Reinsurance Redux - July 2012

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In This Issue:

- Pennsylvania Court Grants Plaintiff’s Motion for Summary Judgment and Holds that Terms Not Defined in Reinsurance Certificates are Defined As Set Forth in the Underlying Insurance Policies

- United States Court of Appeals for the Eighth Circuit Affirms Order Compelling Arbitration of a Subcontract Agreement Dispute, in Which Other Portions of the Subcontract Were Held to be Unenforceable

- United States District Court Denies Request to Vacate an Arbitration Award Notwithstanding Alleged Nondisclosure by Arbitrator

- United States Court of Appeals for the Sixth Circuit Affirms District Court’s Decision that Defendant Waived its Right to Arbitrate

Excerpt from Pennsylvania Court Grants Plaintiff’s Motion for Summary Judgment and Holds that Terms Not Defined in Reinsurance Certificates are Defined As Set Forth in the Underlying Insurance Policies:

On May 15, 2012, the Pennsylvania Court of Common Pleas granted an insurer’s motion for summary judgment, holding that the meaning of terms not defined in reinsurance certificates were set forth in the underlying policies for which the reinsurer provided reinsurance. R & Q Reinsurance Company (“R&Q”) provided reinsurance under an excess of loss facultative certificate for four Ace Property & Casualty Insurance Company (“Ace”) insurance policies. Ace was subsequently sued by insureds alleging asbestos bodily injury under these insurance policies. As a result, the insured under each policy entered into a funding agreement with Ace for payment of their claims. Ace submitted proofs of loss to R&Q under the terms of the facultative certificates. R&Q denied payment claiming that Ace wrongly combined expenses and indemnity to calculate the amount of the attachment point. R&Q argued that under an excess of loss facultative certificate, the meaning of “loss” is limited to indemnity.

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