United Specialty and State National sue U.S. Bank over $14M in reinsurance trust principal

The trust agreements at the center of a new lawsuit had one rule that mattered: income could leave on the grantor’s request, but any withdrawal of principal required the insurers’ written approval. United Specialty Insurance Company and State National Insurance Company say U.S. Bank National Association wired out more than $14 million of principal without that sign-off, and they sued the bank on October 5 in the Northern District of Texas, according to Insurance Business America, which first reported the filing.

The two trusts were established in 2021 by JRG Reinsurance Company to secure hundreds of millions of dollars in reinsurance obligations to the insurers, and U.S. Bank was appointed trustee of both. Fleming International Reinsurance became grantor after Fleming Intermediate Holdings acquired JRG in April 2024, according to the filing.

On August 7, 2025, Fleming’s chief executive sent two letters to a U.S. Bank vice president asking for $13.5 million from the USIC trust and $580,000 from the SNIC trust, and both letters described the funds as income. The bank allegedly processed the smaller transfer from principal the same day; the larger one stalled when a trust officer found the account was $48,072.89 short of principal cash and told Fleming’s chief accounting officer the bank would need to move that sum from income to principal to complete the wire. The two requests together come to the more than $14 million at issue.

The insurers have booked over $200 million in expected credit losses tied to the broader reinsurance program, roughly fourteen times the principal that allegedly left the trusts. That suggests the trust transfers sit on top of a wider reinsurance credit problem rather than being the whole of it, though the coverage does not say how those losses arose or whether they are connected to the trust withdrawals.

In a credit-for-reinsurance file the trust is the collateral, and the control the complaint alleges failed is the cheapest one in the structure. Income and principal are separate pools with separate rules, and the complaint says the bank accepted the grantor’s label without the sign-off the agreements reserved to the beneficiary. The case will turn on whether anyone else checked that label before the money moved.