AUTOMOBILE PHYSICAL DAMAGE CATASTROPHE EXCESS
OF LOSS REINSURANCE AGREEMENT
This Agreement is made and entered into by and between AMERICAN HALLMARK
INSURANCE COMPANY OF TEXAS, Dallas, Texas (hereinafter called the
"Company") and the Reinsurer specifically identified on the signature
page of this Agreement (hereinafter called the "Reinsurer").
ARTICLE 1
BUSINESS REINSURED
This Agreement is to indemnify the Company in respect of the net excess
liability as a result of any loss or losses which may occur during the
term of this Agreement under any Policies classified by the Company as
Private Passenger Automobile Physical Damage Business in force, written
or renewed by or through American Hallmark General Agency, Inc., Dallas,
Texas for and on behalf of State and County Mutual Insurance Company,
Ft. Worth, Texas (hereinafter called the Issuing Carrier ) and assumed
by the Company as reinsurance from the Issuing Carrier under an
Agreement titled 100% Quota Share Reinsurance Agreement, subject to the
terms and conditions herein contained.
ARTICLE 2
COVER
The Reinsurer will be liable in respect of each and every Loss
Occurrence, for 95% of the Ultimate Net Loss over and above an initial
Ultimate Net Loss of $75,000 each and every Loss Occurrence, subject to
a limit of liability to the Reinsurer of $142,500 (being 95% of
$150,000) each and every Loss Occurrence.
ARTICLE 3
TERM
This Agreement shall become effective at 12:01 a.m., Central Standard
Time, July 1, 1997, and shall remain in full force and effect for one
year, expiring 12:01 a.m., Central Standard Time, July 1, 1998.
Should this Agreement expire while a loss covered hereunder is in
progress, the Reinsurer shall be responsible for the loss in progress in
the same manner and to the same extent it would have been responsible
had the Agreement expired the day following the conclusion of the loss
in progress.
ARTICLE 4
TERRITORY
This Agreement will cover wherever the Company s Policies cover.
ARTICLE 5
WARRANTY
It is warranted for purposes of this Agreement that the Company will
retain net and unreinsured the remaining 5% of any loss covered
hereunder.
ARTICLE 6
EXCLUSIONS
This Agreement does not cover:
A. P o ols, Associations and Syndicates per the attached Pools,
Associations and Syndicates Exclusion Clause No. 08-02.5(A).
B. Business excluded by the attached Nuclear Incident Exclusion
Clauses - Physical Damage - Reinsurance - U.S.A., No. 08-33 and Canada
No. 08-34.2.
C. War risks as excluded in the attached North American War Exclusion
Clause (Reinsurance) No. 08-45.
D. Financial Guaranty and Insolvency.
E. Loss or damage or costs or expenses arising from seepage and/or
pollution and/or contamination, other than contamination from smoke
damage. Nevertheless, this exclusion does not preclude any payment of
the cost of the removal of debris of property damaged by a loss
otherwise covered hereunder, but subject always to a limit of 25% of the
Company s Property Business loss under the original Policy.
ARTICLE 7
PREMIUM
A. The Company will pay the Reinsurer a minimum and deposit premium of
$28,500 for the term of this Agreement, to be paid in the amount of
$7,125 on the first day of each calendar quarter.
B. Within 60 days following the expiration of this Agreement, the
Company will calculate a premium at a rate of 1.12% multiplied by the
Company's Gross Net Earned Premium Income. Should the premium so
calculated exceed the minimum and deposit premium paid in accordance
with Paragraph A. above, the Company will immediately pay the Reinsurer
the difference.
ARTICLE 8
REINSTATEMENT
Loss payments under this Agreement will reduce the limit of coverage
afforded by the amounts paid, but the limit of coverage will be
reinstated from the time of the occurrence of the loss, and for each
amount so reinstated, the Company agrees to pay, simultaneously with the
Reinsurer s loss payment, an additional premium calculated at pro rata
of the Reinsurer's premium for the term of this Agreement, being pro
rata only as to the fraction of the face value of this Agreement (i.e.,
the fraction of $142,500) so reinstated. Nevertheless, the Reinsurer's
liability hereunder shall never exceed $142,500 in respect of any one
Loss Occurrence and, subject to the limit in respect of any one Loss
Occurrence, shall be further limited to $285,000 during the term of this
Agreement by reason of any and all claims arising hereunder.
ARTICLE 9
REPORTS
Within 60 days following the expiration of this Agreement, the Company
will furnish the Reinsurer with:
X. Xxxxx Net Earned Premium Income of the Company for the term of this
Agreement.
B. Any other information which the Reinsurer may require to prepare
its Annual Statement which is reasonably available to the Company.
ARTICLE 10
DEFINITIONS
A. The term "Ultimate Net Loss" as used in this Agreement shall mean
the actual loss paid by the Company or for which the Company becomes
liable to pay, such loss to include 90% of any Extra Contractual
Obligation (and expense) as defined in the EXTRA CONTRACTUAL OBLIGATIONS
ARTICLE, expenses of litigation and interest, and all other loss expense
of the Company including subrogation, salvage, and recovery expenses
(office expenses and salaries of officials and employees not classified
as loss adjusters are not chargeable as expenses for purposes of this
paragraph), but salvages and all recoveries, including recoveries under
all reinsurances which inure to the benefit of this Agreement (whether
recovered or not), shall be first deducted from such loss to arrive at
the amount of liability attaching hereunder.
