http://www.lexisnexis.com/mealeys/news.aspx Headline Reinsurance Legal News from LexisNexis® en-us http://www.lexisnexis.com/mealeys/images/lexismealeyslogo.gif 130 29 http://www.lexisnexis.com/mealeys/news.aspx Copyright 2013 http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=24-2%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%201%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' FORT WORTH, Texas - A Texas appeals court panel on May 2 affirmed a lower court decision and said an insurer is estopped from arguing to compel arbitration after arguing against arbitration of a reinsurance dispute in earlier litigations (New Hampshire Insurance Company v. Magellan Reinsurance Company, Ltd., No. 02-12-00196-CV, Texas App. 2nd Dist.; 2013 Tex. App. LEXIS 5437). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=24-2%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%202%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' NEW YORK - Parties to a number of reinsurance agreements filed a joint stipulation asking a New York federal court to confirm an arbitration award on May 9 (Berkley Insurance Company f/k/a Signet Star Reinsurance Company v. Excalibur Reinsurance Corporation, f/k/a PMA Capital Insurance Company, as successor to Caliber One Indemnity Company, No. 13-cv-02633, S.D. N.Y.; See 5/3/13, Page 6). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=24-2%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%203%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' CHICAGO - A reinsurer said in an Illinois federal court on April 25 that a liquidator did not assign arbitration rights to the holder of certain rights regarding a number of reinsurance agreements (Pine Top Receivables of Illinois, LLC v. Banco De Seguros Del Estado, No. 12-cv-06357, N.D. Ill.; 5/3/13, Page 6). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=24-2%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%204%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' NEW YORK - A reinsurer told a New York federal court on April 25 that its reinsured failed to provide it with prompt notice of underlying asbestos exposure claims (Century Indemnity Company, as successor-in-interest to California Union Insurance Company v. Global Reinsurance Corporation of America, as successor-in-interest to Constitution Reinsurance Corporation, No. 13-cv-0797, S.D. N.Y.; See 3/15/13, Page 6). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=24-2%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%205%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' MADISON, Wis. - An insurer told a Wisconsin federal court on May 1 that the issue of whether the insurer owes its reinsurer under a separate controversy is not a genuine issue of material fact that would preclude summary judgment regarding obligations under two reinsurance agreements (Employers Insurance Company of Wausau v. OneBeacon Insurance Company, No. 13-cv-00085, W.D. Wis.; See 5/3/13, Page 9). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=24-2%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%206%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' NEW HAVEN, Conn. - An insurer amended its breach of contract complaint against a reinsurer on April 15, adding that a reinsurance agreement's arbitration clause has no bearing on the suit (Travelers Indemnity Company v. Excalibur Reinsurance Corporation, No. 13-cv-00293, D. Conn.; See 3/15/13, Page 8). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=24-2%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%207%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' NEW YORK - Guy Carpenter & Co. LLC sued Excalibur Reinsurance Corp. in a New York federal court on April 25, claiming that Excalibur owes it nearly $900,000 due to a mistaken overpayment (Guy Carpenter & Company, LLC v. Excalibur Reinsurance Corporation f/k/a PMA capital Insurance Company, No. 13-cv-02756, S.D. N.Y.). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=24-2%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%208%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' By Cliff Schoenberg and Richard Spitzer Among the principal purposes of traditional reinsurance are spreading risk and affording balance sheet relief. Traditional reinsurance spreads risk by transferring it to other insurance or reinsurance companies and achieves balance sheet relief (e.g., an increase in admitted assets or a credit against reinsurance recoverables) to the extent that the reinsurer is licensed in the appropriate jurisdiction or provides collateral to secure its reinsurance payment obligations. Cat bond transactions accomplish the same risk transfer purpose but the ultimate receptacle of the transferred risk is the capital markets, with the special purpose vehicle reinsurer established solely to serve as a weigh-station vehicle to accomplish that intended transfer. So, both traditional catastrophe reinsurance and cat bonds spread the risk of catastrophic losses, with cat bonds able to spread that risk (through the intervention of the special purpose vehicle reinsurer) in the vast capital markets whereas traditional reinsurance is confined to transactions between insurance/reinsurance companies. http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=24-1%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%201%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' COLUMBUS, Ohio - A federal judge in Ohio on April 22 said the court lacks jurisdiction to consider a motion to reconsider an earlier ruling regarding a reinsurance dispute because the case had been transferred to a federal court in Florida before the motion for reconsideration was filed (Certain Underwriters at Lloyd's, London Purportedly at Interest v. Stonebridge Casualty Insurance Company, No. 12-cv-00160, S.D. Ohio; See 2/15/13, Page 13). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=24-1%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%202%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' NEW YORK - An Argentine performance bond issuer argued in a New York federal court on April 26 that the court has no jurisdiction over a dispute between the issuer and its reinsurer (St. Paul Fire & Marine Insurance Company v. Aseguradora De Creditos Y Garantias, S.A., No. 12-cv-4627, S.D. N.Y.; See 9/21/12, Page 13). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=24-1%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%203%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' NEW YORK - A party to a number of reinsurance treaties asked a New York federal court on April 22 to confirm a reinsurance arbitration award (Berkley Insurance Company f/k/a Signet Star Reinsurance Company v. Excalibur Reinsurance Corporation, f/k/a PMA Capital Insurance Company, as successor to Caliber One Indemnity Company, No. 13-cv-02633, S.D. N.Y.). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=24-1%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%204%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' CHICAGO - The assignee of certain rights under a number of reinsurance agreements told an Illinois federal court on April 19 that it has sufficiently alleged facts supporting its contention that it was assigned the right to arbitrate when it was assigned the right to collect debts under the reinsurance agreements (Pine Top Receivables of Illinois, LLC v. Banco De Seguros Del Estado, No. 12-cv-06357, N.D. Ill.; See 4/19/13, Page 8). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=24-1%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%205%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' NEW HAVEN, Conn. - The successor to a fronting reinsurer appealed the confirmation of a reinsurance arbitration award in a Connecticut federal court on April 22 (Arrowood Indemnity Company v. Trustmark Insurance Company, No. 03-cv-01000, D. Conn.; See 4/19/13, Page 5). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=24-1%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%206%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' MADISON, Wis. - A reinsurer told a Wisconsin federal court on April 23 that genuine issues of material fact remain regarding an asbestos-related reinsurance dispute and therefore its reinsured's motion for summary judgment should be denied (Employers Insurance Company of Wausau v. OneBeacon Insurance Company, No. 13-cv-00085, W.D. Wis.; See 4/19/13, Page 11). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=24-1%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%207%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' PHILADELPHIA - A reinsurer filed a notice of appeal in a Pennsylvania federal court on April 29, appealing the court's decision in favor of an insurer in an asbestos personal injury-related reinsurance dispute (Ace Property & Casualty Insurance Company v. Global Reinsurance Corporation of America, No. 11-cv-02838, E.D. Pa.; See 4/4/13, Page 7). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=24-1%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%208%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' NEW YORK - An insurer filed a notice of appeal in a New York federal court on April 23 regarding a summary judgment decision in favor of its reinsurer in a case grounded in the late notice that the insurer gave the reinsurer of underlying asbestos-related claims (AIU Insurance Co. v. TIG Insurance Co., No. 07-cv-7052, S.D. N.Y.; 2013 U.S. Dist. LEXIS 41716; See 4/4/13, Page 4). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=24-1%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%209%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' By Robert M. Hall I. Introduction As a general proposition, a party waives attorney-client and work product privileges when it shares privileged documents with a third party. There are a number of exceptions to this general proposition, one being where the parties share a "common interest." The technical meaning of "common interest" is beyond the scope of this article as it involves nuanced issues of "legal" interest v. other types of interest. However the common interest waiver has arisen in a number of reinsurance disputes both in litigation and arbitration. One court posed the issue as follows: http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=23-24%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%201%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' NEW HAVEN, Conn. - A federal judge in Connecticut on April 8 granted a reinsurer's motion to compel discovery of certain materials, holding that the reinsurer's contentions are in accord with controlling New York law (Travelers Indemnity Company v. Excalibur Reinsurance Corporation, No. 11-cv-01209, D. Conn.; 2013 U.S. Dist. LEXIS 50134; See 4/4/13, Page 13). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=23-24%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%202%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' NEW HAVEN, Conn. - A federal judge in Connecticut on March 29 declined to follow a magistrate judge's recommendation that a reinsurance dispute be remanded to an arbitration panel, and the judge upheld an earlier court confirmation of an arbitration award (Arrowood Indemnity Company v. Trustmark Insurance Company, No. 03-cv-01000, D. Conn.; 2013 U.S. Dist. LEXIS 46566; See 3/5/10, Page 4). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=23-24%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%203%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' TRENTON, N.J. - A New Jersey federal judge granted a motion to dismiss a breach of contract suit and ordered the parties to arbitrate their dispute, saying in an unpublished opinion issued April 11 that a reinsurance agreement's arbitration clause is not trumped by the agreement's service-of-suit clause (New Jersey Physicians United Reciprocal Exchange v. ACE Underwriting Agencies, Ltd., et al., No. 12-cv-04397, D. N.J.; 2013 U.S. Dist. LEXIS 52035). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=23-24%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%204%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' CHICAGO - A reinsurer told an Illinois federal court on April 11 that the assignee of certain rights under a number of reinsurance agreements has not sufficiently pleaded its claims regarding its attempt to get the court to compel arbitration (Pine Top Receivables of Illinois, LLC v. Banco De Seguros Del Estado, No. 12-cv-06357, N.D. Ill.; See 4/4/13, Page 11). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=23-24%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%205%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' NEW YORK - A party to a reinsurance arbitration told a New York federal court on April 2 that an arbitration panel's award is not final and, therefore, the court does not hold jurisdiction to confirm the award (First State Insurance Company, et al. v. National Casualty Company, No. 13-cv-00704, S.D. N.Y.; See 3/1/13, Page 4). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=23-24%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%206%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' NEW HAVEN, Conn. - An insurer told a Connecticut federal court on April 3 that its reinsurer has improperly used its response to a motion to strike as an unauthorized sur-rebuttal regarding a separate motion for pre-pleading security (Travelers Indemnity Company v. Excalibur Reinsurance Corporation, No. 12-cv-01793, D. Conn.; See 3/15/13, Page 11). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=23-24%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%207%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' MADISON, Wis. - An insurer told a Wisconsin federal judge on April 2 that the language of a pair of reinsurance agreements is clear that a reinsurer must honor a settlement made between the insurer and its insured (Employers Insurance Company of Wausau v. OneBeacon Insurance Company, No. 13-cv-00085, W.D. Wis.; See 2/15/13, Page 11). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=23-24%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%208%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' By Adam H. Fleischer and Jason P. Minkin I. Introduction Today more than ever, reinsurers are reinsuring either captive insurance companies or reinsureds who retain only a very small share of the risk for themselves, while passing most of the risk to reinsurers.1 When a loss occurs under such a scenario, reinsurers are often contractually relegated to sitting helplessly on the sideline and watching the claim being managed by a reinsured who really does not have much of its own money on the line, and who has very little incentive to mount a comprehensive, time consuming, and costly coverage defense and investigation. In these instances, the single greatest weapon protecting the reinsurer is the duty of utmost good faith or uberrima fides. http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=23-24%20Mealey%27s%20Litig.%20Rep.%20Reinsurance%209%20(2013)&view=full&ORIGINATION_CODE=00144 target='_blank' By Cliff Schoenberg and Richard Spitzer Cat Bond Structures In a catastrophe bond (cat bond), a special purpose reinsurer is formed, typically in an offshore tax-efficient jurisdiction. The special purpose reinsurer enters into a reinsurance agreement with the sponsoring company (the ceding company), and fully collateralizes its obligations under that contract through the issuance of notes (the cat bonds) to investors. This collateralization addresses one of the two sources of risk faced by cat bond invesors, namely, credit risk. The credit risk (i.e., the risk that the principal amount of the cat bonds will not be returned to the investors even if no covered catastrophe occurs) is typically ameliorated by a requirement that the funds deposited in the collateral account be invested in very safe instruments such as U.S. Treasury Money Market Funds. Of course, the other risk is the insurance risk that the investors assume under the cat bonds, namely, the risk that the investors will experience a loss if a covered catastrophe event occurs that results in a payment to the sponsoring company under the reinsurance agreement.