Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations. B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder. C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable. D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice. E. In the event that the Company determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Company may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company may have, the Company may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. F. If no Termination Event has occurred with respect to a Subscribing Reinsurer: 1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company; and 2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied. G. If a Termination Event has occurred with respect to a Subscribing Reinsurer: 1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company; 2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and 3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability. 4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein). H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the Company. I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it. J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity. K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement: 1. To pay or reimburse the Company for: a. The Subscribing Reinsurer's share under this Contract or any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or any Additional Reinsurance Contract because of cancellations of such policies; b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company. 2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 17 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurersuch Subscribing Reinsurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iviii) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Company may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company may have, the Company may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein).
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the Company.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company for:
a. The Subscribing Reinsurer's share under this Contract or any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.by
Appears in 6 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Company may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company may have, the Company may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means means, (a) as of any particular date prior to the termination of the Subscribing Reinsurer's percentage share in this Contract by the Company, the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (ai) such Subscribing Reinsurer's percentage share under such Reinsured Policy and corresponding Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (cii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein)) and (b) as of any particular date on and after the termination of such Subscribing Reinsurer's percentage share in this Contract by the Company, the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) (aa) Aggregate Losses (as defined in the Reinsured Policy) minus (bb) all Losses (as defined in the Reinsured Policy) paid by the Subscribing Reinsurer and any additional Insurers or Subscribing Reinsurers under such Reinsured Policy and corresponding Subscribing Reinsurance Contract, plus (cc) the sum of the unpaid principal balance of all Covered Loans (as defined in the Reinsured Policy) in Default (as defined in the Reinsured Policy) minus (dd) the Aggregate Retention (as defined in the Reinsured Policy) multiplied by (ii) the Subscribing Reinsurer's percentage share under this Contract.
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the Company.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company for:
a. The Subscribing Reinsurer's share under this Contract or any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 6 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's ’s Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Company may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company may have, the Company may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein).
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the Company.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company for:
a. The Subscribing Reinsurer's share under this Contract or any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 5 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to in this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Company may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company may have, the Company may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein).
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the Company.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company for:
a. The Subscribing Reinsurer's share under this Contract or any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 5 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the date:
1. The Subscribing Reinsurer's Interests and Liabilities Agreement is executedexecuted with respect to the Initial Pool, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder; and
2. Each Set-up File is made available to the Reinsurer in respect of the Policy pursuant to paragraph B of the Reports and Remittances Article, with respect to the Fill-up Pool, the Reinsurer shall contribute such additional collateral to the Trust Account as is required hereunder after giving effect to any increase in the Insurer's Limit of Liability under the Policy, the Aggregate Remaining Limit of Liability, or any other item resulting therefrom.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Company may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company may have, the Company may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein).
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the Company.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company for:
a. The Subscribing Reinsurer's share under this Contract or any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 5 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the such Subscribing Reinsurer's Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Company may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company may have, the Company may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein).
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the Company.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company for:
a. The Subscribing Reinsurer's share under this Contract or any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.by
Appears in 4 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations. No party other than the Subscribing Reinsurer and the Beneficiary shall have any rights to the Trust Account as such rights are described in the Trust Agreement.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company and each Additional Policy issued by Mangrove Cell 6 IC, an incorporated protected cell of Mangrove Insurance Solutions, PCC, a sponsored captive insurance company organized under the laws of the District of Columbia or any other protected cell (an "Other Company"), in each case, to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's or any Other Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's or any Other Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company and any Other Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the The Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable. If the Insured as Beneficiary withdraws any Asset to satisfy the Subscribing Reinsurer's obligations (a "Specific Obligation") due under any Contract or Additional Reinsurance Contract, as to only the Specific Obligation, the Subscribing Reinsurer shall not have any further obligation to the Company or Additional Company with respect to the Specific Obligation.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company Insured determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Insured or the Company at the request of the Insured and on behalf of the Insured may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company Insured (as Beneficiary under the Trust Agreement) may have, the Company Insured may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company Insured may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the CompanyInsured as Beneficiary; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the CompanyInsured as Beneficiary;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein).
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the CompanyCompany or the Insured as Beneficiary.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer Subscribing Reinsurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company Insured as Beneficiary under the Trust Agreement or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the CompanyInsured, without diminution because of insolvency on the part of the Company Insured or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company or Insured for:
a. The Subscribing Reinsurer's share under this Contract or and any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or and any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 4 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the such Subscribing Reinsurer's Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Company may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company may have, the Company may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein).
