WORKERS COMPENSATION EXCESS OF LOSS REINSURANCE AGREEMENT
THIS AGREEMENT is made and entered into by and between Pinnacle
Assurance Corporation, North Palm Beach, Florida (hereinafter called the
"Company"), under the management of Florida Administrators, Inc., North Palm
Beach, Florida, of the one part, and Continental Casualty Company, Chicago,
Illinois (hereinafter called the "Reinsurer") of the other part.
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 Article, in respect to losses that may accrue
to the Company under all policies classified by the Company as Workers
Compensation and Employers' Liability including liability under U.S.
Longshoremen's and Harbor Workers Compensation or similar acts of federal or
state law or common law on business underwritten and accepted by Florida
Administrators, Inc. on behalf of the Company.
All reinsurance for which the Reinsurer 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 Reinsurer in favor of
any third parties or any persons not parties to this Agreement except as
provided in the Insolvency Article.
ARTICLE II
TERM AND CANCELLATION
This Agreement will apply to all losses occurring on or after January
1, 1997, 12:01 A.M. standard time (as defined in the Company's policies) on
inforce policies, or policies written, or renewed with effective dates on or
after January 1, 1997, 12:01 A.M. standard time, and will remain in force and
effect until cancelled as hereinafter provided.
This Agreement may be terminated January 1, 1999 or any January 1ST
thereafter or by either party giving at least 90 days prior notice by certified
or registered mail to the other party. During any such period of notice the
Reinsurer will remain bound by the terms of this Agreement.
In the event this Agreement is cancelled in accordance with the
aforementioned procedure, the Reinsurer will remain liable for all losses under
policies in force until their expiration or renewal dates, whichever come first
not to exceed 12 months plus odd time, nor to exceed 18 months in all. During
the run-off period, the Company will continue to cede to the Reinsurer the
appropriate earned premium.
Alternatively, the Company may elect to cancel (or reduce) the
Reinsurer's liability on a cutoff basis as of the date of cancellation, and the
Reinsurer will not be liable for any losses occurring (or the percentage thereof
equal to the amount of participation reduction) on or after the cancellation
date. Should cancellation take place on a cut-off basis, or the Reinsurer's
participation change, any aggregate losses to the Reinsurer on policies in force
as of the date of cancellation or participation change will be prorated among
those Reinsurers cancelling or reducing their participation and those Reinsurers
initiating or increasing their participation in the same manner that the premium
on the policies is shared.
Notwithstanding the other provisions in this Article, in the event the
Company's policies are written in a jurisdiction where cancellation, renewal, or
nonrenewal is regulated by the insurance authorities, and the Company is bound
by such regulations and statutes of said jurisdiction or by a judicial decision,
the Reinsurer will remain liable on any such policies in force at cancellation
date of
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this Agreement (and will receive the premium therefore) until the date each
expires or until the first renewal date when the Company can lawfully nonrenew
said policies, whichever occurs first.
Notwithstanding the cancellation of this Agreement as herein above
provided, its provisions will continue to apply to all unfinished business
hereunder to the end that all obligations and liabilities incurred by each party
hereunder will be fully performed and discharged.
ARTICLE III
TERRITORY
The territorial scope of this Agreement will cover that of the
Company's policies, but is limited to policies issued to employers with
employees operating in the state of Florida, but this limitation will not apply
to losses if the Company's policies provide coverage outside the aforesaid
territorial limits.
ARTICLE IV
EXCLUSIONS
No reinsurance indemnity will be afforded under this Agreement for:
A. All reinsurance assumed by the Company; however, local agency
reinsurance accepted in the normal course of business and/or
policies written by another carrier at the Company's request
and reinsured 100% by the Company will not be excluded
hereunder and intercompany pooling arrangements will not be
excluded hereunder.
B. 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, howsoever
denominated, established or governed; which provides for any
assessment of or payment or assumption by the Company of part
or all of any claim, debt, charge, fee, or other obligation of
an
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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.
C. Loss or liability excluded by the Nuclear Incident Exclusion
Clause-Liability-- Reinsurance U.S. attached to this
Agreement.
D. Manufacturing, production and refining of petroleum and its
products.
E. Professional sports teams.
F. Operations where the governing classifications are railroad
class codes.
G. Offshore drilling.
H. Tunneling operations involving tunnels over 100 feet in length
(auguring shall not be considered tunneling).
I. Wrecking or demolition of buildings, structures or vessels,
but not to exclude the wrecking or demolition of buildings not
exceeding five stories in height.
J. Financial Guarantee.
K. Pools, Associations and Syndicates.
L. The manufacturing, storage, or transportation of fireworks,
ammunition, nitroglycerin, or other explosive devices.
ARTICLE V
SPECIAL ACCEPTANCE
The Company may submit to the Reinsurer for special acceptance
hereunder business not covered by this Agreement. If said business is accepted
by the Reinsurer, it shall be subject to the terms of this Agreement, except as
such terms are modified by such acceptance.
All individual Waivers of Subrogation need to be referred to Wexford
Underwriting Managers, Inc. prior to issuing.
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The following additional Classifications are to be submitted to the
Company for approval prior to quoting to determine if exposures pose more than
an incidental hazard:
A. Any account with Manual Premium of $350,000 or more
B. Any account with an Experience Modification of 1.50 or higher
and premium of $100,000 or higher
C. Any account with more than incidental USL&H or maritime
exposure. Incidental is defined for the purposes of this
Agreement as not having more than ten percent (10%) of the
Insured's overall workers' compensation payroll (excluding
clerical) assigned to this type of exposure.
In addition, all accounts that have the following NCCI Code
Classifications shall be referred to Wexford Underwriting Managers, Inc. prior
to quoting:
CODE CLASSIFICATION
1164/1165 Mining Risks
2702 Logging and Lumbering
5551 Roofing (all kinds)
7219 Trucking: other than local as a primary code
7720 Police/Detective Agencies
8350 Gas Dealers - LPG
7538 Electric Light or Power Line Construction
ARTICLE VI
DEFINITIONS
"Policy" as used in this Agreement will mean all policies, contracts,
binders, or agreements of insurance or reinsurance whether written or oral, as
intended to be covered hereunder.
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"Ultimate net loss" as used in this Agreement will mean the amount of
any settlement, award, or judgment paid by the Company or for which the Company
has become liable to pay (including interest accrued prior to final judgment if
included as part of loss on reinsured policies) after deduction of all salvages,
subrogations, discounts, and recoveries received by the Company, and inuring
reinsurance whether recovered or not. Loss will include loss expense arising
from the settlement of claims. Recoveries from the Company's underlying
reinsurance agreements will not be deducted when establishing ultimate net loss
hereunder. All salvages, recoveries, or reinsurance received subsequent to any
loss settlement hereunder will be applied as if received prior to the
settlement, and all necessary adjustments will be made by the parties hereto.
Nothing in this definition, however, should be construed to mean that losses
under this Agreement are not recoverable until the Company's ultimate net loss
has been ascertained.
"Loss expense" as used in this Agreement will mean all expenses
incurred by the Company in the investigation, appraisal, adjustment, litigation
and/or defense of claims under policies reinsured hereunder, including court
costs and interest accrued prior to final judgment if included as part of loss
expenses on reinsured policies, interest accrued after final judgment, legal
expenses and costs incurred in connection with coverage questions and legal
actions connected thereto arising under reinsured policies but excluding
internal office expenses, salaries, per diem, and other remuneration of regular
Company employees. However, in the event a verdict or judgment is reduced by an
appeal or a settlement, subsequent to the entry of the judgment, resulting in an
ultimate saving on such verdict or judgment, or a judgment is reversed outright,
the loss expense incurred in securing such final reduction or reversal shall be
prorated between the Reinsurer and the Company in the proportion that each
benefits from such reduction or reversal, and the expenses incurred up to the
time of the original verdict or judgment shall be a) prorated in proportion to
each party's interest in such verdict or judgment, or b) added to the Company's
loss when the terms and conditions of the Company's original policies reinsured
hereunder include loss expense as part of the policy limit.
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"Direct Earned Premium" as used in this agreement is defined as:
Manual Premium (Payroll/100) x Voluntary Rate
+ Increased Limits Factor (Manual Premium x Factor)
-Deductible Credit (Manual Premium x Credit)
Subject Premium
x Managed Care Factor (1 - Managed Care Credit)
x Safety Factor (1 - Safety Credit)
x Drug Free Workplace Factor (1 - DFW Credit)
x Experience Modification Factor
Total Modified Premium
+ Aircraft Seat Surcharge
*-Other Credits that are Subject to Premium Discounts
or are a Part of Standard Premium
- Contracting Classification Premium Adjustment Program
(Modified Premium x CCPAP Credit)
Standard Premium
-Premium Discounts (Stock Volume Discount)
*Direct Earned Premium
*As defined and/or modified by NCCI or the Florida
Department of Insurance
"Occurrence" as used in this Agreement unless otherwise defined in the
policies reinsured hereunder, will mean each and every accident, disaster,
occurrence or casualty or series of accidents, disasters, occurrences or
casualties arising out of one event. Occupational disease sustained by each
employee shall be deemed to be one separate occurrence and the occurrence shall
be deemed to take place on the date upon which the employee is last exposed at
work to conditions allegedly causing such occupational disease.
"Agreement year" as used in this Agreement will mean the period of 12
consecutive months commencing with the inception of this Agreement and each
anniversary thereof that this Agreement remains in effect.
ARTICLE VII
RETENTION AND LIMIT
With respect to all business covered hereunder, no claim will be made
hereunder unless the Company has first sustained Paid Ultimate Net Loss(es) of
$500,000 in the $500,000
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excess $500,000 layer. It is agreed that after the Company has sustained and
paid Ultimate Net Loss(es) of $500,000 in the $500,000 excess $500,000 layer,
the Ultimate Net Loss will become $500,000 for each subsequent occurrence. The
Reinsurer shall then be liable for 100% of the amount by which such loss exceeds
the Company's retention, but the liability of the Reinsurer shall not exceed
Statutory limits for Workers Compensation or $1,000,000 for Employers Liability
as respects any loss occurrence.
