AGREEMENT OF REINSURANCE AND ASSUMPTION
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THIS AGREEMENT is made and entered into effective December 30, 1996 (the
"Effective Date") by and among Rockwood Casualty Insurance Company, a
Pennsylvania insurance company with its home office located at 000 Xxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxxxxxx 00000 (hereinafter called "Rockwood") and Premier Auto
Insurance Company, f/k/a Somerset Casualty Insurance Company, a Pennsylvania
insurance company with its home office located at 000 Xxxx Xxxxxx Xxxxxx Xxxxx,
Xxxxx 000, Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000 (hereinafter called "Premier").
W I T N E S S E T H:
WHEREAS, Rockwood is a duly licensed insurance company in the Commonwealth
of Pennsylvania, authorized to issue property and casualty insurance coverages,
including private passenger automobile insurance; and,
WHEREAS, Rockwood is admitted in and authorized to issue private passenger
automobile insurance in the State of West Virginia; and
WHEREAS, Rockwood issued private passenger automobile policies to various
insureds in the Commonwealth of Pennsylvania (the "Pennsylvania Policies") and
in the State of West Virginia (the "West Virginia Policies") on or before
December 31, 1996 (collectively the "Reinsured Policies"); and
WHEREAS, Premier is a duly licensed insurance company in the Commonwealth
of Pennsylvania authorized to issue property and casualty insurance, including
private passenger automobile insurance policies; and,
WHEREAS, Premier desires to assume Rockwood's Pennsylvania Policies and
reinsure Rockwood's West Virginia Policies and Rockwood desires to transfer its
liabilities under the Reinsured Policies to Premier pursuant to an Agreement of
Reinsurance and Assumption; and,
NOW, THEREFORE, in consideration of the foregoing and the provisions
hereinafter set forth, the parties, intending to be legally bound, hereby agree
as follows:
1. Transfer and Assumption of Rights and Liabilities of the Reinsured
Policies to Premier.
(a) Rockwood hereby transfers and assigns to Premier all of Rockwood's
rights and liabilities under the Reinsured Policies including all residual
market obligations incurred by Rockwood arising from premiums received on the
Pennsylvania
Policies. Premier will contact the Pennsylvania Assigned Risk Plan and inform
the Plan that Premier has assumed Rockwood's obligations to the Plan and ask the
Plan to assign all of Rockwood's assignments to Premier. Any Reinsured Policy
renewed by Premier after the Effective Date of this Agreement shall be the sole
obligation of Premier and shall not be a Reinsured Policy for purposes of this
Agreement for any right or obligation arising subsequent to the renewal date.
(b) Premier hereby assumes all existing and future rights and obligations
of Rockwood under the Pennsylvania Policies, including the right and obligation
to renew, terminate or cancel the Reinsured Policies, with the same effect as if
the Pennsylvania Policies had been originally issued by Premier and hereby
covenants to Rockwood that it shall fully satisfy all obligations owing under
the Pennsylvania Policies. It is the intention of the parties hereto that
Premier's assumption of Rockwood's rights and obligations under the Pennsylvania
Policies is absolute and unconditional and that Rockwood shall have no further
rights or obligations under the Pennsylvania Policies. Premier also hereby
assumes all obligations for servicing the Pennsylvania Policies, including but
not limited to the defense and direct payment of claims, the collection of
premiums, and the management of agency and policyholder relations.
(c) Premier hereby reinsures all existing and future obligation of Rockwood
under the West Virginia Policies and Premier hereby covenants to Rockwood that
it shall fully satisfy all obligations owing under the West Virginia Policies.
Premier also hereby assumes all obligations for servicing the West Virginia
Policies, including but not limited to the defense and direct payment of claims,
the collection of premiums, and the management of agency and policyholder
relations.
(d) On the Effective Date, Rockwood shall transfer to Premier, subject to
Premier's obligation to establish and fund the Collateral Account under the
terms and conditions set forth in Paragraph 7 (b) hereof, one hundred percent
(100%) of the Gross Premiums for the Reinsured Policies, less claims and
expenses paid under the Reinsured Policies through the Effective Date.
