Exhibit 2.2
AMENDED AND RESTATED REINSURANCE AGREEMENT
by and between
LUMBERMENS MUTUAL CASUALTY COMPANY
and certain of its subsidiaries and affiliates
and
TRINITY UNIVERSAL INSURANCE COMPANY
and certain of its subsidiaries and affiliates
Table of Contents
Page
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AMENDED AND RESTATED REINSURANCE AGREEMENT .................................. 1
ARTICLE I DEFINITIONS ....................................................... 1
ARTICLE II ASSUMPTION REINSURANCE ........................................... 5
ARTICLE III INDEMNITY REINSURANCE ........................................... 7
ARTICLE IV REGULATORY APPROVALS ............................................. 7
ARTICLE V UNDERTAKINGS IN CONNECTION WITH
ASSUMPTION TRANSACTION ...................................................... 8
ARTICLE VI DURATION OF AGREEMENT ............................................ 9
ARTICLE VII REINSURANCE PREMIUM ............................................. 9
ARTICLE VIII CEDING COMMISSION AND EXPENSE REIMBURSEMENT .................... 10
ARTICLE IX CREDIT FOR REINSURANCE ........................................... 10
ARTICLE X ADMINISTRATION OF REINSURED POLICIES .............................. 12
ARTICLE XI REPORTS .......................................................... 13
ARTICLE XII RECORDS AND INSPECTION .......................................... 13
ARTICLE XIII INDEMNIFICATION ................................................ 13
ARTICLE XIV COOPERATION ..................................................... 14
ARTICLE XV OFFSET CLAUSE .................................................... 14
ARTICLE XVI INSOLVENCY ...................................................... 14
ARTICLE XVII ERRORS AND OMISSIONS ........................................... 15
ARTICLE XVIII ARBITRATION ................................................... 15
ARTICLE XIX NOTICES ......................................................... 16
ARTICLE XX MISCELLANEOUS .................................................... 17
i
AMENDED AND RESTATED REINSURANCE AGREEMENT
This Amended and Restated Reinsurance Agreement (the "Agreement") is made and
entered into as of June 6, 2003, by and between Lumbermens Mutual Casualty
Company, an Illinois mutual insurance company, American Motorists Insurance
Company, an Illinois stock insurance company, American Manufacturers Mutual
Insurance Company, an Illinois mutual insurance company, American Protection
Insurance Company, an Illinois stock insurance company, and Xxxxxx Lloyds
Insurance Company, a Texas Lloyds company (individually, a "Xxxxxx Company" and,
collectively, "Xxxxxx"), Unitrin Advantage Insurance Company, a New York stock
insurance company, Unitrin Auto and Home Insurance Company, a New York stock
insurance company, Unitrin Preferred Insurance Company, a New York stock
insurance company, Xxxxxx Independence Insurance Company, an Illinois stock
insurance company, and Trinity Lloyd's Insurance Company, a Texas Lloyd's
organization (individually, a "Unitrin Company" and, collectively, the "Unitrin
Companies") and Trinity Universal Insurance Company, a Texas stock insurance
company ("Trinity").
WHEREAS, Xxxxxx writes policies providing Personal Lines Coverage (the "Xxxxxx
Personal Lines Policies"); and
WHEREAS, Xxxxxx desires to provide for an orderly cessation of the Xxxxxx
Personal Lines Policies that it formerly wrote through its Individual and Family
Group business unit and that are currently underwritten by affiliates of
Unitrin, Inc., and to transition such policies to the Unitrin Companies; and
WHEREAS, pursuant to a certain Policy Conversion Agreement with Xxxxxx, the
Unitrin Companies are authorized to underwrite and issue Xxxxxx Personal Lines
Policies; and
WHEREAS, Trinity and Xxxxxx entered into a 100% Quota Share Reinsurance
Agreement as of June 28, 2002 (the "Original Reinsurance Agreement") pursuant to
which Trinity reinsures on a 100% quota share basis certain Xxxxxx Personal
Lines Policies written pursuant to the Policy Conversion Agreement that the
Unitrin Companies are not yet prepared to write directly on their own policy
forms; and
WHEREAS, the Original Reinsurance Agreement was amended as of January 8, 2003 to
provide, in the event of Xxxxxx'x insolvency, for Unitrin to make claim payments
directly to insureds and insured claimants under Xxxxxx Personal Lines Policies
reinsured thereunder; and
WHEREAS, the parties hereto have agreed to amend and restate the Original
Reinsurance Agreement as set forth hereinafter in order to provide, subject to
the terms and conditions set forth hereinafter, for the reinsurance on an
assumption reinsurance basis by the Unitrin Companies of certain Xxxxxx Personal
Lines Policies reinsured hereunder that cover risks in any state in which one or
more of the Unitrin Companies named above are licensed and to provide for the
reinsurance on a 100% quota share reinsurance basis by Trinity of any Xxxxxx
Personal Lines Policies reinsured hereunder that are not assumed by the Unitrin
Companies; and
WHEREAS, the parties intend this amendment and restatement of the Agreement as a
recharacterization of the transfer of business under the Original Reinsurance
Agreement in order to facilitate the substitution of the Unitrin Companies for
Xxxxxx on certain Xxxxxx Personal Lines Policies reinsured hereunder and the
parties do not consider the amendment to involve a new cession of risk.
NOW, THEREFORE, for and in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter set forth, it is agreed by Xxxxxx,
the Unitrin Companies and Trinity as follows:
ARTICLE I
DEFINITIONS
"Ancillary Agreements" shall have the meaning set forth in the
Asset Purchase Agreement, including the
Asset Purchase Agreement but excluding
this Agreement.
"Asset Purchase Agreement" means that Asset Purchase Agreement
between Xxxxxx and Trinity dated as of
April 19, 2002.
"Assumed Policy" means any Ceded Policy to which an
Assumption Effective Date applies, other
than (a) a Ceded Policy for which the
Unitrin Companies have provided Xxxxxx
with an Exclusion Notice and not an
Assumption Notice or (b) a Ceded Policy
for which no company is identified on
Exhibit A as eligible to assume such Ceded
Policy.
"Assuming Reinsurer" means, with respect to any Assumed Policy,
the Unitrin Company reinsurer identified
on Exhibit A hereto (as such exhibit may
be revised from time to time by written
notice provided to Xxxxxx by Trinity) as
the company that is eligible under the
terms of this Agreement to assume such
Assumed Policy pursuant to Section II.B.
"Assumption Certificates" means the certificates to be issued by an
Assuming Reinsurer to the Policyholders of
Assumed Policies, which certificates shall
be substantially in one or more of the
forms set forth in Exhibit B hereto, as
may be modified to comply with state
insurance regulatory requirements, or in
such other form or forms as may be agreed
upon by the parties hereto or may be
determined by Trinity in its sole
discretion to be appropriate to accomplish
the transfer of the Assumed Policies to
the Assuming Reinsurers in accordance with
applicable law.
"Assumption Effective Date" means, with respect to any Assumed Policy,
the latest to occur of (a) an Assumption
Event, (b) the Initial Approval Date and
(c) the first date on which the Assuming
Reinsurer identified on Exhibit A hereto
as the company that is eligible to assume
such Assumed Policy is licensed to write
Personal Lines Coverage in the state in
which the risks covered by the Assumed
Policy are located; provided, however,
that the Initial Approval Date shall not
be considered in determining the
Assumption Effective Date if no approvals,
consents or waiting periods are listed on
Exhibit C.
"Assumption Event" means, with respect to any Ceded Policy,
the occurrence of any of the following:
(i) the delivery of an Assumption Notice
for such Ceded Policy; or
(ii) the Xxxxxx Company that issued such
Ceded Policy is ruled insolvent by a court
of competent jurisdiction or is subject to
a liquidation order entered by a court of
competent jurisdiction.
"Assumption Notice" means a notice of assumption of one or
more Ceded Policies, provided to Xxxxxx
pursuant to Section II.A.
"Ceded Policies" means all Xxxxxx Personal Lines Policies
with a policy effective or renewal date on
or after July 1, 2002 and prior to the
termination of the Policy Conversion
Agreement. The Ceded Policies are
comprised of the Assumed Policies and the
Reinsured Policies. For greater certainty,
the Ceded Policies shall not include any
policy with an initial effective or
renewal date prior to July 1, 2002.
"Change of Control" means (a) the acquisition by any person or
entity of control of 51% or more of the
voting securities or all or substantially
all of the assets of Parent or (b) at any
time during the term of this Agreement,
Parent does not own directly or indirectly
at least fifty one percent (51%) of the
outstanding voting stock of Trinity.
"Excluded Policies" means those policies providing Personal
Lines Coverage that either cover risks
located in any of the Excluded States or
were written by a Terminated Agent.
"Excluded States" means the states of Alaska, Arkansas,
Delaware, Michigan and New Jersey.
"Exclusion Notice" means a notice excluding one or more Ceded
Policies from assumption hereunder,
provided to Xxxxxx pursuant to Section
II.A.
"Extracontractual Obligations" means one hundred percent (100%) of any
punitive, exemplary, compensatory or
consequential damages for which Xxxxxx is
liable, including any Loss Excess of
Policy Limits, as a result of an action
against it by its insured, its insured's
assignee or a third party claimant, which
action alleges negligence, bad faith or
other improper conduct on the part of
Xxxxxx in denying or handling a claim
under a Ceded Policy. An Extracontractual
Obligation shall be deemed to have
occurred on the same date as the loss
covered or alleged to be covered under the
Ceded Policy.
"Gross Liability" means the gross liabilities and
obligations owed by Xxxxxx, including all
(i) losses paid or payable to an insured
or on behalf of an insured to a claimant,
(ii) Extracontractual Obligations, (iii)
IBNR, (iv) allocated and unallocated loss
adjustment expenses incurred by Xxxxxx,
and (v) commissions, profit sharing or
remunerations paid or payable to Producers
by Xxxxxx, but excluding all membership
rights and obligations, as described in
Section II.F.
"IBNR" means a reserve for losses incurred but
not yet reported and for future loss
development.
