1
Exhibit 10.26
INTERESTS AND LIABILITIES CONTRACT
attaching to and forming a part of the
CATASTROPHE FIRST, SECOND, THIRD AND FOURTH
EXCESS OF LOSS REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
between
TRENWICK AMERICA REINSURANCE CORPORATION
Stamford, Connecticut
(hereinafter referred to as the "Company")
and
COLOGNE LIFE REINSURANCE COMPANY
(hereinafter called the "Subscribing Reinsurer")
It is hereby mutually understood and agreed by and between the Company
and the Subscribing Reinsurer that effective 12:01 a.m. January 1, 1998, through
December 31, 1998, both days inclusive, Local Standard Time, the Subscribing
Reinsurer's share in the interests and liabilities of the Reinsurer on the
attached Agreement will be:
10.00% as respects the liability and premium set forth in
EXHIBIT A, FIRST LAYER.
5.00% as respects the liability and premium set forth in
EXHIBIT B, SECOND LAYER.
1.00% as respects the liability and premium set forth in
EXHIBIT C, THIRD LAYER.
1.00% as respects the liability and premium set forth in
EXHIBIT D, FOURTH LAYER.
The share of the Subscribing Reinsurer will be separate and apart from
the shares of the other Reinsurers and will not be joint with those of the other
Reinsurers, and the Subscribing Reinsurer will in no event participate in the
interests and liabilities of the other Reinsurers.
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If the Subscribing Reinsurer wishes to designate an alternate party to
that named in the Service of Suit Article contained in the attached Agreement,
then service of process will be made upon the party hereinafter named:
________________________________________________________________________________
________________________________________________________________________________
IN WITNESS WHEREOF, the parties hereto have caused this Interests and
Liabilities Agreement to be executed in duplicate by their duly authorized
representatives.
TRENWICK AMERICA REINSURANCE CORPORATION
Signature: ______________________________ Title: ____________________________
Attest: ______________________________ Date: ____________________________
and Signed by:
COLOGNE LIFE REINSURANCE COMPANY
Signature: ______________________________ Title: ____________________________
Attest: ______________________________ Date: ____________________________
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INTERESTS AND LIABILITIES CONTRACT
attaching to and forming a part of the
CATASTROPHE FIRST, SECOND, THIRD AND FOURTH
EXCESS OF LOSS REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
between
TRENWICK AMERICA REINSURANCE CORPORATION
Stamford, Connecticut
(hereinafter referred to as the "Company")
and
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
(hereinafter called the "Subscribing Reinsurer")
It is hereby mutually understood and agreed by and between the Company
and the Subscribing Reinsurer that effective 12:01 a.m. January 1, 1998, through
December 31, 1998, both days inclusive, Local Standard Time, the Subscribing
Reinsurer's share in the interests and liabilities of the Reinsurer on the
attached Agreement will be:
0.00% as respects the liability and premium set forth in
EXHIBIT A, FIRST LAYER.
20.00% as respects the liability and premium set forth in
EXHIBIT B, SECOND LAYER.
20.00% as respects the liability and premium set forth in
EXHIBIT C, THIRD LAYER.
25.00% as respects the liability and premium set forth in
EXHIBIT D, FOURTH LAYER.
The share of the Subscribing Reinsurer will be separate and apart from
the shares of the other Reinsurers and will not be joint with those of the other
Reinsurers, and the Subscribing Reinsurer will in no event participate in the
interests and liabilities of the other Reinsurers.
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4
If the Subscribing Reinsurer wishes to designate an alternate party to
that named in the Service of Suit Article contained in the attached Agreement,
then service of process will be made upon the party hereinafter named:
________________________________________________________________________________
________________________________________________________________________________
IN WITNESS WHEREOF, the parties hereto have caused this Interests and
Liabilities Agreement to be executed in duplicate by their duly authorized
representatives.
TRENWICK AMERICA REINSURANCE CORPORATION
Signature: ______________________________ Title: ____________________________
Attest: ______________________________ Date: ____________________________
and Signed by:
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
Signature: ______________________________ Title: ____________________________
Attest: ______________________________ Date: ____________________________
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INTERESTS AND LIABILITIES CONTRACT
attaching to and forming a part of the
CATASTROPHE FIRST, SECOND, THIRD AND FOURTH
EXCESS OF LOSS REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
between
TRENWICK AMERICA REINSURANCE CORPORATION
Stamford, Connecticut
(hereinafter referred to as the "Company")
and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ UNDERWRITERS, LLC
for and on behalf of
CONTINENTAL ASSURANCE COMPANY
(hereinafter called the "Subscribing Reinsurer")
It is hereby mutually understood and agreed by and between the Company
and the Subscribing Reinsurer that effective 12:01 a.m. January 1, 1998, through
December 31, 1998, both days inclusive, Local Standard Time, the Subscribing
Reinsurer's share in the interests and liabilities of the Reinsurer on the
attached Agreement will be:
0.00% as respects the liability and premium set forth in
EXHIBIT A, FIRST LAYER.
0.00% as respects the liability and premium set forth in
EXHIBIT B, SECOND LAYER.
21.50% as respects the liability and premium set forth in
EXHIBIT C, THIRD LAYER.
30.00% as respects the liability and premium set forth in
EXHIBIT D, FOURTH LAYER.
The share of the Subscribing Reinsurer will be separate and apart from
the shares of the other Reinsurers and will not be joint with those of the other
Reinsurers, and the
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Subscribing Reinsurer will in no event participate in the interests and
liabilities of the other Reinsurers.
