ASSET MANAGEMENT AGREEMENT
EXHIBIT
10.9
EXECUTION
COPY
THIS
AGREEMENT, made this 3rd day of July 2007 by and between AII Insurance
Management Limited (“AIM”), a Bermuda corporation, and Maiden Insurance Company,
Ltd. (“Company”), a Bermuda joint stock company.
WITNESSETH
WHEREAS,
Company is a licensed Bermuda insurer, whose sponsors are the Chairman of the
Board, Chief Executive Officer, and a Director of AmTrust Financial Services,
Inc., which is a multinational insurance holding company, which owns AIM and
currently owns three U.S. insurers, an Irish insurer, U.K. insurer and Bermuda
reinsurer;
WHEREAS,
AIM provides certain services to its affiliates, including investment management
services;
WHEREAS,
Company wishes to retain AIM to provide investment management services with
respect to assets held in trust pursuant to those certain reinsurance Trust
Agreements specified on Appendix A (each such agreement a “Trust Agreement”, and
each portfolio of assets held pursuant to a Trust Agreement a “Trust Account”)
and other assets designated by Company in writing from time to time (the
“General Account”, together with the Trust Accounts the “Account”) and AIM is
willing to do so.
NOW,
THEREFORE, in consideration of their respective promises and covenants
hereinafter set forth, AIM and Company agree as follows:
1. AIM
shall
perform the following investment management services on behalf of Company in
accordance with Company’s investment guidelines, which are attached hereto as
Appendix B (the “Investment Guidelines”), and regulatory requirements regarding
investments. Company has established separate Investment Guidelines with respect
to each Reinsurance Trust and with respect to the General Account. Company
in
its discretion may amend the
Investment Guidelines from time to time, by delivering such amendment to AIM
in
writing no less than 5 business days prior to the effective date. In
the
event that there is a failure to comply with the Investment Guidelines as a
result of changes in market conditions or otherwise, AIM shall promptly notify
Company and shall take such corrective action as may be agreed with
Company.
Subject
to the Investment Guidelines, AIM
shall
have full discretionary authority with respect to the Account, including the
authority and power to enter into contracts binding on Company with respect
thereto, and to:
(a) establish,
maintain and terminate discretionary and non-discretionary investment accounts
with banks, brokers, dealers, investment advisers or other investment
professionals, including affiliates of AIM (“Investment Service Providers”),
provided, such Investment Service Providers maintain all required licenses,
registrations, memberships and approvals required to perform the investment
services being offered. If AIM delegates any of its discretionary investment,
advisory and other rights, powers and functions hereunder to any Investment
Service Provider, AIM shall always remain liable to Company for its obligations
hereunder. References herein to AIM shall include, as the context may require,
any of AIM’s affiliates that are selected to manage assets under this Agreement.
Any affiliate of AIM that is delegated authority under this Agreement shall
accept such delegation in an agreement between the AIM and any such affiliate
and acknowledge that it is a fiduciary with respect to the Account.
(b) purchase,
hold, sell, write, exchange, transfer, and otherwise invest and trade in
property of all kind, including without limitation:
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any
publicly-traded or non-publicly traded, U.S or non-U.S.: general
or
limited partnership or limited liability company interest; share
of
capital stock; share of beneficial interest; investment contract,
preorganization certificate or subscription; bond, note, debenture
(whether subordinated, convertible or otherwise), trust receipt or
certificate, loan participation and/or assignment, account or note
receivable, trade acceptance, contract or other claim, executory
contract
(including any notional principal contract), instrument or evidence
of
indebtedness; certificate of
deposit;
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any
non-U.S. currency or any right or option to acquire or dispose of
a
non-U.S. currency, including a put or call;
and
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any
commodity or any right or option to acquire or dispose of a commodity,
including a put or call, a straddle, or futures, forward, or spot
contract, or any notional principal contract relating to any such
commodity, right, or option (whether or not traded on an
exchange);
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(c) invest
or
deposit in obligations of the United States or any agency or instrumentality
thereof, time deposits in and certificates of deposit of banks, the long term
debt of which is rated not less than AA by Standard and Poor’s Ratings Services,
a division of The McGraw Hill Companies, Inc. (“S&P”), securities issued by
corporations the long-term debt of which is rated not less than AA by S&P,
or commercial paper which is rated A-1 by S&P, in each case having a
maturity of not more than 91 days from the date of issuance, or foreign money
market mutual funds, or other short-term investments which have at the time
of
investment a rating of AAA by S&P; and
(d) vote
proxies, grant consents solicited by or with respect to the issuers of
securities in which assets of the Account may be invested from time to time,
provided that Company reserves the right to exercise or direct the exercise
of
voting rights with respect to securities which are Account assets or grant
its
consent with respect to solicitations by or with respect to the issuers of
such
securities, in each case upon consultation with Company.
2.
Portfolio Transactions.
(a) AIM
may
place orders for the execution of transactions for the Account with or through
Investment Service Providers as AIM may select. AIM agrees that securities
are
to be purchased through such brokers as, in AIM’s best judgment, shall offer the
best combination of price and execution. AIM, in seeking to obtain best
execution of portfolio transactions for the Account, may consider the quality
and reliability of brokerage services, as well as research and investment
information and other services provided by brokers or dealers. AIM may cause
the
Account to pay a broker or dealer that provides brokerage and research services
to AIM an amount of commission for effecting a transaction in excess of the
amount of commission that another broker or dealer would have charged for
effecting that transaction, if AIM determines in good faith that such amount
of
commission is reasonable in relation to the value of the brokerage and research
services provided by the broker or dealer. These brokerage and research services
may also assist AIM in rendering services to other clients, and not all such
services will necessarily be used in connection with the Account. In addition,
where permitted by applicable legal and regulatory requirements, AIM or its
affiliates may execute transactions on behalf of the Account.
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(b) Company
authorizes AIM to, at AIM’s discretion, bunch or aggregate orders for the
Account with orders of other clients and to allocate the aggregate amount of
the
investment among accounts (including accounts in which AIM, its affiliates
and/or their personnel have beneficial interests) in a manner in which AIM
shall
determine is fair over time to the participating accounts. When portfolio
decisions are made on an aggregated basis, AIM may in its discretion, place
a
large order to purchase or sell a particular security for the Account and the
accounts of several other clients. Because of the prevailing trading activity,
it is frequently not possible to receive the same price or execution on the
entire volume of securities purchased or sold. When this occurs, the various
prices may be averaged and the Account will be charged or credited with the
average price; and the effect of the aggregation may operate on some occasions
to Company’s disadvantage. Although in such an instance Company will be charged
the average price, AIM will make the information regarding the actual
transactions available to Company upon Company’s request. Neither AIM nor its
affiliates, however, are required to bunch or aggregate orders, and therefore
Company may not receive the average price on any given trade.
3.
Affiliated Brokerage; Principal Transactions
(a) Subject
to AIM’s execution obligations described in Section 2 above, Company hereby
authorizes AIM, when determined by AIM in its capacity of a fiduciary to be
in
the best interest of Company, to effect agency transactions and agency
cross-transactions through affiliated broker-dealers. Such transactions shall
be
effected at prevailing market levels in accordance with the procedures under
Rule 17a-7(b) of the U.S. Investment Company Act of 1940 and other applicable
law. Company at any time without penalty may terminate in whole or in part
its
authorization to effect such transactions by written notice to AIM.
(b) When
determined by AIM in its capacity as a fiduciary to be in the best interest
of
Company, AIM may effect transactions in which, acting for its own account or
an
account of its affiliate, AIM buys a security from, or sells a security to,
Company, with Company’s consent after written disclosure by AIM to Company of
the transaction and the capacity in which AIM is acting before the completion
of
such transaction, in accordance with applicable regulatory
requirements.
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4. Information
and Reports
AIM
shall
or shall direct the Investment Service Providers to provide to Company copies
of
all Account statements and Account information to Company. Monthly, AIM shall
provide Company a written report and inventory of the Account in a format
approved by Company and such other reports and information as Company shall
request. Valuation levels for the assets listed in the written report and
inventory will reflect AIM’s good faith effort to ascertain fair market levels
(including accrued income, if any) for the securities and other assets in the
Account based on pricing and valuation information believed by AIM to be
reliable for round lot sizes. Then current exchange rates will be applied in
valuing holdings in foreign currency.
