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Exhibit 10.39
EXCESS CESSION AND EVENT
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 0000
XXXXXXX
XXXXXXX XXXXX-XXXXXXXXX XXXXXXXX XX XXX XXXXXX
LAWRENCEVILLE, NEW JERSEY
(HEREINAFTER REFERRED TO AS THE "COMPANY")
AND
THE REINSURERS SUBSCRIBING THE RESPECTIVE
INTERESTS AND LIABILITIES AGREEMENTS HERETO
(HEREINAFTER REFERRED TO AS THE "REINSURERS")
ARTICLE I: BUSINESS REINSURED
A. By this Contract, the Reinsurers agree to reinsure the liability which
may accrue to the Company under all of its original policies,
contracts, binders and certificates of insurance or reinsurance
(hereinafter collectively referred to as "original policies")
classified by the Company as:
All business underwritten by New Jersey State Medical Underwriters, Inc.
and classified by the Company as Medical and Dental Practitioner
Professional Liability, Umbrella Liability, Hospital and Other Health Care
Institution Professional Liability and Commercial General Liability
Business, Directors and Officers Liability, Fiduciary Liability, Managed
Care Errors and Omissions Liability, Employment Practice Liability,
Miscellaneous Professional Indemnity (including but not limited to, Lawyers
Professional, Notary Public and Electronic Data Processors - coverage
subject to agreement by Reinsurers) unless otherwise excluded under Article
III: Exclusions, issued or renewed on or after the effective date, subject
to the terms, conditions and limitations hereinafter set forth.
Retroactive dates hereon shall be the same as any retroactive dates
contained in the original policies.
B. It is understood that this Contract applies to losses first occurring
during the original policy period under occurrence policies and Claims
First Made during the original period for claims made policies in
respect of risks attaching during the term of the Contract all
following the underlying terms and conditions.
Permanent Protection Plan policies underwritten by the Company shall in all
cases be deemed to be original policies covering on a losses occurring
during basis. Reinsurers shall be subject to all of the conditions of the
Permanent Protection Plan original policies and all other original policies
including policy limits and aggregate limit formulas under any extended
reporting coverage therein.
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C. It is understood that this contract applies only to original policies with
limits in excess of the company's retention.
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ARTICLE II: COMMENCEMENT AND TERMINATION
A. This Contract shall become effective on January 1, 1999 and
shall continue in force thereafter until terminated.
B. Either party may terminate this Contract on any December 31 by
giving the other party not less than 90 days prior written
notice.
C. Reinsurers shall remain liable in respect to original policies issued or
renewed during the term their contract is in force on the basis of the
original coverage. Reinsurers shall receive their share of premiums for
such respective original policies and there shall be no return of
unearned premiums in respect thereto.
D This Contract shall apply to original policies underwritten by the
Company and incepting during the term of this Contract subject to a
maximum period any one policy not to exceed 36 months plus odd time.
E. In respect of multi-year original policies attaching to this Contract
then reinsurance coverage for the full policy period shall be provided by
those Reinsurers to whom the original net ceded premium has been
allocated to regardless of any termination of the Contract.
ARTICLE III: EXCLUSIONS
This Contract does not apply to and specifically excludes the following:
1. Reinsurance assumed, except reinsurance assumed from American Medical
Mutual, Inc., A Risk Retention Group, Lawrenceville Property and Casualty
Co., Inc., Lawrenceville Re. Ltd., and MIIX Insurance Company of New York,
where the underwriting is through New Jersey State Medical Underwriters,
Inc.
In addition this exclusion shall not apply to assumed reinsurance underwritten
by the Company for captives or other insurance facilities of hospitals and all
other health care institutions where the Underwriting is through New Jersey
State Medical Underwriters, Inc.
2. Claims emanating from policies issued by the Company with effective dates
after the termination date of this Contract.
3. Financial Guaranty and Insolvency Business.
4. 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, insolvency fund, plan, pool, association, fund or other
arrangement, however 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 or 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.
5. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
Liability. Reinsurance U.S.A. and Canada" except for incidents arising from
nuclear medicine, attached to and
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forming part of this Contract.
6. Any business derived from participation in any Pool, Association or
Syndicate.
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ARTICLE IV: RETENTION AND LIMITS
A. Retention:
The Company shall retain and be liable for the first $10,000,000 of
Ultimate Net Loss as respects:
i) each original policy; or, where applicable
ii) each and every Event.
B. Limit Excess of Retention:
i) In respect of Medical and Dental Practitioner Liability,
Umbrella Liability, Hospital and other Healthcare Institution
Professional Liability and Commercial Liability Business:
Reinsurers shall be liable for 92% of $65,000,000 of Ultimate
Net Loss as respects each original policy, or, where
applicable, each and every Event, plus Pro rata Loss
Adjustment Expenses.
ii) In respect of Directors and Officers Liability, Fiduciary
Liability, Managed Care Errors and Omissions Liability,
Employment Practice Liability, and Miscellaneous Professional
Indemnity (including but not limited to Lawyers Professional,
Notary Public and Electronic Data Processors Business
--coverage subject to agreement by Reinsurers):
Reinsurers shall be liable for 92% of $15,000,000 of Ultimate
Net Loss as respects each original policy, or, where
applicable, each and every Event, plus Pro rata Loss
Adjustment Expenses.
ARTICLE V: DEFINITIONS
A. "Ultimate Net Loss" as used herein is defined as the sum or sums
(including Loss in Excess of Policy Limits, Extra Contractual
Obligations, as hereinafter defined) paid or payable by the Company in
settlement of claims including any and all vicarious liability arising
from BUSINESS REINSURED and in satisfaction of judgments rendered on
account of such claims, after deduction of all salvage, all recoveries,
including the Pennsylvania catastrophe fund, if applicable, and all
claims in inuring insurance or reinsurance, whether collectible or not.
Ultimate Net Loss shall not include any Loss Adjustment Expense.
Nothing herein shall be construed to mean that losses under this
Contract are not recoverable until the Company's Ultimate Net Loss has
been ascertained. Ultimate Net Loss shall be calculated on a per claim,
per policy per insured basis or, where applicable, on a per Event
basis. If the Company issues multiple policies to an insured, the
policies will be deemed to be one original policy for purposes of
coverage under this Reinsurance Contract.
B. "Loss in Excess of Policy Limits" and "Extra Contractual Obligations" as
used herein shall be defined as follows:
1. "Loss in Excess of Policy Limits" as used herein shall mean
any amount paid or payable by the Company in excess of its
policy limits, but otherwise within the terms of its policy,
as a result of a settlement by the Company or an action
against it by its insured or its insured's assignee to recover
damages the insured is legally obligated to pay to a third
party claimant because of the Company's alleged or actual
negligence, breach of contract or bad faith in rejecting a
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settlement within policy limits, or in discharging its duty to
defend or prepare the defense in the trial of an action
against its insured, or in discharging its duty to prepare or
prosecute an appeal consequent upon such an action. A Loss in
Excess of Policy Limits shall be deemed to have occurred on
the same date as the loss covered or alleged to be covered
under the policy.
2. "Extra Contractual Obligations" as used herein shall mean any
punitive, exemplary, compensatory, multiplied or consequential
damages, other than Loss in Excess of Policy Limits paid or
payable by the Company as a result of an action against it by
its insured, its insured's assignee or a third party claimant,
which action alleges negligence, breach of contract or bad
faith on the part of the Company in handling a claim under a
policy subject to this Contract. An Extra Contractual
Obligation shall be deemed to have occurred on the same date
as the loss covered or alleged to be covered under the policy.
Notwithstanding anything stated herein, this Contract shall not apply
to any Loss in Excess of Policy Limits or Extra Contractual Obligation
incurred by the Company as a result of any fraudulent and/or criminal
act or any officer or director 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 if any claim covered hereunder.
C. "Incident" as used herein shall mean a single loss occurrence, or
otherwise a series of accidents, acts, errors or omissions including
continuous or repeated exposure to substantially the same general harmful
conditions giving rise to coverage, all as defined and provided within
the original policies underwritten by the Company.
D. "Claims First Made" as used herein shall mean claims reported under
claims made original policies on the earlier date of (1) or (2) below:
1. When the insured first gives notice to the Company that a
claim has been made against the insured; or
2. When the insured first gives notice to the Company of an
Incident involving a particular person which may result in a
claim against the original insured.
Notwithstanding the above, and in all cases, the Claims First Made date shall be
as defined and provided within the underlying policies underwritten by the
Company.
E. 1. "Loss Adjustment Expense" as used herein shall mean expenses
allocable to the investigation defense and/or settlement of
specific claims, including litigation expenses and
postjudgment interest and legal expenses and costs incurred in
connection with coverage questions and legal actions connected
thereto, but not including office expenses or salaries of the
Company's regular employees.
2. "Pro rata Loss Adjustment Expenses" as used herein shall mean
the result obtained by multiplying the covered indemnity
percentage, as calculated below by the Company's "Loss
Adjustment Expense" for a given claim. The percentage shall be
determined by dividing the amount of Ultimate Net Loss
indemnity for a coverage section by the Company's total
Ultimate Net Loss for a given claim.
F. "Net Ceded Premium" as used herein shall mean Gross Allocated Premium
to this Contract less 25%.
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G. "Gross Allocated Premium" as used herein shall mean the written premium
by the Company allocated to this Contract in annual policies or
instalments on multi-year policies.
H. "Event" as used herein shall mean all original claims arising from an
Incident involving more than one insured under original policies An
Event will be deemed to have occurred at the date of the first
occurrence for original occurrence policies and the Claims First Made
date if the original policy is on a "claims made" basis (for claims
made original policies.
ARTICLE VI: CLAIMS REPORTING AND CLAIMS LOSS SETTLEMENT
A. Within 60 days after the end of each calendar quarter, the
Company shall provide the Reinsurers with a claims bordereau
outlining any claim on which the Company has placed a reserve
value of $3,000,000 or more each loss or event. At each
anniversary the Company shall provide a bordereau outlining
all claims and reserves excess of $250,000 each loss or
$2,000,000 each event. Losses and adjustment expenses
recoverable by the Company are payable immediately after
receipt of proof of loss subject to the retention.
B. The Company shall include with each claim bordereau, the following
information as respects new claims, pending claims and closed claims
during the quarter:
1. Claim number or reference number;
2. Name of Insured;
3. Name of Claimant;
4. Subject policy limit;
5. Claims Made date;
6. Loss Occurrence date;
7. Indemnity (paid and outstanding);
8. Expenses (paid and outstanding);
9. Indemnity recovery; if any;
10. Expense recovery; if any;
11. Status
12. Narrative Loss Description of claims of $3,000,000 or more
each loss or Event as respects new claims and closed claims
during the quarter or as otherwise upon request of Reinsurers.
C. The Reinsurers shall have the right, at its own expense, to be
associated in the defense of any claim, suit or proceeding involving
this reinsurance.
D. The Company shall, at its full discretion, adjust and settle all claims
and losses. All such adjustments and settlements shall be binding on
the Reinsurers and the Reinsurers agree to pay all amounts for which
they may be liable immediately after receipt of reasonable evidence of
the amount paid by the Company.
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ARTICLE VII: SALVAGE AND SUBROGATION
The Reinsurers shall be credited with salvage (i.e., reimbursement obtained or
recovery made by the Company, less the actual cost, excluding salaries of
officials and employees of the Company and sums paid to attorneys as retainer,
of obtaining such reimbursement or making such recovery) on account of claims
and settlements involving reinsurance hereunder. Salvage thereon shall always be
used to reimburse the excess carriers in the reverse order of their priority
according to their participation before being used in any way to reimburse the
Company for its primary loss. The Company hereby agrees to enforce its rights to
salvage or subrogation relating to any loss, a part of which loss was sustained
by the Reinsurers, and to prosecute all claims arising out of such rights.
ARTICLE VIII: PREMIUM
The Company shall pay the Reinsurers a Minimum and Deposit Premium of $750,000
annually which shall be payable quarterly as follows:-
31st March, 30th June, 30th September and 31st December.
The Minimum Premium shall be adjusted upwards at 92% of the net ceded premium
within 45 days of 31st December.
ARTICLE IX: OFFSET AND SECURITY
(a) Each party hereto has the right, which may be exercised at any time, to
offset any amounts, whether on account of premiums or losses or
otherwise, due from such party to another party under this Agreement or
any other reinsurance agreement heretofore or hereafter entered into
between them, against any amounts, whether on account of premiums or
losses or otherwise due from the latter party to the former party. The
party asserting the right of offset may exercise this right, whether as
assuming or ceding insurer or in both roles in the relevant agreement or
agreements.
(b) Each party hereby assigns and pledges to the other party (or to each
other party, if more than one) all of its rights under this Agreement to
receive premium or loss payments at any time from such other party
("Collateral"), to secure its premium or loss obligations to such other
party at any time under this Agreement and any other reinsurance
agreement heretofore or hereinafter entered into by and between them
("Secured Obligations"). If at any time a party is in default under any
Secured Obligation or shall be subject to any liquidation,
rehabilitation, reorganization or conservation proceeding, each other
party shall be entitled in its discretion, to apply, or to withhold for
the purpose of applying in due course, any Collateral assigned and
pledged to it by the former party and otherwise to realize upon such
Collateral as security for such Secured Obligations.
(c) The security interest described herein, and the term "Collateral," shall
apply to all payments and other proceeds in respect of the rights
assigned and pledged. A party's security interest in Collateral shall be
deemed evidenced only by the counterpart of this Agreement delivered to
such party.
(d) Each right under this Article is a separate and independent right,
exercisable, without notice or demand, alone or together with other
rights, in the sole election of the party entitled
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thereto, and no waiver, delay, or failure to exercise, in respect of any
right, shall constitute a waiver of any other right. The provisions of
this Article shall survive any cancellation or other termination of this
Agreement.
(e) In the event of the insolvency of a party hereto, offsets shall only be
allowed in accordance with The laws of the insolvent party's state of
domicile.
ARTICLE X: ACCESS TO RECORDS
A. The Company shall place at the disposal of the Reinsurers at all
reasonable time, and the Reinsurers shall have the right to
inspect, through authorized representatives, all books, records,
policies, endorsements and papers of the Company in connection
with any reinsurance hereunder, or claims in connection herewith.
B. The Reinsurers agree that they will not disclose any confidential
information obtained by them hereunder to parties not subject to this
Contract except under the following circumstances and then only when
necessary:
1. When disclosure of such information is required in the normal
course of the Reinsurers' business; or
2. With the prior written consent of the Company; or
3. When the Reinsurers are required by a subpoena or court order to
disclose such information. The Reinsurers shall promptly notify
the Company of any attempt by a third party to obtain from them
any such confidential information.
C. The Reinsurers will provide the Company or its designated representative
with such information as the Reinsurers and Company may agree is
necessary to the Company's handling of the business reinsured herein.
D. The obligations contained in this Article shall survive termination of
this Contract.
ARTICLE XI: LIABILITY OF THE REINSURER
A. The liability of the Reinsurers shall follow that of the Company in every
case and be subject in all respects to all the general and specific
stipulations, clauses, waivers and modifications of the Company's
policies and any endorsements thereon. However, in no event shall this be
construed in any way to provide coverage outside the terms and conditions
set forth in this Contract.
B. Nothing herein shall in any manner create any obligation or establish any
rights against the Reinsurers in favor of any third party or any persons
not parties to this Contract.
ARTICLE XII: NET RETAINED LIABILITY
A. This Contract applies only to that portion of any insurance or
reinsurance which the Company retains net for its own account (prior to
deduction of any underlying reinsurance), and in calculating the amount
of any loss hereunder and also in computing the amount or amounts in
excess of which this Contract attaches only loss or losses in respect of
that portion of any
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policy which the Company retains net for its own account shall be
included.
B. The amount of the Reinsurers' liability hereunder in respect of any loss
or losses shall not be increased by reason of the inability of the
Company to collect from any other reinsurer(s), whether specific or
general, any amounts which may have become due from such reinsurer(s),
whether such inability arises from the insolvency of such other
reinsurer(s) or otherwise.
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ARTICLE XIII: DELAYS, ERRORS OR OMISSIONS
Inadvertent delays, errors or omissions made in connections with this Contract
or any transaction hereunder shall not relieve either party from any liability
which would have attached had such delay, error or omission not occurred,
provided always that such error or omission will be rectified as soon as
possible after discovery. In no event shall later notification of any claim by
the Company constitute a ground upon which the Reinsurers have been prejudiced
by such late notice. As used in this Article, the term "prejudiced" shall mean
that a different outcome in the handling of any claim would have resulted but
for the untimely notice to Reinsurers.
ARTICLE XIV: CURRENCY
Whenever the word "Dollars" or the "$" appears in this Contract, they shall be
construed to mean United States Dollars and all transactions under this Contract
shall be in United States Dollars.
ARTICLE XV: FEDERAL EXCISE TAX
If the Reinsurers are subject to the Federal Excise Tax, the Reinsurers agree to
allow, for the purpose of paying Tax, up to 1% of the premium payable hereon to
the extent such premium is subject to the Tax. In the event of any return
premium becoming due hereunder, the Reinsurers will deduct from the amount of
the return premium the same percentage as it allowed, and the Company or its
agents should take steps to recover the Tax from the U.S.
Government.
ARTICLE XVI: UNAUTHORIZED REINSURERS
A. If the Reinsurers are unauthorized in any state of the United States of
America or the District of Columbia, the Reinsurers agree to fund their
share of the Company's outstanding portion of Ultimate Net Loss and Pro
rata Loss Adjustment Expense reserves as determined by the Company,
respectively by:
1. Clean, irrevocable and unconditional letters of credit issued and
confirmed, if confirmation is required by the insurance regulatory
authorities involved, by a bank or banks meeting the NAIC
Securities Valuation Office credit standards for issuers of
letters of credit and acceptable to said insurance regulatory
authorities; and/or
2. Trust accounts in conformity with New York Regulation 114 for the
benefit of the Company and as may be required by any other
insurance regulatory authority; and/or
3. Cash advances;
if, without such funding, a penalty would accrue to the Company on any
financial statement it is required to file with the insurance regulatory
authorities involved. The Reinsurers, at their sole option, may fund in
other than cash if their method and form of funding are acceptable to the
insurance regulatory authorities involved and the Company.
B. With regard to funding in whole or in part by letters of credit, it is
agreed that each letter of credit will be in a form acceptable to
insurance regulatory authorities involved, will be issued
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for a term of at least one year and will include an "evergreen clause"
which automatically extends the term for at least one additional year at
each expiration date unless written notice of non-renewal is given to the
Company not less than 30 days prior to said expiration date. The Company
and the Reinsurers further agree, notwithstanding anything to the
contrary in this Contract, that said letters of credit may be drawn upon
by the Company or its successors in interest at any time, without
diminution because of the insolvency of the Company or the Reinsurers,
but only for one or more of the following purposes:
1. To reimburse itself for the Reinsurers' share of the paid portion
of Ultimate Net Loss and/or Pro rata Loss Adjustment Expenses paid
under the terms of policies reinsured hereunder, unless paid in
cash by the Reinsurers;
2. To fund a cash account in an amount equal to the Reinsurers' share
of any outstanding portion of Ultimate Net Loss and Pro rata Loss
Adjustment Expense reserves funded by means of a letter of credit
which (a) is under non-renewal notice, if said letter of credit
has not been renewed or replaced by the Reinsurers 10 days prior
to its expiration date, or (b) the Reinsurers have failed to
increase to the amount requested by the Company, it being
understood and nothing in this Contract in any way shall restrict
or limit the rights of the Company under the terms of the letter
of credit;
3. To refund to the Reinsurers any sum in excess of the actual amount
required to fund the Reinsurers' share of the Company's
outstanding portion of Ultimate Net Loss and Pro rata Loss
Adjustment Expense reserves if so requested by the Reinsurers.
4. In the event the amount drawn by the Company on any letter of
credit is in excess of the actual amount required then the Company
shall promptly return to the Reinsurers the excess amount so
drawn.
ARTICLE XVII: INSOLVENCY
A. In the event of the Insolvency of the Company, this reinsurance shall be
payable directly to the Company or to its liquidator, receiver,
conservator or statutory successor immediately upon demand, with
reasonable provision for verification, 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 its 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. Accidental failure to give such notice shall not
excuse the obligation unless Reinsurers are substantially prejudiced by
the failure to give such notice. 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 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.
B. Where two or more of the 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
Contract as though such expense had been incurred by the Company.
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C. It is further understood and agreed that, in the event of the Insolvency
of the Company, the reinsurance under this Contract shall be payable
directly by the Reinsurers to the Company or to its liquidator, receiver
or statutory successor.
ARTICLE XVIII: ARBITRATION
A. As a condition precedent to any right of action hereunder, in the event
of any dispute or difference of opinion hereafter arising with respect to
this Contract, it is hereby mutually agreed that such dispute or
difference of opinion shall be submitted to Arbitration. One Arbiter
shall be chosen by the Company, the other by the Reinsurers, and an
Umpire shall be chosen by the two Arbiters before they enter upon
Arbitration, all of whom shall be active or retired disinterested
executive officers of insurance or reinsurance companies. In the event
that either party should fail to choose an Arbiter within 30 days
following a written request by the other party to do so, the requesting
party may choose two Arbiters who shall in turn choose an Umpire before
entering upon Arbitration. If the two Arbiters fail to agree upon the
selection of an Umpire within 30 days following their appointment, each
Arbiter shall nominate three candidates within 10 days thereafter, two of
whom the other shall decline, and the decision shall be made by drawing
lots. Nothing herein shall prevent either party from commencing a
proceeding in the United States District Court having jurisdiction over
the dispute for the purposes of having said court select an Umpire
pursuant to the Federal Arbitration Act 9 USC 1 (er seq).
B. Each party shall present its case to the Arbiters within 30 days
following the date of appointment of the Umpire. The Arbiters shall
consider this Contract as an honourable engagement rather than merely as
a legal obligation and they are relieved of all judicial formalities and
may abstain from following the strict rules of law. The decision of the
Arbiters shall be final and binding on both parties; but failing to
agree, they shall call in the Umpire and the decision of the majority
shall be final and binding upon both parties. Judgment upon the final
written decision of the Arbiters may be entered in any court of competent
jurisdiction.
C. If more than one of the Reinsurers 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 one party, provided, however, that nothing
herein 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 participating under the terms of this
Contract from several to joint.
D. Each party shall bear the expense of its own Arbiter, and shall jointly
and equally bear with the other the expense of the Umpire and of the
Arbitration. In the event that the two Arbiters are chosen by one party,
as above provided, the expense of the Arbiters, the Umpire and the
Arbitration shall be equally divided between the two parties.
E. Any Arbitration proceedings shall take place at a location in
Lawrenceville, New Jersey. All proceedings pursuant hereto shall be
governed by the law of the State of New Jersey.
ARTICLE XVIIII: SERVICE OF SUIT
(Applicable if the Reinsurer is not domiciled in the United States of America
and/or is not authorized in any State, Territory or District of the United
States where authorization is required by insurance regulatory authorities)
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A. It is agreed that in the event of the failure of the Reinsurers hereon to
pay any amount claimed to be due hereunder, the Reinsurers hereon, at the
request of the Company, will submit to the jurisdiction of a court of
competent jurisdiction within the United States. The foregoing shall not
constitute a waiver of the right of the Reinsurers to commence any suit
in, or to remove, remand or transfer any suit to any other court of
competent jurisdiction in accordance with the applicable statutes of the
state or United States pertinent thereto.
B. It is further agreed that service of process in such suit may be made
upon Saiber Xxxxxxxxxxx Xxxx & Xxxxxxxxx, Xxx Xxxxxxx Xxxxxx, Xxxxxx, XX
00000-0000, Xxxxxx Xxxxxx of America, and that in any suit instituted
against any one of them upon this Contract, the Reinsurers will abide by
the final decision of such Court or of any Appellate Court in the event
of an appeal.
C. The above named are authorized and directed to accept service of process
on behalf of the Reinsurers in any suit and/or upon the request of the
Company to give a written undertaking to the Company that they will enter
a general appearance upon the Reinsurers behalf in the event such suit
shall be instituted.
