1
Exhibit 10.19
INTERESTS AND LIABILITIES CONTRACT
(hereinafter referred to as the "Contract")
to the
QUOTA SHARE REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
It is hereby mutually agreed by
SOUTHERN CALIFORNIA PHYSICIANS INSURANCE EXCHANGE
and/or S.C.P.I.E. INDEMNITY COMPANY
and/or S.C.P.I.E. MANAGEMENT COMPANY
while acting on behalf of:
S.C.P.I.E. MANAGEMENT COMPANY
Beverly Hills, California
(hereinafter collectively referred to as the "Company")
and
LONDON MARKET
(hereinafter referred to as the "Subscribing Reinsurer")
that the Subscribing Reinsurer shall have a 30% participation in the Interests
and Liabilities of the Reinsurer as set forth in the Agreement attached hereto
entitled Quota Share Reinsurance Agreement.
Such participation shall be several and not joint with the
participation of other subscribing reinsurers, and the Subscribing Reinsurer
shall under no circumstances participate in the Interests and Liabilities, if
any, of the other subscribing reinsurers in said Agreement.
The Company shall pay to the Subscribing Reinsurer 30% of all premiums
due or which may become due the Reinsurer in accordance with the provisions of
the Agreement attached.
This Contract shall attach on January 1, 1996 and is subject to the
provisions contained in the Term Article of the attached Agreement, which are
hereby incorporated by reference into this Contract and which shall apply as
though they had been specifically provided for herein.
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The Agreement to which this Contract is attached and therefore the
Interests and Liabilities of the Subscribing Reinsurer therein, may be changed,
altered and amended as the parties may agree, provided such change, alteration
and amendment is evidenced in writing or by Addendum to this Contract, executed
by the Company and the Subscribing Reinsurer.
IN WITNESS WHEREOF, the parties hereto have caused this Interests and
Liabilities Contract to be signed in duplicate by their duly authorized
representatives.
Signed in Beverly Hills, California
this day of , 199
SOUTHERN CALIFORNIA PHYSICIANS INSURANCE EXCHANGE
and/or S.C.P.I.E. INDEMNITY COMPANY
and/or S.C.P.I.E. MANAGEMENT COMPANY
while acting on behalf of:
S.C.P.I.E. MANAGEMENT COMPANY
By:
----------------------------------
Signed in
this day of , 199
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INTERESTS AND LIABILITIES CONTRACT
(hereinafter referred to as the "Contract")
to the
QUOTA SHARE REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
It is hereby mutually agreed by
SOUTHERN CALIFORNIA PHYSICIANS INSURANCE EXCHANGE
and/or S.C.P.I.E. INDEMNITY COMPANY
and/or S.C.P.I.E. MANAGEMENT COMPANY
while acting on behalf of:
S.C.P.I.E. MANAGEMENT COMPANY
Beverly Hills, California
(hereinafter collectively referred to as the "Company")
and
HANNOVER RUCKVERSICHERUNGS-AKTIENGESELLSCHAFT
XXXXX UND XXXXX RUCKVERSICHERUNGS-AKTIENGESELLSCHAFT
(hereinafter referred to as the "Subscribing Reinsurer")
that the Subscribing Reinsurer shall have a 50.00% participation in the
Interests and Liabilities of the Reinsurer as set forth in the Agreement
attached hereto entitled Quota Share Reinsurance Agreement.
Such participation shall be several and not joint with the
participation of other subscribing reinsurers, and the Subscribing Reinsurer
shall under no circumstances participate in the Interests and Liabilities, if
any, of the other subscribing reinsurers in said Agreement.
The Company shall pay to the Subscribing Reinsurer 50.00% of all
premiums due or which may become due the Reinsurer in accordance with the
provisions of the Agreement attached.
This Contract shall attach on January 1, 1996 and is subject to the
provisions contained in the Term Article of the attached Agreement, which are
hereby incorporated by reference into this Contract and which shall apply as
though they had been specifically provided for herein.
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The Agreement to which this Contract is attached and therefore the
Interests and Liabilities of the Subscribing Reinsurer therein, may be changed,
altered and amended as the parties may agree, provided such change, alteration
and amendment is evidenced in writing or by Addendum to this Contract, executed
by the Company and the Subscribing Reinsurer.
IN WITNESS WHEREOF, the parties hereto have caused this Interests and
Liabilities Contract to be signed in duplicate by their duly authorized
representatives.
Signed in Beverly Hills, California
this day of , 199
SOUTHERN CALIFORNIA PHYSICIANS INSURANCE EXCHANGE
and/or S.C.P.I.E. INDEMNITY COMPANY
and/or S.C.P.I.E. MANAGEMENT COMPANY
while acting on behalf of:
S.C.P.I.E. MANAGEMENT COMPANY
By:
-------------------------------------
Signed in
this day of , 199
On behalf of each of the following Companies, whose liability shall be several
and not joint, for their respective shares of the percentage shown on page one
of this Contract.
