EXHIBIT 10.11
PROPERTY AND CASUALTY QUOTA SHARE
REINSURANCE AGREEMENT
between
OLD GUARD MUTUAL INSURANCE COMPANY
OLD GUARD MUTUAL FIRE INSURANCE COMPANY
GOSCHENHOPPEN-HOME MUTUAL INSURANCE COMPANY
NEFFSVILLE MUTUAL FIRE INSURANCE COMPANY
and
AMERICAN RE-INSURANCE COMPANY
TABLE OF CONTENTS
ARTICLE PAGE
ARTICLE I - BUSINESS COVERED . . . . . . . . . . . . . . . . . 1
ARTICLE II - REINSURANCE COVERAGE. . . . . . . . . . . . . . . 1
ARTICLE III - REINSURANCE PREMIUM. . . . . . . . . . . . . . . 2
ARTICLE IV - CEDING COMMISSION . . . . . . . . . . . . . . . . 2
ARTICLE V - EXCLUSIONS . . . . . . . . . . . . . . . . . . . . 2
ARTICLE VI - DEFINITIONS . . . . . . . . . . . . . . . . . . . 3
ARTICLE VII - EXTRA CONTRACTUAL OBLIGATIONS AND/OR EXCESS
JUDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE VIII - WARRANTY OF INURING REINSURANCES. . . . . . . . 5
ARTICLE IX - REPORTS AND REMITTANCES . . . . . . . . . . . . . 5
ARTICLE X - SALVAGE AND RECOVERIES . . . . . . . . . . . . . . 6
ARTICLE XI - ERRORS AND OMISSIONS. . . . . . . . . . . . . . . 7
ARTICLE XII - OFFSET AND SECURITY. . . . . . . . . . . . . . . 7
ARTICLE XIII - ACCESS TO RECORDS . . . . . . . . . . . . . . . 8
ARTICLE XIV - RESERVES AND TAXES . . . . . . . . . . . . . . . 8
ARTICLE XV - INSOLVENCY. . . . . . . . . . . . . . . . . . . . 8
ARTICLE XVI - COMMENCEMENT AND TERMINATION . . . . . . . . . . 9
PROPERTY AND CASUALTY QUOTA SHARE
REINSURANCE AGREEMENT
THIS AGREEMENT made and entered into by and between OLD
GUARD MUTUAL INSURANCE COMPANY, OLD GUARD MUTUAL FIRE INSURANCE
COMPANY, GOSCHENHOPPEN-HOME MUTUAL INSURANCE COMPANY and
NEFFSVILLE MUTUAL FIRE INSURANCE COMPANY, all of Lancaster,
Pennsylvania, (hereinafter and thereinafter collectively referred
to as the "Company") and the AMERICAN RE-INSURANCE COMPANY of
Princeton, New Jersey (hereinafter and thereinafter referred to
as the "Reinsurer").
WITNESSETH:
The Reinsurer hereby reinsures the Company to the extent and
on the terms and conditions and subject to the exceptions,
exclusions and limitations hereinafter set forth, and nothing
hereinafter shall in any manner create any obligations or
establish any rights against the Reinsurer in favor of any third
parties or any persons not parties to this Agreement.
ARTICLE I
BUSINESS COVERED
By this Agreement the Reinsurer agrees to indemnify the
Company for loss amounts incurred by the Company during the term
of this Agreement that arise from policies in-force at the
effective date or issued or renewed during the term of this
Agreement under all lines of business underwritten by the
Company; subject however, to the reinsurance coverage limitation
in ARTICLE II, REINSURANCE COVERAGE, as excluded in ARTICLE V,
EXCLUSIONS, and all other conditions as set forth in this
Agreement.
ARTICLE II
REINSURANCE COVERAGE
The Company shall cede to the Reinsurer and the Reinsurer
shall accept from the Company a 20% quota share participation of
the business covered, net of all other reinsurance except for
Sections 1 and 3 of the Underlying Catastrophe and Aggregate
Excess of Loss Reinsurance Agreement No. 3063-0034. It is
understood and agreed that the Reinsurer's maximum limit of
liability hereunder shall not exceed an Accident Year Loss Ratio
greater than 95% in the aggregate on the business reinsured
hereunder.