D. Further, pursuant to any statute of any state, territory or District of
the United States which makes provision therefor, the Reinsurers hereon
hereby designate the Superintendent, Commissioner or Director of
Insurance or other officer specified for that purposes in the statute, or
his successor or successors in office, as their true and lawful attorney
upon whom may be served any lawful proceeding in any action, suit or
proceeding instituted by or on behalf of the Company or any beneficiary
hereunder arising out of this Contract, and hereby designate the above
named as the person to whom said officer is authorized to mail such
process or a true copy thereof.
ARTICLE XX: INTERMEDIARIES
Medical Brokers, Inc and JLT Risk Solutions are hereby recognized as the
Intermediaries negotiating this Contract for all business hereunder. All
communications (including but not limited to notices of: statements, premium,
return premium, commissions, taxes, losses, Loss Adjustment Expense, salvage and
loss settlements) relating thereto shall be transmitted to the Company or the
Reinsurers through JLT Risk Solutions. Payments by the Company to the
Intermediaries shall be deemed to constitute payment to the Reinsurers. Payments
by the Reinsurers to the Intermediaries shall be deemed to constitute payment to
the Company only to the extent that such payments are actually received by the
Company.
Notwithstanding the above, the Company and Reinsurers hereby agree that all
payments will be direct from the Reinsurers to the Company, or from the Company
to the Reinsurers, as appropriate.
ARTICLE XXI: PROPERTY COVERAGE
The Company may incept at any time during the Contract Period, Property coverage
including Fire, Allied Lines and Extended Coverages, Inland Marine and
Commercial Multi-Peril coverages all when written in conjunction with other
coverages specified elsewhere within the Contract for limits for:-
$14,500,000 Ultimate Net loss plus pro-rata loss adjustment expenses as
respects each and every loss, each original policy
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Excess of:-
$ 500,000 Ultimate Net loss plus pro-rata loss adjustment expenses as
respect each and every loss, each original policy
Coverage shall be subject to the following exclusions and conditions:-
1) Earthquake coverages
2) Seepage and Pollution
3) Within 60 days after the end of each quarter the Company shall provide
Reinsurers with a claims bordereaux outlining any claim on which the
Company has placed a reserve value of more than $300,000.
Losses and adjustment expenses are recoverable by the Company
immediately after receipt of proof of loss subject to the retention
applicable herein.
4) Within 60 days after the end of the quarter that any coverage attaches
the Company shall provide the Reinsurers with a Premium bordereaux
outlining the premium applicable to the original policy and also the
premium applicable to reinsurance.
NUCLEAR INCIDENT EXCLUSION CLAUSE
LIABILITY - REINSURANCE - U.S.A
1. This Agreement does not cover any loss or liability accruing to the
Cedent 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 all purposes of this Agreement
all the original policies of the Cedent (new, renewal and replacement) of
the classes specified in Clause II of this paragraph (2) from the time
specified in Clause III of this paragraph (2) shall be deemed to include
the following provision (specified as the Limited Exclusion Provision):
Limited Exclusion Provision
I. It is agreed that the policy does not apply under any liability
coverage, to (injury, sickness, disease, death or destruction
(bodily injury or property damage with respect to which an insured
under the policy is also an insured under a nuclear energy
liability policy issued by Nuclear Energy Liability Insurance
Association, Mutual Atomic Energy Liability Underwriters or
Nuclear Insurance Association of Canada, or would be an insured
under any such policy but for its termination upon exhaustion of
its limit of liability.
II. Family Automobile Policies (liability only), Special Automobile
Policies (private passenger automobiles, liability only), Farmers
Comprehensive Personal Liability Policies (liability only),
Comprehensive Personal Liability Policies (liability only) or
policies of a similar nature; and the liability portion of
combination forms related to the four classes of policies stated
above, such as the Comprehensive Dwelling Policy and the
applicable types of Homeowners Policies.
16
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 Cedent 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
Agreement the original liability policies of the Cedent (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:
I. Under an Liability Coverage, to (injury, sickness, disease, death
or destruction (bodily injury or property damage
(a) with respect to which an insured under the policy is also
an insured under a nuclear energy liability policy issued
by Nuclear Energy Liability Insurance Association, Mutual
Atomic Energy Liability Underwriters or Nuclear Insurance
Association of Canada, or would be an insured under any
such policy but for its termination upon exhaustion of its
limit of liability; or
(b) resulting from the hazardous properties of nuclear material
and with respect to which (1) any person or organization is
required to maintain financial protection pursuant to the
Atomic Energy Act of 1954, or any law amendatory thereof,
or (2) the insured is, or had this policy not been issued
would be, entitled to indemnity from the United States of
America, or any agency thereof, under any agreement entered
into by the United States of America, or any agency
thereof, with any person or organization.
II. Under any Medical Payments Coverage, or under any Supplementary
Payment Provision relating to (immediate medical or surgical
relief, (first aid, to expenses incurred with respect to
00
(xxxxxx xxxxxx, xxxxxxxx, disease or death (bodily injury
resulting from the hazardous properties of nuclear material and
arising out of the operation of a nuclear facility by any person
or organization.
