‘Reinsurance Assumed’ Provision Applies to Losses and Expenses, Ill. Appeals Court Affirms

CHICAGO — The “reinsurance assumed” provision in reinsurance certificates issued by MidStates Reinsurance Co. to Continental Casualty Co. limits both losses and expenses owed by the reinsurer, an Illinois appeals court has affirmed.

In a Dec. 16 opinion, the appellate court held that neither the “follow the form,” nor the “follow the fortunes” clauses in the certificates can be interpreted to remove expenses from the amount set forth under the “reinsurance assumed” provision.

MidStates reinsured Continental under five excess general liability reinsurance certificates. One of the certificates covered a Continental policy issued to RSR Corp., a smelting company. The four …