Exhibit 10.52
CATASTROPHE WORKERS' COMPENSATION
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2007
issued to
AmCOMP Preferred Insurance Company
North Palm Beach, Florida
AmCOMP Assurance Corporation
North Palm Beach, Florida
and
any and all insurance companies which are now or
hereafter come under the same ownership or management as the
AmCOMP Group
North Palm Beach, Florida
TABLE OF CONTENTS
ARTICLE PAGE
I Classes of Business Reinsured 1
II Term 1
III Special Xxxxxxxxxxx 0
XX Xxxxxxxxx (XXXX 00X) 3
V Exclusions 3
VI Retention and Limit 7
VII Reinstatement 7
VIII Definitions 8
IX Other Reinsurance 11
X Federal Terrorism Recovery 11
XI Annuities at Company's Option 11
XII Claims 12
XIII Commutation 12
XIV Special Commutation 13
XV Salvage and Subrogation 15
XVI Premium 15
XVII Late Payments 16
XVIII Offset 17
XIX Access to Records (BRMA 1D) 17
XX Liability of the Reinsurer 17
XXI Net Retained Lines (BRMA 32E) 17
XXII Errors and Omissions 00
XXXXX Xxxxxxxx (XXXX 00X) 18
XXIV Taxes (BRMA 50B) 18
XXV Federal Excise Tax 18
XXVI Reserves 19
XXVII Insolvency 20
XXVIII Arbitration 21
XXIX Service of Suit (BRMA 49C) 22
XXX Agency Agreement 22
XXXI Governing Law (BRMA 71B) 22
XXXII Intermediary (BRMA 23A) 23
Schedule A
CATASTROPHE WORKERS' COMPENSATION
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2007
issued to
AmCOMP Preferred Insurance Company
North Palm Beach, Florida
AmCOMP Assurance Corporation
North Palm Beach, Florida
and
any and all insurance companies which are now or
hereafter come under the same ownership or management as the
AmCOMP Group
North Palm Beach, Florida
(HEREINAFTER REFERRED TO COLLECTIVELY AS THE "Company")
by
The Subscribing Reinsurer(s) Executing the
Interests and Liabilities Agreement(s)
Attached Hereto
(HEREINAFTER REFERRED TO AS THE "Reinsurer")
ARTICLE I - CLASSES OF BUSINESS REINSURED
By this Contract the Reinsurer agrees to reinsure the excess liability which may
accrue to the Company under its policies, contracts and binders of insurance or
reinsurance (hereinafter called "policies") in force at the effective date
hereof or issued or renewed on or after that date, and classified by the Company
as Workers' Compensation and Employers Liability business, subject to the terms,
conditions and limitations set forth herein and in Schedule A attached to and
forming part of this Contract.
ARTICLE II - TERM
A. This Contract shall become effective at 12:01 a.m., Local Standard Time,
January 1, 2007, with respect to losses arising out of occurrences
commencing at or after that time and date, and shall remain in force until
12:01 a.m., Local Standard Time, January 1, 2008.
B. Unless otherwise mutually agreed, the Reinsurer shall have no liability
for losses arising out of occurrences commencing after the effective time
and date of termination or expiration.
C. Notwithstanding the provisions above, in the event that any policy subject
to this Contract is required by statute, regulation or by order of an
insurance department to be continued in force, the Reinsurer agrees to
extend reinsurance coverage hereunder following the termination or
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expiration of this Contract with respect to such policy until the first
date that the Company may lawfully non-renew, cancel or terminate such
policy, whether or not the Company actually does non-renew, cancel or
terminate such policy. However, under no circumstances shall runoff
coverage under this paragraph exceed 23 months.
D. Seven years after the termination or expiration of this Contract, the
Company shall advise the Reinsurer of any outstanding claims and/or
occurrences (each hereinafter referred to as a "claim") arising during the
term hereof, which have not been finally settled and which may cause a
recovery under this Contract, and no liability shall attach hereunder for
any claim not reported to the Reinsurer within this seven-year period.
ARTICLE III - SPECIAL TERMINATION
Notwithstanding the provisions of paragraph A of the Term Article, the Company
may terminate a Subscribing Reinsurer's percentage share in this Contract if any
of the following circumstances occur, as clarified by public announcement for
subparagraphs 1 through 6 below and upon discovery for subparagraph 7 below. The
Company shall have 120 days from the date of public announcement or discovery,
as applicable, to exercise its option to terminate a Subscribing Reinsurer's
percentage share in this Contract. The effective date of special termination may
not be sooner than one day after the Company provides the Subscribing Reinsurer
notice of its election to specially terminate, unless mutually agreed otherwise.
1. The Subscribing Reinsurer's policyholders' surplus at the inception
of this Contract has been reduced by more than 25.0% of the amount
of surplus 12 months prior to that date; or
2. The Subscribing Reinsurer's policyholders' surplus at any time
during the term of this Contract has been reduced by more than 25.0%
of the amount of surplus at the date of the Subscribing Reinsurer's
most recent financial statement filed with regulatory authorities
and available to the public as of the inception of this Contract; or
3. The Subscribing Reinsurer's A.M. Best's rating has been assigned or
downgraded below A- (including any "Not Rated" rating) and/or
Standard & Poor's rating has been assigned or downgraded below BBB+;
or
4. The Subscribing Reinsurer has become merged with, acquired by or
controlled by any other company, corporation or individual(s) not
controlling the Subscribing Reinsurer's operations previously;
however, this subparagraph shall not apply to the sale of stock to a
non-acquiring entity or where the acquiring company, corporation or
individual(s) has an A.M. Best's rating higher than the rating held
by the Subscribing Reinsurer at the inception of this Contract; or
5. A State Insurance Department or other legal authority has ordered
the Subscribing Reinsurer to cease writing business; or
6. The Subscribing Reinsurer has become insolvent or has been placed
into liquidation or receivership (whether voluntary or involuntary)
or proceedings have been instituted against the Subscribing
Reinsurer for the appointment of a receiver, liquidator,
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rehabilitator, conservator or trustee in bankruptcy, or other agent
known by whatever name, to take possession of its assets or control
of its operations; or
7. The Subscribing Reinsurer has ceased assuming new or renewal
property and casualty treaty reinsurance business.
ARTICLE IV - TERRITORY (BRMA 51A)
The territorial limits of this Contract shall be identical with those of the
Company's policies.
ARTICLE V - EXCLUSIONS
A. This Contract does not apply to and specifically excludes the following:
1. einsurance assumed by the Company under obligatory reinsurance
agreements, except:
a. Agency reinsurance where the policies involved are to be
reunderwritten in accordance with the underwriting standards
of the Company and reissued as Company policies at the next
anniversary or expiration date;
b. Intercompany reinsurance between any of the reinsured
companies under this Contract.
2. Ex-gratia payments.
3. Risks subject to a deductible in excess of $25,000, or a
self-insured retention excess of $25,000, unless such deductible or
self-insured retention is otherwise mandated by statute or
regulatory authority.
4. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
Liability - Reinsurance (U.S.A.)" and loss or liability defined in
the "Nuclear Incident Exclusion Clause - Reinsurance - No. 4"
attached to and forming part of this Contract.
5. Pollution liability coverages excluded under the provisions of the
"Pollution Exclusion Clause - General Liability - Reinsurance (BRMA
39C)" attached to and forming part of this Contract.
6. Liability as a member, subscriber or reinsurer of any Pool,
Syndicate or Association, but this exclusion shall not apply to
Assigned Risk Plans or similar state-mandated plans.
