EXHIBIT 10.27
REINSURANCE POOLING AGREEMENT
AMENDED AND RESTATED AS OF OCTOBER 1, 1997
THIS REINSURANCE POOLING AGREEMENT (the "Agreement") made by
and among Meridian Mutual Insurance Company ("Mutual"), Meridian
Security Insurance Company ("Security"), Citizens Security Mutual
Insurance Company ("Citizens"), Citizens Fund Insurance Company
("Fund"), and Insurance Company of Ohio ("ICO")is amended and
restated entered into effective 12:01 a.m. on the first day of
October, 1997, (the "Effective Time") and shall remain in force
continuously thereafter until cancelled at any time by mutual consent.
WHEREAS Mutual and Security have been parties to this
Agreement since January 1, 1981; and
WHEREAS Citizens, Fund, and ICO became parties to this
Agreement effective August 1, 1996, when Meridian Insurance
Group, Inc., acquired Fund and ICO and became affiliated with
Citizens; and
WHEREAS the parties to this Agreement desire to exclude
certain types of insurance business from this Agreement;
NOW, THEREFORE, do Mutual, Security, Citizens, Fund, and ICO
agree to amend and restate this Agreement as follows as witnessed
by their signatures affixed to this Agreement.
ARTICLE I
The Companies are engaged in the insurance business and maintain
a mutual relationship having certain incidents of common
management, and desire to bring about for each other added
economies of operation, uniform underwriting results,
diversification as respects the classes of insurance business
written, and maximization of capacity. To accomplish the
aforesaid, the Companies do by means of this Agreement, pool all
of their insurance business in force as of the Effective Time of
this Agreement or thereafter, except as excluded under ARTICLE XI
of this Agreement, and agree to share in the fortunes of their
pooled insurance business.
ARTICLE II
Mutual hereby reinsures and Security, Citizens, Fund, and ICO
hereby cede and transfer to Mutual all liabilities incurred under
or in connection with all contracts and policies of insurance
issued by Security, Citizens, Fund, and ICO outstanding and in
force as of the Effective Time of this Agreement, or thereafter
issued by them, except as excluded under ARTICLE XI of this
Agreement. Such liabilities shall include Security's, Citizens',
Fund's, and ICO's reserves for unearned premiums, outstanding
losses and loss expenses (including unreported losses), all other
underwriting and administrative expenses which shall include
service fee income and premium balances charged off as
uncollected receivables, and policyholder dividends as evidenced
by their books and records, but shall not include inter-company
balances, service fee income, liabilities for Federal Income
Taxes, or liabilities incurred in connection with Security's,
Citizens', Fund's, and ICO's investment transactions.
ARTICLE III
Security, Citizens, Fund, and ICO hereby assign and transfer to
Mutual all right, title and interest in and to reinsurance ceded
to reinsurers, other than the parties hereto, outstanding and in
force with respect to the liabilities reinsured by Mutual under
Article II hereof.
ARTICLE IV
Each of Security, Citizens, Fund, and ICO agrees to pay to Mutual
amounts equal to the aggregate of all of its liabilities
reinsured by Mutual under Article II hereof.
ARTICLE V
Security, Citizens, Fund, and ICO hereby reinsure, and Mutual
hereby cedes and transfers to each of them the following
percentage of Mutual's net liabilities under all contracts and
policies of insurance (including those reinsured by Mutual under
Article II hereof) on which Mutual is subject to liability and
which are outstanding and in force as of the Effective Time of
this Agreement, or which are issued thereafter, except as
excluded under ARTICLE XI of this Agreement:
61 percent ceded to Security;
4 percent ceded to Citizens;
9 percent ceded to Fund;
4 percent ceded to ICO.
Such liabilities shall include Mutual's reserves for unearned
premiums, outstanding losses and loss expense (including
unreported losses), all other underwriting and administrative
expenses which shall include service fee income and premium
balances charged off as uncollected receivables, and policyholder
dividends but shall not include inter-company balances, service
fee income, liabilities for Federal Income Taxes or liabilities
incurred in connection with Mutual's investment transactions.
ARTICLE VI
Mutual hereby assigns and transfers to each of Security,
Citizens, Fund, and ICO assets in the amount equal to the
aggregate of all liabilities of Mutual reinsured by that specific
company under Article V hereof.
ARTICLE VII
Mutual agrees to pay to Security, Citizens, Fund, and ICO their
specified participation, as listed in Article V, of all premiums
written by the companies after first deducting premiums on all
reinsurance ceded to reinsurers (other than the parties hereto).
Similarly, it is further agreed that all losses, loss expenses
and other underwriting and administrative expenses which shall
include service fee income and premium balances charged off as
uncollected receivables, (with the exceptions noted in Article II
and V hereof) of the companies, less all losses and expenses
recovered and recoverable under reinsurance ceded to reinsurers
(other than the parties hereto), shall be pro-rated among all
five parties on the basis of their respective participations.
ARTICLE VIII
The obligation of the companies under this Agreement to exchange
reinsurance between themselves may be offset by the reciprocal
obligations so that the net amount only shall be required to be
transferred. An accounting on all transactions shall be rendered
quarterly, or more often as may be mutually agreed, and shall be
settled within a reasonable time thereafter. Except as otherwise
required by the context of this Agreement, the amount of all
payments between the companies under this Agreement shall be
determined on the basis of the convention form of annual
statements of the companies. Notwithstanding anything herein
contained, this Agreement shall not apply to the investment
operations of the companies, but this provision shall not
prohibit other agreements pertaining to the intercompany
allocation or sharing of investment expense.
ARTICLE IX
The conditions of reinsurance hereunder shall in all cases be
identical with the conditions of the original insurance or as
changed during the term of such insurance.
ARTICLE X
Each of the companies hereto, as the assuming insurer, hereby
agrees that all reinsurance made, ceded, renewed or otherwise
becoming effective under this Agreement shall be payable by the
assuming insurer on the basis of the liability of the ceding
insurer under the policy or contract reinsured without diminution
because of the insolvency of the ceding insurer; provided that
such reinsurance shall be payable directly to the ceding insurer
or to its liquidator, receiver or other statutory successor,
except(a) where the contract specifically provided another payee
for such reinsurance in the event of the insolvency of the ceding
insurer and (b) where the assuming insurer, with the consent of
the direct insured or insureds and with the approval of the
appropriate insurance department if such approval is required by
state law, has assumed such policy obligations of the ceding
insurer as direct obligations of the assuming insurer to the
payees under such policies and in substitution for the
obligations of the ceding insurer to such payee; and further
provided that the liquidator, receiver or statutory successor of
the ceding insurer shall give written notice of the pendency of
any claim against the insolvent ceding insurer on the policy or
contract reinsured within a reasonable time after such claim; and
the assuming insurer 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, receiver or statutory
successor, the expense thus incurred by the assuming insurer to
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 insurer.
ARTICLE XI
This Agreement does not cover or include contracts or policies of
insurance that any of the parties to this Agreement (a) have
written and designated as substandard automobile insurance or may
hereafter write and designate as substandard automobile insurance
or (b) have written or may hereafter write by direct-response
marketing.
ARTICLE XII
This Agreement has no fixed term and is terminable with respect
to any one of Security, Citizens, Fund, or ICO (herein the
"terminating party") by the mutual consent of Mutual and the
terminating party or parties. This Agreement may be amended or
terminated without the necessity of a vote by the shareholders or
the policyholders of any of the parties. In the event of
termination of this Agreement, the terminating party shall
transfer back to Mutual the liabilities ceded to it by Mutual,
and Mutual shall transfer back to the terminating party the
liabilities ceded to it by the terminating party, and each party
shall receive from the other assets in an amount equal to the
amount of the policy liabilities received by it.
IN WITNESS WHEREOF, this Agreement is entered into as of the date
written above.
MERIDIAN MUTUAL INSURANCE COMPANY
By
Xxxxx X. Xxxx, President
Attest:
J. Xxxx XxXxxxxx, Secretary
MERIDIAN SECURITY INSURANCE COMPANY
By
Xxxxx X. Xxxx, President
Attest:
J. Xxxx XxXxxxxx, Secretary
CITIZENS SECURITY MUTUAL INSURANCE COMPANY
By__________________________________
Xxxxx X. Xxxx, President
Attest:___________________________
J. Xxxx XxXxxxxx, Secretary
CITIZENS FUND INSURANCE COMPANY
By______________________________________
Xxxxx X. Xxxx, President
Attest:____________________________
J. Xxxx XxXxxxxx, Secretary
INSURANCE COMPANY OF OHIO
By_____________________________________
Xxxxx X. Xxxx, President
Attest:___________________________
J. Xxxx XxXxxxxx, Secretary
