Exhibit 13
SECOND AMENDED AND RESTATED
REINSURANCE POOLING AGREEMENT
THIS AGREEMENT made this 14th day of December, 1992, by and between ALLIED
Mutual Insurance Company (hereinafter referred to as "Mutual"), AMCO Insurance
Company (hereinafter referred to as "AMCO" or the "Pool Administrator"), ALLIED
Property and Casualty Insurance Company (hereinafter referred to as "APC"), and
Depositors Insurance Company (hereinafter referred to as "Depositors"), for and
in consideration of their mutual promises and agreements herein and for their
mutual benefit. Mutual, APC, and Depositors are hereinafter collectively
referred to as "Affiliated Companies". Mutual, AMCO, APC, and Depositors are
hereinafter collectively referred to as "Participants".
WITNESSETH:
WHEREAS, each Participant is an Iowa corporation with its principal place
of business located in Des Moines, Polk County, Iowa; and
WHEREAS, each Participant is engaged in the property-casualty insurance
business, and the Participants maintain a close business relationship; and
WHEREAS, the Participants are parties to an Amended and Restated
Reinsurance Pooling Agreement, dated December 29, 1989,
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which was subsequently amended March 28, 1990; May 31, 1991; August 14, 1991;
and February 25, 1992; and
WHEREAS, the Participants again desire to amend and restate the terms of
such Reinsurance Pooling Agreement; and
WHEREAS, on January 1, 1993, this Second Amended and Restated Reinsurance
Pooling Agreement ("Agreement") shall supersede and replace the aforementioned
document and the amendments thereto; and
WHEREAS, the purpose of this Agreement is to pool or share the risk of loss,
allocated loss adjustment expenses, commissions, and certain taxes
proportionately among the Participants in order to reduce reinsurance costs; to
limit certain of the Affiliated Companies' administrative expenses to a
specified percentage of premiums; and to bring about for each Participant the
potential for added economies of operation, more uniform underwriting results,
diversification as to the classes of insurance business written, and
maximization of capacity; and
WHEREAS, to accomplish such purpose, (1) the Affiliated Companies will cede
to AMCO their Pooled Insurance Business and assume from AMCO an amount equal to
their Applicable Participation Percentage, each as herein defined; (2) all
Pooled Items, as defined herein, will be prorated among the Participants on the
basis of such Applicable Participation Percentages, upon the terms and
conditions set forth herein; and (3) the Pool Administrator will pay, in
exchange for the payment of a fee, the Affiliated Companies' Administrative
Expenses, as herein defined;
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NOW THEREFORE, in consideration of the foregoing premises and for the
mutual covenants contained herein and other good and valuable consideration, the
Participants agree as follows:
I. DEFINITIONS
Section 1.1. The term "Applicable Participation Percentage(s)" shall mean
those percentages as set forth in Exhibit A attached hereto and incorporated
herein as they may be amended from time to time as provided herein.
Section 1.2. The term "Annual Statement" shall mean the statutory form
----------------
annual statement, fire and casualty companies-association edition. The
references to the Annual Statement contained hereinafter are to the following
----------------
Exhibits set forth therein:
1. Page 4, Underwriting and Investment Exhibit, Statement of Income
(Column 1, only): "Income Statement."
2. Page 7, Underwriting and Investment Exhibit, Part 2 - Premiums
Earned: "Earned Premiums Exhibit."
3. Page 11, Underwriting and Investment Exhibit,
Part 4 - Expenses: "Expense Exhibit."
Section 1.3. The term "Pooled Insurance Business" shall mean all insurance
business conducted by the Participants exclusive of any such business or line of
business which is set forth in Exhibit B, "Non-Pooled Business," attached
hereto and incorporated herein, as it may be amended from time to time as
provided herein.
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Section 1.4. The term "Insurance Policies" shall mean the Participants'
insurance, surety, and other underwriting obligations on Pooled Insurance
Business.
Section 1.5. The term "Pooled Items" shall mean those items of income or
expense which are reported in each Participant's Annual Statement for each year,
----------------
as applicable during the term hereof on the Income Statement, Lines 1, 2, 10,
11, 12, and 14A and on the Expense Exhibit, Columns 1-3, Lines 1, 2, and 18,
excluding therefrom however any entry or portion thereof which relates to any
business or line of business set forth in Exhibit B, "Non-Pooled Business."
Such exclusions shall be referred to hereinafter as "Non-Pooled Items."
Section 1.6. The term "Administrative Expenses" shall mean those "Loss
Adjustment," "Other Underwriting," "Investment," and "Miscellaneous" expenses of
each Participant which are reported in its Annual Statement for each year, as
----------------
applicable, during the term hereof on the Expense Exhibit, Lines 3-17 and Line
21 (Column 2, only).
Section 1.7. The term "Company Specific Items" shall mean those items of
income or expense which are reported in each Participant's Annual Statement for
----------------
each year, as applicable, during the term hereof on the Income Statement, Lines
8, 9, and 15 and the Expense Exhibit, Columns 1-3, Lines 19 and 20. In
addition, Company Specific Items shall mean (1) all Non-Pooled Items and (2)
investment portfolio management fees, interest expense, and security transaction
fees which are included in the entries to Line 21, Column 3, on the Expense
Exhibit.
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Section 1.8. The term "Loss" or "Losses" shall mean those loss payments and
allocated loss adjustment expenses incurred by a Participant on Insurance
Policies as reported in its Annual Statement on Income Statement Line 2 and
------ ---------
Expense Exhibit Line 1 (Column 1, only).
Section 1.9. The term "Statutory Reserves" shall mean those reserves
required by statute on Insurance Policies.
Section 1.10. The term "Statement Reserves" shall mean actual loss and
allocated loss adjustment expense reserves on Insurance Policies.
Section 1.11. The term "Underwriting Expenses(s)" shall mean the sum of
those expenses which are reported on Lines 2 and 18 of the Expense Exhibit in
each participant's Annual Statement with respect to Pooled Insurance Business.
------ ---------
Section 1.12. The term "Net Statutory Underwriting Liabilities" shall mean
the difference between those underwriting assets and underwriting liabilities
which relate to Pooled Insurance Business. Underwriting assets as used in
defining "Net Statutory Underwriting Liabilities" include insurance agents'
balances or uncollected premiums, prepaid reinsurance premiums, reinsurance
recoverable on loss payments, equities and deposits in pools and associations,
and all other statutory underwriting assets. Underwriting liabilities include
reserves for Losses, reserves for unearned premiums, and all other underwriting
liabilities as evidenced by the books and records of the Participants but shall
not include liabilities which relate to either Administrative Expenses or
Company Specific Expenses.
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Section 1.13. The term "Net Underwriting Liabilities" shall mean Net
Statutory Underwriting Liabilities less deferred policy acquisition costs
(computed under generally accepted accounting principles) less nonadmitted
accounts receivable (computed under statutory accounting principles) plus
allowances for bad debts (computed under generally accepted accounting
principles).
Section 1.14. The term "Net Underwriting Cash Flow" shall mean net
premiums written (net of reinsurance) by the Participants on Insurance Policies
reduced by net Losses (net of reinsurance and salvage and subrogation) and
Underwriting Expenses paid.
Section 1.15. The term "Net Insurance Policy Liability" shall mean each
Participant's respective rights and obligations under the Insurance Policies,
less all reinsurance recoveries (other than those made pursuant to this
Agreement) and salvage and subrogations recoveries relating to the Insurance
Policies. Net Insurance Policy Liability shall include Net Statutory
Underwriting Liabilities and Net Underwriting Cash Flow.
Section 1.16. The term "Coordinating Committee" shall mean the committee
established by Mutual and ALLIED Group, Inc. ("AGI") which consists of two
members of the AGI Board of Directors who do not serve on the Mutual Board of
Directors and two members of the Mutual Board of Directors who do not serve on
the AGI Board of Directors.
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II. TERM
Section 2.1. This Agreement shall be effective at 12:01 A.M., January 1,
1993 and shall continue in effect until 11:59 P.M., December 31, 2004, and shall
continue thereafter unless prior to December 31, 2002, a party to this Agreement
delivers to the other parties a written notice that such party intends to cease
participation and terminate the Agreement as to it on December 31, 2004 or as of
a specified date thereafter. This Agreement may be terminated by any party
effective after December 31, 2004, provided that such party has given written
notice of termination to the others at least two years prior to the proposed
termination date. Termination of any party's participation in this Agreement
prior to December 31, 2004 shall require Coordinating Committee approval,
provided, however, that the terms and conditions of this Agreement other than
the Administration Fee (See: Section 3.7) shall be subject to renegotiation by
the parties at the written request of any Affiliated Company to the Pool
Administrator at least six months prior to every thirty months during its term
(i.e., July 1, 1995; January 1, 1998; etc.) and, provided further, that the
Administration Fee shall be subject to renegotiation by the parties at the
written request of any party to the others at least six months prior to every
fifth year during its term (i.e., January 1, 1998, 2003, etc.).
Section 2.2. In the event of a Change of Control (as hereinafter defined
in this section) of AGI, Mutual may, in its sole discretion, at any time after
such Change of Control: (i)
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terminate all three of the Intercompany Operating Agreement ("IOA"), Management
Information Services Agreement ("MIS"), and this Agreement upon six (6) months
notice to AGI, AMCO, APC, and Depositors; (ii) extend the term of all three of
the IOA, MIS, and this Agreement for up to ten (10) additional years beyond
December 31, 2004 upon six (6) months notice to AGI, AMCO, APC, and Depositors;
or (iii) allow such agreements to continue in effect. "Change of Control" for
purposes of this section shall mean an event whereby a person, group, or entity
that is not affiliated with AGI or Mutual acquires the ownership of 50% or more
of the voting stock of AGI. A person, group, or entity "affiliated" with AGI or
Mutual shall mean a person, group, or entity that directly or indirectly through
one or more intermediaries controls, is controlled by, or is under common
control with AGI or Mutual.
III. AGREEMENT TO ADMINISTER INSURANCE BUSINESS
Section 3.1. Throughout the term of this Agreement, the Affiliated
Companies shall delegate to, and the Pool Administrator shall assume,
responsibility for the administration of the insurance business of the
Affiliated Companies as hereinafter set forth.
Section 3.2. The Pool Administrator shall undertake and perform the
obligations assumed hereunder in the behalf of the Affiliated Companies in good
faith and in a timely, diligent fashion in keeping with reasonable, accepted
business practices in the property-casualty insurance industry. Such business
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practices shall comport with and be substantially equivalent to those utilized
by the Pool Administrator in the operation of its own insurance business.
Section 3.3. Upon entering this agreement for the administration of
insurance business, the parties acknowledge their existing business affiliation
and/or common ownership, the term of this Agreement, and the IOA to which each
is a party. The parties hereby agree that any dispute concerning the Pool
Administrator's or any Affiliated Company's rights or obligations hereunder
shall be resolved pursuant to Art. IX, Dispute Resolution, hereof.
Section 3.4. Upon the effective date hereof and thereafter throughout the
term of this Agreement, the Pool Administrator shall be responsible for and
shall administer all operations relating to the Pooled Insurance Business and
Non-Pooled Insurance Business of each Affiliated Company that are not reserved
for the direct control of said company's board of directors, any duly authorized
committee thereof, or its officers. Such operations shall include but are not
limited to the following and such other functions as are typically and
necessarily performed by property-casualty insurers.
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. Underwriting
- Policy Design
- Rate Making
- Reinsurance
. Claims
- Reserving
- Investigations and adjustment
. Marketing
- Advertising
- Agency relations
. Policyholder Services
- Policy issuance and endorsement
- Cancellation, renewal, nonrenewal
- Collections
. Administrative Services
- Accounting
- Legal
- Data Processing
- Investment
The Pool Administrator shall either conduct such operations directly or
shall arrange for and administer the performance thereof by duly-qualified third
parties.
