From Global Reins. Corp. of Am. v. Argonaut Ins. Co., 634 F. Supp. 2d 342 (S.D.N.Y. 2009):

The "follow-the-settlements" (or "follow-the-fortunes") doctrine "binds a reinsurer to accept the cedent's good faith decisions on all things concerning the underlying insurance terms and claims against the underlying insured: coverage, tactics, lawsuits, compromise, resistance or capitulation." N. River Ins. Co. v. Ace Am. Reins. Co., 361 F.3d 134, 139 (2d Cir. 2004) (quoting British Int'l Ins. Co. v. Seguros La Republica, S.A., 342 F.3d 78, 85 (2d Cir. 2003)). "This doctrine insulates a reinsured's liability determinations from challenge by a reinsurer unless they are fraudulent, in bad faith, or the payments are clearly beyond the scope of the original policy or in excess of the reinsurer's agree-to exposure." N. River Ins., 361 F.3d at 140 (quoting Christiania Gen. Ms. Corp. v. Great Am. Ins. Co., 979 F.2d 268, 280 (2d Cir. 1992)). However, "while the 'follow the fortunes' clause limits a reinsurer's defenses, it does not make a reinsurer liable for risks beyond what was agreed upon in the reinsurance certificate. . . ." CIGNA, 52 F.3d at 1199.

Here, the [arbitration] Panel determined that "[t]he evidence presented at the Hearing established that the . . . claims comprising the commutation transaction were covered by the original reinsurance contracts issued by [Global]." Once the Panel interpreted the Treaties to include contingent claims as a loss covered under the Treaties, the Panel properly applied the "follow-the-fortunes" doctrine to preclude review of Global's decision to settle the contingent claims. Accordingly, ... the Panel properly applied the "follow-the-fortunes" doctrine to its interpretation of the scope of the Treaties....