EXHIBIT 10 (bs)
QUOTA SHARE
RETROCESSION CONTRACT
issued to
DORINCO REINSURANCE COMPANY
Midland, Michigan
(hereinafter referred to as the "Retrocedant")
by
AMERICAN HALLMARK INSURANCE COMPANY OF TEXAS
Dallas, Texas
(hereinafter referred to as the "Retrocessionaire")
BY THIS CONTRACT the Retrocedant agrees to retrocede to the Retrocessionaire
and the Retrocessionaire agrees to accept 20% of the Retrocedant's 100% in
the interests and liabilities of the Retrocedant under the 100% Quota Share
Reinsurance Agreement, effective September 1, 1998, issued to State and
County Mutual Fire Insurance Company, Fort Worth, Texas, and Van Wagoner
Companies, Inc., Plano, Texas (hereinafter referred to as the "Original
Agreement"). A copy of the Original Agreement and any Endorsements thereto,
are attached to and form part of this Contract.
ARTICLE I - COMMENCEMENT AND TERMINATION
A. This Contract shall become effective at 12:01 a.m., Central Standard
Time, September 1, 2000, and shall continue in force thereafter until
terminated.
B. Either party may terminate this Contract on any September 1, December
1, March 1 or June 1 by giving the other party not less than 90 days
prior notice by certified mail, it being understood and agreed that if
the Original Agreement is terminated for any reason, this Contract
shall expire automatically at the same time.
C. In the event this Contract is terminated prior to the date the Original
Agreement is terminated, the Retrocessionaire shall remain liable
hereunder for its pro rata share of the Retrocedant's liability for
business in force under the Original Agreement until expiration,
cancellation or next premium anniversary of such business, whichever
first occurs, but in no event beyond 12 months following the effective
date of termination of this Contract. In the event this Contract
expires because the Original Agreement is terminated, the liability of
the Retrocessionaire shall follow that of the Retrocedant under the
termination provisions of the Original Agreement.
ARTICLE II - CONCURRENCY OF CONDITIONS
This Contract shall follow in all respects the terms and conditions of the
Original Agreement (including endorsements thereto), provided the terms and
conditions of the Original Agreement are not inconsistent with the terms and
conditions of this Contract. The Retrocedant agrees to transmit all notices
and information pertaining to the subject matter of this Contract as
promptly as possible after receipt thereof.
ARTICLE III - PREMIUM
A. As premium for the reinsurance provided hereunder, the Retrocedant
shall retrocede 20% of the gross premiums ceded to the Retrocedant
under the Original Agreement.
B. The premium due the Retrocessionaire (less commission allowed thereon
under the Original Agreement) shall be remitted by the Retrocedant as
promptly as possible after the Retrocedant receives its share of
premiums under the Original Agreement.
ARTICLE IV - COMMISSION
The Retrocessionaire agrees to allow the Retrocedant a commission equal to
the ceding commission allowed under the Original Agreement.
ARTICLE V - LOSSES AND SALVAGE
A. All loss settlements by the Retrocedant, whether under strict policy
conditions or by way of compromise, shall be unconditionally binding
upon the Retroces-sionaire in proportion to its participation, and the
Retrocessionaire shall benefit proportionately in all salvages and
recoveries.
B. The Retrocessionaire shall pay its pro rata share of any losses and/or
loss adjustment expenses as promptly as possible after receipt and
verification of the Retrocedant's payment request.
ARTICLE VI - OFFSET
The Retrocedant or the Retrocessionaire shall have, and may exercise at any
time and from time to time, the right to offset any balance or balances,
whether on account of premiums or on account of claims or otherwise, due
from one party to the other under the terms of this Contract. However, in
the event of the insolvency of any party hereto, offset shall only be
allowed in accordance with applicable law.
ARTICLE VII - ACCESS TO RECORDS
The Retrocessionaire, by its duly appointed representatives, shall have the
right at any reasonable time to examine all papers in the possession of the
Retrocedant referring to business effected hereunder.
