AM Re sues GIC for $100m+ amid bitter row over US business

AM Re Syndicate, the US-based managing general agent (MGA) that writes primary programme business on a reinsurance basis, is suing  General Insurance Corporation of India (GIC Re) for allegedly breaking two binding authority agreements and working with cedants  AM Re had sourced and serviced for several years directly.

The complaint, filed in New York Southern District Court on Friday (February 4) by law firm Freeborn & Peters, claims that GIC Re breached its obligations to pay AM Re for hundreds of millions of dollars of reinsurance business that AM Re sourced, underwrote, and negotiated on behalf of GIC Re. AM Re is seeking a minimum of $115 million in damages.

The lawsuit states that GIC Re designated AM Re as its agent to underwrite reinsurance business in the US on GIC Re’s behalf pursuant to two binding authority agreements. With the authority granted to it, AM Re did substantial work to provide GIC Re a foothold in the US market and developed a profitable portfolio of reinsurance yielding well over a billion dollars in gross written premium.

However, AM Re says that, after it expended significant effort to source, underwrite and negotiate a portfolio of reinsurance agreements on GIC Re’s behalf for 2022, GIC Re “purported to terminate the binding authority agreements and now refuses to pay AM Re the agreed commissions”. AM Re said it is bringing this action to recover the compensation to which it is entitled by contract and equity.

Intelligent Insurer understands that the decision by GIC Re to circumnavigate AM Re’s involvement in the treaties, was taken very late in the day – leaving cedants with little time to explore other options or find alternative capacity.

One broker, who preferred not to be named, confirmed the sequence of events. “I can confirm that GIC Re renewed a treaty at 1/1/2022 without AM Re’s involvement in those negotiations, and that GIC Re participated as a reinsurer on that same treaty through AM RE in 2019, 2020 and 2021.”

Shevawn Barder (pictured), CEO of  AM Re, also confirmed the position of the business. “ AM Re’s position is that AM Re conducted all management and negotiation of these accounts across the 2021 year leading up to the renewal at Jan 1, 2022.

“We held a two-year binding authority contract that GIC confirmed and later purported to terminate. On all 2022 renewal contracts that attached on the 1st January 2022, AM Re had carried out all negotiations and provided renewal terms consistent with our meetings in Q4 with GIC in Mumbai India.

“Therefore, AM RE is fully entitled to the coverholder commission due on the business written.”

GIC was approached for comment but had not yet responded at the time of publication.

Since its launch in 2014, AM Re has built a profitable business matching Asian reinsurance capacity with US cedants. That business primarily involves excess and surplus (E&S) lines, writing specialty quota share reinsurance matching US cedants with Asian reinsurers.

GIC Re was AM Re’s biggest binder, complementing capacity provided by other carriers in Asia including People’s Insurance Company of China, or PICC, China Pacific Insurance Company.

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