EXHIBIT 10.7
SUMMARY
AND
AGREEMENT WORDING
FOR
-----------------------
FEDERATED NATIONAL INSURANCE COMPANY
PRIVATE PASSENGER AUTOMOBILE QUOTA SHARE REINSURANCE AGREEMENT
EFFECTIVE: DECEMBER 31, 1994
SUMMARY OF
PRIVATE PASSENGER AUTOMOBILE QUOTA SHARE
REINSURANCE AGREEMENT
REINSURED COMPANY: FEDERATED NATIONAL INSURANCE (PREAMBLE)
COMPANY, Pembroke Pines, Florida
hereinafter referred to as the "Company")
BUSINESS REINSURED: In force, new and renewal business classified ARTICLE 1
by the Company as Non-Standard Private
Passenger Automobile Liability and/or
Physical Damage.
ACCOUNT BASIS: Losses Occurring
COVER: 30% Quota Share ARTICLE 2
Maximum original Policy limits:
Bodily injury/per person $10,000
Bodily Injury/per occurrence $20,000
Property Damage $10,000
Automobile Physical Damage (ACV) $30,000
Personal Injury Protection Statutory $10,000
(Maximum Deductible $2,000)
Uninsured Motorist same as Bodily Injury
Coverage provided hereunder is subject to
a maximum recoverable of $1,000,000 any
one Loss Occurrence.
LOSS RATIO CORRIDOR: In the event that a rate increase is not filed ARTICLE 3
by March 1, 1995, all losses in excess of 80%
of written premium up to 85% of written
premium shall be retained by the Company.
COMMENCEMENT AND Continuous from 12:01 a.m., Eastern Standard ARTICLE 4
TERMINATION: Time, December 31, 1994, and shall remain in
full force and effect until terminated as
provided in the following paragraph.
Either the Company or the Reinsurer shall
have the right to terminate this Agreement
as of 12:01 a.m., Eastern Standard Time,
any December 31, by giving 60 days' prior
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notice in writing via either Certified or
Registered Mail, return receipt requested.
Notwithstanding the above, the Reinsurer
may terminate this Agreement at 12:01
a.m., Eastern Standard Time, July 1, 1995,
by giving 60 days' prior notice in writing
via either Certified or Registered Mail,
return receipt requested.
COMMENCEMENT Termination shall be on a cutoff basis unless
TERMINATION (cont'd) otherwise mutually agreed. The Reinsurer will
return to the Company a portfolio representing
the unearned premium reserve under this Agreement.
TERRITORY: Per original Policies. ARTICLE 5
WARRANTY: Premium Cap -- ceded written premiums ARTICLE 6
shall not exceed $5,000,000 or pro rata thereof
for an odd term, or so deemed.
Changes in underwriting guidelines or
rates must be approved by lead Reinsurer.
The number of Agency locations shall not
exceed 40 without Reinsurer approval.
EXCLUSIONS: Per Agreement Wording. ARTICLE 7
ACCOUNTS AND Reports due 45 days following the end of each ARTICLE 7
REMITTANCES: month. Payment due 60 days following the
end of each month. Incoming unearned
premium portfolio due within 60 days
following inception of this Agreement.
CEDING COMMISSION: Minimum: 20% at 74% Loss Ratio ARTICLE 9
Sliding 1 % to 1 %
Provisional: 27.50% at 66.50% Loss Ratio
Sliding .50% to 1 %
Maximum: 42% at 37.50% Loss Ratio
Three Year Adjustment Period being
December 31, 1994 to December 30, 1997.
Cumulative Adjustments to be made at the end
of each Agreement Year using the rating scale
above. Annual adjustments thereafter until all
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losses applicable to the Adjustment Period are
finally paid and settled or commuted.
DEFINITIONS: Policy ARTICLE 10
Agreement Year
Loss Occurrence
Non-Standard Private Passenger Automobile
Liability and/or Physical Damage.
CLAUSES: Original Conditions ARTICLE 11
Currency - U.S. Dollar ARTICLE 12
Loss/Unearned Premium Reserve Funding ARTICLE 13
Taxes (Reinsurers pay FET as applicable) ARTICLE 14
Loss and Loss Expense (Pro Rata not exceed- ARTICLE 15
exceeding 5% of written premium, inclusive of legal,
court and all other costs).
CLAUSES (cont'd) Excess of Policy Limits (90% up to $35,000 ARTICLE 16
inclusive of contractual loss).
Extra Contractual Obligations (90% up to ARTICLE 17
$35,000 inclusive of contractual loss).
Delay, Omission or Error ARTICLE 18
Inspection ARTICLE 19
Arbitration ARTICLE 20
Service of Suit ARTICLE 21
Insolvency ARTICLE 22
Sedgwick Xxxxx Co. Intermediary clause ARTICLE 23
PARTICIPATION: ARTICLE 24
REGULATION 98: Premium and loss payments made to
Sedgwick Xxxxx Co. shall be deposited in a
Premium and Loss Account in accordance with
Section 32.3(a)(1) of Regulation 98 of
the New York Insurance Department. The
parties hereto consent to withdrawals from
said Account in accordance with Section
32.3(a)(3) of the Regulation, including interest
and Federal Excise Tax.
