Exhibit 99(c)
THIS TRANSFER AND ASSUMPTION AGREEMENT (this "Agreement"), made and
effective the 1st day of January, 2002 (the "Effective Date"), by and between
FOLKSAM INTERNATIONAL INSURANCE COMPANY LTD. (PUBL), Reg. No. 502006-1650 a
stock insurance company organized and existing under the laws of Sweden (the
"Company"), and FUND AMERICAN REINSURANCE COMPANY, LTD., a corporation organized
and existing under the laws of Bermuda (the "Reinsurer").
WITNESSETH THAT:
WHEREAS, pursuant to a certain Asset Purchase Agreement, by and between
the Company, certain affiliates named therein and the Reinsurer (the "Asset
Purchase Agreement"), the parties thereto have agreed, subject to the terms and
conditions herein, to transfer certain parts of the reinsurance operations of
the Company to the Reinsurer;
WHEREAS, it is the intent of the parties hereto that the Reinsurer
shall completely replace and be substituted for the Company in all respects
under the certain Treaties (as defined herein) and certain Retrocession
Agreements (as defined herein);
WHEREAS, this Agreement has been approved by the necessary regulatory
authorities as provided in the Asset Purchase Agreement; and the Reinsurer is
duly licensed as contemplated herein;
THEREFORE, in consideration of the mutual covenants hereinafter set
forth and subject to the terms and conditions stated herein, the parties hereto
agree as follows:
ARTICLE I
BUSINESS ASSUMPTIVELY REINSURED
1. The Company hereby cedes and transfers to the Reinsurer, and the
Reinsurer hereby assumes from the Company the "Treaty Liabilities" (as defined
in Article V below) arising under the Treaty or Treaties. The terms "Treaty" or
"Treaties" shall mean (i) all binders, riders, facultative certificates,
treaties, contracts of reinsurance and insurance policies underwritten by the
Singapore Branch of the Company with an effective date prior to January 1, 2002
and (ii) those Treaties underwritten from the Stockholm office of the Company
which the Reinsurer has agreed to assume and the ceding company has agreed to
transfer pursuant to this Agreement (the "Schedule of Assumed Treaties"). The
Company shall provide on December 5, 2001, a list of Treaties proposed for
renewal in the Stockholm office together with the relevant
financial history of the prior underwriting years proposed to be assumed by the
Reinsurer. Such list (the "Proposed Stockholm Assumed Business") shall provide
the following information:
(1) Name of ceding company identity of each Treaty whose Treaty
Liabilities may be assumed,
(2) Estimated Premium booked during 2001,
(3) Unearned Premium Reserves,
(4) Loss Reserves (case and IBNR),
(5) Any Retrocessional recoveries applicable to any Treaty Liabilities.
The Closing Date Balance Sheet (as defined in the Asset Purchase
Agreement) shall include the relevant financial information for the Proposed
Stockholm Assumed Business. In the event a Treaty on the Proposed Stockholm
Assumed Business is renewed for 2002, the Reinsurer shall, if the ceding company
agrees, reinsure such Treaty and at its sole discretion, if the ceding company
agrees, assume the Treaty Liabilities related to the history of such renewed
Treaty which history shall be subject to the indemnities provided for herein. In
the event a Treaty is not renewed, the Reinsurer shall have the option of
assuming prior year Treaty Liabilities for those Treaties on the Proposed
Stockholm Assumed Business together with the related Purchased Assets in a like
amount, which history and Purchased Assets shall also be subject to the
indemnities provided for in the Asset Purchase Agreement.
Notwithstanding the Reinsurer's option to assume the history of the
Treaties on the Proposed Stockholm Assumed Business list, the Company shall have
the right to decline to transfer the history on the Treaties from the Proposed
Stockholm Assumed Business list in an amount not to exceed 20 (twenty) % of the
Loss Reserves on such list at the Closing. Provided, however, in the event the
Company has renewed a Treaty subject to the Reinsurer's assumption of the
history (and the Company has consulted with the Reinsurer on such renewal and
assumption of the history in advance of such a renewal), the history for such
Treaty shall be transferred to the Reinsurer and shall not be subject to the
Company's right to decline the transfer of such history.
Provided however, Reinsurer shall assume no facultative business
underwritten by the Stockholm office prior to January 1, 2002. The parties agree
that the Schedule of Assumed Treaties shall be amended from time to time to
reflect the addition of Treaties as the Company's business is renewed prior to
and after the "Closing" (as such term is defined in the Asset Purchase
Agreement) provided that the Reinsurer expressly agrees to assume such Treaties
as evidenced by the addition of such Treaties to the Schedule of Assumed
Treaties. Except as otherwise provided herein, the Reinsurer shall have no
liability with respect to any Treaties, which are not set forth on the Schedule
of Assumed Treaties. Furthermore, it is expressly agreed, except as provided for
herein, that the Reinsurer shall have no liability for any Treaty UNLESS and
UNTIL the client insured or reinsured, as the case may be, agrees to the
Reinsurer's assumption of the Treaty or Treaties as provided in the "Notice and
Certification of Assumption" as provided in Exhibit A. Provided however, in the
event that a ceding company of the Company's Singapore branch does not agree to
transfer of the Treaty or Treaty Liabilities to the Reinsurer, then in such
event, the Reinsurer, shall 100% reinsure such business and Treaty
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Liabilities from the Company. All "Treaty Liabilities" (as defined in Article V)
for which the Reinsurer shall be liable by virtue of this Agreement shall be
subject in all respects to the same terms, rates and conditions, as the
Treaties. The Reinsurer accepts and assumes the Treaty Liabilities whether
directly assumed or reinsured as provided herein, subject to any and all
defenses, offsets/setoff and counterclaims to which the Company would be
entitled with respect to such Treaties and, in the case of reinsurance of the
Singapore Branch as provided for herein, if applicable, subject to any
setoff/offset for any liability of the Company to the Reinsurer under the Asset
Purchase Agreement (including any Administrative Service Agreement provided for
as part of the Asset Purchase Agreement).
2. Subject to the ceding company's consent to this Agreement, the
Reinsurer shall be the successor to the Company under the Treaties as if such
Treaties were original obligations of the Reinsurer. The Reinsurer substitutes
itself as of the Effective Date (or such other date as the ceding company and
the Reinsurer shall agree) in the place and stead of the Company as if the
Reinsurer had originally contracted with the ceding company. The ceding
companies who have agreed to this Agreement shall have a direct right of action
against the Reinsurer, and the Reinsurer hereby consents to be subject to direct
action taken by any ceding company; PROVIDED, HOWEVER, that the rights of any
ceding company under any Treaty shall be limited to and consist of those rights
set forth in such Treaty (including any endorsement or amendment thereto), and
no ceding company shall have the right to receive any greater amount under any
Treaty than such ceding company would have had in the absence of this Agreement
(except that in assessing such right no effect shall be given to any bankruptcy,
liquidation, insolvency, reorganization or moratorium of the Company, or the
effect of laws or legal procedures affecting enforcement of creditors' rights
against the Company generally). As of the Effective Date, the Reinsurer shall
have all rights to subrogation and salvage proceeds from the business reinsured
to which the Company is legally entitled. Provided Further, it is expressly
understood and agreed by the parties hereto that no such defenses, offsets or
counterclaims are waived by the execution of this Agreement or consummation of
the transactions contemplated hereunder and the Reinsurer shall be fully
subrogated to all such defenses, offsets and counterclaims of the Company to
which the Company is legally entitled.
3. At the Closing, the Company shall deliver to the Reinsurer a list
setting forth a list of each Treaty and the address of the cedents or such
cedents' brokers of record who have agreed in advance of the Closing to have
their Treaty or Treaties assumed by the Reinsurer and for which the Reinsurer
has agreed, pursuant to this Agreement, to assume such Treaties and/or Treaty
Liabilities. The Reinsurer shall mail a certificate of assumption in the form
attached hereto as Exhibit A. (or such other notification requirement as
required by law, if any) to the cedent or cedent's broker of record with respect
to each Treaty so assumed (if required by law).
