Overview
Locke Lord Bissell & Liddell is a premier provider of corporate, regulatory, arbitration, run-off and litigation services to the reinsurance industry. Many of the world’s most prominent reinsurers rely on the firm's depth, skill and expertise, and we are recognized internationally as a leader in the field. With nearly 50 attorneys who concentrate their practice in reinsurance, Locke Lord is uniquely situated to provide the full range of services our reinsurance clients require in this dynamic, challenging and competitive environment.
We’re No. 1. In 2008, Locke Lord was ranked as the No. 1 law firm in the United States in three separate practice areas by Reactions magazine, an international insurance industry magazine that conducts an extensive survey of in-house counsel. Locke Lord was the only U.S. firm that received commendations in all seven specific practice areas surveyed and was also singled out as one of the top two U.S. firms overall. Locke Lord’s international presence was also recognized since it was the only U.S. law firm to receive commendation as one of the top insurance and reinsurance firms in the Bermuda market.
For the fourth consecutive year, Locke Lord ranked as a top Illinois firm in insurance work by Chambers & Partners. In Chambers USA: America's Leading Business Lawyers, 2006-2007, ours was the only firm to receive No. 1 rankings in the areas of insurance: transactional and regulatory; coverage litigation; and insurance: reinsurance litigation. SNL Financial, an independent research analyst firm, identified Locke Lord as one of the leaders in insurance related mergers and acquisitions work, a substantial amount of which involves various forms of reinsurance transactions.
In addition, Locke Lord was also ranked as the No. 1 law firm in the United States by Global Broker & Underwriter magazine in its 2008 legal survey in reinsurance, regulation, litigation, policy drafting, corporate work (contracts, capital and mergers and acquisitions), and alternative risk transfer and insurance linked securities.
Industry Experience
We use our combined decades of experience and in-depth knowledge of the reinsurance industry to help our clients across the United States, in the United Kingdom, in continental Europe and in Bermuda anticipate and take advantage of industry trends and reposition, expand or downsize their businesses. Our attorneys are leaders in transactions, regulatory counseling and dispute resolution. We represent cedents, reinsurers, retrocessionaries, MGAs, intermediaries and buyers and sellers of insurance and reinsurance businesses based in the United States and throughout the world. Our attorneys represent clients in some of the largest and most complex contested and transactional engagements involving the property-casualty and life and health industries.
Reinsurance Transactional Work
We have experience in designing appropriate reinsurance arrangements, including clash, contingency, alternate risk transfer, excess of loss, coinsurance, modified coinsurance and other sophisticated structures, as well as implementing various forms of collateral arrangements to provide security or comply with state laws and regulations governing financial statement credit for ceded reinsurance. Our practice includes major transactions involving assumption reinsurance, indemnity reinsurance and sale of renewal rights.
Representative Engagements—Reinsurance Transactions
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A major life insurance company in its acquisition of the annuity, life and investment businesses of a large financial services group for $1.1 billion;
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A leading life insurer in the sale of its individual life insurance business for $1 billion;
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A national life insurance company in the reinsurance of over $3 billion of life and annuity reserve liabilities with a major U.S. reinsurer;
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A large corporation in a series of unique reinsurance and capital enhancement transactions, which enabled certain syndicates at Lloyd’s, London to satisfy Lloyd’s capitalization requirements
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A major financial insurance company in various reinsurance or servicing transactions involving blocks of debit life, term life and long term care insurance business.
Reinsurance Regulatory Work
We are one of the few firms in the United States with a large group of corporate lawyers and regulatory specialists dedicated to, and with substantial experience in, insurance and reinsurance regulatory law. We routinely represent clients from all parts of the country and internationally, practice before each of the state insurance departments, counsel clients on all aspects of their operations and litigate in state and federal courts throughout the nation. We are active in various state and federal legislative matters and routinely participate in the programs and activities of the National Association of Insurance Commissioners (NAIC). In fact, one of our financial and regulatory specialists formulated the NAIC guidelines for risk transfer in reinsurance transactions. Another was part of the executive team at the New York Department of Insurance that approved the formation of Lloyd’s R&R.
