COURT COMPELS ARBITRATION IN CEDENT DISPUTE WITH SIGNATORY REINSURERS AND STAYS PROCEEDING AGAINST NONSIGNATORIES
Security Life Insurance Company was the successor to certain reinsurance agreements covering underlying life insurance risks. Pursuant to the agreements, the reinsurers created a trust in order to fund the required reserves. The trustee, INA Trust FSB, and the reinsurers thereafter allegedly created a new trust, transferred funds from the previous trust to one of the reinsurers, and/or its principal, but did not name Security Life as a beneficiary under the new trust, as allegedly required under the reinsurance agreements. The reinsurance agreements contained arbitration clauses. The trust agreements did not. Security Life brought suit against the trustee and the reinsurers and their principals in federal court. All the defendants moved to compel arbitration, or, in the alternative, stay the proceeding pending completion of arbitration. The court granted the motion to compel arbitration between Security Life and the defendants which were signatories to the arbitration agreement, and stayed the remainder of the action until completion of that arbitration. Security Life Insurance Co. of America v. Southwest Reinsure, Inc., Case No. 11-1358 (USDC D. Minn. Feb. 11, 2013).
This post written by John Pitblado.
