This case concerned the reinsurance arrangements for multiple layers of excess liability umbrella insurance coverage written from 1981 to 1984. The claimant insurer argued that it had four separate facultative reinsurance contracts obtained through brokers under underwriting treaty pool arrangements, whereby the defendant fronted the reinsurance which was then retroceded out to various pools. However, the insurer had no documentary evidence of the reinsurance arrangements and the defendant put it to proof as to its liability. The insurer’s reply asked the court to infer from the retrocession arrangements that the defendant must have written the reinsurance.

Six weeks before trial, the insurer sought to amend its particulars of claim to allege that the defendant had written 100% of the risks under a 1984/5 facility which had been retroceded to a 1984/5 pool. In 1998 the defendant had agreed that the alleged reinsurance contracts could be transferred to that facility.

The defendant argued that this introduced a new claim which was in fact time barred, did not arise out of the pleaded facts and would put the trial date in jeopardy. The claimant denied this despite having used the wording “Further or alternatively...” to introduce the amendment. It submitted that it was simply adding further factual matters in support of its case that the court should infer that defendant was liable under the four separate facultative reinsurance contracts.

The court did not give permission for the amendment on the basis that on the claimant’s own case it was unnecessary and it might prejudice the defendant in having to meet a new case so close to trial. The claimant would however be able to rely on the documents identified in the proposed amendment in support of its primary case.

This case illustrates the difficulty in the run-off sphere of evidencing reinsurance arrangements many years after they were made. With today’s electronic records, it is easier to trace the reinsurance and retrocession position, but with older contracts this issue still arises more often than insurers would like.