Insured May Not Directly Sue Frontier’s Reinsurer, 2nd Circuit Affirms

NEW YORK — An insured may not directly sue the reinsurer of Frontier Insurance Co. to collect on a judgment issued against Frontier because the reinsurance agreement does not contain a cut-through clause, the 2nd Circuit U.S. Court of Appeals has affirmed. Callon Petroleum Co. v. National Indemnity Co., et al., No. 11-241 (2nd Cir.).

On July 3, the appellate court found that the reinsurance agreement's "no-third-party-rights" provision barred Callon's "cut-through" action against National Indemnity Co.

In 2000, Callon obtained a $2.7 million judgment against Frontier in the U.S. District Court for the Eastern District of Louisiana. The judgment arose …