(e) Premier hereby agrees to reimburse Rockwood for all obligations to
agents who produced the Reinsured Policies pursuant to profit sharing agreements
with Rockwood and all residual market obligations of Rockwood arising from
premium received on the Reinsured Policies.
(f) Premier will offer agency agreements to all appointed Rockwood agents
writing personal passenger automobile business which agreements shall contain
substantially the same terms and conditions as their Rockwood contracts. Premier
shall reimburse Rockwood for any commission obligations arising out of its
termination of its personal passenger automobile agents.
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(g) Rockwood shall deliver to Premier originals or copies of all files and
other documents, if any, maintained by Rockwood with respect to the Reinsured
Policies, and Rockwood shall deliver to Premier any notices of claim and such
other documentation or communications respecting the Reinsured Policies assumed
by Premier received by Rockwood subsequent to the Effective Date of this
Agreement promptly upon receipt thereof.
(h) Rockwood hereby assigns and agrees to promptly remit to Premier any and
all premiums collected by Rockwood on the Reinsured Policies.
(i) Premier shall issue an assumption certificate to each Pennsylvania
Policy on or before the Effective Date in substantially the form attached hereto
as Exhibit "A" or such form as approved by the Pennsylvania Insurance
Department. At the same time, Premier shall send a Request for Consent for
Transfer to each Pennsylvania Policyholder in the form attached hereto as
Exhibit "B".
(j) In order to facilitate a smooth transition for this assumption,
Rockwood shall deliver to Premier all materials and information necessary for
the administration of the Reinsured Policies and all pending and closed claims
on the Effective Date or such sooner date as the parties may agree to.
(k) Rockwood and Premier agree to cooperate in obtaining all appropriate
consents or approvals of insurance regulatory authorities with respect to this
Agreement.
(l) Premier acknowledges that it is not authorized by this Agreement or
otherwise to issue any policy forms which bear Rockwood's name or logo provided,
however, that Premier may fulfill requests for duplicate certificates or
policies with Rockwood's forms accompanied by an explanation that Premier is the
assuming reinsurer.
2. Definitions
A. The term Accident Year as used in this Agreement shall mean those
Reinsured Policies with an inception, renewal or anniversary date
during the twelve (12) months commencing each January 1, and all
premium attributable to, and all losses arising out of such Reinsured
Policies from such inception, renewal or anniversary date until
expiration, cancellation, or next anniversary, whichever occurs first,
will be ascribed to the accident year.
B. The term Reinsured Policy as used in this Agreement shall mean any
binder, policy, certificate or contract of insurance issued, accepted
or held, covered provisionally or otherwise, by or on
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behalf of Rockwood which results in private passenger automobile
insurance.
C. The term Gross Premium as used in this Agreement shall mean all of the
premiums and any other fees as received by the Company from
policyholders on account of the Reinsured Policies, less returns and
adjustments.
D. The term Allocated Loss Adjustment Expense as used in this Agreement
shall mean all costs and expenses allocable to a specific claim that
are incurred in the investigation, appraisal, adjustment, settlement,
litigation, defense or appeal of a specific claim, including court
costs and costs of supersedeas and appeal bonds, and including
post-judgment interest and pre-judgment interest and shall be in
addition to the limit of liability hereon. However, allocated loss
adjustment expense does not include unallocated claim expenses such as
salaries and expenses of employees, office and overhead expenses.
3. Effective Date.
The Effective Date of the transaction contemplated in this Agreement shall
be 12:01 a.m. on December 31, 1996.
4. Conditions Precedent
The obligations of Rockwood and Premier hereunder are subject to the prior
satisfaction of each of the following conditions precedent:
(a) Premier shall have obtained the written consent of the Commissioner of
the Pennsylvania Insurance Department and the Department of Insurance of any
state in which a Reinsured Policy was issued to the transfer and assumption and
to the consent form attached hereto as Exhibit "B".
(b) Rockwood shall have transferred to Premier all funds agreed to herein.
(c) Premier shall have established and funded the Collateral Account as set
forth in Paragraph 7 (b) herein.
5. Representations and Warranties.
Rockwood and Premier warrant that each is authorized to enter into the
arrangement described in this Agreement. Rockwood represents that none of its
agency
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contracts with agents writing personal passenger automobile insurance has been
in existence for more than four years.
