MANAGEMENT AGREEMENT between CastlePoint Insurance Company and Tower Risk Management Corp.
EXHIBIT
10.1
between
CastlePoint
Insurance Company
and
Tower
Risk Management Corp.
This
Agreement, entered into as of July
1, 2007 (the “Agreement”) by and between CASTLEPOINT INSURANCE COMPANY, a
property and casualty insurance company domiciled in New York (the “Company”),
and TOWER RISK MANAGEMENT CORP., a New York corporation (“Manager”), each having
offices located at 000 Xxxxxxxx, Xxx Xxxx, X.X. 00000.
PREAMBLE
WHEREAS,
Company desires to appoint
Manager as its manager for performing underwriting and claims and other services
with respect to certain business, which includes but is not limited to Brokerage
Business and business that is not Specialty Program Business and Insurance
Risk-Sharing Business or Traditional Program Business, as set forth in this
Agreement; and
WHEREAS,
Manager desires to perform
such responsibilities;
NOW,
THEREFORE, Company and Manager, in
consideration of the mutual promises herein contained and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, agree as follows:
1. Appointment.
Company
does hereby nominate,
constitute, and appoint Manager as non-exclusive manager for: (i) the
soliciting, underwriting, quoting, binding, issuing, and servicing of such
of
the Company's insurance policies as the Company determines for time-to-time
on
Exhibit A (such insurance and any policies, contracts, binders,
endorsements, certificates, agreements, or evidence of insurance, individually
and collectively, will be referred to as "Policy" or "Policies" hereunder),
which business includes, but is not limited to, Brokerage Business and business
that is not Specialty Program Business and Insurance Risk Sharing Business
or
Traditional Program Business.
2. Authority. Manager
is authorized to:
2.1 Issue,
or direct Company to issue, Policies subject to: (i) the scope and limits
granted in Exhibit A attached hereto; (ii) the terms and conditions (including
exclusions) of forms
of Policies prescribed by Company; (iii) applicable state insurance laws, rules,
and regulations; (iv) the underwriting guidelines approved by Company; (v)
Company's ultimate right to veto the solicitation, underwriting, quoting,
binding, and issuing of any Policy by Manager; (vi) Company's ultimate right
to
cancel any Policy subject to applicable governmental regulatory requirements
for
cancellation and non-renewal; (vii) Company's ultimate right to veto the
appointment by Manager of any agent, broker or producer, and the ultimate power
of Company to cancel any such agency pursuant to Section 2.4; (viii) Company's
right to approve all advertising with respect to the Policies in which Company's
name is used.
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2.2 Collect,
account, receipt for, and remit premiums on Policies that Manager writes on
behalf of Company in accordance with Section 2.1 and to retain its provisional
management fee and policy billing fees, if any, out of premiums so
collected. Manager agrees to pay all costs and expenses of collection
from insureds where premiums to be received by Manager pursuant to this
Agreement are not paid in full by the insured. Manager agrees that
all premiums, including return premiums received by Manager, are Company's
property and will be paid over to the Company.
2.3 Secure
or obtain agents and producers to produce business. Company
appointments will follow upon Manager providing evidence that the agents and
producers are lawfully licensed to transact the type of insurance they are
expected to write, are not serving on Company's or Manager's board of directors
and complete Company’s appointment process. The agents and producers
must meet the applicable compliance regulations for licensure.
2.4 Terminate
agents and producers.
2.5 Investigate
and settle claims as provided in Section 10 below and establish reserves for
such claims.
2.6 Purchase
and maintain in effect treaty and facultative reinsurance to limit Company’s
exposure on the Policies to the net amounts outlined in Exhibit
A. Company shall reimburse Manager for the Company’s proportionate
share, but not greater than 15% of catastrophe reinsurance costs attributable
to
the business written by it.
3. Performance.
3.1 Manager
hereby accepts the foregoing appointment and agrees faithfully to perform the
duties thereof in a professional manner as an agent of Company and to obey
promptly such reasonable instructions as it may receive from time to time from
Company in accordance with this Agreement.
3.2 If
Manager commits a material breach of this Agreement, Company may, as one remedy
but not as an exclusive remedy, require its own employees or designated
representatives to carry out Manager's duties hereunder. Manager
shall reimburse Company for Company's reasonable expenses, including salaries,
incurred for having Company’s employees or representatives perform such duties
or, at Company's option, Manager shall pay such employees or representatives
directly. Such reimbursement or direct payments shall be made by
Manager within five (5) days after Manager's receipt of invoices of such
expenses.
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4. Fees.