7. All liability of the Company arising by contract, operation of law,
or otherwise, from its participation or membership, whether
voluntary or involuntary, in any insolvency fund. "Insolvency fund"
includes any guaranty fund, insolvency fund, plan, pool,
association, fund or other arrangement, however denominated,
established or governed, which provides for any assessment of or
payment or assumption by the Company of part or all of any claim,
debt, charge, fee or other obligation of an insurer, or its
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successors or assigns, which has been declared by any competent
authority to be insolvent, or which is otherwise deemed unable to
meet any claim, debt, charge, fee or other obligation in whole or in
part.
8. Loss or liability as excluded in the "War Risk Exclusion Clause
(Reinsurance)" attached to and forming part of this Contract.
However, this exclusion shall not apply to an act of terrorism that
is certified by the Secretary of Treasury, in concurrence with the
Secretary of State and the Attorney General of the United States.
9. Operation under the jurisdiction of the United States Xxxxxxxxx and
Harbor Workers' Compensation Act or the Xxxxx Act, except for
incidental exposures (i.e., 10.0% or less of the insured's estimated
payroll when the account is quoted).
10. Operations employing the process of nuclear fission or fusion or
handling of radioactive material, which operations include but are
not limited to:
a. The use of nuclear reactors such as atomic piles, particle
accelerators or generators; or
b. The use, handling or transportation of radioactive materials,
or the use, handling or transportation of any weapon of war
or explosive device employing nuclear fission or fusion.
However, subparagraphs a and b above shall not apply to:
i. The exclusive use of particle accelerators incidental to
ordinary industrial or education research pursuits, or
ii. The exclusive use, handling or transportation of
radioisotopes for medical or industrial use, or to
radium or radium compounds.
11. Operation of docks or wharves as related to port authorities.
12. The manufacturing, mining, refining, processing, distribution,
installation, removal or encapsulment of asbestos.
13. Risks involving known exposure to the following substances:
a. Dioxin;
b. Polychlorinated biphenols;
c. Asbestos.
14. All railway operations except sidetrack agreements.
15. Amusement parks, carnivals or circuses. This exclusion shall not
apply to miniature golf courses or driving range operations.
16. Subaquaeous operations.
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17. Underground mining; however, this exclusion shall not be construed
to apply to open-pit quarrying or "surface mining" operations.
18. Blasting operations, except for incidental exposures (i.e., 10.0% or
less of the insured's estimated payroll when the account is quoted).
19. Demolition of buildings or structures in excess of five stories.
20. Shoring and moving of buildings or structures, or underpinning that
involves pier and beam construction, commercial buildings with more
than three stories or hillside building reinforcements. However,
this exclusion shall not apply to foundation repair risks for which
neither the insured nor its employees are in tunnels or are
otherwise working under buildings.
21. Erection or repair of scaffolds if 10.0% or more of the insured's
annual remuneration is attributed to NCCI Class Code 9529.
22. Construction of tunnels or dams.
23. Fireworks, fuses, or any explosive substance (as defined below) as
follows:
a. Manufacturers or importers of such items;
b. Loading of such items into containers for use as explosive
objects, propellant charges or detonation devices and the
storage thereof (except as previously provided for, on an
incidental basis, in exclusion 18);
c. Manufacturers or importers of any product in which such items
are an ingredient;
d. Handling, storage, transportation or use of such items
(except as previously provided for, on an incidental basis,
in exclusion 18).
"Explosive substance" is defined as any substance manufactured for
the express purpose of exploding as differentiated from commodities
used industrially and which are only incidentally explosive.
24. Onshore and offshore gas and oil drilling operations.
25. Operations where principal business includes the use of any owned or
unowned aircraft, or any device or machine intended for and/or
aiding in the achievement of atmospheric flight, projection or
orbit, and/or the ownership or operation of any airport. This
exclusion shall not apply where exposure is incidental (i.e.,
constitutes 10.0% or less of the insured's payroll) to the principal
business operations and the aircraft contains eight seats or fewer.
26. Municipal law enforcement organizations and municipal fire fighting
organizations, whether professional or voluntary. This exclusion
shall not apply to off-duty law enforcement officers when employed
by an entity other than a municipality for duties performed within
the scope of the job for which they were hired.
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27. Logging or forestry operations.
28. Professional employment organizations (PEOs).
29. Professional sports teams.
30. Operations where the principal business of the risk is
manufacturing, production, distribution, refining or storage of
natural or artificial fuel, gas, butane, propane, liquefied
petroleum gases or gasoline. This exclusion shall not apply to any
risk whose principal business operations are any of the following:
a. Retail gasoline service station, either full or self service,
or retail gasoline marina;
b. Convenience store with gasoline sales with its petroleum gas
and/or storage tanks located below ground.
31. Loss, damage, liability, cost or expense of whatsoever nature
directly caused by, contributed to by, resulting from or arising out
of or in connection with any act of terrorism (as defined in
paragraph G of the Definitions Article) and/or threat thereof,
involving the use of any biological, chemical or nuclear agent,
material, device or weapon.
32. Business reinsured by the Minnesota Workers' Compensation
Reinsurance Association, whether contractually assumed or imposed by
law, including, but not limited to, direct or indirect loss, damage,
liability, cost or expense. However, this exclusion shall not apply
to:
a. Losses paid within the Company's net retention; or
b. Losses paid in excess of the benefits allowed under Minnesota
Workers' Compensation law.
B. In the event the Company is inadvertently bound on any risk which is
excluded under subparagraph 9, subparagraphs 14 through 27, or
subparagraph 30 of paragraph A above, the reinsurance provided under this
Contract shall apply on such risk until discovery by the Company of the
existence of such risk and for 30 days thereafter or for a period of time
specific to the applicable state cancellation requirements, not to exceed
120 days. This limitation shall not apply as respects Arizona. Coverage
shall cease after such time or at policy anniversary as respects Arizona
policies, unless the Company has received from the Reinsurer written
notice of its approval of such risk within 30 days.
C. Notwithstanding the foregoing, any reinsurance falling within the scope of
one or more of the exclusions set forth above that is specially accepted
by the Reinsurer from the Company shall be covered under this Contract and
subject to all of the terms and conditions hereof, except as such terms
are modified by the special acceptance. In the event a reinsurer becomes a
party to this Contract subsequent to one or more special acceptances
hereunder, the new reinsurer shall automatically accept such special
acceptance(s) as being covered hereunder.
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ARTICLE VI - RETENTION AND LIMIT
A. As respects each excess layer of reinsurance coverage provided by this
Contract, the Company shall retain and be liable for the first amount of
ultimate net loss (regardless of the combination of classes of business,
number of policies or number of interests involved), shown as "Company's
Retention" for that excess layer in Schedule A attached hereto, arising
out of each occurrence. The Reinsurer shall then be liable, as respects
each excess layer, for the amount by which such ultimate net loss exceeds
the Company's applicable retention, but the liability of the Reinsurer
shall not exceed the amount, shown as "Reinsurer's Per Occurrence Limit"
for that excess layer in Schedule A attached hereto, as respects any one
occurrence.
B. The Company's ultimate net loss, for the purpose of this Contract, shall
be deemed to be a maximum of $10,000,000 any one life from the ground up.
C. The Company deems that the maximum Employers Liability policy limits
subject hereto shall not exceed $2,000,000. Policy limits in excess of
$2,000,000 may be submitted by special acceptance to the Reinsurer for
coverage hereunder, subject to the provisions of paragraph C of the
Exclusions Article.
ARTICLE VII - REINSTATEMENT
A. In the event all or any portion of the reinsurance under any excess layer
of reinsurance coverage provided by this Contract is exhausted by loss,
the amount so exhausted shall be reinstated immediately from the time the
occurrence commences hereon. For each amount so reinstated the Company
agrees to pay additional premium equal to the product of the following:
1. The percentage of the occurrence limit for the excess layer
reinstated (based on the loss paid by the Reinsurer under that
excess layer); times
2. The earned reinsurance premium for the excess layer reinstated for
the term of this Contract (exclusive of reinstatement premium).
