New Hampshire Insurance Co v. Magellan Reinsurance Company Ltd, Court of Appeal - Privy Council, July 15, 2009,  UKPC 33
|Resolution Date:||July 15, 2009|
|Issuing Organization:||Privy Council|
|Actores:||New Hampshire Insurance Co v. Magellan Reinsurance Company Ltd|
 UKPC 33
New Hampshire Insurance Company v. Magellan Reinsurance Company Limited (The Turks & Caicos Islands)  UKPC 33 (15 July 2009)
Privy Council Appeal No 50 of 2008
New Hampshire Insurance Company Appellant
Magellan Reinsurance Company Limited Respondent
THE COURT OF APPEAL OF
THE TURKS AND CAICOS ISLANDS
- - - - - - - - - - - - - - - - -
JUDGMENT OF THE LORDS OF THE JUDICIAL
COMMITTEE OF THE PRIVY COUNCIL
Delivered the 15th July 2009
- - - - - - - - - - - - - - - - -
Present at the hearing:-
Lord Phillips of Matravers
Lord Brown of Eaton-under-Heywood
- - - - - - - - - - - - - - - -
[Delivered by Lord Mance]
The issue on this appeal is whether New Hampshire Insurance Company (``New Hampshire'') has locus standi to present a winding up petition in respect of its reinsurers, Magellan Reinsurance Company Limited (``Magellan''). Under the Turks and Caicos Islands Companies Ordinance, that issue depends upon whether New Hampshire was a ``creditor'' of Magellan. This in turn depends upon whether Magellan's breach of a reinsurance obligation to pay monies into a trust account held by Texas Commerce Bank constituted New Hampshire a creditor of Magellan. There has been no extension of any right to petition to contingent creditors or creditors with unliquidated claims. (Turks and Caicos law remains in this respect as English law was at the time of the decision in Re Pen-y-Van Colliery Company (1877) 6 Ch D 477.)
Magellan reinsured New Hampshire with effect from 1 October 1995 under a reinsurance agreement dated 17 January 1997 in respect of a book of vehicle service contract reimbursement policies administered by Warrantech Automotive, Inc. New Hampshire appears to have been fronting, since (in return for overriding commission) it ceded 100% of the risk to Magellan for 100% of the premium, and Magellan and Warrantech's sub-agents, Automotive Financial Group, have at least a ``shared ultimate ownership''.
Articles VII and VIII of the reinsurance provided:
``ARTICLE VII - REPORTS AND REMITTANCES
A. The company shall provide monthly accounts and reports within 60 days from the end of each month and shall render to the Reinsurer, on a calendar monthly basis within 60 days from the end of each calendar month, an account current showing the following:
Gross Written Premiums
Loss Expense Paid
Unearned Premium Reserves
Outstanding Loss Reserves
B. The Company shall credit the Reinsurer with the Gross Written Premiums less the Ceding commission and Loss and Loss Expenses paid. The company will remit the balance within 45 days of receipt from Warrantech. The Reinsurer will pay any amounts due within 45 days after receiving the account current.
ARTICLE VIII - TRUST ACCOUNT
The reinsurer will provide the Company with a Trust Agreement acceptable to the Company and its regulatory authorities. The Reinsurer shall be required to deposit an amount equal to 100% of the total unearned premium reserve plus the outstanding loss reserves as determined by the Company at the end of each calendar quarter.''
Article IV defines ``Unearned Premium Reserve'' as ``the premium represented by the unexpired portion of the Policies in force as of any specified date, as determined by the Company [i.e. New Hampshire]'' and ``Outstanding Loss Reserves'' as ``losses reported to the Company which have been reserved but are unpaid at any specified date''.
A trust agreement between Magellan as Grantor, New Hampshire as Beneficiary and Texas Commerce Bank, NA as Trustee was entered into dated 11 April 1997. It provided inter alia:
``Section I. Deposit of Assets to the Trust Account
(a) The Grantor shall establish the Trust Account and the Trustee shall administer the Trust account in its name as Trustee for the Beneficiary. The Trust Account shall be subject to withdrawal by the Beneficiary solely as provided herein.
Section 2. Withdrawal of Assets from the trust Account
(a) Without notice to the Grantor, the Beneficiary shall have the right, at any time and from time to time, to withdraw from the Trust Account, upon written notice to the Trustee (the ``Withdrawal Notice''), such Assets as are specified in such Withdrawal Notice. The Withdrawal Notice may designate a third party (the ``Designee'') (to whom Assets specified therein shall be delivered and may condition delivery of such Assets to such Designee upon receipt, and deposit to the Trust Account, of other Assets specified in such Withdrawal Notice. The Beneficiary need present no statement or document in addition to a Withdrawal Notice in order to withdraw any Assets; nor is said right of withdrawal or any other provision of this Agreement subject to any conditions or qualifications not contained in this Agreement.
(b) Upon receipt of a Withdrawal Notice, the Trustee shall immediately take any and all steps necessary to transfer the Assets specified in such Withdrawal Notice and...
To continue readingREQUEST YOUR TRIAL