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the Company.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company for:
a. The Subscribing Reinsurer's share under this Contract or any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses loses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 4 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations. No party other than the Subscribing Reinsurer and the Beneficiary shall have any rights to the Trust Account as such rights are described in the Trust Agreement.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company and each Additional Policy issued by Chimney Point Insurance IC, Inc., an incorporated protected cell of White Rock USA Ltd., a sponsored captive insurance company organized under the laws of the State of Vermont or any other protected cell (an "Other Company"), in each case, to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's or any Other Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's or any Other Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company and any Other Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the The Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable. If the Insured as Beneficiary withdraws any Asset to satisfy the Subscribing Reinsurer's obligations (a "Specific Obligation") due under any Contract or Additional Reinsurance Contract, as to only the Specific Obligation, the Subscribing Reinsurer shall not have any further obligation to the Company or Additional Company with respect to the Specific Obligation.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company Insured determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Insured or the Company at the request of the Insured and on behalf of the Insured may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company Insured (as Beneficiary under the Trust Agreement) may have, the Company Insured may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company Insured may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the CompanyInsured as Beneficiary; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the CompanyInsured as Beneficiary;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein).
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the CompanyCompany or the Insured as Beneficiary.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer Subscribing Reinsurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company Insured as Beneficiary under the Trust Agreement or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the CompanyInsured, without diminution because of insolvency on the part of the Company Insured or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company or Insured for:
a. The Subscribing Reinsurer's share under this Contract or and any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or and any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 3 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the such Subscribing Reinsurer's Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Company may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company may have, the Company may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein).
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the Company.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company for:
a. The Subscribing Reinsurer's share under this Contract or any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 3 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to in this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. by
A. M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Company may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company may have, the Company may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein).
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the Company.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company for:
a. The Subscribing Reinsurer's share under this Contract or any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 3 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations. No party other than the Subscribing Reinsurer and the Beneficiary shall have any rights to the Trust Account as such rights are described in the Trust Agreement.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company and each Additional Policy issued by Mangrove Cell 6 IC, an incorporated protected cell of Mangrove Insurance Solutions, PCC, a sponsored captive insurance company organized under the laws of the District of Columbia or any other protected cell (an "Other Company"), in each case, to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's or any Other Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's or any Other Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company and any Other Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the The Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable. If the Insured as Beneficiary withdraws any Asset to satisfy the Subscribing Reinsurer's obligations (a "Specific Obligation") due under any Contract or Additional Reinsurance Contract, as to only the Specific Obligation, the Subscribing Reinsurer shall not have any further obligation to the Company or Additional Company with respect to the Specific Obligation.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. by
A. M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company Insured determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Insured or the Company at the request of the Insured and on behalf of the Insured may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company Insured (as Beneficiary under the Trust Agreement) may have, the Company Insured may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company Insured may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the CompanyInsured as Beneficiary; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the CompanyInsured as Beneficiary;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein).
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the CompanyCompany or the Insured as Beneficiary.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer Subscribing Reinsurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company Insured as Beneficiary under the Trust Agreement or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the CompanyInsured, without diminution because of insolvency on the part of the Company Insured or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company or Insured for:
a. The Subscribing Reinsurer's share under this Contract or and any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or and any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 3 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the such Subscribing Reinsurer's Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date date:
1. the Subscribing Reinsurer's Interests and Liabilities Agreement is executedexecuted with respect to the Initial Pool, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder; and
2. each Set-up File is made available to the Reinsurer in respect of the Policy pursuant to paragraph B of the Reports and Remittances Article, with respect to the Fill-up Pool, the Reinsurer shall contribute such additional collateral to the Trust Account as is required hereunder after giving effect to any increase in the Insurer's Limit of Liability under the Policy, the Aggregate Remaining Limit of Liability, or any other item resulting therefrom.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Company may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company may have, the Company may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein).
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the Company.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company for:
a. The Subscribing Reinsurer's share under this Contract or any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 3 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the such Subscribing Reinsurer's Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's ’s Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Company may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company may have, the Company may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein).
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the Company.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company for:
a. The Subscribing Reinsurer's share under this Contract or any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 3 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's ’s Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. by
A. M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Company may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company may have, the Company may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein).
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the Company.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company for:
a. The Subscribing Reinsurer's share under this Contract or any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 2 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Company may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company may have, the Company may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein).
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the Company.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company for:
a. The Subscribing Reinsurer's share under this Contract or any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 2 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. by
A. M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Company may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company may have, the Company may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein).
