EXHIBIT 10.33
AGENCY PROFIT SHARING AGREEMENT
The Company and the Agent agree that:
I. In addition to the commissions otherwise paid by
the Company to the Agent and subject to
requirements imposed by law and conditions set
forth in this agreement, the Company shall pay to
the Agent a Profit-Sharing Commission based on
underwriting profits realized by the Company on all
Qualified Business.
II. Annual Written Premium must equal or exceed
$250,000 in order to be eligible for Profit-Sharing.
III. Definitions:
A. "Income" means the total of all earned
premiums on Qualified Business less any
dividends paid to policyholders.
B. "Outgo" means the sum of the following items
relating to the Qualified Business.
1. Incurred losses (losses paid less salvage
received and subrogations recovered,
plus reserves for losses at the end of the
year, less reserves for losses at the
beginning of the year) shall not be less
than zero.
a) Incurred losses shall be limited to the
first $100,000 for any one loss or
occurrence on a policy per calendar
year.
2. Loss-adjustment expenses (loss-
adjustment expenses paid, plus reserves
for loss adjustment expenses at the end
of the year, less reserves for loss-
adjustment expenses at the beginning of
the year). Such expenses may be based
on the Company ratio of loss expense to
earned premium.
3. Commissions paid or credited by
Company to Agent, excluding Profit-
Sharing Commissions paid under this
Agreement.
4. Company Underwriting expense, as
determined from the consolidated Annual
Statement of the Company, applied as a
ratio of Underwriting expense to earned
premium.
5. Uncollected premiums developed by
audit or under reporting form policies for
which the Agent is not responsible under
the Agency Agreement. If the premiums
due are collected, such premiums less
expense shall be credited to Agent.
6. Profit and Surplus allowance, equal to
five percent of Income.
C. "Qualified Business" means all business
placed with the Company through the Agent
except "Excluded Business."
D. "Annual Written Premium" means the total of
all written premiums for the year on Qualified
Business less return premiums.
E. "Earned Premiums" shall be computed by the
Company from its records on the business
referred to in Section I.
F. "Agent Profit" means the excess of Income
over Outgo.
G. "Agent Loss" means the excess of Outgo over
Income.
H. "Percentage of Profit" means Agent Profit
divided by Earned Premium.
I. "Excluded Business" means business
excluded from profit sharing by law, business
administered by underwriting associations,
non-standard automobile, syndicates or pools
or assigned-risk plans, special reinsurance
placed by or at the request of the Agent,
health insurance, premiums produced through
safety or commercial group methods,
retrospective rating premium developed as
additional premium through operation of the
retrospective rating plan, and any other
premium or line of business determined to be
Excluded Business by mutual agreement
between the agent and the Company.
Business written by the Agent in the State of
Michigan under what is presently referred to as
the Essential Insurance Plan shall not
constitute Excluded Business.
J. "Annual Growth Rate" means the rate of
growth or decline in Annual Written Premium
compared to prior year Annual Written
Premium. Annual Growth Rate is calculated
by dividing current year Annual Written
Premium by prior year Annual Written
Premium. The excess over 100 (or deficit
below 100) is the Annual Growth Rate
percentage shown in the IV. D. Table.
K. "Initial Profit-Sharing Figure" means the result
from performing all calculations in Steps 1
through 4 of Section IV. D. Table.
IV. Profit-Sharing Commission:
A. Following the close of the year, the Company
shall compute Agent Profit or Loss for that
year and report to the Agent. If there is an
Agent Profit, the Profit-Sharing Commission is
determined by applying (as a percentage) the
Profit-Sharing Factor from the Table in
Section D to the Agent Profit. The Profit-
Sharing Factor is determined from three
elements: (1) The Agent Annual Written
Premium; (2) the Agent Annual Growth Rate;
and (3) the Agent Percentage of Profit.
The Profit-Sharing Factor is the percentage
shown in the appropriate column of the Table
corresponding to the Agent Percentage of
Profit on the line corresponding to the Agent
Annual Growth Rate as shown in the
appropriate column for the Agent Annual
Written Premium.
If an Agent Loss existed in the prior year and
(1) such Agent Loss is less than 50% for the
Initial Profit-Sharing Figure, the prior year
Agent Loss shall be subtracted from the Initial
Profit-Sharing Figure and the resulting
amount is the Profit-Sharing Commission, or
(2) such Agent Loss is 50% or more of the
Initial Profit-Sharing Figure, the Profit-Sharing
Commission shall be 50% of the Initial Profit-
Sharing Figure.
B. The Company agrees that the Profit-Sharing
Commission Report shall be in writing and
delivered to the Agent within ninety (90) days
of the close of the year.
C. Any Profit-Sharing Commission payment
shall be made by the Company within ninety
(90) days after the close of the year, provided
the Agent has paid all premiums outstanding
for the year. No charge or deduction for
Profit-Sharing Commission shall be made or
claimed by the Agent in his accounts.
D. Table.
Steps in computing the Profit-Sharing
Commissions are as follows:
1. Select column corresponding to Agent
Annual Written Premium.
