TIG Insurance Company v. Swiss Reinsurance America Corporation

Background

TIG Insurance Company, as successor to Ranger Insurance Company, and Associated Electric and Gas Insurance Services Limited (AEGIS) sued Swiss Reinsurance America Corporation (SRA) for breach of contract. SRA was formerly known as North American Reinsurance Corporation. The case concerns six certificates of facultative reinsurance under which SRA agreed to reinsure Ranger’s liability under six insurance policies covering Duke Power Company and Carolina Power & Light Company for policy periods from October 31, 1982, through October 31, 1985.

The policies were issued as part of a fronting arrangement between Ranger and AEGIS. AEGIS handled and paid all claims under the policies, while Ranger and later TIG did not pay any claims. Decades later, Duke brought a North Carolina insurance-coverage lawsuit involving environmental damage from coal ash. TIG and AEGIS agreed that AEGIS would control the response to that lawsuit, and AEGIS acknowledged responsibility for all past and future losses and defense costs payable under the Ranger policies.

The coal-ash claims involving the Ranger policies were settled in August 2021. AEGIS paid the entire settlement and then billed SRA for 57% of the settlement amount. TIG and AEGIS claimed that this percentage represented the portion for which TIG was responsible and that SRA owed as TIG’s reinsurer. SRA refused to pay.

Issues and Arguments

The plaintiffs argued that the certificates clearly required SRA to pay its share of any settlement involving liability under the Ranger policies. SRA argued that the certificates covered SRA’s reinsurance of TIG or Ranger, not AEGIS, and that they applied only to claims settled by TIG or Ranger. SRA also relied on the parties’ conduct, including AEGIS’s handling and payment of all prior claims, TIG’s failure to establish reserves, and AEGIS’s agreement to bear all losses and defense costs.

The court also addressed AEGIS’s ability to pursue the contract claim. It concluded that TIG, as Ranger’s successor, and SRA were the parties to the certificates. The court found no factual basis showing that AEGIS was an intended third-party beneficiary. Therefore, AEGIS could not pursue the claim as a party to the certificates or as a third-party beneficiary. The court explained that AEGIS could proceed only if TIG had a breach-of-contract claim that could validly be assigned to AEGIS.

Court’s Analysis

Under New York law, a breach-of-contract claim requires an agreement, adequate performance by the plaintiff, a breach by the defendant, and damages. The parties agreed that the certificates were contracts and that SRA received the required premiums. Their dispute concerned whether SRA breached the certificates by refusing to pay AEGIS and whether that refusal caused damages.

The court held that the certificates could reasonably be interpreted in two ways. The plaintiffs’ interpretation was reasonable because the certificates broadly stated that SRA would reinsure the company and pay its proportion of settlements. The plaintiffs also pointed to TIG’s inclusion as a settling insurer in the Duke litigation.

SRA’s interpretation was also reasonable because the certificates stated that SRA would indemnify TIG for liability assumed under the listed Ranger policies. The court found that the certificates did not clearly define what liability Ranger or TIG had assumed. The parties’ course of performance therefore could be considered. That conduct showed that AEGIS handled and paid all claims, TIG paid none, AEGIS posted reserves for the settlement, and TIG did not post reserves. The court stated that this evidence could support an interpretation that TIG’s assumed liability was limited to a credit risk rather than actual liability for Duke’s claims.

Because both interpretations were plausible, the court found genuine disputes of material fact about the scope of the certificates, whether SRA breached them, and whether the plaintiffs suffered damages. Summary judgment—judgment without a trial when no genuine dispute of material fact exists—was therefore inappropriate.

Disposition

Judge Nelson S. Román denied the plaintiffs’ motion for summary judgment and denied SRA’s motion for summary judgment. The order did not resolve whether SRA breached the certificates or whether damages were owed. The court directed the clerk to terminate the two motions and noted that a telephonic pretrial conference was scheduled for April 8, 2025.