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the Company.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company for:
a. The Subscribing Reinsurer's share under this Contract or any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 2 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to in this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Company may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company may have, the Company may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means means, (a) as of any particular date prior to the termination of the Subscribing Reinsurer's percentage share in this Contract by the Company, the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (ai) such Subscribing Reinsurer's percentage share under such Reinsured Policy and corresponding Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (cii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein)) and (b) as of any particular date on and after the termination of such Subscribing Reinsurer's percentage share in this Contract by the Company, the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) (aa) Aggregate Losses (as defined in the Reinsured Policy) minus (bb) all Losses (as defined in the Reinsured Policy) paid by the Subscribing Reinsurer and any additional Insurers or Subscribing Reinsurers under such Reinsured Policy and corresponding Subscribing Reinsurance Contract, plus (cc) the sum of the unpaid principal balance of all Covered Loans (as defined in the Reinsured Policy) in Default (as defined in the Reinsured Policy) minus (dd) the Aggregate Retention (as defined in the Reinsured Policy) multiplied by (ii) the Subscribing Reinsurer's percentage share under this Contract.
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the Company.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company for:
a. The Subscribing Reinsurer's share under this Contract or any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 2 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date each Set-up File is made available to the Subscribing Reinsurer's Interests Reinsurer in respect of the Policy pursuant to paragraph B of the Reports and Liabilities Agreement is executedRemittances Article, such Subscribing the Reinsurer shall contribute such additional collateral to the Trust Account as is required hereunderhereunder after giving effect to any increase in the Insurer's Limit of Liability under the Policy, the Aggregate Remaining Limit of Liability, or any other item resulting therefrom.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Company may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company may have, the Company may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein).
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the Company.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company for:
a. The Subscribing Reinsurer's share under this Contract or any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 2 contracts
Samples: Quota Share Reinsurance Contract, Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations. No party other than the Subscribing Reinsurer and the Beneficiary shall have any rights to the Trust Account as such rights are described in the Trust Agreement.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company and each Additional Policy issued by Chimney Point Insurance IC, Inc., an incorporated protected cell of White Rock USA Ltd., a sponsored captive insurance company organized under the laws of the State of Vermont or any other protected cell (an "Other Company"), in each case, to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's or any Other Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's or any Other Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company and any Other Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the The Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable. If the Insured as Beneficiary withdraws any Asset to satisfy the Subscribing Reinsurer's obligations (a "Specific Obligation") due under any Contract or Additional Reinsurance Contract, as to only the Specific Obligation, the Subscribing Reinsurer shall not have a further obligation to the Company or Additional Company with respect to the Specific Obligation.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company Insured determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Insured or the Company at the request of the Insured and on behalf of the Insured may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company Insured (as Beneficiary under the Trust Agreement) may have, the Company Insured may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company Insured may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the CompanyInsured as Beneficiary; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the CompanyInsured as Beneficiary;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein).
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the CompanyCompany or the Insured as Beneficiary.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer Subscribing Reinsurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company Insured as Beneficiary under the Trust Agreement or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the CompanyInsured, without diminution because of insolvency on the part of the Company Insured or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company or Insured for:
a. The Subscribing Reinsurer's share under this Contract or and any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or and any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 1 contract
Samples: Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions. A. On or prior to the date hereof, each Subscribing Reinsurer has entered into, or shall enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On the date hereof, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), determined solely with respect to this Contract and the Policy. Each Subscribing Reinsurer shall at all times maintain on deposit in the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations. No party other than the Subscribing Reinsurer and the Beneficiary shall have any rights to the Trust Account as such rights are described in the Trust Agreement.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal to the sum, with respect to the Policy and each additional insurance policy (an "Additional Policy" and together with the Policy, the "Reinsured Policies"), if any, issued by the Company and each Additional Policy issued by any other protected cell (an “Other Company”) to the Insured and reinsured by the Subscribing Reinsurer under a reinsurance agreement (an "Additional Reinsurance Contract" and together with this Contract, the "Subscribing Reinsurance Contracts"), of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's or any Other Company’s state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's or any Other Company’s statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company and any Other Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the The Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable. If the Insured as Beneficiary withdraws any Asset to satisfy the Subscribing Reinsurer’s obligations (a “Specific Obligation”) due under any Contract or Additional Reinsurance Contract, as to only the Specific Obligation, the Subscribing Reinsurer shall not have any further obligation to the Company or Additional Company with respect to the Specific Obligation.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company Insured determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Insured or the Company at the request of the Insured and on behalf of the Insured may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company Insured (as Beneficiary under the Trust Agreement) may have, the Company Insured may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company Insured may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the CompanyInsured as Beneficiary; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the CompanyInsured as Beneficiary;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means means, (a) as of any particular date prior to the termination of the Subscribing Reinsurer's percentage share in this Contract by the Company, the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (ai) such Subscribing Reinsurer's percentage share under such Reinsured Policy and corresponding Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (cii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein)) and (b) as of any particular date on and after the termination of such Subscribing Reinsurer's percentage share in this Contract by the Company, the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) (aa) Aggregate Losses (as defined in the Reinsured Policy) minus (bb) all Losses (as defined in the Reinsured Policy) paid by the Subscribing Reinsurer and any additional Insurers or Subscribing Reinsurers under such Reinsured Policy and corresponding Subscribing Reinsurance Contract, plus (cc) the sum of the unpaid principal balance of all Covered Loans (as defined in the Reinsured Policy) in Default (as defined in the Reinsured Policy) minus (dd) the Aggregate Retention (as defined in the Reinsured Policy) multiplied by (ii) the Subscribing Reinsurer's percentage share under this Contract.
