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Exhibit 10.23
AGREEMENT
This Agreement ("Agreement") is made by and among Alleghany
Corporation ("Alleghany"), Underwriters Reinsurance Company ("URC") and London
Life and Casualty Reinsurance Corporation ("London Life"). This Agreement is
effective as of the date of December 20, 2000 (the "Effective Date").
W I T N E S S E T H
WHEREAS, URC and London Life entered into the five in force
Aggregate Stop Loss Covers, including all addenda, listed on Exhibit A hereto
(the "Stop Loss Covers"); and
WHEREAS, URC is a wholly owned subsidiary of Underwriters Re
Group, Inc. ("URG"); and
WHEREAS, in connection with the sale of URG by Alleghany to
Swiss Re America Holding Corporation in May 2000, URC and London Life entered
into the Adverse Development Cover listed on Exhibit A hereto (the "ADC", and
together with the Stop Loss Covers, the "Reinsurance Treaties"); and
WHEREAS, as security for the performance by London Life of
obligations owed by it to URC under the ADC, London Life established a trust
(the "Trust Fund") for the benefit of URC pursuant to a trust agreement dated
May 9, 2000 (the "Trust Agreement") by and among URC, London Life and Bankers
Trust Company, as trustee (the "Trustee"); and
WHEREAS, Alleghany provided a letter of intention to London
Life dated December 20, 1999 in respect of certain matters arising under or
related to the Reinsurance Treaties (the "December 1999 Letter"); and
WHEREAS, URC and London Life desire to fully, finally and
forever determine, settle and commute all liabilities and obligations, known or
unknown, arising under or related to any and all of the Stop Loss Covers, and to
fully release each other from all past, present and future obligations arising
under or related to the said Stop Loss Covers (the "Commutation"); and
WHEREAS, URC and London Life desire to fully, finally and
forever rescind the ADC (the "Rescission"); and
WHEREAS, Alleghany and London Life desire to fully, finally
and forever determine, settle and commute all liabilities and obligations, known
or unknown, arising under or related to the December 1999 Letter or arising
under or related to any and all of the Reinsurance Treaties, and to fully
release each other from all past, present and future obligations arising under
or related to the said December 1999 Letter or the said Reinsurance Treaties
(the "Alleghany Release"); and
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WHEREAS, the parties have determined that it is necessary and
desirable to set forth in this Agreement the transactions required to effect the
Commutation, the Rescission and the Alleghany Release;
NOW, THEREFORE, in consideration of the mutual promises made
and releases granted herein, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
1. On the Effective Date, Alleghany will pay to London Life,
or, at the direction of London Life, Alleghany will pay to URC, an amount in
cash equal to $66,863,000 (the "Alleghany Payment"). London Life agrees that the
payment by Alleghany of the Alleghany Payment on the Effective Date will fully,
completely and forever extinguish all liabilities and obligations of Alleghany
arising under or related to the December 1999 Letter or the Reinsurance
Treaties.
2. On the Effective Date, URC will be paid an amount (the
"Settlement Payment") equal to $115,654,265 (one hundred fifteen million, six
hundred fifty four thousand, two hundred sixty five dollars). Of the Settlement
Payment, $86,000,000 represents the amount paid to commute and settle the Stop
Loss Covers (the "Commutation Amount"), and $29,654,265 represents the amount
paid in connection with the rescission of the ADC (the "Rescission Amount"). Of
the Rescission Amount, $28,607,040 represents the return of the ADC premium (net
of federal excise tax ("FET")), and $1,047,225 represents an interest credit on
the full amount of the ADC premium (including FET) at the rate of 6% per annum
from May 11, 2000 through the Effective Date.
