Tag: life reinsurance

The Difficulty With Sealing Documents

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In several blog posts I have discussed efforts to seal arbitration awards and arbitration materials in court proceedings to confirm or vacate an arbitration award. But that is not the only circumstance where a party will ask the court to seal purportedly confidential or proprietary documents. In motion practice, particularly motions for summary judgment, information and exhibits may be filed under seal because of alleged confidentiality or because the documents contain allegedly sensitive business information that could put the party at a competitive disadvantage.

In a recent case, a party moving for summary judgment sought to seal documents in a variety of categories, including reinsurance-related documents. Given the court’s hesitancy to seal documents from the public, can you guess the outcome?

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Arbitration Award Confirmed Despite Recapture

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Confirming an arbitration award is straightforward, but what about confirming an arbitration award in a yearly renewable term life reinsurance dispute even after the business is recaptured?

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New York Federal Court Allows Final Arbitration Award to Remain Sealed

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Reinsurance arbitrations are typically confidential and generally proceed with a confidentiality agreement in place protecting all arbitration information, including the final award, from disclosure. This is in contrast to legal proceedings, including proceedings collateral to arbitrations, where generally the public’s right to judicial documents outweighs the parties’ privacy. In recent years, when parties to reinsurance arbitrations have gone into court to confirm, enforce, modify or vacate arbitration awards, courts have been reluctant to keep the final awards under seal. In fact, some parties have used this trend as a litigation strategy to “unseal” confidential final arbitration awards by going to court to confirm an award where there was no indication that the losing party would not comply with the award.

Bucking that trend, a New York federal court recently allowed the final arbitration award to remain sealed. Is the tide turning?

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Reinsurance Trustee May Be on the Hook for Breach of Contract and Breach of Fiduciary Duty Damages

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Reinsurance agreements with non-US off-shore reinsurers usually involve a reinsurance trust with a bank acting as trustee. These trust agreements typically absolve the trustee from nearly all liability because of their ministerial role in the reinsurance transaction. This is very common in off-shore life, annuity and long-term care reinsurance agreements.

In the last several years, however, trustees have come under scrutiny because some off-shore reinsurers were not quite on the up-and-up and the assets placed in the trust accounts and managed by the reinsurers’ affiliated investment managers have been substandard. This, of course, has caused the reinsurance arrangement to collapse, regulatory issues and often the total loss of the assets meant to secure the cedent’s losses. Because these reinsurers typically do not have assets on shore, some of their cedents have gone after the trustees seeking damages.

In a recent case in New York State court, the motion court granted the trustee’s motion to dismiss but the intermediate appellate court found otherwise and reversed.

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