ARTICLE III
REINSURANCE PREMIUM
As consideration for the reinsurance provided hereunder, the
Company shall cede to the Reinsurer 20% of the Company's Net
Written Premium of the Company's policies.
ARTICLE IV
CEDING COMMISSION
(a) The Reinsurer shall allow the Company a 35% commission
on all premium ceded to the Reinsurer hereunder. The Company
shall allow the Reinsurer return commission on return premium at
the same rate.
(b) It is expressly agreed that the ceding commission
allowed the Company includes provision for all dividends,
commissions, taxes, assessments, and all other expenses of
whatever nature, except Allocated Loss Adjustment Expenses.
ARTICLE V
EXCLUSIONS
This Agreement does not apply to and specifically excludes:
1. Liability of the Company arising from its participation
or membership, whether voluntary or involuntary, in any
insolvency fund, including any guarantee fund,
association, pool, plan or other facility which
provides for the assessment of, payment by, or
assumption by the Company of a part or the whole of any
claim, debt, charge, fee or other obligations of an
insurer, or its successors or assigns, which has been
declared insolvent by any authority having
jurisdiction.
2. Liability excluded by the provisions of the following
clauses attached hereto, except that the word
"Reassured" used in these clauses shall mean "Company."
Nuclear Incident Exclusion Clause Liability -
Reinsurance - No. 1B
Nuclear Incident Exclusion Clause - Physical
Damage - Reinsurance - No. 2
Nuclear Incident Exclusion Clauses - Physical
Damage & Liability - Boiler & Machinery
Policies - Reinsurance - No. 3
3. Liability of the Company arising from war risk,
bombardment, invasion, insurrection, rebellion,
revolution, military or usurped power, or confiscation
by order of any government or public authority.
ARTICLE VI
DEFINITIONS
(a) The term "Accident Year" shall refer to insured losses
occurring during the twelve month period beginning January 1,
1996 and ending December 31, 1996.
(b) The term "Accident Year Loss Ratio" shall be the amount
resulting by dividing the amount of Losses Incurred by the
Company for the Accident Year for which the computation is being
made, by the Net Earned Premium for the corresponding Accident
Year.
(c) The term "Losses Incurred" shall mean the aggregate sum
or sums paid or to be paid by the Company in settlement of
losses, including Allocated Loss Adjustment Expenses, plus
reserves for outstanding losses and Allocated Loss Adjustment
Expenses (including IBNR), as respects covered losses for which
the Company is liable to pay under the policies, including Extra
Contractual Obligations and Excess Judgments awards, after making
proper deductions for all other reinsurances or insurances except
for Sections 1 and 3 of the Underlying Catastrophe and Aggregate
Excess of Loss Reinsurance Agreement No. 3063-0034, whether
collectible or not, and all salvages and recoveries. The
Reinsurer's liability hereunder shall not be increased by reason
of the inability of the Company to collect from any other
reinsurer or insurer, whether specific or general, any amount
that may be due from them, whether such inability arises from the
insolvency of such other reinsurers or insurers or otherwise.
(d) The term "Allocated Loss Adjustment Expenses" shall
mean all expenses, including taxed court costs, prejudgment and
postjudgment interests, that are allocable to specific claims
recoverable under this Agreement incurred by the Company in the
investigation, appraisal, adjustment, settlement or defense of
such claims made against the Company under its policies.
However, such amounts shall not include office expenses of the
Company and the salaries and expenses of its employees.
(e) The term "IBNR" shall mean that amount of reserves for
outstanding losses and Allocated Loss Adjustment Expenses arising
from insured losses that have already occurred during the term of
this Agreement but have not yet been reported to the Company as
claims recoverable under the Company's policies. Such amounts
shall contemplate the ultimate valuation of such losses and
Allocated Loss Adjustment Expenses.
(f) The term "Net Written Premium" shall mean the Company's
gross written premium, plus additional premium, less return
premium on policies for the period for which the computation is
being made, less premium for inuring reinsurances, except for
premiums for Sections 1 and 3 of the Underlying Catastrophe and
Aggregate Excess of Loss Reinsurance Agreement No. 3063-0034.
