Travelers Casualty & Surety Company v. Gerling Global Reinsurance Corporation of America
United States Court of Appeals for the Second Circuit
419 F.3d 181 (2005)
Travelers (plaintiff) insured asbestos manufacturer OCF, obtaining reinsurance certificates with "follow the fortunes" clauses from Gerling (defendant); after OCF exhausted its "products" coverage and disputed allocation of its "non-products" coverage with Travelers, the two settled without formally agreeing on whether claims arose from one occurrence or many, and Travelers allocated most of the settlement to a single non-products claim before spreading the remainder across excess policies reinsured by Gerling, which refused to pay, arguing Travelers should have followed OCF's separate-occurrence theory; the trial court granted Gerling summary judgment.
Whether, under a reinsurance agreement's "follow the fortunes" clause, a reinsurer is bound by the cedent's settlement absent a showing that the settlement was not in good faith or reasonable.