"IFG" means the business unit formerly within
Xxxxxx and known as the Individual and
Family Group unit and now within Unitrin,
Inc. and known as the Xxxxxx Auto and Home
Group unit, which is engaged in the
marketing, issuance and administration of
policies providing Personal Lines
Coverage.
"Initial Approval Date" means the first date on which all consents
and approvals set forth on Exhibit C
hereto (as such exhibit may be revised
from time to time by written notice
provided to Xxxxxx by Trinity) have been
obtained from a specific state or other
governmental authority in form and
substance reasonably satisfactory to the
Unitrin Companies and all statutory
waiting periods identified on Exhibit C
(as may be revised from time to time by
written notice provided to Xxxxxx by
Trinity) have expired or been terminated.
"Insolvency Event" means as to Trinity that it:
(i) becomes insolvent or is unable to
pay its debts as they become due
in the ordinary course;
(ii) seeks or becomes subject to the
appointment of a rehabilitator,
liquidator, conservator, receiver
or other similar official;
(iii) makes a general assignment,
arrangement or composition with or
for the benefit of its creditors;
(iv) has a party take possession of all
or substantially all of its assets
through attachment, levy or
otherwise; or
(v) is subject to a cease and desist
order entered by an insurance
regulatory authority with
jurisdiction over Trinity,
prohibiting Trinity from reinsuring
any additional Xxxxxx Personal
Lines Policies under the terms of
this Agreement, which order remains
in effect sixty (60) days after the
date that it is entered.
"Xxxxxx Direct" means the business unit within Xxxxxx as
of June 28, 2002, which is engaged in the
marketing, issuance and administration of
automobile and homeowners policies through
the Internet.
"Xxxxxx Personal Lines Policy" means a policy providing Personal Lines
Coverage written on Xxxxxx paper.
"Loss Excess of Policy Limits" means one hundred percent (100%) of any
amount for which Xxxxxx is liable in
excess of its policy limits, but otherwise
within the terms of a Ceded Policy as a
result of an action against it by its
insured or its insured's assignee to
recover damages the insured is legally
obligated to pay to a third party claimant
because of alleged or actual negligence or
bad faith or other improper conduct in
rejecting a settlement within policy
limits, or in discharging its duty to
defend or prepare the defense in the trial
of an action against its insured, or in
discharging its duty to prepare or
prosecute an appeal consequent upon such
an action. A Loss Excess of Policy Limits
shall be deemed to have occurred on the
same date as the loss giving rise to the
Loss Excess of Policy Limits.
"Loss Reserves" means the amount recorded on the books of
Trinity on account of its actual or
potential loss obligation on the Reinsured
Policies, including IBNR, calculated in
accordance with statutory accounting
principles and practices prescribed or
permitted by the Texas Insurance
Department.
"Net Premiums" means the direct premium collected,
including policy fees and charges, minus
return premiums, cancellations and any
other returns of premium.
"Parent" means Unitrin, Inc.
"Personal Lines Coverage" means (a) the personal automobile
insurance, homeowners' insurance and other
personal lines coverages that are
marketed, underwritten, issued and
administered by the IFG business unit
within Xxxxxx as of June 28, 2002, (b)
those personal lines insurance policies
listed on Exhibit D that are marketed,
underwritten, issued and administered by
Xxxxxx Direct, which were written on the
paper of Xxxxxx as of June 28, 2002 and
(c) any additional personal lines
insurance policies that are marketed,
underwritten, issued and administered by
Xxxxxx Direct, which are written on the
paper of Xxxxxx after June 28, 2002, and
in the case of clauses (a), (b) and (c),
excluding any Excluded Policies.
"Policyholders" means any individuals or entities which
are the owners of Ceded Policies.
"Policy Conversion Agreement" means that certain agreement dated as of
June 28, 2002, which provides for the
transition to the Unitrin Companies of the
policies providing Personal Lines
Coverage.
"Producer" means any agent, broker, representative,
or sub-agent of any such person (other
than a Terminated Agent) (i) having a
Producer Agreement with Xxxxxx and (ii)
being entitled to receive any Producer
Payments from Xxxxxx for the solicitation,
sale, marketing, production or servicing
of any of the Ceded Policies.
"Producer Agreement" means any written agreement, contract,
understanding or arrangement between
Xxxxxx and any Producer, including any
assignments of compensation thereunder,
and relating to the solicitation, sale,
marketing, production or servicing of any
of the Ceded Policies.
"Producer Payments" means any expense allowance, commission,
overriding commission, service fee or
other compensation payable by Xxxxxx to a
Producer pursuant to a Producer Agreement.
"Reinsured Policies" means the Ceded Policies reinsured on an
indemnity reinsurance basis by Trinity
pursuant to Section III.A.
"Release of Xxxxxx" means the release of Xxxxxx from all
liabilities with respect to the Assumed
Policies other than the liabilities
retained by Xxxxxx pursuant to Section
II.F.
"Required Assumption Approval" means the approval of any insurance
regulatory authority that may be required
in connection with the assumption of an
Assumed Policy pursuant to Section II.B
without a Release of Xxxxxx, including the
approval of the Assumption Certificate to
be issued by the Assuming Reinsurer to the
Policyholder of the Assumed Policy.
"Required Novation Approval" means the approval of any insurance
regulatory authority that may be required
in connection with the assumption of an
Assumed Policy pursuant to Section II.B
with the Release of Xxxxxx from liability
with respect to such Assumed Policy,
including the approval of the Assumption
Certificate providing such release.
"Terminated Agent" means any agent or producer of Xxxxxx
whose authority to write policies
providing Personal Lines Coverage was
terminated by Xxxxxx on or prior to June
28, 2002.
"Unearned Premium Reserves" means the unearned premium reserve of
Trinity with respect to the Reinsured
Policies, calculated in accordance with
statutory accounting principles and
practices prescribed or permitted by the
Texas Insurance Department.
ARTICLE II
ASSUMPTION REINSURANCE
A. At any time after this Agreement has been executed by each of the parties
hereto, the Unitrin Companies may provide Xxxxxx with a written notice of
assumption (an "Assumption Notice") for all or part of the Ceded Policies.
Such Assumption Notice shall state that it is given pursuant to this
Section II.A and shall identify the Ceded Policies subject to assumption
hereunder, which may include Ceded Policies issued or renewed after the
date of the notice. Notwithstanding anything herein to the contrary, (1)
each Assumed Policy shall be assumed pursuant to the terms and conditions
specified by Section II.B on the Assumption Effective Date for such
Assumed Policy, regardless of whether an Assumption Notice has been
delivered for such Assumed Policy; (2) no Ceded Policy shall be assumed
prior to the Assumption Effective Date for such Ceded Policy, regardless of
whether an Assumption Notice has been delivered for such Ceded Policy
pursuant hereto; and (3) no Ceded Policy shall be assumed hereunder if (a)
it is not the subject of an Assumption Notice and (b) after becoming aware
of the occurrence of an Assumption Event with respect to such Ceded Policy,
the Unitrin Companies provide Xxxxxx with a written notice (an "Exclusion
Notice") which states that it is given pursuant to this Section II.A and
identifies such Ceded Policy as one that is not to be assumed hereunder.
B. As of the Assumption Effective Date with respect to each Ceded Policy that
is not the subject of an Exclusion Notice (an "Assumed Policy"), and except
as otherwise provided in Section II.F, Xxxxxx hereby assigns all of its
rights and delegates all of its duties and obligations with respect to each
such Assumed Policy to the Assuming Reinsurer and the Assuming Reinsurer
hereby accepts such rights and assumes Xxxxxx'x obligations as the Assuming
Reinsurer's direct obligations, as if the Assuming Reinsurer were the
original issuer of such Assumed Policy. As of the Assumption Effective
Date, the Assuming Reinsurer shall be primarily responsible for 100% of the
Gross Liability of Xxxxxx in the Assumed Policies. Xxxxxx shall remain
secondarily liable under the terms of each Assumed Policy until such time
as its liability thereunder shall be released in accordance with the terms
of an Assumption Certificate issued to the Policyholder of such Assumed
Policy pursuant to Section V.D; provided, however, that Xxxxxx shall remain
solely liable at all times for those obligations it retains pursuant to
Section II.F. Notwithstanding anything else herein to the contrary, in the
event that:
(1) any Policyholder of an Assumed Policy refuses to accept the
Assuming Reinsurer as the company responsible for the Assumed
Policy;
(2) a court of competent jurisdiction or insurance regulatory
authority rules that the assumption of the Assumed Policy
pursuant to this Article II was ineffective;
(3) the Assuming Reinsurer is unable to obtain any Required
Assumption Approval with respect to an Assumed Policy in a form
reasonably satisfactory to the Assuming Reinsurer; or
(4) the Assumption Certificate(s) approved for use in connection with
an Assumed Policy are not in a form reasonably satisfactory to
the Assuming Reinsurer
and the Unitrin Companies provide Xxxxxx with written notice that the
Ceded Policies identified in the notice fall within the scope of one
or more of clauses (1), (2), (3) and (4) above, then, as of the
respective Assumption Effective Date(s) for such Ceded Policies, (a)
the assumption reinsurance with respect to such Ceded Policies shall
be null and void; (b) the Assuming Reinsurers shall have no liability
with respect to such Ceded Policies pursuant to this Article II; and
(c) Trinity shall continue to reinsure and service such Ceded Policies
pursuant to the terms of Article III below, subject to the other terms
of this Agreement and the Ancillary Agreements.
C. The Assuming Reinsurer accepts and assumes the Gross Liability in each
Assumed Policy that it assumes pursuant to Section II.B subject to all
defenses, offsets, cross-actions and counterclaims to which Xxxxxx is
entitled with respect to the Assumed Policy or would be entitled with
respect thereto except for its release in accordance with the terms of an
Assumption Certificate issued to the Policyholder of the Assumed Policy
pursuant to Section V.D. It is expressly understood and agreed by the
parties hereto that no such defenses, offsets, cross-actions or
counterclaims are waived by the execution of this Agreement or the
consummation of the transactions contemplated herein, and that on and after
the Assumption Effective Date with respect to each Assumed Policy, the
Assuming Reinsurer of such Assumed Policy shall be fully entitled to assert
all such defenses, offsets, cross-actions and counterclaims and to the
benefits thereof as if it were Xxxxxx.