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PRIVATE PASSENGER AUTOMOBILE QUOTA SHARE REINSURANCE AGREEMENT
This Agreement is made and entered into by and between FEDERATED NATIONAL
INSURANCE COMPANY, Pembroke Pines, Florida (hereinafter called the "Company) and
the Reinsurer specifically identified on the signature page of this Agreement
(hereinafter called the `Reinsurer').
ARTICLE I
BUSINESS REINSURED
This Agreement is to share with the Reinsurer the interests and liabilities of
the Company under all Policies for Non-Standard Private Passenger Automobile
Liability and Physical Damage Business in force at the inception of this
Agreement, or written or renewed by or an behalf of the Company during the term
of this Agreement, subject to the terms and conditions herein contained.
ARTICLE 2
COVER
A. The Company will cede, and the Reinsurer will accept as reinsurance, a
30% show of all business reinsured hereunder subject to the maximum
Policy limits stated below.
B. The maximum Policy limits hereunder shall be as follows:
Bodily Injury/Per Person $10,000
Bodily Injury/Per Occurrence $20,000
Property Damage $10,000
Automobile Physical Damage(ACV) $30,000
Personal Injury Protection Statutory $10,000
(Maximum Deductible $2,000)
Uninsured Motorist same as Bodily Injury
C. Notwithstanding the above, the maximum amount recoverable hereunder for
any one Loss Occurrence will be $1,000,000.
D. The limit of liability of the Reinsurer as respects Excess of Policy
Limits or Extra Contractual Obligations shall be $35,000 Inclusive of
contractual loss.
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ARTICLE 3
LOSS RATIO CORRIDOR
In the event that a rate increase is not filed by March 1, 1995, should the
Reinsurer's losses incurred for any Agreement Year exceed 80% of the subject
premium, the Company shall take a 100% share of the losses Incurred exceeding
that percentage, limited, however, to a maximum of 5% of the subject premium.
Losses incurred, in the context of this Article, shall mean losses and loss
adjustment expenses paid plus the reserve for outstanding losses and loss
adjustment expenses at the time of calculation for the Agreement Year under
consideration.
The loss ratio shall be calculated by dividing losses incurred by subject
premium.
The Company's participation under this Article shall be computed 45 days
following the end of each Agreement Year, and annually thereafter or until the
paid loss, including the Company's participation, exceeds 85% of subject premium
for the Agreement Year under consideration.
The loss participation of the Company under this Article shall be taken into
account when calculating the sliding scale commission, as provided for in the
CEDING COMMISSION ARTICLE.
ARTICLE 4
COMMENCEMENT AND TERMINATION
This Agreement shall become effective at 12:01 a.m., Eastern Standard Time,
December 31, 1994, and shall remain in full force and effect until terminated as
provided in the following paragraph.
Either the Company or the Reinsurer shall have the right to terminate this
Agreement as of 12:01 a.m., Eastern Standard Time, any December 31, by, giving
60 days' prior notice in writing via either Certified or Registered Mall, return
receipt requested. Notwithstanding the above, the Reinsurer may terminate this
Agreement as of 12:01 am.., Eastern Standard Time, July 1, 1995, by giving 60
days' prior notice in writing via either Certified or Registered Mail, return
receipt requested.
Upon termination of this Agreement, the entire liability of the Reinsurer for
losses occurring subsequent to termination of this Agreement shall cease
concurrently with the termination date of this Agreement unless otherwise
mutually agreed.
The Reinsurer will return to the Company a portfolio representing the unearned
premium reserve under this Agreement appropriate to the mode of termination.
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ARTICLE 5
TERRITORY
This Agreement applies to losses arising out of Policies written in Florida,
occurring in the United States of America, its territories and possessions, and
Puerto Rico, or as per original Policies.
ARTICLE 6
WARRANTIES
It is warranted for purposes of this Agreement that:
A. the maximum amount of ceded written premium shall not exceed $5,000,000
or pro rata thereof for an odd term, or so deemed.
B. Any changes in the underwriting guidelines or rates must be approved by
the lead Reinsurer.
C. The number of agency locations shall not exceed 40 without Reinsurer
approval.
ARTICLE 7
EXCLUSIONS
A. This Agreement does not apply to and specifically excludes the
following:
1. All excess of loss reinsurance assumed by the Company.
2. Reinsurance assumed by the Company under obligatory
reinsurance agreements.
3. Financial Guarantee and Insolvency.
4. Third party liability business written by the Company on a
co-indemnity basis where the Company is not the controlling
carrier.
5. Third party liability business written to apply in excess of a
deductible of more than $5.000, and third party liability
business issued to apply specifically in excess over
underlying insurance.
6. Business excluded by the attached Nuclear Incident Exclusion
Clauses:
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a. Nuclear Incident Exclusion Clause - Physical Damage -
Reinsurance U.S.A., No. 08-33
b. Nuclear Incident Exclusion Clause - Liability -
Reinsurance - U.S.A., No. 08-31.1
7. Liability as a member, subscriber or reinsurer of any Pool,
Syndicate or Association; and any combination of insurers or
reinsurers formed for the purpose of covering specific perils,
specific classes of business or for the purpose of insuring
risks located in specific geographical areas; but this
exclusion shall not apply to Assigned Risk Plans or FAIR Plans
or to Coastal Pools, Beach Plans or similar plans, however
styled. It is understood and agreed, however, that this
reinsurance does not include .any increase in liability to the
Company resulting from (a) the inability of any other
participant in a FAIR Plan Coastal Pool, Beach Plan or similar
plan to meet its liability, or (b) any claim against such a
FAIR Plan, Coastal Pool, Beach Plan or similar plan, or any
participant therein, including the Company, whether by way of
subrogation or otherwise, brought by or on behalf of any
insolvency fund.
8. All liability of the Company arising by contract, operation of
law, or otherwise from its participation or membership,
whether voluntary or involuntary, in any insolvency fund.
"Insolvency fund" includes any guaranty fund, insolvency fund,
plan, pool, association, fund or other arrangement, however
denominated, established or governed, which provides for any
assessment of payment or assumption by the Company of part or
all of any claim, debt, charge, fee or other obligation of an
insurer, or its successors or assigns, which has been declared
by any competent authority to be insolvent, or which is
otherwise deemed unable to meet any claim, debt, charge, fee
or other obligation in whole or in part.
9. All Inland Marine business.
10. Business excluded by the attached Pollution and Seepage
Exclusion Clauses:
a. Pollution Exclusion Clause - Auto Liability -
Reinsurance - XXXX Xx. 00X.
b. Pollution and Seepage Exclusion Clause - BRMA No.
39A.
ARTICLE 8
ACCOUNTS AND REMITTANCES
A. Within 45 days following the end of each month, the Company will render
a net account to the Reinsurer for the current Agreement Year. Prior
Agreement Years having activity
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during the month will be accounted for separately in a similar manner.
Such account will contain the following:
1. Net written premium accounted for during the month. being the
gross written premium less returns and cancellations; less
2. The ceding commission as provided for in this Agreement; less
3. Loss and loss expense paid on losses occurring during the
current Agreement Year; plus
4. Subrogation, salvage, or other recoveries on losses occurring
during the current Agreement Year, plus
5. The Company's participation, if any, as provided for In the
LOSS RATIO CORRIDOR ARTICLE.
Within 60 days following the end of the month, the debtor party will
remit to the creditor party any balance due.
This account will also bear a notation advising of the outstanding loss
and loss expense reserve at the end of the month, less the Company's
share of the loss reserve, if any, as a result of the Company's
participation as provided for in the LOSS RATIO CORRIDOR ARTICLE,
separately for each Agreement Year.
B. Within 45 days following the end of each month, the Company will advise
the Reinsurer of the unearned premium reserve at the end of the
quarter.
C. Within 45 days following the end of each Agreement Year, the Company
shall furnish the following information to the Reinsurer for the
Agreement Year.
1. A summary of written premium ceded,
2. A summary of premiums earned,
3. A summary of loss and loss adjustment expense paid and
outstanding, segregated by the Agreement Year in which the
loss occurred, and
4. Any other information which the Reinsurer may require for its
Annual Convention Statement which may be reasonably available
to the Company.
Within 60 days after the inception of this Agreement, the Company will
provide the Reinsurer with a portfolio representing the unearned
premium reserve on Policies covered by this Agreement at its inception,
less provisional ceding commission.
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ARTICLE 9
CEDING COMMISSION
A. The Reinsurer will allow the Company a provisional ceding commission of
27.50% of the written premiums ceded hereunder. Return commission shall
be allowed on return premiums at the same rate.
B. 1. The final ceding commission shall be determined by the loss
experience under this Agreement for each period comprising
three consecutive Agreement Years or lesser period should the
Agreement be terminated prior to the end of a three Agreement
Year period. There shag be provisional adjustments and a final
adjustment for each period, all in accordance with the other
paragraphs of this Article.
2. Within 45 days following the grid of each Agreement Year
within each three Agreement Year period, the Company will
calculate an adjusted ceding commission for the portion of the
three Agreement Year period then expired based on premiums
earned and losses incurred. The ceding commission paid to that
date, whether provisional or prior adjustment, shall be
adjusted between the parties as appropriate. At the end of
each three Agreement Year period, adjustments will continue to
be made annually until all losses have been paid or dosed or
commuted, at which time the ceding commission will become
final.
3. Premium earned for the Agreement Year shall mean all written
premium ceded to this Agreement during the Agreement Year
(less cancellations and returns) plus the unearned premium
reserve at the beginning of the Agreement Year and less the
unearned premium reserve at the end of the Agreement Year.
4. Losses incurred for the Agreement Year shall mean the loss and
loss expense paid by the Reinsurer (less salvages and
recoveries received) on losses occurring during the Agreement
Year, plus loss and loss expense reserves outstanding on
losses occurring during the Agreement Year, minus any loss
participation, if any, by the Company as provided for in the
LOSS RATIO CORRIDOR ARTICLE.
C. 1. Should the ratio of losses incurred to premium earned be 74%
or higher, then the adjusted ceding commission shall be 20%.
