INTERCOMPANY MANAGEMENT AGREEMENT
EXHIBIT
10.2
This
Intercompany Management Agreement (the “Agreement”) is entered into as of June
1, 2006, by and among AmTrust Financial Services, Inc. (“AmTrust”), a Delaware
corporation, Technology Insurance Company, Inc. (“Technology”), a New Hampshire
property/casualty insurer, Rochdale Insurance Company (“Rochdale”), a New York
property/casualty insurer, and Wesco Insurance Company (“Wesco”), a Delaware
property/casualty insurer.
WHEREAS,
AmTrust is the sole shareholder of Technology and Wesco and Technology is the
sole shareholder of Rochdale.
WHEREAS,
Technology, Rochdale and Wesco desire that AmTrust provide management services
and AmTrust desires to provide such services.
NOW,
THEREFORE, AmTrust, Technology, Rochdale and Wesco agree as
follows:
| A. |
Financial
Services
|
AmTrust
shall perform all required financial and accounting services for Technology,
Rochdale and Wesco, including, but not limited to:
|
1.
|
Federal
and state tax compliance (including premium and excise
tax);
|
|
2.
|
Investment
management;
|
|
3.
|
Statutory
accounting;
|
|
4.
|
Loss
reserving;
|
|
5.
|
GAAP
accounting;
|
|
6.
|
Regulatory
compliance;
|
|
7.
|
The
development of premium and commission
rates;
|
|
8.
|
Premium
collections and refunds
|
AmTrust
shall collect, directly or through appointed producers, premiums on all
policies, contracts, binders, riders, and endorsements issued on behalf of
Technology, Rochdale and Wesco and shall deposit such premiums in Fiduciary
Accounts maintained on behalf of each Technology, Rochdale and Wesco, as the
case may be. AmTrust shall pay any return premiums payable to policyholders,
directly or through appointed producers, out of the Fiduciary
Accounts.
| 9. |
Maintenance
of Fiduciary Accounts
|
AmTrust
shall hold separate and apart from all other funds all monies collected or
received pursuant to this Agreement. AmTrust shall further hold separate
and apart from the other parties, monies collected or received on behalf of
Technology, Rochdale or Wesco. AmTrust shall deposit such monies in accounts
at
a federal or state chartered financial institution that is a member of the
Federal Reserve System. Such accounts shall be referred to as Fiduciary
Accounts. The Technology Fiduciary Accounts shall be used for all payments
that
AmTrust makes on behalf of Technology. The Rochdale Fiduciary Account shall
be
used for all payments that AmTrust makes on behalf of Rochdale and the Wesco
Fiduciary Account shall be used for all payments that AmTrust makes on behalf
of
Wesco.
| 10. |
Maintenance
of Books and Records
|
AmTrust
shall maintain complete and orderly files, books, records and accounts of all
transactions in accordance with generally accepted insurance and accounting
practices. At a minimum, such files, books, records and accounts
shall:
|
a)
|
show
all accounts between AmTrust and Technology, AmTrust and Rochdale,
AmTrust
and Wesco and AmTrust and all
producers;
|
|
b)
|
show
all policies issued, all premiums written, collected, earned and
unearned,
all acquisition costs, all return premiums paid and owing, all
commissions, charges, fees and expenses owed by, received by, or
owing to
AmTrust for Technology, Rochdale and Wesco, and the data necessary
to
support all such commissions, charges, fees and
expenses;
|
|
c)
|
include
the relevant statistical information required in any statement that
must
be provided to any regulatory
authority.
|
AmTrust
shall retain all such files, books, records and accounts in accordance with
applicable insurance law.
| B. |
Administrative
Services
|
AmTrust
shall perform all required administrative services for Technology, Rochdale
and
Wesco, including, but not limited to:
| 1. |
Form
and rate filings
|
|
a)
|
obtain
authorization to utilize standard policy forms and applications or
shall
develop forms and applications as
required;
|
|
b)
|
make
all required filings with regulatory
authorities;
|
|
c)
|
The
use and filing of forms and rates by AmTrust shall be subject to
the
approval of Technology, Rochdale and Wesco, as the case may
be.
|
|
2.
|
Prepare
and submit applications for certificates of
authority;
|
-2-
|
3.
|
Prepare
and submit applications for certificate of authority
expansion;
|
|
4.
|
Maintain
rating agency relationships;
|
|
5.
|
Correspondence
with Policyholders and Producers;
|
| C. |
Underwriting
Services
|
AmTrust
shall perform the following underwriting services for Technology, Rochdale
and
Wesco:
|
1.
|
Appointment
of Producers
|
AmTrust
or a designated affiliate as set forth in appropriate agreement may enter into
producer agreements on behalf of Technology, Rochdale and/or Wesco. Technology,
Rochdale and Wesco agree to appoint such producers if required in a particular
state. Prior to entering into any producer agreement, AmTrust or the designated
affiliate shall ascertain that the producer is lawfully licensed to produce
the
type of insurance authorized by the producer agreement. Technology, Rochdale
and
Wesco shall each have the right to require cancellation of any producer
agreement after appropriate notice.
|
2.
|
Marketing
|
AmTrust
shall require that all producer agreements entered into on behalf of Technology,
Rochdale and/or Wesco provide that the producer must obtain approval in writing
from Technology, Rochdale and/or Wesco for any advertisement or promotional
material.