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If the Subscribing Reinsurer wishes to designate an alternate party to
that named in the Service of Suit Article contained in the attached Agreement,
then service of process will be made upon the party hereinafter named:
_______________________________________________________________________________
_______________________________________________________________________________
IN WITNESS WHEREOF, the parties hereto have caused this Interests and
Liabilities Agreement to be executed in duplicate by their duly authorized
representatives.
TRENWICK AMERICA REINSURANCE CORPORATION
Signature: ______________________________ Title: _____________________________
Attest: ______________________________ Date: _____________________________
and Signed by:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ UNDERWRITERS, LLC
for and on behalf of
CONTINENTAL ASSURANCE COMPANY
Signature: ______________________________ Title: _____________________________
Attest: ______________________________ Date: _____________________________
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INTERESTS AND LIABILITIES CONTRACT
attaching to and forming a part of the
CATASTROPHE FIRST, SECOND, THIRD AND FOURTH
EXCESS OF LOSS REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
between
TRENWICK AMERICA REINSURANCE CORPORATION
Stamford, Connecticut
(hereinafter referred to as the "Company")
and
INSURANCE SERVICES ASSOCIATES, LTD.
for and on behalf of
MANULIFE REINSURANCE CORPORATION
(hereinafter called the "Subscribing Reinsurer")
It is hereby mutually understood and agreed by and between the Company
and the Subscribing Reinsurer that effective 12:01 a.m. January 1, 1998, through
December 31, 1998, both days inclusive, Local Standard Time, the Subscribing
Reinsurer's share in the interests and liabilities of the Reinsurer on the
attached Agreement will be:
25.00% as respects the liability and premium set forth in
EXHIBIT A, FIRST LAYER.
35.00% as respects the liability and premium set forth in
EXHIBIT B, SECOND LAYER.
25.00% as respects the liability and premium set forth in
EXHIBIT C, THIRD LAYER.
25.00% as respects the liability and premium set forth in
EXHIBIT D, FOURTH LAYER.
The share of the Subscribing Reinsurer will be separate and apart from
the shares of the other Reinsurers and will not be joint with those of the other
Reinsurers, and the
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Subscribing Reinsurer will in no event participate in the interests and
liabilities of the other Reinsurers.
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If the Subscribing Reinsurer wishes to designate an alternate party to
that named in the Service of Suit Article contained in the attached Agreement,
then service of process will be made upon the party hereinafter named:
________________________________________________________________________________
________________________________________________________________________________
IN WITNESS WHEREOF, the parties hereto have caused this Interests and
Liabilities Agreement to be executed in duplicate by their duly authorized
representatives.
TRENWICK AMERICA REINSURANCE CORPORATION
Signature: ______________________________ Title: _____________________________
Attest: ______________________________ Date: _____________________________
and Signed by:
INSURANCE SERVICES ASSOCIATES, LTD.
for and on behalf of
MANULIFE REINSURANCE CORPORATION
Signature: ______________________________ Title: _____________________________
Attest: ______________________________ Date: _____________________________
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INTERESTS AND LIABILITIES CONTRACT
attaching to and forming a part of the
CATASTROPHE FIRST, SECOND, THIRD AND FOURTH
EXCESS OF LOSS REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
between
TRENWICK AMERICA REINSURANCE CORPORATION
Stamford, Connecticut
(hereinafter referred to as the "Company")
and
LLOYD'S UNDERWRITERS
per Schedule(s) attached hereto
(hereinafter called the "Subscribing Reinsurer")
It is hereby mutually understood and agreed by and between the Company
and the Subscribing Reinsurer that effective 12:01 a.m. January 1, 1998, through
December 31, 1998, both days inclusive, Local Standard Time, the Subscribing
Reinsurer's share in the interests and liabilities of the Reinsurer on the
attached Agreement will be:
30.00% as respects the liability and premium set forth in
EXHIBIT A, FIRST LAYER.
15.00% as respects the liability and premium set forth in
EXHIBIT B, SECOND LAYER.
17.50% as respects the liability and premium set forth in
EXHIBIT C, THIRD LAYER.
10.00% as respects the liability and premium set forth in
EXHIBIT D, FOURTH LAYER.
The share of the Subscribing Reinsurer will be separate and apart from
the shares of the other Reinsurers and will not be joint with those of the other
Reinsurers, and the
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Subscribing Reinsurer will in no event participate in the interests and
liabilities of the other Reinsurers.
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If the Subscribing Reinsurer wishes to designate an alternate party to
that named in the Service of Suit Article contained in the attached Agreement,
then service of process will be made upon the party hereinafter named:
________________________________________________________________________________
________________________________________________________________________________
IN WITNESS WHEREOF, the parties hereto have caused this Interests and
Liabilities Agreement to be executed in duplicate by their duly authorized
representatives.
TRENWICK AMERICA REINSURANCE CORPORATION
Signature: ______________________________ Title: _____________________________
Attest: ______________________________ Date: _____________________________
and Signed by:
LLOYD'S POLICY SIGNING OFFICE
for and on behalf of
UNDERWRITERS AT LLOYD'S
per Schedule(s) attached hereto
Signature: ______________________________ Title: _____________________________
Attest: ______________________________ Date: _____________________________
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INTERESTS AND LIABILITIES CONTRACT
attaching to and forming a part of the
CATASTROPHE FIRST, SECOND, THIRD AND FOURTH
EXCESS OF LOSS REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
between
TRENWICK AMERICA REINSURANCE CORPORATION
Stamford, Connecticut
(hereinafter referred to as the "Company")
and
LONDON LIFE REINSURANCE COMPANY
(hereinafter called the "Subscribing Reinsurer")
It is hereby mutually understood and agreed by and between the Company
and the Subscribing Reinsurer that effective 12:01 a.m. January 1, 1998, through
December 31, 1998, both days inclusive, Local Standard Time, the Subscribing
Reinsurer's share in the interests and liabilities of the Reinsurer on the
attached Agreement will be:
5.00% as respects the liability and premium set forth in
EXHIBIT A, FIRST LAYER.
