EXHIBIT 10.63
EXCESS CATASTROPHE REINSURANCE CONTRACT
EFFECTIVE: JUNE 1, 2003
issued to
Philadelphia Insurance Company
Bala Cynwyd, Pennsylvania
Philadelphia Indemnity Insurance Company
Bala Cynwyd, Pennsylvania
Mobile USA Insurance Company
Pinellas Park, Florida
Liberty American Insurance Company
Pinellas Park, Florida
and
any and all other companies which are now
or may hereafter become member companies of
Philadelphia Insurance Companies
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TABLE OF CONTENTS
ARTICLE PAGE
I Classes of Business Reinsured 0
XX Xxxx 0
XXX Xxxxxxxxx (XXXX 00X) 2
IV Exclusions 2
V Retention and Limit 4
VI Definitions 6
VII Other Reinsurance 7
VIII Loss Occurrence (BRMA 27C) 7
IX Loss Notices and Settlements 8
X Salvage and Subrogation 9
XI Florida Hurricane Catastrophe Fund 9
XII Reinsurance Premium 9
XIII Coverage Renewal 10
XIV Exit Charge and Non Renewal Charge 11
XV Experience Account 11
XVI Investment Income 12
XVII Commutation 12
XVIII Late Payments 12
XIX Security 13
XX Offset (BRMA 36D) 14
XXI Access to Records (BRMA 1D) 14
XXII Liability of the Reinsurer 14
XXIII Net Retained Lines (BRMA 32B) 14
XXIV Errors and Omissions (BRMA 14F) 14
XXV Currency (BRMA 12A) 15
XXVI Taxes (BRMA 50C) 15
XXVII Federal Excise Tax (BRMA 17A) 15
XXVIII Reserve Requirements 15
XXIX Insolvency 17
XXX Arbitration 17
XXXI Service of Suit 18
XXXII Agency Agreement 19
XXXIII Governing Law 19
XXXIV Confidentiality 19
XXXV Severability 20
XXXVI Intermediary (BRMA 23A) 20
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EXCESS CATASTROPHE REINSURANCE CONTRACT
EFFECTIVE: JUNE 1, 2003
issued to
Philadelphia Insurance Company
Bala Cynwyd, Pennsylvania
Philadelphia Indemnity Insurance Company
Bala Cynwyd, Pennsylvania
Mobile USA Insurance Company
Pinellas Park, Florida
Liberty American Insurance Company
Pinellas Park, Florida
and
any and all other companies which are now
or may hereafter become member companies of
Philadelphia Insurance Companies
(hereinafter referred to collectively as the "Company")
by
The Subscribing Reinsurer(s) Executing the
Interests and Liabilities Agreement(s)
Attached Hereto
(hereinafter referred to as the "Reinsurer")
ARTICLE I - CLASSES OF BUSINESS REINSURED
By this Contract the Reinsurer agrees to reinsure the excess liability which may
accrue to the Company under its policies, contracts and binders of insurance or
reinsurance (hereinafter called "policies") in force at the effective date
hereof or issued or renewed on or after that date, and classified by the Company
as Property business, subject to the terms, conditions and limitations
hereinafter set forth.
ARTICLE II - TERM
A. This Contract shall become effective on June 1, 2003, with respect to
losses arising out of loss occurrences commencing on or after that
date, and shall remain in force until May 31, 2004, both days
inclusive.
B. If this Contract expires while a loss occurrence covered hereunder is
in progress, the Reinsurer's liability hereunder shall, subject to the
other terms and conditions of this Contract, be determined as if the
entire loss occurrence had occurred prior to the expiration of this
Contract, provided that no part of such loss occurrence is claimed
against any renewal or replacement of this Contract.
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XXXXXXX XXX - XXXXXXXXX (XXXX 00X)
The territorial limits of this Contract shall be identical with those of the
Company's policies.
ARTICLE IV - EXCLUSIONS
This Contract does not apply to and specifically excludes the following:
1. Financial guarantee and insolvency.
2. Nuclear risks as defined in the "Nuclear Incident Exclusion
Clause - Physical Damage - Reinsurance (U.S.A.)" and the
"Nuclear Incident Exclusion Clause - Physical Damage -
Reinsurance (Canada)" attached to and forming part of this
Contract.
3. Loss or damage caused by or resulting from war, invasion,
hostilities, acts of foreign enemies, civil war, rebellion,
insurrection, military or usurped power, or martial law or
confiscation by order of any government or public authority,
but this exclusion shall not apply to loss or damage covered
under a standard policy with a standard War Exclusion Clause.
4. Loss or liability excluded under the provisions of the "Pools,
Associations and Syndicates Exclusion Clause" attached to and
forming part of this Contract.
5. 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, however
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.
6. Losses in respect of overhead transmission and distribution
lines and their supporting structures, other than those on or
within 300 meters (or 1,000 feet) of the insured premises. It
is understood and agreed that public utilities extension
and/or suppliers extension and/or contingent business
interruption coverages are not subject to this exclusion,
provided that these are not part of a transmitters' or
distributors' policy.
7. Accident and Health, Casualty, Fidelity and/or Surety
business.
8. Pollution and seepage coverages excluded under the provisions
of the "Pollution and Seepage Exclusion Clause (XXXX 00X)"
attached to and forming part of this Contract.
9. Notwithstanding any other provision to the contrary within
this Contract or any amendment thereto, any loss, damage, cost
or expense directly or indirectly caused by, contributed to
by, resulting from, or arising out of or in connection with
any act of
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terrorism, as defined herein, regardless of any other cause or
event contributing concurrently or in any other sequence to
the loss.
An "act of terrorism" includes any act, or preparation in
respect of action, or threat of action, designed to influence
the government de jure or de facto of any nation or any
political division thereof, or in pursuit of political,
religious, ideological, or similar purposes to intimidate the
public or a section of the public of any nation by any person
or group(s) of persons, whether acting alone or on behalf of
or in connection with any organization(s) or government(s) de
jure or de facto, and which:
a. Involves violence against one or more persons; or
b. Involves damage to property; or
c. Endangers life other than that of the person
committing the action; or
d. Creates a risk to health or safety of the public or a
section of the public; or
e. Is designed to interfere with or to disrupt an
electronic system.
This Contract also excludes loss, damage, cost or expense
directly or indirectly caused by, contributed to by, resulting
from, or arising out of or in connection with any action in
controlling, preventing, suppressing, retaliating against or
responding to any act of terrorism.
Notwithstanding the above and subject otherwise to the terms,
conditions and limitations of this Contract, in respect only
of Personal Lines, this Contract will pay actual loss or
damage (but not related cost or expense) caused by any act of
terrorism, provided such act is not directly or indirectly
caused by, contributed to by, resulting from, or arising out
of or in connection with biological, chemical or nuclear
pollution or contamination.
10. Loss or liability in any way or to any extent arising out of
the actual or alleged presence or actual, alleged or
threatened presence of fungi including, but not limited to,
mold, mildew, mycotoxins, microbial volatile organic compounds
or other "microbial contaminations." This includes:
a. Any supervision, instruction, recommendations,
warnings or advice given or which should have been
given in connection with the above; and
b. Any obligation to share damages with or repay someone
else who must pay damages because of such injury or
damage.
For purposes of this exclusion, "microbial contamination"
means any contamination, either airborne or surface, which
arises out of or is related to the presence of fungi, mold,
mildew, mycotoxins, microbial volatile organic compounds or
spores, including, without limitation, Penicillium,
Aspergillus, Fusarium, Aspergillus Flavus and Stachybotrys
chartarum.