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ARTICLE II
ASSIGNMENT OF RETROCESSION AGREEMENTS
Regardless of whether retrocessional reinsurance novation agreements
are entered into, the Reinsurer is hereby substituted for and succeeds to all of
the rights and liabilities of the Company under any reinsurance and retrocession
agreements in effect on the Effective Date which reinsure any Treaty or Treaties
(the "Retrocession Agreements") and the Reinsurer is hereby recognized for all
purposes as the "Company" thereunder in substitution for the Company. As of the
Effective Date, the Company hereby sells, assigns, transfers and conveys, and
the Reinsurer hereby purchases, binds and assumes, any and all rights and
obligations of the Company under any Retrocession Agreement including amounts
held by or which may become due from reinsurers and retrocessionnaires for
losses or loss adjustment expenses on the Treaties for which the Reinsurer has
assumed liability or for losses paid by the Company on or after the Effective
Date. Attached hereto as Exhibit B is a listing of all Retrocession Agreements
related to the Treaties.
ARTICLE III
CREDIT FOR REINSURANCE FACILITIES
1. The Reinsurer has from the Closing full power and authority in
accordance with the designation of the Reinsurer as attorney-in-fact for the
Company pursuant to Article VI hereof for purposes of administering the
Treaties, to act for and on behalf of the Company with respect to any and all
Credit for Reinsurance Facilities outstanding with respect to the Treaties or
any Retrocession Agreements. The Company and the Reinsurer shall each use their
commercially reasonable efforts (as defined in the Asset Purchase Agreement) to:
(1) cause replacement letters of credit (or other acceptable form of
credit for reinsurance facility) to be issued for the account of the
Reinsurer to any cedent under a Treaty where such cedent is not able to
take full statutory credit for the reinsurance assumed by the Reinsurer
under such Treaty due to the Reinsurer's licensing status;
(2) cause the reinsurers and retrocessionnaires of the Company under
the Retrocession Agreements to cause replacement letters of credit to be
issued in favor, and for the benefit, of the Reinsurer; and
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(3) amend any reinsurance trust agreements related to the Retrocession
Agreements to substitute the Reinsurer for the Company as the beneficiary
thereunder; PROVIDED, that all fees and other amounts payable to issuing
banks and other similar third parties relating to all Credit for
Reinsurance Facilities for periods after the Closing shall be for the
account of the Reinsurer.
2. For purposes of this Article III, the term "Credit for Reinsurance
Facilities" means any and all reinsurance trusts, letters of credit, statutory
deposits, funds withheld deposits and other similar agreements or mechanisms
which have been established by, on behalf of, or for the benefit of, the Company
in connection with any Treaty or Retrocession Agreement.
ARTICLE IV
TERRITORY
This Agreement shall apply to Treaties, regardless of the geographic
location of the risk, underwritten by the Stockholm office listed on the
Schedule of Assumed Treaties amended from time to time and the Treaties of the
Singapore branch.
ARTICLE V
TREATY LIABILITIES
The term "Treaty Liabilities" shall mean any and all Liabilities (as
defined in the Asset Purchase Agreement) and any and all obligations of the
Company arising out of the Treaties (including, without limitation, the reserves
for claims and claims expenses, net unearned premium reserves, reinsurance
balances payable, contingent commissions, funds withheld and paid losses payable
reflected on the Closing Date Balance Sheet (as defined in the Asset Purchase
Agreement)), before deduction for all other applicable reinsurance and
retrocessions, if any, under the Company's reinsurance programs assumed
hereunder.