ARTICLE VIII - SERVICE OF SUIT (Applicable if the Retrocessionaire is not
domiciled in the United States of America, and/or is not authorized in any
State, Territory or District of the United States where authorization is
required by insurance regulatory authorities)
A. It is agreed that in the event the Retrocessionaire fails to pay any
amount claimed to be due hereunder, the Retrocessionaire, at the
request of the Retrocedant, will submit to the jurisdiction of any
court of competent jurisdiction within the United States. Nothing in
this Article constitutes or should be understood to constitute a waiver
of the Retrocessionaire's rights 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.
B. Further, pursuant to any statute of any state, territory or district of
the United States which 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 Retrocedant or any
beneficiary hereunder arising out of this Contract.
ARTICLE IX - LOSS RESERVES
A. If the Retrocessionaire is unauthorized in any state of the United
States of America or the District of Columbia, the Retrocessionaire
agrees to fund its share of the Retrocedant's ceded outstanding loss
and loss adjustment expense reserves by:
1. Clean, irrevocable and unconditional letters of credit issued
or confirmed by banks meeting the credit standards of the
NAIC Securities Valuation Office; and/or
2. Escrow accounts for the benefit of the Retrocedant; and/or
3. Cash advances;
if, without such funding, a penalty would accrue to the Retrocedant on
any financial statement it is required to file with the insurance
regulatory authorities involved. The Retrocessionaire, at its sole
option, may fund in other than cash if its method of funding and the
form thereof is acceptable to the insurance regulatory authorities
involved.
B. With regard to funding in whole or in part by letters of credit, it is
agreed that each letter of credit will be issued for a term of at least
one year and will include an "evergreen clause," which automatically
extends the term for at least one additional year at each expiration
date unless written notice of non-renewal is given to the Retrocedant
not less than 30 days prior to said expiration date. The Retrocedant
and the Retrocessionaire further agree, notwithstanding anything to the
contrary in this Contract, that said letters of credit may be drawn
upon by the Retrocedant or its successors in interest at any time,
without diminution because of the insolvency of the Retrocedant or the
Retrocessionaire, but only for one or more of the following purposes:
1. To reimburse itself for the Retrocessionaire's share of
losses and/or loss adjustment expenses paid under the terms
of policies reinsured hereunder, unless paid in cash by the
Retrocessionaire;
2. To reimburse itself for the Retrocessionaire's share of any
other amounts claimed to be due hereunder, unless paid in
cash by the Retrocessionaire;
3. To fund a cash account in an amount equal to the
Retrocessionaire's share of any ceded outstanding loss and
loss adjustment expense reserves funded by means of a letter
of credit which is under non-renewal notice, if said letter
of credit has not been renewed or replaced by the
Retrocessionaire 10 days prior to its expiration date;
4. To refund to the Retrocessionaire any sum in excess of the
actual amount required to fund the Retrocessionaire's share
of the Retrocedant's ceded outstanding loss and loss
adjustment expense reserves, if so requested by the
Retrocessionaire.
In the event the amount drawn by the Retrocedant on any letter of
credit is in excess of the actual amount required for B(1) or B(3), or
in the case of B(2), the actual amount determined to be due, the
Retrocedant shall promptly return to the Retrocessionaire the excess
amount so drawn.
ARTICLE X - INSOLVENCY
A. In the event of the insolvency of the Retrocedant, this reinsurance
shall be payable directly to the Retrocedant or to its liquidator,
receiver, conservator or statutory successor on the basis of the
liability of the Retrocedant without diminution because of the
insolvency of the Retrocedant or because the liquidator, receiver,
conservator or statutory successor of the Retrocedant has failed to pay
all or a portion of any claim. It is agreed, however, that the
liquidator, receiver, xxxxxx- vator or statutory successor of the
Retrocedant shall give written notice to the Retrocessionaire of the
pendency of a claim against the Retrocedant indicating the policy or
bond reinsured which claim would involve a possible liability on the
part of the Retrocessionaire within a reasonable time after such claim
is filed in the conservation or liquidation proceeding or in the
receivership, and that during the pendency of such claim, the
Retrocessionaire may investigate such claim and interpose, at its own
expense, in the proceeding where such claim is to be adjudicated, any
defense or defenses that it may deem available to the Retrocedant or
its liquidator, receiver, conservator or statutory successor. The
expense thus incurred by the Retrocessionaire shall be chargeable,
subject to the approval of the Court, against the Retrocedant as part
of the expense of conservation or liquidation to the extent of a pro
rata share of the benefit which may accrue to the Retrocedant solely as
a result of the defense undertaken by the Retrocessionaire.