Section 3.5. Section 3.4 notwithstanding, each Affiliated Company, through
its board of directors, any duly-authorized committee thereof, or its officers,
shall have ultimate control over and responsibility for its operations as
conducted by the Pool Administrator. Each Affiliated Company shall own and have
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access without restriction to all records and accounts of its insurance business
which are created or maintained by the Pool Administrator. Officers of each
Affiliated Company will duly execute and review the performance of all
contracts to which such company is or becomes a party during the term of the
Agreement which are administered by the Pool Administrator and will be directly
responsible for all matters of applicable insurance or other regulatory
oversight. All premiums and other monies which are collected by the Pool
Administrator on behalf of the Affiliated Companies during the term hereof will
be held thereby in a fiduciary capacity until paid over to the company entitled
thereto pursuant to the terms of the reinsurance pooling arrangement set forth
herein.
Section 3.6. In discharging its obligations hereunder, the Pool
Administrator is hereby authorized to incur and pay necessary and reasonable
business expenses on behalf of each Affiliated Company. All such expenses shall
fall into the categories of Company Specific Expenses or Pooled Items. Each
Affiliated Company shall be responsible for and pay its own Company Specific
Expenses, whether or not incurred by or at the direction of the
Pool Administrator; its proportionate share of the expense component of Pooled
Items; and all such expenses which are Non-Pooled Items. The Pool
Administrator shall be responsible for and pay in a timely fashion all
Administrative Expenses. The board of directors of each Affiliated Company or
any duly-authorized committee or officer thereof at any time during the term
hereof or within twelve months thereafter may
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demand of and shall receive from the Pool Administrator upon reasonable written
notice thereto an accounting for and explanation of the business reason for any
Company Specific Expense or expenses related to Pooled Items incurred by the
Pool Administrator in its behalf or for any pricing, reserving, or other policy
or decision which affects its insurance business.
Section 3.7. As consideration for the obligations undertaken by the Pool
Administrator pursuant hereto, each Affiliated Company shall pay to the Pool
Administrator certain fees as set forth in Exhibit C, Administration Fee,
attached hereto and incorporated herein. Such fees shall be calculated and paid
to the Pool Administrator each month along with any amounts necessary to
reimburse the Pool Administrator for Company Specific Expenses and Non-Pooled
Items paid on behalf of the Affiliated Company.
Section 3.8. In addition to that compensation described in Section 3.7
hereof, the Pool Administrator may earn an annual Performance Fee, as
hereinafter defined, the payment of which by each Affiliated Company shall be
contingent upon such Company's Combined Operating Ratio (as defined below and
adjusted pursuant to generally-accepted accounting principles) pursuant to the
following formulae:
Benchmark Ratio = 104.0
---------------
Performance Ratio = Benchmark Ratio less the Combined Operating Ratio
----------------- multiplied by .5
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Combined Operating Ratio = Income Statement Line 6*
------------------------ -----------------------
Income Statement Line 1
*excluding Performance Fees
Performance Fee = Performance Ratio multiplied
--------------- by net earned premiums.
The maximum Performance Fee which may be earned by the Pool Administrator
and which shall be paid by any Affiliated Company for any calendar year shall
equal 2.5% of such Company's net earned premiums. In the event that any
Affiliated Company's Performance Ratio is equal to or less than zero for any
such year, no Performance Fee shall be paid. Such negative differences shall not
be cumulative for the purpose of the ensuing year's calculation.
IV. REINSURANCE OF INSURANCE IN FORCE
AND THEREAFTER WRITTEN
Section 4.1. Each Affiliated Company shall and does hereby cede to AMCO
100% of its respective Net Insurance Policy Liability on all applicable classes
of insurance business in force during the term of this Agreement and shall and
does hereby cede to AMCO 100% of all Net Insurance Policy Liability incurred or
for which the Affiliated Company may become obligated. AMCO agrees to and does
hereby accept such Net Insurance Policy Liability during the term of this
Agreement.
Section 4.2 AMCO shall and does hereby cede to each Affiliated Company,
based upon its Applicable Participation Percentage, a portion of the total Net
Insurance Policy Liability
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of all Participants (including that of AMCO and that assumed under Section 4.1),
on all classes of insurance business in force during the term of this
Agreement, and AMCO shall and does hereby cede to each Affiliated Company the
same percentage of the total Net Insurance Policy Liability incurred or for
which the Participants shall become obligated during the term of this Agreement.
Each Affiliated Company agrees to and does hereby accept such Net Insurance
Policy Liability during the term of this Agreement.
Section 4.3. Adjustments to the Applicable Participation Percentages may be
made from time to time as agreed upon by the Coordinating Committee and the
Board of Directors of each Participant. Whenever an adjustment to the Applicable
Participation Percentages is made among the Participants, Net Underwriting
Liabilities will be transferred from AMCO to Affiliated Companies as AMCO's
Applicable Participation Percentage is lowered or from Affiliated Companies to
AMCO as AMCO's Applicable Participation Percentage is increased. If the
adjustment to the Applicable Participation Percentages is made only among the
Affiliated Companies, then a transfer of Net Underwriting Liabilities among the
Affiliated Companies in the same manner shall be required. A Participant which
receives additional Net Underwriting Liabilities as a result of such an
adjustment in Applicable Participation Percentages shall receive pro rata from
the other Participants which have had their respective Applicable Participation
Percentage adjusted either cash, securities, other property, or a combination
thereof (at
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fair market value as of the date of transfer) in an amount equal to the
additional Net Underwriting Liabilities. The Participant making the transfer
determines whether cash, securities, other property, or a combination thereof is
transferred. A Participant which transfers Net Underwriting Liabilities as a
result of such an adjustment in Applicable Participation Percentages shall
transfer pro rata to the other Participants which have had their respective
Applicable Participation Percentage adjusted either cash, securities, other
property, or a combination thereof (at fair market value as of the date of
transfer) in an amount equal to the reduced Net Underwriting Liabilities. If the
cash, securities, other property, or a combination thereof, are not transferred
by a Participant on the effective date of a change in the Applicable
Participation Percentages, such Participant shall pay interest (at commercially
reasonable rates) on an amount equal to the amount of the Net Underwriting
Liabilities which were to be transferred from the effective date of the change
in the Applicable Participation Percentages to the effective date of the actual
transfer of cash, securities, other property, or a combination thereof. In no
event will the number of days between the effective date of the change in the
Applicable Participation Percentages and the actual date of transfer of cash,
securities or property exceed ninety (90) days.
Section 4.4. During the term of this Agreement, monthly cash settlements
and accounting adjustments shall be made by AMCO as is necessary to maintain the
proportionate distribution of the Net Statutory Underwriting Liabilities and the
Net Underwriting
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Cash Flows among the Participants in accordance with the Applicable
Participation Percentages as established from time to time. To the extent cash
distributions among the Participants are required, such amounts will be paid
within thirty (30) days after the end of the month for which such a payment is
necessary. In addition, each Affiliated Company agrees to advance to AMCO at any
time during any month, immediately upon AMCO's request, any funds the payment of
which is required by this Agreement. Such advances are to be applied to each
Participant's obligations hereunder.
Section 4.5. The Participants expressly agree that all losses which result
from bad debts relating to Pooled Items, including reinsurance recoverables,
shall be shared proportionately in accordance with their Applicable
Participation Percentages.
