Lack of ‘Cut-Through’ Provision Dooms Wells Fargo’s Reinsurance Action, N.Y. Court Affirms

NEW YORK — Wells Fargo Bank and its captive insurer lack standing to sue certain London reinsurers for contribution toward its settlement of securities lending actions filed against its predecessor, a New York appellate court has affirmed.

In a June 1 order, the New York Appellate Division, 1st Department, affirmed that the lack of a “cut-through” provision in the reinsurance contracts at issue prevents Wells Fargo and its captive from suing the reinsurers.

Wachovia’s captive insurer, Superior Guaranty Insurance Co., formerly Beaumont Insurance Co., issued a Blended Corporate Directors and Officers and Bankers Professional Liability Policy to Wachovia and its …