Reinsurer May Not Pursue Arbitration or Deny Payment on Contracts Related to Ambac Segregated Account, Wis. Court Affirms

MADISON, Wis. — An injunction issued in the rehabilitation of a segregated account of Ambac Assurance Corp. bars a reinsurer from pursuing arbitration of two reinsurance contract disputes and obligates it to make reinsurance payments to Ambac, a Wisconsin appellate court has affirmed.

On Oct. 24, the Wisconsin Court of Appeals explained that because the reinsurance contracts are connected to policies within the segregated account, the injunction applies to those contracts.

In 2003 and 2004, Assured Guaranty Corp. and its affiliate Assured Guaranty Re Ltd. entered into reinsurance agreements that covered a portion of certain Ambac policies. Both reinsurance contracts …