Archive for the ‘Law’ Category

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follow the leader

Jolyjonpatten recently went to a seminar put on the by the lawyer that won the decision for the reinsurers in Wasa v Lexington.

Le jist? Well, Lex wrote a property policy for Alcoa, who got the Uncle Sam Smackdown for 40-odd years of polluting. Whew, at least we have insurance.  Obligingly, the courts decide that the insurers were all jointly and severally liable for decades of muck-raking. Lex waves around its fac policy.

Declined, natch.

To the courts.

The problem is that pesky ruling that Lex and its brethren are jointly liable for decades of wrongdoing, pitching the period clauses in their policies out the window, which, apparently, is cool in PA, but not in the UK. Final ruling? Reinsurers are off the hook because under UK law Lex wouldn’t be jointly liable. The interesting thing is that the fac policy is chock-a-block with follow the fortunes references, etc. Don’t matter, though. Jurisdictions matter. Ouch.

It’s a powerful reminder that capital regulations and tax law aren’t the only reasons to go jurisdiction shopping. Why don’t we think more about it, then? Well, my gut says that finance geeks and top-line cowboys are much more likely to hit the corner office than anyone who cuts his teeth on cathedral-like multi-generational insurance litigation.

You might honor the gods with that well argued case, but the shareholders that hired the underwriter who wrote that policy are gone. Long gone.


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