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Losses resulting from the above causes do not in and of
themselves constitute an event unless arising out of one or
more of the following perils, in which case this exclusion
does not apply:
Fire, lightning, explosion, aircraft or vehicle
impact, falling objects, windstorm, hail, tornado,
cyclone, hurricane, earthquake, volcano, tsunami,
flood, freeze or weight of snow.
Notice of any claims for mold-related losses must be given by
the Company to the Reinsurer, in writing, within 24 months
after the commencement date of the loss occurrence to which
such claims relate.
11. Loss or liability excluded under the provisions of the
"Electronic Data Endorsement B" (N.M.A 2915) attached to and
forming part of this Contract.
ARTICLE V - RETENTION AND LIMIT
A. SECTION 1:
The Company shall retain and be liable for the first $4,000,000 of
ultimate net loss arising out of each loss occurrence. The Reinsurer
shall then be liable (subject to the provisions of paragraphs C and D
below) for the amount by which such ultimate net loss exceeds the
Company's retention, but the liability of the Reinsurer under Section 1
shall not exceed any of the following:
1. $6,000,000 as respects any one loss occurrence;
2. $12,000,000 in all as respects loss occurrences commencing
during any one contract year;
3. $12,000,000 in all for loss occurrences arising out of perils
other than hurricanes and earthquakes commencing during all
contract years ending on or before May 31, 2007.
B. SECTION 2:
1. FLORIDA FIRST LAYER: As respects Property business located
inside the State of Florida, the Company shall retain and be
liable for the first $10,000,000 of ultimate net loss arising
out of each loss occurrence. The Reinsurer shall then be
liable (subject to the provisions of subparagraph 5 of this
paragraph and of paragraphs C and D below) for 25.50% of the
amount by which such ultimate net loss exceeds the Company's
retention, but the liability of the Reinsurer shall not exceed
25.50% of $16,500,000 (being $4,207,500) as respects any one
loss occurrence, nor shall it exceed 25.5% of $16,500,000
(being $4,207,500) in all as respects loss occurrences
commencing during any one contract year.
2. FLORIDA SECOND LAYER: As respects Property business located
inside the State of Florida, the Company shall retain and be
liable for the first $26,500,000 of ultimate net loss arising
out of each loss occurrence. The Reinsurer shall then be
liable (subject to the provisions of subparagraph 5 of this
paragraph and of paragraphs C and D below) for 17.00% of the
amount by which such ultimate net loss exceeds the Company's
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retention, but the liability of the Reinsurer shall not exceed
17.00% of $17,700,000 (being $3,009,000) as respects any one
loss occurrence, nor shall it exceed 17.00% of $17,700,000
(being $3,009,000) in all as respects loss occurrences
commencing during any one contract year.
3. NON FLORIDA FIRST LAYER: As respects Property business located
outside of the State of Florida, the Company shall retain and
be liable for the first $10,000,000 of ultimate net loss
arising out of each loss occurrence. The Reinsurer shall then
be liable (subject to the provisions of subparagraph 5 of this
paragraph and of paragraphs C and D below) for 9.50% of the
amount by which such ultimate net loss exceeds the Company's
retention, but the liability of the Reinsurer shall not exceed
9.50% of $10,000,000 (being $950,000) as respects any one loss
occurrence, nor shall it exceed 9.50% of $10,000,000 (being
$950,000) in all as respects loss occurrences commencing
during any one contract year.
4. NON FLORIDA SECOND LAYER: As respects Property business
located outside of the State of Florida, the Company shall
retain and be liable for the first $20,000,000 of ultimate net
loss arising out of each loss occurrence. The Reinsurer shall
then be liable (subject to the provisions of subparagraph 5 of
this paragraph and of paragraphs C and D below) for 4.3333% of
the amount by which such ultimate net loss exceeds the
Company's retention, but the liability of the Reinsurer shall
not exceed 4.3333% of $30,000,000 (being $1,299,000) as
respects any one loss occurrence, nor shall it exceed 4.3333%
of $30,000,000 (being $1,299,000) in all as respects loss
occurrences commencing during any one contract year.
5. Notwithstanding the provisions of subparagraphs 1, 2, 3 and 4
above, the liability of the Reinsurer under Section 2 shall
not exceed $9,466,500 in all as respects loss occurrences
commencing during any one contract year. Further, the
liability of the Reinsurer under each Layer of Section 2 in
all as respects loss occurrences commencing during any one
contract year shall not exceed the actual amount of
reinstatement premium paid by the Company under the Company's
Property treaty reinsurance covering that Layer for the same
contract year.
C. SECTION 3:
The Company shall retain and be liable for the first $145,200,000 of
ultimate net loss arising out of each loss occurrence. The Reinsurer
shall then be liable (subject to the provisions of paragraphs C and D
below) for the amount by which such ultimate net loss exceeds the
Company's retention, but the liability of the Reinsurer under Section 3
shall not exceed $25,000,000 as respects any one loss occurrence, nor
shall it exceed $25,000,000 in all as respects loss occurrences
commencing during any one contract year.
D. CONTRACT YEAR LIMIT: Notwithstanding the provisions of paragraphs A, B
and C above, the liability of the Reinsurer shall not exceed
$40,467,000 in all as respects loss occurrences commencing during any
one contract year, regardless of the number of Sections involved.
E. No claim shall be made under any Layer of coverage provided by this
Contract in any one loss occurrence unless at least two risks insured
or reinsured by the Company are involved in such loss occurrence. For
purposes hereof, the Company shall be the sole judge of what
constitutes one risk.
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ARTICLE VI - DEFINITIONS
A. "Ultimate net loss" as used herein is defined as the sum or sums
(including extra contractual obligations, limited to 100% of the
original policy limits, loss in excess of policy limits, also limited
to 100% of the original policy limits, and any loss adjustment expense,
as hereinafter defined) paid or payable by the Company in settlement of
claims and in satisfaction of judgments rendered on account of such
claims, after deduction of all salvage, all recoveries and all claims
on inuring insurance or reinsurance, whether collectible or not.
Nothing herein shall be construed to mean that losses under this
Contract are not recoverable until the Company's ultimate net loss has
been ascertained.
B. "Loss in excess of policy limits" and "extra contractual obligations"
as used herein shall be defined as follows:
1. "Loss in excess of policy limits" shall mean any amount paid
or payable by the Company in excess of its policy limits, but
otherwise within the terms of its policy, such loss in excess
of the Company's policy limits having been incurred because
of, but not limited to, failure by the Company to settle
within the policy limits or by reason of the Company's 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 an action against its insured or reinsured or in the
preparation or prosecution of an appeal consequent upon such
an action.
2. "Extra contractual obligations" shall mean any punitive,
exemplary, compensatory or consequential damages paid or
payable by the Company, not covered by any other provision of
this Contract and which arise from the handling of any claim
on business subject to this Contract, such liabilities arising
because of, but not limited to, failure by the Company to
settle within the policy limits or by reason of the Company's
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 reinsured or
in the preparation or prosecution of an appeal consequent upon
such an action. An extra contractual obligation shall be
deemed, in all circumstances, to have occurred on the same
date as the loss covered or alleged to be covered under the
policy.
Notwithstanding anything stated herein, this Contract shall not apply
to any loss in excess of policy limits or any extra contractual
obligation incurred by the Company as a result of any fraudulent and/or
criminal act by any officer or director 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.
If any provision of this paragraph B shall be rendered illegal or
unenforceable by the laws, regulations or public policy of any state,
such provision shall be considered void in such state, but this shall
not affect the validity or enforceability of any other provision of
this Contract or the enforceability of such provision in any other
jurisdiction.
Savings Clause (Applicable only if the Subscribing Reinsurer is
domiciled in the State of New York): In no event shall coverage be
provided to the extent that such coverage is not permitted under New
York law.
