Texas Insurance Company filed a lawsuit against Talisman Specialty Underwriters Inc. For violating the parties’ Managing General Agent (MGA) Agreement by allowing hundreds of insurance policies to be issued by Texas Insurance in sectors (such as marine and energy) where Talisman Specialty did not have the authority to do so. Texas Insurance also alleged that Talisman Specialty withheld $10 million in premiums owed to Texas Insurance and that it failed to segregate them into a trust account for Texas Insurance as required under the MGA.
Talisman Insurance, a subsidiary of Talisman Specialty, filed a motion to intervene. Talisman Insurance claimed that it entered into a share reinsurance agreement with Texas Insurance, pursuant to which Talisman Insurance agreed to reinstate the insurance sold by Talisman Specialty. In turn, Texas Insurance Company agreed to pay Talisman Insurance Company 94% of the insurance premiums it obtained under the reinsurance agreement. In addition, Talisman Insurance alleged that Texas Insurance agreed to have Talisman Specialty remit these payments directly to Talisman Insurance, bypassing Texas Insurance. Talisman Insurance alleged that Texas Insurance breached the reinsurance agreement by filing suit and alleging that Talisman Specialty must first remit the premiums to Texas Insurance, thereby interfering with Talisman Insurance’s right to payment.
The district court found that Talisman Insurance was entitled to intervene as a matter of right because it filed its timely motion early in the case and because it had a direct and substantial interest in the insurance premiums that would not be adequately represented by the existing parties and that could be harmed if it were not allowed to intervene. Talisman Insurance Timely sought to intervene because the motion, although filed approximately two months after Talisman Insurance learned of the lawsuit, came before the opening of discovery in this matter, and, further, Talisman Insurance did not seek to reopen any prior actions in the case.
The court found that Talisman Insurance had a direct and significant ownership interest in the premiums and method of payment, as its purported contractual right to receive its share of the premiums directly from Talisman Specialty allegedly resulted in administrative cost savings. If Talisman Insurance is not permitted to intervene, and is instead required to file a separate lawsuit, its interests in the premiums and method of payment could be harmed by the rulings in the current lawsuit. Finally, the court found that Talisman Insurance’s interests were not adequately represented by its subsidiary, Talisman Specialty, even though the two shared the same counsel, as Talisman Specialty was not a party to the reinsurance agreement and the two entities sought to enforce their rights. Different contractual contracts derived from their individual contracts with the Texas Insurance Company.
As such, the court granted the request to intervene, finding that Talisman Insurance had met all the necessary requirements to establish its right to intervene.
Texas Insurance Company v. Talisman Specialty Underwriters, Inc.No. 2:23-cv-03412 (E.D. La. Dec. 1, 2023).