Overview
Mayer Brown has an extensive national and international insurance and reinsurance practice covering both corporate and litigation aspects. The corporate practice centers around the representation of major domestic and foreign insurers as well as the design, formation, and representation of insured-owned group captives. We represent more than half of the major group captives insuring lawyers' and accountants' professional liability. We have experience and expertise in all aspects of insurance related litigation, whether in court (US state and federal, trial level and appellate) or in arbitration. We also act as counsel to life companies and are regularly involved in mergers and acquisitions, insurance regulatory matters, the development of master policy forms, and a variety of reinsurance matters.

Representation of Reinsurers / Retrocessionaires

• Fireman's Fund Insurance Co. v. SOREMA N.A. Reinsurance Co. We represented SOREMA, the retrocessionaire of Fireman's Fund, in an arbitration involving facultative property reinsurance for damages caused by Hurricane Andrew. The retrocessionaire contended that rescission was appropriate due to certain material misrepresentations and omissions made by the retrocedent during the underwriting process. More than a dozen witnesses and lengthy opening and closing arguments were presented to the three-member arbitration panel for more than two weeks. The parties' cross-petitions concerning selection of the panel were decided in the United States District Court for the Northern District of California, Fireman's Fund Insurance Co. v. SOREMA N.A. Reinsurance Co., 1995 WL 597266 (N.D. Calif. 1995), a leading decision on the subject which affirmed Sorema's right to require arbitrator candidates to respond to a disclosure statement to ensure appointment of an impartial arbitrator.

• In the Arbitration between Dorinco Reinsurance and Vesta Fire. We are currently representing Dorinco Reinsurance Company in an arbitration initiated by Vesta Fire in connection with a quota share treaty covering personal lines business of the ceding company. One of Vesta's other reinsurers which also participated on the quota share treaty brought an action in federal court for rescission and fraud against Vesta and its accountants. The portion of that case against the cedent was severed and the District Court entered an order compelling arbitration. (NRMA Insurance, Ltd. v. Vesta Fire Insurance Corp. (N.D. Ala. CV-99-C-1721-S). Vesta's other reinsurer on the quota share treaty, Alfa Mutual Insurance Company, has brought an action to consolidate the three pending arbitrations initiated by Vesta. (Alfa Mutual Ins. Co. v. Vesta Fire, NRMA and Dorinco, Montgomery Co., Ala. Cir. Ct. CV-2000-1913). Issues between the cedent and its reinsurers will include rescission, allocation, accounting, and treaty interpretation.

• Treaty involving Liability Claims against Casinos. We represented the reinsurer in an arbitration brought by a ceding company which had issued general liability policies to casinos in Nevada. Issues presented to the panel included late notice, adequacy of claims handling, limits of the follow the fortunes doctrine and defense counsel conflict of interest.

• Professional E&O Book of Business. We settled a multi-million dollar dispute after the arbitration panel had been chosen, but before hearing commenced. The arbitration was initiated by the cedent to recover under treaty reinsurance for thousands of claims made under hundreds of professional errors & omissions policies. Our client, the reinsurer, contended that material misrepresentations and omissions were made during the presentation of the risk required rescission, and that late notice and improper claims handling relieved it of liability under the treaty.

• Washburn v. Societe Commerciale de Reassurance. We represented SCOR in connection with matters arising from the insolvency of Reserve Insurance Company and its parent, American Reserve Corporation. The case involved a complex series of reinsurance, retrocessional and guarantee transactions which became the basis for one of the earliest uses of the civil RICO statute. Washburn v. Societe Commerciale de Reassurance, 831 F.2d 149 (7th Cir. 1987). We also litigated the arbitrability of the RICO claim under arbitration provisions in the relevant reinsurance treaties. Reserve v. Brown, 711 F.2d 1343 (7th Cir. 1983).

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Representation of Ceding Companies

• Bank of America Matters. We currently represent Bank of America, N.A. in three related actions pending in the United States District Court for the Southern District of New York:
  • General Star Indemnity Co. v. Platinum Indemnity Limited, et al., No. 00 Civ. 4960 (LMM)
  • Bank of America, N.A., and Platinum Indemnity Limited v. Diamond State Insurance Company, No. 01 Civ. 0645 (LMM)
  • Bank of America, N.A. and Palladium Insurance Limited v. Terra Nova Insurance Company Limited, No. 01 Civ. 0646 (LMM)

  In these actions we represent Bank of America as assignee of ceding companies, Platinum Indemnity Limited and Palladium Insurance Limited, and seek to enforce Bank of America's rights under several reinsurance policies issued by General Star, Diamond State and Terra Nova, which concern weather-related risks. The three reinsurers are attempting to avoid liability under the policies claiming that their managing general agent exceeded its respective authority in binding the reinsurance policies. The central issues in all three of the cases are (1) whether the managing general agent had the actual or apparent authority to bind General Star, Diamond State and Terra Nova to the respective reinsurance agreements; and (2) whether General Star, Diamond State and Terra Nova were negligent or reckless in their respective investigation, placement, monitoring and supervision of the managing general agent when each of them knew or reasonably should have known of the agent's history of engaging in unauthorized insurance practices, exceeding authority guidelines in placing contracts of insurance and/or reinsurance, and collecting premiums with respect thereto.

• Arbitration against the London Market. We represented a ceding company in an arbitration against its London Market reinsurers to collect amounts owed under a quota share treaty in connection with a claim involving products liability. We defeated the reinsurers' defenses of late notice and bad faith claims handling, and successfully argued that the settlement was reasonable. The panel awarded our client the full amount of its claim plus interest.

