Exhibit 10.55
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FIRST-FIFTH EXCESS OF LOSS REINSURANCE AGREEMENT
TABLE OF CONTENTS
Article Page
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Preamble................................................................... 3
1 Business Covered........................................................... 3
2 Territory.................................................................. 4
3 Exclusions................................................................. 4
4 Term....................................................................... 5
5 Attachment of Liability.................................................... 6
6 Warranties................................................................. 6
7 Definitions................................................................ 7
8 Net Retained Lines......................................................... 7
9 Ultimate Net Loss.......................................................... 8
10 Excess of Original Policy Limits........................................... 9
11 Extra Contractual Obligations ............................................. 9
12 Notice of Loss............................................................. 10
13 Commutation................................................................ 10
14 Reports and Remittances.................................................... 11
15 Offset..................................................................... 11
16 Confidentiality............................................................ 11
17 Currency................................................................... 12
18 Federal Excise Tax......................................................... 12
19 Taxes...................................................................... 12
20 Errors and Omissions....................................................... 12
21 Access to Records.......................................................... 13
22 Funding.................................................................... 13
23 Special Funding ........................................................... 14
24 Arbitration................................................................ 15
25 Service of Suit (U.S.A.)................................................... 16
26 Insolvency................................................................. 17
27 Intermediary............................................................... 18
28 Governing Law.............................................................. 18
29 Several Liability Notice................................................... 18
30 Regulation 98.............................................................. 19
Company Signing Block ..................................................... 19
Exhibits
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Exhibit A - First Layer.................................................... 20
Exhibit B - Second Layer................................................... 22
Exhibit C - Third Layer.................................................... 24
Exhibit D - Fourth Layer................................................... 26
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FIRST-FIFTH EXCESS OF LOSS REINSURANCE AGREEMENT
TABLE OF CONTENTS
Exhibits
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(Cont'd) Page
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Exhibit E - Fifth Layer.................................................... 28
Attachments
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Loss Funding - including IBNR.............................................. 29
Nuclear Energy Risks Exclusion Clause (Reinsurance) (1994)
(Worldwide Excluding U.S.A. and Canada).................................... 30
Nuclear Incident Exclusion Clause - Liability - Reinsurance - Canada....... 33
Nuclear Incident Exclusion Clause - Liability - Reinsurance - U.S.A........ 36
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First-Fifth Excess of Loss Reinsurance Agreement
(hereinafter referred to as the "Agreement")
entered into by and between
SCPIE HOLDINGS, INC., and/or
SCPIE INDEMNITY COMPANY and/or
AMERICAN HEALTHCARE INDEMNITY COMPANY, and/or
AMERICAN HEALTHCARE SPECIALTY COMPANY, and/or
SCPIE INSURANCE SERVICES, INC., and/or
SCPIE MANAGEMENT SERVICES, INC.
Los Angeles, California
(hereinafter collectively referred to as the "Company")
and
The Subscribing Reinsurer(s) executing the
Interests and Liabilities Contract(s)
attached to and forming a part
of this Agreement
(hereinafter referred to as the "Reinsurer")
WITNESSETH:
-----------
The Reinsurer hereby reinsures the Company to the extent and on the terms and
conditions subject to the exceptions, exclusions and limitations hereinafter set
forth and nothing hereinafter shall in any manner create any obligations or
establish any rights against the Reinsurer in favor of any third parties or any
persons not parties to this Agreement.
ARTICLE 1
BUSINESS COVERED
The Reinsurer agrees to reimburse the Company, on an excess of loss basis, for
the amount of ultimate net loss which the Company may pay as the result of
claims made during the term of this Agreement under the Classes of Insurance set
forth below with respect to (1) subject policies which are in force or may
hereinafter come into force during the term of this Agreement, and (2) losses
which were first reported to the Company during the period January 1, 1986 to
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December 31, 1994 and are first reported to the Reinsurer during the term of
this Agreement, except as excluded under the Exclusions Article subject to the
limitations set forth in the Limits of Cover Article.
CLASSES OF INSURANCE
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1. Physicians and Surgeons Comprehensive Professional and Business
Liability, including Clinics and Clinical Laboratories.
2. Professional and Business Liability policies for Hospitals and
Healthcare Facilities, including:
(a) Modified Claims Made Coverage Hospitals and Medical Centers
(Primary and Excess);
(b) Claims Made Coverage Hospitals and Medical Centers (Primary and
Excess):
(c) Excess Automobile Liability and Excess Employers Liability
associated with the policy forms outlined above.
3. Errors and Omissions Liability policies for Managed Care
Organizations, and Directors and Officers Liability policies.
4. Physicians and Surgeons Comprehensive Professional Liability and
Personal Umbrella business underwritten by Xxxxx & Xxxxx, Inc., Tampa,
Florida.
ARTICLE 2
TERRITORY
This Contract shall apply to losses occurring within the territorial limits of
the Company's original policies, contracts, and binders of insurance or
reinsurance.
ARTICLE 3
EXCLUSIONS
This Agreement specifically excludes:
1. 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, plan, pool, association, fund or other arrangement,
howsoever denominated, established or governed which provides for any
assessment of or payment or assumption by the Company of part or all
of any
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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.
2. Loss or Liability excluded by the provisions of the attached "Nuclear
Incident Exclusion Clause - Liability - Reinsurance".
3. Assumed Reinsurance other than for Licensing, Financial Rating
Purposes or Acquisition Purposes.
ARTICLE 4
TERM
A. Except as provided in paragraph C. below, this Agreement shall apply to
claims made during the twelve (12) month period beginning January 1, 2001
through December 31, 2001. In the event a loss, as defined in the
Definitions Article, involves a loss or losses covered under the current
Agreement Year and a prior Agreement Year(s), no recovery shall be made
hereunder in respect of any loss which occurred prior to:
1. January 1, 1979 as regards Extra Contractual Obligations (as provided
for in the Extra Contractual Obligations Clause Article).
2. January 1, 1976 as regards all other business.
B. It is understood however, that in respect of Personal Liability and
Discovery Period coverage for Deceased, Disabled, Retired and Withdrawing
Physicians and for Physicians ceasing Medical Practice within the State,
this Agreement covers claims made during the period of this Reinsurance
Agreement. In the event this Agreement is not renewed, all such liability
shall be assumed by the Company with effect from the date of cancellation.
C. The provisions of paragraphs A. and B. notwithstanding, the Company may, at
its option, elect to continue to cover the in-force portfolio of liability
covered under Section A. of the Limits of Cover Article of this Agreement
on the date of expiration for a further period of twelve (12) months.
Should the Company exercise this option, the Company shall give the
Reinsurer notice prior to expiration that they wish to exercise this
option. The Company shall pay to the Reinsurer an additional premium
thereon as set forth in the Premium Article.
D. If any law or regulation of the federal, state or local government or any
jurisdiction in which the Company is doing business shall render illegal
the arrangements made herein, this Agreement can be terminated immediately
insofar as it applies to such jurisdiction by the Company giving notice to
the Reinsurer to such effect.
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E. Notwithstanding the expiration of this Agreement as hereinabove provided,
the provisions of this Agreement shall continue to apply to all
unfinished business hereunder to the end that all obligations and
liabilities incurred by each party hereunder prior to such termination
shall be fully performed and discharged.
ARTICLE 5
ATTACHMENT OF LIABILITY
A. For purposes of determining the attachment of the Reinsurer's liability
hereunder as respects any one loss, all losses (including Discovery Period
Losses) involving one or more Original Insureds, arising from the same
incident, and in which First Notice of Claim or Circumstance is notified to
the Company during the term of this Agreement shall be covered hereunder.
B. The date of loss hereunder shall be the earliest date, within the term of
this Agreement, that the Company has received First Notice of Claim or
Circumstance.
ARTICLE 6
WARRANTIES
The Company warrants the following in respect of the business covered hereunder:
1. In respect of Physicians and Surgeons Comprehensive Professional and
Business Liability policies, including Clinics and Clinical
Laboratories, the maximum original policy limit is $10,000,000 subject
to inuring protection of $8,000,000 in excess of $2,000,000 with a
maximum aggregate of $8,000,000 during each twelve (12) month period,
or so deemed.
2. In respect of Professional and Business Liability policies for
Hospitals, the maximum policy limit is $50,000,000, or so deemed.
