In late December 2021, the U.S. Court of Appeals for the Second Circuit issued a blockbuster decision grappling with the Erie doctrine, stare decisis, and overturning a decades-old precedent. It was the fourth appellate decision in a lengthy litigation reminiscent of Dickens’ Bleak House. This was not litigation about constitutional rights or environmental justice, but a case about an unlikely subject: facultative reinsurance.
In Global Reinsurance v. Century Indemnity, the Second Circuit overturned a 1990 precedent that was notorious in the reinsurance industry, Bellefonte Reinsurance v. Aetna Cas. & Sur. This article tells the story of Global Re and the lessons it teaches regarding the interpretation of reinsurance contracts.