Arent Fox partner Jule Rousseau was quoted in today’s Wall Street Journal commenting on the November 17 New York Court of Appeals decision in the closely watched insurance litigation Kramer v. Phoenix Life Insurance Co., et al., in which the court ruled that it is legal for somebody to take out a life insurance policy and immediately sell it to a stranger.

In addition to representing parties in this appeal, Mr. Rousseau and the Arent Fox Insurance Practice Group represent a number of clients whose businesses will be greatly impacted by the decision.

The Wall Street Journal reports:

The ruling is a blow to insurers and a victory for hedge funds that have bought billions of dollars of such policies in recent years, part of a controversial practice in which thousands of people have taken out life policies and quickly sold them to investors, who pay the premiums and collect when the insured dies. The case, a focus of a page-one article in The Wall Street Journal in June, involves a dispute over $56 million in life insurance taken out by the late Arthur Kramer, a Manhattan attorney who died in 2008. Just after taking out the policies, Mr. Kramer sold the right to collect on them to hedge funds.

In a 5-2 decision, the New York Court of Appeals ruled that the state’s laws allow a person to take out an insurance policy with the intent of selling it to a stranger. The majority ruled that this didn’t violate insurable-interest laws, which are intended to ban transactions tantamount to wagers on a stranger’s life.

The ruling is valid only in New York, but some legal experts predict its influence will be broader. Scores of similar disputes over alleged “stranger-originated” life insurance policies are being litigated across the U.S.

“I think Kramer will go far beyond the borders of New York and will be a very important case in settling the industry and ultimately giving greater certainty to investors that they can buy life insurance policies without fear of insurers or heirs contesting their legality,” said Julius Rousseau, an attorney at Arent Fox LLP in New York, who filed a brief in the case for the Life Insurance Settlement Association, a trade group for the policy-resale industry.

To read the full Wall Street Journal article, please click here or here.

To read the New York Court of Appeals decision, please click here.