrations, the expectation is that arbitrations will increase in the coming years. As reflected in the following discussion, arbitration presents unique issues.

A. Enforceability of Arbitration Provisions

Enforceability of arbitration provision to be submitted to arbitration panel.

Mt. Valley Prop., Inc. v. Applied Risk Servs., Inc., No. 1:15‐cv‐00187‐ DBH, 2015 U.S. Dist. LEXIS 171799 (D. Me., Dec. 22, 2015). The Magistrate determined that a reinsurance participation contract stating that arbitrators were to decide all disputes related to the “enforceability” of the agreement was a clear and unmistakable agreement to arbitrate the issue of arbitrability.

Life Receivables Trust v. Goshawk Syndicates 102 at Lloyd’s, 888 N.Y.S.2d 458 (1st Dept. 2009). Under American Arbitration Association rules, validity of an arbitration agreement to be decided by the arbitration panel.

B. Motion to Compel or Stay Arbitration

Stay of arbitration denied.

Savers Prop. & Cas. Ins. Co, et al. v. Nat'l Union Fire Ins. Co., 748 F. 3d 708 (6th Cir. 2014). In reversing a decision from the Eastern District of Michigan, the Sixth Circuit dissolve the injunction which halted an ongoing arbitration proceeding based in part upon allegations of ex parte communications with an arbitrator. In adopting the majority rule, the court noted that parties to an arbitration are precluded from challenging “the proceedings or the partiality of the arbitrators until the conclusion of the arbitration and the rendition of a final award.”

Allstate Ins. Co. v. OneBeacon Am. Ins. Co., 2013 U.S. Dist. LEXIS 146826 (D. Mass. Oct. 8, 2013). Court will not enjoin arbitration where umpire

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was informed which party named him as candidate because no contractual provision allowed for such relief.

NW. Nat’l Ins. Co. v. INSCO, Ltd., 866 F. Supp. 2d 214 (S.D. N.Y. 2011). Refusing to stay arbitration pending the reinsurer’s appeal of an order disqualifying its counsel.

B.D. Cooke & Partners Ltd. v. Certain Underwriters at Lloyd’s London, 606F. Supp. 2d 420 (S.D.N.Y. March 31, 2009). After granting a motion tocompel arbitration, a motion to stay arbitration pending resolution ofmotion for reconsideration denied as the “harm of unnecessaryexpenses” is insufficient to overcome plaintiff’s interest in advancing itscase. Motion for reconsideration denied at 2010 U.S. Dist. LEXIS 21710(S.D.N.Y March 9, 2010).

Preston v. Ferrer, 128 S.Ct. 978, 169 L.Ed. 2d 917 (2008). Where parties agree to arbitrate all disputes, the FAA supersedes state laws lodging primary jurisdiction.

Dorinco Reinsurance Co. v. Ace Amer. Ins. Co., No. 08-1310 (6th Cir. April 28, 2008), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 19, No. 3 (6/6/2008). Motion to stay arbitration proceedings pending appeal of a district court’s ruling permitting the reinsurers to appoint a single arbitrator to two arbitration panels was denied insofar as appellants could not show a likelihood of success on the merits.

Century Indem. Co. v. New England Reinsurance Corp., 2004 WL 1813209 (E.D. Pa. 2004). Motion to stay four of five arbitrations arising out of the same series of reinsurance contracts pending conclusion of first arbitration denied.

ReliaStar Life Ins. Co. v. Am. Healthcare Indem. Co., 2004 U.S. Dist. LEXIS 2649 (D. Minn. 2004).

Utica Mut. Ins. Co. v. Am. Mut. Reinsur. Co., 2003 U.S. Dist. LEXIS 8025 (N.D. Ill. 2003).

Gerling Global Reinsurance Co. v. ACE Prop. & Cas. Ins. Co., 42 Fed. App’x 522 (2nd Cir. 2002). Second Circuit affirmed denial of insurer’s motion to dismiss or stay, ruling that dispute does not fall within narrow arbitration clause.

Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading, Inc., 252 F.3d 218 (2nd Cir. 2001), cert. denied, 122 S.Ct. 546 (2001).

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Christian Mut. Life Ins. Co. v. Penn Mut. Life Ins. Co., et al., 163 F. Supp. 2d 260 (S.D.N.Y. 2001).

First Fid. Bancorporation v. Nat’l Union Fire Ins. Co., 1990 WL 167642 No. Civ. A. 90-1866 (E.D.Pa. 1990).

Pacific Reinsurance Mgmt. Corp. v. Ohio Reinsurance Corp., 814 F.2d 1324 (9th Cir. 1987).

Stay of arbitration granted.

Companion Prop. & Cas. Ins. Co. v. Allied Provident Ins., Inc., 2014 U.S. Dist. LEXIS 136473 (S.D.N.Y. Sept. 26, 2014) Court stayed the arbitration proceedings while the reinsurer appointed a new arbitrator after its arbitrator resigned due to severe health issues.

In re Ins. Co. of North Am. v. Pub. Serv. Mut. Ins. Co., No. 08-cv-7003, 2008 U.S. Dist. LEXIS 101788 (S.D.N.Y. Dec. 10, 2008), vacated by 2009 U.S. Dist. LEXIS 55271 (S.D.N.Y. June 29, 2009), reaff’d at 2009 U.S. Dist. LEXIS 66325 (S.D.N.Y. July 29, 2009). Prior order compelling new arbitration following resignation of arbitrator for health concerns vacated and parties ordered to continue arbitration with original panel following newly-discovered evidence concerning arbitrator’s health. Aff’d at 609 F.3d 122 (2d Cir. June 23, 2010). Second Circuit found the district court'sdecision to reappoint arbitrator or require a replacement in the event hedeclined was reasonable, as it avoided the waste entailed in convening anew panel after the remaining arbitrators had already engaged insignificant proceedings in the case.

Security Ins. Co. of Hartford v. TIG Ins. Co., No. 3:01 cv 2198, 2003 U.S. Dist. LEXIS 14777 (D. Conn., 2003), aff’d, 360 F.3d 322 (2nd Cir. 2004). Despite an arbitration agreement, the choice of law clause in the reinsurance agreement requires application of California law, which allows stay pending outcome of pending court action.

Motion to enjoin arbitration granted.

Arrowood Indem. Co. v. Equitas Ins. Ltd., 2015 WL 4597543 (S.D.N.Y. July 30, 2015). Reinsurer initiated a second arbitration arguing the initial arbitration award permits them to arbitrate whether any sums have been “improperly paid” to the cedent and obtain reimbursement. The Court found that the “right of reimbursement, however, is not a loophole that allows another arbitration panel to revisit and potentially alter the interpretation of a critical policy term that was at the heart of the Panel’s work and decision. . . . Under these circumstances, the

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[s]econd [a]rbitration demand to recover sums already paid amounts toa collateral attack on the merits of the [initial arbitration] [a]ward. . .[T]he FAA does not permit a second arbitration demand to be used tonullify an arbitral award, in whole or in part, on the same untimelyground.” Therefore, the Court enjoined the second arbitration. Noticeof appeal filed August 28, 2015.

Motion or petition to compel arbitration granted.

Am. United Life Ins. Co. v. Travelers Indem. Co., et al., 2015 WL 4936595 (D. Conn. Aug. 18, 2015). The court granted a reinsurer’s petition to compel arbitration to resolve the threshold issue of what type of arbitration panel should be convened to resolve the pending issues. The court noted, “[p]rocedural questions that grow out of the dispute and bear on the final disposition and questions of whether the ‘necessary prerequisites to arbitration’ have been met are presumptively for the arbitrator rather than the court to decide.”

McLarens Young Int’l, Inc. v. Am. Safety Cas. Ins. Co., 780 S.E.2d 464 (Ga. App., 4th Div. 2015). An insurer and its reinsurer jointly demanded arbitration against a claims management company based on the company’s failure to settle an underlying claim. The insurer assigned its rights to the reinsurer to pursue arbitration under the contract between the insurer and the claims management company. The Court of Appeals of Georgia affirmed the trial court’s ruling compelling arbitration and held that the insurer had fully performed its obligations; therefore, the contract was no longer executory, and the insurer could assign its rights regardless of the non‐assignment clause.

Nationwide Mut. Ins. Co. v. Liberty Mut. Ins. Co., 57 F. Supp. 3d 112 (D. Mass. 2014). Motion to compel granted for the six “resubmitted” claims, however, motion to compel was denied “insofar as it would require relitigation of the arbitration panel’s decision” with respect to billings of future claims. The Court declined to decide as to whether the resubmitted billings are future claims under the arbitration award.

Trenwick Am. Reinsurance Corp. v. Unionamerica Ins. Co., 2013 U.S. Dist. LEXIS 97518 (D. Conn. July 12, 2013). Courts have authority to decide arbitrability. Accordingly, the court granted a third-party’s motion to compel arbitration because reinsurance contract included a valid arbitration clause and clearly established rights in favor of third party insurer.

Security Life Ins. Co. of Am. v. Southwest Reinsure, Inc., 2013 U.S. Dist. LEXIS 17786 (D. Minn. February 11, 2013). Granting Defendants’ motion

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to stay litigation pending arbitration and finding a non-signatory can enforce an arbitration provision under an equitable estoppel theory.

New Jersey Physicians United Reciprocal Exch. v. Ace Underwriting Agencies Ltd., et al., 2013 U.S. Dist. LEXIS 52035 (D. N.J. April 11, 2013). Motion to compel arbitration and stay litigation granted.

Repwest Ins. Co. v. Praetorian Ins. Co., et al., 890 F. Supp. 2d 1168 (D. Ariz. 2012). Granting the reinsurer’s motion to compel arbitration holding that the dispute arose out of the interpretation of a reinsurance agreement, not the validity of a commutation agreement.

Munich Reinsurance Am., Inc. v. Nat’l Cas. Co., 2011 U.S. Dist. LEXIS 44759 (S.D.N.Y. April 26, 2011). Motion to compel arbitration granted. Court found issue of how “act as one” provision applies to be issue for arbitration panel.

ProNational Ins. Co v. AXA Liabilities Managers Inc., No. 08-cv-02022 (N.D. Ala. January 28, 2010). Where a party is relying on the terms of a contract for its claims, the doctrine of equitable estoppel prohibits a signatory from avoiding arbitration against a non-signatory to a reinsurance agreement where the non-signatory seeks arbitration.

Safety Nat’l Cas. Ass’n v. Certain Underwriters at Lloyd’s, London, 587 F.3d 714 (5th Cir. 2009), Writ of certiorari denied, 131 S. Ct. 65 (2010) (enbanc) (addressing Louisiana law) Arbitration provision in reinsurancecontract deemed enforceable despite state statute prohibiting arbitrationagreements in insurance contracts. McCarran-Ferguson Act does notreverse-preempt the Convention on the Recognition and Enforcement ofForeign Arbitral Awards. Granting motion to lift stay for the limitedpurpose of compelling the nomination and selection of qualified umpirecandidates at 2011 U.S. Dist. LEXIS 91297 (M.D. La. Aug. 16, 2011).

Century Indem. Co. v. Certain Underwriters at Lloyd’s London, 584 F.3d 513 (3d Cir. 2009). Third Circuit holds that retrocessionaire was required to arbitrate with retrocedent where the retrocession agreement incorporated arbitration clause in the underlying reinsurance contract.

Sun Life Assurance Co. of Canada v. Liberty Mut. Ins. Co., No. 09-cv-02133, 2009 U.S. Dist. LEXIS 114694 (S.D. Cal. Dec. 9, 2009). Motion to compel third arbitration and stay pending litigation granted. Substantive determinations of the parties’ rights and liabilities are properly within the purview of the arbitrator.

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Trustmark Ins. Co. v. Clarendon Nat’l Ins. Co., No. 09 C 6169, 2010 U.S. Dist. LEXIS 8078 (N.D. Ill. Feb 1, 2010).

Northbrook Indem. Co. v. First Auto. Serv. Corp., N.M.¸ No. 3:07-cv-683-32JRK, 2008 U.S. Dist. LEXIS 61424 (M.D. Fla. Aug. 1, 2008).

Doeff v. Transatlantic Reinsurance Co., 2007 WL 4373041 (E.D. Pa. 2007). Reinsurer’s motion to compel arbitration, as required under the reinsurance contract, was granted insofar as insured was determined to be a third-party beneficiary of the reinsurance contract.

Newmont U.S.A. Ltd., formerly known as Newmont Mining Corp. & N.I. Ltd. v. Ins. Co. of North Am., 2006 U.S. Dist. LEXIS 67905 (D. Colo. 2006). Previous settlement agreement between parties did not release reinsurer for claims that did not arise from or relate to the declaratory judgment action from which the settlement agreement arose.

Vesta Fire Ins. Co. v. Employers Reinsurance Corp., No. 3:05-CV-2404-P, 2006 WL 1506949 (N.D. Tex. May 31, 2006), mot. for reconsideration denied, No. 3:05-CV-2404-P (N.D. Tex. June 30, 2006), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 17, No. 7 (08/03/06).

Medical Ins. Exchange of California v. Certain Underwriters at Lloyds, London, No. 05-2609, 2006 WL 463531 (N.D. Cal. Feb. 24, 2006).

King County v. Swiss Reinsurance Am. Corp., et al., No. C05-783, W.D. Wash (August 31, 2005), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 16, No. 11 (10/06/05). Arbitration provisions in issued reinsurance policies are enforceable, irrespective of the fact that the binders contained no such provision.

Harco Nat’l Ins. Co. v. Millenium Ins. Underwriting Ltd., 2005 U.S. Dist. LEXIS 15960 (N.D. Ill. 2005).

PNI, Inc. v. Leyton, 2004 WL 555249 (D. Or. 2004).

Associated Int’l Ins. Co. v. Montenegro Re Ltd., 2004 WL 2526426 (Cal. App. 2 Dist. 2004).

Nat’l Am. Ins. Co. v. Scor Reinsurance Co., 362 F.3d 1288 (10th Cir. 2004).

Guarantee Trust Life Ins. Co. v. Am. United Life Ins. Co., No. 03 C 4250 (N.D. Ill. 2003), 2003 U.S. Dist. LEXIS 22777. Under Pennsylvania law, the parties are bound by the two-word phrase “arbitration clause” on the reinsurance slip.

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Zurich Am. Ins. Co. v. Cebcor Service Corp., 2003 U.S. Dist. LEXIS 10346 (N.D. Ill. 2003). The term “arbitration” in a reinsurance cover note establishes binding agreement to arbitrate.

Utica Mut. Ins. Co. v. Gulf Ins. Co., 762 N.Y.S.2d 730 (N.Y.App.Div. 2003).

Assurance Foreningen Skuld and Skuld Mut. Protection and Indem. Ass’n (Bermuda) Ltd. v. Apollo Ship Chandlers, Inc., 847 So.2d 991 (Fla. App. 2003).

Century Indem. Co. v. Viacom Int’l, Inc., 2003 U.S. Dist. LEXIS 2452 (S.D.N.Y. 2003).

Underwriters Reinsur. Co. v. ACE Am. Ins. Co., No. CV-02-08177 (C.D. Cal. 2003), reprinted in Mealey’s Report: Reinsurance, Vol. 13, No. 21 (03/06/03). Court held that a broad arbitration provision in a novation agreement applied to a dispute arising under a related reinsurance agreement.

The North River Ins. Co. v. Transamerica Occidental Life Ins. Co., 2002 U.S. Dist. LEXIS 10637 (N.D. Tex. June 12, 2002).

Ace Capital Re Overseas Ltd. v. Central United Life Ins. Co., 307 F.3d 24, 2002 U.S. App. LEXIS 21715 (2d Cir. 2002).

Bank of America, N.A., et. al. v. Diamond State Ins. Co., Ltd., 2002 U.S. Dist. LEXIS 23225 (S.D.N.Y. 2002).

Southern Food Service Mgmt., Inc. v. Am. Fid. Assurance Co. & Ins. Mass Marketing Systems, Inc., 2002 Ala. LEXIS 321 (Ala. 2000)

Gulf Guar. Life Ins. Co. v. Conn. Gen. Life Ins. Co., 304 F.3d 476 (5th Cir. 2002).

Sovereign Gen. Ins. Services Inc. v. LeBoeuf Lamb Greene & MacRae, No. C 02-02972 CRB, (N.D.Cal.) reprinted in Mealey’s Report: Reinsurance, Vol. 13, No. 12 (10/17/02).

Burlington Ins. Co. v. Trygg-Hansa Ins. Co., No. 00-1373, 2001 U.S. App. LEXIS 10625 (4th Cir. 2001).

Hughes & Bond v. Public Service Mut. Ins. Co., 2001 Bankr. LEXIS 1803 (Bankr. S.D.N.Y. 2001).

Nat’l Union Fire Ins. Co. of Pittsburgh, et al. v. ABS Ins. Ltd., 2001 U.S. Dist. LEXIS 940 (S.D.N.Y. 2001).

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Clarendon Nat’l Ins. Co. v. Kings Reinsurance Co. Ltd., 241 F.3d 131 (2d Cir. 2001).

Cont’l Ins. Co. v. Allianz Ins. Co., et al., 2002 U.S. App. LEXIS 25879. Arbitration should be compelled unless the parties’ agreement can only be interpreted as canceling the arbitration clause.

Hartford Accident & Indem. Co. v. Swiss Reinsurance Am. Corp., 246 F.3d 219 (2d Cir. 2001). Manner in which insurer should allocate its reinsurance billings to its reinsurer was a proper issue for an arbitration panel to determine pursuant to the language contained in the treaty reinsurance contracts.

Ace Ltd. v. Cigna Corp. & Cigna Holding, Inc., 2001 U.S. Dist. LEXIS 9240 (S.D.N.Y. 2001). Dispute regarding taxes arising from acquisition of property and casualty business constitutes a tax matter subject to arbitration clause.

Clarendon Nat’l Ins. Co. v. Lin W. Lan, et al., 152 F. Supp. 2d 506 (S.D.N.Y. 2001). Fact that parties have not agreed on location of arbitration does not prevent the court from ordering arbitration in its own district.

Garten v. Kurth, et al., 265 F.3d 136 (S.D.N.Y. 2001).

Sphere Drake Ins. Ltd. v. Clarendon Nat’l Ins. Co., 263 F.3d 26 (2d Cir. 2001).

Credit Gen. Ins. Co. v. John Hancock Mut. Life. Ins. Co., 2000 U.S. Dist. LEXIS 9009 (N.D. Ohio 2000).

Allianz Life. Ins. Co. v. Am. Phoenix Life & Reassurance Co., 2000 U.S. Dist. LEXIS 7216 (D. Minn. 2000). Arbitration compelled solely on placement slip wording (that neither specified scope nor procedures for arbitration), relying on industry custom and practice.

NRMA Ins. Ltd. v. Vesta Fire Ins. Corp., 2000 U.S. Dist. LEXIS 8435 (N.D. Ala. 2000).

Nichols v. Vesta Fire Ins. Corp., 56 F. Supp. 2d 778 (E.D. Ky. 1999). Liquidator of insolvent reinsurer ordered to arbitrate with retrocessionaire.

Monumental Life Ins. Co. v. R.A.J. Holdings, Inc., 1999 WL 632891 (E.D. La. 1999). Non-signatory corporate parent of signatory to arbitration agreement may be bound to arbitrate.

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Constitution Reinsurance Corp. v. Republic Western Ins. Co., 1999 U.S. Dist. LEXIS 2651 (S.D.N.Y. 1999). Arbitration compelled despite fact that dispute resolution organization designated in reinsurance agreement no longer in existence.

Koken v. Cologne Reinsurance (Barbados) Ltd., 34 F. Supp. 2d 240 (M.D. Pa. 1999). Cedent’s liquidator ordered to arbitrate.

Winward Agency, Inc. v. Cologne Life Reinsurance Corp., 1997 WL 164269 (E.D. Pa. 1997).

Certain Underwriters at Lloyd’s London v. Colonial Penn Ins. Co., 1997 WL 316459 (S.D.N.Y. 1997).

Quackenbush v. Allstate Ins. Co., 1517 U.S. 706 (1996).

In re Laitasalo, 196 B.R. 913 (Bankr. S.D.N.Y. 1996).

The Hartford Steamboiler Inspection & Ins. Co. v. Industrial Risk Insurers, 1995 WL 645971 (Conn.Super.Ct. 1995).

In the Matter of the Liquidation of Integrity Ins. Co., No. C-70-95, (N.J. Super. Ct.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 6, No. 8 (8/23/95).

Cologne Reinsurance Co. of Am. v. Southern Underwriters Inc., 218 A.D.2d 680, 630 N.Y.S.2d 548 (1995).

Zurich Ins. Co. v. Ennia Gen. Ins. Co., 882 F. Supp. 1438 (S.D.N.Y. 1995).

Fremont Indem. Co. v. Assicurazioni Generali SPA, No. CV94-7908 (C.D. Cal.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 5, No. 22 (3/22/95).

“Winterthur” Swiss Ins. Co., et al. v. First State Ins. Co., et al., No. 3:94CV1476, (D. Conn.), reprinted in Mealey’s Report: Reinsurance, Vol. 5, No. 21 (3/8/95).

Stephens v. Am. Int’l Ins. Co., 1994 WL 414374 (S.D.N.Y. Aug. 5, 1994).

Argonaut Ins. Co. v. The Reinsurance Corp. of N.Y., 1994 WL 178293 (N.D. Ill. 1994).

Selcke v. New England Ins. Co., 995 F.2d 688 (7th Cir. 1993), motion to vacate denied, 2 F.3d 790 (1993).

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Progressive Cas. Ins. Co. v. C.A. Reaseguradora Nacional de Venezuela, 991 F.2d 42 (2d Cir. 1993).

Pan Atlantic Reinsurance Co., Ltd. v. Republic Ins. Co., 1992 WL 116424, (S.D.N.Y. 1992).

Motion or petition to compel arbitration granted although litigation pending.

Kwelm v. Public Service Mut. Ins. Co., No. 97-8886-A (Bankr. S.D.N.Y. 2001).

St. Paul Fire & Marine Ins. Co. v. Barge, et al., 483 S.E.2d 883 (Ga. App. 1997), cert. denied, 522 U.S. 997 (1997).

Motion or petition to compel arbitration denied.

Arrowood Indem. Co. v. Equitas Ins. Ltd., 2015 WL 4597543 (S.D.N.Y. July 30, 2015). Granting the cedent’s motion to enjoin the arbitration and, as such, denying the reinsurer’s motion to compel. Notice of appeal filed August 28, 2015.

Transatlantic Reinsurance Co. v. Nat’l Indem. Co., 2014 U.S. Dist. LEXIS 85533 (N.D. Ill. June 24, 2014). Reinsurer’s motion to compel a third-party to participate in an arbitration between the reinsurer and reinsured was denied on the basis that the arbitration clause in the reinsurance agreement was not sufficiently broad to bind non-signatories nor did the third-party consent to be bound by the arbitration clause.

New Hampshire Ins. Co. v. Magellan Reinsurance Co., 2013 Tex. App. LEXIS 5437 (Tex. Ct. App. May 2, 2013). Finding that the reinsured was judicially estopped from compelling arbitration based upon its arguments in prior proceedings contesting arbitration.

Pine Top Receivables of Ill., Inc. v. Banco, 771 F.3d 980 (7th Cir. November 7, 2014) (applying Illinois law). Since the Purchase Agreement did not convey the cedent's right to compel arbitration against the reinsurer to the assignee, the court dismissed assignee's attempts to compel arbitration.

Clearwater Ins. Co. v. Superior Court., No. B200692, 2008 Cal. App. LEXIS 903 (2008). Unpublished. Non-signatory to reinsurance agreement could not compel reinsurer to arbitrate under reinsurance contracts containing arbitration provisions.

Mary Jo Hudson, Ohio Superintendent of Ins., et al. v. John Hancock Financial Services, Inc., 2007 Ohio 6997 (Ohio App. 10th Dist., 2007),

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discretionary appeal not allowed by 888 N.E.2d 1114 (Ohio 2008). Liquidator not bound by arbitration clauses.

Invitrogen Corp. v. Employers Ins. Co. of Wausau, No. CV-06-0232-PHX-MHM (D. Az. Mar. 9, 2007). Parties’ settlement agreement language, and not reinsurance contract, controls dispute over current reinsurance obligations.

