REINSURER: Select Reinsurance Ltd.
REINSURED: PXRE Reinsurance Ltd.
TERM: Agreement commencing January 1, 2001
covering Subject Business attaching from inception to
December 31, 2001. It is agreed by the parties to this
Agreement that this slip replaces any previously
executed placing slip covering this exposure for PXRE
Reinsurance Company.
BUSINESS COVERED: The Covered Contracts are:
1. the Quota Share Reinsurance of Tower Insurance
Company of New York
2. the Quota Share Reinsurance of Legion Insurance
Company
The terms set out herein shall apply to both covered
contracts individually. The execution of one contract is
for the convenience of the parties, all terms shall
apply if there were separate contracts for each of the
contracts.
LIMITS & RETENTIONS: The Reinsurer shall indemnify the Reinsured for all
ultimate net loss incurred by the Reinsured in excess
of 0% of the Subject Premium Income on the Covered
Contract subject to a maximum of 100% of the Subject
Premium Income on the Covered Contract.
CEDED PREMIUM &
CEDING COMMISSION: The Reinsurance Premium shall be equal to 100% of the
Subject Premium Income on the Covered Contract, subject
to a maximum of $13,956,000 for Covered Contract 1 and
$4,544,000 for Covered Contract 2. There shall be a
ceding commission of 30% of any Reinsurance Premium. The
Reinsurer shall pay such Ceding Commission to the
Company at the time of final settlement of the
losses hereunder or commutation.
COMMUTATION
PROVISIONS: This Agreement may be commuted at any time if both
parties agree. If commuted or at the settlement of all
losses, the Reinsurer shall pay to the Reinsured the
balance of a notional experience account. The balance of
the experience account at the end of each calendar
quarter shall be:
90% of Reinsurance Premium paid, Less Reinsurer's margin
of 8.065% of Reinsurance Premium if commuted by December
31, 2003, 8.355% if not commuted by December 31, 2003.
Less paid Ultimate Net Loss Less paid Ceding Commission
Plus an interest credited quarterly on the average daily
balance at a rate of USD LIBOR less 100 bp.
OTHER WORDING: 1. Ultimate Net Loss shall mean the amounts paid,
payable or deducted from funds withheld by third parties
on behalf of the Reinsured under the Covered Business.
2. Right of offset to the fullest extent allowed by
applicable law and regulation.
3. Other conditions to be agreed.
ACCEPTED HEREON: 100% by the Reinsurer
/s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx
Vice President
Select Reinsurance Ltd.
AND FOR PXRE Reinsurance Ltd.
By: /s/ Xxxxxx X. Xxxxx
-------------------------- -----------------------
Xxxxxxx X. Xxxxx Xxxxxx X. Xxxxx
President Chairman
PXRE Reinsurance Ltd. PXRE Reinsurance Ltd.
The Reinsurer's and Reinsured's Right of Commutation
This Agreement may be commuted at any calendar quarter end while coverage under
this contract is in effect by:
a) The Reinsured at its sole option should the balance of the
Experience Account be positive by providing 60 days written notice
to the Reinsurer; or
b) The Reinsurer at its sole option by providing 60 days written notice
to the Reinsured; or
c) By mutual agreement of the Reinsured and the Reinsurer with each
party agreeing to do so in writing with 60 days notice
Such Commutation shall constitute a full and final settlement of all obligations
and rights under this Agreement for both the Reinsured and the Reinsurer. The
Commutation shall be effective on the date the Commutation payment is made to
the Reinsured by the Reinsurer.
The Commutation Payment shall be calculated as follows:
a. the Reinsured and the Reinsurer shall jointly retain and compensate
an Actuary who shall determine the present value, calculated at the
rate of 7.25% per annum, of all incurred but unpaid (by the
Reinsurer to the Reinsured) Ceded Ultimate Net Losses as of the
Commutation Date, unless the Reinsured and the Reinsurer mutually
agree on this amount, and as such the services of the Actuary shall
not be required.
b. There shall be a final calculation of the Experience Account as of
the Commutation Date utilizing 100% of the amount calculated in (a)
above if elected to be commuted by the Reinsured, and 110% of the
amount calculated in (a) above if elected to be commuted by the
Reinsurer. The amount of Ceded Ultimate Net Losses utilized for such
Final Calculation as calculated in (a) above, shall be payable to
the Reinsured to the Reinsurer, subject to the limit of this
Agreement.
c. If the balance of the Experience Account is positive after this
Final Calculation, the Communtation Payment shall be equal to the
positive amount. If the balance of the Experience Account is
negative after this Final Calculation, no amount shall be payable by
the Reinsurer to the Reinsured.
