According to a U.S. Securities and Exchange Commission filing on June 9, Willis agreed to settle with American Reliable Insurance Co. and Assurant General Insurance Ltd. over the brokerage’s role in the placement of personal accident reinsurance in the excess of loss market in London and U.S.
London-based Willis’ agreement comes after a September 2007 ruling by the Commercial Court in London, which required Willis to make the payments to the Assurant subsidiaries. No admission of wrongdoing by any party was part of the agreement, according to the 8-K filing.
In July 2003, a London High Court ruling found that London-based Sphere Drake Insurance Ltd. , which is now in runoff, was a victim of fraud when is assumed loss-making low-layer carve-out risks, comprising the accident and health portion of workers compensation policies. At the time, Willis, which placed workers comp carve-out business with Sphere Drake and other reinsurers, was involved in placing business from cedent American Reliable in a program whose losses exceeded $70 million.
Willis Ltd. has agreed to pay the Assurant subsidiaries in two installments. The first payment of $60 million will be paid within 30 days of the settlement date, and the second installment of $79 million will be paid within 90 days of the settlement.
The settlement, Willis said in its filing, will be covered by its errors and omissions insurance.