EXHIBIT 10 (a)
CLAIM ACCOUNT AGREEMENT
THIS AGREEMENT is made and entered into as of February 1, 2001, by and
between GE Reinsurance Corporation, Lincolnshire, Illinois ("GE Re"),
Dorinco Reinsurance Company, Midland, Michigan ("Dorinco"), American
Hallmark Insurance Company of Texas, Dallas, Texas ("AHIC"), and Hallmark
Claims Services, Inc., Dallas, Texas ("HCS"), collectively "the parties".
WHEREAS, GE Re and Dorinco are quota share reinsurers of State and County
Mutual Fire Insurance Company, Fort Worth, Texas ("State and County") with
respect to certain business produced by and through Associated General
Agency ("AGA") under a 100% Reinsurance Agreement effective March 1, 1998
and terminated on a run off basis effective June 30, 2000 ("Reinsurance
Agreement"); and
WHEREAS, GE Re and Dorinco have 37.5% and 62.5% shares respectively in the
Reinsurance Agreement; and
WHEREAS, Dorinco retrocedes 40% of its 62.5% share in the Reinsurance
Agreement to AHIC under a Retrocession Agreement effective March 1, 1998 and
terminated on a run off basis effective June 30, 2000 ("Retro"); and
WHEREAS, AGA has subcontracted with HCS to perform certain policy servicing
and claim handling functions on behalf of AGA; and
WHEREAS, the parties desire to establish a Claim Account to be funded by GE
Re, Dorinco, and AHIC in the aggregate amount of $500,000, each to fund in
proportion to its respective interest (i.e., 37.5% GE Re, 37.5% Dorinco, and
25% AHIC) for the purpose of facilitating the payment of claims subject to
the Reinsurance Agreement and Retro during the run off without resorting to
cash calls. The Claim Account is to be administered by HCS.
NOW THEREFORE, the parties agree as follows:
1. As promptly as possible after February 1, 2001, GE Re, Dorinco, and
AHIC will deposit the following amounts in Account No. 004770648879
(the "Claim Account") at Bank of America, Dallas, Texas, ABA Routing
No. 000000000:
GE Re: $187,500
Dorinco: $187,500
AHIC: $125,000
2. HCS is authorized to transfer funds from the Claim Account to the
Premium Trust Account under the Reinsurance Agreement as needed solely
for the purpose of paying loss and loss adjustment expenses under the
terms of the Reinsurance Agreement and Retro. From the monthly
accounting rendered under the Reinsurance Agreement, HCS shall cause
the Claim Account to be replenished to its original or subsequently
agreed upon balance by transferring funds from the Premium Trust
Account into the Claim Account each month as required.
3. Interest earned on the Claim Account balance shall be credited to the
Claim Account for the benefit of GE Re, Dorinco, and AHIC in proportion
to the respective interest of each.
4. HCS shall be responsible for administration of the Claim Account, and
shall provide a monthly reconciliation of all Claim Account activity on
forms mutually agreeable to the parties.
5. Additional deposits to or withdrawals from the claim account may be
made at any time at the discretion of GE Re, Dorinco, and AHIC upon
notifying HCS to effect such deposit or withdrawals.
6. Any one of GE Re, Dorinco, or AHIC may individually terminate the
authority of HCS to act on its behalf under this Agreement at any time.
Alternatively, GE Re, Dorinco, and AHIC, may, at any time, acting
collectively, terminate this Agreement entirely. In either case,
written notice by the terminating reinsurer(s) shall be given to HCS
stating in the notice when such termination shall be effective and
stating to whom any balance(s) in the Claim Account attributable to
such reinsurer(s) shall be transmitted.
7. Upon final settlement of all losses subject to the Reinsurance
Agreement, any balance remaining in the Claim Account (including
interest) shall be paid or released to GE Re, Dorinco, and AHIC in
proportion to the interest of each.
IN WITNESS WHEREOF, the parties have executed this Agreement in
quadruplicate on the dates shown below.
GE Reinsurance Corporation Hallmark Claims Services, Inc.
By: By:
Date: Date:
Dorinco Reinsurance Company
By:
Date:
American Hallmark Insurance Company of Texas
By:
Date:
