Midwest Employers Casualty Company ("MECC") filed suit against Legion Insurance Company in the United States District Court for the Eastern District of Missouri seeking a declaration with respect to its liability under forty-three reinsurance contracts issued to Legion. Specifically, MECC contends that the reinsurance contracts operate on a "losses occurring" basis, meaning that they provide coverage to Legion for losses that occurred during the period each reinsurance contract was in force. See Midwest Employers Casualty Co. v. Legion Ins. Co., No. 07-870 (E.D. Mo. 2007). Legion, on the other hand, contends that the reinsurance contracts operate on a "risks attaching" basis, meaning that they cover losses whenever they occur, so long as the underlying insurance policy became effective during the period of the reinsurance contract.
MECC sought the production of, among other things, all reinsurance contracts written on a losses occurring basis related to program business written by Legion during the period relevant to the lawsuit, as well as other documents related to the reinsurance contracts issued by MECC. Legion objected to the production of such documents on the grounds that MECC’s request was neither relevant to the issues in the lawsuit nor reasonably calculated to lead to the discovery of admissible evidence, and thus would constitute an undue burden on Legion if forced to comply. MECC moved to compel production.
The court ordered Legion to comply with MECC’s request, finding that the documents sought were "highly probative" to the core issues in the lawsuit—namely, whether the forty-three reinsurance contracts issued by MECC to Legion were written on a risks attaching or losses occurring basis. Click here to review a copy of the court’s decision.