R&Q Reins. Co. v. St. Paul Fire & Marine Ins. Co., No. 16-1473, 2017 U.S. Dist. LEXIS 120858 (E.D. Pa. Aug. 1, 2017).
A Pennsylvania federal court, embroiled in an asbestos-related reinsurance dispute, has granted a motion to compel the cedent disclose historical loss reserves for the underlying insured and information about other reinsurers that also reinsured the same underlying policies. The court, however, granted the reinsurer's motion to obtain the cedent's proprietary information because that information was protected under the court's protective order.
The dispute involves asbestos losses ceded to two facultative certificates. The discovery dispute involves the cedent's proprietary business information, its historical loss reserves for the underlying insured and information concerning other reinsurers that reinsured the same underlying policies.
As to the proprietary information, the court held that it is discoverable, albeit protected under the protective order issued in the case. Because the cedent agreed to the protective order, the court held that it could not withhold that information without further justification just because it was proprietary.
Concerning the historical loss reserves, the court found that they were relevant to the reinsurer's claim that the cedent did not give prompt notice of loss. The court also found that reserves do not fall under the attorney-client or work product privileges. The court also distinguished disclosure of reserve information to counsel for policyholders and disclosure at the request of a reinsurer.
Finally, on other reinsurer information, the court found that this information was relevant to the reinsurer's late notice claim. Whether and when the cedent gave notice of the same loss to other reinsurers was relevant and discovery was compelled.