V. RECIPROCAL ASSIGNMENTS
Section 5.1. In conformity with this Agreement, each Affiliated Company
hereby sells, assigns, and delivers to AMCO all right, title, and interest in
its Net Underwriting Liabilities as of the effective date of this Agreement, and
AMCO hereby accepts and assumes the same. As of the same date, AMCO hereby
sells, assigns, and delivers to each of the Affiliated Companies, based upon
their respective Applicable Participation Percentages, their proportionate share
of the total Net Underwriting Liabilities of all of the Participants, and
Affiliated Companies accept and assume the same. Notwithstanding
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anything to the contrary herein contained, each Participant agrees to assume,
for statutory annual statement and other financial statement purposes, its
respective proportionate share (based upon the Applicable Participation
Percentages) of amounts disallowed for unauthorized reinsurance effected by any
Participant with non-admitted companies (not authorized to do insurance business
within a state) and any amount disallowed for overdue premium balances or other
non-admitted assets included within the scope of this Agreement. Each
individual Participant will establish its own liability for the excess of
Statutory Reserves over Statement Reserves, irrespective of the Applicable
Participation Percentages.
VI. SET OFF
Section 6.1. The obligations of each Participant under this Agreement to
transfer monies or other assets to any other Participant may be offset by the
reciprocal obligations of the other Participant such that only a net amount need
be transferred. Transactions under this Agreement may be cleared through an
account of AMCO or through a joint account carried for the benefit of all
Participants in accordance with this Agreement.
VII. ADMINISTRATION
Section 7.1. It is the intent of the Participants that administration of
the Agreement shall be accomplished by persons who are employees of AGI and that
such officers and employees
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shall be subject to the direction and control of its board of directors and
committees thereof as may be provided in the IOA to which each Participant is a
party.
VIII. MODIFICATIONS AND AMENDMENTS
Section 8.1. With the approval of the Coordinating Committee and the Board
of Directors of each Participant, this Agreement may be modified at any time to
accomplish any of the following ends: (1) to permit any Participant to conform
to applicable law, (2) to change the Applicable Participation Percentages to
recognize changes in the financial condition or direct business production of
the Participants, or (3) to make any reasonable and equitable amendments where
such amendments are deemed necessary or helpful in the conduct of the business
of the Participants.
IX. DISPUTE RESOLUTION
Section 9.1. Any dispute arising out of the operation of this Agreement to
which Mutual is an interested party shall be resolved by the Coordinating
Committee. Any dispute in which Mutual has no interest shall be resolved by the
Executive Committee of the Board of Directors of AGI.
Section 9.2. Each Participant hereby consents and agrees that any dispute
between the parties hereto with respect to the interpretation, performance, or
breach of any of the terms of this Agreement or the transactions contemplated
hereby which cannot be resolved as hereinbefore provided shall be referred to
arbitration conducted in accordance with the rules and procedures
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of the American Arbitration Association ("AAA"), upon written request of any
disputing Participant, such request to be delivered to the other Participants.
Within thirty (30) days of the delivery of such written notice, the disputing
Participants shall each nominate an AAA-licensed arbitrator (the "Party
Arbitrators"). Within thirty (30) days of their nomination, the two Party
Arbitrators shall select a third AAA-licensed arbitrator (the "Third
Arbitrator") and shall give the disputing Participants written notice of such
choice.
Section 9.3. The arbitrators shall be empowered to decide all issues
submitted to arbitration using principles of law and equity and, if required, by
application of any customary practices in the insurance and reinsurance
industries. The arbitrators shall be relieved of all judicial formalities and
shall not be required to follow any rules of evidence except as such rules may
be imposed on arbitration proceedings conducted in accordance with the laws of
the State of Iowa, but the arbitrators shall attempt to enforce the intents and
purposes of this Agreement to the extent practicable and in accordance with Iowa
law. The decision of a majority of the arbitrators shall be final and binding.
Section 9.4. The disputing Participants shall each bear the expenses of its
Party Arbitrator. The disputing Participants shall jointly share all other
expenses of the arbitration proceeding and the expenses of the Third Arbitrator.