B. Whenever the Company requests payment by the Reinsurer of any loss under
any excess layer hereunder, the Company shall submit a statement to the
Reinsurer of reinstatement premium due the Reinsurer for that excess
layer. If the earned reinsurance premium for any excess layer for the term
of this Contract has not been finally determined as of the date of any
such statement, the calculation of reinstatement premium due for that
excess layer shall be based on the annual deposit premium for that excess
layer and shall be readjusted when the earned reinsurance premium for that
excess layer for the term of this Contract has been finally determined.
Any reinstatement premium shown to be due the Reinsurer for any excess
layer as reflected by any such statement (less prior payments, if any, for
that excess layer) shall be payable by the Company concurrently with
payment by the Reinsurer of the requested loss for that excess layer. Any
return reinstatement premium shown to be due the Company shall be remitted
by the Reinsurer as promptly as possible after receipt and verification of
the Company's statement.
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C. Notwithstanding anything stated herein, the liability of the Reinsurer
hereunder shall not exceed the amount, shown as "Reinsurer's Per
Occurrence Limit" for that excess layer in Schedule A attached hereto, as
respects loss or losses arising out of any one occurrence, nor shall it
exceed the amount, shown as "Reinsurer's Term Limit" for that excess layer
in Schedule A attached hereto, as respects loss or losses arising out of
all occurrences during the term of this Contract.
ARTICLE VIII - DEFINITIONS
A. "Ultimate net loss" as used herein is defined as the sum or sums
(including loss in excess of policy limits, extra contractual obligations
and any loss adjustment expense, as hereinafter defined) paid or payable
by the Company in settlement of claims and in satisfaction of judgments
rendered on account of such claims, after deduction of all recoveries from
subrogation, all recoveries, and all claims on inuring insurance or
reinsurance, whether collectible or not. Nothing herein shall be construed
to mean that losses under this Contract are not recoverable until the
Company's ultimate net loss has been ascertained.
B. "Loss in excess of policy limits" and "extra contractual obligations" as
used herein shall be defined as follows:
1. "Loss in excess of policy limits" shall mean 90.0% of any amount
paid or payable by the Company in excess of its policy limits, but
otherwise within the terms of its policy, such loss in excess of the
Company's policy limits having been incurred because of, but not
limited to, failure by the Company to settle within the policy
limits or by reason of the Company's alleged or actual negligence or
bad faith in rejecting an offer of settlement or in the preparation
of the defense or in the trial of an action against its insured or
reinsured or in the preparation or prosecution of an appeal
consequent upon such an action.
2. "Extra contractual obligations" shall mean 90.0% of any punitive,
exemplary, compensatory or consequential damages paid or payable by
the Company, not covered by any other provision of this Contract and
which arise from the handling of any claim on business subject to
this Contract, such liabilities arising because of, but not limited
to, failure by the Company to settle within the policy limits or by
reason of the Company's alleged or actual negligence or bad faith in
rejecting an offer of settlement or in the preparation of the
defense or in the trial of an action against its insured or
reinsured or in the preparation or prosecution of an appeal
consequent upon such an action. An extra contractual obligation
shall be deemed, in all circumstances, to have occurred on the same
date as the loss covered or alleged to be covered under the policy.
Notwithstanding anything stated herein, this Contract shall not apply to
any loss in excess of policy limits or any extra contractual obligation
incurred by the Company as a result of any fraudulent and/or criminal act
by any officer or director of the Company 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.
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If any provision of this paragraph B 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
Contract or the enforceability of such provision in any other
jurisdiction.
C. "Occurrence" as used herein is defined as an accident or occurrence or a
series of accidents or occurrences arising out of or caused by one event,
whether involving one or more of the Company's policies, except that:
1. As respects Workers' Compensation policies, each occupational or
industrial disease or cumulative injury case contracted by an
employee of an insured shall be deemed to have been caused by a
separate occurrence commencing on:
a. The date of disability for which compensation is payable if
the case is compensable under the Workers' Compensation Law;
b. The date disability due to the disease actually began if the
case is not compensable under the Workers' Compensation Law;
or
c. The date of cessation of employment if claim is made after
employment has ceased.
2. Notwithstanding the provisions of subparagraph 1 above, as respects
losses resulting from occupational or industrial disease and
cumulative injury suffered by employees of an insured for which the
employer is liable as a result of a sudden and accidental event not
exceeding 72 hours in duration, all such losses shall be considered
one occurrence and may be combined with losses not classified as
occupational or industrial disease or cumulative injury which arise
out of the same event and the combination of such losses shall be
considered as one occurrence within the meaning hereof.
3. Notwithstanding the foregoing, the following shall apply to
occurrences involving natural disasters:
a. An occurrence shall be limited to damage, injury or loss
arising out of a natural disaster during any continuous 168
hour period.
b. The Company may choose the date and time when such 168 hour
period commences and if the occurrence is of greater duration
than 168 hours, the Company may divide such occurrence into
two or more occurrences, provided no two periods overlap and
provided no period commences earlier than the date and time
of the first loss to the Company in such occurrence.
c. "Natural disaster" shall mean loss caused by the perils of
tornado, cyclone, windstorm, hurricane and hail arising from
the same atmospheric disturbance; earthquake, including
ensuing fire, landslide, mudslide, flood, tidal wave;
volcanic eruptions; flood; tides; tidal wave;
landslide/mudslide; and meteors.
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D. "Occupational or industrial disease" shall mean any abnormal condition
that fulfills all of the following conditions:
1. It is not traceable to a definite compensable accident occurring
during the employee's present or past employment; and
2. It has been caused by exposure to a disease producing agent or
agents present in the workers' occupational environment; and
3. It has resulted in a disability or death.
E. "Cumulative injury" is any injury that fulfills all of the following
conditions:
1. It is not traceable to a definite compensable accident occurring
during the employee's present or past employment; and
2. It has occurred from, and has been aggravated by, a repetitive
employment-related activity; and
3. It has resulted in a disability or death.
F. "Loss adjustment expense" as used herein shall mean expenses assignable to
the investigation, appraisal, adjustment, settlement, litigation, defense
and/or appeal of specific claims, regardless of how such expenses are
classified for statutory reporting purposes. Loss adjustment expense shall
include, but not be limited to, interest on judgments, expenses of outside
adjusters and claim-specific declaratory judgment expenses or other legal
expenses and costs incurred in connection with coverage questions and
legal actions connected thereto, but shall not include office expenses or
salaries of the Company's regular employees other than medical management
personnel whose cost the Company will xxxx to specific cases on a time and
expense basis.
G. "Act of terrorism" as used herein shall mean either:
1. Any act of any person or persons either acting on behalf of or in
connection with any organization or group with activities directed
towards overthrowing, intimidating, coercing or influencing any
government DE JURE or DE FACTO or its populace or its economic,
political or social systems, by force, violence, weapons of mass
destruction, disruption or subversion of communication and
information system infrastructures and/or its content thereof, or
sabotage and/or threat therefrom; or
2. An act of terrorism that is certified by the Secretary of Treasury,
in concurrence with the Secretary of State and the Attorney General
of the United States.
Notwithstanding the above, in the event of an occurrence which arises out
of an act of workplace violence and is not consistent with the provisions
of subparagraphs 1 and 2 of this paragraph G, such loss shall be covered
hereunder, subject to the provisions of the Retention and Limit Article
and all other provisions of this Contract and shall not be considered an
act of terrorism. Further, any occurrence which is not or cannot be
determined, classified or certified in accordance with the provisions of
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subparagraphs 1 and 2 of this paragraph G shall be covered hereunder and
not considered an act of terrorism.
ARTICLE IX - OTHER REINSURANCE
A. The Company shall be permitted to carry facultative reinsurance,
recoveries under which shall inure to the benefit of this Contract.
B. The Company shall be permitted to carry underlying quota share reinsurance
and underlying excess reinsurance, recoveries under which shall inure
solely to the benefit of the Company and be entirely disregarded in
applying all of the provisions of this Contract.
ARTICLE X - FEDERAL TERRORISM RECOVERY
A. Any loss reimbursement the Company receives from the United States
Government under the Terrorism Risk Insurance Act of 2002, as amended by
the Terrorism Risk Insurance Extension Act of 2005 (together the
"Terrorism Act") as a result of occurrences commencing during the term of
this Contract shall inure to the benefit of this Contract in the
proportion that the Company's insured losses (as defined in the Terrorism
Act) in that occurrence under policies reinsured under this Contract bear
to the Company's total insured losses in that occurrence.
B. If a loss reimbursement received by the Company under the Terrorism Act is
based on the Company's insured losses in more than one occurrence and the
United States Government does not designate the amount allocable to each
occurrence, the reimbursement shall be prorated in the proportion that the
Company's insured losses in each occurrence bear to the Company's total
insured losses arising out of all occurrences to which the recovery
applies.
ARTICLE XI - ANNUITIES AT COMPANY'S OPTION
A. Whenever the Company is required, or elects, to purchase an annuity or to
negotiate a structured settlement in excess of the retention of this
Contract, either in satisfaction of a judgment or in an out-of-court
settlement or otherwise, the cost of the annuity or the structured
settlement, as the case may be, shall be deemed part of the Company's
ultimate net loss, provided such annuity or structured settlement terms
grant the Company full and final release as respects the indemnity portion
of the settlement. Additionally, it is the Company's intent to place all
annuities or structured settlements with a carrier whose A.M. Best's
rating is "A" or better.
B. The terms "annuity" or "structured settlement" shall be understood to mean
any insurance policy, lump sum payment, agreement or device of whatever
nature resulting in the payment of a lump sum by the Company in settlement
of any or all future liabilities which may attach to it as a result of an
occurrence.
C. In the event the Company purchases an annuity which inures in whole or in
part to the benefit of the Reinsurer, it is understood that the liability
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of the Reinsurer is not released thereby. In the event the Company is
required to provide benefits not provided by the annuity for whatever
reason, the Reinsurer shall pay its share of any loss.
ARTICLE XII - CLAIMS
A. Whenever a claim or settlement by the Company appears likely, in the sole
judgment of the Company, to result in a claim under this Contract, the
Company shall notify the Reinsurer. Further, the Company shall notify the
Reinsurer whenever a claim involves a fatality, amputation, spinal cord
damage, brain damage, blindness or extensive xxxxx, regardless of
liability, including all subsequent developments. The Reinsurer shall have
the right to participate, at its own expense, in the defense of any claim
or suit or proceeding involving this reinsurance.
B. All claim settlements made by the Company, provided such settlements are
within the terms of this Contract, shall be binding upon the Reinsurer,
and the Reinsurer agrees to pay all amounts for which it may be liable
upon receipt of reasonable evidence of the amount paid by the Company.
ARTICLE XIII - COMMUTATION
A. Either the Company or the Reinsurer may request commutation of that
portion of any excess loss hereunder represented by any outstanding claim
or claims after seven years from the date of an occurrence. If both
parties desire to commute a claim or claims, then within 60 days after
such agreement, the Company shall submit a statement of valuation of the
outstanding claim or claims showing the elements considered reasonable to
establish the ultimate net loss and the Reinsurer shall pay the amount
requested. Commutation of loss will be calculated on the present value of
the loss within the layer of coverage.
B. If agreement, as outlined in the paragraph above, cannot be reached, the
effort can be abandoned or, alternately, the Company and the Reinsurer may
mutually appoint an actuary or appraiser to investigate, determine and
capitalize such claim or claims. If both parties then agree, the Reinsurer
shall pay its proportion of the amount so determined to be the capitalized
value of such claim or claims.
C. If the parties, as outlined in the paragraphs above, fail to agree, they
may abandon the effort or they may agree to settle any difference using a
panel of three actuaries, one to be chosen by each party and the third by
the two so chosen. If either party refuses or neglects to appoint an
actuary within 60 days, the other party may appoint two actuaries. If the
two actuaries fail to agree on the selection of a third actuary within 60
days of their appointment, each of them shall name two, of whom the other
shall decline one and the decision shall be made by drawing lots. All the
actuaries shall be regularly engaged in the valuation of Workers'
Compensation claims and shall be Fellows of the Casualty Actuarial Society
or Members of the American Academy of Actuaries. None of the actuaries
shall be under the control of either party to this Contract.
D. Each party shall submit its case to its actuary within 60 days of the
appointment of the third actuary. The decision in writing of any two
actuaries, when filed with the parties hereto, shall be final and binding
on both parties. The expense of the actuaries and of the commutation shall
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be equally divided between the two parties. Said commutation shall take
place in North Palm Beach, Florida, unless some other place is mutually
agreed upon by the Company and the Reinsurer.
ARTICLE XIV - SPECIAL COMMUTATION
A. In the event a Subscribing Reinsurer meets one or more of the following
conditions, the Company may require a commutation of that portion of any
excess loss hereunder represented by any outstanding claim or claims,
including any related loss adjustment expense:
1. The Subscribing Reinsurer's A.M. Best's rating has been assigned or
downgraded below A- (including any "Not Rated" rating) and/or
Standard & Poor's rating has been assigned or downgraded below BBB+;
or
2. The Subscribing Reinsurer has ceased assuming new or renewal
property and casualty treaty reinsurance business.
"Outstanding claim or claims" shall be defined as known or unknown claims,
including any billed yet unpaid claims. However, unless otherwise mutually
agreed, this paragraph A shall not apply unless the outstanding claim or
claims is for an amount not less than $5,000.
B. If the Company elects to require commutation as provided in paragraph A
above, the Company shall submit a Statement of Valuation of the
outstanding claim or claims as of the last day of the month immediately
preceding the month in which the Company elects to require commutation, as
determined by the Company. Such Statement of Valuation shall include the
elements considered reasonable to establish the excess loss and shall set
forth or attach the information relied upon by the Company and the
methodology employed to calculate the excess loss. The Subscribing
Reinsurer shall then pay the amount requested within 30 calendar days of
receipt of such Statement of Valuation, unless the Subscribing Reinsurer
needs additional information from the Company to assess the Company's
Statement of Valuation or contests such amount.
C. If the Subscribing Reinsurer needs additional information from the Company
to assess the Company's Statement of Valuation or contests the amount
requested, the Subscribing Reinsurer shall so notify the Company within 15
calendar days of receipt of the Company's Statement of Valuation. The
Company shall supply any reasonably requested information to the
Subscribing Reinsurer within 15 calendar days of receipt of the
notification. Within 30 calendar days of the date of the notification or
of the receipt of the information, whichever is later, the Subscribing
Reinsurer shall provide the Company with its Statement of Valuation of the
outstanding claim or claims as of the last day of the month immediately
preceding the month in which the Company elects to require commutation, as
determined by the Subscribing Reinsurer. Such Statement of Valuation shall
include the elements considered reasonable to establish the excess loss
and shall set forth or attach the information relied upon by the
Subscribing Reinsurer and the methodology employed to calculate the excess
loss.
D. In the event the Subscribing Reinsurer's Statement of Valuation of the
outstanding claim or claims is viewed as unacceptable to the Company, the
Page 13
Company may either abandon the commutation effort, or may seek to settle
any difference by using an independent actuary agreed to by the parties.