D. The Assuming Reinsurer shall succeed to all rights, privileges and
obligations of Xxxxxx under the Assumed Policies that it assumes pursuant
to Section II.B, and Xxxxxx hereby irrevocably sells, transfers, conveys,
assigns and delivers to the Assuming Reinsurer all such rights and
privileges and delegates the performance of such obligations to such
Assuming Reinsurer as of the Assumption Effective Date with respect to such
Assumed Policies. On and after the applicable Assumption Effective Date,
the Policyholder and any other insured under any Assumed Policy shall have
the right to file claims under the Assumed Policy directly with the
Assuming Reinsurer with respect to such Assumed Policy, and shall have a
direct right of action against the
Assuming Reinsurer therefor. Any payments for benefits under any Assumed
Policy by Xxxxxx or by Trinity on behalf of Xxxxxx prior to the applicable
Assumption Effective Date shall be deemed to have been made by the Assuming
Reinsurer for purposes of determining any maximum benefits payable under
such Assumed Policy.
E. Except as expressly provided herein, there are no exclusions from the
cession of Assumed Policies under this Agreement. The territorial limits of
this Agreement are the same as those of the Assumed Policies. The Assuming
Reinsurers acknowledge that there is no reinsurance maintained by Xxxxxx on
the Assumed Policies, the benefits of which would inure to any Assuming
Reinsurer.
F. Notwithstanding any other provision of this Agreement, the Assuming
Reinsurers shall not be responsible for, and do not accept, any liability
for membership rights or obligations of Lumbermens Mutual Casualty Company
("Lumbermens") or American Manufacturers Mutual Insurance Company
("American Manufacturers") arising out of their structure as mutual
insurance companies. Transfer of the Assumed Policies shall not include any
voting rights, rights to a liquidating dividend or other rights incident to
the mutual member status of Lumbermens' or American Manufacturers'
Policyholders. Lumbermens and American Manufacturers shall remain obligated
to their respective Policyholders with respect to any such membership
rights.
ARTICLE III
INDEMNITY REINSURANCE
A. As of July 1, 2002, Xxxxxx hereby cedes to Trinity, and Trinity hereby
accepts and reinsures on an indemnity reinsurance basis a 100% quota share
participation in the Gross Liability of Xxxxxx in each Ceded Policy that is
not assumed pursuant to Section II.B; provided, however, that such
indemnity reinsurance shall automatically terminate and Trinity shall have
no further liability under this Article III with respect to such Reinsured
Policy as of the Assumption Effective Date for its assumption pursuant to
Section II.B; and provided, further, that in the event that the assumption
of any Ceded Policy is null and void pursuant to the terms and conditions
of the last sentence of Section II.B, then such Ceded Policy shall continue
to be reinsured by Trinity pursuant to this Section III.A and the other
terms of this Agreement. Each Ceded Policy reinsured on an indemnity
reinsurance basis pursuant to this Section III.A shall be referred to
herein as a "Reinsured Policy."
B. Trinity's liability with respect to the Reinsured Policies shall attach or
shall be deemed to attach simultaneously with that of Xxxxxx. Trinity is
absolutely and unconditionally bound to follow the fortunes of Xxxxxx with
respect to the Reinsured Policies.
C. This Article III provides for indemnity reinsurance solely between Xxxxxx
and Trinity, and shall not create any right or legal relations between
Trinity and (i) any Policyholder of a Reinsured Policy or (ii) any other
person, except as provided in the cut-through provision of Article XVI.
D. Except as expressly provided herein, there are no exclusions from the
cession of Reinsured Policies under this Agreement. The territorial limits
of this Agreement are the same as those of the Reinsured Policies. Trinity
acknowledges that there is no reinsurance maintained by Xxxxxx on the
Reinsured Policies, the benefits of which would inure to Trinity.
X. Xxxxxx shall provide Trinity with immediate notice if it is unable to
comply with any material provision of an order entered with respect to any
Xxxxxx Company pursuant to Section 186.1 of the Illinois Insurance Code or
any other corrective, consent or similar order with respect to any Xxxxxx
Company entered by the Director of the Illinois Insurance Department or any
other regulatory authority.
ARTICLE IV
REGULATORY APPROVALS
A. The parties hereto shall cooperate and use their commercially reasonable
efforts to promptly obtain all Required Assumption Approvals in connection
with all assumption transactions contemplated by Section II.B. The Unitrin
Companies shall file the form of one or more of the Assumption Certificates
with the insurance regulatory authorities in each state in which an
Assuming Insurer assumes Assumed Policies pursuant to Section II.B and
shall, in each case, request approval for issuance of a form of Assumption
Certificate providing for the Release of Xxxxxx, based on the deemed
consent of Policyholders. In the event that the insurance
regulatory authorities of a particular state refuse to approve a form of
Assumption Certificate providing for such deemed consent, the Unitrin
Companies shall request approval for prompt issuance of a form of
Assumption Certificate that notifies Policyholders that the Assuming
Insurer is primarily liable under the terms of the Assumed Policies and
that Xxxxxx remains secondarily liable thereunder.
B. In the event of (i) the refusal by the insurance regulatory authorities of
certain states to approve the issuance of Assumption Certificates providing
for deemed consent to the Release of Xxxxxx, and (ii) the issuance of
Assumption Certificates in any such states that do not provide for the
Release of Xxxxxx, the parties hereto shall thereafter cooperate and use
their commercially reasonable efforts to obtain all Required Novation
Approvals in connection with the assumption transactions in such states.
The Unitrin Companies shall file and request approval for the issuance of a
second Assumption Certificate in such states that provides for the Release
of Xxxxxx on such conditions as applicable state law or state insurance
regulatory authorities may require.
C. The parties hereto shall each furnish to the other such necessary
information and reasonable assistance as the other may request in
connection with the preparation of necessary filings or submissions to any
insurance regulatory authority.
D. Notwithstanding any other provision of this Agreement, in the event that
the wording of an Assumption Certificate form, as required by a particular
state, is not reasonably satisfactory to the Assuming Reinsurers, the
Assuming Reinsurers shall have no obligation to issue Assumption
Certificates in such state.
E. In the event that Trinity determines in its sole discretion that the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act") applies to the assumption transaction, the parties shall promptly
make the filings required by the HSR Act and promptly comply with any
request for additional information made by the Federal Trade Commission or
the Department of Justice in connection with such filings and shall use all
reasonable efforts to obtain early termination of the applicable waiting
period under the HSR Act. Trinity or the Unitrin Companies shall pay all
filing fees required in connection with such filings.
ARTICLE V
UNDERTAKINGS IN CONNECTION WITH ASSUMPTION TRANSACTION
A. On and after the applicable Assumption Effective Date, the Assuming
Reinsurer shall assume all responsibility for, and agrees to undertake and
perform or cause to be performed by any other party designated by the
Assuming Reinsurer, all servicing and administration of each Assumed Policy
that it assumes pursuant to Section II.B, including without limitation, the
payment of claims under such Assumed Policy and the investigation,
adjustment, appraisal, defense or settlement thereof, at the Assuming
Reinsurer's sole cost and expense, billing and issuance of endorsements,
renewal of policies and such other administrative services as the Assuming
Reinsurer, in its sole discretion, deems necessary, appropriate, or lawful
in connection with such Assumed Policy, as though such Assumed Policy were
originally issued as the direct insurance obligations of the Assuming
Reinsurer.
B. On and after the applicable Assumption Effective Date, all premium payments
under any Assumed Policy shall be the sole property of the Assuming
Reinsurer for such Assumed Policy. The Assuming Reinsurers shall be
authorized to endorse for payment all checks, drafts and money orders
payable to Xxxxxx with respect to premiums payable on the Assumed Policies.
Effective as of the applicable Assumption Effective Date, Xxxxxx hereby
irrevocably assigns to the Assuming Reinsurer all of its rights and
privileges to draft or debit the accounts of any Policyholders for premiums
due under the Assumed Policies pursuant to existing pre-authorized bank
draft or electronic fund transfer arrangements between Xxxxxx and such
Policyholders.
C. On and after the applicable Assumption Effective Date, each Assuming
Reinsurer shall assume Xxxxxx'x liability for Producer Payments for
premiums collected and received by the Assuming Reinsurer for the Assumed
Policies assumed by such Assuming Reinsurer. Each Assuming Reinsurer shall
be entitled to exercise all rights of Xxxxxx under the terms of the
Producer Agreements to the extent that such rights relate to the Assumed
Policies assumed by such Assuming Reinsurer, including without limitation,
any rights to suspend or
terminate Producer Payments to any Producer for any reason or cause set
forth in the Producer Agreement. Effective as of the applicable Assumption
Effective Date, Xxxxxx hereby transfers and assigns to each Assuming
Reinsurer all of its rights under such Producer Agreements with respect to
the Assumed Policies assumed by such Assuming Reinsurer. Each Assuming
Reinsurer shall have the right to appoint any Producer as an agent of the
Assuming Reinsurer for the purpose of providing services to any of the
Policyholders of the Assumed Policies assumed by such Assuming Reinsurer.
D. After the receipt of any Required Assumption Approvals, the Assuming
Reinsurers shall issue to each of the Policyholders of the Assumed Policies
that they assume pursuant to Section II.B Assumption Certificates in the
form approved by the state insurance regulatory authorities of the state in
which the risks insured under the particular Assumed Policy are located. In
the event that such Assumption Certificate does not provide for the Release
of Xxxxxx, the Assuming Reinsurer shall issue to such Policyholder a second
Assumption Certificate providing for the Release of Xxxxxx after the
receipt of any Required Novation Approvals. The Assuming Reinsurers shall
mail the Assumption Certificates issued pursuant to this Section V.D at the
Assuming Reinsurers' sole expense to each Policyholder's last known address
in the records regarding the Assumed Policies maintained by IFG.
