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matters, including the institution and implementation of liquidation
proceedings.
Stephens v. National Distillers and Chemical Corp., 69 F. 3d 1226 (2d Cir.
1995). This case analyses the Foreign Sovereign Immunities Act (FSIA) and
McCarran‐Ferguson in the context of pre‐answer security. The U. S. District
Court for the Southern District of New York applied the FSIA and exempted
foreign retrocessionaires from the New York pre‐answer security
requirement. The Liquidator for Delta America Re brought this action to
recover balances due from National Distillers and retrocessionaires of Delta.
When the case was transferred to New York, the Liquidator demanded that
the retrocessionaires post security to cover any potential judgment as
provided under New York Insurance Law Section 1213(c). The Second Circuit,
affirming the District Court, held that: the security requirement was a
prohibited attachment as to an insurance company that was a branch of a
foreign government under the Foreign Sovereign Immunities Act ("FSIA”);
and the McCarran‐Ferguson Act did not preclude application of the FSIA.
Third Circuit
Suter v. Munich Reins. Co., 223 F.3d 150 (3d Cir. 2000). The liquidator of an
insolvent insurance company brought a state‐court action against an alien
reinsurer to recover on reinsurance treaties. The reinsurer removed to case
to federal court pursuant to the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (the “Convention”). The Third
Circuit held that the McCarran‐Ferguson Act did not operate in such a
manner that the New Jersey Liquidation Act would reverse preempt the
removal provisions of the Convention. The mere fact that policyholders of
the insolvent insurer could receive less money if no coverage existed under
the reinsurance agreement did not impair the operation of any provision of
Liquidation Act.
Fourth Circuit Gordon v. U.S. Dept. of the Treasury, 668 F. Supp. 483 (D. Md. 1987), aff'd 846
F.2d 272 (4th Cir. 1988). The liquidation of an insolvent insurance company and
the prioritizing of claims to be paid do not constitute the "business of
insurance" as that term is used in the McCarran‐Ferguson Act. Therefore, the
federal statute giving the United States absolute priority in collecting money
due from an insolvent debtor was upheld over the State insurance scheme, in
which the Government's claims would have fallen within the fourth category of
priority.
North Carolina v. United States, 139 F.3d 892, 1998 WL 178374 (4 th Cir. (N.C.)).
Northwestern Security Life Insurance Company, which specialized in life,
health, and accident insurance, failed after rehabilitation efforts proved
unsuccessful. On May 8, 1990, Northwestern was placed into liquidation
under the control of the North Carolina Insurance Commissioner. The
federal priority statute required the Commissioner to pay the federal tax
claims of the United States first. After the Supreme Court held, in U.S. Dept.
of Treasury v. Fabe, 508 U.S. 491 (1993), that under the McCarran‐Ferguson
Act, 15 U.S.C. § 1012, state insurance insolvency statutes are not preempted
by the federal priority statute to the extent that the state statutes afford a
higher priority to policyholder claims and claims for administrative expenses
than to claims of the United States, the commissioner filed an amended tax
return for 1990 and 1991. The Internal Revenue Service claimed that federal
income taxes accrued during liquidation were entitled to first priority status
as administrative expenses under North Carolina General Statute § 58‐30‐
220(l).