The arbitration proceeding shall take place at Des Moines, Iowa unless another
location is mutually agreed upon by the disputing
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Participants. The arbitration proceeding shall be governed by the laws of the
State of Iowa. The Participants hereby agree that any information respecting any
matters submitted to arbitration in accordance with the foregoing or any aspect
of the arbitration proceeding itself shall be treated as confidential and will
not be disclosed to anyone not employed or acting on behalf of a party hereto in
connection with such arbitration or used at any time in any manner that is
adverse to the interests of the parties hereto but, in any such case, such
information may be disclosed if such disclosure is made in connection with
party's prosecution or defense of any legal proceedings or if such disclosure is
required pursuant to a subpoena or other legal order issued by any judicial or
regulatory body or is otherwise required by law.
Section 9.5. Anything set forth herein to the contrary notwithstanding,
with respect to any issue to be determined by arbitration, the disputing
Participants shall each submit in writing to the arbitrators their proposed
resolution of such issue. The arbitrators shall be constrained in their decision
relating to such issue to select only between the proposed resolutions of the
disputing Participants, and the arbitrators shall have no discretion to fashion
any compromise or other resolution of the issue submitted for arbitration.
X. AUTONOMY OF PARTICIPANTS AND COOPERATION
Section 10.1. The Participants shall attempt to position themselves in
their respective target markets, whether separate
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or overlapping, so as to preserve and strengthen their individual identities
while making the best use of their association as described herein. The
underwriting policies and programs of each Participant and the declaration of
dividends to its shareholders or policyholders shall be subject to the control
and be the responsibility of its board of directors.
Section 10.2. Notwithstanding the foregoing, Participants will fully
cooperate with each other and their respective counsel, if any, and accountants
in connection with any steps to be taken as part of their obligations under this
Agreement. They shall use their best efforts to take or cause to be taken any
and all actions necessary or required to obtain all of the regulatory consents
or approvals and any third party consents described herein, unless the receipt
thereof has been waived in writing by the Participants.
XI. INSOLVENCY
Section 11.1. Each Participant accepts as well as cedes its Pooled Items.
The reinsurance provided hereunder shall be payable by the accepting Participant
on the basis of the liability of the ceding Participant under the policy or
contract reinsured without diminution because of the insolvency of the ceding
Participant; provided, that such reinsurance shall be payable directly to the
ceding Participant or to its liquidator, receiver or other statutory successor,
except: (i) where this Agreement specifically provides another payee of such
reinsurance in the event of the insolvency of the ceding Participant, or (ii)
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where the accepting Participant, with the consent of the direct insured or
insureds, has assumed such policy obligations of the ceding Participant as
direct obligations of the accepting Participant to the payees under such
policies and in substitution for the obligations of the ceding Participant to
such payee.
XII. ALLOCATION OF REFUNDS
Section 12.1. Although Losses and costs are based on the Applicable
Participation Percentages in effect on the date of payment, any refund of net
earned premiums (net premiums written adjusted for the change in the net
unearned premium reserve for all Participants) required by any insurance
regulatory authorities will be allocated to the various Participants based upon
the Applicable Participation Percentages in effect in the month such premiums
were earned. The same allocation method will be used for related commission
refunds from agents, interest due to policyholders, end any other related items.
XIII. ASSIGNMENTS
Section 13.1. Neither this Agreement nor any rights hereunder may be
assigned by any of the Participants.
XIV. WAIVER, MODIFICATIONS, REMEDIES
Section 14.1. No delay or omission of any Participant to exercise any
right or power hereunder shall impair such right or power or be a waiver of any
default or an acquiescence therein. Any single or partial exercise of any such
right or power shall
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not preclude other or further exercise thereof or the exercise of any other
right. No waiver or modification hereto shall be valid unless in writing signed
by the Participants and then only to the extent as specifically set forth in
such writing. In addition to any rights granted herein, the Participants shall
have and may exercise any and all rights and remedies now or hereafter provided
by law.
