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EXHIBIT 10.26
ADDENDUM NUMBER 2
This Addendum attaches to and forms a part of the
INTERESTS AND LIABILITIES CONTRACT
(hereinafter referred to as the "Contract")
to the
REINSTATEMENT/RETROACTIVE/AGGREGATE EXTENSION
EXCESS OF LOSS REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
entered into by and between
SOUTHERN CALIFORNIA PHYSICIANS INSURANCE EXCHANGE
and/or S.C.P.I.E. INDEMNITY COMPANY
and/or S.C.P.I.E. MANAGEMENT COMPANY
and/or AMERICAN HEALTHCARE INDEMNITY COMPANY,
and/or FG CASUALTY COMPANY,
and/or S.C.P.I.E. INSURANCE SERVICES. INC.,
and/or S.C.P.I.E. MANAGEMENT SERVICES, INC.
Beverly Hills, California
(hereinafter collectively referred to as the "Company")
and
HANNOVER RUCKVERSICHERUNGS - AKTIENGESELLSCHAFT
(hereinafter referred to as the "Subscribing Reinsurer")
IT IS HEREBY AGREED that the Agreement attached to this Contract entitled
Reinstatement/Retroactive/Aggregate Extension Excess of Loss Reinsurance
Agreement shall be amended in accordance with the provisions of the attached
Endorsement Number 2, effective as
specified therein.
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IN WITNESS WHEREOF, the parties hereto have caused this Addendum Number 2
to be signed in duplicate by their duly authorized representatives.
Signed in Beverly Hills, California
this day of , 199
SOUTHERN CALIFORNIA PHYSICIANS INSURANCE EXCHANGE
and/or S.C.P.I.E. INDEMNITY COMPANY
and/or S.C.P.I.E. MANAGEMENT COMPANY
and/or AMERICAN HEALTHCARE INDEMNITY COMPANY,
and/or FG CASUALTY COMPANY,
and/or S.C.P.I.E. INSURANCE SERVICES. INC.,
and/or S.C.P.I.E. MANAGEMENT SERVICES, INC.
By: /s/ XXXXXX X. XXX
------------------------------
Signed in
this day of , 199
HANNOVER RUCKVERSICHERUNGS - AKTIENGESELLSCHAFT
By:_________________________________________
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ENDORSEMENT NUMBER 2
This Endorsement attaches to and forms a part of the
REINSTATEMENT/RETROACTIVE/AGGREGATE EXTENSION
EXCESS OF LOSS REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
entered into by and between
SOUTHERN CALIFORNIA PHYSICIANS INSURANCE EXCHANGE
and/or S.C.P.I.E. INDEMNITY COMPANY
and/or S.C.P.I.E. MANAGEMENT COMPANY
while acting on behalf of:
S.C.P.I.E. MANAGEMENT COMPANY
Beverly Hills, California
(hereinafter collectively referred to as the "Company")
and
The Subscribing Reinsurer(s) executing the
Interests and Liabilities Contract(s)
attached to and forming a part
of this Agreement
(hereinafter referred to as the "Reinsurer")
IT IS HEREBY AGREED that, effective December 31, 1996, Pacific Standard
Time, this Agreement will be amended as follows:
1. The named Companies hereon, collectively referred to as the "Company",
shall be revised as follows:
SOUTHERN CALIFORNIA PHYSICIANS INSURANCE EXCHANGE
and/or S.C.P.I.E. INDEMNITY COMPANY
and/or S.C.P.I.E. MANAGEMENT COMPANY
and/or AMERICAN HEALTHCARE INDEMNITY COMPANY,
and/or FG CASUALTY COMPANY,
and/or S.C.P.I.E. INSURANCE SERVICES. INC.,
and/or S.C.P.I.E. MANAGEMENT SERVICES, INC.