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C. "Loss adjustment expense" as used herein shall mean expenses assignable
to the investigation, appraisal, adjustment, settlement, litigation,
defense and/or appeal of specific claims, regardless of how such
expenses are classified for statutory reporting purposes. Loss
adjustment expense shall include, but not be limited to, declaratory
judgments, interest on judgments, expenses of outside adjusters, and a
pro rata share of the salaries and expenses of the Company's field
employees according to the time occupied adjusting such losses and
expenses of the Company's officials incurred in connection with the
losses, but shall not include office expenses or salaries of the
Company's regular employees.
D. "Net earned premium" as used herein is defined as gross earned premium
of the Company for the classes of business reinsured hereunder, less
the earned portion of premiums ceded by the Company for reinsurance
which inures to the benefit of this Contract. Net earned premium will
not include the Company's earned premium for Homeowners, Manufactured
Homeowners and Condominium policies that include a "No Wind/No Water"
exclusion, although coverage is provided for these polices. It is
understood that net earned premium shall include catastrophe fees, but
shall exclude Managing General Agent fees, DRST fees and policy
surcharges to recoup residual market deficit assessments.
E. "Contract year" as used herein shall mean the period from June 1, 2003
to May 31, 2004, both days inclusive, and each respective 12-month
period thereafter that this Contract is renewed as provided in Article
XIII.
ARTICLE VII - OTHER REINSURANCE
The Company shall be permitted to carry Commercial Property excess reinsurance,
recoveries under which shall inure to the benefit of this Contract.
ARTICLE VIII - LOSS OCCURRENCE (BRMA 27C)
A. 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 windstorm, 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
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respect of individual losses which occur beyond such 72
consecutive hours during the continued occupation of an
assured's premises by strikers, provided such occupation
commenced during the aforesaid period.
3. As regards earthquake (the epicenter of which need not
necessarily be within the territorial confines referred to in
the introductory portion of this paragraph) 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 frozen pipes and tanks and melting snow)
may be included in the Company's "loss occurrence."
B. Except for those "loss occurrences" referred to in subparagraphs 1 and
2 of paragraph A above, 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.
C. However, as respects those "loss occurrences" referred to in
subparagraphs 1 and 2 of paragraph A above, if the disaster, accident
or loss occasioned by the event is of greater duration than 72
consecutive hours, then the Company may divide that disaster, accident
or loss into two or more "loss occurrences," provided that no two
periods overlap and no individual loss is included in more than one
such period, and provided that no period commences 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.
D. It is understood that losses arising from a combination of two or more
perils as a result of the same event shall be considered as having
arisen from one "loss occurrence." Notwithstanding the foregoing, the
hourly limitations as stated in paragraphs A, B and C shall not be
exceeded as respects the applicable perils and no single "loss
occurrence" shall encompass a time period greater than 168 consecutive
hours.
ARTICLE IX - LOSS NOTICES AND SETTLEMENTS
A. Whenever losses sustained by the Company appear likely to result in a
claim hereunder, the Company shall notify the Reinsurer, and the
Reinsurer shall have the right to participate in the adjustment of such
losses at its own expense.
B. All loss settlements made by the Company, provided they are within the
terms of this Contract, shall be binding upon the Reinsurer, and the
Reinsurer agrees to pay all amounts for which it may be liable upon
receipt of reasonable evidence of the amount paid (or scheduled to be
paid) by the Company.
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ARTICLE X - SALVAGE AND SUBROGATION
The Reinsurer shall be credited with salvage (i.e., reimbursement obtained or
recovery made by the Company, less the actual cost, excluding salaries of
officials and employees of the Company and sums paid to attorneys as retainer,
of obtaining such reimbursement or making such recovery) on account of claims
and settlements involving reinsurance hereunder. Salvage thereon shall always be
used to reimburse the excess carriers in the reverse order of their priority
according to their participation before being used in any way to reimburse the
Company for its primary loss. The Company hereby agrees to enforce its rights to
salvage or subrogation relating to any loss, a part of which loss was sustained
by the Reinsurer, and to prosecute all claims arising out of such rights.
ARTICLE XI - FLORIDA HURRICANE CATASTROPHE FUND
A. Any loss reimbursement paid or payable to the Company under the Florida
Hurricane Catastrophe Fund (FHCF) as a result of loss occurrences
commencing during the term of this Contract shall inure to the benefit
of this Contract. Further, any FHCF loss reimbursement shall be deemed
to be paid to the Company in accordance with the reimbursement contract
between the Company and the State Board of Administration of the State
of Florida at the full payout level set forth therein and will be
deemed not to be reduced by any reduction or exhaustion of the FHCF's
claims paying capacity.
B. Prior to the determination of the Company's FHCF retention and payout,
if any, under the reimbursement contract, the Reinsurer's liability
hereunder will be determined provisionally based on the projected
payout, determined in accordance with the provisions of the
reimbursement contract. Following determination of the payout under the
reimbursement contract, the ultimate net loss under this Contract will
be recalculated. If, as a result of such calculation, the loss to the
Reinsurer under any excess layer of this Contract in any one loss
occurrence is less than the amount previously paid by the Reinsurer
under that excess layer, the Company shall promptly remit the
difference to the Reinsurer. If the loss to the Reinsurer under any
excess layer in any one loss occurrence is greater than the amount
previously paid by the Reinsurer, the Reinsurer shall promptly remit
the difference to the Company.
C. If an FHCF reimbursement amount is based on the Company's losses in
more than one loss occurrence and the FHCF does not designate the
amount allocable to each loss occurrence, the FHCF reimbursement amount
shall be prorated in the proportion that the Company's losses in each
loss occurrence bear to the Company's total losses arising out of all
loss occurrences to which the FHCF reimbursement applies.
D. Any reimbursement premiums or emergency assessment paid by the Company
under the FHCF shall be deemed to be premiums paid for inuring
reinsurance.
ARTICLE XII - REINSURANCE PREMIUM
The Company shall pay the Reinsurer an annual premium of $10,000,000 in four
installments of $2,500,000 each on June 1, 2003, September 1, 2003, December 1,
2003 and March 1, 2004.
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ARTICLE XIII - COVERAGE RENEWAL
A. At the expiration of this Contract and annually thereafter if
applicable, the Reinsurer may, but is not obligated to, offer to renew
this Contract at the expiring terms and conditions for a renewal
premium equal to the previous year's annual premium plus an additional
premium of 10.0% of the deficit in the Experience Account at the
expiration of this Contract, payable in three equal installments due on
June 1, September 1 and December 1 of the renewal year.
B. Should the Company elect to decline the Reinsurer's offer for renewal
as described above and the Experience Account is negative, the Company
will pay the Reinsurer a non- renewal charge calculated in accordance
with Article XIV, payable within 90 days of expiration. Should the
Company elect to decline the Reinsurer's offer for renewal as described
above and the Experience Account is positive, the Reinsurer will pay
the Company a profit commission equal to the positive balance of the
Experience Account within 90 days of expiration. If the offer of
renewal is accepted and this Contract enters a second year, the Company
can not decline any further offers to renew this Contract prior to May
31, 2007 if the Experience Account has a negative balance.
C. Further, should the Company elect to decline the Reinsurer's offer for
renewal as described above, this Contract and all previous contracts
for this coverage will be terminated.
D. Should the Reinsurer elect to decline to offer renewal terms as
described above, the Reinsurer shall forfeit the non-renewal charge and
shall pay the Company a profit commission equal to any positive balance
in the Experience Account in return for a full and final release of all
its obligations under this Contract.
E. If, pursuant to the terms of this Article, this Contract is renewed and
losses greater than $10,000,000 have been ceded, the terms of this
provision will not apply to contract years entered into after May 31,
2007. The maximum recovery in the aggregate over all contract years
shall be $161,866,000.