ARTICLE VIII
NET RETAINED LIABILITY
In computing the amount or amounts in excess of which this Agreement
attaches, only an Ultimate Net Loss or losses in respect to that portion of any
insurance or reinsurance that the Company retains net for its own account will
be included. The amount of the Reinsurer's liability hereunder with respect to
any Ultimate Net Loss or losses will not be increased by the inability of the
Company to collect from any other reinsurers any amounts that may have become
due from them, whether such inability arises from the insolvency of such
reinsurers or otherwise. Permission is hereby granted the Company to carry
underlying treaty and facultative reinsurance and recoveries made thereunder
shall be disregarded for all purposes of this Agreement and shall inure to the
sole benefit of the Company.
ARTICLE IX
RATE AND PREMIUM
The Company will pay the Reinsurers 1.20 % of the Direct Earned Premium
on the policies in force at the inception of this Agreement, or written or
renewed with an effective date thereafter. The Company will be subject to a
minimum premium of $1,612,800 and will pay a deposit premium of $2,016,000 on
estimated Direct Earned Premium of $168,000,000 for the period of January 1,
1997 to January 1, 1999 as follows:
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Payable: January 31, 1997 - $252,000
April 1, 1997 - $252,000
July 1, 1997 - $252,000
October 1, 1997 - $252,000
January 1, 1998 - $252,000
April 1, 1998 - $252,000
July 1, 1998 - $252,000
October 1, 1998 - $252,000
ARTICLE X
OTHER REINSURANCE
The Company is permitted to have other treaty reinsurance. The premium
for any such reinsurance that inures to the benefit of this Agreement may be
deducted from the gross subject premium hereunder. Additionally, the Company may
purchase facultative reinsurance on any subject risk it deems advisable, and the
premium for that portion of the Company's policy reinsured elsewhere will be
deducted from the gross subject premium hereunder
ARTICLE XI
EXCESS OF ORIGINAL POLICY LIMITS AND EXTRA CONTRACTUAL OBLIGATIONS
This Agreement will extend to cover any losses arising from claims
related extra contractual obligations and/or excess limits liability.
This Agreement shall protect the Company, within the limits hereof, in
connection with Ultimate Net Loss in excess of the limit of the original policy
for which the Company may be legally liable to pay on business covered
hereunder, where loss in excess of the limit has been incurred because of, but
not limited to, its failure to settle within the original policy limit or by
reason of alleged or actual negligence, fraud or bad faith in rejecting an offer
of settlement or in the preparation of the defense or in the trial of any action
against its insured or in the
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preparation or prosecution of an appeal consequent upon such action. One hundred
percent (100%) of the amount of any excess of original policy limits shall be
added to the Ultimate Net Loss which is covered under the other provisions of
this Agreement and the sum thereof shall be considered one loss subject to the
provisions of this Agreement.
However, this Article shall not apply where the loss has been incurred
due to the fraud of a member of the board of directors or a corporate officer of
the Company acting individually or collectively or in collusion with any
individual or corporation or any other organization or party involved in the
presentation, defense or settlement of any claim covered hereunder.
For the purposes of this Article, the word "loss" shall mean any
amounts for which the Company would have been contractually liable to pay had it
not been for the limit of the original policy.
This Agreement shall protect the Company, within the limit thereof,
where the loss includes any Extra Contractual Obligations. Eighty percent (80%)
of the amount of any Extra Contractual Obligations shall be added to the
Ultimate Net Loss which is covered under the other provisions of this Agreement
and the sum thereof shall be considered one loss subject to the provisions of
this Agreement.
"Extra Contractual Obligations" are defined as those liabilities not
covered under any other provision of this Agreement and which arise from the
handling of any claim on business covered hereunder, such liabilities arising
because of, but not limited to, the following: failure by the Company to settle
within the policy limit, or by reason of alleged or actual negligence, fraud or
bad faith in rejecting an offer of settlement or in the preparation of the
defense or in the trial of any action against its insured or in the preparation
or prosecution of any appeal consequent upon such action.
The date on which any Extra Contractual obligation is incurred by the
Company shall be deemed, in all circumstances, to be the date of the original
loss from which the Extra Contractual Obligation arises.
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However, this Article shall not apply where the loss has been incurred
due to fraud of a member of the board of directors or a corporate officer of the
Company acting individually or collectively or in collusion with any individual
or corporation or any other organization or party involved in the presentation,
defense or settlement of any claim covered hereunder.
ARTICLE XII
REPORTS AND REMITTANCES
Within 45 days after the close of each quarter, the Company will
furnish the Reinsurer with a report of reinsurance premium due them for that
period. Such report will show and properly segregate the Company's subject
premium to which the reinsurance rate applies as well as set forth the
Reinsurer's portion of unearned premium reserve and contain such other
information as may be required by the Reinsurer for completion of its NAIC
annual statements.
Within 180 days following each annual anniversary date, the premium due
the Reinsurer will be prorated against the minimum and deposit premium set forth
in Rate and Premium Article, and any balance shown to be due either party shall
be paid at that time as an interim audit. At 180 days following the expiration
date, on July 1, 1999, the second interim audit will be performed by the Company
and any balance shown to be due the Reinsurer will be remitted immediately. At
270 days following expiration date, on October 1, 1999, a final audit will be
performed by the Company and any balance shown to be due the Reinsurer will be
remitted immediately. If the balance shows an amount due the Company from the
Reinsurer, such amount shall be remitted within 30 days of receipt of the audit.