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ARTICLE VI
TREATY ADMINISTRATION
1. The Reinsurer shall administer and service all Treaties assumed or
reinsured under this Agreement after the Closing Date. The Company grants to the
Reinsurer authority (exclusive of the Company) in all matters relating to
contract administration including but not limited to contract changes,
reinstatements, rate changes, contract renewals, commissions, audits and
administrative procedures. The Reinsurer shall bear all expenses related to such
administration after the Closing. With respect to the rights, duties, privileges
and obligations of the Company, and in order to assist and to more fully
evidence the substitution of the Reinsurer in the place and stead of the
Company, the Company hereby nominates, constitutes and appoints the Reinsurer as
the attorney-in-fact of the Company with respect to the rights, duties,
privileges and obligations of the Company in and to the Treaties and the
Retrocession Agreements, with full power and authority to act in the name, place
and stead of the Company with respect to the Treaties and the Retrocession
Agreements, including without limitation, the power, without reservation, to
service all contracts, to adjust, to defend, to compromise, to settle and to pay
all claims, to recover salvage and subrogation for any losses incurred under any
of the Treaties and to take such other and further actions as may be necessary
or desirable to effect the transactions contemplated by this Agreement.
2. The Reinsurer shall have authority and absolute discretion with
respect to any and all matters relating to claim settlement, salvage,
arbitration, and litigation concerning the Treaties. The Reinsurer shall bear
all expenses incurred in connection with the administration of the Treaties.
ARTICLE VII
INDEMNIFICATION
The Company shall indemnify the Reinsurer as provided for in the Asset
Purchase Agreement between the parties hereto.
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ARTICLE VIII
PREMIUMS: CONSIDERATION
1. The Reinsurer shall be entitled to 100% of all premiums and other
considerations received on or after the Effective Date by the Company or the
Reinsurer with respect to the Treaties. The Company shall promptly remit and
hereby assigns to the Reinsurer any premiums and other considerations received
by it or its Affiliates on or after the Effective Date in respect of any of the
Treaties. Furthermore, with respect to any such remittance, the Company shall
also furnish the Reinsurer with appropriate information pertaining thereto (e.g.
the nature of the payment, source of funds, Treaty identification and period or
periods to which it relates and any special rates or instructions accompanying
same). At the Closing, the Reinsurer shall assume the responsibility for billing
and collecting premiums.
2. As consideration for the assumption of the Treaty Liabilities by the
Reinsurer, as of the Closing Date, the Company (i) does hereby transfer and
assign to the Reinsurer all of its rights, title and interest in all Purchased
Assets (as defined in the Asset Purchase Agreement) transferred pursuant to the
Asset Purchase Agreement, and (ii) does hereby assign to the Reinsurer, pursuant
to Article II hereof, its rights under all applicable Retrocession Agreements.
ARTICLE IX
RECORDS AND ACCOUNTING AND OWNERSHIP OF THE RENEWAL RIGHTS
The Company shall forward to the Reinsurer all reports, records,
underwriting files, claim files and other information the Reinsurer reasonably
believes are required to administer the Treaties and all renewals of the Company
which renew on or after the Effective Date. The Company shall cooperate with the
Reinsurer in the transfer of the administration of the Treaties and the renewal
rights to the Reinsurer; it being the intent of the parties to this Agreement
that the rights and obligations of the Company under the Treaties shall become
the rights and obligations of the Reinsurer and that the Reinsurer shall succeed
to the Company's rights of renewing business on or after the Effective Date. All
rights, title and interest in the Treaties and the renewals, reports, records,
underwriting files, claim files and any and all information related thereto
shall vest in the Reinsurer upon the Closing.
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ARTICLE X
INSOLVENCY
1. The Treaty Liabilities shall be payable by the Reinsurer in
accordance with the terms of this Agreement and without diminution because of
the insolvency of the Company.
2. In the event of Company's insolvency, any amounts payable by the
Reinsurer to the Company pursuant to this Agreement shall be payable, without
diminution because of such insolvency (except for the right of offset/setoff
provided herein), on the basis of claims allowed against the estate of the
Company by any court of competent jurisdiction or by the liquidator, receiver or
statutory successor of the Company.
ARTICLE XI
GENERAL PROVISIONS
1. All notices and other communications shall be in writing and shall
be delivered personally or mailed postage prepaid, certified or registered mail,
return receipt requested to the party at the address set forth after its name
below or at such different address as such party shall have advised the other
party in writing:
IF TO THE REINSURER: Fund American Reinsurance Company Ltd.