IPC v. BP North Am. Petroleum, 2006 WL 119838 (S.D.N.Y. January 17, 2006). Court declined to appoint a domestic arbitrator to hear a dispute because the underlying contract stated that the aggrieved party was to petition the English High Court to appoint an arbitrator.

Amcomp Preferred Ins. Co. v. Koken, 916 So.2d 986 (Fla.App. 2005). Reinsurer’s liquidator not bound by arbitration clause in reinsurance agreement.

Am. Special Risk Ins. Co. v. Factory Mut. Ins. Co., 2005 WL 1620392 (Pa.Com.Pl. 2005).

New Hampshire Ins. Co. v. Canali Reinsurance Co., Ltd., 2004 WL 769775 (S.D.N.Y. 2004).

Bank of America, N.A. v. Diamond State Ins. Co. Ltd., Nos. 01 Civ. 0645 and 02 Civ. 2900, 2003 U.S. Dist. LEXIS 15075 (S.D.N.Y., 2003). The court ruled that under Section 4 of the FAA, “the party in default” who is entitled to a jury trial on the issue of the making of the contract is the party seeking to avoid arbitration.

Hobbs v. IGF Ins. Co. et al., 2002 La.App. LEXIS 3219 (La.App. 2002). Louisiana’s statutory prohibition against mandatory arbitration clauses in insurance contracts applies to a federally reinsured crop insurance policy issued and managed in Louisiana when claims are based solely on state law.

In re Integrity Ins. Co., No. C-07022-86, (N.J. Super. Bergen Co.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 13, No. 16 (12/12/02).

Northwestern Nat’l Ins. Co. v. Capitol Indem. Corp., No. 600944/02 N.Y. Sup. N.Y. Co., reprinted in Mealey’s Report: Reinsurance, Vol. 13, No. 15 (12/2/02). An arbitration clause in a reinsurance pooling agreement between a pool member and the pool manager does not cover disputes between pool members.

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Gerling Global Reinsurance Corp. v. The Home Ins. Co., 2002 N.Y. App. Div. LEXIS 12519 (N.Y. 2002), leave to appeal denied, 2003 N.Y. LEXIS 419 (N.Y.App. 2003).

World Omni Financial Corp. v. ACE Capital Re, Inc., 2002 U.S. Dist. LEXIS 21409 (S.D.N.Y. 2002), vacated and remanded, 2003 U.S. App. LEXIS 8441 (2nd Cir. 2003).

ACE Capital Re Overseas Ltd. v. Central United Life Ins. Co., 2001 U.S. Dist. LEXIS 18447 (S.D.N.Y. 2001), vacated, 307 F.3d 24, 2002 U.S. App. Lexis 21715 (2nd Cir. 2002).

CNA Reinsurance Co. Ltd. v. Trustmark Ins. Co., 2001 U.S. Dist. LEXIS 7523 (N.D. Ill. 2001).

Bank of AM., N.A. v. Diamond State Ins. Co., 2001 U.S. Dist. LEXIS 13751 (S.D.N.Y. 2001), aff’d, 38 Fed. App’x 687 (2nd Cir. 2002).

Argonaut Ins. Co., et al. v. Travelers Ins. Co., 295 A.D. 2d 235 (N.Y. App. Div. 2002).

Sphere Drake Ins. Ltd. v. All Am. Life Ins. Co., 256 F.3d 587 (7th Cir. 2001), rev’d on other grounds, 307 F.3d 617 (7th Cir. 2002). A court rather than an arbitration panel should decide whether a contract exists, and whether arbitration of a dispute arising from that contract is warranted.

Federated Rural Elec. Ins. Exch. v. Nationwide Mut. Ins. Co., 134 F. Supp. 2d 923 (S.D. Ohio 2001).

Sandvik AB v. Advent Int’l Corp., 220 F.3d 99 (3rd Cir. 2000). Denial of motion to compel upheld where the court found that the contract containing the arbitration clause was void.

Safety Nat’l Cas. Corp. v. Certain Underwriters at Lloyd’s of London, No. 99-4276-CV-C-5, (W.D. Mo.), reprinted in Mealey’s Litigation Report:Reinsurance, Vol. 10, No. 22 (3/23/00).

Jaynee LaVecchia v. Munich Reinsurance Co., No. 99-5611, (3rd Cir.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 10, No. 13 (11/11/99).

Transit Cas. Co. v. Certain Underwriters at Lloyd’s of London, et al., 963 S.W.2d 392 (Mo.Ct.App. 1998).

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Munich Am. Reinsurance Co. v. Crawford, 141 F.3d 585 (5th Cir. 1998), cert. denied, 525 U.S. 1016, 119 S.Ct. 539 (1998). Federal Arbitration Act preempted by state insolvency law under McCarran-Ferguson Act.

Federated Rural Elec. Ins. Co. v. Nationwide Mut. Ins. Co., 874 F. Supp. 1204 (D.Kan. 1995).

DR Industries Co. v. Central Nat’l Ins. Co. of Omaha (In Rehabilitation), No. 507 (Neb. Dist. Ct.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 5, No. 18 (1/25/95). Nebraska law makes arbitration clauses unenforceable.

Menorah Ins. Co. v. INX Reinsurance Corp., 72 F.3d 218 (1st Cir. 1995).

Chesapeake Ins. Co. Ltd. v. 10A Ltd., 1994 WL 854658 (N.Y.Sup.Ct. 1994).

Frank B. Hall Co. v. Colorado School Districts Self-Ins. Pool, No. 92 CV 225 (Colo. Dist. Ct.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 3, No. 24 (4/28/93).

Am. Home Assurance Co. v. Fremont Indem. (Consolidated with Belvedere Ins. Co. Ltd, GTE Reinsurance Co., Ltd., Arkwright Mut. Ins. Co., Nat’l Union Fire Ins. Co. of Pittsburgh), 1992 WL 135809 (S.D.N.Y. 1992), aff’d, 983 F.2d 1048 (2nd Cir. 1992).

Mut. Reinsurance Bureau v. Great Plains Mut. Ins. Co., 969 F.2d 931 (10th Cir. 1992), cert. denied, 506 U.S. 1001, 113 S.Ct. 604 (1992), superseded by statute as stated in Friday v. Trinity Universal of Kansas, 262 Kan. 347 (1997). Reinsurance is part of the “business of insurance” under the McCarran-Ferguson Act and, therefore, state arbitration statutes may now be relevant in reinsurance arbitration.

Motion to stay litigation pending arbitration denied.

Cont’l Cas. Co., et al. v. Commercial Risk Re-Insurance Co., et al., No. 07-C-6912, 2009 U.S.Dist.LEXIS 32208 (N.D.Ill. April 16, 2009). Motion tostay litigation regarding a commutation agreement denied insofar as thedispute between the parties was not subject to an arbitration provision.The court also denied a motion to appoint an umpire, finding that suchan appointment was premature in the absence of an ongoing arbitration.

Global Reins. Corp.-U.S. Branch v. Equitas Ltd., 60018-2007, 2008 N.Y. Misc. LEXIS 6979 (N.Y. County, July 3, 2008).

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VCW, Inc., et al. v. Mut. Risk Management Ltd., et al. No. 99-CV-82169 (Mo. Ct. App.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 12, No. 2 (5/24/01).

Aceros Prefabricator S.A. – against – Trade Arbed, No. 00 Civ. 9387 (LMM) (S.D. NY 2001), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 12, No. 1 (5/10/01).

Weatherford, et al. v. Honorable Leamon Freeman, No. 82, 346, (Okla.Sup.Ct.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 4, No. 14 (11/23/93).

Stephen Selcke v. New England Ins. Co., No. 92 C 5599 (N.D.Ill. 1992).

Litigation stayed pending arbitration.

Fencourt Reinsurance Co. Ltd. v. ITT Industries Inc., No. 06-cv-04786 (E.D. Pa. June 20, 2008), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 19, No. 5 (7/3/2008). Captive Reinsurer was deemed a “third-party beneficiary” of distribution agreement and thus was bound to arbitrate its claims against former parent.

Int’l Ins. Agency Servs. v. Revios Reins. U.S., Inc. No. 04 C 1190, 2007 U.S. Dist. LEXIS 22229 (N.D. Ill. Mar. 27, 2007). Highlighting the five doctrines through which a non-signatory can be bound by arbitration agreements entered into by others, non-signatory estopped from avoiding arbitration provisions found in two reinsurance agreements because the claimant’s cause of action was based on those reinsurance agreements.

Trustmark Ins. Co. v. Transamerica Occidental Life Ins. Co., 484 F. Supp. 2d 850 (N.D. Ill. May 1, 2007). Under Illinois law, “[p]arties to a broadly worded arbitration clause who fail to excluded a particular type of dispute are assumed to have intended to include such disputes within the ambit of their agreement.”

Am. Southern Ins. Co. v. PXRE Reinsurance Co., No. 1:04-cv-3572-WSD, N.D. Ga. (June 13, 2005), reprinted in Mealey’s Litigation Report:Reinsurance, Vol. 16, No. 11 (10/06/05). Motion to stay litigation as to abad faith damages claim granted as the arbitration agreement allowsparties to submit “any and all disputes” to arbitration.

Markel Corp. Group Ins. Co. v. PMA Capital Ins. Co., 2005 WL 327534 (E.D. Pa. 2005).

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Associated Int’l Ins. Co. v. Montenegro Re Ltd., 2004 WL 2526426 (Calif. App. 2 Dist. 2004).

Farm Bureau Mut. Ins. Co. v. Am. Int’l Group Inc., No. 4:03-CV-10050 (S.D. IA 2003), 2003 U.S. Dist. LEXIS 14463. While interpretation count was stayed, misrepresentation counts could proceed.

United States Fire Ins. Co. v. Universal Bonding Ins. Co., et al., No. MRS-C-196-00, (N.J. Super., 2003), reprinted in Mealey’s Litigation Report:Reinsurance, Vol. 14, No. 7 (8/7/03).

In re: PRS Ins. Groups, Case No. 00-4070 [MFW], Adversary No. 02-1977 [MFW], (D. Del. Bkcy. 2003), 2003 Bankr. LEXIS 748.

Litigation dismissed in favor of arbitration.

Eagle Star Ins. Co. v. Highlands Ins. Co. v. ACE Prop. & Cas. Ins. Co., 165 Fed. App’x 529, 2006 WL 204783 (9th Cir. Jan. 27, 2006). Third party complaint by cedent against reinsurer is subject to arbitration clause where the allegations “touch matters” covered by the contract.

Cont’l Cas. Co. v. Am. Nat’l Ins. Co., 417 F.3d 727 (7th Cir. 2005). Dispute subject to arbitration, but suit dismissed since arbitration forum was outside of the district.

Am. Centennial Ins. Co. v. Gerling Global Int’l Reinsurance Co., 2005 U.S. Dist. LEXIS 5370 (S.D.N.Y. 2005).

PNI, Inc. v. Leyton, 2004 WL 555249 (D. Or. 2004).

Hartford Accident & Indem. Co. v. Ace Am. Reinsurance Co., 2003 WL 22245421 (Conn. Super. 2003).

The Canada Life Assur. Co. v. The Guardian Life Ins. Co. of Am., 242 F. Supp. 2d 344 (S.D.N.Y. 2003).

Security Life Ins. Co. of Am. v. Hannover Life Reassurance Co. of Am., 2001 WL 392412 (D. Minn. 2001).

Burlington Ins. Co., et al. v. Trygg-Hansa Ins. Co., 2001 WL 543221, 9 Fed. App’x 196 (4th Cir. 2001).

Hughes & Bond v. Public Service Mut. Ins. Co., 2001 Bankr. LEXIS 1803 (Bankr. S.D.N.Y. 2001).

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Ins. Co. of the State of Pennsylvania v. Am. Alternative Ins. Corp., No. 982947 (Cal. App. 1st Dist.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 9, No. 3 (6/11/98).

Unigard Security Ins. Co. v. Banco De Seguros Del Estado, 1998 WL 184368 (D. Mass. 1998).

Stonewall Ins. Co. v. Argonaut Ins. Co., No. CV-97-S-461-S, (N.D. Ala.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 8, No. 12 (10/29/97).

Assicurazioni Generali S.P.A. London Branch v. Sedgwick James of Oregon, Inc., 1997 WL 572685 (D. Ore. 1997).

In Re: Mission Ins. Co. in Liquidation: Charles Quackenbush v. Allstate Ins. Co., No. B107839, (Cal. App. Ct.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 8, No. 9 (9/10/97).

Ochsner/Sisters of Charity Health Plan Inc. v. Certain Underwriters at Lloyd’s London, 1996 WL 495157 (E.D. La. 1996).

St. Paul Fire & Marine Ins. Co. v. Employers Reinsurance Corp., 919 F. Supp. 133 (S.D.N.Y. 1996).

Federated Rural Elec. Ins. Co. v. Int’l Ins. Co., 1995 WL 405288 (D.Kan. 1995).

Cologne Reinsurance Co. of Am. v. Southern Underwriters Inc., et al., 218 A.D.2d 680, 630 N.Y.S.2d 548 (1995).

North River Ins. Co. v. Allstate Ins. Co., 866 F. Supp. 123 (S.D.N.Y. 1994).

Stonewall Ins. Co. v. North Am. Reinsurance, No. BC 094185 (Cal.Super.Ct.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 5, No. 8 (8/31/94).

Maleski v. The Mut. Fire, Marine & Inland Ins. Co., 534 Pa. 575, 633 A.2d 1143 (1993).

Costle v. Fremont Indem. Co., 839 F. Supp. 265 (D.Vt. 1993).

Clarendon Nat’l Ins. Co. v. Transamerica Ins. Co., 1992 U.S.Dist. LEXIS 7627 (S.D.N.Y. 1992).

Schacht v. Hartford Fire Ins. Co., 1991 WL 171377, reconsideration denied, 1991 WL 247644 (N.D.Ill. 1991).

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North River Ins. Co. v. Reinsurance Corp., 1991 U.S. Dist. LEXIS 5734 (S.D.N.Y. 1991).

Party can demand arbitration even after litigation filed.

Ivax Corp. v. B. Braun of Am. Inc., No. 01-11565 (11th Cir.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 12, No. 24 (4/18/02). Right to arbitrate not waived by suing a nonsignatory to an arbitration agreement.

Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading, Inc., 252 F.3d 218 (2nd Cir. 2001). Right to arbitration not waived by filing suit.

Gen. Security Assurance Corp. of N.Y. v. Capital Assurance Co., No. 110807/93 (N.Y.Sup.Ct.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 5, No. 6 (7/27/94).

Proper venue for compelling arbitration.

Nat’l Indem. Co. v. Transatlantic Reinsurance Co., 13 F. Supp. 3d 992 (D. Neb. 2014). Finding that “where an arbitration provision contains a forum selection clause, the only proper venue in which to compel arbitration is the venue encompassing that forum.”

Service of suit clause versus arbitration clause.

New Jersey Physicians United Reciprocal Exch. v. Ace Underwriting Agencies Ltd., et al., 2013 U.S. Dist. LEXIS 52035 (D. N.J. April 11, 2013). Finding a service of suit provision did not negate an arbitration clause and granting a reinsurer’s motion to compel arbitration and stay the current proceedings pending arbitration.

Dinallo v. Dunav Ins. Co., No 09-cv-05575, 2009 U.S. Dist. LEXIS 108433 (S.D.N.Y. Nov. 19, 2009). Where removal was based on diversity, Court found, “Service of suit clause operates as a waiver of the defendant’s right to remove to federal court,” aff’d, 2010 U.S. App. LEXIS 24583 (2nd Cir. NY 2010); mot. for reconsideration denied, 2010 U.S. Dist. LEXIS 7958 (S.D.N.Y. February 1, 2010); aff’d by, 2010 U.S. App. LEXIS 24583 (2d Cir. December 1, 2010).

B.D. Cooke & Partners Ltd. v. Certain Underwriters at Lloyd’s London, 606F. Supp. 2d 420 (S.D.N.Y. March 31, 2009). Despite finding that theservice of suit and arbitration clauses created an “ambiguity” in thereinsurance contract, the Court concluded that the service of suit clausedid not waive the defendants’ right to removal, based on New York

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Convention and Federal Arbitration Act. mot. to remand denied, 2009 U.S. Dist. LEXIS 27143 (S.D.N.Y. 2009). Motion for reconsideration denied at 2010 U.S. Dist. LEXIS 21710 (S.D.N.Y March 9, 2010).

Railroad Ins. Underwriters v. Certain Underwriters at Lloyd’s, London, Excess Ins. Co. Ltd. & Harpers Ins. Ltd., No. C 07-3071 (S.D.N.Y. 2007), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 18, No. 5 (7/6/07). Service of suit clause does not override the arbitration clause or provide a “carve out” for purported debt collection claims.

Security Life Ins. Co. v. Hannover Life Reassurance Co. of Am., 2001 WL 392412 (D. Minn. 2001). Service of suit clause does not carve out an exception to the arbitration clause, it provides means to compel arbitration or enforce an arbitration award. Thus, service of suit language does not affect a mandatory arbitration clause.

Suter v. Munich Reinsurance Co., 223 F.3d 150 (3d Cir. 2000). Service of suit clause does not defeat a foreign reinsurer’s right to remove litigation from state court to federal court to enforce its contractual arbitration rights.

Credit Gen. Ins. Co. v. John Hancock Mut. Life. Ins. Co., 2000 U.S. Dist. LEXIS 9009 (N.D. Ohio 2000). Service of suit clause did not confer jurisdiction in the face of a broad arbitration clause.

NRMA Ins., Ltd. v. Vesta Fire Ins. Corp., No. CV-99-C-1721-S (N.D.Ala. 2000). Arbitration compelled in spite of service of suit clause.

Waiver of right to arbitrate.

Security Life Ins. Co. of Am. v. Southwest Reinsure, Inc., 2013 U.S. Dist. LEXIS 17786 (D. Minn. February 11, 2013). Assertion of the right to arbitrate in one party’s first responsive pleading avoids waiver as to that party, and despite an “unfortunate delay” in the request for arbitration by additional parties, because such delay was largely the Plaintiff’s doing, no prejudice existed warranting waiver as to those parties.

AXA Versicherung AG v. N.H. Ins. Co., No. 05-cv-10180, 2008 WL 1849312 (S.D.N.Y. April 22, 2008), remanded, at 2009 U.S. App. LEXIS 21923 (2d Cir. Oct. 6, 2009). Second Circuit remands matter back to district court, in part, to determine if insurer had waived its right to arbitrate the matter, decided, at 708 F. Supp. 2d 423 (S.D.N.Y. 2010). The court found that the primary insurer waived its right to arbitration because it did not seek arbitration prior to trial, aff’d, 391 Fed. App’x 25, 27 (2d Cir. 2010). Second Circuit affirmed the decision of the district court, but found that

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there was no need to reach the issue of whether the primary insurer waived its right to arbitration.

Vesta Fire Ins. Co. v. Employers Reinsurance Corp., No. 3:05-CV-2404-P, 2006 WL 1506949 (N.D. Tex. May 31, 2006), mot. for reconsideration denied, No. 3:05-CV-2404-P (N.D. Tex. June 30, 2006), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 17, No. 7 (08/03/06). Reinsurer did not waive its right to arbitration under Loss Portfolio Transfer Agreement by delaying its request to arbitrate where no showing that reinsurer acted inconsistently with its right to arbitrate and no prejudice.

Republic Ins. Co. v. PAICO Receivables, LLC., 383 F.3d 341 (5th Cir. 2004). Reinsurer waived its right to arbitrate since it had undertaken extensive litigation activities to the prejudice of cedent.

Nat’l Am. Ins. Co. v. Transamerica Occidental Life Ins. Co., 328 F.3d 462 (8th Cir. 2003). Arbitrators should decide whether party to reinsurance contract waived the right to arbitrate because disputed contract was subject of prior arbitration.

Century Indemnity Co. v. Viacom Int’l, Inc., 2003 U.S. Dist. LEXIS 2452 (S.D.N.Y. 2003). Party did not waive its right to arbitrate, either expressly or impliedly.

Gen. Star Nat’l Ins. Co. v. Administratia Asigurarilor de Stat, 289 F. 3d 434 (6th Cir. 2002). Where insurer did not assert a right to arbitrate until 17 months after it got notice of the suit and until after a default judgment had been entered, it waived its right to arbitrate.

C. Choosing a Qualified Arbitrator

The resignation of an arbitrator does not require a new panel.

Companion Prop. & Cas. Ins. Co. v. Allied Provident Ins., Inc., 2014 U.S. Dist. LEXIS 136473 (S.D.N.Y. Sept. 26, 2014). A new panel was not required after one of the party-appointed arbitrators had to step down due to severe health issues. The appropriate course of action was to appoint a new arbitrator, not disqualify the entire panel. Only the death of an arbitrator requires that a new panel be convened.

In re: Ins. Co. of North Am. v. Pub. Serv. Mut. Ins. Co., No. 08-cv-7003, 2008 U.S. Dist. LEXIS 101788 (S.D.N.Y. Dec. 10, 2008), vacated by 2009 U.S. Dist. LEXIS 55271 (S.D.N.Y. June 29, 2009), reaff’d at 2009 U.S. Dist. LEXIS 66325 (S.D.N.Y. July 29, 2009). Prior order compelling new

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arbitration following resignation of arbitrator for health concerns vacated and parties ordered to continue arbitration with original panel following newly-discovered evidence concerning arbitrator’s health, aff’d by 2010 U.S. App. LEXIS 12853 (2d Cir. 2010). District Court’s decision to continue with the original arbitration panel, whether the arbitrator rejoined the panel or not, was not an abuse of discretion.

Wellpoint Health Networks v. John Hancock Life Ins. Co., No. 07-c-943, 2008 U.S. Dist. LEXIS 33944 (N.D. Ill. April 24, 2008). Court confirmed arbitration award rejecting objection based on replacement of party-appointed arbitrator, aff’d by 576 F.3d 643 (7th Cir. 2009), rehearing denied at 2009 U.S. App. LEXIS 21265 (7th Cir. Ill. Sept. 22, 2009).

In re Arbitration Between Dow Corning Corp. v. Safety Nat’l Cas. Corp., 335 F.3d 742 (8th Cir. 2003).

Nat’l Am. Ins. Co. v. Transamerica Occidental Life Ins. Co., 328 F.3d 462 (8th Cir. 2003).

Death or resignation of arbitrator requires new panel and arbitration to beginanew when arbitration provision does not provide for replacement arbitrator.

Pemex-Refinacion v. Tbilisi Shipping Co. Ltd., 2004 U.S. Dist. LEXIS 17478 (S.D.N.Y 2004).

Partiality of arbitrators.

Amerisure Mut. Ins. Co. v. Everest Reinsurance Co., 109 F. Supp. 3d 969 (E.D. Mich. 2015). The general rule is that an arbitrator’s potential partiality must be raised during the arbitration in order for a court to later consider it on a motion to vacate. The court ruled that in light of the general rule, Everest (the reinsurer) failed to preserve the majority of its partiality challenge. However, even if the reinsurer had sufficiently preserved its evident partiality claim, it still failed to establish the umpire had “a motive to favor [the reinsured].”

Companion Prop. & Cas. Ins. Co. v. Allied Provident Ins., Inc., 2014 U.S. Dist. LEXIS 136473 (S.D.N.Y. Sept. 26, 2014). The court found that the reinsurer did not satisfy the high standard showing partiality where its reliance and conclusions from one email amounted to “pure speculation.” Court also found the reinsurer’s claims that the umpire and the cedent-appointed arbitrator conspired to exclude its appointed arbitrator (who had health issues) from participating in an interim decision contradicted by the evidence.

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Scandinavian Reinsurance Co. v. St. Paul Fire & Marine Ins. Co., 668 F.3d 60 (2d Cir. N.Y. 2012). Two arbitrators’ failure to disclose their involvement in a possibly related arbitration was not, in itself, indicative of evident partiality. The standard for evident partiality is whether a reasonable person would have to conclude that an arbitrator was partial to one party of the arbitration.

IRB-Brasil Resseguros S.A. v. Nat’l Indem. Co., 2011 U.S. Dist. LEXIS 136640 (S.D.N.Y. November 29, 2011). Finding that communication between the cedent’s party appointed arbitrator and neutral umpire candidates did not render the umpire candidates under the control of the cedent, and thus, disqualification of the umpire candidates was not warranted. Later proceeding on other issues at 2011 U.S. Dist. LEXIS 136640 (S.D.N.Y. November 29, 2011).