B. It is further understood and agreed that, in the event of the
insolvency of the Retrocedant, the reinsurance under this Contract
shall be payable directly by the Retrocessionaire to the Retrocedant or
to its liquidator, receiver, conservator or statutory successor, except
as provided by Section 4118(a) of the New York Insurance Law or except
(a) where this Contract specifically provides another payee of such
reinsurance in the event of the insolvency of the Retrocedant or (b)
where the Retrocessionaire with the consent of the direct insured or
insureds has assumed such policy obligations of the Retrocedant as
direct obligations of the Retrocessionaire to the payees under such
policies and in substitution for the obligations of the Retrocedant to
such payees.
ARTICLE XI - ARBITRATION
A. As a condition precedent to any right of action hereunder, in the event
of any dispute or difference of opinion hereafter arising with respect
to this Contract, it is hereby mutually agreed that such dispute or
difference of opinion shall be submitted to arbitration. One Arbiter
shall be chosen by the Retrocedant, the other by the Retrocessionaire,
and an Umpire shall be chosen by the two Arbiters before they enter
upon arbitration, all of whom shall be active or retired disinterested
executive officers of insurance or reinsurance companies or Lloyd's
London Underwriters. In the event that either party should fail to
choose an Arbiter within 30 days following a written request by the
other party to do so, the requesting party may choose two Arbiters who
shall in turn choose an Umpire before entering upon arbitration. If
the two Arbiters fail to agree upon the selection of an Umpire within
30 days following their appointment, each Arbiter shall name three
nominees, of whom the other shall decline two, and the decision shall
be made by drawing lots.
B. Each party shall present its case to the Arbiters within 30 days
following the date of appointment of the Umpire. The Arbiters shall
consider this Contract as an honorable engagement rather than merely as
a legal obligation and they are relieved of all judicial formalities
and may abstain from following the strict rules of law. The decision
of the Arbiters shall be final and binding on both parties; but failing
to agree, they shall call in the Umpire and the decision of the
majority shall be final and binding upon both parties. Judgment upon
the final decision of the Arbiters may be entered in any court of
competent jurisdiction.
C. Each party shall bear the expense of its own Arbiter, and shall jointly
and equally bear with the other the expense of the Umpire and of the
arbitration. In the event that the two Arbiters are chosen by one
party, as above provided, the expense of the Arbiters, the Umpire and
the arbitration shall be equally divided between the two parties.
D. Any arbitration proceedings shall take place at a location mutually
agreed upon by the parties to this Contract, but notwithstanding the
location of arbitration, all proceedings pursuant hereto shall be
governed by the law of the state in which the Retrocedant has its
principal office.
ARTICLE XII - INTERMEDIARY
Xxxx X. Xxxxxxx Associates, Inc. is hereby recognized as the intermediary
negotiating this Contract. All communications (including but not limited to
notices, statements, premiums, return premiums, commissions, taxes, losses,
loss adjustment expenses, salvage and loss settlements) relating hereto
shall be transmitted to the Retrocedant and the Retrocessionaire through
Xxxx X. Xxxxxxx Associates, Inc., 0000 Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000. Payments by the Retrocedant to Xxxx X. Xxxxxxx Associates,
Inc. shall be deemed to constitute payment to the Retrocessionaire.
Payments by the Retrocessionaire to Xxxx X. Xxxxxxx Associates, Inc. shall
be deemed only to constitute payment to the Retrocedant to the extent that
such payments are actually received by the Retrocedant.
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
executed by their duly authorized representatives:
In Midland, Michigan, this ____________ day of ______________________, 20__.
DORINCO REINSURANCE COMPANY
By ______________________________________
(signature)
______________________________________
(name)
______________________________________
(title)
In Dallas, Texas, this ____________ day of __________________________, 20__.
AMERICAN HALLMARK INSURANCE COMPANY OF TEXAS
By ______________________________________
(signature)
______________________________________
(name)
______________________________________
(title)