10.00% as respects the liability and premium set forth in
EXHIBIT B, SECOND LAYER.
10.00% as respects the liability and premium set forth in
EXHIBIT C, THIRD LAYER.
5.00% as respects the liability and premium set forth in
EXHIBIT D, FOURTH LAYER.
The share of the Subscribing Reinsurer will be separate and apart from
the shares of the other Reinsurers and will not be joint with those of the other
Reinsurers, and the Subscribing Reinsurer will in no event participate in the
interests and liabilities of the other Reinsurers.
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If the Subscribing Reinsurer wishes to designate an alternate party to
that named in the Service of Suit Article contained in the attached Agreement,
then service of process will be made upon the party hereinafter named:
________________________________________________________________________________
________________________________________________________________________________
IN WITNESS WHEREOF, the parties hereto have caused this Interests and
Liabilities Agreement to be executed in duplicate by their duly authorized
representatives.
TRENWICK AMERICA REINSURANCE CORPORATION
Signature: ______________________________ Title: _____________________________
Attest: ______________________________ Date: _____________________________
and Signed by:
LONDON LIFE REINSURANCE COMPANY
Signature: ______________________________ Title: _____________________________
Attest: ______________________________ Date: _____________________________
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INTERESTS AND LIABILITIES CONTRACT
attaching to and forming a part of the
CATASTROPHE FIRST, SECOND, THIRD AND FOURTH
EXCESS OF LOSS REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
between
TRENWICK AMERICA REINSURANCE CORPORATION
Stamford, Connecticut
(hereinafter referred to as the "Company")
and
NEW HAMPSHIRE INSURANCE COMPANY
(hereinafter called the "Subscribing Reinsurer")
It is hereby mutually understood and agreed by and between the Company
and the Subscribing Reinsurer that effective 12:01 a.m. January 1, 1998, through
December 31, 1998, both days inclusive, Local Standard Time, the Subscribing
Reinsurer's share in the interests and liabilities of the Reinsurer on the
attached Agreement will be:
10.00% as respects the liability and premium set forth in
EXHIBIT A, FIRST LAYER.
10.00% as respects the liability and premium set forth in
EXHIBIT B, SECOND LAYER.
5.00% as respects the liability and premium set forth in
EXHIBIT C, THIRD LAYER.
4.00% as respects the liability and premium set forth in
EXHIBIT D, FOURTH LAYER.
The share of the Subscribing Reinsurer will be separate and apart from
the shares of the other Reinsurers and will not be joint with those of the other
Reinsurers, and the Subscribing Reinsurer will in no event participate in the
interests and liabilities of the other Reinsurers.
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If the Subscribing Reinsurer wishes to designate an alternate party to
that named in the Service of Suit Article contained in the attached Agreement,
then service of process will be made upon the party hereinafter named:
________________________________________________________________________________
________________________________________________________________________________
IN WITNESS WHEREOF, the parties hereto have caused this Interests and
Liabilities Agreement to be executed in duplicate by their duly authorized
representatives.
TRENWICK AMERICA REINSURANCE CORPORATION
Signature: ______________________________ Title: _____________________________
Attest: ______________________________ Date: _____________________________
and Signed by:
NEW HAMPSHIRE INSURANCE COMPANY
per AIG EUROPE (UK) LTD
Signature: ______________________________ Title: _____________________________
Attest: ______________________________ Date: _____________________________
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INTERESTS AND LIABILITIES CONTRACT
attaching to and forming a part of the
CATASTROPHE FIRST, SECOND, THIRD AND FOURTH
EXCESS OF LOSS REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
between
TRENWICK AMERICA REINSURANCE CORPORATION
Stamford, Connecticut
(hereinafter referred to as the "Company")
and
RELIANCE NATIONAL INSURANCE COMPANY
(hereinafter called the "Subscribing Reinsurer")
It is hereby mutually understood and agreed by and between the Company
and the Subscribing Reinsurer that effective 12:01 a.m. January 1, 1998, through
December 31, 1998, both days inclusive, Local Standard Time, the Subscribing
Reinsurer's share in the interests and liabilities of the Reinsurer on the
attached Agreement will be:
20.00% as respects the liability and premium set forth in
EXHIBIT A, FIRST LAYER.
5.00% as respects the liability and premium set forth in
EXHIBIT B, SECOND LAYER.
0.00% as respects the liability and premium set forth in
EXHIBIT C, THIRD LAYER.
0.00% as respects the liability and premium set forth in
EXHIBIT D, FOURTH LAYER.
The share of the Subscribing Reinsurer will be separate and apart from
the shares of the other Reinsurers and will not be joint with those of the other
Reinsurers, and the Subscribing Reinsurer will in no event participate in the
interests and liabilities of the other Reinsurers.
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If the Subscribing Reinsurer wishes to designate an alternate party to
that named in the Service of Suit Article contained in the attached Agreement,
then service of process will be made upon the party hereinafter named:
________________________________________________________________________________
________________________________________________________________________________
IN WITNESS WHEREOF, the parties hereto have caused this Interests and
Liabilities Agreement to be executed in duplicate by their duly authorized
representatives.
