Westport Not Obligated to Fund Cedent's Settlement, 2nd Circuit Affirms

HARTFORD, Conn. -Westport Insurance Corp. is not obligated to fund its cedent's settlement of a suit brought against an investment company because the reinsured policies became effective after the reinsurance agreement terminated, a federal appellate court has affirmed. Arrowood Surplus Lines Insurance Co. v. Westport Insurance Corp., No. 10-0397 (2nd Cir.).

In upholding a ruling by a Connecticut federal court, the 2nd Circuit U.S. Court of Appeals further held in its Oct. 8 opinion that the follow the fortunes doctrine does not apply in this instance.

In December 1999, Arrowood's predecessor, Connecticut Specialty, issued a general liability policy to Equity …