III. Under any liability Coverage, to (injury, sickness, disease, death
or destruction (bodily injury or property damage resulting from
the hazardous properties or 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 or by or on behalf of an insured;
or
(c) (the injury, sickness, disease, death or destruction (the
bodily injury or property damage arises out of the
furnishing by an insured of services, materials, parts or
equipment in connection with the planning, construction,
maintenance, operation or use of any nuclear facility, but
if such facility is located within the United States of
America, its territories, or possessions or Canada, this
exclusion (c) applies only to (injury to or destruction of
property at such nuclear facility. (property damage to such
nuclear facility and any property thereat.
IV. As used in this endorsement: "hazardous properties" include
radioactive, toxic or explosive properties; "nuclear material"
means source material, special nuclear material or by-product
material; "source material", "special nuclear material" and
by-product material" have the meanings given to 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 by-product
material and (2) resulting from the operation by any person or
organization of any nuclear facility included within the
definition of nuclear facility under paragraph (a) or (b) thereof;
"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,
18
and includes the site on which any of the foregoing is located,
all operations conducted on such site and all premises used for
such operations; "nuclear reactor" means any apparatus designed or
used to sustain nuclear fission in a self-supporting chain
reaction or to contain a xxxxxxxx xxxx of fissionable material;
(with respect to injury to or destruction of property, the word
"injury" or "destruction" (property damage" includes all forms of
radioactive contamination of property. (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 Cedent 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 anyway 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 Cedent in Canada and
that with respect of 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.
Note: The words printed in italics in the Limited Exclusion provision and in
the Broad Exclusion provision apply only in relation to original
liability policies which include a Limited Exclusion provision or a Broad
Exclusion Provision containing these words.
NUCLEAR INCIDENT EXCLUSION CLAUSE
LIABILITY - REINSURANCE - CANADA
1. This Contract does not cover any loss or liability accruing to the
Company 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 was restricting the operation of paragraph 1 of this
Clause it is agreed that for all purposes of this Contract all the
original liability contracts of the Company, whether new, renewal or
replacement, of the following classes, namely,
Personal Liability,
Farmers Liability,
Storekeepers Liability,
Which become effective on or after 31st December 1984, shall be deemed to
include, from their inception dates and thereafter, the following provision:
Limited Exclusion Provision
This Policy does not apply to bodily injury or property damage with
respect to which the Insured is also insured under a contract of nuclear
energy liability insurance (whether the
19
insured is named in such contract or not and whether or not it is legally
enforceable by the Insured) issued by the Nuclear Insurance Association
of Canada or any other group or pool of insurers or would be an Insured
under any such policy but for its termination upon exhaustion of its
limit of liability.
With respect to property, loss of use of such property shall be deemed to
be property damage.
3. Without in any way restricting the operation of paragraph 1 of this
Clause it is agreed that for all purposes of this Contract all the
original liability contracts of the Company, whether new, renewal or
replacement, of any class whatsoever (other than Personal Liability,
Farmers Liability, Storekeepers Liability or Automobile Liability
contracts), which become effective on or after 31st December 1984, shall
be deemed to include, from their inception dates and thereafter, the
following provision:-
Broad Exclusion Provision
It is agreed that this Policy does not apply:
(a) to liability imposed by or arising under the Nuclear Liability
Act; or
20
(b) to bodily injury or property damage with respect to which an
Insured under this Policy is also insured under a contract of
nuclear energy liability insurance (whether the Insured is named
in such contract or not and whether or not it is legally
enforceable by the Insured) issued by the Nuclear Insurance
Association of Canada or any other insurer or group or pool of
insurers or would be an Insured under any such policy but for its
termination upon exhaustion of its limit of liability; or
(c) to bodily injury or property damage resulting directly or
indirectly from the nuclear energy hazard arising from:
(1) the ownership, maintenance, operation or use of a nuclear
facility by or on behalf if an Insured;
(2) the furnishing by an Insured of services, materials, parts
or equipment in connection with the planning, construction,
maintenance, operation or use of any nuclear facility; and
(3) the possession, consumption, use, handling, disposal or
transportation of fissionable substances or of other
radioactive material (except radioactive isotopes away from
a nuclear facility, which have reached the final stage of
fabrication so as to be usable for any scientific, medical,
agricultural, commercial or industrial purpose) used,
distributed, handled or sold by an Insured.
