EXHIBIT 10.19 (i)
ADDENDUM SIX
to
MANAGEMENT AGREEMENT NO. 1
between
USBENEFITS INSURANCE SERVICES, INC.
and
THE CONTINENTAL INSURANCE COMPANY
AMENDED PROVISIONS
------------------
THIS AGREEMENT is hereby amended for any and all business covered by this
Agreement in the State of Indiana as set forth below. The parties ratify and
confirm all of the other provisions of this Agreement executed by the parties
effective as of January 1, 1994.
A. Section 3 - DUTIES AND RESPONSIBILITIES OF THE UNDERWRITING MANAGER
Add as 3.10: The Underwriting Manager shall not do any of the following:
(a) bind reinsurance or retrocessions on behalf of the
Company; (b) commit the Company to participate in insurance
or reinsurance syndicates; (c) appoint any producer without
assuring the Company that the producer is lawfully licensed
to transact the type of insurance which is the subject of
this Agreement; (d) without the prior approval of the
Company, commit the Company to pay a claim over a specified
amount, net of reinsurance, that shall exceed one percent
(1%) of the Company's policyholder surplus as of December 31
of the last completed calendar year before said payment or
commitment; (e) collect any payment from a reinsurer or
commit the Company to any claim settlement with a reinsurer
without the prior approval of the Company; (f) permit its
subproducer to serve on the Company's board of directors; (g)
jointly employ an individual who is employed with the
Company; or (h) appoint a sub-underwriting manager or sub-
managing general agent. In the event the Underwriting Manager
is given prior approval to commit the Company to any claim
settlement with a reinsurer, the Underwriting Manager shall
promptly forward to the Company a report of such claim
settlement.
B. Section 4 - PREMIUMS is modified as follows:
4.3 Add to this subsection: The Underwriting Manager will render accounts
to the Company detailing all transactions and will remit all funds due
under this Agreement to the Company on not less than a monthly basis.
C. Section 7 - RECORDS AND REPORTS
7.1 Add to this subsection: The Company shall have access to and the right
to copy all accounts and records of the Underwriting Manager related
to the business of the Company which is the subject of this Agreement
in a form usable by the Company, and the Commissioner of the Indiana
Department of Insurance shall have access to all books, bank accounts,
and records of the Underwriting Manager in a form usable to the
Commissioner of the Indiana Department of Insurance.
D. Section 6 - MANAGEMENT OF CLAIMS AND LOSSES is amended as follows:
6.3 Add to this subsection: Any settlement authority granted to the
Underwriting Manager by the Company under this Agreement may be
terminated for cause upon the Company's written notice to the
Underwriting Manager or upon the termination of this Agreement. The
Company may suspend the settlement authority of the Underwriting
Manager during the pendency of any dispute regarding the cause for
termination of said authority.
E. ADDENDUM ONE
1. Type of Business Covered is amended by adding the following: The
maximum policy period is one (1) year.
8. Policy Cancellation Provisions is amended by adding the following: The
Company shall have the right to cancel or nonrenew any policy of
insurance issued pursuant to this Agreement subject only to policy
provisions and applicable state laws and regulations concerning those
actions.
-2-
IN WITNESS WHEREOF, the parties hereto by their respective duly authorized
officers have caused this Addendum Six to be executed in triplicate this 20th
day of April, 1995.
The Continental Insurance Company
By: /s/ Xxxxxx Xxxxxx
-----------------------------------
Witnessed: /s/ Xxxxx Xxxxxxx
----------------------------
USBenefits Insurance Services, Inc.
By: /s/ Xxxx X. Xxxxx
-----------------------------------
Xxxx X. Xxxxx, President and
Chief Executive Officer
Witnessed: /s/ Xxxx X. Xxxxxxx
----------------------------
Xxxx X. Xxxxxxx, Senior Vice
President, Secretary and
General Counsel
-3-
ADDENDUM SIX
to
MANAGEMENT AGREEMENT NO.1
between
USBENEFITS INSURANCE SERVICES, INC.
and
THE CONTINENTAL INSURANCE COMPANY
AMENDED PROVISIONS
THIS AGREEMENT is hereby amended for any and all business covered by this
Agreement in the State of Montana as set forth below. The parties ratify and
confirm all of the other provisions of this Agreement executed by the parties
effective as of January 1, 1994.
