General Re Life Corp. v. Lincoln National Life Insurance

General Re entered into a Reinsurance Agreement with Lincoln, which allowed General Re to increase premiums only if the increase was founded on a “change in anticipated mortality.”. If General Re exercised that right, Lincoln could “recapture” its life insurance policies, rather than pay increased premiums. General Re increased the premiums. Lincoln elected to arbitrate the rate increase, as provided for in the Agreement. The arbitration panel found that there was a change in the anticipated mortality so that General Re was entitled to increase premiums. The Final Award stated that if Lincoln chose to exercise its right to recapture: “All premium and claim transactions paid by one party to the other following the effective date of the recapture … shall be unwound.” The Award directed the parties to work together in calculating the amounts, and that any disagreement over the calculations should be submitted to the panel, which retained jurisdiction as "necessary to resolve any dispute over the calculation and payment of the amounts awarded.” Lincoln later wrote to the arbitral panel, set forth the parties’ dispute regarding the language of the Final Award regarding Unearned Premiums, and requested that the panel settle the issue. General Re argued the arbitrators lacked authority to reconsider and fundamentally change the methodology ordered in the Award. The panel issued a "Clarification," stating that the Award contained “ambiguities” and that both parties were reading the Award inconsistently with the Agreement. The district court confirmed the Clarification. The Second Circuit affirmed. The doctrine of functus officio, which limits the power of arbitrators to alter an award once the arbitrators have decided the issue, did not bar the panel from clarifying how the parties were to calculate an ambiguous award. View "General Re Life Corp. v. Lincoln National Life Insurance" on Justia Law