EXHIBIT 10.54
EXECUTION COPY
100% QUOTA SHARE RETROCESSION AGREEMENT
(NON-TRADITIONAL - B-1)
BY AND BETWEEN
ST. XXXX REINSURANCE COMPANY LIMITED
(RETROCEDANT)
and
PLATINUM UNDERWRITERS REINSURANCE INC.
(RETROCESSIONAIRE)
DATED AS OF 1 NOVEMBER, 2002
EXECUTION COPY
THIS QUOTA SHARE RETROCESSION AGREEMENT (this "AGREEMENT"), effective as of
12:01 a.m. London time on the day following the Closing (such term and all other
capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Formation and Separation Agreement, as defined below; such
time the "EFFECTIVE TIME" and such date the "EFFECTIVE DATE"), is made by and
between ST. XXXX REINSURANCE COMPANY LIMITED, a United Kingdom domiciled
insurance company ("RETROCEDANT"), and PLATINUM UNDERWRITERS REINSURANCE, INC.
(formerly known as USF&G Family Insurance Company), a Maryland domiciled stock
insurance company ("RETROCESSIONAIRE").
WHEREAS, pursuant to a Formation and Separation Agreement dated as of October
28, 2002 (the "FORMATION AND SEPARATION AGREEMENT") between Platinum
Underwriters Holdings, Ltd. ("PLATINUM HOLDINGS"), the ultimate parent of
Retrocessionaire, and The St. Xxxx Companies, Inc. ("THE ST. XXXX"), the
ultimate parent of Retrocedant, Platinum Holdings acquired one hundred percent
(100%) of the issued and outstanding Shares; and
WHEREAS, pursuant to the Formation and Separation Agreement, The St. Xxxx agreed
to cause its insurance subsidiaries to cede specified liabilities under certain
reinsurance contracts of The St. Paul's insurance subsidiaries, and Platinum
Holdings agreed to cause its insurance subsidiaries to reinsure such
liabilities; and
WHEREAS, Retrocedant has agreed to retrocede to Retrocessionaire, and
Retrocessionaire has agreed to assume by indemnity reinsurance, as of the
Effective Time, a one hundred percent (100%) quota share of the liabilities
arising pursuant to the Reinsurance Contracts (as defined hereunder), subject to
the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and promises and upon
the terms and conditions set forth herein, the parties hereto agree as follows:
1. BUSINESS COVERED
Retrocedant hereby obligates itself to retrocede to Retrocessionaire
and Retrocessionaire hereby obligates itself to accept, pursuant to the
terms of this Agreement, a one hundred percent (100%) quota share of
any and all liabilities incurred by Retrocedant on or after January 1,
2002 but not yet paid as of the Effective Time, under all reinsurance
and retrocession contracts that:
(i) are listed in Exhibit A-1 hereto, and Exhibit A-2 sets forth
the aggregate loss, loss adjustment expense and ceding commission
reserve amounts, each as of June 30, 2002, over the Reinsurance
Contracts, by line of business, or
(ii) are new or renewal non-traditional reinsurance or retrocession
contracts of the kind listed in Exhibit A-1 hereto entered into by
Retrocedant pursuant to Clause 4.2 or 4.3 of Part B or (to the extent
provided therein) Clause 10 of Part C of the UK Underwriting Agency and
Underwriting Management Agreement (the "AGENCY AGREEMENT") between
Retrocedant and Platinum Re (UK) Limited of even date herewith and that
Retrocedant has consented to being retroceded to Retrocessionaire,
2
(each, a "REINSURANCE CONTRACT").
Notwithstanding the foregoing, Retrocedant shall retain all liabilities
for ceding commission and brokerage fees up to the carrying value of
the related reserves on the books of the Retrocedant as of September
30, 2002 (the "Initial Ceding Commission Reserves"), and as finally
determined pursuant to the provisions of Article IV herein, which
reserves shall also be retained by Retrocedant. All liabilities for
ceding commissions and brokerage fees in excess of such carrying value
shall be assumed by Retrocessionaire, as provided for above.
Notwithstanding the foregoing, Retrocedant will retain all liabilities
arising under any Reinsurance Contract relating to or emanating from
the losses caused by the European floods in August 2002 (he "Flood
Liabilities").
With respect to any named storm(s) (which are Tropical Prediction
Center designated named storms) in existence as of the Effective Time
which cause insured damage within 10 days of the Effective Date, except
as provided for herein, Retrocedant shall retrocede one hundred percent
(100%) quota share of losses arising from all such storms, net of the
inuring benefit of Inuring Retrocessions as allocated pursuant to
Exhibits D and F (but excluding the inuring benefit of the Holborn
aggregate cover referenced as Item 13 in Exhibit D) to Retrocessionaire
and Retrocessionaire shall accept one hundred percent (100%) quota
share of such losses. However, Retrocedant shall retain $25,000,000 of
losses, in the aggregate, net of the inuring benefit of Inuring
Retrocessions as allocated pursuant to Exhibits D and F, in excess of
the first $25,000,000, net of the inuring benefit of Inuring
Retrocessions as allocated pursuant to Exhibits D and F, that
Retrocessionaire assumes. Retrocedant shall use commercially reasonable
efforts to arrange, on behalf of Retrocessionaire, third party
retrocessional coverage for losses arising from such named storms in
excess of $50,000,000 in the aggregate, net of the inuring benefit of
Inuring Retrocessions as allocated pursuant to Exhibits D and F. The
cost of such coverage shall not exceed $5 million with such cost shared
equally by Retrocedant and Retrocessionaire. The amount of such
coverage shall be $100,000,000 or such lesser amount as may be
available on the specified terms. It is understood that the calculation
of any losses or retentions by the Retrocedant or the Retrocessionaire,
as the case may be, pursuant to this subparagraph shall include all
losses or retentions, respectively, with respect to all subsidiaries of
The St. Xxxx or Platinum Holdings, as the case may be, under any Quota
Share Retrocession Agreement, as defined in the Formation and
Separation Agreement, between a subsidiary of The St. Xxxx, as cedant,
and any subsidiary of Platinum Holdings as retrocessionaire.
The Flood Liabilities, the 2002 UK Bank Book Liabilities and the
liabilities in respect of the named storms, as described above retained
by Retrocedant as specified above (collectively, the "Excluded Losses")
shall not be subject to this Agreement.
No retrocession shall attach with respect to any contracts of
reinsurance of any kind or type whatsoever issued and/or assumed by
Retrocedant, other than the Reinsurance Contracts.
3
2. TERM
This Agreement shall be continuous as to the Reinsurance Contracts.
Except as mutually agreed in writing by Retrocedant and
Retrocessionaire, this Agreement shall remain continuously in force
until all Reinsurance Contracts are terminated, expired, cancelled or
commuted.
3. COVERAGE
3.1 SECTION A (RETROSPECTIVE) COVERAGE PERIOD
The Section A (Retrospective) Coverage Period will be the period from
and including January 1, 2002 to but not including the Effective Time.
3.2 SECTION B (PROSPECTIVE) COVERAGE PERIOD
The Section B (Prospective) Coverage Period will be the period from and
including the Effective Time through the commutation, expiration or
final settlement of all liabilities under any of the Reinsurance
Contracts.
3.3 COVERAGE LIMITS
Coverage under this Agreement for a specific Reinsurance Contract shall
be subject to the aggregate limit specified in the Reinsurance Contract
reduced by all payments made by either Retrocedant or Retrocessionaire
pursuant to such Reinsurance Contract. The application of any such
aggregate limits shall be made in chronological order in accordance
with the dates of the respective losses. It is understood, however,
that such application shall not result in Retrocedant's becoming liable
for any adverse development under this Agreement except as otherwise
explicitly set forth herein.
4. PREMIUMS AND ADDITIONAL CONSIDERATION
4.1 SECTION A (RETROSPECTIVE) COVERAGE PERIOD -- PREMIUMS
(A) On the Effective Date, in respect of the Section A
(Retrospective) Coverage Period, Retrocedant shall pay to the
account of Retrocessionaire an aggregate amount representing
the sum of all amounts related and specifically allocated to
each individual Class of Business (the "Initial Section A
Premium") equal to one hundred percent (100%) of the carrying
value on the books of the Retrocedant as of September 30,
2002, of the aggregate of all Loss Reserves relating to the
Reinsurance Contracts, determined in accordance with statutory
accounting principles on a basis consistent in all material
respects with the methods, principles, practices and policies
employed in the preparation and presentation of Retrocedant's
annual statutory financial statement as of 31 December 2001 as
filed with the Financial Services Authority (consistent with
the methods, principles, practices and policies applied at
June 30, 2002) and as submitted to
4
The St. Xxxx, provided, that in no event shall such amount be
less than Retrocedant's good faith estimate, based upon due
investigation by the Retrocedant, as of the date at which such
the calculation is being made, of all Loss Reserves relating
to the Reinsurance Contracts by applicable Class of Business
that would be required (i)]in order for such reserves to be in
full compliance with customary practices and procedures of
Retrocedant for filings and financial statements as of
September 30, 2002, and (ii) to cause such reserves to bear a
reasonable relationship to the events, conditions,
contingencies and risks which are the bases for such reserves,
to the extent known by Retrocedant at the time of such
calculation.
(B) On the 90th day following the Effective Date (or if such 90th
day is not a Business Day, the first Business Day following
such 90th day), Retrocedant shall prepare and deliver to
Retrocessionaire an accounting (the "Proposed Loss Reserve
Accounting") of all Loss Reserves relating to the Reinsurance
Contracts, as of the Effective Date, determined in accordance
with this Section 4.1 and the Methodology for Calculation of
the Final Section A Premium, as set forth on Exhibit B hereto
(the "Final Section A Premium") and the reserves for ceding
commissions and brokerage fees relating to the Reinsurance
Contracts on the books at the Retrocedant as of the Effective
Date (the "Final Ceding Commission Reserves"), and taking into
consideration all relevant data becoming available to
Retrocedant subsequent to the Effective Date. In the event the
Final Section A Premium for any individual Class of Business
is greater than the Initial Section A Premium for such
individual Class of Business or the Final Ceding Commission
Reserves are less than the Initial Ceding Commission Reserves,
Retrocedant shall promptly pay to the account of
Retrocessionaire the difference plus interest on such amount
at the Applicable Rate from and including the Effective Date
to and including the date of such payment. In the event the
Final Section A Premium for any individual Class of Business
is less than the Initial Section A Premium for such individual
Class of Business or the Final Ceding Commission Reserves are
greater than the Initial Ceding Commission Reserves,
Retrocessionaire shall promptly pay to the account of
Retrocedant the difference plus interest on such amount at the
Applicable Rate (as defined below) from and including the
Effective Date to and including the date of such payment.
"Class of Business" shall be defined as each individual class
or line of business as delineated by the Retrocedant as of the
date hereof as set forth on Exhibit A-1.
(C) In the event that a reinsurance contract is not included in
one of the classes set forth in Exhibit A-1, but is deemed to
be a Reinsurance Contract by the mutual agreement of the
parties, the parties shall determine whether the Final Section
A Premium reflected one hundred percent of the associated
reserves with respect to such Reinsurance Contract as of the
Effective Date. If the Final Section A Premium did not so
reflect such associated reserves with respect to such
Reinsurance Contract as of the Effective Date, Retrocedant
shall promptly pay to the account of Retrocessionaire an
amount equal to the amount that
5
should have been included in the Final Section A Premium, as
determined pursuant to paragraph (b) of this Section 4.1, less
any amounts paid by Retrocedant on or after the Effective Date
pursuant to such Reinsurance Contract relating to such
reserves, plus interest on such amount at the Applicable Rate
calculated from and including the Effective Date to and
including the date of such payment to Retrocessionaire.
(D) Notwithstanding the foregoing, the parties agree that all
gross estimated premiums written prior to the Effective Date
and earned but not yet billed, net of applicable ceding
commission and retrocession premium (net of retrocession
commissions) ("EBUB", and also referred to as "estimated
premiums receivable" or "EBNR" or "earned but unbilled") as of
the Effective Time and relating to the Reinsurance Contracts,
as determined on or before 30 September, 2002, as set forth in
Exhibit C, in a manner consistent with Retrocedant's customary
practices and procedures and as submitted to The St. Xxxx,
shall be allocated to Retrocedant. All payments received after
the Effective Time by Retrocedant or Retrocessionaire in
respect of EBUB as of the Effective Time shall be retained by
Retrocedant or held on trust for and paid by Retrocessionaire
to or to the order of Retrocedant, and all rights to collect
such amounts shall be retained by or transferred to
Retrocedant. Any changes made on or after the Effective Time
as to the estimated amount of EBUB as of the Effective Time
shall be for the account of Retrocessionaire and shall not
affect the amount retained by Retrocedant. The parties agree
that as of the first anniversary of the date hereof,
Retrocessionaire shall pay to Retrocedant the difference, if
any, between the amount of EBUB as of the Effective Time and
the aggregate amount subsequently billed and paid to and/or
retained by Retrocedant prior to that date with respect to
EBUB as of the Effective Time, it being understood that
Retrocedant shall bear all risk of non-payment and
non-collectibility with respect to premiums written and
unearned as of the Effective Date and subsequently billed. All
amounts, if any, in respect of EBUB which are in excess of
EBUB as of the Effective Time, calculated pursuant to the
first sentence of this Section 4.1(D), shall be for the
account of Retrocessionaire and no such amounts shall be
retained by or payable to Retrocedant.
4.2 SECTION B (PROSPECTIVE) COVERAGE PERIOD -- PREMIUMS.
(A) On the Effective Date, in respect of the Section B
(Prospective) Coverage Period, Retrocedant shall transfer to
Retrocessionaire an aggregate amount representing the sum of
all amounts related and specifically allocated to each
individual Class of Business (the "Initial Section B Premium")
equal to the carrying value on the books of Retrocedant as of
September 30, 2002, of one hundred percent (100%) of the
unearned premium reserves, net of unearned ceding commission
and brokerage fees and net of Inuring Retrocession premiums as
provided for in Section 7.4 in each case relating to the
Reinsurance Contracts, determined in accordance with statutory
accounting principles on a basis consistent in all material
respects with the methods,
6
principles, practices and policies employed in the preparation
and presentation of Retrocedant's annual statutory financial
statement as of 31 December 2001 as filed with the Financial
Services Authority (consistent with the methods, principles,
practices and policies applied at June 30, 2002) and as
submitted to The St. Xxxx.
(B) On the 90th day following the Effective Date (or if such 90th
day is not a Business Day, the first Business Day following
such 90th day), Retrocedant shall prepare and deliver to
Retrocessionaire an accounting (the "Proposed Premium Reserve
Accounting", together with the Proposed Loss Reserve
Accounting, the "Proposed Accounting") of all unearned premium
reserves relating to the Reinsurance Contracts, as of the
Effective Date, determined in accordance with statutory
accounting principles on a basis consistent in all material
respects with the methods, principles, practices and policies
employed in the preparation and presentation of Retrocedant's
annual statutory financial statement as of 31 December 2001 as
filed with the Financial Services Authority (consistent with
the methods, principles, practices and policies applied at
June 30, 2002) and as submitted to The St. Xxxx, relating to
the Reinsurance Contracts, net of the unearned ceding
commission and net of Inuring Retrocession premiums as
provided for in Section 7.4 and as allocated pursuant to
Exhibit E (the "Final Section B Premium"). In the event the
Final Section B Premium for any individual Class of Business
is greater than the Initial Section B Premium for such
individual Class of Business, Retrocedant shall promptly pay
to the account of Retrocessionaire the difference plus
interest on such amount at the Applicable Rate from and
including the Effective Date to and including the date of such
payment. In the event the Initial Section B Premium for any
individual Class of Business is greater than the Final Section
B Premium for such individual Class of Business,
Retrocessionaire shall promptly pay to the account of
Retrocedant the difference plus interest on such amount at the
Applicable Rate from and including the Effective Date to and
including the date of such payment.
(C) Retrocedant shall transfer to Retrocessionaire with respect to
all Reinsurance Contracts, one hundred percent (100%) of all
gross premiums written on or after the Effective Time, net of
premium returns, allowances and cancellations and less any
applicable Retrocedant Ceding Commission and Inuring
Retrocession premiums as provided for in Section 7.4 and as
allocated pursuant to Exhibit F, provided, however, that all
premiums written arising in respect of a Loss Occurrence (as
such term is defined in the Reinsurance Contract) occurring
prior to 1st January, 2002, including reinstatement premiums,
loss share premiums and penalty premiums, shall be for the
account of Retrocedant.
(D) Retrocedant shall retain all gross premiums written on or
after the Effective Time attributable to losses arising from
the Excluded Losses, including but not limited to adjusted
premiums, portions of reinstatement premiums and other
adjustments attributable to such losses.
7
4.3 DISPUTE RESOLUTION.
(A) After receipt of the Proposed Accounting, together with the
work papers used in preparation thereof, Retrocessionaire
shall have 30 days (the "Review Period") to review such
Proposed Accounting. Unless Retrocessionaire delivers written
notice to Retrocedant on or prior to the 30th day of the
Review Period stating that it has material objections to the
Proposed Accounting for one or more Classes of Business or the
Final Ceding Commission Reserves, Retrocessionaire shall be
deemed to have accepted and agreed to the Proposed Accounting
and the Final Ceding Commission Reserves. Retrocessionaire
shall not object to any method, principle, practice or policy
employed in the preparation of the Proposed Accounting if such
method, principle, practice or policy is consistent in all
material respects with that employed in the preparation and
presentation of Retrocedant's statutory annual financial
statement as of 31 December 2001, as filed with the Financial
Services Authority and as submitted to The St. Xxxx, it being
understood that Retrocessionaire reserves the right to object
to the appropriateness of a particular application or manner
of application of any such method, principle, practice or
policy. If Retrocessionaire so notifies Retrocedant of any
material objection(s) to the Proposed Accounting or the Final
Ceding Commission Reserves, the parties shall in good faith
attempt to resolve, within 30 days (or such longer period as
the parties may agree) following such notice (the "Resolution
Period"), their differences with respect to such material
objections related to any Class of Business so identified.
Retrocedant and Retrocessionaire agree that only those Classes
of Business (or the Final Ceding Commission Reserves, if
applicable) to which such notification relates shall be
subject to adjustment, and any resolution by them as to any
disputed amounts, as evidenced by a writing signed by both
parties, shall be final, binding and conclusive.
In the event that Retrocessionaire believes that Loss Reserves
for a Class of Business need to be increased beyond the amount
implied by the algorithm set forth in Exhibit C, or the Final
Ceding Commission Reserves need to be reduced,
Retrocessionaire and Retrocedant will endeavor to agree on an
appropriate adjustment. If the two parties cannot agree on an
adjustment, Retrocedant may elect to (i) retain the
liabilities and the associated Loss Reserves for the subject
Class of Business and all unearned premium and
Retrocessionaire shall transfer to Retrocedant all Initial
Section A Premium and Initial Section B Premium paid by
Retrocedant for the subject Class of Business, plus interest
on the average amount at the Applicable Rate from the
Effective Date to the date of such transfer, or (ii) extend
the time period for adjusting the reserve to as much as 36
months or (iii) choose to arbitrate according to Section
4.3(B), it being understood that arbitration according to
Section 4.3(b) shall be the sole remedy for disputes regarding
the Final Ceding Commission Reserves. In the event that
Retrocedant chooses to extend the time period for adjusting
the reserves for a Class of Business, Retrocedant retains the
exposure to
8
adverse loss development and Retrocessionaire will suffer no
exposure to paid losses in excess of the Initial Section A
Premium and Initial Section B Premium paid by Retrocedant. At
the end of the extended period, any continued disagreement
between Retrocedant and Retrocessionaire would be submitted to
arbitration as set forth in Section 4.3(B) hereto.
(B) Any amount remaining in dispute at the conclusion of the
Resolution Period for which Retrocedant has not elected the
remedies set forth in Section 4.3(A)(i) and (ii) above or as
to which any extension period has elapsed without agreement
between the parties ("Unresolved Changes") shall be submitted
to arbitration. One arbiter (each arbiter, an "Arbiter") shall
be chosen by Retrocedant, the other by Retrocessionaire, and
an umpire (the "Umpire") shall be chosen by the two Arbiters
before they enter upon arbitration. 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, but only after
providing 10 days' written notice of its intention to do so
and only if such other party has failed to appoint an Arbiter
within such 10 day period. The two Arbiters shall in turn
choose an Umpire who shall act as the Umpire and preside over
the hearing. If the two Arbiters fail to agree upon the
selection of an Umpire within 30 days after notification of
the appointment of the second Arbiter, the selection of the
Umpire shall be made by the X.X.X.X. Reinsurance and Insurance
Arbitration Society of the UK ("XXXXX UK"). All Arbiters and
Umpires shall be active or retired disinterested
property/casualty actuaries of insurance or reinsurance
companies or Lloyd's of London Underwriters.
(C) Each party shall present its case to the Arbiters within 30
days following the date of appointment of the Umpire, unless
the parties mutually agree to an extension of time. Subject to
the provisions of paragraph (f) of this Section 4.3, 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.
(D) 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 unless otherwise directed by
the Arbiters.
(E) Any arbitration proceedings shall take place in London,
England unless the parties agree otherwise.
(F) Once the Proposed Accounting has been finalized in accordance
with the above process, the Final Section A Premium and the
Final Section B Premium amounts shall be as set forth in the
Proposed Accounting, as determined by the Arbiters, if
applicable (the "Arbitrated Final Section A Premium" and/or
"Arbitrated Final Section B Premium", as the case may be). In
the event the
9
sum of the Arbitrated Final Section A Premium and the
Arbitrated Final Section B Premium amounts (determined in
accordance with the first sentence of this Section 4.3(f)) is
greater than the amount paid by Retrocedant to
Retrocessionaire on the Effective Date, Retrocedant shall
promptly pay to the account of Retrocessionaire the difference
plus interest on such amount at the Applicable Rate from and
including the Effective Date to and including the date of such
payment. In the event the sum of such amounts (determined in
accordance with the first sentence of this Section 4.3(f)) is
lower than the amount paid by Retrocedant to Retrocessionaire
on the Effective Date, Retrocessionaire shall promptly pay to
the account of Retrocedant the difference plus interest on
such amount at the Applicable Rate from the Effective Date to
the date of such payment.
(G) It is understood that the dispute resolution provisions set
forth in this Section 4.3 represent the exclusive remedy for
disputes arising between the parties with respect to the
Proposed Accounting and that the dispute mechanisms set forth
in Section 15 shall be the exclusive remedy for all disputes
not relating to the Proposed Accounting.
5. RETROCEDANT CEDING COMMISSION
With respect to the Reinsurance Contracts, Retrocessionaire shall pay
to Retrocedant a ceding commission (the "RETROCEDANT CEDING
COMMISSION") with respect to the Section B (Prospective) Coverage
Period, and such Retrocedant Ceding Commission shall equal 100 percent
(100%) of the actual expenses incurred in writing each Reinsurance
Contract, including actual ceding commissions and brokerage fees, as
determined in accordance with Retrocedant's customary practices and
procedures and as submitted to The St. Xxxx, all as allocable pro rata
to periods from and after the Effective Time. Retrocedant Ceding
Commissions shall also include all underwriting fees and other costs
and expenses paid by Retrocedant pursuant to the Agency Agreement
between Retrocedant and Platinum Re (UK) Limited, dated as of the date
hereof, and all underwriting and other expenses incurred by Retrocedant
on or after the Effective Date with respect to the liabilities
transferred hereunder, as determined in accordance with Retrocedant's
customary practices and procedures.
6. ORIGINAL CONDITIONS
All retrocessions assumed under this Agreement shall be subject to the
same rates, terms, conditions, waivers and interpretations, and to the
same modifications and alterations, as the respective Reinsurance
Contracts.
10
7. INURING RETROCESSIONS
7.1 ALLOCATION TO RETROCESSIONAIRE
Retrocedant agrees that the retrocession contracts purchased by the
reinsurance division of The St. Xxxx ("ST. XXXX RE") from third party
retrocessionaires ("THIRD PARTY RETROCESSIONAIRES") on behalf of
Retrocedant prior to the Effective Time that are listed on Exhibit C
hereto shall inure to the benefit of Retrocessionaire to the extent of
liabilities covered under this Agreement ("INURING RETROCESSIONS"),
subject to the agreed allocations in Exhibits D, E and F. It is further
understood and agreed that facultative reinsurance not listed on
Exhibit C but relating to the Reinsurance Contracts shall also inure to
the benefit of Retrocessionaire to the extent of liabilities covered
under this Agreement and shall be considered Inuring Retrocessions
under this Agreement.
7.2 TRANSFER
Retrocedant and Retrocessionaire shall use their respective
commercially reasonable efforts to obtain the consent of Third Party
Retrocessionaires under the Inuring Retrocessions to include
Retrocessionaire as an additional reinsured with respect to the
Reinsurance Contracts or, in the alternative, to make all payments,
directly to Retrocessionaire, to the extent allocable to the
Reinsurance Contracts, in the manner set forth in Exhibit D hereto, and
to seek all payments, to the extent allocable to the Reinsurance
Contracts, in the manner set forth herein in Exhibit E hereto, directly
from Retrocessionaire, it being understood that Retrocessionaire shall
bear all risk of non-payment or non-collectibility under the Inuring
Retrocessions.
7.3 INURING RETROCESSIONS CLAIMS
(A) Each of the parties agrees to transfer to the other party all
recoveries or any portion thereof that such party receives on
or after the Effective Time pursuant to the Inuring
Retrocessions which are allocated to the other party in the
manner set forth in Exhibit D hereto. Retrocedant shall use
its commercially reasonable efforts to collect any recoveries
due to Retrocessionaire under the Inuring Retrocessions that
indemnify the Retrocedant for losses or expenses payable or
return of premium allocable to the Retrocessionaire and shall
hold them on trust for, and pay them to or to the order of
Retrocessionaire. The parties agree that Retrocessionaire's
obligations to make payments pursuant to the Inuring
Retrocessions or to reimburse Retrocedant pursuant to this
Agreement shall not be waived by non-receipt of any such
amounts. Retrocessionaire shall reimburse Retrocedant for one
hundred percent (100%) of any expenses reasonably incurred by
Retrocedant in attempting to make such collection, including
all allocated expenses, as determined in accordance with St.
Xxxx Re's customary practices and procedures. Retrocessionaire
shall have the right to associate with Retrocedant, at
Retrocessionaire's own expense, in any actions brought by
Retrocedant to make such collections.
11
(B) In the event claims of Retrocedant and Retrocessionaire
aggregate in excess of the applicable limit under an Inuring
Retrocession, all limits applicable to either Retrocedant or
Retrocessionaire shall be allocated between Retrocedant and
Retrocessionaire in the manner set forth in Exhibit F hereto.
7.4 INITIAL CONSIDERATION
To the extent not already reflected in the calculation of Final Section
B Premium, as part of the Section B (Prospective) Coverage Period
premiums described in Section 4.2, Retrocessionaire shall reimburse
Retrocedant for one hundred percent (100%) of any and all unearned
premiums paid by Retrocedant under such Inuring Retrocessions net of
any applicable unearned ceding commissions paid to Retrocedant
thereunder.
7.5 ADDITIONAL CONSIDERATION
Retrocessionaire agrees to pay under the Inuring Retrocessions all
future premiums Retrocedant is obligated to pay pursuant to the terms
of the Inuring Retrocessions to the extent that such premiums are
allocable to Retrocessionaire in the manner set forth in Exhibit E
hereto, and not otherwise paid by Retrocessionaire and to indemnify
Retrocedant for all such premiums paid directly by Retrocedant, net of
any ceding commissions and similar amounts paid by Third Party
Retrocessionaires to Retrocedant.
7.6 TERMINATION AND COMMUTATION OF INURING RETROCESSIONS
(A) With respect to any Inuring Retrocessions providing coverage
solely with respect to the Reinsurance Contracts, Retrocedant
agrees, on behalf of itself and its affiliates, that
Retrocedant shall not take any action or fail to take any
action that would reasonably result in the termination or
commutation of or any material change in the coverage provided
by any Inuring Retrocession, without the prior written consent
of the Retrocessionaire, such consent not to be unreasonably
withheld.
(B) With respect to any Inuring Retrocessions providing coverage
for both Reinsurance Contracts and to business not being
transferred, neither party shall take any action or fail to
take any action that would reasonably result in the
termination or commutation of or any material change in the
coverage provided by any Inuring Retrocession, without the
prior written consent of the other party, such consent not to
be unreasonably withheld.
8. LOSS AND LOSS EXPENSE; SALVAGE AND SUBROGATION; FOLLOW THE FORTUNES
(A) Retrocessionaire shall be liable for one hundred percent
(100%) of all future loss, loss adjustment expenses, incurred
but not reported losses and other payment obligations that
arise (including ceding commissions, as and to the
12
extent determined in Article IV) under the Reinsurance
Contracts on and after January 1, 2002 and are payable as of
or after the Effective Time and shall reimburse Retrocedant
for any losses, loss adjustment expenses and other payment
obligations paid by Retrocedant following the Effective Time
in respect of the Reinsurance Contracts, net of any recoveries
received by Retrocedant with respect thereto, including
recoveries under Inuring Retrocessions. Retrocessionaire shall
have the right to all salvage and subrogation on the account
of claims and settlements with respect to the Reinsurance
Contracts.
(B) In the event of a claim under a Reinsurance Contract, the
Retrocedant will assess the validity of the claim and make a
determination as to payment, consistent with the claims
handling guidelines previously provided to Retrocedant in
writing by Retrocessionaire and Retrocessionaire may exercise
its rights under Section 10.1 in respect thereof. Retrocedant
shall provide prompt notice of any claim in excess of $500,000
to Retrocessionaire. All payments made by Retrocedant, whether
under strict contract terms or by way of compromise, shall be
binding on Retrocessionaire. In addition, if Retrocedant
refuses to pay a claim in full and a legal proceeding results,
Retrocessionaire will be unconditionally bound by any
settlement agreed to by Retrocedant or the adverse judgment of
any court or arbitrator (which could include any judgment for
bad faith, punitive damages, excess policy limit losses or
extra contractual obligations) and Retrocedant may recover
with respect to such settlements and judgments under this
Agreement. Though Retrocedant will settle such claims and
litigation in good faith, Retrocessionaire is bound to accept
the settlements paid by Retrocedant and such settlements may
be for amounts that could be greater than the amounts that
would be agreed to by Retrocessionaire if Retrocessionaire
were to settle such claims or litigation directly. It is the
intent of this Agreement that Retrocessionaire shall in every
case in which this Agreement applies and in the proportions
specified herein, "follow the fortunes" of Retrocedant in
respect of risks Retrocessionaire has accepted under this
Agreement.
