and Aviva." Yet given that Harrisons US is excluded from Policy
No. 6687287, and given that Aviva is not a party to the 1980
OneBeacon policy, it defies logic to say that the two policies in
combination create an ongoing obligation that Aviva reinsure
OneBeacon with respect to Harrisons US. As amended, Policy No.
6687287 has nothing to do with Harrisons US (Harrisons US is
"specifically excluded from this policy"), and the 1980 OneBeacon
policy on its own cannot bind Aviva (a non-party to that policy).
Moreover, the 1981 OneBeacon Policy, which OneBeacon
claims is a renewal of its 1980 Policy, does not contain the 1980
OneBeacon Endorsement Number 4 or any similar provision indicating
that the 1981 OneBeacon Policy was reinsured by Aviva. This
omission is consistent with Aviva terminating its reinsurance
relationship with OneBeacon and OneBeacon taking on the ultimate
insurance risk for Harrisons US in the 1981 policy period.
Similarly, there is no indication that the 1982 OneBeacon Policy
had the 1980 OneBeacon Endorsement Number 4 or any similar
provision. Thus, in contrast to the 1980 OneBeacon policy, the
1981 and 1982 OneBeacon Policies did not tell Harrisons US that
Aviva was standing behind OneBeacon as the reinsurer.
Furthermore, if there is some ambiguity regarding the
meaning of the 1981 Aviva Endorsement and the 1981 OneBeacon
Policy, Massachusetts law allows us to examine the extrinsic
evidence to determine whether the parties intended for the
reinsurance arrangement to continue after the end of the first
year. See Den norske Bank AS v. First Nat'l Bank, 75 F.3d 49, 52
(1st Cir. 1996) ("Although not admissible either to contradict or
alter express terms, extrinsic evidence is admissible to assist the
factfinder in ascertaining the intent of the parties as imperfectly
expressed in ambiguous contract language." (citing Robert Indus.,
Inc. v. Spence, 291 N.E.2d 407, 410 (Mass. 1973))). Here, the
extrinsic evidence on the record convinces us that the reinsurance
arrangement did not continue.
Firstly, the fact that there is no Facultative
Certificate between Aviva and OneBeacon for the second and third
policy years suggests that the relationship between the two
companies changed after the first year. Secondly, and most
importantly, the evidence regarding the flow of premium payments
supports the view that Aviva terminated its reinsurance obligation
after the first year. In the first year, in which both parties
agree that Aviva reinsured OneBeacon, Aviva received a premium
payment of $45,530 Canadian and remitted a 10% fee to OneBeacon.
Moreover, the OneBeacon ledger shows that there was a reinsurer for
the 1980 OneBeacon policy -- identified with the code "C44." In
the second year, however, the OneBeacon ledger reflects that
OneBeacon directly received the full $24,000 U.S. premium payment.
Furthermore, the ledger does not indicate that there was a
reinsurer for the 1981 or 1982 OneBeacon Policies. Further,
OneBeacon has not pointed to any evidence that it shared the
second- or third-year premium with Aviva. OneBeacon would have
this Court reach a result that OneBeacon kept all of the