Exhibit 10.3
AMENDMENT TO THE
AMENDED AND RESTATED
FACULTATIVE OBLIGATORY QUOTA
SHARE RETROCESSIONAL AGREEMENT
This AMENDMENT TO THE AMENDED AND RESTATED FACULTATIVE OBLIGATORY QUOTA
SHARE RETROCESSIONAL AGREEMENT, effective as of November 20, 2002 (this
"Amendment"), is made in respect of the Amended and Restated Facultative
Obligatory Quota Share Retrocessional Agreement, dated as of October 1, 1997
(and as heretofore and as amended hereby, the "Quota Share Agreement"), between
SELECT REINSURANCE LTD., a Bermuda company (the "Reinsurer"), and PXRE
REINSURANCE COMPANY, a Connecticut company (the "Company"). Capitalized terms
used herein but not otherwise defined shall have the meanings given to such
terms in the Quota Share Agreement.
RECITALS
WHEREAS, the parties desire to extend the term of the Quota Share
Agreement;
NOW THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, it is hereby mutually agreed by the parties as follows:
ARTICLE I
AMENDMENT
The "Termination Date" of December 31, 2002 currently set forth in
Article III of the Quota Share Agreement is hereby deleted and, henceforth, the
"Termination Date" shall be December 31, 2005. Notwithstanding the foregoing,
for the avoidance of doubt, the Reinsurer hereby acknowledges that, in
determining the Quota Share that the Company may offer to cede to the Reinsurer
for the Policy Year 2004 and the Policy Year 2005, pursuant to Article II of the
Quota Share Agreement, the Company may, in its sole discretion, offer to cede a
Quota Share of 0% (zero percent).
ARTICLE II
MISCELLANEOUS
This Amendment shall be construed and enforced in accordance with, and
governed by, the laws of the State of New York (other than any conflict of law
rule which might result in the application of the law of any other
jurisdiction).
This Amendment may not be modified or amended or any term or provision
hereof waived or discharged except in writing signed by the party against whom
such amendment, modification, waiver or discharge is sought to be enforced.
Except as provided for herein, the terms of the Quota Share Agreement shall
remain in effect.
This Amendment may be executed in any number of counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts
shall together constitute the same Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
signed by their duly authorized officers as of the date first written above.
PXRE REINSURANCE COMPANY
By /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
SELECT REINSURANCE LTD.
By /s/ Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
November 20, 2002
Select Reinsurance Ltd.
Xxxxxxxx Xxxx
Xxxxxxxx, Bermuda
This letter agreement (this "Agreement") will confirm our agreement
with respect to the following matters:
1. In each of the three calendar years from 2003 through 2005, PXRE
Reinsurance Company and its affiliates (collectively, "PXRE") will, if
consistent with the reasonable business needs of PXRE, use reasonable
efforts to offer or introduce to Select Reinsurance Ltd. ("Select Re")
reinsurance business with aggregate premiums equal to a minimum of 20%
of Select Re's shareholders' equity at $115 million ("Subject Equity"),
provided, in each of 2004 and 2005, Subject Equity shall increase by
the earnings thereon in the prior calendar year, if any, and, subject
to the prior written consent of PXRE, by the amount of any additional
capital raised by Select Re. Notwithstanding the foregoing, Select Re
and PXRE agree that Select Re shall have the right to accept or reject
any risk offered by PXRE and that the minimum undertaking for a
particular calendar year shall be appropriately adjusted in the event
that during such calendar year Subject Equity is adversely impacted by
insurance, investment or other losses.
2. With respect to non-finite reinsurance business ceded from PXRE to
Select Re, Select Re shall within forty-five (45) days after the close
of each calendar quarter pay to PXRE a ceding commission equal to 15%
of gross premiums, less any returns and/or cancellations, ceded to
Select Re on all non-finite reinsurance business primarily involving
excess property, marine and aerospace risks during such quarter
3. With respect to finite reinsurance business ceded from PXRE to Select
Re, Select Re shall pay a ceding commission or a profit commission, or
some combination of both to PXRE in respect thereof as PXRE and Select
Re may agree on a case by case basis.
