EXHIBIT 10.22
CITIZENS CORPORATION AND SUBSIDIARIES
INTERCOMPANY REINSURANCE AGREEMENT
(HEREINAFTER REFERRED TO AS THE "AGREEMENT")
BETWEEN
CITIZENS INSURANCE COMPANY OF AMERICA
(HEREINAFTER REFERRED TO AS THE "REINSURER")
AND
CITIZENS INSURANCE COMPANY OF THE MIDWEST
(HEREINAFTER REFERRED TO AS THE "REINSURED")
ARTICLE I
COMMENCEMENT AND CANCELLATION
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This Agreement shall be effective at 12:01 a.m., standard time at the address of
the Reinsured, on January 1, 1995, with respect to losses occurring on or after
that date, and remain inforce for an indefinite period but may be terminated by
either party by giving ninety (90) days written notice.
Upon cancellation of this Agreement and unless otherwise mutually agreed, the
liability of the Reinsurer with respect to policies in effect at the time and
date of cancellation, shall continue until the expiration or cancellation or
next anniversary date of each such policy of the Reinsured, whichever comes
first.
ARTICLE II
BUSINESS COVERED
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This Agreement applies to new and renewal insurance contracts (Covered
Contracts) issued by the Reinsured, which are effective on and after the
commencement date of this Agreement.
ARTICLE III
RETENTION AND LIMITS
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The Reinsured hereby obligates itself to cede to the Reinsurer and the Reinsurer
obligates itself to accept cessions of reinsurance of 80% of the Reinsured's Net
Retained Liability for Covered Contracts inforce at the effective date hereof or
renewed on or after that date.
The Reinsured shall retain net for its own account the remaining 20% of its Net
Retained Liability.
For the purposes of this Agreement, Net Retained Liability is defined as the
insurance liabilities exceeding recoveries from any other reinsurance contract.
ARTICLE IV
LIABILITY OF THE REINSURER
--------------------------
The liability of the Reinsurer with respect to each session hereunder shall
commence simultaneuosly with that of the Reinsured subject to the terms,
conditions and limitations hereinafter set forth.
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ARTICLE V
LOSS AND LOSS ADJUSTMENT EXPENSE
--------------------------------
The Reinsured at its full, sole discretion shall adjust, settle or compromise
all claims or losses.
Any loss settlement made by the Reinsured, whether under the strict conditions
of the policy or by way of compromise, shall be unconditionally binding upon the
Reinsurer in proportion to its participation hereunder.
The Reinsurer shall bear its proportionate share of all expenses incurred by the
Reinsured in the investigation, adjustment, appraisal or defense of all claims
under policies reinsured hereunder and shall receive its proportionate share of
any recoveries of such expenses.
If there are any recoveries, salvages or reimbursements subsequent to a loss
settlement, and if the expenses incurred in obtaining salvage or other
recoveries are less than the amount recovered, the amount recovered shall first
be applied to the reimbursement of the expense of recovery, and the remaining
expense shall be borne by the Reinsured and the Reinsurer in proportion to the
liability of each party for the loss before such recovery has been obtained.
All salvages, recoveries and payments recovered or received subsequent to a loss
settlement under this Agreement shall be applied as if recovered and received
prior to the said settlement; and all necessary adjustments shall be made by the
parties hereto.
ARTICLE VI
OTHER EXPENSES
--------------
The Reinsurer shall bear its proportionate share of all acquisition,
underwriting, investment and general expenses of the Reinsured.
ARTICLE VII
COMMISSIONS
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The Reinsurer shall receive, from the Reinsured, its proportionate share of
ceding commissions or contingent commissions from any other reinsurance
contracts covering the insurance policies issued by the Reinsured.
ARTICLE VIII
ORIGINAL CONDITIONS
-------------------
All amounts ceded hereunder shall be subject to the same rates, clauses,
conditions, waivers, and to the same modifications and alterations as the
respective policies of the Reinsured. The Reinsurer shall be receive from the
Reinsured its proportionate share of gross premiums less commission expense
hereon received by the Reinsured, prior to disbursement of any dividends, but
after deduction of premiums, if any, ceded by the Reinsured for any other
reinsurance contract.
ARTICLE IX
INSOLVENCY
----------
In the event of the insolvency of the Reinsured, this reinsurance shall be
payable directly to the Reinsured, or to its liquidator, receiver, conservator
or statutory successor on the basis of the liability of the Reinsured without
diminution because of the insolvency or because the liquidator, receiver,
conservator or statutory successor has failed to pay all or a portion of any
claim. However, as a condition precedent to any such payment the liquidator,
receiver, conservator or statutory successor shall give written notice to the
Reinsurer of the pendency of a claim against the Reinsured indicating the
covered contract 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 of liquidation proceeding
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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 that it may deem
available to the Reinsured 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 Reinsured as part of the
expense of conservation or liquidation to the extent of a prorata share of the
benefit which may accrue to the Reinsured solely as a result of the defense
undertaken by the Reinsurer.
ARTICLE X
ARBITRATION
-----------
Any controversy of claim arising out of or relating to this Agreement, or breach
thereof, shall be settled by arbitration in accordance with the Rules of the
American Arbitration Association, and judgement upon the award may be entered in
any court having jurisdiction thereof.
ARTICLE XI
TAXES
-----
The Reinsured shall be liable for all taxes on premium ceded to the Reinsurer
under this agreement. If the Reinsurer is obligated to pay any taxes on such
premium, the Reinsured shall reimburse the Reinsurer; however, the Reinsured
shall not be required to pay taxes twice on the same premium.
ARTICLE XII
ERRORS AND OMISSIONS
--------------------
Any inadvertant error or omission shall not invalidate the liability of the
Reinsurer, provided that the error or omission is rectified promptly upon
discovery.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the duly authorized officers.
In Howell, Michigan, this 18th day of April, 1995
CITIZENS INSURANCE COMPANY OF AMERICA
Name /s/ Xxxxxx X. Xxxxxx
Title Assistant Vice President
In Indianapolis, Indiana this 20th day of April, 1995
CITIZENS INSURANCE COMPANY OF THE MIDWEST
Name /s/ Xxxxxxx Xxxxxxx
Title Vice President
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