E. If the parties cannot agree on an acceptable independent actuary within 15
calendar days of the date of the Subscribing Reinsurer's Statement of
Valuation, then each party shall appoint an actuary as party arbitrators
for the limited and sole purpose of selecting an independent actuary. If
the actuaries cannot agree on an acceptable independent actuary within 15
calendar days of the date of the Subscribing Reinsurer's Statement of
Valuation, the Company shall supply the Subscribing Reinsurer with a list
of at least three proposed independent actuaries, and the Subscribing
Reinsurer shall select the independent actuary from that list.
F. Upon selection of the independent actuary, both parties shall present
their respective written submissions to the independent actuary. The
independent actuary may, at his or her discretion, request additional
information. The independent actuary shall issue his or her decision
within 45 calendar days after the written submissions have been filed and
any additional information has been provided.
G. The decision of the independent actuary shall be final and binding. The
expense of the independent actuary shall be equally divided between the
two parties. For the purposes of this Article, unless mutually agreed
otherwise, an "independent actuary" shall be an actuary who satisfies each
of the following criteria:
1. Is regularly engaged in the valuation of claims resulting from lines
of business subject to this Contract; and
2. Is either a Fellow of the Casualty Actuarial Society or of the
American Academy of Actuaries; and
3. Is disinterested and impartial regarding this commutation.
H. Notwithstanding paragraphs A, B and C above, in the event that the
Subscribing Reinsurer no longer meets any of the conditions specified in
subparagraph 1 or 2 in paragraph A above, this commutation may continue on
a mutually agreed basis.
I. Payment by the Subscribing Reinsurer of the amount requested in accordance
with paragraph B, C or F above, shall release the Subscribing Reinsurer
from all further liability for outstanding claim or claims, known or
unknown, under this Contract and shall release the Company from all
further liability for payments of salvage or subrogation amounts, known or
unknown, to the Subscribing Reinsurer under this Contract.
J. In the event of any conflict between this Article and any other article of
this Contract, the terms of this Article shall control.
K. This Article shall survive the expiration or termination of this Contract.
Page 14
ARTICLE XV - SALVAGE AND SUBROGATION
The Reinsurer shall be credited with recoveries from salvage (i.e.,
reimbursement obtained or recovery made by the Company, less the actual cost,
excluding salaries of officials and employees of the Company and sums paid to
attorneys as retainer, of obtaining such reimbursement or making such recovery)
on account of claims and settlements involving reinsurance hereunder. Recoveries
therefrom shall always be used to reimburse the excess carriers in the reverse
order of their priority according to their participation before being used in
any way to reimburse the Company for its primary loss. The Company hereby agrees
to enforce its rights to salvage or subrogation relating to any loss, a part of
which loss was sustained by the Reinsurer, and to prosecute all claims arising
out of such rights.
ARTICLE XVI - PREMIUM
A. As premium for each excess layer of reinsurance coverage provided by this
Contract, the Company shall pay the Reinsurer the greater of the
following:
1. The amount, shown as "Annual Minimum Premium" for that excess layer
in Schedule A attached hereto (or a pro rata portion thereof if this
Contract is terminated prior to January 1, 2008); or
2. The percentage, shown as "Premium Rate" for that excess layer in
Schedule A attached hereto, of the Company's net earned premium for
the term of this Contract.
B. The Company shall pay the Reinsurer an annual deposit premium for each
excess layer of the amount, shown as "Annual Deposit Premium" for that
excess layer in Schedule A attached hereto, in four equal installments of
the amount, shown as "Quarterly Deposit Premium" for that excess layer in
Schedule A attached hereto, on January 1, April 1, July 1 and October 1 of
2007. However, no deposit premium installments shall be due after the
effective date of termination.
C. Within 60 days following the termination or expiration of this Contract
and within 60 days following the 12-month period thereafter, the Company
shall provide a report to the Reinsurer setting forth the premium due
hereunder for each excess layer for the term of this Contract, computed in
accordance with paragraph A, and any additional premium due the Reinsurer
for each such excess layer shall be remitted by the Company with its
report. If the premium so computed for any excess layer is less than the
previously paid, but more than the minimum premium for that excess layer,
the balance shall be refunded by the Reinsurer to the Company within 30
days of the report.
D. "Net earned premium" as used herein is defined as the Company's gross
earned premium for the classes of business subject to this Contract
(exclusive of premium for business covered by the Minnesota Workers'
Compensation Reinsurance Association), adjusted for experience
modification, discounts, credits, surcharges, expense constants and
deductible credits, plus or minus the Reinsurer's pro rata share of any
premium arising from audit adjustments, minus premiums paid for
facultative reinsurance which inures to the benefit of this Contract.
Page 15
ARTICLE XVII - LATE PAYMENTS
A. The provisions of this Article shall not be implemented unless
specifically invoked, in writing, by one of the parties to this Contract.
B. In the event any premium, loss or other payment due either party is not
received by the intermediary named in the Intermediary Article (BRMA 23A)
(hereinafter referred to as the "Intermediary") by the payment due date,
the party to whom payment is due may, by notifying the Intermediary in
writing, require the debtor party to pay, and the debtor party agrees to
pay, an interest penalty on the amount past due calculated for each such
payment on the last business day of each month as follows:
1. The number of full days which have expired since the due date or the
last monthly calculation, whichever the lesser; times
2. 1/365ths of the six-month United States Treasury Xxxx rate as quoted
in THE WALL STREET JOURNAL on the first business day of the month
for which the calculation is made; times
3. The amount past due, including accrued interest.
It is agreed that interest shall accumulate until payment of the original
amount due plus interest penalties have been received by the Intermediary.
C. The establishment of the due date shall, for purposes of this Article, be
determined as follows:
1. As respects the payment of routine deposits and premiums due the
Reinsurer, the due date shall be as provided for in the applicable
section of this Contract. In the event a due date is not
specifically stated for a given payment, it shall be deemed due 30
days after the date of transmittal by the Intermediary of the
initial billing for each such payment.
2. Any claim or loss payment due the Company hereunder shall be deemed
due 30 days after the proof of loss and demand for payment is
transmitted to the Reinsurer. If such loss or claim payment is not
received within the 30 days, interest will accrue on the payment or
amount overdue in accordance with paragraph B above, from the date
the proof of loss and demand for payment was transmitted to the
Reinsurer.
3. As respects any payment, adjustment or return due either party not
otherwise provided for in subparagraphs 1 and 2 above, the due date
shall be as provided for in the applicable section of this Contract.
In the event a due date is not specifically stated for a given
payment, it shall be deemed due 30 days following transmittal of
written notification that the provisions of this Article have been
invoked.
For purposes of interest calculations only, amounts due hereunder shall be
deemed paid upon receipt by the Intermediary.
D. Nothing herein shall be construed as limiting or prohibiting a Subscribing
Reinsurer from contesting the validity of any claim, or from participating
in the defense of any claim or suit, or prohibiting either party from
Page 16
contesting the validity of any payment or from initiating any arbitration
or other proceeding in accordance with the provisions of this Contract. If
the debtor party prevails in an arbitration or other proceeding, then any
interest penalties due hereunder on the amount in dispute shall be null
and void. If the debtor party loses in such proceeding, then the interest
penalty on the amount determined to be due hereunder shall be calculated
in accordance with the provisions set forth above unless otherwise
determined by such proceedings. If a debtor party advances payment of any
amount it is contesting, and proves to be correct in its contestation,
either in whole or in part, the other party shall reimburse the debtor
party for any such excess payment made plus interest on the excess amount
calculated in accordance with this Article.
E. Interest penalties arising out of the application of this Article that are
$1,000 or less from any party shall be waived unless there is a pattern of
late payments consisting of three or more items over the course of any
12-month period.
