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EXHIBIT 10.20
VARIABLE SHARE
QUOTA SHARE REINSURANCE AGREEMENT
REINSURED: Commonwealth Mortgage Assurance Company (and
Affiliates)
REINSURER: Capital Mortgage Reinsurance Company
EFFECTIVE DATE: January 1, 1997
TERM: Continuous from the Effective Date until
terminated as provided below.
DEFINITIONS: When used in this Agreement, the following
terms shall have the specific meanings shown
unless the context of any provision hereof
clearly indicates otherwise. Any definitions
set forth herein shall (i) include the
singular as well as plural, and (ii) all
accounting terms involving premium and loss
calculations shall have the meanings
ascribed to them under statutory accounting
principles prescribed or permitted under the
laws and regulations of the Commonwealth of
Pennsylvania.
"Affiliate" means any insurance company
controlled by, controlling or under common
control with the Reinsured or the Reinsurer,
as applicable.
"Captive Insurer" means an insurer that is
controlled by, controlling or under common
control with a mortgage originator and
assumes risk on mortgage loans insured by
the Reinsured (or any insurer controlled by,
controlling or under common control with the
Reinsured) and originated by such mortgage
lender.
"Agreement" means this Variable Share Quota
Share Reinsurance Agreement.
"Losses" means losses paid plus allocated
loss adjustment expenses paid by the
Reinsured during the Term of this Agreement
arising from Covered Business and reported
by the Reinsured within its statutory
financial statements, net of any salvage in
connection therewith. The Reinsured's
determination of Losses shall be binding on
the Reinsurer.
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"Calendar Year" means each whole calendar
year, i.e., each January 1 through December
31.
"Calendar Year's Earned Premium" means for
any Calendar Year, the amount of gross
earned premium allocable to Covered Business
and reported by the Reinsured within its
statutory financial statement for the
particular Calendar Year.
"Calendar Year's Losses" means, for any
Calendar Year, the amount of Losses
allocable to Covered Business and reported
by the Reinsured within its year-end
statutory financial statement for the
particular Calendar Year.
"Calendar Year's Ever to Date Written
Premium" means for any particular Calendar
Year, the aggregate amount of all gross
written premium allocable to Covered
Business reported by the Reinsured within
its year-end financial statements for the
period from the Underwriting Year through
the end of the particular Calendar Year.
"Calendar Year's Ever to Date Covered
Losses" means, for any particular Calendar
Year, the aggregate amount of all Losses
reimbursed, or reimbursable by the Reinsurer
hereunder, whether under the Calendar Year
Variable Quota Share Coverage or the
Underwriting Year Excess Coverage, from the
Effective Date through the end of the
particular Calendar Year.
"Underwriting Year" means the Calendar Year
beginning January 1, 1997 and ending
December 31, 1997.
"Underwriting Year's Written Premium" means
the gross written premium allocable to
Covered Business written by the Reinsured
during the Underwriting Year.
"Underwriting Year's Net Losses" means the
aggregate of all losses allocable to Covered
Business minus the amount of such Losses
reimbursed, or reimbursable by the Reinsurer
pursuant to this Agreement from the
Effective Date through the end of a
particular Calendar Year.
"Gross Risk in Force" means the aggregate
amount of exposure arising from Covered
Business calculated as
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follows: (i) in the case of primary mortgage
guaranty insurance policies, the unpaid
principal balance of each mortgage loan
insured multiplied by the coverage
percentage for each such loan, and (ii) in
the case of Agency Pool Insurance policies,
the stop loss amount for each policy less
any losses paid by the Reinsured in
connection with such policy.
"Agency Pool Insurance" means coverage
provided by the Reinsured to either the
Federal Home Loan Mortgage Corporation or
Federal National Mortgage Association (the
"Agencies") that a mortgage originator or
one of the Agencies purchases from the
Reinsured on a pool of mortgages sold to
such Agency.
"Agency Pool Insurance Limit" means $100
million of risk covered under Agency Pool
Insurance policies. For the avoidance of
doubt, the aggregate amount of Agency Pool
Insurance risk the Reinsured may write and
cede to the Reinsurer under the Agreement is
$100 million and the maximum amount of Loss
on Agency Pool Insurance payable by the
Reinsurer is $15 million (i.e., 15% of $100
million). Any Agency Pool Insurance risk
written by the Reinsured in excess of the
Agency Pool Insurance Limit shall be voided
for coverage purposes on a last written
first excluded basis.
