AIRROC_013014_Layout 1 1/30/2014 2:21 PM Page 1 Full Service Counsel to the Insurance Industry Saul Ewing’s Insurance Practice Contact us to find out how Saul Ewing’s experienced brings real world insurance industry insurance attorneys can help you and regulatory experience to a wide with your next project. variety of insurance issues, including litigation, regulatory counseling, reinsurance, and corporate matters. Joseph C. Monahan Partner, Insurance Practice » www.saul.com 215.972.7826 < [email protected] EDITOR’S NOTES Frack Attack Peter A. Scarpato A few years ago, no one heard about Act of 2014 (LIMA). With the help of present a streamlined mediation process fracking. Any mention of the word Adam Lewis, Anna gives us Test Drive for use by AIRROC members and would have evoked laughter over the Future of Runoff, a recitation of how nonmembers. And in AIRROC / IAIR its similarity to its infamous Anglo LIMA modifies useful parts of Part VII to Pair Up for Progress, Kathleen McCain Saxon sound-alike. Today, the fracking fit the Vermont and U.S. environments, discusses how she and Carolyn Fahey debate rages on, from state to state, creating the first U.S. law permitting developed AIRROC and IAIR’s second entrepreneur to environmentalist, all transfer of runoff insurance and Joint Issues Forum at the NAIC meetings wondering if this process of releasing reinsurance business. in Washington D.C. natural gas from submerged rock is Growth and adjustment are hallmarks And finally, Art Coleman revisits savior or slayer of the earth. of any successful organization. In his classic piece, Commutations – A In his review of the book, Fracking Evolution: All Aboard the Board, Connie Historical Perspective, his collaborative, Risks and Rewards by Barbara Hadley, O’Mara and Bina Dagar interview out- irreverent look at his original experiences Tom Rennell and Derek Austin, Jeffrey going board members Keith Kaplan and with commutations, including a valuable Grossman takes us cover-to-cover, with Glenn Frankel, and incoming members step-by-step guide to this time-honored a synopsis of how this comprehensive J. Marcus Doran and me, on past part of the business. End as always with work examines the geological to accomplishments and future goals. Along Fran Semaya and Peter Bickford’s Present chemical to financial elements of this with evolution, effective associations Value and we’re done. booming industry. Well-researched and need dedicated leaders. In this edition, Let us hear from you. l informative, the book gives us a sense we are pleased to hear from our past and that the jury is still out. Of course, like current Executive Directors. Trish Getty, everything else, there’s the legal side. And driving force behind the initial growth in Hydraulic Fracturing, Fred Pomerantz, of AIRROC and namesake of our Trish Andrew Scholz and James Macri survey Getty Scholarship, recounts a visit with the cracked landscape of cases, legislation our 2014 honoree, Abigayle Claflin, and and regulatory issues, predicting that her grandfather in Where Do Values Peter A. Scarpato, Editor insurance and risk shifting disputes are Spring From? And we have the Message & Chair AIRROC Matters, around the corner. from our current energetic and tireless Vice President – Ceded ED, Carolyn Fahey. Entitled Definitely Joseph McCullough and Peter Steffen Reinsurance of NOT A Polar Bear…, Carolyn outlines confront an issue lurking in the weeds but ACE Brandywine. seldom expressed, Is the Duty of Utmost upcoming events and future innovations, peter.scarpato@brandy- Good Faith in Runoff? Has the emergence including our mobile responsive website wineholdings.com of run off eroded this bedrock principle and AIRROC App. of reinsurance. Recent cases and arbitral If you’re in run off you aren’t far from awards beg to differ. disputes. AIRROC continues to offer We asked our newest AIRROC Person of more efficient alternatives to traditional the Year, Anna Petropoulos, to provide arbitration. In AIRROC Dispute perspective on a matter near and dear, the Resolution: Adding Simplified Mediation Vermont Legacy Insurance Management to Your Toolbelt, Frank Kehrwald and I AIRROC®Publication Committee Editor & Chair Jonathan Bank Carolyn Fahey Vivien Tyrell Design & Illustration Peter A. Scarpato [email protected] [email protected] [email protected] Myers Creative Services [email protected] Peter H. Bickford