A federal court has confirmed a multimillion-dollar arbitration award in a reinsurance dispute that tested the limits of the "follow the settlements" doctrine.
The April 14, 2026 decision from the United States District Court for the District of Vermont rejected every argument raised by Hamilton Managing Agency Limited and Antares Managing Agency Limited in their effort to overturn an arbitration ruling that went against them. The case turned on a question that has divided the reinsurance world for years: what happens when a reinsurance contract does not contain a "follow the settlements" or "follow the fortunes" clause?
The dispute traces back to a Directors and Officers/Errors and Omissions liability policy that ICI Mutual Insurance Company issued to an unnamed policyholder for the period of July 31, 2019 to July 31, 2020. The policy carried a $100 million limit of liability over a $2.5 million per-claim deductible and provided coverage for "Costs of Correction" – essentially, amounts spent to correct situations that, if left unaddressed, would automatically have resulted in legal liability. The policy also included a Prior Acts Exclusion, barring coverage for wrongful acts committed before a specified date.
During the policy period, the policyholder completed an acquisition and determined that it needed to restate certain financial statements previously submitted to the SEC's Office of the Chief Accountant. ICI Mutual launched an approximately 18-month investigation, ultimately concluding it owed the full $100 million policy limit. It then turned to its reinsurers for their share under a reinsurance slip that provided a $10 million limit as part of a $35 million excess of $65 million layer.
The reinsurers said no. They argued the Prior Acts Exclusion knocked out coverage entirely and that they were not bound to simply accept ICI Mutual's determination.
The matter went to arbitration before a sole arbitrator, Andrew Maneval, selected from a list of three candidates proposed by ICI Mutual. Things got interesting in October 2024 when the reinsurers discovered that Maneval had previously testified as an expert witness in two separate cases, expressing the view that industry custom and practice supported imputing "follow the fortunes" obligations into all reinsurance contracts. That testimony had not been disclosed before his appointment.
The reinsurers raised the issue but stopped short of requesting the arbitrator's removal, later confirming there were no lingering concerns about his involvement. That decision proved consequential.
After a nine-day hearing in March 2025, the arbitrator issued a nuanced ruling. He agreed with the reinsurers that the slip did not contain a "follow the settlements" clause and that one should not be implied. But he rejected the idea that this entitled them to a complete, ground-up re-examination of ICI Mutual's coverage decision. Instead, drawing on industry custom and the slip's "honorable engagement" clause – which relieved him of strict legal formalities – he applied a reasonableness standard and found that ICI Mutual's determination was well-supported and made in good faith. The Prior Acts Exclusion defense did not carry the day.
The reinsurers petitioned to vacate the award on three grounds: the arbitrator's alleged partiality stemming from his undisclosed testimony, that he exceeded his authority by declining to conduct a full independent review, and that he disregarded applicable New York law.
Chief Judge Christina Reiss rejected all three arguments. On partiality, she found the reinsurers had effectively waived the objection – the prior testimony was publicly available, they never requested the arbitrator's CV before selecting him, and they ultimately told him there were no issues with his continued service. On the scope of authority question, the court noted that the arbitration clause gave the arbitrator wide discretion, and his middle-ground approach addressed the substance of both parties' positions. On the manifest disregard claim, the court pointed out that the arbitrator was expressly empowered to set aside strict legal rules in favor of industry custom, and that New York law on the question of implied "follow the settlements" obligations remained unsettled.
The court confirmed the award in full, including attorney's fees, arbitration costs, and pre-judgment interest running at nine percent per annum under New York's statutory rate. It also granted mandatory post-judgment interest under federal law.
The case carries practical takeaways for the reinsurance market. The arbitrator's approach – rejecting both a full "follow the fortunes" imputation and an unrestricted independent review in favor of a reasonableness test grounded in industry practice – charts a path that future arbitrators may follow when contracts are silent on the question. And the disclosure episode serves as a reminder that arbitrator vetting before appointment matters, because raising concerns after an unfavorable result is a much harder sell.
