LLR: Insurance & Reinsurance

Treaty - Excess of loss - Variation - Estoppel - Whole account run-off - Brokers’ letter asking reinsurers to follow reassured’s decision on asbestos-related claims agreement - Whether reinsurers agreed to vary treaty - Whether reinsurers estopped from defending reassured’s claims.

Arbitration - Award - “Convention award” - Arbitration clause in excess of loss reinsurance agreement providing for London arbitration - Disputes referred to sole arbitrator - Arbitration hearings in London - Final interim award made and signed in Paris - Whether award “made” in France and a “Convention award” - Whether appeal against award outside jurisdiction of English court - Whether party estopped from objecting to applications for leave to appeal.

Practice - Writ - Service out of jurisdiction - Retrocession agreement concluded between Bermudan cedant and Kenyan retrocesssionaire through London brokers - Writ issued in English court by cedant against retrocessionaire - Whether leave given to cedant to serve writ out of jurisdiction should be set aside.

Notice - Excess of loss - Duty on ceding excess of loss insurer to give “prompt notice” of “any occurrence or accident... likely to involve this reinsurance” - Custom and practice in reinsurance industry.

Security - Trust fund - Whether reinsurer entitled to return of balance of fund - Whether reinsurer or reassured entitled to interest.

Marine quota share treaty - Abandonment - Discharge by consent - Alleged failure by reassured to supply statements and - Delay in payment - Payments made through third parties - Whether intention to repudiate can be inferred - Effect of repeated demands.

Funding - Claim - Broker’s gratuitous payment to reassured - Whether payment diminished reassured’s loss - Whether recoverable by reassured from reinsurer.

Insolvency - Winding up - Insurance companies - Valuation of liabilities - Long-tail US casualty and professional indemnity insurance and reinsurance - Whether Policyholders’ Protection Board obliged to cover claims - Insurance Companies (Winding Up) Rules 1985, Rule 6, Schedule 1, paragraph 2(2)(a)(b).

Practice and procedure - Writ - Application for leave to serve writ outside jurisdiction - Whether affidavit in support of application sufficient - Whether leave should be granted - RSC order 11, r (1), (4)(a).

Follow the fortunes - Defence costs - ‘in addition thereto” - Liability of reinsurers where reinsured agreed to pay defence costs in excess of policy limits - Effect of reinsurance certificate wordings “in addition thereto”, “reinsurance accepted” “subject to the... amount of liability set forth herein”.

Follow the fortunes - Asbestos-related claims - Whether reinsurer bound to reimburse reinsured for payments made on original insured’s behalf - Effect of reinsured’s participation in Wellington Agreement and payments through Claims Facility - Whether reinsurer’s right to associate did extend to decisions which might involve original insurance - Whether reinsurer not liable on grounds of untimely notice.

Reinsurance certificate - Construction - Notice of loss - Notice to be given of occurrence “which appears likely to involve loss” under reinsurance - Meaning - Whether notice given in time - Whether reinsurer prejudiced - Whether contra proferentem rule to be applied.

Broker - Duty of care - Assignee - Bank to issue letter of credit in favour of sellers of goods - Buyers obtained insurance policies to cover bank against default in reimbursement of money due under credit - Buyers in liquidation - Claim by bank against insurers or brokers who effected policies - Bank’s title to sue - Extent of broker’s duty to bank in contract and in tort.

Contract - Construction - Whether person contracting as agent or principal - Whether court could look at deleted words.

Negligence - Insurance broker - Extent of duty of care.

Arbitration - Award - “Convention award” - Arbitration clause in excess of loss reinsurance agreement providing for London arbitration - Disputes referred to sole arbitrator - Arbitration hearings in London - Final interim award made and signed in Paris - Whether award “made” in France and a “Convention award” - Whether appeal against award outside jurisdiction of English court - Whether party estopped from objecting to applications for leave to appeal.

“Follow the settlements” - Ultimate net loss - Longtail asbestos-related liabilities - Payments made under Wellington Agreement - Whether outside scope of aggregate excess of loss treaty - Reinsurers’ assurance that “assent to [Wellington Agreement] will not prejudice [reinsured’s] position - Promissory estoppel - Whether reinsurers precluded from raising any issue as to scope of reinsurance coverage.

Insolvency - Pool - Reinsurers’ liability - Reinsured in liquidation - Misrepresentation alleged by reinsurers (pool participants) - Whether rescission of reinsurance agreement available to reinsurers - Whether third parties would be affected - Whether reinsurers could assert fraud against reinsured’s liquidator - Whether reinsurers could raise alleged fraudulent misrepresentations regarding placement and in reinsurance agreements.

