1. September 15, 2014

3. Joseph Scully
Day Pitney, LLP
Steven Mestman
October Mountain Consulting, LLC
Jeff Kayl
Everest Global Services
Myra Lobel
Guy Carpenter & Company

4.  What role does underwriting have in the
litigation and resolution of reinsurance
disputes?
 How have reinsurance disputes impacted the
underwriting process?

5.  Underwriting clearly has had an impact in many
disputes.
 Underwriting intent is relevant but does not
supersede contract language, or even implied
contract terms.
 As with any contract, courts have resorted to
underwriting evidence to fill gaps in contract
wording and help explain ambiguous terms.

6.  Absent underwriting documentation, courts will look
elsewhere.
 Cont'l Cas. Co. v. Yosemite Ins. Co., 2001 U.S. Dist.
LEXIS 25913 (N.D. Ill. Mar. 5, 2001):
◦ “[T]hough it would no doubt help to know what occurred during
negotiations, where neither side has this information, the court
will consider other evidence to show what may have occurred.” Id.
at *21.
◦ While cedent had evidence demonstrating its intent with respect
to the retention, there was no evidence demonstrating that the
cedent communicated that intent to reinsurer.
◦ Relied on testimony of reinsurer’s claims personnel.

7.  Commercial Union Ins. Co. v. Seven Provinces Ins. Co., 217 F.3d
33 (1st Cir. 2000):
◦ “Because the policy was several decades old, evidence of the
parties' actual intent was unavailable, but each side proffered an
expert who worked in the insurance business and could testify to
what the terms in the policy must have meant in light of industry
practice.” Id. at 38-39.
◦ “In other words, after recognizing the ambiguous language of the
facultative reinsurance certificate, and after considering two
plausible explanations of what that language meant, the court
chose one explanation over another based on its assessment of
the credibility of the witnesses.” Id. at 39.
◦ Trial court simply picked the expert it liked best.

8.  OneBeacon Am. Ins. Co. v. Commercial Union Assur. Co., 684
F.3d 237 (1st Cir. 2012):
◦ Dispute concerning existence of reinsurance after 1980
◦ Assuming an ambiguity, court concluded that underwriting
documentation supported finding no reinsurance:
 Parties had facultative certificate for 1980, but not thereafter.
 Flow of premium payments supported view that reinsurance was
terminated after first year.
 Coding on cedent’s ledger indicated reinsurance in 1980, but
not thereafter.

9.  Hartford Accident & Indem. Co. v. Ace Am. Reins. Co., 284
Conn. 744, 762 (Conn. 2007):
◦ Cedent accumulated asbestos losses as arising out of a
“common cause.”
◦ Both cedent and reinsurers pointed to same
underwriting documents to support their interpretation
of the provision – broker documents concerning
aggregate extension proposal.
◦ Court remanded case for fact finder to consider
underwriting evidence and determine meaning of the
common cause provision.

10.  Largely anecdotal
 Many of the same issues:
◦ Contract existence and terms
◦ Interpretation of provisions such as occurrence,
ultimate net loss, expenses, etc.
 Difficult to discern importance of
underwriting evidence

11.  Process
 Documentation
 Wording
 Costs

12.  How have disputes changed the underwriting
process?
 How has it changed documentation of
contract negotiations?
 Is more paper better?

13.  How has contract wording changed as a
result of disputes?
 Is change good?

14.  Gradual progression to more detailed and
complex agreements.
 Common contract provision issues which
have changed and the reasons for the
changes.

15.  Disputes have had obvious impact on dispute
resolution provisions:
◦ Impartiality and qualifications of arbitrators
◦ Incapacity of panel member
◦ ex parte communications/confidentiality
◦ Arbitration timing
◦ Consolidation/Alternatives to 3-person panel

16.  1999 Professional Lines XOL
 2000 Casualty QS & XOL

17.  2000 Multiple Line QS
 2005 Excess Casualty QS
 2014 Professional Lines QS

18.  1999 Professional Lines XOL

19.  2000 Casualty QS & XOL

20.  2005 Excess Casualty QS

21.  2014 Professional Lines QS

22.  2014 Professional Lines QS

23.  1999 Professional Lines XOL

24.  2000 Employers’ Liability XOL
 2005 Excess Casualty QS

25.  2000 Multiple Line QS

26.  2000 Multiple Line QS - continued

27.  2000 Multi Line QS

28.  2005 Excess Casualty QS

29.  1999 Professional Lines XOL

30.  1999 Professional Lines XOL

31.  1999 Professional Lines XOL

32.  2000 Employers’ Liability XOL
 2014 Professional Lines QS

33.  1999 Professional Lines XOL
 2000 Employers’ Liability XOL
 2000 Professional Liability QS and XOL
 2014 Professional Lines QS

34.  2005 EXCESS CASUALTY QS
TERM: Section A: As respects business ceded under excess liability following form insurance policies:
Losses occurring on policies attaching and on policies having deemed or actual anniversary dates during the 12 month term beginning January
1, 2005, per the Company’s policy form. Run-off to policy expiration or renewal date, whichever comes first, for all policies in force at the date
of cancellation or Agreement expiration.
Cut-off at Company’s option, in which event Reinsurers will immediately return their pro-rata share of unearned premium. Regardless of
expiration method, Reinsurers’ liability will continue in the event Company is bound by statute or regulation to continue coverage.
Section B: As respects business ceded under occurrence first reported policies:
Occurrences reported on policies attaching and on policies having deemed or actual anniversary dates during the 12 month term beginning
January 1, 2005, per the Company’s policy form.
Run-off to policy expiration or renewal date, whichever comes first, for all policies in force at the date of cancellation or Agreement expiration.
In the event any extended discovery or reporting options are exercised in accordance with policies, Reinsurers will be liable for the additional
period. In the event the Company should become bound by statute, regulation, or judicial decision for a period longer than the initial policy
period, Reinsurers will be liable for the additional period.
Cut-off at the Company's sole option, in which case Reinsurers will immediately return their pro rata share of the unearned premium.

35.  1999 Professional Lines XOL

36.  2000 Employers’ Liability XOL

37.  Premiums
 Kicking the tires more – greater pre-contract
scrutiny
 Reinsurers more actively monitoring underwriting
and claims
 Avoidance of unique risks
Aviva Abramovsky, Reinsurance: the Silent Regulator, 15 CONN.
INS. L.J. 345 (2009)

39.  Joseph Scully
 Day Pitney LLP
 860-275-0135; jkscully@daypitney.com
 Steven A. Mestman
 October Mountain Consulting LLC
 973-738-4064; steve.mestman@roadrunner.com
 Jeff Kayl
 Everest Reinsurance Company
 908-604-3000; jeff.kayl@everestre.com
 Myra Lobel
 Guy Carpenter & Company LLC
 917-937-3157; myra.e.lobel@guycarp.com