HANNOVER RUCKVERSICHERUNGS-AKTIENGESELLSCHAFT - 80%
XXXXX UND XXXXX RUCKVERSICHERUNGS-AKTIENGESELLSCHAFT - 20%
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QUOTA SHARE REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
entered into by and between
SOUTHERN CALIFORNIA PHYSICIANS INSURANCE EXCHANGE
and/or S.C.P.I.E. INDEMNITY COMPANY
and/or S.C.P.I.E. MANAGEMENT COMPANY
while acting on behalf of:
S.C.P.I.E. MANAGEMENT COMPANY
Beverly Hills, 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 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 I
BUSINESS COVERED:
A. The Company shall cede to the Reinsurer and the Reinsurer shall accept
from the Company an 80% quota share participation of the net retained insurance
liability of the Company on each risk insured under new and renewal policies
becoming effective on and after January 1, 1996, as respects losses occurring on
and after said date, covering business classified by the Company as:
1. Directors and Officers Liability for the following type(s) of
Original Insureds:
a. Physician Groups and/or Clinics.
b. Managed Care Organizations.
c. Association of California Hospital Districts - Program
Beta.
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2. Errors and Omissions Liability for the following type(s) of
Original Insureds:
Managed Care Organizations.
B. The term "policies" means the Company's binders, policies and contracts
providing insurance on the business covered under this Agreement.
ARTICLE II
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 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. All Assumed Reinsurance.
4. As per the Company's original policies.
ARTICLE III
TERRITORY:
The territorial limits of this Agreement shall be identical with those
of the Company's policies.
ARTICLE IV
TERM:
A. This Agreement shall apply to claims made and first reported on risks
attaching during the twelve (12) month period from January 1, 1996 through
December 31, 1996, both days inclusive.
B. 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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C. 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 V
LIMITS OF COVER:
A. With respect to business classified as Directors and Officers Liability:
The liability of the Reinsurer shall not exceed $4,000,000 per policy in
the aggregate and/or coverage part (i.e., 80% of $5,000,000).
B. With respect to business classified as Errors and Omissions Liability:
The liability of the Reinsurer shall not exceed $800,000 per policy in
the aggregate and/or coverage part (i.e., 80% of $1,000,000).
C. This Agreement is extended to protect the Company for loss in Excess of
Original Policy Limits and 80% of any Extra Contractual Obligations as defined
in the Articles of that title herein; provided, however, the contractual loss
and the Excess of Original Policy Limits and Extra Contractual Obligations
loss(es) combined shall not exceed the limits in paragraphs A. and B. above.
ARTICLE VI
COMPANY RETENTION:
The Company shall retain net for its own account the remaining 20% of
its net retained insurance liability on each risk reinsured under this
Agreement.
ARTICLE VII
DEFINITIONS:
A. The term "net retained insurance liability" as used herein means the
remaining portion of the Company's gross liability on each risk reinsured under
this Agreement after deducting recoveries from all reinsurance, other than the
reinsurance provided.
B. The term "original gross premiums" as used herein means gross premiums
and additional premiums.
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ARTICLE VIII
ORIGINAL CONDITIONS:
All reinsurance coming within the terms of this Agreement shall be
subject to the same terms, rates, conditions and waivers and to the same
modifications and alterations as the respective policies of the Company, except
as modified by the terms of this Agreement.
ARTICLE IX
EXCESS OF ORIGINAL POLICY LIMITS:
A. This Agreement shall protect the Company, within the limits hereof, in
connection with 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 or 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. However, this Article shall not apply where the loss has been incurred
due to fraud by 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 purpose of this Article, the word "loss" shall mean any amounts
for which the Company would have been contractually liable to pay had it not
been for the limit of the original policy.
ARTICLE X
EXTRA CONTRACTUAL OBLIGATIONS:
A. This Agreement shall protect the Company for any Extra Contractual
Obligations within the limits hereof. The term "Extra Contractual Obligations"
is defined as those liabilities not covered under any other provision of this
Agreement and which arise from the 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 any Extra Contractual Obligation is incurred by the
Company shall be deemed, in all circumstances, to be the date of the original
disaster and/or casualty.
C. However, this Article shall not apply where the loss has been incurred
due to fraud by 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 XI
LOSSES, LOSS ADJUSTMENT EXPENSES AND SALVAGES:
A. The Company shall settle all loss claims under its policies and the
Reinsurer shall pay to the Company its pro rata share of such loss claims as
payable by the Company.
B. The Reinsurer shall also bear its pro rata share of loss adjustment
expenses incurred by the Company under policies subject hereto, such loss
adjustment expenses being within the limit of the Company's original policies.
C. The Reinsurer shall benefit pro rata in all salvages, discounts and
other recoveries.
D. The term "loss adjustment expense" as used herein shall follow the
definitions contained in the Company's original policies.
ARTICLE XII
REINSURANCE PREMIUM:
The Company shall pay to the Reinsurer 80% of the Company's original
gross premiums received by the Company on business covered hereunder.