Xxxxxxxx Xxxx
00 Xxxxxxxx Xxxxxx
XX XX Xxxxxxx
Xxxxxxxxx: Xxxxxx Xxxx
Telephone No: 000-000-0000
Telecopier: 000-000-0000
with a copy under separate cover to:
Folksamerica Reinsurance Company
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
Telecopier: (000) 000-0000
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IF TO THE COMPANY: Folksam International Insurance Company Ltd. (publ)
Folksam Building
Xxxxxxxxxx 00
Xxxxxxxxx, Xxxxxx S-106 60
Fax: 000 00 0 000 0000
Delivery of notices and other communications by FAX shall be effective
so long as a confirming copy is mailed to the appropriate address and in the
manner set forth above within one (1) Business Day (as defined in the Asset
Purchase Agreement) after the FAX transmission.
2. Any inadvertent delay, omission or error shall not be held to
relieve either party hereto from any liability which would attach to it
hereunder if such delay, omission or error is rectified immediately upon
discovery and will not prejudice the other party.
3. This Agreement:
except as otherwise provided in Article I item 2 is not intended to
confer any rights upon any person other than the parties hereto and their
respective successors and permitted assigns;
shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns; and
shall be governed by and construed in accordance with the laws of
Sweden, other than any conflict of law rules which might result in the
application of the laws of any other jurisdiction.
ARTICLE XII
ARBITRATION
1. Any dispute, controversy or claim arising out of or in connection
with this Agreement, or the breach, termination or invalidity thereof, shall be
settled by arbitration in accordance with the Rules of the Arbitration Institute
of the Stockholm Chamber of Commerce.
2. The place of arbitration shall be Stockholm, Sweden.
3. The language to be used in the arbitral proceedings shall be
English.
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4. The arbitral proceedings under this Agreement shall be joined with
any arbitral proceedings between the parties in relation to any of the other
agreements, entered into between the parties this day, i.e. Asset Purchase
Agreement, the Note (as defined in the Asset Purchase Agreement) and the
Administrative Services Agreement.
5. The parties undertake and agree that all arbitral proceedings
conducted by reference to this Article will be kept strictly confidential, and
all information disclosed in the course of such arbitral proceedings will be
used solely for the purpose of these proceedings.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers on the day and year first above mentioned.
Attest: Fund American Reinsurance Company, Ltd.
----------------------------------- ---------------------------------------
Name: Name:
Title:
Attest: Folksam International Insurance Company
(publ)
----------------------------------- ---------------------------------------
Name: Name:
Title:
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EXHIBIT A
TO CLIENT:
NOTICE AND CERTIFICATION OF ASSUMPTION
BY
Fund American Reinsurance Company, Ltd.
Pursuant to the terms of a Transfer and Assumption Agreement, all
liability and obligations of Folksam International Insurance Company (publ)
("Folksam International", a Swedish Corporation) under all contracts of assumed
treaty and facultative reinsurance listed below and any amendment or
modifications thereto (the "Contract or Contracts") will be assumed by Fund
American Reinsurance Company, Ltd. ("Fund American", a Bermuda Corporation).
Contracts Assumed: LIST or Attach separate Schedule if more space
needed
DRAFT NOTE: FILL IN LIST OF TREATIES FOR STOCKHOLM CLIENTS ASSUMED; FOR
SINGAPORE, WE CAN JUST SAY "ALL" CONTRACTS FOR A SPECIFIC CLIENT AND WE DO
NOT NEED TO LIST
All terms and conditions of your Contract remain unchanged, except that
Fund American shall be substituted as the Reinsurer. All payments, notices,
claims and suits or actions on any of the Contracts shall hereafter be made to
Fund American as though it were the original Reinsurer.
Please confirm your agreement to the Assumption to:
Xxxxxx Xxxxxxxxxx, Managing Director
Folksam International Insurance Company (publ)
Folksam Building
Xxxxxxxxxx 00
Xxxxxxxxx, Xxxxxx S-106 60
IN WITNESS WHEREOF, Fund American caused this Notice and Certification to be
executed by its duly authorized officers.
BY:
-------------------------------------------
Name:
Title:
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