A. Section 3 - DUTIES AND RESPONSIBILITIES OF THE UNDERWRITING MANAGER
Add as 3.10: The Underwriting Manager shall not (a) appoint any producer
without ensuring the Company that the producer it appoints is
lawfully licensed to transact the type of insurance which is
the subject of this Agreement; (b) permit any of its
subproducers to serve on the Company's board of directors; or
(c) jointly employ an individual who is also employed with
the Company.
B. ADDENDUM ONE
8. Policy Cancellation Provisions is amended by the addition of the
following: The Company may cancel or decline to renew any policy of
insurance, as provided by law.
C. ADDENDUM FOUR is amended as follows:
2. Crime Policy
The Underwriting Manager shall maintain a crime policy covering any losses
which may occur as a result of the Underwriting Manager's misuse or
improper investment of funds held by the Underwriting Manager on behalf of
the Company
in an amount equal to the greater of $100,000 or five percent (5%) of the
gross direct written premium underwritten by the Underwriting Manager on
behalf of the Company.
IN WITNESS WHEREOF, the parties hereto by their respective duly authorized
officers have caused this Addendum Six to be executed in duplicate this 14th day
of June, 1995.
The Continental Insurance Company
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Witnessed: /s/ M. A. XxXxxxxx
------------------------------
USBenefits Insurance Services, Inc.
By: /s/ Xxxx X. Xxxxx
----------------------------------
Witnessed: /s/ Xxxx X. Xxxxxxx
------------------------------
ADDENDUM SIX
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to
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MANAGEMENT AGREEMENT NO. 1
--------------------------
between
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USBENEFITS INSURANCE SERVICES, INC.
-----------------------------------
and
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THE CONTINENTAL INSURANCE COMPANY
---------------------------------
AMENDED PROVISIONS
------------------
STATE of MISSOURI
-----------------
THIS AGREEMENT is hereby amended for any and all business covered by this
Agreement in the State of Missouri as set forth below. The parties hereto ratify
and confirm all of the other provisions of this Agreement executed by the
parties effective as of January 1, 1994.
Attached hereto is a Managing General Agent's Contract ("Contract")
between The Continental Insurance Company ("Insurer") and USBenefits
Insurance Services, Inc. ("MGA") dated June 21, 1995 for the State of
Missouri in the form prescribed by the State of Missouri Department of
Insurance which complies with the requirements of the Missouri Managing
General Agents Act (Sections 375.147 to 375.153, RSMo). The parties hereto
agree that the terms and conditions of the Contract shall apply only with
respect to business written in the State of Missouri and that this
Agreement shall continue to govern the terms and conditions of the
relationship between The Continental Insurance Company and USBenefits
Insurance Services, Inc. If there is a conflict between the terms and
conditions of the Contract and this Agreement, the latter shall control
unless a contrary result is clearly required by applicable Missouri law,
in which event such result shall be applicable only with respect to
Missouri business.
IN WITNESS WHEREOF, the parties hereto by their respective duly authorized
officers have caused this Addendum Six to be executed in duplicate this 21st day
of June 1995.
The Continental Insurance Company USBenefits Insurance Services, Inc.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxx
--------------------------------- ---------------------------------
Witness: /s/ M. A. XxXxxxxx Witness: /s/ Xxxxxxx X. Gunckick
---------------------------- ----------------------------
2
[SEAL STATE OF MISSOURI
APPEARS DEPARTMENT OF INSURANCE X.X. XXX 000
HERE] MANAGING GENERAL AGENTS (MGA) XXXXXXXX XXXXXXXXX XXXX, XX 00000-0000
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MANAGING GENERAL AGENT'S CONTRACT
Article - Preamble
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(1) The parties to this agreement are:
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(a) THE INSURER
The Continental Insurance Company ("Insurer")
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and
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(b) MANAGING GENERAL AGENT OR MGA
USBenefits Insurance Services, Inc. ("MGA")
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(2) The promises and agreements made by the insurer in this managing general
agent's contract are made in consideration of the promises and agreements
made by the managing general agent. The promises and agreements made by the
managing general agent in this managing general's contract are made in
consideration of the promises and agreements made by the insurer.