TRENWICK AMERICA REINSURANCE CORPORATION
Signature: ______________________________ Title: _____________________________
Attest: ______________________________ Date: _____________________________
and Signed by:
RELIANCE NATIONAL INSURANCE COMPANY
Signature: ______________________________ Title: _____________________________
Attest: ______________________________ Date: _____________________________
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CATASTROPHE FIRST, SECOND, THIRD AND FOURTH
EXCESS OF LOSS REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
between
TRENWICK AMERICA REINSURANCE CORPORATION
Stamford, Connecticut
(hereinafter referred to as the "Company")
and
THE SUBSCRIBING REINSURER(S) SPECIFIED IN THE
INTERESTS AND LIABILITIES CONTRACT(S)
ATTACHED TO THIS AGREEMENT
(hereinafter referred to collectively as the "Reinsurers")
Term: January 1, 1998 through December 31, 1998, Local Standard Time, both
days inclusive.
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CONTENTS
ARTICLE PAGE
------- ----
WITNESSETH:........................................................1
I COVERAGE...........................................................1
II TERM...............................................................2
III EXTENDED EXPIRATION................................................2
IV EXCLUSIONS.........................................................3
V TERRITORY..........................................................3
VI NET RETAINED LINES.................................................3
VII ULTIMATE NET LOSS..................................................4
VIII REPORTS AND REMITTANCES............................................5
IX NOTICE OF LOSS AND LOSS SETTLEMENTS................................5
X OFFSET.............................................................6
XI SALVAGE AND SUBROGATION............................................6
XII ERRORS AND OMISSIONS...............................................7
XIII CURRENCY...........................................................8
XIV ACCESS TO RECORDS..................................................8
XV TAXES..............................................................8
XVI FEDERAL EXCISE TAX.................................................9
XVII ARBITRATION........................................................9
XVIII SERVICE OF SUIT...................................................11
XIX INSOLVENCY........................................................13
XX FUNDING OF LOSS RESERVES..........................................14
XXI COMMUTATION AND SUNSET............................................18
XXII INTERMEDIARY......................................................18
EXECUTION.........................................................19
22
EXHIBITS
EXHIBIT A - FIRST LAYER.....................................................20
RETENTION AND LIMIT.............................................20
RATE AND PREMIUM................................................20
REINSTATEMENT...................................................21
EXHIBIT B - SECOND LAYER....................................................22
RETENTION AND LIMIT.............................................22
RATE AND PREMIUM................................................22
REINSTATEMENT...................................................23
EXHIBIT C - THIRD LAYER.....................................................24
RETENTION AND LIMIT.............................................24
RATE AND PREMIUM................................................24
REINSTATEMENT...................................................25
EXHIBIT D - FOURTH LAYER....................................................26
RETENTION AND LIMIT.............................................26
RATE AND PREMIUM................................................26
REINSTATEMENT...................................................27
23
CATASTROPHE FIRST, SECOND, THIRD AND FOURTH
EXCESS OF LOSS REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
between
TRENWICK AMERICA REINSURANCE CORPORATION
Stamford, Connecticut
(hereinafter referred to as the "Company")
and
THE SUBSCRIBING REINSURER(S) SPECIFIED IN THE
INTERESTS AND LIABILITIES CONTRACT(S)
ATTACHED TO THIS AGREEMENT
(hereinafter referred to collectively as the "Reinsurers")
WITNESSETH:
That in consideration of the mutual covenants hereinafter contained and
upon the terms and conditions hereinbelow set forth, the parties hereto agree as
follows:
ARTICLE I
COVERAGE
The Reinsurer will indemnify the Company, subject to the limits set
forth in the Retention and Limit Sections of Exhibits A, B, C and D attaching to
and forming part of this Agreement for the Company's participation on any loss
or losses occurring during the term of this Agreement under all policies,
binders, contracts, or
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agreements of insurance or reinsurance, whether written or oral, (hereinafter
called "policies") underwritten by ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ Group.
All reinsurance for which the Reinsurers will be obligated by virtue of
this Agreement will be subject to the same terms, conditions, interpretations,
waivers, modifications, and alterations as the respective policies of the
Company to which this Agreement applies. Nothing herein will in any manner
create any obligations or establish any rights against the Reinsurers in favor
of any third parties or any persons not parties to this Agreement except as
provided in the Insolvency Article.
ARTICLE II
TERM
The term of this Agreement shall be the twelve month period commencing
January 1, 1998, through, December 31, 1998, Local Standard Time, both days
inclusive and this Agreement shall apply to losses occurring during the
aforementioned term. "Local Standard Time" is defined as where the loss occurs.
ARTICLE III
EXTENDED EXPIRATION
Should this Agreement expire while a loss occurrence covered hereunder
is in progress, the Reinsurers will be responsible for their portion of the
entire loss or damage caused by such loss occurrence, subject to the other
conditions of this
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Agreement, and provided that no part of said loss occurrence is claimed against
any renewal or replacement of this Agreement.
ARTICLE IV
EXCLUSIONS
No reinsurance indemnity will be afforded under this Agreement for:
A. Employers Liability.
B. Loss or liability excluded under the subject policies.
ARTICLE V
TERRITORY
This Agreement shall provide coverage wherever the subject policies
apply.
ARTICLE VI
NET RETAINED LINES
This Agreement applies to only that portion of any reinsurance which
the Company retains net for its own account, and in calculating the amount of
loss hereunder and also in computing the amount or amounts in excess of which
this Agreement attaches, only loss in respect of that portion of any reinsurance
which the Company retains net for its own account shall be included. The amount
of the Reinsurer's liability hereunder shall not be increased by reason of the
inability of the Company to collect from any other Reinsurers, whether specific
or general, any
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amounts which may have become due from them, whether such inability arises from
the insolvency of such other Reinsurers or otherwise.