9. EXTRA CONTRACTUAL OBLIGATIONS
In the event Retrocedant or Retrocessionaire is held liable to pay any
punitive, exemplary, compensatory or consequential damages because of
alleged or actual bad
faith or negligence related to the handling of any claim under any
Reinsurance Contract or otherwise in respect of such Reinsurance
Contract, the parties shall be liable for such damages in proportion to
their responsibility for the conduct giving rise to the damages. Such
determination shall be made by Retrocedant and Retrocessionaire, acting
jointly and in good faith, and in the event the parties are unable to
reach agreement as to such determination, recourse shall be had to
Section 15 hereof.
13
10. ADMINISTRATION OF REINSURANCE CONTRACTS
10.1 ADMINISTRATION
(A) The parties agree that, as of the Effective Time, Retrocedant
shall have the sole authority to administer the Reinsurance
Contracts in all respects, which authority shall include, but
not be limited to, authority to xxxx for and collect premiums,
adjust all claims and handle all disputes thereunder and to
effect any and all amendments, commutations and cancellations
of the Reinsurance Contracts, subject, however, in the case of
administration of claims, to all claims handling guidelines
provided in advance in writing by Retrocessionaire to
Retrocedant. Retrocedant shall not, on its own, settle any
claim, waive any right, defense, setoff or counterclaim
relating to the Reinsurance Contracts with respect to amounts
in excess of $500,000 or make any ex gratia payments, and
shall not amend, commute or terminate any of the Reinsurance
Contracts, in each case without the prior written consent of
Retrocessionaire.
(B) Notwithstanding the foregoing, to the extent permitted by law
Retrocessionaire may, at its discretion and at its own
expense, assume the administration, defence and settlement of
any claim upon prior written notice to Retrocedant. Upon
receipt of such notice, Retrocedant shall not compromise,
discharge or settle such claim except with the prior written
consent of Retrocessionaire. Retrocessionaire shall not take
any action in the administration of such claim that would
reasonably be expected to adversely affect Retrocedant, its
business or its reputation, without the prior written consent
of Retrocedant. Subject to the terms of Section 9 hereof,
Retrocessionaire shall indemnify Retrocedant for all Losses,
including punitive, exemplary, compensatory or consequential
damages arising from such assumption of the conduct of such
settlement pursuant to Section 14 herein.
10.2 REPORTING AND REGULATORY MATTERS
Each party shall provide the notices and filings required to be made by
it to relevant regulatory authorities as a result of this Agreement.
Notwithstanding the foregoing, each party shall provide to the other
party any information in its possession regarding the Reinsurance
Contracts as reasonably required by the other party to make such
filings and in a form as agreed to by the parties.
10.3 DUTY TO COOPERATE
Upon the terms and subject to the conditions and other agreements set
forth herein, each party agrees to use its commercially reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause
to be done, and to assist and cooperate with the other party in doing,
all things necessary or advisable to perform the transactions
contemplated by this Agreement.
14
10.4 COMMUNICATIONS RELATING TO THE REINSURANCE CONTRACTS
Following the Effective Time, Retrocedant and Retrocessionaire shall
each promptly forward to the other copies of all material notices and
other written communications it receives relating to the Reinsurance
Contracts (including, without limitation, all inquiries and complaints
from relevant insurance regulators, brokers and other service providers
and reinsureds and all notices of claims, suits and actions for which
it receives service of process.)
11. REPORTS AND REMITTANCES
11.1 REPORT FROM RETROCEDANT
Within thirty days following the end of each month, Retrocedant shall
provide Retrocessionaire with a summary statement of account for the
previous month showing all activity relating to each of the Reinsurance
Contracts, including related administration costs and expenses incurred
by Retrocedant, consisting of the categories of information set forth
in Exhibit G hereto. The monthly statement of account shall also
provide a breakdown of any amounts due to Retrocedant or
Retrocessionaire, as the case may be, as reimbursement for paid claims,
collected premiums or other amounts due pursuant to the terms of this
Agreement, including amounts relating to Inuring Retrocessions.
11.2 REMITTANCES
Within ten Business Days after delivery of each monthly report pursuant
to Section 11.1, Retrocedant and Retrocessionaire shall settle all
amounts then due under this Agreement for that month. It is agreed that
Retrocedant shall retain all premiums received arising from all
business written for which the first day of the original cedant's
account period occurs prior to the Effective Date until such time as
such aggregate amount of such premiums received equals the net amount
to be retained by Retrocedant pursuant to Section 4.01(D) and 4.02(B)
herein, after which time, such premiums shall be remitted by
Retrocedant to Retrocessionaire.
11.3 LATE PAYMENTS
Should any payment due any party to this Agreement be received by such
party after the due date for such payment under this Agreement,
interest shall accrue from the date on which such payment was due until
payment is received by the party entitled thereto, at an annual rate
equal to the London Interbank Offered Rate quoted for six month periods
as reported in The Wall Street Journal on the first Business Day of the
month in which such payment first becomes due plus one hundred basis
points (the "APPLICABLE RATE").
15
11.4 COST REIMBURSEMENT
Retrocessionaire shall reimburse for its allocated share of all costs
and expenses incurred by Retrocedant in administering the Reinsurance
Contracts as set forth in Exhibit H hereto.
11.5 CURRENCY
For purposes of this Agreement, where Retrocedant receives premiums or
pays losses in currencies other than United States dollars, GBP or
Euros, such premiums or losses shall (subject to the consent of
Retrocessionaire, not to be unreasonably withheld or delayed) be
converted into United States dollars at the actual rates of exchange at
which these premiums or losses are entered in Retrocedant's books.
12. MAINTENANCE OF LICENSES
Each of Retrocedant and Retrocessionaire hereby covenants to maintain
at all times all licences and authorisations required to undertake the
actions contemplated hereby.
13. ACCESS TO RECORDS
13.1 From and after the Closing Date, Retrocedant shall afford to
Retrocessionaire and its respective authorized accountants, counsel and
other designated representatives (collectively, "Representatives")
reasonable access (including using commercially reasonable best efforts
to give access to Persons possessing information) during normal
business hours to all data and information that is specifically
described in writing (collectively, "Information") within the
possession of Retrocedant relating to the liabilities transferred
hereunder, insofar as such information is reasonably required by
Retrocessionaire. Similarly, from and after the Closing Date,
Retrocessionaire shall afford to Retrocedant, any Post-closing
Subsidiary of Retrocedant and their respective Representatives
reasonable access (including using commercially reasonable best efforts
to give access to Persons possessing information) during normal
business hours to Information within Retrocessionaire's possession
relating to Retrocedant, insofar as such information is reasonably
required by Retrocedant. Information may be requested under this
Section 13 for, without limitation, audit, accounting, claims,
litigation (other than any claims or litigation between the parties
hereto) and tax purposes, as well as for purposes of fulfilling
disclosure and reporting obligations and for performing this Agreement
and the transactions contemplated hereby.
13.2 From and after the Closing Date, Retrocessionaire and Retrocedant or
their designated representatives may inspect, at the place where such
records are located, any and all data and information that is
specifically described in writing within the possession of the other
party hereto reasonably relating to this Agreement, on reasonable prior
notice and during normal business hours. The rights of the parties
under this Section 13 shall survive termination of this Agreement and
shall continue for as long as there may be liabilities under the
Reinsurance Contracts or reporting or retention requirements under
applicable law. In addition, each party shall have the right to take
copies (including
16
electronic copies) of any information held by the other party that
reasonably relates to this Agreement or the Reinsurance Contracts. Each
party shall, and shall cause its designated representatives to, treat
and hold as confidential information any information it receives or
obtains pursuant to this Section 13.
14. INDEMNIFICATION
14.1 INDEMNIFICATION BY RETROCEDANT
Retrocedant agrees to indemnify, defend and hold harmless
Retrocessionaire, and its officers, directors and employees with
respect to any and all Losses arising from any breach by Retrocedant of
any representation, warranty or covenant herein. Retrocedant further
agrees to indemnify, defend and hold harmless Retrocessionaire and its
officers, directors and employees against any and all Losses arising
out of Retrocedant's administration of the Reinsurance Contracts,
including but not limited to extracontractual obligations, payments in
excess of policy limits and settlements made in respect of any such
claims to the extent arising from the gross negligence or wilful
misconduct of Retrocedant except to the extent such actions are taken
with the prior consent or direction of Retrocessionaire. Such
indemnification obligations shall be limited to the aggregate of all
fees paid to Retrocedant pursuant to Section 11.4 hereof.
14.2 INDEMNIFICATION BY RETROCESSIONAIRE
Retrocessionaire agrees to indemnify, defend and hold harmless
Retrocedant, and its officers, directors and employees with respect to
any and all Losses arising from any breach by Retrocessionaire of any
representation, warranty or covenant herein. Retrocessionaire further
agrees to indemnify, defend and hold harmless Retrocedant and its
officers, directors and employees against any and all Losses arising
out of Retrocessionaire's administration of the Reinsurance Contracts,
including but not limited to extracontractual obligations, payments in
excess of policy limits and settlements made in respect of any such
claims.
14.3 INDEMNIFICATION PROCEDURES
(A) If a party seeking indemnification pursuant to this Section 14
(each, an "INDEMNITEE") receives notice or otherwise learns of
the assertion by a Person (including, without limitation, any
governmental entity) who is not a party to this Agreement or
an Affiliate thereof, of any claim or of the commencement by
any such Person of any Action (a "THIRD PARTY CLAIM") with
respect to which the party from whom indemnification is sought
(each, an "INDEMNIFYING PARTY") may be obligated to provide
indemnification pursuant to Section 14.1 or 14.2, such
Indemnitee shall give such Indemnifying Party written notice
thereof promptly after becoming aware of such Third Party
Claim; provided that the failure of any Indemnitee to give
notice as provided in this Section 14.3 shall not relieve the
Indemnifying Party of its obligations under this Section 14,
except to the extent that such Indemnifying Party is
prejudiced by such failure to give
17
notice. Such notice shall describe the Third Party Claim in as
much detail as is reasonably possible and, if ascertainable,
shall indicate the amount (estimated if necessary) of the Loss
that has been or may be sustained by such Indemnitee.
(B) An Indemnifying Party may elect to defend or to seek to settle
or compromise, at such Indemnifying Party's own expense and by
such Indemnifying Party's own counsel, any Third Party Claim.