ARTICLE XIII
COMMISSION:
The Reinsurer shall make a commission allowance equal to the original
acquisition cost plus 15% not to exceed 25% in all to the Company on the
premiums ceded under this Agreement. On all return premiums the Company shall
return to the Reinsurer the commission allowed thereon.
ARTICLE XIV
REPORTS AND REMITTANCES:
A. The Company will provide the Reinsurer with 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. The Company shall render a quarterly account within forty-five (45)
days after the end of each quarter summarizing the following information
relating to reinsurance covered under this Agreement during the said quarter:
1. Statement of premiums;
2. Statement of losses and loss expenses paid and salvages
recovered;
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3. Account Current summarizing premiums, commissions, losses and
loss expenses paid and salvages recovered;
and any balance due the Reinsurer from the Company, as indicated by the
aforesaid Account Current, shall be remitted to the Reinsurer with the
quarterly account. Any balance due the Company from the Reinsurer shall be
remitted to the Company within sixty (60) days after the close of said
quarterly account.
ARTICLE XV
COMMUTATION CLAUSE:
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.
ARTICLE XVI
OFFSET:
The Company and the Reinsurer shall have the right to offset any
balance or amounts due from one party to the other under the terms of this
Agreement. The party asserting the right of offset may exercise such right any
time whether the balances due are on account of premiums or losses or otherwise.
ARTICLE XVII
CONFIDENTIALITY CLAUSE:
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 XVIII
CURRENCY:
Premiums shall be payable by the Company and losses shall be paid to
the Company in United States currency.
ARTICLE XIX
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 will 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 XX
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.
ARTICLE XXI
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 attorney of its own choice to assess the Company's claims procedures
who shall report to the Reinsurer the results of such.
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ARTICLE XXII
FUNDING:
(This clause 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 will 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 will 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.
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:
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.
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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 XXIII
SPECIAL FUNDING CLAUSE:
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 will
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.
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 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 will 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, will 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.
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ARTICLE XXIV
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 will 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.
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 Beverly Hills, 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 interpret this Agreement as if it were an honorable
engagement rather than as merely a legal obligation and shall made 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 any 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.
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ARTICLE XXV
SERVICE OF SUIT CLAUSE (U.S.A.):
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, will submit to the jurisdiction of a Court of competent
jurisdiction within the United States. Nothing in this Clause 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,
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 or of any
State in the United States. 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 will
abide by the final decision of such Court or of any Appellate Court in the event
of an appeal.
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 will 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 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 his 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 person to whom the said officer is
authorized to mail such process or a true copy thereof.
ARTICLE XXVI
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.
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01-96-0922
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) will 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 deem available to the Company(ies) or its liquidator or receiver or
statutory successor. The expense thus incurred by the Reinsurer will 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 will
be apportioned in accordance with the terms of this Agreement as though such
expense had been incurred by the insolvent Company(ies).
ARTICLE XXVII
INTERMEDIARY:
Xxxxxxx Incorporated Reinsurance Intermediaries 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 Xxxxxxx Incorporated Reinsurance Intermediaries, 000
Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000-0000. 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 XXVIII
GOVERNING LAW:
This Agreement shall be governed by and interpreted in accordance with
the laws of the State of California, U.S.A.
ARTICLE XXIX
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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NUCLEAR INCIDENT EXCLUSION CLAUSE -- LIABILITY --
REINSURANCE -- U.S.A.
[ITALICS] (Whenever the word "Reassured" appears in this clause, it shall be
deemed to read "Reassured," "Reinsured," "Company," or whatever other word is
employed throughout the text of the reinsurance agreement to which this clause
is attached to designate the company or companies reinsured.)
(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.
([ITALICS] to injury, sickness, disease, death or
([ITALICS] destruction
to ( with respect to which an
( insured under the policy is also an
( insured
(bodily injury or property damage
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.
(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 and 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:
1. Under any Liability Coverage to ([ITALICS] injury, sickness,
([ITALICS] disease, death
([ITALICS] 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.
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II. Under any Medical Payments Coverage, or under any Supplementary
Payments Provision relating
to ([ITALICS] immediate medical or surgical death
( to expenses incurred with respect
(first aid,
([ITALICS] bodily injury, sickness, disease or death
to ( resulting from the
( hazardous properties of nuclear material and
(bodily injury
arising out of the operation of a nuclear facility by any person
or organization.
([ITALICS] injury sickness,
([ITALICS] disease, death
III. Under any Liability Coverage to ([ITALICS] 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
([ITALICS] injury, sickness, disease, death or
([ITALICS] destruction
(c) the ( arises out of the furnishing by an insured
( of services,
(bodily injury or property damage
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
([ITALICS] injury to or destruction of property at
to ([ITALICS] 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 tailings
or wastes produced by the extraction or concentration of uranium
or thorium from any ore processed primarily 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;
[ITALICS] With respect to injury to or destruction of property,
the word "injury" or "destruction"
"property damage" includes all forms of radioactive
contamination of property.
[ITALICS] 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.
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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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