ARIAS U.S Spring Conference Ethics Presentation May 7, 2015 Seema A. Misra, Stroock & Stroock & Lavan LLP Stacey Schwartz, Swiss Re America Holding Corp.

Overview of Session General Objectives of the Session 2

ARIAS U.S. Code of Conduct The purpose of the Code of Conduct is to provide guidance to arbitrators in the conduct of insurance and reinsurance arbitrations in the United States, whether conducted by a single arbitrator or a panel of arbitrators, whether or not certified by ARIASU.S. and regardless of how appointed. Comments accompanying the Canons explain and illustrate the meaning and purpose of each Canon. These Canons are, however, not intended to override the agreement between the parties in respect to arbitration and do not displace applicable laws or arbitration procedures. Though these Canons set forth considerations and behavioral standards only for arbitrators, it is expected that the parties and their counsel will conform their own behavior to the Canons and will avoid placing arbitrators in positions where they are unable to sit or are otherwise at risk of contravening the Canons. 3

The Code of Ethics For Arbitrators In Commercial Disputes (AAA) In those instances where this Code has been approved and recommended by organizations that provide, coordinate, or administer services of arbitrators, it provides ethical standards for the members of their respective panels of arbitrators. However, this Code does not form a part of the arbitration rules of any such organization unless its rules so provide. 4

The Code of Ethics For Arbitrators In Commercial Disputes (AAA) There are many different types of commercial arbitration. Some proceedings are conducted under arbitration rules established by various organizations and trade associations, while others are conducted without such rules. Although most proceedings are arbitrated pursuant to voluntary agreement of the parties, certain types of disputes are submitted to arbitration by reason of particular laws. This Code is intended to apply to all such proceedings in which disputes or claims are submitted for decision to one or more arbitrators appointed in a manner provided by an agreement of the parties, by applicable arbitration rules, or by law. In all such cases, the persons who have the power to decide should observe fundamental standards of ethical conduct. In this Code, all such persons are called “arbitrators,” although in some types of proceeding they might be called “umpires,” “referees,” “neutrals,” or have some other title. 5

THE FACT PATTERN 6

The Parties Hawthorne Insurance Company (Cedent) – Entered the program market in 1997 when it poached chief underwriting officer, Patricia Prescott to develop a program unit (the Revere Insurance Group) Gaia Corporation – Private company involved in the acquisition of runoff insurance books – Acquired Hawthorne in 2003 and placed it into runoff Seminole Insurance Company (Reinsurer) – Multi-line Florida insurer that reinsured Hawthorne from 1997 – 2000 – Seminole underwrote program business on both a direct and assumed reinsurance basis; also participated in underwriting pools including the Old Floridian Underwriting Pool (“OFUP”) 7

The Reinsurance Contract Provides reinsurance to Hawthorne for all of Revere's workers’ compensation programs for the period of November 1, 1997 through October 31, 2000 (per occurrence, for claims above $250,000, with limits of $750,000) Seminole has 40% participation in the Contract, 8

Summary of Dispute Gaia seeks payment for amounts due and owing from Seminole under the Reinsurance Contract. Seminole seeks rescission of the Contract based on Hawthorne's underwriting and claim violations. 9

The Witnesses Patricia Prescott – Headed up Hawthorne’s Revere business unit from 1997 until – Previously chief underwriting officer at Henry Underwriters. Olivia Osceola – Seminole’s chief actuary and risk officer. 10

The Arbitration Clause As a condition precedent to any right of action hereunder, any irreconcilable dispute arising out of the interpretation, performance or breach of this Contract, including the formation or validity thereof, whether arising before or after the expiration or termination of the Contract, shall be submitted for decision to a panel of three arbitrators, one to be chosen by each party, and the third by the two so chosen. The arbitration shall take place in Hartford, Connecticut. Each party shall submit its case to the panel within 90 days of the appointment of a third arbitrator. This Article shall survive the termination of this Contract. 11

The Party Appointed Arbitrators Allison Abiaka – Seminole’s PAA – on the AAA’s Commercial Panel. – Also acting as umpire in dispute where OFUP is party; accepted appointment although Seminole told her another individual (Bolek) had withdrawn because she was serving as umpire in a different dispute involving the OFUP Barbara Bradford – Gaia’s PAA – ARIAS-certified. – Bradford used to be a broker who conducted business with Henry Underwriters during Prescott’s time there. 12

The Umpire: Patricia DeLeon On the AAA’s Commercial Panel. Acted as Seminole’s PAA in dispute over different contract where Seminole was reinsurer. The arbitration settled before hearing; During discovery, she learns that that current dispute involves sunset clause, which had been issue in prior arbitration Conducted audit of Revere for different reinsurer. Majority shareholder in a retail agent, which is one of Seminole's top three producers, based upon premium written. Father-in-law has pension from Gaia (50% of income). 13