Jeffrey D. Grossman Greg Wyles [email protected] [email protected] [email protected] [email protected] Assistant Editors The AIRROC® Matters Editorial Board welcomes authors’ new and Maryann Taylor Jenna Buda Nicholas Horsmon Jonathan Yorke reprinted with permission articles [email protected] [email protected] [email protected] [email protected] on current topics of interest to Michael H. Goldstein Bina T. Dagar Joseph C. Monahan AIRROC®’s membership. The [email protected] [email protected] [email protected] Marketing Consultant Board reserves the right to edit Dale Diamond Frederick J. Pomerantz Gina Pirozzi submissions for content and/ Committee Outreach [email protected] [email protected] [email protected] or space. Connie D. O’Mara Randi Ellias Francine L. Semaya [email protected] [email protected] [email protected] AIRROC MATTERS / SPRING 2015 3 Run-off Solutions From advising on entering the run-off market, buying and selling portfolios and entities, resolving disputes, managing discontinued operations and achieving exit strategies, our lawyers get the job done. Americas | Asia | Europe | www.mayerbrown.com Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the “Mayer Brown Practices”). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. “Mayer Brown” and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions. AIRROC Board of Directors & Officers Vol. 11 No. 1 Spring 2015 www.airroc.org Katherine Barker (Co-Chair) Excalibur Re Marianne Petillo (Co-Chair) ROM Re EDITOR’S NOTES Ed Gibney (Vice Chair) R&Q Solutions LLC Frack Attack Peter A. Scarpato 3 Karen Amos Resolute Management Services ON THE RADAR Michael Baschwitz Zurich Book Review: Fracking Risks and Rewards Sheila Chapman CNA Jeffrey D. Grossman 6 Art Coleman (Immediate Past Chairman) Citadel Re Hydraulic Fracturing J. Marcus Doran The Hartford/First State A Retrospective of Key Legal Disputes in 2014 Michael Fitzgerald QBE North America Frederick J. Pomerantz, Andrew J. Scholz & James D. Macri 8 Frank Kehrwald Swiss Re Mindy Kipness AIG Thanks to our Corporate Partners 11 Peter A. Scarpato Brandywine LEGALESE Leah Spivey Munich Re America Sylvain Villeroy de Galhau Is the Duty of Utmost Good Faith in Runoff? AXA Liabilities Managers UK Joseph T. McCullough & Peter B. Steffen 12 Ann Weikers RiverStone Resources LLC Carolyn Fahey (Executive Director)* Advertisers in this Issue 15 Joseph J. DeVito (Treasurer)* DeVito Consulting William Littel (Secretary)* Allstate THINK TANK Susan Aldridge (General Counsel)* Chadbourne & Test Drive the Future of Runoff Parke LLP Anna Petropoulos & Adam M. Lewis 18 *Non-Board member SPOTLIGHT AIRROC Executive Committees Evolution: All Aboard The Board Connie D. O’Mara & Bina T. Dagar 20 Member Services/DRP Committee Co-Chair Ann Weikers RiverStone Resources LLC AIRROC UPDATE Co-Chair Frank Kehrwald Swiss Re Vice Chair Art Coleman Citadel Re Definitely NOT a Polar Bear… Carolyn Fahey 23 Education Committee Where Do Values Spring From? Trish Getty 23 Co-Chair Karen Amos Resolute Management Services Co-Chair J. Marcus Doran The Hartford/First State AIRROC Dispute Resolution Frank Kehrwald & Peter A. Scarpato 25 Finance Committee Chair Michael Fitzgerald QBE WHO’S TALKING Co-Vice Chair Marianne Petillo ROM Re Co-Vice Chair Leah Spivey Munich Re America AIRROC/IAIR Pair up for Progress Marketing/Member Recruitment Committee Kathleen M. McCain & Carolyn Fahey 27 Co-Chair Mindy Kipness AIG AIRROC MATTERS CLASSIC Co-Chair Michael Baschwitz Zurich Vice Chair Sylvain Villeroy de Galhau Commutations – A Historical Perspective AXA Liabilities Managers UK Art Coleman 30 October Event Committee PRESENT VALUE Co-Chair Edward Gibney R&Q Solutions LLC News & Events / Mark Your Calendar Vice Chair Robert Sirois RiverStone Resources LLC Illustrations / Rafael Edwards Francine L. Semaya & Peter H. Bickford 36 Publication Committee Chair / Editor-in-Chief Peter A. Scarpato Copyright Notice AIRROC® Matters is published to provide insights and commentary on U.S. legacy business, to educate members Brandywine and the public, stimulating discussion and fostering innovation to advance the industry’s interests. Publishing and editorial decisions are based on the editor’s judgment of writing quality, relevance to AIRROC® members’ interests and timeliness of submissions. CLIP Committee Published articles should not be deemed to reflect the views of any AIRROC® member, unless