ARTICLE VII
ULTIMATE NET LOSS
The term "Ultimate Net Loss" as used in this Agreement shall mean the
amount paid or payable by the Company in settlement of claims or losses after
deduction for all recoveries, all salvages and all claims upon other
reinsurances, whether collectible or not, and shall include expenses of
litigation, if any, and all other loss adjustment expenses of the Company
including a pro rata share of the salaries and expenses of the Company's outside
employees according to time occupied in adjusting such claims and losses and
expenses of the Company's officials incurred in connection therewith, but
excluding salaries of the Company's officials and any normal overhead charges.
All salvages, recoveries, or payments recovered or received by the
Company after a loss settlement hereunder shall be applied as if recovered or
received before such settlement, and all necessary adjustments shall be made by
the parties hereto. However, nothing herein shall be construed to mean that
losses under this Agreement shall not be recoverable until the Company's
Ultimate Net Loss has been ascertained.
The Company shall be permitted to carry underlying excess reinsurance,
recoveries under which shall inure solely to the benefit of the Company and be
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entirely disregarded in applying all of the provisions of this Agreement.
Nothing in this clause, however, shall be construed to mean that losses under
this Agreement are not recoverable until the Company's Ultimate Net Loss has
been ascertained.
ARTICLE VIII
REPORTS AND REMITTANCES
As soon as possible following the close of the annual period, the
Company will furnish the Reinsurers with a report of reinsurance premium due
them for that period. Such report will show and properly segregate the Company's
premium to which the reinsurance rate applies as well as contain such other
information as may be required by the Reinsurer for completion of their NAIC
interim and/or annual statements. The premium due the Reinsurers will be
balanced against the minimum and deposit premium set forth in the Rate and
Premium Sections of Exhibits A, B, C and D attaching to and forming part of this
Agreement, and any balance shown to be due the Reinsurers will be paid within 75
days following the close of the annual period.
ARTICLE IX
NOTICE OF LOSS AND LOSS SETTLEMENTS
In the event of a loss occurrence taking place which either results in
or appears to be of a serious enough nature as to result in a loss involving
this Agreement, the Company shall give notice as soon as reasonably practicable
to the
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Reinsurers, and the Company shall keep the Reinsurer advised of all subsequent
developments in connection therewith.
The Reinsurers agree to abide by all loss settlements of the Company
under this Agreement, such settlements to be construed as satisfactory proof of
loss, and amounts falling to the share of the Reinsurers shall be immediately
payable upon reasonable evidence of the amount paid or to be paid by the
Company.
ARTICLE X
OFFSET
Each party hereto shall have, and may exercise at any time and from
time to time, the right to offset any balance or balances, whether on account of
premiums or on account of losses or otherwise, due from each party to the other
(or, if more than one, any other) party hereto under this Agreement; provided,
however, that in the event of the insolvency of a party hereto, offsets shall
only be allowed in accordance with the provisions of the Applicable Insurance
Regulation.
ARTICLE XI
SALVAGE AND SUBROGATION
The Reinsurers will be credited with their share of salvage and/or
subrogation in respect of claims and settlements under this Agreement, less
their share of recovery expense. Unless the Company and Reinsurers agree to the
contrary, the Company will enforce its right to salvage and/or subrogation and
will prosecute all
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claims arising out of such right. Should the Company refuse or neglect to
enforce this right, the Reinsurers are hereby empowered and authorized to
institute appropriate action in the name of the Company.
Amounts recovered from salvage and/or subrogation will always be used
to reimburse the excess reinsurers (and the Company, should it carry a portion
of excess coverage net) in the reverse order of their participation in the loss
before being used in any way to reimburse the Company for its primary loss. If
the amount recovered exceeds the recovery expense, the recovery expense will be
borne by each party in proportion to its benefit from the recovery. If the
recovery expense exceeds the amount recovered, the amount recovered (if any)
will be applied to the reimbursement of recovery expense and the remaining
expense as well as any originally incurred loss expense will be added to the
ultimate net loss.
ARTICLE XII
ERRORS AND OMISSIONS
Inadvertent delay, error or omission made in connection with this
Agreement shall not relieve either party from any liability which should have
attached to either party had such delay, error or omission not occurred. Such
delay, error or omission shall be rectified upon discovery.
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ARTICLE XIII
CURRENCY
Wherever the word "Dollars" and the sign "$" appear in this Agreement,
they shall be construed to mean United States Dollars, and all premiums and
losses hereunder shall be payable in United States Currency.
ARTICLE XIV
ACCESS TO RECORDS
The Company shall place at the disposal of the Reinsurers and the
Reinsurers shall have the right to inspect, through its authorized
representatives, at all reasonable times, the books, records and papers of the
Company pertaining to the reinsurance provided hereunder and all claims made in
connection therewith.
ARTICLE XV
TAXES
The Company shall not claim a deduction in respect of the premium
hereon when making tax returns, other than income or profits tax returns, to any
state or territory of the United States of America or the District of Columbia.
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ARTICLE XVI
FEDERAL EXCISE TAX
(This Article is applicable only to a Reinsurer who is domiciled
outside the United States of America, excepting an Underwriter at Lloyd's London
and other Reinsurer exempt from Federal Excise Tax.)
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. In the event of any return of
premium becoming due hereunder, the Reinsurer will deduct the applicable
percentage of the return premium payable hereon as imposed under Section 4371 of
the Internal Revenue Service Code from the amount of the return, and the Company
or its agent should take steps to recover the tax from the United States
government.
ARTICLE XVII
ARBITRATION
As a condition precedent to any right of action hereunder, any dispute
arising out of this Agreement, whether arising before or after termination,
shall be submitted to the decision of a board of arbitration composed of two
arbitrators and an umpire, meeting in Stamford, Connecticut unless otherwise
agreed.