As used in this Policy:
(I) the term "nuclear energy hazard" means the radioactive, toxic,
explosive or other hazardous properties of radioactive material;
(II) the term "radioactive material" means uranium, thorium, plutonium,
neptunium, their respective derivatives and compounds, radioactive
isotopes of other element and any other substances that the Atomic
Energy Control Board may, by regulation, designate as being
prescribed substances capable of releasing atomic energy, or as
being requisite for the production, use or application of atomic
energy;
(III) The term "nuclear facility" means:
(a) any apparatus designed or used to sustain nuclear fission
in a self-supporting chain reaction or to contain a
xxxxxxxx xxxx of plutonium, thorium and uranium or any one
or more of them;
(b) any equipment or device designed or used for (i) separating
the isotopes of plutonium, thorium and uranium or any one
or more of them, (ii) processing or utilizing spent fuel,
or (iii) handling, processing or packaging waste;
(c) any equipment or device used for the processing,
fabricating or alloying of plutonium, thorium or uranium
enriched in the isotope uranium 233 or in the isotope
uranium 235, or any one or more of them if at any time the
total amount of such material in the custody of the Insured
at the premises where such equipment or device is located
consists of or contains more than 25 grams of plutonium or
uranium 233 or any combination thereof, or more than 250
grams of uranium 235;
21
(d) any structure, basin, excavation, premises or place
prepared or used for the storage or disposal of waste
radioactive material; and includes the site on which any of
the foregoing is located, together with all operations
conducted thereon and all premises used for such
operations,
(IV) the term "fissionable substance" means any prescribed substance
that is, or from which can be obtained, a substance capable of
releasing atomic energy by nuclear fission.
(V) With respect to property, loss of use of such property shall be
deemed to be property damage.
22
IN ALL COMMUNICATIONS PLEASE QUOTE
THE FOLLOWING REFERENCE
901/LK9905081
REINSURANCE
AGREEMENT
THE COMPANY IS REQUESTED TO READ THIS AGREEMENT CAREFULLY.
IF IT IS BELIEVED TO BE INCORRECT THE AGREEMENT SHOULD BE
IMMEDIATELY RETURNED, WITH AN EXPLANATION TO:
JLT Risk Solutions Limited
0 Xxxxxxxx Xxxxxx,
Xxxxxx,
XX0X 0XX.
23
--------------------------------------------------------------------------------
AMERICAN RE-INSURANCE COMPANY
THIS AGREEMENT made and entered into by and between the MEDICAL INTER-INSURANCE
EXCHANGE OF NEW JERSEY (hereinafter referred to as the "Company") and the
AMERICAN RE-INSURANCE COMPANY, a Delaware Corporation with Administrative
Offices in Princeton, New Jersey (hereinafter referred to as "Reinsurers")
THE COMPANY IS REQUESTED TO READ THIS AGREEMENT CAREFULLY. IF IT IS BELIEVED TO
BE INCORRECT THE AGREEMENT SHOULD BE IMMEDIATELY RETURNED, WITH AN EXPLANATION,
TO THE PERSON OR ENTITY DESIGNATED ON THE BACK PAGE OF THIS AGREEMENT.
--------------------------------------------------------------------------------
IN CONSIDERATION of the Company having paid the premium specified in the
Schedule to Reinsurers, whose duly authorised representative has hereunto
subscribed his name.
REINSURERS HEREBY AGREE to reinsure the Company against loss as more fully set
forth in this Agreement and the attachments hereto during the Period of
Reinsurance stated in the said Schedule, or during any subsequent period as may
be mutually agreed upon between the Company and Reinsurers.
PROVIDED that the liability of Reinsurers subscribing to this Agreement shall
not exceed their proportion of the limits of liability expressed in the said
Schedule or such other limits of liability as may be substituted therefor by
Addendum hereon or attached hereto signed by or on behalf of Reinsurers.
If the Company shall make any claim under this Agreement with knowledge that the
same is false or fraudulent as regards amount or otherwise, this Agreement shall
become null and void forthwith and any and all claims hereunder shall be
forfeited and of no force and effect.
IN WITNESS HEREOF the parties hereto have caused this Agreement to be executed
in duplicate this 28th day of September, One Thousand Nine Hundred and
Ninety-Nine.
ACCEPTED BY:
AMERICAN RE-INSURANCE COMPANY MEDICAL INTER-INSURANCE EXCHANGE OF
NEW JERSEY
/s/ Xxxx X. Xxxxx /s/ Xxxxxx X. Xxxxxx
----------------------------- -----------------------------------
24
Contract Number: 901/LK9905081 Reinsurers reference:
THE SCHEDULE
COMPANY: MEDICAL INTER-INSURANCE EXCHANGE OF NEW JERSEY
ADDRESS: Xxx Xxxxxxxx Xxxx, Xxxxxxxxxxxxx, Xxx Xxxxxx,
Xxxxxx Xxxxxx of America.
PERIOD OF REINSURANCE: Effective 1st January, 1999 covering on a risks
attaching basis for Business Covered and
continuous thereafter unless terminated.
LIMIT OF LIABILITY: All as more fully set forth in the attached wording
This Contract reinsures 28% part of the 92% of the Limit of Liability expressed
in the attached wording.
INTEREST: All as more fully set forth in the attached wording
PREMIUM: US$210,000 (being 28% of Minimum and Deposit Premium
of US$750,000) annual, payable quarterly on 31st
March, 30th June, 30th September and 31st December.
--------------------------------------------------------------------------------
25
SEVERAL LIABILITY NOTICE
The subscribing Reinsurers' obligations under this contract of reinsurance 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.
