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Montana Court Issues Protected Cell Captive Decision

Court Ruling Gavel
June 16, 2015

The US District Court for the District of Montana has issued a declaratory judgment in a case involving a protected cell captive (PCC) formed under Montana law that had entered into a reinsurance agreement on behalf of an unincorporated cell.

The district court declaratory judgment action was the result of a demand for arbitration sent to Pacific Re, Inc. ("Pacific Re"), and to Pac Re 5­-AT ("Cell 5"), a protected cell Pacific Re agreed to establish for Safebuilt Insurance Services, Inc. The demand was sent by defendants AmTrust North America, Inc. ("AmTrust"), and Technology Insurance Company, Inc. ("TIC"), and is based on alleged breaches of a captive reinsurance agreement.

The reinsurance agreement included a provision stating that any dispute between the parties would be submitted to a panel of three arbitrators. The court concluded that the protected cell captive is a proper party to the demand for arbitration.

Although the declaratory action is based upon Montana law, it should provide some guidance to those considering the formation of a PCC. It is important to have captive legal counsel review the PCC statutes in the jurisdiction where a PCC or a cell within a PCC is being formed.

Read the Pac in Re 5-AT v. Amtrust North Am., Inc., 2015 U.S. Dist. LEXIS 65541 (D. Mont. May 13, 2015), decision.

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