Unicover - Recent Ruling By A New Jersey Appellate Court

Reliastar Life Insurance Company v Roger Smith and Aon Re Inc

There has been a recent ruling in the US concerning this all too well known workers' compensation reinsurance dispute. On 1 March 2011, the New Jersey Superior Court Appellate Division affirmed a jury verdict and held that Aon Re, Inc. ("Aon") and Roger Smith ("Smith") had not breached their fiduciary duties to a reinsurer, Reliastar Life Insurance Company ("Reliastar").

Background

In the mid 1990's, Unicover Managers Inc. ("Unicover") brought together a group of insurance companies (the "Pool") for the purpose of selling workers' compensation reinsurance. In its role as manager of the Pool, Unicover appointed Aon to act as its broker. Aon was also responsible for organising retrocessional coverage to protect the Pool's underwritten obligations. Smith was Aon's representative who dealt with Unicover. On 1 March 1998, Reliastar joined the Pool as a 5% member following an approach from Smith. Over