(3) This written managing general agent's contract contains the entire
agreement of the insurer and the managing general agent.
(4) This managing general agent's contract will not become effective until
signed by the insurer and the managing general agent, and is filed with and
approved by the director of insurance of the state of Missouri.
Article II - Mandatory Provisions
Not withstanding any provision in this managing general agent's contract or
any other written, oral or parol agreement to the contrary, the following
provisions are binding upon the insurer and the managing general agent:
(1) The insurer may terminate the contract for cause upon written notice to the
managing general agent. The insurer may suspend the underwriting authority
of the managing general agent during the pendency of any dispute regarding
the cause for termination. Nothing in this section is intended to relieve
the managing general agent or insurer of any other contractual obligation;
(2) The managing general agent will render accounts to the insurer detailing
all transactions and remit all funds due under the contract to the insurer
on not less than a monthly basis;
(3) All funds collected for the account of an insurer will be held by the
managing general agent in a fiduciary capacity in a segregated account in a
bank which is a member of the Federal Reserve System. This account shall be
used for all payments on behalf of the insurer and for no other purpose.
The managing general agent may retain no more than three months' estimated
claim payments and allocated loss adjustment expenses;
(4) Separate records of business written by the managing general agent shall be
maintained. The insurer shall have access and right to copy all accounts
and records related to its business in a form usable by the insurer and the
director or insurance of the state of Missouri shall have access to all
books, bank accounts and records of the managing general agent in a form
usable to the director. Such records shall be retained for a minimum of
three years following the transactions to which the records relate;
(5) This contract may not be assigned in whole or in part by the managing
general agent.
(6) Appropriate underwriting guidelines are established in Article III of this
managing general agent's agreement;
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MO 375-0038(8/91)
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(7) The insurer shall retain the right to cancel or not renew any policy of
insurance subject to the applicable laws and regulations concerning the
cancellation and nonrenewal of insurance policies;
(8) This managing general agent's contract [X] does [ ] does not permit the
managing general agent to settle claims on behalf of the insurer. If this
managing general agent's contract permits the managing general agent to
settle claims on behalf of the insurer.
(a) All claims must be reported to the insurer in a timely manner.
(b) A copy of the claim will be sent to the insurer at its request or as
soon as it becomes known that the claim:
a. Has the potential to exceed $24,000 or exceeds the limit set by
the insurer, ($ 50,000), whichever is less;
b. Involves a coverage dispute;
c. May exceed the managing general agent's claims settlement
authority;
d. Is open for more than six months; or
e. Is closed by payment of $24,000 or the amount set by the insurer,
whichever is less.
(c) All claim files will be the joint property of the insurer and
managing general agent. However, upon an order of liquidation of the
insurer such files shall become the sole property of the insurer or
its estate, but the managing general agent shall have reasonable
access to and the right to copy the files on a timely basis;
(d) Any settlement authority granted to the managing general agent may be
terminated for cause upon the insurer's written notice to the
managing general agent or upon the termination of the contract. The
insurer may suspend the settlement authority during the pendency of
the dispute regarding the cause of termination. Nothing in this
paragraph is intended to relieve the managing general agent or
insurer or any other contractual obligation.
(e) Article III contains other provisions relating to the settlement of
claims by the managing general agent on behalf of the insurer.
(9) Electronic claims files [ ] are [X] are not in existence. If such files
are in existence, Article III of this managing general agent's contract
will contain provisions which govern the timely transmission of the data
by the managing general agent to the insurer.
(10) This contract [ ] does [X] does not provide for a sharing of interim
profits by the managing general agent. If this contract does provide for
such sharing, then:
(a) provisions for such sharing are described in Article III of this
managing general agent's contract.
