RiverStone Management is a leader in run-off, claim resolution, rein-surance, recovery and dispute resolution. The company has been owned by Toronto and New York-listed financial services group Fairfax Financial Holdings since 1999.
Catherine Regan is RiverStone’s general counsel and company secretary. She joined in 1999 from chemical company Rohm and Haas. Her role includes providing corporate, legal, compliance and regulatory advice to RiverStone. “My job on the corporate side was to simplify the legal structure so that we have a nice slimmed-down corporate structure, with very little fat – much like a supermodel,” says Regan. Working closely with Denton Wilde Sapte, in 2004 RiverStone transferred substantially all of the business that was underwritten by Sphere Drake Insurance into RiverStone Insurance under Part VII of the Financial Services and Markets Act 2000 (FSMA). The exercise involved $517.3m (£300.6m) of gross loss reserves and 13 insurance companies transferring all or part of their businesses into RiverStone Insurance.
During 2004, Regan’s team worked closely with the Financial Services Authority and overcame the opposition to its application to the High Court in order to obtain the approvals that were necessary to complete the transfer. This required detailed considerations of the laws in Bermuda and in several European jurisdictions.
The process also squeezed 13 separate applications into one process and was achieved within a strict deadline by the relatively small in-house legal function. Additionally, two of the companies had undergone schemes of arrangement, so the business was being transferred from these schemed companies into a company that had not undergone a scheme.
In July 2005, Regan’s team overcame several obstacles to obtain legal recognition of the Part VII transfer in the US. This was an ambitious goal because an application to obtain recognition for a similar Part VII transfer had previously been denied by the US courts.
The overall effect of the Part VII process was to transform the administration of the business that was subject to the transfer, which has previously been a heavy burden for all of the participant companies and had involved complicated agency agreements.
“Now we have a large reinsurance repository with the economies of scale that brings,” explains Regan. “We have also moved two French portfolios to RiverStone Insurance under the French Civil Code, which is a much more magical and quick process than a Part VII transfer or a scheme of arrangement. We use creative legal mechanisms to transfer liabilities and create a streamlined legal strucure,” she adds.
The legal team splits the in-house function in two. The litigation section has three in-house lawyers, while Regan’s corporate side has another in-houser.
Regan says: “It’s definitely beneficial to have a strong in-house team as it keeps legal costs down. It also results in a more mature relationship with firms. We don’t expect them to tell us what to do, we go to them with ideas and we work together to see if we can achieve our vision.”
RiverStone tries to handle most legal work in-house. However, it outsources some litigation work to Clyde & Co, while Lovells handles US law issues for the company from time-to-time.
“You can’t do a Part VII transfer or a complicated corporate restructure without hiring an outside lawyer. But we do go to them with an idea. It’s a partnership so consequently you need to get on with people,” explains Regan.
Regan claims the company’s dual legal functions – litigation and corporate – work well together. “We just have to make sure that we have enough resources and continually strive to ensure we’re delivering the service to the company at every level.”
As well as running-off its existing portfolios, RiverStone will continue to look for new run-off opportunities that are consistent with its existing holdings. “Obviously, like the rest of the market we’re assessing the impact of the BAIC decision on our future plans. We’re also very aware of the need to respond to enhanced regulation of the financial services market and the need for increasing focus on compliance and good corporate governance,” says Regan.
But amid all this, Regan still finds time to do Brighton’s 10km run – in fact 15 people from RiverStone entered this year.
Director, general counsel and
|Annual UK legal spend||£2m|
|Employees in the UK||135|
|Director, general counsel and company secretary||Catherine Regan|
|Reporting to||Managing director, Nick Bentley|
|Main law firms||Clyde & Co, Denton Wilde Sapte, Lovells, Lord Bissell & Brook|