In a dispute regarding reinsurance coverage for the settlement of asbestos-related claims for nearly a billion dollars, on October 29, 2015, a New York appeals panel affirmed a New York state trial court decision, which denied the reinsurers’ motion for a ruling that the reasonableness of the cedent’s allocation of all settlement dollars to asbestos-insurance claims is properly the subject of evidence at trial. The court noted that in a prior appeal in the case, the Court of Appeals, New York’s high court, denied the cedent’s motion for summary judgment, in part, finding issues of fact as to 1) whether the cedent, “in allocating the settlement amount, reasonably attributed nothing to so-called ‘bad faith’ claims against it”, and 2) whether “certain claims were given unreasonable values for settlement purposes”. (We reported on the Court of Appeals decision on April 1, 2013.) Thus, the court held that the trial court correctly found that the reinsurers’ motion for a ruling allowing evidence on the reasonableness of the cedent’s allocation of the entire settlement to asbestos-insurance claims was contrary to the Court of Appeals decision, which limited the triable issues to two issues.

United States Fidelity & Guaranty Co. v. American Re-Insurance Co., No. 604517/02 (N.Y. App. Div. Oct. 29, 2015).