Fireman's Fund Ins. Co. v. OneBeacon Ins. Co., No. 20-4282 (2d Cir. 2022)
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Defendant OneBeacon Insurance Company reinsured one of three excess insurance policies issued by Plaintiff Fireman’s Fund Insurance Company to policyholder ASARCO, Inc. After developing significant potential liability on claims made by asbestos-injured claimants, ASARCO sought coverage from Fireman’s Fund under all of its excess policies. ASARCO and Fireman’s Fund ultimately settled all of the claims under the three policies. Fireman’s Fund allocated a portion of that settlement to the policy reinsured by OneBeacon and sought reinsurance coverage on the allocated sum. OneBeacon rejected Fireman’s Fund’s claim, arguing that the settlement allocation violated the terms of the excess and reinsurance policies. The district court granted summary judgment to Fireman’s Fund, and OneBeacon appealed.
The Second Circuit affirmed. The court agreed with the district court that Fireman’s Fund’s allocation of a portion of the settlement to the excess policy reinsured by OneBeacon was not contrary to that policy’s exhaustion requirement or to the terms of the reinsurance policy. OneBeacon is therefore obligated under the reinsurance policy’s follow-the-settlements clause to provide the requested coverage.
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