2. Should the ratio of losses incurred to premium earned be less
than 74%, the adjusted commission shall be determined by
adding one percent (1%) to the ceding commission for each one
percent reduction of loss ratio subject to a ceding commission
of 27.50% at a loss ratio of 66.50%.
3. Should the ratio of losses incurred to premium earned be less
than 66.50%, then the adjusted commission shall be further
adjusted by adding one half of one percent (.50%) to the
ceding commission for each one percent reduction of loss
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ratio below 66.50%, subject to a maximum ceding commission of
42% at a loss ratio of 37.50% or less.
D. 1. Upon termination, any period of less than 12 months from
inception shall be considered as an Agreement Year for
purposes of this Article, any period of less than 12 months
from anniversary will be considered as part of the preceding
Agreement Year.
2. Should this Agreement be terminated on a run-off basis wherein
the Reinsurer is liable for losses occurring after the date of
termination, then such run-off period shall be considered as
part of the last Agreement Year.
E. Should the Reinsurer's participation in this Agreement increase or
decrease within a multi-year adjustment period, the incremental
participation percentage increase or decrease shall be treated as a
separate new or terminated participation, respectively for purposes of
calculating amounts hereunder.
ARTICLE 10
DEFINITIONS
A. The term "Policy" as used in this Agreement shall mean any binder,
policy, or contract of insurance or reinsurance issued, accepted or
held covered provisionally or otherwise, by or on behalf of the
Company.
B. The term "Agreement Year" as used In this Agreement shall mean the 12
consecutive months commencing with each December 31. In the event of
termination of this Agreement at July 1. 1995, the period from
inception to the termination date will be considered an Agreement Year.
Any period following termination of this Agreement in which the
Reinsurer remains liable for losses arising out of Policies in force at
the date of termination will be considered as part of the concluding
Agreement Year.
C. The term "Loss Occurrence" as used in this Agreement shall mean any one
disaster or casualty or accident or loss or series of disasters or
casualties or accidents or losses arising out of or caused by one
event.
D. The term "Non-Standard Private Passenger Automobile Liability and/or
Physical Damage Business" as used in this Agreement shall mean all
insurances and reinsurances written by the Company and classified as
Non-Standard Private Passenger Automobile Liability and/or Physical
Damage Including bodily injury and property damage, personal injury
protection, medical payments, comprehensive, collision and uninsured
motorist coverage.
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ART1CLE 11
ORIGINAL CONDITIONS
All insurances falling under this Agreement shall be subject to the same terms,
rates, conditions and waivers, and to the same modifications, alterations and
cancellations as the respective Policies of the Company (except that in the
event of the insolvency of the Company the provisions of the INSOLVENCY ARTICLE
of this Agreement shall apply) and the Reinsurer shall be credited with its
exact proportion of the original gross premiums received by the Company.
ARTICLE 12
CURRENCY
The currency to be used for all purposes of this Agreement shall be United
States of America currency.
ARTICLE 13
LOSS/UNEARNED PREMIUM RESERVE FUNDING
With respect to loss and unearned premium reserves, funding will be in
accordance with the attached Loss and Unearned Premium Reserve Funding Clause
No. 13-02-2.
ARTICLE 14
TAXES
The Company will be liable for taxes (except Federal Excise Tax) on premiums
reported to the Reinsurer hereunder.
Federal Excise Tax applies only to those Reinsurers, excepting Underwriters at
Lloyd's, London and other Reinsurers exempt from the Federal Excise Tax, who are
domiciled outside the United States of America.
The Reinsurer has agreed to allow for the purpose of paying the Federal Excise
Tax 1% of the premium payable hereon to the extent such premium is subject to
Federal Excise Tax.
In the event of any return of premium becoming due hereunder, the Reinsurer will
deduct 1% from the amount of the return, and the Company or its agent should
take steps to recover the Tax from the U.S. Government.
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ARTICLE 15
LOSS AND LOSS EXPENSE
Any loss settlement made by the Company, whether under strict Policy conditions
or by way of compromise, shall be unconditionally binding upon the Reinsurer in
proportion to its participation, and the Reinsurer shall benefit proportionally
in all salvages and recoveries.
The Reinsurer shall bear its proportionate share of all expenses incurred by the
Company in the investigation, adjustment, appraisal or defense of all claims
under Policies reinsured hereunder (excluding, however, office expenses and
salaries of officials of the Company) and shall receive its proportionate share
of any recoveries of such expenses. Notwithstanding the above, expenses
hereunder shall be limited to 5% of written premiums.
ARTICLE 16
EXCESS OF POLICY LIMITS
In the event the loss includes an amount in excess of the Company's Policy
limit, 90% of such amount, in excess OF the Company's Policy limit shall be
added to the amount of the Company's Policy limit, and the sum thereof shall be
covered hereunder, subject to the Reinsurers limit of liability appearing in the
COVER ARTICLE of this Agreement.
However, this Article shall not apply where the loss has been incurred due to
the fraud of a member of the Board of Directors or a corporate officer of the
Company 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.
For the purpose of this Article, the word "loss" shall mean any amounts for
which the Company would have been contractually liable to pay had it not been
for the limit of the original Policy.
