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Category: Insurance case law · Reviewed by Amy Price, Account Executive · Last reviewed June 2026
GE Reinsurance Corporation and others v New Hampshire Insurance Company and another [2003] EWHC 302 (Comm) — High Court of Justice, Commercial Court, 2003.
Citation, court and year verified against the official judgment text published by The National Archives, Find Case Law (https://caselaw.nationalarchives.gov.uk/ewhc/comm/2003/302).
The dispute arose out of a film finance insurance programme. Notes totalling US$100m were issued by a wholly-owned subsidiary of Destination Film Distribution Co. Inc. to provide the company’s capital, and the trustees for the noteholders were insured against Destination’s default in repaying them. The total sum insured was US$118.75m including interest, for a policy period of 14 October 1998 to 15 October 2003. Destination became insolvent and claims were made for non-payment of interest.
AIG Europe (UK) Limited wrote 60 per cent of the risk on behalf of New Hampshire Insurance Company. The claimants — GE Reinsurance Corporation (formerly Kemper Reinsurance Company), Great Lakes Reinsurance (UK) plc, Sphere Drake Insurance Ltd (formerly Odyssey Re (London) Ltd) and Royal & Sun Alliance Insurance plc — reinsured about 37 per cent of that part of the risk. Willis Limited was the broker who placed both the insurance and the reinsurance.
The reinsurers sought declarations that they were not liable under the reinsurance, relying on breaches of two provisions of the reinsurance slip: a provision about Destination’s employment of a Mr Stabler as chief executive (“the Stabler Wording”), and a retention warranty. New Hampshire counterclaimed for declarations that the reinsurers were liable and, in the alternative, claimed damages from Willis. Willis admitted that it owed New Hampshire duties in contract and tort to obtain reinsurance co-extensive with New Hampshire’s liabilities under the insurance and not containing a retention warranty, but alleged contributory negligence.
(1) Whether the Stabler Wording in the reinsurance slip was a warranty, and if so whether it had been broken when Mr Stabler’s employment terminated on 8 November 1999.
(2) Whether the reinsurance was subject to a retention warranty and, if so, its effect.
(3) Whether, if the reinsurers succeeded, New Hampshire could recover its resulting loss from Willis as damages for failing to obtain reinsurance back-to-back with the insurance.
(4) Whether any such damages should be reduced for contributory negligence on New Hampshire’s part.
Langley J held that the contract of reinsurance was contained in the reinsurance slip and that, read as a matter of ordinary language, the Stabler Wording required Mr Stabler’s contract of employment as chief executive to be maintained for the policy period. That did not happen. No claim for rectification was made, so the words correctly recorded the bargain the parties had made; the arguments that the wording was merely a statement of what the Operating Agreement should contain were rejected.
The judge concluded that the reinsurers were entitled to the relief they sought, namely declarations that they were under no liability to New Hampshire under the reinsurance slip.
On the claim against the broker, the judge held that New Hampshire was entitled to recover damages from Willis for the loss it would suffer by reason of the failure of the reinsurance, and to do so without any reduction for contributory negligence. In a transaction of that novel type the onus on Willis to get it right, and to alert insurers to any risks, was such that it would not be fair to attribute fault to New Hampshire for failing to spot the problem: New Hampshire did not receive notice of the terms of the reinsurance until it was too late, and there was no standard market language for covers of this kind that would have put it on notice. It was Willis which drafted the terms of both slips and failed to alert New Hampshire to the discrepancy.
(i) Where the reinsurance contract is contained in the slip, a provision in the slip that on its ordinary meaning requires a state of affairs to be maintained for the policy period takes effect according to those words. The fact that the insurance and reinsurance were intended to be back-to-back does not entitle the court to read the slip down, and the parties’ approval of the underlying documentation does not displace the words they used, absent a claim for rectification.
(ii) A broker who places both the insurance and the reinsurance, and who owes the fronting insurer a duty to obtain reinsurance co-extensive with that insurance, is liable in damages for the failure of the reinsurance where the slip it drafted contains terms the insurance does not. On these facts the fronting insurer was not contributorily negligent in failing to detect the discrepancy.
The decision is a standard reference point on two things that matter well beyond reinsurance.
First, it is a reminder that a slip means what it says. Where a term in the slip requires a state of affairs to continue for the policy period, an insured or cedant cannot rely on the commercial intention that two contracts be back-to-back to cut that term back. The remedy for words that do not reflect the bargain is rectification, and if it is not claimed the words stand.
Second, it is one of the clearer illustrations of broker exposure where the same broker places two layers of a programme. Willis had admitted duties to obtain reinsurance co-extensive with the insurance and without a retention warranty; when the reinsurance failed on a term the insurance did not contain, the loss fell on the broker. The court declined to reduce those damages for contributory negligence, holding that the responsibility for getting a novel structure right rested with the broker who drafted both slips.
For brokers, the practical lesson is the discipline of checking that reinsurance and insurance wordings match line by line, and of putting the client on notice in writing wherever they do not.
By Apex Insurance Brokers on 2026-06-06. Next review: 2026-12-06.
This entry is part of the Apex Insurance Wiki. Last reviewed by Apex Insurance Brokers on 2026-06-06. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
The construction of the reinsurance wording, including a retention provision and the wording said to have been broken. The judge held that the wording in question meant what it said and had been broken, and rejected the reinsurers’ construction of the retention provision.
The broker. Willis had admitted that it owed New Hampshire a duty to obtain reinsurance co-extensive with the insurance it had placed and without a retention warranty. Because the reinsurance failed on a term the insurance did not contain, New Hampshire recovered its loss from Willis in damages, with no deduction for contributory negligence.
The Commercial Court, part of the High Court of Justice, neutral citation [2003] EWHC 302 (Comm).
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