2. Determine Agent Annual Growth Rate
and locate in column corresponding to
Agent Annual Written Premium.
3. Determine Agent Percentage of Profit
and select appropriate column in right-
hand portion of Table.
4. By going horizontally to the right from
the Agent Annual Growth Rate (as
located in Step 2) to the column
containing the Agent Percentage of
Profit (as located in Step 3), the
intersecting figure is the Profit-Sharing
Factor.
PROFIT-SHARING TABLE
(STEP 1) IF ANNUAL WRITTEN PREMIUM IS: (STEP 3) THE PERCENTAGE OF PROFIT IS:
OVER $4,000,001 $2,000,001 $1,000,001 $500,001 $250,000-- 5%or 5.1%to 10.1%to 15.1%to 20.1%to 25%or
$6,000,000 $6,000,000 $4,000,000 $2,000,000 $1,000,000 $500,000 less 10% 15% 20% 25% more
(STEP 2) AND ANNUAL GROWTH RATE IS: (STEP 4) THE PROFIT-SHARING FACTOR IS:
-15.0 -8.1 5 7 9 11 13 17
-15.0 -8.1 -8.0 0 6 8 10 12 14 18
-15.0 -8.1 -8.0 0 .1 4 7 9 11 13 15 19
-15.0 -12.1 -8.0 0 .1 4 4.1 8 8 10 12 14 16 20
-15.0 -12.1 -12 -8.1 .1 4 4.1 8 8.1 12 9 11 13 15 17 21
-15.0 -12.1 -▇▇ -▇.▇ -▇.▇ -▇.▇ 4.1 8 8.1 12 12.1 16 10 12 14 16 18 ▇▇
-▇▇ -▇.▇ -▇.▇ -▇.▇ -▇.▇ 0 8.1 12 12.1 16 16.1 20 11 13 15 17 19 23
-8.0 -4.1 -4.0 0 .1 2 12.1 16 16.1 20 20.1 24 12 14 16 18 20 24
-4.0 0 .1 2 2.1 4 16.1 20 20.1 24 24.1 28 13 15 17 19 21 25
.1 2 2.1 4 4.1 7 20.1 24 24.1 28 28.1 32 14 16 18 20 22 26
2.1 4 4.1 6 7.1 10 24.1 28 28.1 32 32.1 36 15 17 19 21 23 27
4.1 6 6.1 9 10.1 13 28.1 32 32.1 36 36.1 40 16 18 20 22 24 28
6.1 8 9.1 12 13.1 16 32.1 36 36.1 40 40.1 44 17 19 21 23 25 29
8.1 11 12.1 15 16.1 19 36.1 40 40.1 44 44.1 48 18 20 22 24 26 30
11.1 14 15.1 18 19.1 22 40.1 44 44.1 48 48.1 52 19 21 23 25 27 31
14.1 17 18.1 21 22.1 25 Over 44 Over 48 Over 52 20 22 24 26 28 32
17.1 20 21.1 24 25.1 28 21 23 25 27 29 33
Over 20 Over 24 Over 28 22 24 26 28 30 34
V. Other Provisions.
A. The Agreement supersedes all additional
commission, bonus commission, growth
opportunity bonus, contingent or profit-sharing
agreements of any kind and any such
previous agreements are terminated.
B. The failure of the Company to enforce or apply
at any time, any of the provisions of this
Agreement, shall in no way be construed to be
a waiver of such provisions, nor in any way to
affect the right of the Company thereafter to
enforce or apply each and every such
provision.
C. No Profit-Sharing Commission shall be
payable for any calendar year in which the
Agent's monthly account with the Company is
delinquent in accordance with the Agency
Agreement and the Agent is suspended as a
result of such delinquency.
D. The Agent and the Company recognize that
the Company must record its transactions and
activities in accordance with rules and
regulations of insurance regulatory agencies.
In addition, the parties recognize that their
records may vary as regards the timing and
accounting treatment of transaction entries. It
is agreed that all definitions and computations
under this Agreement shall reflect the records
of the Company which are conclusively
presumed to be correct. The Company will
make a good faith effort to correct any errors
in its records disclosed by computations under
the Agreement, to the extent and in the
manner permitted by insurance accounting
regulations.
E. This agreement may be terminated by either
party following ninety (90) days prior written
notice, or shall terminate automatically
concurrent with the effective date of
termination of the Agency Agreement or
Agent's contract with the Company. Upon
termination, only Profit-Sharing Commission
accrued and unpaid at the end of the year
prior to the year of termination shall be
payable to Agent.
In witness whereof, Agent and Company have executed
this Agreement
on ________________________, 19 ___,
to be effective ________________, 19_______,
and thereafter until terminated as provided herein.
__________________________________________
herein referred to as "Agent"
by________________________________________
Title ______________________________________
Meridian Mutual Insurance Company
Meridian Security Insurance Company
Meridian Mutual Insurance Company and
Meridian Security Insurance Company Jointly
Herein referred to as "Company"
by _______________________________________
Title ______________________________________