ARTICLE 17
EXTRA CONTRACTUAL OBLIGATIONS
This Agreement shag protect the Company, subject to the Reinsurer's limit of
liability appearing In the COVER ARTICLE of this Agreement, where the loss
includes any Extra Contractual Obligations for 90% of such Extra Contractual
Obligations. "Extra Contractual Obligations" are defined as those liabilities
not covered under any other provision of this Agreement and which arise from
handling of any claim on business covered hereunder, such liabilities arising
because of, but not limited to the following: failure by the Company to settle
within the Policy limit, 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 an appeal consequent upon such action.
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The date on which any Extra Contractual Obligation is incurred by the Company
shall be deemed, in all circumstances, to be the date of the original loss.
However, this Article shall not apply where the loss has been incurred due to
the fraud of a member of the Board of Directors or a corporate officer of the
Company 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.
ARTICLE 18
DELAY, OMISSION OR ERROR
Any inadvertent delay, omission or error shall not be held to relieve either
party hereto from any liability which would attach to it hereunder if such
delay, omission or error had not been made, providing such delay, omission or
error is rectified upon discovery.
ARTICLE 19
INSPECTION
The Company shall place at the disposal of the Reinsurer at all reasonable
times, and the Reinsurer shall have the right to inspect, through its authorized
representatives, all books, records and papers of the Company in connection with
any reinsurance hereunder or claims in connection herewith.
ARTICLE 20
ARBITRATION
Any irreconcilable dispute between the parties to this Agreement will be
arbitrated in Pembroke Pines, Florida in accordance with the attached
Arbitration Clause No. 22-01.1.
ARTICLE 21
SERVICE OF SUIT
The attached Service of Suit Clause No. 20-01.5 - U.S.A. will apply to this
Agreement.
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ARTICLE 22
INSOLVENCY
In the event of the insolvency of the Company, the attached Insolvency Clause
No. 21-01 - 1/1/86 will apply.
ARTICLE 23
INTERMEDIARY
Sedgwick Xxxxx Co. is hereby recognized as the intermediary negotiating this
Agreement for all business hereunder. All communications. including notices,
premiums, return premiums, commissions, taxes, losses, loss adjustment expenses,
salvages and loss settlements relating thereto shag be transmitted to the
Reinsurer or the Company through Sedgwick Xxxxx Co., 0000 Xxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxxxx 00000. Payments by the Company to the intermediary
shall be deemed to constitute payment to the Reinsurer. Payments by the
Reinsurer to the intermediary shall be deemed only to constitute payment to the
Company to the extent that such payments are actually received by the Company.
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ARTICLE 24
PARTICIPATION: PRIVATE PASSENGER AUTOMOBILE QUOTA SHARE
REINSURANCE AGREEMENT
EFFECTIVE: December 31, 1994
This Agreement obligates the Reinsurer for _________% of the interests and
liabilities set forth under this Agreement.
The participation of the Reinsurer in the interests and liabilities of this
Agreement shall be separate and apart from the participations of other
reinsurers and shall not be joint with those of other reinsurers, and the
Reinsurer shall in no event participate in the interests and liabilities of
other reinsurers.
IN WITNESS WHEREOF, the parties hereto, by their authorized representatives,
have executed this Agreement as of the following dates:
PARTICIPATING REINSURERS
----------------------------------------------------------------
Transatlantic Reinsurance Company 100.00%
Total 100.00%
Upon completion of Reinsurer's signing, fully executed signature pages will be
forwarded to you for the completion of your file.
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ARTICLE24
PARTICIPATION: PRIVATE PASSENGER AUTOMOBILE QUOTA SHARE
REINSURANCE AGREEMENT
EFFECTIVE: December 31, 1994
This Agreement obligates the Reinsurer for 100% of the interests and liabilities
set forth under this Agreement.
The participation of the Reinsurer in the interests and liabilities of this
Agreement shall be separate and apart from the participations or other
reinsurers and shall not be joint with those of other reinsurers, and the
Reinsurer shall in no event participate in the interests and liabilities of
other reinsurers.
IN WITNESS WHEREOF. the parties hereto, by their authorized representatives,
have executed this Agreement as of the following dates:
In New York, New York, this ___ day of ____________, 1995.
TRANSATLANTIC REINSURANCE COMPANY
New York, New York
By:
---------------------------------------
(signature)
------------------------------------------
(name)
------------------------------------------
(title)
and in Pembroke Pines, Florida, this ___ day of _____________, 1995.
FEDERATED NATIONAL INSURANCE COMPANY
By:
---------------------------------------
(signature)
------------------------------------------
(name)
------------------------------------------
(title)
PRIVATE PASSENGER AUTOMOBILE QUOTA SHARE REINSURANCE AGREEMENT
issued to
FEDERATED NATIONAL INSURANCE COMPANY
ALEXANDER REINSURANCE INTERMEDIARIES, INC. COVER NOTE: 2409_1997
XXX XXXXXXXX XXXXXX, XXXXX 0000
XXXXXXXX, XXXXXXXXXXX 00000-0000
Federated National Insurance Company
0000 Xxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
We hereby confirm that per your authorization the following reinsurance has been
effected. Please examine this document carefully. Immediate notification must be
given of any discrepancies, inaccuracies or necessary changes. This Cover Note
shall be superseded by the Agreement when signed by you and the Reinsurers.