(g) The term "Net Earned Premium" shall mean the Company's
Net Written Premium for the period for which computation is being
made, plus unearned premium at the beginning of the period, less
unearned premium at the end of the period.
(h) The term "Policies" as used herein means the Company's
binders, contracts and policies in-force at the effective date or
issued or renewed during the term of this Agreement under all
lines of business underwritten by the Company and reinsured under
this Agreement.
ARTICLE VII
EXTRA CONTRACTUAL OBLIGATIONS AND/OR EXCESS JUDGMENTS
(a) This Agreement shall indemnify the Company, within the
reinsurance coverage as provided in ARTICLE II, REINSURANCE
COVERAGE of this Agreement, for Extra Contractual Obligations
and/or Excess Judgments awards incurred by the Company that arise
from the business reinsured hereunder.
(b) "Extra Contractual Obligations" are defined as those
damages for which the Company is legally liable to pay that are
not covered under any other provision of this Agreement,
including related expenses, that arise as a result of the
Company's handling of any claim on the business reinsured
hereunder, such liabilities arising because of, but not limited
to, the following: failure by the Company to settle within the
policy limit, or by reason of 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 in the preparation or prosecution of an appeal
consequent upon such action.
(c) "Excess Judgments" are defined as those damages for
which the Company is legally liable to pay that are in excess of
its policy limits, but otherwise within the coverage terms of the
business reinsured hereunder, including related expenses, that
arise as a result of the Company's alleged or actual tortious
conduct in the handling of the investigation, defense or
settlement of the claim made against the Company's insured and an
action is taken by the insured or assignee and a judgment
rendered against the Company for an amount in excess of the
Company's policy limit.
(d) The date on which an Extra Contractual Obligation
and/or an Excess Judgment award is incurred by the Company shall
be deemed, in all circumstances, to be the date of the original
loss occurrence.
(e) However, this Article shall not apply where the loss
has been incurred due to the fraud of a member of the Board of
Directors or a corporate officer of the Company or any other
employee of the Company with claims settlement authority 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.
(f) Recoveries, collectibles or retentions from any form of
insurance and/or reinsurance, including but not limited to,
deductibles or self-insured retentions, that protect the Company
against claims the subject matter of this clause, will inure to
the benefit of the Reinsurer and shall be deducted from the total
amount of Extra Contractual Obligations and/or Excess Judgments
awards for purposes of determining the amount recoverable
hereunder.
(g) If any provision of this Article 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 Agreement or the
enforceability of such provision in any other jurisdiction.
ARTICLE VIII
WARRANTY OF INURING REINSURANCES
It is understood and agreed that all underlying reinsurance
coverages in effect as of the effective date of this Agreement
are deemed in-force and in effect, whether actually purchased or
not, for purposes of determining reinsurance recoveries under
this Agreement. In the event the Company changes any of the
underlying reinsurances, the Company must give written notice of
such change to the Reinsurer.
ARTICLE IX
REPORTS AND REMITTANCES
(a) Reinsurance Premium amounts due the Reinsurer shall be
paid by the Company in accordance with the terms set forth in
ARTICLE III, REINSURANCE PREMIUM, of this Agreement.
(b) It is understood and agreed that the net unearned
premium on business in-force at the inception of this Agreement
shall be due and paid to the Reinsurer on or before January 31,
1996.
(c) The Company will provide and forward to the Reinsurer
within 45 days after the close of each calendar quarter, on forms
mutually acceptable to the Company and to the Reinsurer, the
following information relating to reinsurance covered under this
Agreement:
1. Gross and Net Written Premium;
2. Gross and Net reserves for unearned premium;
3. Gross and Net Earned Premium;
4. Gross and Net ceding commissions;
5. Gross and Net paid losses and Allocated Loss
Adjustment Expenses, net of salvage,
recoveries, and inuring reinsurances;
6. Gross and Net reserves for outstanding losses
and Allocated Loss Adjustment Expenses
(including IBNR), net of inuring
reinsurances;
7. Account Current summarizing net premiums,
commissions, losses and loss expenses paid
and salvages recovered.
(d) As of the date of calculation, any amount shown due the
Reinsurer in the Account Current shall be paid by Company with
its report. Any amount due the Company as shown in the Account
Current shall be paid by the Reinsurer within 30 days following
the Reinsurer's receipt of the Company's report.