Within 30 days of the receipt of notice from an Indemnitee in
accordance with Section 14.3(A) (or sooner, if the nature of
such Third Party Claim so requires), the Indemnifying Party
shall notify the Indemnitee of its election whether the
Indemnifying Party will assume responsibility for defending
such Third Party Claim, which election shall specify any
reservations or exceptions. After notice from an Indemnifying
Party to an Indemnitee of its election to assume the defense
of a Third Party Claim, such Indemnifying Party shall not be
liable to such Indemnitee under this Section 14 for any legal
or other expenses (except expenses approved in writing in
advance by the Indemnifying Party) subsequently incurred by
such Indemnitee in connection with the defense thereof;
provided that, if the defendants in any such claim include
both the Indemnifying Party and one or more Indemnitees and in
any Indemnitee's reasonable judgment a conflict of interest
between one or more of such Indemnitees and such Indemnifying
Party exists in respect of such claim or if the Indemnifying
Party shall have assumed responsibility for such claim with
reservations or exceptions that would materially prejudice
such Indemnitees, such Indemnitees shall have the right to
employ separate counsel to represent such Indemnitees and in
that event the reasonable fees and expenses of such separate
counsel (but not more than one separate counsel for all such
Indemnitees reasonably satisfactory to the Indemnifying Party)
shall be paid by such Indemnifying Party. If an Indemnifying
Party elects not to assume responsibility for defending a
Third Party Claim, or fails to notify an Indemnitee of its
election as provided in this Section 14, such Indemnitee may
defend or (subject to the remainder of this Section 14) seek
to compromise or settle such Third Party Claim at the expense
of the Indemnifying Party.
(C) Neither an Indemnifying Party nor an Indemnitee shall consent
to entry of any judgment or enter into any settlement of any
Third Party Claim which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such
Indemnitee, in the case of a consent or settlement by an
Indemnifying Party, or the Indemnifying Party, in the case of
a consent or settlement by the Indemnitee, of a written
release from all liability in respect to such Third Party
Claim.
(D) If an Indemnifying Party chooses to defend or to seek to
compromise or settle any Third Party Claim, the Indemnitee
shall make available at reasonable times to such Indemnifying
Party any personnel or any books, records or other documents
within its control or which it otherwise has the ability to
make available that are necessary or appropriate for such
defense, settlement or
18
compromise, and shall otherwise cooperate in a reasonable
manner in the defense, settlement or compromise of such Third
Party Claim.
(E) Notwithstanding anything in this Section 14 to the contrary,
neither an Indemnifying Party nor an Indemnitee may settle or
compromise any claim over the objection of the other; provided
that consent to settlement or compromise shall not be
unreasonably withheld or delayed. If an Indemnifying Party
notifies the Indemnitee in writing of such Indemnifying
Party's desire to settle or compromise a Third Party Claim on
the basis set forth in such notice (provided that such
settlement or compromise includes as an unconditional term
thereof the giving by the claimant or plaintiff of a written
release of the Indemnitee from all liability in respect
thereof) and the Indemnitee shall notify the Indemnifying
Party in writing that such Indemnitee declines to accept any
such settlement or compromise, such Indemnitee may continue to
contest such Third Party Claim, free of any participation by
such Indemnifying Party, at such Indemnitee's sole expense. In
such event, the obligation of such Indemnifying Party to such
Indemnitee with respect to such Third Party Claim shall be
equal to (i) the costs and expenses of such Indemnitee prior
to the date such Indemnifying Party notifies such Indemnitee
of the offer to settle or compromise (to the extent such costs
and expenses are otherwise indemnifiable hereunder) plus (ii)
the lesser of (A) the amount of any offer of settlement or
compromise which such Indemnitee declined to accept and (B)
the actual out-of-pocket amount such Indemnitee is obligated
to pay subsequent to such date as a result of such
Indemnitee's continuing to pursue such Third Party Claim.
(F) In the event of payment by an Indemnifying Party to any
Indemnitee in connection with any Third Party Claim, such
Indemnifying Party shall be subrogated to and shall stand in
the place of such Indemnitee as to any events or circumstances
in respect of which such Indemnitee may have any right or
claim relating to such Third Party Claim against any claimant
or plaintiff asserting such Third Party Claim or against any
other Person. Such Indemnitee shall cooperate with such
Indemnifying Party in a reasonable manner, and at the cost and
expense of such Indemnifying Party, in prosecuting any
subrogated right or claim.
(G) Except with respect to claims relating to actual fraud, the
indemnification provisions set forth in this section are the
sole and exclusive remedy of the parties hereto for any and
all claims for indemnification under this Agreement.
14.4 SURVIVAL
This Section 14 shall survive termination of this Agreement.
19
15. ARBITRATION
15.1 All disputes and differences arising under or in connection with this
Agreement shall be referred to arbitration under the Arbitration Rules
of XXXXX UK.
15.2 The Arbitration Tribunal shall consist of three arbitrators, one to be
appointed by the claimant party, one to be appointed by the respondent
party and the third to be appointed by the two appointed arbitrators.
15.3 The third member of the Tribunal shall be appointed as soon as
practicable (and no later than 28 days) after the appointment of the
two party-appointed arbitrators. The Tribunal shall be constituted upon
the appointment of the third arbitrator.
15.4 The Arbitrators shall be persons (including those who have retired)
with not less than ten years' experience of insurance or reinsurance
within the industry or as lawyers or other professional advisers
serving the industry.
15.5 Where a party fails to appoint an arbitrator within 14 days of being
called upon to do so or where the two party-appointed arbitrators fail
to appoint a third within 28 days of their appointment, then upon
application XXXXX (UK) will appoint an arbitrator to fill the vacancy.
At any time prior to the appointment by XXXXX (UK) the party or
arbitrators in default may make such appointment.
15.6 The Tribunal may in its sole discretion make such orders and directions
as it considers to be necessary for the final determination of the
matters in dispute. The Tribunal shall have the widest discretion
permitted under the law governing the arbitral procedure when making
such orders or directions.
15.7 The seat of arbitration shall be London.
15.8 Each party shall bear the expense of its own arbitrator and shall share
equally with the other party the expense of the third arbitrator and of
the arbitration.
15.9 This Section 15 shall survive termination of this Agreement.
16. INSOLVENCY
16.1 In the event of the insolvency of Retrocedant, this reinsurance shall
be payable directly to Retrocedant, or to its liquidator, receiver,
conservator or statutory successor on the basis of the liability of
Retrocedant without diminution because of the insolvency of Retrocedant
or because the liquidator, receiver, conservator or statutory successor
of Retrocedant has failed to pay all or a portion of any claim.
16.2 It is agreed, however, that the liquidator, receiver, conservator or
statutory successor of Retrocedant shall give written notice to
Retrocessionaire of the pendency of a claim against Retrocedant
indicating the Reinsurance Contract, which claim would involve a
20
possible liability on the part of 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, 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
Retrocedant or its liquidator, receiver, conservator or statutory
successor. The expense thus incurred by Retrocessionaire shall be
chargeable, subject to the approval of the court, against 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 Retrocedant solely
as a result of the defense undertaken by Retrocessionaire.
16.3 As to all reinsurance made, ceded, renewed or otherwise becoming
effective under this Agreement, the reinsurance shall be payable as set
forth above by Retrocessionaire to Retrocedant or to its liquidator,
receiver, conservator or statutory successor, except (i) where the
Reinsurance Contracts specifically provide another payee in the event
of the insolvency of Retrocedant, and (ii) where Retrocessionaire, with
the consent of the reinsured or reinsureds under the Reinsurance
Contracts, has assumed such Reinsurance Contract obligations of
Retrocedant as direct obligations of Retrocessionaire to the payees
under such Reinsurance Contracts and in substitution for the
obligations of the Retrocedant to such payees.
16.4 For the purposes of this section 16, an insolvency event shall occur
if:
(A) (i) a winding up petition is presented in respect of
Retrocedant or a provisional liquidator is appointed
over it or if Retrocedant goes into administration,
administrative receivership or receivership or if
Retrocedant has a scheme of arrangement or voluntary
arrangement proposed in relation to all or any part
of its affairs; or
(ii) Retrocedant goes into compulsory or voluntary
liquidation;
or, in each case, if Retrocedant becomes subject to any other
similar insolvency process (whether under the laws of England
and Wales or elsewhere); and
(B) Retrocedant is unable to pay its debts as and when they fall
due within the meaning of section 123 of the Insolvency Xxx
0000 (or any statutory amendment or re-enactment of that
section).
17. OFFSET
Retrocedant and Retrocessionaire shall have the right to offset any
balance or amounts due from one party to the other under the terms of
this Agreement. The party asserting the right of offset may exercise
such right at any time whether the balances due are on account of
premiums, losses or otherwise.
21
18. ERRORS AND OMISSIONS
Any inadvertent delay, omission, error or failure shall not relieve
either party hereto from any liability which would attach hereunder if
such delay, omission, error or failure had not been made provided such
delay, omission, error or failure is rectified as soon as reasonably
practicable upon discovery.
19. CREDIT FOR REINSURANCE; SECURITY
19.1 CREDIT FOR REINSURANCE
Retrocessionaire shall take all actions reasonably necessary, if any,
to permit Retrocedant to obtain full financial statement credit in all
applicable jurisdictions for all liabilities assumed by the
Retrocessionaire pursuant to this Agreement, including but not limited
to loss and loss adjustment expense reserves, unearned premium
reserves, reserves for incurred but not reported losses, allocated loss
adjustment expenses and ceding commissions, and to provide the security
required for such purpose, in a form acceptable to Retrocedant. Any
reserves required by the foregoing in no event shall be less than the
amounts required under the law of the jurisdiction having regulatory
authority with respect to the establishment of reserves relating to the
relevant Reinsurance Contracts. For purposes of this Section 19, such
"actions reasonably necessary" may include, without limitation, the
furnishing of a letter of credit or the establishment of a custodial or
trust account, as permitted under applicable law, to secure the payment
of the amounts due the Retrocedant under this Agreement.
19.2 EXPENSES
All expenses of establishing and maintaining any letter of credit or
other security arrangement shall be paid by Retrocessionaire.
19.3 SECURITY
(A) Retrocessionaire shall establish and maintain a trust fund or
other security arrangement for the benefit of Retrocedant as
security for the obligations of Retrocessionaire under this
Agreement. The trust fund or other security arrangement shall
be in a form reasonably satisfactory to Retrocedant and shall
comply with such requirements (if any) as may be laid down by
the Financial Services Authority. It is understood that to the
extent Retrocessionaire provides such other security
arrangement reasonably satisfactory to Retrocedant,
Retrocessionaire shall not be required to provide a trust fund
under this provision. It is further understood that to the
extent payments are made either to Retrocedant or to an
affiliate of Retrocedant pursuant to such other security
arrangement in respect of obligations of Retrocessionaire
hereunder, Retrocessionaire shall be relieved of such
obligations to the extent of such payment.
