REINSURANCE COVER NOTE
Agreement No: 970062
MEMORANDUM OF REINSURANCE EFFECTED ON BEHALF OF:
REINSURED: HOME STATE INSURANCE GROUP
---------
HOME STATE INSURANCE COMPANY
Red Bank, New Jersey
QUAKER CITY INSURANCE COMPANY
Trevose, Pennsylvania
NEW YORK MERCHANT BAKERS INSURANCE
COMPANY Binghamton, New York
HOME MUTUAL INSURANCE COMPANY OF BINGHAMTON, NEW YORK
Binghamton, New York
PINNACLE INSURANCE COMPANY
Carrollton, Georgia
XXXXXXXXX INSURANCE COMPANY
Wallingford, Connecticut
(hereinafter referred to as the "Company")
TYPE: BLACK AND SILVER CAR COMMERCIAL AUTOMOBILE LIABILITY QUOTA
---- SHARE REINSURANCE AGREEMENT
PERIOD: Continuous from January 1, 1997 at 12:01 a.m., Eastern
------ Standard Time, subject to cancellation at any January 1
anniversary thereafter by either party giving ninety (90)
days' prior written notice.
In the event of cancellation, at the Company's option:
1. Reinsurers shall remain liable for their share of all
policies in force hereunder at the effective date of
cancellation until the natural expiration or prior
termination date of said policies, but in no event
more than twelve (12) months plus three (3) months'
odd time.
2. The Company shall reassume the unexpired liability for
all in-force business as of the date of cancellation
and the Reinsurers shall return their share of the
unearned premium less ceding commission.
CLASS: All in-force, new and renewal business classified by the
----- Company as Black and Silver Car Commercial Automobile
Liability including No-Fault, Uninsured and Underinsured
Motorists and Medical Payments.
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REINSURANCE COVER NOTE
Agreement No: 970062
EXCLUSIONS: This Agreement shall not apply to:
----------
1. Assumed reinsurance other than business assumed via
intra-company reinsurance and facultative commercial
automobile liability reinsurance in connection with
business originally produced by the Company and
reported to Reinsurers;
2. Loss or liability excluded by the provision of the
"Nuclear Incident Exclusion Clauses - Liability -
Reinsurance - USA and Canada";
3. Financial Guarantee and Insolvency;
4. Insolvency Funds;
5. War Risks, as described in the North American War Risk
Exclusion Clause;
6. All business derived directly or indirectly from any
Pool, Association or Syndicate, except that individual
losses from Assigned Risk Plans or similar plans are
not excluded.
TERRITORIAL
SCOPE: As per the Company's original policies.
-----
QUOTA SHARE
PARTICIPATION: 50% of the Company's net liability, not to exceed 50% of
------------- $100,000 per person/$300,000 per occurrence Bodily Injury
and $50,000 per occurrence Property Damage for Black Cars
and $25,000 per person/$50,000 per occurrence Bodily Injury
and $10,000 per occurrence Property Damage for Silver Cars,
including Personal Injury Protection and Uninsured and
Underinsured Motorists.
PREMIUM: 50% of original net written premium. Premium ceded shall be
------- net of the cost of the First-Fourth Casualty Clash Excess
of Loss Reinsurance Agreements' earned reinsurance premium.
WARRANTY: Reinsurers hereon to have the benefit of recoveries from
-------- the Company's Casualty Clash Excess of Loss Reinsurance
Agreements with limits of 100% of $6,000,000 each
occurrence excess of $500,000 each occurrence. The First
Casualty Clash Excess of Loss Reinsurance Agreement, 100%
of $500,000 each occurrence excess $500,000 each
occurrence, will have two reinstatements The Second-Fourth
Casualty Excess of Loss Reinsurance Agreement will have one
reinstatement on each layer.