IRB-Brasil Resseguros S.A. v. Nat’l Indem. Co., 2011 U.S. Dist. LEXIS 116664 (S.D.N.Y. October 5, 2011). Denying the cedent’s petition to disqualify the reinsurer’s party appointed arbitrator since the cedent failed to proffer any authority to grant the relief sought. Later proceeding on other issues at 2011 U.S. Dist. LEXIS 136640 (S.D.N.Y. November 29, 2011).

Liberty Mut. Ins. Co., et al. v. Certain Underwriters At Lloyd’s, et al., No. 10-cv-10623 (D. Mass. Aug. 11, 2010). An insurance group’s allegationsthat the reinsurer was not forthcoming about its previous dealings withthe appointed umpire are not sufficient to cast doubt on the umpire’sneutrality.

Scandinavian Reinsurance Co. v. St. Paul Fire & Marine Inc. Co., 732 F. Supp. 2d 293 (S.D.N.Y. Feb. 23, 2010). Evident partiality existed where arbitrators failed to disclose their involvement in simultaneous arbitration involving similar issues and common witnesses. Rev’d and remanded, 668 F.3d 60 (2d Cir. Feb. 3, 2012). The Second Circuit disagreed with the district court and found that under the circumstances, the fact of two arbitrators' overlapping service in the similar arbitrations did not, in itself, suggest that they were predisposed to rule in any particular way in the arbitration.

Arrowood Indem. Co. v. Trustmark Ins. Co., 2010 U.S. Dist. LEXIS 109782 (D. Conn. February 2, 2010). Umpire’s fully-disclosed relationship with Plaintiff and Plaintiff’s counsel did not constitute “evident partiality” under the federal Arbitration Act, 9 U.S.C. § 10.

United States Life Ins. Co. v. Superior Nat’l Ins. Co., et al., 591 F.3d 1167 (9th Cir. 2010). Arbitration panel’s ex parte meeting with neutral experts

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did not amount to prejudicial misbehavior as the panel afforded the parties ample opportunity to proffer arguments and present evidence.

Trustmark Ins. Co. v. John Hancock Life Ins. Co., 680 F. Supp. 2d 944(N.D. Ill. 2010). Although a signatory to a confidentiality agreement in a prior arbitration between same parties, arbitrator failed to recuse himself from panel deliberations involving the operation and effect of the prior confidentiality agreement and was therefore disqualified in subsequent arbitration, rev’d, 631 F.3d 869 (7th Cir. Ill. 2011). Arbitrator designated to participate in the parties’ second arbitration was “disinterested” insofar as the arbitrator had no financial stake in the outcome and knowledge acquired in a prior arbitration did not require disqualification. Reh’g den., 2011 U.S. App. LEXIS 4510 (7th Cir. Mar. 1, 2011), cert. den., 131 S. Ct. 2465 (May 16, 2011).

Trustmark Ins. Co. v. Clarendon Nat’l Ins. Co., 2010 U.S. Dist. LEXIS 8078 (N.D. Ill Feb 1, 2010). Arbitrator’s participation in confidentiality agreement in earlier related arbitration did not disqualify arbitrator in second arbitration where there were no facts showing party and its arbitrator “breached, repudiated, or will necessarily breach the Confidentiality Agreement. The mere fear of a future breach in this case is not a cause of action,” appeal dism’d No. 10-1502 (7th Cir. Feb. 2, 2010).

Employers Ins. Co. of Wausau v. Certain Underwriters at Lloyd’s of London, 09-cv-201-bbc, 2009 U.S. Dist. LEXIS 89945 (W.D. Wis. Sep. 29, 2009), reconsideration denied, 2009 U.S. Dist. LEXIS 98746 (W.D. Wis. Oct. 23, 2009). Request to disqualify party-appointed arbitrator denied as allegations deemed “too attenuated” and did not demonstrate actual or apparent partiality.

Ario v. Cologne Reinsurance (Barbados), Ltd., 2009 U.S. Dist. LEXIS 106133 (M.D. Pa. Nov. 13, 2009). Confirming the award and finding no evidence of “evident partiality” by the arbitrators.

Uhl v. Komatsu Forklift Co., 512 F.3d 294 (6th Cir. 2008). Parties must demonstrate specific facts that indicate improper motive to prove an arbitrator’s “evident partiality” under the Federal Arbitration Act. Arbitrator’s failure to disclose previous relationship as co-counsel with party counsel did not amount to evident partiality.

Glacier Reinsurance AG v. Odyssey Am. Reinsurance Corp., No. 07-583; 2007 WL 1875658 (D. Conn. June 27, 2007). Court appointed umpire nominee in reinsurance arbitration because the nominee had previously

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served as arbitrator or umpire for both parties and was therefore less likely to be partial to either party to the arbitration.

The Travelers Indem. Co, et al. v. Everest Reinsurance Co., 2004 WL 2297860 (D. Conn. 2004). Where court was charged with appointing an umpire, nominee was not chosen because of previous employment as expert witness for one party. Court held “the mere impression of possible bias is enough for the court to pass on his appointment as umpire.”

Fid. Fed. Bank v. Durga Ma Corp., Nos. 02-56381, 56548 (9th Cir. 2004). Party with constructive knowledge of arbitrator’s partiality waives right to challenge such partiality if it fails to object to the arbitrator’s appointment until after the award is issued.

Encyclopaedia Universalis DS.A. v. Encyclopedia Britannica Inc., No. 03-Civ. 4363, (S.D.N.Y. 2003), 2003 LEXIS 21850, aff’d 2005 U.S. App. LEXIS 5157 (2d Cir. 2005). The failure to discuss with another arbitrator the appointment of a third arbitrator as per the agreement and the decision of an award made by only two arbitrators, leaving one party and its appointed arbitrator out, creates the appearance of impropriety and perceived bias.

In re Arbitration Between Dow Corning Corp. v. Safety Nat’l Cas. Corp., 335 F.3d 742 (8th Cir. 2003). No finding of “evident partiality.”

Cont’l Cas. Co. v. QBE Ins. Co., No. 03 C 2222 (N.D.Ill. 2003), 2003 U.S. Dist. LEXIS 17826. Where transaction took place in the U.S. and is governed by U.S. law, umpire need not be from a country other than that of the parties in order to be impartial.

Certain Underwriters at Lloyd’s London v. Argonaut Ins. Co., 264 F. Supp. 2d 926 (N.D. Cal. 2003). Court refused to disqualify umpire for evident partiality because Federal Arbitration Act does not allow removal before issuance of final arbitral award.

Feinberg v. Katz, 2003 U.S. Dist. LEXIS 1677 (S.D.N.Y. 2003). Motion to disqualify counsel denied as court held that an attorney who had served as a party-appointed arbitrator in related matter was allowed to continue as that party’s counsel.

Nationwide Mut. Ins. Co. v. First State Ins. Co., 213 F. Supp. 2d 10 (D. Mass. 2002). Judge refused to vacate an arbitration award finding no improper bias on the part of a party-appointed arbitrator.

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Sphere Drake Ins. Co. Ltd. v. All Am. Ins. Co., 307 F.3d 617 (7th Cir. 2002); cert. denied, Am. Gen. Life Ins. Co., v. Sphere Drake Ins. Co., 123 S. Ct. 1754 (2003). Holding that the lower court erred in setting aside a final arbitration award since there was no evidence that the party appointed arbitrator’s failure to make full disclosure demonstrated “evident partiality.”

Truck Ins. Exchange v. Certain Underwriters at Lloyd’s London, et al., No. S068479 (Cal. Super. 2001), reprinted in Mealey’s Litigation Report: Reinsurance, Vol 12, No. 5 (7/5/01). Attorney precluded from serving as an arbitrator because he and his firm may have performed legal services for some of the defendant reinsurers where agreement called for arbitrators that were “disinterested.”

First State Ins. Co. v. Employers Ins. Of Wausau, No. 99-12478 (D.Mass.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 10, No. 21 (3/9/00). Reinsurer precluded from appointing its regular lawyer as an arbitrator where agreement called for panel of “disinterested” arbitrators.

Schmitz v. Zilveti, 20 F.3d 1043 (9th Cir. 1994). Award vacated as arbitrator was “evidently partial.”

Prop. & Cas. Ins. Ltd. v. Am. Centennial Ins. Co., No. 3:94-CV-1014-X (N.D. Texas), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 5, No. 13 (11/9/94). No finding of “evident partiality.”

Motion to vacate arbitration award based on arbitrator’s alleged bias,misconduct, or lack of qualifications denied.

Amerisure Mut. Ins. Co. v. Everest Reinsurance Co., 109 F. Supp. 3d 969 (E.D. Mich. 2015). Even if Everest preserved its claim of evident partiality for judicial review, the court found no “justification to vacate, modify, or correct the Final Award” on the bases that, inter alia, the umpire was biased against Everest.

Zurich Am. Ins. Co., et al., v. Team Tankers A.S., et al., 2014 U.S. Dist. LEXIS 89260 (S.D.N.Y. June 30, 2014) aff’d, 811 F.3d 584 (2d Cir. 2016). Umpire’s failure to disclose inoperable brain tumor did not constitute corruption or misconduct under Section 10 of the Federal Arbitration Act. The court noted that under the Federal Arbitration Act, an arbitrator is under no duty to disclose medical conditions.

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Nationwide Mut. Ins. Co. v. The Home Ins. Co., No. C2-03933 (S.D. Ohio 2004), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 15, No. 11 (10/07/04), aff’d, 429 F.3d 640 (6th Cir. 2005).

British Ins. Co. of Cayman v. Water Street Ins. Co., Ltd., 93 F. Supp. 2d 506 (S.D.N.Y. 2000).

Northwestern Nat’l Ins. Co. v. Generali Mexico Compania de Seguros, S.A., 2000 WL 520638 (S.D.N.Y. 2000), reh’g denied, 2000 WL 702996(S.D.N.Y. May 30, 2000).

Nationwide Mut. Ins. Co. v. The Home Ins. Co., 90 F. Supp. 2d 893 (S.D. Ohio 2000), aff’d, 278 F.3d 621 (6th Cir. 2002), aff’d in part, rev’d in part, 330 F.3d 843 (6th Cir. 2003). Portion of the district court’s judgment vacating the arbitrators’ order that insurer pay a third-party was affirmed; portion of order requiring arbitrators to reconsider offset was reversed.

Northwestern Nat’l Ins. Co. v. Allstate Ins. Co., 832 F. Supp. 1280 (E.D.Wis. 1993).

When arbitrator resigns, party who originally designated that arbitratornominates the substitute arbitrator.

Companion Prop. & Cas. Ins. Co. v. Allied Provident Ins., Inc., 2014 U.S. Dist. LEXIS 136473 (S.D.N.Y. Sept. 26, 2014). Court stayed the arbitration proceedings and ordered the reinsurer to appoint a new arbitrator within three weeks of the date of the order after its arbitrator had to resign due to severe health issues.

NW. Nat’l Ins. Co. v. INSCO, Ltd., 2011 U.S. Dist. LEXIS 50789 (S.D.N.Y. May 12, 2011). Cedent sought a court-appointed replacement party arbitrator for the reinsurer. However, the court refused to appoint a replacement party arbitrator for the reinsurer upon the resignation of the reinsurer’s initial selection when the reinsurer agreed to and had already appointed a replacement arbitrator.

In the matter of the Arbitration Between Evanston Ins. Co. & Kansa Gen. Intern. Ins. Co., 1995 WL 23063 (N.D.Ill. 1995).

Reviewing impartiality of arbitrator is improper prior to arbitration.

Odyssey Reinsurance Co. v. Certain Underwriters at Lloyd’s London Syndicate 53, et al., 2014 U.S. Dist. LEXIS 96356 (S.D.N.Y. June 30, 2014). The Court refused to consider a challenge to the respondents’ umpire

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candidates insofar as a court cannot entertain a challenge to the qualifications or partiality of arbitrators until after the conclusion of the arbitration and the rendition of an award. Vacated and remanded on other grounds, 615 Fed. App’x 22 (2d Cir. Aug. 26, 2015). In a footnote, the Second Circuit explained that because other grounds required the district court to intervene and appoint an umpire, it would not decide “whether, and under what circumstances, a district court might be empowered to review candidates’ qualifications prior to arbitration proceedings.”

Savers Prop. & Cas. Ins. Co, et al. v. Nat'l Union Fire Ins. Co., 2014 U.S. App. LEXIS 6488, 16 (6th Cir. April 9, 2014). In reversing a decision from the Eastern District of Michigan, the Sixth Circuit dissolved the injunction which halted an ongoing arbitration proceeding based in part upon allegations of ex parte communications with an arbitrator. In adopting the majority rule, the court noted that parties to an arbitration are precluded from challenging “the proceedings or the partiality of the arbitrators until the conclusion of the arbitration and the rendition of a final award.”

Allstate Ins. Co. v. OneBeacon Am. Ins. Co., 2013 U.S. Dist. LEXIS 146826 (D. Mass. Oct. 8, 2013). Court refused to enjoin arbitration or disqualify umpire where umpire was inadvertently informed which party named him as candidate, in part, because pre-award challenges on the basis of bias are not permitted.

Nat'l Cas. Co. v. OneBeacon Am. Ins. Co., 744 F. 3d 25 (1st Cir. 2014). Cedent sought to remove an umpire candidate whom had been officer of another reinsurer under the same reinsurance contracts at issue in the arbitration, but the court declined to do so as there had not yet been an arbitral award nor had the candidate even been appointed.

Trustmark Ins. Co. v. Clarendon Nat’l Ins. Co., No. 09 C 6169, 2010 U.S. Dist. LEXIS 8078 (N.D. Ill Feb. 1, 2010). “The requirement that [an] arbitrator be ‘disinterested’ is an issue of bias or qualification available for challenge only after an arbitration award issues.”

Odyssey Reinsurance Corp. v. ACE Prop. & Cas. Ins. Co., No. 04 Civ. 5181 (S.D.N.Y. 2004), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 15, No. 15 (12/02/04).

Gulf Guar. Life Ins. Co. v. Conn. Gen. Life Ins. Co., 304 F.3d 476 (5th Cir. 2002).

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Travelers Indem. Co. v. Gerling Global Reinsurance Corp., 2001 U.S. Dist. LEXIS 6684 (S.D.N.Y. 2001).

In re Arbitration between Certain Underwriters at Lloyd’s, London & Cont’l Cas. Co., 1997 WL 461035 (N.D.Ill. 1997).

Fireman’s Fund Ins. Co. v. Sorema North Am. Reinsurance Co., 1995 WL 597266 (N.D.Cal. 1995).

Old Republic Ins. Co. v. Meadows Indem. Co., Ltd., 870 F. Supp. 210 (N.D.Ill. 1994).

Arbitrator can be removed before the entry of an award for misconduct.

Metropolitan Prop. & Cas. Ins. Co. v. J.C. Penney Cas. Ins. Co., 780 F. Supp. 885 (D.Conn. 1991).

Delay in choosing arbitrator does not waive right to appoint arbitrator.

In the Matter of the Arbitration Between Argonaut Midwest Ins. Co. v. Gen. Reinsurance Corp., 1998 WL 474142 (N.D.Ill. 1998).

New England Reinsurance Corp. v. Tennessee Ins. Co., 780 F. Supp. 73 (D.Mass. 1991).

Delay in choosing arbitrator forfeits right to appoint arbitrator.

Certain Underwriters at Lloyd’s London v. Argonaut Ins., 500 F.3d 571 (7th Cir. 2007). Reinsured forfeited its right to appoint an arbitrator by failing to make the appointment within 30 days of receiving written notice from the reinsurer to do so. In seeking a uniform federal rule and with no state-specific exceptions extending the appointment deadlines, the Seventh Circuit upheld the strict adherence to the 30 day time limit, motion to vacate subsequent arbitration award denied at 2009 U.S. Dist. LEXIS 87827 (N.D.Ill. Sept. 24, 2009).

Cont’l Cas. Co. v. Hartford Steam Boiler Inspection & Ins. Co., 2004 WL 725469 (N.D.Ill. 2004).

In the matter of the arbitration between Cravens Dargon & Co. v. The Gen. Ins. Co. of Trieste & Venice - U.S. Branch, 1996 WL 41825 (S.D.N.Y. 1996).

In Re: Employers Ins. of Wausau v. Jackson, 190 Wis.2d 597, 527 N.W.2d 681 (1995), recon. denied, 534 N.W.2d 88 (1995).

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Universal Reinsurance Corp. v. Allstate Ins. Co., 16 F.3d 125 (7th Cir. 1994).

Delay in choosing arbitrator operates as forfeiture against respondent but notclaimant.

Certain Underwriters at Lloyd’s v. Mut. Marine Office, Inc., No. 603452/04 (N.Y. Sup., New York Co. 2005), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 16, No. 1 (05/12/05). Treaty set no time restriction upon claimant under which it had to appoint its arbitrator. In any event, respondent had no right to bring special proceeding seeking to have court appoint arbitrator on behalf of claimant.

Century Indem. Co. v. Arkwright Ins. Co., No. 99-MISC-46 (E.D. Pa.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 11, No. 3 (6/15/00).

Delay in choosing arbitrator does not invalidate selection.

Ancon Ins. Co. (U.K.) Ltd. v. GE Reinsurance Corporation, 480 F. Supp. 2d 1278 (D. Kan. 2007). Despite valid adverse selection clause, clerical error resulting in late arbitrator appointment will not invalidate selection where contract did not make time of the essence.

Party did not forfeit its right to name umpire candidates.

Am. United Life Ins. Co. v. Travelers Indem. Co., et al., 2015 WL 4936595 (D. Conn. Aug. 18, 2015). The court found that the cedent’s failure to name umpire candidates by the agreed upon deadline was attributable to its efforts to settle the dispute. Therefore, there was not an impasse due to the cedent’s failure to avail itself of the designated procedures such that judicial intervention was warranted.

Lincoln Gen. Ins. Co. v. Clarendon Nat’l Ins. Co., No. 04:08-cv-0583 (M.D. Pa. Aug. 15, 2008). Where party sought judicial review of its obligation to arbitrate, a short, non-prejudicial, and good faith delay in appointing an arbitrator does not waive a party’s right to appoint an arbitrator.

Sufficient time must pass before the inability to choose an umpire justifiesjudicial intervention.

Am. Home Assur. Co. v. Employers Ins. Co. of Wausau, 13 Civ. 5169 (AKH) (S.D.N.Y. October 15, 2013). Court appointed an umpire where parties' inability to agree on an umpire had lasted seven and a half months.

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Global Reinsurance Corp.-U.S. Branch, f/k/a Gerling Global Reinsurance Corp-U.S. Branch v. Certain Underwriters at Lloyd’s, London, 465 F. Supp. 2d 308 (S.D.N.Y. 2006). Six days between the time insured notified reinsurers of objection to umpire candidate and the time the petition to appoint an umpire cannot be characterized properly as a ‘lapse’ that justifies judicial intervention.

Section 5 of the FAA requires that a court appoint an umpire when there is abreakdown in the selection process.

Odyssey Reinsurance Co. v. Certain Underwriters at Lloyd’s London Syndicate 53, et al., 615 Fed.App’x 22 (2d Cir. 2015). Vacating the prior District Court ruling, 2014 WL 3058377 (S.D.N.Y. June 30, 2014), the Second Circuit Court found that under the FAA the court had the authority and obligation to appoint an umpire because there had been a breakdown in the process, which had caused a lapse and had long delayed the arbitration. The case was remanded to the Southern District of New York to designate and appoint an umpire.

Arbitrator Immunity.

Morgan Phillips, Inc. v. Jams/Endispute, 140 Cal.App.4th 795 (2006). Arbitral immunity does not apply to arbitrator who withdraws from arbitration and refuses to render arbitration award without legal cause.

Prudential-Bache Securities [Hong Kong] Ltd. And Prudential-Bache Int’l Bank Ltd. v. Nat’l Association of Securities Dealers Dispute Resolution Inc., 2003 U.S. Dist. LEXIS 19239, No. 03 Civ 556 [JSR] (S.D.N.Y. 2003). Arbitrators and their sponsors “are immune from suit for jurisdictional determinations made in their capacity as arbitrators.”

Leibowitz v. City of New York, 2001 N.Y. Slip Op. 40053(U). Arbitrator immune from lawsuit for failing to file an arbitration award on time.

Motion to compel parties to proceed with the umpire selection process granted.

Munich Reinsurance Am., Inc. v. Nat’l Cas. Co., 2011 U.S. Dist. LEXIS 44759 (S.D.N.Y. April 26, 2011) (Motion to compel arbitration granted. Court found issue of how “act as one” provision applies to be issue for arbitration panel.

Clearwater Ins. Co. v. Granite State Ins. Co., et al., 2006 U.S. Dist. LEXIS 74771 (N.D. Cal. 2006).

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Odyssey Reinsurance Corp. v. ACE Prop. & Cas. Ins. Co., No. 04 Civ. 5181 (S.D.N.Y. 2004), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 15, No. 15 (12/02/04).

Fid. Security Life Ins. Co., et al. v. John Hancock Life Ins. Co., No. 01-11663 WGY (D. Mass. 2002), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 13, No. 12 (10/17/02).

Judicial selection of an umpire when the arbitrators are unable to agree.

Am. Home Assur. Co. v. Employers Ins. Co. of Wausau, 13 Civ. 5169 (AKH) (S.D.N.Y. October 15, 2013).

Employers Ins. Co. of Wausau v. Certain Underwriters at Lloyd’s of London, 09-cv-201-bbc, 2009 U.S. Dist. LEXIS 89945 (W.D. Wis. Sep. 29, 2009), reconsideration denied, 2009 U.S. Dist. LEXIS 98746 (W.D. Wis. Oct. 23, 2009)

Judicial selection of replacement umpire is inappropriate where it goes againstthe “general intent” of the parties and/or agreement.

Nat’l Cas. Co. v. Cont’l Cas. Co., et al., No. 13C 6590 (N.D. Ill. March 6, 2014). Because the arbitration agreement contained detailed procedures for selecting an umpire, the court ordered parties to follow those same procedures in selecting a replacement umpire, as most in line with the “general intent” of the agreement.

Judicial appointment of an umpire deferred until after organizational meeting.

Employers Ins. Co. of Wausau v. Arrowood Indem. Co., 12-cv-8005 (S.D. N.Y. April 9, 2014). Court deferred judicial appointment of an umpire for six remaining cases until after the organizational meetings and the parties were able to consider the disclosures.

Section 5 of the Federal Arbitration Act gives a court authority to select areplacement umpire when the reinsurance contract in question is silent on theissue.

AIG Global Trade & Political Risk Ins. Co., et al. v. Odyssey Am. Reinsurance Corp., et al., No. 05-9152, (S.D.N.Y. 2006). Section 5 of the Federal Arbitration Act gives a court authority to select a replacement umpire when the reinsurance contract in question is silent on the issue.

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Section 5 of the Federal Arbitration Act does not preclude judicial involvement inprocedural pre-arbitration matters, such as enforcing a contractual provisionspecifying that umpire candidates must be neutral.

Arrowood Indem. Co. v. Clearwater Ins. Co., 2011 Conn. Super. LEXIS 3334 (Conn. Super. Ct. July 26, 2011).

Where arbitration panel shows manifest disregard for state law, issues onremand should be decided by new arbitration panel.

Koken v. Cologne Reinsurance [Barbados] Ltd., 2006 WL 2460902 (M.D. Pa. 2006), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 17, No. 16 (12/21/06).

D. Authority of Arbitrators

Arbitrators exceeded their authority.

Pool Re Ins. Corp. v. Organizational Strategies, Inc., et al., 783 F.3d 256 (5th Cir. 2015). Vacating an arbitration award involving multiple parties under different contracts with different arbitration provisions, which therefore was rendered in excess of the arbitrator’s jurisdiction.

Amerisure Mut. Ins. Co. v. Global Reinsurance Corp. of Am., f/k/a Gerling Global Reinsurance Corp. of Am., 927 N.E.2d 740 (Ill. App. 2010). Arbitration panel committed a “gross error of law” in awarding attorney fees pursuant to Illinois Insurance Code, 215 ILCS 5/155, as the authority to award attorney fees pursuant this statute exclusively rested with the circuit court. Reh’g den., 2010 Ill. App. LEXIS 461 (Ill. App. Ct. Apr. 15, 2010), cert. den., 237 Ill. 2d 551, 938 N.E.2d 518 (Ill. 2010).