ARTICLE XVIII - OFFSET
Each party hereto has the right, which may be exercised at any time, to offset
any amounts, whether on account of premiums or losses or otherwise, due from
such party to another party under this Contract or any other reinsurance
contract heretofore or hereafter entered into between them, against any amounts,
whether on account of premiums 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.
ARTICLE XIX - ACCESS TO RECORDS (BRMA 1D)
The Reinsurer or its designated representatives shall have access at any
reasonable time to all records of the Company which pertain in any way to this
reinsurance.
ARTICLE XX - LIABILITY OF THE REINSURER
A. The liability of the Reinsurer shall follow that of the Company in every
case and be subject in all respects to all the general and specific
stipulations, clauses, waivers and modifications of the Company's policies
and any endorsements thereon. However, in no event shall this be construed
in any way to provide coverage outside the terms and conditions set forth
in this Contract.
B. Nothing herein shall in any manner create any obligations or establish any
rights against the Reinsurer in favor of any third party or any persons
not parties to this Contract.
ARTICLE XXI - NET RETAINED LINES (BRMA 32E)
A. This Contract applies only to that portion of any policy which the Company
retains net for its own account (prior to deduction of any underlying
reinsurance specifically permitted in this Contract), and in calculating
the amount of any loss hereunder and also in computing the amount or
Page 17
amounts in excess of which this Contract attaches, only loss or losses in
respect of that portion of any policy which the Company retains net for
its own account shall be included.
B. The amount of the Reinsurer's liability hereunder in respect of any loss
or losses shall not be increased by reason of the inability of the Company
to collect from any other reinsurer(s), whether specific or general, any
amounts which may have become due from such reinsurer(s), whether such
inability arises from the insolvency of such other reinsurer(s) or
otherwise.
ARTICLE XXII - ERRORS AND OMISSIONS
Except as provided in paragraph D of the Term Article, inadvertent delays,
errors or omissions made in connection with this Contract or any transaction
hereunder shall not relieve either party from any liability which would have
attached had such delay, error or omission not occurred, provided always that
such error or omission is rectified as soon as possible after discovery.
ARTICLE XXIII - CURRENCY (BRMA 12A)
A. Whenever the word "Dollars" or the "$" sign appears in this Contract, they
shall be construed to mean United States Dollars and all transactions
under this Contract shall be in United States Dollars.
B. Amounts paid or received by the Company in any other currency shall be
converted to United States Dollars at the rate of exchange at the date
such transaction is entered on the books of the Company.
ARTICLE XXXX - XXXXX (XXXX 00X)
In consideration of the terms under which this Contract is issued, the Company
will not claim a deduction in respect of the premium hereon when making tax
returns, other than income or profits tax returns, to any state or territory of
the United States of America or the District of Columbia.
ARTICLE XXV - FEDERAL EXCISE TAX
A. The Reinsurer has agreed to allow for the purpose of paying the Federal
Excise Tax the applicable percentage of the premium payable hereon (as
imposed under Section 4371 of the Internal Revenue Code) to the extent
such premium is subject to the Federal Excise Tax.
B. In the event of any return of premium becoming due hereunder the Reinsurer
will deduct the applicable percentage from the return premium payable
hereon and the Company or its agent should take steps to recover the tax
from the United States Government.
Page 18
ARTICLE XXVI - RESERVES
(Applies only to a reinsurer which (1) does not qualify for full credit with any
insurance regulatory authority having jurisdiction over the Company's reserves,
or (2) which is or becomes rated "B++" or lower or holds a "Not Rated" rating by
A.M. Best or is or becomes rated BBB+ or lower by Standard & Poor's, unless the
Reinsurer has an A.M. Best's rating of "A" or Standard & Poor's rating of "A"
and group policyholders' surplus equal to or above $2,000,000,000 at the
inception of this Contract)
A. As regards policies or bonds issued by the Company coming within the scope
of this Contract, the Company agrees that when it shall file with the
insurance regulatory authority or set up on its books reserves for losses
covered hereunder which it shall be required by law to set up, it will
forward to the Reinsurer a statement showing the proportion of such
reserves which is applicable to the Reinsurer. The Reinsurer hereby agrees
to fund such reserves in respect of known outstanding losses that have
been reported to the Reinsurer and allocated loss adjustment expense
relating thereto, losses and allocated loss adjustment expense paid by the
Company but not recovered from the Reinsurer, plus reserves for losses and
allocated loss adjustment expense incurred but not reported, as shown in
the statement prepared by the Company (hereinafter referred to as
"Reinsurer's Obligations") by Regulation 114 trust accounts, funds
withheld, cash advances or a Letter of Credit, or combination thereof. For
purposes of this Contract, the Lloyd's United States Credit for
Reinsurance Trust Fund shall be considered an acceptable funding
instrument. The Reinsurer shall have the option of determining the method
of funding provided it is acceptable to the insurance regulatory
authorities having jurisdiction over the Company's reserves.
B. When funding by a Letter of Credit, the Reinsurer agrees to apply for and
secure timely delivery to the Company of a clean, irrevocable and
unconditional Letter of Credit issued by a bank meeting the NAIC
Securities Valuation Office credit standards for issuers of Letters of
Credit and containing provisions acceptable to the insurance regulatory
authorities having jurisdiction over the Company's reserves in an amount
equal to the Reinsurer's proportion of said reserves. Such Letter of
Credit shall be issued for a period of not less than one year, and shall
contain an "evergreen" clause, which automatically extends the term for
one year from its date of expiration or any future expiration date unless
30 days (60 days where required by insurance regulatory authorities) prior
to any expiration date the issuing bank shall notify the Company by
certified or registered mail that the issuing bank elects not to consider
the Letter of Credit extended for any additional period.
C. The Reinsurer and Company agree that the Letters of Credit provided by the
Reinsurer pursuant to the provisions of this Contract may be drawn upon at
any time, notwithstanding any other provision of this Contract, and be
utilized by the Company or any successor, by operation of law, of the
Company including, without limitation, any liquidator, rehabilitator,
receiver or conservator of the Company for the following purposes, unless
otherwise provided for in a separate Trust Agreement:
1. To reimburse the Company for the Reinsurer's Obligations, the
payment of which is due under the terms of this Contract and which
has not been otherwise paid;
2. To make refund of any sum which is in excess of the actual amount
required to pay the Reinsurer's Obligations under this Contract, if
so requested by the Reinsurer;
Page 19
3. To fund an account with the Company for the Reinsurer's Obligations.
Such cash deposit shall be held in an interest bearing account
separate from the Company's other assets, and interest thereon not
in excess of the prime rate shall accrue to the benefit of the
Reinsurer;
4. To pay the Reinsurer's share of any other amounts the Company claims
are due under this Contract.
In the event the amount drawn by the Company on any Letter of Credit is in
excess of the actual amount required for subparagraphs 1 or 3, or in the
case of subparagraph 4, the actual amount determined to be due, the
Company shall promptly return to the Reinsurer the excess amount so drawn.
All of the foregoing shall be applied without diminution because of
insolvency on the part of the Company or the Reinsurer.
D. The issuing bank shall have no responsibility whatsoever in connection
with the propriety of withdrawals made by the Company or the disposition
of funds withdrawn, except to ensure that withdrawals are made only upon
the order of properly authorized representatives of the Company.
E. At quarterly intervals and on an estimated basis 45 days prior to each
December 31, or more frequently as agreed but never more frequently than
quarterly, the Company shall prepare a specific statement of the
Reinsurer's Obligations, for the sole purpose of amending the Letter of
Credit, in the following manner:
1. If the statement shows that the Reinsurer's Obligations exceed the
balance of credit as of the statement date, the Reinsurer shall,
within 30 days after receipt of notice of such excess, secure
delivery to the Company of an amendment to the Letter of Credit
increasing the amount of credit by the amount of such difference.