================================================================================
COMPANY: FEDERATED NATIONAL INSURANCE COMPANY; Pembroke Pines, Florida
EFFECTIVE: Continuous and to take effect December 31, 1996 as respects
in-force, new and renewal policies.
CANCELLATION: The Reinsurer shall have the right to terminate this Agreement
as of 12:01 a.m., Eastern Standard Time, any December 31, by
giving 90 days prior notice in writing via either Certified or
Registered Mail, return receipt requested.
The Company shall have the right to terminate this Agreement
as of 12:01 a.m., Eastern Standard Time, December 31, 1998,
and any subsequent December 30, by giving 90 days prior notice
in xxxxxxx via either Certified or Registered Mail, return
receipt requested.
Run-off limited to 12 months plus odd time, not to exceed 18
months. Cut-off at Company's option, in which event Reinsurers
will immediately return their pro rata share of unearned
premium. Regardless of cancellation method, Reinsurers'
liability will continue in the event Company is bound by
statue or regulation.
BUSINESS
COVERED: All business classified by the Company as Commercial and/or
Private Passenger Automobile Liability and/or Physical Damage.
EXCLUSIONS: See attached.
TERRITORY: Per original policies.
LIMIT AND
RETENTION: 50% Quota Share of the following maximum limits:
Bodily Injury/per person $10,000
Bodily Injury/per occurrence $20,000
Property Damage Liability $10,000
Automobile Physical Damage (ACV)
Private Passenger $30,000
Commercial $40,000
Personal Injury Protection Statutory $10,000
(Maximum Deductible S2,000)
Uninsured Motorist same as bodily injury
LOSS EXPENSE: Pro Rata not exceeding 7.0% of earned premium, inclusive of
legal, court and all other costs.
PREMIUM: 50% GNWP
CEDING
COMMISSION: Minimum: 27.0% at 67.5% Loss Ratio
Sliding 1% to 1%
28.5% at 66.0% Loss Ratio
Sliding .615% to 1%
Provisional: 30.0% at 63.56% Loss Ratio
Sliding .615% to 1%
Maximum: 36.49% at 53.0% Loss Ratio
Two Year Adjustment Period being December 31, 1996 to December
31, 1998. Should the treaty be terminated prior to the
completion of the two year block, the Adjustment Period will
be modified to reflect the lesser period. Cumulative
Adjustments to be made at the end of each Agreement Year using
the appropriate sliding commission scale. Annual adjustments
thereafter until losses applicable to the Adjustment Period
are finally paid and settled or commuted.
CEDING
COMMISSION
Continued: Should this Agreement be terminated on a run-off basis wherein
the Reinsurer is liable for losses occurring after the date of
termination, then such run-off period shall be considered as
part of the last Agreement Year.
FUNDING: Letters of Credit and/or Trust Agreements -- Required from
unauthorized Reinsurers. For outstanding losses and expenses,
recoverables, IBNR, and unearned premium.
REPORTS AND
REMITTANCES: Reports due within 45 days following the end of each month.
Remittances due within 60 days following the end of each
month.
OTHER
PROVISIONS: Original Conditions (as attached)
Currency Clause - U.S. Dollar
Taxes Clause (Reinsurers pay FET as applicable)
Excess of Policy Limits (90% up to $150,000, 30% is
$45,000 inclusive of contractual loss).
Extra Contractual Obligations (90% up to $150,000,
30% is $45,000 inclusive of contractual loss).
Delays, Errors or Omissions Clause
Inspection Clause
Arbitration Clause
Service of Suit Clause
Insolvency Clause (as attached)
Alexander Re, Inc. Intermediary Clause
And others as existing.
WORDING: As expiring.
If any provisions of this contract will be rendered illegal or
unenforceable by the laws, regulations, or public policy of
any state, such provision will be considered void in such
state, but this will not affect the validity or enforceability
of any other provision of this contract or the enforceability
of such provision in any other jurisdiction.
Each Reinsurer subscribing to the coverage evidence by this Final Placement Slip
and named in it has bound itself only for its own part and not for any other and
only for its proportion of the total coverage evidenced by this Final Placement
Slip. Written evidence of the acceptance of this reinsurance by each Reinsurer
is available at your request.
REINSURED WITH
DOMESTIC MARKET
FEIN OR ISI # PERCENTAGE
00-0000000 Transatlantic Reinsurance Company 100.00%
TOTAL FOR DOMESTIC COMPANIES 100.00%
TOTAL FOR ALL PARTICIPANTS 100.00%
ALEXANDER REINSURANCE INTERMEDIARIES, INC.
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Xxxxxx X. Xx Xxxxxx Date
Senior Vice President
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Xxxxxx X. Xxxxx, Xx. Date
Vice President
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Xxx Xxxxxxx Date
Federated National Insurance Company
EXCLUSIONS
A. This Agreement does not apply to and specifically excludes the
following:
1. All excess of loss reinsurance assumed by the Company.
2. Reinsurance assumed by the Company under obligatory
reinsurance agreements.