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ARTICLE XIII
LOSS NOTICES AND SETTLEMENTS
The Company will be responsible for the investigation, settlement,
defense or appeal of any claim made or suit brought, or proceeding instituted
against the Company and shall give prompt notice to the Reinsurer upon learning
of any of the following:
A. Any claim, suit or proceeding that appears to involve
indemnity by the Reinsurer.
B. Any occurrence, claim, award or proceeding judgment which
exceeds 50% of the Retention as outlined in Article VII -
Retention and Limit.
C. Any occurrence which causes serious injury to two or more
employees of an insured.
D. Any case involving:
1. Amputation of a major extremity.
2. Brain or spinal cord injury.
3. Multiple Deaths.
4. Permanent total disability as defined in the Workers
Compensation Act of the state of Florida.
5. Any second or third degree burn of 50% or more of the
body.
6. The reopening of any case in which further award
might involve liability of the Reinsurer.
The Company will not make voluntary settlement involving loss to the
Reinsurer without written consent of the Reinsurer.
The Company will forward promptly to the Reinsurer any information it
may request on the individual occurrences, claims, or cases. The Company will
send to the Reinsurer within 60 days after the end of this Agreement an
experience report, upon a form satisfactory to the Reinsurer showing in detail
the amounts disbursed during the term of this Agreement in settling claims and
the estimated future payments on, or reserves for, outstanding claims.
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The Reinsurer, at its own election and expense and in addition to any
indemnity for claim expenses provided by this Agreement, shall have the right
but not the duty to participate with the Company in the investigation,
settlement, defense or appeal of any claim, suit or proceeding which might
involve liability of the Reinsurer.
ARTICLE XIV
OFFSET
The Company and Reinsurer hereunder will be entitled to deduct from
amounts due to the other party under this Agreement any amounts due itself from
the other party under this Agreement; however, in the event of the insolvency of
any party hereto, offset will be in accordance with applicable law.
ARTICLE XV
SALVAGE AND SUBROGATION
The Reinsurer will be credited with its share of salvage and/or
subrogation in respect of claims and settlements under this Agreement, less its
share of recovery expense. Unless the Company and Reinsurer agree to the
contrary, the Company will enforce its right to salvage and/or subrogation and
will prosecute all claims arising out of such right. Should the Company refuse
or neglect to enforce this right, the Reinsurer is 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 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
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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 XVI
DELAYS, ERRORS, OR OMISSIONS
Any inadvertent delay, error or omission will not be held to relieve
either party hereto from any liability that would attach to it hereunder if such
delay, omission, or error had not been made, providing such error or omission is
rectified upon discovery.
ARTICLE XVII
AMENDMENTS
By mutual consent of the Company and the Reinsurer, any of the terms or
conditions of this Agreement may be altered or amended by addenda. Each such
addendum will then constitute a part of this Agreement.
ARTICLE XVIII
ACCESS TO RECORDS
Provided the Company received prior notice, the Reinsurer or its
designated representatives will have the right to inspect at any reasonable
time, all records of the Company that pertain in any way to this Agreement.
ARTICLE XIX
INSOLVENCY
In the event of the Company's insolvency, the reinsurance afforded by
this Agreement will be payable by the Reinsurer on the basis of the Company's
liability under the policies reinsured without diminution because of the
Company's insolvency or because its liquidator, receiver, conservator, or
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statutory successor has failed to pay all or a portion of any claims, subject
however to the right of the Reinsurer to offset against such funds due
hereunder, any sums that may be payable to it by said insolvent Company in
accordance with the Offset Article. The reinsurance will be payable by the
Reinsurer directly to the Company, its liquidator, receiver, conservator, or
statutory successor except (a) where this Agreement specifically provides
another payee of such reinsurance in the event of the Company's insolvency and
(b) where the Reinsurer, with the consent of the direct insured or insureds, has
assumed such policy obligations of the Company as direct obligations of itself
to the payees under such policies in substitution of the Company's obligation to
such payees.
The Company's liquidator, receiver, conservator, or statutory successor
will give written notice of the pendency of a claim against the Company under
the policies reinsured within a reasonable time after such claim is filed in the
insolvency proceeding. During the pendency of such claim, the Reinsurer may
investigate said claim and interpose in the proceeding where the claim is to be
adjudicated, at its own expense, any defense that it may deem available to the
Company, its liquidator, receiver, conservator, or statutory successor. The
expense thus incurred by the Reinsurer will be chargeable against the Company,
subject to court approval, as part of the expense of conservation or liquidation
to the extent that such proportionate share of the benefit will accrue to the
Company solely as a result of the defense undertaken by the Reinsurer.
ARTICLE XX
ARBITRATION
As a condition precedent to any right of action hereunder, any dispute
that arises out of or in connection with this Agreement, including its formation
or validity, will be submitted for decision to an arbitration panel composed of
two arbitrators and an umpire. The arbitration will be conducted under the
Federal Arbitration Act and will proceed as set forth below.
All notices in connection with arbitration will be in writing and sent
certified or registered mail, return receipt requested. The term "days" as used
herein will mean calendar days. Notice
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requesting arbitration will reference this Article, will state issues to be
resolved in the view of the claimant, and will appoint the arbitrator selected
by the claimant. Within 30 days after receipt of such notice, the respondent
will notify the claimant of any additional issues to be resolved and of the name
of its appointed arbitrator. As time is of the essence, if the respondent fails
to appoint its arbitrator within 30 days after receipt of notice requesting
arbitration, the claimant is authorized to and will appoint the second
arbitrator.
