In This Issue:

- Reinsurer’s Obligation to Provide Coverage to Reinsured Not Contingent Upon Exhaustion of Limits of Primary Policy

In granting an insurer’s motion for judgment on the pleadings, the United States District Court for the Southern District of New York held that a reinsurer’s obligation to provide coverage to its reinsured was not contingent upon exhaustion of the limits of an underlying primary insurance policy. Lexington Insurance Co. v. Tokio Marine & Nichido Fire Insurance Co. Ltd., No. 11 Civ. 391 (DAB) (S.D.N.Y. Mar. 28, 2012). PAGE 2

- Court Articulates Methodology For Calculating Prejudgment Interest on Previously Remitted Indemnity Payments Under Reinsurance Agreement

When awarding prejudgment interest against a reinsurer on previously remitted indemnification payments, the United States District Court for the District of New Jersey held that prejudgment interest would be calculated from the date the complaint was filed for payments demanded prior to that date and declined to enhance the interest rate. Munich Reinsurance America, Inc. v. Tower Insurance Co. of New York, Civ. A. No. 09 2598, 2012 WL 1018799 (D.N.J. March 26, 2012). PAGE 3

- Non-Signatory to Arbitration Agreement Does Not Waive Right to Have Court, Not an Arbitrator, Determine Issue of Arbitrability

On March 6, 2012, the Eighth Circuit held that a non-signatory to an arbitration agreement did not waive its right to have the court, not an arbitrator, determine the issue of arbitrability despite the fact that the non-signatory had notice of the arbitration and affirmatively chose not to participate. The Eighth Circuit held that although such conduct might waive the right of a non-signatory to have a court determine the issue of arbitrability, such a case was not warranted here. Local 36 Sheet Metal Workers’ Int’l Assoc. v. Whitney, 670 F.3d 865 (8th Cir. 2012). PAGE 4

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Introduction

On April 3, 2012, the Lead Director Network (LDN) gathered in Washington, DC, for its 12th meeting. Members examined the role of the board and lead director in overseeing strategic risks. This issue of ViewPoints synthesizes discussions of the LDN members concerning this topic. For further information about this document, see page 11. For a full list of contributing members, see the appendix on page 12.

Executive summary

Boards and lead directors continuously evaluate risks and opportunities at their companies. At the April 3 meeting, members discussed the following issues surrounding their boards’ oversight of strategic risk:

- Changes in risk oversight since the financial crisis (page 2) Since the LDN last discussed risk oversight in the wake of the financial crisis, members have noticed a maturation of both risk management and risk oversight. Although boards have always devoted time and attention to risk oversight, members said that boards are now more thoughtful about risk than they have ever been, more carefully and constantly evaluating risks. However, despite improvements in risk oversight, members agreed that the oversight process will never be perfect.

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