3. The Settlement Payment will be paid to URC as follows: (i)
London Life hereby directs Alleghany to pay the Alleghany Payment in cash to URC
on the Effective Date; (ii) on the Effective Date, London Life and URC will
jointly instruct the Trustee to liquidate the assets held in the Trust Fund as
soon as reasonably possible and, upon completion of the liquidation, to pay the
proceeds of such liquidation up to $45,791,265 (the "Liquidation Amount") to
URC, with any proceeds in excess of the Liquidation Amount to be paid to London
Life; and (iii) on the Effective Date, London Life will pay to URC an amount in
cash equal to $3,000,000. In addition, following completion of the liquidation
and payment of the Liquidation Amount to URC, London Life will pay URC an
amount, such amount to represent interest on the Liquidation Amount, equal to
$7,500 per day from the Effective Date through the date that the Liquidation
Amount is paid to URC.
4. As of the Effective Date, London Life shall and does hereby
relinquish to and in favor of URC all of London Life's rights and interests in
respect of the Withheld Accounts, as defined in the Stop Loss Covers.
5. On the Effective Date, URC shall release and return to
London Life any Letters of Credit or other security held by URC under the Stop
Loss Covers as security for the performance by London Life of any of its
obligations arising under or related to the Stop Loss Covers, except as provided
in paragraph 4 above.
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6. London Life agrees that, if the proceeds of liquidation of
the assets of the Trust Fund are less than the Liquidation Amount, then London
Life shall promptly pay to URC an amount in cash equal to the difference between
the Liquidation Amount and the proceeds of liquidation of the assets of the
Trust Fund.
7. All payments to be made to URC hereunder shall be made in
United States Dollars ($) and by wire transfer to the bank account of URC
designated by URC on Schedule I to this Agreement.
8. As of the Effective Date, each of London Life and URC does
hereby fully, finally and forever rescind the ADC in its entirety.
9. In consideration of the Settlement Payment and the release
by London Life of its rights and interests in the Withheld Accounts, and of the
mutual promises made and the mutual releases granted herein, London Life and URC
each does hereby release and forever discharge the other from any and all
liabilities and obligations arising under or related to any and all of the
Reinsurance Treaties, whether such liabilities or obligations are known or
unknown, reported or unreported, and whether currently existing or arising in
the future (the "Reinsurance Treaties Released Liabilities"). Such Reinsurance
Treaties Released Liabilities shall include but are not limited to all claims,
debts, demands, allegations, actions, causes of action, suits, duties, dues,
sums of money, accounts, reckonings, bonds, specialties, indemnities,
exonerations, covenants, contracts, controversies, agreements, promises,
omissions, trespasses, variances, damages, judgements, costs, expenses and
losses whatsoever arising under or related to the Reinsurance Treaties,
including but not limited to any common law or statutory claims for fraud and
misrepresentation, or any other claims whatsoever. It is the intention of the
parties that this release shall operate as a full and final settlement of all
past, present and future obligations and liabilities of URC to London Life and
of London Life to URC arising under or related to the Reinsurance Treaties and
shall completely discharge any claim whatsoever by either URC or London Life
against the other arising under or related to the Reinsurance Treaties. URC
specifically agrees and acknowledges that Alleghany has no obligations or
liabilities to URC arising under or related to the Reinsurance Treaties.
10. In consideration of Alleghany's payment at the direction
of London Life of the Alleghany Payment being paid to URC as part of the
Settlement Payment, and of the mutual promises made and the mutual releases
granted herein, Alleghany and London Life each does hereby release and forever
discharge the other from any and all liabilities and obligations arising under
or related to the December 1999 Letter or arising under or related to any and
all of the Reinsurance Treaties, whether such liabilities or obligations are
known or unknown, reported or unreported, and whether currently existing or
arising in the future (the "Alleghany Released Liabilities"). Such Alleghany
Released Liabilities shall include but are not limited to all claims, debts,
demands, allegations, actions, causes of action, suits, duties, dues, sums of
money, accounts, reckonings, bonds, specialties, indemnities, exonerations,
covenants, contracts, controversies, agreements, promises, omissions,
trespasses, variances, damages, judgements, costs, expenses and losses
whatsoever arising under or related to the December 1999 Letter or arising under
or related to the Reinsurance Treaties, including but not limited to any common
law or statutory claims for fraud and misrepresentation, or any other claims
whatsoever. It is the intention of the parties that this release shall operate
as a full and final settlement of all past,
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present and future obligations and liabilities of Alleghany to London Life and
of London Life to Alleghany arising under or related to the December 1999 Letter
or the Reinsurance Treaties, and shall completely discharge any claim whatsoever
by either Alleghany or London Life against the other arising under or related to
the December 1999 Letter or the Reinsurance Treaties.