Manager
shall receive a
management fee quarterly for the foregoing services (“Management Fees”) during
each calendar year of this agreement (or part thereof) equal to (A) the
management fee percentage for such year (as set forth below) (the “Management
Fee Percentage”) times (B) the amount of Subject Written Premium on
Policies managed by Manager for Company, net of return premiums. “Subject
Written Premium” shall mean direct written premium net of specific, aggregate
and property catastrophe excess of loss reinsurance costs. It is expressly
agreed that the Management Fee Percentage payable to the manager shall be
reduced by any expenses attributable to boards, bureaus and taxes that are
required to be paid by Company. The provisional Management Fee Percentage shall
be 34%.
Such
Management Fee Percentage shall be
subject to adjustment until all losses for a given year have been settled (or
deemed settled as set forth below). Within sixty (60) days following
the end of each year, Company shall calculate the Net Loss Ratio for each year
that remains open and shall forward copies of such calculations to Manager.
The
Management Fee Percentage shall be increased nine-tenths of a percentage point
for every percentage point by which the Net Loss Ratio is below 61% up to a
maximum Management Fee Percentage of 36%, and decreased nine-tenths of a
percentage point for every percentage point by which the Net Loss Ratio exceeds
61%, subject to a minimum Management Fee Percentage of 31% as
follows:
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Net
Loss Ratio
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Management
Fee Percentage
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||
|
64.33%
or higher
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31.0
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||
|
64
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31.3
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||
|
63
|
32.2
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||
|
62
|
33.1
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||
|
61
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34.0
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||
|
60
|
349
|
||
|
59
|
35.8
|
||
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58.78
or lower
|
36.0
|
||
The
parties will settle amounts due within ten (10) days thereafter. The
Net Loss Ratio for each year shall be deemed to be finalized six (6) years
following the close of such year or at any time before six (6) years by mutual
agreement of the parties.
For
the purposes of this paragraph 4,
"Net Loss Ratio" shall mean, for any period of time, the ratio of Net Losses
incurred during such period to Net Premium Earned for such period, where “Net
Losses” means, for any period of time, any and all amounts that the Company is
required to pay to or on behalf of insureds for insurance claims made under
its
Policies including loss adjustment expenses, after the application of any
applicable reinsurance.
5. Territory.
Manager's
authority to solicit, quote,
underwrite, bind, issue, or service Policies extends only to insureds or
prospective insureds located in the states specified in Exhibit A attached
hereto, subject to: (i) the applicable licensing authority of Company, (ii)
Company having made and received approval of all necessary regulatory filings
and (iii) Manager obtaining licenses if required for activities conducted by
Manager pursuant to this Agreement.
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6. Representations
and Warranties of Manager. On the
effective date hereof, during the term of this Agreement, and for any period
described in Section 14.5, Manager hereby represents and warrants to Company
as
follows:
6.1 Laws
and Licenses. Manager has complied and will comply with all
applicable laws, rules, and regulations. Manager shall provide
current copies of Manager's licenses, which will be maintained in Company's
records. Company will appoint Manager in all applicable
states. Manager will obtain and maintain at its own expense all
licenses required for it to perform this Agreement.
6.2 No
Breach. This Agreement is a valid and binding obligation of
Manager. The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein will not breach or conflict
with Manager's by-laws or certificate of incorporation, nor with any agreement,
covenant, or understanding (oral or written) to which Manager is bound, and
will
not adversely affect the application for issuance or the validity of any license
of Manager.
6.3 Status. Manager
is a duly organized and validly existing corporation in the State of New
York.
6.4 Authorization. The
execution, delivery, and performance of this Agreement by Manager have been
duly
and properly authorized by it.
7. Representations
and Warranties of Company. On the
effective date hereof, during the term of this Agreement, and for any period
described in Section 14.5, each Company hereby represents and warrants to
Manager as follows:
7.1 Laws
and Licenses. Company has complied and will comply with all
applicable laws, rules and regulations and shall, whenever necessary, obtain
and
maintain at its own expense all licenses required for it to perform this
Agreement.
7.2 No
Breach. This Agreement is a valid and binding obligation of
Company. The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein will not breach or conflict
with Company's by-laws or articles of incorporation, nor with any agreement,
covenant, or understanding (oral or written) to which Company is bound, and
will
not adversely affect the application for issuance or the validity of any license
of Company.
7.3 Status. Company
is a duly organized and validly existing corporation in the State of New
York.
7.4 Authorization. The
execution, delivery, and performance of this Agreement by Company have been
duly
and properly authorized by it.
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8. Duties
and Responsibilities. Subject to Company's
supervision and instructions, Manager agrees to perform the following duties
and
services in addition to those otherwise enumerated in this Agreement with
regards to Policies it manages hereunder:
8.1 Solicit,
underwrite, quote, bind, issue, secure proper countersignature when required
by
applicable laws, and service Policies on behalf of Company.
8.2 Cancel
Policies issued or underwritten by Manager in accordance with the terms of
the
Policies and applicable state regulations.
8.3 Issue
Policies only on forms approved by Company and filed with and approved by
regulatory authorities wherever such filing and approval is
required.
8.4 Underwrite
and issue Policies in accordance with the premium rates and underwriting
criteria and guidelines as approved by Company.
8.5 Investigate
and settle claims as provided in Section 10 below and establish reserves for
such claims.
8.6 Maintain
at Manager's expense data processing systems and equipment, an office or offices
and a staff of employees sufficient in number and qualifications to perform
the
duties set forth in this Agreement.
8.7 Pay
to Company any fines imposed by regulatory authorities, taxation authorities,
and their agents for data collection and advisory organizations, due to late
filing or poor quality of data provided by Manager.
8.8 Pay
to Company any fines imposed by regulatory authorities upon Company due to
the
use of unapproved forms or rates by Manager or due to other market conduct
violations caused by Manager's willful misconduct.
8.9 Maintain
separately for Company and each other insurer with which Manager does business,
complete and current records and accounts, including underwriting files, which
Manager shall retain in accordance with Section 12 and any applicable
laws.
8.10 Refund
within sixty (60) days of the end of each calendar month, return commissions
on
Policy cancellations or premium reduction, in each case at the same rate at
which such commissions were originally retained.
8.11 Collect,
account and receipt for premiums on Policies that Manager writes on behalf
of
Company in accordance with Section 2.1, and return premiums to policyowners,
as
necessary. Manager shall promptly remit premiums collected on
Company’s behalf, less return premium, reinsurance costs and Management Fees, to
Company.
8.12 Hold
all monies, including premiums, return premiums, and monies received by Manager,
in a fiduciary capacity for Company. Except as otherwise authorized by this
Agreement, Manager shall maintain such monies in a separate and segregated
bank
account in a bank that is a member of the Federal Reserve System and is insured
by the Federal Deposit Insurance Corporation. This account shall not be used
for
any purpose other than payments to or on behalf of Company. Any investment
income produced from this bank account is the property of Manager.
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8.13 Comply
with all regulatory requirements including, but not limited to, the
cancellation, non-renewal, or conditional renewal of policies.
8.14 Return
upon demand after termination of this Agreement, all unused Policies, forms,
and
other property furnished to Manager by Company. Such items remain the property
of Company. Manager shall fully cooperate with and assist Company in recovering
such items from third parties, if any.
8.15 Exercise
Manager's authority through authorized employees of Manager or its
affiliates.
8.16 Exercise
exclusive and independent control of Manager's time and conduct.
9. Limitations
of Authority.
Notwithstanding
the foregoing, all
underwriting services provided to Company by Manager shall be based upon the
written criteria, standards and guidelines of Company which shall retain the
final authority over underwriting decisions including, but not limited to,
acceptance, rejection, cancellation and termination of risks.
10. Claims.
10.1 Manager
shall or shall arrange to investigate, negotiate, and settle all Policy claims
or losses on behalf of Company; however, Manager shall obtain the prior approval
of Company before handling and settling any Policy claim or loss which is in
excess of One Hundred Thousand Dollars ($100,000) gross incurred
loss. Manager shall determine coverage for claims; however, Manager
shall obtain the prior written approval of Company for the handling of
litigation in which the Company is named as a defendant or claims in which
Manager seeks declaratory relief on behalf of Company. All claims or
losses shall be reported in monthly statements pursuant to Section 11
below. In addition, Manager shall immediately notify Company in
writing of any claim or loss as Company requests upon receiving notice or
knowledge of: (i) any Policy claim or loss in excess of Two Hundred Fifty
Thousand Dollars ($250,000) gross incurred loss; or (ii) any loss regardless
of
incurred dollar amount involving the following: fatalities; brain stem/brain
damage injuries; spinal cord injuries; heart attacks; severe, non-accumulative
hearing loss; severe, non-accumulative vision loss; amputation of major body
part; paraplegia; quadriplegia; serious xxxxx (i.e. second or third degree
and/or xxxxx over 50% of the body); non-union, compound, comminuted, serious
fractures; injury to the spine or pervasive nerve damage; class action suits;
allegations of criminal conduct by an insured or allegations of criminal conduct
by an insured or allegations of criminal conduct on the insured’s premises; bad
faith claims or suits; demands in excess of policy limits; actual or alleged
violations of the Deceptive Trade Practices Act; actual or alleged violations
of
the applicable State Insurance Codes; actual or alleged violation of law by
Manager; or litigation naming Company as a defendant. In determining
gross incurred loss, Manager shall consider the facts and circumstance of the
claim or loss, Manager’s analysis of the insured’s liability for the claim or
loss, Manager’s analysis of damages resulting from the claim or loss and
Manager’s analysis of the applicability of coverage for the claim or
loss. These individually reported claims or losses should be updated
semi-annually and more frequently upon the occurrence of any material change
in
any claim or loss or any information previously reported to
Company. Company shall be immediately notified if Manager is closing
a file on a reported claim or loss and of the reason for this file
closure. Failure to promptly notify Company of claims under this
Section 10.1 shall be considered a material breach of this Agreement and subject
to all the remedies provided herewith.
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10.2 Whenever
Manager shall deem it prudent to engage legal counsel or loss adjusters to
protect Company's interest regarding claims or losses, such services shall
be
provided only by qualified attorneys-at-law and/or licensed loss adjusters
selected by Manager, who have substantial experience in the handling of claims
litigation of the type involved. Upon execution of this Agreement, Manager
shall
submit to Company for approval a list of the attorneys and loss adjusters it
intends to use. Such list shall be considered approved unless Company objects
to
any of such firms or individuals within fourteen (14) days after receipt of
such
list. Any provision hereof to the contrary notwithstanding, it is agreed that,
with respect to any claim or loss of any amount, Manager shall promptly furnish
Company, or its designee, any additional claim or loss information requested
by
Company with respect to a claim or loss pertaining to any Policy covered by
this
Agreement, and it is further agreed with respect to any claim or loss of any
amount as follows:
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a.
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Company
may assign an attorney of its own choice to assume the defense of
any
claim or loss reported to Company and, in the event an attorney has
already been employed by Manager, the service of such attorney which
has
already been employed by Manager shall be terminated by Manager forthwith
and Manager shall waive any conflict of interest that may have been
created by such attorney's employment by
Manager.
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b.
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In
the event that Company is named as a defendant in any lawsuit, Manager
shall, as soon as it has notice or knowledge of such lawsuit, immediately
give written notice thereof to Company accompanied by a copy of the
complaint and any court papers related to such
lawsuit.
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10.3 All
claims services provided to Company by Manager shall be based upon the written
criteria, standards and guidelines of Company which shall retain the final
authority over claims decisions including, but not limited to, payment and
non-payment of claims.
10.4 The
Company
will establish a bank account to fund claim payments on its policies managed
by
Manager. Manager shall be made an authorized signatory on, and shall
pay claims out of such account. Manager shall not be obligated to pay
claims unless such account is sufficiently funded by the Company.
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11.
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Accounting
and Reporting Procedures.
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Manager
shall:
Within
thirty (30) days after the end of each month, remit to Company all premiums
collected on Policies issued under the terms of this Agreement, less the
provisional management fee due to Manager in accordance with Exhibit A attached
hereto. Manager may not offset balances due to Company hereunder
against balances due Manager under any other contract with Company;
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On
behalf of Company supply accounting, underwriting, and claim bordereaux with
copies to Company, pursuant to these terms and conditions;
With
regard to business placed by Manager with Company hereunder, furnish to Company,
in electronic format, within thirty (30) days after the end of each quarter
a
report of written, earned, and unearned premiums; losses and loss
adjustment expenses paid and outstanding; loss and loss adjustment expenses
incurred; commissions earned by Manager;
Provide
detail and summary reports, in an electronic or printed medium, as are required
to meet all reporting requirements of state regulatory or taxation authorities,
their managers for data collection, and advisory organizations including but
not
limited to:
a. Within
thirty (30) days of the close of the calendar quarter: direct
premiums (written and earned); in force premiums; policy counts (written and
in
force); direct losses and loss adjustment expenses including subrogation (paid
and reserved); number of claims open, closed with payment, and closed without
payment; as prescribed by state regulatory authorities.
b. Within
thirty (30) days of the close of the calendar quarter: direct written
premium, losses, and loss adjustment expense including subrogation (paid and
reserved) transaction data as prescribed by advisory organizations providing
loss cost and policy forms.
c. Thirty
(30) days prior to the prescribed deadline: the reports of direct
premiums (written and earned), losses, and loss adjustment expenses including
salvage and subrogation (paid and reserved) as required by state regulatory
data
collection agents, including but not limited to financial calls, unit
statistical data, summary statistical data, and detailed claim information
for
National Council on Compensation Insurance (NCCI), Insurance Services Office
(ISO), and National Association of Independent Insurers (NAII), and various
state-specific reporting requirements as necessary.
By
the first business day of February of each year, Manager shall provide Company
with any information Company may require in order to complete its statutory
financial statements for the prior year. Company shall notify Manager of the
material information required by December 31 of the prior year.
12. Books
and Records.
Manager
shall keep such books and
records as may be (i) reasonably requested by Company; or (ii) required by
law,
rulings, or orders of the insurance departments of the states having
jurisdiction over: (a) Manager or Manager's business or (b) any
Policies. Manager shall make such books and records available for
examination, audit, and copying by the insurance departments of such states
and
by Company, or by their authorized representatives. Company shall
have the right to examine and review at any reasonable time all books, records,
files, and papers, including, but not by way of limitation, claim files and
underwriting files
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maintained
and kept by Manager which relate to this Agreement and the
Policies. Manager shall institute and maintain retention and disposal
systems for claim files and underwriting files in accordance with procedures
and
requirements as prescribed by law. All books and records of Manager shall be
maintained at the principal
place
of business of Manager and shall be complete, accurate, and up-to-date, and
shall reflect all monies paid or received by Agent and all transactions of
Manager pursuant to this Agreement. Anything to the contrary notwithstanding,
all of the books, records, files, and papers maintained and kept by Manager
relating to underwriting and claims matters involving this Agreement or the
Policies, shall be and remain the sole and exclusive property of Company except
that upon termination of this Agreement, all right, title, and interest in
and
to all Policy renewals or expirations and all records with respect to renewals
and expirations shall automatically and irrevocably transfer to and vest in
Manager provided Manager has accounted for and has made payments of all amounts
due Company and continues to do so.
13. Indemnification.
13.1 Manager
shall indemnify and hold harmless Company from and against all losses, damages,
costs, expenses, claims, fines, penalties, or liabilities of any description
suffered by Company with respect to Manager on any Policies issued or
underwritten by Manager, including, without limitation, any attorney's fees,
in
connection with or arising out of: (i) any violations by Manager of laws, rules,
or regulations to which it is subject; (ii) any material breach of any warranty
or representation of Manager made in this Agreement or any other material breach
of this Agreement by Manager; or (iii) any willful misconduct, gross negligence,
or misrepresentation, of Manager or of it officers, directors, employees,
agents, sub-producers, or independent contractors.
13.2 Company
shall indemnify and hold harmless Manager from and against all losses, damages,
costs, expenses, claims, fines, penalties, or liabilities of any description
suffered by Manager with respect to Company on any Policies issued or
underwritten by Company, including, without limitation, any attorney's fees,
in
connection with or arising out of: (i) any violations by Company of laws, rules,
or regulations to which it is subject; (ii) any breach of any warranty or
representation of Company made in this Agreement or any other breach of this
Agreement by Company; or (iii) any alleged or actual misconduct, negligence,
misrepresentation, or other acts or failures to act of Company or of it
officers, directors, employees, agents, sub-producers, or independent
contractors.
14. Termination
of Agreement.
14.1 This
Agreement shall continue until terminated in accordance with Sections 14.2
through 14.6 below.
14.2 This
Agreement may be terminated immediately by either party upon giving written
notice to the other party via electronic, certified or registered mail in the
event of:
a. The
misappropriation by either party of any funds or property belonging to the
other
party;
b. The
fraud, gross negligence, or willful misconduct of the other party;
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c. The
license or certificate of authority of the other party in their state of
domicile is canceled, non-renewed or suspended by any public
authority;
d. An
assignment by the other party for the benefit of creditors; the dissolution
or
liquidation of the other party; the appointment of a conservator, receiver,
or
liquidator for a substantial part of the other party’s property; the institution
of bankruptcy, insolvency, or similar proceedings by or against the other
party;
e. Material
breach by the other party of any provision of this Agreement;
f. If
any law or regulation of the federal, state, or local government of any
jurisdiction in which the other party is doing business shall render illegal
or
invalid any transaction contemplated by this Agreement, or any term of this
Agreement, this Agreement may be terminated insofar as it applies to such
jurisdiction by either party giving notice to the other party to such effect
or
by either party giving notice to the other party to such effect;
g. Change
in ownership of ten percent (10%) or more of the outstanding voting stock of
the
other party, sale or transfer of the other party’s assets, merger of the
other party, or change or resignation of any principal officer or
director of the other party;
h. The
licenses required of the other party for it to perform under this Agreement
expire, are terminated, or are not valid pursuant to the law of the State in
which the other party is transacting business on behalf of either
party.
14.3 This
Agreement may be terminated at any time by the Company if the Reinsurance
covering the business under this agreement is cancelled, terminated or
expired.
14.4 This
Agreement may be terminated at any time by mutual written agreement, or upon
sixty (60) days prior written notice by either Company or Manager.
14.5 If
at any time either party sends notice of termination to the other party as
provided in Section 14.2 above or the Agreement is otherwise terminated as
provided herein, the Manager shall not solicit, underwrite, quote, bind, or
issue any Policies or renew any existing Policies for which the inception date
or renewal date falls after the effective date of termination of this Agreement,
nor shall Manager cancel and rewrite any existing Policies.
14.6 Unless
otherwise indicated by this Agreement or either party otherwise notifies the
other party in writing, Manager's duties and responsibilities under this
Agreement shall survive termination of this Agreement until such time as all
Policies issued, underwritten, or serviced by Manager pursuant to this Agreement
have expired and all known losses under such Policies have been paid or settled,
have run off or otherwise have been disposed of in the judgment of Company,
all
incurred but not reported loss reserves have been reduced to zero, and any
amounts owed to Company by others has been paid. The only compensation Manager
shall receive for its performance of its duties hereunder (both during and
after
the term of this Agreement) is set forth in Section 4.
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14.7 Upon
termination of the Agreement, Manager shall, unless notified in writing to
the
contrary by Company:
a. Continue
to represent Company for the purpose of servicing Policies placed by Manager
with Company which are in force on, or renewed at Company's election, or as
required by law, after the date of termination of this Agreement, and Manager
shall continue to receive its normal compensation for such
services.
b. Issue
and countersign appropriate endorsements on Policies in force, provided that
without prior written approval of Company, such endorsement shall not increase
nor extend Company's liability nor extend the term of any Policy.
c. Collect
and receipt for premiums and retain commissions out of premiums collected as
full compensation.
14.8 Any
notice issued pursuant to this Section shall be effective on the day after
it is
received by Manager.
15. Suspension
of Manager's Authority.
15.1 In
lieu of terminating this Agreement, Company may give written notice to Manager
that Company is immediately suspending Manager's authority in its entirety
or in
any particular state to bind new or renewal business, change any existing Policy
and/or settle any claim during the pendency of any of the following
events:
a. Manager
is delinquent in payment of any monies due Company;
b. Any
dispute exists between Manager and Company regarding the existence of any of
the
events listed in Section 14.2;
15.2 Such
suspension shall remain in effect until such delinquency is cured or dispute
is
resolved and Manager receives written notification from Company to that effect.
If such delinquency is not cured within fifteen (15) days from the date of
receipt of written notification by Manager of such delinquency, Company may
exercise its right to terminate this Agreement under Section 14.2.
15.3 Unless
otherwise notified in writing to the contrary by Company, Manager's obligation
under this Agreement shall continue during the suspension of Manager's authority
under this Agreement.
15.4 Any
notice of suspension issued pursuant to this Section shall be effective
immediately.
16. Ownership
of Expirations.
The
use and control of expirations of
the Policies will remain the property of Manager; and Company will not, without
consent of Manager, (a) refer or communicate to any other agent or broker,
Company’s records of insureds, expiration dates and other material information
relating to specific risks except for loss or claims information specifically
requested by the insured or the insured’s authorized representative nor (b) use
such material information relating to specific risks for purposes of
solicitation.
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17. Mediation;
Arbitration and Injunctive Relief.
17.1 If
any dispute arises between Company and Manager with reference to the
interpretation, performance, or breach of this Agreement (whether the dispute
arises before or after termination of this Agreement) such dispute, if not
resolved by the parties, must be submitted to non-binding
mediation. If such dispute is not resolved by non-binding mediation
within sixty (60) days it will then be submitted for decision to a panel of
three arbitrators. Notice requesting arbitration will be in writing
and sent certified or registered mail, return receipt requested.
17.2 One
arbitrator shall be chosen by each party and the two arbitrators shall, before
instituting the hearing, choose an impartial third arbitrator who shall preside
at the hearing. If either party fails for any reason to appoint its
arbitrator within thirty (30) days after being requested to do so by the other
party, the latter, after ten (10) days notice by certified or registered mail
of
its intention to do so, may appoint the second arbitrator. If the two
arbitrators are unable to agree upon the third arbitrator within thirty (30)
days of their appointment, the third arbitrator shall be selected from a list
of
six individuals (three named by each arbitrator) by a judge of the United States
District Court having jurisdiction over the geographical area in which the
arbitration is to take place, or if that court declines to act, the state court
having general jurisdiction in such area.
17.3 All
arbitrators shall be active or retired disinterested officials of insurance
or
reinsurance companies not under the control or management of either party to
this Agreement and will not have personal or financial interests in the result
of the arbitration.
17.4 Within
thirty (30) days after notice of appointment of all arbitrators, the panel
shall
meet and determine timely periods for briefs, discovery procedures, and
schedules for hearings.
17.5 The
panel shall be relieved of all judicial formality and shall not be bound by
the
strict rules of procedure and evidence. Arbitration shall take place
in New York, New York. Insofar as the arbitration panel looks to
substantive law, it shall consider the law of the State of New
York. The decision of any two arbitrators when rendered in writing
shall be final and binding. The panel is empowered to grant interim
relief as it may deem appropriate.
17.6 The
panel shall interpret this Agreement as an honorable engagement rather than
merely a legal obligation and shall make its decision considering the custom
and
practice of the applicable insurance and reinsurance businesses within sixty
(60) days following the termination of the hearing unless the parties consent
to
an extension. Judgment upon the award may be entered in any court
having jurisdiction thereof.
17.7 Punitive
damages will not be awarded. The arbitrators may, however, at their
discretion award such other costs and expenses as they deem appropriate,
including but not limited to attorneys' fees, the cost of arbitration, and
arbitrators’ fees, to the extent permitted by law.
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17.8 It
is understood and agreed that in the event of any breach or threatened breach,
Company may apply to a court of competent jurisdiction for, and shall be
entitled to, injunctive relief from such court, without the requirement of
posting a bond or proof of damages, designed to cure existing breaches and
to
prevent a future occurrence or threatened future occurrence of like breaches
on
the part of Manager. It is further understood and agreed that the
remedies and recourses herein provided shall be in addition to, and not in
lieu
of, any other remedy or recourse which is available to Company either at law
or
in equity in the absence of this paragraph including without limitation the
right to damages.
18. Miscellaneous.
18.1 This
Agreement may be revised by mutual agreement of Manager and Company and such
revision shall be evidenced by a written agreement duly executed by authorized
representatives of Manager and Company, which specifies the effective date
thereof. Any amendment to which section 1505 of the New York Insurance Laws
is
applicable shall be resubmitted to the Superintendent of Insurance in accordance
with the provisions of that section.
18.2 Manager
shall not have authority to represent Company on any exclusive basis with
respect to any policy form, line, or class or subclass of business, unless
otherwise authorized in writing by Company.
18.3 Manager
shall not commit Company to any expenses or obligations not specifically
provided for herein without the prior written permission of
Company. Company shall reimburse Manager for expenses and costs
incurred by Manager which are not in the ordinary course of business and which
Company has specifically approved.
18.4 Company
shall have the right to oversee and supervise the operation of this Agreement,
including but not limited to the right at all reasonable times to have access
to
and to copy at Company's expense Manager's books and records as they relate
to
this Agreement, which rights shall survive the termination or expiration of
this
Agreement. The director or commissioner of insurance of any state where Manager
issues Policies on behalf of Company shall have at all reasonable times the
right of access to all books, records, and bank account of Manager in a form
usable by such official.
18.5 During
the term of this Agreement, Manager shall obtain and maintain in full force
and
effect, at its expense, fidelity insurance with a minimum policy limit of
$1,000,000, errors and omissions insurance with a minimum policy limit of
$2,000,000, directors and officers insurance with a minimum policy limit of
$2,000,000, and general liability insurance with a minimum policy limit of
$1,000,000 and on such terms as are reasonably acceptable to
Company. Manager shall furnish Company with copies of the
certificates of insurance for such insurance, and shall not cancel or amend
any
such insurance without Company's prior written consent.
18.6 Manager
shall provide to Company, copies of its quarterly financial reports and annual
audited financial reports.
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18.7 If
Manager fails in any respect to fulfill its duties and responsibilities under
this Agreement, then the expense incurred by Company in order to fulfill
Manager's duties and responsibilities under this Agreement will be fully
reimbursed by Manager.
18.8 This
Agreement may not be directly or indirectly assigned by either party in whole
or
in part, nor may Manager appoint a sub managing general Manager.
18.9 Any
provision of this Agreement which conflicts with applicable law or regulation
will be amended to the minimum extent necessary to effectuate compliance with
such law or regulation.
18.10 Manager
is an independent contractor, not an employee of Company, and nothing in this
Agreement shall be construed to create an employer/employee relationship between
Company and Manager.
18.11 This
Agreement shall be construed in accordance with the laws of the State of New
York.
18.12 Neither
Company nor Manager shall disclose material details of this Agreement and the
Policies without the prior consent of the other party. However, this
restriction will not apply to disclosures made by Company or Manager to its
agents, producers, shareholders, policyholders, auditors, accountants,
arbitrators, legal counsel, or other third parties as required in the ordinary
course of business, nor to disclosures required by arbitration panels,
governmental agencies, regulatory authorities, or courts of law.
18.13 Failure
of either party to enforce compliance with any term or condition of this
Agreement shall not constitute a waiver of such term or condition. No
waiver of any breach or default hereunder shall be valid unless in writing
and
signed by the party giving such waiver, and no such waiver shall be deemed
a
waiver of any subsequent breach or default of the same or similar
nature.
18.14 Manager
acknowledges and agrees that it will benefit from this Agreement and that a
breach by it of the covenants contained herein would cause Company irreparable
damages that could not adequately be compensated for only by monetary
compensation. Manager shall notify Company in writing via electronic,
certified or registered mail, within five (5) days if there is a change in
ownership of ten percent (10%) or more of the outstanding voting stock of
Manager, sale or transfer of all Manager's assets, merger of Manager, or change
of any principal officer or director of Manager including, but not limited
to,
resignation.
18.15 Any
notice or other communications required or permitted hereunder shall be
sufficiently given if sent by electronic, certified or registered mail, postage
prepaid, if to Company, addressed to Tower Risk Management Corp., 000 Xxxxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: Xxxxxxx Xxxxxxxxxxx, General
Counsel, and if to Company addressed to CastlePoint Insurance Company., 000
Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, Attention: General Counsel or such
other address as notified by either party to the other.
18.16 Notwithstanding
any other provisions of this Agreement, the business and affairs of Company
shall be managed by its board of directors, and, to the extent delegated by
the
board, by its appropriately authorized officers. The board of directors and
officers of Manager shall not have any management prerogatives with respect
to
the business affairs and operations of the Company.
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IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the
date first written above.
|
TOWER
RISK MANAGEMENT CORP.
|
||
|
/s/
Xxxxxxx X. Xxxxxxxxx
|
||
|
Name:
Xxxxxxx X. Xxxxxxxxx
|
||
|
Title:
Senior Vice President &
Chief
Financial
Officer
|
|
CASTLEPOINT
INSURANCE COMPANY
|
||
|
/s/
Xxxx X. Xxxxxx
|
||
|
Name:
Xxxx X. Xxxxxx
|
||
|
Title:
Senior Vice President &
Chief
Financial
Officer
|
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EXHIBIT
A
SCHEDULE
OF AUTHORITY
Manager
is only authorized to accept or bind business, as defined in Section A below,
subject to the amounts and stipulations indicated below. Amounts in
excess of the authorized limits or classifications must be referred to Company
for review and approval prior to binding.
X. XXXXX
NET WRITTEN PREMIUM LIMIT. A maximum of
$100,000,000 unless Manager obtains the prior written consent of
Company. Gross Net Written Premium shall mean gross written premium
of Company less returned premium for cancellations and reductions.
B. POLICY
LIMITS, COVERAGE CLASSIFICATIONS AND MAXIMUM NET LINES (after treaty and
facultative reinsurance).
|
Coverage
|
Limit
|
Maximum
Net Lines
|
|
Property
(including
Equipment Breakdown)
|
$50
Million or TBA
|
$1
Million per risk/per occurrence
|
|
General
Liability and Auto Liability
|
$1
Million per Occurrence / $2 Million Aggregate
|
$1
Million per occurrence
|
|
Workers’
Compensation
Employer’s
Liability
|
Statutory
$1
Million
|
$1
Million per occurrence
|
|
Excess
and Umbrella Liability
|
$10
Million
|
$250,000
per occurrence
|
The
above coverages are provided on ISO forms and on certain independent manuscript
forms to be agreed.
Other
classifications of insurance may be written on Company's insurance policies
subject to Company’s prior approval.
C. TERRITORIAL
LIMITATIONS. Manager shall not issue any policy in
any jurisdiction other than the authorized states defined as those states in
which Company is licensed and has filed and approved rates and
policies. Company at its own discretion may limit or revoke Manager's
authority as regards any particular state.
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