Insurance Insolvency

The attorneys of Pietragallo’s Insurance Insolvency practice have been involved in several of the nation's largest insurance company insolvency proceedings. Our first engagement involved the rehabilitation proceedings for the Mutual Fire, Marine Inland Insurance Company ("Mutual Fire"), then the largest insolvency proceeding in the history of Pennsylvania. In conjunction with experts, consultants and the Mutual Fire staff, we reconstructed detailed accounting information that encompassed a decade of commercial activity and thousands of reinsurance transactions all over the globe. As a result of actions brought by our attorneys, Mutual Fire recovered over $150 million, which contributed to the company's successful rehabilitation.

The Mutual Fire representation included a massive professional liability case against Shand, Morahan & Company, Inc. and its former parent Alexander & Alexander, Inc. The matter was resolved in the receiver's favor for a total settlement of $51.6 million, the largest settlement in Pennsylvania in 1995.

In the Mutual Fire representation, our attorneys also pursued a claim against GTE Reinsurance Company, Ltd. This case resulted in a settlement of $44.9 million from GTE Re, which was the largest reinsurance recovery in Pennsylvania history at the time.

Our attorneys also represented the Insurance Commissioner of Delaware, as Liquidator of National Heritage Life Insurance Company, which was Delaware's largest insurance company insolvency.

We have also been retained repeatedly by the Insurance Commissioner in Pennsylvania. Currently, our attorneys are actively involved as counsel to the Insurance Commissioner of Pennsylvania in two liquidation proceedings involving Colonial Assurance Company ("Colonial") and Legion Insurance Company ("Legion").

In Legion, we serve as chief counsel in the liquidation proceedings and represent the estate in a variety of legal matters. Specifically, our attorneys represent the Liquidator in a number of matters before the Commonwealth Court in actions by claimants seeking to intervene in the liquidation in order to gain immediate access to Legion's assets. In February 2006, we were successful in obtaining court approval for Legion’s proposed distribution of approximately $150 million to state guaranty associations. Since then, we have represented successfully the Liquidator against various challenges to this approved distribution. Most recently, in May 2007, we defeated claims raised by Oregon Insurance Guaranty Association that the early distribution of Legion’s assets violated state law.

Insolvency proceedings, like bankruptcy proceedings, provide unique challenges for firms retained to perform legal services. Competence and efficiency are critical since the receiver often assumes control of the company without the benefit of former management, without full knowledge of the record keeping practice of the company and with limited statute-of-limitations protection. Our attorneys have met the challenges of these types of unique representation.

Insolvency proceedings also require versatility since the nature of claims asserted and defended vary based upon the insurance products provided by the insolvent insurer. Over the years, our attorneys have litigated claims involving Reinsurance, Directors and Officers Liability, Accounting Malpractice and Broker Liability. The years of accumulated experience gained from these representations has provided our firm with one of the most diverse insolvency practices of any firm in the country.