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. Insolvency
AA Mutual International Insurance Co Ltd, Re [2004] EWHC 2430 (Ch). AA
Mutual International Insurance Co Ltd (AA) sought an administration order
under the Insolvency Act 1986 Schedule B1. AA had been authorized to
underwrite insurance business by the UK authorities in 1979; however, the
company went into run‐off in 1987. At that point, it was no longer authorised to
underwrite insurance business but was authorised to continue to carry out
contracts of insurance. In this case, the High Court considered whether it had
jurisdiction under European legislation to make such an order. It found that AA
was an "insurance undertaking" within the meaning of the European Council
Directive 2001/17 Article 2(a) as it had received authorisation to carry on such
business by the UK under European Council Directive 73/239 Article 6. In
addition, administration was found to be a "reorganisation measure" under
Article 2(c) of Directive 2001/17; and, under Articles 2(g) and 4 of the same
Directive, the High Court had exclusive jurisdiction to decide reorganisation
measures in relation to AA. As AA was authorised under the Financial Services
and Markets Act 2000 Part IV, it was a UK insurer which fell within the Insurers
(Reorganisation and Winding Up) Regulations 2004. In this case, the court
found that an administration order would achieve the best result for AA's
creditors and so the order was made as the conditions of Schedule B1 of the
Insolvency Act 1986 were satisfied.
Ackman and Others, and Scher and others v The Policyholders Protection Board
[1992] 2 Lloyd's Rep. 321, CA. A series of professional indemnity policies were
issued to lawyers, doctors and accountants (the Professionals) practicing in
North America. The insurance companies who issued these policies
subsequently became insolvent and as a result the Professionals claimed against
the Policyholders Protection Board. As a result, the Court of Appeal was asked
to consider several issues regarding the meaning of the Policyholders Protection
Act 1975 (the Act). It held that a policy was a "U.K. policy" as long as the insurer
was carrying out insurance business which was part of the insurer's U.K.
authorised business whether or not it was performed in the U.K. The second
issue in question was who was a "private policyholder" within the meaning of
the Act. The Court of Appeal held that a professional corporation did not qualify
as a "private policyholder". Finally, the Court of Appeal decided that "any
liability" within the meaning of the Act meant any liability (actual or contingent)
which could, under the terms of the policy, give rise to or capable of giving rise
to a liability on the part of the insurer. In addition, the Court of Appeal held that
such a liability must have occurred during the policy period but prior to the
commencement of the liquidation.
A Company (No. 013734 of 1991), Re [1992] 2 Lloyd's Rep. 415. The Petitioner in
this case was a reassured with claims against the above reinsurance company
(R). The Petitioner itself was in liquidation and claimed against R under two
reinsurance excess of loss contracts. Directions had been made in the
liquidation of the Petitioner valuing or settling contingent claims of an uncertain
value and one of the questions in this case was the extent to which such valued
or settled contingent claims amounted to a "loss settlement" or "compromise
settlement" in respect of which R was obliged to pay. R disputed liability and
quantum but the Petitioner sought a winding‐up order against R on the basis
that there was a minimum undisputed amount due on which to base the
winding‐up petition. There were two main limbs to R's argument: (1) that it was
a precondition of liability that the Petitioner should have actually paid its
underlying assureds, and (2) that the valuation by the court's order in the
Plaintiff's liquidation could not amount to a "loss settlement" or "compromise
settlement" within the reinsurance contracts.