The US District Court for the District of Connecticut recently dismissed a customer suit against an insurer, based upon its determination that all of the underlying claims were excluded by the policy’s Insolvency Exclusion.1 Associated Community Bancorp, Inc., et al. v. The Travelers Companies, Inc., et al.
If an administration order is made and a pending winding-up petition is subsequently dismissed, the costs of that petition are payable as an expense of the administration.1
The UK Government has announced a consultation on proposals to strengthen the administration regime for insurers, in particular to improve the protection and payment of benefits for persons insured with companies facing financial difficulties and addressing gaps in the administration regime for insurers as compared with the liquidation regime. The proposals include:
1. applying to administration the existing rules for valuing insurance contracts in liquidation; and
2. revising the objectives of administration in insurance company cases by:
In our September 2009 Pensions update we reported on proposals to make changes to the employer debt regime aimed at assisting corporate restructurings. The final regulations have now been published and come into force on 6 April 2010. Under these provisions, where there is a corporate restructuring and one employer’s assets and pension liabilities are transferred to another, then as long as the prescribed steps (set out below) are followed, no statutory employer debt will arise. Employers relying on an easement will not be expected to seek clearance from the Pensions Regulator.
The Government has announced that it will shortly begin a consultation on important new measures designed to boost confidence in the ‘pre-pack’ administration procedure.
Readers of our December 2009 issue will recall that we wrote about the Scottish court decision on the Scottish Lion Insurance Company scheme of arrangement. Just before this issue went to press the decision of the Scottish court of appeal (the Inner House of the Court of Session) on the issue of whether “creditor democracy” would be allowed to prevail or whether unanimity was required became known.
Protecting clients’ money and assets has been a pillar of the UK financial regulatory regime. The obligation on regulated entities to “…arrange adequate protection for clients’ assets when it is responsible for them” is enshrined in Principle 10 of the Principles of Business Sourcebook of the Financial Services Authority (FSA) Handbook. The FSA has made rules to protect client money by requiring FSA regulated entities to hold such money in trust accounts (the Client Money Rules).
The PPF policy statement can be found here
Following its November 2009 consultation, the PPF has published a statement confirming its policy on measuring insolvency risk for the 2011/12 levy. Schemes and employers should act quickly before the 30 and 31 March 2010 deadlines.
The policy statement confirms that for the 2011/12 levy year, the PPF will adopt new policies, including:
Court Broadens Interpretation of Code Sections Invalidating Ipso Facto Contract Provisions
During the second afternoon session of the first day of the PLUS D&O Symposium, the panelists discussed the complex underwriting issues that arise when the company to be insured is insolvent, in bankruptcy, or close to bankruptcy. The panelists discussed the following topics and provided the following insights: