Reinsurer Need Not Show Prejudice to Avoid Liability, 3rd Cir. Rules

PHILADELPHIA – Applying New York law, a federal appeals court has ruled that Global Reinsurance Corporation of America is not required to show that it was prejudiced by a cedent’s breach of a condition precedent in order to avoid liability.

In overturning a lower court’s determination that Pennsylvania law applies to the issue, the 3rd Circuit U.S. Court of Appeals held that the cedent’s failure to provide Global with prompt notice of a claim or occurrence excused Global from its duty to perform under a facultative certificate.

PEIC entered into a facultative contract with Global's predecessor, Constitution Reinsurance Corp. …