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The members of the board of arbitration shall be active or retired,
disinterested officials of insurance or reinsurance companies or Lloyd's of
London Underwriters, or underwriting members of any Exchange formed for the
purpose of writing insurance or reinsurance. Each party shall appoint its
arbitrator, and the two arbitrators shall choose an umpire before instituting
the hearing. If the respondent fails to appoint its arbitrator within four weeks
after being requested to do so by the claimant, the claimant shall also appoint
the second arbitrator. If the two arbitrators fail to agree upon the appointment
of an umpire within four weeks after their nominations, each of them shall name
three, of whom the other shall decline two, and the decision shall be made by
drawing lots.
The claimant shall submit its initial brief within 20 days from the
appointment of the umpire. The respondent shall submit its brief within 20 days
thereafter, and the claimant may submit a reply brief within 10 days after
filing of the respondent's brief.
The board shall make its decision with due regard to the custom and
usage of the insurance and reinsurance business. The board shall issue its
decision in writing based upon a hearing in which evidence may be introduced
without following strict rules of evidence but in which cross-examination and
rebuttal shall be allowed. The board shall make its decision within 60 days
following the termination of the hearings unless the parties consent to an
extension. The majority decision of the
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board shall be final and binding upon all parties to the proceeding. Judgment
may be entered upon the award of the board in any court having jurisdiction
thereof.
If more than one reinsurer is involved in the same dispute, all such
reinsurers shall constitute and act as one party for purposes of this Article,
and communications shall be made by the Company to each of the reinsurers
constituting the one party, provided that nothing therein shall impair the
rights of such reinsurers to assert several, rather than joint, defenses or
claims, nor be construed as changing the liability of the reinsurers under the
terms of this Agreement from several to joint.
Each party shall bear the expense of its own arbitrator and shall
jointly and equally bear with the other party the expense of the umpire. The
remaining costs of the arbitration proceedings shall be allocated by the board.
ARTICLE XVIII
SERVICE OF SUIT
(This Article is applicable only to an unauthorized Reinsurer in the
Company's State of Domicile or to the Reinsurer who is domiciled outside the
United States of America.)
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 of America.
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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 and Mount, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇, and that in any suit instituted against any one of them upon this
contract, the Reinsurer will abide by the final decision of the Court or of any
Appellate Court in the event of an appeal.
The above-named are authorized and directed to accept service of
process on behalf of Reinsurer's 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.
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 any action, suit or proceeding instituted by or on behalf
of the Company or any beneficiary hereunder
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arising out of this contract or reinsurance, and hereby designate the
above-named as the person to whom the said officer is authorized to mail such
process or true copy thereof.
ARTICLE XIX
INSOLVENCY
In the event of insolvency of the Company, this reinsurance shall be
payable directly to the Company, or to its liquidator, receiver, conservator or
statutory successor, on the basis of the liability of the Company without
diminution because of the insolvency of the Company or because the liquidator,
receiver, conservator or statutory successor of the Company has failed to pay
all or a portion of any claim. It is agreed, however, that the liquidator,
receiver, conservator or statutory successor of the Company shall give written
notice to the Reinsurers of the pendency of a claim against the Company,
indicating the policy or bond reinsured, which claim would involve a possible
liability on the part of the Reinsurers within a reasonable time after such
claim is filed in the conservation or liquidation proceeding or in the
receivership, and that during the pendency of such claim the Reinsurers may
investigate such claim and interpose, at their own expense, in the proceeding
where such claim is to be adjudicated, any defense or defenses that it may deem
available to the Company or its liquidator, receiver, conservator or statutory
successor. The expense thus incurred by the Reinsurers shall be chargeable,
subject to the approval of the Court, against the Company as part of the expense
of conservation or
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36
liquidation to the extent of a pro rata share of the benefit which may accrue to
the Company solely as a result of the defense undertaken by the Reinsurers.
Where two or more reinsurers are involved in the same claim and a
majority in interest elect to interpose defense to such claim, the expense shall
be apportioned in accordance with the terms of this Agreement as though such
expense had been incurred by the Company.
It is further understood and agreed that, in the event of the
insolvency of the Company, the reinsurance under this Agreement shall be payable
directly by the Reinsurers to the Company or to its liquidator, receiver,
conservator or statutory successor, except (1) where the Agreement specifically
provides another payee of such reinsurance in the event of the insolvency of the
Company and (2) where the Reinsurers with the consent of the direct insured or
insureds has assumed such policy obligations of the Company as direct
obligations of the Reinsurers to the payees under such policies and in
substitution for the obligations of the Company to such payees.
ARTICLE XX
FUNDING OF LOSS RESERVES
(Applies only to the Reinsurer who is unlicensed or unaccredited by the
insurance regulatory authority having jurisdiction over the Company's
outstanding loss reserves.)
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As regards all business coming within the scope of this Agreement, the
Company agrees to forward to the Reinsurer a statement showing their proportion
of outstanding loss reserves, if any, when the Company files reserves with the
insurance department or sets up on its book reserves which are required by law.
Under no circumstance shall any amount relating to reserves in respect of losses
or loss expenses Incurred But Not Reported be included in the calculation of the
reserves hereunder.
