Opinion ID: 2455129
Heading Depth: 1
Heading Rank: 2

Heading: The Reinsurance Contracts

Text: On August 21, 1999, Scandinavian and St. Paulboth reinsurance companies entered into a specialized type of reinsurance contract known as a stop-loss retrocessional agreement. [1] See Retrocessional Casualty Aggregate Stop Loss Agreement AR 11914 (the Agreement). Under the Agreement, St. Paul ceded to Scandinavian some of the reinsurance liabilities that St. Paul had assumed from other insurance companies under reinsurance business that had been, or would be, written by St. Paul between January 1, 1999, and December 31, 2001. In exchange for Scandinavian's assumption of these liabilities, St. Paul became obligated to pay premiums to Scandinavian. But the Agreement contemplated that instead of paying the premiums to Scandinavian directly, St. Paul would provisionally retain those funds within an experience account, [2] where the funds would accumulate interest. Any amounts that Scandinavian became obligated to pay St. Paul based on the assumed liabilities would first be paid out of that account. Only if the experience account became fully depleted would Scandinavian have to pay St. Paul out of its own funds. The Agreement contained a dispute-resolution clause providing for binding arbitration of any dispute arising out of the interpretation, performance or breach of this Agreement, including the formation or validity thereof. Agreement at 11. It required that such disputes be submitted for decision to a panel of three arbitratorstwo party-appointed arbitrators and an umpireall of whom would be disinterested active or former executive officers of insurance or reinsurance companies or Underwriters at Lloyd's, London. Id.