Reinsurance Focus

This case arose out of a reinsurance contract between Scottish Re Life Corporation (“Scottish Re”) and Annuity and Life Reassurance Ltd. (ALR). The contract required ALR to maintain significant assets in a trust for Scottish Re’s benefit. In 2005, Transamerica Occidental Life Insurance Company (“Transamerica”) assumed all of ALR’s obligations to Scottish Re by executing a novation agreement. Scottish Re agreed to release its interest in the trust to Transamerica as part of the novation agreement, not realizing at that time that Transamerica was not licensed or accredited by the State of New York. That fact affected Scottish Re’s financial status and ability to do business in New York. Scottish Re filed a motion to compel arbitration and for provisional and/or injunctive relief. The trial court issued an order directing arbitration and for provisional remedies, requiring Transamerica to either repudiate its claim of rescission or return the assets it had received as part of the novation agreement to a qualifying trust for Scottish Re’s benefit.

Earlier this month, the North Carolina Court of Appeals allowed an appeal from the trial court’s interlocutory order. While interlocutory orders are not generally immediately appealable in state court, the Court of Appeals stated that “[g]iven the large amount of money at issue in this case, the fact that the trial court impinged appellant’s right to the use and control of those assets, and the unavoidable and lengthy delays, acknowledged by both parties, preceding actual arbitration of the matter, we hold that appellee must be granted its appeal to preserve a substantial right.” The Court of Appeals affirmed the granting of provisional remedies. Scottish Re Life Corp. v. Transamerica Occidental Life Ins. Co., No. 06 CVS 2724 (N.C. Ct. App. July 3, 3007).