Mealey's Insurance Insolvency : Mealey's : Legal News & Analysis

Mealey's Insurance Insolvency

July 25, 2023
Asbestos Firms, Insolvent Insurer Group Duel In Settlement Appeal

NEW ORLEANS — An appeal by two asbestos law firms of a Louisiana federal bankruptcy judge’s approval of a $1 million settlement between the Chapter 7 trustee for a bankrupt insulation supplier and the Louisiana Insurance Guaranty Association (LIGA) should be tossed because the firms’ arguments against dismissal “focus primarily on rehashing their arguments before the Bankruptcy Court,” the trustee and LIGA argue in a reply brief in federal court.
July 20, 2023
Rehab Plan Proposed For Reinsurer Of Wisconsin Town Mutual Insurers

MADISON, Wis. — Following issuance of a rehabilitation order, Wisconsin’s commissioner of Insurance has asked a Wisconsin court to approve a rehabilitation plan for Wisconsin Reinsurance Corp. and its subsidiary 1st Auto & Casualty Insurance Co.
July 20, 2023
Challenge To Denial Of Stay Enforcement Bid Is Dismissed On Stipulation

NEW YORK — One appeal has been dropped in a sprawling dispute involving the joint provisional liquidators (JPLs) of Bermuda insurer and reinsurer PB Life and Annuity Co. Ltd. (PBLA) and other debtors, with a New York federal judge granting the parties’ stipulation of dismissal with prejudice.
July 19, 2023
Judge Denies Motions To Amend In Hurricane Coverage Suit Against Insolvent Insurer

LAFAYETTE, La. — A Louisiana federal judge denied a homeowner’s motions to amend and file a supplemental complaint in his suit against a now-insolvent insurer for failure to cover damages purportedly caused by Hurricanes Laura and Delta, finding that adding the Louisiana Insurance Guaranty Association (LIGA) “would be futile” because it would destroy diversity jurisdiction and require dismissal.
July 19, 2023
Judge Grants Homeowners’ Dismissal In Hurricane Damage Row With Insolvent Insurer

NEW ORLEANS — A Louisiana federal judge granted homeowners’ motion to dismiss their claims for breach of contract and breach of the duty of good faith and fair dealing against an insolvent insurer and the Louisiana Guaranty Association (LIGA) as the purported guarantor for the insurer, related to the insurer’s alleged failure to compensate them for damages caused by Hurricane Ida.
July 19, 2023
Michigan High Court Extends Deadline In Coverage Row Involving Insolvent Insurer

LANSING, Mich. — The Michigan Supreme Court issued an order giving an insurer additional time to file a supplemental brief in its appeal of a decision finding that an uninsured driver involved in an auto accident was covered under her brother’s policy after a passenger injured in the accident received no-fault benefits from an insurer later declared insolvent.
July 18, 2023
Settlement Notice Issued In Water Damage Coverage Row Involving Insolvent Insurer

MIAMI — An insurer on July 17 provided a Florida court with notice that it served a homeowner with a proposed settlement in the homeowner’s breach of contract suit against the insurer and an insolvent insurer, alleging failure to cover all water-related damages.
July 17, 2023
Judge Allows Adding Guaranty Association And Remands In Hurricane Coverage Dispute

NEW ORLEANS — A Louisiana federal judge on July 14 granted a homeowner’s motion to add the Louisiana Guaranty Association (LIGA) as a defendant and remanded to state court her suit against a now-insolvent insurer for its breach of contract and bad faith failure to compensate her for purported damage caused by Hurricane Ida, finding that the purpose of the amendment “is the inclusion of the proper defendant, rather than the exclusion of federal jurisdiction.”
July 17, 2023
Receiver Asks Delaware Court to Liquidate Life And Health Reinsurer

WILMINGTON, Del. — As previously signaled, the receiver for Scottish Re (U.S.) Inc. in Rehabilitation (SRUS) on July 14 moved in the Delaware Court of Chancery for entry of a liquidation and injunction order declaring, in part, that the life and health reinsurer “is impaired, insolvent, and in an unsound condition.”
July 14, 2023
Bifurcated Settlement Granted For 1 Defendant In SEC Suit Over Alleged Fraud

DURHAM, N.C. — A North Carolina federal judge has approved a bifurcated settlement that the U.S. Securities and Exchange Commission negotiated with one of three defendants in a civil suit over a former investment advisory firm’s alleged “series of fraudulent and improper schemes” that defrauded clients of more than $75 million.
July 13, 2023
Window Cleaners Name Mediation Attendees In Guaranty Association’s $186,000 Suit

CLEARWATER, Fla. — A window cleaning company filed in a Florida state court a certification of authority naming attendees at a mediation conference in a suit filed against the company by the Florida Insurance Guaranty Association (FIGA), as successor in interest to the Florida Department of Financial Services, alleging that it negligently performed cleaning services on windows at condominiums insured by a now-insolvent insurer, resulting in damages of more than $186,570.68.
July 12, 2023
Panel Affirms Denial To Add Punitive Damages In Suit Against Now-Insolvent Insurer

DAYTONA BEACH, Fla. — A Florida appellate court affirmed a lower court’s order denying a homeowner’s request to amend his complaint to add punitive damages in his breach of the duty of good faith and fair dealing suit against a now-insolvent insurer, finding that the homeowner failed to satisfy punitive damages requirements under Florida law regarding the “general business practice” related to the insurer’s alleged lack of standards for investigating claims.
July 10, 2023
South Dakota High Court: Trust Not Liable For Guaranty Association Assessments

