Source: http://truthaboutlloyds.com/litigation/transit_rr_553.html
Timestamp: 2017-04-23 19:49:20
Document Index: 206804606

Matched Legal Cases: ['§ 375', '§ 375', '§ 375', '§ 375', '§ 375', '§ 375', '§ 375', '§ 375']

a.	No credible evidence exists to support a finding that the Lloyd's "trust" required under § 375.246.1(4)(a) has, as the statute requires, a "trusteed account representing the group's [Lloyd's] liabilities attributable to business written in the United States" or "a trusteed surplus of which one hundred million dollars shall be held jointly for the benefit of United States ceding insurers. . ." To the contrary, the evidence is clear that the current "trusteed surplus" is not held only for "business written in the United States" but includes any "liabilit[ies]. . .express[ed] in U.S. dollars." (Plaintiff's Exhibit 18A, ¶1.3)
b.	No credible evidence exists showing that the trusteed surplus is held "jointly for the benefit of United States ceding insurers." In fact, Defendants' attorneys admit that the Lloyd's underwriting members (or "Names") "write insurance on their own accounts on a strictly several, not joint, basis." (Defendants' Exhibit 13, Mulhern letter; see also Plaintiff's Exhibit 18A, ¶5.1.)
d.	No credible evidence exists showing that the trusts were "established in a form approved by the director of insurance" for Missouri, as required by § 375.246.1(4)(c). In fact, the Department's witness conceded that the trusts had not been approved. (Tr. at 560.) The trusts also do not provide that "contested claims shall be binding and enforceable upon the final order of any court of competent jurisdiction in the United States," as required by this same subsection. The key trust document filed by Lloyd's – the Lloyd's American Trust Deed ("LATD") – governs all payouts of funds in question in this action, gives significant control over the assets of the trusts to the "Agents" and "Council" of Lloyd's, and gives very limited responsibility over the trusts to the "American Trustee," Citibank. (Plaintiff's Exhibit 18A, ¶ ¶ 3.2, 4.1, 4.2(c), 12.1; ¶4.3)
10.	The pre-answer security statutes, when read in pari materia with the primary statute governing "reinsurance" -- § 375.246 – indicate a legislative goal of protecting the policyholders of Missouri insurance companies against alien reinsurers who may become financially impaired or insolvent and leave Missouri policyholders without security to cover the payment of future losses. (Tr. at 517-518, 520-522.) When a company is not licensed in Missouri, it is not subject to Missouri regulation or seizure of assets. These unauthorized insurers or reinsurers must, if they want to avoid posting security, either acquire a "certificate of authority" (i.e. a license to do business in the state) or qualify under some other exception to this requirement. The members of Lloyd's 553 have done neither. Likewise, a Missouri ceding insurer, in order to transact lawful reinsurance, must use a reinsurer who is licensed in Missouri or one who has posted collateral or security for the losses ceded to it in the form of Letters of Credit or cash. See § 375.246; see also the testimony of the Department's witness at Tr. at 517-522. Defendants' interpretation of two statutes in isolation would perpetuate an illogical and unfair result contrary to the intent expressed in the statutory scheme. 11.	Under §§ 375.789 and 375.281 and Article IX of the parties' reinsurance agreement Lloyd's Syndicate 109 et al, is required to post a clean, unconditional, irrevocable, Letter of Credit, Cash Advance or a Combination there of to secure Transit's loss reserves of $13,744,486.00 and paid losses of $2,090,826.00 for a total of $15,835,312.00 all of which may be a part of any Final Judgment.
Pursuant to the Liquidation Order, the Missouri insurance insolvency code (§§ 375.650, et seq.) and §§ 375.789 and 375.281, the underwriting members of Lloyd's 553 must, within 10 days of this Order, post "a clean, unconditional, irrevocable Letter of Credit, Cash Advance, or a combination thereof" in the sum of $10,787,035.00 as and for Transit's core reserves of $9,583,114, paid balances due of $977,313.00 and prejudgment interest of $226,561.00 all of which may be part of "any final judgment", pursuant to §§ 375.789 and 375.281. The total security due of $10,787,035.00 is based on Transit's September 30, 1997 loss figures. Defendants have already posted an LOC in the sum of $8,322,136. Thus, the amount of the security shall be increased by $2,454,899.00. Defendants are ordered to post a new Letter of Credit or other valid security in the total sum of $10,787,035.00.