F. Any provisional notices to renew or to not offer renewal terms, and
responses to such offers, are provisional only, and subject to change
based on loss development or loss occurrences between the date of the
provisional notices or responses, and the actual expiration date of
coverage.
G. If the coverage is renewed, it is intended that the coverage granted
under this Contract in years subsequent to the 2003 contract year
should be comparable in risk exposure to the 2003 contract year. If the
Reinsurer believes there has been significant change to such risk
exposure the retentions and limits will be adjusted as set forth in
paragraphs H, I and J below, unless the parties mutually agree to
alternative adjustments.
H. The Company agrees to continue to use RMS for catastrophe modeling,
unless mutually agreed otherwise, using software at least as advanced
as used in the preparation of the loss curves and analysis for this
program.
I. For Section 1 and Section 2: If there is an exposure increase, a
coinsurance clause will be added so the expected loss for Section 1 and
each layer of Section 2, as measured using RMS output, is comparable to
the expected loss in the first contract year.
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J. For Section 3: The attachment will be reset to the comparable risk
level as it was at the inception of this Contract.
ARTICLE XIV - EXIT CHARGE AND NON RENEWAL CHARGE
A. Upon declination of the Reinsurer's offer of renewal per the terms of
Article XIII, a non-renewal charge shall be payable to the Reinsurer by
the Company for 40.0% of the absolute value of the negative balance in
the Experience Account (before the calculation and payment of this
non-renewal charge) for the absolute value of the first $7,500,000 of
the negative balance and 95.0% of the absolute value of the negative
balance in excess of $7,500,000 (before the calculation and payment of
this non-renewal charge). Upon the expiration of coverage for the year
ended May 31, 2007, an exit charge shall be payable to the Reinsurer by
the Company for 75.0% of the absolute value of the negative balance in
the Experience Account (before the calculation and payment of this exit
charge).
B. Since the exit charge and non-renewal charge are based on the negative
balance in the Experience Account, which includes outstanding losses,
if agreement to commute is not reached concurrent with the exit or
non-renewal charge calculation, then the exit or non-renewal charge
will adjust quarterly based on loss development, until commutation.
ARTICLE XV - EXPERIENCE ACCOUNT
A. The Reinsurer shall maintain an Experience Account, the balance of
which shall be calculated as follows:
1. 87.5% of the cumulative annual reinsurance premium paid or
payable by the Company from the inception of this Contract;
less
2. 100% of cumulative incurred losses from the inception of this
Contract; plus
3. 75.0% of cumulative additional premium, if any, paid or
payable by the Company in accordance with Article XIII from
the inception of this Contract; plus
4. Cumulative interest credited on positive Experience Account
cash balances as provided in Article XVI from the inception of
this Contract.
B. The cash balance in the Experience Account shall be the balance in the
Experience Account, as defined above, plus 100% of outstanding losses,
inclusive of IBNR, under the contract, and plus investment income as
defined in Article XIV.
C. The balance in the Experience Account and the cash balance in the
Experience Account shall be calculated no less than quarterly.
D. "Reinsurer's incurred loss" as used herein shall mean ceded losses and
loss adjustment expense paid as of the effective date of calculation,
plus the ceded reserves for losses and loss adjustment expense
outstanding as of the same date, all as respects losses arising out of
loss occurrences commencing during the period under consideration.
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ARTICLE XVI - INVESTMENT INCOME
Beginning with the first renewal of this Contract, any positive cash balance in
the Experience Account shall be credited with interest by the Reinsurer
quarterly using 25.0% of the one-year Treasury Xxxx rate in effect at the
beginning of the quarter.
ARTICLE XVII - COMMUTATION
The Company and the Reinsurer may mutually agree to commute this Contract at any
time on or after May 31, 2004 or any May 31 thereafter if coverage is extended.
Upon commutation, if the present value of the Reinsurer's share of outstanding
ultimate net loss is less than the positive cash balance in the Experience
Account, the Reinsurer shall pay the positive cash balance in the Experience
Account to the Company. If the present value of the Reinsurer's share of
outstanding ultimate net loss is greater than the positive cash balance in the
Experience Account, then, upon mutual agreement of the Company and the Reinsurer
only, the Reinsurer shall pay such excess to the Company, net of any non renewal
or exit charge. In either event, the Reinsurer shall be released in respect of
all its obligations under this Contract.
ARTICLE XVIII - LATE PAYMENTS
A. The provisions of this Article shall not be implemented unless
specifically invoked, in writing, by one of the parties to this
Contract.
B. In the event any premium, loss or other payment due either party is not
received by the intermediary named herein (hereinafter referred to as
the "Intermediary") by the payment due date, the party to whom payment
is due may, by notifying the Intermediary in writing, require the
debtor party to pay, and the debtor party agrees to pay, an interest
penalty on the amount past due calculated for each such payment on the
last business day of each month as follows:
1. The number of full days which have expired since the due date
or the last monthly calculation, whichever the lesser, times
2. 1/365ths of the six-month United States Treasury Xxxx Rate as
quoted in The Wall Street Journal on the first business day of
the month for which the calculation is made; times
3. The amount past due, including accrued interest.
It is agreed that interest shall accumulate until payment of the
original amount due plus interest penalties have been received by the
Intermediary.
C. The establishment of the due date shall, for purposes of this Article,
be determined as follows:
1. As respects the payment of routine deposits and premiums due
the Reinsurer, the due date shall be as provided for in the
applicable section of this Contract. In the event a due date
is not specifically stated for a given payment, it shall be
deemed due 30 days
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after the date of transmittal by the Intermediary of the
initial billing for each such payment.
2. Any claim or loss payment due the Company hereunder shall be
deemed due 10 business days after the proof of loss or demand
for payment is transmitted to the Reinsurer. If such loss or
claim payment is not received within the 10 days, interest
will accrue on the payment or amount overdue in accordance
with paragraph B above, from the date the proof of loss or
demand for payment in accordance with the provisions of
Article IX, was transmitted to the Reinsurer.
3. As respects any payment, adjustment or return due either party
not otherwise provided for in subparagraphs 1 and 2 of
paragraph C above, the due date shall be as provided for in
the applicable section of this Contract. In the event a due
date is not specifically stated for a given payment, it shall
be deemed due 10 business days following transmittal of
written notification that the provisions of this Article have
been invoked.
For purposes of interest calculations only, amounts due hereunder shall
be deemed paid upon receipt by the Intermediary.
D. Nothing herein shall be construed as limiting or prohibiting a
subscribing reinsurer from contesting the validity of any claim, or
from participating in the defense of any claim or suit, or prohibiting
either party from contesting the validity of any payment or from
initiating any arbitration or other proceeding in accordance with the
provisions of this Contract. If the debtor party prevails in an
arbitration or other proceeding, then any interest penalties due
hereunder on the amount in dispute shall be null and void. If the
debtor party loses in such proceeding, then the interest penalty on the
amount determined to be due hereunder shall be calculated in accordance
with the provisions set forth above unless otherwise determined by such
proceedings. If a debtor party advances payment of any amount it is
contesting, and proves to be correct in its contestation, either in
whole or in part, the other party shall reimburse the debtor party for
any such excess payment made plus interest on the excess amount
calculated in accordance with this Article.
E. Interest penalties arising out of the application of this Article that
are $100 or less from any party shall be waived unless there is a
pattern of late payments consisting of three or more items over the
course of any 12-month period.
ARTICLE XIX - SECURITY
A. It is a condition precedent to claims payments hereunder that would
result in a negative cash balance in the Experience Account greater
than $7,500,000, that if the Reinsurer gives notice of its intent to
renew, the Company must provide a letter of credit or other security
acceptable to the Reinsurer for the amount of any future premium due,
including non renewal or exit fees, assuming no future losses, up to a
maximum of the absolute value of any negative cash balance in the
Experience Account, less $7,500,000.
