In a decision handed down May 29, 2025, a New York appellate court ordered Millennia Assurance, Inc. to deposit $4,753,758.02 into a trust account, siding with New York Marine and General Insurance Company in a dispute over collateral obligations between the two insurance businesses.
The case involves New York Marine’s claim that Millennia failed to post the required collateral in connection with insurance obligations ceded to it. In 2022, New York Marine was hit with a statutory Schedule F penalty from a state regulator for not maintaining sufficient collateral. That penalty led to a reduction in the company’s total policyholder surplus and undermined its ability to issue or reinsure federal bonds.
New York Marine had asked the Supreme Court, New York County, to compel Millennia to deposit the collateral amount. The motion was initially denied without prejudice, but the Appellate Division, First Department, reversed that ruling. The appellate court found that New York Marine met the legal standard for a preliminary injunction, showing both a likelihood of success and potential for irreparable harm.
The decision pointed to an affidavit submitted by the vice president of Coaction Management, which services policies for New York Marine. The affidavit detailed the financial impact of the collateral shortfall and included a “collateral review statement” showing the exact deficiency of $4,753,758.02.
While Millennia argued that New York Marine had ample surplus and was not at risk of defaulting on claims, the court found that the reduction in surplus caused by the penalty could have broad business consequences that are difficult to quantify. The court cited prior decisions where injunctions were upheld in similar circumstances, emphasizing that when future damages are difficult to measure, legal remedies may not be sufficient.
The appellate court ordered Millennia to deposit the full amount into the trust account. The ruling applies only to the preliminary relief and does not decide the full merits of the case.
No insurance policy clauses were examined in the ruling. The decision focused on the collateral obligations and regulatory consequences tied to the reinsurance agreement.
