EXHIBIT 10.13 (16)
ADDENDUM NO. 2
TO
AGGREGATE LOSS RATIO REINSURANCE AGREEMENT
BETWEEN
NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
(HEREINAFTER CALLED THE "RETROCEDENT")
AND
GRANITE REINSURANCE COMPANY, LTD.
(HEREINAFTER CALLED THE "RETROCESSIONAIRE")
It is understood and agreed that Addendum Number 3 to the Underlying Agreements,
copies attached hereto, are accepted as part of the Underlying Agreements.
It is understood and agreed that effective January 1st, 2002 the following
articles are amended to read as follows:
ARTICLE IV COVERAGE
The Retrocessionaire shall be liable separately for each Reinsurance Agreement,
for losses incurred (including all Loss Adjustment Expenses) in excess of a loss
ratio of: (1) 79% for business effective prior to 2002, however excluding
business in-force on December 31st, 2001; or (2) 78.675% for business effective
in 2002. All terms and conditions of the Underlying Agreements, copies attached
hereto, shall apply.
ARTICLE VI PREMIUMS
For business effective as described in ARTICLE IV (1):
The Retrocedent shall pay an initial deposit premium of $10,000 within 15 days
of receipt of the first cash premium payment received on any of the Underlying
Agreements. The final premium shall be 12.5% of the premium cash payments
received. The difference between that premium and the deposit premium shall be
paid to the Retrocessionaire. In addition the Retrocedent shall pay 100% of the
payment received upon the finalization of the liabilities in accordance with the
Underlying Agreements. The aformentioned payments shall be made within 30 days
of the finalization of all liabilities on the Underlying Agreements. However, no
payment shall be made after the deposit premium unless all conditions of this
agreement have been complied with.
For business effective as described in ARTICLE IV (2):
The Retrocedent shall pay an initial deposit premium of $10,000 within 30 days
of receipt of the first cash premium payment received on any of the Underlying
Agreements. The final premium shall be .375% of the premiums reported on the
account statement(s) of the Underlying Agreement. Upon the finalization of
all liabilities on the Underlying Agreement the Retrocedent shall pay the
Retrocessionaire the difference between the final premium and the deposit
premium, as well as, 100% of the Profit Account Balance. However, no payment
shall be made unless all conditions of this agreement have been complied with.
ARTICLE VII DEFINITIONS
Loss Ratio shall mean losses paid and outstanding, including IBNR and allocated
loss adjustment expenses, divided by earned premium calculated separately;
(1) For business effective as described in ARTICLE IV (1), the combined sum of
Superior Insurance Company from January 1st, 2001 to the date of calculation and
Pafco General Insurance Company from January 1st, 2000 to the date of
calculation.
(2) For business as described in ARTICLE IV (2), from January 1st, 2002 to the
date of calculation.
Profit Account Balance, shall mean for business effective as described in
ARTICLE IV (2):
Cash payments received by the Retrocedent on the Underlying Agreements,
minus
3.375% of the total premiums reported on the Underlying Agreements, minus
Cash payments made on the Underlying Agreements.
ARTICLE VIII REPORTS AND ACCOUNTING
The Retrocedent shall forward to the Retrocessionaire a copy of all reports
received in accordance with the Underlying Agreements within 30 days of their
receipt. In the event the paid loss (including all loss adjustment expenses)
are in excess of (1) 79% on business as described in ARTICLE IV (1), or (2)
78.625% on business as described in ARTICLE IV (2), of the earned premium on any
individual agreement, the Retrocessionaire shall pay such excess within 30 days
of receipt of the accounts statement, however, not in excess of the limit of
liability. Any amounts otherwise due shall be reduced by the amount of
Investment Allowance in the Underlying Agreement that would have been due but
was not paid.
IN WITNESS WHEREOF: the parties hereto have caused this Agreement to be
executed by their Authorized representatives.
In:________________________________this_________day of______________________2002
NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
By:_______________________________
Title:______________________________
And in_____________________________this_________day of _____________________2002
GRANITE REINSURANCE COMPANY, LTD.
By:_______________________________
Title:______________________________