PMA Capital Ins. Co. v. Platinum Underwriters Bermuda, Ltd., No. 09-mc-0084, 2009 U.S. Dist. LEXIS 85046 (E.D. Pa. Sept. 15, 2009). Arbitration award vacated as being “completely irrational” insofar as the award eliminated key provisions of the reinsurance agreement and awarded relief not sought, aff’d, 2010 U.S. App. LEXIS 23222 (3d Cir. Pa. Nov. 8, 2010).

Garamendi v. California Compensation Ins. Co., No. B177760, Cal.App., 2nd Dist., reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 16, No. 18 (01/19/06). Arbitrators did not have authority to grant reinsurers setoff of damages against their obligation to return premiums upon rescission of reinsurance contract.

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Encyclopaedia Universalis DS.A. v. Encyclopedia Britannica Inc., No. 03-Civ. 4363 [SAS] (S.D.N.Y. 2003), 2003 LEXIS 21850, aff’d 2005 U.S. App. LEXIS 5157 (2d Cir. 2005). An arbitral tribunal that was improperly composed has no power to bind the parties; any assertion of such power exceeds its mandate.

Arbitration panel has authority to fashion a remedy not specifically requested bya party, provided the remedy relates to an issue directly before the panel.

First State Ins. Co. v. Nationwide Mut. Ins. Co., No. 13‐cv‐11322 (D. Mass. March 25, 2015). Finding that “the arbitral panel did not exceed its scope of authority in crafting the remedial Phase I and Phase II awards because the panel was, at least arguably, interpreting the contract in doing so.”

First State Ins. Co. v. Nat’l Cas. Co., 781 F.3d 7, 11 (1st Cir. 2015). Finding that the arbitrators did not exceed the scope of their authority in fashioning the payment protocol which was in part “based upon the terms of the subject reinsurance agreements.”

Harper Ins. Ltd. v. Century Indem. Co., No. 10 Civ. 7866, 2011 U.S. Dist. LEXIS 84112 (S.D.N.Y. July 27, 2011).

Arbitration panel has authority to award punitive damages.

Bowen v. Amoco Pipeline Co., 2001 U.S. App. LEXIS 13867 (10th Cir. 2001).

Arbitration panel’s authority defined by the reinsurance agreement’s arbitrationprovision, not petition to compel arbitration.

Associated Int’l Ins. Co. v. Montenegro Re, Ltd., No. B203064, 2008 Cal. App. Unpub. LEXIS 10329 (2008).

Unless contract provides otherwise, arbitration panel may resolve issuespresented to it.

Amerisure Mut. Ins. Co. v. Everest Reinsurance Co., 109 F. Supp. 3d 969, 1000 (E.D. Mich. 2015). Finding that the parties submitted their dispute over the reinsurer’s liability for certain losses to the panel for resolution and declining to disturb the panel’s ruling (which is subject to “extraordinary deference”) on this issue.

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Global Reinsurance Corp. v. Argonaut Ins. Co., 548 F. Supp. 2d 104 (S.D.N.Y. 2008). Arbitration panel did not exceed its authority in clarifying previous orders relating to the calculation of the amount awarded.

Commercial Risk Reinsurance Co. v. Sec. Ins. Co., 526 F. Supp. 2d 424 (S.D.N.Y. 2007), order denying reconsideration, December 12, 2007. Arbitration panel has broad discretion to determine the admissibility of witness testimony, and appropriately exercised its discretion in excluding reinsurer’s witness on damages, who had not been previously disclosed.

Burlington Ins. Co. v. Trygg-Hansa Ins. Co., AB, No. 1:99CV00334, 2006 WL 1367418 (M.D. N.C. May 16, 2006). Second arbitration panel did not exceed authority in treating prior panel’s award as setoff. “If the [arbitration] clauses cover all claims, then the panel may rationally issue one final award after multiple rounds of arbitration.”

Northwestern Nat’l Ins. Co. v. Generali Mexico Compania de Seguros, S.A., 2000 WL 702996 (S.D.N.Y. 2000). Arbitration panel may awardattorneys’ fees under appropriate circumstances absent a specificprohibition in the arbitration clause.

St. Paul Fire & Maine Ins. Co. v. Employers Reinsurance Co., 919 F. Supp. 133 (S.D.N.Y. 1996).

Michigan Mut. Ins. Co. v. Unigard Sec. Ins. Co., 44 F.3d 826 (9th Cir. 1995).

Gen. Security Assurance Corp. of N.Y. v. Capital Assurance Co., No. 110807/93 (N.Y.Sup.Ct.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 5, No. 6 (7/27/94).

Arbitrators have expansive authority to manage and conduct arbitrations.

TIG Ins. Co. v. Global Int’l. Reinsurance Co., 640 F. Supp. 2d 519 (S.D.N.Y. 2009). Arbitrators have great latitude to determine the procedures governing their proceeding, and to restrict or control evidentiary proceedings, including summary judgment.

Arbitrators have extensive latitude in applying relevant law, and the “manifestdisregard” doctrine is limited to instances of egregious impropriety.

ACE Am. Ins. Co., et al. v. Christiana Ins. LLC, No. 11-cv-8862, 2012 U.S. Dist. LEXIS 51863 (S.D.N.Y. April 12, 2012).

Arbitrators have authority to determine if arbitration provision was terminated.

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Trenwick Am. Reinsurance Corp. v. CX Reinsurance Co. Ltd., 2014 U.S. Dist. LEXIS 70823 (D. Conn. May 23, 2014). Where broad arbitration clause exists, arbitrators must determine whether an arbitration provision has been extinguished by a commutation.

Sun Life Assurance Co. of Canada v. Liberty Mut. Ins. Co., No. 09-cv-02133, 2009 U.S. Dist. LEXIS 114694 (S.D.Cal. Dec. 9, 2009). Where broad arbitration clauses exist, arbitrator must determine if such a clause has been effectively eliminated by a commutation.

Arbitration provision not limited to disputes over existing claims.

Hartford Accident & Indem. Co. v. Swiss Reinsurance Am. Corp., 2001 U.S. App. LEXIS 6465 (2nd Cir. 2001). Manner in which insurer should allocate its reinsurance billings to its reinsurer was a proper issue for an arbitration panel to determine pursuant to the language contained in the treaty reinsurance contracts.

Arbitrators, not the Court, must decide scope of counterclaims to be resolved inan arbitration.

Century Indem. Co. v. New England Reinsurance Corp., 2004 U.S. Dist. LEXIS 15404 (E.D. Pa. 2004).

Arbitration applies only to interpretation of contract disputes.

Associated Indem. Corp. v. The Home Ins. Co., 19 F.3d 1432 (6th Cir. 1994).

Issue of reinsurer’s ultimate liability is arbitrable.

Alabama Reassurance Co. v. Sutcher (In re Inter-Am. Ins. Co.), 303 Ill.App.3d 95, 707 N.E.2d 617 (1999).

Whether award in prior arbitration operates as res judicata or collateral estoppelis issue for arbitration panel.

Employers Ins. Co. of Wausau, et al. v. OneBeacon Am. Ins. Co., et al., 744 F.3d 25 (1st Cir. 2014). Finding that the preclusive effect of a priorarbitration fell within the broadly worded arbitration agreement covering“‘any irreconcilable dispute between [the parties] in connection with’ theMLEC Agreements” despite the District Court for the District ofMassachusetts’ prior confirmation of the arbitration decision.

Liberty Mut. Ins. Co. et al., v. Allstate Ins. Co., 2014 U.S. Dist. LEXIS 43354 (D. Mass. March 31, 2014).

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Nat'l Cas. Co. v. OneBeacon Am. Ins. Co., 2013 U.S. Dist. LEXIS 92840 (D. Mass. July 1, 2013), aff'd 2014 U.S. App. LEXIS 3613 (1st Cir. Mass. Feb. 26, 2014).

North River v. Allstate, 866 F. Supp. 123 (S.D.N.Y. 1994).

Excess & Treaty Management Corp. v. North River Ins. Corp., 1994 WL 323213 (S.D.N.Y. 1994).

Whether award in prior arbitration operates as res judicata or collateral estoppelis issue for judge, not arbitration panel.

AXA Versicherung AG v. N.H. Ins. Co., 2008 U.S. Dist. LEXIS 3803 (S.D.N.Y. Jan. 12, 2008). Court denied reinsured’s collateral estoppel argument based on prior arbitration award reasoning that the panel’s failure to couch its finding as a “legal determination,” and its failure to decide identical issues, precluded the application of the doctrine, remanded on other issues, at 2009 U.S. App. LEXIS 21923 (2nd Cir. Oct. 6, 2009).


Rembrandt Industries, Inc. v. Hodges Int’l, Inc., 344 N.E.2d 383, 38 N.Y.2d 502 (1976).

Effect of prior court ruling regarding arbitrability of disputes is a questionreserved for the arbitrator.

Am. Ins. Co. v. Am. Re-Insurance Co., 2006 U.S. Dist. LEXIS 95801 (N.D. Cal. 2006).


Conversion claim not subject to arbitration.

Old Republic Ins. Co., et al. v. Tom Lanier, 644 So.2d 1258 (Ala. 1994).

Arbitration panel can re-examine its decision only under limited circumstances,like apparent mistake.

Colonial Penn Ins. Co. v. Omaha Indem. Co., et al., 943 F.2d 327 (3rd Cir. 1991).

Arbitration panel’s authority to order the production of documents by anonparty for discovery purposes is limited.

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Life Receivables Trust v. Syndicate 102, 549 F.3d 210 (2d Cir. 2008). Section 7 of the FAA does not authorize an arbitrator to compel pre-hearing document discovery from non-parties.

Dynegy Midstream Services, LP v. Trammochem, 451 F.3d 89 (2d Cir. 2006). Federal Arbitration Act does not authorize nationwide service of process or enforcement.

Hay Group, Inc. v. E.B.S., Acquisition Corp., 360 F.3d 404 (3d Cir. 2004). Arbitrator’s subpoena power under Section 7 does not include authority to subpoena non-parties for pre-hearing discovery.

Section 7 of the FAA authorizes arbitrators to compel pre-hearing documentdiscovery from non-parties.

In re Arbitration Between Sec. Life Ins. Co. of Am., 228 F.3d 865 (8th Cir. 2000).

Section 7 of the FAA may authorize pre-hearing document discovery where thereis a special need for the documents.

COMSTAT Corp. v. NSF, 190 F.3d 269 (4th Cir. 1999). FAA does not authorize a federal court to compel a nonparty’s compliance with an arbitrator’s subpoena for pre-hearing discovery, absent a showing of special need or hardship.

Courts have no authority to impede an arbitration panel’s decisions as to amotion to stay arbitration.

Georgia Cas. & Sur. Co. v. Excalibur Reinsurance Corp., 4 F. Supp. 3d 1362, 1371 (D. Ga. March 13, 2014).

A court cannot order depositions in private arbitration proceedings.

In re Arbitration between Norfolk Southern Corp., et al., & ACE Bermuda, 626 F. Supp. 2d 882 (N.D. Ill. June 15, 2009). 28 U.S.C. § 1782 does not grant the district courts authority to order U.S. witnesses to provide testimony or documents for use in a foreign, private arbitration.

Matria Healthcare, LLC v. Duthie, 584 F. Supp. 2d 1078 (N.D. Ill. October 6, 2008). Non-party to an arbitration cannot be compelled to participate in deposition discovery under Section 7 of the Federal Arbitration Act without the non-party’s consent.

Finality of arbitration award is not arbitrable.

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Federated Rural Electric Ins. Exchange v. Nationwide Mut. Ins. Co., 134 F. Supp. 2d 923 (S.D. Ohio 2001).

Enforcement of subpoena issued by arbitration panel or at its request upheld.

Scandinavian Reinsur. Co. v. Cont’l Cas. Co., No. 04 C 7020 (N.D.Il. 2004), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 15, No. 18 (1/20/05). Arbitration panel can compel non-party witnesses to attend pre-hearing depositions.

Riunione Di Sicurta, SPA v. United Nat’l Ins. Co., No. 01-MC-72 (E.D. Pa. Sept. 20, 2001).

In the Matter of Arbitration Between Security Life Ins. Co. of Am. & Duncanson & Holt, Inc., 228 F.3d 865 (8th Cir. 2000).

Arbitration award in excess of limits of involved treaties upheld.

Employers Ins. of Wausau v. Certain Underwriters at Lloyd’s London, 202 Wis.2d 673, 552 N.W.2d 420 (1996).

Arbitrators may impose equitable solution to reinsurance dispute.

Unigard Security Ins. Co. v. CIGNA Reinsurance Co., 82 F.3d 423 (9th Cir. 1996).

Arbitration award can be judicially reviewed if there are allegations thearbitrators exceeded their authority.

Amerisure Mut. Ins. Co. v. Everest Reinsurance Co., 109 F. Supp. 3d 969 (E.D. Mich. 2015). Finding that although one aspect of the arbitrators’ award exceeded the panel’s authority, the ruling was fully supported by an alternative ground such that the arbitration panel did not exceed its powers.

HCC Aviation Ins. Group v. Employers Reinsurance Co., 2005 WL 2233594 (N.D. Tex. September 13, 2005). Arbitrators exceeded their powers in ordering a reinsurer to indemnify a claims handling facility pursuant to the “law of the case” doctrine, as the issue had been resolved in an earlier stage of the same litigation.

In re Arbitration Between Dow Corning Corp. v. Safety Nat’l Cas. Corp., 335 F.3d 742 (8th Cir. 2003). Arbitrators exceeded their authority in declaring their decision to be binding. The court ruled that according to the agreement between the parties, the arbitration award is non-binding as a matter of law.

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Colonial Penn Ins. Co. v. Am. Centennial Ins. Co., 1997 WL 10004 (S.D.N.Y. 1997), aff’d, 133 F.3d 906 (2nd Cir. 1997).

Executive Life Ins. Co. v. Alexander Ins. Ltd., 999 F.2d 318 (8th Cir. 1993). Found that arbitrators had not exceeded their authority.

Confidentiality of arbitration.

Michigan Millers Mut. Ins. Co. v. Westport Ins. Corp., No. 14‐cv‐00151‐PLM (W.D. Mich. Aug. 21, 2015). Magistrate judge denied motion to maintain under seal certain redacted passages and exhibits to a motion for a partial stay. The decision was based upon movant’s violation of a local rule requiring a party to first seek leave of court before filing documents under seal. The judge also found the movant’s reliance on the protective order entered in the case and a confidentiality order in a pending arbitration unavailing.

Amerisure Mut. Ins. Co. v. Everest Reinsurance Co., 2014 U.S. Dist. LEXIS 153013 (E.D. Mich. Oct. 29, 2014). Granting, in part, the cedent’s request to seal, the court sealed the portions of the final award that identified non-parties to the arbitration. However, the court refused to seal those portions of the final award containing the panel majority’s “discrete substantive rulings.” The reinsurer’s attempt to prevent unhelpful portions of the final award from becoming public in order to avoid its use in future litigation was insufficient harm which justified the entry of a protective order.

Eagle Star Ins. Co. v. Arrowood Indem. Co., 2013 U.S. Dist. LEXIS 135869 (S.D.N.Y. Sept. 23, 2013). Granting intervening parties' (other insurance companies) motion to unseal documents which were filed in support of a petition to confirm the arbitration award and a related motion to dismiss, because right to access judicial documents outweighs a confidentiality agreement where no private interests are threatened.

First State Ins. Co. v. Nat’l Cas. Co., 2013 U.S. Dist. LEXIS 188100 (S.D.N.Y. February 19, 2013). Finding National Casualty failed to overcome the presumption that documents filed in connection with a petition to confirm an arbitration award are subject to public access and denying National Casualty’s motion to seal certain documents submitted in connection with First State’s petition to confirm a final arbitration award.

Swiss Reinsurance Co. Ltd. v. Lincoln Nat’l Reinsurance Co. (Barbados) Ltd., No. 09-cv-00036, (N.D. Ind. Feb. 6, 2009). Court grants reinsurance company’s motion to seal its petition to confirm an arbitral award under the New York Convention.

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Century Indem. Corp. v. Certain Underwriters at Lloyd’s London, No. 08-219, 2009 U.S. Dist. LEXIS 1744 (E.D. Pa. Jan. 12, 2009). Court granted motion to seal the final arbitration award concluding that it was within its discretion to seal award based on significant business, privacy interests.

Nationwide Mut. Ins. Co. v. Randall & Quilter Reinsurance Co., No. C2-07-120, 2008 WL 207854 (S.D. Ohio Jan. 24 2008). Court denied motion to confirm purported interim confidentiality award since no written order was entered and statute of limitations had run since purported confidentiality award was an interim award for which confirmation should have been sought within one year.

TIG Ins. Co. v. AON Re, Inc., 2004 WL 2826395 (N.D. Tex. 2004). Court denied insurer’s motion to file entire summary judgment motion under seal in connection with issues arising from confidential arbitration but allowed insurer to refile it with confidential portions separately compiled.

Trustmark Ins. Co. v. John Hancock Life Ins. Co., 2004 U.S. Dist. LEXIS 10922 (N.D. Ill. 2004). Courts should not include arbitration panel’s reasoning in order confirming arbitration award.

The Travelers Ins. Co. v. Connecticut Gen. Life Ins. Co., 2003 WL 22413681 (Conn. Super. 2003). An agreement between the parties to keep an arbitration award confidential is not sufficient to overcome the presumption favoring public access to judicial records. Preserving the confidentiality of an arbitration award requires a showing of a specific injury.

A court has authority to dismiss arbitration for lack of prosecution.

Windward Agency, Inc. v. Cologne Reinsurance Co., 123 Fed. App’x 481 (3rd Cir. 2005).

Windward Agency Inc. v. Cologne Life Reinsurance Co., 353 F. Supp. 2d 538 (E.D. Pa. 2003).

If party agrees to submit issue to arbitration, it cannot later argue thatarbitrators exceeded their authority in deciding issue.

Sphere Drake Ins. Co. v. All Am. Life Ins. Co., 2004 WL 442640 (N.D. Ill. 2004).

Party-appointed arbitrators can select a non-U.S. umpire.

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Mut. Marine Office, Inc. v. Ins. Corporation of Ireland, 2005 U.S. Dist. LEXIS 11584 (S.D.N.Y. 2005).

Issue of attorney disqualification in an arbitration is appropriately decided by acourt and not the arbitrators.

Utica Mut. Ins. Co. v. Emplrs Ins. Co., 2014 U.S. Dist. LEXIS 132271 (N.D.N.Y Sept. 22, 2014). Court considered whether the cedent’s coverage counsel who represented cedent and negotiated on behalf of cedent in the underlying litigation should be disqualified from representing cedent in the arbitration. However, a decision could not be reached as further discovery was required.

Employers Ins. Co. of Wausau v. Munich Reins. Am., Inc., 2011 U.S. Dist. LEXIS 52048 (S.D.N.Y. May 13, 2011). Dispute over whether retrocedent’s attorney should be disqualified because counsel had previously represented the retrocessionaire in an allegedly substantially similar matter was properly decided by the court and not the panel as this dispute did not arise out of the reinsurance contracts so as to put the matter squarely before the arbitration panel.

Issues of procedural arbitrability are for arbitrators to decide.

Milan Express Co., Inc. v. Applied Underwriters Captive Risk Assur. Co., 590 Fed. App’x 482 (6th Cir. 2014). The lower court issued an order stopping arbitration, finding that Nebraska statutory law made the arbitration clause unenforceable. On appeal, the Sixth Circuit Court found that the clear and unambiguous language of the agreement manifestly intended to submit the threshold question of arbitrability to the arbitrator, not the courts, and therefore vacated the lower court’s order stopping the arbitration. Later proceeding on other issues at Milan Express Co., Inc. v. Applied Underwriters Captive Risk Assur. Co., 2016 WL 407317 (W.D. Tenn. February 2, 2016).

Vesta Fire Ins. Co. v. Employers Reinsurance Corp., No. 3:05-CV-2404-P, 2006 WL 1506949 (N.D. Tex. May 31, 2006), mot. for reconsideration denied, No. 3:05-CV-2404-P (N.D. Tex. June 30, 2006), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 17, No. 7 (08/03/06). Arbitrators, not a court, should decide whether conditions precedent to arbitration have been met, such as whether party’s compliance with statute of limitations on underlying claim is condition precedent to arbitration.

Statute of limitations issues may be decided by the Court, not the arbitrators.

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In re ROM Reinsurance Mgmt. Co. Inc., et al. v. Cont’l Ins. Co., 115 A.D. 3d 480 (N.Y. App. Div. 2014). Remanding an asbestos related reinsurance dispute to the lower court as the parties’ choice of law provision contained in the reinsurance contract in favor of New York law incorporated “New York’s rule that threshold statute of limitations questions are for the courts.” Enforced by, 128 A.D. 3d 570 (N.Y. App. Div. 2015). Decision by lower court that petitioners participated in arbitration when they went through the arbitrator selection process, therefore precluding a stay due to statute of limitations, was proper.

Arbitrators can order the reimbursement of arbitration and attorney fees.

Gen. Sec. Nat’l Ins. Co. v. Aequicap Program Administrators, 785 F. Supp. 2d 411 (S.D.N.Y. 2011). Arbitration panel did not exceed its authority or act with manifest disregard for the law in ordering an award of attorneys fees.

ReliaStar Life Ins. Co. of N.Y. v. EMC Nat’l Life Co., 564 F.3d 81 (2nd Cir. 2009). Second Circuit concludes that the parties’ arbitration agreement was sufficiently broad to confer equitable authority on the arbitrators to sanction a party’s bad faith participation at the arbitration in the form of attorney’s and arbitrator’s fees.

Nat’l Union Fire Ins. Co. of Pittsburgh PA v. Odyssey Am. Reinsurance Corp., No. 05-cv-07539, 2009 U.S. Dist. LEXIS 108318 (S.D.N.Y. 2009). Arbitration panel did not act with manifest disregard of the law in ordering an award of attorneys’ fees.

Certain Underwriters at Lloyd’s London v. Argonaut Ins. Co., No. 04-cv-05852, 2009 U.S. Dist. LEXIS 87827 (N.D. Ill. Sept. 24, 2009).

Newmont U.S.A. Ltd. v. Ins. Co. of N.A., No. 06-cv-01178-ZLW-BNB, 2008 WL 4378777 (D. Colo. Sept. 19, 2008).

Odyssey Reinsurance Corp., et al. v. ACE Prop. & Cas. Ins. Co., 2006 N.Y. Misc. LEXIS 2439 (N.Y. Sup. Ct. 2006). Arbitrators did not exceed authority in ordering reinsurer to reimburse cedent’s arbitration fees from the date of filing of pre-hearing briefs to the date of the arbitration award.

Pre-judgment interest properly decided by arbitrators.

Newmont U.S.A. Ltd. v. Ins. Co. of N.A., No. 06-cv-01178-ZLW-BNB, 2008 WL 4378777 (D. Colo, Sept. 19, 2008).

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Post-judgment interest rate on an arbitration award is a question for the courtand calculated according to federal post-judgment interest statute.

Newmont U.S.A. Ltd. v. Ins. Co. of N.A., No. 06-cv-01178-ZLW-BNB, 2008 WL 4378777 (D. Colo. Sept. 19, 2008).

Post-judgment interest on arbitration award imposed by trial court interfereswith the arbitrator’s jurisdiction and impermissibly modifies the award.

Barnes v. Old Am. Mut. Fire. Ins. Co., 2010 Tex. App. LEXIS 1353 (Tex. App. February 26, 2010), reprinted in Mealey’s Litigation Reports: Reinsurance, Vol. 20, No. 21 (3/5/10).

Arbitrators, not a judge, should decide whether reinsurer can offset sums owedby another reinsurer.

Aegis Security Ins. Co. v. Harco Nat’l Ins. Co., No. 1:CV-06-0606, 2006 WL 1722395 (M.D. Pa. June 22, 2006), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 17, No. 9 (09/07/06).

When arbitration award is ambiguous, issue must be remanded to arbitrationpanel for clarification.

Security Ins. Co. of Hartford, as successor to Fire & Cas. Ins. Co. of Connecticut v. Trustmark Ins. Co., 2006 U.S. Dist. LEXIS 82438 (D. Conn. 2006).

E. Consolidation of Arbitrations

Arbitrations cannot be consolidated if a party objects and the agreement doesnot address consolidation.

Georgia Cas. & Sur. Co. v. Excalibur Reinsurance Corp., 4 F. Supp. 3d 1362, 1371 (D. Ga. 2014). Declining to consolidate two reinsurance arbitrations “because neither contract contains a consolidation clause nor is governed by arbitration law that permits judicial consolidation, . . .”