We have represented government agencies in drafting insurance legislation and regulations. Our firm has been appointed as one of a few U.S. counsels for transactional/regulatory work for one of the world’s largest reinsurers. Our attorneys also assisted leading U.S. and European reinsurers in discussions with foreign insurance regulators to develop favorable terms of reinsurance regulation.
We form and capitalize domestic and offshore reinsurance companies. We counsel on licensing, TPA and MGA matters, accreditation and financial statement credit issues, security and collateral issues under reinsurance treaties (including statutory accounting issues), market conduct issues, use of terrorism exclusions, financial reinsurance/surplus relief issues, rights and remedies in the event of the insolvency of the cedent or reinsurer, use of cut-through endorsements and analysis of the enforceability of arbitration remedies in domestic and international reinsurance treaties. Our attorneys developed novel regulatory structures - used as the market standard for the last 10 years - to facilitate writing by non-U.S. insurers of reinsurance nationwide.
We have considerable experience in negotiating and obtaining regulatory approval of various forms of administration agreements and structuring and/or unwinding reinsurance pools involving affiliated and non-affiliated insurers and reinsurers. We have represented clients in the design and formation of offshore captive insurers, including single-parent captives, association captives and rent-a-captives. Our legal services include corporate, regulatory and tax advice concerning the formation and operation of these captives. In connection with federal income tax issues, we advise on the tax deductibility of premium payments, controlled foreign corporation (CFC) issues, and related person insurance income (RPII) issues, as well as what actions an offshore company can take and still not be deemed to be doing business in the United States for income tax purposes.
Representative cases include the following examples:
- Represented a life reinsurance company in a financial examination matter involving the attempted disqualification of hundreds of millions of dollars of admitted assets held in reinsurance security trust accounts;
- Represented numerous insurance and reinsurance companies in affiliated reinsurance and other transactions subject to approvals under state insurance holding company acts;
- Counseled various clients on privacy issues arising from Gramm-Leach-Bliley and other federal and state initiatives;
- Counseled various reinsurers and cedents on rights and strategic alternatives under reinsurance treaties with financially troubled companies;
- Counseled various insurers on federal terrorism legislation and the use of multi-state terrorism exclusions;
- Analyzed market conduct risks and mitigants arising from administration of credited interest rates and other non-guaranteed elements under direct and assumed life insurance policies and annuities;
- Represented a life insurance company in a major examination matter involving nine state insurance departments, including allegations of problems with advertising, underwriting procedures and marketing practices;
- Counseled clients concerning the reinsurance of punitive damages under various state laws;
- Assisted the Commonwealth of Puerto Rico in drafting its legislation and regulations to establish a comprehensive tax and insurance regulatory regime for the formation of captive and specialty international insurers to write insurance and reinsurance of foreign risks;
- Advised a leading European reinsurer in connection with its privatization bid to purchase the Brazilian government-owned reinsurance monopoly.
Litigation and Dispute Resolution
Locke Lord ranks as one of the leading providers of arbitration and litigation services to the reinsurance industry. Befitting the scope and focus of our practice, the companies for which we have provided reinsurance-related services are located internationally and are acknowledged industry leaders.
Clients seek our assistance in handling some of the most complex and highest exposure reinsurance disputes in the United States and abroad. We have extensive experience in both property and casualty and life and health reinsurance. We represent clients in cases addressing issues such as late notice, transaction-related purchase price disputes, rescission and misrepresentation, coverage disputes, reserve methodology and calculation disputes, the application of actuarial and statutory accounting principles, rights to reinsurance collateral, duty to disclose material change in risk, scope of ECO and XPL clauses, right of direct action against reinsurer upon ceding company’s insolvency, number of occurrences, salvage and subrogation, loss adjustment expense allocation, aggregation, net retained lines, premium disputes, follow the fortunes, claims cooperation, set-offs and right- to-associate clauses.
