The Back to Back Presumption in Proportional Reinsurance – the US 2nd Circuit Goes Awry

How far does the presumption a proportional reinsurance is back to back with the underlying go, when such presumption is inconsistent with the terms of the reinsurance? Specifically, can the clear meaning of the fundamental reinsuring clause be changed by reference to the foreign law of the underlying, even where that law did not exist or has changed since the reinsurance contract was concluded. This question, presently unanswered by the English Courts, has now been addressed by the United States Court of Appeals for the 2nd Circuit. In this briefing we discuss the judgment and how the decision has gone awry.

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