Court Dismisses Suit by Insurer Against Former Reinsurance Broker
Olympus Insurance Company entered into a contract with reinsurance broker Aon Benfeld, Inc. The contract required Aon to pay Olympus an “Annual Fee” (essentially defined as a rebate) under a so-called “evergreen” clause, based on the amount of commissions Aon received pursuant to reinsurance contracts it placed on Olympus’s behalf. The parties’ contract also contained a forfeiture clause, which stated that “No Annual Fee shall be payable subsequent to any decision by [Olympus] to terminate or replace Benfield.” Olympus terminated the parties’ contract by notice, and thereafter sought the Annual Fee. Aon refused to pay based on the loss forfeiture clause, and Olympus sued. Aon moved to dismiss for failure to state a claim. In an animated opinion, the Court found Olympus’s contract claim to be a “strained construction” of the parties’ agreement and dismissed it along with Olympus’s remaining quasi-contract claims “with prejudice and on the merits.” Olympus Insurance Co. v. Aon Benfeld, Inc., No. 11-CV-2607 (USDC D. Minn. March 30, 2012).
This post written by John Pitblado.
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