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The policyholder can not collect claims of USD 22 million from reinsurers, brokers



A policyholder can not bypass his insurer by collecting a $ 22 million claim from 10 reinsurance companies and insurance brokers, a federal appellate court said Friday in a ruling involving a Willis Towers Watson PLC chief.

The complicated case involves a network of insurance and reinsurance contracts between several companies, according to the judgment of the U.S. Court of Appeals for the District of Columbia Circuit in Vantage Commodities Financial Services I, LLC v. Assured Risk Transfer PPCC, LC et al.

New York-based Vantage, which finances energy companies in retail, entered into a loan agreement that gives Glacial Energy Holdings credit, according to the ruling.

In an effort to reduce risk, Vantage retained New York-based Equifin Risk Solutions LLC to create and manage a special purpose backed by insurance, Assured Risk. Equifin in turn retained Willis Towers Watson Management (Vermont) Ltd. to assist with the formation, licensing and management of ART.

After forming ART, Equifin̵

7;s president began looking for reinsurers, which initially included Hannover Re and Partner
Reinsurance Europe PLC, then another eight reinsurers.

The two subsequent reinsurance agreements covered approximately 90% of the USD 22 million in liability in ART’s credit insurance with Vantage, the decision stated.

When Global, which had filed for bankruptcy, failed in its loan, Vantage filed a claim with ART, demanding more than $ 19 million in payments.

An arbitration tribunal holding Vantage was entitled to recover more than $ 25 million, consisting of $ 22 million under credit insurance plus interest and costs, but ART did not have sufficient funds to pay the price.

After reinsurers announced to ART that they would deny all reinsurance claims, Vantage filed a lawsuit in the U.S. District Court for the District of Columbia against ART, Willis Vermont, other Willis entities and reinsurance companies, and sued for breach of contract.

The district court ruled in favor of the reinsurers and Willis, and was upheld by a panel of three judges.

“The reinsurance agreements here did not create a contractual relationship with Vantage, but instead stated that the agreements” were only between (ART) and the reinsurer “and that” nothing in the agreement or agreement shall create any obligations or establish any rights against the reinsurer (s) for any person. or entity that is not a party to this “, it is stated in the judgment confirming the lower court.

Lawyers did not respond to requests for comment.


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