3. In respect of Professional and Business Liability policies for
Healthcare Facilities, the maximum policy limit is $10,000,000, or so
deemed.
4. In respect of Errors and Omissions Liability policies for Managed Care
Organizations and Directors and Officers Liability policies, the
maximum original policy limit is $5,000,000, or so deemed.
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ARTICLE 7
DEFINITIONS
A. The term "each and every loss" shall mean the happening of one or a series
of related acts, errors, or omissions to act, accidents or occurrences
arising out of one event.
B. The term "Gross Net Earned Premium Income" shall mean the gross earned
premium on business the subject matter hereof less cancellations and return
premiums and less premiums paid for reinsurance recoveries under which
would inure to the benefit of the Reinsurer. Such Premium Income shall be
understood to include:
1. that content of pre-paid premiums under policies in respect of
Deceased, Disabled and Retired Insureds, the coverage for which
becomes effective during the Agreement period.
2. the premium transferred internally by the Company from a prior
Agreement year or years, in respect of Deceased, Disabled and Retired
Insureds and in respect of other withdrawing Insureds who have
purchased extended coverage under Reporting Endorsements.
C. 1. With respect to recoveries made under Section A. of the Limits of
Cover Article, the term "claims made" as used herein shall mean (A) In
respect of Claims Made Policies, claims first notified to the Company
during the term of this Agreement on any in-force policy or reporting
endorsement arising out of incidents subsequent to the retroactive
date of said policy as the result of the rendering of or failure to
render a professional service or the reporting of losses which arise
from the insured premises and operations incidental to the practice of
a physician, hospital or managed care organization and/or (B) In
respect of Occurrence, or Modified Claims Made Policies, claims or
losses first notified to the Company during the term of this
Agreement.
2. With respect to recoveries made under Section B. of the Limits of
Cover Article, the term "claims made" as used herein shall mean claims
first reported to the Company during the period January 1, 1986 to
December 31, 1994 and first reported to the Reinsurer during the term
of this Agreement.
ARTICLE 8
NET RETAINED LINES
A. This Agreement applies to only that portion of any insurance which the
Company retains net for its own account; and in calculating the amount of
any loss hereunder and also in computing the amount or amounts in excess of
which this Agreement attaches, only loss or losses in respect of that
portion of any insurance which the Company retains net for its own account
shall be included.
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B. The amount of the Reinsurer's liability hereunder in respect of any loss or
losses shall not be increased by reason of the inability of the Company to
collect from any other underwriters, whether specific or general, any
amount which may become due from them, whether such inability arises from
the insolvency of such other underwriters or otherwise.
ARTICLE 9
ULTIMATE NET LOSS
A. The term "ultimate net loss" as used herein shall be understood to mean the
sum actually paid by the Company in settlement of losses for which it is
held liable, including loss adjustment expense, 80% of Extra Contractual
Obligations and 100% of loss in Excess of Original Policy Limits as
provided in the respectively captioned Articles, after making proper
deductions for all recoveries, salvages, and claims upon other reinsurances
and insurances which inure to the benefit of the Reinsurer under this
Agreement, whether collectible or not; provided, however, that in the event
of the insolvency of the Company, "ultimate net loss" shall mean the amount
of loss which the Company has incurred or for which it is liable, and
payment by the Reinsurer shall be made to the liquidator, receiver or
statutory successor of the Company in accordance with the provisions of the
Insolvency Article in this Agreement. The ultimate net loss shall include
Declaratory Judgment Expenses incurred in connection with coverage
questions and legal actions related to a specific claim. Nothing in this
clause, however, shall be construed to mean that losses under this
Agreement are not recoverable until the ultimate net loss of the Company
has been ascertained.
B. "Loss adjustment expense" means all costs and expenses allocable to a
specific claim that are incurred by the Company 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 (a) pre-judgment interest, unless included as part of
the award or judgment; (b) post-judgment interest; and (c) legal expenses
and costs incurred in connection with coverage questions and legal actions
connected thereto. Office expenses and salaries of officials and employees
not classified as loss adjusters are not chargeable as expenses for the
purpose of this paragraph.
C. In the event a verdict or judgment is reduced by an appeal or a settlement,
subsequent to the entry of a judgment, resulting in an ultimate saving on
such verdict or judgment, or a judgment is reversed outright, the expense
incurred in securing such final reduction or reversal shall (1) be prorated
between the Reinsurer and the Company in proportion that each benefits from
such reduction or reversal and the expense incurred up to the time of the
original verdict or judgment shall be prorated in proportion to each
party's interest in such verdict or judgment; or (2) when the terms and
conditions of the Company's original policies reinsured hereunder include
expenses as part of the policy limit, be added to the Company's ultimate
net loss.
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ARTICLE 10
EXCESS OF ORIGINAL POLICY LIMITS
A. This Agreement shall protect the Company, within the limits hereof, in
connection with any loss in excess of the limit of its original policy,
such loss in excess of the limit having been incurred because of failure by
it 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.
B. 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.
C. For the purposes 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 11
EXTRA CONTRACTUAL OBLIGATIONS
A. This Agreement shall protect the Company within the limits hereof, where
the ultimate net loss includes 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 reinsured or
in the preparation or prosecution of an appeal consequent upon such action.
B. The date on which an Extra Contractual Obligation is incurred by the
Company shall be deemed, in all circumstances, to be the date of the
original accident, casualty, disaster or loss and furthermore, for the
purposes hereof be deemed to follow the claims made provisions of this
Agreement, subject always to the provisions of the Term Article.
C. 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.
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ARTICLE 12
NOTICE OF LOSS
A. In the event of a claim arising hereunder which either results in or
appears to be of serious enough nature as probably to result in a loss
involving this Agreement, the Company shall give notice as soon as
reasonably practicable to the Reinsurer and the Company shall keep the
Reinsurer advised of all subsequent developments in connection therewith.
B. The Company shall also promptly notify the Reinsurer of all incidents
involving the following injuries for which the Company has established an
indemnity reserve of $550,000 or greater and with policy limits to affect
the Reinsurer:
1. Death of high wage earner with two or more dependents.
2. Brain Injury.
3. Nerve Injury.
4. Paralysis - cord injury.
5. Amputations.
6. Internal injuries which require continuous treatment (e.g., Dialysis,
Hyperalimentation, failure to diagnose).
7. Blindness.
C. All loss settlements made by the Company provided they are within the terms
of the Company's original policies and of this Agreement, shall be
unconditionally binding upon Reinsurer and amounts falling to the share of
the Reinsurer shall be payable to the Company in accordance with the
provisions set forth in paragraph C. of the Reports and Remittances
Article.
ARTICLE 13
COMMUTATION
The Company or the Reinsurer may, at any time express their desire to the other
party to commute all losses which are applicable to any Agreement year and which
are still unsettled. In such event the Company and the Reinsurer shall mutually
determine and evaluate such losses and the payment by the Reinsurer of their
proportion of the amount so ascertained and mutually agreed to be the value of
such losses shall relieve them of all further liability, in respect of that
Agreement year both in respect of known or unknown losses.
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ARTICLE 14
REPORTS AND REMITTANCES
A. The Company shall provide the Reinsurer within forty-five (45) days at the
end of each quarter, all necessary data respecting premiums and losses,
including reserves thereon, as at dates and on forms mutually acceptable to
the Company and the Reinsurer.
B. Payments of deposit premium and adjusted premium shall be made in
accordance with the provisions of the Premium Article.
C. Payment by the Reinsurer of its portion of loss and loss expenses paid by
the Company shall be made by the Reinsurer to the Company as soon as
possible, but not later than sixty (60) days after proof of payment by the
Company is received by the Reinsurer.
ARTICLE 15
OFFSET
The Company and the Reinsurer may offset any balance or amount due from one
party to the other under this Agreement or any other agreement heretofore or
hereafter entered into between the Company and the Reinsurer, whether acting as
assuming reinsurer or ceding company. This provision shall not be affected by
the insolvency of either party to this Agreement.
ARTICLE 16
CONFIDENTIALITY
A. This Agreement and the pre Agreement documentation may contain confidential
or proprietary information of either party to this Agreement. All parties
shall maintain the confidentiality of this information and shall not
disclose these to any third party without both parties approval.
