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Exhibit 10.28
SPECIFIC RETROCESSION AGREEMENT
ARTICLE PAGE
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TERM AND CANCELLATION I 3
CONCURRENCY OF CONDITIONS II 4
PREMIUM AND CEDING COMMISSION III 4
RESERVES AND FUNDING IV 5
SETTLEMENTS AND SALVAGE V 7
OFFSET VI 7
DELAYS, ERRORS, OR OMISSIONS VII 8
ENTIRE AGREEMENT/AMENDMENTS VIII 8
ACCESS TO RECORDS IX 9
INSOLVENCY X 9
ARBITRATION XI 11
SERVICE OF SUIT XII 13
FOLLOW THE FORTUNES XXXX 00
XXXXXXXXXXXX XXX 00
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SPECIFIC RETROCESSION AGREEMENT
(hereinafter referred to as the "Agreement")
between
TRENWICK AMERICA REINSURANCE CORPORATION
a CONNECTICUT corporation
(hereinafter referred to as the "Retrocedent")
and
INTERNATIONAL SURETY AND CASUALTY COMPANY
a TEXAS corporation
(hereinafter referred to as the "Retrocessionaire")
as respects the
100% QUOTA SHARE REINSURANCE AGREEMENT AR 11148
(hereinafter referred to as the "Original Agreement")
Effective July 1, 1998
issued by the Retrocedent to
STATE AND COUNTY MUTUAL FIRE INSURANCE COMPANY
(hereinafter referred to as the "Original Reinsured")
By this Agreement the Retrocedent agrees to retrocede to the
Retrocessionaire, and the Retrocessionaire agrees to accept retrocession from
the Retrocedent a 37% share of the Retrocedent's 27% share in the Original
Agreement a copy of which is attached hereto and made a part of this Agreement.
This Agreement and any modification or endorsement hereto shall be
governed and interpreted in accordance with the laws of the State of New York,
U.S.A. Nothing hereinafter shall in any manner create any obligations or
establish any rights against Retrocessionaire in favor of any third parties or
any persons not parties to this Agreement except as provided in the Insolvency
Article.
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ARTICLE I
TERM AND CANCELLATION
This Agreement will apply to all business subject to the Original
Agreement effective July 1, 1998.
This Agreement may be canceled (or the Retrocessionaire's participation
may be reduced) any June 30th by either party giving at least 120 days prior
notice by certified or registered mail to the other party. During any such
period of notice the Retrocessionaire will remain bound by the terms of this
Agreement.
In the event this Agreement is canceled (or the Retrocessionaire's
participation is reduced) in accordance with the aforementioned procedure, the
Retrocessionaire will remain liable for all losses under policies in force until
their expiration or renewal dates.
In the event the Original Reinsured's policies are written in a
jurisdiction where cancellation, renewal, or nonrenewal is regulated by the
insurance authorities, and the Original Reinsured and the Retrocedent are bound
to continue coverage by such regulations and statutes of said jurisdiction or by
a judicial decision, the Retrocessionaire will remain liable on any such
policies in force at cancellation date of this Agreement (and will receive the
premium therefor) until the date each expires or until the first renewal date
when the Original Reinsured can lawfully nonrenew said policies, whichever
occurs first.
Alternatively, the Retrocedent may elect to cancel (or reduce) the
Retrocessionaire's liability on a cut-off basis as of the date of cancellation,
and the Retrocessionaire will not be liable for any losses occurring (or the
percentage thereof
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equal to the amount of participation reduction) on or after the cancellation
date and will return immediately to the Retrocedent the unearned premium less
ceding commission as of that date, computed on a monthly pro rata basis.
Notwithstanding the foregoing, in the event the Original Agreement
attached hereto is cancelled for whatever reason, this Agreement will be
cancelled concurrently with the cancellation of said Original Agreement.
Notwithstanding the cancellation of this Agreement as hereinabove
provided, its provisions will continue to apply to all unfinished business
hereunder to the end that all obligations and liabilities incurred by each party
hereunder will be fully performed and discharged.
ARTICLE II
CONCURRENCY OF CONDITIONS
This Agreement will follow in all respects the terms and
conditions of the Original Agreement (including letters of understanding and/or
addenda attached thereto when accepted by the Retrocedent), provided the terms
and conditions of the Original Agreement are not inconsistent with the terms and
conditions of this Agreement. The Retrocedent agrees to transmit to the
Retrocessionaire all notices and information pertaining to the subject matter of
this Agreement as promptly as possible after receipt thereof by the Retrocedent.
ARTICLE III
PREMIUM AND CEDING COMMISSION
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As premium for the reinsurance provided hereunder, the Retrocedent will
retrocede to the Retrocessionaire its proportional share of the net earned
premium ceded to the Retrocedent in respect of the Original Agreement, less the
ceding commission set forth below.
