Lawsuit Involving LMX Reinsurance Spiral Losses Reinstated Against E&O Insurers in N.J.

TRENTON, N.J. — A New Jersey appellate court has reinstated a lawsuit filed against two insurers by the shareholders of a reinsurer that sustained considerable losses due to its participation in the LMX reinsurance program, ruling that a related judgment issued in Bermuda does not bar the action.

In a March 10 opinion, the New Jersey Appellate Division concluded that the plaintiffs’ interests were not adequately represented in the Bermuda action and that binding them to that judgment in favor of defendants would violate constitutional due process.

Plaintiffs Robert D. Ferguson, Kansa International Corporation Ltd., Milo Family Limited Partnership, Imipolex …