B. The provisions of this Article can be waived or modified upon mutual
agreement.
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ARTICLE XX - OFFSET (BRMA 36D)
The Company and the Reinsurer, each at its option, may offset any balance or
balances, whether on account of premiums, claims and losses, loss expenses or
salvages due from one party to the other under this Contract; provided, however,
that in the event of the insolvency of a party hereto, offsets shall only be
allowed in accordance with applicable statutes and regulations.
ARTICLE XXI - ACCESS TO RECORDS (BRMA 1D)
The Reinsurer or its designated representatives shall have access at any
reasonable time to all records of the Company which pertain in any way to this
reinsurance.
ARTICLE XXII - LIABILITY OF THE REINSURER
A. The liability of the Reinsurer shall follow that of the Company in
every case and be subject in all respects to all the general and
specific stipulations, clauses, waivers and modifications of the
Company's policies and any endorsements thereon. However, in no event
shall this be construed in any way to provide coverage outside the
terms and conditions set forth in this Contract.
B. Nothing herein shall in any manner create any obligations or establish
any rights against the Reinsurer in favor of any third party or any
persons not parties to this Contract.
ARTICLE XXIII - NET RETAINED LINES (BRMA 32B)
A. This Contract applies only to that portion of any policy which the
Company retains net for its own account, and in calculating the amount
of any loss hereunder and also in computing the amount or amounts in
excess of which this Contract attaches, only loss or losses in respect
of that portion of any policy which the Company retains net for its own
account shall be included.
B. 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 reinsurer(s), whether specific or
general, any amounts which may have become due from such reinsurer(s),
whether such inability arises from the insolvency of such other
reinsurer(s) or otherwise.
ARTICLE XXIV - ERRORS AND OMISSIONS (BRMA 14F)
Inadvertent delays, errors or omissions made in connection with this Contract or
any transaction hereunder shall not relieve either party from any liability
which would have attached had such delay, error or omission not occurred,
provided always that such error or omission is rectified as soon as possible
after discovery.
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ARTICLE XXV - CURRENCY (BRMA 12A)
A. Whenever the word "Dollars" or the "$" sign appears in this Contract,
they shall be construed to mean United States Dollars and all
transactions under this Contract shall be in United States Dollars.
B. Amounts paid or received by the Company in any other currency shall be
converted to United States Dollars at the rate of exchange at the date
such transaction is entered on the books of the Company.
ARTICLE XXVI - TAXES (BRMA 50C)
In consideration of the terms under which this Contract is issued, the Company
will not claim a deduction in respect of the premium hereon when making tax
returns, other than income or profits tax returns, to any state or territory of
the United States of America, the District of Columbia or Canada.
ARTICLE XXVII - FEDERAL EXCISE TAX (BRMA 17A)
(Applicable to those reinsurers, excepting Underwriters at Lloyd's London and
other reinsurers exempt from Federal Excise Tax, who are domiciled outside the
United States of America.)
A. The Reinsurer has agreed to allow for the purpose of paying the Federal
Excise Tax the applicable percentage of the premium payable hereon as
imposed under Section 4371 of the Internal Revenue Code to the extent
such premium is subject to the Federal Excise Tax.
B. In the event of any return of premium becoming due hereunder the
Reinsurer will deduct the applicable percentage from the return premium
payable hereon and the Company or its agent should take steps to
recover the tax from the United States Government.
ARTICLE XXVIII - RESERVE REQUIREMENTS
(Applies only to a reinsurer which does not qualify for full credit with any
insurance regulatory authority having jurisdiction over the Company's reserves,
or which is or becomes rated "B++" or lower by A.M. Best.)
A. If the Reinsurer is unauthorized in any state of the United States of
America or the District of Columbia or is rated B++ or lower by A.M.
Best, the Reinsurer agrees to fund its share of the Company's ceded
United States outstanding loss and loss adjustment expense reserves
(including incurred but not reported loss reserves) by:
1. Clean, irrevocable and unconditional letters of credit issued
and confirmed, if confirmation is required by the insurance
regulatory authorities involved, by a bank or banks meeting
the NAIC Securities Valuation Office credit standards for
issuers of letters of credit and acceptable to said insurance
regulatory authorities; and/or
2. Escrow accounts for the benefit of the Company; and/or
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Page 15
3. Cash advances;
if, without such funding as regards an unauthorized Reinsurer, a
penalty would accrue to the Company on any financial statement it is
required to file with the insurance regulatory authorities involved.
The Reinsurer, at its sole option, may fund in other than cash if its
method and form of funding are acceptable to the insurance regulatory
authorities involved.
B. If the Reinsurer is unauthorized in any province or jurisdiction of
Canada or is rated B++ or lower by A.M. Best, the Reinsurer agrees to
fund 115% of its share of the Company's ceded Canadian outstanding loss
and loss adjustment expense reserves (including incurred but not
reported loss reserves) by:
1. A clean, irrevocable and unconditional letter of credit issued
and confirmed, if confirmation is required by the insurance
regulatory authorities involved, by a Canadian bank or banks
meeting the NAIC Securities Valuation Office credit standards
for issuers of letters of credit and acceptable to said
insurance regulatory authorities, for no more than 15/115ths
of the total funding required; and/or
2. Cash advances for the remaining balance of the funding
required;
if, without such funding as regards an unauthorized Reinsurer, a
penalty would accrue to the Company on any financial statement it is
required to file with the insurance regulatory authorities involved.
C. With regard to funding in whole or in part by letters of credit, it is
agreed that each letter of credit will be in a form acceptable to
insurance regulatory authorities involved, will be issued for a term of
at least one year and will include an "evergreen clause," which
automatically extends the term for at least one additional year at each
expiration date unless written notice of non-renewal is given to the
Company not less than 30 days prior to said expiration date. The
Company and the Reinsurer further agree, notwithstanding anything to
the contrary in this Contract, that said letters of credit may be drawn
upon by the Company or its successors in interest at any time, without
diminution because of the insolvency of the Company or the Reinsurer,
but only for one or more of the following purposes:
1. To reimburse itself for the Reinsurer's share of losses and/or
loss adjustment expense paid under the terms of policies
reinsured hereunder, unless paid in cash by the Reinsurer;
2. To reimburse itself for the Reinsurer's share of any other
amounts claimed to be due hereunder, unless paid in cash by
the Reinsurer;
3. To fund a cash account in an amount equal to the Reinsurer's
share of any ceded outstanding loss and loss adjustment
expense reserves (including incurred but not reported loss
reserves) funded by means of a letter of credit which is under
non-renewal notice, if said letter of credit has not been
renewed or replaced by the Reinsurer 10 days prior to its
expiration date;
4. To refund to the Reinsurer any sum in excess of the actual
amount required to fund the Reinsurer's share of the Company's
ceded outstanding loss and loss adjustment
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Page 16
expense reserves (including incurred but not reported loss
reserves), if so requested by the Reinsurer.
In the event the amount drawn by the Company on any letter of credit is
in excess of the actual amount required for C(1) or C(3), or in the
case of C(2), the actual amount determined to be due, the Company shall
promptly return to the Reinsurer the excess amount so drawn.