Unless otherwise mutually agreed, each member of the arbitration panel
will be an impartial active or former officer of an insurance or reinsurance
company or an Underwriter at Lloyd's of London. Before instituting the hearing
the two appointed arbitrators will choose an impartial umpire. If the two
arbitrators fail to agree on the appointment of an umpire within 30 days after
the appointment of the second arbitrator, within 10 days thereafter the two
arbitrators will request the American Arbitration Association ("AAA") to appoint
an umpire with the qualifications set forth above in this Article without regard
to the AAA's Commercial Arbitration Rules. If the AAA fails to appoint an umpire
within 30 days after its receipt of the arbitrators' request, either party may
apply to a court of competent jurisdiction to appoint an umpire with the
qualifications set forth above in this Article. The umpire will immediately
notify each party of his selection. In the event of the resignation or death of
any member of the arbitration panel, a replacement will be appointed in the same
manner as the resigning or deceased member was appointed.
Within 30 days after notice of appointment of the umpire, the claimant
and respondent will each submit an initial brief to the panel. Within 45 days
after notice of appointment of the umpire, the panel will meet and determine
timely periods for the submission of reply briefs and amended briefs, procedures
for discovery, and a scheduled date for the hearing. Arbitration will be held in
the city of the Company's home office unless the parties mutually agree to
another venue.
The panel will be relieved of all judicial formality and the umpire
will be the final judge of the panel's procedures, the rules of evidence,
privilege, and production, and the excessiveness and relevancy of any witnesses
and documents upon the petition of any participating party. The panel
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will be authorized to issue interim orders and awards in the interest of
fairness and the prompt and orderly resolution of issues in dispute. To the
extent permitted by law, the umpire and the panel will be empowered to issue
orders to enforce such decisions. Insofar as the panel looks to substantive law,
it will consider the law of the state of Florida.
The panel will make its award with regard to the terms expressed in
this Agreement, the original intentions of the parties to the extent reasonably
ascertainable, and the custom and practice of the insurance and reinsurance
business. The panel will make its award within 30 days after the close of the
hearing. Each award by the panel will be in writing and may state factual
findings that served as a basis for the award. Each award by the panel will be
agreed upon by a majority of the panel's members and will be final and binding
on all parties to the proceeding. Any party may apply to a court of competent
jurisdiction for an order confirming the award, and a judgment of that court
will thereupon be entered on the award. If such an order is issued, the
attorneys' fees of the party so applying and court costs will be paid by the
party against whom confirmation is sought.
Each party will bear the expense of the arbitrator appointed on its
behalf and ail remaining costs of the arbitration will be finally allocated by
the panel. The panel may award interest, costs and expenses as it deems
appropriate, including but not limited to attorneys' fees, to the extent
permitted by law.
ARTICLE XXI
TAXES
The Company will pay all taxes on premiums reported to the Reinsurer on
this Agreement.
ARTICLE XXII
CURRENCY
The sign "$" in this Agreement refers to United States of America
Dollars. Premiums due the Reinsurer and loss payments due the Company hereunder
will be in United States of America Dollars.
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ARTICLE XXIII
COMMUTATION
By mutual agreement, after termination of the Agreement the Company
shall submit a statement to the Reinsurer listing amounts paid, and reserves, in
respect of all incurred losses known, and reported to the Company subject to
this Agreement. This statement shall form the basis of a final agreed value for
all such losses. The amounts of reserves contained therein shall be determined
by employing one or more of the following alternatives:
A. A calculation based on the following criteria:
1. In respect of all "index linked" benefits, annuity
values shall be calculated based upon annual discount
of 0%, and an annual escalation of 0%.
2. In respect of all un-indexed benefits, annuity values
shall be calculated based upon annual discount of 4%.
3. In respect of all future medical costs, annuity
calculation shall be based upon the Company's
evaluation of long term medical care and
rehabilitation requirements, using an annual discount
of 0% and an annual escalation of 0%.
4. Where applicable, survivor's life expectancy as well
as remarriage probability shall be reflected in the
calculation by employing tables recommended by a
mutually acceptable actuarial consultant.
B. Any other method of calculating the agreed value of one or
more losses, as mutually agreed between the Company and the
Reinsurer.
Such calculation shall be considered the final and agreed value of all
known losses subject to this Agreement and the resulting loss, if any, shall be
accepted by the Company in full settlement of the Reinsurer's liability for all
such losses.
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Notwithstanding, if the Reinsurer and the Company cannot reach a
settlement by mutual agreement, then the Reinsurer and the Company shall
mutually appoint an independent actuary who shall investigate, determine and
capitalize the present value of any such unsettled claims under the excess
layer. Cost of any independent actuary shall be shared on an equal basis by the
Reinsurer and the Company.