4. With respect to reinsurance business introduced directly to Select Re
by PXRE following a favorable underwriting recommendation by PXRE, or
substantially similar risks written by Select Re with the same cedant
or an affiliate of such cedant or with others utilizing proprietary
information or techniques developed by or for PXRE, Select Re shall
within forty-five (45) days after the close of each calendar quarter
pay to PXRE with respect to such quarter:
(a) 15% of gross premiums, less any returns and/or cancellations,
received by Select Re on business primarily involving excess
property, marine and aerospace risks;
(b) 20% of Select Re's margin on finite risks; and
(c) 5% of gross premiums, less any returns and/or cancellations,
received by Select Re on other business, including casualty
and pro rata property, marine and aerospace risks.
5. With respect to any reinsurance business introduced directly by PXRE or
its affiliates and written directly by Select Re without a favorable
underwriting recommendation by PXRE or its affiliates, Select Re shall
make such payment to PXRE in respect thereof as PXRE and Select Re may
agree on a case by case basis.
6. For purposes of this Agreement, the term "reinsurance business" shall
mean (i) non-finite reinsurance business of the type written in the
ordinary course of business by PXRE; (ii) any finite reinsurance
contract if (x) PXRE at the time such contract is offered to Select Re
advises Select Re in good faith that in PXRE's judgment such contract
should be treated as a reinsurance transaction, and not as a deposit
transaction, under United States generally accepted accounting
principles; or (y) PXRE at the time such contract is offered to Select
Re advises Select Re in good faith that in PXRE's judgment such
contract should be treated as a deposit transaction, and not as a
reinsurance transaction, under United States generally accepted
accounting principles and Select Re agrees to accept the cession of
such contract; or (iii) any other contract that the parties may agree
in writing to deem "reinsurance business" for purposes of this
Agreement.
7. This Agreement may be terminated:
(a) by PXRE by notice to Select Re in the event that Select Re's
shareholders' equity (calculated under United States generally
accepted accounting principles) shall have declined by 50% or
more from the amount of such shareholders' equity as at the
previous December 31;
(b) by PXRE upon (i) a material breach by Select Re or any of its
subsidiaries or affiliates of its obligations under this
Agreement or under any reinsurance agreement (or related
agreement) between the parties hereto or any of their
subsidiaries or affiliates (x) which breach has not been cured
within ten (10) days following receipt by Select Re of written
notice of such breach or (y) if such breach is not susceptible
to cure within such ten (10) day period, steps reasonable
designed to cure such breach are not commenced within such
period, such steps are not diligently pursued or such breach
is not cured within a reasonable period following such written
notice of breach, (ii) the conviction of, or plea of nolo
contendere by, Select Re or any of its subsidiaries or
affiliates or any of their respective directors (other than
any designated by PXRE) or executive officers ("Select Re
Persons") to a felony or a crime involving moral turpitude, or
the entry of a judgment no longer subject to appeal against
Select Re or any of its subsidiaries or affiliates or any of
the Select Re Persons finding a common law fraud, or other
unlawful conduct by Select Re or any of its subsidiaries or
affiliates or any of the Select Re Persons that is injurious
to the financial condition or reputation of, or is otherwise
materially injurious to, PXRE or any of its subsidiaries or
affiliates; or (iii) upon a Change in Control. In the event
PXRE elects to terminate this agreement under paragraph
6(b)(iii), such termination shall take effect no earlier than
three months after notice to Select Re of such election and
during the period prior to the effectiveness of the
termination, PXRE shall remain obligated, consistent with the
reasonable business needs of PXRE, to use reasonable efforts
to offer or introduce to Select Re reinsurance business as
provided for in paragraph 1 and otherwise in accordance with
the terms of this agreement, provided, however, that the
minimum percentage of Subject Equity to be offered or
introduced during such notice period shall be reduced pro rata
to reflect the portion of the calendar year following the
effectiveness of the termination; or
(c) by Select Re upon (i) a material breach by PXRE or any of its
subsidiaries or affiliates of its obligations under this
Agreement or under any reinsurance agreement (or related
agreement) between the parties hereto or any of their
subsidiaries or affiliates (x) which breach has not been cured
within ten (10) days following receipt by PXRE of written
notice of such breach or (y) if such breach is not susceptible
to cure within such ten (10) day period, steps reasonably
designed to cure such breach are not commenced within such
period, such steps are not diligently pursued or such breach
is not cured within a reasonable period following such written
notice of breach or (ii) the conviction of, or plea of nolo
contendere by, PXRE or any of its subsidiaries or affiliates
or any of their respective directors or executive officers
(the "PXRE Persons") to a felony or crime involving moral
turpitude, or the entry of a judgment no longer subject to
appeal against PXRE or any of its subsidiaries or affiliates
or any of the PXRE Persons finding a common law fraud, or
other unlawful conduct by PXRE or any of its subsidiaries or
affiliates or any of the PXRE Persons that is injurious to the
financial condition or reputation, of or is otherwise
materially injurious to, Select Re or any of its subsidiaries
or affiliates.
