COURT APPROVES COMMUTATION AND SETTLEMENT BETWEEN RELIANCE INSURANCE COMPANY (IN LIQUIDATION) AND REINSURER
In an opinion illustrating the principles for the approval of commutations in liquidation proceedings, a Pennsylvania state court approved a commutation and settlement agreement by and between Reliance Insurance Company (“Reliance”) and General Security National Insurance Company, formerly known as Sorema North America Reinsurance Company (“GSN”). Under the terms of the agreement, GSN agreed to pay Reliance $13,000,000 in exchange for a release of all past, present, and future liabilities which have arisen or may arise under certain reinsurance contracts issued by GSN to certain enumerated Reliance subsidiaries (though generally excluding certain foreign subsidiaries). The court found that the agreement constituted a fair and reasonable settlement of GSN’s past and potential future obligations to Reliance under the reinsurance agreements recited. Ario v. Reliance Ins. Co., Docket No. 269 M.D. 2001 (Pa. Commw. Ct. Dec. 30, 2008).
This post written by John Pitblado.