ARTICLE X
SALVAGE AND RECOVERIES
(a) The Reinsurer shall be subrogated, as respects any loss
for which the Reinsurer shall actually pay or become liable, but
only to the extent of the amount of payment by or the amount of
liability to the Reinsurer, to all the rights of the Company
against any person or other entity who may be legally responsible
in damages for said loss. The Company hereby agrees to enforce
such rights, but in case the Company shall refuse or neglect to
do so the Reinsurer is hereby authorized and empowered to bring
any appropriate action in the name of the Company or its
policyholders, or otherwise to enforce such rights.
(b) All salvages, recoveries or reimbursements, after
deduction of expenses applicable thereto, recovered or received
subsequent to a loss settlement recoverable under this Agreement
shall be applied as if recovered or received prior to the
settlement and all necessary adjustments shall be made by the
parties hereto, provided always, that nothing in this clause
shall be construed to mean that losses under this Agreement are
not recoverable until the Company's Aggregate Ultimate Net Loss
has been ascertained. Expenses hereunder shall exclude all
office expenses of the Company and all salaries and expenses of
its officials and employees.
ARTICLE XI
ERRORS AND OMISSIONS
Errors or omissions on the part of the Company shall not
invalidate the reinsurance under this Agreement, provided such
errors or omissions are corrected promptly after discovery
thereof, but the liability of the Reinsurer under this Agreement
or any endorsements attached thereto shall in no event exceed the
limits specified therein, nor be extended to cover any risks,
perils or classes of insurance generally or specifically excluded
therein.
ARTICLE XII
OFFSET AND SECURITY
(a) Each party hereto has the right, which may be exercised
at any time, to offset any amounts, whether on account of premium
or losses or otherwise, due from such party to another party
under this Agreement or any other reinsurance agreement
heretofore or hereafter entered into between them, against any
amounts, whether on account of premium or losses or otherwise due
from the latter party to the former party. The party asserting
the right of offset may exercise this right, whether as assuming
or ceding insurer or in both roles in the relevant agreement or
agreements.
(b) Each party hereby assigns and pledges to the other
party (or to each other party, if more than one) all of its
rights under this Agreement to receive premium or loss payments
at any time from such other party ("Collateral"), to secure its
premium or loss obligations to such other party at any time under
this Agreement and any other reinsurance agreement heretofore or
hereafter entered into by and between them ("Secured
Obligations"). If at any time a party is in default under any
Secured Obligation or shall be subject to any liquidation,
rehabilitation, reorganization or conservation proceeding, each
other party shall be entitled in its discretion, to apply, or to
withhold for the purpose of applying in due course, any
Collateral assigned and pledged to it by the former party and
otherwise to realize upon such Collateral as security for such
Secured Obligations.
(c) The security interest described herein, and the term
"Collateral," shall apply to all payments and other proceeds in
respect of the rights assigned and pledged. A party's security
interest in Collateral shall be deemed evidenced only by the
counterpart of this Agreement delivered to such party.
(d) Each right under this Article is a separate and
independent right, exercisable, without notice or demand, alone
or together with other rights, in the sole election of the party
entitled thereto, and no waiver, delay, or failure to exercise,
in respect of any right, shall constitute a waiver of any other
right. The provisions of this Article shall survive any
cancellation or other termination of this Agreement.
(e) In the event of the insolvency of a party hereto,
offsets shall only be allowed in accordance with the laws of the
insolvent party's state of domicile.
ARTICLE XIII
ACCESS TO RECORDS
The Company shall place at the disposal of the Reinsurer and
the Reinsurer shall have the right to inspect, through its
authorized representatives, at all reasonable times during the
currency of this Agreement and thereafter, the books, records and
papers of the Company pertaining to the reinsurance provided
hereunder and all claims made in connection therewith.
ARTICLE XIV
RESERVES AND TAXES
(a) The Reinsurer shall maintain legal reserves with
respect to unearned premium and claims hereunder.
(b) The Company will be liable for all taxes on premium
reported to the Reinsurer hereunder and will reimburse the
Reinsurer for such taxes where the Reinsurer is required to pay
the same.