(b) If the managing general agent has the authority to determine the
amount of the interim profits by establishing loss reserves or
controlling claim payments, or in any other manner, interim profits
will not be paid to the managing general agent until one year after
they are earned for property insurance business and five years after
they are earned on casualty business and not until the profits have
been verified pursuant to the Missouri Managing General Agents Act.
(11) The managing general agent shall not:
(a) bind reinsurance or retrocessions on behalf of the insurer. The
managing general agent (however, [ ] may [X] may not) bind
facultative reinsurance contracts pursuant to obligatory facultative
agreements. If the managing general agent is permitted to bind
facultative reinsurance contracts, this managing general agent's
contract will contain in Article III reinsurance underwriting
guidelines, including, for both reinsurance assumed and ceded, a list
of reinsurers with which such automatic agreements are in effect, the
coverages and amounts or percentages that may be reinsured and
commission schedules;
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MO 375-0038 (8/91)
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(b) Commit the insurer to participate in insurance or reinsurance
syndicates;
(c) Appoint any producer without assuring that the producer is lawfully
licensed to transact the type of insurance for which he is appointed;
(d) Without prior approval of the insurer, pay or commit the insurer to
pay a claim over a specified amount, net of reinsurance, which shall
not exceed one percent of the insurer's policyholder's surplus as of
December 31 of the immediately preceding calendar year.
(e) Collect any premium from a reinsurer or commit the insurer to any
claim settlement with a reinsurer; without prior approval of the
insurer. If prior approval is given, a report must be promptly
forwarded to the insurer;
(f) Permit its subproducer to serve on its board of directors;
(g) Jointly employ an individual who is employed with the insurer; or
(h) Appoint a subordinate managing general agent.
Article III - Optional Provisions
(1) The following are underwriting guidelines for the managing general agent
(see Article II(6)):
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(A) THE MAXIMUM ANNUAL PREMIUM VOLUME
$200,000,000 of gross written premiums per calendar year.
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(B) THE BASIS OF THE RATES TO BE CHARGED
Rating Guidelines are set forth in the MGA's Rating Manual on file with
the Insurer. The MGA shall promptly advise & provide the Insurer with any
amendment or modification to such Rating Manual.
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(C) THE TYPES OF RISKS WHICH MAY BE WRITTEN
Medical stop-loss business, also known as excess or stop-loss insurance.
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(D) MAXIMUM LIMITS OF LIABILITY
See Attached.
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(E) APPLICABLE EXCLUSIONS
Excluded self-insured health benefit plans: (1) Multiple Employer Welfare
Association (MEWAs); (2) Multiple Employers Trusts (METs); and (3)
Associations
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(F) TERRITORIAL LIMITATIONS
The United States of America, including the District of Columbia, but
excluding U.S. territories and possessions.
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(G) POLICY CANCELLATION PROVISIONS
All policies issued by the MGA on behalf of the Insurer shall adhere to the
cancellation provisions contained in the policies, except for any
amendatory cancellation endorsements which may be required by the insurance
laws of the states where the policies are issued.
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(H) THE MAXIMUM POLICY PERIOD
12-month period.
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(I) OTHER UNDERWRITING GUIDELINES
None.
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MO 375 0038 (8/91)
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(2) The following provisions govern the settlement of claims by the managing
general agent on behalf of the insurer (see Article II (8)(c):
All claim files will be the joint property of the Insurer and the MGA.
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However, upon an order of liquidation of the Insurer such files shall become
the sole property of the Insurer or its estate, but the MGA shall have
reasonable access to and the right to copy the files on a timely basis.
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(3) The following provisions govern the timely transmission of data in
electronic claims files by the managing general agent to the insurer
(see Article II (9)):
Where electronic claims files are in existence, any electronic transmission
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of claims data shall be submitted by the MGA to the Insurer on a timely basis
no later than fifteen (15) days after the end of each calendar month.
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(4) The following provisions govern the sharing of interim profits by the
managing general agent (see Article II (10)):
If this Agreement is ever amended to provide for a sharing of interim profits
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by the MGA, and the MGA has the authority to determine the amount of the
interim profits by establishing loss reserves or controlling claim payments,
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or in any other manner, interim profits will not be paid to the MGA until one
(1) year after they are earned for property insurance business and five (5)
years after they are earned on casualty business, and not until the profits
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have been verified.
