On July 29, 2021, the United States Court of Appeals for the Second Circuit issued its ruling on the appeal of Utica Mutual Insurance Company (“Utica”) from the decision of the United States District Court for the Northern District of New York in the dispute between Utica and Munich Reinsurance America, Inc. (“MRAm”). The court affirmed the decision of the court below that MRAm had no obligation to reimburse Utica for approximately $2.7 million in defense expenses in addition to policy limits. Utica Mut. Ins. Co. v. Munich Reins. Amer., Inc., 2021 U.S. App. LEXIS 22476 (2d Cir. July 29, 2021) (cited herein as “Opinion”).
Whenever the Second Circuit, perhaps the nation’s leading court in commercial matters, visits the reinsurance arena, the entire industry must take notice. That is especially true here, as the Utica v. MRAm opinion brings a measure of clarity to three separate issues, all of which have larger ramifications for the industry generally. This article will summarize the ruling, analyze the holdings of the court, and offer some thoughts on the impact of this ruling on future reinsurance disputes.