COVERED BUSINESS: All primary mortgage guaranty
insurance policies and Agency Pool Insurance
policies issued by the Reinsured during the
Underwriting Year, subject to the Agency
Pool Insurance Limit.
EXCLUSIONS: (i) Pool Insurance (other than Agency Pool
Insurance)
(ii) Reinsurance Assumed
(iii) Any policy issued as a replacement for
an outstanding mortgage insurance policy of
any entity acquired by the Reinsured.
(iv) Any policy with regard to which the
insured under such policy (or its affiliate)
provides any insurance or co-insurance (or
its functional equivalent) to the Reinsured
in connection with such policy.
(v) Any policy for which any portion of the
risk is ceded to a Captive Insurer.
(vi) Any Agency Pool Insurance policy issued
to Norwest Mortgage Corporation.
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(vii) Any policy issued in connection with
"supernotes," i.e., a risk sharing financial
product sold by the Reinsured.
COVERAGES: Calendar Year Variable Quota Share Coverage:
The Reinsurer will assume as reinsurance and
be liable for:
(i) 7.5% of the amount of each Calendar
Year's Losses that do not exceed 55%
of such Calendar Year's Earned
Premium.
(ii) 11.25% of the amount of each
Calendar Year's Losses that exceed
55% but are less than or equal to
180% of such Calendar Year's Earned
Premium. Provided, however, that for
any Calendar Year in which such
Calendar Year's Losses exceed 55% of
such Calendar Year's Earned Premium,
the Reinsurer shall assume and be
liable for an additional 3.75% of
such Calendar Year's Losses up to
55% of such Calendar Year's Earned
Premium.
(iii) 15% of the amount of each Calendar
Year's Losses that exceed 180% of
such Calendar Year's Earned Premium.
(iv) 100% of the amount of each Calendar
Year's Losses that exceed 85% of the
Reinsured's Gross Risk in Force at
the end of such Calendar Year and
are not covered pursuant to
provisions (i) through (iii) above.
Underwriting Year Excess Coverage: The
Reinsurer will assume as reinsurance and be
liable for:
(i) 100% of the Underwriting Year's Net
Losses incurred by the Reinsured
during Calendar Years one through
four, to the extent that 8% of the
Underwriting Year's Written Premium,
plus any unpaid ceding commission,
exceeds the Calendar Year's Ever to
Date Covered Losses at the end of
the fourth Calendar Year of this
Agreement.
(ii) 100% of the Underwriting Year's
Net Losses incurred by the Reinsured
during Calendar Years five through
seven, to the extent that 8% of
the premium allocable to the Under-
writing Year and
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collected during the first and
second Calendar Years of this
Agreement plus any unpaid ceding
commission, exceeds the Calendar
Year's Ever to Date Covered Losses
at the end of the seventh Calendar
Year of this Agreement.
(iii) 100% of the Underwriting Year's Net
Losses incurred by the Reinsured
through the end of the tenth
Calendar Year of this Agreement, to
the extent that 8% of the premium
allocable to the Underwriting Year,
plus any unpaid ceding commission,
exceeds the Calendar Year's Ever to
Date Covered Losses, at the end of
the tenth Calendar Year of this
Agreement.
PREMIUM: The Reinsured shall pay to the Reinsurer a
premium (the "Premium") during the Term of
this Agreement equal to 15% of the
Reinsured's gross written premium allocable
to Covered Business during each calendar
quarter. The Premium, net of any ceding
commission due hereunder, shall be due and
payable within thirty (30) days after the
end of such calendar quarter and shall be
remitted as set forth below.
CEDING
COMMISSION: The Reinsurer shall pay to the Reinsured a
ceding commission of thirty-two percent
(32%) of the Premium paid hereunder,
provided, however, that for any Calendar
Year for which such Calendar Year's Losses
exceed fifty-five percent (55%) of such
Calendar Year's Earned Premium, no ceding
commission shall be paid.
