‘Reinsurance Assumed’ Provision Applies to Losses and Expenses, Ill. Judge Rules

CHICAGO — The “reinsurance assumed” provision in reinsurance certificates issued by MidStates Reinsurance Co. to Continental Casualty Co. limits both losses and expenses owed by the reinsurer, an Illinois state judge has ruled.

On Aug. 29, Judge Mary L. Mikva of the Cook County Circuit Court ruled that neither the “follow the form,” nor the “follow the fortunes” clauses in the certificates can be interpreted to remove expenses from the amount set forth under the “reinsurance assumed” provision.

MidStates reinsured Continental under five excess general liability reinsurance certificates. One of the certificates covered a Continental policy issued to RSR Corp., …