Cedents Must Pay $15 Million Premium To Granite Re, 8th Circuit Rules

LITTLE ROCK, Ark. - An insurance holding company and its subsidiaries are obligated to pay the entire $15 million premium for a five-year reinsurance contract even though they stopped writing the reinsured business after only a year, the 8th Circuit U.S. Court of Appeals ruled March 12. Granite Reinsurance Company Ltd. v. Acceptance Insurance Companies Inc., No. 07-6027, 8th Cir.).

In reversing a Nebraska federal court ruling, the 8th Circuit explained that the stop loss contract did not provide for early termination and clearly stated that the $15 million premium is payable over the five years, regardless of which year …