SERVICES AGREEMENT
AGREEMENT, dated as of December 11, 1996, by and between PXRE
Reinsurance Company, a Connecticut corporation ("PXRE") and Transnational
Reinsurance Company, a Connecticut corporation ("Transnational").
W I T N E S S E T H :
WHEREAS, Transnational will, after the merger of PXRE Corporation and
Transnational Re Corporation, be a wholly-owned subsidiary of PXRE; and
WHEREAS, Transnational does not have any employees or facilities and the
parties to this Agreement believe that the business of Transnational would be
more efficiently and economically conducted by PXRE than by Transnational; and
WHEREAS, Transnational desires PXRE to provide, and PXRE has agreed to
provide to Transnational, the services of certain of its personnel, all upon the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereby agree as follows:
1. Subject to the provisions of this Agreement, PXRE shall be
responsible for supervising and controlling all organizational, operational and
management functions of Transnational and its business, including without
limitation, the following:
(a) the exercise of general and active management of the day-to-day
operations of Transnational;
(b) the transaction of reinsurance business, including without
limitation, (x) the negotiation and execution of any and all binders,
policies, certificates, agreements and contracts of reinsurance
(including, without limitation, retrocessional reinsurance) in the name
of Transnational, (y) the collection of premiums on behalf of
Transnational and (z) the rejection, adjustment, settlement and payment
of claims and settlement of losses;
(c) the supervision of investment and portfolio management services
performed by third parties pursuant to investment management agreements;
(d) the maintaining of books and records of Transnational,
including adequate and correct accounts of the assets and business
transactions of Transnational; and
(e) the preparation and filing of reports required to be filed by
Transnational with appropriate governmental authorities, including
without limitation, annual, quarterly and other periodic filings with
insurance regulatory authorities and tax returns, and the payment of all
taxes and other fees which may be due and owing by Transnational.
2. PXRE shall provide Transnational with the services of such executive,
managerial, administrative and other personnel as may be necessary to conduct
Transnational's operations pursuant to this Agreement.
3. PXRE shall provide Transnational with such operational and
administrative facilities, data processing equipment and services, office
equipment, furnishings and fixtures, and such other support assets as may be
necessary or desirable for the operation and administration of Transnational's
business pursuant to this Agreement.
4. PXRE shall have the authority to appoint and remove, as it deems
appropriate from time to time, legal counsel, investment advisors, accountants,
auditors and actuaries of Transnational and to determine the reasonable fees
payable by Transnational to such persons for such services, subject to the
approval of the Board of Directors of Transnational with respect to the
appointment and removal of independent public accountants and actuaries.
5. PXRE shall conduct the business of Transnational only in the ordinary
course and in substantially the same manner as it conducts its own business,
subject to the exercise of its reasonable business judgment.
6. All costs and expenses incurred by PXRE for the employees, equipment,
facilities and other items provided by PXRE pursuant to this Agreement shall be
allocated as follows:
(a) all reinsurance losses, loss adjustment expenses and
underwriting expenses of Transnational, including, but not limited to,
all related claim adjustment services, commissions and brokerage
expenses, premiums on ceded retrocesssions (if any) and all other loss
adjustments and underwriting expenses to be reflected in the annual
statement to be filed with state insurance regulatory authorities, shall
be paid by Transnational;
(b) all investment expenses of Transnational shall be paid by
Transnational;
(c) all out-of-pocket expenses incurred by PXRE for goods and
services from third party vendors or other non-related parties which are
identifiable to Transnational shall be charged at cost to Transnational;
(d) all other expenses incurred by PXRE, including rent, salaries,
employee benefits and other general overhead expenses of PXRE,
reasonably and equitably determined by PXRE to be attributable to
Transnational for the services and facilities provided by PXRE to
Transnational pursuant to this Agreement, shall be charged at cost to
Transnational.
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PXRE's determination of charges hereunder shall be conclusive as between the
parties, except that if Transnational objects to any such determination, it
shall so advise PXRE within thirty (30) days of receipt of notice of said
determination. In the event of a disagreement between the parties as to a fair
basis for allocating any amounts payable hereunder, the basis for allocation
shall be fairly fixed by an independent public accounting firm selected by
Transnational. Reimbursement for expenses due under this Agreement shall be due
and payable by Transnational within fifteen (15) days after request for payment
by PXRE, not less often than quarterly.
7. This Agreement shall remain in effect unless and until terminated by
either party giving at least sixty (60) days' prior written notice to the other
party.
8. This Agreement may not be assigned by either party without the prior
written consent of the other party hereto.
9. Any amendment or modification of this Agreement shall be in writing,
signed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the date first above written.
PXRE REINSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman of the Board, President
and Chief Executive Officer
TRANSNATIONAL REINSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman of the Board, President
and Chief Executive Officer
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