1025-00005 · Quorum Insurance Holdings · Pre-Litigation/Motions

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SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK — COMMERCIAL DIVISION

PINNACLE ATLANTIC REINSURANCE LTD.,

Plaintiff,

— against —

QUORUM CASUALTY & SURETY COMPANY and QUORUM INSURANCE HOLDINGS CORP.,

Defendants.

Index No. ____ (To Be Assigned)

MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS' MOTION TO COMPEL ARBITRATION AND STAY LITIGATION PURSUANT TO CPLR § 7503 AND 9 U.S.C. § 4

Prepared by:

Jeffrey Park, Senior Associate Yuki Nakamura, Associate

CALDERWOOD & HARKNESS LLP One Liberty Plaza, 55th Floor New York, New York 10006 Telephone: (212) 558-4000 Facsimile: (212) 558-3588

Attorneys for Defendants Quorum Casualty & Surety Company and Quorum Insurance Holdings Corp.

Matter No. 1025-00005

TABLE OF AUTHORITIES

Cases.

Statutes and Rules

Other Authorities.

PRELIMINARY STATEMENT

Calderwood & Harkness LLP respectfully submits this Memorandum of Law on behalf of Defendants Quorum Casualty & Surety Company ("QC&S"), a New York-domiciled stock property and casualty insurer (NAIC No. 24891), and its parent, Quorum Insurance Holdings Corp. ("QIH," Nasdaq: QIHC), a Delaware corporation headquartered at 200 Constitution Plaza, Suite 3400, Hartford, Connecticut 06103, in support of Defendants' motion to compel arbitration and stay the instant action.

Plaintiff Pinnacle Atlantic Reinsurance Ltd. ("Pinnacle Atlantic" or "PARL"), a Bermuda Class 4 insurer (BMA Registration No. BMA-4R-2008-0331) maintaining a U.S. office at 1285 Avenue of the Americas, 28th Floor, New York, New York 10019, has commenced this action seeking the return of $78,400,000 in reinsurance recoverables previously paid by Pinnacle Atlantic under Treaty No. PA-QCS-2019-EXL-0044 (the "Treaty"), together with $12,600,000 in alleged interest, for a total demand of $91,000,000. Despite the magnitude of this dispute, the matter before the Court on the instant motion is straightforward: the parties agreed, clearly and unambiguously, to resolve all treaty disputes through binding arbitration, and this Court should enforce that agreement.

The Treaty at issue is an aggregate excess-of-loss reinsurance treaty effective July 1, 2019, covering commercial general liability, excess and umbrella liability, and professional liability losses incurred by QC&S. It was negotiated at arm's length between two large and sophisticated participants in the global reinsurance market, placed through Broadreach Intermediaries Inc. ("Broadreach"), a licensed New York reinsurance intermediary. The Treaty contains, at Article 22, a broad, mandatory arbitration clause requiring that "any dispute arising out of or relating to the formation, interpretation, performance, or breach of this Treaty" be resolved by a three-member arbitration panel sitting in New York, New York, under the Rules of ARIAS-U.S. (AIDA Reinsurance and Insurance Arbitration Society — U.S.). The clause is comprehensive, unequivocal, and entirely consistent with the longstanding norm in the reinsurance industry that treaty disputes be submitted to arbitration before panels of experienced reinsurance professionals.

Despite this clear and unambiguous agreement to arbitrate, Pinnacle Atlantic's counsel, Hargrove, Fitch & Calloway LLP ("HFC"), asserted in its pre-suit demand letter dated February 14, 2026 — without elaboration, analysis, or citation to any authority — that the arbitration clause is "inapplicable to the specific claims raised." This assertion is legally meritless and factually unsupportable. All four of Pinnacle Atlantic's claims arise directly under, and relate directly to, specific provisions of the Treaty:

(1) Pinnacle Atlantic's first claim alleges late notice under Article 7 of the Treaty regarding the Meridian Docks mass tort cluster — a dispute about the performance and interpretation of the Treaty's notice provisions;

(2) Pinnacle Atlantic's second claim alleges misallocation of $22,300,000 in IBNR reserves under Article 5 of the Treaty — a dispute about the interpretation and application of the Treaty's "losses incurred" definition;

(3) Pinnacle Atlantic's third claim challenges the Veridian Financial Services E&O cluster settlement under the follow-the-fortunes doctrine set forth in Article 11 of the Treaty — a dispute about whether QC&S's claims-handling met the Treaty's standard of good faith and businesslike conduct; and

(4) Pinnacle Atlantic's fourth claim alleges underreporting of ceded earned premium under Article 3 of the Treaty — a dispute about the calculation of premiums owed under the Treaty's premium provisions.

These are paradigmatic reinsurance treaty disputes. They are precisely the type of disputes that the parties, acting as experienced reinsurance professionals, agreed to submit to binding arbitration when they executed the Treaty. There is nothing collateral or extra-contractual about any of Pinnacle Atlantic's claims. Each cause of action finds its origin in, and seeks relief under, a specific article of the Treaty. HFC's bare, unsupported assertion that Article 22 is "inapplicable" cannot overcome the well-established presumption of arbitrability that attaches to a broad arbitration clause in a commercial reinsurance agreement.

On March 18, 2026, Calderwood & Harkness, on behalf of QC&S, sent a formal response to HFC rejecting all four grounds asserted in the pre-suit demand letter and simultaneously issued a Demand to Arbitrate invoking Treaty Article 22 and formally demanding arbitration pursuant to ARIAS-U.S. Rules. Rather than complying with its contractual obligation to proceed to arbitration, Pinnacle Atlantic filed the instant action. This motion follows.

Defendants respectfully move this Court, pursuant to CPLR § 7503(a) and, alternatively, 9 U.S.C. §§ 3 and 4, to (i) compel arbitration of all claims asserted by Pinnacle Atlantic in this action, (ii) direct Pinnacle Atlantic to appoint its party-appointed arbitrator within 30 days of the Court's order, and (iii) stay all proceedings in this action pending the completion of arbitration.

STATEMENT OF FACTS

A. The Parties

Quorum Casualty & Surety Company. QC&S is a New York-domiciled stock property and casualty insurance company, with its principal offices located at 200 Constitution Plaza, Suite 3200, Hartford, Connecticut 06103. QC&S has been continuously licensed and authorized to transact insurance business in New York and in all other states and the District of Columbia since its founding in 1974. QC&S maintains an A.M. Ridgeway rating of A (Excellent) with a Stable outlook, and reported statutory surplus of $1,420,000,000 as of December 31, 2025. QC&S's principal lines of business include commercial general liability, excess and umbrella liability, professional liability (including errors and omissions and directors and officers coverage), workers' compensation, and commercial automobile liability. QC&S cedes a portion of its risk to both domestic and international reinsurers through a portfolio of treaty and facultative reinsurance arrangements.

Quorum Insurance Holdings Corp. QIH is a publicly traded insurance holding company organized under the laws of Delaware, with its principal offices located at 200 Constitution Plaza, Suite 3400, Hartford, Connecticut 06103. QIH's common stock is listed on the Nasdaq Global Select Market under the ticker symbol QIHC. QIH is the ultimate parent of QC&S and several other operating insurance subsidiaries. Martin Galbraith serves as Chief Executive Officer, and Rachel Sondergaard serves as Executive Vice President and General Counsel. For fiscal year 2025, QIH reported consolidated gross written premium of approximately $4.18 billion, net earned premium of approximately $2.93 billion, and a market capitalization of approximately $6.7 billion as of February 28, 2026.

QIH is named as a co-defendant in Pinnacle Atlantic's action solely by virtue of its status as the parent company of QC&S. As discussed herein, QIH is a signatory to the Treaty in its capacity as the guarantor of QC&S's obligations thereunder pursuant to Treaty Article 24 (Parent Guarantee), and is accordingly bound by Treaty Article 22's arbitration clause.

Pinnacle Atlantic Reinsurance Ltd. Pinnacle Atlantic is a Class 4 insurer registered with the Bermuda Monetary Authority (BMA Registration No. BMA-4R-2008-0331). Pinnacle Atlantic is a wholly owned subsidiary of Pinnacle Atlantic Group Holdings Ltd., a Bermuda holding company. Sir Edmund Haverford serves as Chief Executive Officer of the Pinnacle Atlantic Group. Pinnacle Atlantic maintains a United States office at 1285 Avenue of the Americas, 28th Floor, New York, New York 10019, from which it conducts a substantial portion of its North American reinsurance business. For fiscal year 2025, Pinnacle Atlantic reported gross reinsurance assumed of approximately $9.6 billion. Pinnacle Atlantic is one of the largest global professional reinsurers, transacting business across property, casualty, specialty, and life and annuity lines.

Broadreach Intermediaries Inc. Broadreach Intermediaries Inc. is a New York-licensed reinsurance intermediary with offices at 100 Wall Street, 18th Floor, New York, New York 10005. Broadreach served as the designated intermediary broker under Treaty Article 9 (Intermediary Clause), acting as the conduit for the delivery of all notices, premium payments, loss reports, and other communications between QC&S and Pinnacle Atlantic during the term of the Treaty. James "Jamie" Castellano, a Senior Vice President at Broadreach, served as the account executive responsible for the placement, ongoing administration, and renewal of the Treaty. (Engström Aff. ¶¶ 8–10, attached hereto as Exhibit E.)

B. The Treaty and Its Arbitration Clause

Treaty Structure and Terms. Treaty No. PA-QCS-2019-EXL-0044 is an aggregate excess-of-loss reinsurance treaty, effective as of 12:01 a.m. Eastern Time on July 1, 2019, for an initial term of five years through 11:59 p.m. Eastern Time on June 30, 2024. (A true and complete copy of the executed Treaty is attached hereto as Exhibit A.) The Treaty provides for automatic annual extensions unless either party gives at least 90 days' written notice of non-renewal prior to the applicable anniversary date. Pursuant to this renewal mechanism, the Treaty was extended through June 30, 2025, and again through June 30, 2026, for a total of two one-year extensions beyond the initial term. On October 1, 2025, Pinnacle Atlantic delivered a written non-renewal notice to QC&S through Broadreach, advising that it would not extend the Treaty beyond June 30, 2026. Accordingly, the Treaty will lapse at the end of its current annual period on June 30, 2026, subject to the survival of ongoing obligations including, critically, the arbitration clause. (Engström Aff. ¶¶ 12–16.)

Under the Treaty, QC&S cedes to Pinnacle Atlantic aggregate net incurred losses in excess of an annual aggregate retention of $120,000,000 per treaty year, up to a cession limit of $200,000,000 per treaty year — thereby providing coverage for losses between $120,000,000 and $320,000,000 in any given treaty year. The Treaty covers QC&S's commercial general liability, excess and umbrella liability, and professional liability (including errors and omissions) lines of business. The provisional treaty premium rate is 42% of ceded earned premium, subject to a sliding-scale adjustment with a minimum rate of 35% and a maximum rate of 52%, determined based on treaty-year loss experience at 36 months of development. (Treaty Art. 3; Engström Aff. ¶¶ 17–20.)

The Treaty designates New York law as the governing law (Treaty Art. 16) and was placed through Broadreach Intermediaries, with all communications and transactions conducted through the intermediary in New York.

The Arbitration Clause — Treaty Article 22. Treaty Article 22, titled "Arbitration," provides in relevant part:

"22.1 Any dispute arising out of or relating to the formation, interpretation, performance, or breach of this Treaty, including but not limited to any question regarding its existence, validity, or termination, shall be referred to and finally resolved by arbitration administered under the Rules of ARIAS-U.S. in effect at the time of the arbitration.

22.2 The arbitration panel shall consist of three (3) arbitrators, each of whom shall be a current or former officer of an insurance or reinsurance company, or a current or former Lloyd's underwriter. The Cedent and the Reinsurer shall each appoint one (1) arbitrator within thirty (30) days of the commencement of the arbitration proceeding. The two party-appointed arbitrators shall select a neutral umpire within thirty (30) days of their appointment. If the party-appointed arbitrators cannot agree on an umpire, either party may request that ARIAS-U.S. appoint the umpire in accordance with its procedures.

22.3 The seat of arbitration shall be New York, New York.

22.4 The arbitration panel shall base its decision on the terms and conditions of this Treaty, the custom and usage of the insurance and reinsurance industry, and, to the extent applicable, the substantive law of New York, without regard to its conflict-of-laws principles. The panel shall have the authority to award any remedy or relief that would be available from a court of competent jurisdiction, including but not limited to interim or injunctive relief.

22.5 All proceedings and evidence shall be kept confidential by the parties and the arbitrators, except as may be required by law or regulation.

22.6 The arbitration award shall be final and binding upon the parties. Judgment upon the award may be entered in any court of competent jurisdiction."

(Treaty Art. 22, Ex. A at 47–48.)

The language of Article 22.1 is unmistakably broad. By its express terms, it encompasses "any dispute arising out of or relating to the formation, interpretation, performance, or breach" of the Treaty — language that, as demonstrated in the Argument section below, constitutes the broadest type of arbitration clause recognized under both New York and federal law. The clause further encompasses disputes regarding the Treaty's "existence, validity, or termination," thereby capturing even challenges to the enforceability of the Treaty itself.