2. If, however, the statement shows that the Reinsurer's Obligations
are less than the balance of credit as of the statement date, the
Company shall, within 30 days after receipt of written request from
the Reinsurer, release such excess credit by agreeing to secure an
amendment to the Letter of Credit reducing the amount of credit
available by the amount of such excess credit.
ARTICLE XXVII - INSOLVENCY
A. In the event of the insolvency of one or more of the reinsured companies,
this reinsurance shall be payable directly to the company or to its
liquidator, receiver, conservator or statutory successor on the basis of
the liability of the company without diminution because of the insolvency
of the company or because the liquidator, receiver, conservator or
statutory successor of the company has failed to pay all or a portion of
any claim. It is agreed, however, that the liquidator, receiver,
conservator or statutory successor of the company shall give written
notice to the Reinsurer of the pendency of a claim against the company
indicating the policy or bond 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 or liquidation proceeding 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
Page 20
the proceeding where such claim is to be adjudicated, any defense or
defenses that it may deem available to the company 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 company as part of the expense of conservation or liquidation
to the extent of a pro rata share of the benefit which may accrue to the
company solely as a result of the defense undertaken by the Reinsurer.
B. Where two or more reinsurers are involved in the same claim and a majority
in interest elect to interpose defense to such claim, the expense shall be
apportioned in accordance with the terms of this Contract as though such
expense had been incurred by the company.
C. It is further understood and agreed that, in the event of the insolvency
of one or more of the reinsured companies, the reinsurance under this
Contract shall be payable directly by the Reinsurer to the company or to
its liquidator, receiver or statutory successor, except as provided by
Section 4118(a) of the New York Insurance Law or except (1) where this
Contract specifically provides another payee of such reinsurance in the
event of the insolvency of the company or (2) where the Reinsurer with the
consent of the direct insured or insureds has assumed such policy
obligations of the company as direct obligations of the Reinsurer to the
payees under such policies and in substitution for the obligations of the
company to such payees.
ARTICLE XXVIII - ARBITRATION
A. As a condition precedent to any right of action hereunder, in the event of
any dispute or difference of opinion hereafter arising with respect to
this Contract, it is hereby mutually agreed that such dispute or
difference of opinion shall be submitted to arbitration. One Arbiter shall
be chosen by the Company, the other by the Reinsurer, and an Umpire shall
be chosen by the two Arbiters before they enter upon arbitration, all of
whom shall be active or retired disinterested executive officers of
insurance or reinsurance companies or Lloyd's London Underwriters. In the
event that either party should fail to choose an Arbiter within 30 days
following a written request by the other party to do so, the requesting
party may choose two Arbiters who shall in turn choose an Umpire before
entering upon arbitration. If the two Arbiters fail to agree upon the
selection of an Umpire within 30 days following their appointment, the
Umpire shall be appointed in accordance with the procedures of the
American Arbitration Association.
B. Each party shall present its case to the Arbiters within 30 days following
the date of appointment of the Umpire. The Arbiters shall consider this
Contract as an honorable engagement rather than merely as a legal
obligation and they are relieved of all judicial formalities and may
abstain from following the strict rules of law. The decision of the
Arbiters shall be final and binding on both parties; but failing to agree,
they shall call in the Umpire and the decision of the majority shall be
final and binding upon both parties. Judgment upon the final decision of
the Arbiters may be entered in any court of competent jurisdiction.
C. If more than one reinsurer is involved in the same dispute, all such
reinsurers shall constitute and act as one party for purposes of this
Article and communications shall be made by the Company to each of the
reinsurers constituting one party, provided, however, that nothing herein
Page 21
shall impair the rights of such reinsurers to assert several, rather than
joint, defenses or claims, nor be construed as changing the liability of
the reinsurers participating under the terms of this Contract from several
to joint.
D. Each party shall bear the expense of its own Arbiter, and shall jointly
and equally bear with the other the expense of the Umpire and of the
arbitration. In the event that the two Arbiters are chosen by one party,
as above provided, the expense of the Arbiters, the Umpire and the
arbitration shall be equally divided between the two parties.
E. Any arbitration proceedings shall take place at a location mutually agreed
upon by the parties to this Contract, but notwithstanding the location of
the arbitration, all proceedings pursuant hereto shall be governed by the
law of the state in which the Company has its principal office.
ARTICLE XXIX - SERVICE OF SUIT (BRMA 49C)
(Applicable if the Reinsurer is not domiciled in the United States of America,
and/or is not authorized in any State, Territory or District of the United
States where authorization is required by insurance regulatory authorities)
A. It is agreed that in the event the Reinsurer fails to pay any amount
claimed to be due hereunder, the Reinsurer, at the request of the Company,
will submit to the jurisdiction of a court of competent jurisdiction
within the United States. Nothing in this Article constitutes or should be
understood to constitute a waiver of the Reinsurer's rights to commence an
action in any court of competent jurisdiction in the United States, to
remove an action to a United States District Court, or to seek a transfer
of a case to another court as permitted by the laws of the United States
or of any state in the United States.
B. Further, pursuant to any statute of any state, territory or district of
the United States which makes provision therefor, the Reinsurer hereby
designates the party named in its Interests and Liabilities Agreement, or
if no party is named therein, the Superintendent, Commissioner or Director
of Insurance or other officer specified for that purpose in the statute,
or his successor or successors in office, as its true and lawful attorney
upon whom may be served any lawful process in any action, suit or
proceeding instituted by or on behalf of the Company or any beneficiary
hereunder arising out of this Contract.
ARTICLE XXX - AGENCY AGREEMENT
If more than one reinsured company is named as a party to this Contract, the
first named company shall be deemed the agent of the other reinsured companies
(subject to the provisions of the Insolvency Article) for purposes of sending or
receiving notices required by the terms and conditions of this Contract, and for
purposes of remitting or receiving any monies due any party.
ARTICLE XXXI - GOVERNING LAW (BRMA 71B)
This Contract shall be governed by and construed in accordance with the laws of
the State of Florida.
Page 22
ARTICLE XXXII - INTERMEDIARY (BRMA 23A)
Xxxxxxxx Inc. is hereby recognized as the Intermediary negotiating this Contract
for all business hereunder. All communications (including but not limited to
notices, statements, premium, return premium, commissions, taxes, losses, loss
adjustment expense, salvages and loss settlements) relating thereto shall be
transmitted to the Company or the Reinsurer through Xxxxxxxx Inc. Payments by
the Company to the Intermediary shall be deemed to constitute payment to the
Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed to
constitute payment to the Company only to the extent that such payments are
actually received by the Company.
IN WITNESS WHEREOF, the Company by its duly authorized representative has
executed this Contract as of the date undermentioned at:
Xxxxx Xxxx Xxxxx, Xxxxxxx, this _______ day of ______________ in the year _____.
__________________________________________________
AmCOMP Preferred Insurance Company
AmCOMP Assurance Corporation
any and all insurance companies which are now or
hereafter come under the same ownership or
management as the AmCOMP Group
Page 23
Schedule A
SCHEDULE A
CATASTROPHE WORKERS' COMPENSATION
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2007
issued to
AmCOMP Preferred Insurance Company
North Palm Beach, Florida
AmCOMP Assurance Corporation
North Palm Beach, Florida
and
any and all insurance companies which are now or
hereafter come under the same ownership or management as the
AmCOMP Group
North Palm Beach, Florida
First Second
Excess Excess
Company's Retention $10,000,000 $20,000,000
Reinsurer's Per $10,000,000 $10,000,000
Occurrence Limit
Reinsurer's Term Limit $20,000,000 $20,000,000
Annual Minimum Premium $430,400 $260,000
Premium Rate 0.194% 0.117%
Annual Deposit Premium $538,000 $325,000
Quarterly Deposit Premium $134,500 $81,250
The figures listed above for each excess layer shall apply to each Subscribing
Reinsurer in the percentage share for that excess layer as expressed in its
Interests and Liabilities Agreement attached hereto.