The Reinsurer hereby agrees that within 30 days of receiving the
reserve statement they will, at their option, either:
1. apply for and secure delivery to the Company a clean, irrevocable and
unconditional Letter of Credit; or
2. provide a Cash Advance to the Company (which shall be deposited by the
Company in a bank acceptable to the insurance regulatory authorities,
in a separate account for the benefit of the Company apart from its
general assets and in trust for such uses and purposes as specified
herein). The Company agrees that the Reinsurer shall be credited with
the interest thereon at the prevailing rates, not to exceed the prime
rate); or
3. provide assets for the benefit of the Company and enter into a Trust
Agreement with the Company (which shall comply with the requirements of
the insurance regulatory authorities, for a New York licensed Company
the applicable regulation is No. 114)
in an amount equal to the Reinsurer's proportion of said reserves.
The Letter of Credit shall be issued or confirmed by a bank acceptable
to the governmental authorities having jurisdiction over said reserves. The
terms and
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conditions of the Letter of Credit shall comply with all requirements of said
authorities, including but no limited to the following:
The Letter of Credit shall be issued for an initial period of
not less than one year and shall automatically extend for an additional
period of at least one year at each and every expiry date, unless and
until, the Company has received at least 30 days prior notice from the
issuing bank (at least 60 days prior notice from a confirming bank) by
certified mail, registered mail, or receipted hand delivery), of its
intention not to extend said Letter of Credit.
If the insurance regulatory authority requires the Reinsurer to fund
their proportion of outstanding loss reserves, if any, by Cash Advances or a
combination of Cash Advance and Letter of Credit, the Reinsurer agrees to
provide their proportion of said reserves in an amount and of such nature as to
be acceptable to the insurance regulatory authority.
The Company and any of its successors in interest, undertakes to use
and apply any amounts which it may draw upon such Letter of Credit, Trust
Agreement or Cash Advance, without diminution because of insolvency on the part
of the Company or the Reinsurer, for the following purposes only:
1. to pay or reimburse the Company for the Reinsurer's share of any losses
and allocated loss expenses paid by the Company, but not recovered from
the Reinsurer;
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2. to make refund of any sum which is in excess of the actual amount
required by the insurance regulatory authority to fund the Reinsurer's
share of any liability reinsured by this Agreement;
3. to create a Cash Advance account, in the event the issuing bank gives
notice of its intention not to extend the Letter of Credit or cancel
the Trust Agreement and provided that the obligations secured by the
Letter of Credit or Trust Agreement remain unliquidated and
undischarged at the time of receipt by the Company of such notice. That
cash advance account shall be established and utilized in accordance
with the provisions herein.
The 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 see that withdrawals are made only upon the order of
properly authorized representatives of the Company and it is understood that the
Company shall incur no obligation to said bank in acting upon said credit, other
than as appears in the express terms thereof.
All Letters of Credit, Cash Advances or Trust Agreements for the
benefit of the Company under this Agreement shall be adjusted at annual
intervals, or more frequently as agreed (but never more frequently than
quarterly), to reflect the current balance of the Reinsurer's proportion of the
Company's outstanding loss reserves. The Company shall forward to the Reinsurer
a statement showing their proportion of said reserves. If the statement shows
the Reinsurer's share of said reserves to be either in excess of or less than
the current amount of the Letter of Credit, Cash Advance or Trust Agreement, an
adjustment shall be made within 30 days of receipt of the statement by the
Reinsurer in order to have the amount of the Letter of Credit,
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Cash Advance or Trust Agreement equal to the obligations of the Reinsurer
hereunder.
ARTICLE XXI
COMMUTATION AND SUNSET
This Agreement shall follow the Commutation and Sunset provisions of
the Company's policies. Commutation under such policies shall not exceed one
hundred and twenty months (120) months from the date of loss or the end of the
Company's policy and shall include losses first notified to the Reinsurers no
later than one hundred and twenty months (120) months from the date of loss or
the end of the Company's policy
ARTICLE XXII
INTERMEDIARY
Aon Re Inc., an Illinois corporation, or one of its affiliated
corporations duly licensed as a reinsurance intermediary, is hereby recognized
as the Intermediary negotiating this Agreement for all business hereunder. All
communications (including but not limited to notices, statements, premiums,
return premiums, commissions, taxes, losses, loss expenses, salvages, and loss
settlements) relating to this Agreement will be transmitted to the Company or
the Reinsurers through the Intermediary. Payments by the Company to the
Intermediary will be deemed payment to the Reinsurers. Payments by the
Reinsurers to the Intermediary will be
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deemed payment to the Company only to the extent that such payments are actually
received by the Company.
EXECUTION
This Agreement is executed by the Company and each Subscribing Reinsurer by the
signing, in duplicate, of the Interests and Liabilities Contract(s) attached to
this Agreement. This Agreement to be agreed by Lead Subscribing Reinsurer on
behalf of all Subscribing Reinsurers. Amendments and or alterations to this
Agreement are to be agreed by two lead Subscribing Reinsurers on behalf of all
Subscribing Reinsurers.
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EXHIBIT A -FIRST LAYER
RETENTION AND LIMIT
No claim will be made hereunder unless the Company has first sustained,
by reason of any one loss, an ultimate net loss in excess of $1,000,000. The
Reinsurer will then be liable for the amount of ultimate net loss in excess of
$1,000,000 any one loss, but the limit of liability of the Reinsurer will not
exceed $4,000,000 with respect to any one loss.
RATE AND PREMIUM
For the term of this Agreement, there will be a minimum and deposit
premium hereon of $128,000, payable in equal quarterly installments of $32,000
on January 1, 1998, April 1, 1998, July 1, 1998 and October 1, 1998. At
Agreement expiration, the Company will adjust the minimum and deposit premium
against a rate of 1.25% of its applicable net earned premium.
"Net earned premium" as used herein is the gross earned premium of the
Company for the classes of business reinsured hereunder as specified in the
Coverage Article, less the earned portion of premium paid for per risk
reinsurance that inures to the benefit of this Agreement.
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REINSTATEMENT
In the event of the whole or any portion of the indemnity given
hereunder being exhausted the amount so exhausted shall be automatically
reinstated from the time of commencement of any loss occurrence subject to the
payment of any additional premium calculated Pro Rata as to amount and as to
time, such additional premium to be paid at the time the loss settlement is made
by Reinsurer.
If the loss settlement is made prior to the adjustment of premium the
reinstatement premium shall be calculated provisionally on the deposit premium.
Nevertheless, the liability under this Exhibit A shall never be more
than $4,000,000 in respect of any loss nor more than $12,000,000 in all during
the period of this Agreement representing two fully reinstatements only of the
above limit of indemnity.
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EXHIBIT B - SECOND LAYER
RETENTION AND LIMIT
No claim will be made hereunder unless the Company has first sustained,
by reason of any one loss, an ultimate net loss in excess of $5,000,000. The
Reinsurer will then be liable for the amount of ultimate net loss in excess of
$5,000,000 any one loss, but the limit of liability of the Reinsurer will not
exceed $20,000,000 with respect to any one loss.
RATE AND PREMIUM
For the term of this Agreement, there will be a minimum and deposit
premium hereon of $50,000, payable in equal quarterly installments of $12,500 on
January 1, 1998, April 1, 1998, July 1, 1998 and October 1, 1998. At Agreement
expiration, the Company will adjust the minimum and deposit premium against a
rate of 0.50% of its applicable net earned premium.
"Net earned premium" as used herein is the gross earned premium of the
Company for the classes of business reinsured hereunder as specified in the
Coverage Article, less the earned portion of premium paid for per risk
reinsurance that inures to the benefit of this Agreement.
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REINSTATEMENT
In the event of the whole or any portion of the indemnity given
hereunder being exhausted the amount so exhausted shall be automatically
reinstated from the time of commencement of any loss occurrence subject to the
payment of any additional premium calculated Pro Rata as to amount and as to
time, such additional premium to be paid at the time the loss settlement is made
by Reinsurers.
If the loss settlement is made prior to the adjustment of premium the
reinstatement premium shall be calculated provisionally on the deposit premium.
Nevertheless, the liability shall never be more than $20,000,000 in
respect of any loss nor more than $60,000,000 in all during the period of this
Agreement representing two full reinstatements only of the above limit of
indemnity.
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EXHIBIT C - THIRD LAYER
RETENTION AND LIMIT
No claim will be made hereunder unless the Company has first sustained,
by reason of any one loss, an ultimate net loss in excess of $25,000,000. The
Reinsurer will then be liable for the amount of ultimate net loss in excess of
$25,000,000 any one loss, but the limit of liability of the Reinsurer will not
exceed $25,000,000 with respect to any one loss.
RATE AND PREMIUM
For the term of this Agreement, there will be a minimum and deposit
premium hereon of $34,000, payable in equal quarterly installments of $8,500 on
January 1, 1998, April 1, 1998, July 1, 1998 and October 1, 1998. At Agreement
expiration, the Company will adjust the minimum and deposit premium against a
rate of 0.33% of its applicable net earned premium.
"Net earned premium" as used herein is the gross earned premium of the
Company for the classes of business reinsured hereunder as specified in the
Coverage Article, less the earned portion of premium paid for per risk
reinsurance that inures to the benefit of this Agreement.
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REINSTATEMENT
In the event of the whole or any portion of the indemnity given
hereunder being exhausted the amount so exhausted shall be automatically
reinstated from the time of commencement of any loss occurrence subject to the
payment of any additional premium calculated Pro Rata as to amount and as to
time, such additional premium to be paid at the time the loss settlement is made
by Reinsurers.
If the loss settlement is made prior to the adjustment of premium the
reinstatement premium shall be calculated provisionally on the deposit premium.
Nevertheless, the liability shall never be more than $25,000,000 in
respect of any loss nor more than $75,000,000 in all during the period of this
Agreement representing two full reinstatements only of the above limit of
indemnity.
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EXHIBIT D - FOURTH LAYER
RETENTION AND LIMIT
No claim will be made hereunder unless the Company has first sustained,
by reason of any one loss, an ultimate net loss in excess of $50,000,000. The
Reinsurer will then be liable for the amount of ultimate net loss in excess of
$50,000,000 any one loss, but the limit of liability of the Reinsurer will not
exceed $50,000,000 with respect to any one loss.
RATE AND PREMIUM
For the term of this Agreement, there will be a minimum and deposit
premium hereon of $34,000, payable in equal quarterly installments of $8,500 on
January 1, 1998, April 1, 1998, July 1, 1998 and October 1, 1998. At Agreement
expiration, the Company will adjust the minimum and deposit premium against a
rate of 0.33% of its applicable net earned premium.
"Net earned premium" as used herein is the gross earned premium of the
Company for the classes of business reinsured hereunder as specified in the
Coverage Article, less the earned portion of premium paid for per risk
reinsurance that inures to the benefit of this Agreement.
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REINSTATEMENT
In the event of the whole or any portion of the indemnity given
hereunder being exhausted the amount so exhausted shall be automatically
reinstated from the time of commencement of any loss occurrence subject to the
payment of any additional premium calculated Pro Rata as to amount and as to
time, such additional premium to be paid at the time the loss settlement is made
by Reinsurers.
If the loss settlement is made prior to the adjustment of premium the
reinstatement premium shall be calculated provisionally on the deposit premium.
Nevertheless, the liability shall never be more than $50,000,000 in
respect of any loss nor more than $150,000,000 in all during the period of this
Agreement representing two full reinstatements only of the above limit of
indemnity.
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