ARTICLE XV
INSOLVENCY
In the event of the insolvency of the Company and the
appointment of a conservator, liquidator or statutory successor,
the reinsurance provided by this Agreement shall be payable by
the Reinsurer directly to the Company or to its liquidator,
receiver or statutory successor on the basis of the liability of
the Company under the contract or contracts reinsured. Subject
to the right of offset and the verification of coverage, the
Reinsurer shall pay its share of the loss without diminution
because of the insolvency of the Company. The liquidator,
receiver or statutory successor of the Company shall give written
notice of the pendency of each claim against the Company on a
policy or bond reinsured within a reasonable time after such
claim is filed in the insolvency proceeding. During the pendency
of such claim, the Reinsurer may, at its own expense, investigate
such claim and interpose in the proceeding where such claim is to
be adjudicated any defense or defenses which it may deem
available to the Company, its liquidator or receiver or statutory
successor. Subject to court approval, any expense thus incurred
by the Reinsurer shall be chargeable against the Company as part
of the expense of liquidation to the extent of such proportionate
share of the benefit as shall accrue to the Company solely as a
result of the defense undertaken by the Reinsurer. The
reinsurance shall be payable as set forth above except where this
Agreement specifically provides for the payment of reinsurance
proceeds to another party in the event of the insolvency of the
Company.
ARTICLE XVI
COMMENCEMENT AND TERMINATION
(a) This Agreement is effective 12:01 A.M., Eastern
Standard Time, January 1, 1996 and shall terminate at Midnight,
Eastern Standard Time, December 31, 1996.
(b) Upon termination of this Agreement, the Reinsurer shall
not be bound on any policies on or after the date of termination,
however all policies bound under the terms of this Agreement that
are in effect as of said termination date shall remain in force
until cancellation or natural termination thereof.
(c) Notwithstanding the termination of this Agreement, the
provisions of this Agreement shall continue to apply to all
unfinished business hereunder until all obligations and
liabilities incurred by each party under this Agreement prior to
said date are fully performed and discharged.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed in duplicate this 11th day of September,
1996.
ACCEPTED:
OLD GUARD MUTUAL INSURANCE COMPANY
OLD GUARD MUTUAL FIRE INSURANCE COMPANY
GOSCHENHOPPEN-HOME MUTUAL INSURANCE COMPANY
NEFFSVILLE MUTUAL FIRE INSURANCE COMPANY
/s/ Xxxxx X. Xxxxxx
AMERICAN RE-INSURANCE COMPANY
/s/ American Re-Insurance Company
NUCLEAR INCIDENT EXCLUSION CLAUSE-LIABILITY-REINSURANCE
No. 1B
(1) This reinsurance does not cover any loss or liability
accruing to the Reassured as a member of, or subscriber to, any
association of insurers or reinsurers formed for the purpose of
covering nuclear energy risks or as a direct or indirect
reinsurer of any such member, subscriber or association.
(2) Without in any way restricting the operation of
paragraph (1) of this Clause it is understood and agreed that for
all purposes of this reinsurance all the original policies of the
Reassured (new, renewal and replacement) of the classes specified
in Clause II of this paragraph (2) from the time specified in
Clause III in this paragraph (2) shall be deemed to include the
following provision (specified as-the Limited Exclusion
Provision):
Limited Exclusion Provision*
I. It is agreed that the policy does not apply under any
liability coverage,
to {injury, sickness, disease, death or destruction
{bodily injury or property damage
with respect to which an insured under the policy is
also an insured under a nuclear energy liability policy
issued by Nuclear Energy Liability Insurance
Association, Mutual Atomic Energy Liability
Underwriters or Nuclear Insurance Association of
Canada, or would be an insured under any such policy
but for its termination upon exhaustion of its limit of
liability.
II. Family Automobile Policies (liability only), Special
Automobile Policies (private passenger automobiles,
liability only), Farmers Comprehensive Personal
Liability Policies (liability only), Comprehensive
Personal Liability Policies (liability only) or
policies of a similar nature; and the liability portion
of combination forms related to the four classes of
policies stated above, such as the Comprehensive
Dwelling Policy and the applicable types of Homeowners
Policies.