X. Xxxxxx shall forward promptly to the Assuming Reinsurers any notices
(including claims notices, services of process or notices of administrative
proceedings), copies of all lawsuits, correspondence, communications and
inquiries or complaints from Policyholders, insurance departments or their
representatives received by Xxxxxx with regard to the Assumed Policies. In
the event of any action with regard to an Assumed Policy (other than an
action to enforce the rights incident to mutual member status identified in
Section II.F), the Assuming Reinsurer that assumed that Assumed Policy
shall undertake Xxxxxx'x defense should Xxxxxx be named as a defendant in
such action and satisfy all liabilities arising from such Assumed Policy,
including any Extracontractual Obligations but excluding any liabilities
retained by Xxxxxx pursuant to Section II.F.
F. Xxxxxx hereby agrees to execute and deliver any and all financing
statements reasonably requested by the Assuming Reinsurers to the extent
that it may appear appropriate to the Assuming Reinsurers to file such
financing statements pursuant to Article 9 of the Uniform Commercial Code
in order to reflect their ownership interests in the Assumed Policies and
all rights therein, including, but not limited to, all rights to the Net
Premiums payable thereunder.
ARTICLE VI
DURATION OF AGREEMENT
A. This Agreement shall commence as of July 1, 2002.
B. This Agreement shall not be subject to termination by any party except as
follows:
(i) By written agreement by and among Xxxxxx, Trinity and the Unitrin
Companies on the date indicated by such agreement; or
(ii) Upon the expiration of all liability on the Ceded Policies and the
complete performance by Xxxxxx, Trinity and the Unitrin Companies of
all obligations and duties arising under this Agreement.
ARTICLE VII
REINSURANCE PREMIUM
A. As premium for the reinsurance of the Reinsured Policies, Xxxxxx shall cede
and hereby cedes to Trinity 100% of the Net Premiums received or to be
received on the Reinsured Policies. Trinity shall be entitled to all
subrogation, salvage and other recoveries and all premiums collected on the
Ceded Policies hereunder, whenever realized.
B. Upon the Assumption Effective Date with respect to any Assumed Policy, all
assets of Trinity supporting any Unearned Premium Reserves and Loss
Reserves maintained by Trinity with respect to such Assumed Policy shall be
and become the sole and exclusive property of the Assuming Reinsurer for
such Assumed Policy. No
consideration other than the assignment of rights and privileges pursuant
to Articles II and V shall be due from Xxxxxx upon the assumption of any
Assumed Policy pursuant to Section II.X.
X. Xxxxxx shall promptly endorse and remit to Trinity any Net Premiums
received by Xxxxxx on the Ceded Policies along with any information
received by Xxxxxx that identifies such Net Premiums to particular Ceded
Policies. Trinity shall remit to the Assuming Reinsurers any portion of
such payments from Xxxxxx that is allocable to the Assumed Policies. All
Net Premiums on the Ceded Policies shall be the sole property of Trinity
and the Assuming Reinsurers, and any such Net Premiums that are received by
Xxxxxx shall be held for the sole benefit of Trinity and the Assuming
Reinsurers, subject to the terms of this Agreement.
ARTICLE VIII
CEDING COMMISSION AND EXPENSE REIMBURSEMENT
A. In lieu of the payment of ceding commissions hereunder, Trinity or the
Assuming Reinsurers shall pay the commissions payable pursuant to the
Policy Conversion Agreement except that Assumed Policies shall be deemed to
be included within the meaning of "Renewal Rights Policies" as defined in,
and for purposes of, the Policy Conversion Agreement.
B. Trinity and the Assuming Reinsurers shall promptly reimburse Xxxxxx for one
hundred percent (100%) of the following costs incurred by Xxxxxx for the
Ceded Policies: (1) all premium taxes and policy fees, if any, on the Ceded
Policies; and (2) all fees and assessments or increases thereof levied
against Xxxxxx by any state insurance guaranty or insolvency pool, guaranty
fund, assigned risk plan, board or bureau, joint underwriting association,
FAIR plan or similar plans on the Ceded Policies or by reason of Xxxxxx'x
increased premium base due to the issuance of the Ceded Policies.
X. Xxxxxx shall promptly return or forward to Trinity any amount of premium
taxes and policy fees, if any, or other fees and assessments by any state
insurance guaranty or insolvency pool, guaranty fund, assigned risk plan,
board or bureau, joint underwriting association, FAIR plan or similar plans
refunded or credited to Xxxxxx for Ceded Policies and shall provide Trinity
with any information received by Xxxxxx that identifies these refunds or
credits to particular Ceded Policies. Trinity shall remit to the Assuming
Reinsurers any portion of such refunds or credits that is allocable to the
Assumed Policies.
ARTICLE IX
CREDIT FOR REINSURANCE
A. For purposes of this Article IX, each of the following events shall
constitute a "Triggering Event:"
(i) a Change of Control;
(ii) an Insolvency Event;
(iii) Trinity ceasing to be a licensed, authorized and admitted
insurance company in the State of Illinois; and
(iv) aggregate Net Premiums on the Reinsured Policies for any
twelve (12) month period ending on the following anniversary
dates of July 1, 2002 exceeding the corresponding annual
limits at any time during such period:
1st Anniversary $800,000,000
2nd Anniversary $700,000,000
3rd Anniversary $500,000,000
4th Anniversary $300,000,000
B. Upon the occurrence of any Triggering Event, Trinity does hereby
immediately grant a security interest in favor of Xxxxxx equal to 102% of
the sum of the Unearned Premium Reserves and Loss Reserves with respect to
the business ceded to Trinity. The foregoing security interest shall be
automatically extinguished whenever Trinity
provides Xxxxxx with the Security Facility (as defined below), and Xxxxxx
shall promptly provide Trinity with any documentation evidencing the
extinguishment of such security interest as Trinity may reasonably require.
As soon as reasonably practicable, but in no event later than (a) thirty
(30) days after the occurrence of a Triggering Event in IX.A(i), IX.A(iii)
or IX.A(iv), or (b) two (2) business days after the occurrence of a
Triggering Event in Section IX.A(ii), Trinity shall establish and maintain
in favor of Xxxxxx a reinsurance security trust arrangement or
unconditional evergreen letter of credit issued by a "qualified United
States financial institution" (as such term is defined under Section
173.1(3)(A) of the Illinois Insurance Code) or any combination thereof (a
"Security Facility") as chosen by Trinity in its discretion.
C. Any Security Facility established for a Triggering Event in IX.A(iii) shall
satisfy the requirements necessary for Xxxxxx to take credit for
reinsurance in Illinois for the reinsurance provided by Trinity hereunder,
notwithstanding any other provisions of this Article IX. Any Security
Facility for a Triggering Event in Section IX.A(i), IX.A(ii) or IX.A(iv)
shall be established in accordance with the requirements for such Security
Facility set forth in Section 173.1(2) of the Illinois Insurance Code and
the regulations promulgated thereunder; provided, however, that in the
event of a conflict between the provisions of such statute and regulations
and the provisions of this Article IX, the provisions of this Article IX
shall control.
X. Xxxxxx may withdraw funds maintained in any Security Facility, without
diminution, limitation or restriction, only in amounts necessary to satisfy
Trinity's payment obligations under this Agreement as and when they become
due; provided, however, no such withdrawals shall be permitted unless and
until Trinity is in material breach of its payment obligations under this
Agreement. A Triggering Event shall not constitute a breach under this
Agreement.
E. The Security Facility shall be established in an amount equal to 102% of
the sum of the following amounts calculated at the time of the Triggering
Event: (i) Unearned Premium Reserves and (ii) Loss Reserves (collectively,
the "Reinsurance Obligations"). For purposes of this Article IX, the amount
of funds in the Security Facility shall be determined as: (a) the face
amount of any letter of credit less prior draws on such letter of credit
(if any), and (b) the aggregate fair market value of all assets held in any
trust account. The amount of funds maintained in the Security Facility
shall be adjusted on a quarterly basis to an amount at least equal to 102%
of the Reinsurance Obligations calculated as of the close of the
immediately preceding calendar quarter (the "Minimum Security Balance"),
and Trinity may remove amounts from the Security Facility to the extent
that such adjustments show that the amount in the Security Facility,
exceeds the Minimum Security Balance. Such adjustments shall be made not
later than forty-five (45) days following the close of each calendar
quarter.
F. Notwithstanding any occurrence of multiple Triggering Events, nothing
herein shall require Trinity to establish or maintain more than one
Security Facility, provided, however, that in the event of an occurrence of
a Triggering Event in IX.A(iii), Trinity shall establish a separate
Security Facility for each Xxxxxx ceding company and the Reinsurance
Obligations and Required Minimum Balance shall be computed separately for
each such Security Facility on the basis of the Reinsured Policies issued
by the Xxxxxx ceding company for which the Security Facility is
established. Nothing herein shall require Trinity to maintain a Security
Facility in an amount in excess of 102% of the Minimum Security Balance
with respect to such Security Facility.
G. With respect to the occurrence of a Triggering Event specified under any of
Section IX.A(i), IX.A(ii) or IX.A(iv), Trinity shall maintain the Security
Facility until the termination, cancellation or expiration of all of
Trinity's obligations under this Agreement.
H. With respect to the occurrence of a Triggering Event specified under
Section IX.A(iii), Trinity shall maintain the Security Facility until such
time as Trinity regains its status as a licensed, authorized and admitted
insurance company in the State of Illinois.
I. Trinity shall promptly provide Xxxxxx with written notice following the
occurrence of a Triggering Event. In the event that Trinity is no longer
required to maintain a Security Facility pursuant to Section IX.G or H,
Xxxxxx shall promptly take such all steps as shall be necessary to effect
the release to Trinity of any remaining amount in the Security Facility.
J. Trinity shall bear all costs and expenses necessary for the establishment
and maintenance of any Security Facility.
K. During the term of this Agreement, Trinity shall maintain catastrophe
reinsurance covering the Reinsured Policies with a reinsurer having an AM
Best rating of A- or better, with an attachment point no higher than
twenty million dollars ($20,000,000) per occurrence and a limit of no less
than the one in two hundred and fifty(250) year exceeding probability loss
for all material perils combined, as determined by the RMS catastrophe
model or equivalent model.