Beverly Hills, California
(hereinafter collectively referred to as the "Company")
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2. Article V, "Limits", shall be revised as follows:
ARTICLE V
LIMITS:
A. The Reinsurance coverage provided hereunder is in three Sections,
Section (A), Section (B) and Section (C), as follows:
Section (A): Reinstatement Premium Protection:
The Company has purchased Excess of Loss Reinsurance for
limits of $3,000,000 excess of $2,000,000, each occurrence,
$5,000,000 excess of $5,000,000 each occurrence, and $10,000,000
excess of $10,000,000 each occurrence. In the event of a loss, and
the Company elects reinstatement thereunder, the Company must pay
to the Reinsurers on said covers an additional premium as called
for under the original contracts. In the event of such a
contingency, the Reinsurer hereunder shall reimburse the Company
the reinstatement premiums paid under said original contracts up
to the following maximum amounts:
$3,000,000 $5,000,000 $10,000,000
XS XS XS
Year: Reinstatement: $2,000,000: $5,000,000: $10,000,000
----- -------------- ----------- ----------- -----------
1987 1st $1,862,696 $ 509,137 Nil
2nd $2,794,043 Nil Nil
1988 1st $2,118,125 $ 578,954 Nil
2nd $3,262,500 Nil Nil
1989 1st $2,175,000 $ 594,500 Nil
2nd $3,262,500 Nil Nil
1990 1st $1,687,896 $ 500,000 Nil
2nd $2,531,844 Nil Nil
1991 1st $1,533,062 $ 500,000 Nil
2nd $2,299,592 Nil Nil
1992 1st $1,462,500 $ 425,000 $450,000
2nd $2,193,750 Nil Nil
1993 1st $1,672,391 $ 450,000 $557,463
2nd $2,508,586 Nil Nil
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$3,000,000 $5,000,000 $10,000,000
XS XS XS
Year: Reinstatement: $2,000,000: $5,000,000: $10,000,000
----- -------------- ----------- ----------- -----------
1994 1st $1,791,639 $ 450,000 $581,504
2nd $2,687,459 Nil Nil
1995 1st $1,771,431 $ 450,000 $610,838
2nd $2,834,290 Nil Nil
1996 1st $1,471,706 $440,000 $579,626
2nd $2,354,730 Nil Nil
Section (B): Retroactive Liability:
In consideration for the premium set forth in the Premium
Article, as respects this Section, the Reinsurer agrees to assume
retroactively for the years 1989, 1990, 1991 and 1992, the limits
of $1,000,000 excess of $1,000,000 each occurrence and for the
years 1987 through 1993 the limits of $3,000,000 each occurrence,
each policy in excess of $2,000,000 each occurrence, each policy;
subject to a maximum amount recoverable under this Section of
$10,000,000 in all during the term of this Agreement.
Section (C): First Excess Aggregate Extension:
In consideration for the premium set forth in the Premium
Article, the Reinsurer agrees to provide the Company with an
additional aggregate extension limit for the layer $1,000,000
excess of $1,000,000, each occurrence, separately for the years
1991, 1992, 1993, 1994, 1995 and 1996, such additional limit being
$5,000,000 excess of $8,500,000 or 182.5% of the Gross Reinsurance
Premium Earned during each Agreement term, whichever is the
greater, subject to a maximum amount recoverable under this
Section of $10,000,000 in all during the term of this Agreement.
B. Notwithstanding the individual limitations set forth in each Section
outlined above, the maximum amount recoverable hereunder shall not exceed
$35,000,000 in all during the term of this Agreement.
C. With the exception of the coverage provided under Section (B), the
Company deems to have carried the following additional reinsurances:
1987 - $1,000,000 excess of $1,000,000, each occurrence.
1988 - $1,000,000 excess of $1,000,000, each occurrence.
1989 - $1,000,000 excess of $1,000,000, each occurrence
(commuted as of December 31, 1993).
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1990 - $1,000,000 excess of $1,000,000, each occurrence.
(Commuted as of December 31, 1994).
1991 - $1,000,000 excess of $1,000,000, each occurrence.
(Commuted as of December 31, 1995).
$8,000,000 excess of $2,000,000 each occurrence, each policy.
(Commuted as of December 31, 1995).
1992 - $1,000,000 excess of $1,000,000, each occurrence.
$8,000,000 excess of $2,000,000 each occurrence, each policy.
(Commuted as of December 31, 1995).