III. The inception dates and thereafter of all original
policies as described in 11 above, whether new, renewal
or replacement, being policies which either
(a) become effective on or after 1st May, 1960, or
(b) become effective before that date and contain the
Limited Exclusion Provision set out above;
provided this paragraph (2) shall not be applicable to
Family Automobile Policies, Special Automobile
Policies, or policies or combination policies of a
similar nature, issued by the Reassured on New York
risks, until 90 days following approval of the Limited
Exclusion Provision by the Governmental Authority
having jurisdiction thereof.
(3) Except for those classes of policies specified in
Clause 11 of paragraph (2) and without in any way restricting the
operation of paragraph (1) of this Clause, it is understood and
agreed that for all purposes of this reinsurance the original
liability policies of the Reassured (new, renewal and
replacement) affording the following coverages:
Owners, Landlords and Tenants Liability, Contractual
Liability, Elevator Liability, Owners or Contractors
(including railroad) Protective Liability,
Manufacturers and Contractors Liability, Product
Liability, Professional and Malpractice Liability,
Storekeepers Liability, Garage Liability, Automobile
Liability (including Massachusetts Motor Vehicle or
Garage Liability)
shall be deemed to include, with respect to such coverages, from
the time specified in Clause V of this paragraph (3), the
following provision (specified as the Broad Exclusion Provision):
Broad Exclusion Provision*
It is agreed that the policy does not apply:
I. Under any Liability Coverage,
to {injury, sickness, disease, death or destruction
{bodily injury or property damage
(a) with respect to which an insured under the
policy is also an insured under a nuclear
energy liability policy issued by Nuclear
Energy Liability Insurance Association,
Mutual Atomic Energy Liability Underwriters
or Nuclear Insurance Association of Canada,
or would be an insured under any such policy
but for its termination upon exhaustion of
its limit or liability; or
(b) resulting from the hazardous properties of
nuclear material and with respect to which
(1) any person or organization is required to
maintain financial protection pursuant to the
Atomic Energy Act of 1954, or any law
amendatory thereof, or (2) the insured is, or
had this policy not been issued would be,
entitled to indemnity from the United States
of America, or any agency thereof, under any
agreement entered in to by the United States
of America, or any agency thereof, with any
person or organization.
II. Under any Medical Payments Coverage, or under any
Supplementary Payments Provision relating
to {immediate medical or surgical relief,
{first aid, to expenses incurred with respect
to {bodily injury, sickness, disease or death
{bodily injury resulting from the hazardous
properties of nuclear material and arising out of
operation of nuclear facility by any person or
organization.
NUCLEAR INCIDENT EXCLUSION CLAUSE-
PHYSICAL DAMAGE-REINSURANCE-NO. 2
(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.
NUCLEAR INCIDENT EXCLUSION CLAUSES-PHYSICAL DAMAGE
AND LIABILITY
(BOILER AND MACHINERY POLICIES)-REINSURANCE-No. 3
(1) This reinsurance does not cover any loss or liability
accruing to the Reassured as a member of, or subscriber to, any
association of insurers or reinsurers formed for the purpose of
covering nuclear energy risks or as a direct or indirect
reinsurer of any such member, subscriber or association.
(2) Without in any way restricting the operation of
paragraph (1) of this Clause it is understood and agreed that for
all purposes of this reinsurance all original Boiler and
Machinery Insurance contracts of the Reassured (new, renewal and
replacement) shall be deemed to include the following provisions
of this paragraph.
This Policy does not apply to "loss," whether it be direct
or indirect, proximate or remote
(a) from an Accident caused directly or indirectly by
nuclear reaction, nuclear radiation or radioactive
contamination, all whether controlled or
uncontrolled; or
(b) from nuclear reaction, nuclear radiation or
radioactive contamination, all whether controlled
or uncontrolled, caused directly or indirectly by,
contributed to or aggravated by an Accident.
(3) However, it is agreed that loss arising out of the use
of Radioactive Isotopes in any form is not hereby excluded from
reinsurance protection.
(4) Without in any way restricting the operation of
paragraph (1) hereof, it is understood and agreed that
(a) all policies issued by the Reassured to become
effective on or before 30th April, 1958, shall be
free from the application of the other provisions
of this Clause until expiry date or 30th April,
1961, 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 to become
effective 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.