6. Extra Contractual Obligations.
Premier specifically agreed and acknowledges that it has assumed
responsibility for any extra contractual obligation, including punitive damages
and loss in excess of policy limits, incurred by Rockwood arising out of the
Reinsured Policies. Extra Contractual Obligations are defined as those
liabilities not covered under any other provision of this Agreement and which
arise from the handling of any claim under the Reinsured Policies, such
liabilities arising because of, but not limited to, the following: failure by
Rockwood or Premier to settle within policy limits, or by reason of alleged or
actual negligence, fraud or bad faith in rejecting an offer of settlement or in
the preparation of the defense or in the trial of any action against its insured
or in the preparation or prosecution of any appeal upon such action or for any
other action for which Rockwood is deemed to be liable whether or not such loss
is covered by or within the limits of the Reinsured Policies.
The date on which any extra contractual obligation is incurred by Rockwood
shall be deemed, in all circumstances, to be the date of the original loss.
This Paragraph shall not apply where the loss has been incurred due to a
fraud of a member of the Board of Directors or a corporate officer of Rockwood
acting individually or collectively or in collusion with any individual or
corporation or any other organization or party involved in the presentation,
defense or settlement of any claim covered hereunder, committed subsequent to
December 31, 1996.
7. Indemnification.
(a) Premier agrees to defend, indemnify and hold harmless Rockwood, its
officers, directors, agents, employees and affiliates from and against any and
all liability, costs, damages and expense, including reasonable attorneys' fees,
incurred in connection with any and all claims or actions by any party against
Rockwood based upon, arising out of, or related to the Reinsured Policies
including Extra Contractual Obligations as set forth in Paragraph 6 hereof.
(b) Premier shall deposit with Rockwood on the Effective Date an amount
equal to one hundred percent (100&) of the unearned Gross Premium and eighty
percent (80%) of the earned Gross Premium on the Reinsured Policies ("Collateral
Account"). The Collateral Account shall be held by Rockwood in a segregated,
interest bearing account which shall be under the exclusive control of Rockwood
but which shall be owned by Premier.
(c) The funds held in the Collateral Account may not be used by Rockwood
for any purpose except for: (1) payments to Premier as set forth in Paragraph
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7(e); or (2) in the event that Premier shall fail to perform its obligations
under this Agreement, for the payment of losses, allocated loss adjustment
expenses and unearned premiums liabilities, in connection with the Reinsured
Policies.
(d) Within forty five (5) days following the end of each calendar quarter,
Premier will render an accounting to Rockwood for the Reinsured Policies by
Accident Year. The report will include written premiums, earned and unearned
premiums, losses and allocated loss adjustment expense paid and an actuarial
evaluation of losses and allocated loss adjustment expenses by Accident Year
("Quarterly Accounting"). If any Quarterly Accounting indicates that unpaid
losses, including incurred by not reported losses, exceed the amounts held in
the Collateral Account, Premier shall within ten (10) days of the Quarterly
Accounting, deposit into the Collateral Account cash in the amount of the
difference between the total unpaid losses and the amount in the Collateral
Account.
(e) Within fifteen (15) days following the end of each calendar quarter,
Premier shall file with Rockwood a quarterly statement of (1) the losses and
allocated loss adjustment expenses paid during the prior quarter and (2) the
amount of premium which was earned during the prior quarter ("Quarterly
Statement"). Within fifteen (15) days of receipt of the Quarterly Statement,
Rockwood shall release to Premier from the Collateral Account: (1) an amount
equal to the loss and allocated loss adjustment expense paid by Premier during
the prior quarter; (2) twenty percent (20%) of the amount of premium which
became earned during the prior quarter; and (3) the amount of reserves held on
any Pennsylvania Policy where the policyholder has executed a Consent in the
form set forth in Exhibit "B" hereto.
(f) Premier agrees to defend, indemnify and hold harmless Rockwood from any
and all damages, claims, demands, liabilities or expenses (including, without
limitation court costs and attorneys' fees) (collectively, "Liabilities") which
Rockwood may suffer or incur resulting from, related to or arising out of any
Liabilities arising out of this Agreement of Reinsurance and Assumption and the
assumption certificates issued pursuant thereto including, but not limited to
primary liabilities and residual liabilities.