• Accident & Health Reinsurance. We currently represent a retrocedent in an arbitration initiated by one of its retrocessionaires to avoid the contract based on alleged misrepresentations and omissions made by an MGA and a broker during the initial placement of the coverage.

• Workers Compensation Carve-Out Reinsurance. We currently represent a retrocedent which, through the use of a managing general agent, placed several different, overlapping facultative and treaty retro coverages for hundreds of assumed treaties. Some retro protections are non-performing and others dispute the amount of premium that can be ceded and the order in which the retro program should be applied for each ceded treaty. Several arbitrations and litigations have been commenced in the US and London concerning these programs, and issues to be resolved include the ability of the retrocessionaires to rescind based on exceeding the premium estimate, the order in which the retro program is to be applied to losses, and the effect and application of inuring reinsurance.

• Hurricane Damage Claim. The Firm represented a retrocedent in an arbitration to recover amounts paid as a result of an underlying arbitration award brought by the ceding company for losses from a hurricane in Puerto Rico. Our client, represented by other lawyers, had participated in an arbitration which resulted in an award against it. It then sought to collect a portion of the award from its retrocessionaire, which denied liability alleging the underlying arbitration was not adequately defended. The second panel disagreed, and awarded the full amount of the underlying amount to our client.

• Boiler & Machinery Treaty. We represented the ceding company in an arbitration against its reinsurers to collect $50 million from its reinsurers under a boiler and machinery treaty.

• Diminished Value Claim. The Firm represented an excess insurer in an arbitration against one of the largest US reinsurers to collect under a facultative certificate for losses arising from homeowners' claims against the insured home builder and land developer which built and sold homes on or near contaminated property. Issues presented to the panel included late notice, reasonableness of settlement, exhaustion of primary insurance and trigger and allocation for environmental property damage claims.

• The Central National Insurance Company v. The Greyhound Corp. We brought suit in federal court on behalf of Central National to enforce Greyhound's obligation to guarantee its subsidiary's reinsurance obligations to Central National. Greyhound claimed that Central

  National, the ceding company, had mishandled a significant portion of the underlying claims. The issue was tried to a special master who ruled for Central National on the majority of matters. Before verdict was entered by the federal judge, Greyhound paid a settlement to Central National.

• Steadfast Insurance Co. v. Cornerstone Insurance Company. We are currently representing the captive insurance company of a multi-billion dollar group of healthcare companies which has paid several claims against its insured nursing homes. The captive reinsured portions of its risk to commercial reinsurers, including Steadfast, a member of the Zurich Group. Steadfast filed suit in federal court in Los Angeles seeking to avoid arbitration. Steadfast Insurance Co. v. Cornerstone Insurance Co. (C.D. Calif. 00 04883 WJR). We successfully argued for a stay and the court compelled arbitration . The primary issues that will be presented to the arbitration panel are choice of law, treaty interpretation and the insurability of punitive damages.

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Other Representations

• Brokers and Agents. Issues of agency and who a particular broker acts for in a particular context or transaction commonly arise in insurance and reinsurance coverage disputes. We have litigated this issue repeatedly in a variety of contexts and understand the rules and dual agency issues and insurance regulations that relate to insurance intermediaries.

• Environmental Claims:
  • We are currently involved in an on-going dispute, not yet submitted to arbitration, concerning a reinsurer's liability for amounts our client may ultimately pay for environmental damage under policies issued to a cooperative which manufactured chemicals.
  • We represented a ceding company in connection with its presentation to reinsurers of losses arising from asbestos and pollution claims.

• Arbitrators and Umpires. Our partners and former partners have served as party-appointed arbitrators and neutral umpires in hundreds of reinsurance arbitrations concerning the full range of issues surrounding the underwriting, presentation, and accounting of reinsurance risks; claims handling; contract interpretation; rescission, late notice and other defenses; and the use and scope of authority of managing general agents, brokers, and reinsurance intermediaries.

• Reinsurance Audits. We have performed market practice reinsurance audits for various insurers and reinsurers in the US and Bermuda.

• Third Party Administrator. We represented a third-party administrator ("TPA") in a tripartite arbitration against a professional E&O insurer over interpretation of the TPA contract, payment of fees, and the parties' rights and obligations at termination.

• Self-Insured. We recently briefed and argued a matter before a single arbitrator on behalf of a major healthcare company which was self-insured for liability resulting from a fatal automobile accident involving one of its employees. The arbitrator agreed with our position that self-insurance was not insurance for purposes of the "other insurance" clause in the employee's automobile policy, and therefore the self-insured was not required to contribute to the settlement along with the employee's insurer.

• Breast Implants. We represented an insurer in an arbitration initiated by one of its insureds in connection with projected losses from breast implant liability. Issues included allocation, exhaustion, other insurance, trigger and number of occurrences. The matter was settled on favorable terms prior to a hearing.

• Kempe v. Ocean Drilling & Exploration Co. (ODECO). We represented ODECO and certain of its officers and directors in RICO litigation arising from the insolvency of its Bermuda captive, Mentor Insurance, Ltd. The case was successfully resolved after we prevailed on a motion to dismiss the case on grounds of forum non conveniens in deference to a Bermuda forum where trial by jury, punitive damages and RICO treble damages were all unavailable. Kempe v. Ocean Drilling & Exploration Co., 876 F.2d 1138 (5th Cir. 1989).