5.
Custody
Custody
of the cash and assets of the General Account shall be held by a custodian
(the
“Custodian”) appointed by Company pursuant to a separate custody agreement or by
Company itself. Custody of the cash and assets of the Trust Accounts shall
be
held by a trustee or trustees (the “Trustee(s)”) appointed by Company pursuant
to the Trust Agreements or other separate trust agreement. The Custodian and
the
Trustee are qualified custodians as defined in Section 206(4)-2 of the
Investment Advisers Act of 1940, as amended (the “Advisers Act”). Company
authorizes AIM to give Custodian and the Trustee instructions for the purchase,
sale, conversion, redemption, exchange or retention of any security, cash or
cash equivalents or other investment for Company. Except as provided in Section
1 and the Trust Agreements, exclusive responsibility for the custody and
safekeeping of Company’s assets constituting the Account shall remain with the
Custodian and the Trustee, and AIM and its affiliates shall not have custody
or
physical control of the assets and cash in the Account. AIM shall provide the
Custodian and the Trustee with such documents and information, including
certification of AIM’s duly authorized representatives, as the Custodian or
Trustee may reasonably request. All directions given by AIM to the Custodian
shall be in writing, and signed by an authorized representative of AIM;
provided, however, that the Custodian may accept oral directions from AIM,
subject to confirmation in writing. AIM’s directions to the Trustee shall be
given as provided in the Trust Agreements. Company will give AIM reasonable
prior notice of any change the Custodian or the Trustee, together with the
name
and other relevant information with respect to the new Custodian or
Trustee.
6. Compensation
and Reimbursement of Expenses
(a) Subject
to section 6(d) below, within 30 days of the end of each calendar quarter,
Company shall pay to AIM an amount equal to 0.0875% of the average value of
the
Account for the preceding calendar quarter.
(b) Company
shall be responsible for the investment expenses of the Account, as well as
expenses incurred in connection with carrying out its own accounting, auditing,
and compliance policies, procedures, and other obligations with respect to
the
Account. Company shall reimburse AIM for the payment of reasonable expenses
incurred by AIM with respect to such policies, procedures, and obligations
of
Company, but in no event shall Company be responsible for AIM’s general overhead
expenses or expenses of AIM in carrying out its own accounting, auditing and
compliance policies, procedures or obligations. Investment expenses shall
include brokerage commissions, transfer fees, registration costs, taxes and
other similar costs and transaction-related expenses and fees arising out of
transactions in the Account. AIM may, at its discretion, make payments out
of
fees received from Company pursuant to this Agreement to any Investment Service
Provider from which it obtains investment advisory services, including
Investment Service Providers that are affiliates of AIM, and Company shall
have
no obligation to compensate such Investment Service Provider for such
services.
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(c)
Custodial fees are charged separately by the Custodian for the General Account
and are not included in the investment advisory fee due AIM pursuant to this
Agreement. Company will pay any custodial fees directly from the custodial
account. Trustee fees may not be paid from the Trust Accounts; Company will
pay
any trustee fees due under the Trust Agreements.
(d) AIM
agrees to waive the investment advisory fee due pursuant to Section 6(a) of
this
Agreement on any assets of the Account invested in any collective investment
vehicle advised or sponsored by AIM or any of its affiliates.
7. Directions
to AIM
All
directions by or on behalf of Company to AIM shall be in writing signed either
by Company or by an authorized agent of Company or, if by telephone, confirmed
in writing. For this purpose, the term in writing, shall include directions
given by facsimile. A list of persons authorized to give instructions to AIM
hereunder with specimen signatures, is set out in Appendix C to this Agreement.
Company may revise the list of authorized persons from time to time by sending
AIM a revised list which has been certified either by Company or by a duly
authorized agent of Company. AIM shall incur no liability whatsoever in relying
upon any direction from, or document signed by, any person reasonably believed
by it to be authorized to give or sign the same, whether or not the authority
of
such person is then effective. AIM shall be under no duty to make any
investigation or inquiry as to any statement contained in any writing and may
accept the same as conclusive evidence of the truth and accuracy of the
statements therein contained. Directions given by Company to AIM hereunder
shall
be effective only upon actual receipt by AIM and shall be acknowledged by AIM
through its actions hereunder only, unless Company is advised by AIM
otherwise.