(g) The representations, warranties, and agreements of the parties
contained in this Agreement shall survive the transfer on the Effective Date of
the rights and obligations under the Reinsured Policies. The indemnification
provisions set forth herein are not intended as exclusive remedies. Each party
shall have the right to pursue such legal or equitable remedies as may be
available for any breach of this Agreement.
(h) If Rockwood learns of any matter for which it asserts Premier is liable
under this Paragraph, Rockwood shall promptly notify Premier in writing of the
existence of such matter. Premier shall have the obligation at its sole expense
and in the name of Rockwood to contest any matter involving a third party for
which indemnification or defense has been sought by Rockwood. As requested by
Premier, Rockwood shall cooperate with Premier in such contest provided any
expenditures incurred in such cooperation shall be
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paid by Premier. If Premier does not serve on Rockwood a written notice of its
intention to defend or does not commence to contest any matter within twenty
days after receipt of notice from Rockwood of the existence of such matter or if
Premier disputes it is liable to Rockwood for any such sum, Rockwood shall have
full right and power to defend or otherwise deal with and dispose of the matter
and to receive indemnification therefor from Premier. Rockwood shall not pay or
otherwise settle, compromise or deal with any matter for which Premier may be
liable for indemnification under this Paragraph so long as Premier is contesting
the matter in good faith pursuant to this Agreement, and no final judgment has
been entered against Rockwood.
(i) Any controversy or claim arising out of or relating to this Agreement,
or any breach hereof, including, without limitation, any claim that this
Agreement or any part hereof is invalid, illegal or otherwise voidable or void,
shall be submitted to binding arbitration in Harrisburg, Pennsylvania in
accordance with the rules of the American Arbitration Association, and any
judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof.
8. Inspection
Premier shall place at the disposal of Rockwood at all reasonable times,
and Rockwood shall have the right to inspect, through its authorized
representatives, all books, records and papers of Premier in connection with
Premier's service of the Reinsured Policies. Rockwood shall place at the
disposal of Premier at all reasonable times, and Premier shall have the right to
inspect, through its authorized representatives, all books, records, and papers
of Rockwood in connection with the Reinsured Policies.
9. Insolvency
In the event of the insolvency of Rockwood, Premier agrees that its
obligations hereunder are payable directly to Rockwood or to its statutory
rehabilitator or liquidator without diminution because of Rockwood's insolvency.
10. General.
(a) Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania, without giving
effect to principles of conflicts of law thereof.
(b) Further Assurances. The parties hereto agree to execute and deliver any
and all papers and documents necessary to complete the transactions contemplated
hereby.
(c) Binding Effect. This Agreement shall be binding upon the parties hereto
and their respective successors and assigns; provided, however, that this
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Agreement and all rights hereunder may not be assigned by any party hereto
without the written consent of the other party.
(d) Exhibits. All of the Exhibits attached to this Agreement are hereby
incorporated herein and made a part hereof.
(e) Entire Agreement. This Agreement contains the entire agreement among
the parties hereto and there are no agreements, representations or warranties
which are not set forth herein. All prior negotiations, agreements and
understandings are superseded hereby. This Agreement may not be amended or
revised except by a writing signed by all parties hereto. No representation,
promise, inducement or statement of intention has been made by any party hereto
other than as set forth in the Agreement.
(f) Inspection. Either party shall have the right at any reasonable time,
to inspect at the office of the other party, all books and documents relating to
the Reinsured Policies.
(g) Severability. Inapplicability or unenforceability of any provision of
this Agreement shall not limit or impair the operation or validity of any other
provision of this Agreement.
(h) Currency. The currency to be used for all purposes of this Agreement
shall be United States of America currency.
(i) Notices. Any notice, authorization, request or demand required or
permitted to be given hereunder shall be in writing and shall be sent for
overnight delivery through Federal Express, Express Mail or United Parcel
Service.
TO ROCKWOOD: Xxxx X. Xxxxxx
Rockwood Casualty Insurance Company
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
TO PREMIER: Xxxxxxx X. Xxxxxxxx
Premier Auto Insurance Company
000 Xxxx Xxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000
IN WITNESS WHEREOF, and intending to be legally bound, the parties have
executed this Agreement on the date(s) stated below.
