“Solvent Run-offs finally ‘off and running’ in the United States”
In a decision that could have wide-ranging implications, both for solvent run-offs and for rehabilitation proceedings that modify existing policies and reinsurance agreements to enable impaired companies to emerge from rehabilitation, the Superior Court of Rhode Island, in In re: GTE Reinsurance Company Limited (the “Decision”), approved GTE Reinsurance Company’s (“GTE Re”) Commutation Plan pursuant to Rhode Island’s Voluntary Restructuring of Solvent Insurers Act (the “R.I. Restructuring Act”). In doing so, the court rejected constitutional challenges to the commutation plan and the R.I. Restructuring Act by certain of GTE Re’s cedents.
This Stroock Special Bulletin examines the Decision and its potential implications.