8. Term
and
Termination
(a) This
Agreement shall remain in effect from for a period of one year from the
Effective Date (the “Initial Term”). Thereafter, this Agreement shall
automatically renew for successive one year terms unless (i) AIM or Company,
as
the case may be, provides notice thirty (30) days prior to the end of a term
of
its intent not to renew, or (ii) this Agreement is terminated pursuant to
sections 8(b) and (c) below.
(b) Following
the Initial Term, the Agreement may be terminated at any time by either party
upon thirty (30) days written notice.
(c) Company
may terminate this Agreement immediately, upon written notice, upon the
occurrence of any of the following events:
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i. AIM
fails
to comply with any term or condition of this Agreement, or for whatever reason,
does not commence fulfillment of duties provided in this Agreement, or once
having commenced its duties, engages in neglect of its duties and obligations
hereunder, fails or refuses to act to carry out its duties and obligations
hereunder;
ii. AIM
is
sold, undergoes a material change in ownership, in its capital participation
or
control, change in management, board of directors, officers or key personnel
or
causes to be sold, transferred or pledged all or substantially all of its stock
or assets to a third party; or
iii. AIM
suffers the loss, suspension or revocation of any license or certificate of
authority from any regulatory body that is material to the performance of its
duties and obligations herein, or such license becomes invalid or expires and
is
not renewed without any lapse.
9. Confidentiality
It
is
understood and agreed that all information pertaining to Company, whether
developed by AIM or Company, is the sole and exclusive property of Company
(“Proprietary Information”). AIM shall maintain the confidentiality of the
Proprietary Information and upon termination of this Agreement shall return
or
destroy all Proprietary Information as directed by Company. It is further
understood and agreed that all of Company’s files and records shall be made
available only to inspection by directors, officers and employees of AIM, the
directors, officers, employees and independent auditors of Company, and anyone
properly authorized in writing by Company. Notwithstanding the above,
Proprietary Information may be disclosed if (i) requested by or through, or
related to a judicial, administrative, governmental or self-regulatory
organization process, investigation, inquiry or proceeding, or is otherwise
legally required, (ii) required in order for each party to carry out its
responsibilities hereunder, or (iii) permitted upon the prior written consent
of
the other party. Company and AIM shall cooperate in responding to any
governmental inquiry or investigation.
10. Choice
of
Law
This
Agreement shall be governed and construed by the laws of the Islands of Bermuda.
Each party submits to the jurisdiction of the courts of the Islands of Bermuda,
which shall be the exclusive forum for adjudicating any dispute based on,
arising out of, or in connection with this Agreement.
11. Assignment
No
assignment of this Agreement shall be made by AIM without the written consent
of
Company. For purposes of this Agreement, the term “assignment” shall have the
meaning given it by Section 202(a)(1) of the Advisers Act.
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Notices
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| (a) |
All
notices, requests, demands and other communications under this Agreement
shall be in writing and delivered in person, by fax, e-mail, recognized
overnight courier, or certified mail, postage prepaid and properly
addressed as follows
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To
Company:
Maiden
Insurance Company, Ltd.
0
Xxxx
Xxxxxx
Xxxxxxxx
XX 00, Xxxxxxx
Xxxxxxxxx:
Xxxxxxxx X. Xxxxx
Fax
No.:
000-000-0000
To
AIM:
AII
Insurance Management Limited
0
Xxxx
Xxxxxx
Xxxxxxxx
XX 00, Xxxxxxx
Xxxxxxxxx:
Xxxxxxx Xxxx
Fax
No.:
000-000-0000
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IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the
Effective Date.
Maiden
Insurance Company, Ltd.
By:__
/s/
Xxxxxxxx X. Turin_____________
Xxxxxxxx
X. Xxxxx
Director
AII
Insurance Management Limited
By:__
/s/
Andre Dill____________________________
Xxxxx
Xxxx
Assistant
Secretary