11. London Life and URC specifically agree and acknowledge
that the Settlement Payment is being released to URC in good faith and
constitutes fair consideration for the discharge of amounts allegedly owing now
or potentially owing in the future by London Life to URC arising under or
related to the Reinsurance Treaties.
12. URC may seek to collect refunds of FET paid in connection
with the commutation of URC Aggregate Excess of Loss Treaty No. 348-9 and in
connection with the ADC premium. London Life agrees to cooperate with URC, at
London Life's own expense, in URC's efforts to collect such refunds of FET to
the extent reasonably requested by URC. London Life agrees that any such refunds
of FET collected by URC shall be retained by URC.
13. This Agreement shall have no effect upon any reinsurance
treaties in effect between URC and London Life other than the Reinsurance
Treaties listed on Exhibit A attached hereto. By entering into this Agreement,
URC expressly does not release, modify, compromise or waive any rights it may
have under any reinsurance agreements in effect between URC and London Life
other than the Reinsurance Treaties listed on Exhibit A attached hereto.
14. This Agreement is made by each party, and the releases
given hereunder are given by each party, on behalf of itself, its affiliates,
parents and subsidiaries, officers, directors, shareholders and agents and their
heirs, executors, administrators, predecessors, successors and assigns and such
releases given to a party hereunder shall also release and forever discharge
such party's affiliates, parents and subsidiaries, officers, directors,
shareholders and agents and their heirs, executors, administrators,
predecessors, successors and assigns. The rights, duties and obligations set
forth in this Agreement shall inure to the benefit of and be binding upon any
and all predecessors, parents, successors, affiliates, officers, directors,
employees, subsidiaries, stockholders, liquidators, receivers and assigns of
each of the parties hereto. Nothing in this Agreement is intended to benefit any
third party.
15. Each party hereto expressly warrants and represents that
it is a company in good standing in its jurisdiction of incorporation; that the
execution of this Agreement is fully authorized by it; that the person executing
this Agreement on its behalf has the necessary and appropriate authority to do
so; that the execution, delivery and performance by it of this Agreement does
not and will not contravene any law, governmental rule or regulation, judgment
or order applicable to it, and does not and will not contravene any provision
of, or constitute a default under, any agreement or instrument to which it is a
party or by which its properties are bound; and that no authorization, consent
or approval of any government entity is required to make this Agreement valid
and binding upon them.
16. The failure of any party to enforce any provision of this
Agreement shall not be construed as a waiver by such party of such provision or
any other provision of this Agreement. No waiver of any provision of this
Agreement by any party shall be deemed a waiver of any of its other terms, nor
shall such waiver constitute a continuing waiver.
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17. In the event that any court of competent jurisdiction
renders a final, non-appealable order or ruling declaring this Agreement null,
void, illegal or unenforceable, it is mutually agreed by URC, London Life and
Alleghany that this Agreement shall be immediately rescinded, that the Alleghany
Payment shall be refunded by URC to Alleghany, and that the portion of the
Settlement Payment paid by London Life (including the proceeds of liquidation of
the assets of the Trust Fund paid to URC as provided in paragraph 3 above) shall
be refunded by URC to London Life, so that each of the parties hereto shall be
restored to the position it was in just prior to the making of this Agreement.
18. Each party to this Agreement represents and warrants to
the other parties hereto that the drafting and negotiation of this Agreement has
been participated in by each of the parties or their counsel, or both, and for
all purposes this Agreement shall be deemed to have been drafted jointly by all
parties.