Negotiation and Execution. The Treaty was negotiated over a period of approximately four months, from March 2019 through late June 2019, between QC&S's reinsurance team (led by Tobias Engström, Senior Vice President, Reinsurance & Capital Markets, QIH) and Pinnacle Atlantic's treaty underwriting team, with Broadreach serving as the intermediary. (Engström Aff. ¶¶ 21–26.) The arbitration clause was included in the initial draft circulated by Broadreach and was accepted by both parties without material modification. This is consistent with the universal practice in the reinsurance industry, where arbitration clauses are standard features of virtually all treaty agreements. The Treaty was signed by Mr. Engström on behalf of QC&S and by Alastair Prentice, Senior Vice President of Treaty Underwriting, on behalf of Pinnacle Atlantic, on June 28, 2019. (Engström Aff. ¶ 27; Treaty signature page, Ex. A at 56.)

C. The Dispute

The dispute between the parties concerns $78,400,000 in aggregate reinsurance recoverables billed by QC&S under the Treaty for Treaty Years 2022 and 2023.

Treaty Year 2022 (July 1, 2022 through June 30, 2023): QC&S reported aggregate net incurred losses of $189,700,000, exceeding the annual aggregate retention of $120,000,000 by $69,700,000. Accordingly, QC&S billed Pinnacle Atlantic for a ceded loss of $69,700,000. This represented the largest single-year cession under the Treaty since inception, driven principally by (i) the Meridian Docks mass tort cluster (approximately $41,200,000 in net incurred losses allocated to TY 2022) and (ii) the Veridian Financial Services E&O cluster settlement ($34,500,000 in net incurred losses allocated to TY 2022). (Engström Aff. ¶¶ 30–34.)

Treaty Year 2023 (July 1, 2023 through June 30, 2024): QC&S reported aggregate net incurred losses of $128,700,000, exceeding the annual aggregate retention of $120,000,000 by $8,700,000. Accordingly, QC&S billed Pinnacle Atlantic for a ceded loss of $8,700,000. (Engström Aff. ¶¶ 35–37.)

In total, QC&S billed and Pinnacle Atlantic paid $78,400,000 in reinsurance recoverables across seven billing installments between October 15, 2022 and March 29, 2024. Each billing was submitted through Broadreach in accordance with the Treaty's reporting and settlement procedures set forth in Article 8 (Reporting and Settlement). Pinnacle Atlantic paid each installment without reservation or objection at the time of payment. (Engström Aff. ¶¶ 38–42.)

On December 12, 2025, Pinnacle Atlantic, through its in-house counsel, sent a reservation-of-rights letter to QC&S. The letter stated, in general terms, that Pinnacle Atlantic was "reviewing the validity and propriety of cessions under Treaty Years 2022 and 2023" and reserved all rights with respect thereto. The letter did not identify any specific claims or grounds for challenge. (Engström Aff. ¶ 43.)

On February 14, 2026, HFC, on behalf of Pinnacle Atlantic, sent a pre-suit demand letter to QC&S demanding the return of the full $78,400,000 in reinsurance recoverables, plus $12,600,000 in alleged interest calculated at approximately 8% per annum over an average 24-month period, for a total demand of $91,000,000. (A true and complete copy of the HFC demand letter is attached hereto as Exhibit B.) The demand letter set forth four specific grounds for Pinnacle Atlantic's claims, each of which is addressed below. Critically, the demand letter included a single sentence, buried in the penultimate paragraph, asserting that the arbitration clause in Article 22 is "inapplicable to the specific claims raised." No analysis, reasoning, or legal authority was provided in support of this assertion. (Ex. B at 11.)

D. Pinnacle Atlantic's Four Grounds — All Treaty-Based

The HFC demand letter identified four specific grounds for Pinnacle Atlantic's claims. As set forth below, each ground is rooted in a specific article of the Treaty and constitutes a quintessential treaty dispute.

1. Late Notice (Article 7). Pinnacle Atlantic's first claim alleges that QC&S failed to timely notify Pinnacle Atlantic, through Broadreach, of the Meridian Docks mass tort cluster. The Meridian Docks cluster consists of 31 commercial general liability claims arising under Policy No. CGL-2020-09844, issued to Meridian Docks Development LLC, a commercial real estate developer. The claims allege personal injuries sustained by construction workers and building occupants as a result of alleged exposure to defective construction materials at several Meridian Docks project sites in the greater New York metropolitan area.

QC&S first established reserves for the Meridian Docks claims on or about March 15, 2021. Notice of the claims was provided to Pinnacle Atlantic through Broadreach on May 22, 2022 — a gap of approximately 14 months and 7 days between the initial reserving and the notification to the reinsurer. Pinnacle Atlantic contends that this delay constitutes a breach of Article 7 of the Treaty, which requires QC&S to provide "prompt notice" of all claims or occurrences that may reasonably be expected to result in a recovery under this Treaty. (Treaty Art. 7.1; Ex. B at 3–5.)

QC&S's position, as communicated in the March 18, 2026 response letter, is that the notification was timely under Article 7 because, at the time of initial reserving, the Meridian Docks claims were in their earliest stages, and QC&S had no reasonable basis to conclude that the claims would ultimately aggregate to a level that would pierce the $120,000,000 treaty-year retention. It was not until the spring of 2022 that the scope and severity of the claims became apparent. (Ex. C at 4–6; Engström Aff. ¶¶ 44–49.)

Regardless of which party's interpretation of Article 7 is correct, this claim is manifestly a dispute "arising out of or relating to the . . . interpretation [and] performance" of the Treaty.

2. IBNR Misallocation (Article 5). Pinnacle Atlantic's second claim alleges that QC&S improperly allocated $22,300,000 in incurred but not reported ("IBNR") reserve strengthening to Treaty Year 2022 instead of Treaty Year 2021. Article 5 of the Treaty defines "losses incurred" for purposes of determining the aggregate net incurred loss in each treaty year. Pinnacle Atlantic contends that the $22,300,000 in IBNR development, which related to claims with occurrence dates in TY 2021, should have been allocated to TY 2021 under Article 5's "losses incurred" definition, and that by allocating the development to TY 2022, QC&S artificially inflated the TY 2022 aggregate and caused a recovery against Pinnacle Atlantic that would not have occurred had the development been allocated to TY 2021 (where the aggregate net incurred loss would not have reached the $120,000,000 retention). (Ex. B at 5–7.)

QC&S's position is that Article 5 defines "losses incurred" based on the date of reserve booking, not the occurrence date, and that the $22,300,000 in reserve strengthening was properly recognized in TY 2022 when it was first booked on QC&S's statutory financial statements. (Ex. C at 6–8; Engström Aff. ¶¶ 50–54.)

This claim is self-evidently a dispute about the "interpretation" of Article 5 of the Treaty.

3. Follow-the-Fortunes (Article 11). Pinnacle Atlantic's third claim challenges the propriety of QC&S's settlement of the Veridian Financial Services E&O cluster under the follow-the-fortunes doctrine codified in Article 11 of the Treaty. The Veridian Financial Services cluster involved three related professional liability claims arising under Policy No. PL-2021-15327, issued to Veridian Financial Services, Inc., a financial advisory firm. The three claims — designated Claim A ($14,200,000), Claim B ($12,800,000), and Claim C ($7,500,000) — were settled by QC&S in a single settlement on September 8, 2023, for an aggregate amount of $34,500,000. (Ex. B at 7–9.)

Article 11 of the Treaty provides that Pinnacle Atlantic shall "follow the fortunes" of QC&S with respect to claims settlements, provided that such settlements are made "in good faith and in a businesslike manner." Pinnacle Atlantic contends that QC&S's settlement of the Veridian cluster lacked good faith and businesslike conduct because, in Pinnacle Atlantic's view, the settlement amounts were excessive relative to the probable exposure and because QC&S allegedly failed to conduct adequate investigation of the merits of Claim C before agreeing to settle. (Ex. B at 7–9.)

QC&S strongly disputes these contentions and maintains that the Veridian settlement was made in good faith, at arm's length, following extensive evaluation of the underlying claims by QC&S's professional liability claims team, outside counsel, and an independent coverage consultant. (Ex. C at 8–10; Engström Aff. ¶¶ 55–62.)

This claim is, by its very terms, a dispute about the "performance" of the Treaty and the "interpretation" of Article 11.

4. Premium Underreporting (Article 3). Pinnacle Atlantic's fourth claim alleges that QC&S underreported ceded earned premium to Pinnacle Atlantic by $6,800,000. Under Article 3 of the Treaty, QC&S is obligated to report ceded earned premium to Pinnacle Atlantic quarterly, and the treaty premium payable by QC&S is calculated as a percentage of ceded earned premium. Pinnacle Atlantic contends that QC&S reported $38,400,000 in ceded earned premium for the relevant periods, whereas Pinnacle Atlantic's own calculations indicate that $45,200,000 should have been reported — a difference of $6,800,000. At the provisional treaty premium rate of 42%, this alleged underreporting would result in an underpayment of treaty premium of $2,856,000. (Ex. B at 9–10.)

QC&S's position is that the $6,800,000 discrepancy arises from Pinnacle Atlantic's improper inclusion of run-off portfolio transfer premiums that are expressly excluded from the calculation of ceded earned premium under Article 3.4 of the Treaty. QC&S maintains that its premium reporting is accurate and consistent with Article 3's definitions. (Ex. C at 10–12; Engström Aff. ¶¶ 63–68.)

This claim is plainly a dispute about the "interpretation" and "performance" of Article 3 of the Treaty.

E. QC&S's Invocation of Arbitration

Upon receipt of the HFC demand letter, QC&S promptly retained Calderwood & Harkness LLP. Calderwood & Harkness was retained on March 2, 2026. (Engström Aff. ¶ 69.)

On March 18, 2026, Calderwood & Harkness, on behalf of QC&S and QIH, sent two letters to HFC. The first letter was a substantive response to the demand letter, setting forth QC&S's positions on each of the four grounds raised by Pinnacle Atlantic and rejecting the demand in its entirety. (A true and complete copy of the response letter is attached hereto as Exhibit C.) The second letter was a formal Demand to Arbitrate, expressly invoking Treaty Article 22 and formally demanding that all disputes between the parties be submitted to arbitration before a three-member panel in New York, New York, under the ARIAS-U.S. Rules. (A true and complete copy of the Demand to Arbitrate letter is attached hereto as Exhibit D.) In the Demand to Arbitrate, QC&S notified Pinnacle Atlantic of its intention to appoint its party-appointed arbitrator and requested that Pinnacle Atlantic appoint its own arbitrator within 30 days in accordance with Article 22.2 and ARIAS-U.S. Rule 4.

Pinnacle Atlantic did not respond to the Demand to Arbitrate. Instead, on or about April 7, 2026, Pinnacle Atlantic filed the instant action, commencing litigation in this Court in direct disregard of the mandatory arbitration provision to which it agreed. This motion to compel arbitration and stay litigation follows.

ARGUMENT

POINT I

THE COURT SHOULD COMPEL ARBITRATION BECAUSE THE TREATY CONTAINS A VALID AND ENFORCEABLE AGREEMENT TO ARBITRATE

A. Legal Standard for Compelling Arbitration Under CPLR § 7503(a)

Under CPLR § 7503(a), "[a] party aggrieved by the failure of another to arbitrate may apply for an order compelling arbitration." The statute provides that "[w]here there is no substantial question whether a valid agreement was made or complied with, . . . the court shall direct the parties to arbitrate." This standard reflects New York's longstanding and well-established public policy favoring the enforcement of agreements to arbitrate, a policy that the Court of Appeals has recognized is of particular force in the commercial context.

The Court of Appeals has consistently held that, in ruling on a motion to compel arbitration, the court's inquiry is narrowly circumscribed. The court must determine: (1) whether a valid agreement to arbitrate exists between the parties; (2) whether the dispute at issue falls within the scope of that agreement; and (3) whether any recognized defense to arbitration — such as waiver, revocation, fraud in the inducement of the arbitration clause itself, or unconscionability — has been established. Matter of Smith Barney Shearson Inc. v. Sacharow, 91 N.Y.2d 39, 49 (1997); Matter of Nationwide Gen. Ins. Co. v. Investors Ins. Co. of Am., 37 N.Y.2d 91, 95 (1975). The court does not inquire into the merits of the underlying dispute. Diamond Waterproofing Sys., Inc. v. 55 Liberty Owners Corp., 4 N.Y.3d 247, 252 (2005) ("The court's role is limited to determining threshold issues of arbitrability and does not extend to the substantive merits of the dispute.").

The strong public policy favoring arbitration means that, where a valid and broad arbitration agreement exists, "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25 (1983); accord Smith Barney, 91 N.Y.2d at 49. This presumption of arbitrability is not merely an interpretive canon; it is a substantive principle that reflects the judiciary's respect for the parties' contractual choice of a dispute-resolution forum. As the Court of Appeals has explained, arbitration is "a creature of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit," Cooper v. Ateliers de la Motobecane, S.A., 57 N.Y.2d 408, 412 (1982), but where the parties have agreed to a broad arbitration clause, the agreement will be enforced according to its terms.

The burden is on the party resisting arbitration to demonstrate that the dispute falls outside the scope of the arbitration agreement or that a recognized defense applies. Flores v. Lower E. Side Serv. Ctr., Inc., 4 N.Y.3d 363, 374 (2005). Where, as here, the arbitration clause uses the broadest possible language — "any dispute arising out of or relating to" the agreement — the party opposing arbitration bears a particularly heavy burden. It is "only when it can be said with positive assurance that the arbitration clause is not susceptible of an interpretation covering the disputed matter" that the court may deny a motion to compel arbitration. Diamond Waterproofing, 4 N.Y.3d at 252.

These principles apply with particular force in the commercial reinsurance context, where arbitration has been the customary and preferred method of dispute resolution for well over a century. Courts in New York recognize that reinsurance disputes typically involve complex factual and technical issues — including questions of actuarial methodology, reserving practices, coverage allocation, and industry custom — that are best resolved by arbitrators with specialized experience in the reinsurance industry, rather than by generalist courts. See Ostrager & Newman, Handbook on Insurance Coverage Disputes § 16.01 (20th ed. 2023) ("Arbitration is the predominant method for resolving disputes under reinsurance contracts.").

B. The Treaty Contains a Valid Agreement to Arbitrate

There can be no serious dispute that the Treaty contains a valid, enforceable agreement to arbitrate. Treaty Article 22 is a written, bilateral agreement between QC&S (as cedent) and Pinnacle Atlantic (as reinsurer) to submit all disputes "arising out of or relating to the formation, interpretation, performance, or breach" of the Treaty to binding arbitration before a three-member panel in New York, New York, under the ARIAS-U.S. Rules. The clause satisfies every requirement for a valid arbitration agreement under both New York law and the Federal Arbitration Act.

The agreement is in writing. Both CPLR Article 75 and Section 2 of the Federal Arbitration Act require that the arbitration agreement be in writing. Treaty Article 22 is a written provision contained in a fully executed treaty agreement, signed by authorized officers of both QC&S and Pinnacle Atlantic. (Treaty Art. 22, Ex. A at 47–48; Engström Aff. ¶ 27.)

The agreement is clear and unambiguous. The language of Article 22 leaves no room for doubt as to the parties' intent. The clause requires arbitration of "any dispute" — without limitation or qualification — that arises out of or relates to the Treaty. It specifies the number and qualifications of arbitrators, the selection process, the seat of arbitration, the governing procedural rules, and the finality of the award. This is a comprehensive, well-drafted arbitration provision that reflects the deliberate choice of two sophisticated commercial parties to resolve their disputes through arbitration rather than litigation.

The agreement was entered into by sophisticated commercial parties. The Treaty was negotiated at arm's length between QC&S, a New York-domiciled insurer with $1.42 billion in statutory surplus, and Pinnacle Atlantic, a Bermuda Class 4 reinsurer with $9.6 billion in gross reinsurance assumed. Both parties are sophisticated participants in the global reinsurance market, each represented by experienced reinsurance professionals and in-house legal counsel during the negotiation and execution of the Treaty. The Treaty was placed through Broadreach Intermediaries, a licensed New York reinsurance intermediary, and the arbitration clause was reviewed and accepted by both parties during the negotiation process. (Engström Aff. ¶¶ 21–27.) These are not unsophisticated consumers or individuals who might lack the bargaining power or sophistication to understand the implications of an arbitration agreement. These are large, experienced commercial enterprises that knowingly and voluntarily agreed to arbitrate their disputes.

No challenge to the validity of the arbitration clause has been raised. Pinnacle Atlantic has not contended — either in the HFC demand letter, in its complaint, or at any other point — that Article 22 was procured through fraud, duress, undue influence, or any other infirmity that would specifically invalidate the arbitration clause. Pinnacle Atlantic does not argue that it did not agree to arbitrate, or that the arbitration clause was not part of the Treaty, or that the clause was unconscionable. The sole contention advanced by HFC is that the clause is "inapplicable to the specific claims raised" — a scope argument, not a validity argument. As demonstrated in Point II below, this scope argument fails.

For these reasons, the Court should find that a valid agreement to arbitrate exists between the parties, satisfying the first element of the CPLR § 7503(a) inquiry.

QIH is also bound by the arbitration clause. QIH, as the parent company of QC&S, executed a parent guarantee of QC&S's obligations under the Treaty, set forth in Treaty Article 24. (Treaty Art. 24, Ex. A at 51–52; Engström Aff. ¶¶ 70–72.) By executing the parent guarantee, QIH agreed to be bound by all terms and conditions of the Treaty, including the arbitration clause. QIH is therefore both entitled to invoke the arbitration clause and bound by it. Pinnacle Atlantic, having named QIH as a defendant in this action, cannot avoid arbitration with QIH any more than it can avoid arbitration with QC&S.

C. Alternative Basis: The Federal Arbitration Act Applies

In addition to CPLR Article 75, the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1–16, provides an independent and alternative basis for compelling arbitration and staying this action.

The Treaty involves interstate and international commerce. The FAA applies to any "written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract." 9 U.S.C. § 2. The term "involving commerce" is interpreted broadly to reach the full extent of Congress's commerce power. Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 273–74 (1995). Here, the Treaty is a reinsurance agreement between a New York-domiciled insurer and a Bermuda-domiciled reinsurer, placed through a New York intermediary, involving the cession of risk on a national portfolio of commercial liability insurance policies. The premiums and claims payments flowed across state and international boundaries throughout the Treaty's term. There can be no doubt that the Treaty "involves commerce" within the meaning of the FAA.

The FAA mandates enforcement of the arbitration agreement. Section 2 of the FAA provides that written agreements to arbitrate in contracts involving commerce "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The Supreme Court has repeatedly emphasized that Section 2 reflects "a liberal federal policy favoring arbitration agreements." Moses H. Cone, 460 U.S. at 24; Camberwell Enterprises Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). This policy requires courts to enforce arbitration agreements according to their terms and to resolve any ambiguities regarding scope in favor of arbitration. Mastrobuono v. Shearson Lehman Marvelo, Inc., 514 U.S. 52, 62 (1995); Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985).

The FAA provides for both a stay and an order to compel. Under Section 3 of the FAA, a court "shall" stay proceedings in any action referable to arbitration under the agreement. 9 U.S.C. § 3. The stay is mandatory, not discretionary. Under Section 4, a party "aggrieved by the alleged failure, neglect, or refusal of another to arbitrate" may petition the court for "an order directing that such arbitration proceed in the manner provided for in such agreement." 9 U.S.C. § 4.

The FAA applies in state court. It is well established that the FAA applies in state court proceedings. The FAA's substantive provisions — including Section 2's mandate of enforceability, Section 3's stay requirement, and Section 4's authority to compel arbitration — are applicable in state court by virtue of the Supremacy Clause. See Concepcion, 563 U.S. at 341–42. This Court therefore has authority to apply the FAA as an alternative basis for compelling arbitration and staying this action.

The result is the same under either framework. Whether this Court analyzes the motion under CPLR Article 75 or the FAA, the outcome is identical. Both frameworks require enforcement of valid written arbitration agreements, both establish a strong presumption of arbitrability, and both require a stay of litigation pending arbitration where the claims are referable to arbitration. Defendants invoke both frameworks in the alternative to ensure that the Court has a complete basis for granting the relief requested.

POINT II

ALL OF PINNACLE ATLANTIC'S CLAIMS FALL WITHIN THE SCOPE OF THE ARBITRATION CLAUSE

A. The Arbitration Clause Is Broad and Encompasses All Treaty-Related Disputes

Having established that a valid agreement to arbitrate exists, the Court must next determine whether the disputes at issue fall within the scope of that agreement. Here, they plainly do.

Treaty Article 22.1 provides for arbitration of "any dispute arising out of or relating to the formation, interpretation, performance, or breach of this Treaty." This is the broadest possible formulation of an arbitration clause. Courts in New York and the Second Circuit have consistently recognized the critical distinction between narrow arbitration clauses — which are limited to disputes "arising under" the contract — and broad arbitration clauses — which cover disputes "arising out of or relating to" the contract. See Collins & Aikman Prods. Co. v. Bldg. Sys., Inc., 58 F.3d 16, 20 (2d Cir. 1995); Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc., 252 F.3d 218, 224 (2d Cir. 2001). The "arising out of or relating to" formulation is the gold standard of broad arbitration clauses, and courts have repeatedly held that it "create[s] a presumption of arbitrability" that is overcome only if the opposing party can demonstrate "with positive assurance" that the clause is "not susceptible of an interpretation that covers the asserted dispute." WorldCrisa Corp. v. Armstrong, 129 F.3d 71, 74 (2d Cir. 1997) (quoting Camberwell Enterprises Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 650 (1986)); JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 172 (2d Cir. 2004).

The Second Circuit has explained that the phrase "relating to" in an arbitration clause is "deliberately broad," and has been interpreted to capture disputes that have a "significant relationship" to the contract, even if the claim does not technically "arise under" the contract's specific provisions. Collins & Aikman, 58 F.3d at 20. Under this standard, a claim "relates to" the contract if the claim "is in any way connected to" the parties' agreement or "involves issues that can only be evaluated by reference to" the agreement's terms. Louis Dreyfus, 252 F.3d at 225.

Article 22.1 goes even further than the typical "arising out of or relating to" clause, because it explicitly identifies four categories of disputes that fall within its scope: disputes relating to the "formation, interpretation, performance, or breach" of the Treaty. This enumeration captures every conceivable type of treaty dispute — from questions about whether the Treaty was validly formed, to questions about what its provisions mean, to questions about whether the parties have performed their obligations, to questions about whether either party has breached its commitments. There is, quite literally, no type of dispute that arises from the Treaty relationship between QC&S and Pinnacle Atlantic that does not fall within the scope of Article 22.

Moreover, Article 22.1 expressly includes disputes "regarding [the Treaty's] existence, validity, or termination." This language means that even a challenge to the Treaty's enforceability or a dispute about whether the Treaty has been terminated would be for the arbitrators, not the courts, to decide. See Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002); Granite Rock Co. v. International Brotherhood of Teamsters, 561 U.S. 287, 299–300 (2010).

Against this backdrop, the question before this Court is whether Pinnacle Atlantic's four claims fall within the scope of Article 22. The answer is an emphatic yes.

B. Each of Pinnacle Atlantic's Four Claims Arises Under a Specific Treaty Article

Pinnacle Atlantic's claims do not merely "relate to" the Treaty in some attenuated sense. Each of the four claims expressly invokes a specific article of the Treaty and seeks relief based on the alleged breach or misapplication of that article. These are not collateral tort claims, statutory claims, or extra-contractual claims that might arguably lie outside the scope of the arbitration agreement. They are quintessential treaty disputes — the very type of disputes that the parties contemplated and agreed to resolve through arbitration when they executed Article 22.

Claim 1 — Late Notice (Article 7). Pinnacle Atlantic's first claim expressly invokes Article 7 of the Treaty and alleges that QC&S failed to comply with Article 7's "prompt notice" requirement by waiting approximately 14 months and 7 days to notify Pinnacle Atlantic of the Meridian Docks mass tort cluster. The claim requires interpretation of what Article 7 means by "prompt notice," determination of when QC&S's obligation to notify arose under the Treaty's terms, and evaluation of whether QC&S's conduct constituted a breach of its performance obligations. This is a textbook dispute about the "interpretation" and "performance" of the Treaty.

The notice dispute also raises factual questions uniquely suited to resolution by experienced reinsurance arbitrators — including when QC&S had a reasonable basis to believe that the Meridian Docks claims would aggregate to a level that might result in a recovery under the Treaty, and whether the applicable standard under Article 7 is based on the cedent's actual knowledge or on a reasonable-cedent standard. These are questions of reinsurance industry custom and practice that the parties specifically entrusted to a panel of "current or former officer[s] of an insurance or reinsurance company." (Treaty Art. 22.2.)

Claim 2 — IBNR Allocation (Article 5). Pinnacle Atlantic's second claim expressly invokes Article 5 of the Treaty and challenges the allocation of $22,300,000 in IBNR reserve strengthening between Treaty Years 2021 and 2022. The claim turns entirely on the interpretation of Article 5's definition of "losses incurred" — specifically, whether IBNR development is allocated to a treaty year based on the occurrence date of the underlying claims or based on the date the reserve adjustment is booked on QC&S's statutory financial statements. This is a purely contractual interpretation dispute. It arises directly under the Treaty and can be resolved only by reference to the Treaty's specific provisions. It is a dispute about the "interpretation" and "performance" of the Treaty, squarely within the scope of Article 22.

Moreover, the IBNR allocation dispute involves complex actuarial and accounting questions — including the proper application of loss development factors, the interaction between statutory reserving requirements and treaty definitions, and the treatment of IBNR in the context of aggregate excess-of-loss treaties — that are ideally suited for resolution by reinsurance arbitrators with industry expertise.

Claim 3 — Follow-the-Fortunes (Article 11). Pinnacle Atlantic's third claim expressly invokes Article 11 of the Treaty and challenges whether QC&S's settlement of the Veridian Financial Services E&O cluster — comprising three related claims totaling $34,500,000 — met the standard of "good faith and . . . businesslike manner" required by Article 11 for the reinsurer's follow-the-fortunes obligation to attach. The follow-the-fortunes doctrine is a fundamental principle of reinsurance law, and its application in any particular case depends on the specific terms of the treaty and the facts and circumstances of the underlying claim. Here, Article 11 sets forth the applicable standard, and the dispute turns on whether QC&S's conduct in evaluating, negotiating, and settling the Veridian claims met that standard. This is plainly a dispute about the "performance" of the Treaty and the "interpretation" of Article 11.

It bears emphasis that the follow-the-fortunes doctrine is deeply rooted in reinsurance industry custom and practice, and questions regarding its application are routinely submitted to reinsurance arbitration panels. Indeed, the doctrine exists specifically to allocate the risk of claims-handling decisions between cedents and reinsurers within the framework of the reinsurance relationship, and disputes about its application are among the most common subjects of reinsurance arbitration. See Staring & Hansell, Law of Reinsurance § 14:4 (2024 ed.).

Claim 4 — Premium Underreporting (Article 3). Pinnacle Atlantic's fourth claim expressly invokes Article 3 of the Treaty and alleges that QC&S underreported ceded earned premium by $6,800,000, resulting in an alleged premium underpayment of $2,856,000 at the provisional 42% rate. The dispute turns on a narrow question of treaty interpretation: whether run-off portfolio transfer premiums are included in or excluded from the calculation of "ceded earned premium" under Article 3. QC&S contends that Article 3.4 expressly excludes such premiums; Pinnacle Atlantic apparently disagrees. This is a dispute about the "interpretation" and "performance" of the Treaty, squarely within the scope of Article 22.

The premium calculation dispute is a technical, treaty-specific question that requires close analysis of the Treaty's definitional provisions and their application to QC&S's book of business. It is precisely the kind of dispute that the parties agreed to submit to arbitrators with expertise in reinsurance treaty interpretation.

Summary. Each of Pinnacle Atlantic's four claims arises directly under a specific article of the Treaty. Each claim requires interpretation of the Treaty's terms and evaluation of the parties' performance under the Treaty. Each claim is therefore a dispute "arising out of or relating to the . . . interpretation, performance, or breach of [the] Treaty" within the plain meaning of Article 22.1. There is nothing remotely approaching "positive assurance" that Article 22 is "not susceptible of an interpretation" covering these disputes. To the contrary, these disputes fall squarely and unambiguously within Article 22's scope.

C. HFC's Bare Assertion That the Arbitration Clause Is "Inapplicable" Lacks Merit

In the February 14, 2026 pre-suit demand letter, HFC stated, in a single sentence without elaboration, that "the arbitration provision set forth in Article 22 of the Treaty is inapplicable to the specific claims raised herein." (Ex. B at 11.) No analysis was provided. No legal authority was cited. No reasoning was offered to explain why an arbitration clause that covers "any dispute arising out of or relating to the formation, interpretation, performance, or breach of this Treaty" would not apply to four claims that each invoke a specific article of the Treaty.

This bare, conclusory assertion falls far short of the showing required to overcome the strong presumption of arbitrability that attaches to a broad arbitration clause. As the Court of Appeals has held, the party resisting arbitration bears the burden of demonstrating that the claim falls outside the scope of the arbitration clause, and that burden is not discharged by a naked assertion of inapplicability. See Flores, 4 N.Y.3d at 374; Smith Barney, 91 N.Y.2d at 49–50.

Characterization of claims does not defeat arbitrability. To the extent Pinnacle Atlantic may argue at the hearing on this motion that its claims sound in tort (e.g., fraudulent misrepresentation), unjust enrichment, restitution, or some other cause of action independent of the Treaty, such an argument is unavailing. New York courts have consistently held that the characterization of a claim — whether as a contract claim, a tort claim, or an equitable claim — does not determine whether it is arbitrable. Rather, the Court looks to whether the claim "relates to" the parties' agreement. See Collins & Aikman, 58 F.3d at 20 (finding tort claims arbitrable where they "relat[ed] to" the contract containing the arbitration clause); JLM Indus., 387 F.3d at 172–73 (same). Here, every single claim alleged by Pinnacle Atlantic — whatever label may be affixed to it — is "inextricably intertwined" with the Treaty. Pinnacle Atlantic's demand for the return of $78,400,000 in reinsurance recoverables can only be understood by reference to the Treaty under which those payments were made. Each ground advanced in support of the demand — late notice, IBNR misallocation, follow-the-fortunes, premium underreporting — is defined by, and can only be evaluated against, the Treaty's specific provisions. There is no freestanding, independent claim that exists outside the Treaty relationship.

The interest demand does not defeat arbitrability. To the extent Pinnacle Atlantic may contend that its demand for $12,600,000 in interest falls outside the arbitration clause because it involves statutory or common-law obligations independent of the Treaty, this argument likewise fails. The interest claim is entirely derivative of the underlying demand for return of reinsurance recoverables. If the recoverables claims are arbitrable — and they plainly are — the associated interest claim is arbitrable as well. A party cannot carve out a derivative monetary demand and use it as a wedge to avoid arbitration of the underlying substantive claims. See Louis Dreyfus, 252 F.3d at 225–26. Moreover, Treaty Article 22.4 expressly empowers the arbitration panel to "award any remedy or relief that would be available from a court of competent jurisdiction," which would include interest on any amounts found to be owed.

The absence of analysis in HFC's letter is telling. The fact that HFC did not — and could not — articulate any reasoned basis for its assertion that Article 22 is "inapplicable" is itself compelling evidence that the assertion lacks merit. Experienced reinsurance litigators such as Mr. Calloway and Ms. Subramanian are well aware that arbitration clauses using "arising out of or relating to" language are presumptively applicable to all disputes connected to the underlying agreement. If there were a legitimate basis for arguing that these four treaty-based claims somehow fall outside Article 22's scope, HFC would have articulated it. The silence speaks volumes.

D. The Presumption of Arbitrability Is Especially Strong in Reinsurance

Even if there were any ambiguity regarding the scope of Article 22 — and there is none — the Court should resolve that ambiguity in favor of arbitration, particularly given the reinsurance context of this dispute.

Arbitration is the overwhelmingly predominant method for resolving disputes under reinsurance contracts. As the Second Circuit has recognized, "[a]rbitration provisions are an integral part of the reinsurance relationship" and "the reinsurance industry has a well-established tradition of resolving disputes through arbitration." Hartford Acc. & Indem. Co. v. Marlowe Indemnity Co., 246 F.3d 219, 226 (2d Cir. 2001). This tradition dates back more than a century and reflects the industry's recognition that reinsurance disputes are best resolved by panels of experienced reinsurance professionals who understand the technical complexities, business practices, and customs of the industry. See Scandinavian Reins. Co. v. Saint Paul Fire & Marine Ins. Co., 668 F.2d 60, 63–64 (2d Cir. 1981) (recognizing "the strong federal policy in favor of the arbitral resolution of disputes and the longstanding practice by the reinsurance industry of submitting disputes to arbitration").

New York courts, too, have recognized the particular importance of arbitration in the reinsurance industry. Reinsurance disputes frequently involve complex actuarial questions, reserving practices, allocation methodologies, industry customs, and technical treaty interpretation issues that are poorly suited for resolution by generalist judges or lay juries. By contrast, the ARIAS-U.S. Rules — which govern the arbitration under the Treaty — provide for a panel of arbitrators who are "current or former officer[s] of an insurance or reinsurance company, or . . . current or former Lloyd's underwriter[s]" (Treaty Art. 22.2) — individuals with the specialized expertise needed to evaluate the parties' claims fairly and efficiently.

ARIAS-U.S. was founded in 1994 specifically to provide an organized, professional framework for the resolution of reinsurance and insurance disputes through arbitration. The adoption of ARIAS-U.S. Rules in the Treaty reflects a deliberate, informed choice by QC&S and Pinnacle Atlantic to submit their disputes to this specialized forum. See ARIAS-U.S., Practical Guide to Reinsurance Arbitration Procedure at 1–3 (5th ed. 2021) (describing the purpose and history of ARIAS-U.S. and its role in promoting efficient, expert resolution of reinsurance disputes).

The claims at issue here are textbook reinsurance arbitration disputes. They involve the interpretation of treaty notice provisions (Article 7), the application of loss-incurred definitions and IBNR reserving practices (Article 5), the follow-the-fortunes doctrine and the evaluation of claims-handling decisions (Article 11), and the calculation of ceded earned premium under complex treaty definitions (Article 3). These are the very types of disputes that reinsurance arbitration exists to resolve. The parties recognized this when they agreed to Article 22, and this Court should give full effect to that agreement.

The Second Circuit has noted that courts should be especially reluctant to interfere with the arbitral process in the reinsurance context, where the parties have specifically chosen arbitration as their dispute-resolution mechanism and where the subject matter of the dispute requires specialized industry expertise. See Hartford Acc. & Indem. Co., 246 F.3d at 226–27; Citizens Cas. Co. of N.Y. v. Employers Ins. of Wausau, 75 F.3d 764, 768–69 (2d Cir. 1996); N. Am. Reinsurance Corp. v. Pine Top Ins. Co., 800 F. Supp. 1188, 1191 (S.D.N.Y. 1992). That principle applies with full force here.

POINT III

PINNACLE ATLANTIC HAS NOT ESTABLISHED ANY DEFENSE TO ARBITRATION

Even where a valid arbitration agreement exists and the dispute falls within its scope, the court must consider whether the party resisting arbitration has established a recognized defense. Here, Pinnacle Atlantic has not raised — and cannot establish — any defense to arbitration.

A. No Waiver

Waiver of the right to arbitrate requires a showing that the party seeking arbitration engaged in litigation conduct so inconsistent with an intent to arbitrate that it would be inequitable to permit the party to invoke the arbitration clause. Waiver is not to be lightly inferred, and courts require a showing of both (i) extensive litigation activity and (ii) prejudice to the opposing party. See Flores, 4 N.Y.3d at 374–75.

Here, QC&S has not engaged in any litigation activity that could conceivably constitute a waiver. The procedural chronology is as follows:

• February 14, 2026: HFC sends pre-suit demand letter on behalf of Pinnacle Atlantic.

• March 2, 2026: QC&S retains Calderwood & Harkness.

• March 18, 2026: Calderwood & Harkness sends response letter rejecting Pinnacle Atlantic's claims and simultaneously sends Demand to Arbitrate invoking Article 22.

• April 7, 2026 (approx.): Pinnacle Atlantic files the instant action without responding to the Demand to Arbitrate.

• April __, 2026: QC&S files the instant motion to compel arbitration and stay litigation.

QC&S demanded arbitration within 16 days of retaining counsel. It has not filed an answer, has not participated in discovery, has not filed any dispositive motion, and has not engaged in any conduct inconsistent with the right to arbitrate. To the contrary, QC&S's very first substantive act following the commencement of this dispute was to invoke the arbitration clause and demand arbitration.

To the extent Pinnacle Atlantic might argue that QC&S's participation in the pre-suit demand and response process constitutes a waiver, this argument is without merit. Pre-suit correspondence between parties and their counsel is a routine precursor to both litigation and arbitration. Responding to a demand letter and rejecting its claims — while simultaneously demanding arbitration — is entirely consistent with the right to arbitrate. There is no authority for the proposition that pre-suit correspondence, without more, constitutes waiver of an arbitration clause.

Moreover, Pinnacle Atlantic cannot credibly claim prejudice from any alleged delay. QC&S demanded arbitration before Pinnacle Atlantic even filed suit. Pinnacle Atlantic has not expended resources on litigation discovery or motion practice that would be wasted if the matter were referred to arbitration. There is, in short, no basis for a waiver defense.

B. No Revocation or Repudiation of the Arbitration Agreement

Pinnacle Atlantic has not contended that the arbitration agreement has been revoked, repudiated, or terminated. Nor could it. The Treaty remains in effect through June 30, 2026, and even after the Treaty lapses, the arbitration clause survives as to disputes arising during the Treaty term. Article 22 does not contain any sunset or expiration provision, and the disputes at issue relate to Treaty Years 2022 and 2023 — periods squarely within the Treaty term.

It is worth noting the fundamental inconsistency in Pinnacle Atlantic's position. Pinnacle Atlantic's entire complaint is premised on the assertion that QC&S breached the Treaty — specifically, Articles 3, 5, 7, and 11. Pinnacle Atlantic seeks to enforce these Treaty provisions in its favor and recover $91,000,000 based on alleged Treaty violations. At the same time, Pinnacle Atlantic seeks to avoid Article 22 — the Treaty's dispute-resolution mechanism — which is contained in the very same agreement. This is impermissible cherry-picking. A party cannot invoke the substantive provisions of a contract in its favor while simultaneously repudiating the contract's dispute-resolution clause. See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 449 (2006); Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403–04 (1967).

Under the well-established separability doctrine, the arbitration clause is treated as an agreement independent of the underlying contract. Prima Paint, 388 U.S. at 402–04; Buckeye, 546 U.S. at 445–46; Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 70–71 (2010). This means that even if there were questions about the validity of other Treaty provisions — and there are not — the arbitration clause would survive as a severable agreement and remain enforceable. The separability doctrine ensures that a party cannot defeat an arbitration clause by attacking the contract in which it is contained, because challenges to the contract

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK — COMMERCIAL DIVISION
PINNACLE ATLANTIC REINSURANCE LTD.,
Plaintiff,
— against —
QUORUM CASUALTY & SURETY COMPANY and QUORUM INSURANCE HOLDINGS CORP.,
Defendants.
Index No. ____ (To Be Assigned)
MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS' MOTION TO COMPEL ARBITRATION AND STAY LITIGATION PURSUANT TO CPLR § 7503 AND 9 U.S.C. § 4
Prepared by:
Jeffrey Park, Senior Associate Yuki Nakamura, Associate
CALDERWOOD & HARKNESS LLP One Liberty Plaza, 55th Floor New York, New York 10006 Telephone: (212) 558-4000 Facsimile: (212) 558-3588
Attorneys for Defendants Quorum Casualty & Surety Company and Quorum Insurance Holdings Corp.
Matter No. 1025-00005
TABLE OF CONTENTS
TABLE OF AUTHORITIES
Cases.
Statutes and Rules
Other Authorities.
PRELIMINARY STATEMENT
Calderwood & Harkness LLP respectfully submits this Memorandum of Law on behalf of Defendants Quorum Casualty & Surety Company ("QC&S"), a New York-domiciled stock property and casualty insurer (NAIC No. 24891), and its parent, Quorum Insurance Holdings Corp. ("QIH," Nasdaq: QIHC), a Delaware corporation headquartered at 200 Constitution Plaza, Suite 3400, Hartford, Connecticut 06103, in support of Defendants' motion to compel arbitration and stay the instant action.
Plaintiff Pinnacle Atlantic Reinsurance Ltd. ("Pinnacle Atlantic" or "PARL"), a Bermuda Class 4 insurer (BMA Registration No. BMA-4R-2008-0331) maintaining a U.S. office at 1285 Avenue of the Americas, 28th Floor, New York, New York 10019, has commenced this action seeking the return of $78,400,000 in reinsurance recoverables previously paid by Pinnacle Atlantic under Treaty No. PA-QCS-2019-EXL-0044 (the "Treaty"), together with $12,600,000 in alleged interest, for a total demand of $91,000,000. Despite the magnitude of this dispute, the matter before the Court on the instant motion is straightforward: the parties agreed, clearly and unambiguously, to resolve all treaty disputes through binding arbitration, and this Court should enforce that agreement.
The Treaty at issue is an aggregate excess-of-loss reinsurance treaty effective July 1, 2019, covering commercial general liability, excess and umbrella liability, and professional liability losses incurred by QC&S. It was negotiated at arm's length between two large and sophisticated participants in the global reinsurance market, placed through Broadreach Intermediaries Inc. ("Broadreach"), a licensed New York reinsurance intermediary. The Treaty contains, at Article 22, a broad, mandatory arbitration clause requiring that "any dispute arising out of or relating to the formation, interpretation, performance, or breach of this Treaty" be resolved by a three-member arbitration panel sitting in New York, New York, under the Rules of ARIAS-U.S. (AIDA Reinsurance and Insurance Arbitration Society — U.S.). The clause is comprehensive, unequivocal, and entirely consistent with the longstanding norm in the reinsurance industry that treaty disputes be submitted to arbitration before panels of experienced reinsurance professionals.
Despite this clear and unambiguous agreement to arbitrate, Pinnacle Atlantic's counsel, Hargrove, Fitch & Calloway LLP ("HFC"), asserted in its pre-suit demand letter dated February 14, 2026 — without elaboration, analysis, or citation to any authority — that the arbitration clause is "inapplicable to the specific claims raised." This assertion is legally meritless and factually unsupportable. All four of Pinnacle Atlantic's claims arise directly under, and relate directly to, specific provisions of the Treaty:
(1) Pinnacle Atlantic's first claim alleges late notice under Article 7 of the Treaty regarding the Meridian Docks mass tort cluster — a dispute about the performance and interpretation of the Treaty's notice provisions;
(2) Pinnacle Atlantic's second claim alleges misallocation of $22,300,000 in IBNR reserves under Article 5 of the Treaty — a dispute about the interpretation and application of the Treaty's "losses incurred" definition;
(3) Pinnacle Atlantic's third claim challenges the Veridian Financial Services E&O cluster settlement under the follow-the-fortunes doctrine set forth in Article 11 of the Treaty — a dispute about whether QC&S's claims-handling met the Treaty's standard of good faith and businesslike conduct; and
(4) Pinnacle Atlantic's fourth claim alleges underreporting of ceded earned premium under Article 3 of the Treaty — a dispute about the calculation of premiums owed under the Treaty's premium provisions.
These are paradigmatic reinsurance treaty disputes. They are precisely the type of disputes that the parties, acting as experienced reinsurance professionals, agreed to submit to binding arbitration when they executed the Treaty. There is nothing collateral or extra-contractual about any of Pinnacle Atlantic's claims. Each cause of action finds its origin in, and seeks relief under, a specific article of the Treaty. HFC's bare, unsupported assertion that Article 22 is "inapplicable" cannot overcome the well-established presumption of arbitrability that attaches to a broad arbitration clause in a commercial reinsurance agreement.
On March 18, 2026, Calderwood & Harkness, on behalf of QC&S, sent a formal response to HFC rejecting all four grounds asserted in the pre-suit demand letter and simultaneously issued a Demand to Arbitrate invoking Treaty Article 22 and formally demanding arbitration pursuant to ARIAS-U.S. Rules. Rather than complying with its contractual obligation to proceed to arbitration, Pinnacle Atlantic filed the instant action. This motion follows.
Defendants respectfully move this Court, pursuant to CPLR § 7503(a) and, alternatively, 9 U.S.C. §§ 3 and 4, to (i) compel arbitration of all claims asserted by Pinnacle Atlantic in this action, (ii) direct Pinnacle Atlantic to appoint its party-appointed arbitrator within 30 days of the Court's order, and (iii) stay all proceedings in this action pending the completion of arbitration.
STATEMENT OF FACTS
A. The Parties
Quorum Casualty & Surety Company. QC&S is a New York-domiciled stock property and casualty insurance company, with its principal offices located at 200 Constitution Plaza, Suite 3200, Hartford, Connecticut 06103. QC&S has been continuously licensed and authorized to transact insurance business in New York and in all other states and the District of Columbia since its founding in 1974. QC&S maintains an A.M. Ridgeway rating of A (Excellent) with a Stable outlook, and reported statutory surplus of $1,420,000,000 as of December 31, 2025. QC&S's principal lines of business include commercial general liability, excess and umbrella liability, professional liability (including errors and omissions and directors and officers coverage), workers' compensation, and commercial automobile liability. QC&S cedes a portion of its risk to both domestic and international reinsurers through a portfolio of treaty and facultative reinsurance arrangements.
Quorum Insurance Holdings Corp. QIH is a publicly traded insurance holding company organized under the laws of Delaware, with its principal offices located at 200 Constitution Plaza, Suite 3400, Hartford, Connecticut 06103. QIH's common stock is listed on the Nasdaq Global Select Market under the ticker symbol QIHC. QIH is the ultimate parent of QC&S and several other operating insurance subsidiaries. Martin Galbraith serves as Chief Executive Officer, and Rachel Sondergaard serves as Executive Vice President and General Counsel. For fiscal year 2025, QIH reported consolidated gross written premium of approximately $4.18 billion, net earned premium of approximately $2.93 billion, and a market capitalization of approximately $6.7 billion as of February 28, 2026.
QIH is named as a co-defendant in Pinnacle Atlantic's action solely by virtue of its status as the parent company of QC&S. As discussed herein, QIH is a signatory to the Treaty in its capacity as the guarantor of QC&S's obligations thereunder pursuant to Treaty Article 24 (Parent Guarantee), and is accordingly bound by Treaty Article 22's arbitration clause.
Pinnacle Atlantic Reinsurance Ltd. Pinnacle Atlantic is a Class 4 insurer registered with the Bermuda Monetary Authority (BMA Registration No. BMA-4R-2008-0331). Pinnacle Atlantic is a wholly owned subsidiary of Pinnacle Atlantic Group Holdings Ltd., a Bermuda holding company. Sir Edmund Haverford serves as Chief Executive Officer of the Pinnacle Atlantic Group. Pinnacle Atlantic maintains a United States office at 1285 Avenue of the Americas, 28th Floor, New York, New York 10019, from which it conducts a substantial portion of its North American reinsurance business. For fiscal year 2025, Pinnacle Atlantic reported gross reinsurance assumed of approximately $9.6 billion. Pinnacle Atlantic is one of the largest global professional reinsurers, transacting business across property, casualty, specialty, and life and annuity lines.
Broadreach Intermediaries Inc. Broadreach Intermediaries Inc. is a New York-licensed reinsurance intermediary with offices at 100 Wall Street, 18th Floor, New York, New York 10005. Broadreach served as the designated intermediary broker under Treaty Article 9 (Intermediary Clause), acting as the conduit for the delivery of all notices, premium payments, loss reports, and other communications between QC&S and Pinnacle Atlantic during the term of the Treaty. James "Jamie" Castellano, a Senior Vice President at Broadreach, served as the account executive responsible for the placement, ongoing administration, and renewal of the Treaty. (Engström Aff. ¶¶ 8–10, attached hereto as Exhibit E.)
B. The Treaty and Its Arbitration Clause
Treaty Structure and Terms. Treaty No. PA-QCS-2019-EXL-0044 is an aggregate excess-of-loss reinsurance treaty, effective as of 12:01 a.m. Eastern Time on July 1, 2019, for an initial term of five years through 11:59 p.m. Eastern Time on June 30, 2024. (A true and complete copy of the executed Treaty is attached hereto as Exhibit A.) The Treaty provides for automatic annual extensions unless either party gives at least 90 days' written notice of non-renewal prior to the applicable anniversary date. Pursuant to this renewal mechanism, the Treaty was extended through June 30, 2025, and again through June 30, 2026, for a total of two one-year extensions beyond the initial term. On October 1, 2025, Pinnacle Atlantic delivered a written non-renewal notice to QC&S through Broadreach, advising that it would not extend the Treaty beyond June 30, 2026. Accordingly, the Treaty will lapse at the end of its current annual period on June 30, 2026, subject to the survival of ongoing obligations including, critically, the arbitration clause. (Engström Aff. ¶¶ 12–16.)
Under the Treaty, QC&S cedes to Pinnacle Atlantic aggregate net incurred losses in excess of an annual aggregate retention of $120,000,000 per treaty year, up to a cession limit of $200,000,000 per treaty year — thereby providing coverage for losses between $120,000,000 and $320,000,000 in any given treaty year. The Treaty covers QC&S's commercial general liability, excess and umbrella liability, and professional liability (including errors and omissions) lines of business. The provisional treaty premium rate is 42% of ceded earned premium, subject to a sliding-scale adjustment with a minimum rate of 35% and a maximum rate of 52%, determined based on treaty-year loss experience at 36 months of development. (Treaty Art. 3; Engström Aff. ¶¶ 17–20.)
The Treaty designates New York law as the governing law (Treaty Art. 16) and was placed through Broadreach Intermediaries, with all communications and transactions conducted through the intermediary in New York.
The Arbitration Clause — Treaty Article 22. Treaty Article 22, titled "Arbitration," provides in relevant part:
"22.1 Any dispute arising out of or relating to the formation, interpretation, performance, or breach of this Treaty, including but not limited to any question regarding its existence, validity, or termination, shall be referred to and finally resolved by arbitration administered under the Rules of ARIAS-U.S. in effect at the time of the arbitration.
22.2 The arbitration panel shall consist of three (3) arbitrators, each of whom shall be a current or former officer of an insurance or reinsurance company, or a current or former Lloyd's underwriter. The Cedent and the Reinsurer shall each appoint one (1) arbitrator within thirty (30) days of the commencement of the arbitration proceeding. The two party-appointed arbitrators shall select a neutral umpire within thirty (30) days of their appointment. If the party-appointed arbitrators cannot agree on an umpire, either party may request that ARIAS-U.S. appoint the umpire in accordance with its procedures.
22.3 The seat of arbitration shall be New York, New York.
22.4 The arbitration panel shall base its decision on the terms and conditions of this Treaty, the custom and usage of the insurance and reinsurance industry, and, to the extent applicable, the substantive law of New York, without regard to its conflict-of-laws principles. The panel shall have the authority to award any remedy or relief that would be available from a court of competent jurisdiction, including but not limited to interim or injunctive relief.
22.5 All proceedings and evidence shall be kept confidential by the parties and the arbitrators, except as may be required by law or regulation.
22.6 The arbitration award shall be final and binding upon the parties. Judgment upon the award may be entered in any court of competent jurisdiction."
(Treaty Art. 22, Ex. A at 47–48.)
The language of Article 22.1 is unmistakably broad. By its express terms, it encompasses "any dispute arising out of or relating to the formation, interpretation, performance, or breach" of the Treaty — language that, as demonstrated in the Argument section below, constitutes the broadest type of arbitration clause recognized under both New York and federal law. The clause further encompasses disputes regarding the Treaty's "existence, validity, or termination," thereby capturing even challenges to the enforceability of the Treaty itself.