Arbitration - Arbitration clause - Meaning of “disputes” and “differences” - Whether difference existed between parties to retrocession treaty - Meaning of “there is not in fact any dispute between the parties” - Arbitration Act 1975 section 1(1).

Practice - Procedure - Application for summary judgment - Arbitration agreement between parties - Whether readily and immediately demonstrable that respondent had no good grounds for disputing claim - Whether court could be satisfied that there was not any dispute between parties - Whether third party retrocessionnaire could be bound by judgment and award against reinsured - Effect of “follow the fortunes” clause.

Jurisdiction - Reinsurance - Brussels Convention 1968 - Lis alibi pendens - Taking into account the domicile of the parties - Applicability and construction of article 21.

Arbitration clause - “Any dispute arising out of this contract” - Reinsurer’s action against pool manager, intermediary and cedants - Arbitration clauses in contracts with cedants - Whether entire action should be stayed - Interrelatedness of facts and legal claims upon which arbitrable and non-arbitrable claims based - Whether filing of motion for stay by pool manager and intermediary would be deemed waiver of objections to court’s jurisdiction over them.

Antitrust - Jurisdiction - Immunity - Alleged boycott of ISO CGL “occurrence” form by US and foreign insurers and reinsurers - Alleged conspiracy to restrict available reinsurance and retrocessional cover - Directness of injury - States’ standing to bring antitrust suit - Whether McCarran Act immunity attached to foreign reinsurers - Whether primary insurers lost immunity by acting in concert with foreign reinsurers - Whether defendants engaged in boycott - Whether US court should exercise jurisdiction over British reinsurers.

Acquisition - Reinsurance company - IBNR reserves - Alleged misrepresentation, non-disclosure and breach of California state security laws by vendor of reinsurance company, vendor’s president and auditors - Purchaser of reinsurance company informed that IBNR reserves were “adequate” - Reports that IBNR were $1 million to $3 million inadequate - Statement by vendor’s auditor “off the record” that IBNR reserves were understated $2 million - Non-disclosure of IBNR computer programme - Whether summary judgment in favour of vendor, vendor’s president and auditors should be affirmed.

Jurisdiction - US federal court - Diversity and ancillary jurisdiction - Reinsurer’s complaint against reinsurers, syndicates at Lloyd’s - Syndicates’ Names including Illinois residents - Whether complete diversity of citizenship lacking - Whether ancillary jurisdiction conferred by reinsurers’ counter-claim alleging racketeering - Whether court should exercise discretion in favour of retaining jurisdiction.

Arbitration - Arbitration clause - Illegality - Quota share retrocession agreement containing arbitration clause - Alleged illegality of underlying insurance and reinsurance agreements - Separability principle - Power of arbitrators to hear disputes as to termination, avoidance and validity of agreement containing arbitration clause - Whether power extends to disputes as to illegality of contract - Distinction between initial and supervening illegality - Whether clause separable.

Underwriting agent - Duty of care - Treaty quota share business - Duty to monitor business and require periodic audits of ceding company’s underwriting, reporting and claims practices and procedures - Documentation of pre-acceptance procedures and post-acceptance monitoring - Whether managing agent’s president had actual knowledge of failure to perform proper procedures and participated in, directed and supervised inadequate procedures - Whether fiduciary relationship existed between agent and reinsurer - Causation.

Pool - Management - Damages - Reinsurance pool managers sued by members of pool for alleged fraud and wrongful conduct - Arbitration ordered by US court - Escrow account set up by Pacific Re v Ohio Re US CA 172 arbitrators - Whether pool members entitled to declaration that retention of outside counsel was breach of authority by arbitrators.

Arbitration - Arbitrators’ authority - Retention of outside counsel - Interim final order establishing escrow account - Whether breach of authority - Whether manifest disregard of law or fact.

Arbitration - Jurisdiction - Member of reinsurance pool not consenting to arbitration - Whether member outside arbitrators’ jurisdiction.

Practice and procedure - Appeal - Order by district court that supersedeas bond be lodged for $20 million amount of escrow order pending appeal - Whether order improper and excessive.

Non-disclosure - Misrepresentation - Fair presentation - Renewal of casualty excess of loss treaty for 1982 - Earlier years’ records - Whether long record, including years 1977-79, provided by broker and available to reinsurers’ underwriter - Risk broked to concentrate underwriter’s mind on short record covering years 1980-1981 - Whether prudent underwriter would have wanted to see long record - Whether doctrine of waiver defeated any reliance on non-disclosure.

