Insurers with unwanted runoff blocks of business should consider the latest guidance from insurance regulators on potential transactional structures that could mitigate this issue.

When is an insurance commissioner not a governmental authority? A federal district judge reminds us that a state insurance commissioner, when acting as receiver of an insolvent insurer, acts in a different capacity to his governmental role. This principle can cause an insurance commissioner to fall outside a contractual definition of “governmental authority” even where the definition contains inclusive language on multiple capacities.

In its recent decision in Rodriguez v. Federal Deposit Insurance Corp., No. 18–1269 (Sup. Ct. Feb. 25, 2020), the Supreme Court held that federal courts may not apply the federal common law “Bob Richards Rule” to determine who owns a tax refund when a parent holding company files a tax return but a subsidiary generated the losses giving rise to the refund. Instead, the court should look to applicable state law.

General Legal Background

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In CMH Liquidating Trust v. National Union Fire Insurance Company of Pittsburgh, PA, Case No. 16-cv-14434 (E.D. Mich. 2019) (“CMH”), the District Court for the Eastern District of Michigan held that an insurance policy that was renewed post-petition was still an executory contract, and thus, a provision denying coverage for acts leading to bankruptcy was a prohibited ipso facto clause.

What Happened?

The Bottom Line

Our two-part article on non-con and true sale issues in insurance contexts continues with a deeper dive into the considerations that distinguish these issues from similar remoteness principles in a Bankruptcy Code context. In Part One, we explained some of the basics of state insurance law that bear on these issues and how these can give rise to different approaches in opinion-giving; in this Part Two, we identify some practical obstacles that arise in these kinds of contexts and opinions.

A Pennsylvania Hypothetical

This two-part article discusses the key concerns, from a non-consolidation and true sale perspective, that arise when an insurance company, as opposed to a bankruptcy-eligible entity, is a sponsor/seller in a securitization or similar structured finance transaction. This Part One introduces the main contrasts between non-con and true sale analysis in a traditional bankruptcy context and such analysis in an insurance-law scenario.

Channel 1 – Thorpe Insulation Addresses Insurer Standing to Object to Plan and Assignability of Insurance Contracts to Plan Trusts

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