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Bondholders
of failed film production company, Destination, claimed from their insurer,
New Hampshire, which in turn claimed from its reinsurers, the claimants.
The reinsurance contract contained a warranty, rather than a mere statement
of an obligation on the part of Destination, that a specified individual
would remain as Chief Executive Officer of that company throughout the
policy period. As that individualÕs employment was terminated,
the court held that the reinsurance was discharged with effect from
that date. No such warranty appeared in the insurance contract and so
it was held that the broker, Willis, had failed to obtain reinsurance
that was co-extensive with New Hampshire's insurance liability. New
HampshireÕs alternative claim against Willis therefore succeded.
The decision is being appealed and a decision is expected in early 2004.
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