Canadian Underwriter

Hanover Re sees little impact from Sphere Drake decision

July 15, 2003   by Canadian Underwriter

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A decision in favor of Fairfax’s Sphere Drake should not materially impact Germany’s Hanover Re, the reinsurer says.
The decision, against brokers and underwriting agents who the court says fraudulently exposed Sphere Drake to U.S. workers’ compensation carve out business, means Sphere Drake has grounds to refuse payment of the losses under the reinsurance contracts.
“There has been speculation that this ruling might have a major impact on our New York subsidiary, Clarendon Insurance Group,” states a Hannover Re release. “We therefore wish to clarify that the worst-case scenario of this judgement is in the order of $US15 million. This amount would be recovered from the prior shareholders.”
Those shareholders have already provided collateral with respect to the relevant reinsurance agreements.

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