LOSS
PAYMENTS: Calendar Year Variable Quota Share Coverage
The Reinsurer shall pay to the Reinsured a
provisional payment for Losses reinsured
under the Calendar Year Variable Quota Share
Coverage equal to 7.5% of the amount of the
Reinsured's Losses during each calendar
quarter during the Term of this Agreement no
later than the later of (i) thirty (30) days
after the end of such calendar quarter, and
(ii) ten (10) business days following the
receipt by the Reinsurer of a schedule
setting forth the amount of the Reinsured's
Losses during such quarter. Sixty (60) days
after the end of each Calendar Year (or any
shorter
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period in the event of a termination) the
Reinsured shall prepare and forward to the
Reinsurer a loss account showing for such
Calendar Year (or shorter period) and the
Underwriting Year, all Losses, Written
Premium, Earned Premium and Gross Risk in
Force. Within ten (10) days after the
Reinsurer's receipt of the loss account for
a particular Calendar Year (or shorter
period), the Reinsurer and the Reinsured
shall transfer funds between them so as to
reconcile the difference between (i) the
Reinsured's Calendar Year's Losses
reimbursed and reimbursable hereunder, and
(ii) the sum of the provisional payments for
Losses and payments of ceding commissions
made by the Reinsurer with respect to the
calendar quarters during such Calendar Year
(or shorter period).
Underwriting Year Excess Coverage
The Reinsurer shall remit to the Reinsured a
provisional payment of any amounts due the
Reinsured under the Underwriting Year Excess
Coverage on or before the last business day
of the fourth, seventh and tenth Calendar
Years of this Agreement. The Reinsured shall
provide the Reinsurer with a provisional
loss account no later than thirty (30) days
prior to the end of any such Calendar Year.
Sixty (60) days after the end of the fourth,
seventh and tenth Calendar Years of this
Agreement, the Reinsured shall prepare and
forward to the Reinsurer a loss account
showing for such Calendar Year and the
Underwriting Year, all Losses, Written
Premium, Earned Premium and Gross Risk in
Force. Within ten (10) business days after
the Reinsurer's receipt of the loss account
for the fourth, seventh and tenth Calendar
Years, the Reinsurer and the Reinsured shall
transfer funds between them so as to
reconcile the difference between (i) the
Reinsured's Underwriting Year's Net Losses,
and (ii) the sum of the provisional payments
made by the Reinsurer under the Underwriting
Year Excess Coverage with respect to such
Calendar Year.
CANCELLATION, A. This Agreement is non-cancelable by
TERMINATION: either party hereto for a period of ten
years from the effective date hereof, except
as provided in Section (B) below.
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B. Upon the occurrence of one or more of the
following events, the Reinsured, upon
providing ninety (90) days prior written
notice to the Reinsurer, shall have the
right to terminate this Agreement on a
cut-off basis, providing that such event or
events have not been corrected prior to the
expiration of such ninety (90) day period:
1. Notice from Standard & Poor's Corporation
("S&P"), Xxxxx'x Investor Services, Inc.
("Moody's"), or any other nationally
recognized rating agency that rates the
Reinsured, confirmation of which shall be
provided to the Reinsurer, that the
Reinsured's then-current financial strength
or claims-paying rating cannot be maintained
because of the reinsurance coverage provided
hereunder.
2. Receipt by the Reinsured of written
notice from the Pennsylvania Department of
Insurance, or any other regulatory
authority, a copy of which notice shall be
provided to the Reinsurer, denying to the
Reinsured full financial statement credit
according to the statutory requirements of
the Commonwealth of Pennsylvania or any
other jurisdiction in which the failure of
the Reinsured to obtain such full financial
statement credit would have a material
adverse impact on the Reinsured.
3. Each party shall have the right to
terminate this Agreement in the event of any
actual or alleged breach or non-performance
of a material provision of this Agreement by
the other party which is not corrected or
cured within thirty (30) days of the receipt
by such other party of a written notice
specifying the nature of the claimed breach
or non-performance.
4. Each party shall have the right to
terminate this Agreement on December 31,
2006 (or any subsequent December 31) by
providing at least ninety (90) days prior
written notice of its intention to terminate
this Agreement.
After a termination cut-off pursuant to this
Section, the Reinsurer shall pay to the
Reinsured a profit commission equal to (i)
8% of the current Calendar Year's Ever to
Date Written Premium, plus (ii) any unpaid
ceding commission not paid in any Calendar
Year when the Underwriting Year's Ever to
Date Covered Losses exceeded fifty-five
percent (55%) of such Calendar Year's Earned
Premium,
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minus (iii) such Calendar Year's ever to
Date Covered Losses.