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the CompanyCompany or the Insured as Beneficiary.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer Subscribing Reinsurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company Insured as Beneficiary under the Trust Agreement or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the CompanyInsured, without diminution because of insolvency on the part of the Company Insured or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company or Insured for:
a. The Subscribing Reinsurer's share under this Contract or and any Additional Reinsurance Contract of premiums returned or returnable, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or and any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Company.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 1 contract
Samples: Quota Share Reinsurance Contract
Trust Account Creation and Funding Provisions.
A. On or prior to the date hereof, each Each Subscribing Reinsurer has entered into, or shall will enter into, a Master Reinsurance Trust Agreement (the "Trust Agreement") in the form attached as Exhibit C to such Subscribing Reinsurer's Interests and Liabilities Agreement. On No later than sixty (60) days after the effective date hereofof this Contract, each Subscribing Reinsurer shall deposit in the trust account established thereunder (the "Trust Account") an amount equal to its Trust Funding Obligations (as defined below), ) determined solely with respect to this Contract and the PolicyPolicy and calculated as of the effective date of this Contract. Each Subscribing Reinsurer shall at all times maintain on deposit in party acknowledges that the Trust Account Assets (as defined in the Trust Agreement) which have a fair market value equal to such Subscribing Reinsurer's Trust Funding Obligations.
B. Each Subscribing Reinsurer's Trust Funding Obligations shall be equal Company may issue additional enterprise paid primary mortgage insurance policies to the sumInsured (each, with respect to the Policy an “Additional Insurance Policy”, and each additional insurance policy (an "Additional Policy" and collectively together with the Policy, the "“Reinsured Policies"), if any, issued by the Company ”) and that each such Additional Insurance Policy will be subject to the Insured and reinsured by the Subscribing Reinsurer under a separate reinsurance agreement (each, an "“Additional Reinsurance Contract" ” and together with this Contract, the "“Subscribing Reinsurance Contracts”). The "), Aggregate Trust Funding Obligations" means the sum of the products of (i) such Subscribing Reinsurer's percentage share under this Contract or such Additional Reinsurance Contract, as applicable, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Limit of Liability under the Policy or such Additional Policy, as applicable, and as such term is defined therein, multiplied by (iv) the "Required Collateral Percentage" identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable; provided, that (a) if a Termination Event has occurred with respect to a Subscribing Reinsurer, such Subscribing Reinsurer's all Trust Funding Obligations shall not be less than the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (i) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (ii) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (iii) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein), multiplied by (iv) the Termination Event Percentage identified on Schedule 1 to this Contract or in such Additional Reinsurance Contract, as applicable and (b) if and for so long as any Subscribing Reinsurer is not authorized or licensed by the Company's state of domicile so as to provide credit for the reinsurance ceded hereunder in the Company's statutory financial statements, such Subscribing Reinsurer's Trust Funding Obligations shall not be less than the aggregate amount, under this Contract and each Additional Reinsurance Contract, of any (A) reinsured losses and allocated loss expenses paid or payable by the Company, but not recovered from such Subscribing Reinsurer; (B) reserves for reinsured losses reported and outstanding, (C) reserves for reinsured losses incurred but not reported; and (D) reserves for allocated reinsured loss expenses and unearned premiums. Within ten (10) business days following the date the Subscribing Reinsurer's Interests and Liabilities Agreement is executed, such Subscribing Reinsurer shall contribute collateral to the Trust Account as required hereunder.