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ROCKWOOD CASUALTY INSURANCE PREMIER AUTO INSURANCE
COMPANY COMPANY
By:_________________________________ By:___________________________
Title:______________________________ Title:________________________
Date:_______________________________ Date:_________________________
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IMPORTANT NOTICE
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This Certificate forms a part of your policy as a policyholder of Rockwood
Casualty Insurance Company and should be attached thereto.
CERTIFICATE OF ASSUMPTION
--------------------------------------------
This Is To Certify That
This Policy Of
Rockwood Casualty Insurance Company
Policy No.______________
Has Been Assumed By
Premier Auto Insurance Company
000 Xxxx Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Premier Auto Insurance Company has taken responsibility for and agreed to carry
out all of the obligations of your personal passenger automobile policy with
Rockwood Casualty Insurance Company.
The transfer of responsibility to Premier was completed following the approval
of the Insurance Department of the Commonwealth of Pennsylvania.
All premiums now or hereafter due on this policy, requests for service, claims
or any other correspondence should be sent to Premier Auto Insurance Company or
to your agent.
IN WITNESS WHEREOF, Premier Auto Insurance Company has caused this Certificate
of Assumption to be executed on this ______ day of _________________, 1997.
------------------------------- -------------------------------------
PRESIDENT PRESIDENT
ROCKWOOD CASUALTY INSURANCE CO. PREMIER AUTO INSURANCE CO.
000 Xxxx Xxxxxx 000 Xxxx Xxxxxx Xxxxxx Xx., Xxxxx 000
Xxxxxxxx, Xxxxxxxxxxxx 00000 Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000
FORM NO.________________
EXHIBIT "A "
IMPORTANT: THIS DOCUMENT CONTAINS INFORMATION REGARDING YOUR
CONTRACT RIGHTS. PLEASE READ IT CAREFULLY.
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REQUEST FOR CONSENT TO TRANSFER OF POLICY
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Premier Auto Insurance Company ("Premier") has agreed to replace the Rockwood
Casualty Insurance Company ("Rockwood") as your insurer under Policy No(s).
_________ effective on ______________ (date). Premier is a duly licensed
insurance company in the Commonwealth of Pennsylvania authorized to issue
private passenger automobile insurance policies as of ___________________
(date). Premier's principal place of business is 502 Xxxx Xxxxxx Xxxxxx Xxxxx,
Xxxxx 000, Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000.
There will be no change in the terms and conditions of your policy as a result
of a transfer between Rockwood and Premier.
Your Rights
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You may choose to accept or reject the transfer of your policy to Premier. If
you want your policy transferred to Premier, you should sign and date this
consent and return it in the enclosed preaddressed, postage-paid envelope. If
you do not wish to consent to the transfer of your policy to Premier, you may
keep your policy with Rockwood until its renewal date. Regardless of whether or
not you accept the transfer, your policy will be serviced by Premier and all
further premium payments, claims inquiries or other policy services should be
directed to Premier at the address noted above or through its qualified agents.
In addition, whether or not you accept or reject the transfer, at its annual
renewal, your policy will be terminated by Rockwood and a new policy will be
offered to you by Premier.
Effect of Transfer
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If you accept this transfer, Premier Auto Insurance Company will be your
insurer. It will have direct responsibility to you for the payment of all
claims, benefits and for all other policy obligations, both past and future.
Rockwood Casualty Insurance Company will be released of all of its obligations
to you under the policies.
If you have any further questions about this agreement, you may contact either
Premier or your agent.
Sincerely,
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Rockwood Casualty Insurance Company Premier Auto Insurance Company
REQUEST FOR CONSENT TO TRANSFER OF POLICY
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Yes, I accept the transfer of my automobile insurance policy, Policy No(s).
_______________ from Rockwood Casualty Insurance Company to Premier Auto
Insurance Company and I understand that this transfer replaces Rockwood with
Premier in regard to
any and all obligations under the policies.
(Date)_________________________ (Signature)____________________________
FOR:
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(Name of Policyholder)