3. Financial guarantee and insolvency.
4. Third party liability business written by the Company on a
co-indemnity basis where the Company is not the controlling
carrier.
5. Third party liability business written to apply in excess of a
deductible of more than $5,000, and third party liability
business issued to apply specifically in excess over
underlying insurance.
6. Business excluded by the attached Nuclear Incident Exclusions
Clauses:
a. Nuclear Incident Exclusion Clause - Physical Damage -
Reinsurance - U.S.A., No. 08-33.
b. Nuclear Incident Exclusion Clause - Liability -
Reinsurance -U.S.A., No. 08-31.1.
7. Liability as a member, subscriber or reinsurer of any Pool,
Syndicate or Association; and any combination of insurers or
reinsurers formed for the purpose of covering specific perils,
specific classes of business or for the purpose of insuring
risks located in specific geographical areas; but this
exclusion shall not apply to Assigned Risk Plans of FAIR Plans
or to Coastal Pools, Beach Plans or similar plans, however,
styled. It is understood and agreed, however, that this
reinsurance does not include any increase in liability to the
Company resulting from (a) the inability of any other
participant in a FAIR Plan, Coastal Pool, Beach Plan or
similar plan to meet its liability, or (b) any claim against
such a FAIR Plan, Coastal Pool, Beach Plan or similar plan, or
any participant therein, including the Company, whether by way
of subrogation or otherwise, brought by or on behalf of any
insolvency fund.
8. All liability of the Company arising by contract, operation of
law, or otherwise for its participation or membership, whether
voluntary or involuntary, in any insolvency fund. "Insolvency
fund" includes any guaranty fund, insolvency fund, plan, pool,
association, fund or other arrangement, however denominated,
established or governed, which provides for any assessment of
or payment or assumption by the Company of part or all of any
claim, debt, charge, fee or other obligation of an insurer, or
its successors or assigns, which has been declared by
any competent authority to be insolvent, or which is otherwise
deemed unable to meet any claim, debt, charge, fee or other
obligation in whole or in part.
9. All Inland Marine business.
10. Business excluded by the attached Pollution and Seepage
Exclusion Clauses:
a. Pollution Exclusion Clause - Auto Liability -
Reinsurance - XXXX Xx. 00X.
b. Pollution and Seepage Exclusion Clause - BRMA No.
39A.
ORIGINAL CONDITIONS
All insurances falling under this Agreement shall be subject to the same terms,
rates, conditions and waivers, and to the same modifications, alterations and
cancellations as the respective Policies of the Company (except that in the
event of the insolvency of the Company the provisions of the INSOLVENCY ARTICLE
of the Agreement shall apply) and the Reinsurer shall be credited with its exact
proportion of the original gross premiums received by the Company.
Nothing herein shall in any manner create any obligations or establish any
nights against the Reinsurer in favor of any third parties or any persons not
parties to this Agreement.
INSOLVENCY
In the event of insolvency of the Company, this reinsurance shall be payable
directly to the Company, or to its liquidator, receiver, conservator or
statutory successor, on the basis of the liability of the Company without
diminution because of the insolvency of the Company or because the liquidator,
receiver, conservator or statutory successor of the Company has failed to pay
all or a portion of any claim. It is agreed, however, that the liquidator,
receiver, conservator or statutory successor of the Company shall give written
notice to the Reinsurer of the pendency of a claim against the Company,
indicating the policy or bond reinsured, which claim would involve a possible
liability on the part of the Reinsurer within a reasonable time after such claim
is filed in the conservation or liquidation proceeding or in the receivership,
and that during the pendency of such claim the 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 that it may deem available to the
Company or its liquidator, receiver, conservator or statutory successor. The
expense thus incurred by the Reinsurer shall be chargeable, subject to the
approval of the Court, against the Company as part of the expense conservation
or liquidation to the extent of a pro rata share of the benefit which may accrue
to the Company solely as a result of the defense undertaken by the Reinsurer.
Where two or more reinsurers are involved in the same claim and a majority in
interest elect to interpose defense to such claim, the expense shall be
apportioned in accordance with the terms of this Agreement as though such
expense had been incurred by the Company.
It is further understood and agreed that, in the event of the insolvency of the
Company, the reinsurance under this Agreement shall be payable directly by the
Reinsurer to the Company or to its liquidator, receiver, conservator or
statutory successor, except (1) where the Agreement specifically provides
another payee of such reinsurance in the event of the insolvency of the Company
and (2) where the Reinsurer with the consent of the direct insured or insureds
has assumed such policy obligations of the Company as direct obligations of the
Reinsurer to the payees under such policies and in substitution for the
obligations of the Company to such payees.
COMMERCIAL AND PRIVATE PASSENGER
AUTOMOBILE LIABILITY & PHYSICAL DAMAGE QUOTA SHARE
REINSURANCE AGREEMENT 2409
REINSURANCE PLACEMENT SLIP
COMPANY: FEDERATED NATIONAL INSURANCE COMPANY; Pembroke Pines, Florida
EFFECTIVE: Continuous and to take effect January 1, 1997 as respects
in-force, new and renewal policies.
CANCELLATION: The Reinsurer shall have the right to terminate this Agreement
as of 12:01 a.m., Eastern Standard Time, December 31, by
giving 90 days prior notice in writing via either Certified
Registered Mail, return receipt requested.
The Company shall have the right to terminate this Agreement
as of 12:01 a.m., Eastern Standard Time, December 31, 1998,
and any subsequent December 31, by giving 90 days prior notice
in writing via either Certified or Registered Mail, return
receipt requested.
Run-off limited to 12 months plus odd time, not to exceed 18
months. Cut-off at Company's option, in which event Reinsurers
will immediately return their pro rata share of unearned
premium. Regardless of cancellation method, Reinsurers'
liability will continue in the event Company is bound by
statue or regulation.
BUSINESS
COVERED: All business classified by the Company as Commercial and/or
Private Passenger Automobile Liability and/or Physical Damage.
EXCLUSIONS. See attached.
TERRITORY: Per original policies.
LIMIT AND
RETENTION: 30% Quota Share of the following maximum limits:
Bodily Injury/per person $10,000
Bodily Injury/per occurrence $20,000
Property Damage Liability $10,000
LIMIT AND
RETENTION
CONTINUED: Automobile Physical Damage (ACV)
Private Passenger $30,000
Commercial $40,000
Personal Injury Protection Statutory $10,000
(Maximum Deductible $2,000)
Uninsured Motorist same as bodily injury
LOSS EXPENSE: Pro Rata not exceeding 7.0% of earned premium, inclusive of
legal, court and all other costs.
PREMIUM: 30% GNWP
CEDING
COMMISSION: Minimum: 27.0% at 67.5% Loss Ratio
Sliding 1% to 1%
28.5% at 66.0% Loss Ratio
Sliding .615% to 1%
Provisional: 30.0% at 63.56% Loss Ratio
Sliding .615 % to 1 %
Maximum: 36.49% at 53.0% Loss Ratio
Two Year Adjustment Period being January 1, 1997 to December
31, 1998. Should the treaty be terminated prior to the
completion of the two- year block, the Adjustment Period will
be modified to reflect the lesser period. Cumulative
Adjustments to be made at the end of each Agreement Year using
the appropriate sliding commission scale. Annual adjustments
thereafter until losses applicable to the Adjustment Period
are finally paid and settled or commuted.
Should this Agreement be terminated on a run-off basis wherein
the Reinsurer is liable for losses occurring after the date of
termination, then such run-off period shall be considered as
pail of the last Agreement Year.
FUNDING: Letters of Credit and/or Trust Agreements -- Required from
unauthorized Reinsurers. For outstanding losses and expenses,
recoverables, IBNR, and unearned premium.
REPORTS AND
REMITTANCES: Reports due within 45 days following the end of each month.
Remittances due within 60 days following the end of each
month.
OTHER
PROVISIONS: Original Conditions (as attached)
Currency Clause - U.S. Dollar
Taxes Clause (Reinsurers pay FET as applicable)
Excess of Policy Limits (90% up to $150,000, 30% is
$45,000 inclusive of contractual loss).
Extra Contractual Obligations (90% up to $150,000,
30$ is $45,000 inclusive of contractual loss).
Delays, Errors or Omissions Clause
Inspection Clause
Arbitration Clause
Service of Suit Clause
Insolvency Clause (as attached)
Alexander Re, Inc. Intermediary Clause
And others as existing.
WORDING: As expiring.
If any provisions of this contract will be rendered illegal or
unenforceable by the laws, regulations, or public policy of
any state, such provision will be considered void in such
state, but this will not affect the validity or enforceability
of any other provision of this contract or the enforceability
of such provision in any other jurisdiction.
We ask that you review the terms and conditions set forth
hereon. Assuming that you find everything in order, please
indicate your desired participation by signing and returning
one (1) copy of this Placement Slip to Alexander Re
Intermediaries, Inc.
Please indicate your desired participation by signing and
returning one (1) copy of this Placement Slip to Alexander Re.
REINSURER
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THRU:
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AUTHORIZED PERCENTAGE: % BEING $
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REFERENCE NO.:
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BY: DATED:
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ALEXANDER
RE
Date: March 19, 1997
To: Xxxxxxx Xxxxxxxxx, Assistant Secretary
Company: Transatlantic Reinsurance Company
Fax Number: 000-000-0000
From: Xxxxxx X. Xxxxx, Xx.
Number of pages to follows: 0
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Re: Federated National
As previously discussed, Xxx Xxxxxx has confirmed that the Quota Share
participation will revert back to 30% on April 1, 1997 on a cut-off basis. This
is being done because projected premium volume for 1997 has been revised
downward due to the delay in the start-up of the Mobile Homeowners program.
Because of the cut-off provision at 4/1, Transatlantic will be returning an
unearned premium portfolio to Federated National which will be very close to the
amount calculated for 12/31/96. Because of this and since the UEP has not yet
been sent to Transatlantic, we suggest doing an unearned calculation upon
receipt of the March amount and remitting the appropriate funds due either party
at that point. We will be providing the 12/31/96 calculation to you within one
week.
Please let me know if you are in agreement with this.