At any termination of this Agreement, the
Reinsurer shall refund to the Reinsured, in
addition to any other sums due to the
Reinsured hereunder, 14.67% of the
Reinsured's ceded unearned premium with
respect to Covered Business as of the date
of such termination.
FINANCIAL The Reinsurer shall take all steps necessary
STATEMENT CREDIT: for the Reinsured to obtain full financial
statement credit according to the statutory
requirements of the Commonwealth of
Pennsylvania, the State of New York, and any
other jurisdiction in which the failure of
the Reinsured to obtain such full financial
statement credit would have a material
adverse impact on the Reinsured.
TRUST
AGREEMENT: Upon the execution of this Agreement by the
parties, the Reinsurer shall establish a
trust account (the "Trust") for the benefit
of the Reinsured at a financial institution
and under a trust agreement acceptable to
the Reinsured. The Reinsured shall promptly
reimburse the Reinsurer for the reasonable
and customary fees and expenses of the
administration of the Trust.
The payments of Premium (net of any ceding
commissions due) by the Reinsured hereunder
shall be made in two parts: (i) an amount
equal to 14.67% of any Premium shall be
remitted directly to the Reinsurer; and (ii)
any remaining Premium due, net of any ceding
commission, shall be deposited directly into
the Trust.
Deposits of Premium into the Trust shall be
invested at the discretion of the Reinsurer,
provided, however, that at each quarter-end
(i) at least ninety-five percent (95%) of
the assets of the Trust shall consist of
instruments or securities determined, as of
the date of each quarter-end, to be of
investment grade as defined from time to
time by S&P and/or Xxxxx'x, (ii) at least
fifty percent (50%) of the investments and
cash assets of the Trust shall consist of
cash or cash equivalents, or securities
determined, as of the date of purchase, to
be of the highest investment grade as
determined from time to time by S&P and/or
Xxxxx'x, and
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(iii) none of the assets of the Trust may be
invested in instruments or securities with
any real estate-related risk, and (iv) none
of the assets of the Trust may be invested
in instruments or securities of the
Reinsurer, the Reinsured or any Affiliate of
either. The Reinsurer shall be entitled to
the investment income generated by the
Trust.
The Reinsured has the right and the
obligation to withdraw assets from the Trust
at any time and from time to time, as the
Reinsured shall elect, in satisfaction of
the Reinsurer's obligations hereunder,
provided that such obligations have not been
previously reimbursed to the Reinsured by
the Reinsurer. In the event that, at any
time, the assets of the Trust are
insufficient to satisfy fully the
obligations of the Reinsurer hereunder, the
Reinsurer shall satisfy such shortfall
directly as provided hereinabove.
The Reinsurer may withdraw, and retain for
its own account, all investment income
earned on the Trust's assets at any time and
from time to time as the Reinsurer shall
elect. The trustee shall allow no other
withdrawals or substitutions of assets from
or to the Trust except as permitted
hereunder.
The trustee shall immediately honor all
withdrawal requests made in accordance
herewith and take all steps necessary to
transfer the applicable assets held under
the Trust to the appropriate party.
Any disputes arising from the Trust may not
be the subject of an arbitration proceeding
between the parties unless both the
Reinsured and the Reinsurer agree in writing
to such an arbitration proceeding.
OTHER
PROVISIONS: This Agreement is subject to the negotiation
and execution of a formal reinsurance treaty
and a trust agreement both acceptable to the
parties containing in addition to the terms
and conditions set forth herein, ordinary
and customary clauses set forth in
reinsurance transactions generally,
including, but not limited to the following:
Follow the Fortunes Clause
Offset Clause
Errors and Omissions Clause
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Inspections Clause
Taxes Clause
Service of Suit Clause
Insolvency Clause
Arbitration Clause
Assignment Clause
Notices Clause
Waiver Clause
Negotiated Agreement Clause
Governing Law Clause (PA)
Salvage Clause
Subrogation Clause
Access to Records Clause
Reports Clause
Parental Wrap of Reinsurer Clause
Penalty Interest for Late Payments
AGREED TO AND ACCEPTED BY:
COMMONWEALTH MORTGAGE ASSURANCE COMPANY
BY: _____________________________________
NAME: _____________________________________
TITLE: _____________________________________
DATE: _____________________________________
CAPITAL MORTGAGE REINSURANCE COMPANY
BY: _____________________________________
NAME: _____________________________________
TITLE: _____________________________________
DATE: _____________________________________
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(iii) none of the assets of the Trust may be
invested in instruments or securities with
any real estate-related risk, and (iv) none
of the assets of the Trust may be invested
in instruments or securities of the
Reinsurer, the Reinsured or any Affiliate of
either. The Reinsurer shall be entitled to
the investment income generated by the
Trust.