C. At the request of the Company or the Insured, any Subscribing Reinsurer shall designate notional sub-accounts within the Trust Account corresponding to this Contract and each Additional Reinsurance Contract, and the allocation of Assets in the Trust Account to each such sub-account with a fair market value at least equal to the Trust Funding Obligations, as determined solely with respect to the Subscribing Reinsurance Contract to which such sub-account corresponds. Notwithstanding any such allocation, or the designation or existence of any sub-account, the Company or the Insured as the Beneficiary (as defined in the Trust Agreement) of the Trust Account shall be permitted to freely withdraw any Asset to the extent that such amounts are due and owing under the terms of this Contract or any Additional Reinsurance Contract and are for the purposes as outlined under paragraph K of this Article and apply such Asset to satisfy any obligation of the Subscribing Reinsurer under any Subscribing Reinsurance Contract or Reinsured Policy, as applicable.
D. Each Subscribing Reinsurer shall notify the Company of any Termination Event with respect to such Subscribing Reinsurer or any downgrade in, or withdrawal of, its Rating by A.M. Best or Standard & Poor's within five (5) calendar days of the date on which such Subscribing Reinsurer is first informed of such Termination Event, downgrade or withdrawal, and within ten (10) calendar days of such date shall deposit in to the Trust Account such amount, if any, as is required so that the fair market value of the Assets then on deposit in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations as of the date of such notice.
E. In the event that the Company determines at any time that the fair market value of all Assets then on deposit in the Trust Account of a Subscribing Reinsurer is less than one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations, the Company may (but is not required to do so unless requested by the Insured) send a written notice to that Subscribing Reinsurer, with a copy to the Insured and to the trustee under the Trust Agreement (the "Trustee"), requiring such Subscribing Reinsurer to deposit such amount as is required into such Trust Account so that the fair market value of the Assets deposited in the Trust Account is at least equal to such Subscribing Reinsurer's Trust Funding Obligations. The Subscribing Reinsurer shall deposit such amount in such Trust Account within five (5) calendar days of receipt of such notice. If the Subscribing Reinsurer does not timely deposit such amount, in addition to any other legal or equitable remedy the Company may have, the Company may issue a written instruction to the Trustee directing the Trustee to transfer from the Income Account (as defined in the Trust Agreement) to such Trust Account such amounts as are required so that the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations. If the Assets in the Income Account are insufficient for such purpose, the Company may also direct the Trustee to deposit all amounts otherwise required to be deposited into the Income Account to the Trust Account until such time as the fair market value of the Assets deposited in such Trust Account is equal to such Subscribing Reinsurer's Trust Funding Obligations.
F. If no Termination Event has occurred with respect to all Reinsured Policies and all Subscribing Reinsurance Contracts under which it will be a Subscribing Reinsurer:
1. Such The “Subscribing Reinsurer may periodically request that the Beneficiary (as that term is defined in Trust Funding Obligation” means the Trust Agreement) issue a Withdrawal Notice (as that term is defined in the Trust Agreement) to the Trustee directing the Trustee to (i) withdraw from the Trust Account and (ii) pay directly to the requesting Subscribing Reinsurer that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer exceeds one hundred and two percent (102%) of such Subscribing Reinsurer's Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company; and
2. Subject to the deduction of the Trustee's compensation and expenses in accordance with the Trust Agreement, such Subscribing Reinsurer may withdraw funds deposited in such Subscribing Reinsurer's Income Account only if the fair market value of the Assets on deposit in the Trust Account by such Subscribing Reinsurer exceeds one hundred percent (100%) of such Subscribing Reinsurer's Trust Funding Obligations. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied.