ARTICLE X
ADMINISTRATION OF REINSURED POLICIES
A. Subject to and in compliance with the additional terms and conditions of
the Service Schedule attached hereto, Trinity shall be responsible for the
administration of all aspects of the Reinsured Policies ceded pursuant to
Article III, including, but not limited to, handling of all regulatory
policy filings; underwriting, accepting risks and issuing the Reinsured
Policies; billing and collecting all premiums; paying all agents' and
brokers' commissions; defending, adjusting, settling and paying all claims
arising under the Reinsured Policies; reporting to Xxxxxx, and compiling
statistical data necessary for Xxxxxx to comply with all financial
reporting and regulatory reporting requirements. Trinity may assign all or
any part of its administrative duties contemplated by this Agreement to any
one or more of its affiliates with the written consent of Xxxxxx, which
consent shall not be unreasonably withheld; provided, however, Trinity may
assign all or any part of its administrative duties contemplated by this
Agreement to any of the Unitrin Companies without obtaining the consent of
Xxxxxx.
X. Xxxxxx shall forward promptly to Trinity any notices (including claims
notices, services of process or notices of administrative proceedings),
copies of all lawsuits, correspondence, communications and inquiries or
complaints from Policyholders, insurance departments or their
representatives received by Xxxxxx with regard to the Reinsured Policies.
Trinity shall assume the defense of Xxxxxx in any actions with regard to
the Reinsured Policies.
X. Xxxxxx does hereby appoint and name Trinity, acting through its authorized
officers and employees, as Xxxxxx'x exclusive administrator of the
Reinsured Policies and as its lawful attorney in fact with respect to the
rights, duties, privileges and obligations of Xxxxxx relating to the
Reinsured Policies, (i) to do any and all lawful acts that Xxxxxx might
have done with respect to the Reinsured Policies, and (ii) to proceed by
all lawful means (A) to perform any and all of Xxxxxx'x obligations under
the Reinsured Policies, (B) to enforce any right and defend against any
liability arising under the Reinsured Policies, (C) to xxx or defend (in
the name of Xxxxxx, when necessary) any action arising under the Reinsured
Policies, (D) to collect any and all sums due or payable to Xxxxxx under
the Reinsured Policies and to quit and release for same, (E) to collect any
and all premiums due or payable under the Reinsured Policies through any
automatic charge authorizations or otherwise of persons who own or hold
Reinsured Policies, (F) to sign (in Xxxxxx'x name, when necessary)
vouchers, receipts, releases and other papers in connection with any of the
foregoing matters, (G) to take actions necessary, as may be reasonably
determined, to maintain the Reinsured Policies in compliance with
applicable laws, (H) to request rate changes for the Reinsured Policies and
make required filings of Reinsured Policy forms, and (J) to do everything
lawful in connection with the satisfaction of Trinity's obligations and the
exercise of its rights under this Agreement. In the absence of any
agreement signed by the parties hereto, this appointment may not be
revoked, terminated, limited or modified by Xxxxxx. If requested by
Trinity, Xxxxxx shall execute and deliver to Trinity a power of attorney
certificate in substantially the form as provided hereinabove as evidence
of such power.
D. Trinity hereby accepts appointment as Xxxxxx'x exclusive administrator of
the Reinsured Policies and as Xxxxxx'x lawful attorney in fact with respect
to the rights, duties and privileges of Xxxxxx relating to the Reinsured
Policies and agrees to administer the Reinsured Policies pursuant to the
terms and conditions of this Agreement.
E. Notwithstanding anything contained herein, Xxxxxx shall be responsible for
filing all financial reports, including but not limited to premium tax
returns and financial statements related to the Reinsured Policies, and any
other action that cannot be delegated by law.
ARTICLE XI
REPORTS
Trinity and the Assuming Reinsurers shall furnish Xxxxxx such information and
details in a format and timeframe reasonably necessary for Xxxxxx to prepare its
financial statements and to comply with the requirements of the regulatory
authorities having jurisdiction over Xxxxxx.
ARTICLE XII
RECORDS AND INSPECTION
During the term of this Agreement, the records pertaining to the Reinsured
Policies, including claims arising under the Reinsured Policies, shall be deemed
to be jointly owned records of Xxxxxx and Trinity, and shall be made available
to Xxxxxx and Trinity and their respective representatives or any duly appointed
examiner for any state within the United States. The records pertaining to the
Assumed Policies, including claims arising under the Assumed Policies, shall be
the sole property of the Assuming Reinsurers, and shall be made available to
Xxxxxx and Trinity and their respective representatives or any duly appointed
examiner for any state within the United States. Each party shall have the right
at any reasonable time during normal business hours and at its own cost to
inspect, through its duly authorized representatives, and make copies of all
books, records, and papers pertaining to any matter under this Agreement or any
claims or losses incurred under the Ceded Policies.
ARTICLE XIII
INDEMNIFICATION
A. Trinity shall indemnify, defend and hold harmless Xxxxxx (and its
directors, officers, employees, representatives, affiliates, successors and
permitted assigns) (the "Xxxxxx Indemnitees") from and against all actions,
claims, losses, liabilities, damages, deficiencies, costs, expenses,
(including reasonable fees and expenses of attorneys), interest and
penalties (collectively, referred to hereinafter as "Losses") asserted
against, imposed upon or incurred by such Xxxxxx Indemnitees resulting
from, arising out of, based upon or otherwise in respect of any of the
following: (a) any breach of any covenant or agreement made or to be
performed by Trinity pursuant to this Agreement, (b) violation of any law,
rule or regulation by Trinity, (c) the payment of or failure to pay any
liabilities reinsured by Trinity hereunder, (d) any negligent or
intentional actions, omissions or failure to act by Trinity in connection
with the Reinsured Policies, (e) any fraud, theft or embezzlement by
officers, employees or agents of Trinity during the term of this Agreement,
(f) any Extracontractual Obligations with respect to the Reinsured Policies
not otherwise reinsurable under Article III, and (g) the reasonable costs
to Xxxxxx Indemnitees of enforcing this indemnity against Trinity.
B. The Assuming Reinsurer shall indemnify, defend and hold harmless the Xxxxxx
Indemnitees from and against all Losses asserted against, imposed upon or
incurred by such Xxxxxx Indemnitees resulting from, arising out of, based
upon or otherwise in respect of any of the following: (a) any breach of any
covenant or agreement made or to be performed by such Assuming Reinsurer
pursuant to this Agreement, (b) violation of any law, rule or regulation by
such Assuming Reinsurer, (c) the payment of or failure to pay any
liabilities assumed by such Assuming Reinsurer hereunder, (d) any negligent
or intentional actions, omissions or failure to act by such Assuming
Reinsurer in connection with the Assumed Policies it has assumed hereunder,
(e) any fraud, theft or embezzlement by officers, employees or agents of
such Assuming Reinsurer during the term of this Agreement, (f) any
Extracontractual Obligations with respect to the Assumed Policies assumed
by such Assuming Reinsurer not otherwise reinsurable under Article II, and
(g) the reasonable costs to Xxxxxx Indemnitees of enforcing this indemnity
against such Assuming Reinsurer.
X. Xxxxxx shall indemnify, defend and hold harmless Trinity and the Unitrin
Companies (and their respective directors, officers, employees,
representatives, affiliates, successors and permitted assigns) (the
"Trinity Indemnitees") from and against all Losses asserted against,
imposed upon or incurred by such Trinity Indemnitees resulting from,
arising out of, based upon or otherwise in respect of any of the following:
(a) any breach of any covenant or agreement made or to be performed by
Xxxxxx pursuant to this Agreement, (b) violation of any law, rule or
regulation by Xxxxxx, (c) any negligent or intentional actions, omissions
or failure to act by Xxxxxx in connection with the Ceded Policies, (d) any
fraud, theft or embezzlement by officers, employees or agents of Xxxxxx
during the term of this Agreement, and (e) the reasonable costs to Trinity
Indemnitees of enforcing this indemnity against Xxxxxx.
D. If an event occurs which a party asserts is an indemnifiable event
hereunder, the party seeking indemnification shall promptly notify the
party obligated to provide indemnification (the "Indemnifying Party"). If
such event
involves (i) any claim or (ii) the commencement of any action or proceeding
by a third person, the party seeking indemnification will give the
Indemnifying Party prompt written notice of such claim or the commencement
of such action or proceeding, provided, however, that the failure to
provide prompt notice as provided herein will relieve the Indemnifying
Party of its obligations hereunder only to the extent that such failure
prejudices the Indemnifying Party hereunder. If any such action is brought
against any party seeking indemnification and it notifies the Indemnifying
Party of the commencement thereof, the Indemnifying Party shall be entitled
to participate therein and, to the extent that it wishes, to assume the
defense thereof, with counsel reasonably satisfactory to the party seeking
indemnification. After notice from the Indemnifying Party to the party
seeking indemnification of such election to so assume the defense thereof,
the Indemnifying Party shall not be liable to the party seeking
indemnification for any legal expenses of other counsel or any other
expenses subsequently incurred by such party in connection with the defense
thereof, and the party seeking indemnification agrees to cooperate fully
with the Indemnifying Party and its counsel in the defense against any such
asserted liability. The party seeking indemnification shall have the right
to participate at its own expense in the defense of such asserted
liability. In no event shall an Indemnifying Party be liable for any
settlement effected without its consent, which consent will not be
unreasonably withheld.
E. For purposes of this Agreement, the persons providing the services required
to be performed hereunder by Trinity shall be considered Trinity employees.
F. No party shall assert a claim for indemnification for a Loss under this
Article XIII to the extent it has or is asserting a claim for
indemnification of such Loss under the indemnification provisions of any of
the Ancillary Agreements.
ARTICLE XIV
COOPERATION
The parties agree to cooperate fully with each other with respect to claims or
other disputes arising out of or in connection with the Ceded Policies,
including, but not limited to, making their respective employees available to
testify in court or elsewhere, and providing relevant information to regulatory
authorities. Xxxxxx shall be reimbursed for its necessary out-of-pocket expenses
incurred in connection with the performance of services contemplated by this
Article.
ARTICLE XV
OFFSET CLAUSE
Each party hereto shall have, and may exercise at any time and from time to
time, the right to offset any balance or balances, whether on account of
premiums or on account of losses or otherwise, due from such party to the other
party hereto under this Agreement; and the party asserting the right of offset
shall have and may exercise such right whether the balance or balances due or to
become due to such party from the other are on account of premiums or on account
of losses or otherwise and regardless of the capacity, whether as assuming
insurer or as ceding insurer or otherwise, in which each party acted under this
Agreement.
ARTICLE XVI
INSOLVENCY
In the event of the insolvency and the appointment of a conservator, liquidator,
receiver or statutory successor, of Xxxxxx, Trinity shall pay directly to the
Policyholders (or their mortgagees or loss payees, as their interests may
appear) under the Reinsured Policies, without diminution on account of Xxxxxx
being placed in conservation, liquidation, receivership or similar proceedings,
all amounts due and unpaid in respect of the Gross Liability of Xxxxxx in the
Reinsured Policies, and such Policyholders (or mortgagees or loss payees) shall
be entitled to enforce their rights under the Reinsured Policies in respect of
such Gross Liability directly against Trinity without first seeking recourse
against Xxxxxx. Such Policyholders (or mortgagees or loss payees) shall, for
purposes of this cut-through provision, constitute third-party beneficiaries of
the Agreement, and all claims against Trinity with respect to the Gross
Liability reinsured by Trinity under this Agreement shall be deemed to be or to
have been made on and for such persons' behalf. Any amount paid pursuant to this
cut-through provision directly to such persons under a Reinsured Policy shall
reduce (by the amount of such payment) both the liability of Trinity to Xxxxxx
under this Agreement and the liability of Xxxxxx under the appropriate Reinsured
Policy.
ARTICLE XVII
ERRORS AND OMISSIONS
Inadvertent delays, errors, or omissions made in connection with this Agreement
or any transactions hereunder, whether in respect to cessions, or claims, or
otherwise, shall not invalidate this Agreement and shall not relieve either
party from any liability under this Agreement which would have attached had such
delay, error, or omission not occurred, provided always that such error or
omission be rectified as soon as possible after discovery.
ARTICLE XVIII
ARBITRATION
A. Any dispute arising out of this Agreement shall be submitted to the
decision of a board of arbitration composed of two arbitrators and an
umpire, meeting in Chicago, Illinois, unless otherwise agreed. The laws of
the State of Illinois shall govern the interpretation and application of
this Agreement and the enforcement of the arbitration award.
B. The members of the board of arbitration shall be active or retired
disinterested officials of insurance or reinsurance companies, other than
the parties or their affiliates. Each party shall appoint its arbitrator,
and the two arbitrators shall choose an umpire before instituting the
hearing. If the respondent fails to appoint its arbitrator within twenty
(20) days after being requested to do so by the claimant, the latter shall
also appoint the second arbitrator within ten (10) days after the
expiration of the twenty (20) days for respondent to appoint its
arbitrator. If the two arbitrators fail to agree upon the appointment of an
umpire at the end of twenty (20) days following the last date of the
appointment of the arbitrators, each of them shall name three candidates
within ten (10) days, of whom the other shall decline two within ten (10)
days after the three are named and the decision shall be made of the
remaining two by drawing lots within five (5) days after the last
declination of a candidate.
C. The claimant shall submit its initial statement within twenty (20) days
from appointment of the umpire. The respondent shall submit its statement
within twenty (20) days after receipt of the claimant's statement, and the
claimant may submit a reply statement within ten (10) days after receipt of
the respondent's statement. No other statement shall be submitted by either
party.
D. The board shall consider this Agreement an honorable engagement rather than
merely a legal obligation and shall make its decision with regard to the
custom and usage of the insurance and reinsurance business. The board shall
have injunctive powers, including but not limited to the power to cause a
party to deposit any monies in dispute into an interest-bearing escrow
account. The board shall issue its decision in writing upon evidence
introduced at a hearing or by other means of submitting evidence in which
strict rules of evidence need not be followed, but in which cross
examination and rebuttal shall be allowed if requested. Any hearing shall
commence within thirty (30) days of claimant's reply statement, or of
respondent's statement if claimant does not submit a reply statement. The
board shall make its decision within forty-five (45) days following the
termination of the hearing unless the parties consent to an extension. The
majority decision of the board shall be final and binding upon all parties
to the proceeding. As soon as practical after the board renders an award,
judgment shall be entered upon the award of the board in any court having
jurisdiction thereof. Post-award interest shall accrue on any award from
the time the board renders the award until the award is paid in full. The
amount of post-award interest shall be the amount specified under Illinois
law. The board shall have the authority to award pre-award interest,
attorneys' fees and any interim relief the board may deem appropriate, but
shall have no authority to award punitive damages.
E. Each party shall bear the expense of its own arbitrator and shall jointly
and equally bear with the other party the expense of the umpire. The
remaining costs of the arbitration proceedings shall be allocated by the
board.
F. In the event of subsequent actions or proceedings to enforce any rights
hereunder, the prevailing party shall be entitled to recover its reasonable
attorneys' fees.
G. For purposes of this Article, all Xxxxxx Companies that are parties to this
Agreement shall be considered as one party and Trinity and all Unitrin
Companies that are parties to this Agreement shall be considered as the
other party.
ARTICLE XIX
NOTICES
A. Any notice or other communication required or permitted under this
Agreement shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be
deemed effective upon actual delivery. In each case, notice shall be
directed to the following address:
1. if to Xxxxxx to:
Xxxxxx Insurance Companies
Xxx Xxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Attn.: General Counsel
2. if to Trinity or the Unitrin Companies to:
Trinity Universal Insurance Company
c/x Xxxxxx Auto and Home Group
0000 Xxxxxxx Xx.
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attention: President
with a copy to:
Unitrin Services Company
One X. Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Secretary
B. By notice given in accordance with this Article to the other party, any
party may designate another address or person for receipt of notice
hereunder.
ARTICLE XX
MISCELLANEOUS
A. This Agreement, together with the Policy Conversion Agreement and the Asset
Purchase Agreement, constitute the entire contract between the parties and
there are no other understandings between them with respect to the subject
matter of this Agreement other than as is expressed herein or in a duly
executed addendum. Any changes or modifications to this Agreement shall be
null and void unless made by a signed addendum hereto.
B. This Agreement shall be governed by the laws of the State of Illinois.
C. This Agreement may be executed in multiple counterparts, each of which
shall be an original.
D. This Agreement shall inure to the benefit of the parties and be binding
upon their successors and assigns.
[signature pages follow]
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly
executed by their respective corporate officers on the 6th day of June, 2003.
LUMBERMENS MUTUAL CASUALTY COMPANY
BY:___________________________________________
TITLE:___________________________________
AMERICAN MOTORISTS INSURANCE COMPANY
BY:___________________________________________
TITLE:___________________________________
AMERICAN MANUFACTURERS MUTUAL INSURANCE COMPANY
BY:___________________________________________
TITLE:___________________________________
AMERICAN PROTECTION INSURANCE COMPANY
BY:___________________________________________
TITLE:___________________________________
XXXXXX LLOYDS INSURANCE COMPANY
BY:___________________________________________
TITLE:___________________________________
UNITRIN ADVANTAGE INSURANCE COMPANY
BY:___________________________________________
TITLE:___________________________________
UNITRIN AUTO AND HOME INSURANCE COMPANY
BY:___________________________________________
TITLE:___________________________________
UNITRIN PREFERRED INSURANCE COMPANY
BY:___________________________________________
TITLE:___________________________________
XXXXXX INDEPENDENCE INSURANCE COMPANY
BY:___________________________________________
TITLE:___________________________________
TRINITY LLOYD'S INSURANCE COMPANY
BY:___________________________________________
TITLE:___________________________________
TRINITY UNIVERSAL INSURANCE COMPANY
BY:___________________________________________
TITLE:___________________________________
Service Schedule
Trinity shall administer the Reinsured Policies in accordance with this
Schedule.
A. Marketing. Trinity shall have the authority to appoint producers on
behalf of Xxxxxx for the production of new insurance business, to develop
marketing plans and advertising material, to negotiate commission levels and
other terms and conditions of producer contracts and administer the operation of
Xxxxxx marketing programs. Trinity shall provide policy owner servicing for
Reinsured Policies on behalf of Xxxxxx.
B. Underwriting Authority. Trinity shall have authority to issue, amend
by endorsement and cancel contracts of insurance; to accept and decline risks
with full underwriting authority; to collect premiums; to reject, adjust,
compromise and pay losses; to pay for surveys; and generally to do everything
necessary for the administration of the insurance business conducted pursuant to
the Agreement.
C. Losses, Claim Expenses, Attorney Appointments and Loss Reporting.
1. Trinity shall on behalf of Xxxxxx and in satisfaction
of Trinity's obligations as reinsurer receive,
supervise the adjustment of, settle and compromise
and pay all claims for losses under the Reinsured
Policies, and shall pay all survey, investigating,
legal and other costs thereof. Trinity shall pay in
the name of Xxxxxx losses and claims expenses out of
funds held by Trinity. Xxxxxx shall have full access
to Trinity's claim files and other claims records.
2. Trinity shall on behalf of Xxxxxx (and at Trinity's
expense) appoint claims, defense and loss control
attorneys.
3. Trinity shall report all losses to Xxxxxx and any
third party reinsurers.
D. Other Duties of Trinity. Trinity agrees to perform the following
additional services:
1. Underwrite each risk, and issue and service the
insurance contract therefor; handle and pay accounts
in connection therewith.
2. Collect premiums on all Reinsured Policies.
3. Credit to Xxxxxx amounts due within 30 days after the
close of the quarter in which the business was
written and accounted for.
4. Keep all necessary records for the period of time
required by applicable laws after the termination of
this Agreement to account for transactions, which
records shall be open for inspection at all times by
Xxxxxx.
5. Provide all data processing and accounting services
as necessary to service the Reinsured Policies.
6. Cancel Reinsured Policies for nonpayment of premiums.
7. In all respects see that the operations hereunder
conducted by Trinity are in material compliance with
applicable laws and regulations.
8. Issue statements to Xxxxxx as follows:
(a) No later than 30 days after the close of each
calendar quarter a statement of accounts shall be
given to Xxxxxx in such form and in such detail
as may reasonably be required by Xxxxxx, and the
balance due as shown in such statement shall be
remitted not later than 45 days after the close
of the quarter. Accounts shall be rendered and
all payments made in United States currency.
(b) Trinity shall also furnish Xxxxxx as soon as
practicable after the end of each calendar
quarter, statements reflecting all necessary
figures for any statement, annual report or
otherwise, required by insurance departments or
other authorities.
E. Expenses. All expenses incurred in connection with the servicing of
the Reinsured Policies shall be borne exclusively by Trinity. Trinity
acknowledges that its sole and exclusive compensation for the administration,
servicing and handling of the Reinsured Policies is the Net Premiums on the
Reinsured Policies.
EXHIBIT A
Eligible Assuming Reinsurers for Particular Assumed Policies
-------------------------------------------------------------------------------
State Xxxxxx Company* Assuming Reinsurer**
----- -------------- ------------------
-------------------------------------------------------------------------------
California AMM KIC
----------
-------------------------------------------------------------------------------
AMPICO UAH
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Colorado AMICO UAH
--------
-------------------------------------------------------------------------------
AMM UAH
-------------------------------------------------------------------------------
AMPICO UAH
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Connecticut AMICO KIC
-----------
-------------------------------------------------------------------------------
AMPICO KIC
-------------------------------------------------------------------------------
AMM UPIC
-------------------------------------------------------------------------------
LMC UPIC
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
District of Columbia AMICO UAH
--------------------
-------------------------------------------------------------------------------
LMC UAH
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Florida AMM UAH
-------
-------------------------------------------------------------------------------
AMICO UAH
-------------------------------------------------------------------------------
AMPICO UAH
-------------------------------------------------------------------------------
LMC KIC
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Georgia AMM UAH
-------
-------------------------------------------------------------------------------
LMC UAH
-------------------------------------------------------------------------------
AMPICO UAH
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Indiana AMM KIC
-------
-------------------------------------------------------------------------------
AMPICO UPIC
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Illinois AMM UAH
--------
-------------------------------------------------------------------------------
AMPICO UPIC
-------------------------------------------------------------------------------
LMC KIC
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Kansas AMICO KIC
------
-------------------------------------------------------------------------------
AMM KIC
-------------------------------------------------------------------------------
AMPICO KIC
-------------------------------------------------------------------------------
LMC KIC
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
---------------------
* This column identifies the Xxxxxx Companies writing Ceded Policies in the
states specified. Such Xxxxxx Companies include Lumbermens Mutual Casualty
Company ("LMC"), American Motorists Insurance Company ("AMICO"), American
Manufacturers Mutual Insurance Company ("AMM"), American Protection Insurance
Company ("AMPICO"), and Xxxxxx Xxxxx'x Insurance Company ("KLIC").
** This column identifies the Assuming Reinsurers eligible to assume the Ceded
Policies written by the corresponding Xxxxxx Companies in the states specified.
Such Assuming Reinsurers include Unitrin Auto and Home Insurance Company
("UAH"), Unitrin Preferred Insurance Company ("UPIC"), Xxxxxx Independence
Insurance Company ("KIC"), and Trinity Lloyd's Insurance Company ("TLIC").
-------------------------------------------------------------------------------
State Xxxxxx Company* Assuming Reinsurer**
----- -------------- ------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Kentucky AMICO UAH
--------
-------------------------------------------------------------------------------
AMM UPIC
-------------------------------------------------------------------------------
AMPICO UAH
-------------------------------------------------------------------------------
LMC UAH
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Louisiana AMM UPIC
---------
-------------------------------------------------------------------------------
AMPICO UAH
-------------------------------------------------------------------------------
LMC UAH
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Maine AMICO KIC
-----
-------------------------------------------------------------------------------
AMM KIC
-------------------------------------------------------------------------------
AMPICO KIC
-------------------------------------------------------------------------------
LMC KIC
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Maryland AMICO KIC
--------
-------------------------------------------------------------------------------
AMM KIC
-------------------------------------------------------------------------------
AMPICO KIC
-------------------------------------------------------------------------------
LMC UAH
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Minnesota AMICO UAH
---------
-------------------------------------------------------------------------------
AMM UAH
-------------------------------------------------------------------------------
AMPICO KIC
-------------------------------------------------------------------------------
LMC UAH
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Mississippi AMICO UAH
-----------
-------------------------------------------------------------------------------
AMM UAH
-------------------------------------------------------------------------------
AMPICO UAH
-------------------------------------------------------------------------------
LMC UAH
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Missouri AMICO KIC
--------
-------------------------------------------------------------------------------
AMPICO KIC
-------------------------------------------------------------------------------
AMM UPIC
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
New Hampshire AMM UPIC
-------------
-------------------------------------------------------------------------------
LMC UPIC
-------------------------------------------------------------------------------
AMPICO KIC
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
New Mexico AMICO UAH
----------
-------------------------------------------------------------------------------
AMM UAH
-------------------------------------------------------------------------------
AMPICO KIC
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
New York AMPICO UAH
--------
-------------------------------------------------------------------------------
LMC UAH
-------------------------------------------------------------------------------
AMM UPIC
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
North Carolina AMICO UAH
--------------
-------------------------------------------------------------------------------
AMM UAH
-------------------------------------------------------------------------------
AMPICO UAH
-------------------------------------------------------------------------------
LMC UAH
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Ohio AMICO UAH
----
-------------------------------------------------------------------------------
AMM KIC
-------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
State Xxxxxx Company* Assuming Reinsurer**
----- --------------- --------------------
------------------------------------------------------------------------------------------
LMC KIC
------------------------------------------------------------------------------------------
AMPICO UPIC
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Oregon AMM KIC
------
------------------------------------------------------------------------------------------
LMC KIC
------------------------------------------------------------------------------------------
AMPICO UAH
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Pennsylvania AMICO UAH
------------
------------------------------------------------------------------------------------------
AMM UAH
------------------------------------------------------------------------------------------
AMPICO UAH
------------------------------------------------------------------------------------------
LMC UAH
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
South Carolina AMM UPIC
--------------
------------------------------------------------------------------------------------------
AMPICO UAH
------------------------------------------------------------------------------------------
LMC UAH
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Tennessee AMICO UAH
---------
------------------------------------------------------------------------------------------
AMM UAH
------------------------------------------------------------------------------------------
AMPICO UAH
------------------------------------------------------------------------------------------
LMC UAH
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Texas AMICO KIC
-----
------------------------------------------------------------------------------------------
AMM UAH
------------------------------------------------------------------------------------------
AMPICO UPIC
------------------------------------------------------------------------------------------
KLIC TLIC
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Vermont AMICO KIC
-------
------------------------------------------------------------------------------------------
AMM KIC
------------------------------------------------------------------------------------------
AMPICO KIC
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Virginia LMC KIC
--------
------------------------------------------------------------------------------------------
AMM KIC
------------------------------------------------------------------------------------------
AMICO UAH
------------------------------------------------------------------------------------------
AMPICO UAH
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Washington AMICO UAH
----------
------------------------------------------------------------------------------------------
AMM UAH
------------------------------------------------------------------------------------------
AMPICO UAH
------------------------------------------------------------------------------------------
LMC UAH
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Wisconsin AMM KIC
---------
------------------------------------------------------------------------------------------
LMC KIC
------------------------------------------------------------------------------------------
AMPICO UPIC
------------------------------------------------------------------------------------------
EXHIBIT B
FORMS OF ASSUMPTION CERTIFICATE
[Form 1]
[Name of Unitrin Insurer]
[Address]
CERTIFICATE OF ASSUMPTION
This certifies that, except as provided in the EXCEPTION(S) below, [name of
Unitrin insurer] assumes all liabilities under the Policy to which this
Certificate is attached, which was originally issued by [name of Xxxxxx
insurer]. [Name of Xxxxxx insurer] has been placed into [conservation/
rehabilitation/liquidation] proceedings by order of the ___________ Court
entered __________________. Except as provided in the EXCEPTION(S) below, [name
of Unitrin insurer] will pay all benefits and claims under the Policy in strict
accordance with its terms.
EXCEPTION: If the Policy was issued prior to July 1, 2002, [name of Unitrin
insurer] does not assume any liability for, and will not pay, any benefits,
claims or other obligations incurred prior to the first date on which the Policy
was renewed on or after July 1, 2002. [Name of Xxxxxx insurer] retains
responsibility for the payment of all such benefits, claims and other
obligations.
[Use only for policies issued by mutual insurer.] EXCEPTION: Regardless of the
date on which the Policy was issued, [name of Unitrin insurer] does not assume
any liability or responsibility for any voting rights, rights to a liquidating
distribution or demutualization benefits or any other rights incident to mutual
membership of any policyholders of [name of Xxxxxx insurer]. Moreover, as a
result of the assumption, you will no longer be a policyholder of [name of
Xxxxxx insurer] and will no longer retain any membership interest in [name of
Xxxxxx insurer].
RELEASE: As a consequence of its assumption transaction with [name of Unitrin
insurer], [name of Xxxxxx insurer] is released of all obligations to you other
than the obligations expressly retained by [name of Xxxxxx insurer] pursuant to
the terms of this Certificate and any obligations it may have in connection with
your terminated membership interest in [name of Xxxxxx insurer]. [Use final
phrase of preceding sentence ("and any obligations....") only for policies
issued by mutual insurer.]
All premiums payable under the Policy, all claims assumed by [name of Unitrin
insurer] pursuant to this Certificate and all correspondence (other than
correspondence related to claims not assumed by [name of Unitrin insurer])
should be delivered to Xxxxxx Auto and Home Group, 0000 Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxxxx, XX 00000. All claims not assumed by [name of Unitrin insurer] and
correspondence relating to such claims should be delivered to _________________.
This Certificate of Assumption is part of and should be attached to your Policy.
The effective date of this Certificate is _________________.
IN WITNESS WHEREOF, [name of Unitrin insurer] has issued this Certificate.
[Add Signatures]
[Form 2]
[Name of Unitrin Insurer]
[Address]
CERTIFICATE OF ASSUMPTION
This certifies that, except as provided in the EXCEPTION(S) below, [name of
Unitrin insurer] assumes all liabilities under the Policy to which this
Certificate is attached, which was originally issued by [name of Xxxxxx
insurer]. If you fail to object to this assumption in writing by __________, (1)
you will be deemed to have accepted [name of Unitrin insurer] as your insurer
and to have released [name of Xxxxxx insurer] to the extent provided in the
RELEASE below and (2) except as provided in the EXCEPTION(S) below, [name of
Unitrin insurer] will pay all benefits and claims under the Policy in strict
accordance with its terms.
EXCEPTION: If the Policy was issued prior to July 1, 2002, [name of Unitrin
insurer] does not assume any liability for, and will not pay, any benefits,
claims or other obligations incurred prior to the date on which the Policy was
first renewed on or after July 1, 2002. [Name of Xxxxxx insurer] retains
responsibility for the payment of all such benefits, claims and other
obligations.
[Use only for policies issued by mutual insurer.] EXCEPTION: Regardless of the
date on which the Policy was issued, [name of Unitrin insurer] does not assume
any liability or responsibility for any voting rights, rights to a liquidating
distribution or demutualization benefits or any other rights incident to mutual
membership of any policyholders of [name of Xxxxxx insurer]. Moreover, as a
result of the assumption, you will no longer be a policyholder of [name of
Xxxxxx insurer] and will no longer retain any membership interest in [name of
Xxxxxx insurer].
RELEASE: As a consequence of its assumption transaction with [name of Unitrin
insurer], [name of Xxxxxx insurer] is released of all obligations to you other
than the obligations expressly retained by [name of Xxxxxx insurer] pursuant to
the terms of this Certificate and any obligations it may have in connection with
your terminated membership interest in [name of Xxxxxx insurer]. [Use final
phrase of preceding sentence ("and any obligations") only for policies issued by
mutual insurer.]
Any objection to this assumption must be delivered in writing to Xxxxxx Auto and
Home Group, 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxxx, XX 00000 no later than
________. In the event that you object to the assumption in the manner provided
herein, continue to pay premiums under the Policy, file claims and correspond
with [name of Xxxxxx insurer] as you have in the past. In the event that you do
not object to the assumption in the manner provided herein, all premiums payable
under the Policy, all claims assumed by [name of Unitrin insurer] pursuant to
this Certificate and all correspondence (other than correspondence related to
claims not assumed by [name of Unitrin insurer]) should be delivered to Xxxxxx
Auto and Home Group, 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxxx, XX 00000. All
claims not assumed by [name of Unitrin insurer] and correspondence relating to
such claims should be delivered to _____________________.
NOTWITHSTANDING ANYTHING ELSE HEREIN, IF YOU OBJECT TO THIS ASSUMPTION IN
WRITING BY ___________, THIS CERTIFICATE SHALL BE NULL AND VOID; THE RELEASE OF
[name of Xxxxxx insurer] SHALL BE INEFFECTIVE; AND [name of Unitrin insurer]
SHALL HAVE NO OBLIGATION TO YOU AND NO LIABILITY UNDER THE POLICY.
This Certificate of Assumption is part of and should be attached to your Policy.
The effective date of this Certificate is _________________.
IN WITNESS WHEREOF, [name of Unitrin insurer] has issued this Certificate.
[Add Signatures]
[Form 3]
[Name of Unitrin Insurer]
[Address]
CERTIFICATE OF ASSUMPTION
This certifies that, except as provided in the EXCEPTION(S) below, [name of
Unitrin insurer] assumes all liabilities under the Policy to which this
Certificate is attached, which was originally issued by [name of Xxxxxx
insurer]. [Name of Xxxxxx insurer] also remains liable under the terms of the
Policy and nothing herein is intended to effect any release of [name of Xxxxxx
insurer]. However, except as provided in the EXCEPTION(S) below, [name of
Unitrin insurer] and not [name of Xxxxxx insurer] will pay all benefits and
claims under the Policy in strict accordance with its terms.
EXCEPTION: If the Policy was issued prior to July 1, 2002, [name of Unitrin
insurer] does not assume any liability for, and will not pay, any benefits,
claims or other obligations incurred prior to the first date on which the Policy
was renewed on or after July 1, 2002. [Name of Xxxxxx insurer] retains sole
responsibility for the payment of all such benefits, claims and other
obligations.
[Use only for policies issued by mutual insurer.] EXCEPTION: Regardless of the
date on which the Policy was issued, [name of Unitrin insurer] does not assume
any liability or responsibility for any voting rights, any rights to a
liquidating distribution or demutualization benefits or any other rights
incident to mutual membership of any policyholders of [name of Xxxxxx insurer].
[Name of Xxxxxx insurer] retains sole responsibility to you with respect to such
membership rights.
All premiums payable under the Policy, all claims assumed by [name of Unitrin
insurer] pursuant to this Certificate and all correspondence (other than
correspondence related to claims not assumed by [name of Unitrin insurer])
should be delivered to Xxxxxx Auto and Home Group, 0000 Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxxxx, XX 00000. All claims not assumed by [name of Unitrin insurer] and
correspondence relating to such claims should be delivered to _________________.
This Certificate of Assumption is part of and should be attached to your Policy.
The effective date of this Certificate is _________________.
IN WITNESS WHEREOF, [name of Unitrin insurer] has issued this Certificate.
[Add Signatures]
[Form 4]
[Name of Unitrin Insurer]
[Address]
CERTIFICATE OF ASSUMPTION
This certifies that, except as provided in the EXCEPTION(S) below, [name of
Unitrin insurer] assumes all liabilities under the Policy to which this
Certificate is attached, which was originally issued by [name of Xxxxxx
insurer]. If you fail to object to this assumption in writing by __________, (1)
you will be deemed to have accepted [name of Unitrin insurer] as your insurer
and to have released [name of Xxxxxx insurer] to the extent provided in the
RELEASE below and (2) except as provided in the EXCEPTION(S) below, [name of
Unitrin insurer] will pay all benefits and claims under the Policy in strict
accordance with its terms. See the attached Notice for additional information
regarding the consequences of this assumption transaction.
EXCEPTION: If the Policy was issued prior to July 1, 2002, [name of Unitrin
insurer] does not assume any liability for, and will not pay, any benefits,
claims or other obligations incurred prior to the date on which the Policy was
first renewed on or after July 1, 2002. [Name of Xxxxxx insurer] retains
responsibility for the payment of all such benefits, claims and other
obligations.
[Use only for policies issued by mutual insurer.] EXCEPTION: Regardless of the
date on which the Policy was issued, [name of Unitrin insurer] does not assume
any liability or responsibility for any voting rights, rights to a liquidating
distribution or demutualization benefits or any other rights incident to mutual
membership of any policyholders of [name of Xxxxxx insurer]. Moreover, as a
result of the assumption, you will no longer be a policyholder of [name of
Xxxxxx insurer] and will no longer retain any membership interest in [name of
Xxxxxx insurer].
RELEASE: As a consequence of its assumption transaction with [name of Unitrin
insurer], [name of Xxxxxx insurer] is released of all obligations to you other
than the obligations expressly retained by [name of Xxxxxx insurer] pursuant to
the terms of this Certificate and any obligations it may have in connection with
your terminated membership interest in [name of Xxxxxx insurer]. [Use final
phrase of preceding sentence ("and any obligations") only for policies issued by
mutual insurer.]
Any objection to this assumption must be delivered in writing to Xxxxxx Auto and
Home Group, 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxxx, XX 00000 no later than
________. In the event that you object to the assumption in the manner provided
herein, continue to pay premiums under the Policy, file claims and correspond
with [name of Xxxxxx insurer] as you have in the past. In the event that you do
not object to the assumption in the manner provided herein, all premiums payable
under the Policy, all claims assumed by [name of Unitrin insurer] pursuant to
this Certificate and all correspondence (other than correspondence related to
claims not assumed by [name of Unitrin insurer]) should be delivered to Xxxxxx
Auto and Home Group, 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxxx, XX 00000. All
claims not assumed by [name of Unitrin insurer] and correspondence relating to
such claims should be delivered to ____________________.
NOTWITHSTANDING ANYTHING ELSE HEREIN, IF YOU OBJECT TO THIS ASSUMPTION IN
WRITING BY ___________, THIS CERTIFICATE SHALL BE NULL AND VOID; THE RELEASE OF
[name of Xxxxxx insurer] SHALL BE INEFFECTIVE; AND [name of Unitrin insurer]
SHALL HAVE NO OBLIGATION TO YOU AND NO LIABILITY UNDER THE POLICY.
This Certificate of Assumption is part of and should be attached to your Policy.
The effective date of this Certificate is _________________.
IN WITNESS WHEREOF, [name of Unitrin insurer] has issued this Certificate.
[Add Signatures]
NOTICE
Lumbermens Mutual Casualty Company, an Illinois mutual insurance company and
American Manufacturers Mutual Insurance Company, an Illinois mutual insurance
company (both mutual insurance companies collectively referred to as "Xxxxxx"),
entered into a transaction with Unitrin, Inc. and certain of its subsidiaries
("Unitrin"), pursuant to which Xxxxxx agreed to sell most of its personal lines
insurance business to Unitrin. Pursuant to the attached Certificate of
Assumption, you are being provided with the opportunity to replace Xxxxxx with a
stock insurer subsidiary of Unitrin as the insurer under your Policy subject to
the EXCEPTION(S) stated in the Certificate.
As a policyholder of a Xxxxxx mutual insurance company, you have certain
membership interests in your insurer that you would not have as a policyholder
of a Unitrin stock insurer. These membership interests include the right to vote
on the election of the Xxxxxx board of directors and other matters submitted to
a vote at policyholder meetings, and the right to participate in demutualization
benefits, if any, if Xxxxxx is converted to a stock insurer and in liquidating
distributions, if any, if Xxxxxx is liquidated. However, if you do not object to
the assumption in writing by the date specified in the Certificate and in the
manner specified therein, you will no longer be a policyholder of Xxxxxx and
therefore will no longer retain any membership interest in Xxxxxx.
Please note that, except where required by state law or contractual commitments,
Xxxxxx is no longer renewing its insurance policies, and it will not be able to
continue to renew your Policy indefinitely.
EXHIBIT C
Consents and Approvals
None
EXHIBIT X
Xxxxxx Direct Policies Written on Xxxxxx Paper
