Global Reinsurance Corporation of America v. Century Indemnity Company, 124

This case presents a certified question from the 2d Circuit about whether a New York Court of Appeals decision (Excess) created a rule or presumption that a per-occurrence liability cap in a facultative reinsurance certificate necessarily caps all reinsurer obligations, including defense costs.
Global (reinsurer) had issued a facultative certificate (Certificate X) reinsuring Century's $1,000,000 per-occurrence liability policy, with Global accepting $250,000 part of $500,000 each occurrence in excess of Century's $500,000 retention.
Century billed Global $327,149 under Certificate X (≈ $82,627 loss + $244,522 expense). Global argued the $250,000 reinsurance limit capped both loss and expense; Century argued the limit applied to losses only and expenses were payable in addition.
The question asked whether Excess Insurance Co. v Factory Mutual Insurance Co., 3 NY3d 577 (2004), established a rule/presumption that per-occurrence limits are expense-inclusive as a matter of law.
The Court of Appeals held that Excess did not establish such a blanket rule; instead New York contract principles govern and each reinsurance certificate must be read as a whole to determine whether expenses are included.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Excess creates a rule/presumption that a per-occurrence liability cap in a facultative reinsurance certificate limits the reinsurer's total exposure (including defense costs)	Global: The per-occurrence cap ($250,000) limits all payments (loss + expense) under Certificate X	Century: The cap applies only to indemnity for loss; defense/expense obligations are separate and payable beyond the cap	Held: No. Excess did not create a blanket rule or strong presumption. Standard contract interpretation applies; examine the certificate language and context to determine whether expenses are included
Proper interpretive approach for facultative reinsurance certificates	Global implicitly: interpret limit as expense-inclusive (per its reading)	Century implicitly: construe certificate to preserve expense coverage unless language caps it	Held: Courts must read certificates as a whole; where unambiguous, enforce plain meaning; where ambiguous, consider surrounding circumstances; courts should not infer expense-inclusiveness absent clear language

Excess Ins. Co. Ltd. v. Factory Mut. Ins. Co., 3 N.Y.3d 577 (N.Y. 2004) (addressed whether a reinsurer's aggregate liability cap included loss adjustment expenses in context of a follow-the-settlements clause)
Travelers Cas. & Sur. Co. v. Certain Underwriters at Lloyd's of London, 96 N.Y.2d 583 (N.Y. 2001) (reinsurance basics and contract interpretation principles)
Sumitomo Marine & Fire Ins. Co. v. Cologne Reins. Co. of Am., 75 N.Y.2d 295 (N.Y. 1990) (facultative reinsurance is policy-specific; role of certificates)
Union Carbide Corp. v. Affiliated FM Ins. Co., 16 N.Y.3d 419 (N.Y. 2011) (treat reinsurance contracts under general contract law; read policy as whole)
Greenfield v. Philles Records, 98 N.Y.2d 562 (N.Y. 2002) (clear and unambiguous contracts are enforced according to their plain meaning)