Employers Ins. Co. of Wausau v. Century Indem. Co., 2005 WL 2100977 (W.D. Wis. 2005), aff’d, 443 F.3d 573 (7th Cir. 2006). Consolidation is a procedural issue to be decided by the arbitrators.

ReliaStar Life Ins. Co. v. Canada Life Assur. Co., 2005 U.S. Dist. LEXIS 4045 (D. Minn. 2005).

Certain Underwriters at Lloyd’s & Excess Ins. Co., Ltd. v. Century Indem. Co., 2005 WL 1941652 (E.D. Pa. 2005).

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ReliaStar Life Ins. Co. v. Am. Healthcare Indem. Co., 2004 U.S. Dist. LEXIS 2649 (D. Minn. 2004).

Employers Ins. of Wausau v. First State Ins. Group, 2004 U.S. Dist. LEXIS 12712 (D. Mass. 2004). It was improper for a party to ask an arbitration panel to override court’s decision to deny consolidation based on subsequent legal developments.

Clarendon Nat’l Ins. Co. v. The John Hancock Life Ins. Co., 2001 U.S. Dist. LEXIS 13736 (S.D.N.Y. 2001).

Hartford Accident & Indem. Co. v. Swiss Reinsurance Am. Corp., 87 F. Supp. 2d 300 (S.D.N.Y. 2000), aff’d in part and rev’d in part, 246 F.3d 219 (2nd Cir. 2001).

Home Ins. Co. v. New England Reinsurance Corp., 1999 WL 681388 (S.D.N.Y. 1999).

Ins. Co. of the State of Pennsylvania v. Am. Alternative Ins. Corp., No. 982947 (Cal. Super., San Francisco Co.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 8, No. 23 (4/16/98).

Am. Centennial Ins. Co. v. Nat’l Cas. Co., 951 F.2d 107 (6th Cir. 1991).

Arbitrations consolidated despite objections and fact that agreement did notaddress consolidation.

Prudential Prop. & Cas. Ins. Co. v. Folksamerica Reinsurance Co., et al., No. 01-3504 (D.N.J. 2001), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 12, No. 11 (10/4/01).

Gen. & Cologne Life Re of Am. v. Connecticut Gen. Life Ins. Co., et al., No. 600278 (N.Y.Sup. 2001), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 12, No. 8 (8/16/01). A party may arbitrate its claims arising from its participation as both a retrocessionaire and a retrocedent in one consolidated proceeding.

Interstate Fire & Cas. Co. v. Ameristar Ins. Services, Inc., 2000 WL 984290 (N.D.Ill. 2000).

Connecticut Gen. Life Ins. Co. v. Sun Life Assurance Co. of Canada, 210 F.3d 771 (7th Cir. 2000).

Arbitration consolidated where agreement addresses consolidation.

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Bank of Am., N.A. v. Diamond State Ins. Co., Ltd., 2002 U.S. Dist. LEXIS 23225 (S.D.N.Y. 2002).

Parties’ “informal agreement” to litigate actions simultaneously warrantsconsolidation even though no explicit agreement to consolidate.

Philadelphia Reinsur. Corp. v. Employers Ins. of Wausau, 2003 U.S. App. LEXIS 6198 (3d Cir. 2003).

Question of whether disputes arising from multiple reinsurance contracts shouldbe resolved in a single arbitration should be submitted to arbitrators, not acourt.

Granite State Ins. Co. v. Clearwater Ins. Co., 2013 U.S. Dist. LEXIS 118413 (N.D. Cal. Aug. 19, 2013).

Arrowood Indem. Co. v. Harper Ins. Co., 2012 U.S. Dist. LEXIS 5840 (W.D. N.C. Jan. 19, 2012).

IRB-Brasil Resseguros S.A. v. Nat’l Indem. Co., 2011 U.S. Dist. LEXIS 116664 (S.D.N.Y. October 5, 2011). Later proceeding on other issues at 2011 U.S. Dist. LEXIS 136640 (S.D.N.Y. November 29, 2011).

Allstate Ins. Co. v. Liberty Mut. Ins. Co., 2011 U.S. Dist. LEXIS 53608 (D. Mass. May 19, 2011). Determination of whether to consolidate the two arbitrations is a procedural matter for the arbitration panel, not the court, to decide.

Dorinco Reinsurance Co. v. Ace Am. Ins. Co., No. 07-12622, 2008 WL 192270 (E.D. Mich. Jan. 23, 2008).

Certain Underwriters at Lloyd’s London, et al. v. Westchester Fire Ins., 489 F.3d 580 (3d Cir. 2007).

Markel Int’l Ins. Co. v. Westchester Fire Ins. Co., 442 F. Supp. 2d 200 (D.N.J. 2006).

Allstate Ins. Co. v. Global Reinsurance Corp., 2006 WL 2289999 (S.D.N.Y. 2006).

Certain Underwriters at Lloyd’s London v. Cravens Dargan & Co., Pacific Coast, 197 Fed. App’x 645 (9th Cir. 2006).

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F. Motion to Confirm, Vacate, or Modify Arbitration Award

Parties may not expand grounds for the vacatur or modification of an arbitrationaward as §§ 10 and 11 of the Federal Arbitration Act provide the exclusivegrounds for vacating, modifying or correcting an arbitration award.

Sotheby’s Int’l Realty, Inc. v. Relocation Group, LLC, 588 Fed. App’x 64 (2d Cir. 2015). The Second Circuit reversed the lower court’s decision to vacate the arbitration panel’s award using the doctrine of “manifest disregard of the law.”

Ario, Ins. Comm’r of the Commonwealth of Pennsylvania v. The Underwriting Members of Syndicate 53 at Lloyd’s for the 1998 Year of Account, 618 F. 3d 277 (3d Cir. 2010). Absent a clear intent to apply the PUAA (Pennsylvania Uniform Arbitration Act) in the reinsurance agreement, the FAA vacatur standards apply.

Hall Street Associates L.L.C. v. Mattel, Inc., 128 S. Ct. 1396 (2008), on remand at 9th Cir., resubmitted to district court at 531 F.3d 1019 (9th Cir. 2008).

The FAA provides the exclusive means of addressing and redressingwrongdoing in an arbitration proceeding.

Arrowood Indem. Co. v. Equitas Ins. Ltd., 2015 WL 2258260 (S.D.N.Y. May 14, 2015). The court rejected the reinsurers’ attempt to avoid the FAA’s three‐month deadline to file a challenge to an arbitration award by claiming the cedent’s alleged misconduct “continued” into the judicial proceeding confirming the award. The reinsurers brought the motion pursuant to Fed. R. Civ. Pro. 60(b)(3), alleging misconduct by the cedent in procuring the confirmation of the arbitration award. The court rejected the reinsurers’ argument that the challenge related to the judicial proceeding, finding that the FAA is the exclusive means of addressing and redressing alleged wrongdoing in an arbitration proceeding. Related proceeding at 2015 WL 4597543 (S.D.N.Y. July 30, 2015) (“[s]uch arbitral mulligans are forbidden by the FAA”) ‐‐ notice of appeal filed August 28, 2015.

The venue provisions of the FAA are “permissive,” permitting a motion toconfirm, vacate or modify an arbitration award to be brought either where theaward was made or “in any district proper” under the FAA’s general venuestatute.

Cortez Byrd Chips, Inc. v. Bill Harbert Construction Co., 529 U.S. 193 (2000). Arbitration award confirmed.

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Arbitration award confirmed.

Liberty Mut. Ins. v. Nationwide Mut. Ins. Co., 31 N.E.3d 1192 (Mass. App. Ct. 2015) (unpublished). Affirmed order confirming an arbitration award which found that the access to records provision did not include right to documents protected by the attorney‐client privilege or work product doctrine.

Certain Underwriters at Lloyd’s, London v. Transport Ins. Co., No. 1:15‐cv‐12313 (D. Mass. Nov. 20, 2015). Granted London syndicates’ motion to confirm an award after a dispute arose regarding a revised billing, resulting in the issuance of a final award that incorporated the panel’s interim ruling by reference.

Nat’l Cas. Co. v. Allianz Global Corp. & Specialty Co., No. 15‐cv‐00185 (W.D. Wis. April 14, 2015). Confirming award pursuant to the parties’ stipulation for entry of an order and order confirming final award and judgment.

First State Ins. Co. v. Nat’l Cas. Co., 781 F.3d 7, 13 (1st Cir. 2015). Finding that the arbitration panel did not exceed its authority and confirming the arbitration panel’s contract interpretation award. Noting, “[a] federal court’s authority to defenestrate an arbitration award is extremely limited.”

First State Ins. Co. v. Nationwide Mut. Ins. Co., 2015 WL 1387830 (D. Mass. March 25, 2015). Confirming the award and treating First State’s motion to confirm the Phase II Award as seeking confirmation of the full award.

Liberty Mut. Ins. Co. v. R&Q Reinsurance Co., No. 14‐cv‐13306 (D. Mass. March 20, 2015). Confirming an arbitration award that was not disputed and had been satisfied.

Amerisure Mut. Ins. Co. v. Everest Reinsurance Co., 109 F. Supp. 3d 969 (E.D. Mich. 2015). Finding that Everest was not denied a fair arbitration hearing and granting Amerisure Mutual Insurance Company’s motion to confirm a $14 million arbitration award.

Employers Ins. of Wausau v. Nutmeg Ins. Co., et al., No. 14‐CV‐9284 (S.D.N.Y. March 10, 2015). Granting Employers Insurance Company of Wausau’s motion to confirm an interim arbitration order.

Employers Ins. Co. of Wausau v. Cont’l Cas. Co., No. 14‐CV‐09192 (S.D.N.Y. February 20, 2015). Judgment entered confirming an

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arbitration panel’s $337,954.94 reinsurance arbitration award against Continental Casualty Company following Continental’s failure to respond to the petition to confirm the award.

Clearwater Ins. Co. v. Granite State Ins. Co., 2015 WL 500184 (S.D.N.Y. February 5, 2015). Granting Clearwater’s unopposed petition to confirm an arbitration award, but directing the parties to submit additional briefing to determine whether various materials should remain sealed.

Cont’l Ins. Co. v. Transatlantic Reinsurance Co., No. 14‐CV‐9285 (E.D. Ill. January 27, 2015). Confirming the final arbitration award in favor of cedent, Continental Insurance Company.

Associated Industries Ins. Co., Inc. v. Excalibur Reinsurance Corporation, 2014 U.S. Dist. LEXIS 169163 (S.D.N.Y. November 26, 2014). Confirmed an arbitration award and denied a petition to partially vacate an award holding that the Arbitration “Panel did not ‘manifestly’ disregard the follow-the-fortunes doctrine or exceed its authority.” The court held that parties should not be “heard to complain when the arbitrators do what arbitrators so often do – reach compromise verdicts that can easily be justified by taking a particular view of the evidence.”

Am. Home Assurance Co. v. Employers Ins. Co. of Wausau, 2014 WL 9866871 (S.D. N.Y March 13, 2014). Confirming an arbitration award finding the reinsurer’s position that it fully complied with the award was irrelevant.

R&Q Reinsurance Co. v. Utica Mut. Ins. Co., 18 F. Supp. 3d 389 (S.D. N.Y. 2014). Finding the parties “tasked the arbitral panel with resolving their dispute at a conceptual [i.e. the handling of future asbestos losses], rather than mathematical level” and therefore in confirming the award, the court rejected the reinsurer’s argument that the award was not final because it did not specify the amount owed to the cedent.

Everest Reinsurance Co. v. Nat’l Union Fire Ins. Co. of Pittsburgh, P.A., No. 14-CV-00065 (S.D. N.Y. March 14, 2014). Granting an unopposed petitionto confirm the arbitration award.

Platinum Underwriters Berm., Ltd. v. Excalibur Reinsureance Corp., 2013 U.S. Dist. LEXIS 98671 (E.D. Pa. July 15, 2013). Confirming an arbitration award because the arbitrators did not "exceed their powers" where award was derived from the applicable contract.

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Arrowood Indem. Co. v. Trustmark Ins. Co., 938 F. Supp. 2d. 267 (D. Conn. March 29, 2013). Upholding a prior confirmation of an arbitration award and declining to adopt a magistrate’s recommendation to remand the dispute back to the panel, a third time, aff’d at 560 Fed. App’x 75 (2d Cir. 2014).

Aurum Asset Managers, LLC v. Banco Do Estado Do Rio Grande Do Sol, No. 08-mc-102 (E.D. Pa. June 26, 2012). Granting a motion to confirm an arbitration award in favor of the assignee of various reinsurance assets and against reinsurers.

Am. Centennial Ins. Co. v. Global Int’l Reinsurance Co., Ltd., 2012 U.S. Dist. LEXIS 94754 (S.D.N.Y. July 9, 2012). Granting a cross-petition to confirm an arbitration award based upon the reinsured’s failure to proffer a basis to vacate the panel’s rulings under the FAA or the New York Convention.

ACE Prop. & Cas. Ins. Co. v. Global Reinsurance Corp. of Am., U.S. Branch, 11 Civ. 6945 (S.D.N.Y. July 25, 2012), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 23, No. 7 (8/3/12). Granting the reinsured’s petition to confirm an arbitration award under the FAA.

Aioi Nissay Dowa Ins. Co. Ltd. v. Prosight Specialty Mgmt. Co., Inc., et al., 2012 U.S. Dist. LEXIS 118233 (S.D.N.Y. August 21, 2012). Granting the reinsurer’s petition to confirm the arbitration award finding no basis to vacate under the New York Convention or the FAA.

AXA Vericherung AG v. N.H. Ins. Co., et al., 12-cv-6009 (S.D.N.Y. September 5, 2012). Granting the reinsurer’s (unopposed) petition to confirm the arbitration award under the United Nations Convention and the FAA. Later proceeding on other issues at 962 F. Supp. 2d 509 (S.D.N.Y. 2013).

Century Indem. Co. v. AXA Belgium, 2012 U.S. Dist. LEXIS 136472 (S.D.N.Y. September 24, 2012). Granting the petition to confirm an arbitration award wherein the parties had “overlapping liability to one another for certain insurance and reinsurance obligations.”

ACE Am. Ins. Co., et al. v. Christiana Ins. LLC, 2012 U.S. Dist. LEXIS 51863 (S.D.N.Y. April 12, 2012). Panel’s refusal to hear evidence as to prior course of conduct or apply a specific burden of proof standard did not warrant vacatur, as long as the panel was even arguably acting within its scope of authority.

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Century Indem. Co. v. Certain Underwriters at Lloyd’s London, et al., 2012 U.S. Dist. LEXIS 4237 (S.D.N.Y. January 10, 2012). Granting cross-petitions to confirm the arbitration awards finding no basis “for vacating, modifying, or correcting any portion of the awards.”

Century Indem. Co. v. Certain Underwriters at Lloyd’s London, 2011 U.S. Dist. LEXIS 55056 (S.D.N.Y. May 22, 2011).

Gen. Security Nat’l Ins. Co. v. Aequicap Program Administrators, 785 F. Supp. 2d 411 (S.D.N.Y. April 29, 2011).

Century Indem. Co. v. Clearwater Ins. Co., 2011 U.S. Dist. LEXIS 153293 (S.D.N.Y. March 30, 2011). Court confirmed cedent’s award granting interest payments and declaratory relief because reinsurer failed to move to vacate, modify, or correct the award within the time period provided under the FAA.

Century Indem. Co., et al. v. Tokio Re Corporation for & on behalf of Tokio Re Marine & Nichido Fire Ins. Co., No. 10-cv-02064 (D. D.C. March 18, 2011), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 21, No. 23 (4/1/11).

ACE Prop. & Cas. Ins. Co. v. AXA Re, 2012 U.S .Dist. LEXIS 2360 (S.D.N.Y. January 9, 2011).

Pacific Employers Ins. Co. v. Global Reinsurance Corp. of Am., 11 Civ. 6301 (S.D.N.Y. December 9, 2011), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 22, No. 16 (12/23/11).

Century Indem. Co. v. Equitas Ins. Ltd, et al., 2011 U.S. Dist. LEXIS 112852 (S.D.N.Y. September 27, 2011). Court granted unopposed petition for confirmation of arbitration award and struck the cross-petition to confirm the arbitration award on the grounds that it constituted “redundant, immaterial, and impertinent matter” under Fed. R. Civ. P. 12(f).

Harper Ins. Ltd. v. Century Indem. Co., 819 F. Supp. 2d 270 (S.D.N.Y 2011). Court confirms arbitration award despite panel’s issuance of remedy not specifically requested by party.

OneBeacon Am. Ins. Co. v. Swiss Re. Am. Corp., 2010 U.S. Dist. LEXIS 136039 (D. Mass. Dec. 23, 2010). Court denied an insurer’s motion to vacate an arbitration award, holding that the arbitration panel was within its discretion to limit discovery regarding industry custom and practice

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regarding aggregation of asbestos, non-products claims, and, in so doing, did not deprive OneBeacon of a “full and fair hearing”.

R&Q Reinsurance Co. v. Am. Motorist Ins. Co., 2010 U.S. Dist. LEXIS 109349 (N.D. Ill. Oct. 14, 2010). Motion to vacate untimely (filed one day after the “three-month” deadline, see 9 U.S.C. § 12). Moreover, the fact that the panel did not provide a detailed explanation did not, by itself, disqualify the award from being a “reasoned award.”

First Automotive Service Corporation, N.M., etc., et al., v. First Colonial Ins. Co., etc., et al., 2010 U.S. Dist. LEXIS 66974 (M.D. Fla. June 16, 2010). Award confirmed pursuant to 9 U.S.C. § 9. Request for Rule 11 sanction in the district court, however, denied insofar as the arguments supporting the unsuccessful motion to vacate were not frivolous.

Clarendon Am. Ins. Co., et al. v. Am. Constantine Ins. Co., No. 10-cv-02928 (S.D.N.Y. June 8, 2010). Court confirmed the arbitration panel’s nearly $7 million award and entered judgment against the reinsurer.

Mut. Marine Office, Ins. v. Transfercom Ltd., No. 08-cv-10367, 2009 U.S. Dist. LEXIS 31739 (S.D.N.Y. April 15, 2009), reprinted in Mealey’s Litigation Reports: Reinsurance, Vol. 20, No. 1 (5/01/09).

Global Reinsurance Corp. v. Argonaut Ins. Co., 634 F. Supp. 2d 342 (S.D.N.Y. 2009); 2009 U.S. Dist. LEXIS 37460 (March 23, 2009). Holding that there was no “manifest disregard of the law” since the Panel found that the claims at issue were covered by the original reinsurance contracts, and thus, the panel properly applied the “follow-the-fortunes/follow-the-settlements” doctrine to the scope of the retrocession agreements.

Global Reinsurance Corp – U.S. Branch v. Argonaut Ins. Co., No. 08 Civ. 8482, 2009 U.S. Dist. LEXIS 47860 (S.D.N.Y. May 22, 2009).

TIG Ins. Co. v. Global Int’l. Reinsurance Co., 08 Civ. 7338, 09 Civ. 1289, 640 F. Supp. 2d 519 (S.D.N.Y. Aug. 7, 2009). Arbitrator’s decision entitled to “great deference,” and only a narrow set of circumstances warrant vacatur.

Ario v. Cologne Reinsurance (Barbados), Ltd., 2009 U.S. Dist. LEXIS 106133 (M.D. Pa. Nov. 13, 2009). Confirming the award and finding no evidence of “evident partiality” by the arbitrators.

Certain Underwriters at Lloyd’s London v. Argonaut Ins. Co., No. 04-cv-05852, 2009 U.S. Dist. LEXIS 87827 (N.D. Ill. Sept. 24, 2009). Confirming

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the panel award, the court found that a prior judicial ruling on Rule 11 sanctions does not hinder panel’s authority to award attorneys’ fees in reinsurance dispute.

Trustmark Ins. Co. v. Claredon Nat’l Ins. Co., No. 09-cv-01673, 2009 U.S. Dist. LEXIS 109414 (N.D. Ill. Nov. 20, 2009). Arbitration award confirmed with court declining to rule on potential set-off calculations as outside the scope of its authority under the FAA.

Clearwater Ins. Co. et al., v. Various London Market Reinsurers, No. 08-cv-8695 (S.D.N.Y. Feb. 4, 2009). Court confirms arbitration award, and rules that the award shall be several among respondents and less amounts previously paid by certain respondents.

Century Indem. Co. v. Fencourt Reinsurance Co., Ltd., 640 F. Supp. 2d 626 (E.D. Pa. July 22, 2009). Motion to vacate single paragraph of arbitration award was denied as panel’s interpretation of ambiguous reinsurance language not “completely irrational.”

Century Indem. Co. v. Certain Underwriters at Lloyd’s London, 584 F.3d 513 (3rd Cir. 2009).

Nationwide Mut. Ins. Co. v. Westchester Fire Ins. Co., No. 08-00673, (W.D. Wis. Feb. 3, 2009). Court confirms final arbitration award after receiving proof of diversity of citizenship. Court also seals the order to comply with the confidentiality order entered by the arbitration panel.

Associated Int’l Ins. Co. v. Montenegro Re, Ltd., No. B203064, 2008 Cal. App. Unpub. LEXIS 10329 (Cal. App. Dec. 22, 2008).

Commercial Union Ins. Co. v. Lines, No. 02-cv-0573, 2008 U.S. Dist. LEXIS 42789 (S.D.N.Y. May 30, 2008), Aff’d by 2009 U.S. App. LEXIS 22270 (2nd Cir. October 9, 2009). Court confirmed arbitration awards between an insured, its captive insurer and reinsurer even though the cedent had re-domesticated to avoid being liquidated.

Wellpoint Health Networks v. John Hancock Life Ins. Co., 547 F. Supp. 2d 899 (N.D. Ill. 2008). Court confirmed arbitration award rejecting objection based on replacement of party-appointed arbitrator. Aff’d by 576 F.3d 643 (7th Cir. 2009), rehearing denied at 2009 U.S. App. LEXIS 21265 (7th Cir. Ill. Sept. 22, 2009).

Employers Surplus Lines Ins. Co. v. Global Reinsurance Corp., No. 7-cv-254 2008 WL 337317 (S.D.N.Y. 2008). A Partial Final Award did not render

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the arbitrator functus officio so as to prevent him from reconsidering that finding and issuing a Final Award.

Global Reinsurance Corp. v. Argonaut Ins. Co., 548 F. Supp. 2d 104 (S.D.N.Y 2008). Motion to confirm a final award as clarified by the panel in a later order granted.

Nationwide Mut. Ins. Co. v. Randall & Quilter Reinsurance Co., No. C2-07-120, 2008 WL 207854 (S.D. Ohio Jan. 24 2008). “Final and binding” language in a reinsurance contract constitutes consent to judicial confirmation of the arbitration award.

HCC Aviation Ins. Group, Inc. v. Universal Loss Management Inc., No. 05-11118; 2007 WL 1879322 (5th Cir. June 28, 2007). Vacatur of award reversed since any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.

Sphere Drake Ins. Ltd. v. Lincoln Nat’l Life Ins. Co., 2006 WL 2699270 (N.D. Ill. 2006). Arbitration Panel’s decision to apply collateral estoppel to prevent an insurer from re-litigating claims is not outside the parameters of due process.

Koken v. LDG Re Corp., 2006 WL 3857489 (E.D. Pa. 2006).

HSN Capital LLC [UAS] v. Productora Y Comercializador De television, S.A. De C.V. [Mexico], 2006 U.S. Dist. LEXIS 45289 (M.D. Fla. 2006). Fact that arbitrator and counsel for prevailing party had limited contact at professional functions in the past was not sufficient to merit vacatur of the arbitration award. (08/03/06).

Mut. Marine Office, Inc. v. Alea Europe Ltd. (f/k/a Rhine Reinsurance Co. Ltd.), No. 06 Civ. 0872 (S.D.N.Y. March 14, 2006), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 16, No. 22 (03/16/06).

Burlington Ins. Co. v. Trygg-Hansa Ins. Co., AB, No. 1:99CV00334, 2006 WL 1367418 (M.D. N.C. May 16, 2006). Arbitration award construed as setoff of sums owed by cedents to reinsurer against sums reinsurer owed cedents pursuant to previous award.

Industrial Risk Insurers v. Hartford Steam Boiler Inspection & Ins. Co., No. CV030823599, 2006 WL 1000061 (Conn. Super. Ct. Mar. 27, 2006).

