Reinsurance Redux - April 2013

In This Issue:

- Assignment of Right to Collect on Reinsurance Treaty Held Not to Include Underlying Arbitration Clause:

On February 25, 2013, the United States District Court for the Northern District of Illinois held that the assignment of a bankrupt reinsurer’s right to receive payments under certain reinsurance treaties did not also assign the treaties’ arbitration provision. The Court denied the assignee’s request to compel arbitration. Pine Top Receivables of Ill. v. Banco de Seguros del Estado, 12 C 6357, 2013 WL 677986 (N.D. Ill. Feb. 25, 2013).

- One Bad Apple: A Service of Suit Provision in Any Reinsurance Contract at Issue May Spoil a Defendant’s Removal Power with Regard to All Contracts in the Suit:

The U.S. District Court for the Southern District of New York held on March 11, 2013 that where a reinsurer is sued for failure to pay amounts due under multiple reinsurance contracts, at least one of which contains a service of suit provision, the provision will apply to the entire action and not be limited to the contract or contracts that actually con- tain the provision. Insurance Co. of the State of Pa. v. TIG Ins. Co., 12 CV 6651 VM, 2013 WL 950819 (S.D.N.Y. Mar. 11, 2013).

- Prejudice Not Required to Prove a Late Notice Defense Under Illinois Law:

On March 25, 2013, the U.S. District Court for the Southern District of New York ruled that a late notice provision in reinsurance certificates prevented an insurance company’s attempt to collect from its reinsurer after more than three years elapsed before it finally notified the reinsurer. AIU Ins. Co. v. TIG Ins. Co., 07 CIV. 7052 SHS, 2013 WL 1195258 (S.D.N.Y. Mar. 25, 2013).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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