A l l salvages, recoveries or payments recovered or received
subsequent to loss settlement hereunder shall be applied as if recovered
or received prior to the aforesaid settlement, and all necessary
adjustments shall be made by the parties hereto.
For purposes of this definition, the phrase "becomes liable to pay"
shall mean the existence of a judgment which the Company does not intend
to appeal, or a release has been obtained by the Company, or the Company
has accepted a proof of loss.
Nothing in this clause shall be construed to mean that losses are
not recoverable hereunder until the Company's Ultimate Net Loss has been
ascertained.
B. The term "Loss Occurrence" shall mean the sum of all individual
losses directly occasioned by any one disaster, accident or loss or
series of disasters, accidents or losses arising out of one event which
occurs within the area of one state of the United States or province of
Canada and states or provinces contiguous thereto and to one another.
However, the duration and extent of any one "Loss Occurrence" shall be
limited to all individual losses sustained by the Company occurring
during any period of 168 consecutive hours arising out of and directly
occasioned by the same event, except that the term "Loss Occurrence"
shall be further defined as follows:
1. As regards windstorms, hail, tornado, hurricane, cyclone, including
ensuing collapse and water damage, all individual losses sustained by
the Company occurring during any period of 72 consecutive hours arising
out of and directly occasioned by the same event. However, the event
need not be limited to one state or province or states or provinces
contiguous thereto.
2. As regards riot, riot attending a strike, civil commotion,
vandalism and malicious mischief, all individual losses sustained by the
Company occurring during any period of 72 consecutive hours within the
area of one municipality or county and the municipalities or counties
contiguous thereto arising out of and directly occasioned by the same
event. The maximum duration of 72 consecutive hours may be extended in
respect of individual losses which occur beyond such 72 consecutive
hours during the continued occupation of an insured's premises by
strikers, provided such occupation commenced during the aforementioned
period.
3. As regards earthquake (the epicenter of which need not necessarily
be within the territorial confines referred to in the opening paragraph
of this definition) and fire following directly occasioned by the
earthquake, only those individual fire losses which commence during the
period of 168 consecutive hours may be included in the Company's "Loss
Occurrence."
4. As regards "freeze," only individual losses directly occasioned by
collapse, breakage of glass and water damage (caused by bursting of
frozen pipes and tanks) may be included in the Company's "Loss
Occurrence."
For all "Loss Occurrences" the Company may choose the date and time
when any such period of consecutive hours commences, provided that it is
not earlier than the date and time of the occurrence of the first
recorded individual loss sustained by the Company arising out of that
disaster, accident or loss and provided that only one such period of 168
consecutive hours shall apply with respect to one event except for those
"Loss Occurrences" referred to in Paragraphs 1. and 2. above where only
one such period of 72 consecutive hours shall apply with respect to one
event, regardless of the duration of the event.
No individual losses occasioned by an event that would be covered
by 72 hours clauses may be included in any "Loss Occurrence" claimed
under the 168 hours provision.
C. The term "Gross Net Earned Premium Income" as used in this
Agreement shall mean gross earned premium income on business the subject
of this Agreement less earned premium income paid for reinsurances,
recoveries under which would inure to the benefit of this Agreement.
D. The term "Policy" as used in this Agreement shall mean any binder,
policy, or contract of insurance or reinsurance issued, accepted or held
covered provisionally or otherwise, by or through American Hallmark
General Agency, Inc., Dallas, Texas for and on behalf of the Issuing
Carrier.
ARTICLE 11
NET RETAINED LINES
This Agreement applies only to that portion of any reinsurances covered
by this Agreement which the Company retains net for its own account, and
in calculating the amount of any loss hereunder and also in computing
the amount in excess of which this Agreement attaches, only loss or
losses in respect of that portion of any reinsurances which the Company
retains net for its own account shall be included, it being understood
and agreed that the amount of the Reinsurer's 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 reinsurers, whether
specific or general, any amounts which may have become due from them
whether such inability arises from the insolvency of such other
reinsurers or otherwise.
ARTICLE 12
CURRENCY
The currency to be used for all purposes of this Agreement shall be
United States of America currency.
ARTICLE 13
LOSS FUNDING
With respect to losses, funding will be in accordance with the attached
Loss Funding Clause No. 13-01.2.
ARTICLE 14
TAXES
The Company will be liable for taxes (except Federal Excise Tax) on
premiums reported to the Reinsurer hereunder.
F e deral Excise Tax applies only to those Reinsurers, excepting
Underwriters at Lloyd's, London and other Reinsurers exempt from the
Federal Excise Tax, who are domiciled outside the United States of
America.
The Reinsurer has agreed to allow for the purpose of paying the Federal
Excise Tax 1% of the premium payable hereon to the extent such premium
is subject to Federal Excise Tax.
In the event of any return of premium becoming due hereunder, the
Reinsurer will deduct 1% from the amount of the return, and the Company
or its agent should take steps to recover the Tax from the U.S.
Government.
ARTICLE 15
NOTICE OF LOSS AND LOSS SETTLEMENTS
The Company will advise the Reinsurer promptly of all claims which in
the opinion of the Company may involve the Reinsurer and of all
subsequent developments on these claims which may materially affect the
position of the Reinsurer.
The Reinsurer agrees to abide by the loss settlements of the Company,
provided that retroactive extension of Policy terms or coverages made
voluntarily by the Company and not in response to court decisions
(whether such court decision is against the Company or other companies
affording the same or similar coverages) will not be covered under this
Agreement.
When so requested the Company will afford the Reinsurer an opportunity
to be associated with the Company, at the expense of the Reinsurer, in
the defense of any claim or suit or proceeding involving this
reinsurance and the Company will cooperate in every respect in the
defense of such claim, suit or proceeding.
The Reinsurer will pay its share of loss settlements immediately upon
receipt of proof of loss from the Company.
ARTICLE 16
EXTRA CONTRACTUAL OBLIGATIONS
Provided that the Ultimate Net Loss of the Company, exclusive of Extra
Contractual Obligations and related expense, exceeds the retention of
t h e Company's lowest layer of Property per occurrence excess
reinsurance, this Agreement shall protect the Company, subject to the
Reinsurer's limit of liability appearing in the COVER ARTICLE of this
Agreement, where the loss includes any Extra Contractual Obligations as
provided for in the definition of Ultimate Net Loss. "Extra Contractual
Obligations" are defined as those liabilities not covered under any
other provision of this Agreement and which arise from 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 an 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 Occurrence.
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.
ARTICLE 17
DELAY, OMISSION OR ERROR
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 had not been made, providing
such delay, omission or error is rectified upon discovery.
ARTICLE 18
INSPECTION
The Company shall place at the disposal of the Reinsurer at all
reasonable times, and the Reinsurer shall have the right to inspect,
through its authorized representatives, all books, records and papers of
the Company in connection with any reinsurance hereunder or claims in
connection herewith.
ARTICLE 19
ARBITRATION
Any irreconcilable dispute between the parties to this Agreement will be
arbitrated in Dallas, Texas in accordance with the attached Arbitration
Clause No. 22-01.1.
ARTICLE 20
SERVICE OF SUIT
The attached Service of Suit Clause No. 20-01.5 - U.S.A. will apply to
this Agreement.
ARTICLE 21
INSOLVENCY
In the event of the insolvency of the Company, the attached Insolvency
Clause No. 21-01 - 1/1/86 will apply.
ARTICLE 22
ENTIRE AGREEMENT
This Agreement sets forth all of the duties and obligations between the
Company and the Reinsurer and supersedes any and all prior or
contemporaneous or written agreements with respect to matters referred
to in this Agreement. The Agreement may not be modified, amended or
changed except by an agreement in writing signed by both parties.
ARTICLE 23
INTERMEDIARY
Sedgwick Re, Inc. is hereby recognized as the Intermediary negotiating
this Agreement for all business hereunder. All communications,
including notices, premiums, return premiums, commissions, taxes,
losses, loss adjustment expenses, salvages and loss settlements relating
thereto shall be transmitted to the Reinsurer or the Company through
Sedgwick Re, Inc., 0000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxxxx
00000. Payments by the Company to the Intermediary shall be deemed to
constitute payment to the Reinsurer. Payments by the Reinsurer to the
Intermediary shall be deemed only to constitute payment to the Company
to the extent that such payments are actually received by the Company.
ARTICLE 24
PARTICIPATION: AUTOMOBILE PHYSICAL DAMAGE CATASTROPHE EXCESS OF LOSS
REINSURANCE AGREEMENT EFFECTIVE: July 1, 1997
This Agreement obligates the Reinsurer for _______% of the interests and
liabilities set forth under this Agreement.
The participation of the Reinsurer in the interests and liabilities of
this Agreement shall be separate and apart from the participations of
other reinsurers and shall not be joint with those of other reinsurers,
and the Reinsurer shall in no event participate in the interests and
liabilities of other reinsurers.
I N W I TNESS WHEREOF, the parties hereto, by their authorized
representatives, have executed this Agreement as of the following dates:
PARTICIPATING REINSURERS
Xxxxxx Reinsurance Company 100.00%
Upon completion of Reinsurers' signing, fully executed signature pages
will be forwarded to you for the completion of your file.
XXXXXX REINSURANCE COMPANY
By_________________________________________
(signature)
___________________________________________
(name)
___________________________________________
(title)
and in Dallas, Texas, this day of , 1997.
AMERICAN HALLMARK INSURANCE COMPANY OF TEXAS
By_________________________________________
(signature)
___________________________________________
(name)
___________________________________________
(title)
AUTOMOBILE PHYSICAL DAMAGE CATASTROPHE
EXCESS OF LOSS REINSURANCE AGREEMENT
issued to
AMERICAN HALLMARK INSURANCE COMPANY OF TEXAS