22
(B) Retrocessionaire shall be permitted to liquidate the trust or
terminate the other security arrangement at the earlier of (i)
such time as Retrocessionaire's obligations under this
Agreement have been met or are terminated or waived or (ii)
the reserves so reported by Retrocessionaire do not exceed
$100 million as of two successive calendar year ends.
(C) Retrocedant shall bear the costs and expenses of the trustee
relating to the trust.
20. MISCELLANEOUS PROVISIONS
20.1 SEVERABILITY
If any term or provision of this Agreement shall be held void, illegal,
or unenforceable, the validity of the remaining portions or provisions
shall not be affected thereby.
20.2 SUCCESSORS AND ASSIGNS
This Agreement may not be assigned by either party without the prior
written consent of the other. The provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
parties hereto and their respective successors and assigns as permitted
herein.
20.3 EQUITABLE RELIEF
Each party hereto acknowledges that if it or its employees or agents
violate the terms of this Agreement, the other party will not have an
adequate remedy at law. In the event of such a violation, the other
party shall have the right, in addition to any other rights that may be
available to it, to obtain in any court of competent jurisdiction
injunctive relief to restrain any such violation and to compel specific
performance of the provisions of this Agreement. The seeking or
obtaining of such injunctive relief shall not foreclose or limit in any
way relief against either party hereto for any monetary damage arising
out of such violation.
20.4 EXECUTION IN COUNTERPARTS
This Agreement may be executed by the parties hereto in any number of
counterparts and by each of the parties hereto in separate
counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
20.5 NOTICES
All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly
given if delivered by hand (with receipt
23
confirmed), or by facsimile (with transmission confirmed), or by
certified mail, postage prepaid and return receipt requested, addressed
as follows (or to such other address as a party may designate by
written notice to the others) and shall be deemed given on the date on
which such notice is received:
If to Retrocedant:
St. Xxxx Reinsurance Company Limited
00 Xxxxxxxxxx Xxxxxx
Xxxxxx
X0 0XX
Facsimile: x00 00 0000 0000
Attention: Company Secretary
If to Retrocessionaire:
Platinum Underwriters Reinsurance, Inc.
000 Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 001 212 238 9202
Attention: Chief Financial Officer
20.6 WIRE TRANSFER
All settlements in accordance with this Agreement shall be made by wire
transfer of immediately available funds on the due date, or if such day
is not a Business Day, on the next day which is a Business Day,
pursuant to the following wire transfer instructions:
For credit to Platinum Underwriters Reinsurance, Inc.
USD Account
Citibank
Newcastle, Delaware
Account Number 00000000
Bank ABA Number 000000000
- GBP Account
Citibank
London
Account Number 00000000
SWIFT XXXXXX0X
- EUR Account
Citibank
London
Account Number 00000000
SWIFT XXXXXX0X
For credit to St. Xxxx Reinsurance Company Limited [ ]
- USD Account
Citibank
London
Account Number 988529
Sort Code 18-50-08
- GBP Account
Citibank
London
Account Number 0000000
Sort Code 18-50-08
- EUR Account
Citibank
London
Account Number 0000000
Sort Code 18-50-08
Payment may be made by cheque payable in immediately available funds in
the event the party entitled to receive payment has failed to provide
wire transfer instructions.
20.7 HEADINGS
Headings used herein are not a part of this Agreement and shall not
affect the terms hereof.
24
20.8 FURTHER ASSURANCES
Each of the parties shall from time to time, on being reasonably
requested to do so by the other party to this Agreement, shall do such
acts and/or execute such documents in a form reasonably satisfactory to
the party concerned as may be necessary to give full effect to this
Agreement and securing to that party the full benefit of the rights,
powers and remedies conferred upon it by this Agreement.
20.9 THIRD PARTY RIGHTS
(A) Section 14 confers a benefit on the officers, directors and
employees of Retrocedant and of Retrocessionaire (the "Third
Parties") and, subject to the remaining provisions of this
Section 20.9, is intended to be enforceable by the Third
Parties by virtue of the Contracts (Rights of Third Parties)
Xxx 0000.
(B) The parties to this Agreement do not intend that any term of
this Agreement, apart from Section 14, should be enforceable,
by virtue of the Contracts (Rights of Third Parties) Xxx 0000,
by any person who is not a party to this Agreement.
(C) Notwithstanding the provisions of Section 20.9(A) above, this
Agreement may be rescinded or varied in any way and at any
time by the parties to this Agreement without the consent of
any or all of the Third Parties.
20.10 AMENDMENTS; ENTIRE AGREEMENT
This Agreement may be amended only by written agreement of the parties.
This Agreement, together with the Formation and Separation Agreement,
supersedes all prior discussions and written and oral agreements and
constitutes the sole and entire agreement between the parties with
respect to the subject matter hereof.
20.11 GOVERNING LAW
This Agreement shall be governed by English law.
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorised representatives as of the date first above written.
ST. XXXX REINSURANCE COMPANY LIMITED
By /s/ X. Xxxxxxx
-----------------------------------
Name: X. XXXXXXX
Title: MANAGING DIRECTOR
PLATINUM UNDERWRITERS REINSURANCE,
INC.
By ________________________________
Name:
Title:
EXHIBIT A-1
Reinsurance Contracts
ST. XXXX REINSURANCE COMPANY LIMITED : NON-TRADITIONAL B1 QUOTA SHARE TREATY
SCHEDULE A- REINSURANCE CONTRACTS.
Reserving Class Genius Class Policy Reference Inception Expiry Cedant Title
88 88 Non Trad Intl 003102011FXP 18/05/01 31/03/04 Transatlantic Re Co *AC* XXX 0xx Xxxxxxxx Xxxx Xxxxx
00 00 Non Trad Intl 003103011FXP 18/05/01 31/03/04 Transatlantic Re Co *AC* TRC 2nd Property Risk Retro
A-1
EXHIBIT A-2
Loss Reserves by Class of Business
None.
A-2
EXHIBIT B
Loss Reserves
Loss Reserves shall consist of loss and loss adjustment expense reserves,
including incurred but not reported loss and loss adjustment expense reserves as
of the Effective Time with respect to premium earned on the Reinsurance
Contracts net of retrocessional recoverables under the Inuring Retrocessions,
Loss Reserves shall not include any loss and loss adjustment expense reserves or
ceding commission reserves relating to Excluded Losses. Aggregate Loss Reserves
as of June 30, 2002 are set forth on Exhibit A-1.
Methodology for Calculation of Final Section A Premium
It is understood that the Loss Reserve analysis will be performed by
Retrocessionaire's employees under the direction of Retrocedant and reviewed by
Retrocedant's employees.
Excluding catastrophes, the IBNR component of Loss Reserves will be booked, by
Class of Business, to the planned IBNR. Planned IBNR is determined using the
Xxxxxxxxxxx-Xxxxxxxx methodology, using the planned loss ratio (adjusted for the
difference between actual and planned commission and brokerage) as the initial
expected loss ratio and the development pattern used for the class in the
September 30, 2002 analysis. In the case of a Class of Business where the
expected reported losses are less than 75% of the expected ultimate losses, as
per the loss development patterns in use as of September 30, 2002, the IBNR will
not be less than that amount needed to produce an ultimate loss ratio equal to
the ultimate plan loss ratio (adjusted for the difference between actual and
planned commission and brokerage).
In addition to the above, known large events and catastrophe variances from plan
as of the Effective Date will be added to the ultimate losses. Subsequent
adjustments to the reserves for known large events and catastrophe variances
from plan in the 90 days following the Effective Date could be upward or
downward.
Calculation Methodology for Earned But Not Yet Billed Premium
Earned But Not Yet Billed Premium shall equal estimated premiums receivable with
respect to the Reinsurance Contracts net of estimated ceding commissions and
Inuring Retrocession premiums. Earned But Not Yet Billed Premium as of September
30, 2002 is equal to $[ ].
B-1
EXHIBIT C
Inuring Retrocessions
PLATINUM RE UK / US / BERMUDA - SCHEDULE OF INURING REINSURANCE :
PROPORTIONAL AS AT 17/10/02
Reference Inception Expiration
No. Name of Contract Date Date Cover
--------------------------------------------------------------------------------------------
1) Worldwide Property 1/1/02 12/31/02 International Property Risk
Excluding Japan Excess of Loss & Catastrophe
Excess of Loss Business
(protects Europe)
2) UK/Eire Cat. XL Q.S. / 1/1/02 12/31/02 U.K. / Eire Cat. Excess
1st & / 2nd Surplus of Loss Treaty Business
(protects Europe)
3) UK/Europe Cat. XL Quota 1/1/02 12/31/02 International Property
Share Treaty Catastrophe Excess of Loss
Business (protects Europe)
4) Japan Cat. XL Surplus 1/1/02 12/31/02 Japan / Japanese Islands
Treaty Property Cat. Excess of Loss
Business (protects New York
& Europe)
Reference
No. Name of Contract Limit Projected Prem. Participants % Placed
---------------------------------------------------------------------------------------------------------------------
1) Worldwide Property USD 40,000,000 Aggregate USD 9m - USD 12m [100% Nisshin - 50% 55%
Excluding Japan Cession Limit treaty estimate] Nichido - 5%
2) UK/Eire Cat. XL Q.S. / GBP 100,000,000 Aggregate GBP 5m [100% treaty Nisshin - 14% 29%
1st & / 2nd Surplus Cession Limit estimate] PX Re - 10%
TOA Re - 5%
3) UK/Europe Cat. XL Quota GBP 75,000,000 Aggregate GBP 3m - GBP 3.5m Montpelier 100%
Share Treaty Cession Limit Re - 100%
4) Japan Cat. XL Surplus USD 30,000,000 Aggregate USD 1.2m PX Re - 100% 100%
Treaty Cession Limit : quake USD
20,000,000 Aggregate
Cession Limit : windstorm
C-1
5) Casualty Clash Quota 1/1/96 12/31/02 Casualty Clash, Casualty
Share Contingency, Casualty Cat.
and Workers Comp. Cat. (NY)
6) Nisshin NM Open Cover 7/1/01 6/30/02 Business in the Pacific Rim
Region from our NY,
Xxxxxxxxx & XX xxxxxxx
0) Xxxxx Xxxxxxx Property 4/1/02 12/1/02 North America Property
Cat. Quota Share Catastrophe business written
by NY & Chicago
5) Casualty Clash Quota 20% Quota Share of $ 4,200,000 Auto-Owners 100%
Share USD 7,500,000 any Ins. Co.
one occurrence etc.
6) Nisshin NM Open Cover SGD 2,000,000 $ 500,000 Nisshin F & M 100%
7) North America Property 50% Quota Share estimated Montpelier Re 100%
Cat. Quota Share $ 12,500,000
C-2
PLATINUM RE UK / US / BERMUDA - SCHEDULE OF INURING REINSURANCE :
NON-PROPORTIONAL AS AT 17/10/02
Reference Inception Expiration
No. Name of Contract Date Date Cover Limit Retention
--------------------------------------------------------------------------------------------------------------------
1a) Marine XL (a) 5/1/01 4/30/02 Protects Europe $ 1,500,000 $ 1,000,000
XL account L 750,000 L 500,000
1b) Marine XL (b) 1/1/02 12/31/02 Protects Europe $ 5,000,000 $ 5,000,000
XL account L 2,500,000 L 2,500,000
1c) Marine XL (c) 1/1/02 12/31/02 Protects Europe $ 5,000,000 $10,000,000
XL account L 2,500,000 L 5,000,000
2a) International 7/11/01 7/10/02 Protects Europe $ 7,500,000 $ 7,500,000
Property Cat. XL Risk/Prorata/Cat. L 5,000,000 L 5,000,000
XL business
Reference projected
No. Name of Contract Reinstatement premium ROL %Placed Participants
---------------------------------------------------------------------------------------------------------------------
1a) Marine XL (a) 1 @ 100% $ 360,000 26.67% 100% PX Re - 44.20%
L 20,000 Lloyd's Synd. 2121 (HYL) - 10%
Cornhill Ins. - 33.33%
XL Re - 12.47%
1b) Marine XL (b) 2 @ 100% $ 1,125,000 25.00% 100% Lloyd's Synd. 1861 (BRM) - 20%
L 62,500 QBE Intnl. London - 30%
Cornhill - 25%
Odyssey London Branch - 25%
1c) Marine XL (c) 2 @ 100% $ 675,000 15.00% 100% QBE Intnl. London - 50%
L 37,500 Cornhill - 25%
Odyssey London Branch - 25%
2a) Property Cat. XL 1 @ 100% $ 843,750 22.50% 100% PX Re - 40%
International L 562,500 GE Frankona Re (Germany) - 20%
Xxxxxxx Global (UK) - 1.91%
Safety National Casualty Corp. - 7.61
Lloyd's Synd. 566 (STN) - 15.24%
Lloyd's Synd. 780 (BFC) - 3.81%
Lloyd's Synd. 2121 (HYL) - 3.81%
Lloyd's Synd. 2027 (COX) - 3.81%
Lloyd's Synd. 2010 (MMX) - 3.81%
C-3
2b) International 7/11/01 7/10/02 Protects Europe $ 7,500,000 $15,000,000
Property Cat. XL Risk/Prorata/Cat. L 5,000,000 L10,000,000
XL business
2c) International 7/11/01 7/10/02 Protects Europe $ 7,500,000 $22,500,000
Property Cat. XL Risk/Prorata/Cat. L 5,000,000 L15,000,000
XL business
3a) Joint Risk XOL 2/13/02 2/12/03 1st layer XS 5M $ 2,500,000 $ 2,500,000
Cover - First aggregate
Layer
3b) Joint Risk XOL 2/13/02 2/12/03 Property Risk & $ 5,000,000 $ 5,000,000
Cover - Second Prorata
Layer business
(all offices)
2b) International 1 @ 100% $ 1,162,500 31.00% 100% PX Re - 15.66%
Property Cat. XL L 775,000 [18.91% w.e.f. 1/11/02]
GE Frankona Re (Germany) - 25%
XL Re (UK) - 15%
Xxxxxxx Global (UK) - 1.54%
Taisei F&M - 3.25% (replaced
@1/11/02)
Protective Ins. Co. - 3.25%
Safety National Corp. - 6.5%
Lloyd's Synd. 000 (XXX) - 19.23%
Lloyd's Synd. 566 (STN) - 7.69%
Lloyd's Synd. 958 (GSC) - 1.92%
Lloyd's Synd. 529 (SHE) - 0.96%
2c) International 1 @ 100% $ 900,000 24.00% 100% PX Re - 12% [14.93% w.e.f. 1/11/02]
Property Cat. XL L 600,000 GE Frankona Re (Germany) - 20%
XL Re (UK) - 15%
Xxxxxxx Global (UK) - 1.17%
Taisei F&M - 2.93% (replaced @
1/11/02)
Royal Bank of Canada Ins. Co. - 5.87%
Protective Ins. Co. - 2.93%
Safety National Corp. - 5.86%
Lloyd's Synd. 000 (XXX) - 17.5%
Lloyd's Synd. 566 (STN) - 6.75%
Lloyd's Synd. 2027 (COX) - 4.42%
Lloyd's Synd. 958 (GSC) - 1.76%
Lloyd's Synd. 529 (SHE) - 0.88%
Lloyd's Synd. 727 (XXX) - 2.93%
3a) Joint Risk XOL 1 @ 100% $ 875,000 35.00% 100% Lloyd's Synd. 566 (STN) - 25%
Cover - First Lloyd's Synd. 780 (BFC) - 15%
Layer Xxxxxxx Global (UK) - 2.373%
XL Re - 8.898%
Transatlantic Re - 15%
Lloyd's Synd. 000 (XXX) - 5.933%
Lloyd's Synd. 2010 (MMX) - 4.449%
Lloyd's Synd. 282 (LSM) - 4.449%
GE Frankona - 8.898%
PX Re - 10%
3b) Joint Risk XOL 1 @ 100% $ 2,000,000 40.00% 100% Lloyd's Synd. 566 (STN) - 10%
Cover - Second Lloyd's Synd. 780 (BFC) - 15%
Layer Xxxxxxx Global (UK) - 4%
XL Re - 15%
Transatlantic Re - 20%
Lloyd's Synd. 2010 (MMX) - 3.50%
Lloyd's Synd. 282 (LSM) - 7.50%
GE Frankona - 15%
PX Re - 10%
C-4
4a) International 3/9/02 2/8/03 International $ 20,000,000 $50,000,000
Cat. XOL - First Risk/Prorata/Cat.
Layer XL (all offices)
4b) International 3/9/02 2/8/03 International $ 30,000,000 $70,000,000
Cat. XOL - Second Risk/Prorata/Cat.
Layer XL (all offices)
5) Satellite XL 6/12/02 6/11/03 Protects all $ 10,000,000 $ 10,000
[Geosynchronous / offices. 3 satellite
Geostationary warranty.
In-Orbit Covers naturally
Reinsurance] occurring
phenomena in
space.
6) Latin America & 7/1/00 6/3/06 All loss recoveries $ 25,000,000 $15,000,000
Caribbean ILW XOL on Latin America Term Aggregate
and Caribbean Limit - USD 75M
business subject
to USD 1 Billion
ILW
7) Caribbean ILW XOL 11/1/01 10/31/02 Caribbean $ 15,000,000 $ 100,000
Property business
subject to an
Industry Loss of
USD1.5 Billion
8) N.A. $10 Billion 7/1/01 6/30/02 North American $ 2,500,000 $ 10,000
ILW Property business
subject to
Industry Loss of
USD 10B
4a) International 1 @ 100% $ 4,800,000 24.00% 100% Lloyd's Synd. 566 (STN) - 12.5%
Cat. XOL - First Lloyd's Synd. 780 (BFC) - 10%
Layer Lloyd's Synd. 282 (LSM) - 8%
PX Re - 8%
Renaissance Re - 25%
Di Vinci Re - 12.5%
Transatlantic Re - 10%
GE Frankona Re - 10%
Royal Bank of Canada - 4%
4b) International 1 @ 100% $ 4,500,000 15.00% 100% Lloyd's Synd. 566 (STN) - 5%
Cat. XOL - Second Lloyd's Synd. 780 (BFC) - 12.5%
Layer Lloyd's Synd. 000 (XXX) - 4.004%
Lloyd's Synd. 2010 (MMX) - 1.202%
Lloyd's Synd. 282 (LSM) - 10.01%
Lloyd's Synd. 1096 (RAS) - 1.602%
Xxxxxxx Global (UK) - 0.801%
PX Re - 8.007%
Folksamerica - 16.014%
Renaissance Re - 8.007%
Di Vinci Re - 4.004%
Transatlantic Re - 7.5%
Auto-Owners - 16.015%
Royal Bank of Canada - 2.667%
Protective - 2.667%
5) Satellite XL 0 $ 575,000 5.75% 100% Renaissance Re - 100%
[Geosynchronous /
Geostationary
In-Orbit
Reinsurance]
6) Latin America & margin -$ 400,000 N/A 56.50% Fuji F & M - 5%
Caribbean ILW XOL Nisshin F & M - 13.5%
Sumitomo - 10%
Taisei F & M - 8%
Toa Re - 20%
7) Caribbean ILW XOL Nil $ 3,450,000 23.00% 100% Continental Casualty - 100%
8) N.A. $10 Billion 1 @ 100% $ 500,000 20.00% 100% Transatlantic Re - 100%
ILW
C-5
9) N.A. $10 Billion 8/1/01 7/31/02 North American $ 2,500,000 $ 1,000,000
ILW Property business
subject to Industry
Loss of USD 10B
10) N.A. Property / 1/1/02 12/31/02 North American $ 10,000,000 $ 100,000
WCA Cat $ 30B ILW Property and
Workers
Compensation
business subject
to ILW of USD 30
Billion
11) N.A. Property Cat 1/5/02 1/5/03 North American $ 5,000,000 $ 50,000
$15B ILW Property business
subject to ILW of
USD 15 Billion
12a) Marine XOL - 1st 1/1/02 12/31/02 Marine business $ 5,000,000 $ 5,000,000
layer [NY] for New York
Office
12b) Marine XOL - 2nd 1/1/02 12/31/02 Marine business $ 5,000,000 $10,000,000
layer [NY] for New York
Office
13) Single Period 1/1/02 12/31/02 Covers aggregate $200,000,000 79.4% Traditional bus.