1993 - $1,000,000 excess of $1,000,000, each occurrence.
$8,000,000 excess of $2,000,000 each occurrence, each policy.
(Commuted as of December 31, 1995).
1994 - $1,000,000 excess of $1,000,000, each occurrence.
$8,000,000 excess of $2,000,000 each occurrence, each policy.
1995 - $1,000,000 excess of $1,000,000, each occurrence.
$8,000,000 excess of $2,000,000 each occurrence, each policy.
1996 - $1,000,000 excess of $1,000,000, each occurrence.
$8,000,000 excess of $2,000,000 each occurrence, each policy.
3. Article XIII, "Premium", shall be revised as follows:
ARTICLE XIII
PREMIUM:
A. The Company shall pay to the Reinsurer in full as of January 1, 1995,
December 31, 1995 and December 31, 1996, the following reinsurance
premium, in respect of the various Sections covered hereunder:
1/1/95 12/31/95 12/31/96
------ -------- ---------
Section (A) $2,983,071 $1,821,299 $1,705,669
Section (B) $1,847,218 $1,129,205 $1,057,514
Section (C) $1,132,166 $ 692,094 $ 648,154
subject to additional premium as set forth in paragraph B. below.
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B. In the event that the Reinsurer's payment of its liabilities under one
or more of the Sections in this Agreement as of any December 31 exceed
$14,000,000 the Company shall pay, as additional premium to the
Reinsurer, 60% of the difference between such paid amount and 100% of the
premium payable hereunder as of January 1, 1995, December 31, 1995 and
December 31, 1996 combined.
4. Article XIV, "Profit Commission", shall be revised as follows:
ARTICLE XIV
PROFIT COMMISSION:
A. As of December 31, 1996 and annually thereafter the Reinsurer shall
allow the Company a profit commission on the results under this Agreement
in accordance with the following formula:
Income:
1. 95% of the reinsurance premiums paid or payable under Sections
(A), (B) and (C) of the Premium Article, including additional
premium, if any as of January 1, 1995 and December 31, 1995 and
94.9% of premiums payable as of December 31, 1996; plus
2. Interest Credit computed at 6.25% annual interest rate on Net
Cash held by the Reinsurer from January 1, 1995 and 5.50% annual
interest rate on Net Cash held by the Reinsurer from December 31,
1995. The term "Net Cash" shall mean 95% of premiums paid as of
January 1, 1995 and December 31, 1995, and 94.9% of premiums
payable as of December 31, 1996 hereunder, less payments under the
provisions of Sections (A), (B) and (C) and less any provisional
profit commission paid in previous calculations.
Outgo:
100% of all paid and outstanding liabilities under Sections (A),
(B) and (C) as at the date of calculation.
The amount by which Income exceeds Outgo is profit.
The amount by which Outgo exceeds Income is deficit.
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B. It is understood and agreed that payment of Profit Commission to the
Company shall be as of December 31, 1999 and shall be subject to a full
and final release of the Reinsurer's liability under this Agreement.
However, notwithstanding the foregoing, the Company, at its option, can
elect to receive as of any December 31 an annual provisional payment of
20% of the expected total Profit Commission hereunder. Should the
provisional Profit Commission calculation result in a deficit, then any
previous provisional payment of Profit Commission paid to the Company
shall be returned to the Reinsurer to the extent required to eliminate
any deficit. Likewise, for purposes of all Profit Commission calculations
hereunder any allocation under "Outgo" for incurred but not reported loss
reserves shall be subject to mutual agreement of the parties hereto.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
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MEMORANDUM OF CHANGES
to the
SOUTHERN CALIFORNIA PHYSICIANS INSURANCE EXCHANGE, et al
PER POLICY EXCESS OF LOSS REINSURANCE AGREEMENT
This Endorsement Number 2, effective December 31, 1996, contains the
following revisions to the attached Agreement Number 01-95-0879 as per the cover
note/placement slip:
1. The list of Companies hereon, collectively referred to as the "Company",
has been revised.
2. Article V, "Limits", has been revised.
3. Article XIII, "Premium", has been revised.
4. Article XIV, "Profit Commission", has been revised.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
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