GIC ‘disputes’ contract breach claims and $115m lawsuit filed by AM Re
General Insurance Corporation of India (GIC Re) has “disputed” the claims made by AM Re Syndicate who is suing the Indian government-run reinsurer for allegedly breaking binding authority agreements and working with cedants AM Re had sourced, underwrote, and negotiated for several years on behalf of GIC Re. AM Re is seeking a minimum of $115 million in damages, which so far GIC Re has refused to honour.
In a statement issued on March 3, GIC Re confirmed that it had executed binder authority agreements with AM Re Syndicate USA for motor and marine business effective for a 24 month period from January 1, 2021 and December 31. 2022, respectively.
The reinsurer, however, argued allegations of breach of obligation to pay stating that it had issued a “notice of termination for these agreements on 28 October 2021 (Motor) and 12 November 2021 (Marine) with a notice period of 90 days, and as on date the termination is final”.
“ GIC disputes the allegations of the complaint as well as the quantification of these claims and will address both aspects at the appropriate time in the litigation,” the company said in a statement.
GIC Re has also objected to the amount AM Re has sought in damages. “No further detail or basis has been provided at this time inter alia as to why AM RE alleges that the amounts would be at least $115 million,” GIC Re said.
It added that the complaint is “still at a nascent stage” and GIC Re is in the process of studying the complaint and quantification in detail in order to determine the next steps.
The lawsuit filed by AM Re in the US District Court - Southern District Court of New York in February 2022, makes monetary claims purportedly arising from the termination of the binder authority agreements and non-payment of agreed commissions.
According to AM Re, it had spent significant effort in negotiating reinsurance agreements on behalf of GIC Re for 2022, but the latter “purported to terminate the binding authority agreements and now refuses to pay AM Re the agreed commissions”.
AM Re alleges that GIC Re breached its obligations to pay for hundreds of millions of dollars of reinsurance business that it sourced and serviced on behalf of the reinsurer.
GIC Re was AM Re’s biggest binder before it pulled capacity.
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