B. Notwithstanding the above, any party may disclose such information without
further approval from the other party in answer to interrogations,
subpoenas or other legal/arbitration process as well as to the Company's
reinsurance intermediary hereon, the Reinsurer's retrocessionaires or in
response to requests by governmental and regulatory agencies. In addition
the parties may disclose such information to their accountants and outside
legal counsel as may be necessary.
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ARTICLE 17
CURRENCY
Premiums shall be payable by the Company and losses shall be paid to the Company
in United States currency.
ARTICLE 18
FEDERAL EXCISE TAX
(Applicable to those reinsurers, excepting Underwriters at Lloyd's, London and
other reinsurers exempt from Federal Excise Tax, who are domiciled outside the
United States of America.)
A. The Reinsurer has agreed to allow, for the purpose of paying the Federal
Excise Tax, the applicable percentage of the premium payable hereon (as
imposed under Section 4371 of the Internal Revenue Service Code) to the
extent such premium is subject to the Federal Excise Tax.
B. In the event of any return of premium becoming due hereunder the Reinsurer
shall deduct the aforesaid percentage from the return premium payable
hereon and the Company or its agent should take steps to recover the tax
from the United States government.
ARTICLE 19
TAXES
The Company shall be liable for all taxes on premiums reported to the Reinsurer
hereunder and shall reimburse the Reinsurer for such taxes where the Reinsurer
is required to pay the same. The Company agrees, when making tax returns in
respect of Canadian provincial premium taxes, not to claim any deduction for
premiums ceded hereunder.
ARTICLE 20
ERRORS AND OMISSIONS
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, provided such delay, omission or
error is rectified immediately upon discovery; provided, however, this Article
is not to override retroactive dates specified in the Term Article.
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ARTICLE 21
ACCESS TO RECORDS
A. 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 this reinsurance hereunder or the subject matter thereof.
B. The Reinsurer shall be afforded the opportunity, at its own expense to
appoint an agent of its own choice to assess the Company's claims
procedures who shall report to the Reinsurer the results of such.
ARTICLE 22
FUNDING
(This Article is only applicable to those Reinsurer(s) who cannot qualify for
credit by the State having jurisdiction over the Company's loss reserves.)
A. As regards policies or bonds issued by the Company coming within the scope
of this Agreement, the Company agrees that, when it shall file with the
Insurance Department or set up on its books reserves for losses covered
hereunder which it shall be required by law to set up, it shall forward to
the Reinsurer a statement showing the proportion of such loss reserves
which is applicable to the Reinsurer. The Reinsurer hereby agrees that it
shall apply for and secure delivery to the Company of a clean, irrevocable
and unconditional Letter of Credit, issued by a bank which is acceptable to
the regulatory authority(ies) having jurisdiction over the Company's loss
reserves in an amount equal to the Reinsurer's proportion of reserves in
respect of known outstanding losses that have been reported to the
Reinsurer and allocated loss expenses relating thereto, plus reserves for
losses incurred but not reported, as shown in the statement prepared by the
Company (see attached schedule).
B. The Letter of Credit shall be issued for a period of not less than one (1)
year, and shall be automatically extended for one (1) year from its date of
expiration or any future expiration date unless thirty (30) days prior to
any expiration date the issuing bank shall notify the Company by registered
mail that the bank elects not to consider the Letter of Credit extended for
any additional period. An issuing bank, not a member of the Federal Reserve
System or not chartered in New York State shall provide sixty (60) days
notice to the Company prior to any expiration in the event of
non-extension.
C. Notwithstanding any other provision of this Agreement, the Company or its
successors in interest may draw upon such credit at any time without
diminution because of the insolvency of the Company or of the Reinsurer for
one or more of the following purposes only:
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1. To pay the Reinsurer's share or to reimburse the Company for the
Reinsurer's share of any loss reinsured by this Agreement, the payment
of which has been agreed by the Reinsurer and which has not been
otherwise paid.
2. To make refund of any sum which is in excess of the actual amount
required to pay the Reinsurer's share of any liability reinsured by
this Agreement.
3. In the event of expiration of the Letter of Credit as provided for
above, to establish deposit of the Reinsurer's share of known and
reported outstanding losses and allocated expenses relating thereto
under this Agreement. Such cash deposit shall be held in an interest
bearing account separate from the Company's other assets, and interest
thereon shall accrue to the benefit of the Reinsurer.
D. The issuing bank shall have no responsibility whatsoever in connection with
the propriety of withdrawals made by the Company or the disposition of
funds withdrawn, except to ensure that withdrawals are made only upon the
order of properly authorized representatives of the Company.
E. At annual intervals, or more frequently as agreed but never more frequently
than quarterly, the Company shall prepare a specific statement, for the
sole purpose of amending the Letter of Credit, of the Reinsurer's share of
known and reported outstanding losses and allocated expenses relating
thereto, plus reserves for losses incurred but not reported. If the
statement shows that Reinsurer's share of such losses and allocated loss
expenses exceeds the balance of credit as of the statement date, the
Reinsurer shall, within thirty (30) days after receipt of notice of such
excess, secure delivery to the Company of an amendment of the Letter of
Credit increasing the amount of credit by the amount of such difference.
If, however, the statement shows that the Reinsurer's share of known and
reported outstanding losses plus allocated loss expenses relating thereto,
plus reserves for losses incurred but not reported is less than the balance
of credit as of the statement date, the Company shall, within thirty (30)
days after receipt of written request from the Reinsurer, release such
excess credit by agreeing to secure an amendment to the Letter of Credit
reducing the amount of credit available by the amount of such excess
credit.
ARTICLE 23
SPECIAL FUNDING
A. If, during the period of this Agreement and thereafter, as respects any
outstanding liabilities hereunder, the Reinsurer shall fail to pay any loss
payable hereunder within the time prescribed, the Reinsurer agrees that it
shall fund uncollected paid losses and loss adjustment expenses within
thirty (30) days from the date of written demand by the Company to so fund.
Such demand shall not be made unless balances are sixty (60) days or more
past the due date of payment specified in this Agreement.
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B. The Reinsurer shall have the sole option of determining the method of
funding referred to above, provided it is acceptable to the insurance
regulatory authorities involved. If the Reinsurer elects to fund the
aforesaid loss by a Letter of Credit, the procedures set forth in the
Funding Article in respect of Letters of Credit shall apply. If the
Reinsurer has already funded obligations hereunder in accordance with the
Funding Article in this Agreement, it agrees that such funds as are
required to pay overdue losses may immediately be drawn down by the
Company.
C. The phrase "any loss payable" as used in paragraph A. above shall mean any
ultimate net loss subject to recovery under this Agreement wherein the
Reinsurer has not disputed said loss in writing within the due date for
payment.
D. The Company shall provide the Reinsurer with a reinsurance proof of loss
and such other substantive loss material reflecting the nature of the
settlement (i.e., applicable Proofs of Loss, Releases, adjuster's reports,
etc.). If, subsequent to receipt of this material, the information supplied
is insufficient or not in accordance with the contractual conditions, then
the payment due date as defined in the Reports and Remittances Article,
shall be deemed to be the date upon which the Reinsurer received such
additional substantive material necessary to approve payment of the claim,
or the date the claim is presented in a manner acceptable to the Reinsurer.
ARTICLE 24
ARBITRATION
A. As a condition precedent to any right of action hereunder, any dispute
arising out of the interpretation, performance or breach of this Agreement,
including the formation or validity thereof, shall be submitted for
decision to a panel of three arbitrators. Notice requesting arbitration
shall be in writing and sent certified or registered mail, return receipt
requested.
B. One arbitrator shall be chosen by each party and the two arbitrators shall,
before instituting the hearing, choose an impartial third arbitrator who
shall preside at the hearing. If either party fails to appoint its
arbitrator within thirty (30) days after being requested to do so by the
other party, the latter, after ten (10) days' notice by certified or
registered mail of its intention to do so, may appoint the second
arbitrator.
C. If the two arbitrators are unable to agree upon the third arbitrator within
thirty (30) days of their appointment, the deficiency shall be supplied on
the application of the party requesting arbitration by an appointment made
by the American Arbitration Association. Notwithstanding the appointment of
any third Arbitrator by the American Arbitration Association, the
arbitration proceedings shall not be governed by the American Arbitration
Association's commercial arbitration rules.
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D. All arbitrators shall be disinterested active or former executive officers
of insurance or reinsurance companies or Underwriters at Lloyd's, London.
E. Within thirty (30) days after notice of appointment of all arbitrators, the
panel shall meet and determine timely periods for briefs, discovery
procedures and schedules for hearings.
F. The panel shall be relieved of all judicial formality and shall not be
bound by the strict rules of procedure and evidence Unless the panel agrees
otherwise, arbitration shall take place in Los Angeles, California, but the
venue may be changed when deemed by the panel to be in the best interest of
the arbitration proceeding. Insofar as the arbitration panel looks to
substantive law, it shall consider the law of the State of California. The
decision of any two arbitrators when rendered in writing shall be final and
binding. The panel is empowered to grant interim relief as it may deem
appropriate.
G. The panel shall make its decision considering the custom and practice of
the applicable insurance and reinsurance business within sixty (60) days
following the termination of the hearings. Judgment upon the award may be
entered in a court having jurisdiction thereof.
H. Each party shall bear the expense of its own arbitrator and shall jointly
and equally bear with the other party the cost of the third arbitrator. The
remaining costs of the arbitration shall be allocated by the panel. The
panel may, at its discretion, award such further costs and expenses as it
considers appropriate, including but not limited to attorneys fees, to the
extent permitted by law.
ARTICLE 25
SERVICE OF SUIT (U.S.A.)
(This Article applies only to those reinsurers not domiciled in the United
States of America, and/or not authorized in any state, territory and/or district
of the United States of America where authorization is required by insurance
regulatory authorities.)
A. It is agreed that in the event of the failure of the Reinsurer hereon to
pay any amount claimed to be due hereunder, the Reinsurer hereon, at the
request of the Company, shall submit to the jurisdiction of a court of
competent jurisdiction within the United States of America. Nothing in this
Article constitutes or should be understood to constitute a waiver of the
Reinsurer's rights to commence an action in any court of competent
jurisdiction in the United States of America, to remove an action to a
United States District Court, or to seek a transfer of a case to another
court as permitted by the laws of the United States of America or of any
State in the United States of America. It is further agreed that service of
process in such suit may be made upon Messrs. Mendes & Mount, 000 Xxxxx
Xxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000, and that in any suit
instituted, the Reinsurer shall abide by the final decision of such court
or of any appellate court in the event of an appeal.
Effective: January 1, 0000 XXX: June 25, 2001
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B. The above-named are authorized and directed to accept service of process on
behalf of the Reinsurer in any such suit and/or upon the request of the
Company to give written undertaking to the Company that they shall enter a
general appearance upon the Reinsurer's behalf in the event such a suit
shall be instituted.
C. Further, pursuant to any statute of any state, territory or district of the
United States of America which makes provision therefor, the Reinsurer
hereon hereby designates the Superintendent, Commissioner or Director of
Insurance or other officer specified for that purpose in the statute, or
its successor or successors in office, as their true and lawful attorney
upon whom may be served any lawful process in action, suit or proceeding
instituted by or on behalf of the Company or any beneficiary hereunder
arising out of this Agreement, and hereby designate the above-named as the
firm to whom the said officer is authorized to mail such process or a true
copy thereof.
ARTICLE 26
INSOLVENCY
A. The portion of any risk or obligation assumed by the Reinsurer, when such
portion is ascertained, shall be payable on demand of the Company at the
same time as the Company shall pay its net retained portion of such risk or
obligation, with reasonable provision for verification before payment, and
the reinsurance shall be payable by the Reinsurer, on the basis of the
liability of the Company under the policy or policies reinsured without
diminution because of the insolvency of the Company.
B. In the event of the insolvency of one or more than one of the Companies,
reinsurance under this Agreement shall be payable immediately on demand,
with reasonable provision for verification, on the basis of claims allowed
against the insolvent Company(ies) by any court of competent jurisdiction
or by any liquidator, receiver, or statutory successor of the Company(ies)
having authority to allow such claims, without diminution because of such
insolvency or because such liquidator, receiver, or statutory successor has
failed to pay all or a portion of any claims.
Such payments by the Reinsurer shall be made directly to the Company or its
liquidator, receiver or statutory successor, except where the contract of
insurance or reinsurance provides another payee of such reinsurance in the
event of the insolvency of the Company(ies).
C. It is agreed, however, that the liquidator or receiver or statutory
successor of the insolvent Company(ies) shall give written notice to the
Reinsurer of the pendency of a claim against the insolvent Company(ies) on
the policy or policies reinsured within a reasonable time after such claim
is filed in the insolvency proceeding 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 which it may
Effective: January 1, 0000 XXX: June 25, 2001
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xxxx available to the Company(ies) or its liquidator or receiver or
statutory successor. The expense thus incurred by the Reinsurer shall be
chargeable, subject to court approval, against the insolvent Company(ies)
as part of the expense of liquidation to the extent of a proportionate
share of the benefit which may accrue to the Company(ies) solely as a
result of the defense undertaken by the Reinsurer.
D. 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 insolvent Company(ies).
ARTICLE 27
INTERMEDIARY
Xxx Xxxxxxxxx & Company, Inc. is hereby recognized as the Intermediary
negotiating this Agreement for all business hereunder. All communications
(including but not limited to notices, statements, premium, return premium,
commissions, taxes, losses, loss adjustment expense, salvages and loss
settlements) relating thereto shall be transmitted to the Company or the
Reinsurer through Xxx Xxxxxxxxx & Company, Inc., 0 Xxxxx Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 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 to constitute payment to the Company only to the
extent that such payments are actually received by the Company.
ARTICLE 28
GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with the laws
of the State of California, U.S.A.
ARTICLE 29
SEVERAL LIABILITY NOTICE
The Subscribing Reinsurers' obligations under contracts of reinsurance to which
they subscribe are several and not joint and are limited solely to the extent of
their individual subscriptions. The subscribing reinsurers are not responsible
for the subscription of any co-subscribing reinsurer who for any reason does not
satisfy all or part of its obligations.
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ARTICLE 30
REGULATION 98
Premium and loss payments made to Xxx Xxxxxxxxx & Company, Inc. 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.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized representative(s) this day of , 2001.
-------- ----------
SCPIE HOLDINGS, INC., and/or
SCPIE INDEMNITY COMPANY and/or
AMERICAN HEALTHCARE INDEMNITY COMPANY, and/or
AMERICAN HEALTHCARE SPECIALTY COMPANY, and/or
SCPIE INSURANCE SERVICES, INC., and/or
SCPIE MANAGEMENT SERVICES, INC.
Los Angeles, California
--------------------------------------------------------------------------------
Effective: January 1, 0000 XXX: June 25, 2001
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EXHIBIT A - FIRST LAYER
Attaching to and forming a part of the
EXCESS OF LOSS REINSURANCE AGREEMENT
LIMITS OF COVER
A. As respects Physicians and Surgeons Comprehensive Professional and Business
Liability Policies, including clinics and clinical laboratories,
Professional and Business Liability polices for Healthcare Facilities, and
Errors and Omissions liability policies for Managed Care Organizations and
Directors and Officers Liability Policies in force during the term of this
Agreement, the Company shall retain for its own account and pay under one
or more of the Company's policies the first $1,250,000 ultimate net loss,
each and every loss and the Reinsurer agrees to reimburse the Company for
the amount of ultimate net loss paid in excess of $1,250,000, each and
every loss, but the Reinsurer's maximum liability shall not exceed
$3,750,000 resulting from each and every loss.
B. As respects Professional and Business Liability Policies for Hospitals in
force during the term of this Agreement, the Company shall retain for its
own account and pay under one or more of the Company's policies the first
$2,000,000 ultimate net loss, each and every loss and the Reinsurer agrees
to reimburse the Company for the amount of ultimate net loss paid in excess
of $2,000,000, each and every loss, but the Reinsurer's maximum liability
shall not exceed $3,000,000 resulting from each and every loss.
C. It is understood and agreed that this Agreement shall respond to individual
losses under Physicians and Surgeons Comprehensive Professional and
Business Liability Policies, including clinics and clinical laboratories,
Professional and Business Liability policies for Healthcare Facilities,
Errors and Omissions Liability Policies for Managed Care Organizations, and
Directors and Officers Liability Policies and/or any combination thereof,
in excess of $1,250,000 arising from any one incident. However, in the
event any such combined loss were to include Professional and Business
Liability Policies for Hospitals, then this Agreement shall attach in
excess of $2,000,000 arising from any one incident.
D. As respects losses which were first reported to the Company during the
period January 1, 1986 to December 31, 1994 and are first reported to the
Reinsurer during the term of this Agreement, the Company shall retain for
its own account and pay under one or more of the Company's policies the
first $2,000,000 ultimate net loss, each and every loss and the Reinsurer
agrees to reimburse the Company for the amount of ultimate net loss paid in
excess of $2,000,000, each and every loss, but the Reinsurer's maximum
liability shall not exceed $3,000,000 resulting from each and every loss.
The coverage provided hereunder shall be no narrower nor broader in scope
than that which was provided to the
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Company under their Second Excess of Loss Reinsurance Agreement in force
for the same period (see attached Cover Note Numbers 10710-003/86,
01-87-0021, 01-88-0021, 01-89-0021, 01-90-0021, 01-91-0021, 01-92-0021,
01-93-0021 and 01-94-0021).
E. The Reinsurer's maximum aggregate liability from all losses during the term
of this Agreement shall not exceed $15,000,000.
F. Not withstanding the foregoing it is a condition hereto that an Annual
Aggregate Deductible of $1,750,000, otherwise recoverable, shall first be
deducted before any liability attaches hereon.
PREMIUM
A. The Company shall pay to the Reinsurer a deposit premium of $6,484,000
payable in equal quarterly installments of $1,621,000 on January 1, April
1, July 1 and October 1, 2001. In the event of cancellation, at the option
of the Company, the Reinsurer agrees to run-off policies in force until
natural expiration, not to exceed twelve (12) months from the expiration
date hereon, subject to a premium equal to 50% of the Actual Earned
Reinsurance Premium, as set forth in paragraph B. The run-off premium shall
be paid in equal quarterly installments on January 1, April 1, July 1 and
October 1, 2002.
B. As soon as practicable after expiration of this Agreement, the Company
shall calculate the premium due the Reinsurer based on a rate of 4.178% of
the Gross Net Earned Premium Income accounted for by the Company during the
term of this Agreement on all business subject matter of the Agreement,
subject to a minimum premium of $5,187,200. In the event the premium due
hereunder is greater than the deposit premium paid, the difference shall be
paid to the Reinsurer forthwith. If the actual premium is less then the
deposit premium paid, the difference shall be refunded to the Company,
subject to the minimum premium.
Effective: January 1, 0000 XXX: June 25, 2001
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EXHIBIT B - SECOND LAYER
Attaching to and forming a part of the
EXCESS OF LOSS REINSURANCE AGREEMENT
LIMITS OF COVER
A. The Company shall retain for its own account and pay under one or more of
the Company's policies the first $5,000,000 ultimate net loss, each and
every loss and the Reinsurer agrees to reimburse the Company for the amount
of ultimate net loss paid in excess of $5,000,000, each and every loss, but
the Reinsurer's maximum liability shall not exceed $5,000,000 resulting
from each and every loss.
B. As respects losses which were first reported to the Company during the
period January 1, 1987 to December 31, 1994 and are first reported to the
Reinsurer during the term of this Agreement, the Company shall retain for
its own account and pay under one or more of the Company's policies the
first $5,000,000 ultimate net loss, each and every loss and the Reinsurer
agrees to reimburse the Company for the amount of ultimate net loss paid in
excess of $5,000,000, each and every loss, but the Reinsurer's maximum
liability shall not exceed $5,000,000 resulting from each and every loss.
The coverage provided hereunder shall be no narrower nor broader in scope
than that which was provided to the Company under their Third Excess of
Loss Reinsurance Agreement in force for the same period (see attached Cover
Note Numbers 01-87-0022, 01-88-0022, 01-89-0022, 01-90-0022, 01-91-0022,
01-92-0022, 01-93-0022 and 01-94-0022).
PREMIUM
A. The Company shall pay to the Reinsurer a deposit premium of $2,040,000
payable in equal quarterly installments of $510,000 on January 1, April 1,
July 1 and October 1, 2001. In the event of cancellation, at the option of
the Company, the Reinsurer agrees to run-off policies in force until
natural expiration, not to exceed twelve (12) months from the expiration
date hereon, subject to a premium equal to 50% of the Actual Earned
Reinsurance Premium, as set forth in paragraph B. The run-off premium shall
be paid in equal quarterly installments on January 1, April 1, July 1 and
October 1, 2002.
B. As soon as practicable after expiration of this Agreement, the Company
shall calculate the premium due the Reinsurer based on a rate of 1.314% of
the Gross Net Earned Premium Income accounted for by the Company during the
term of this Agreement on all business subject matter of the Agreement,
subject to a minimum premium of $1,630,000. In the
Effective: January 1, 0000 XXX: June 25, 2001
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event the premium due hereunder is greater than the deposit premium paid,
the difference shall be paid to the Reinsurer forthwith. If the actual
premium is less then the deposit premium paid, the difference shall be
refunded to the Company, subject to the minimum premium.
REINSTATEMENT
A. As respects Sections A. and B. combined of the Limits of Cover Section:
1. In the event of any portion of the coverage under this Agreement being
depleted or exhausted by loss, the amount so depleted or exhausted
shall be reinstated from the time claim is first made and the Company
shall pay the Reinsurer for such reinstatement an additional premium
calculated as follows:
(a) For the first reinstatement, 50% of the annual reinsurance
premium pro rated as to the amount so reinstated;
(b) For the second reinstatement, 100% of the annual reinsurance
premium pro rated as to the amount so reinstated.
2. All calculations of reinstatement premiums shall be based on paid
losses only.
B. Nevertheless, the Reinsurer's liability shall never be more than $5,000,000
in respect of any claim made nor more than the Maximum Annual Aggregate
Amount Recoverable under Sections A. and B. combined of $15,000,000 in all
during the term of the Agreement.
Effective: January 1, 0000 XXX: June 25, 2001
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EXHIBIT C - THIRD LAYER
Attaching to and forming a part of the
EXCESS OF LOSS REINSURANCE AGREEMENT
LIMITS OF COVER
A. The Company shall retain for its own account and pay under one or more of
the Company's policies the first $10,000,000 ultimate net loss, each and
every loss and the Reinsurer agrees to reimburse the Company for the amount
of ultimate net loss paid in excess of $10,000,000, each and every loss,
but the Reinsurer's maximum liability shall not exceed $10,000,000
resulting from each and every loss.
B. As respects losses which were first reported to the Company during the
period January 1, 1992 to December 31, 1994 and are first reported to the
Reinsurer during the term of this Agreement, the Company shall retain for
its own account and pay under one or more of the Company's policies the
first $10,000,000 ultimate net loss, each and every loss and the Reinsurer
agrees to reimburse the Company for the amount of ultimate net loss paid in
excess of $10,000,000, each and every loss, but the Reinsurer's maximum
liability shall not exceed $10,000,000 resulting from each and every loss.
The coverage provided hereunder shall be no narrower nor broader in scope
than that which was provided to the Company under their Fourth Excess of
Loss Reinsurance Agreement in force for the same period (see attached Cover
Note Numbers 01-92-0599, 01-93-0599 and 01-94-0599).
PREMIUM
A. The Company shall pay to the Reinsurer a deposit premium of $1,420,000
payable in equal quarterly installments of $355,000 on January 1, April 1,
July 1 and October 1, 2001. In the event of cancellation, at the option of
the Company, the Reinsurer agrees to run-off policies in force until
natural expiration, not to exceed twelve (12) months from the expiration
date hereon, subject to a premium equal to 50% of the Actual Earned
Reinsurance Premium, as set forth in paragraph B. The run-off premium shall
be paid in equal quarterly installments on January 1, April 1, July 1 and
October 1, 2002.
B. As soon as practicable after expiration of this Agreement, the Company
shall calculate the premium due the Reinsurer based on a rate of 0.920% of
the Gross Net Earned Premium Income accounted for by the Company during the
term of this Agreement on all business subject matter of the Agreement,
subject to a minimum premium of $1,136,000. In the event the premium due
hereunder is greater than the deposit premium paid, the difference
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shall be paid to the Reinsurer forthwith. If the actual premium is less
then the deposit premium paid, the difference shall be refunded to the
Company, subject to the minimum premium.
REINSTATEMENT
A. As respects Sections A. and B. combined of the Limits of Cover Section:
1. In the event of any portion of the coverage under this Agreement being
depleted or exhausted by loss, the amount so depleted or exhausted
shall be reinstated from the time claim is first made and the Company
shall pay the Reinsurer for such reinstatement an additional premium
calculated as follows:
(a) For the first reinstatement, 100% of the annual reinsurance
premium pro rated as to the amount so reinstated;
(b) For the second reinstatement, 100% of the annual reinsurance
premium pro rated as to the amount so reinstated.
2. All calculations of reinstatement premiums shall be based on paid
losses only.
B. Nevertheless, the Reinsurer's liability shall never be more than
$10,000,000 in respect of any claim made nor more than the Maximum Annual
Aggregate Amount Recoverable under Sections A. and B. combined of
$30,000,000 in all during the term of the Agreement.
Effective: January 1, 0000 XXX: June 25, 2001
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EXHIBIT D - FOURTH LAYER
Attaching to and forming a part of the
EXCESS OF LOSS REINSURANCE AGREEMENT
LIMITS OF COVER
The Company shall retain for its own account and pay under one or more of
the Company's policies the first $20,000,000 ultimate net loss, each and
every loss and the Reinsurer agrees to reimburse the Company for the amount
of ultimate net loss paid in excess of $20,000,000, each and every loss,
but the Reinsurer's maximum liability shall not exceed $30,000,000
resulting from each and every loss.
PREMIUM
A. The Company shall pay to the Reinsurer a deposit premium of $1,000,000
payable in equal quarterly installments of $250,000 on January 1, April 1,
July 1 and October 1, 2001. In the event of cancellation, at the option of
the Company, the Reinsurer agrees to run-off policies in force until
natural expiration, not to exceed twelve (12) months from the expiration
date hereon, subject to a premium equal to 50% of the Actual Earned
Reinsurance Premium, as set forth in paragraph B. The run-off premium shall
be paid in equal quarterly installments on January 1, April 1, July 1 and
October 1, 2002.
B. As soon as practicable after expiration of this Agreement, the Company
shall calculate the premium due the Reinsurer based on a rate of 0.645% of
the Gross Net Earned Premium Income accounted for by the Company during the
term of this Agreement on all business subject matter of the Agreement,
subject to a minimum premium of $800,000. In the event the premium due
hereunder is greater than the deposit premium paid, the difference shall be
paid to the Reinsurer forthwith. If the actual premium is less then the
deposit premium paid, the difference shall be refunded to the Company,
subject to the minimum premium.
REINSTATEMENT
A. As respects Sections A. and B. combined of the Limits of Cover Section:
1. In the event of any portion of the coverage under this Agreement being
depleted or exhausted by loss, the amount so depleted or exhausted
shall be reinstated from the
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time claim is first made and the Company shall pay the Reinsurer for
such reinstatement an additional premium calculated as follows:
For the first reinstatement, 100% of the annual reinsurance premium
pro rated as to the amount so reinstated;
2. All calculations of reinstatement premiums shall be based on paid
losses only.
B. Nevertheless, the Reinsurer's liability shall never be more than
$30,000,000 in respect of any claim made nor more than the Maximum Annual
Aggregate Amount Recoverable under Sections A. and B. combined of
$60,000,000 in all during the term of the Agreement.
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EXHIBIT E - FIFTH LAYER
Attaching to and forming a part of the
EXCESS OF LOSS REINSURANCE AGREEMENT
LIMITS OF COVER
The Company shall retain for its own account and pay under one or more of
the Company's policies the first $50,000,000 ultimate net loss, each and
every loss and the Reinsurer agrees to reimburse the Company for the amount
of ultimate net loss paid in excess of $50,000,000, each and every loss,
but the Reinsurer's maximum liability shall not exceed $20,000,000
resulting from each and every loss.
PREMIUM
A. The Company shall pay to the Reinsurer a deposit premium of $295,000
payable in equal quarterly installments of $73,750 on January 1, April 1,
July 1 and October 1, 2001. In the event of cancellation, at the option of
the Company, the Reinsurer agrees to run-off policies in force until
natural expiration, not to exceed twelve (12) months from the expiration
date hereon, subject to a premium equal to 50% of the Actual Earned
Reinsurance Premium, as set forth in paragraph B. The run-off premium shall
be paid in equal quarterly installments on January 1, April 1, July 1 and
October 1, 2002.
B. As soon as practicable after expiration of this Agreement, the Company
shall calculate the premium due the Reinsurer based on a rate of 0.190% of
the Gross Net Earned Premium Income accounted for by the Company during the
term of this Agreement on all business subject matter of the Agreement,
subject to a minimum premium of $236,000. In the event the premium due
hereunder is greater than the deposit premium paid, the difference shall be
paid to the Reinsurer forthwith. If the actual premium is less then the
deposit premium paid, the difference shall be refunded to the Company,
subject to the minimum premium.
Effective: January 1, 0000 XXX: June 25, 2001
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LOSS FUNDING - INCLUDING IBNR
THIS IS APPLICABLE TO NON-ADMITTED REINSURERS ONLY
--------------------------------------------------
After consultation with their outside Actuaries, Xxxxxxxxxxx, Towers Xxxxxx,
S.C.P.I.E. intends to use the following IBNR factors applied to Gross
Reinsurance Premiums for 2000 Letter of Credit Funding purposes applicable to
Non-Admitted Reinsurers only:
IBNR
Period Factor
------ ------
Current Year 97.00%
First Development Year 40.00%
Second Development Year 17.00%
Third Development Year 7.00%
Fourth Development Year &
Subsequent 2.00%
The Letter of Credit Funding requirement for IBNR shall be net of any Specific
---
Case Base Loss Reserves. Therefore, the factors outlined above represent the
ceiling for the sum of Specific Case Base Loss Reserves and IBNR. Further, a cap
------- ---
of five times the Gross Reinsurance Premium shall apply as the Lifetime IBNR
Maximum for each Treaty Year.
Effective: January 1, 0000 XXX: June 25, 2001
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NUCLEAR ENERGY RISKS EXCLUSION CLAUSE (REINSURANCE) (1994)
(WORLDWIDE EXCLUDING U.S.A. AND CANADA)
This Agreement shall exclude Nuclear Energy Risks whether such risks are written
directly and/or by way of reinsurance and/or via Pools and/or Associations.
For all purposes of this Agreement Nuclear Energy Risks shall mean all first
---------
party and/or third party insurances or reinsurances (other than Workers'
------------------------------------------------------------------------
Compensation and Employers' Liability) in respect of:
----------------------------------------------------
(I) All Property on the site of a nuclear power station.
Nuclear Reactors, reactor buildings and plant and equipment therein on
any site other than a nuclear power station.
(II) All Property, on any site (including but not limited to the sites
referred to in (I) above) used or having been used for:
(a) the generation of nuclear energy; or
(b) the Production, Use or Storage of Nuclear Material.
(III) Any other Property eligible for insurance by the relevant local
Nuclear Insurance Pool and/or Association but only to the extent of
the requirements of that local Pool and/or Association.
(IV) The supply of goods and services to any of the sites, described in (I)
to (III) above, unless such insurances or reinsurances shall exclude
the perils of irradiation and contamination by Nuclear Material.
Except as undernoted, Nuclear Energy Risks shall not include:
(i) Any insurance or reinsurance in respect of the construction or
erection or installation or replacement or repair or maintenance or
decommissioning of Property as described in (I) to (III) above
(including contractors' plant and equipment);
(ii) Any Machinery Breakdown or other Engineering insurance or reinsurance
not coming within the scope of (i) above.
Provided always that such insurance or reinsurance shall exclude the perils of
irradiation and contamination by Nuclear Material.
However, the above exemption shall not extend to:
(1) The provision of any insurance or reinsurance whatsoever in respect
of:
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(a) Nuclear Material;
(b) Any Property in the High Radioactivity Zone or Area of any
Nuclear Installation as from the introduction of Nuclear Material
or - for reactor installations - as from fuel loading or first
criticality where so agreed with the relevant local Nuclear
Insurance Pool and/or Association.
