INTER-COMPANY EXPENSE AGREEMENT BETWEEN PROVISION STATE INSURANCE COMPANY AND PATRONS MUTUAL INSURANCE COMPANY OF CONNECTICUT
Exhibit 10.30
INTER-COMPANY EXPENSE AGREEMENT
BETWEEN
PROVISION STATE INSURANCE COMPANY
AND
PATRONS MUTUAL INSURANCE COMPANY OF CONNECTICUT
THIS AGREEMENT, made as of the 18th day of June, 2001, between Patrons Mutual Insurance Company of Connecticut (“Patrons CT”) and Provision State Insurance Company (“Provision”), both insurance companies organized and exiting under the laws of the State of Connecticut.
WITNESSETH:
WHEREAS, Provision is a wholly-owned subsidiary of Patrons CT and an inactive insurance company whose primary activity is holding the investment in Real Estate for Patrons;
WHEREAS, Patrons CT has extensive experience in the operation of its insurance business and has trained personnel, for conducting its present and future operations (which include insurance, reinsurance and investment operations and activities incidental, ancillary or complementary to an insurance business);
WHEREAS, Patrons CT and Provision desire to arrange that Patrons CT having the appropriate experience, personnel, equipment and facilities shall provide administrative and other services to Provision;
NOW, THEREFORE, in consideration for providing these services, it is agreed as follows:
Section 1. SERVICES. Commencing on the Effective Date (as defined below) and until the termination of this Agreement, Patrons CT shall provide to Provision such management services as shall be reasonably necessary or desirable for the conduct of the
insurance business of Provision. Such services shall include, but not be limited to, accounting, tax and auditing services, legal services, actuarial services, employee benefit plans and personnel administration, insurance production and underwriting services, processing and payment of claims, servicing of policyholders, billing and collection services, software development services, electronic data processing operations, communications operations, investment and property management services.
Section 2. CHARGES. Provision agrees to pay to Patrons CT a charge equal to all expenses, direct and indirect, reasonably and equitably determined by Patrons CT to be attributable to Provision for services and facilities provided by the former to the latter pursuant hereto, except to the extent application of laws or regulations would otherwise require.
The basis for determining such charges to Provision shall be similar to those used by Patrons CT for internal cost distribution including, where applicable, time records prepared for this purpose. Such basis shall be modified and adjusted where necessary or appropriate to reflect fairly and equitably the actual incidence of cost incurred by Patrons CT on behalf of Provision.
Patron CT’s determination of charges hereunder shall be conclusive as between such parties, except that if the Provision objects to any such determination, it shall so advise Patrons CT within thirty (30) days of receipt of notice of said determination. Unless such parties can reconcile any such objection, or otherwise agree, they shall select a firm of independent certified public accountants which shall determine the charges properly allocable to Provision and shall, within a reasonable time, submit such determination, together with the basis therefor, in writing to both parties whereupon such determination shall be binding. The expenses of any such determination by a firm of independent certified public accountants shall be borne as determined to be equitable by such accountants.
Section 3. SETTLEMENT. At quarterly intervals, Patrons CT shall submit to Provision an account of amounts payable and the account shall be settled within thirty (30) days thereafter. The amounts payable by Provision may be offset by any reciprocal obligations due to Provision, so that only net amounts shall be required to be transferred between the parties. Settlement shall be in the form of cash or cash equivalent securities.
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Section 4 . ACCOUNTING RECORDS. Patrons CT shall be responsible for maintaining full and accurate accounting records of all services rendered and facilities used pursuant to this Agreement and such additional information as Provision may reasonably request for purposes of its internal accounting operations. Patrons CT shall keep such accounting records insofar as they pertain to the computation of charges hereunder available at its principal offices for audit, inspection and copying by Provision or any governmental agency having jurisdiction during reasonable business hours.
Section 5 . TERMINATION. This agreement may be terminated by action of either the Board of Directors of Patrons CT or Provision and upon one (1) years prior written notice to the other party.
Section 6 . SETTLEMENT OF TERMINATION. No later than ninety (90) days after the effective date of termination, Patrons CT shall deliver to Provision a detailed written statement for all charges incurred and not included in any previous statement to the effective date of termination. The amounts owed hereunder shall be due and payable within thirty (30) days of receipt of such statement.
Section 7 . ASSIGNMENT AND ADDITIONAL PARTIES. This Agreement shall not be assignable by Patrons CT or Provision without the consent of the other party, except in the case of assignment to a corporation or other organization which is a successor to Provision or Patrons CT, as the case may be, in which case such successor shall be bound hereunder and by the terms of said assignment in the same manner as its assignor is bound hereunder.
Section 8 . GOVERNING LAW. This Agreement shall be governed by and constructed in accordance with Connecticut law.
Section 9 . This Agreement may be executed in one or more counterparts, and by different parties on separate counterparts, either of which shall and will be treated and considered as an original, but all of which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the day and year first above written.
| PROVISION STATE INSURANCE COMPANY | ||
| By |
| |
| Its Treasurer | ||
| PATRONS MUTUAL INSURANCE COMPANY OF | ||
| By |
| |
| Its President & CEO | ||
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FIRST AMENDMENT
to
INTER-COMPANY EXPENSE AGREEMENT
among
PROVISION STATE INSURANCE COMPANY
PATRONS MUTUAL INSURANCE COMPANY OF CONNECTICUT
STATE AUTOMOBILE MUTUAL INSURANCE COMPANY
and
STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY
This First Amendment to Inter-Company Expense Agreement (“First Amendment”), dated as of December 14, 2007, amends the Inter-Company Expense Agreement (the “Expense Agreement”), dated as of June 18, 2001, by and between Provision State Insurance Company (“Provision”) and Patrons Mutual Insurance Company of Connecticut (“Patrons CT”) as follows:
RECITALS
WHEREAS, Provision and Patrons CT have previously entered into the Expense Agreement; and
WHEREAS, Patrons CT and Provision will affiliate their business operations with State Automobile Mutual Insurance Company (“XXX”) upon the closing of the transactions contemplated by the Amended and Restated Affiliation Agreement (the “Restated Affiliation Agreement”), by and among XXX, Patrons CT and Litchfield Mutual Fire Insurance Company; and
WHEREAS, the parties intend to add XXX and State Auto Property and Casualty Insurance Company (“SAP&C”) as parties to the Expense Agreement, and to set forth herein certain methodologies in determining the expenses charged for services provided to Provision by XXX and SAP&C.
STATEMENT OF AGREEMENT
In consideration of the mutual covenants set forth herein and INTENDING TO BE LEGALLY BOUND HEREBY, the parties to this First Amendment agree to amend the Expense Agreement as follows:
| 1. |
Capitalized terms used in this First Amendment (including the Recitals) which are not otherwise defined herein shall have the meanings ascribed to such terms in the Expense Agreement. |
| 2. |
Upon the Effective Date (as defined below) of this First Amendment, XXX and SAP&C shall supplement the management and operations services provided to Provision by Patrons CT pursuant to Section 1 of the Expense Agreement. The parties acknowledge that Patrons CT has its own employees who provide managerial, supervisory, administrative, technical, professional, and clerical services to Provision. Notwithstanding the foregoing, Patrons CT and Provision understand and agree that State Auto P&C, acting by and through its employees, is authorized to provide certain other executive, administrative, |
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| technical, managerial and professional support services to Provision as needed and agreed upon by the parties, while State Auto Mutual is authorized to provide certain data processing equipment, office supplies and equipment, furniture and fixtures, automobiles and such other items of tangible personal property or facilities to Provision as needed and agreed upon by the parties, the costs of which shall be allocated as described below. |
| 3. |
Section 2 of the Expense Agreement is hereby deleted in its entirety and replaced by the following: “Provision agrees to pay to Patrons CT, XXX and SAP&C a charge equal to all expenses, direct and indirect, reasonably and equitably determined by Patrons CT, XXX and SAP&C to be attributable to Provision for services and facilities provided by the former to the latter pursuant hereto, except to the extent application of laws or regulations would otherwise require. |
“The basis for determining such charges to Provision shall be similar to those used by Patrons CT, XXX and SAP&C for internal cost distribution including, where applicable, time records prepared for this purpose. Such basis shall be modified and adjusted where necessary or appropriate to reflect fairly and equitably the actual incidence of cost incurred by Patrons CT, XXX and SAP&C on behalf of Provision.
“Patrons CT’s, SAM’s and SAP&C’s determination of charges hereunder shall be conclusive as between such parties, except that if the Provision objects to any such determination, it shall so advise Patrons CT, XXX and SAP&C within thirty (30) days of receipt of notice of said determination. Unless such parties can reconcile any such objection, or otherwise agree, they shall select a firm of independent certified public accountants which shall determine the charges properly allocable to Provision and shall, within a reasonable time, submit such determination, together with the basis therefor, in writing to both parties whereupon such determination shall be binding. The expenses of any such determination by a firm of independent certified public accountants shall be borne as determined to be equitable by such accountants.”
| 4. |
Section 3 of the Expense Agreement is hereby deleted in its entirety and replaced by the following: “Within 45 days after the end of each calendar quarter, Patrons CT shall submit to Provision an account of amounts payable and the account shall be settled within thirty (30) days thereafter. The amounts payable by Provision may be offset by any reciprocal obligations due to Provision, so that only net amounts shall be required to be transferred between the parties. Settlement shall be in the form of cash or cash equivalent securities. |
“Within 45 days after the end of each calendar quarter, XXX and SAP&C shall submit to Provision an account of amounts payable and the account shall be settled within thirty (30) days thereafter. XXX and SAP&C shall pay none of Provision’s insurance losses, loss adjustment expenses and underwriting expenses. Underwriting expenses include, without limitation, expenses for SAP&C employees providing services on behalf of Provision for only part of their time, which expenses shall be allocated in accordance with statutory accounting principles to Provision in proportion to the amount of time those employees spend on behalf of Provision. Provision’s share of pension and benefit expenses under the benefit plans for employees of SAP&C shall be allocated to Provision based on the percentage of SAP&C’s payroll expenses allocated to Provision pursuant to the terms hereof. The amounts payable by Provision may be offset by any reciprocal obligations due to Provision, so that only net amounts shall be required to be transferred between the parties. Settlement shall be in the form of cash or cash equivalent securities.”
