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Commercial Covid-19

Investor Caution in the Wake of a Hard Insurance Market

September 15, 2020

Investor Caution in the Wake of a Hard Insurance Market

The insurance industry is facing a hard market thanks to multiple factors including the COVID pandemic. Hard markets are a time of high insurance premiums, more precise and complex underwriting, fewer policies being written, and a shrinking pool of competitors. With that in mind, insurers are raising money to make the most of opportunities as they arise. At the same time, investors are understandably cautious. Intelligent Insurer details a recent panel discussion on hard markets with commentary from Stefan Holzberger of AM Best and Jon Warwick of ILS Capital. The experts predict how investors may respond to hard market conditions and how that will impact the insurance industry in the coming months. Holzberger notes that factors affecting the market cycle include low-interest rates, loss creep from previous catastrophic events, and litigation finance. He predicts a sustained hard market. Lit fin can be a particular thorn in the side of insurers, since it affords ordinary people the opportunity to pursue insurance claims even after they’ve been denied. Warwick explains that while investor confidence is favorable, capacity is reduced. This reduced capacity can create more difficult conditions for reinsurance programs. That’s bound to cause a spike in prices. In some areas, rates have increased as much as 75%. While some factors were in place even before the start of the year, the uncertainty brought about by COVID has brought extreme volatility to the market. Holzberger predicts that this rate of hardening will continue to increase and intensify. Warwick predicts that rate hikes will impact territories and classes differently. He refers to one company that doubled its insurance—causing premiums to go up a shocking 1,000%. Both experts predict good things for the future of the insurance industry. Despite some difficulties, the market is well-capitalized with solid liquidity.  

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Commentary Frames Litigation Finance as the Last Preservation Tool for Inventor Estates

A new commentary argues that the debate over funder disclosure in patent cases is not really about transparency at all, but about whether an independent inventor's family retains the value of what the inventor spent a career building.

As reported by IPWatchdog, the piece is written by Scott Moskowitz, founder of Blue Spike and Wistaria Trading and a named inventor on more than 110 patents. His starting point is that patents are inheritable property with twenty-year terms that outlast careers, yet the US enforcement architecture strips their value while owners are alive.

Moskowitz points to empirical work measuring the market reaction to inter partes review petitions, including a one-day abnormal return of roughly -12% following the first Hayman Capital challenge in 2015. A public company absorbs that as a bad quarter. For an inventor whose net worth is a portfolio, he argues, the same drop is a retirement, and the depressed figure becomes the only number available when the estate is later valued.

The commentary contrasts patents with other asset classes. Real estate, operating-company equity and art each have financing vehicles, insurance products and secondary markets. Patents have none at scale, because no lender will take collateral exposed to a PTAB invalidation rate of 61% to 70%.

Against that backdrop, the piece argues that litigation finance filled the gap because nothing else could, and that pending disclosure measures would remove it. It singles out the March 2026 rules suggestion before the Advisory Committee on Civil Rules, the USITC's proposed 19 C.F.R. § 210.14a, and S.3826, the Litigation Funding Transparency Act of 2026.

Moskowitz's proposed alternative is symmetry: treat funder disclosure the way Rule 26 and Rule of Evidence 411 already treat insurance, with mandatory disclosure on both sides paired with a restriction on using it to prove the merits.

Commercial

High Court Refuses to Stay Mariana Dam Litigation as Representation Fight Heads to Open Court

The High Court has declined to pause the Mariana dam litigation against BHP while a dispute over who represents the claimants is resolved, keeping the case on its existing timetable.

As reported by Legal Futures, the court rejected an application by Bailey Glasser International to stay proceedings. Pogust Goodhead, which acts for more than 400,000 claimants over the 2015 Fundão dam collapse in Brazil, characterised the outcome as its first victory in the representation dispute.

The court also directed that the underlying dispute over representation be determined at an expedited hearing on 5 and 6 October. Notably, it rejected Bailey Glasser International's request that the hearing be held in private, meaning the arguments over control of one of the largest group claims in English legal history will be aired publicly.

The ruling preserves the existing case management timetable, including the quantum trial listed for April 2027.

Pogust Goodhead chief executive Alicia Alinia said: "The ruling is an important win for our clients. The court has rejected any attempt to delay this litigation and confirmed that the timetable towards justice remains intact." She added that after almost 11 years, the claimants "deserve clarity, not delay."

The outcome matters beyond the parties. The Mariana claim is among the most heavily funded pieces of group litigation in the English courts, and a prolonged stay would have pushed back recovery timelines for the capital deployed behind it. Bailey Glasser International and the client committee were approached for comment.

Commercial

Woodville Administrators Report £298.7M in Claims Against £254,734 in Cash

Administrators for collapsed litigation lender Woodville have filed their formal statement of proposals, and the arithmetic is stark: unsecured creditor claims of £298,681,307 set against £254,734 of cash in the business.

As reported by the Law Society Gazette, Robert Goodhew and Andrew Stoneman of Kroll Advisory told creditors that Woodville's directors have yet to answer basic questions regarding the use of investor funds. The administrators concluded that rescuing the company as a going concern is not practicable. Administration began on 16 July.

The proposals describe a loan book concentrated on roughly ten law firms and associated entities in Wales and the north-west of England. Only one firm's borrowings appear to be secured. Two of those firms, ASL Boston and McDermott Smith, owe a combined £51.7 million and are themselves in insolvency proceedings.

A further £37 million is owed by parties the administrators describe as connected. That figure includes £17.6 million due from Integrity Protect No 1 Limited, which shares shareholders and directors with Woodville, and £8 million advanced to wholly owned subsidiary Horizon, which entered receivership two weeks before Woodville itself collapsed.

The administrators also flagged that the "performance bonds" issued to retail investors may have been mis-sold or misrepresented, a finding that could shape both regulatory scrutiny and any future recovery claims.

Recoveries so far have been modest. The sale of office furniture raised £650. The administrators' own fee is estimated at £3 million, and they said they are taking advice on enforcement action against directors who have not cooperated with the investigation.