The Retrocessionaire will allow the Retrocedent a ceding commission in
accordance with Article IX of the Original Agreement plus brokerage paid to the
Intermediary of 1.5% of the gross ceded earned premium under the Original
Agreement.
ARTICLE IV
RESERVES AND FUNDING
As regards business coming within the scope of this Agreement, the
Retrocedent agrees that, when it files with the Insurance Department or sets up
on its books reserves for losses (including loss and loss expense paid by the
Retrocedent but not recovered from the Retrocessionaire, and loss and loss
expense reported and outstanding but not including any amount relating to
reserves in respect of incurred but not reported losses) and/or unearned
premium, which it is required by law to set up (hereinafter referred to as
"Retrocessionaire's Obligations"), it will forward to the Retrocessionaire a
statement showing the proportion of such reserves applicable to it. The unearned
premium held by the Retrocedent on behalf of the Retrocessionaire will be
deposited into a Trust Account at Texas State Bank, McAllen, Texas by the
Intermediary. This Trust Account will be established in accordance with the
terms of the Trust Agreement, a copy of which is attached hereto and made a part
of this Agreement. The interest earned on funds
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deposited in the Trust Account will be shared equally between the Retrocedent
and the Retrocessionaire and will be remitted quarterly with the corresponding
monthly account under the Original Agreement.
Notwithstanding any other provisions of this Agreement, the Retrocedent
or its court-appointed successor in interest may draw upon the Trust Account at
any time without diminution because of the insolvency of the Retrocedent or of
the Retrocessionaire for one or more of the following purposes only:
A. To pay or reimburse the Retrocedent for the Retrocessionaire's
Obligations under this Agreement which have not otherwise been
paid by the Retrocessionaire;
B. To make payment to the Retrocessionaire of any amounts held in
the Trust Account that exceed one hundred two percent (102%)
of the actual amount required to fund the Retrocessionaire's
Obligations; or
C. Where the Retrocedent has received notification of termination
of the Trust Account and where any of the Retrocessionaire's
entire Obligations remain unliquidated and discharged ten (10)
days prior to such termination date, to withdraw amounts equal
to such Obligations and deposit such amounts in a separate
account, in the name of the Retrocedent, in any United States
bank or trust company, apart from its general assets, in trust
for such uses and purposes specified in (a) and (b) above as
may remain executory after such withdrawal and for any period
after such termination date.
At annual intervals, or more frequently as agreed but never more
frequently than semi-annually, the Retrocedent will prepare and forward to the
Retrocessionaire a statement to reflect the Retrocessionaire's share of reserves
for losses and/or unearned premium. If the statement shows that the
Retrocessionaire's share of such reserves exceeds the balance available in the
Trust Account as of the statement date, then the Retrocessionaire will, within
30 days after receipt of notice of such excess, deposit with
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the Trustee under the Trust Agreement assets having a value on the date of
deposit equal to such excess. If, however, the statement shows that the
Retrocessionaire's share of such reserves is less than the balance available in
the Trust Account as of the statement date,
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then the Retrocedent will, within 30 days after receipt of written request from
the Retrocessionaire, make a withdrawal from the Trust Account in the amount of
such excess and remit the same to the Retrocessionaire.
ARTICLE V
SETTLEMENTS AND SALVAGE
The Retrocedent will have the right to settle all claims under the
Original Agreement. The Retrocessionaire will be liable for its proportional
share of loss and loss expense that the Retrocedent pays or allows under the
Original Agreement, including loss expense directly incurred by the Retrocedent,
if any. The Retrocessionaire agrees that settlements hereunder will take place
at the same time as under the Original Agreement. All settlements, provided they
are within the terms of this Agreement, will be unconditionally binding on the
Retrocessionaire in proportion to its participation in this Agreement.
The Retrocessionaire will receive its proportional share of all salvage
recovered and/or recoveries made by the Retrocedent in respect of losses subject
to this Agreement.
ARTICLE VI
OFFSET
The Retrocedent and the Retrocessionaire will each be entitled to
deduct from amounts due the other party under this Agreement any amounts due
itself from the other party under this Agreement or under any other reinsurance
or retrocession agreement
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heretofore or hereafter entered into by and between them through the reinsurance
intermediary designated in ARTICLE XIV of this Agreement. In the event of the
insolvency of a party hereto, however, offset shall only be allowed in
accordance with the provisions of Section 7427 of the Insurance Laws of the
State of New York.
