Global Reinsurance Corporation of America, successor in interest to Constitution Reinsurance Corporation v. Century Indemnity Company, successor in interest to CCI Insurance Company, successor in interest to Insurance Company of North America

Summary

The New York Court of Appeals answered in the negative a certified question from the Second Circuit concerning whether Excess Insurance Co. Ltd. v. Factory Mutual Insurance Co. established a rule or presumption that a per-occurrence liability cap in a facultative reinsurance contract necessarily includes defense costs. The Court held that New York law instead requires interpretation of the reinsurance contract according to its specific language, read as a whole, without a blanket expense-inclusive presumption. The Court emphasized that its prior decision in Excess addressed a different issue involving loss adjustment expenses and did not resolve the treatment of third-party defense costs.

Holdings

1. Excess did not impose either a rule of construction or a presumption that a limitation-on-liability clause in a facultative reinsurance contract necessarily caps all obligations of the reinsurer, including defense costs.

Questions Presented

1. Whether Excess Insurance Co. Ltd. v. Factory Mutual Insurance Co. imposed a rule of construction or strong presumption that a per-occurrence liability cap in a facultative reinsurance contract limits all reinsurance obligations, including defense costs.
2. Whether the interpretation of expense coverage under a facultative reinsurance certificate is governed by the certificate's specific language and the standard rules of contract interpretation.

Disposition

other