ARTICLE XXIX - INSOLVENCY
A. In the event of the insolvency of one or more of the reinsured
companies, this reinsurance shall be payable directly to the company or
to its liquidator, receiver, conservator or statutory successor on the
basis of the liability of the company without diminution because of the
insolvency of the company or because the liquidator, receiver,
conservator or statutory successor of the company has failed to pay all
or a portion of any claim. It is agreed, however, that the liquidator,
receiver, conservator or statutory successor of the company shall give
written notice to the Reinsurer of the pendency of a claim against the
company indicating the policy or bond reinsured which claim would
involve a possible liability on the part of the Reinsurer within a
reasonable time after such claim is filed in the conservation or
liquidation proceeding or in the receivership, and that during the
pendency of such claim, the Reinsurer may investigate such claim and
interpose, at its own expense, in the proceeding where such claim is to
be adjudicated, any defense or defenses that it may deem available to
the company or its liquidator, receiver, conservator or statutory
successor. The expense thus incurred by the Reinsurer shall be
chargeable, subject to the approval of the Court, against the company
as part of the expense of conservation or liquidation to the extent of
a pro rata share of the benefit which may accrue to the company solely
as a result of the defense undertaken by the Reinsurer.
B. Where two or more reinsurers are involved in the same claim and a
majority in interest elect to interpose defense to such claim, the
expense shall be apportioned in accordance with the terms of this
Contract as though such expense had been incurred by the company.
C. It is further understood and agreed that, in the event of the
insolvency of one or more of the reinsured companies, the reinsurance
under this Contract shall be payable directly by the Reinsurer to the
company or to its liquidator, receiver or statutory successor, except
as provided by Section 4118(a) of the New York Insurance Law or except
(1) where this Contract specifically provides another payee of such
reinsurance in the event of the insolvency of the company or (2) where
the Reinsurer with the consent of the direct insured or insureds has
assumed such policy obligations of the company as direct obligations of
the Reinsurer to the payees under such policies and in substitution for
the obligations of the company to such payees.
ARTICLE XXX - ARBITRATION
A. As a condition precedent to any right of action hereunder, any dispute
or difference between the Company and any Reinsurer relating to the
interpretation or performance of this Contract, including its formation
or validity, or any transaction under this Contract, whether arising
before or after termination, shall be submitted to arbitration.
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Page 17
B. If more than one reinsurer is involved in the same dispute, all such
reinsurers shall constitute and act as one party for purposes of this
Article provided that communication shall be made by the Company to
each of the reinsurers constituting the one party, and provided,
however, that nothing therein shall impair the rights of such
reinsurers to assert several, rather than joint, defenses or claims,
nor be construed as changing the liability of the Reinsurer under the
terms of this Contract from several to joint.
C. Upon written request of any party, each party shall choose an
arbitrator and the two chosen shall select a third arbitrator. If
either party refuses or neglects to appoint an arbitrator within 30
days after receipt of the written request for arbitration, the
requesting party may appoint a second arbitrator. If the two
arbitrators fail to agree on the selection of a third arbitrator within
30 days of their appointment, the Company shall petition the American
Arbitration Association to appoint the third arbitrator. If the
American Arbitration Association fails to appoint the third arbitrator
within 30 days after it has been requested to do so, either party may
request a justice of a court of general jurisdiction of the state in
which the arbitration is to be held to appoint the third arbitrator.
All arbitrators shall be active or retired officers of insurance or
reinsurance companies, or Lloyd's London Underwriters, and
disinterested in the outcome of the arbitration. Each party shall
submit its case to the arbitrators within 30 days of the appointment of
the third arbitrator.
D. The parties hereby waive all objections to the method of selection of
the arbitrators, it being the intention of both sides that all the
arbitrators be chosen from those submitted by the parties.
E. The arbitrators shall have the power to determine all procedural rules
for the holding of the arbitration including but not limited to
inspection of documents, examination of witnesses and any other matter
relating to the conduct of the arbitration. The arbitrators shall
interpret this Contract as an honorable engagement and not as merely a
legal obligation; they are relieved of all judicial formalities and may
abstain from following the strict rules of law. The arbitrators may
award interest and costs. Each party shall bear the expense of its own
arbitrator and shall share equally with the other party the expenses of
the third arbitrator and of the arbitration.
F. The decision in writing of the majority of the arbitrators shall be
final and binding upon both parties. Judgment may be entered upon the
final decision of the arbitrators in any court having jurisdiction. The
arbitration shall take place in Bala Cynwyd, Pennsylvania, unless
otherwise mutually agreed between the Company and the Reinsurer.
G. This Article shall remain in full force and effect in the event any
other provision of this Contract shall be found invalid or non-binding.
H. All time limitations stated in this Article may be amended by mutual
consent of the parties, and will be amended automatically to the extent
made necessary by any circumstances beyond the control of the parties.
ARTICLE XXXI - SERVICE OF SUIT
(Applicable if the Reinsurer is not domiciled in the United States of America,
and/or is not authorized in any State, Territory or District of the United
States where authorization is required
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Page 18
by insurance regulatory authorities. This Article is not intended to conflict
with or override the parties' obligations to arbitrate their disputes in
accordance with the Article XXIX)
A. It is agreed that in the event the Reinsurer fails to pay any amount
claimed to be due hereunder, the Reinsurer, at the request of the
Company, will submit to the jurisdiction of any court of competent
jurisdiction within the United States. Nothing in this Article
constitutes or should be understood to constitute a waiver of the
Reinsurer's rights to commence an action in any court of competent
jurisdiction in the United States, to remove an action to a United
States District Court, or to seek a transfer of a case to another court
as permitted by the laws of the United States or of any state in the
United States.
B. Further, pursuant to any statute of any state, territory or district of
the United States which makes provision therefore, the Reinsurer hereby
designates the party named in its Interests and Liabilities Agreement,
or if no party is named therein, the Superintendent, Commissioner or
Director of Insurance or other officer specified for that purpose in
the statute, or his successor or successors in office, as its true and
lawful attorney upon whom may be served any lawful process in any
action, suit or proceeding instituted by or on behalf of the Company or
any beneficiary hereunder arising out of this Contract.
ARTICLE XXXII - AGENCY AGREEMENT
If more than one reinsured company is named as a party to this Contract, the
first named company shall be deemed the agent of the other reinsured companies
for purposes of sending or receiving notices required by the terms and
conditions of this Contract, and for purposes of remitting or receiving any
monies due any party.
ARTICLE XXXIII - GOVERNING LAW
This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Pennsylvania exclusive of the rules
with respect to conflicts of law, except as to rules with respect to credit for
reinsurance in which case the applicable rules of all states shall apply.
ARTICLE XXXIV - CONFIDENTIALITY
The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly, communicate, disclose or divulge to any third
party, any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions as outlined in this Article shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, retrocessionaires, legal counsel, and arbitrators involved
in any arbitration procedures under this Contract or disclosures required upon
subpoena or other dully-issued order of a court or other governmental agency or
regulatory authority.
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ARTICLE XXXV - SEVERABILITY
If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.
ARTICLE XXXVI - INTERMEDIARY (BRMA 23A)
Xxxxxxxx Inc. is hereby recognized as the Intermediary negotiating this Contract
for all business hereunder. All communications (including but not limited to
notices, statements, premium, return premium, commissions, taxes, losses, loss
adjustment expense, salvages and loss settlements) relating thereto shall be
transmitted to the Company or the Reinsurer through Xxxxxxxx Inc., 0000 Xxxx
00xx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 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 to constitute payment to the
Company only to the extent that such payments are actually received by the
Company.
IN WITNESS WHEREOF, the Company by its duly authorized representative has
executed this Contract as of the date undermentioned at:
Bala Cynwyd, Pennsylvania, this 18th day of August in the year 2003.
/s/ Xxxxxxxxxxx Xxxxxxx
-----------------------
Xxxxxxxxxxx Xxxxxxx, Executive Vice President &
Chief Underwriting Officer
Philadelphia Insurance Companies
(for and on behalf of the "Company")
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Page 20
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (U.S.A.)
1. This Reinsurance does not cover any loss or liability accruing to the
Reassured, directly or indirectly and whether as Insurer or Reinsurer,
from any Pool of Insurers or Reinsurers formed for the purpose of
covering Atomic or Nuclear Energy risks.