Puerto Rico Telephone Co. v. U.S. Phone Manufacturing Corp., 427 F.3d 21 (1st Cir. 2005). Motion to vacate not in order when party’s objections to the arbitration are essentially disagreements with arbitrator

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conclusions. Parties must be explicit if they intend to subject an arbitration award to different standards of review than what was provided in the Federal Arbitration Act.

Cont’l Cas. Co. v. Scandinavian Reinsurance Co., 2005 WL 2171187 (N.D. Ill. August 30, 2005). Court upholds arbitration award not awarding monetary damages because it was issued as a declaratory judgment.

Nat’l Cas. Co. v. First State Ins. Group, 2005 U.S. App. LEXIS 26273 (1st Cir. 2005). Arbitration award upheld despite cedent’s refusal to comply with panel’s discovery order.

Industrial Risk Insurers v. Hartford Steam Boiler Inspection & Ins. Co., 273 Conn. 86 (2005).

United States Life Ins. Co. v. Superior Nat’l Ins. Co., No. CV-07-00850-VBF (C.D. Cal. 2007), aff’d at 591 F.3d 1167 (9th Cir. 2010) (“Phase II” – addressing improper claims handling)

United States Life Ins. Co. v. Superior Nat’l Ins. Co., No. CV 05-678-GLT (C.D. Cal. 2005), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 16, No. 2 (05/26/05), aff’d, 160 Fed. App’x 559 (9th Cir. 2005) (“Phase I” – addressing contract reformation and rescission).

Sompo Japan Ins., Inc. v. Fortress Re, Inc., No. 1:03CV1208 (M.D.N.C. 2004).

Nationwide Mut. Ins. Co., v. the Home Ins. Co., No. C2-03933 (S.D. Ohio 2004), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 15, No. 11 (10/07/04), aff’d, 429 F.3d 640 (6th Cir. 2005).

Fid. Fed. Bank v. Durga Ma Corp., Nos. 02-56381, 56548 (9th Cir. 2004). Party with constructive knowledge of arbitrator’s partiality waives right to challenge such partiality if it fails to object to the arbitrator’s appointment until after the award is issued.

LDG Re v. Reliance Ins. Co., No. 04-1419 (E.D. Pa. 2004), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 15, No. 5 (7/8/04).

Sphere Drake Ins. Co. v. All Am. Life Ins. Co., 2004 WL 442640 (N.D. Ill. 2004). Factual or legal errors by arbitrators do not authorize courts to annul arbitration awards. Arbitrators may rely on position papers as judicial admissions.

Trustmark Ins. Co. v. John Hancock Life Ins. Co., 2004 U.S. Dist. LEXIS 10922 (N.D. Ill. 2004).

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RGA Reinsurance Co. v. Ulico Cas. Co., 355 F.3d 1136 (8th Cir. 2004).

Colmar Ltd. v. FreemantleMedia North Am., 344 Ill. App. 3d 977 (1st Dist. 2003).

UnionAmerica Ins. Co. v. Allstate Ins. Co., No. 03 C 7400 (N.D. Ill. 2004), 2004 U.S. Dist. LEXIS 458. Party cannot seek to modify previous arbitration award or remedy its alleged defects once deadline for appeal has passed, but party may pursue arbitration of disputes as to its application to new situations which original arbitrators did not contemplate.

Houston Gen. Ins. Co. v. Certain Underwriters at Lloyd’s London, 2003 U.S. Dist. LEXIS 19516 (S.D.N.Y. 2003).

Certain Underwriters at Lloyd’s, London v. BCS Ins. Co., 239 F. Supp. 2d 812 (N.D. Ill. 2003).

Banco de Seguros Del Estado v. Mut. Marine Offices, Inc., 2003 U.S. Dist. LEXIS 8169 (S.D.N.Y. 2003).

Crye-Leike, Inc. v. Darren Thomas, 196 F. Supp. 2d 680 (W.D.Tenn. 2002).

Koken v. Legion Ins. Co., No. 183 M.D. 2002 (Pa. Comm., Middle Dist.), reprinted in, Mealey’s Litigation Report, Reinsurance, Vol. 13, No. 12 (10/17/02).

Banco de Seguros Del Estados v. Mut. Marine Offices, Inc., 2002 U.S. Dist. LEXIS 14472 (S.D.N.Y. 2002) motion for reconsideration denied, 2002 U.S. Dist. LEXIS 16980 (S.D.N.Y. 2002). Interim arbitration order requiring a party to post pre-judgment security is reviewable under the Inter-American Convention. Judge confirmed interim award ordering reinsurer to post more than $700,000 in prejudgment security.

Bowen v. Amoco Pipeline Co., 254 F.3d 925 (10th Cir. 2001).

New England Reinsurance Corp. v. Dunav Reinsurance Co., No. 01-1232 (D.Mass. 2001), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 12, No. 18 (1/24/02).

Southwire Co. NSA, Ltd. et al. v. Am. Arbitration Association, et al., 248 Ga.App. 226, 545 S.E.2d 681 (Ga. App. 4th Div. 2001).

In the Matter of the Arbitration Between Cragwood Managers, L.L.C. & Reliance Ins. Co., 132 F. Supp. 2d 285 (S.D.N.Y. 2001).

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Federated Rural Electric Ins. Exchange v. Nationwide Mut. Ins. Co., 134 F. Supp. 2d 923 (S.D. Ohio 2001). Reinsurer barred from challenging an arbitration award issued in favor of cedent because its motion to vacate or modify was not filed within three months after the award was filed and court found that arbitration award was not in manifest disregard of the law where the arbitration panel relied on trial court’s unpublished opinion for support.

In re Liquidation of Inter-Am. Ins. Co. of Illinois, 329 Ill. App. 3d 606 (2002).

Am. Nat’l Ins. Co. v. Everest Reinsurance Co., 180 F. Supp. 2d 884 (S.D. Texas 2001).

Industrial Risk Insurers v. Hartford Steam Boiler Inspection & Ins. Co., 258 Conn. 101, 779 A.2d 737 (Conn. 2001).

First State Ins. Co. v. Banco De Seguros Del Estado, 254 F.3d 354 (1st Cir. 2001). Court confirmed award in favor of cedent stating that reinsurer clearly failed to meet its burden of establishing lack of proper notice under Article V(1)(b) of the Convention of Recognition & Enforcement of Foreign Arbitral Awards.

Investors Equity Life Ins. Co. v. ADM Investor Services, Inc., 1 Fed. App’x 709 (9th Cir. 2001).

Northwestern Nat’l Ins. Co. v. Generali Mexico Compania de Seguros, S.A., 2000 WL 520638 (S.D.N.Y. 2000), reh’g denied, 2000 WL 702996(S.D.N.Y. May 30, 2000).

British Ins. Co. of Cayman v. Water Street Ins. Co., 93 F. Supp. 2d 506 (S.D.N.Y. 2000).

Nationwide Mut. Ins. Co. v. The Home Ins. Co., 90 F. Supp. 2d 893 (S.D. Ohio 2000).

Employers Ins. of Wausau v. Banco de Seguros Del Estado, 199 F.3d 937 (7th Cir. 1999).

In Re: Global Reinsurance Corp. v. Yasuda Fire & Marine Ins. Co., 1999 U.S.Dist. LEXIS 11480 (S.D.N.Y. 1999).

Industrial Risk Insurers v. Hartford Steam Boiler Inspection & Ins. Co., 1999 Conn.Super. LEXIS 1240 (Conn. Super. Ct. Apr. 29, 1999), 258 Conn. 101, 779 A.2d 737 (Conn. 2001).

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St. Paul Fire & Marine Ins. Co. v. Employers Reinsurance Corp., No. 94 Civ. 9283 [SS], (S.D.N.Y.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 9, No. 18 (1/28/99).

North River Ins. Co. v. Philadelphia Reinsurance Corp., 63 F.3d 160 (2nd Cir. 1995), cert. denied, 516 U.S. 1184, 116 S.Ct. 1289 (1996), on remand, 1998 WL 78177 (S.D.N.Y 1998).

Arbitration award confirmed in part.

Nationwide Mut. Ins. Co. v. First State Ins. Co., 213 F. Supp. 2d 10 (D.Mass. 2002).

D&E Construction Co., Inc. v. Robert J. Denley Co., Inc., 38 S.W.3d 513 (Tenn. 2001).

Clarendon Nat’l Ins. Co. v. TIG Reinsurance Co., 183 F.R.D. 112 (S.D.N.Y. 1998).

Arbitration award vacated in part.

Nationwide Mut. Ins. Co. v. Liberty Mut. Ins. Co., 57 F. Supp. 3d 112 (D. Mass. Nov. 6, 2014). Motion to vacate the arbitration panel’s emailed clarification of its initial Award was granted as the motion to clarify was not timely made under Massachusetts law.

Amerisure Mut. Ins. Co. v. Global Reinsurance Corp. of Am., f/k/a Gerling Global Reinsurance Corp. of Am., 927 N.E.2d 740 (Ill. App. 2010). Portion of arbitration award vacated for gross error of law in awarding attorney fees under 215 ILCS 5/155 (Illinois Insurance Code) as the authority to award such fees is explicitly and exclusively vested within the circuit court. Reh’g denied at 2010 Ill. App. LEXIS 461 (1st Dist. Apr. 15, 2010); appeal denied at 237 Ill. 2d 551 (2010).

Koken v. Cologne Reinsurance (Barbados) Ltd., 2006 WL 2460902 (M.D. Pa. 2006). Portion of arbitration award that allowed reinsurer to enforce a stop-loss agreement with a now-insolvent insurer is void as it violates applicable insurance law.

Arbitration award vacated.

PoolRe Ins. Corp. v. Organizational Strategies, Inc., et al., 783 F.3d 256 (5th Cir. 2015). Vacating an arbitration award where arbitrator was not appointed under the method provided in certain of the contracts at issue and was rendered in excess of the arbitrator’s jurisdiction by

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requiring that all disputes be submitted to the ICC which was contrary to the contract.

PMA Capital Ins. Co. v. Platinum Underwriters Bermuda, Ltd., No. 09-mc-0084, 2009 U.S. Dist. LEXIS 85046 (E.D. Pa. Sept. 15, 2009). Arbitration award vacated as completely irrational for eliminating key provisions of the reinsurance agreement and awarding relief not sought, aff’d 2010 U.S. App. LEXIS 23222 (3d Cir. Nov. 8, 2010).

Certain Interested Underwriters at Lloyd’s v. Pinehurst Accident Reinsurance Group, No. 08-2950, 2009 U.S. Dist. LEXIS 47443 (D.N.J. Jun. 4, 2009). After vacating a previous confirmation order of an arbitration award and remanding back to the arbitrator for clarification of the award, Court granted motion for reconsideration and certified specific questions to the arbitration panel to clear up any ambiguities in the award.

Scandinavian Reinsurance Co. v. St. Paul Fire & Marine Inc. Co., 732 F. Supp. 2d 293 (S.D.N.Y. 2010). Evident partiality existed sufficient to vacate an arbitration award based on the arbitrators’ failure to disclose their involvement in prior arbitrations involving similar issues and related witnesses. Rev’d & remanded, 668 F.3d 60 (2d Cir. Feb. 3, 2012). The Second Circuit disagreed and found that the facts not disclosed by the arbitrators were not a material conflict of interest.

Burlington Ins. Co. v. Trygg-hansa Ins. Co. AB, 261 Fed. App’x 631 (4th Cir. Jan. 17, 2008). Vacating order granting motion to confirm an arbitration award because the award remained ambiguous despite previous attempts at clarification.

Olsen v. U.S. ex rel. U.S. Dept. of Agric., 546 F. Supp. 2d 1122 (E.D. Wash. 2008), aff’d by 334 Fed. App’x 834 (9th Cir. Wash. 2009). Arbitration award was vacated for lack of jurisdiction when government reinsurer was neither a party to the contract containing the arbitration provision, nor in privity with the insured.

ACandS, Inc. v. Travelers Ins. Co., 435 F.3d 252 (3d Cir. 2006). Arbitration award vacated as violating automatic stay provision of Bankruptcy Code where party filed for bankruptcy after arbitration panel was constituted, but before award issued.

HCC Aviation Ins. Group v. Employers Reinsurance Co., 2005 WL 2233594 (N.D. Tex. September 13, 2005). Arbitrators exceeded their powers in ordering a reinsurer to indemnify a claims handling facility pursuant to the “law of the case” doctrine, as the issue had been resolved in an earlier stage of the same litigation.

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Garamendi v. California Compensation Ins. Co., No. B177760, Cal.App., 2nd Dist., reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 16, No. 18 (01/19/06).

Encyclopaedia Universalis DS.A. v. Encyclopedia Britannica Inc., No. 03-Civ. 4363 [SAS], (S.D.N.Y. 2003), 2003 LEXIS 21850, aff’d 2005 U.S. App. LEXIS 5157 (2nd Cir. 2005). An arbitral tribunal that was improperly composed has no power to bind the parties; any assertion of such power exceeds its mandate.

Certain Underwriters at Lloyd’s London v. Argonaut Ins. Co., 264 F. Supp. 2d 926 (N.D.Cal. 2003). Arbitration panel’s award of sanctions against reinsurers had no basis in the reinsurance treaty or the Federal Arbitration Act.

Schmitz v. Zilveti, 20 F.3d 1043 (9th Cir. 1994). Arbitrator was “evidently partial.”

Court could not confirm foreign arbitration award due to lack of subject matterjurisdiction.

Czarina, LLC v. W.F. Poe Syndicate, 358 F.3d 1286 (11th Cir. 2004).

Petition to confirm arbitration orders issued during ongoing arbitration denied.

First State Ins. Co. v. Nationwide Mut. Ins. Co., 2014 U.S. Dist. LEXIS 149649 (D. Mass. Oct. 21, 2014), on reconsideration at 2015 U.S. Dist. LEXIS 37774 (D. Mass. Mar. 25, 2015). The court found, and reaffirmed, that the original petition to confirm an arbitration award was premature because the award to be confirmed only resolved issues relating to contract interpretation and the panel expressed no intention in the award to resolve all claims submitted for arbitration. However, because the arbitration had been concluded and a final award had been issued by the time the court made its October 21, 2014 ruling, dismissal was improper.

Nat’l Cas. Co. v. Cont’l Cas. Co., et al., No. 13C 6590 (N.D. Ill. March 6, 2014). Invoking judicial review of certain arbitration panel orders while the remainder of the arbitration is pending is not a “sensible or efficient way to proceed.”

Petition to confirm interim arbitration award granted.

Companion Prop. & Cas. Ins. Co. v. Allied Provident Ins., Inc., 2014 U.S. Dist. LEXIS 136473 (S.D.N.Y. Sept. 26, 2014). The court determined it was

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authorized to confirm the arbitration panel’s interim award for prehearing security, particularly where the reinsurer simply ignored the panel’s ruling, leaving the cedent with no choice but to petition the court to confirm the award. Furthermore, failure to hold a hearing was not fundamentally unfair where hearing was not requested.

Motion denied based on lack of subject matter jurisdiction.

Aurum Asset Managers LLC, et al. v. Banco Do Estado Do Rio Grande Do Sul, et al., 2010 U.S. Dist. LEXIS 109577 (E.D. Pa. Oct. 13, 2010). Court vacated order confirming arbitration award for want of subject matter jurisdiction because respondent is a foreign institution entitled to immunity against suit, which it did not waive. Aff’d at 441 Fed. App’x. 822 (3d Cir. 2011) finding that the district court did not err in applying a de novo standard. The clear usurpation standard for vacating an order affirming an arbitration award only applied in circumstances in which the parties had their day in court on the issue of jurisdiction, which the parties had not yet had.

Am. Bankers Ins. Co. of Florida, et al. v. Nat’l Cas. Co., No. 2:08-cv-13522, 2009 U.S.Dist. LEXIS 8621 (E.D. Mich. Feb. 3, 2009). Petition to confirm arbitration award dismissed for failure to meet threshold diversity jurisdiction requirements. While 9 U.S.C.A. § 9 permits a district court to confirm an arbitration award, it does not provide an independent basis for subject matter jurisdiction.

Gerling Global Reinsurance Corp. v. Sompo Japan Ins. Co., 348 F. Supp. 2d 102 (S.D.N.Y. 2004). Where complaint based entirely on judicial decision and not on foreign arbitration award, there is no basis for federal subject matter jurisdiction.

Motion to vacate untimely

Arrowood Indem. Co. v. Equitas Ins. Ltd., 2015 WL 2258260 (S.D.N.Y. May 14, 2015). The reinsurers’ motion seeking relief from a final judgment confirming an arbitration award was denied as untimely. The reinsurers brought the motion pursuant to Fed. R. Civ. Pro. 60(b)(3), alleging misconduct by the cedent in procuring the confirmation of the arbitration award. The court rejected the reinsurers’ argument that the challenge related to the judicial proceeding confirming the arbitration award under Federal Rule 60(b), finding that the FAA is the exclusive means of addressing and redressing alleged wrongdoing in an arbitration proceeding. Therefore, the FAA’s “three‐month” deadline for filing a motion to vacate controlled. Related proceeding at 2015 WL

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4597543 (S.D.N.Y. July 30, 2015) ‐‐ notice of appeal filed August 28, 2015. R&Q Reinsurance Co. v. Am. Motorist Ins. Co., 2010 U.S. Dist. LEXIS 109349 (N.D. Ill. Oct. 14, 2010). Motion to vacate untimely insofar as it was filed and served one day after the “three-month” deadline. See 9 U.S.C. § 12. Attempt to interpret “three months” as “ninety days” rejected.

G. Posting of Security

Posting of security not required as a pre-condition to arbitration hearing.

Pine Top Receivables of Illinois, LLC v. Banco De Seguros Del Estado, 2013 U.S. Dist. LEXIS 15246 (N.D. Ill. February 5, 2013). Declining to amend or correct decision which refused to require the reinsurer to post security under the Illinois Insurance Code.

Yukos Oil Co. & Dardana Ltd., No. A3/2001/1029 (Eng. App.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 13, No. 4 (6/20/02). English Court of Appeal set aside a portion of an order that required $2.5 million in security.

In the matter of the Arbitration Between: Certain Underwrites at Lloyd’s, London v. The Travelers Ins. Co., No. 395CV02420 (D.Conn.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 6, No. 18 (1/31/96).

Recyclers Ins. Group v. Ins. Co. of North Am., 1992 U.S.Dist. LEXIS 8731 (E.D.Pa. 1992).

Posting of security can be required pending final arbitration.

Companion Prop. & Cas. Ins. Co. v. Allied Provident Ins., Inc., 2014 U.S. Dist. LEXIS 136473 (S.D.N.Y. Sept. 26, 2014). The court confirmed the panel’s interim award for prehearing security where the panel had a “barely colorable justification” for its decision.

Sphere Drake Ins. v. All Am. Life Ins., No. 99 C 4573 (N.D.Ill. 2003), reprinted in Mealey’s Litigation Reports: Reinsurance, Vol. 14, No. 12 (10/16/03). The court has discretion to fashion suitable security, and under Illinois law, may require a party to maintain security even if only a substantially reduced possibility of payment for final judgment exists.

Int’l Ins. Co. v. Caja Nacional de Ahorro y Seguro, 293 F.3d 392 (7th Cir. 2002).

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British Ins. Co. of Cayman v. Water Street Ins. Co., Ltd., 93 F. Supp. 2d 506 (S.D.N.Y. 2000).

The Home Ins. Co. v. El Banco De Seguros Del Estado, No. 98-6022 (S.D.N.Y.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 9, No. 22 (3/25/99).

Meadows Indem. Co. v. Arkwright Mut. Ins. Co., 1996 WL 557513 (E.D.Pa. 1996).

Yasuda Fire & Marine Ins. Co. of Europe, Ltd. v. Cont’l Cas., 37 F.3d 345 (7th Cir. 1994).

Posting of security required pending conclusion of arbitration after reinsurerfailed to vacate award within 3-month statute of limitations.

Employers Ins. of Wausau v. Grand Union Ins. Co., Ltd., 1991 U.S. Dist. LEXIS 12157 (S.D.Fla. 1991).

Reinsurer not required to post letter of credit after reinsurer paid arbitral award.

Employers Ins. of Wausau v. El Banco De Seguros Del Estado, 357 F.3d 666 (7th Cir. 2004), vacating in part, No. 98-C-521-C, 2001 WL 1882467 (W.D.Wis. 2001).

Arbitration panel to decide whether posting of security required.

Georgia Cas. & Sur. Co. v. Excalibur Reinsurance Corp., 4 F. Supp. 3d 1362, 1371 (D. Ga. 2014). Finding that whether the contract required the reinsurer to post security was a matter for the arbitrators.

Banco de Seguros Del Estados v. Mut. Marine Offices, Inc., 2002 U.S. Dist. LEXIS 14472 (S.D.N.Y. 2002) recons. denied, 2002 U.S. Dist. LEXIS 16980 (S.D.N.Y. 2002); aff’d, No. 02 Civ. 467 [SAS] (2d Cir. 2003), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 14, No. 11 (10/02/03). Arbitrators had authority to order a reinsurer to post prejudgment security where reinsurer was not immune under the Foreign Sovereign Immunity Act.

TIG Ins. Co. v. Water Street Ins. Co., 1999 U.S. Dist. LEXIS 22938 (E.D.N.Y.).

Cont’l Cas. Co. v. Certain Underwriters of Lloyd’s, Nos. C-92-4094 and C-98-3145 (N.D.Cal.), reprinted in Mealey’s Litigation Report: Reinsurance,Vol. 9, No. 15 (12/12/98).

Foreign reinsurers are not immune from having to post security.

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Banco de Seguros del Estado v. Mt. McKinley Ins. Co., No. 02 Civ. 3949 (S.D.N.Y.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 13, No. 12 (10/17/02). Holding that a foreign reinsurer is not immune from having to post securities and refusing to vacate a pre-hearing security order.

In re Cox Dedicated Corporate Member Ltd. Subscription, 2006 WL 2640625 (Tex. App. 1st Dist. 2006). Where case settled in post-trial mediation, unauthorized foreign insurers required to deposit cash or other specific bonds to secure any potential judgment or have their pleadings stricken.

A rehabilitator of an insurer must repay sums improperly withdrawn from trustestablished by the insurer’s former reinsurer.

Commercial Risk Re-insurance Co. v. Superintendent of InsOf the State of New York, 2003 N.Y. Slip Op. 19566 (N.Y. Sup., App. Div., 1st Dept. 2003), 2003 N.Y. App. Div. LEXIS 13320, leave to appeal denied, No. 191 (N.Y. App. 2004), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 15, No. 3 (6/10/04).

Security required prior to unauthorized reinsurer defending a court action orproceeding.

Travelers Indem. Co. v. Excalibur Reinsurance Corp., 2014 U.S. Dist. LEXIS 35434 (D. Conn. March 17, 2014). Directing the reinsurer to post the full value of the cession in pre-pleading security finding it “‘sufficient to secure the payment of any final judgment which may be rendered in the action or proceeding’” under Conn. Gen. Stat. § 38a-27(a).

Travelers Indem. Co. v. Excalibur Reinsurance Corp., 2014 U.S. Dist. LEXIS 33182 (D. Conn. March 11, 2014). Unauthorized reinsurer (which cancelled its authorization to do business in Connecticut during the pendency of litigation) was required to post pre-pleading security pursuant to Conn. Gen. Stat. § 38a-27(a).

Arrowood Surplus Lines Ins. Co., et al. v. Gettysburg Nat’l Indem. [SAC] Ltd., No. 09-cv-00972, 2010 U.S. Dist. LEXIS 45669 (D. Conn. May 7, 2010) (applying Connecticut law). Pre-pleading security of reinsurer, as “unauthorized insurer,” must be posted, pursuant to Conn. Gen. Stat. § 38a-27(a), for “an amount . . . . sufficient to secure the payment of any final judgment which may be rendered in the action or proceeding.”

Hartford Accident & Indem. Co. v. Ace Am. Reinsurance Co., 103 Conn.App. 319, 930 A.2d 701 (2007). While unauthorized reinsurer was

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required to post security pursuant to Connecticut general statute §38a-27, the amount of the security was to be determined by an evidentiary hearing.

Order denying request for pre-pleading security in litigation is an immediatelyappealable final judgment.

Hartford Accident & Indem. Co. v. Ace Am. Reinsurance Co., 901 A.2d 1164 (Conn. 2006).

