ACE Property & Casualty Insurance Co. v. Global Reinsurance Corp. of America (U.S. District Court, E.D. PA)
In a case removed to federal court from a Pennsylvania state court, a Pennsylvania excess insurer recently filed a claim against a New York reinsurer in a dispute over its obligations under a facultative reinsurance contract. Unlike a typical treaty reinsurance contract, which reinsures multiple insurance policies written under certain circumstances, a facultative reinsurance contract reinsures a specific insurance policy. The parties entered into such an agreement to reinsure on an excess of loss basis an excess umbrella policy issued to Marley Wylain, Inc. The agreement was issued for the 1977 calendar year, and was extended to August 1, 1978. The agreement provided that the reinsurer’s liability shall follow that of the excess insurer’s and shall be subject to the terms and conditions of the excess insurance policy. The excess insurer also contends that all of its loss settlements under the policy would also be binding upon the reinsurer pursuant to the terms of the facultative contract.
In the complaint, the Pennsylvania insurer sets forth the following allegations against the New York reinsurer:
After the facultative contract was executed, Marley Wylain was named as a defendant in a number of asbestos products personal injury claims and lawsuits. These claims were tendered to Wylain’s primary insurers for defense and indemnity. Eventually, the insurance coverage below the excess insurer’s policy exhausted, and the Pennsylvania insurer agreed to participate in defense and indemnity of Wylain’s claims. By December of 2010, the excess insurer’s loss payments on behalf of Marley exceeded the $10 million retention noted in the facultative reinsurance contract. The excess insurer then began to bill the reinsurer for its loss payments. To date, those billings exceed $101,000. The excess insurer noted that it expects substantial additional billings in the years to come over these asbestos loss payments.
The New York excess insurer alleged that the reinsurer breached the facultative contract by failing to timely pay the loss payments billed after a definitive statement of the loss was provided. In the lawsuit, the excess insurer seeks an award for all of the outstanding billings and attorneys’ fees for the costs associated with the suit. The excess insurer further seeks a declaration that the reinsurer is obligated to pay past, current, and future billings in a timely manner pursuant to the terms of the facultative reinsurance contract.
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Bryan Richmond and Joseph Oliva