PIERRE, S.D. — The South Dakota Supreme Court reversed a lower court decision determining that the South Dakota Life and Health Guaranty Association had the authority to assess the South Dakota Bankers Benefit Plan Trust after its membership with the guaranty association ended, finding that because the assessments occurred after the legislature eliminated the requirement for the trust’s membership in the association, the trust was not obligated to pay the assessments to cover an insolvent insurer’s obligations.
July 07, 2023
Insurance Commissioner Reports Balance Over $1.4M In Insolvent Insurer’s Fund

ST. THOMAS, Virgin Islands — The Virgin Islands commissioner of insurance filed a court-ordered quarterly accounting and status report with a U.S. Virgin Islands federal court showing that more than $1.4 million remains in a fund set up for payment of claims to an insolvent insurer’s policyholders.
July 05, 2023
New York Justice Compels Arbitration In Row Over Reinsurance Receivables

NEW YORK — Saying that selecting an arbitrator constitutes participating in arbitration and that a “liquidator case is inapplicable to this action where the Liquidator is not party to the arbitration,” a New York justice compelled arbitration in a dispute over reinsurance receivables.
July 03, 2023
Dismissal Bid Is Terminated In Appeal Over Partial Stay Of Adversary Proceeding

NEW YORK — Citing a ruling by a North Carolina court, movants successfully sought termination of their bid to dismiss an appeal in New York federal court that seeks reversal of a bankruptcy judge’s order partially staying an adversary proceeding filed by the joint provisional liquidators (JPLs) of Bermuda insurer and reinsurer PB Life and Annuity Co. Ltd. (PBLA) and other debtors.
June 27, 2023
Receiver Updates Delaware Court On Plans To Seek Liquidation Of Reinsurer

WILMINGTON, Del. — The receiver for Scottish Re (U.S.) Inc. in Rehabilitation (SRUS) intends to seek entry of a liquidation and injunction order “on or about July 12,” he told the Delaware Court of Chancery in a successful bid to enlarge the word limit.
June 22, 2023
North Carolina Panel Affirms Enforceability Of MOU Involving Insolvent Insurers

RALEIGH, N.C. — A North Carolina appellate court affirmed in part a lower court’s decision that a memorandum of understanding (MOU) was enforceable in a breach of contract and fraud suit filed by insolvent insurers against their purchaser and his affiliated companies, finding that the lower court correctly relied on evidence to affirm the fraud judgment.
June 21, 2023
Kansas Federal Judge Asks For Status Report In Insolvent Insurer’s Liquidation

TOPEKA, Kan. — A Kansas federal judge ordered the Kansas insurance commissioner, as liquidator of an insolvent medical malpractice insurer, the insolvent insurer’s parent company and others to file another status report advising the court on the liquidation proceedings if the liquidator has not moved to lift the stay in the case by the end of July.
June 21, 2023
Pennsylvania Supreme Court Affirms Approval Of Rehabilitation Plan For SHIP

PHILADELPHIA — In a one-page per curium order, the Pennsylvania Supreme Court on June 20 affirmed an appellate court’s approval of a plan of rehabilitation for the Senior Health Insurance Company of Pennsylvania (SHIP), a Pennsylvania life and health insurance company.
June 20, 2023
Condo Association Moves To Substitute FIGA For Insolvent Insurer In Coverage Row

BRADENTON, Fla. — A condominium association that sued its now-insolvent insurer for breach of contract in a Florida court for refusal to pay all alleged storm-related losses moved to substitute the Florida Insurance Guaranty Association (FIGA) for the insurer, asserting that FIGA is “obligated for the covered claim” because it arose before the insurer’s adjudication of insolvency.
June 19, 2023
Judge Finds No Duty To Indemnify In MDL Coverage Row Involving Liquidated Insurer

KANSAS CITY, Kan. — A Kansas federal judge granted a liability insurer’s motion for judgment on the pleadings in its suit involving an insolvent insurer and seeking a declaratory judgment that the directors and officers (D&O) policy issued to its insured does not provide coverage for claims in an underlying multidistrict litigation antitrust dispute, finding that there is no “potential. . . to owe a duty to indemnify . . . in the MDL action.”
June 19, 2023
Guaranty Association Seeks $186,000 In Damages From Window Cleaning Company

CLEARWATER, Fla. — The Florida Insurance Guaranty Association (FIGA), as successor in interest to the Florida Department of Financial Services, filed in a Florida court a notice of mediation authority, authorizing a claims adjustor to settle for it in a suit filed against a window cleaning service, alleging that the window cleaners negligently performed cleaning services on exterior glass at condominiums insured by a now-insolvent insurer, resulting in damages of more than $186,570.68.
June 15, 2023
Judge Grants Transfer In Breach Of Contract Dispute Over Insolvent Annuity Insurer

PHILADELPHIA — A Pennsylvania federal judge granted an auto insurer’s motion to transfer a breach of contract suit filed against it by an annuitant after her structured settlement annuity payments related to injuries sustained in an auto accident were reduced when the annuity insurer was placed into liquidation, finding that Pennsylvania courts lack jurisdiction because the annuitant’s car accident in New Jersey and the resulting settlement issued by a New Jersey court “do not relate to any insurance policy issued” by the auto insurer in Pennsylvania.
June 15, 2023
Third-Party Complaint Is Filed In Suit Involving Reinsurance Commutation

JACKSON, Miss. — Defendants in a lawsuit involving what the plaintiff alleges was “a corporate insurance and risk management program promoted, created, and put in place by Defendants for Domino’s Pizza franchisees” have filed a third-party complaint against Domino’s Pizza LLC and related entities in a Mississippi federal court.