In the event the Reinsurer and the Company cannot reach an agreement on
an independent actuary, each party shall appoint an actuary. The two chosen
actuaries shall then select a third actuary. If either party refuses or neglects
to appoint an actuary within 30 days after settlement cannot be reached, the
requesting party may appoint a second actuary. If the two actuaries fail to
agree on the selection of a third actuary within 30 days after their
appointment, each of them shall name three individuals, of whom the other shall
decline two, and the decision shall be made by drawing lots. All actuaries
selected by drawing lots shall be disinterested in the outcome of the
commutation and shall be a Fellow of Society of Actuaries/Fellow of the Casualty
Actuarial Society or an Associate of Society of Actuaries/Associate of Casualty
Actuarial Society. The decision in writing of any two actuaries, when filed with
the parties hereto, will be final and binding on both parties. The expenses of
the actuaries and of the commutation shall be equally divided between the two
parties.
Any payment by the Reinsurer under this Article shall constitute a
complete release of the Reinsurer for their liability under the excess layer(s)
commuted as respects such claim.
ARTICLE XXIV
INTERMEDIARY
Florida Administrators, Inc., North Palm Beach, Florida, is hereby
recognized as the Intermediary negotiating this Agreement for all business
hereunder. All communications (including, but not limited to, notices,
statements, premiums, returned premiums, commissions, taxes, losses, loss
expenses, salvages, and loss settlements) relating thereto shall be transmitted
to the Company
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or the Reinsurer through Florida Administrators, Inc., North Palm Beach,
Florida. Payments by the Company to the Intermediary shall be deemed payment to
the Reinsurer. Payment by the Reinsurer to the Intermediary will be deemed
payment to the Company only to the extent that such payments are actually
received by the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives.
Signed at ____________________, this _______ day of ________________ 199_.
Pinnacle Assurance Corporation
Signature: Title:
--------------- ------------------------------
Attest:
---------------------
Signed at New York, New York, this 9 day of April 1997
Accepted herein: 100%
Continental Casualty Company
Signature: /s/ illegible Title: Vice President
------------------- -----------------------------
Attest:/s/ illegible
---------------------
-00-
XXXXXXXX
Xxxxxxxxx to and forming a part of
Workers Compensation Excess of Loss Reinsurance Agreement
Contract Number W-128579674A
In consideration of the premium charged, it is hereby mutually understood and
agreed that as of 12:01 A.M. standard time, September 26, 1997, the preamble,
ARTICLE 1, coverage, and is amended to read:
THIS AGREEMENT is made and entered into by and between Pinnacle
Assurance Corporation, North Palm Beach, Florida (hereinafter called the
"Company"), under the management of Pinnacle Administrative Company, North Palm
Beach, Florida, formerly known as Florida Administrators, Inc., of the one part,
and Continental Casualty Company, Chicago, Illinois (hereinafter called the
"Reinsurer") of the other part.
ARTICLE I, COVERAGE
The Reinsurer will indemnify the Company, subject to the limited set
forth in the Retention and Limit Article, in respect to losses that may accrue
to the Company under all policies classified by the Company as Workers
Compensation and Employers' Liability including liability under U.S.
Longshoremen's and Harbor Workers Compensation or similar acts of federal or
state law or common law on business underwritten and accepted by Pinnacle
Administrative Company, on behalf of the Company.
All reinsurance for which the Reinsurer will be obligated by virtue of
this Agreement will be subject to the same terms, conditions, interpretations,
waivers, modifications, and alterations as 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 Reinsurer in favor of any third
parties or any persons not parties to this Agreement except as provided in the
insolvency Article.
ARTICLE XXIV, INTERMEDIARY
Pinnacle Administrative Company, North Palm Beach, Florida, is hereby
recognized as the Intermediary negotiating this Agreement for all business
hereunder. All communications (including, but not limited to, notices,
statements, premiums, returned premiums, commissions,
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taxes, losses, loss expenses, salvages, and loss settlements) relating thereto
shall be transmitted to the Company or the Reinsurer through Pinnacle
Administrative Company, North Palm Beach, Florida. Payments by the Company to
the Intermediary shall be deemed payment to the Reinsurer. Payment by the
Reinsurer to the Intermediary will be deemed payment to the Company only to the
extent that such payments are actually received by the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives.
Signed at Palm Beach, Florida this 3rd day of June 1998.
Pinnacle Assurance Corporation
Signature: /s/ Xxx Xxxxxxx Title: Chief Financial Officer
---------------------- -------------------------
Attest: /s/ Xxxx Xxxxx
---------------------
Signed at New York, New York this 26 day of May 1998.
CONTINENTAL CASUALTY COMPANY
Signature: /s/ Illegible Title: Vice President
----------------------- ------------------------
Attest: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------
-00-
XXXXXXXX
Xxxxxxxxx to and forming a part of
Workers Compensation Excess of Loss Reinsurance Agreement
Contract Number W-128579674A
In consideration of the premium charged, it is hereby mutually understood and
agreed that as of 12:01 A.M. standard time October 31, 1997, the preamble, is
amended to read:
THIS AGREEMENT is made and entered into by and between Pinnacle
Assurance Corporation, and AmComp Assurance Corporation, North Palm Beach,
Florida (hereinafter called the "Company"), under the management of Pinnacle
Administrative Company, North Palm Beach, Florida, of the one part, and
Continental Casualty Company, Chicago, Illinois (hereinafter called the
"Reinsurer") of the other part.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives.
Signed at Palm Beach, Florida this 3rd day of June 1998.
Pinnacle Assurance Corporation
AmComp Assurance Corporation
Signature: /s/ Xxx Xxxxxxx Title: Chief Financial Officer
------------------ ----------------------------------
Attest: /s/ Xxxx Xxxxx
---------------------
Signed at New York, New York this 26 day of May 1998.
CONTINENTAL CASUALTY COMPANY
Signature: /S/ Illegible Title: Vice President
-------------------- ---------------------------------
Attest: /s/ Xxxxx X. Xxxxxxxxx
-----------------------
-00-
XXXXXXXX
Xxxxxxxxx to and forming a part of
Workers Compensation Excess of Loss Reinsurance Agreement
Contract Number W-128579674A
In consideration of the premium charged, it is hereby mutually understood and
agreed that as of 12:01 A.M. standard time, November 25, 1997, the preamble, is
amended to read:
THIS AGREEMENT is made and entered into by and between AmComp Preferred
Insurance Company, formerly known as Pinnacle Assurance Corporation, and AmComp
Assurance Corporation, North Palm Beach, Florida (hereinafter called the
"Company"), under the management of Pinnacle Administrative Company, North Palm
Beach, Florida, of the one part, and Continental Casualty Company, Chicago,
Illinois (hereinafter called the "Reinsurer") of the other part.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives.
Signed at Palm Beach, Florida, this 3rd day of June 1998.
AmComp Preferred Insurance Company
AmComp Assurance Corporation
Signature: /s/ Xxx Xxxxxxx Title: Chief Financial Officer
------------------ ----------------------------------
Attest: /s/ Xxxx Xxxxx
---------------------
Signed at New York, New York this 26 day of May 1998.
CONTINENTAL CASUALTY COMPANY
Signature: /S/ Illegible Title: Vice President
-------------------- ---------------------------------
Attest: /s/ Xxxxx X. Xxxxxxxxx
-----------------------
-00-
XXXXXXXX
Xxxxxxxxx to and forming a part of
Workers Compensation Excess of Loss Reinsurance Agreement
Contract Number W-128579674A
In consideration of the premium charged, it is hereby mutually understood and
agreed that as of 12:01 A.M. standard time, January 1, 1998, ARTICLE II, TERM
AND CANCELLATION, ARTICLE VII, RETENTION AND LIMIT, ARTICLE IX, RATE AND
PREMIUM, and ARTICLE XII, REPORTS AND REMITTANCES, are amended to read:
ARTICLE II, TERM AND CANCELLATION,
This Agreement will apply to all losses occurring on or after January
1, 1997, 12:01 A.M. standard time (as defined in the Company's policies) on
policies written, or renewed with effective dates on or after January 1, 1997,
12:01 A.M. standard time, and will remain in force and effect until cancelled as
hereinafter provided.
This Agreement may be terminated January 1, 2001 or any January 1st
thereafter or by either party giving at least 90 days prior notice by certified
or registered mail to the other party. During any such period of notice the
Reinsurer will remain bound by the terms of this Agreement.
In the event this Agreement is cancelled in accordance with the
aforementioned procedure, the Reinsurer will remain liable for all losses under
policies in force until their expiration or renewal dates, whichever come first
not to exceed 12 months plus odd time, nor to exceed 18 months in all. During
the nun-off period, the Company will continue to cede to the Reinsurer the
appropriate earned premium.
Alternatively, the Company may elect to cancel (or reduce) the
Reinsurer's liability on a cut-off basis as of the date of cancellation, and the
Reinsurer will not be liable for any losses occurring (or the percentage thereof
equal to the amount of participation reduction) on or after the cancellation
date. Should cancellation take place on a cut-off basis, or the Reinsurer's
participation change, any aggregate losses to the Reinsurer on policies in force
as of the date of cancellation or participation change will be prorated among
those Reinsurers cancelling or reducing their participation and those Reinsurers
initiating or increasing their participation in the same manner that the premium
on the policies is shared.
Notwithstanding the other provisions in this Article, in the event the
Company's policies are written in a jurisdiction where cancellation, renewal, or
nonrenewal is regulated by the
-25-
insurance authorities, and the Company is bound by such regulations and statutes
of said jurisdiction or by a judicial decision, the Reinsurer will remain liable
on any such policies in force at cancellation date of this Agreement (and will
receive the premium therefore) until the date each expires or until the first
renewal date when the Company can lawfully nonrenew said policies, whichever
occurs first.
Notwithstanding the cancellation of this Agreement as herein above
provided, its provisions will continue to apply to all unfinished business
hereunder to the end that all obligations and liabilities incurred by each party
hereunder will be fully performed and discharged.
ARTICLE VII, RETENTION AND LIMIT
No claim will be made hereunder unless the Company has first sustained
and paid an Ultimate Net Loss of $500,000 each and every occurrence. The
Reinsurer will then be liable for 100% of the amount by which such loss exceeds
the Company's retention, but the liability of the Reinsurer shall not exceed
Statutory limits for Workers Compensation or $1,000,000 for Employers' Liability
as respects any loss occurrence.