Accident Year net losses 93.5% Non-traditional
Aggregate XOL incurred on an business
(Holborn) ultimate accident
year basis IRO all
business written
by All offices
including
Discovery Re.
14) Workers' 1/1/02 12/31/02 Covers Workers' $ 50,000,000 $75,000,000
Compensation Cat. 1/1/03 12/31/05 Compensation $ 50,000,000 $75,000,000
XOL (Holborn) treaty business
15) Puerto Rico ILW 7/26/02 7/25/03 Property business $ 10,000,000 $ 10,000
XOL subject to an
Industry Loss of
USD 1.5 Billion
9) N.A. $10 Billion 1 @ 100% $ 475,000 19.00% 100% IPC Re Limited - 100%
ILW
10) N.A. Property / 1 @ 100% $ 420,000 4.20% 100% Tokio Millenium Re - 100%
WCA Cat $ 30B ILW
11) N.A. Property Cat 1 @ 100% $ 950,000 19.00% 100% Odyssey Re - 100%
$15B ILW
12a) Marine XOL - 1st 1 @ 100% $ 1,125,052 22.50% 100% Lloyd's Synd. 457 (WTK) - 7.5%
layer [NY] Cornhill - 21.5%
Folksamerica Re - 30%
Lloyd's Synd. 2 (WHS) - 20%
Nisshin F & M - 1%
XL Mid Ocean Re - 20%
12b) Marine XOL - 2nd 1 @ 100% $ 624,982 12.50% 100% Lloyd's Synd. 457 (WTK) - 7.5%
layer [NY] Cornhill - 21.5%
Folksamerica Re - 30%
Lloyd's Synd. 2 (WHS) - 20%
Nisshin F & M - 1%
XL Mid Ocean Re - 20%
13) Single Period $ 4,750,000 100% Underwriters Reinsurance - 53.75%
Accident Year London Life & General - 25%
Aggregate XOL PMA Reins. - 10%
(Holborn) Hannover Re - 9%
E & S Reins. - 2.25%
14) Workers' $10,000,000 100% Swiss Re - 81.25%
Compensation Cat. Annual Agg. Hannover - 15%
XOL (Holborn) Of 50M E & S Reins. - 3.75%
15) Puerto Rico ILW Nil $ 1,250,000 12.50% 100% ACE Tempest Re - 50%
XOL Renaissance Re - 50%
C-6
EXHIBIT D
Allocation of Recoveries
1. Recoveries allocable to this contract available under an Inuring
Retrocession shall be allocated between the parties in proportion to
the losses otherwise recoverable.
2. Any and all loss recoveries and premium adjustments allocable to this
contract resulting from triggering the 2002 Holborn cover will be
allocated between The St. Xxxx Companies and Retrocessionaire and its
affiliates ("Platinum Re") based on variance from plan and in
accordance with the existing methodology shown below.
Variance from plan at an underwriting year level will be the basis for
the allocation. The 2000, 2001 and 2002 underwriting year plan loss
ratios associated with the 2002 calendar year plan loss ratio will be
compared to indicated ultimate loss ratios for the same underwriting
years. These indicated ultimate loss ratios are the same ones used to
determine if the Holborn cover has been triggered. The 2002
underwriting year must be segmented into three pieces. Namely, that
business written on Fire and Marine paper and subject to transfer, that
written on Fire and Marine paper and not subject to transfer and that
written on Platinum Re paper. The distinction is warranted as the
cession to Platinum Re will be net of the Holborn cover. The variance
in loss ratio by underwriting year will be multiplied by the respective
underwriting year's EP component in the 2002 calendar year. This is the
same EP by underwriting year that was used to calculate the total 2002
Holborn Year's EP. This dollar variance will be the basis for
determining the distribution to be applied to the total loss recovery
and AP. It is in this manner that the total loss recovery and AP
attributable to the 2002 Holborn Year will be allocated to underwriting
year. To the extent that the recoveries and AP's have been allocated to
the 2000 and 2001 underwriting years they will be afforded to The St.
Xxxx Companies. Similarly, the allocation to that part of the 2002
underwriting year pertaining to non-transferred business will also be
realised by The St. Xxxx Companies. The allocation pertaining to
business written on The St. Xxxx xxxxx and transferred will be used in
determining the net transferred business that will be ceded to Platinum
Re. The remaining allocation associated with 2002 underwriting year
business written on Platinum Re paper will inure to the benefit of
Platinum Re directly. The margin for the 2002 Holborn cover will be
distributed based on earned premium and allocated between The St. Xxxx
Companies and Platinum Re by underwriting year.
D-1
EXHIBIT E
Allocation of Retrocessional Premiums
1. Ceded premium allocable to this contract will be allocated between the
parties and to the underwriting year in proportion to the earned
subject premium. Ceding commission will be allocated in the same
manner.
2. Reinstatement premium allocable to this contract due in respect of
non-proportional Inuring Retrocessions will be allocated between the
parties in proportion to the related allocated recoverable losses.
3. Any and all loss recoveries and premium adjustments allocable to this
contract resulting from triggering the 2002 Holborn cover will be
allocated between The St. Xxxx Companies and Platinum Re based on
variance from plan and in accordance with the existing methodology
shown below.
Variance from plan at an underwriting year level will be the basis for
the allocation. The 2000, 2001 and 2002 underwriting year plan loss
ratios associated with the 2002 calendar year plan loss ratio will be
compared to indicated ultimate loss ratios for the same underwriting
years. These indicated ultimate loss ratios are the same ones used to
determine if the Holborn cover has been triggered. The 2002
underwriting year must be segmented into three pieces. Namely, that
business written on Fire and Marine paper and subject to transfer, that
written on Fire and Marine paper and not subject to transfer and that
written on Platinum Re paper. The distinction is warranted as the
cession to Platinum Re will be net of the Holborn cover. The variance
in loss ratio by underwriting year will be multiplied by the respective
underwriting year's EP component in the 2002 calendar year. This is the
same EP by underwriting year that was used to calculate the total 2002
Holborn Year's EP. This dollar variance will be the basis for
determining the distribution to be applied to the total loss recovery
and AP. It is in this manner that the total loss recovery and AP
attributable to the 2002 Holborn Year will be allocated to underwriting
year. To the extent that the recoveries and AP's have been allocated to
the 2000 and 2001 underwriting years they will be afforded to The St.
Xxxx Companies. Similarly, the allocation to that part of the 2002
underwriting year pertaining to non-transferred business will also be
realised by The St. Xxxx Companies. The allocation pertaining to
business written on The St. Xxxx xxxxx and transferred will be used in
determining the net transferred business that will be ceded to Platinum
Re. The remaining allocation associated with 2002 underwriting year
business written on Platinum Re paper will inure to the benefit of
Platinum Re directly. The margin for the 2002 Holborn cover will be
distributed based on earned premium and allocated between The St. Xxxx
Companies and Platinum Re by underwriting year.
4. The $10 million of premium payable for 2002 under the Workers
Compensation Catastrophe Excess of Loss $50 million excess of $75
million Retrocession Contract will be split $1 million for Platinum Re
and $9 million for The St. Xxxx Companies. Such contract has a feature
that states that for certain unfavourable experience on the Whole
Account Stop Loss Cover the premium on this cover could reduce by as
E-1
much as $9 million. In this event the reduction in ceded premium would
benefit The St. Xxxx Companies exclusively. The Platinum Re Share would
remain at $1 million.
The contract has a feature that allows the Retrocessionaire to renew
the cover if it is in a loss position. In this event the subsequent
years' premium will be split in proportion to the losses incurred to
the cover.
E-2
EXHIBIT F
Allocation of Limits
Available limits under an Inuring Retrocession shall be allocated between the
parties in proportion to the losses otherwise recoverable.
F-1
EXHIBIT G
Form of Retrocedant's Report
Retrocedant will provide the following information separately for each coverage
period on a monthly basis:
a) Transaction listing at assumed policy level showing all revenue items
including booked premiums, booked acquisition costs and paid losses entered in
Retrocedant's books during the relevant accounting period.
b) Claims listing at assumed policy level showing loss description, date
of loss, paid amount and outstanding case reserve.
c) Listing of Inuring Retrocession amounts allocated to Retrocessionaire
during the relevant accounting period including details of non-proportional
Inuring Retrocession premiums and recoverables.
Note 1 relating to a) and b): Revenue and reserve amounts will be shown in the
accounting currency used by Retrocedant for the purposes of its own books.
Note 2 relating to a) and b): Transaction and claims listings will include gross
amounts and proportional Inuring Retrocession amounts.
Note 3 relating to c): Retrocession amounts will be paid to Retrocessionaire
only following receipt by Retrocedant. These amounts together with any unpaid
amounts that are due to Retrocessionaire but not yet received by Retrocedant
will be included in the listing of Inuring Retrocession amounts.
G-1
EXHIBIT H
Allocation of Administrative Expenses
Retrocessionaire shall pay to Retrocedant the "actual cost" to Retrocedant
(which shall consist of Retrocedant's direct and reasonable indirect costs), as
certified in good faith by Retrocedant. For greater certainty, the parties agree
that "actual cost" will include any incremental and out-of-pocket costs incurred
by Retrocedant in connection with the administrative services provided
hereunder, including the conversion, acquisition and disposition cost of
software and equipment acquired for the purposes of providing the services and
the cost of establishing requisite systems and data feeds and hiring necessary
personnel.
No later than 30 days following the last day of each calendar quarter,
Retrocedant shall provide Retrocessionaire with a report setting forth an
itemised list of the services provided to Retrocessionaire during such last
calendar quarter, in a form agreed to by the parties. Retrocessionaire shall
promptly (and in no event later than 30 days after receipt of such report,
unless Retrocessionaire is contesting the amount set forth in the report in good
faith) pay to Retrocedant by wire transfer of immediately available funds all
amounts payable as set forth in such report. Each party will pay all taxes for
which it is the primary obligor as a result of the provision of any service
under this Agreement; provided, that Retrocessionaire shall be solely
responsible for, and shall reimburse Retrocedant in respect of, any sales, gross
receipts, value added or transfer tax payable with respect to the provision of
any service under this Agreement, and any such reimbursement obligation shall be
in addition to Retrocessionaire's obligation to pay for such service.
H-1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorised representatives as of the date first above written.
ST. XXXX REINSURANCE
COMPANY LIMITED
By______________________________
Name:
Title:
PLATINUM UNDERWRITERS
REINSURANCE, INC.
By /s/ Xxxxxxx X. Xxxxx
------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President and Chief
Underwriting Officer
