A defunct Texas insurance company has agreed to arbitrate a reinsurance dispute with a New Zealand insurer which also operates in the UK.
Texas-based Gramercy Insurance had alleged in a lawsuit that Contractor’s Bonding Ltd., also known as CBL Insurance, owed it more than $1 million (around £773,000) under a reinsurance agreement. New Zealand-based CBL argued that the agreement had a provision requiring disputes to be arbitrated in Atlanta.
The underlying lawsuit stems from a 2007 reinsurance agreement between CBL and Gramercy. Under the agreement, the two companies would reconcile the amounts each one owed on claims and settle through a trust.
The lawsuit alleges that Gramercy had asked CBL to help defend against a claim brought by Topdanmark, a Danish insurer. Gramercy claimed that CBL owed it $1.04 million and has refused to pay. CBL, meanwhile, said it shouldn’t have to pay because Gramercy didn’t pay 100% of claims to insureds before it went into receivership in 2012.
The New Zealand firm told the court that Gramercy did not object to staying the lawsuit in order to pursue arbitration.
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