We offer comprehensive resolution services and, where a reasonable compromise cannot be achieved, provide our clients with aggressive and effective arbitration and litigation skills. Our extensive knowledge of and experience working with individual arbitrators and umpires on various issues enable us to provide clients with valuable insights into the strategic options for selecting a particular panel and presenting their case to the panel.
In keeping with the national and international breadth and diversity of this practice, we routinely arbitrate and litigate reinsurance disputes in various forums. We have handled numerous arbitrations and litigation matters (in both state and federal courts) in New York and in other locations throughout the world including Alabama, Arizona, Bermuda, California, Florida, Illinois, London, Massachusetts and Washington, D.C.
Recent examples of the diversity of our litigation experience include the following:
- Negotiated a settlement for a major health care insurer in a $300 million dispute regarding the sale of two HMOs. The issues included valuation of reserves and the application of actuarial and accounting principles as they relate to the health care industry;
- Obtained judgment in favor of a major U.S. life reinsurer after a two-week trial in defense of breach of contract/promissory estoppel claims regarding reinsurance of a $30 million block of individual disability insurance;
- Obtained affirmance from the U.S. Court of Appeals for the Seventh Circuit of a grant of summary judgment in favor of our reinsurer clients on the issue of whether Federal or state law applies to arbitrator appointment deadlines in an arbitration clause in an international reinsurance treaty subject to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The arbitration clause provided that a party's failure to name an arbitrator within 30 days of a request to do so gave the other party the right to name two of the three arbitrators who would decide the case. The Seventh Circuit held that Federal law applied to arbitration agreements subject to the Convention and that under Federal law, arbitrator appointment deadlines are strictly construed, even where the last day to perform falls on a Sunday or holiday.
- Obtained summary judgment in New Jersey for a reinsurer of the captive of one of the largest asbestos manufacturers regarding which documents constituted the facultative reinsurance contracts between reinsurer and captive cedent;
- Represented the London market in connection with disputes involving a captive insurance company and over $1.5 billion in environmental and health hazard claims. The case was litigated in the Supreme Court of Massachusetts, Northern District of New York, the Supreme Court of Bermuda and House of Lords in London;
- Represented a large international reinsurer in collecting $45 million of amounts due under a quota share treaty reinsuring Argentinean Pension Fund business;
- Obtained summary judgment on behalf of reinsurers of an insolvent Massachusetts company in a case involving alleged exposure of more than $90 million, including allegations of unfair claim practices;
- Defended a major U.S. reinsurer in connection with several claims brought by the Florida Department of Insurance with respect to interpretation of aggregate spread loss endorsements to a workers’ compensation treaty;
- Obtained a $25 million damages award for our client reinsurer in an arbitration against a ceding company based on accounting discrepancies and overcharges for loss adjustment expenses;
- Obtained a reversal in a $30 million reinsurance coverage action in which summary judgment had been entered against a reinsurer of a Bermuda-based captive;
- Defended a major U.S. reinsurance company with respect to claims of rescission on $40 million of retrocessional coverage relating to a group medical quota share treaty;
- Obtained a substantial recovery for an Asian reinsurer’s dispute involving an improper draw down of credit, where we were able to show that the ceding company had acted improperly;
- Our efforts in multi-state and federal courts, and in United Kingdom courts, led to settlements at a fraction of the estimated losses in a European and Asian reinsurers’ dispute over large reinsurance claims arising out of complex environmental claims of various U.S. corporations. More than 400 claims had resulted in massive losses estimated at approximately $1 billion;
- Began defending several members of a worker’s compensation pool carve-out, which involves claims of rescission and claims of damages in excess of $80 million
- Began representing global insurance company in a pending arbitration matter involving potential obligations under certain Enron-related surety bonds.