The Reinsured has the right and the
obligation to withdraw assets from the Trust
at any time and from time to time, as the
Reinsured shall elect, in satisfaction of
the Reinsurer's obligations hereunder,
provided that such obligations have not been
previously reimbursed to the Reinsured by
the Reinsurer. In the event that, at any
time, the assets of the Trust are
insufficient to satisfy fully the
obligations of the Reinsurer hereunder, the
Reinsurer shall satisfy such shortfall
directly as provided hereinabove.
The Reinsurer may withdraw, and retain for
its own account, all investment income
earned on the Trust's assets at any time and
from time to time as the Reinsurer shall
elect. The trustee shall allow no other
withdrawals or substitutions of assets from
or to the Trust except as permitted
hereunder.
The trustee shall immediately honor all
withdrawal requests made in accordance
herewith and take all steps necessary to
transfer the applicable assets held under
the Trust to the appropriate party.
Any disputes arising from the Trust may not
be the subject of an arbitration proceeding
between the parties unless both the
Reinsured and the Reinsurer agree in writing
to such an arbitration proceeding.
INSOLVENCY: In the event of the insolvency of the
Reinsured, this reinsurance shall be payable
directly to the Reinsured, or its
liquidator, receiver, conservator or
statutory successor on the basis of the
liability of the Reinsured without
diminution because of the insolvency of the
Reinsured or because the liquidator,
receiver, conservator or statutory successor
of the Reinsured has failed to pay all or a
portion of any claim. It is agreed, however,
that within a reasonable time the
liquidator, receiver, conservator or
statutory successor of the Reinsured shall
give written notice to the Reinsurer of the
pendency of a claim against
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the Reinsured. During the pendency of such
claim, the Reinsurer may investigate such
claim and interpose, at its own expense, in
the proceeding where such claim is to be
adjudicated, any defense or defenses that
they may deem available to the Reinsured or
its liquidator, receiver, conservator or
statutory successor. The expense thus
incurred by the Reinsurer shall be
chargeable, subject to the approval of the
court, against the Reinsured as part of the
expense of conservation or liquidation to
the extent of a pro rata share of the
benefit which may accrue to the Reinsured
solely as a result of the defense undertaken
by the Reinsurer.
ERRORS AND OMISSIONS: Any inadvertent delay, omission or error
shall not be held to relieve either party
hereto from any liability which would attach
to it hereunder if such delay, omission or
error had not been made, provided such
delay, omission or error is rectified as
soon as possible after discovery.
ACCESS TO RECORDS: The Reinsurer or its duly authorized
representative shall have access to and the
right to inspect the books and records of
the Reinsured at all reasonable times for
the purpose of obtaining information
concerning this Agreement, the Covered
Business or the subject matter hereof.
ARBITRATION; SERVICE OF As a condition precedent to any right of
PROCESS AND JURISDICTION: action hereunder, if any dispute shall arise
between the parties hereto with reference to
the interpretation of this Agreement or
their rights with respect to any transaction
involved, whether such dispute arises before
or after termination of this Agreement, such
dispute, upon the written request of either
party, shall be submitted to three
arbitrators, one to be chosen by each party,
and the third by the two arbitrators so
chosen. If either party refuses or neglects
to appoint an arbitrator within thirty (30)
days after the receipt of written notice
from the other party requesting it to do so,
the requesting party may appoint two
arbitrators. If the two arbitrators fail to
agree in the selection of a third arbitrator
within thirty (30) 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
arbitrators shall be active or retired
disinterested officers of insurance
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or reinsurance companies or underwriters at
Lloyd's of London not under the control of
either party hereto.