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| 5. |
Section 4 of the Expense Agreement is hereby deleted in its entirety and replaced by the following: “Patrons CT, XXX and SAP&C shall be responsible for maintaining full and accurate accounting records of all services rendered and facilities used pursuant to this Agreement and such additional information as Provision may reasonably request for purposes of its internal accounting operations. Expenses shall be apportioned in accordance with statutory accounting principles consistently applied. The books, accounts, and records shall be so maintained as to clearly and accurately disclose the nature and details of the transactions including such accounting information as is necessary to support the expenses apportioned to the respective parties. Patrons CT, XXX and SAP&C shall keep such accounting records insofar as they pertain to the computation of charges hereunder available at its principal offices for audit, inspection and copying by Provision or any governmental agency having jurisdiction during reasonable business hours.” |
| 6. |
Section 5 of the Expense Agreement is hereby deleted in its entirety and replaced by the following: “This agreement may be terminated with respect to any of the parties by action of such party’s Board of Directors and upon ninety (90) days’ prior written notice to the other parties hereto.” |
| 7. |
Section 6 of the Expense Agreement is hereby deleted in its entirety and replaced by the following: “No later than ninety (90) days after the effective date of termination, Patrons CT, XXX and SAP&C shall deliver to Provision a detailed written statement for all charges incurred and not included in any previous statement to the effective date of termination. The amounts owed hereunder shall be due and payable within thirty (30) days of receipt of such statement.” |
| 8. |
Section 7 of the Expense Agreement is hereby deleted in its entirety and replaced by the following: “This Agreement shall not be assignable by Patrons CT, XXX, SAP&C or Provision without the consent of the other parties, except in the case of assignment to a corporation or other organization which is a successor to Provision, XXX, SAP&C or Patrons CT, as the case may be, in which case such successor shall be bound hereunder and by the terms of said assignment in the same manner as its assignor is bound hereunder. Under no circumstances can this Agreement be assigned without the prior approval of the Connecticut and the Ohio Insurance Departments.” |
| 9. |
The following is hereby added to the Expense Agreement as new Section 10: |
“COMPLETE AGREEMENT. This document, together with such amendments hereto as may from time to time be validly executed in writing by the parties, constitutes the entire agreement between the parties and supersedes all prior or contemporaneous discussions, negotiations, representations, or agreements relating to the subject matter of this Agreement.”
| 10. |
The following is hereby added to the Expense Agreement as new Section 11: |
“AMENDMENT. This Agreement may be amended by mutual consent of the parties. Except as provided herein, no alteration or variation of the terms of this Agreement shall be valid unless made in writing and signed by all the parties to this Agreement. Furthermore, no alteration or variation of the terms of this Agreement shall be valid unless prior approval for such alteration or variation has been received from the Commissioners of the Ohio and the Connecticut Departments of Insurance.”
| 11. |
This First Amendment shall be effective (the “Effective Date”) as of the Patrons Closing Date (as defined in the Restated Affiliation Agreement). Notwithstanding the foregoing, the effectiveness of this First Amendment is subject to the receipt of all |
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| regulatory consents required to implement the terms of this First Amendment. Until such time as all such regulatory consents have been obtained, this First Amendment shall not become operative to amend the Expense Agreement in any manner whatsoever and shall be of no force or effect. |
| 12. |
This First Amendment constitutes an integral part of the Expense Agreement. In the event of any inconsistencies between the provisions of the Expense Agreement and this First Amendment, the provisions of this First Amendment shall control. Except as expressly amended hereby, the terms and provisions of the Expense Agreement shall continue in full force and effect without change for the balance of the term thereof. |
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed as of the day and year first above written.
| PATRONS MUTUAL INSURANCE COMPANY OF CONNECTICUT | ||
| By: |
/s/ Xxxxxxx Xxxxxxx | |
| Xxxxxxx Xxxxxxx, President | ||
| PROVISION STATE INSURANCE COMPANY | ||
| By: |
/s/ Xxxxxxx Xxxxxxx | |
| Xxxxxxx Xxxxxxx, President | ||
| STATE AUTOMOBILE MUTUAL INSURANCE COMPANY | ||
| By: |
/s/ Xxxxxx X. Xxxxxxxx, Xx. | |
| Xxxxxx X. Xxxxxxxx, Xx., President | ||
| STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY | ||
| By: |
/s/ Xxxxxx X. Xxxxxxxx, Xx. | |
| Xxxxxx X. Xxxxxxxx, Xx., President | ||
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