We previously reported on this case on January 5, 2016, June 28, 2016, July 20, 2016, and December 14, 2016. The case concerns Companion Property and Casualty Insurance Company's participation in a fronted insurance program with two reinsurers. Reinsurance collateral trusts were established for Companion's benefit and maintained by defendant U.S. Bank as trustee. In 2015, Companion filed a complaint against U.S. Bank, alleging that, it, as trustee, negligently permitted the reinsurers to replace $180 million in assets held in trust accounts with worthless and defective assets. Companion asserted that U.S. Bank was liable for these substitutions because certain assets in the trust accounts violated the terms of the Trust Agreements. U.S. Bank then made claims against several third-parties, some of which have since been dismissed from the case.
Recently, Companion moved to quash U.S. Bank's subpoena to the South Carolina Department of Insurance requesting production of "all documents and communications" related to information about Companion's finances that it reported to the SC DOI. Companion argued that the subpoena sought confidential information protected as privileged by the South Carolina Insurance Holding Company Regulatory Act (the "Act"), as well as the production of documents and materials that were overly broad and previously produced. The court declined to quash the subpoena, but did modify its terms. The court found it significant that both parties stipulated that the Act did not protect as privileged a number of requested documents. The court also found that the South Carolina Department's promise to review the documents prior to production and ensure that privileged documents were not produced was insufficient to adequately address Companion's concerns. The Court accorded Companion reasonable time to review the documents that the Department identified as responsive to the subpoena and raise document-specific objections to the production of documents that it determined were privileged under the Act. Companion Prop. & Cas. Ins. Co. v. U.S. Bank Nat'l Ass'n, No. 3:15-cv-01300 (USDC D.S.C. Apr. 10, 2017).
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