Chasing down reinsurance proceeds from non-US reinsurers is never easy. Multiple US cedents have had to bring proceedings to collect from a wide variety of non-US reinsurers from around the globe. Many of these reinsurers were or are arms of foreign governments and many have gone insolvent or have been privatized. Not surprisingly, some never appear in US proceedings and then seek to resist default judgments. In a recent case, a cedent obtained a default but was temporarily denied a default judgment because of issues with evidence of damages.
In National Indemnity Co. v. IRB Brasil Re, No. 8:23-CV-74 (D. Neb. Feb. 14, 2024), the cedent sought reinsurance recovery for $160 million in losses arising from policies issued to the State of Montana in 1973 and 1974. This reinsurer refused to pay and the cedent sued. Service was made through the Hague Convention and a default was entered when no answer was filed. The cedent sought a default judgment and then the reinsurer moved to quash service and vacate the default.
In rejecting the reinsurer’s motions, the court found that the reinsurer did not meet its burden to show that service of process was not made. The court rejected the reinsurer’s claim that it did not know about the proceedings and pointed to communications between the reinsurer’s counsel and cedent’s counsel trying to settle the dispute. The court also rejected the reinsurer’s evidence of technical deficiencies of service finding that the reinsurer’s own statements contradicted the reinsurer’s arguments.
Unfortunately, however, because of a slight disparity between the default judgment amount sought and the evidence presented, the court would not grant the default judgment until the cedent thoroughly explained its damages calculation methodology. While we have not checked the court docket for this issue, it is highly likely that the cedent provided the declaration requested in a timely manner and a default judgment has issued.