Affirmation - Non-disclosure/misrepresentation defence by reinsurers - Whether reinsurers invoked or asserted contractual right - Whether reinsurers had requisite knowledge of matters on which they could rely - Whether reinsurers entitled to period of time to consider whether or not to avoid - Whether that should include inquiries of witnesses on other side - Whether reinsurers acted in way only consistent with intention not to treat contract as at an end.

Non-disclosure - Additional losses - Applicability of Errors and Omissions clause to precontractual material misrepresentation - Whether additional losses should have been known to reassured and communicated to broker - Whether additional losses material to contract should have been disclosed when final presentation took place - Whether reinsurers had affirmed contract or were estopped from reliance on non-disclosure - Effect of knowledge through loss borderaux.

Jurisdiction - Texas - Foreign reinsurer - Reinsurance provided by Malaysian reinsurer, through reinsurance brokers acting outside United States, to foreign primary insurer of Texas company - Insolvency of primary insurer - Whether Texas court had jurisdiction over reinsurer - “Foreseeability” that reinsured would write casualty coverage within United States.

Arbitration clause - Construction - Qualification of arbitrator - “disinterested executive officials of Insurance or Reinsurance Companies” - Arbitrator employed as executive official of reinsurance company at time of appointment - Arbitrator’s retirement from employment and appointment as consultant to firm of solicitors before arbitration hearing - Whether arbitrator disqualified from acting as arbitrator.

Acquisition - Reinsurance company - Loss reserves - IBNR - Methods of calculation - Preparation of loss triangles - Adequacy of reserves - Reinsurance company allegedly insolvent at time of acquisition Alleged misrepresentation and breach of warranty - Whether seller violated US federal securities laws, committed common-law fraud and breached stock purchase agreement.

Arbitration - Jurisdiction - Rehabilitation - Whether arbitration clause in reinsurance agreements affected court’s jurisdiction - Whether clause abrogated by rehabilitation - Whether rehabilitator’s complaint was “petition” to court under provisions of rehabilitation plan.

Misrepresentation - Non-disclosure - Quota share treaties - Changed wording of premium clause enabling underwriting agent to increase deductions - Whether brokers’ failure to draw change to attention of reinsurers was lack of good faith - Whether professional underwriter should have appreciated significance of change - Estimate of premium income - Whether notice of provisional cancellation gave rise to further duty of disclosure by reassured - Whether endorsements to treaty gave rise to right of reinsurers to avoid contract.

Reinsurance contract - Treaty - Termination -Whether clear and unequivocal affirmation of contract - Whether express invocation of contractual right to inspect was affirmation of contract - Whether reinsurers’ notice of cancellation under continuing treaty created new obligation on reassured - Whether reinsurers’ affirmation of cover after knowledge of breach waived breach.

Market practice - Fair presentation - Character of treaty - Presence of Japanese companies behind cedant -Materiality of cedant’s retention.

Jurisdiction - Reinsurance pool - Claims by pool members against South African company - Service out of jurisdiction - RSC Order 11 rule 1 (d)(iii) - Whether parties’ clear intention that English law should govern - Whether England or South Africa most appropriate forum - Whether pool members had established good arguable case that moneys were due under reinsurance contracts Effect of alleged illegality.

Reinsurance contract - Illegality -Whether burden of proving illegality is prima facie case or strong probability.

Practice - Ex parte order - Burden on plaintiff when initial order challenged - RSC Order 12 rule 8 - Whether proper, on such application, to consider defence such as illegality.

Reinsurance - Jurisdiction - Service out of jurisdiction - Application to set aside - Contracts of reinsurance placed in London but confirmed in Guernsey by underwriting agents - Claim for declaration that plaintiffs not party to contracts - Whether claim brought to “affect” a contract or prove no contract existed - Discretion of court -Whether plaintiffs would have had a good arguable case that agent acted without authority - Whether plaintiffs set up a proper claim in quasi-contract within rules of court - Rules of Supreme Court Order 11 rule 1(1)(d)(ii), (e) - Whether defendants voluntarily submitted to jurisdiction by issue of summons to stay under Arbitration Act 1975.

Marine - Free of particular average clause -Compromised total loss - Whether fpa clause barred recovery for compromised total loss - Follow the fortunes.

Production of documents - Privilege - RICO action in New York - Motion for production of London auditors’ reports - Whether defendant had established attorney-client or work-product privilege - Whether defendant had shown that reports were prepared in anticipation of litigation or compliance with the law - Whether plaintiff had demonstrated substantial need and undue hardship sufficient to overcome work-product privilege.