G. If a Termination Event has occurred with respect to a Subscribing Reinsurer:
1. Such Subscribing Reinsurer may request that the Beneficiary issue a Withdrawal Notice to the Trustee directing the Trustee to withdraw from the Trust Account and pay directly to such Subscribing Reinsurer only that specific dollar amount (as determined by the Beneficiary) by which the fair market value of the Assets on deposit in the Trust Account exceeds one hundred and two percent (102%) of the greater of such Subscribing Reinsurer's (a) Aggregate Remaining Limit of Liability (as defined below) and (b) Trust Funding Obligations, issuance of such Withdrawal Notice not to be unreasonably or arbitrarily withheld by the Company;
2. Such Subscribing Reinsurer may not withdraw any funds from the Income Account that such Subscribing Reinsurer otherwise would be entitled to withdraw under the terms of the Trust Agreement unless the fair market value of the Assets on deposit in the Trust Account by that Subscribing Reinsurer (directly or by the payment of premium otherwise payable to that Subscribing Reinsurer into the Trust Account) exceeds one hundred percent (100%) of that Subscribing Reinsurer's Aggregate Remaining Limit of Liability. The Company or the Insured as the Beneficiary of the Trust Account may instruct the Trustee not to permit withdrawals from the Income Account by a Subscribing Reinsurer to the extent such condition is not satisfied; and
3. Any and all premiums payable under this Contract to such Subscribing Reinsurer shall be paid by the Company to the Trust Account of such Subscribing Reinsurer until such time as the fair market value of the Assets on deposit therein is equal to such Subscribing Reinsurer's Aggregate Remaining Limit of Liability.
4. The "Aggregate Remaining Limit of Liability" of a Subscribing Reinsurer means the sum of, with respect to each Reinsured Policy and corresponding Subscribing Reinsurance Contract, the products of (a) such Subscribing Reinsurer's percentage share under such Subscribing Reinsurance Contract, multiplied by (b) the Insurer's Deal Percentage as identified in the relevant Policy, or if not identified, 100%, multiplied by (c) the Remaining Limit of Liability under such Reinsured Policy (as the term "Remaining Limit of Liability" is defined therein).
H. All Assets delivered to the Trustee for deposit to the Trust Account shall be valued at their fair market value and consist only of Eligible Investments (as that term is defined in the Trust Agreement). In addition, a Subscribing Reinsurer shall provide each and any Asset to the Trustee in such form that the Beneficiary of the Trust or the Trustee upon direction by the Beneficiary of the Trust may negotiate any such Asset without the consent or signature of the Subscribing Reinsurer or any other person or entity. The Subscribing Reinsurer shall provide such documents as are necessary to authorize such transfer at the time the Asset is deposited to the Trust Account or if requested thereafter by the Trustee or the Company.
I. Each Subscribing Reinsurer must timely and fully comply with the requirements of this Article and must fully fund the Trust Account as set forth herein, even in the event of a dispute concerning the same or any other aspects of this Contract. The existence of a dispute as to the obligations of a Subscribing Reinsurer under the Trust Agreement or under this Contract shall not constitute a basis for failing to fund the Trust Account in accordance with the terms of this Article. The parties acknowledge and agree that the failure to fund the Trust Account as required herein would result in irreparable harm to the Company and the Insured for which no adequate remedy exists at law or in equity. In the event of an actual breach of the provisions of this Article by that Subscribing Reinsurer, the Company and/or the Insured may elect equitable relief in the form of specific performance by that Subscribing Reinsurer requiring the immediate funding of the Trust Account in accordance with this Article, without the requirement of posting a bond or other security and the Insurer shall not object to, and hereby expressly consents to and waives all defenses to, the entry of such relief against it.
J. The requirements of this Article apply in addition to and not in lieu of any and all other rights, remedies or causes of action which the Company or the Insured may have under this Contract, under any other agreement, or that otherwise may accrue to the Company or the Insured at law or in equity.
K. The Company and each Subscribing Reinsurer agree that the Assets in the Trust Account may be withdrawn by the Company or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Subscribing Reinsurer, only for the following purposes or as permitted under the Trust Agreement:
1. To pay or reimburse the Company for:
a. The Subscribing Reinsurer's share Obligation under this Contract or any similar “trust funding obligation” under an Additional Reinsurance Contract of premiums returned or returnableContracts, but not yet recovered from the Subscribing Reinsurer, to the owners of policies reinsured under this Contract or any Additional Reinsurance Contract because of cancellations of such policies;
b. The Subscribing Reinsurer's share of surrenders and benefits or losses paid or payable by the Company pursuant to the provisions of the policies reinsured under this Contract or any Additional Reinsurance Contract; and
c. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the Companyas applicable.
2. To make payment to the Subscribing Reinsurer of any amounts in excess of one hundred two percent (102%) of the greater of (A) the amount necessary to secure the credit or reduction from liability for reinsurance taken by the Company and (B) such Subscribing Reinsurer's Trust Funding Obligations.
Appears in 1 contract
Samples: Quota Share Reinsurance Contract