(d) A "Change of Control" shall be deemed to have occurred with
respect to PXRE if:
i. any "person" (as such term is used in Sections 13(d)
and 14(d) of the United States Securities and
Exchange Act of 1934) (other than any holder of
Series A, Series B or Series C Convertible Voting
Preferred Shares of PXRE Group Ltd. ("PXT") by reason
of the receipt of share dividends), directly or
indirectly, acquires securities of PXT representing
40% or more of the combined voting power of PXT's
then outstanding securities with respect to matters
presented at PXT's general meetings, other than the
election of directors ("Voting Power"); provided,
however, that the disposition by an original holder
of either Series A, Series B or Series C Convertible
Voting Preferred Shares (a "Preferred Shareholder")
of such preferred shares (or any securities into
which such shares have ultimately been converted) to
a person will not constitute a Change of Control
under this clause (i) unless (x) such person,
immediately following such acquisition from such
Preferred Shareholder, holds securities representing
at least 50% Voting Power, or (y) such person has
acquired securities from more than one Preferred
Shareholder in the same or related transactions, and
immediately following the last of such transactions,
holds securities representing at least 40% Voting
Power; provided further, however, if, by reason of
the preceding proviso, the acquisition by a person of
at least 40% but less than 50% Voting Power does not
constitute a Change of Control under this clause (i),
a Change of Control will be deemed to occur if such
person thereafter becomes holder of at least 50%
Voting Power, whether or not pursuant to a related
transaction; or
ii. the stockholders of PXT approve (A) any merger or
consolidation of PXT with any other corporation,
other than a merger or consolidation in which PXT is
the surviving entity or a merger or consolidation
which would result in the holders of the voting
securities of PXT outstanding immediately prior
thereto holding immediately thereafter securities
representing more than 55% of the combined voting
power of the voting securities of PXT or such
surviving entity outstanding immediately after such
merger or consolidation, or (B) any sale or other
disposition (in one transaction or a series of
related transactions) of all, or substantially all,
of the assets of PXT.
The party desiring to terminate this Agreement
pursuant to clause (a) through (c) above shall give
prompt written notice of such termination to the
other party. No termination of this Agreement
pursuant to clause (a) through (c) above by a party
will relieve the other party from any liability for
any breach of this Agreement or any such reinsurance
agreement (or related agreement) or from the
performance of any obligation due with respect to any
period preceding such termination.
8. The parties hereby agree that this Agreement amends, restates and
replaces in its entirety the letter agreement, dated September 1, 1998,
between PXRE Reinsurance Company and Select Re (as amended by the
letter agreement dated November 1, 1999).
9. This Agreement shall be governed as to performance, administration and
interpretation by the laws of New York, exclusive of the rules with
respect to conflicts of law.
If this foregoing correctly reflects our agreement, please sign and return to
the undersigned the enclosed copy of this letter.
Sincerely,
/s/ Xxxx Xxxxx
Xxxx Xxxxx
Senior Vice President and
Chief Financial Officer
Agreed and Accepted:
SELECT REINSURANCE LTD.
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: President
Date:
