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Exhibit 10(W)
Reinsurance Pooling Agreement
Amended and Restated
As of January 1, 2000
By and among
State Automobile Mutual Insurance Company
State Auto Property and Casualty Insurance Company
Milbank Insurance Company
Midwest Security Insurance Company
Farmers Casualty Insurance Company
State Auto Insurance Company
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REINSURANCE POOLING AGREEMENT
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AMENDED AND RESTATED
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AS OF JANUARY 1, 2000
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This Reinsurance Pooling Agreement Amended and Restated effective as of
12:01 a.m., Eastern Standard Time, January 1, 2000 (the "2000 Pooling
Agreement") is by and among State Automobile Mutual Insurance Company, 000 Xxxx
Xxxxx Xxxxxx, Xxxxxxxx, Xxxx (hereinafter referred to as "State Auto Mutual"),
State Auto Property and Casualty Insurance Company, 000 Xxxxx Xxxx Xxxxxx,
Xxxxx, Xxxxx Xxxxxxxx (hereinafter referred to as "State Auto P&C"), Milbank
Insurance Company, Xxxx Xxxxxxx 00, Xxxxxxx, Xxxxx Xxxxxx (hereinafter referred
to as "Milbank"), Midwest Security Insurance Company, 0000 Xxxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxxx (hereinafter referred to as "Midwest Security"), Farmers
Casualty Insurance Company, 0000 Xxxxxxxx Xxxxx, Xxxx Xxx Xxxxxx, Xxxx
(hereinafter referred to as "Farmers Casualty") and State Auto Insurance
Company, 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxx ("State Auto IC"). (State Auto
Mutual, State Auto P&C, Milbank, Midwest Security, Farmers Casualty and State
Auto IC are herein collectively referred to as the "Pooled Companies" and
individually as a "Pooled Company").
BACKGROUND INFORMATION
----------------------
The Pooled Companies have determined that their business operations
should be conducted by employees of State Auto P&C on behalf of each of the
Pooled Companies and that State Auto Mutual should remain as the agent for each
of the Pooled Companies with respect to collecting and disbursing funds as
required by the Pooled Companies' business operations. These arrangements have
been effected through the Management Agreement dated January 1, 2000 (the "2000
Management Agreement"), as to Midwest Security through the Amended and Restated
Management Agreement dated effective January 1, 2000 (the "2000 Midwest
Management Agreement"), as to Farmers Casualty through the Amended and Restated
Management Agreement dated effective January 1, 2000 (the "2000 Farmers Casualty
Management Agreement") and by means of mutual reinsurance on a percentage basis
as herein provided.
State Auto Mutual and State Auto P&C originally entered into an
intercompany Reinsurance Agreement effective as of 12:01 a.m., January 1, 1987
(the "Reinsurance Agreement").
The Reinsurance Agreement has since been amended by an Addendum
effective January 1, 1987, adding insolvency and arbitration provisions; by
Amendment Number 1 effective as of January 1, 1992 amending the pooling
percentages from 20% State Auto P&C - 80% State Auto Mutual to 30% and 70%
respectively; by Amendment Number 2 effective as of January 1, 1991 excluding
post retirement health care benefits liability as a pooled expense and as of
January 1, 1994 excluding post employment benefits liability as a pooled
expense; and by Amendment Number 3 effective as of January 1, 1995 adding
Milbank as a party and adjusting the pooling percentages as follows: State Auto
P&C 35%, State Auto Mutual 55% and Milbank 10% and by an Amended and Restated
Reinsurance Pooling Agreement dated July 1, 1996 (the "7/1/96 Reinsurance
Agreement"), which excluded from the Reinsurance Agreement catastrophic loss
claims and loss adjustment expenses incurred by State Auto Mutual,
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State Auto P&C and Milbank in the amount of $100,000,000 in excess of
$120,000,000 of such losses and loss adjustment expense and the premiums for
such exposure; and by an Amended and Restated Reinsurance Pooling Agreement
effective January 1, 1998 (the "'98 Pooling Agreement") which added Midwest
Security as a party and adjusted the Respective Percentages (as defined below)
to State Auto P&C 37%, State Auto Mutual 52%, Milbank 10%, and Midwest Security
1%; and by a Reinsurance Pooling Agreement Amended and Restated as of January 1,
1999 (hereafter referred to as the "'99 Pooling Agreement") which added Farmers
Casualty as a party and adjusted the Respective Percentages to State Auto
P&C-37%, State Auto Mutual-49%, Milbank-10%, Farmers Casualty-3%, Midwest
Security-1%. In addition to the foregoing amendments to the pooling arrangement
as set forth in the various agreements, each of these agreements and this 2000
Pooling Agreement is subject to the Guaranty Agreement dated as of May 16, 1991
between State Auto Mutual and State Auto P&C (the "Reserve Guaranty Agreement").
The parties desire to amend and restate the '99 Pooling Agreement as
the 2000 Pooling Agreement, to provide for the continuation of the pooling
arrangement it effects, including the above-described previous amendments and
the additional amendments incorporated herein, which include the following: to
remove from the scope of the 2000 Pooling Agreement the premiums, losses,
underwriting and administrative expenses attributable to State Auto Mutual's
voluntary assumption of reinsurance from third parties which are unaffiliated
with State Auto Mutual, which voluntary assumed reinsurance contracts/treaties
initially commenced on or after January 1, 1999 (this January 1, 1999 and after
voluntary third party assumption reinsurance is hereafter referred to as the
"State Auto Mutual Reinsurance Book"); to add State Auto IC as a new party; to
remove an exclusion for post retirement health care benefits liabilities; and
post employment benefits liabilities and to adjust the Respective Percentages as
set forth below.
STATEMENT OF AGREEMENT
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In consideration of the mutual covenants set forth herein and INTENDING
TO BE LEGALLY BOUND HEREBY, the parties hereto hereby agree as follows:
1. DEFINITIONS: As used in this Agreement:
(a) "Net Liabilities" shall mean all direct liabilities plus
reinsurance assumed minus reinsurance ceded, except as
otherwise expressly excluded below, provided that the parties
hereto expressly understand and agree that Net Liabilities
excludes any and all liabilities arising out of the State Auto
Mutual Reinsurance Book for such reinsurance assumed on and
after January 1, 2000.
(b) "Net Premiums" shall mean all direct premiums plus
reinsurance assumed minus reinsurance ceded, except as
otherwise expressly excluded below, provided that the parties
hereto expressly understand and agree that Net Premiums
excludes any and all premiums arising out of the State Auto
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Mutual Reinsurance Book for such reinsurance assumed on and
after January 1, 2000.
c. "Respective Percentage" shall be:
As to State Auto IC 1%
As to Farmers Casualty 3%
As to Midwest Security 1%
As to Milbank 10%
As to State Auto P&C 39%
As to State Auto Mutual 46%
2. CESSION:
(a) STATE AUTO P&C CESSION: State Auto Mutual hereby reinsures
and assumes and State Auto P&C hereby cedes and transfers to
State Auto Mutual all Net Liabilities incurred under or in
connection with all contracts and policies of insurance issued
by State Auto P&C outstanding and in force as of and
subsequent to 12:01 a.m. Eastern Standard Time, January 1,
2000. Such liabilities shall include State Auto P&C's reserves
for unearned premiums, outstanding losses and loss expenses
(including unreported losses) and all other outstanding
underwriting and administrative expenses as evidenced by State
Auto P&C's books and records at the close of business on
December 31, 1999, but shall not include intercompany
balances, liabilities incurred in connection with the
investment transactions of State Auto P&C, liabilities for
dividends to stockholders declared and unpaid, other
liabilities not incurred in connection with underwriting
operations and liabilities arising out of the State Auto
Mutual Reinsurance Book. It is further agreed State Auto
Mutual shall receive the Net Premiums for said contracts and
policies.
(b) MILBANK CESSION: State Auto Mutual hereby reinsures and
assumes and Milbank hereby cedes and transfers to State Auto
Mutual all Net Liabilities incurred under or in connection
with all contracts and policies of insurance issued by Milbank
outstanding and in force as of and subsequent to 12:01 a.m.
EST, January 1, 2000. Such liabilities shall include Milbank's
reserves for unearned premiums, outstanding losses and loss
expenses (including unreported losses) and all other
outstanding underwriting and administrative expenses as
evidenced by Milbank's books and records at the close of
business on December 31, 1999, but shall not include
intercompany balances, liabilities incurred in connection with
the investment transactions of Milbank, liabilities for
dividends to stockholders declared and unpaid, other
liabilities not incurred in connection with underwriting
operations and liabilities arising out of the State
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Auto Mutual Reinsurance Book. It is further agreed that State
Auto Mutual shall receive the Net Premiums for said contracts
and policies.
(c) MIDWEST SECURITY CESSION: State Auto Mutual hereby
reinsures and assumes and Midwest Security hereby cedes and
transfers to State Auto Mutual all Net Liabilities incurred
under or in connection with all contracts and policies of
insurance issued by Midwest Security outstanding and in force
as of and subsequent to 12:01 a.m. EST, January 1, 2000. Such
liabilities shall include Midwest Security's reserves for
unearned premiums, outstanding losses and loss expenses
(including unreported losses) and all other outstanding
underwriting and administrative expenses as evidenced by
Midwest Security's books and records at the close of business
on December 31, 1999, but shall not include intercompany
balances, liabilities incurred in connection with the
investment transactions of Midwest Security, liabilities for
dividends to stockholders declared and unpaid, other
liabilities not incurred in connection with underwriting
operations and liabilities arising out of the State Auto
Mutual Reinsurance Book. It is further agreed that State Auto
Mutual shall receive the Net Premiums for said contracts and
policies.
(d) FARMERS CASUALTY CESSION: State Auto Mutual hereby
reinsures and assumes and Farmers Casualty hereby cedes and
transfers to State Auto Mutual all Net Liabilities incurred
under or in connection with all contracts and policies of
insurance issued by Farmers Casualty outstanding and in force
as of and subsequent to 12:01 a.m. EST, January 1, 2000. Such
liabilities shall include Farmers Casualty's reserves for
unearned premiums, outstanding losses and loss expenses
(including unreported losses) and all other outstanding
underwriting and administrative expenses as evidenced by
Farmers Casualty's books and records at the close of business
on December 31, 1999, but shall not include intercompany
balances, liabilities incurred in connection with the
investment transactions of Farmers Casualty, liabilities for
dividends to stockholders declared and unpaid, other
liabilities not incurred in connection with underwriting
operations and liabilities arising out of the State Auto
Mutual Reinsurance Book. It is further agreed that State Auto
Mutual shall receive the Net Premiums for said contracts and
policies.
(e) STATE AUTO IC CESSION: State Auto Mutual hereby reinsures
and assumes and State Auto IC hereby cedes and transfers to
State Auto Mutual all Net Liabilities incurred under or in
connection with all contracts and policies of
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insurance issued by State Auto IC outstanding and in force as
of and subsequent to 12:01 a.m. EST, January 1, 2000. Such
liabilities shall include State Auto IC's reserves for
unearned premiums, outstanding losses and loss expenses
(including unreported losses) and all other outstanding
underwriting and administrative expenses as evidenced by State
Auto IC's books and records at the close of business on
December 31, 1999, but shall not include intercompany
balances, liabilities incurred in connection with the
investment transactions of State Auto IC, liabilities for
dividends to stockholders declared and unpaid, other
liabilities not incurred in connection with underwriting
operations and liabilities arising out of the State Auto
Mutual Reinsurance Book. It is further agreed that State Auto
Mutual shall receive the Net Premiums for said contracts and
policies.
3. ASSETS TRANSFER TO STATE AUTO MUTUAL:
(a) STATE AUTO P&C: In consideration of the agreements herein
contained, State Auto P&C hereby agrees that there has been or
will be assigned and transferred to State Auto Mutual an
amount, in cash or other assets, equal to the aggregate of all
liabilities of State Auto P&C assumed by State Auto Mutual
under paragraph 2(a) hereof, less a ceding commission equal to
the sum of the acquisition expenses associated with the
unearned premium reserves which are transferred as provided
herein. There have been included among the assets assigned and
transferred to State Auto Mutual by State Auto P&C all of the
right, title and interest of State Auto P&C in and to all
assets relative to the underwriting operations of State Auto
P&C, due or that became due, as evidenced by its books and
records at the close of business on December 31, 1999, not
including investments, accrued investment income, intercompany
balances and bank deposits.
(b) MILBANK: In consideration of the agreements herein
contained, Milbank hereby agrees that there has been or will
be assigned and transferred to State Auto Mutual an amount, in
cash or other assets, equal to the aggregate of all
liabilities of Milbank assumed by State Auto Mutual under
paragraph 2(b) hereof, less a ceding commission equal to the
sum of the acquisition expenses associated with the unearned
premium reserves which are transferred as provided herein.
There shall be included among the assets assigned and
transferred to State Auto Mutual by Milbank all of the right,
title and interest of Milbank in and to all assets relative to
the underwriting operations of Milbank due or that
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may become due as evidenced by its books and records at the
close of business on December 31, 1999 not including
investments, accrued investment income, intercompany balances
and bank deposits.
(c) MIDWEST SECURITY: In consideration of the agreements
herein contained, Midwest Security hereby agrees that there
has been or will be assigned and transferred to State Auto
Mutual an amount, in cash or other assets, equal to the
aggregate of all liabilities of Midwest Security assumed by
State Auto Mutual under paragraph 2(c) hereof, less a ceding
commission equal to the sum of the acquisition expenses
associated with the unearned premium reserves which are
transferred as provided herein. There shall be included among
the assets assigned and transferred to State Auto Mutual by
Midwest Security all of the right, title and interest of
Midwest Security in and to all assets relative to the
underwriting operations of Midwest Security due or that may
become due as evidenced by its books and records at the close
of business on December 31, 1999, not including investments,
accrued investment income, intercompany balances and bank
deposits.
(d) FARMERS CASUALTY: In consideration of the agreements
herein contained, Farmers Casualty hereby agrees that there
has been or will be assigned and transferred to State Auto
Mutual an amount, in cash or other assets, equal to the
aggregate of all liabilities of Farmers Casualty assumed by
State Auto Mutual under paragraph 2(d) hereof, less a ceding
commission equal to the sum of the acquisition expenses
associated with the unearned premium reserves which are
transferred as provided herein. There shall be included among
the assets assigned and transferred to State Auto Mutual by
Farmers Casualty all of the right, title and interest of
Farmers Casualty in and to all assets relative to the
underwriting operations of Farmers Casualty due or that may
become due as evidenced by its books and records at the close
of business on December 31, 1999, not including investments,
accrued investment income, intercompany balances and bank
deposits.
(e) State Auto IC: In consideration of the agreements herein
contained, State Auto IC hereby agrees that there has been or
will be assigned and transferred to State Auto Mutual an
amount, in cash or other assets, equal to the aggregate of all
liabilities of State Auto IC assumed by State Auto Mutual
under paragraph 2(e) hereof, less a ceding commission equal to
the sum of the acquisition expenses associated with the
unearned premium reserves which are transferred as provided
herein. There shall be included
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among the assets assigned and transferred to State Auto Mutual
by State Auto IC all of the right, title and interest of State
Auto IC in and to all assets relative to the underwriting
operations of State Auto IC due or that may become due as
evidenced by its books and records at the close of business on
December 31, 1999, not including investments, accrued
investment income, intercompany balances and bank deposits.
4. ASSUMPTION OF REINSURANCE:
(a) STATE AUTO P&C: State Auto P&C hereby reinsures and
assumes and State Auto Mutual hereby cedes and transfers to
State Auto P&C its Respective Percentage of all Net
Liabilities under all contracts and policies of insurance,
(including those ceded by State Auto P&C and reinsured by
State Auto Mutual as provided in paragraph 2(a)), on which
State Auto Mutual is subject to liability and which are
outstanding and in force on or after the effective date
hereof.
Such liabilities shall include reserves for unearned premiums,
outstanding losses (including unreported losses) and loss expenses and
all other underwriting and administrative expenses, but shall not
include intercompany balances, liabilities for federal income taxes,
liabilities incurred in connection with investment transactions,
liabilities for dividends to stockholders declared and unpaid, other
liabilities not incurred in connection with underwriting operations and
liabilities arising out of the State Auto Mutual Reinsurance Book.
(b) MILBANK: Milbank hereby reinsures and assumes and State
Auto Mutual hereby cedes and transfers to Milbank its
Respective Percentage of all Net Liabilities under all
contracts and policies of insurance, (including those ceded by
Milbank and reinsured by State Auto Mutual as provided in
paragraph 2(b)), on which State Auto Mutual is subject to
liability and which are outstanding and in force on or after
the effective date hereof.
Such liabilities shall include reserves for unearned premiums,
outstanding losses (including unreported losses) and loss expenses and
all other underwriting and administrative expenses, but shall not
include intercompany balances, liabilities for federal income taxes,
liabilities incurred in connection with investment transactions,
liabilities for dividends to stockholders declared and unpaid, other
liabilities not incurred in connection with underwriting operations and
liabilities arising out of the State Auto Mutual Reinsurance Book.
(c) MIDWEST SECURITY: Midwest Security hereby reinsures and
assumes and State Auto Mutual hereby cedes and transfers to
Midwest Security its Respective Percentage of all
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Net Liabilities under all contracts and policies of insurance,
(including those ceded by Midwest Security and reinsured by
State Auto Mutual as provided in paragraph 2(c)), on which
State Auto Mutual is subject to liability and which are
outstanding and in force on or after the effective date
hereof.
Such liabilities shall include reserves for unearned premiums,
outstanding losses (including unreported losses) and loss expenses and
all other underwriting and administrative expenses, but shall not
include intercompany balances, liabilities for federal income taxes,
liabilities incurred in connection with investment transactions,
liabilities for dividends to stockholders declared and unpaid, other
liabilities not incurred in connection with underwriting operations and
liabilities arising out of the State Auto Mutual Reinsurance Book.
(d) FARMERS CASUALTY: Farmers Casualty hereby reinsures and
assumes and State Auto Mutual hereby cedes and transfers to
Farmers Casualty its Respective Percentage of all Net
Liabilities under all contracts and policies of insurance,
(including those ceded by Farmers Casualty and reinsured by
State Auto Mutual as provided in paragraph 2(d)), on which
State Auto Mutual is subject to liability and which are
outstanding and in force on or after the effective date
hereof.
Such liabilities shall include reserves for unearned premiums,
outstanding losses (including unreported losses) and loss expenses and
all other underwriting and administrative expenses, but shall not
include intercompany balances, liabilities for federal income taxes,
liabilities incurred in connection with investment transactions,
liabilities for dividends to stockholders declared and unpaid, other
liabilities not incurred in connection with underwriting operations and
liabilities arising out of the State Auto Mutual Reinsurance Book.
(e) STATE AUTO IC: State Auto IC hereby reinsures and assumes
and State Auto Mutual hereby cedes and transfers to State Auto
IC its Respective Percentage of all Net Liabilities under all
contracts and policies of insurance, (including those ceded by
State Auto IC and reinsured by State Auto Mutual as provided
in paragraph 2(e)), on which State Auto Mutual is subject to
liability and which are outstanding and in force on or after
the effective date hereof.
Such liabilities shall include reserves for unearned premiums,
outstanding losses (including unreported losses) and loss expenses and
all other underwriting and administrative expenses, but shall not
include intercompany balances, liabilities for federal income taxes,
liabilities incurred in connection with investment transactions,
liabilities for dividends to stockholders declared and unpaid, other
liabilities not
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incurred in connection with underwriting operations and liabilities
arising out of the State Auto Mutual Reinsurance Book.
5. ASSET TRANSFER BY STATE AUTO MUTUAL:
(a) STATE AUTO P&C: In consideration of the agreements herein
contained, State Auto Mutual hereby agrees that there has been
or will be assigned and transferred to State Auto P&C an
amount, in cash or other assets, equal to the aggregate of all
liabilities of State Auto Mutual assumed by State Auto P&C
under paragraph 4(a) hereof, less a ceding commission equal to
the sum of the acquisition expenses associated with the
unearned premium reserves which are transferred as provided
herein. There shall be included among the assets assigned and
transferred to State Auto P&C by State Auto Mutual all of the
right, title and interest of State Auto Mutual in and to all
assets relative to the underwriting operations of State Auto
Mutual, due or that may become due, as evidenced by its books
and records at the close of business on December 31, 1999, not
including investments, accrued investment income, intercompany
balances and bank deposits.
(b) MILBANK: In consideration of the agreements herein
contained, State Auto Mutual hereby agrees that there has been
or will be assigned and transferred to Milbank an amount, in
cash or other assets, equal to the aggregate of all
liabilities of State Auto Mutual assumed by Milbank under
paragraph 4(b) hereof, less a ceding commission equal to the
sum of the acquisition expenses associated with the unearned
premium reserves which are transferred as provided herein.
There shall be included among the assets assigned and
transferred to Milbank by State Auto Mutual all of the right,
title and interest of State Auto Mutual in and to all assets
relative to the underwriting operations of State Auto Mutual,
due or that may become due, as evidenced by its books and
records at the close of business on December 31, 1999, not
including investments, accrued investment income, intercompany
balances and bank deposits.
(c) MIDWEST SECURITY: In consideration of the agreements
herein contained, State Auto Mutual hereby agrees that there
has been or will be assigned and transferred to Midwest
Security an amount, in cash or other assets, equal to the
aggregate of all liabilities of State Auto Mutual assumed by
Midwest Security under paragraph 4(c) hereof, less a ceding
commission equal to the sum of the acquisition expenses
associated with the unearned premium reserves which are
transferred as provided herein. There shall be included among
the assets assigned and transferred to Midwest
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Security by State Auto Mutual all of the right, title and
interest of State Auto Mutual in and to all assets relative to
the underwriting operations of State Auto Mutual, due or that
may become due, as evidenced by its books and records at the
close of business on December 31, 1999, not including
investments, accrued investment income, intercompany balances
and bank deposits.
(d) FARMERS CASUALTY: In consideration of the agreements
herein contained, State Auto Mutual hereby agrees that there
has been or will be assigned and transferred to Farmers
Casualty an amount, in cash or other assets, equal to the
aggregate of all liabilities of State Auto Mutual assumed by
Farmers Casualty under paragraph 4(d) hereof, less a ceding
commission equal to the sum of the acquisition expenses
associated with the unearned premium reserves which are
transferred as provided herein. There shall be included among
the assets assigned and transferred to Farmers Casualty by
State Auto Mutual all of the right, title and interest of
State Auto Mutual in and to all assets relative to the
underwriting operations of State Auto Mutual, due or that may
become due, as evidenced by its books and records at the close
of business on December 31, 1999, not including investments,
accrued investment income, intercompany balances and bank
deposits.
(e) State Auto IC: In consideration of the agreements herein
contained, State Auto Mutual hereby agrees that there has been
or will be assigned and transferred to State Auto IC an
amount, in cash or other assets, equal to the aggregate of all
liabilities of State Auto Mutual assumed by State Auto IC
under paragraph 4(e) hereof, less a ceding commission equal to
the sum of the acquisition expenses associated with the
unearned premium reserves which are transferred as provided
herein. There shall be included among the assets assigned and
transferred to State Auto IC by State Auto Mutual all of the
right, title and interest of State Auto Mutual in and to all
assets relative to the underwriting operations of State Auto
Mutual, due or that may become due, as evidenced by its books
and records at the close of business on December 31, 1999, not
including investments, accrued investment income, intercompany
balances and bank deposits.
6. PREMIUM COLLECTION AND PAYMENT OF LOSSES:
As of the effective date of this Agreement and pursuant to the
terms of the 2000 Management Agreement as amended from time to time,
the 2000 Midwest Management Agreement, as amended from time to time,
and the 2000 Farmers Casualty Management Agreement, as amended
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from time to time, State Auto P&C, Milbank, Midwest Security, Farmers
Casualty, and State Auto IC hereby authorize and empower State Auto
Mutual to collect and receive all premiums and to take charge of,
adjust and administer the payment of all losses with respect to any and
all contracts and policies of insurance previously or thereafter issued
by State Auto P&C, Milbank, Midwest Security, Farmers Casualty and
State Auto IC and to reinsure or terminate all such contracts and
policies, and in all respects to act as though said contracts and
policies were issued by State Auto Mutual. State Auto Mutual agrees to
administer the payment of all losses and loss adjustment expenses in
connection with such contracts and policies. None of the foregoing is
intended to affect or impair the direct obligation of State Auto P&C,
Milbank, Midwest Security, Farmers Casualty and State Auto IC to their
insureds under policies issued by State Auto P&C, Milbank, Midwest
Security, Farmers Casualty, and State Auto IC, respectively.
7. PREMIUM PAYABLE BY STATE AUTO MUTUAL:
(a) STATE AUTO P&C: Commencing with the effective date of this
Agreement, State Auto Mutual hereby agrees to pay to State
Auto P&C its Respective Percentage of the Net Premiums written
by the parties hereto. Similarly, commencing with the
effective date of this Agreement, all losses, loss expenses,
underwriting expenses, and administrative expenses chargeable
to underwriting of the parties hereto (except for losses, loss
expenses, underwriting expenses and administrative expenses
chargeable to the State Auto Mutual Reinsurance Book),
including the policyholder dividends, less all losses and
expenses recovered and recoverable under reinsurance ceded to
reinsurers other than the parties hereto, (except for
catastrophe reinsurance ceded by State Auto Mutual, Farmers
Casualty, Midwest Security, Milbank, and State Auto IC to
State Auto P&C pursuant to a Property Catastrophe Overlying
Excess of Loss Reinsurance Contract dated as of July 1, 1999
as amended January 1, 2000 in which State Auto P&C provides
catastrophe coverage for the aforesaid companies for
$135,000,000 of catastrophe losses and loss expenses in excess
of $120,000,000 of such losses and loss expenses incurred by
the Pooled Companies) (the "State Auto P&C Catastrophe
Assumption Agreement") shall be prorated among the parties on
the basis of the Respective Percentage of each. Accounts shall
be rendered at quarterly intervals and shall be settled within
sixty (60) days thereafter.
(b) MILBANK: Commencing with the effective date of this
Agreement, State Auto Mutual hereby agrees to pay Milbank its
Respective Percentage of the Net Premiums written by the
parties hereto. Similarly, commencing with the effective date
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of this Agreement, all losses, loss expenses, underwriting
expenses, and administrative expenses chargeable to
underwriting of the parties hereto (except for losses, loss
expenses, underwriting expenses and administrative expenses
chargeable to the State Auto Mutual Reinsurance Book),
including policyholder dividends, less all losses and expenses
recovered and recoverable under reinsurance ceded to
reinsurers other than the parties hereto, (except for the
State Auto P&C Catastrophe Assumption Agreement) shall be
prorated among the parties on the basis of the Respective
Percentage of each. Accounts shall be rendered at quarterly
intervals and shall be settled within sixty (60) days
thereafter.
(c) MIDWEST SECURITY: Commencing with the effective date of
this Agreement, State Auto Mutual hereby agrees to pay Midwest
Security its Respective Percentage of the Net Premiums written
by the parties hereto. Similarly, commencing with the
effective date of this Agreement, all losses, loss expenses,
underwriting expenses, and administrative expenses chargeable
to underwriting of the parties hereto (except for losses, loss
expenses, underwriting expenses and administrative expenses
chargeable to the State Auto Mutual Reinsurance Book),
including policyholder dividends, less all losses and expenses
recovered and recoverable under reinsurance ceded to
reinsurers other than the parties hereto, (except for the
State Auto P&C Catastrophe Assumption Agreement) shall be
prorated among the parties on the basis of the Respective
Percentage of each. Accounts shall be rendered at quarterly
intervals and shall be settled within sixty (60) days
thereafter.
(d) FARMERS CASUALTY: Commencing with the effective date of
this Agreement, State Auto Mutual hereby agrees to pay Farmers
Casualty its Respective Percentage of the Net Premiums written
by the parties hereto. Similarly, commencing with the
effective date of this Agreement, all losses, loss expenses,
underwriting expenses, and administrative expenses chargeable
to underwriting of the parties hereto (except for losses, loss
expenses, underwriting expenses and administrative expenses
chargeable to the State Auto Mutual Reinsurance Book),
including policyholder dividends, less all losses and expenses
recovered and recoverable under reinsurance ceded to
reinsurers other than the parties hereto, (except for the
State Auto P&C Catastrophe Assumption Agreement) shall be
prorated among the parties on the basis of the Respective
Percentage of each. Accounts shall be rendered at quarterly
intervals and shall be settled within sixty (60) days
thereafter.
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(e) STATE AUTO IC: Commencing with the effective date of this
Agreement, State Auto Mutual hereby agrees to pay State Auto
IC its Respective Percentage of the Net Premiums written by
the parties hereto. Similarly, commencing with the effective
date of this Agreement, all losses, loss expenses,
underwriting expenses, and administrative expenses chargeable
to underwriting of the parties hereto (except for losses, loss
expenses, underwriting expenses and administrative expenses
chargeable to the State Auto Mutual Reinsurance Book),
including policyholder dividends, less all losses and expenses
recovered and recoverable under reinsurance ceded to
reinsurers other than the parties hereto, (except for the
State Auto P&C Catastrophe Assumption Agreement) shall be
prorated among the parties on the basis of the Respective
Percentage of each. Accounts shall be rendered at quarterly
intervals and shall be settled within sixty (60) days
thereafter.
8. OFFSET: It is understood and agreed that, insofar as is practicable
and consistent with the purposes and intentions of this Agreement, the
obligations of each company under this Agreement to transfer assets to
the other company may, in whole or in part, be offset against the
reciprocal reinsurance obligations of each company to the other company
so that each company shall deliver hereunder only a net amount of
assets required under such offset.
9. GENERAL STATEMENT OF INTENT: It is the purpose and intent of this
Agreement that:
(a) State Auto Mutual shall be liable as a reinsurer to State
Auto P&C, Milbank, Midwest Security, Farmers Casualty, and
State Auto IC on the policies and contracts of insurance of
State Auto P&C, Milbank, Midwest Security, Farmers Casualty
and State Auto IC respectively, issued and in force at 12:01
a.m., EST, January 1, 2000, or on which there were, at that
time, unsettled claims or losses, and on policies and
contracts thereafter issued by State Auto P&C, Milbank,
Midwest Security, Farmers Casualty and State Auto IC to the
extent of State Auto Mutual's Respective Percentage. Premiums,
losses, loss expenses, underwriting expenses and
administrative expenses chargeable to the State Auto Mutual
Reinsurance Book from and after 12:01 a.m. EST January 1, 2000
are excluded from the scope of the 2000 Pooling Agreement.
(b) State Auto P&C shall be liable as a reinsurer to State
Auto Mutual, Milbank, Midwest Security, Farmers Casualty and
State Auto IC on the policies and contracts of insurance of
State Auto Mutual, Milbank, Midwest Security, Farmers Casualty
and State Auto IC, respectively, issued and in force
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at 12:01 a.m., EST, January 1, 2000, or on which there were,
at that time, unsettled claims or losses, and on policies and
contracts thereafter issued by State Auto Mutual, Milbank,
Midwest Security, Farmers Casualty and State Auto IC to the
extent of State Auto P&C's Respective Percentage. Premiums,
losses, loss expenses, underwriting expenses and
administrative expenses chargeable to the State Auto Mutual
Reinsurance Book from and after 12:01 a.m. EST January 1, 2000
are excluded from the scope of the 2000 Pooling Agreement.
(c) Milbank shall be liable as a reinsurer to State Auto
Mutual, State Auto P&C, Midwest Security, Farmers Casualty and
State Auto IC on the policies and contracts of State Auto
Mutual, State Auto P&C, Midwest Security, Farmers Casualty and
State Auto IC, respectively, issued and in force at 12:01
a.m., EST, on January 1, 2000 or on which there were, at that
time, unsettled claims or losses and on policies thereafter
issued by State Auto Mutual, State Auto P&C, Midwest Security,
Farmers Casualty and State Auto IC to the extent of Milbank's
Respective Percentage. Premiums, losses, loss expenses,
underwriting expenses and administrative expenses chargeable
to the State Auto Mutual Reinsurance Book from and after 12:01
a.m. EST January 1, 2000 are excluded from the scope of the
2000 Pooling Agreement.
(d) Midwest Security shall be liable as a reinsurer to State
Auto Mutual, State Auto P&C, Milbank, Farmers Casualty and
State Auto IC on the policies and contracts of State Auto
Mutual, State Auto P&C, Milbank, Farmers Casualty and State
Auto IC, respectively, issued and in force at 12:01 a.m., EST,
on January 1, 2000 or on which there were, at that time,
unsettled claims or losses and on policies thereafter issued
by State Auto Mutual, State Auto P&C, Milbank, Farmers
Casualty and State Auto IC to the extent of Midwest Security's
Respective Percentage. Premiums, losses, loss expenses,
underwriting expenses and administrative expenses chargeable
to the State Auto Mutual Reinsurance Book from and after 12:01
a.m. EST January 1, 2000 are excluded from the scope of the
2000 Pooling Agreement.
(e) Farmers Casualty shall be liable as a reinsurer to State
Auto Mutual, State Auto P&C, Milbank, Midwest Security and
State Auto IC on the policies and contracts of State Auto
Mutual, State Auto P&C, Milbank, Midwest Security and State
Auto IC, respectively, issued and in force at 12:01 a.m., EST,
January 1, 2000 or on which there were, at that time,
unsettled claims or losses, and on policies and
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contracts thereafter issued by State Auto Mutual, State Auto
P&C, Milbank, Midwest Security and State Auto IC to the extent
of Farmers Casualty's Respective Percentage. Premiums, losses,
loss expenses, underwriting expenses and administrative
expenses chargeable to the State Auto Mutual Reinsurance Book
from and after 12:01 a.m. EST January 1, 2000 are excluded
from the scope of the 2000 Pooling Agreement.
(f) State Auto IC shall be liable as a reinsurer to State Auto
Mutual, State Auto P&C, Milbank, Midwest Security and Farmers
Casualty on the policies and contracts of State Auto Mutual,
State Auto P&C, Milbank, Midwest Security and Farmers
Casualty, respectively, issued and in force at 12:01 a.m.,
EST, January 1, 2000 or on which there were, at that time,
unsettled claims or losses, and on policies and contracts
thereafter issued by State Auto Mutual, State Auto P&C,
Milbank, Midwest Security and Farmers Casualty to the extent
of State Auto IC's Respective Percentage. Premiums, losses,
loss expenses, underwriting expenses and administrative
expenses chargeable to the State Auto Mutual Reinsurance Book
from and after 12:01 a.m. EST January 1, 2000 are excluded
from the scope of the 2000 Pooling Agreement.
(g) The parties hereto shall, on and after 12:01 a.m., EST,
January 1, 2000, participate on the basis of 46% for State
Auto Mutual, 39% for State Auto P&C, 10% for Milbank, 1% for
Midwest Security, 3% for Farmers Casualty, and 1% for State
Auto IC in all of the underwriting operations of each of the
six parties hereto. Premiums, losses, loss expenses,
underwriting expenses and administrative expenses chargeable
to the State Auto Mutual Reinsurance Book from and after 12:01
a.m. EST January 1, 2000 are excluded from the scope of the
2000 Pooling Agreement.
10. LOSSES EXCLUDED: Notwithstanding any of the foregoing, the parties
hereto understand and agree that this 2000 Pooling Agreement shall not
apply to catastrophe losses and loss expenses for residential and
commercial property to the extent such losses and loss expenses are
covered by the State Auto P&C Catastrophe Assumption Agreement. Once
the aforesaid $135,000,000 of coverage is exhausted by loss expenses
and loss payments on behalf of any party hereto, under either the State
Auto P&C Catastrophe Assumption Agreement or directly, all parties
understand and agree that catastrophe losses and loss expenses in
excess of $255,000,000 shall once again be ceded and assumed under the
terms of the 2000 Pooling Agreement. All premiums attributable to the
State Auto P&C Catastrophe Assumption Agreement are to be paid to State
Auto P&C outside of the 2000 Pooling Agreement. All premiums, losses,
loss expenses, underwriting expenses and administrative expenses
attributable
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to the State Auto Mutual Reinsurance Book from and after 12:01 a.m. EST
January 1, 2000 are outside the 2000 Pooling Agreement. In addition,
this 2000 Pooling Agreement is subject to the Reserve Guaranty
Agreement.
11. LIABILITIES EXCLUDED: In addition to the liabilities set forth in
paragraphs 2(a), 2(b), 2(c), 2(d), 2(e) and 10 above, this Agreement
shall not apply to the investment operation or liabilities for federal
income tax or other liabilities excluded by this Agreement.
12. "FOLLOW THE FORTUNES": The reinsurance provided by the terms of
this Agreement shall be subject to the same terms and conditions under
which the original insurance was concluded, or which may be or may have
been agreed to during the term of the original insurance contract.
13. METHODS AND PROCEDURES: The president of State Auto Mutual, State
Auto P&C, Milbank, Midwest Security, Farmers Casualty and State Auto
IC, or any officer of any of these companies designated by said
president, shall determine the methods and procedures, including
accounting transactions, by which the terms of this Agreement shall be
performed by and on behalf of the parties hereto.
14. AMENDMENTS: This Agreement may be modified from time to time, so as
to adapt its provisions to the varying conditions of the business of
the Pooled Companies, by a mutual agreement in writing of the parties
hereto, subject to ratification by the Board of Directors of each party
and with the approval of the insurance regulatory officials from the
State of Ohio, the State of South Carolina, the State of South Dakota,
the State of Wisconsin, and the State of Iowa as required by law.
15. TERM: This Agreement shall remain in full force and effect until
canceled by agreement of the parties or by the giving of ninety (90)
days notice by one of the parties to the other parties and to the
respective domiciliary insurance department of each of the parties.
16. INTERPRETATION: Wherever required to give the correct meaning
throughout this Agreement, the singular shall be interpreted in the
plural. Clerical errors or errors of involuntary or inadvertent
omission or commission shall not be interpreted as a discharge of
liability on behalf of any of the parties to this contract. Such errors
shall be rectified at the time of discovery or as soon as practicable
thereafter. Caption headings are for convenience only and are not
intended to affect the construction of the terms hereof.
17. INSOLVENCY: The reinsurance made under this Agreement (which the
parties understand and agree excludes the State Auto Mutual Reinsurance
Book for such business assumed on and after January 1, 2000) shall be
payable by the assuming reinsurer on the basis of the liability of the
ceding insurer under the contract or contracts reinsured without
diminution because of the insolvency of the ceding insurer. In the
event of insolvency
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of the ceding insurer, the liquidator or receiver or statutory
successor of such insurer shall give written notice to the assuming
reinsurer of the pendency of a claim against the insolvent ceding
insurer on the policy or bond reinsured within a reasonable time after
such claim is filed in the insolvency proceeding; that during the
pendency of such claim the assuming reinsurer may investigate such
claim and interpose, at its own expense, in the proceeding where such
claim is to be adjudicated any defense or defenses which it may deem
available to the ceding insurer or its liquidator or receiver or
statutory successors; that the expense thus incurred by the assuming
reinsurer shall be chargeable, subject to court approval, against the
insolvent ceding insurer as part of the expense of liquidation to the
extent of a proportionate share of the benefit which may accrue to the
ceding insurer solely as a result of the defense undertaken by the
assuming reinsurer. The reinsurance made effective under this Agreement
shall be payable by the assuming reinsurer to the ceding insurer or to
the liquidator, receiver or statutory successor of the ceding insurer.
18. ARBITRATION: In the event of any dispute hereafter arising with
respect to this Agreement, State Auto Mutual, State Auto P&C, Milbank,
Midwest Security, Farmers Casualty and State Auto IC hereby agree that
such dispute shall, upon the request of the one of the parties, be
submitted to arbitration. One arbitrator shall be chosen by each party
and those arbitrators shall then select an umpire who shall hear and
decide the issues to be arbitrated. If one party fails to name an
arbitrator within thirty (30) days after receipt of a written request
to do so, the party initiating the arbitration may choose the
arbitrators. The decision of the umpire shall be final and binding on
the parties. Each party shall bear the expense of its arbitrator and
the cost of the umpire shall be shared equally. The arbitration shall
take place at Columbus, Ohio or such other location upon which the
parties may mutually agree.
19. COUNTERPARTS: The 2000 Pooling Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of
which shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date and the year first above written.
Attest State Automobile Mutual
Insurance Company
/s/ Xxxx X. Xxxxxxx By /s/ Xxxxxx X. Xxxxx
-------------------------- ---------------------------------
Secretary President
State Auto Property and
Casualty Insurance Company
/s/ Xxxx X. Xxxxxxx By /s/ Xxxxxx X. Xxxxx
-------------------------- ---------------------------------
Secretary President
Milbank Insurance Company
/s/ Xxxx X. Xxxxxxx By /s/ Xxxxxx X. Xxxxx
-------------------------- ---------------------------------
Secretary President
Midwest Security
Insurance Company
/s/ Xxxx X. Xxxxxxx By /s/ Xxxxxx X. Xxxxx
-------------------------- ---------------------------------
Secretary President
Farmers Casualty
Insurance Company
/s/ Xxxx X. Xxxxxxx By /s/ Xxxxxx X. Xxxx
-------------------------- ---------------------------------
Assistant Secretary President
State Auto Insurance Company
/s/ Xxxx X. Xxxxxxx By /s/ Xxxxxx X. Xxxxx
-------------------------- ---------------------------------
Secretary President