2. Without in any way restricting the operation of paragraph (1) of this
Clause, this Reinsurance does not cover any loss or liability accruing
to the Reassured, directly or indirectly and whether as Insurer or
Reinsurer, from any insurance against Physical Damage (including
business interruption or consequential loss arising out of such
Physical Damage) to:
I. Nuclear reactor power plants including all auxiliary property
on the site, or
II. Any other nuclear reactor installation, including laboratories
handling radioactive materials in connection with reactor
installations, and "critical facilities" as such, or
III. Installations for fabricating complete fuel elements or for
processing substantial quantities of "special nuclear
material," and for reprocessing, salvaging, chemically
separating, storing or disposing of "spent" nuclear fuel or
waste materials, or
IV. Installations other than those listed in paragraph (2) III
above using substantial quantities of radioactive isotopes or
other products of nuclear fission.
3. Without in any way restricting the operations of paragraphs (1) and (2)
hereof, this Reinsurance does not cover any loss or liability by
radioactive contamination accruing to the Reassured, directly or
indirectly, and whether as Insurer or Reinsurer, from any insurance on
property which is on the same site as a nuclear reactor power plant or
other nuclear installation and which normally would be insured
therewith except that this paragraph (3) shall not operate
(a) where Reassured does not have knowledge of such nuclear
reactor power plant or nuclear installation, or
(b) where said insurance contains a provision excluding coverage
for damage to property caused by or resulting from radioactive
contamination, however caused. However on and after 1st
January 1960 this sub-paragraph (b) shall only apply provided
the said radioactive contamination exclusion provision has
been approved by the Governmental Authority having
jurisdiction thereof.
4. Without in any way restricting the operations of paragraphs (1), (2)
and (3) hereof, this Reinsurance does not cover any loss or liability
by radioactive contamination accruing to the Reassured, directly or
indirectly, and whether as Insurer or Reinsurer, when such radioactive
contamination is a named hazard specifically insured against.
5. It is understood and agreed that this Clause shall not extend to risks
using radioactive isotopes in any form where the nuclear exposure is
not considered by the Reassured to be the primary hazard.
6. The term "special nuclear material" shall have the meaning given it in
the Atomic Energy Act of 1954 or by any law amendatory thereof.
7. Reassured to be sole judge of what constitutes:
(a) substantial quantities, and
(b) the extent of installation, plant or site.
Note.- Without in any way restricting the operation of paragraph (1) hereof,
it is understood and agreed that
(a) all policies issued by the Reassured on or before 31st
December 1957 shall be free from the application of the other
provisions of this Clause until expiry date or 31st December
1960 whichever first occurs whereupon all the provisions of
this Clause shall apply.
(b) with respect to any risk located in Canada policies issued by
the Reassured on or before 31st December 1958 shall be free
from the application of the other provisions of this Clause
until expiry date or 31st December 1960 whichever first occurs
whereupon all the provisions of this Clause shall apply.
12/12/57
N.M.A. 1119
BRMA 35B
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (CANADA)
1. This Agreement does not cover any loss or liability accruing to the
Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
from any Pool of Insurers or Reinsurers formed for the purpose of
covering Atomic or Nuclear Energy risks.
2. Without in any way restricting the operation of paragraph 1 of this
clause, this Agreement does not cover any loss or liability accruing to
the Reinsured, directly or indirectly, and whether as Insurer or
Reinsurer, from any insurance against Physical Damage (including
business interruption or consequential loss arising out of such
Physical Damage) to:
(a) nuclear reactor power plants including all auxiliary property
on the site, or
(b) any other nuclear reactor installation, including laboratories
handling radioactive materials in connection with reactor
installations, and critical facilities as such, or
(c) installations for fabricating complete fuel elements or for
processing substantial quantities of prescribed substances,
and for reprocessing, salvaging, chemically separating,
storing or disposing of spent nuclear fuel or waste materials,
or
(d) installations other than those listed in (c) above using
substantial quantities of radioactive isotopes or other
products of nuclear fission.
3. Without in any way restricting the operation of paragraphs 1 and 2 of
this clause, this Agreement does not cover any loss or liability by
radioactive contamination accruing to the Reinsured, directly or
indirectly, and whether as Insurer or Reinsurer, from any insurance on
property which is on the same site as a nuclear reactor power plant or
other nuclear installation and which normally would be insured
therewith, except that this paragraph 3 shall not operate:
(a) where the Reinsured does not have knowledge of such nuclear
reactor power plant or nuclear installation, or
(b) where the said insurance contains a provision excluding
coverage for damage to property caused by or resulting from
radioactive contamination, however caused.
4. Without in any way restricting the operation of paragraphs 1, 2 and 3
of this clause, this Agreement does not cover any loss or liability by
radioactive contamination accruing to the Reinsured, directly or
indirectly, and whether as Insurer or Reinsurer, when such radioactive
contamination is a named hazard specifically insured against.
5. This clause shall not extend to risks using radioactive isotopes in any
form where the nuclear exposure is not considered by the Reinsured to
be the primary hazard.
6. The term "prescribed substances" shall have the meaning given to it by
the Atomic Energy Control Act R.S.C. 1985(c), A-16 or by any law
amendatory thereof.
7. Reinsured to be sole judge of what constitutes:
(a) substantial quantities, and
(b) the extent of installation, plant or site.
8. Without in any way restricting the operation of paragraphs 1, 2, 3 and
4 of this clause, this Agreement does not cover any loss or liability
accruing to the Reinsured, directly or indirectly, and whether as
Insurer or Reinsurer, caused:
(1) by any nuclear incident, as defined in the Nuclear Liability
Act or any other nuclear liability act, law or statute, or any
law amendatory thereof or nuclear explosion, except for
ensuing loss or damage which results directly from fire,
lightning or explosion of natural, coal or manufactured gas;
(2) by contamination by radioactive material.
NOTE: Without in any way restricting the operation of paragraphs 1, 2, 3 and
4 of this clause, paragraph 8 of this clause shall only apply to all
original contracts of the Reinsured, whether new, renewal or
replacement, which become effective on or after December 31, 1992.
N.M.A. 1980 (2/19/93)
POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE
SECTION A:
Excluding:
(a) All business derived directly or indirectly from any Pool,
Association or Syndicate which maintains its own reinsurance
facilities.
(b) Any Pool or Scheme (whether voluntary or mandatory) formed
after March 1, 1968 for the purpose of insuring property
whether on a country-wide basis or in respect of designated
areas. This exclusion shall not apply to so-called Automobile
Insurance Plans or other Pools formed to provide coverage for
Automobile Physical Damage.
SECTION B:
It is agreed that business written by the Company for the same perils, which is
known at the time to be insured by, or in excess of underlying amounts placed in
the following Pools, Associations or Syndicates, whether by way of insurance or
reinsurance, is excluded hereunder:
Industrial Risk Insurers,
Associated Factory Mutuals,
Improved Risk Mutuals,
Any Pool, Association or Syndicate formed for the purpose of writing
Oil, Gas or Petro-Chemical Plants and/or Oil or Gas Drilling Rigs,
United States Aircraft Insurance Group,
Canadian Aircraft Insurance Group,
Associated Aviation Underwriters,
American Aviation Underwriters.
Section B does not apply:
(a) Where The Total Insured Value over all interests of the risk
in question is less than $250,000,000.
(b) To interests traditionally underwritten as Inland Marine or
stock and/or contents written on a blanket basis.
(c) To Contingent Business Interruption, except when the Company
is aware that the key location is known at the time to be
insured in any Pool, Association or Syndicate named above,
other than as provided for under Section B(a).
