The Pennsylvania Supreme Court has upheld the right of policyholders in an insurance company liquidation to payment of their claims by reinsurers if the insolvent company had only acted as a "fronting company" for the policyholders.

The case dealt with the failure of Legion Insurance Co. of Philadelphia, and a sister company, Villanova Insurance Co.

A spokesman for Pennsylvania Insurance Commissioner, whose office served as liquidator of the insurance companies, said in response to the decision that the department is analyzing the decision and what it means.

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