Schedule A
NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE (U.S.A.)
(Approved by Lloyd's Underwriters' Fire and Non-Marine Association)
(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 II 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 II 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
of 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 into by
the United States of America, or any agency thereof, with any
person or organization.
Page 1 of 2
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 the operation of a nuclear facility by any person or
organization.
III. Under any Liability Coverage to
(INJURY, SICKNESS, DISEASE, DEATH OR DESTRUCTION
(bodily injury or property damage
resulting from the hazardous properties of nuclear material, if
(a) the nuclear material (1) is at any nuclear facility owned by,
or operated by or on behalf of, an insured or (2) has been
discharged or dispersed therefrom;
(b) the nuclear material is contained in spent fuel or waste at
any time possessed, handled, used, processed, stored,
transported or disposed of by or on behalf of an insured; or
(c) the
(INJURY, SICKNESS, DISEASE, DEATH OR DESTRUCTION
(bodily injury or property damage
arises out of the furnishing by an insured of services,
materials, parts or equipment in connection with the
planning, construction, maintenance, operation or use of any
nuclear facility, but if such facility is located within the
United States of America, its territories, or possessions or
Canada, this exclusion (c) applies only to
(INJURY TO OR DESTRUCTION OF PROPERTY AT SUCH NUCLEAR
FACILITY
(property damage to such nuclear facility and any
property thereat.
IV. As used in this endorsement:
"hazardous properties" include radioactive, toxic or explosive
properties; "nuclear material" means source material, special
nuclear material or byproduct material; "source material", "special
nuclear material", and "byproduct material" have the meanings given
them in the Atomic Energy Act of 1954 or in any law amendatory
thereof; "spent fuel" means any fuel element or fuel component,
solid or liquid, which has been used or exposed to radiation in a
nuclear reactor; "waste" means any waste material (1) containing
byproduct material and (2) resulting from the operation by any
person or organization of any nuclear facility included within the
definition of nuclear facility under paragraph (a) or (b) thereof;
"nuclear facility" means
(a) any nuclear reactor,
(b) any equipment or device designed or used for (1) separating
the isotopes of uranium or plutonium, (2) processing or
utilizing spent fuel, or (3) handling processing or packaging
waste,
(c) any equipment or device used for the processing, fabricating
or alloying of special nuclear material if at any time the
total amount of such material in the custody of the insured
at the premises where such equipment or device is located
consists of or contains more than 25 grams of plutonium or
uranium 233 or any combination thereof, or more than 250
grams of uranium 235,
(d) any structure, basin, excavation, premises or place prepared
or used for the storage or disposal of waste, and includes
the site on which any of the foregoing is located, all
operations conducted on such site and all premises used for
such operations; "nuclear reactor" means any apparatus
designed or used to sustain nuclear fission in a
self-supporting chain reaction or to contain a xxxxxxxx xxxx
of fissionable material;
(WITH RESPECT TO INJURY TO OR DESTRUCTION OF PROPERTY, THE
WORD "INJURY" OR "DESTRUCTION," ("property damage" includes
all forms of radioactive contamination of property, (INCLUDES
ALL FORMS OF RADIOACTIVE CONTAMINATION OF PROPERTY.
V. The inception dates and thereafter of all original policies
affording coverages specified in this paragraph (3), whether new,
renewal or replacement, being policies which become effective on or
after 1st May, 1960, provided this paragraph (3) shall not be
applicable to
(i) Garage and Automobile Policies issued by the Reassured
on New York risks, or
(ii) statutory liability insurance required under Chapter 90,
General Laws of Massachusetts, until 90 days following
approval of the Broad Exclusion Provision by the
Governmental Authority having jurisdiction thereof.
(4) Without in any way restricting the operation of paragraph (1) of this
Clause, it is understood and agreed that paragraphs (2) and (3) above are
not applicable to original liability policies of the Reassured in Canada
and that with respect to such policies this Clause shall be deemed to
include the Nuclear Energy Liability Exclusion Provisions adopted by the
Canadian Underwriters' Association or the Independent Insurance Conference
of Canada.
________________________________________________________________________________
*NOTE. THE WORDS PRINTED IN ITALICS IN THE LIMITED EXCLUSION PROVISION AND IN
THE BROAD EXCLUSION PROVISION SHALL APPLY ONLY IN RELATION TO ORIGINAL
LIABILITY POLICIES WHICH INCLUDE A LIMITED EXCLUSION PROVISION OR A
BROAD EXCLUSION PROVISION CONTAINING THOSE WORDS.
Page 2 of 2
NUCLEAR INCIDENT EXCLUSION CLAUSE REINSURANCE - NO. 4
(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
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 operations of Nuclear Incident
Exclusion Clause No. 1B - Liability, No. 2 - Physical Damage, No. 3 -
Boiler and Machinery and paragraph (1) of this clause, it is understood
and agreed that for all purposes as respects the reinsurance assumed by
the Reinsurer from the Reassured, all original insurance policies or
contracts of the Reassured (new, renewal and replacement) shall be deemed
to include the applicable existing Nuclear Clause and/or Nuclear Exclusion
Clause(s) in effect at the time and any subsequent revisions thereto as
agreed upon and approved by the Insurance Industry and/or a qualified
Advisory or Rating Bureau.
POLLUTION EXCLUSION CLAUSE - GENERAL LIABILITY - REINSURANCE
A. This reinsurance excludes all loss and/or liability accruing to the
reinsured company as a result of:
1. bodily injury or property damage arising out of the actual, alleged
or threatened discharge, dispersal, release or escape of pollutants:
a. at or from premises owned, rented or occupied by a named
insured;
b. at or from any site or location used by or for a named
insured or others for the handling, storage, disposal,
processing or treatment of waste;
c. which are at any time transported, handled, stored, treated,
disposed of, or processed as waste by or for a named insured
or any person or organization for whom a named insured may be
legally responsible; or
d. at or from any site or location on which a named insured or
any contractors or subcontractors working directly or
indirectly on behalf of a named insured are performing
operations:
(i) if the pollutants are brought on or to the site or
location in connection with such operations; or
(ii) if the operations are to test for, monitor, clean up,
remove, contain, treat, detoxify or neutralize the
pollutants;
2. any governmental direction or request that a named insured test for,
monitor, clean up, remove, contain, treat, detoxify or neutralize
pollutants.
B. Subparagraphs A(1)(a) and A(1)(d)(i) above do not apply to bodily injury
or property damage caused by heat, smoke or fumes from a hostile fire.
C. "Hostile fire" means a fire which becomes uncontrollable or breaks out
from where it was intended to be.
D. "Pollutants" means any solid, liquid, gaseous or thermal irritant or
contaminant, including smoke, vapor, soot, fumes, acids, alkalis,
chemicals and waste. Waste includes material to be recycled, reconditioned
or reclaimed.
WAR RISK EXCLUSION CLAUSE (REINSURANCE)
As regards interests which at time of loss or damage are on shore, no liability
shall attach hereto in respect of any loss or damage which is occasioned by war,
invasion, hostilities, acts of foreign enemies, civil war, rebellion,
insurrection, military or usurped power, or martial law or confiscation by order
of any government or public authority.
Nevertheless, this clause shall not be construed to apply to loss or damage
occasioned by riots, strikes, civil commotion, vandalism or malicious damage.
