Santa Barbara Fire to Cost in Excess of $130 Million

According to several reports, the cost of the Santa Barbara fire that burned over 8,000 acres and destroyed close to 80 residential homes may exceed $130 million dollars representatives from First American Spatial Solutions (FASS) said.  While the amount of the loss appears to be large, it could have been worse given the large geographic exposure, the large population and the magnitude of the fire.  Representative from FASS estimates that it values the average property damage to be approximately $1.2 million per
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Edward Liddy, AIG’s Chairman and CEO, to resign.

Edward Liddy, AIG's current Chairman and CEO, announced today that he will resign as both CEO and Chairman for the company.  His goal is to step down when AIG's Board of Directors have found suitable replacements but no timetable has been set.    Mr. Liddy also recommended to AIG's Board of Directors that it should consider the position of CEO and Chairman separate and distinct.  The Board agreed with his assessment and the search will begin immediately with expected participation by both the Board
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Lloyd’s Obtains License to Increase Its Influence In Europe’s Ninth Largest Market

Reports circulating today indicate that Lloyd's has received an "establishment license" to expand its marketshare in Portugal.  The agreement will specifically allow Lloyd's underwriters to appoint certain coverholders to assist them in writing additional policies in Portugal.  Prior to the agreement, Lloyd's was writing  approximately £17.m of non-life gross premiums in that country.  According to Jose Ribeiro, a director in Lloyd's International Marketing Division, Portugal is Europe's ninth largest market and, with the expansion, Lloyd is certain to increase its marketshare in that country and he would not be
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Ohio Supreme Court Found Proposed Title Reinsurance Agreement Unenforceable

Olympic Holding Company L.L.C. v. ACE Limited et al (May 7, 2009 Supreme Court of Ohio) In a 4-2 decision, the Supreme Court of Ohio reversed the Ohio Court of Appeals, 10th Circuit, and found that a joint venture agreement between a title reinsurer and several title agencies does not comply with the Ohio Statute of Frauds and, as a result, imposed no fiduciary duties upon the parties. This lawsuit was commenced shortly after the reinsurer failed to execute a
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Second Circuit Remands Lloyd’s Dispute on Policy Terms

Crucible Materials Corp v. Certain Underwiters at Lloyd's (2d Circ. May 14, 2009 (New York)) The plaintiff insured alleged that defendant insurer breached an excess insurance contract insuring against property damage claims arising from the insured's manufacturing operations at 18 sites across the United States. Concluding that the insured failed to present evidence of the terms of the contract, the United States District Court  New York granted summary judgment to the insurer. The district court based its decision awarding summary judgment in
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Renewal Premium Check Cashed After Expiry of First Policy Did Not Reinstate Prior Policy, But Formed New One

Hartland v. Progressive County Mutual Insurance CompanyUT ( Ct. App. Texas, April 23, 2009) The policyholder sent a renewal premium check after the policy expired.  The insurer accepted the check, and issued a revised renewal declarations page listing the date the check was received as the inception date of the renewed polcy. The policyholder argued that the acceptance of the check formed a contract under the terms of the original renewal policy, and coverage was uninterrupted.  Rejecting that argument, the
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Life Insurers Approved for Treasury Funds

At least four U.S. insurers won approval on Thursday to raise billions of dollars through the government's bank bailout plan, the U.S. Treasury Department said. Hartford Financial , the No. 4 U.S. insurer and beset by worries about capital, got preliminary approval to raise $3.4 billion via the Troubled Assets Relief Program, known as TARP. Three other insurers that also secured a greenlight included Prudential Financial Inc Lincoln National Corp., and the Principal Financial Group a Treasury spokesman said. The
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IRS Issues “Stranger Owned Life Insurance” Rules

The Internal Revenue Service (“IRS”) issued two Revenue Rulings on May 1, 2009, addressing certain tax aspects of sales and surrenders of life insurance policies: Rev. Rul. 2009-13 and Rev. Rul. 2009-14. These rulings resolve some longstanding questions regarding sales of life insurance policies and in many respects are consistent with life settlement industry expectations. www.irs.gov/pub/irs-drop/rr-09-13.pdf www.irs.gov/pub/irs-drop/rr-09-14.pdf By Daniel W. Gerber and Kimberly E. Whistler http://www.goldbergsegalla.com/attorneys/Gerber.html http://www.goldbergsegalla.com/attorneys/Whistler.html  
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Rectification of insurance policies

Dunlop Haywards (DHL) Ltd (2)  Erinaceous Commercial Property Services Ltd -v- Erinaceous Insurance Services Ltd and (1) Lockton Companies International Ltd (2) MSI Corporate Capital Ltd & Others, [2009] EWCA Civ 354.8 (April  28, 2009) The Court of Appeal considered the factual matters which may be taken into account by the courts in claims for rectification of insurance policies. The claimant insured alleged failure by the broker to arrange effective excess insurance coverage for the insured. An application was made by the defendant broker
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