Exhibit 10.6
REINSURANCE COMMUTATION AND RELEASE AGREEMENT
This Reinsurance Commutation and Release Agreement (hereinafter referred to as
the "Agreement"), is entered into by and between Philadelphia Insurance Company,
Philadelphia Indemnity Insurance Company, both of Bala Cynwyd, Pennsylvania, and
any and all other companies which are now or may hereafter become member
companies of Philadelphia Consolidated Holding Corporation (hereinafter referred
to collectively as the "Company") and Swiss Reinsurance America Corporation,
Armonk, New York (hereinafter referred to as "Swiss Re"). The Company and Swiss
Re are sometimes referred to individually as a "Party" and collectively as the
"Parties."
WHEREAS, the Company and Swiss Re entered into the Whole Account Net Quota Share
Reinsurance Contract, effective April 1, 2003 and Addendum No. 1 thereto,
effective January 1, 2004 (hereinafter referred to collectively as the
"Treaty");
WHEREAS, the Company ceded and Swiss Re assumed a 55.0% share in the terms and
conditions under the Treaty for the period January 1, 2004 to December 31, 2004
(the "2004 Contract Year);
WHEREAS, the Company and Swiss Re have agreed to cancel and commute the 2004
Contract Year as of January 1, 2006, fully and finally settle, commute and
discharge any and all of their respective obligations and liabilities under the
2004 Contract Year, and enter into mutual releases relating thereto;
NOW THEREFORE, in consideration of the covenants, assumptions, promises,
payments, agreements and other good and valuable consideration recited as set
forth herein, the sufficiency of which is acknowledged, the Parties agree to the
following:
ARTICLE I - CONSIDERATION
In consideration for commuting the 2004 Contract Year, the Company shall receive
a commutation profit commission of $21,403,025.96 which shall be deemed to equal
55.0% of the balance of the Funds Withheld Account associated with the 2004
Contract Year. Swiss Re shall retain 55.0% of the Reinsurer's Expense Allowance
paid under the Treaty (being 55.0% of 3.80% of the 2004 Contract Year Ceded Net
Written Premium). Such amounts shall be deemed to be fully earned premium by
Swiss Re. Further, the Company acknowledges that receipt of such commutation
profit commission constitutes a full and final settlement of all obligations of
Swiss Re to the Company under the 2004 Contract Year, and that no further
amounts are or will be owed to the Company by Swiss Re for the 2004 Contract
Year.
ARTICLE II - MUTUAL RELEASE
Each Party hereto, on behalf of itself and its predecessors, successors,
assigns, affiliates and subsidiaries, and their past, present and future
officers, directors, shareholders, employees, agents, receivers, trustees,
attorneys, and legal representatives hereby releases, acquits, and forever
discharges the other Party, its predecessors, successors, assigns, affiliates
and subsidiaries, and their past, present and future officers, directors,
shareholders, employees,
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agents, receivers, trustees, attorneys, and legal representatives from any and
all claims, loss debts, demands, causes of action, liabilities, obligations,
costs, disbursements, fees, attorneys' fees, expenses, damages, and injuries of
every kind, nature and description based on, relating to, or arising out of the
2004 Contract Year, including, but not limited to, any common-law or statutory
claims for fraud and misrepresentation, or statutory RICO claims, whether or not
now known, suspected, reported, or claimed whether fixed or contingent,
currently existing or arising in the future.
ARTICLE III - REPRESENTATIONS AND WARRANTIES
Both Parties to this Agreement hereby represent and warrant that:
1. All judicial, statutory, regulatory, administrative, and/or ministerial
actions necessary for the execution, delivery, and performance of this
Agreement by each Party have been or will be duly taken, and that no
further action, consent or approval of any person, entity, court or other
governmental authority is required by either Party for the lawful execution
or delivery of this Agreement or the lawful performance and consummation of
the transactions contemplated herein, nor will such transactions violate
any provision of any law or conflict with any order, writ, injunction, or
decree of any court or other governmental authority.
2. The individual executing this Agreement on behalf of each Party has the
full legal right, power, and authority to execute and deliver this
Agreement on behalf of such Party.
