Reinsurers Clash Over Benefit Reserve Adjustments

“The company and Transamerica were unable to resolve the issues through negotiations and the matter is now in arbitration,” Annuity and Life Re says.

When Transamerica submitted an initial position statement to the arbitration panel in July, asked for $45 million and said it has the right to rescind the novations of both the Scottish Re and F&G books, Annuity and Life Re says.

Transamerica also has asked the arbitration panel to make a unit of Annuity and Life Re put $51 million in a trust fund to secure payment of a future arbitration award.

“Importantly, Annuity and Life Reassurance Ltd., the company that is party to the arbitration, has total assets of less than $36 million at June 30,” Annuity and Life Re observes.

The arbitration panel has scheduled a hearing to take place April 16, 2007, and could rule on the trust fund request this fall, Annuity and Life Re says.

“The company believes Transamerica’s position with respect to both the F&G and Scottish Re books is without merit,” Annuity and Life Re says. “The company is working with counsel in presenting its position to the arbitration panel.”

Annuity and Life Re also notes that Scottish Re is adjusting its billing methodology and pay end up claiming that it has paid too much for past reinsurance from Annuity and Life Re or may have failed to bill Annuity and Life Re for some claims that Annuity and Life Re was supposed to cover.

Annuity and Life Re “has not been provided any data or back-up in order to validate the adjustment and no additional liability has been established at this time,” the company says.