The court held that in this case, there should be no set-off for the settlement of the second dentist because there were different damages caused by each defendant; notwithstanding the fact that some of the injuries were aggravated -- there were additional separate injuries caused by the dentists and, therefore, there would be no setoff.
The nursing home settled and after trial, the court held that a set-off was appropriate for the nursing home's settlement.
Once entitlement to a set-off is determined, calculating the set-off is the next step.
As to economic damages, multiply the ratio of economic damages/total verdict by the settlement amount to determine the set-off.
In Standard & Poor's view, on an insolvency of the insurance company, if the borrower contested the set-off prohibition, the courts would use discretion, taking into consideration the closeness of the relationship between the bank and the insurance company as well as the degree to which the mortgage product's marketing material explained the risks of the insurance company's insolvency.
Karen Naylor, Managing Director at Standard & Poor's European Structured Finance Ratings Services group, stated that in the case where a pool of Dutch mortgage loans is being securitized, the set-off issue can determine, quite simply, whether or not investors in the RMBS are repaid interest and principal.
Naylor explained further that the set-off problem can occur only when the insurer is defaulting on its obligations and that it is, therefore, possible to rate a transaction where the current rating on the insurer provides a ceiling to the rating on the securitization notes.
Assuming that this is not acceptable, though, then the rating consequences of the set-off issue will vary with the exact type of mortgage product involved; in the case of 'savings mortgages', set-off is not usually a problem," she said.