3. The Parties represent each to the other that they have not assigned to
third parties any claims intended to be released by this Agreement. The
Parties are not aware of any third party who might assert some interest in
any claims intended to be released hereunder.
4. The Company and Swiss Re further agree and stipulate that they have
completely read, fully understood, and voluntarily accepted the terms of
this Agreement, and that:
a. By entering into this Agreement, neither the Company nor Swiss Re is
making any representations as to any fact or circumstance other than
those contained within this Agreement;
b. Neither the Company nor Swiss Re is relying upon the other, nor upon
any person, third party, or anything other than its own independent
knowledge and judgment and the advice of its own counsel in entering
into this Agreement; and
c. Both Parties acknowledge that there is a risk that subsequent to
execution of this Agreement certain facts, circumstances, or legal
decisions may be discovered, established or adjudicated which were
different from, less than, or greater than that believed or known by
one of the Parties hereto at the time of the execution of this
Agreement. It is further understood that the Parties hereby assume
such risk and agree that this Agreement shall apply under any such
different, unknown, or unanticipated conditions.
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ARTICLE IV - CONFIDENTIALITY AND NONDISCLOSURE
The Company and Swiss Re hereby expressly agree that the terms and conditions of
this Agreement shall be CONFIDENTIAL between Parties and shall not be disclosed
by either Party without the prior written consent of the other, except to the
broker of record of the Treaty, or where required by Order of a court,
administrative tribunal, regulatory body, or arbitration panel. In the event
disclosure is to be made pursuant to this Article, the disclosing Party shall
take all steps necessary to preserve the confidentiality of such information,
including giving prior written notice to the other Party, specifying the
information to be disclosed, the manner of disclosure, and to whom disclosure is
to be made. The other, non-disclosing Party shall be provided a reasonable
opportunity to oppose such disclosure. Any third party to whom disclosure is
made shall be bound by this Article and shall so state in writing to the Parties
hereto prior to disclosure.
ARTICLE V - GENERAL CONDITIONS
A. This Agreement is binding on and shall inure to the benefit of all Parties
hereto and their representative officers, directors, employees, agents,
attorneys, shareholders, predecessors, parents, affiliates, subsidiaries,
successors and assigns (including without limitation, any receiver,
conservator, rehabilitator, liquidator, provisional liquidator, trustee or
other statutory successor or quasi-statutory successor) upon its execution.
B. The Parties specifically agree and acknowledge that the consideration for
the commutation is being paid to the Company in good faith and constitutes
fair consideration for the discharge of amounts allegedly owing now or
potentially owing in the future by Swiss Re to the Company for the 2004
Contract Year.
C. This Agreement constitutes the entire understanding by and between the
Parties hereto, superseding all negotiations, prior discussions,
representations, promises, and understandings, oral or written, expressed
or implied, made prior to or contemporaneous with its execution. This
Agreement may only be modified or amended by written agreement, entered
into subsequent to the date of this commutation and duly executed by the
Parties hereto.
D. The failure of the Parties to enforce any provision of this Agreement shall
not be construed as a waiver of such provision or any other provision of
this Agreement. No waiver of any provision of this Agreement shall be
deemed a waiver of any of its other terms, nor shall such waiver constitute
a continuing waiver.
E. This Agreement may be executed and delivered in multiple counterparts, each
of which, when so executed and delivered, shall be an original, but such
counterparts shall together constitute but one of the same instrument and
Agreement.
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F. This Agreement shall be interpreted, construed, and enforced in accordance
with the laws of the State of New York (without giving effect to conflicts
of law principles).
IN WITNESS WHEREOF, the Parties hereto by their respective duly authorized
representatives have executed this Agreement as of the dates undermentioned at:
Bala Cynwyd, Pennsylvania, this 26th day of January in the year 2006.
Xxxxxxxxxxx X. Xxxxxxx,
----------------------------------------
Executive Vice President and
Chief Underwriting Officer
Philadelphia Insurance Company
Philadelphia Indemnity Insurance Company
Calabasas, California, this 27th day of January in the year 2006.
Xxxxxx X. xx Xxxxx,
----------------------------------------
General Counsel
Swiss Re Underwriters Agency, Inc. (for
Swiss Reinsurance America Corporation)
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