(d) To risks as follows:
Offices, Hotels, Apartments, Hospitals, Educational
Establishments, Public Utilities (other than railroad
schedules) and builder's risks on the classes of risks
specified in this subsection (d) only.
Where this clause attaches to Catastrophe Excesses, the following Section C is
added:
SECTION C:
Nevertheless the Reinsurer specifically agrees that liability accruing to the
Company from its participation in residual market mechanisms including but not
limited to:
(1) The following so-called "Coastal Pools":
Alabama Insurance Underwriting Association
Louisiana Insurance Underwriting Association
Mississippi Windstorm Underwriting Association
North Carolina Insurance Underwriting Association
South Carolina Windstorm and Hail Underwriting Association
Texas Windstorm Insurance Association
AND
(2) All "Fair Plan" and "Rural Risk Plan" business
Page 1 of 2
AND
(3) Citizens Property Insurance Corporation ("CPIC") and the
California Earthquake Authority ("CEA")
for all perils otherwise protected hereunder shall not be excluded, except,
however, that this reinsurance does not include any increase in such liability
resulting from:
(i) The inability of any other participant in such "Coastal Pool"
and/or "Fair Plan" and/or "Rural Risk Plan" and/or Residual
Market Mechanisms to meet its liability.
(ii) Any claim against such "Coastal Pool" and/or "Fair Plan"
and/or "Rural Risk Plan" and/or Residual Market Mechanisms, or
any participant therein, including the Company, whether by way
of subrogation or otherwise, brought by or on behalf of any
insolvency fund (as defined in the Insolvency Fund Exclusion
Clause incorporated in this Contract).
SECTION D:
(1) Notwithstanding Section C above, in respect of the CEA, where
an assessment is made against the Company by the CEA, the
Company may include in its Ultimate Net Loss only that
assessment directly attributable to each separate loss
occurrence covered hereunder. The Company's initial capital
contribution to the CEA shall not be included in the Ultimate
Net Loss.
(2) Notwithstanding Section C above, in respect of CPIC, where an
assessment is made against the Company by CPIC, the maximum
loss that the Company may include in the Ultimate Net Loss in
respect of any loss occurrence hereunder shall not exceed the
lesser of:
(a) The Company's assessment from CPIC for the accounting
year in which the loss occurrence commenced, or
(b) The product of the following:
(i) The Company's percentage participation in
CPIC for the accounting year in which the
loss occurrence commenced; and
(ii) CPIC's total losses in such loss occurrence.
Any assessments for accounting years subsequent to that in which the loss
occurrence commenced may not be included in the Ultimate Net Loss hereunder.
Moreover, notwithstanding Section C above, in respect of CPIC, the Ultimate Net
Loss hereunder shall not include any monies expended to purchase or retire bonds
as a consequence of being a member of CPIC. For the purposes of this Contract,
the Company may not include in the Ultimate Net Loss any assessment or any
percentage assessment levied by CPIC to meet the obligations of an insolvent
insurer member or other party, or to meet any obligations arising from the
deferment by CPIC of the collection of monies.
NOTES: Wherever used herein the terms:
"Company" shall be understood to mean "Company," "Reinsured,"
"Reassured" or whatever other term is used in the
attached reinsurance document to designate the
reinsured company or companies.
"Agreement" shall be understood to mean "Agreement," "Contract,"
"Policy" or whatever other term is used to designate
the attached reinsurance document.
"Reinsurers" shall be understood to mean "Reinsurers,"
"Underwriters" or whatever other term is used in the
attached reinsurance document to designate the
reinsurer or reinsurers.
Page 2 of 2
POLLUTION AND SEEPAGE EXCLUSION CLAUSE
This Contract excludes loss and/or damage and/or costs and/or expenses arising
from seepage and/or pollution and/or contamination, other than contamination
from smoke. Nevertheless, this exclusion does not preclude payment of the cost
of removing debris of property damaged by a loss otherwise covered hereunder,
subject always to a limit of 25% of the Company's property loss under the
applicable original policy.
BRMA 39A
ELECTRONIC DATA ENDORSEMENT B
1. ELECTRONIC DATA EXCLUSION
Notwithstanding any provision to the contrary within the Contract or
any endorsement thereto, it is understood and agreed as follows:-
a) This Contract does not insure loss, damage, destruction,
distortion, erasure, corruption or alteration of ELECTRONIC
DATA from any cause whatsoever (including but not limited to
COMPUTER VIRUS) or loss of use, reduction in functionality,
cost, expense of whatsoever nature resulting therefrom,
regardless of any other cause or event contributing
concurrently or in any other sequence to the loss.
ELECTRONIC DATA means facts, concepts and information
converted to a form useable for communications, interpretation
or processing by electronic and electromechanical data
processing or electronically controlled equipment and includes
programs, software and other coded instructions for the
processing and manipulation of data or the direction and
manipulation of such equipment.
COMPUTER VIRUS means a set of corrupting, harmful or otherwise
unauthorized instructions or code including a set of
maliciously introduced unauthorized instructions or code,
programmatic or otherwise, that propagate themselves through a
computer system or network of whatsoever nature. COMPUTER
VIRUS includes but is not limited to "Trojan Horses," "worms"
and "time or logic bombs."
b) However, in the event that a peril listed below results from
any of the matters described in paragraph a) above, this
Contract, subject to all its terms, conditions and exclusions,
will cover physical damage occurring during the Contract
period to property insured by this Contract directly caused by
such listed peril.
Listed Perils
Fire
Explosion
2. ELECTRONIC DATA PROCESSING MEDIA VALUATION
Notwithstanding any provision to the contrary within the Contract or
any endorsement thereto, it is understood and agreed as follows:-
Should electronic data processing media insured by this Contract suffer
physical loss or damage insured by this Contract, then the basis of
valuation shall be the cost of the blank media plus the costs of
copying the ELECTRONIC DATA from back-up or from originals of a
previous generation. These costs will not include research and
engineering nor any costs of recreating, gathering or assembling such
ELECTRONIC DATA. If the media is not repaired, replaced or restored the
basis of valuation shall be the cost of the blank media. However this
Contract does not insure any amount pertaining to the value of such
ELECTRONIC DATA to the Assured or any other party, even if such
ELECTRONIC DATA cannot be recreated, gathered or assembled.
N.M.A. 2915 (25.1.01)
Form approved by Lloyd's Underwriters' Non-Marine Association Limited
INTERESTS AND LIABILITIES AGREEMENT
of
Federal Insurance Company
Xxxxxx, New Jersey
through
Chubb Re, Inc.
Bernardsville, New Jersey
(hereinafter referred to as the "Subscribing Reinsurer")
with respect to the
EXCESS CATASTROPHE REINSURANCE CONTRACT
EFFECTIVE: JUNE 1, 2003
issued to and duly executed by
Philadelphia Insurance Company
Bala Cynwyd, Pennsylvania
Philadelphia Indemnity Insurance Company
Bala Cynwyd, Pennsylvania
Mobile USA Insurance Company
Pinellas Park, Florida
Liberty American Insurance Company
Pinellas Park, Florida
and
any and all other companies which are now
or may hereafter become member companies of
Philadelphia Insurance Companies
The Subscribing Reinsurer hereby accepts a 100% share in the interests and
liabilities of the "Reinsurer" as set forth in the attached Contract captioned
above.
This Agreement shall become effective on June 1, 2003, and shall continue in
force until May 31, 2004, both days inclusive.
The Subscribing Reinsurer's share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.
IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date undermentioned at:
Bernardsville, New Jersey, this 23 day of December in the year 2003.
/s/ Xxxxx Xxxxxxx
-----------------
Xxxxx Xxxxxxx, Managing Director
Chubb Re, Inc. (for and on behalf of Federal Insurance Company)