XV. CONFIDENTIAL INFORMATION
Section 15.1. The Participants agree that any confidential information
provided to any of them or their representatives in connection with this
Agreement will be used solely for the purpose of the transactions contemplated
by this Agreement, will not be disclosed to anyone not employed or acting on
behalf of the Participants, and will not be used at any time in any manner that
is adverse to the interest of the Participants. The aforesaid notwithstanding,
information may be used in connection with any arbitration relating to the
transactions contemplated by this Agreement, and such information may be
disclosed if such disclosure is made in connection with the Participants'
prosecution or defense of any legal proceeding or if such disclosure is required
pursuant to a legal order issued by any judicial or regulatory body or is
otherwise required by law.
XVI. NOTICES
Section 16.1. All notices, demands or requests given pursuant to or
required by this Agreement shall be in writing and
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shall be deemed to be received when personally delivered or, if mailed, when
sent by registered or certified mail, to any Participant at its address below
set forth or such other address as it may from time to time designated in
writing and shall be deemed given on the date given or mailed.
XVII. GOVERNING LAW
Section 17.1. The provisions of this Agreement shall be governed and
interpreted in accordance with the laws of the State of Iowa.
XVIII. SEVERABILITY
Section 18.1. If any of the provisions of this Agreement shall be held by
a court of competent jurisdiction to be invalid, it is agreed that such
invalidity or illegality should not invalidate the whole Agreement, but as to
such jurisdiction this Agreement shall be construed as if it did not contain the
provision or provisions held to be invalid or illegal in that particular
jurisdiction, but only insofar as such construction does not affect the
substance of this Agreement, and the rights and obligations of the parties
hereto shall be construed and enforced accordingly in that jurisdiction.
XIX. ENTIRE AGREEMENT
Section 19.1. This Agreement constitutes the entire understanding and
agreement of the Participants with respect to the subject matter hereof and
supersedes all other prior
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agreements and understandings, written or oral, among the Participants with
respect to such subject matter.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year above first written.
ALLIED Mutual Insurance Company
000 Xxxxx Xxxxxx
Xxx Xxxxxx, XX 00000
By: /s/
-------------------------------
President
AMCO Insurance Company
000 Xxxxx Xxxxxx
Xxx Xxxxxx, XX 00000
By: /s/
-------------------------------
Chairman
ALLIED Property and Casualty
Insurance Company
000 Xxxxx Xxxxxx
Xxx Xxxxxx, XX 00000
By: /s/
-------------------------------
President
Depositors Insurance Company
000 Xxxxx Xxxxxx
Xxx Xxxxxx, XX 00000
By: /s/
-------------------------------
President
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EXHIBIT A - APPLICABLE PARTICIPATION PERCENTAGES
The Applicable Participation Percentages as of 12:01 a.m. January 1, 1993
are:
Mutual 40%
AMCO 43%
APC 11%
Depositors 6%
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EXHIBIT B - NON-POOLED INSURANCE BUSINESS
The Non-Pooled Insurance Business as of 12:01 a.m., January 1, 1993 shall
be:
1. All premiums written by the Square Deal Division of Mutual.
2. Any premiums ceded or assumed pursuant to the Property Special
Catastrophe Excess Contract, dated 01-01-93.
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EXHIBIT C - ADMINISTRATION FEE
The Administration Fee to be paid to the Pool Administrator by each
Affiliated Company pursuant to Section 3.6 of the Agreement as of 12:01 a.m.,
January 1, 1993 shall be the total of the following:
1. 12.85% of Adjusted Written Premiums* multiplied by its Applicable
Participation Percentage (underwriting expense).
2. 8.0% of Adjusted Earned Premiums+, multiplied by its Applicable
Participation Percentage (7.25% for unallocated LAE and 0.75% for
investment expense).
3. 25.89% of crop-hail direct written premiums (underwriting expense).
4. 11.95% of crop-hail direct earned premiums (11.2% for unallocated
LAE and 0.75% for investment expense.)
* Adjusted Written Premiums are the Participants' total direct written
premiums on Pooled Insurance Business plus those written premiums
assumed by AMCO from Motor Club of Iowa Insurance Company.
+ Adjusted Earned Premiums are the Participants' total direct earned
premiums on Pooled Insurance Business plus those earned premiums
assumed by AMCO from Motor Club of Iowa Insurance Company.
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