19. Each party to this Agreement represents and warrants to
the other parties hereto that this Agreement is entered into freely, without
duress, in good faith, at arms' length, in the regular course of business and in
reliance on its own independent investigations and analyses of the facts
underlying the subject matter of this Agreement, and that except as set forth in
writing in this Agreement, the decision to execute the Agreement is not
predicated upon or influenced by any declarations, representations, warranties
or promises of any kind made directly or indirectly by the other party, or any
predecessors in interest, successors, assigns, officers, directors, employees or
agents of same.
20. The parties, as between and among themselves, understand
that they may have sustained damages or incurred obligations that may not yet be
manifest and that are presently unknown, but nevertheless, URC deliberately
intends and does hereby release each of London Life and Alleghany to the extent
that this Agreement so provides, and London Life deliberately intends and does
hereby release each of Alleghany and URC to the extent that this Agreement so
provides. Furthermore, the parties expressly accept and assume the risk that the
factual or legal assumptions made by either party in connection with this
Agreement may be found hereafter to be different from the true facts or law, and
the parties agree that this Agreement shall be and remain in full force and
effect notwithstanding such differences in facts or law. In this regard, the
parties specifically waive the provisions of the California Civil Code, Section
1542, which provides as follows:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the
time of executing the release, which, if known by him, must
have materially affected his settlement with the debtor."
21. This Agreement shall constitute the entire Agreement among
the parties as respects its subject matter and supersedes all prior or
contemporaneous discussions, understandings or agreements. No supplement,
modification, waiver or termination of this Agreement shall be binding or
enforceable unless executed in a writing signed by all of the parties hereunder,
and this provision cannot be orally waived.
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22. This Agreement may be executed in multiple counterparts,
each of which, when so executed and delivered, shall be an original, but such
counterparts shall together constitute one and the same instrument and
agreement.
23. This Agreement shall be interpreted and governed by the
laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives as of the
dates indicated below.
Signed in New York, New York, this 20th day of December 2000,
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For and on behalf of Alleghany Corporation
By: /s/ Xxxxx X. Xxxxxx
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Title: Senior Vice President
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Signed in Calabasas, California, this 20th day of December 2000,
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For and on behalf of Underwriters Reinsurance Company
By: /s/ Xxxxxxx X. Xxxxxxxxxx
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Title: Senior Vice President
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Signed in St. Xxxxxxx, Barbados, W.I., this 20th day of December 2000,
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For and on behalf of London Life and Casualty Reinsurance Corporation
By: /s/ Xxxxxx X. Xxxxx
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Title: President & CEO
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EXHIBIT A
TO THE AGREEMENT BY AND AMONG
ALLEGHANY CORPORATION, UNDERWRITERS REINSURANCE COMPANY
AND LONDON LIFE AND CASUALTY REINSURANCE CORPORATION,
EFFECTIVE AS OF DECEMBER 20, 2000
URC TREATY NO. REINSURANCE TREATY EFFECTIVE DATE
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349-9 Aggregate Excess of Loss July 1, 1995
Addendum No. 1 January 1, 1998
Addendum No. 2 April 30, 2000
352-9 Aggregate Excess of Loss July 1, 1996
Addendum No. 1 January 1, 1998
Addendum No. 2 April 30, 2000
354-9 Aggregate Excess of Loss July 1, 1997
Addendum No. 1 January 1, 1998
Addendum No. 2 July 1, 1997
April 30, 2000
355-9 Aggregate Excess of Loss July 1, 1998
Addendum No. 1 April 30, 2000
356-9 Aggregate Excess of Loss July 1, 1999
Addendum Xx. 0 Xxxxx 00, 0000
XXX00 Xxxxxxxxx Excess of Loss (ADC) May 10, 2000
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SCHEDULE I
TO THE AGREEMENT BY AND AMONG
ALLEGHANY CORPORATION, UNDERWRITERS REINSURANCE COMPANY
AND LONDON LIFE AND CASUALTY REINSURANCE CORPORATION,
EFFECTIVE AS OF DECEMBER 20, 2000
URC BANK ACCOUNT INFORMATION
The Bank of New York
ABA 000000000
Credit Acct: GLA111565
Account Name: Institutional Custody Insurance Division
For Further Credit to: Underwriters Reinsurance Company
Account #367599