ARTICLE VII
DELAYS, ERRORS, OR OMISSIONS
The Retrocedent will not be prejudiced in any way by any delay or by
any omission, through error, accident, or oversight, to cede to the
Retrocessionaire any reinsurance correctly falling to its share under the terms
of this Agreement. Neither will the Retrocedent be prejudiced by erroneous
cancellation (either partial or total) of any cession, by omission to report or
erroneously reporting any losses, or by any other error or omission. Further,
delays, errors, or omissions inadvertently made will not invalidate the
liability of the Retrocessionaire. Any such error or omission, however, will be
corrected immediately upon discovery.
ARTICLE VIII
ENTIRE AGREEMENT/AMENDMENTS
This Agreement constitutes the entire agreement between the parties.
This Agreement may be altered or amended in any of its terms and conditions by
mutual consent of the Retrocedent and the Retrocessionaires either by addenda
hereto or by an exchange of letters; such addenda or letters will then
constitute a part of this Agreement.
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ARTICLE IX
ACCESS TO RECORDS
Provided the Retrocedent has received prior notice, the
Retrocessionaire or its designated representatives will have the right to
inspect, at any reasonable time, all records of the Retrocedent that pertain in
any way to this Agreement.
ARTICLE X
INSOLVENCY
In the event of the Retrocedent's insolvency, the reinsurance afforded
by this Agreement will be payable by the Retrocessionaire on the basis of the
Retrocedent's liability under the Original Agreement without diminution because
of the Retrocedent's insolvency or because its liquidator, receiver,
conservator, or statutory successor has failed to pay all or a portion of any
claims, subject however to the right of the Retrocessionaire to offset against
such funds due hereunder, any sums that may be payable to them by said insolvent
Retrocedent in accordance with the Offset Article. The reinsurance will be
payable by the Retrocessionaire directly to the Retrocedent, or to its
liquidator, receiver, conservator, or statutory successor except (a) where this
Agreement specifically provides another payee of such reinsurance in the event
of the Retrocedent's insolvency or (b) where the Retrocessionaire, with the
consent of the direct insured or insureds, has assumed such policy obligations
of the Retrocedent as direct obligations of itself to the payees under such
policies in substitution for the Retrocedent's obligation to
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such payees. Then, and in that event only, the Retrocedent, with the prior
approval of the liquidator, receiver, conservator, or statutory successor is
entirely released from its obligation and the Retrocessionaire will pay any loss
directly to payees under such policies.
The Retrocedent's liquidator, receiver, conservator, or statutory
successor will give written notice of the pendency of a claim against the
Retrocedent under the Original Agreement within a reasonable time after such
claim is filed in the insolvency proceeding. During the pendency of such claim,
the Retrocessionaire may investigate said claim and interpose in the proceeding
where the claim is to be adjudicated, at its own expense, any defense that it
may deem available to the Retrocedent, or to its liquidator, receiver,
conservator, or statutory successor. The expense thus incurred by the
Retrocessionaire will be chargeable against the Retrocedent, subject to court
approval, as part of the expense of conservation or liquidation to the extent
that such proportionate share of the benefit will accrue to the Retrocedent
solely as a result of the defense undertaken by the Retrocessionaire.
In the event of insolvency, bankruptcy, receivership, rehabilitation or
liquidation of the Retrocessionaire, the Retrocedent may immediately take
possession of all of the assets held in the Trust Account maintained in
connection herewith, and may retain all or any portion of any amount then due or
which may become due to the Retrocessionaire under this Agreement. Such amounts
shall be used for the purpose of paying any and all liability of the
Retrocessionaire hereunder until all such liabilities have been discharged, at
which time the Retrocedent shall pay to the Retrocessionaire, its conservator,
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liquidator, receiver or statutory successor the balance of such amounts withheld
as may remain, provided no
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default of the Retrocessionaire has occurred hereunder, in which case the
Retrocessionaire, its conservator, liquidator, receiver or statutory successor
forfeits any amounts which may remain.
ARTICLE XI
ARBITRATION
In the event of any arbitration between the Retrocedent and the
Original Reinsured under the terms of the Original Agreement attached hereto,
the Retrocessionaire agrees to abide by the results of such arbitration or any
settlement arising therefrom.
As a condition precedent to any right of action hereunder, any dispute
arising out of the interpretation, performance or breach of this Agreement,
including the formation or validity thereof, will be submitted for decision to a
panel of three arbitrators. Notice requesting arbitration will be in writing and
sent certified or registered mail, return receipt requested.
One arbitrator will be chosen by each party and the two arbitrators
will, before instituting the hearing, choose an impartial third arbitrator who
will preside at the hearing. If either party fails to appoint its arbitrator
within 30 days after being requested to do so by the other party, the latter
after 10 days notice by certified or registered mail of its intention to do so,
may appoint the second arbitrator.
