Reinsurer Bound by Follow-The-Fortunes Language

KANSAS CITY, Mo. - The doctrine of follow-the-fortunes requires Employers Reinsurance Corp. to reimburse its cedent for settlements made under reinsured disability income policies, a Missouri federal judge ruled Aug. 19. Employers Reinsurance Corp. v. Massachusetts Mutual Life Insurance Co., No. 06-0188 (W.D. Mo.).

Chief Judge Fernando J. Gaitan Jr. of the U.S. District Court for the Western District of Missouri determined that the reinsurance contract, which covered policies assumed by Massachusetts Mutual Life Insurance Co., contained follow-the-fortunes language.

Employers Reinsurance Corp. issued Connecticut Mutual Life Insurance Co. an excess disability income reinsurance treaty, under which it agreed to reinsure …