ARTICLE IX, RATE AND PREMIUM
The Company will pay the Reinsurers 1.25% of the Direct Earned Premium
on the policies at the inception of this Addendum, or written or renewed with an
effective date thereafter. The Company will be subject to a minimum premium of
$3,450,000 and will pay a deposit premium of $4,312,500 on estimated Direct
Earned Premium of $345,000,000 for the period January 1, 1998 to January 1, 2001
as follows:
January 31, 1998 $359,375
April 1, 1998 $359,375
July 1, 1998 $359,375
October 1, 1998 $359,375
January 1, 1999 $359,375
April 1, 1998 $359,375
July 1, 1999 $359,375
October 1, 1998 $359,375
January 1, 2000 $359,375
April 1, 2000 $359,375
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July 1, 2000 $359,375
October 1, 2000 $359,375
ARTICLE XII, REPORTS AND REMITTANCES
Within 45 days after the close of each quarter, the Company will
furnish the Reinsurer with a report of reinsurance premium due them for that
period. Such report will show and properly segregate the Company's subject
premium to which the reinsurance rate applies as well as set forth the
Reinsurer's portion of unearned premium reserve and contain such other
information as may be required by the Reinsurer for completion of its NAIC
annual statements.
Within 180 days following each annual anniversary date, the premium due
the Reinsurer will be prorated against the minimum and deposit premium set forth
in Rate and Premium Article, and any balance shown to be due either party shall
be paid at that time as an interim audit. At 180 days following the expiration
date, on July 1, 2001, the third interim audit will be performed by the Company
and any balance shown to be due the Reinsurer will be remitted immediately. At
270 days following expiration date, on October 1, 2001, a final audit will be
performed by the Company and any balance shown to be due the Reinsurer will be
remitted immediately. If the balance shows an amount due the Company from the
Reinsurer, such amount shall be remitted within 30 days of receipt of the audit.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives.
Signed at Palm Beach, Florida, this 3rd day of June 1998.
AmComp Preferred Insurance Corporation
AmComp Assurance Corporation
Signature: /s/ Xxx Xxxxxxx Title: Chief Financial Officer
------------------ ----------------------------------
Attest: Xxxx Xxxxx
---------------------
Signed at New York, New York this 26 day of May 1998.
CONTINENTAL CASUALTY COMPANY
Signature: /S/ Illegible Title: Vice President
-------------------- ---------------------------------
Attest: /s/ Xxxxx X. Xxxxxxxxx
-----------------------
-00-
XXXXXXXX
Xxxxxxxxx to and forming a part of
Workers Compensation Excess of Loss Reinsurance Agreement
Contract Number W-128579674A
In consideration of the premium charged, it is hereby mutually understood and
agreed that as of 12:01 A.M. standard time, January 1, 1998, ARTICLE IV,
EXCLUSIONS, is amended to read:
ARTICLE IV, EXCLUSIONS
No reinsurance indemnity will be afforded under this Agreement for:
A. All reinsurance assumed by the Company; however, local agency
reinsurance accepted in the normal course of business will not be
excluded hereunder and intercompany pooling arrangements will not be
excluded hereunder.
B. 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, howsoever denominated, established or governed; which
provides for any assessment of or payment or assumption by the Company
of part or all of any claim, debt, charge, fee, or other obligation of
an insurer, or its successors or assigns, which has been declared by
any competent authority to be insolvent, or which is otherwise deemed
unable to meet any claim, debt, charge, fee or other obligation in
whole or in part.
C. Loss or liability excluded by the Nuclear Incident Exclusion Clause --
Liability -- Reinsurance U.S. attached to this Agreement.
D. Manufacturing, production and refining of petroleum and its products.
E. Professional sports teams.
F. Operations where the governing classifications are railroad class
codes.
G. Offshore drilling.
H. Tunneling operations involving tunnels over 100 feet in length
(auguring shall not be considered tunneling).
I. Wrecking or demolition of buildings, structures or vessels, but not to
exclude the wrecking or demolition of buildings not exceeding five
stories in height.
J. Financial Guarantee.
K. Pools, Associations and Syndicates.
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L. The manufacturing, storage, or transportation of fireworks, ammunition,
nitroglycerin, or other explosive devices.
M. No reinsurance indemnity will be afforded under this Agreement for:
(1) Operations in which asbestos contracting related
classifications of 5472 or 5473 or Asbestos Goods
Manufacturing classification of 1852 are
appropriately assigned.
(2) Operations involving the installation or removal of
asbestos material, but not to exclude the incidental
exposure to asbestos material which may occur in the
normal operations including, but not limited to,
plumbing, carpentry, other building contractors or
subcontractors and retail or wholesale distributors.
N. All risks involving exposure to the following substances:
(1) dioxin
(2) polychlorinated biphenyls
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives.
Signed at Palm Beach, Florida, this 3rd day of June 1998.
AmComp Preferred Insurance Company
AmComp Assurance Corporation
Signature: /s/ Xxx Xxxxxxx Title: Chief Financial Officer
------------------ ----------------------------------
Attest: /s/ Xxxx Xxxxx
---------------------
Signed at New York, New York this 26 day of May 1998.
Signed at New York, New York, this 26 day of June 1998.
CONTINENTAL CASUALTY COMPANY
Signature: /S/ Illegible Title: Vice President
-------------------- ---------------------------------
Attest: /s/ Xxxxx X. Xxxxxxxxx
-----------------------
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