Negotiation and Execution. The Treaty was negotiated over a period of approximately four months, from March 2019 through late June 2019, between QC&S's reinsurance team (led by Tobias Engström, Senior Vice President, Reinsurance & Capital Markets, QIH) and Pinnacle Atlantic's treaty underwriting team, with Broadreach serving as the intermediary. (Engström Aff. ¶¶ 21–26.) The arbitration clause was included in the initial draft circulated by Broadreach and was accepted by both parties without material modification. This is consistent with the universal practice in the reinsurance industry, where arbitration clauses are standard features of virtually all treaty agreements. The Treaty was signed by Mr. Engström on behalf of QC&S and by Alastair Prentice, Senior Vice President of Treaty Underwriting, on behalf of Pinnacle Atlantic, on June 28, 2019. (Engström Aff. ¶ 27; Treaty signature page, Ex. A at 56.)
C. The Dispute
The dispute between the parties concerns $78,400,000 in aggregate reinsurance recoverables billed by QC&S under the Treaty for Treaty Years 2022 and 2023.
Treaty Year 2022 (July 1, 2022 through June 30, 2023): QC&S reported aggregate net incurred losses of $189,700,000, exceeding the annual aggregate retention of $120,000,000 by $69,700,000. Accordingly, QC&S billed Pinnacle Atlantic for a ceded loss of $69,700,000. This represented the largest single-year cession under the Treaty since inception, driven principally by (i) the Meridian Docks mass tort cluster (approximately $41,200,000 in net incurred losses allocated to TY 2022) and (ii) the Veridian Financial Services E&O cluster settlement ($34,500,000 in net incurred losses allocated to TY 2022). (Engström Aff. ¶¶ 30–34.)
Treaty Year 2023 (July 1, 2023 through June 30, 2024): QC&S reported aggregate net incurred losses of $128,700,000, exceeding the annual aggregate retention of $120,000,000 by $8,700,000. Accordingly, QC&S billed Pinnacle Atlantic for a ceded loss of $8,700,000. (Engström Aff. ¶¶ 35–37.)
In total, QC&S billed and Pinnacle Atlantic paid $78,400,000 in reinsurance recoverables across seven billing installments between October 15, 2022 and March 29, 2024. Each billing was submitted through Broadreach in accordance with the Treaty's reporting and settlement procedures set forth in Article 8 (Reporting and Settlement). Pinnacle Atlantic paid each installment without reservation or objection at the time of payment. (Engström Aff. ¶¶ 38–42.)
On December 12, 2025, Pinnacle Atlantic, through its in-house counsel, sent a reservation-of-rights letter to QC&S. The letter stated, in general terms, that Pinnacle Atlantic was "reviewing the validity and propriety of cessions under Treaty Years 2022 and 2023" and reserved all rights with respect thereto. The letter did not identify any specific claims or grounds for challenge. (Engström Aff. ¶ 43.)
On February 14, 2026, HFC, on behalf of Pinnacle Atlantic, sent a pre-suit demand letter to QC&S demanding the return of the full $78,400,000 in reinsurance recoverables, plus $12,600,000 in alleged interest calculated at approximately 8% per annum over an average 24-month period, for a total demand of $91,000,000. (A true and complete copy of the HFC demand letter is attached hereto as Exhibit B.) The demand letter set forth four specific grounds for Pinnacle Atlantic's claims, each of which is addressed below. Critically, the demand letter included a single sentence, buried in the penultimate paragraph, asserting that the arbitration clause in Article 22 is "inapplicable to the specific claims raised." No analysis, reasoning, or legal authority was provided in support of this assertion. (Ex. B at 11.)
D. Pinnacle Atlantic's Four Grounds — All Treaty-Based
The HFC demand letter identified four specific grounds for Pinnacle Atlantic's claims. As set forth below, each ground is rooted in a specific article of the Treaty and constitutes a quintessential treaty dispute.
1. Late Notice (Article 7). Pinnacle Atlantic's first claim alleges that QC&S failed to timely notify Pinnacle Atlantic, through Broadreach, of the Meridian Docks mass tort cluster. The Meridian Docks cluster consists of 31 commercial general liability claims arising under Policy No. CGL-2020-09844, issued to Meridian Docks Development LLC, a commercial real estate developer. The claims allege personal injuries sustained by construction workers and building occupants as a result of alleged exposure to defective construction materials at several Meridian Docks project sites in the greater New York metropolitan area.
QC&S first established reserves for the Meridian Docks claims on or about March 15, 2021. Notice of the claims was provided to Pinnacle Atlantic through Broadreach on May 22, 2022 — a gap of approximately 14 months and 7 days between the initial reserving and the notification to the reinsurer. Pinnacle Atlantic contends that this delay constitutes a breach of Article 7 of the Treaty, which requires QC&S to provide "prompt notice" of all claims or occurrences that may reasonably be expected to result in a recovery under this Treaty. (Treaty Art. 7.1; Ex. B at 3–5.)
QC&S's position, as communicated in the March 18, 2026 response letter, is that the notification was timely under Article 7 because, at the time of initial reserving, the Meridian Docks claims were in their earliest stages, and QC&S had no reasonable basis to conclude that the claims would ultimately aggregate to a level that would pierce the $120,000,000 treaty-year retention. It was not until the spring of 2022 that the scope and severity of the claims became apparent. (Ex. C at 4–6; Engström Aff. ¶¶ 44–49.)
Regardless of which party's interpretation of Article 7 is correct, this claim is manifestly a dispute "arising out of or relating to the . . . interpretation [and] performance" of the Treaty.
2. IBNR Misallocation (Article 5). Pinnacle Atlantic's second claim alleges that QC&S improperly allocated $22,300,000 in incurred but not reported ("IBNR") reserve strengthening to Treaty Year 2022 instead of Treaty Year 2021. Article 5 of the Treaty defines "losses incurred" for purposes of determining the aggregate net incurred loss in each treaty year. Pinnacle Atlantic contends that the $22,300,000 in IBNR development, which related to claims with occurrence dates in TY 2021, should have been allocated to TY 2021 under Article 5's "losses incurred" definition, and that by allocating the development to TY 2022, QC&S artificially inflated the TY 2022 aggregate and caused a recovery against Pinnacle Atlantic that would not have occurred had the development been allocated to TY 2021 (where the aggregate net incurred loss would not have reached the $120,000,000 retention). (Ex. B at 5–7.)
QC&S's position is that Article 5 defines "losses incurred" based on the date of reserve booking, not the occurrence date, and that the $22,300,000 in reserve strengthening was properly recognized in TY 2022 when it was first booked on QC&S's statutory financial statements. (Ex. C at 6–8; Engström Aff. ¶¶ 50–54.)
This claim is self-evidently a dispute about the "interpretation" of Article 5 of the Treaty.
3. Follow-the-Fortunes (Article 11). Pinnacle Atlantic's third claim challenges the propriety of QC&S's settlement of the Veridian Financial Services E&O cluster under the follow-the-fortunes doctrine codified in Article 11 of the Treaty. The Veridian Financial Services cluster involved three related professional liability claims arising under Policy No. PL-2021-15327, issued to Veridian Financial Services, Inc., a financial advisory firm. The three claims — designated Claim A ($14,200,000), Claim B ($12,800,000), and Claim C ($7,500,000) — were settled by QC&S in a single settlement on September 8, 2023, for an aggregate amount of $34,500,000. (Ex. B at 7–9.)
Article 11 of the Treaty provides that Pinnacle Atlantic shall "follow the fortunes" of QC&S with respect to claims settlements, provided that such settlements are made "in good faith and in a businesslike manner." Pinnacle Atlantic contends that QC&S's settlement of the Veridian cluster lacked good faith and businesslike conduct because, in Pinnacle Atlantic's view, the settlement amounts were excessive relative to the probable exposure and because QC&S allegedly failed to conduct adequate investigation of the merits of Claim C before agreeing to settle. (Ex. B at 7–9.)
QC&S strongly disputes these contentions and maintains that the Veridian settlement was made in good faith, at arm's length, following extensive evaluation of the underlying claims by QC&S's professional liability claims team, outside counsel, and an independent coverage consultant. (Ex. C at 8–10; Engström Aff. ¶¶ 55–62.)
This claim is, by its very terms, a dispute about the "performance" of the Treaty and the "interpretation" of Article 11.
4. Premium Underreporting (Article 3). Pinnacle Atlantic's fourth claim alleges that QC&S underreported ceded earned premium to Pinnacle Atlantic by $6,800,000. Under Article 3 of the Treaty, QC&S is obligated to report ceded earned premium to Pinnacle Atlantic quarterly, and the treaty premium payable by QC&S is calculated as a percentage of ceded earned premium. Pinnacle Atlantic contends that QC&S reported $38,400,000 in ceded earned premium for the relevant periods, whereas Pinnacle Atlantic's own calculations indicate that $45,200,000 should have been reported — a difference of $6,800,000. At the provisional treaty premium rate of 42%, this alleged underreporting would result in an underpayment of treaty premium of $2,856,000. (Ex. B at 9–10.)
QC&S's position is that the $6,800,000 discrepancy arises from Pinnacle Atlantic's improper inclusion of run-off portfolio transfer premiums that are expressly excluded from the calculation of ceded earned premium under Article 3.4 of the Treaty. QC&S maintains that its premium reporting is accurate and consistent with Article 3's definitions. (Ex. C at 10–12; Engström Aff. ¶¶ 63–68.)
This claim is plainly a dispute about the "interpretation" and "performance" of Article 3 of the Treaty.
E. QC&S's Invocation of Arbitration
Upon receipt of the HFC demand letter, QC&S promptly retained Calderwood & Harkness LLP. Calderwood & Harkness was retained on March 2, 2026. (Engström Aff. ¶ 69.)
On March 18, 2026, Calderwood & Harkness, on behalf of QC&S and QIH, sent two letters to HFC. The first letter was a substantive response to the demand letter, setting forth QC&S's positions on each of the four grounds raised by Pinnacle Atlantic and rejecting the demand in its entirety. (A true and complete copy of the response letter is attached hereto as Exhibit C.) The second letter was a formal Demand to Arbitrate, expressly invoking Treaty Article 22 and formally demanding that all disputes between the parties be submitted to arbitration before a three-member panel in New York, New York, under the ARIAS-U.S. Rules. (A true and complete copy of the Demand to Arbitrate letter is attached hereto as Exhibit D.) In the Demand to Arbitrate, QC&S notified Pinnacle Atlantic of its intention to appoint its party-appointed arbitrator and requested that Pinnacle Atlantic appoint its own arbitrator within 30 days in accordance with Article 22.2 and ARIAS-U.S. Rule 4.
Pinnacle Atlantic did not respond to the Demand to Arbitrate. Instead, on or about April 7, 2026, Pinnacle Atlantic filed the instant action, commencing litigation in this Court in direct disregard of the mandatory arbitration provision to which it agreed. This motion to compel arbitration and stay litigation follows.
ARGUMENT
POINT I
THE COURT SHOULD COMPEL ARBITRATION BECAUSE THE TREATY CONTAINS A VALID AND ENFORCEABLE AGREEMENT TO ARBITRATE
A. Legal Standard for Compelling Arbitration Under CPLR § 7503(a)
Under CPLR § 7503(a), "[a] party aggrieved by the failure of another to arbitrate may apply for an order compelling arbitration." The statute provides that "[w]here there is no substantial question whether a valid agreement was made or complied with, . . . the court shall direct the parties to arbitrate." This standard reflects New York's longstanding and well-established public policy favoring the enforcement of agreements to arbitrate, a policy that the Court of Appeals has recognized is of particular force in the commercial context.
The Court of Appeals has consistently held that, in ruling on a motion to compel arbitration, the court's inquiry is narrowly circumscribed. The court must determine: (1) whether a valid agreement to arbitrate exists between the parties; (2) whether the dispute at issue falls within the scope of that agreement; and (3) whether any recognized defense to arbitration — such as waiver, revocation, fraud in the inducement of the arbitration clause itself, or unconscionability — has been established. Matter of Smith Barney Shearson Inc. v. Sacharow, 91 N.Y.2d 39, 49 (1997); Matter of Nationwide Gen. Ins. Co. v. Investors Ins. Co. of Am., 37 N.Y.2d 91, 95 (1975). The court does not inquire into the merits of the underlying dispute. Diamond Waterproofing Sys., Inc. v. 55 Liberty Owners Corp., 4 N.Y.3d 247, 252 (2005) ("The court's role is limited to determining threshold issues of arbitrability and does not extend to the substantive merits of the dispute.").
The strong public policy favoring arbitration means that, where a valid and broad arbitration agreement exists, "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25 (1983); accord Smith Barney, 91 N.Y.2d at 49. This presumption of arbitrability is not merely an interpretive canon; it is a substantive principle that reflects the judiciary's respect for the parties' contractual choice of a dispute-resolution forum. As the Court of Appeals has explained, arbitration is "a creature of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit," Cooper v. Ateliers de la Motobecane, S.A., 57 N.Y.2d 408, 412 (1982), but where the parties have agreed to a broad arbitration clause, the agreement will be enforced according to its terms.
The burden is on the party resisting arbitration to demonstrate that the dispute falls outside the scope of the arbitration agreement or that a recognized defense applies. Flores v. Lower E. Side Serv. Ctr., Inc., 4 N.Y.3d 363, 374 (2005). Where, as here, the arbitration clause uses the broadest possible language — "any dispute arising out of or relating to" the agreement — the party opposing arbitration bears a particularly heavy burden. It is "only when it can be said with positive assurance that the arbitration clause is not susceptible of an interpretation covering the disputed matter" that the court may deny a motion to compel arbitration. Diamond Waterproofing, 4 N.Y.3d at 252.
These principles apply with particular force in the commercial reinsurance context, where arbitration has been the customary and preferred method of dispute resolution for well over a century. Courts in New York recognize that reinsurance disputes typically involve complex factual and technical issues — including questions of actuarial methodology, reserving practices, coverage allocation, and industry custom — that are best resolved by arbitrators with specialized experience in the reinsurance industry, rather than by generalist courts. See Ostrager & Newman, Handbook on Insurance Coverage Disputes § 16.01 (20th ed. 2023) ("Arbitration is the predominant method for resolving disputes under reinsurance contracts.").