(2) The provision of any insurance or reinsurance for the undernoted
perils:
. fire, lightning, explosion;
. earthquake;
. aircraft and other aerial devices or
. articles dropped therefrom;
. irradiation and radioactive contamination;
. any other peril insured by the relevant local Nuclear Insurance
Pool and/or Association;
in respect of any other Property not specified in (1) above which
directly involves the Production, Use or Storage of Nuclear Material
as from the introduction of Nuclear Material into such Property.
Definitions
-----------
"Nuclear Material" means:
(i) Nuclear fuel, other than natural uranium and depleted uranium, capable
of producing energy by a self-sustaining chain process of nuclear
fission outside a Nuclear Reactor, either alone or in combination with
some other material; and
(ii) Radioactive Products or Waste.
"Radioactive Products or Waste" means any radioactive material produced in, or
any material made radioactive by exposure to the radiation incidental to the
production or utilization of nuclear fuel, but does not include radioisotopes
which have reached the final stage of fabrication so as to be usable for any
scientific, medical, agricultural, commercial or industrial purpose.
"Nuclear Installation" means:
(i) Any Nuclear Reactor;
(ii) Any factory using nuclear fuel for the production of Nuclear Material,
or any factory for the processing of Nuclear Material, including any
factory for the reprocessing of irradiated nuclear fuel; and
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(iii) Any facility where Nuclear Material is stored, other than storage
incidental to the carriage of such material.
"Nuclear Reactor" means any structure containing nuclear fuel in such an
arrangement that a self-sustaining chain process of nuclear fission can occur
therein without an additional source of neutrons.
"Production, Use or Storage of Nuclear Material" means the production,
manufacture, enrichment, conditioning, processing, reprocessing, use, storage,
handling and disposal of Nuclear Material.
"Property" shall mean all land, buildings, structures, plant, equipment,
vehicles, contents (including but not limited to liquids and gases) and all
materials of whatever description whether fixed or not.
"High Radioactivity Zone or Area" means:
(i) For nuclear power stations and Nuclear Reactors, the vessel or
structure which immediately contains the core (including its supports
and shrouding) and all the contents thereof, the fuel elements, the
control rods and the irradiated fuel store; and
(ii) For non-reactor Nuclear Installations, any area where the level of
radioactivity requires the provision of a biological shield.
N.M.A. 1975(a)
April 1, 1994
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NOTES: Wherever used herein the terms:
"Reinsured" shall be understood to mean "Company", "Reinsured",
"Reassured" or whatever other term is used in the
attached reinsurance document to designate the
reinsured company or companies.
"Agreement" shall be understood to mean "Agreement", "Contract",
"Policy" or whatever other term is used to designate
the attached reinsurance document.
"Reinsurers" shall be understood to mean "Reinsurers",
"Underwriters" or whatever other term is used in the
attached reinsurance document to designate the
reinsurer or reinsurers.
Effective: January 1, 0000 XXX: June 25, 2001
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NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - CANADA
1. This Agreement does not cover any loss or liability accruing to the
Reinsured as a member of, or subscriber to, any association of insurers or
reinsurers formed for the purpose of covering nuclear energy risks or as a
direct or indirect reinsurer of any such member, subscriber or association.
2. Without in any way restricting the operation of paragraph 1 of this clause
it is agreed that for all purposes of this Agreement all the original
liability contracts of the Reinsured, whether new, renewal or replacement,
of the following classes, namely,
Personal Liability
Farmers' Liability
Storekeepers' Liability
which become effective on or after 31st December 1992, shall be deemed to
include, from their inception dates and thereafter, the following
provision:-
Limited Exclusion Provision.
This Policy does not apply to bodily injury or property damage with respect
to which the Insured is also insured under a contract of nuclear energy
liability insurance (whether the Insured is unnamed in such contract and
whether or not it is legally enforceable by the Insured) issued by the
Nuclear Insurance Association of Canada or any other group or pool of
insurers or would be an Insured under any such policy but for its
termination upon exhaustion of its limit of liability.
With respect to property, loss of use of such property shall be deemed to
be property damage.
3. Without in any way restricting the operation of paragraph 1 of this clause
it is agreed that for all purposes of this Agreement all the original
liability contracts of the Reinsured, whether new, renewal or replacement
of any class whatsoever (other than Personal Liability, Farmers' Liability,
Storekeepers' Liability or Automobile Liability contracts), which become
effective on or after 31st December 1992, shall be deemed to include from
their inception dates and thereafter, the following provision:-
Broad Exclusion Provision
It is agreed that this Policy does not apply:
(a) To any liability imposed by or arising from any nuclear liability act,
law or statute or any law amendatory thereof; nor
(b) to bodily injury or property damage with respect to which an Insured
under this policy is also insured under a contract of nuclear energy
liability insurance (whether the Insured is unnamed in such contract
and whether or not it is legally enforceable by the Insured)
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issued by the Nuclear Insurance Association of Canada or any other
insurer or group or pool of insurers or would be an Insured under any
such policy but for its termination upon exhaustion of its limit of
liability; nor
(c) to bodily injury or property damage resulting directly or indirectly
from the nuclear energy hazard arising from:
(i) the ownership, maintenance, operation or use of a nuclear
facility by or on behalf of an Insured;
(ii) the furnishing by an Insured of services, materials, parts or
equipment in connection with the planning, construction,
maintenance, operation or use of any nuclear facility; and
(iii) the possession, consumption, use, handling, disposal or
transportation of fissionable substances, or of other radioactive
material (except radioactive isotopes, away from a nuclear
facility, which have reached the final stage of fabrication so as
to be useable for any scientific, medical, agricultural,
commercial or industrial purpose) used, distributed, handled or
sold by an Insured.
As used in this Policy:
1. The term "nuclear energy hazard" means the radioactive, toxic, explosive,
or other hazardous properties of radioactive material;
2. The term "radioactive material" means uranium, thorium, plutonium,
neptunium, their respective derivatives and compounds, radioactive isotopes
of other elements and any other substances which may be designated by or
pursuant to any law, act or statute, or law amendatory thereof as being
prescribed substances capable of releasing atomic energy, or as being
requisite for the production, use or application of atomic energy;
3. The term "nuclear facility" means:
(a) any apparatus designed or used to sustain nuclear fission in a
self-supporting chain reaction or to contain a xxxxxxxx xxxx of
plutonium, thorium and uranium or any one or more of them;
(b) any equipment or device designed or used for (i) separating the
isotopes of plutonium, thorium and uranium or any one or more of them,
(ii) processing or utilizing spent fuel, or (iii) handling, processing
or packaging waste;
(c) any equipment or device used for the processing, fabricating or
alloying of plutonium, thorium or uranium enriched in the isotope
uranium 233 or in the isotope uranium 235, or any one or more of them
if at any time the total amount of such material in the custody of the
Insured at the premises where such equipment or device is located
consists of or
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contains more than 25 grams of plutonium or uranium 233 or any
combination thereof, or more than 250 grams of uranium 235;
(d) any structure, basin, excavation, premises or place prepared or used
for the storage or disposal of waste radioactive material;
and includes the site on which any of the foregoing is located, together
with all operations conducted thereon and all premises used for such
operations.
4. The term "fissionable substance" means any prescribed substance that is, or
from which can be obtained, a substance capable of releasing atomic energy
by nuclear fission.
5. With respect to property, loss of use of such property shall be deemed to
be property damage.
NMA 1979a
(01.04.96) Form approved by Lloyd's Underwriters' Non-Marine Association
Limited.
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NOTES: Wherever used herein the terms:
"Reassured" shall be understood to mean "Company", "Reinsured",
"Reassured" or whatever other term is used in the
attached reinsurance document to designate the
reinsured company or companies.
"Agreement" shall be understood to mean "Agreement", "Contract",
"Policy" or whatever other term is used to designate
the attached reinsurance document.
"Reinsurers" shall be understood to mean "Reinsurers",
"Underwriters" or whatever other term is used in the
attached reinsurance document to designate the
reinsurer or reinsurers.
Effective: January 1, 0000 XXX: June 25, 2001
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NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - U.S.A.
(1) This reinsurance does not cover any loss or liability accruing to the
Reassured as a member of, or subscriber to, any association of insurers or
reinsurers formed for the purpose of covering nuclear energy risks or as a
direct or indirect reinsurer of any such member, subscriber or association.
