GE Re Seeks $42 Million, Contract Rescission

January 9, 2002

GE Reinsurance Corp. has reportedly demanded that Pennsylvania-based Harleysville Group Inc., and its parent company Harleysville Mutual, repay some $42 million in losses incurred by GE, stemming from an agreement made in 1999 covering automobile policies placed by a managing general agent in California. It’s also seeking to rescind the agreement and to stop making payments under it.

Although neither company has so far directly commented on the claims, reports from Reuters News Agency and CBS Market Watch both indicated that GE sent Harleysville a demand for payment and rescission at the end of December. The letter, which also demanded the repayment of some $42 million, apparently alleged that there were significant nondisclosures of material facts by Harleysville at the time the agreement was signed. No details of the of the nature of these misrepresentations has yet been made available.

GE’s notice also requested asked for arbitration of the dispute. Harleysville has denied that there were any nondisclosures, calling the GE claims “wholly without merit,” and has indicated that it would defend against them in state and federal courts, rather than through arbitration.

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