B. The Treaty Contains a Valid Agreement to Arbitrate
There can be no serious dispute that the Treaty contains a valid, enforceable agreement to arbitrate. Treaty Article 22 is a written, bilateral agreement between QC&S (as cedent) and Pinnacle Atlantic (as reinsurer) to submit all disputes "arising out of or relating to the formation, interpretation, performance, or breach" of the Treaty to binding arbitration before a three-member panel in New York, New York, under the ARIAS-U.S. Rules. The clause satisfies every requirement for a valid arbitration agreement under both New York law and the Federal Arbitration Act.
The agreement is in writing. Both CPLR Article 75 and Section 2 of the Federal Arbitration Act require that the arbitration agreement be in writing. Treaty Article 22 is a written provision contained in a fully executed treaty agreement, signed by authorized officers of both QC&S and Pinnacle Atlantic. (Treaty Art. 22, Ex. A at 47–48; Engström Aff. ¶ 27.)
The agreement is clear and unambiguous. The language of Article 22 leaves no room for doubt as to the parties' intent. The clause requires arbitration of "any dispute" — without limitation or qualification — that arises out of or relates to the Treaty. It specifies the number and qualifications of arbitrators, the selection process, the seat of arbitration, the governing procedural rules, and the finality of the award. This is a comprehensive, well-drafted arbitration provision that reflects the deliberate choice of two sophisticated commercial parties to resolve their disputes through arbitration rather than litigation.
The agreement was entered into by sophisticated commercial parties. The Treaty was negotiated at arm's length between QC&S, a New York-domiciled insurer with $1.42 billion in statutory surplus, and Pinnacle Atlantic, a Bermuda Class 4 reinsurer with $9.6 billion in gross reinsurance assumed. Both parties are sophisticated participants in the global reinsurance market, each represented by experienced reinsurance professionals and in-house legal counsel during the negotiation and execution of the Treaty. The Treaty was placed through Broadreach Intermediaries, a licensed New York reinsurance intermediary, and the arbitration clause was reviewed and accepted by both parties during the negotiation process. (Engström Aff. ¶¶ 21–27.) These are not unsophisticated consumers or individuals who might lack the bargaining power or sophistication to understand the implications of an arbitration agreement. These are large, experienced commercial enterprises that knowingly and voluntarily agreed to arbitrate their disputes.
No challenge to the validity of the arbitration clause has been raised. Pinnacle Atlantic has not contended — either in the HFC demand letter, in its complaint, or at any other point — that Article 22 was procured through fraud, duress, undue influence, or any other infirmity that would specifically invalidate the arbitration clause. Pinnacle Atlantic does not argue that it did not agree to arbitrate, or that the arbitration clause was not part of the Treaty, or that the clause was unconscionable. The sole contention advanced by HFC is that the clause is "inapplicable to the specific claims raised" — a scope argument, not a validity argument. As demonstrated in Point II below, this scope argument fails.
For these reasons, the Court should find that a valid agreement to arbitrate exists between the parties, satisfying the first element of the CPLR § 7503(a) inquiry.
QIH is also bound by the arbitration clause. QIH, as the parent company of QC&S, executed a parent guarantee of QC&S's obligations under the Treaty, set forth in Treaty Article 24. (Treaty Art. 24, Ex. A at 51–52; Engström Aff. ¶¶ 70–72.) By executing the parent guarantee, QIH agreed to be bound by all terms and conditions of the Treaty, including the arbitration clause. QIH is therefore both entitled to invoke the arbitration clause and bound by it. Pinnacle Atlantic, having named QIH as a defendant in this action, cannot avoid arbitration with QIH any more than it can avoid arbitration with QC&S.
C. Alternative Basis: The Federal Arbitration Act Applies
In addition to CPLR Article 75, the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1–16, provides an independent and alternative basis for compelling arbitration and staying this action.
The Treaty involves interstate and international commerce. The FAA applies to any "written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract." 9 U.S.C. § 2. The term "involving commerce" is interpreted broadly to reach the full extent of Congress's commerce power. Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 273–74 (1995). Here, the Treaty is a reinsurance agreement between a New York-domiciled insurer and a Bermuda-domiciled reinsurer, placed through a New York intermediary, involving the cession of risk on a national portfolio of commercial liability insurance policies. The premiums and claims payments flowed across state and international boundaries throughout the Treaty's term. There can be no doubt that the Treaty "involves commerce" within the meaning of the FAA.
The FAA mandates enforcement of the arbitration agreement. Section 2 of the FAA provides that written agreements to arbitrate in contracts involving commerce "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The Supreme Court has repeatedly emphasized that Section 2 reflects "a liberal federal policy favoring arbitration agreements." Moses H. Cone, 460 U.S. at 24; Camberwell Enterprises Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). This policy requires courts to enforce arbitration agreements according to their terms and to resolve any ambiguities regarding scope in favor of arbitration. Mastrobuono v. Shearson Lehman Marvelo, Inc., 514 U.S. 52, 62 (1995); Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985).
The FAA provides for both a stay and an order to compel. Under Section 3 of the FAA, a court "shall" stay proceedings in any action referable to arbitration under the agreement. 9 U.S.C. § 3. The stay is mandatory, not discretionary. Under Section 4, a party "aggrieved by the alleged failure, neglect, or refusal of another to arbitrate" may petition the court for "an order directing that such arbitration proceed in the manner provided for in such agreement." 9 U.S.C. § 4.
The FAA applies in state court. It is well established that the FAA applies in state court proceedings. The FAA's substantive provisions — including Section 2's mandate of enforceability, Section 3's stay requirement, and Section 4's authority to compel arbitration — are applicable in state court by virtue of the Supremacy Clause. See Concepcion, 563 U.S. at 341–42. This Court therefore has authority to apply the FAA as an alternative basis for compelling arbitration and staying this action.
The result is the same under either framework. Whether this Court analyzes the motion under CPLR Article 75 or the FAA, the outcome is identical. Both frameworks require enforcement of valid written arbitration agreements, both establish a strong presumption of arbitrability, and both require a stay of litigation pending arbitration where the claims are referable to arbitration. Defendants invoke both frameworks in the alternative to ensure that the Court has a complete basis for granting the relief requested.
POINT II
ALL OF PINNACLE ATLANTIC'S CLAIMS FALL WITHIN THE SCOPE OF THE ARBITRATION CLAUSE
A. The Arbitration Clause Is Broad and Encompasses All Treaty-Related Disputes
Having established that a valid agreement to arbitrate exists, the Court must next determine whether the disputes at issue fall within the scope of that agreement. Here, they plainly do.
Treaty Article 22.1 provides for arbitration of "any dispute arising out of or relating to the formation, interpretation, performance, or breach of this Treaty." This is the broadest possible formulation of an arbitration clause. Courts in New York and the Second Circuit have consistently recognized the critical distinction between narrow arbitration clauses — which are limited to disputes "arising under" the contract — and broad arbitration clauses — which cover disputes "arising out of or relating to" the contract. See Collins & Aikman Prods. Co. v. Bldg. Sys., Inc., 58 F.3d 16, 20 (2d Cir. 1995); Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc., 252 F.3d 218, 224 (2d Cir. 2001). The "arising out of or relating to" formulation is the gold standard of broad arbitration clauses, and courts have repeatedly held that it "create[s] a presumption of arbitrability" that is overcome only if the opposing party can demonstrate "with positive assurance" that the clause is "not susceptible of an interpretation that covers the asserted dispute." WorldCrisa Corp. v. Armstrong, 129 F.3d 71, 74 (2d Cir. 1997) (quoting Camberwell Enterprises Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 650 (1986)); JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 172 (2d Cir. 2004).
The Second Circuit has explained that the phrase "relating to" in an arbitration clause is "deliberately broad," and has been interpreted to capture disputes that have a "significant relationship" to the contract, even if the claim does not technically "arise under" the contract's specific provisions. Collins & Aikman, 58 F.3d at 20. Under this standard, a claim "relates to" the contract if the claim "is in any way connected to" the parties' agreement or "involves issues that can only be evaluated by reference to" the agreement's terms. Louis Dreyfus, 252 F.3d at 225.
Article 22.1 goes even further than the typical "arising out of or relating to" clause, because it explicitly identifies four categories of disputes that fall within its scope: disputes relating to the "formation, interpretation, performance, or breach" of the Treaty. This enumeration captures every conceivable type of treaty dispute — from questions about whether the Treaty was validly formed, to questions about what its provisions mean, to questions about whether the parties have performed their obligations, to questions about whether either party has breached its commitments. There is, quite literally, no type of dispute that arises from the Treaty relationship between QC&S and Pinnacle Atlantic that does not fall within the scope of Article 22.
Moreover, Article 22.1 expressly includes disputes "regarding [the Treaty's] existence, validity, or termination." This language means that even a challenge to the Treaty's enforceability or a dispute about whether the Treaty has been terminated would be for the arbitrators, not the courts, to decide. See Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002); Granite Rock Co. v. International Brotherhood of Teamsters, 561 U.S. 287, 299–300 (2010).
Against this backdrop, the question before this Court is whether Pinnacle Atlantic's four claims fall within the scope of Article 22. The answer is an emphatic yes.
B. Each of Pinnacle Atlantic's Four Claims Arises Under a Specific Treaty Article
Pinnacle Atlantic's claims do not merely "relate to" the Treaty in some attenuated sense. Each of the four claims expressly invokes a specific article of the Treaty and seeks relief based on the alleged breach or misapplication of that article. These are not collateral tort claims, statutory claims, or extra-contractual claims that might arguably lie outside the scope of the arbitration agreement. They are quintessential treaty disputes — the very type of disputes that the parties contemplated and agreed to resolve through arbitration when they executed Article 22.
Claim 1 — Late Notice (Article 7). Pinnacle Atlantic's first claim expressly invokes Article 7 of the Treaty and alleges that QC&S failed to comply with Article 7's "prompt notice" requirement by waiting approximately 14 months and 7 days to notify Pinnacle Atlantic of the Meridian Docks mass tort cluster. The claim requires interpretation of what Article 7 means by "prompt notice," determination of when QC&S's obligation to notify arose under the Treaty's terms, and evaluation of whether QC&S's conduct constituted a breach of its performance obligations. This is a textbook dispute about the "interpretation" and "performance" of the Treaty.
The notice dispute also raises factual questions uniquely suited to resolution by experienced reinsurance arbitrators — including when QC&S had a reasonable basis to believe that the Meridian Docks claims would aggregate to a level that might result in a recovery under the Treaty, and whether the applicable standard under Article 7 is based on the cedent's actual knowledge or on a reasonable-cedent standard. These are questions of reinsurance industry custom and practice that the parties specifically entrusted to a panel of "current or former officer[s] of an insurance or reinsurance company." (Treaty Art. 22.2.)
Claim 2 — IBNR Allocation (Article 5). Pinnacle Atlantic's second claim expressly invokes Article 5 of the Treaty and challenges the allocation of $22,300,000 in IBNR reserve strengthening between Treaty Years 2021 and 2022. The claim turns entirely on the interpretation of Article 5's definition of "losses incurred" — specifically, whether IBNR development is allocated to a treaty year based on the occurrence date of the underlying claims or based on the date the reserve adjustment is booked on QC&S's statutory financial statements. This is a purely contractual interpretation dispute. It arises directly under the Treaty and can be resolved only by reference to the Treaty's specific provisions. It is a dispute about the "interpretation" and "performance" of the Treaty, squarely within the scope of Article 22.
Moreover, the IBNR allocation dispute involves complex actuarial and accounting questions — including the proper application of loss development factors, the interaction between statutory reserving requirements and treaty definitions, and the treatment of IBNR in the context of aggregate excess-of-loss treaties — that are ideally suited for resolution by reinsurance arbitrators with industry expertise.
Claim 3 — Follow-the-Fortunes (Article 11). Pinnacle Atlantic's third claim expressly invokes Article 11 of the Treaty and challenges whether QC&S's settlement of the Veridian Financial Services E&O cluster — comprising three related claims totaling $34,500,000 — met the standard of "good faith and . . . businesslike manner" required by Article 11 for the reinsurer's follow-the-fortunes obligation to attach. The follow-the-fortunes doctrine is a fundamental principle of reinsurance law, and its application in any particular case depends on the specific terms of the treaty and the facts and circumstances of the underlying claim. Here, Article 11 sets forth the applicable standard, and the dispute turns on whether QC&S's conduct in evaluating, negotiating, and settling the Veridian claims met that standard. This is plainly a dispute about the "performance" of the Treaty and the "interpretation" of Article 11.