Foreign reinsurer must post security pursuant to applicable state law.

AIU Ins. Co. v. Certain Underwriters at Lloyd’s, London, No. 602924/07 (N.Y. Sup. Ct. May 5, 2008), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 19, No. 2 (5/16/2008). Court required foreign reinsurer to post pre-hearing security pursuant to New York Insurance Law § 1213(c)(1) despite its allegations that the reinsurance was placed through a domestic broker.

Sec. Ins. Co. of Hartford v. Universal Reinsurance Co. Ltd., 2007 WL 214606 (D. Conn. 2007).

General agent not required to post security.

Gen. Fid. Ins. Co. v. WFT Inc. No. 3:11-0448, 2012 U.S. Dist. LEXIS 148726 (N.D. Tx. October 15, 2012) (applying Texas law). Judge refused to order a managing general agent to post security on a pending $2.5M arbitration for allegedly past-due commissions, stating that the reinsurer cannot show that it was likely to succeed because it was too early to present and analyze the claim. Judge also denied the reinsurer’s request for security on a $71K interim arbitration award finding no reason to believe that the managing general agent will not pay the award.

Judgment awarded against retrocessionaire requiring it to post security for theretrocessionaire’s portion of the retrocedent’s reserves for losses.

North Star Reins. Corp. v. Harel Ins. Co, No. 08-cv-02380 (S.D.N.Y. Sept. 5, 2008).

XI. Discovery of Reinsurance Information

Discovery issues regarding reinsurance related information are becoming morewidespread in both the direct and reinsurance context. Whether the information sought is discoverable is highly dependent upon the circumstances, including the jurisdiction, type of dispute (coverage or reinsurance), party seeking discovery, relevancy of the information to the

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claims at issue (e.g. bad faith) or defenses at issue (e.g. late notice), nature of the information sought and/or existence of a privilege. The following case law illustrates the fact specific nature of this issue.

Reinsurance agreements and insurer/reinsurer communications werediscoverable by insureds in underlying action.

PCS Phosphate Co., Inc. v. Am. Home Assurance Co., No. 14‐CV‐99, 2015 WL 8490976 (E.D.N.C. Dec. 10, 2015). The court held that reinsurance related communications between an insurer and its reinsurer are relevant and discoverable in cases where a plaintiff asserts bad faith claims against an insurer. The court noted that this type of information is generally not discoverable where the claims are limited to interpretation of an insurance policy.

Leevac Shipbuilders LLC v. Westchester Surplus Lines Ins. Co., 2015 U.S. Dist. LEXIS 5070 (W.D. La. Jan. 15, 2015). The Court ordered the insurer to provide reinsurance related documentation to the insured holding that reinsurance related communications are discoverable when related to the issue of bad faith.

Progressive Cas. Ins. Co. v. Fed. Deposit Ins. Corp., 49 F. Supp. 3d 545 (N.D. Iowa Oct. 3, 2014). Granting the receiver’s motion to compel production of certain reinsurance communications and reinsurance agreements. Related proceeding at 302 F.R.D. 497 (N.D. Iowa Aug. 22, 2014). The court compelled the insurer to comply with its March 14, 2014 Order producing the requested agreement(s) and communications and that the reinsurer likewise comply with a subpoena issued by the insured requesting similar documents.

Klein, et al., v. Fed. Ins. Co., et al., 2014 U.S. Dist. LEXIS 95482 (N.D. Texas July 14, 2014). Reinsurance information was discoverable by the underlying insured insofar as it may be relevant to the contested issue of notice.

Nat’l Union Fire Ins. Co. of Pittsburgh, PA, et al., v. Donaldson Co., Inc., et al., 2014 U.S. Dist. LEXIS 85621 (D. Minn. June 24, 2014). Reinsurance communications were discoverable insofar as they may be relevant to the underlying insured’s claims for breach of the duty of good faith and fair dealing against an insurer. Later proceedings on other issues at WL 1292561 (D. Minn. Mar. 23, 2015) and 2015 WL 4898662 (D. Minn. Aug. 17, 2015).

Mine Safety Appliances Co. v. AIU Ins. Co., 2013 Del. Super. LEXIS 229 (Del. Super. Ct. June 6, 2013). Granting the insured's request to compel

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production of reinsurance agreements. Furthermore, where the insurer raised a late notice defense, the court ordered the insurer to produce to the insured all non-privileged communications with any reinsurer relating to when the insurer received notice from the insured or another source and when the insurer gave notice to its reinsurer.

Certain Underwriters at Lloyd’s, London, et al. v. Rockwell Automation, Inc., et al., No. BC327570 (Cal. January 31, 2013). Granting the insured’s motion to compel discovery of reinsurance information, but limiting the discovery to the policies at issue.

Fireman’s Fund Ins. Co., et al. v. Great Am. Ins. Co. of N.Y., et al., 284 F.R.D. 132 (S.D.N.Y. 2012) (applying New York law). Reinsurance communications discoverable and not protected by the common interest privilege. Later proceedings on other issues at 10 F. Supp. 3d 460.

US Bank Nat'l Ass'n v. PHL Variable Ins. Co., 2012 U.S. Dist. LEXIS 158448 (S.D.N.Y. Nov. 5, 2012) (applying New York law). Judge refused to quash subpoena served on two reinsurers for discovery of life insurance reinsurance documents, but required that the bank serving the subpoenas pay the reinsurers’ expenses pertaining to the document search and retrieval. Judge stated that the reinsurers had standing to challenge the subpoenas, yet because of the broad definition of relevance in the context of discovery, the bank’s request was relevant.

Nat’l Union Fire Ins. Co. of Pittsburg, PA. v. Mead Johnson & Co., et al., 2011 U.S. Dist. LEXIS 122149 (S.D. Ind. October 21, 2011). Reinsurance communications discoverable. Aff’d in part, rev’d in part on other grounds at 2014 U.S. Dist. LEXIS 30432 (S.D. Ind. Mar. 10, 2014).

Suffolk Fed. Credit Union v. Cumis Ins. Society, Inc., 270 F.R.D. 141 (E.D. N.Y. 2010) (applying New York law). Reinsurance information discoverable.

Sunnen Products Co. v. Travelers Cas. & Sur. Co., No. 09-cv-00889, 2010 U.S. Dist LEXIS 16953 (E.D. Mo. February 25, 2010). Reinsurance agreements are discoverable.

Hartman v. Am. Red Cross, No. 09-cv-01302, 2010 U.S. Dist. LEXIS 46126 (C.D. Ill. May 11, 2010) (applying Illinois law). Finding defendant’s reinsurance agreement to be discoverable despite defendant’s contention that the alleged liability would never implicate the reinsurance.

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Regence Group, et al. v. TIG Specialty Ins. Group, No. 07-1337-HA, 2010 U.S. Dist. LEXIS 9840 (D. Or. February 4, 2010) (applying Oregon law). Motion for reconsideration denied, upholding discoverability of reinsurance policies, reinsurer communication, documents exchanged with reinsurer in arbitration, and documents relating to the payments received from reinsurers. Later proceeding on other issues at 903 F. Supp. 2d (D. Or. 2012).

Cameron Parish Sch. Bd. v. RSUI Indem. Co., No. 06-cv-01970, 2008 U.S. Dist. LEXIS 56069 (W.D. La. July 23, 2008). While reinsurance information is not relevant to insured’s breach of contract claim, the information is discoverable insofar as it may be relevant to bad faith allegations.

Neles-Jamesbury, Inc. v. Liberty Mut. Ins. Co., 23 Mass. L. Rptr. 313, 2007 WL 4099341 (Mass. Super. 2007). Reinsurance agreements discoverable.

Machinery Movers, Riggers & Machinery Erectors, et al. v. Fid. & Deposit Co. of Mary, et al., 2007 WL 3120029 (N.D. Ill. 2007). Reinsurance communications and agreements are discoverable.

Heights at Issaquah Ridge Owners Assoc., et al v. Steadfast Ins. Co., et al., 2007 WL 4410260 (W.D. Wa. 2007). Insured required to produce copies of its reinsurance policies, but not reinsurance communications. As to the production of reinsurance policies the district court stated, “[t]he rule is absolute, and does not require a showing of relevance.”

Mid-Continent Cas. Co. v. Eland Energy, Inc., 3: 7 MD 78, 2007 U.S. Dist. LEXIS 21671 (D. Conn. Mar. 26, 2007). Insurer required to produce communications with reinsurer regarding the insurer’s ordinary claims handling, but not communications relating to declaratory judgment.

United States Fire Ins. Co., et al. v. Bunge North Am. Inc., et al., No. 05-2192-JWL-DJW (D. Kan. May 25, 2007), aff’d 2007 WL 2103353 (D. Kan. Jul 23, 2007). Insurers ordered to produce relevant reinsurance and loss reserve information in coverage action regarding groundwater contamination.

Sotelo v. Old Republic Life Ins. Co., et al., 2006 U.S. Dist. LEXIS 68387 (N.D. Cal. 2006). Reinsurer must produce documents related to its reinsurance of a policy issued by cedent, as insurer intended to rescind the underlying policy on the basis of misrepresentation.

Executive Risk Indem.s Inc. v. CIGNA Corp., 2006 Phila. Ct. Com. Pl. LEXIS 328 (Pa. Comm. Pls. Aug. 18, 2006). Excess insurer required to produce

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reinsurance coverage information, but not reserve information related to underlying litigation.

Koken v. Am. Patriot Ins. Agency, Inc., No. 05C 1049, 2006 WL 1749689 (N.D. Ill. June 20, 2006). Liquidator of insurance company ordered to produce all exhibits relating to reinsurance treaty, even those relating to other insurance programs.

Cont’l Ins. Co. v. Garlock Sealing Technologies & & Coltec Industries Inc., No. 116789/04 (N.Y. Sup. March 23, 2006), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 16, No. 24 (04/20/06). Cedent’s documents relating to reserves and reinsurance information are discoverable for purposes of establishing that policyholder’s claims were denied because of insufficient reserves.

Bondex Int’l Inc., et al. v. Hartford Accident & Indem. Co., No. 1:03CV1322, 2006 WL 355289 (N.D. Ohio Feb. 15, 2006). Discovery of reinsurance related to policies issued to insureds and insurer’s communications with reinsurers related to their respective policies allowed, but reserve information not discoverable because not relevant and is work product.

GAF Corp. v. Reliance Ins. Co., No. 00-6289 [DMC] (D.N.J. 2005), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 15, No. 21 (03/03/05). Motion to compel production of reinsurance and reserve information from insurer granted.

PECO Energy Co. v. Ins. Co. of North Am., 2004 Pa. Super. LEXIS 1706 (Pa. Super. 2004). Discovery of reinsurance information and other claims files allowed but reserve information not discoverable.

United Technologies Corp. v. Am. Home Assurance Co., No. 2:92 CV 267 [JBA] (D.Conn.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 12, No. 5 (7/5/01). Limited discovery of reinsurers allowed on offset defense.

Silicon Valley Bank v. New Hampshire Ins. Co., et al., No. CV 00-696-RSWL (C.D.Cal. 2001), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 12, No. 11 (10/4/01).

Massachusetts Bay Ins. Co. v. Stamm, 700 N.Y.S.2d 707 (App. Div. 2000). Disclosure of documents to reinsurers constitutes waiver of attorney-client privilege.

Front Royal Ins. Co. v. Gold Players, Inc., 187 F.R.D. 252 (W.D. Va. 1999).

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Young v. Liberty Mut. Ins. Co., 1999 WL 301688 (D.Conn. 1999).

Union Pacific Resources Co. v. Cont’l Ins. Co., No. 249-23-98, (Texas Dist. Johnson Co.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 9, No. 10 (9/24/98).

Northern Indiana Public Service Co. v. Certain London Market Insurers, No. 71-D05-9509-CP-00850 (Ind. Super. St. Joseph Co.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 8, No. 21 (3/11/98).

Catherine McLean v. Cont’l Cas. Co., et al., 1996 WL 684209 (S.D.N.Y. 1996).

Raclaur, Inc. v. Allianz Ins. Group, No. L-12078-95 (N.J.Super.Ct. 1996).

Lipton v. Superior Court (Lawyers’ Mut. Ins. Co.), 48 Cal.App.4th 1599, 56 Cal.Rptr.2d 341 (1996).

Temple-Inland Inc. v. Highlands Ins. Co., No. 28,449-95-03 (Texas Dist.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 6, No. 24 (4/25/96).

Great Lakes Dredge & Dock Co. v. Commercial Union Ins. Co., 159 F.R.D. 502 (N.D.Ill. 1995), aff’d in part, vacated in part & remanded by, 260 F.3d 789 (7th Cir. Ill. 2001), on remand, 2002 WL 31133095 (N.D. Ill. 2002).

Missouri Pacific Railroad Co. v. Aetna Cas. & Sur. Co., 1995 WL 861147 (N.D.Tex.).

Morton Int’l Inc. v. Liberty Mut. Ins. Co., 1995 WL 868455 (W.Va.Cir.Ct. 1995).

Owens-Corning Fiberglas Corp. v. Am. Centennial Ins. Co., 74 Ohio Misc.2d 239, 660 N.E.2d 807 (Ohio C.P. 1995).

North River Ins. Co. v. Columbia Cas. Co., 1995 WL 5792 (S.D.N.Y. 1995).

Am. Cas. Co. of Reading et al. v. Gen. Metals of Tacoma Inc. et al., No. C92-5192B (W.D. Wash.).

Allendale Mut. Ins. Co. v. Bull Data Systems Inc., et al., 152 F.R.D. 132 (N.D.Ill. 1993), aff’d in part & rev’d in part, GE v. Deutz AG, 270 F.3d 144 (3rd Cir. Pa. 2001).

Hoechst Celanese Corp. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 1993 Del. LEXIS 420 (Del.Super.Ct.).

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Am. Colloid Co. v. Old Republic Ins. Co., 1993 WL 222678 (N.D.Ill. 1993).

North Am. Philips Corp. v. Aetna Cas. & Sur. Co., 1993 WL 213717 (Conn.Super. 1993).

Biddle Sawyer Corp. v. Fireman’s Fund Ins. Co., et al., No. AM-1368-91T5F (N.J.Super.Ct., App.Div. 1992).

Snyder Gen. Corp. v. Cont’l Ins. Co., et al., No. CA3-90-2396-P (N.D.Tex. 1991).

Nat’l Union Fire Ins. Co. of Pittsburgh. Pa. v. Cont’l Illinois Corp., 116 F.R.D. 78, 661 F. Supp. 964 (N.D. Ill. 1987).

Insurer/reinsurer communications were not discoverable by insureds inunderlying action.

Indianapolis Airport Auth. v. Travelers Prop. & Cas. Co. of Am., 2015 WL 1548959, *3 (S.D. Ind. 2015). Granting Traveler’s motion to quash a non‐party subpoena to General Reinsurance seeking General Reinsurance’s claims and underwriting files, including nine types of reinsurance documents, such as communications between Travelers and General Reinsurance.

Harleysville Lake States Ins. Co. v. Lancor Equities, Ltd., 2014 U.S. Dist. LEXIS 154685 (N.D. Ill. Oct. 31, 2014). In a “straightforward insurance coverage declaratory judgment action,” which included a bad faith claim under Section 155 of the Illinois Insurance Code, the insured’s request for documents other than the reinsurance agreement, including correspondence related to any loss or claim, was denied. The court declined to compel production of documents beyond the agreement(s) into documents which would likely generate disputes about privilege and work product protection in response to a request that goes well beyond the claims and defenses at issue.

United States Fire Ins. Co. v. The City of Warren, No. 10-13128, 2012 U.S. Dist. LEXIS 58353 (E.D. Mich. April 26, 2012). Reserve information and communications between insurer and reinsurer were irrelevant and not discoverable.

Isilon Systems Inc. v. Twin City Fire Ins. Co., No. C10-1392, 2012 U.S. Dist. LEXIS 18626 (W.D. Wash. Feb. 15, 2012) (applying Washington law). While reinsurance policies are discoverable under Fed. R. Civ. P. 26(a), the rule does not extend to communications between an insurer and its

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reinsurer unless the insured adequately demonstrates their relevance to a bad faith claim.

Insurer/reinsurer communications admissible in underlying trial.

U.S. Bank Nat’l Ass’n v. PHL Variable Life Ins. Co., 112 F. Supp. 3d 122 (S.D.N.Y. 2015). On motions‐in‐limine, the court found that communications between the insurer and reinsurer were admissible. While the communications constitute double hearsay, each level was independently admissible as an exception to the hearsay rule applied.

Reinsurance agreements were discoverable by third-party claims administrator.

Clarendon Nat’l Ins. Co. v. Atlantic Risk Management, Inc., Nos. 5303N, 5303NA, 5303NB, 5303NC and 106324/06, 2009 N.Y.App.Div.LEXIS 1192 (N.Y. App. 2009).

Insurer/cedent reserve information discoverable by reinsurer where cedent isaccused of bad faith for not having adequate and reasonable reserve proceduresin place.

Granite State Ins. Co. v. Clearwater Ins. Co., No. 09-cv-10607, 2012 U.S. Dist. LEXIS 61150 (S.D.N.Y. April 30, 2012).

Loss reserve information of insurer and reinsurer discoverable by insured whereinsurer accused of bad faith.

McAdam v. State Nat’l Ins. Co., Inc., 2013 U.S. Dist LEXIS 157202 (S.D. Cal. November 1, 2013) (applying California law). Motion to compel discovery of loss reserve information granted to determine subjective component of bad faith claim. Vacated & remanded on other grounds at 15 F. Supp. 3d 1009 (S.D. Cal. March 21, 2014).

Assignee of reinsured permitted to discover “other reinsured” information fromreinsurer relating to similarly-situated risks.

Scottsdale Ins. Co. v. Am. Re-Insurance Co., 2007 WL 405870 (D. Neb., February 2, 2007).

Inter-insurer discovery of reinsurance information allowed in order to explorethe propriety of settlement funding.

Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. Cont’l Cas. Co., No. 07-cv-11073, 2009 U.S. Dist. LEXIS 66365 (S.D.N.Y. July 24, 2009).

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Reinsurer entitled to underwriting guidelines, guides and/or manuals for theplacement of reinsurance through an intermediary from assignee of reinsured.

Scottsdale Ins. Co. v. Am. Re-Insurance Co., 2008 U.S. Dist. LEXIS 36797 (D. Neb., May 6, 2008). In the face of the reinsurer’s claim that the intermediary improperly placed reinsurance coverage, discovery of underwriting guidelines, guides and/or manuals for the placement of reinsurance through an intermediary allowed.

Facultative reinsurance information and documentation in an environmentalcoverage dispute is discoverable and does not fall into the category of tradesecrets or proprietary interest.

Cascade Pole Co., et al. v. Reliance Ins. Co., et al., No. 88-2-0231-3 (Wash.Sup.Ct. 1992).

Attorney-client privilege and work product doctrine upheld so as to precludediscovery of reinsurance information.

ARTRA 524(g) Asbestos Trust v. Transp. Ins. Co., 2011 U.S. Dist. LEXIS 110272 (N.D. Ill. September 29, 2011) (applying Illinois law). Motion to compel production of all documents and communications between the insurer and its reinsurers denied in part as certain communications were protected by the attorney-client privilege, work-product doctrine and/or the common interest doctrine.

Zurich Am. Ins. Co. v. Superior Court of Los Angeles County, 155 Cal. App. 4th 1485, 66 Cal. Rptr. 3d 833 (2007). Corporate communications that discuss legal advice fall within the attorney-client privilege, even if the communication did not directly involve an attorney. As such, reserve and reinsurance matters may be privileged if the documents contained a discussion of legal advice and the privilege had not been waived through broader dissemination.

Minnesota School Boards Ass’n Ins. Trust v. Employers Ins. Co. of Wausau, 183 F.R.D. 627 (N.D. Ill. 1999).

Nat’l Union Fire Ins. Co. v. Stauffer Chemical Co., 558 A.2d 1091 (Del.Super.Ct. 1989).

Reinsurance information is not protected by the work product doctrine.

Progressive Cas. Ins. Co. v. Fed. Deposit Ins. Corp., 49 F. Supp. 3d 545 (N.D. Iowa Oct. 3, 2014). Because the reinsurance information was created in the ordinary course of the insurer’s business and distributed to

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the reinsurance companies and broker for business purposes, it was not subject to the protection.

Work product doctrine waived.

Progressive Cas. Ins. Co. v. Fed. Deposit Ins. Corp., 49 F. Supp. 3d 545 (N.D. Iowa Oct. 3, 2014). Insurer waived any potential attorney-client privilege when it voluntarily disclosed the documents to its reinsurers and brokers. The disclosure was not protected by the common interest doctrine because that doctrine applies only when the parties share a common legal interest. Absent evidence the parties shared a joint legal strategy or enterprise, an insurer and its reinsurers and brokers share a commercial and financial interest only.

AIU Ins. Co. v. Certain Underwriters at Lloyd’s, London, et al., Index No. 602924/07 (Supreme Court of New York, County of New York, January 30, 2011). Cedent’s information regarding a statement discussed in a memo was not protected under the work-product doctrine because the memo had already been produced during discovery to the reinsurers.

Bank of Am., N.A. v. Terra Nova Ins. Co., 212 F.R.D. 166 (S.D.N.Y. 2002), writ of mandamus denied, No. 03-3016 (2nd Cir. 2003). Reinsurer waived work product protection by revealing certain information to governmental authorities regarding investigation into insurance agent’s fraud.

Reinsurer is not joint holder of attorney-client privilege between reinsured andits counsel. Reinsurer’s production of documents in response to subpoena didnot waive attorney-client privilege between reinsured and its counsel.

Pfizer Inc. v. Employers Ins. of Wausau, et al., No. C-108-92, N.J.Super. Middlesex Co. (October 8, 1998.)

Great Am. Surplus Lines Ins. Co. v. Ace Oil Co., 120 F.R.D. 533 (E.D.Cal. 1988).

Access to records provision does not include reinsurer’s right to privilegeddocuments.

Liberty Mut. Ins. v. Nationwide Mut. Ins. Co., 31 N.E.3d 1192 (Mass. App. Ct. 2015) (unpublished).

Reinsurer’s motion to compel production of documents from its reinsureddenied based on attorney-client privilege.

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Travelers Cas. & Sur. Co. v. Century Indem. Co., 2011 U.S. Dist. LEXIS 132131 (D. Conn. November 16, 2011) (applying Connecticut law). Reinsurer is not entitled to privileged material under access to records clause or common interest doctrine.

AIU Ins. Co. v. TIG Ins. Co., 07-cv-7052, 2008 U.S. Dist. LEXIS 96693 (S.D.N.Y. Nov. 25, 2008). With the exception of one document previously sent to reinsurer, motion to compel production of privileged documents based on at issue and waiver doctrines denied.

Nat’l Union Fire Ins. Co. v. Clearwater Ins. Co., 2007 WL 2106098 (S.D.N.Y. 2007). Reinsurer’s motion to compel an unredacted copy of reinsured’s counsel’s settlement analysis letter was denied. The letter evaluated whether to settle the matter and rendered legal advice as to the consequences of settlement and thus was, in part, privileged.

Gulf Ins. Co. v. Transatlantic Reinsurance Co., 788 N.Y.S.2d 44 (2004). Reinsurance agreement’s “access to records” clause does not waive claims of privilege with regard to those documents.

United States Fire Ins. Co. v. Phoenix Assurance Co., 193 A.D.2d 559, 598 N.Y.S.2d 938 (App.Div. 1993).

North River Ins. Co. v. Philadelphia Reinsurance Corp., 797 F. Supp. 363 (D.N.J. 1992), aff’d in part, rev’d in part on other grounds, 52 F.3d 1194 (3rd Cir. 1995).

Reinsurer’s motion to compel production of documents from its reinsuredgranted.

Utica Mut. Ins. Co. v. R&Q Reinsurance Co., 2015 WL 7176450 (N.D. N.Y. June 2, 2015). Granting part of a reinsurer’s motion to compel the production of deposition and hearing transcripts from a prior arbitration between the parties as relevant to the present issues in dispute. The court noted, however, that the cedent will still be able to assert all warranted objections to the use of the arbitration testimony, including whether circumstances had changed since the testimony was offered, which the cedent argued, in part, was a basis for not producing the transcripts.

