In First State Insurance Company v. National Casualty Co., 781 F.3d 7 (1st Cir. 2015), the U.S. Court of Appeals for the First Circuit (the “Court of Appeals”) affirmed a district court’s refusal to vacate an arbitration award resolving claims under excess of loss reinsurance agreements. In doing so, it interpreted the reinsurance agreements and addressed the operation and effect of an “honorable engagement provision” in the reinsurance agreements’ arbitration provision. The district court’s docket is sealed, and its opinion is not available for public viewing.

Factual Background -

First State Insurance Group (“First State”) and National Casualty Co. (“National Casualty”) are parties to eight excess of loss reinsurance agreements pursuant to which National Casualty agreed to reinsure losses arising from various products liability, asbestos and environmental claims made against First State based upon First State’s direct writings and First State’s reinsurance of direct writings by other insurance companies. The reinsurance agreements contained a follow the fortunes provision.

This Article has been previously published in Harris Martin’s Reinsurance and Arbitration publication.