losses it sustains under insurance policies that the reinsured has issued to the general public. See id. at 6-7. Similarly, a "retrocession" is a form of reinsurance provided by one reinsurance company, "the retrocessionaire," to another reinsurance company, "the retrocedent." See id. at 662. The goal of a retrocession is to indemnify the retrocedent for losses that the retrocedent sustains under the reinsurance policies that it has issued to insurance companies. See id. at 587-88.
Allstate alleges that its former wholly owned subsidiary, Northbrook Excess and Surplus Insurance Company ("NESCO"), entered into four reinsurance contracts with a Mexican reinsurer, Seguros La Republica ("SLR"). SLR, in turn, entered into retrocession agreements with defendants, whereby defendants agreed to reinsure SLR's reinsurance of NESCO. Under SLR's retrocessions with defendants, each retrocessionaire agreed to reinsure a portion of SLR's risks. Accordingly, defendants were to indemnify SLR for SLR's loses under the NESCO reinsurance contracts, and each defendant would receive a portion of the premiums that SLR received from NESCO.
Allstate alleges that between 1976 and 1980, NESCO paid approximately $ 9,770,000 in premiums to SLR. Plaintiff alleges that, during this time, NESCO paid less than $ 600,000 in claims on the insurance policies that SLR had agreed to reinsure. In 1980, however, when the volume of claims increased, SLR stopped making the payments to NESCO that were mandated by the reinsurance agreements between NESCO and SLR.
Thereafter, plaintiff alleges that NESCO contacted SLR, seeking payment of the sums that SLR owed NESCO under their reinsurance contracts. At this time, SLR informed NESCO that SLR had retroceded a percentage of the NESCO reinsurance treaties to defendants. Allstate alleges that SLR told NESCO that, under the retrocession agreements between SLR and defendants, each defendant was responsible to SLR for a percentage of NESCO's reinsurance claims. SLR claimed that it did not have sufficient funds to satisfy its obligations to NESCO because SLR had not received payments from defendant-retrocessionaires, as specified in the retrocession agreements.
In 1985, NESCO merged into Allstate. After this merger, Allstate and SLR entered an agreement under which SLR paid to Allstate a portion of the money that SLR owed to NESCO. Further, as part of this agreement, SLR assigned to Allstate all of SLR's rights against defendant-retrocessionaires.
Allstate brings suit against defendants and alleges three causes of action. First, Allstate contends that, as SLR's assignee, Allstate is entitled to sue defendants based on the retrocession agreements between SLR and defendants. Second, Allstate contends that defendants and NESCO had an implied contract. Allstate contends that, as NESCO's successor-in-interest, it is entitled to recover on that implied contract. Third, Allstate brings a claim for unjust enrichment.
Three motions are currently before this Court. Allstate moves to compel defendants to post pre-filing security as required by New York Insurance Law section 1213(c)(1), which states in pertinent part:
Before any unauthorized foreign or alien insurer files any pleading in any proceeding against it, it shall either: