Endurance accused of bid to ‘destroy’ Sawgrass
Florida mutual Sawgrass has accused its part-owner Endurance of trying to destroy its business after the John Charman-led firm threatened to sell the renewal rights of 40,000 homeowner policies to a competitor.
The accusations came as Sawgrass sought an injunction to block Endurance from trying to obtain its renewal data.
The Bermudian carrier is trying to force Sawgrass into arbitration proceedings in a bid to obtain valuable proprietary information about the mutual's book of business.
Endurance claims that it is entitled to the information under a reinsurance contract that Sawgrass had in place with Montpelier, a recently acquired subsidiary of the Bermudian.
But the Floridian counterclaimed that: "[Endurance] and its affiliates have had only one goal - to put Sawgrass out of business and sell the policies written by Sawgrass to a competitor."
Montpelier's relationship with Sawgrass was not limited to a reinsurance agreement. It also acted as a managing general agent for the mutual through its subsidiary Cladium.
The contractor was authorised to develop underwriting guidelines for Sawgrass, as well as servicing policies and creating marketing materials for the Florida homeowners' insurer.
In a court filing issued last week, Sawgrass said that before Endurance had consummated the Montpelier acquisition, its general counsel John Del Col visited the mutual's head office.
During a meeting with Sawgrass's CEO Dan O'Neal the lawyer allegedly said that Endurance had signed a nondisclosure agreement with two of the mutual's competitors that were looking to buy the renewal rights to its business.
The filing alleged that Del Col had "threatened" to "immediately sell any and all renewal rights" for policies written by Sawgrass once the ink had dried on the Montpelier contract.
"[This] would effectively leave Sawgrass unable to continue in business and in grave danger of becoming insolvent," the documents alleged.
"Del Col's disclosure at this meeting essentially confirmed that, even before Endurance had acquired any ownership in Cladium, the company had decided to dismantle the book of business Sawgrass had generated through Cladium," they continued.
"Endurance had either acquired or sought to acquire trade secret information from
Sawgrass through Cladium and to use that information to Sawgrass's immediate detriment."
The mutual claimed that after Endurance had acquired Montpelier it "renewed the threats to wipe out Sawgrass's insurance programme with its policyholders" by attempting to sell renewal rights to the Floridian's competitors.
It said Endurance had tried to gain access to its trade secrets under a clause in the reinsurance agreement between Sawgrass and Montpelier. However, Sawgrass claimed, the relevant part of the contract said of the information: "It is only to be used by the reinsurer for underwriting and claims-handling purposes."
The mutual also claimed that Endurance was no longer entitled to the information because the policy had expired and that there were no claims during the period.
Summing up, the filing said: "Sawgrass will be irreparably harmed by any finding that Endurance is entitled to access its confidential records, especially given Endurance's stated intention to provide this information to Sawgrass's competitors.
"Once the information is released, the action can never be undone," it went on.
In November last year, The Insurance Insider reported that Sawgrass was part-financed by a $15mn surplus note initially issued to Greenlight Re that Montpelier Re acquired in 2015.
This publication revealed that Endurance was looking to dispose of its inherited interest in the Floridian, leaving Sawgrass in a position where it needed to either sell outright or find a buyer for the surplus note.
Stonybrook Capital was understood to be advising the carrier on the process.
Sawgrass reported $46.6mn of gross written premium for 2014 and policyholders' surplus of $20.9mn as at 30 June 2015.
Endurance declined to comment.