Opinion ID: 1060083
Heading Depth: 2
Heading Rank: 4

Heading: claim for set off

Text: Swiss Re asserts that the Commission erred in not permitting it to set off sums owed by it to Fidelity under the Integrated treaties against the sums owed to it under the Fidelity treaty. Set off of mutual debts and credits of insurers in receivership is controlled by Code § 38.2-1515(A): In all cases of mutual debts or mutual credits between the insurer and another person in connection with any action or proceeding under this chapter, the credits and debts shall be set off and the balance only shall be allowed or paid, except as provided in subsection B of this section. The rationale underlying the principle of a set off is that `[t]he demands must be due between the same parties, and in the same right.' First National Bank of Waynesboro v. Johnson, 183 Va. 227, 237, 31 S.E.2d 581, 585 (1944). At the time Swiss Re acquired the Integrated treaties, Fidelity was already in receivership. Any rights acquired by Swiss Re at that time were necessarily limited by the effect of that receivership, and, thus, were of a quality distinguishable from the obligations it owed under the Fidelity treaty. Accordingly, there is a lack of mutuality between the Fidelity treaty and the Integrated treaties, barring set off of the respective debts owed. A contrary holding would run counter to the express provision in the statute that debts owed by the insurer cannot be acquired for the purpose of obtaining a set off. Code § 38.2-1515(B)(2). For these reasons, the decision of the Commission will be affirmed. Affirmed.