It bears emphasis that the follow-the-fortunes doctrine is deeply rooted in reinsurance industry custom and practice, and questions regarding its application are routinely submitted to reinsurance arbitration panels. Indeed, the doctrine exists specifically to allocate the risk of claims-handling decisions between cedents and reinsurers within the framework of the reinsurance relationship, and disputes about its application are among the most common subjects of reinsurance arbitration. See Staring & Hansell, Law of Reinsurance § 14:4 (2024 ed.).
Claim 4 — Premium Underreporting (Article 3). Pinnacle Atlantic's fourth claim expressly invokes Article 3 of the Treaty and alleges that QC&S underreported ceded earned premium by $6,800,000, resulting in an alleged premium underpayment of $2,856,000 at the provisional 42% rate. The dispute turns on a narrow question of treaty interpretation: whether run-off portfolio transfer premiums are included in or excluded from the calculation of "ceded earned premium" under Article 3. QC&S contends that Article 3.4 expressly excludes such premiums; Pinnacle Atlantic apparently disagrees. This is a dispute about the "interpretation" and "performance" of the Treaty, squarely within the scope of Article 22.
The premium calculation dispute is a technical, treaty-specific question that requires close analysis of the Treaty's definitional provisions and their application to QC&S's book of business. It is precisely the kind of dispute that the parties agreed to submit to arbitrators with expertise in reinsurance treaty interpretation.
Summary. Each of Pinnacle Atlantic's four claims arises directly under a specific article of the Treaty. Each claim requires interpretation of the Treaty's terms and evaluation of the parties' performance under the Treaty. Each claim is therefore a dispute "arising out of or relating to the . . . interpretation, performance, or breach of [the] Treaty" within the plain meaning of Article 22.1. There is nothing remotely approaching "positive assurance" that Article 22 is "not susceptible of an interpretation" covering these disputes. To the contrary, these disputes fall squarely and unambiguously within Article 22's scope.
C. HFC's Bare Assertion That the Arbitration Clause Is "Inapplicable" Lacks Merit
In the February 14, 2026 pre-suit demand letter, HFC stated, in a single sentence without elaboration, that "the arbitration provision set forth in Article 22 of the Treaty is inapplicable to the specific claims raised herein." (Ex. B at 11.) No analysis was provided. No legal authority was cited. No reasoning was offered to explain why an arbitration clause that covers "any dispute arising out of or relating to the formation, interpretation, performance, or breach of this Treaty" would not apply to four claims that each invoke a specific article of the Treaty.
This bare, conclusory assertion falls far short of the showing required to overcome the strong presumption of arbitrability that attaches to a broad arbitration clause. As the Court of Appeals has held, the party resisting arbitration bears the burden of demonstrating that the claim falls outside the scope of the arbitration clause, and that burden is not discharged by a naked assertion of inapplicability. See Flores, 4 N.Y.3d at 374; Smith Barney, 91 N.Y.2d at 49–50.
Characterization of claims does not defeat arbitrability. To the extent Pinnacle Atlantic may argue at the hearing on this motion that its claims sound in tort (e.g., fraudulent misrepresentation), unjust enrichment, restitution, or some other cause of action independent of the Treaty, such an argument is unavailing. New York courts have consistently held that the characterization of a claim — whether as a contract claim, a tort claim, or an equitable claim — does not determine whether it is arbitrable. Rather, the Court looks to whether the claim "relates to" the parties' agreement. See Collins & Aikman, 58 F.3d at 20 (finding tort claims arbitrable where they "relat[ed] to" the contract containing the arbitration clause); JLM Indus., 387 F.3d at 172–73 (same). Here, every single claim alleged by Pinnacle Atlantic — whatever label may be affixed to it — is "inextricably intertwined" with the Treaty. Pinnacle Atlantic's demand for the return of $78,400,000 in reinsurance recoverables can only be understood by reference to the Treaty under which those payments were made. Each ground advanced in support of the demand — late notice, IBNR misallocation, follow-the-fortunes, premium underreporting — is defined by, and can only be evaluated against, the Treaty's specific provisions. There is no freestanding, independent claim that exists outside the Treaty relationship.
The interest demand does not defeat arbitrability. To the extent Pinnacle Atlantic may contend that its demand for $12,600,000 in interest falls outside the arbitration clause because it involves statutory or common-law obligations independent of the Treaty, this argument likewise fails. The interest claim is entirely derivative of the underlying demand for return of reinsurance recoverables. If the recoverables claims are arbitrable — and they plainly are — the associated interest claim is arbitrable as well. A party cannot carve out a derivative monetary demand and use it as a wedge to avoid arbitration of the underlying substantive claims. See Louis Dreyfus, 252 F.3d at 225–26. Moreover, Treaty Article 22.4 expressly empowers the arbitration panel to "award any remedy or relief that would be available from a court of competent jurisdiction," which would include interest on any amounts found to be owed.
The absence of analysis in HFC's letter is telling. The fact that HFC did not — and could not — articulate any reasoned basis for its assertion that Article 22 is "inapplicable" is itself compelling evidence that the assertion lacks merit. Experienced reinsurance litigators such as Mr. Calloway and Ms. Subramanian are well aware that arbitration clauses using "arising out of or relating to" language are presumptively applicable to all disputes connected to the underlying agreement. If there were a legitimate basis for arguing that these four treaty-based claims somehow fall outside Article 22's scope, HFC would have articulated it. The silence speaks volumes.
D. The Presumption of Arbitrability Is Especially Strong in Reinsurance
Even if there were any ambiguity regarding the scope of Article 22 — and there is none — the Court should resolve that ambiguity in favor of arbitration, particularly given the reinsurance context of this dispute.
Arbitration is the overwhelmingly predominant method for resolving disputes under reinsurance contracts. As the Second Circuit has recognized, "[a]rbitration provisions are an integral part of the reinsurance relationship" and "the reinsurance industry has a well-established tradition of resolving disputes through arbitration." Hartford Acc. & Indem. Co. v. Marlowe Indemnity Co., 246 F.3d 219, 226 (2d Cir. 2001). This tradition dates back more than a century and reflects the industry's recognition that reinsurance disputes are best resolved by panels of experienced reinsurance professionals who understand the technical complexities, business practices, and customs of the industry. See Scandinavian Reins. Co. v. Saint Paul Fire & Marine Ins. Co., 668 F.2d 60, 63–64 (2d Cir. 1981) (recognizing "the strong federal policy in favor of the arbitral resolution of disputes and the longstanding practice by the reinsurance industry of submitting disputes to arbitration").
New York courts, too, have recognized the particular importance of arbitration in the reinsurance industry. Reinsurance disputes frequently involve complex actuarial questions, reserving practices, allocation methodologies, industry customs, and technical treaty interpretation issues that are poorly suited for resolution by generalist judges or lay juries. By contrast, the ARIAS-U.S. Rules — which govern the arbitration under the Treaty — provide for a panel of arbitrators who are "current or former officer[s] of an insurance or reinsurance company, or . . . current or former Lloyd's underwriter[s]" (Treaty Art. 22.2) — individuals with the specialized expertise needed to evaluate the parties' claims fairly and efficiently.
ARIAS-U.S. was founded in 1994 specifically to provide an organized, professional framework for the resolution of reinsurance and insurance disputes through arbitration. The adoption of ARIAS-U.S. Rules in the Treaty reflects a deliberate, informed choice by QC&S and Pinnacle Atlantic to submit their disputes to this specialized forum. See ARIAS-U.S., Practical Guide to Reinsurance Arbitration Procedure at 1–3 (5th ed. 2021) (describing the purpose and history of ARIAS-U.S. and its role in promoting efficient, expert resolution of reinsurance disputes).
The claims at issue here are textbook reinsurance arbitration disputes. They involve the interpretation of treaty notice provisions (Article 7), the application of loss-incurred definitions and IBNR reserving practices (Article 5), the follow-the-fortunes doctrine and the evaluation of claims-handling decisions (Article 11), and the calculation of ceded earned premium under complex treaty definitions (Article 3). These are the very types of disputes that reinsurance arbitration exists to resolve. The parties recognized this when they agreed to Article 22, and this Court should give full effect to that agreement.
The Second Circuit has noted that courts should be especially reluctant to interfere with the arbitral process in the reinsurance context, where the parties have specifically chosen arbitration as their dispute-resolution mechanism and where the subject matter of the dispute requires specialized industry expertise. See Hartford Acc. & Indem. Co., 246 F.3d at 226–27; Citizens Cas. Co. of N.Y. v. Employers Ins. of Wausau, 75 F.3d 764, 768–69 (2d Cir. 1996); N. Am. Reinsurance Corp. v. Pine Top Ins. Co., 800 F. Supp. 1188, 1191 (S.D.N.Y. 1992). That principle applies with full force here.
POINT III
PINNACLE ATLANTIC HAS NOT ESTABLISHED ANY DEFENSE TO ARBITRATION
Even where a valid arbitration agreement exists and the dispute falls within its scope, the court must consider whether the party resisting arbitration has established a recognized defense. Here, Pinnacle Atlantic has not raised — and cannot establish — any defense to arbitration.
A. No Waiver
Waiver of the right to arbitrate requires a showing that the party seeking arbitration engaged in litigation conduct so inconsistent with an intent to arbitrate that it would be inequitable to permit the party to invoke the arbitration clause. Waiver is not to be lightly inferred, and courts require a showing of both (i) extensive litigation activity and (ii) prejudice to the opposing party. See Flores, 4 N.Y.3d at 374–75.
Here, QC&S has not engaged in any litigation activity that could conceivably constitute a waiver. The procedural chronology is as follows:
• February 14, 2026: HFC sends pre-suit demand letter on behalf of Pinnacle Atlantic.
• March 2, 2026: QC&S retains Calderwood & Harkness.
• March 18, 2026: Calderwood & Harkness sends response letter rejecting Pinnacle Atlantic's claims and simultaneously sends Demand to Arbitrate invoking Article 22.
• April 7, 2026 (approx.): Pinnacle Atlantic files the instant action without responding to the Demand to Arbitrate.
• April __, 2026: QC&S files the instant motion to compel arbitration and stay litigation.
QC&S demanded arbitration within 16 days of retaining counsel. It has not filed an answer, has not participated in discovery, has not filed any dispositive motion, and has not engaged in any conduct inconsistent with the right to arbitrate. To the contrary, QC&S's very first substantive act following the commencement of this dispute was to invoke the arbitration clause and demand arbitration.
To the extent Pinnacle Atlantic might argue that QC&S's participation in the pre-suit demand and response process constitutes a waiver, this argument is without merit. Pre-suit correspondence between parties and their counsel is a routine precursor to both litigation and arbitration. Responding to a demand letter and rejecting its claims — while simultaneously demanding arbitration — is entirely consistent with the right to arbitrate. There is no authority for the proposition that pre-suit correspondence, without more, constitutes waiver of an arbitration clause.
Moreover, Pinnacle Atlantic cannot credibly claim prejudice from any alleged delay. QC&S demanded arbitration before Pinnacle Atlantic even filed suit. Pinnacle Atlantic has not expended resources on litigation discovery or motion practice that would be wasted if the matter were referred to arbitration. There is, in short, no basis for a waiver defense.
B. No Revocation or Repudiation of the Arbitration Agreement
Pinnacle Atlantic has not contended that the arbitration agreement has been revoked, repudiated, or terminated. Nor could it. The Treaty remains in effect through June 30, 2026, and even after the Treaty lapses, the arbitration clause survives as to disputes arising during the Treaty term. Article 22 does not contain any sunset or expiration provision, and the disputes at issue relate to Treaty Years 2022 and 2023 — periods squarely within the Treaty term.
It is worth noting the fundamental inconsistency in Pinnacle Atlantic's position. Pinnacle Atlantic's entire complaint is premised on the assertion that QC&S breached the Treaty — specifically, Articles 3, 5, 7, and 11. Pinnacle Atlantic seeks to enforce these Treaty provisions in its favor and recover $91,000,000 based on alleged Treaty violations. At the same time, Pinnacle Atlantic seeks to avoid Article 22 — the Treaty's dispute-resolution mechanism — which is contained in the very same agreement. This is impermissible cherry-picking. A party cannot invoke the substantive provisions of a contract in its favor while simultaneously repudiating the contract's dispute-resolution clause. See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 449 (2006); Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403–04 (1967).
Under the well-established separability doctrine, the arbitration clause is treated as an agreement independent of the underlying contract. Prima Paint, 388 U.S. at 402–04; Buckeye, 546 U.S. at 445–46; Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 70–71 (2010). This means that even if there were questions about the validity of other Treaty provisions — and there are not — the arbitration clause would survive as a severable agreement and remain enforceable. The separability doctrine ensures that a party cannot defeat an arbitration clause by attacking the contract in which it is contained, because challenges to the contract

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK — COMMERCIAL DIVISION

PINNACLE ATLANTIC REINSURANCE LTD.,

TABLE OF CONTENTS

TABLE OF AUTHORITIES

PRELIMINARY STATEMENT

STATEMENT OF FACTS

ARGUMENT

POINT I

POINT II

ALL OF PINNACLE ATLANTIC'S CLAIMS FALL WITHIN THE SCOPE OF THE ARBITRATION CLAUSE

POINT III

PINNACLE ATLANTIC HAS NOT ESTABLISHED ANY DEFENSE TO ARBITRATION

Record

Parties

Dates

Amounts