| D. |
Compensation
|
|
1.
|
Expenses
|
|
a)
|
Technology,
Rochdale and Wesco each shall reimburse AmTrust for all direct expenses
that are attributable to it, including but not limited
to:
|
|
·
|
Agents’
commissions
|
|
·
|
Reinsurance
|
|
·
|
Advertising
|
|
·
|
Boards,
bureaus and associations
|
|
·
|
Surveys
and underwriting reports
|
|
·
|
Audits
of policyholder records
|
|
·
|
Salaries
|
|
·
|
Payroll
taxes
|
|
·
|
Employee
Relations and Welfare
|
|
·
|
Insurance
|
-3-
|
·
|
Directors’
fees
|
|
·
|
Travel
and travel items
|
|
·
|
Rent
and rent items
|
|
·
|
Equipment
|
|
·
|
Printing
and stationery
|
|
·
|
Legal
and auditing
|
|
·
|
Premium
taxes
|
|
·
|
Insurance
licenses and fees
|
|
·
|
Guaranty
association assessments
|
|
b)
|
Quarterly,
all common expenses incurred by AmTrust in connection with this Agreement
shall be allocated between Technology, Rochdale and Wesco in a manner
consistent with New Hampshire RSA 401-B:5(a) and New York Insurance
Department Regulation 30 (11 NYCRR §§ 106.2, 106.3) and Delaware Insurance
Code, § 5005(a). Salaries shall be allocated to each company based on the
percentage of total premium written by each
company.
|
|
2.
|
Fees
|
Technology,
Rochdale and Wesco, collectively, shall pay to AmTrust an annual fee in an
amount equal to 2% of the total written premium or $750,000, whichever is less.
Within 30 days of the end of each calendar quarter, the fee shall be allocated
to each company based on the percentage of total premium written by each company
in that quarter.
| 3. |
Remittance
|
|
Within
45 days of the end of each calendar quarter, each of the companies
shall
remit payment to AmTrust for expenses and the the part of the annual
fee
payable for that quarter. Notwithstanding the foregoing the total
fee
payable by the companies shall not exceed $187,500 for any quarter
or
$750,000 for the entire calendar
year.
|
| E. |
General
Provisions
|
|
1.
|
Effective
Date
|
This
Agreement shall be effective upon its approval by the New Hampshire Insurance
Department, New York Insurance Department and Delaware Insurance
Department.
|
2.
|
Termination
|
This
Agreement may be terminated:
-4-
|
a)
|
by
mutual agreement at any time;
|
|
b)
|
by
any party upon giving the greater of thirty (30) days written notice
or
the minimum notice required by any applicable
law;
|
|
c)
|
for
cause upon fifteen (15) days written
notice.
|
|
3.
|
Assignment;
Binding Agreement
|
Neither
this Agreement nor any of the rights or obligations hereunder may be assigned
in
whole or in part. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto.
|
4.
|
Severability
and Modification
|
If
any of
the provisions of this Agreement shall be determined to be contrary to law
or
unenforceable by any court of competent jurisdiction, the remaining provisions
shall be severable and shall remain enforceable in accordance with their terms.
No other changes in, modifications of , or additions to this Agreement shall
be
valid unless the same shall be in writing and signed by all the parties
hereto.
|
5.
|
Counterparts
|
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together will constitute one and the same
instrument.
|
6.
|
Headings
|
The
article and section headings contained in this Agreement are inserted for the
convenience of the parties only and shall not affect in any way its meaning
or
interpretation.
|
7.
|
Governing
Law
|
This
Agreement, and any amendments hereto, shall be construed and interpreted in
accordance with the substantive laws of the State of New York.
|
8.
|
Termination
of Prior Management Agreement; Entire
Agreement
|
|
Upon
the effective date of this Agreement, the Intercompany Management
Agreement entered into among AmTrust, Technology and Rochdale effective
January 1, 2001 shall terminate. This Agreement shall thereafter
constitute the entire agreement between the parties as to the provision
of
services hereunder.
|
-5-
|
9.
|
Waiver and Further Agreement |
Any
waiver of any breach of any terms or conditions of this Agreement shall only
be
effective if made in writing signed by the waiving party or parties and shall
not operate as a waiver of any other breach of such terms or conditions or
any
other term or condition. No failure to enforce any provision hereof shall
operate as a waiver of or estoppel with respect to such provision or of any
other provisions hereof. No waiver shall act as a continuing waiver except
to
the extent specifically stated therein. Each of the parties hereto agrees to
execute all such further instruments and documents and to take all such further
action as the other parties may reasonably require in order to effectuate the
terms and purposes of this Agreement.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
set forth above.
____________________________________
Xxxxx
X.
Xxxxxxx
President
TECHNOLOGY
INSURANCE COMPANY, INC.
___________________________________
Xxxxxxx
Xxxxx
Secretary
and General Counsel
ROCHDALE
INSURANCE COMPANY
___________________________________
Xxxxxxx
Xxxxx
Secretary
and General Counsel
-6-
WESCO
INSURANCE COMPANY
___________________________________
Xxxxx
X.
Xxxxxxx
Secretary
and General Counsel
-7-