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MO 375-0038 (8/91)
(5) The following provisions govern reinsurance underwriting guidelines, for
both reinsurance assumed and ceded, for the binding by the managing
general agent of facultative reinsurance contracts (see Article II
(11)(b)):
The MGA shall not commit the Insurer to participate in insurance or
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reinsurance syndicates.
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(a) list of reinsurers with which obligatory facultative reinsurance
agreements are in effect:
None.
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(b) the coverages and amounts or percentages that may be reinsured:
Not Applicable.
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MO 375-0038 (8/91)
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(c) commission schedules:
Not Applicable.
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(d) other provisions relating to underwriting guidelines for facultative
reinsurance:
Not Applicable.
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Article IV - Other Provisions
(1) The provisions of this Article IV are in addition to and not in lieu of the
provisions of Articles I, II, and III. The provisions of Articles I, II and
III shall be construed wherever possible as not in conflict and not in
place of this Article IV, but as minimum requirements in addition to this
Article IV only in the event of irreconcilable conflict, the provisions of
Articles I, II and III will prevail over the provisions of this Article IV.
None.
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SIGNATURE DATE
Xxxxx X. Xxxxxx June 21, 1995
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NAME TITLE
/s/ Xxxxx X. Xxxxxx Group Vice President
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INSURER
The Continental Insurance Company ("Insurer")
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SIGNATURE DATE
/s/ Xxxx X. Xxxxx June 21, 1995
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NAME TITLE
Xxxx X. Xxxxx President & Chief Executive Officer
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MANAGING GENERAL AGENT
USBenefits Insurance Services, Inc. ("MGA")
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MO 375-0038 (8/91)
ATTACHMENT
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ITEM (D) - Maximum Limits of Liability
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(1) Specific excess insurance: Reimbursement is limited to 100% of payments
-------------------------
made by the insured in excess of the specific attachment point specified in
the policy, subject to a specific lifetime maximum of $2,000,000; and (2)
Aggregate excess insurance: Reimbursement is limited to 100% of payments
--------------------------
made by the insurer in excess of the annual aggregate attachment point
specified in the policy, subject to a maximum of $2,000,000 per agreement
year.
ADDENDUM SEVEN
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to
--
MANAGEMENT AGREEMENT NO. 1
between
USBENEFITS INSURANCE SERVICES, INC., a California corporation having its
principal offices at 000 Xxxx Xxxxxx Xxxxx, xxxxx 0000 Xxxxx Xxxx, XX 00000
(herein referred to as the "Underwriting Manager")
and
THE CONTINENTAL INSURANCE COMPANY, (one of the CNA Insurance
Companies) a New Hampshire corporation
having its principal offices at 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000
(herein referred to as the "Company")
THIS AGREEMENT is hereby amended as set forth below, such amendments to
be effective as of May 10, 1995. The parties hereto ratify and confirm all of
the other provisions of this Agreement executed by the parties effective as of
January 1, 1994.
1. Section 1 amended to read in full as follows:
Section 1 - SCOPE OF AGREEMENT
The Company appoints the Underwriting Manager as the exclusive Underwriting
Manager of the Company with the authority to solicit, receive, negotiate,
underwrite, accept and manage medical stop-loss insurance business (which
business is defined in the Underwriting and Rating Guidelines, Methods and
Procedures ["Underwriting Guidelines"] attached as Addendum One hereto, and is
referred to herein as "Medical Stop-Loss Business"), subject to its compliance
with all of the terms of this Agreement. The Underwriting Manager acknowledges
and agrees that as of the date hereof other members of The CNA Insurance
Companies group are involved in the writing of medical stop-loss business on a
direct basis, and that activities such as those in existence on the date hereof
shall not be deemed to be a violation by the Company of the terms and conditions
of this Agreement.
This Agreement is composed of Sections 1 through 20 and Addenda One through
Seven. The terms of the Sections and Addenda shall determine the rights and
obligations of the parties.
The Underwriting Manager shall solicit, receive, negotiate, underwrite, accept
and manage Medical Stop-Loss Business, subject to all the terms of this
Agreement. The Underwriting Manager will not act as a producer or provide
marketing or insurance management services for any other insurance company with
respect to Medical Stop-Loss Business, unless it has first obtained the prior
written approval of the Company. The Company agrees not to appoint any other
party to solicit, receive, underwrite, accept or manage Medical Stop-Loss
Business on its behalf without the prior written approval of the Underwriting
Manager. A willful violation of this provision by one party is grounds for
immediate termination of the Agreement by the other party.
2. Section 2 is amended to read in full as follows:
Section - PARTIES TO THE AGREEMENT
This Agreement is solely between the Company and the Underwriting Manager. No
third party shall have any rights or benefits under this Agreement, unless
otherwise provide herein. Except as permitted by this Agreement and with respect
to the activities of the CNA Insurance Companies as noted in Section 1 above,
the Company and the Underwriting Manager agree that neither party shall, without
prior notice to the other party, take any action to assist or facilitate in the
solicitation, negotiation, underwriting, acceptance or management of Medical
Stop-Loss Business during the term hereof by an affiliate, parent or controlling
person (as such terms are defined in the Securities Exchange Act of 1934) of
such party. A willful violation of this provision by one party is grounds for
immediate termination of the Agreement by the other party. The Underwriting
Manager shall not delegate any authority granted by this Agreement to any other
duly licensed party without the prior written approval of the Company subject to
a contract in a form acceptable to the Company. The Underwriting Manager shall
be responsible for all acts or omissions of any delegee and shall remain
responsible for performance of its duties under this Agreement. It shall
supervise all activities performed by any delegee on behalf of the Underwriting
Manager.
3. Section 3.4 is deleted in its entirety.
4. Paragraph (i) of Section 3.9 is amended to read in its entirety as follows:
i. Insert any advertisements representing the Company in any
publications, or issue any circular or paper referring to the
Company, its logo, or any program written thereunder unless such
advertisement, circular or paper is first reviewed and approved in
writing by the Company. If the Company shall be subject to any loss
or expense arising out of such unauthorized action or statement,
the Underwriting Manager shall indemnify the Company for all costs
and damages arising therefrom.
5. Section 10.7 is amended in its entirety as follows:
10.7
(a) The Company agrees that during the term of this Agreement, and for
a period of time following the termination of this Agreement, it will not,
directly or indirectly, for itself or for others, call upon, solicit, take
away, quote or offer coverage to any customer of the Underwriting Manager.
The period of time during which this paragraph applies shall be:
(i) Termination as of December 31, 1995 - Twenty Four (24) months;
(ii) Termination as of December 31, 1996 - Eighteen (18) months; or
(iii) Termination as of December 31, 1997, or later - Twelve (12) months.
(b) Furthermore, the Company agrees that, during the term of this
Agreement and for the period of time specified in paragraph 10.7 (a)
above, it will not use any confidential information, trade secrets, or
property of the Underwriting Manager acquired by the Company through its
relationship with the Underwriting Manager to compete with the
Underwriting Manager. If following termination of this Agreement the
Underwriting Manager determines to discontinue its operations in the
Medical Stop-Loss Business, it will promptly notify the Company of such
decision and thereafter, the provisions of this Section 10.7 and of
Section 10.4 hereof shall be null and void and of no further effect.
IN WITNESS WHEREOF, the parties hereto by their repective duly
authorized officers have caused this Addendum Seven to be executed in duplicate
this 9th day of August, 1995.
The Continental Insurance Company
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Xxxxx X. Xxxxxx, Group Vice
President
Witnessed:
/s/ Xxxxxxx X. XxXxxxxx
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Xxxxxxx X. XxXxxxxx,
Assistant Secretary
USBenefits Insurance Services, Inc.
By: /s/ Xxxx X. Xxxxx
--------------------------
Xxxx X. Xxxxx, President and
Chief Executive Officer
Witnessed:
/s/ Xxxx X. Xxxxxxx
-------------------------------
Xxxx X. Xxxxxxx, Senior Vice
President, Secretary and General
Counsel