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REINSURANCE COVER NOTE
Agreement No: 970062
CEDING
COMMISSION: Three-Year Block: January 1, 1996 - December 31, 1998
----------
Provisional commission of 27.0% of ceded premiums, subject
to adjustment on earned-to-incurred basis, as follows:
Minimum Ceding Commission of 22.00% at a Loss Ratio of
71.50% or higher; Increasing 1.00% for each 1.00% reduction
in Loss Ratio; Provisional Ceding Commission of 27.00% at a
Loss Ratio of 66.50%; Increasing 1.00% for each 0.75%
reduction in Loss Ratio; Maximum Commission of 39.00% at a
57.50% Loss Ratio. Loss Corridor: The Company will retain
net 7.0 loss ratio points attaching at a ceded loss ratio
of 71.5% and ending at 78.5%.
Annual adjustments at the end of each Agreement period
based on losses incurred during each accident year. No
upward adjustment until the end of the three-year block.
Deficit/Credit carry forward not to exceed three (3) years.
Calculation of this commission adjustment shall apply
collectively for all Companies reinsured under this
Agreement, and not individually.
REPORTS AND
ACCOUNTS: Within sixty (60) days after the close of each month, the
-------- Company shall render to the Reinsurers the following:
a. Reinsurance premium written for the month;
b. Less ceded earned premium for Casualty Clash
reinsurance for the month which inures to the benefit
of the Quota Share;
c. Less commission allowed on the reinsurance premium for
the month;
d. Less Reinsurers' share of paid loss and loss
adjustment expenses paid during the month;
e. Plus Reinsurers' share of all salvage recovered during
the month;
f. Net balance due.
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REINSURANCE COVER NOTE
Agreement No: 970062
The Company shall advise the unearned premium and
outstanding losses by line of business and remit the
Reinsurers' net balance within sixty (60) days after the
end of each month.
CLAUSES: Net Liability.
------- Parties to the Agreement.
Reinsurers Liability.
Losses and Loss Settlements.
Extra Contractual Obligations on a 100% basis, subject to a
maximum loss of $250,000 plus allocated loss adjustment
expenses for Reinsurers' share.
Loss in Excess of Policy Limits on a 100% basis, subject to
a maximum loss of $250,000 plus allocated loss
adjustment expenses for Reinsurers' share.
Funding of Reserves.
Currency.
Taxes.
Access to Records.
Errors and Omissions, not to apply to Exclusions.
Original Conditions.
Insolvency.
Arbitration.
Federal Excise Tax.
Service of Suit - NMA 1998 - Mendes & Mount (where
applicable).
Offset.
Severability.
Minet Re North America, Inc. Intermediary.
WORDING: As per existing Reinsurance Agreements as far as applicable
------- and as noted herein, which complies with the requirements
of the State of New York Insurance Department.
REINSURERS:
----------
NAIC
FEIN No. No. Through Minet Re North America Share
-------- ---- ------------------------------ -----
00-0000000 24457 Reliance Insurance Company
through Reliance Reinsurance Corp. 50%
Philadelphia, Pennsylvania
00-0000000 22314 Underwriters Reinsurance Company 50%
Concord, New Hampshire --
TOTAL PLACEMENT: 100%
====
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REINSURANCE COVER NOTE
Agreement No: 970062
We will periodically provide a list of those companies with which Minet Re North
America, Inc. is affiliated, which may be parties to this placement. This list
is available on request.
FOR AND ON BEHALF OF:
MINET RE NORTH AMERICA, INC.
___________________________ DATE: _______________
Senior Vice President
AGREED TO:
HOME STATE INSURANCE GROUP
HOME STATE INSURANCE COMPANY
QUAKER CITY INSURANCE COMPANY
NEW YORK MERCHANT BAKERS INSURANCE COMPANY
HOME MUTUAL INSURANCE COMPANY OF BINGHAMTON, NEW YORK
PINNACLE INSURANCE COMPANY
XXXXXXXXX INSURANCE COMPANY
___________________________ DATE: _______________
Authorized Signature
Please examine this document carefully and advise us immediately if any of the
details on the security used are not in accordance with your order or
requirements.
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