(2) Without in any way restricting the operation of paragraph (1) of this
Clause it is understood and agreed that for all purposes of this
reinsurance all the original policies of the Reassured (new, renewal and
replacement) of the classes specified in Clause II of this paragraph (2)
from the time specified in Clause III in this paragraph (2) shall be deemed
to include the following provision (specified as the Limited Exclusion
Provision):
Limited Exclusion Provision.*
I. It is agreed that the policy does not apply under any liability
coverage, to
injury, sickness, disease, death or destruction
bodily injury or property damage
with respect to which an insured under the policy is also an insured
under a nuclear energy liability policy issued by Nuclear Energy
Liability Insurance Association, Mutual Atomic Energy Liability
Underwriters or Nuclear Insurance Association of Canada, or would be
an insured under any such policy but for its termination upon
exhaustion of its limit of liability.
II. Family Automobile Policies (liability only), Special Automobile
Policies (private passenger automobiles, liability only), Farmers
Comprehensive Personal Liability Policies (liability only),
Comprehensive Personal Liability Policies (liability only) or policies
of a similar nature; and the liability portion of combination forms
related to the four classes of policies stated above, such as the
Comprehensive Dwelling Policy and the applicable types of Homeowners
Policies.
III. The inception dates and thereafter of all original policies as
described in II above, whether new, renewal or replacement, being
policies which either
(a) become effective on or after 1st May, 1960, or
(b) become effective before that date and contain the Limited
Exclusion Provision set out above;
provided this paragraph (2) shall not be applicable to Family
Automobile Policies, Special Automobile Policies, or policies or
combination policies of a similar nature, issued by the Reassured on
New York risks, until 90 days following approval of the Limited
Exclusion Provision by the Governmental Authority having jurisdiction
thereof.
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(3) Except for those classes of policies specified in Clause II of paragraph
(2) and without in any way restricting the operation of paragraph (1) of
this Clause, it is understood and agreed that for all purposes of this
reinsurance the original liability policies of the Reassured (new, renewal
and replacement) affording the following coverages:
Owners, Landlords and Tenants Liability, Contractual Liability,
Elevator Liability, Owners or Contractors (including railroad)
Protective Liability, Manufacturers Contractors Liability, Product
Liability, Professional and Malpractice Liability, Storekeepers
Liability, Garage Liability, Automobile Liability (including
Massachusetts Motor Vehicle or Garage Liability)
shall be deemed to include, with respect to such coverages, from the time
specified in Clause V of this paragraph (3), the following provision
(specified as the Broad Exclusion Provision):
Broad Exclusion Provision.*
It is agreed that the policy does not apply:
I. Under any Liability Coverage, to
injury, sickness, disease, death or destruction
bodily injury or property damage
(a) with respect to which an insured under the policy is also an
insured under a nuclear energy liability policy issued by Nuclear
Energy Liability Insurance Association, Mutual Atomic Energy
Liability Underwriters or Nuclear Insurance Association of
Canada, or would be an insured under any such policy but for its
termination upon exhaustion of its limit of liability; or
(b) resulting from the hazardous properties of nuclear material and
with respect to which (1) any person or organization is required
to maintain financial protection pursuant to the Atomic Energy
Act of 1954, or any law amendatory thereof, or (2) the insured
is, or had this policy not been issued would be, entitled to
indemnity from the United States of America, or any agency
thereof, under any agreement entered into by the United States of
America, or any agency thereof, with any person or organization.
II. Under any Medical Payments Coverage, or under any Supplementary
Payments Provision relating to
immediate medical or surgical relief
first aid,
to expenses incurred with respect to
Effective: January 1, 0000 XXX: June 25, 2001
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bodily injury, sickness, disease or death
bodily injury
resulting from the hazardous properties of nuclear material and
arising out of the operation of a nuclear facility by any person or
organization.
III. Under any Liability Coverage, to
injury, sickness, disease, death or destruction
bodily injury or property damage
resulting from the hazardous properties of nuclear material, if
(a) the nuclear material (1) is at any nuclear facility owned by, or
operated by or on behalf of, an insured or (2) has been
discharged or dispersed therefrom;
(b) the nuclear material is contained in spent fuel or waste at any
time possessed, handled, used, processed, stored, transported or
disposed of by or on behalf of an insured; or
(c) the
injury, sickness, disease, death or destruction
bodily injury or property damage
arises out of the furnishing by an insured of services,
materials, parts or equipment in connection with the planning,
construction, maintenance, operation or use of any nuclear
facility, but if such facility is located within the United
States of America, its territories or possessions or Canada, this
exclusion (c) applies only to
injury to or destruction of property at such nuclear
facility.
property damage to such nuclear facility and any property
thereat.
IV. As used in this endorsement:
"hazardous properties" include radioactive, toxic or explosive
properties; "nuclear material" means source material, special nuclear
material or byproduct material; "source material", "special nuclear
material", and "byproduct material" have the meanings given them in
the Atomic Energy Act of 1954 or in any law amendatory thereof; "spent
fuel" means any fuel element or fuel component, solid or liquid, which
has been used or exposed to radiation in a nuclear reactor; "waste"
means any waste material (1) containing byproduct material other than
the tailings or wastes produced by the extraction or concentration of
uranium or thorium from any ore processed primarily
Effective: January 1, 0000 XXX: June 25, 2001
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for its source material content and (2) resulting from the operation
by any person or organization of any nuclear facility included under
the first two paragraphs of the definition of nuclear facility;
"nuclear facility" means
(a) any nuclear reactor,
(b) any equipment or device designed or used for (1) separating the
isotopes of uranium or plutonium, (2) processing or utilizing
spent fuel, or (3) handling, processing or packaging waste,
(c) any equipment or device used for the processing, fabricating or
alloying of special nuclear material if at any time the total
amount of such material in the custody of the insured at the
premises where such equipment or device is located consists of or
contains more than 25 grams of plutonium or uranium 233 or any
combination thereof, or more than 250 grams of uranium 235,
(d) any structure, basin, excavation, premises or place prepared or
used for the storage or disposal of waste,
and includes the site on which any of the foregoing is located, all
operations conducted on such site and all premises used for such
operations; "nuclear reactor" means any apparatus designed or used to
sustain nuclear fission in a self-supporting chain reaction or to
contain a xxxxxxxx xxxx of fissionable material;
With respect to injury to or destruction of property, the word
"injury" or "destruction" includes all forms of radioactive
contamination of property. "property damage" includes all forms of
radioactive contamination of property.
V. The inception dates and thereafter of all original policies affording
coverages specified in this paragraph (3), whether new, renewal or
replacement, being policies which become effective on or after 1st
May, 1960, provided this paragraph (3) shall not be applicable to
(i) Garage and Automobile Policies issued by the Reassured on New
York risks, or
(ii) statutory liability insurance required under Chapter 90, General
Laws of Massachusetts,
until 90 days following approval of the Broad Exclusion Provision by
the Governmental Authority having jurisdiction thereof.
(4) Without in any way restricting the operation of paragraph (1) of this
Clause, it is understood and agreed that paragraphs (2) and (3) above are
not applicable to original liability policies of the Reassured in Canada
and that with respect to such policies this Clause shall be deemed to
include the Nuclear Energy Liability Exclusion Provisions adopted by the
Canadian Underwriters' Association or the Independent Insurance Conference
of Canada.
Effective: January 1, 0000 XXX: June 25, 2001
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*NOTE. The words printed in italics in the Limited Exclusion Provision and in
the Broad Exclusion Provision shall apply only in relation to original liability
policies which include a Limited Exclusion Provision or a Broad Exclusion
Provision containing those words.
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NOTES: Wherever used herein the terms:
"Reassured" shall be understood to mean "Company", "Reinsured",
"Reassured" or whatever other term is used in the
attached reinsurance document to designate the
reinsured company or companies.
"Agreement" shall be understood to mean "Agreement", "Contract",
"Policy" or whatever other term is used to designate
the attached reinsurance document.
"Reinsurers" shall be understood to mean "Reinsurers",
"Underwriters" or whatever other term is used in the
attached reinsurance document to designate the
reinsurer or reinsurers.
Effective: January 1, 0000 XXX: June 25, 2001
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