Reinsurance Redux - May 2012

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In This Issue:

- Reinsurer’s Obligation to Provide Coverage to Reinsured Not Contingent Upon Exhaustion of Limits of Primary Policy

In granting an insurer’s motion for judgment on the pleadings, the United States District Court for the Southern District of New York held that a reinsurer’s obligation to provide coverage to its reinsured was not contingent upon exhaustion of the limits of an underlying primary insurance policy. Lexington Insurance Co. v. Tokio Marine & Nichido Fire Insurance Co. Ltd., No. 11 Civ. 391 (DAB) (S.D.N.Y. Mar. 28, 2012). PAGE 2

- Court Articulates Methodology For Calculating Prejudgment Interest on Previously Remitted Indemnity Payments Under Reinsurance Agreement

When awarding prejudgment interest against a reinsurer on previously remitted indemnification payments, the United States District Court for the District of New Jersey held that prejudgment interest would be calculated from the date the complaint was filed for payments demanded prior to that date and declined to enhance the interest rate. Munich Reinsurance America, Inc. v. Tower Insurance Co. of New York, Civ. A. No. 09 2598, 2012 WL 1018799 (D.N.J. March 26, 2012). PAGE 3

- Non-Signatory to Arbitration Agreement Does Not Waive Right to Have Court, Not an Arbitrator, Determine Issue of Arbitrability

On March 6, 2012, the Eighth Circuit held that a non-signatory to an arbitration agreement did not waive its right to have the court, not an arbitrator, determine the issue of arbitrability despite the fact that the non-signatory had notice of the arbitration and affirmatively chose not to participate. The Eighth Circuit held that although such conduct might waive the right of a non-signatory to have a court determine the issue of arbitrability, such a case was not warranted here. Local 36 Sheet Metal Workers’ Int’l Assoc. v. Whitney, 670 F.3d 865 (8th Cir. 2012). PAGE 4

Please see full newsletter below for more information.

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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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