Michigan Millers Mut. Ins. Co. v. Westport Ins. Corp., 1:14‐cv‐00151‐PLM (W.D. Mich. March 24, 2015). Granting the reinsurer’s motion to compel production of documents transmitted to the reinsured’s reinsurance consultant as litigation was not reasonably anticipated until years after the communications occurred.

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Lexington Ins. Co. v. Sirius Am. Ins. Co., 2014 N.Y. Misc. LEXIS 4138 (N.Y. Sup. Ct. Sept. 15, 2014). Cedent precluded from summary judgment where it failed to provide satisfactory proof of loss to reinsurer, as required under the certificates at issue. As such, the cedent was ordered to provide such proofs within 60 days of the court’s order. In addition, cedent ordered to produce documents regarding its settlement and allocation decisions.

Travelers Indem. Co. v. Excalibur Reinsurance Corp., 2013 U.S. Dist. LEXIS 50134 (D. Conn. April 8, 2013) (applying Connecticut law). Reinsurer’s motion to compel discovery relating to its challenge of the reasonableness of the reinsured’s post settlement allocation and the economic consequence thereof granted.

Travelers Cas. & Sur. Co. v. Nationwide Mut. Ins. Co., No. 3:11-cv-107 (D. Conn. May 29, 2012). Granting the reinsurer’s motion to compel in part ordering the reinsured to produce all documentation evaluated and/or relied upon to treat various settlements as a single occurrence under the reinsurance policies.

Travelers Cas. & Sur. Co. v. Century Indem. Co., 2011 U.S. Dist. LEXIS 132131 (D. Conn. November 16, 2011) (applying Connecticut law). Reinsurer’s motion to compel production of documents evaluated and/or relied upon by the reinsurer in its presentation of the asbestos claims as a single reinsurance occurrence granted.

Nat’l Union Fire Ins. Co. v. Clearwater Ins. Co., 2007 WL 2106098 (S.D.N.Y. 2007). Reinsurer was entitled to the reinsured’s communication with its other reinsurers regarding the settlement of the same loss.

Am. Re-Ins. Co. v. United States Fid. & Guar. Co., 837 N.Y.S.2d 616, 40 A.D.3d 486 (N.Y.A.D. 1 Dept. 2007). Cedent waived attorney-clientprivilege to certain testimony and documents regarding settlementagreement entered into between the cedent and underlying insuredwhen the cedent placed the privileged matter at issue in the reinsurancelitigation.

Travelers Cas. & Sur. Co. v. Constitution Reins. Corp., No. 01-71057 (E.D. Mich. 2003), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 14, No. 6 (7/17/03).

Reinsurer’s motion to compel production of documents from its reinsureddenied.

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Utica Mut. Ins. Co. v. Clearwater Ins. Co., 13‐cv‐01178 (N.D.N.Y. July 14, 2015). The court affirmed the decision of the magistrate judge which denied the reinsurer’s motion to compel discovery related to the cedent’s practice of including aggregate limits in its primary policies during the relevant timeframe as “irrelevant to the claims and defenses in this action,” especially in light of the fact that the aggregate limit issue was litigated and resolved in the underlying settlement.

Utica Mut. Ins. Co. v. R&Q Reinsurance Co., 2015 WL 7176450 (N.D.N.Y. June 2, 2015). Denying, based on relevancy, the part of a reinsurer’s motion to compel: (1) the production of documents relating to primary insurance policies issued by the cedent to two other insureds; and (2) documents concerning correspondence between the cedent and its other reinsurers regarding the existence of aggregate limits. The court reasoned that the issue had been litigated and resolved in the underlying settlement.

Travelers Cas. & Sur. Co. v. Century Indem. Co., 2011 U.S. Dist. LEXIS 132131 (D. Conn. November 16, 2011) (applying Connecticut law). Reinsurer’s motion to compel production of coverage dispute documents and reinsured’s communications with other reinsurers concerning the asbestos claims at issue denied.

Hartford Accident & Indem. Co. v. Argonaut Ins. Co., No. 06-cv-01813, 2008 U.S. Dist. LEXIS 47985 (D. Conn. June 23, 2008). Denying reinsurer’s discovery requests, where reinsurer sought underlying insurance policies to show bad faith on the part of the reinsured. Court noted that discovery of the documents would undermine the follow-the-fortunes doctrine.

Reinsurance documents not relevant in environmental coverage dispute.

OneBeacon Am. Ins. Co. v. Narragansatt Elec. Co. C.A. No. 05-3086, (Mass. Super. Ct. June 23, 2007). While underwriting and claims files relating to environmental claims are discoverable, reinsurance information need not be produced. The benefit of producing communications between insurers and their reinsurers was outweighed by the burden of locating and producing reinsurance information.

Golden Eagle Refinery Co., Inc. v. Associated Int’l Ins. Co., No. BC 128622, (Cal.Super.Ct.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 8, No. 8 (8/27/97).

Possible reinsurance of risk is irrelevant.

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United States of Am. ex rel. Modern Electric Inc. v. Ideal Electronic Security Co., 1999 U.S. App. LEXIS 22198 (D.C. Cir.1999).

Reinsurer’s motion to compel production of drafting history granted.

Arkwright Mut. Ins. Co. v. Nat’l Union Fire Co. of Pittsburgh, Pa., 1993 WL 437767 (S.D.N.Y. 1993).

Reinsurance information not generally discoverable, but exceptions could bemade in cases of insolvency of cedents.

Home Ins. Co. v. Uniroyal Inc., No. CV-93 5227405 (Conn.Super.Ct.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 5, No. 21 (3/8/95).

Reinsurance information is discoverable.

Phoenix Ins. Co. v. Cantex, Inc., 2015 WL 1740334, *4 (D. Colo. April 14, 2015). Denying the insurers’ motion for a protective order in connection with a Rule 30(b)(6) deposition which sought, inter alia, reserve and reinsurance information.

Smith v. ComputerTraining.Com, Inc., 2014 U.S. Dist. LEXIS 135904 (E.D. Mich. Sept. 26, 2014). Claimants were able to obtain reinsurance information (including any applicable reinsurance agreement(s)) after a large judgment was entered against the insured because the documents were likely to lead to discovery of relevant admissible evidence regarding the financial status of the insured.

Munoz v. PHH Corp., 2013 U.S. Dist. LEXIS 24671 (E.D. Ca. February 22, 2013). Granting RESPA putative class action plaintiffs’ motion for production of reinsurance documents which required the reinsurer to produce documents given to the federal Consumer Financial Protection Bureau pursuant to a Civil Investigatory Demand into alleged kickbacks related to the mortgage lender’s captive reinsurance agreements.

Reinsurance information is not discoverable.

Indianapolis Airport Auth. v. Travelers Prop. & Cas. Co. of Am., 2015 WL 1548959, *3 (S.D. Ind. 2015). In granting Traveler’s motion to quash a non‐party subpoena to General Reinsurance seeking various types of reinsurance documents, the court also stated that the insured “is precluded from seeking discovery of Travelers’ reinsurance documents.”

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Broadrock Gas Svcs., LLC v. AIG Specialty Ins. Co., 2015 WL 916464, *3 (S.D.N.Y. March 2, 2015). Declining to order the production of redacted segments of documents related to the insurer’s reinsurance calculations.

La. Generating LLC v. Ill. Union Ins. Co., 2011 U.S. Dist. LEXIS 88089 (M.D. La. August 9, 2011). Denying a motion to compel production of documents, the Court found that the insured failed to demonstrate how the production of reinsurance-related documents were relevant to the insurer’s defense obligations in the direct coverage action.

Nat’l Union Fire Ins. Co. of Pittsburg, PA. v. Mead Johnson & Co., et al., 2011 U.S. Dist. LEXIS 122149 (S.D. Ind. October 21, 2011) (applying Indiana law). Reinsurance agreement is not likely admissible. aff’d in part, rev’d in part on other grounds at 2014 U.S. Dist. LEXIS 30432 (S.D. Ind. Mar. 10, 2014).

TIG Ins. Co. v. Tyco Int’l Ltd., No. 08-cv-1584, 2010 U.S. Dist. LEXIS 120342 (M.D. Pa. 2010) (applying Pennsylvania law). Reinsurance agreements not discoverable. Later proceeding on other issues at 919 F. Supp. 2d 439 (M.D. Pa. 2013).

The Flintkote Co. v. Gen. Accident Assurance Co. of Canada, et al., No. 3:04-cv-01827, 2009 U.S. Dist. LEXIS 44066 (N.D.Cal. May 26, 2009). Motion to compel reinsurance information denied without prejudice where the court determined that reinsurance information was not directly at issue and thus “less relevant” to determining the state of mind of the insurer. Later proceeding on other issues at 692 F. Supp. 2d 1194 (N.D. Cal. 2010).

Mt. McKinley Ins. Co., etc., et al. v. Corning Inc., 81 A.D.3d 498 (N.Y. Super. Ct. February 15, 2011). Motion to compel reinsurance information in coverage action denied as the insured’s discovery requests were based on pure speculation, and cases ordering disclosure of reinsurance information between an insurer and reinsurer were distinguishable from an insured’s requests for reinsurance information.

H & L Chevrolet, Inc. v. Berkley Ins. Co., No. AC-27670, 2008 Conn. App. LEXIS 453 (Conn. App. Sept. 23, 2008). A car dealer and its extended warranty provider failed to make requisite showing to permit discovery of reinsurance records.

Bituminous Cas. Corp. v. Smith Bros. Inc., No. 07-cv-00354, 2008 U.S. Dist. LEXIS 81915 (S.D. Miss. Sept. 22, 2008). Reinsurance deemed irrelevant and not discoverable in matter where insurer sought declaratory

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judgment seeking to adjudicate whether an individual qualified as an insured under its policy.

Turnell Corp. v. United States Fid. & Guaranty Co., 2007 WL 3071856 (E.D. Mo. October 19, 2007). Motion to compel defendant to identify its reinsurer and produce a copy of the reinsurance agreement denied because the defendant had not notified the reinsurer of the claim.

Catholic Mut. Relief Society, et al. v. The Superior Court of Los Angeles, 42 Cal.4th 358, 165 P.3d 154, 64 Cal.Rptr.3d 434 (August 27, 2007). California Code of Civil Procedure § 2017.210 does not authorize pretrial discovery of a nonparty liability insurer’s reinsurance agreements. However, in certain unusual circumstances, i.e., reinsurance agreement functioning as a liability policy, discovery of reinsurance agreements would be appropriate.

Heights at Issaquah Ridge Owners Assoc., et al v. Steadfast Ins. Co., et al., 2007 WL 4410260 (W.D. Wa. 2007). Loss reserves and communications between the insurer and its reinsurer not discoverable as the plaintiff could not demonstrate the relevance to its bad faith claim. However, reinsurance policies were discoverable.

Spirco Envtl. Inc. f/k/a Spirco Servs. Inc., v. Am. Int’l Specialty Lines Ins. Co., 2006 WL 2521618 (E.D. Mo. 2006).

Olin Corp. v. Ins. Co. of N.A., No. 84 Civ. 1968 (S.D.N.Y.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 6, No. 24 (4/25/96).

North River Ins. Co. v. Columbia Cas. Co., 1995 WL 338296 (S.D.N.Y. 1995).

WMX Technologies Inc. v. Admiral Ins. Co., No. AM-001003-94T2 (N.J.Super.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 6, No. 4 (6/28/95).

Clark Equipment Co. v. Liberty Mut. Ins. Co., 1995 WL 867344 (Del Super. 1995).

Reinsurance information not discoverable by insureds.

BASF AG v. Great Am. Ins. Co., No. 04C6969 (N.D. Ill. 2005), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 16, No. 18 (01/19/06).

Catholic Mut. Relief Society v. Superior Court, 27 Cal.Rptr.3d 515 (Cal.App., 2nd Dist. 2005), pet. for review granted, 116 P.3d 478 (2005).

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Uniroyal Inc. v. Am. Re-Insurance Co., et al., No. L08172-94, (N.J.Super. Middlesex Co.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 10, No. 15 (12/9/99).

Northern Illinois Gas Co. v. Home Ins. Co., et al., No. 95-L-17549, (Ill.Cir.Ct. Cook Cty.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 8, No. 1 (5/7/97).

Waste Management Inc., et al. v. Admiral Ins. Co., et al., 1994 N.J. LEXIS 863 (N.J.Super.Ct. 1994).

Aluminum Co. of Am. v. Accident & Cas. Ins. Co., No. 92-2-28065-5, (Wash.Super.Ct.), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 5, No. 4 (6/29/94).

E.I. du Pont de Nemours & Co. v. Admiral Ins. Co., 1994 WL 315241(Del.Super. 1994).

Rhone-Poulenc Rorer Inc. v. Home Indem. Co., 139 F.R.D. 609 (E.D.Penn. 1991).

Leski v. Fed. Ins. Co., 129 F.R.D. 99 (D.N.J. 1989).

Retrocessionaire materials discoverable in suit between cedent and reinsurer.

Republic Ins. Co. v. PAICO Receivables, LLC, 2005 U.S. Dist. LEXIS 3606 (N.D. Tex. 2005). Reinsurer breached settlement agreement with cedent’s assignee by failing to provide access to records, copies of retrocessional billings and accounting updates.

Arkwright Mut. Ins. Co. v. Nat’l Union Fire Ins. Co., 1994 WL 512354 (S.D.N.Y. 1994).

Reinsurer’s industry materials discoverable.

Aetna Cas. & Sur. Co. v. Certain Underwriters at Lloyd’s, 263 A.D.2d 367, 692 N.Y.S.2d 384 (App. Div. 1999).

Insurer compelled to produce only final reinsurance agreement in underlyingmatter but discovery of reinsurance communication disallowed.

Harleysville Lake States Ins. Co. v. Lancor Equities, Ltd., 2014 U.S. Dist. LEXIS 154685 (N.D. Ill. Oct. 31, 2014) (applying Illinois law). In a “straightforward insurance coverage declaratory judgment action,” which included a bad faith claim under Section 155 of the Illinois Insurance Code, only the reinsurance agreement was discoverable.

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Medmarc Cas. Ins. Co. v. Arrow Int’l, Inc., 2002 U.S. Dist. LEXIS 15082 (E.D.Pa. 2002).

Documents created by reinsurance working group for annual conference notdiscoverable based upon the joint defense privilege in suit between cedent andreinsurer.

Travelers Cas. & Sur. Co. v. Excess Ins. Co. Ltd., WL 1782541 (S.D. Ohio Nov. 8, 2000).

Arbitration materials discoverable.

Utica Mut. Ins. Co. v. R&Q Reinsurance Co., 2015 WL 7176450 (N.D.N.Y June 2, 2015). Granting part of a reinsurer’s motion to compel the production of deposition and hearing transcripts from a prior arbitration between the parties. In so ruling, the court noted that the reinsured will still be able to assert all warranted objections to use of the arbitration testimony and changed circumstances which the reinsured argued, in part, was a basis for not producing the documents.

Galleon Syndicate Corp. v. Pan Atlantic Group, Inc., 223 A.D.2d 510, 637 N.Y.S.2d 104 (1996).

Non-party to arbitration not required to comply with panel’s subpoena toproduce documents.

Hay Group, Inc. v. E.B.S. Acquisition Corp., 360 F.3d 404 (3rd Cir. 2004). Arbitrators are not authorized to serve subpoenas to non-parties for documents to be produced either in advance of a hearing or at a hearing unless non-party is to testify as witness.

OneBeacon Am. Ins Co. et al. v. Factory Mut. Ins. Co., No. 03-MDB-10239-GAO, (D. Mass. 2003), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 14, No. 12 (11/13/03).

Limited discovery of reinsurers allowed because of offset claim.

United Technologies Corp., et al. v. Am. Home Assurance Co., No. 2:92 CV 267 (D.Conn. 2001), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 12, No. 5 (7/5/01).

Attorney-client privilege does not preclude discovery of claims documents whenattorneys are hired to conduct claims functions.

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First Aviation Services Inc., et al. v. Gulf Ins. Co., 205 F.R.D. 65 (D.Conn. 2001). Attorney-client privilege assertion failed in situation where law firm was acting as an outside claims handler.

Depositions of reinsurance executives allowed.

Gen. Star Indem. Co. v. Platinum Indem. Ltd., et al., 2002 U.S. Dist. LEXIS 17903 (S.D.N.Y 2002). Court refused to bar depositions of two executives where neither submitted affidavits stating he lacked relevant knowledge or that his knowledge was identical to that of other deponent.

Information sought by reinsured from reinsurer regarding other claims isirrelevant and not discoverable.

Excess Ins. Co., Ltd. v. Factory Mut. Ins. Co., No. 605759 (N.Y. Sup. 2003), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 14, No. 3 (6/5/03).

Information sought by reinsured from reinsurer regarding other similar claims isdiscoverable.

Zurich Am. Ins. Co. v. ACE Am. Reinsurance Co., 2006 WL 3771090 (S.D.N.Y. 2006), reprinted in Mealey’s Litigation Report: Reinsurance, Vol. 17, No. 17 (01/04/07).

Documents created by reinsurer in the ordinary course of investigatingreinsured’s claim discoverable.

AIU Ins. Co. v. TIG Ins. Co., No. 07-7052, 2008 U.S. Dist. LEXIS 66370 (S.D.N.Y. Aug. 28, 2008) (applying New York law). Reinsured’s motion to compel documents from reinsurer granted insofar as documents sought were not prepared in the anticipation of litigation and thus not protected by the work-product doctrine, modified by 2009 U.S. Dist. LEXIS 58070 (S.D.N.Y. July 8, 2009). Upon reexamination, court found 25 (of 266) documents previously ordered discoverable to be privileged and properly withheld, magistrate judge’s recommendation at 2010 U.S. Dist. LEXIS 22254 (S.D.N.Y. Feb. 11, 2010). Magistrate judge recommended that reinsurer’s motion for partial summary judgment be granted, adopted by, in part, vacated by, in part, summary judgment granted by, in part 2010 U.S. Dist. LEXIS 22245 (S.D.N.Y. Mar. 9, 2010). Magistrate judge’s recommendation vacated without prejudice, except as to the recommendation for summary judgment in favor of reinsurer on the issue of whether reinsurer provided coverage.

Reinsurance information discoverable by underlying claimants.

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Smith v. ComputerTraining.Com, Inc., 2014 U.S. Dist. LEXIS 135904 (E.D. Mich. Sept. 26, 2014). An insurer was ordered to produce any reinsurance policy(ies) related to the insured in response to document subpoenas from the underlying claimants after a large judgment was entered against the insured because the documents were likely to lead to discovery of relevant admissible evidence regarding the financial status of the insured.

Tardiff v. Knox County, et al., No. 02-251-P-C, 2004 U.S. Dist. LEXIS 22862 (D. Maine 2004). Defendant reinsured self-funded insurance pool ordered to produce reinsurance agreement to class action plaintiffs pursuant to FRCP 26(a)(1)(D) because reinsurers are insurers who are exposed to potential liability regardless of who will ultimately receive reinsurance proceeds.

State Insurance Department required to index and justify nondisclosure ofdocuments relating to reinsurance transactions based upon policyholder’s suitunder Freedom of Information Act

Goodrich Corp. v. Clark, 837 N.E.2d 953 (Ill.App. 2005).

Subpoena power in seeking reinsurance information

U.S.A. v. Ferguson, et al., 2007 WL 2815068 (D.Conn. 2007). Criminal defendants attempt to subpoena reinsurer’s counsel and former employees concerning loss portfolio transaction and reinsurance transactions quashed insofar as defendants could provide no basis for the admissibility of the material.

Transferring motion to compel responses to subpoena seeking reinsuranceinformation.

Fed. Deposit Ins. Corp. v. Everest Reinsurance Holdings, Inc., 115 A. D. 3d 480 (N.Y. App. Div. 1st Dep’t 2014). Transferring a motion to compel responses to a subpoena request for reinsurance information to the court in which the underlying matter is pending particularly in light of the conflict between New York and Georgia law on the relevance of reinsurance information.

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XII. Reinsurance Claim Issues Arising From September 11, 2001

After the terrorist attacks on September 11, 2001, courts were confronted with a rangeof issues, including jurisdiction (subject matter and personal), duplicative litigation,consolidation, exhaustion of underlying policy limits, “one event” and effect of acommutation agreement. The follow case law is illustrative.

Subject matter jurisdiction.

Combined Ins. Co. of Am. v. Certain Underwriters at Lloyd’s of London, No. 01-10023, S.D.N.Y., reprinted in Mealey’s Litigation Report: Reinsurance Vo. 13, No. 11 (10/3/02), aff’d., No. 02-9089 (2d Cir. 2003), 2003 U.S. App. LEXIS 17545. Holding that the Air Transportation Safety System Stabilization Act does not apply to a suit seeking reinsurance proceeds for accidental death and dismemberment claims arising out of the September 11 attacks on the World Trade Center.

Canada Life Assurance Co. v. Converium Ruckerversicherung, 210 F. Supp. 2d 322 (S.D.N.Y. 2002), aff’d, 335 F.3d 52 (2nd Cir. 2003). Holding that Section 408(b)(3) of the Air Stabilization Act which states that the United States District Court for the Southern District of New York shall have original and exclusive jurisdiction over all actions brought for any claim resulting from or relating to the terrorist-related aircraft crashes of September 11, 2001 does not apply to reinsurance disputes.

Personal jurisdiction.

Associated Aviation Underwriters v. Arab Ins. Group, 2003 U.S. Dist. LEXIS 6254 (S.D.N.Y. 2003). Providing reinsurance on a New York policy does not provide sufficient contact with New York simply because the underlying events which trigger indemnification occur in the state. Section 408(b) of the Air Transportation Safety and System Stabilization Act does not apply to reinsurance disputes.

Duplicative litigation.

Combined Ins. Co. of Am. v. Certain Underwriters at Lloyd’s, London, 826 N.E.2d 1089 (Ill. App. Ct. 2005). Dismissal based upon other pending action not appropriate where dismissal would require an Illinois resident to file a counterclaim in the concomitant matter pending in the foreign jurisdiction.

Consolidation.

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ReliaStar Life Ins. Co. v. Am. Healthcare Indem. Co., 2004 U.S. Dist. LEXIS 2649 (D. Minn. 2004). Claims arising from 9/11 attacks cannot be consolidated absent contract language requiring consolidation.

Full Exhaustion of Underlying Limits Not Required.

Lexington Ins. Co. v. Tokio Marine & Nichido Fire Ins. Co. Ltd., No. 11-cv-00391, 2012 U.S. Dist. LEXIS 59635 (S.D.N.Y. March 28, 2012) (applying New York law). Reinsurer denied claims of reinsured excess insurer arguing that because the underlying settlement did not result in the primary insurer actually paying all of its limits, the reinsured excess insurer had no obligation to pay. The Court held that the excess insurer’s liability was not contingent upon exhaustion of the underlying limit and, therefore, the reinsurer’s obligations were triggered as well.

One Event.

Aioi Nissay Dowa Ins. Co. Ltd. v. Prosight Specialty Mgmt. Co., Inc., et al., 2012 U.S. Dist. LEXIS 118233 (S.D.N.Y. August 21, 2012) (applying New York Law). Court granted the reinsurer’s petition to confirm an arbitration award wherein the panel found that “[b]ecause the WTC Losses occurred within one 24 hour period and within a 10 mile radius. . . all such losses constituted one event under the Contracts.” Subsequent findings of fact and conclusions of law proceeding in Aioi Nissay Dowa Ins. Co. v. Prosight Specialty Mgmt. Co., 11 Civ. 1330, 2013 U.S. Dist. LEXIS 87050 (S.D.N.Y. June 20, 2013) aff’d, 563 Fed. App’x 68 (2d Cir. N.Y. April 22, 2014).

Effect of commutation agreement with other reinsurers must be taken intoaccount when billing remaining reinsurer.

Aioi Nissay Dowa Ins. Co. Ltd. v. Prosight Specialty Mgmt. Co., Inc., et al., 563 Fed. App’x 68 (2d Cir. N.Y. April 22, 2014). Reinsurer was obligated to cover a percentage of the premiums that the cedent actually paid to reinstate the value of its reinsurance contracts. However, the cedent entered into very favorable commutation agreements with other reinsurers, thus the cedent never had to pay the reinstatement premiums it would have otherwise owed. Therefore, the cedent breached the “Ultimate Net Loss Clause” and the “Several Liability Clause” in the contract by overbilling the reinsurer.

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Current U.S. Reinsurance Claim Issues

Documents

Transcript of Current U.S. Reinsurance Claim Issues