Liquidator May Not Sue Policyholder on Behalf of Guaranty Associations, Court Rules

PHILADELPHIA - The liquidator of Reliance Insurance Co. may not seek reimbursement of sums paid to a policyholder by state guaranty associations for claims that were also covered under a contingent liability policy issued by a reinsurer, a Pennsylvania state court has ruled. Reliance Insurance Company in Liquidation v. Aramark Corp., et al., No. 5 REL 2008 (Pa. Comm. Ct.).

On Dec. 9, the Pennsylvania Commonwealth Court ruled that the liquidator does not have standing to sue Aramark Corp. on behalf of the guaranty associations because he lacks a "direct, substantial and present" interest.

Reliance Insurance Co. covered Aramark under …