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If the two arbitrators are unable to agree upon the third arbitrator
within 30 days of their appointment, they will request the American Arbitration
Association to appoint a third arbitrator with the qualifications set forth
below in this Article.
All arbitrators will be disinterested active or former executive
officers of insurance or reinsurance companies or Underwriters at Lloyd's,
London.
Within 30 days after notice of appointment of all arbitrators, the
panel will meet and determine timely periods for briefs, discovery procedures
and schedules for hearings.
The panel will be relieved of all judicial formality and will not be
bound by the strict rules of procedure and evidence. Unless the panel agrees
otherwise, arbitration will take place in Stamford, Connecticut, but the venue
may be changed when deemed by the panel to be in the best interest of the
arbitration proceeding. The decision of any two arbitrators when rendered in
writing will be final and binding. The panel is empowered to grant interim
relief as it may deem appropriate.
To the extent, and only to the extent, that the provisions of this
Agreement are ambiguous or unclear, the panel will make its decision considering
the custom and practice of the applicable insurance and reinsurance business as
promptly as possible, but within 60 days following the termination of the
hearings. Judgment upon the award may be entered in any court having
jurisdiction thereof.
Each party will bear the expense of its own arbitrator and will jointly
and equally bear with the other party the cost of the third arbitrator. The
remaining costs of the arbitration will be allocated by the panel. The panel
may, at its discretion, award such
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further costs and expenses as it considers appropriate, including but not
limited to attorneys fees, to the extent permitted by law.
ARTICLE XII
SERVICE OF SUIT
In the event the Retrocessionaire hereon fails to pay any amount or
perform any obligation claimed due hereunder, such Retrocessionaire, at the
request of the Retrocedent, will submit to the jurisdiction of a court of
competent jurisdiction within the United States and will comply with all
requirements necessary to give that court jurisdiction. Nothing in this Article
constitutes or should be understood to constitute a waiver of the
Retrocessionaire's right to commence an action in any court of competent
jurisdiction in the United States, to remove an action to a United States
District Court, or to seek a transfer of a case to another court as permitted by
the laws of the United States or of any state in the United States. Service of
process in such suit may be made upon Mendes and Mount, 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000-0000. In any suit instituted against it upon this
Agreement, the Retrocessionaire will abide by the final decision of such court
or of any appellate court in the event of an appeal.
The above named are authorized and directed to accept service of
process on behalf of the Retrocessionaire in any such suit and/or upon the
request of the Retrocedent to give a written undertaking to the Retrocedent that
they will enter a general appearance upon the Retrocessionaire's behalf in the
event such a suit is instituted.
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Further, pursuant to any statute of any state, territory, or district
of the United States that makes provision therefor, the Retrocessionaire hereby
designates the Superintendent, Commissioner, or Director of Insurance or other
officer specified for that purpose in the statute (or his successor or
successors in office) as its true and lawful attorney upon whom may be served
any lawful process in any action, suit, or proceeding instituted by or on behalf
of the Retrocedent or any beneficiary hereunder arising out of this Agreement,
and hereby designates the above named as the person to whom the said officer is
authorized to mail such process or a true copy thereof.
ARTICLE XIII
FOLLOW THE FORTUNES
The liability of the Retrocessionaire will commence as of the effective
date of this Agreement and, unless otherwise specifically provided herein, will
follow in all respects the terms and conditions of the Original Agreement and
any amendments thereto. The Retrocessionaire agrees that it is the true intent
of this Agreement that the Retrocessionaire will, in every case to which this
Agreement applies, follow the fortunes of the Retrocedent.
ARTICLE XIV
INTERMEDIARY
Aon Re Inc., an Illinois corporation, or one of its affiliated
corporations duly licensed as a reinsurance intermediary, is hereby recognized
as the Intermediary
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negotiating this Agreement for all business hereunder. All communications
(including but not limited to notices, statements, premiums, return premiums,
commissions, taxes, losses, loss expenses, salvages, and loss settlements)
relating to this Agreement will be transmitted to the Retrocedent or the
Retrocessionaire through the Intermediary. Payments by the Retrocedent to the
Intermediary will be deemed payment to the
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Retrocessionaire. Payments by the Retrocessionaire to the Intermediary will be
deemed payment to the Retrocedent only to the extent that such payments are
actually received by the Retrocedent.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives.
Signed at STAMFORD, CONNECTICUT
TRENWICK AMERICA REINSURANCE CORPORATION
Signature: ___________________________ Title: ________________________
Attest: ___________________________ Date: ________________________
Signed at DALLAS, TEXAS
INTERNATIONAL SURETY AND CASUALTY COMPANY
Signature: ___________________________ Title: ________________________
Attest: ___________________________ Date: ________________________
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