Except as may be otherwise provided herein,
the arbitrators shall promulgate rules to
interpret this Agreement based upon the
Commercial Arbitration Rules of the American
Arbitration Association and the Convention
on Recognition and Enforcement of Foreign
Arbitral Awards (June 10, 1958). The
arbitrators shall interpret this Agreement
as an honorable engagement rather than as a
legal obligation and will make their award
with the view to effecting the general
purpose and intent of this Agreement, rather
than in accordance with the literal
interpretation of Agreement.
The party requesting the arbitration shall
submit its case to the arbitrators within
forty-five (45) days of the appointment of
the third arbitrator. The party responding
to the request for arbitration shall submit
its case to the arbitrators within
forty-five (45) days of the receipt of the
petitioner's case. A hearing shall be held
within thirty (30) days after receipt of the
parties cases in writing. The arbitrators
shall render their decision within thirty
(30) days after completion of the hearing.
The decision in writing of any two
arbitrators, when filed with the parties
hereto, shall be final and binding on both
parties. Judgment may be entered upon the
final decision of the arbitrators in any
court having jurisdiction. Each party shall
bear the expense of its own arbitrator and
shall jointly and equally bear with the
other party the expense of the third
arbitrator and arbitration. Said arbitration
shall take place in New York, New York
unless some other place is mutually agreed
upon by the parties hereto.
The Reinsured hereby irrevocably submits to
the nonexclusive jurisdiction of any Federal
or State of New York court sitting in the
State of New York over any suit, action or
proceeding arising out of or relating to
this Agreement. The Reinsured irrevocably
waives, to the fullest extent permitted by
law, any objection which it may now or
hereafter have to the laying of the venue of
any such suit, action or proceeding brought
in such court and any claim than any suit,
action or proceeding brought in such court
has been brought in an inconvenient forum.
The Reinsured agrees that a final judgment,
not subject to any further appeal, in any
such suit, action or proceeding
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brought in such a court shall be conclusive
and binding upon it and will be given effect
in the country of domicile of the Reinsured
to the fullest extent permitted by
applicable law and may be enforced in any
Federal or State of New York court sitting
in the State of New York, by a suit upon
such judgment, provided that service of
process is effected upon it as specified in
the "Notice" section of this Agreement or as
otherwise permitted by law. Nothing herein
shall be deemed to limit or waive the
Reinsured's right to remove a suit, action
or proceeding to Federal court.
Further, pursuant to any statute of any
state, territory or district of the United
States that makes provision therefor, the
Reinsured hereby designates the
superintendent, Commissioner or Director of
Insurance or other officer specified for the
purpose in the statute, or his successor or
successors in office, as the 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 Reinsured
under this Agreement, and hereby designates
the person named in this Agreement in the
"Notice" section of this Agreement as the
person whom the officer is authorized to
mail such process or a true copy thereof.
The Reinsured hereby consents to process
being served in any suit, action or
proceeding of the nature referred to above
in any Federal or State of New York court
sitting in the State of New York by service
of process as set forth above, provided
that, to the extent lawfully and possible,
written notice of said service upon such
agent shall be mailed by registered or
certified air mail, postage prepaid, return
receipt requested, to the Reinsured at its
address specified herein or to any other
address of which the Reinsured shall have
given notice to the Reinsurer. The Reinsured
irrevocably waives, to the fullest extent
permitted by law, all claim of error by
reason of any such service and agrees that
such service shall be deemed in every
respect effective service of process upon
the Reinsured in any such suit, action or
proceeding and shall, to the fullest extent
permitted by law, be taken and held to be
valid and personal service upon and personal
delivery to the Reinsured.
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Nothing in this section shall affect the
right of the Reinsured from receiving
service of process in any other manner
permitted by law or limit the right of the
Reinsurer to bring proceedings against the
Reinsured in any court having jurisdiction
over the Reinsured and such proceeding.
OFFSET: The parties hereto have the right to offset
any balance(s) due from one to the other
under this Agreement or any other agreement
between the parties. The party asserting the
right of offset may exercise such right at
any time whether the balance(s) due are on
account of premiums or Losses or otherwise.
In the event of the insolvency of a party
hereto, offsets shall only be allowed in
accordance with applicable law.
APPLICABLE LAW: This Agreement shall be interpreted in
accordance with the laws of Pennsylvania
without giving effect to the conflict of law
rules thereof.
REPRESENTATIONS AND
WARRANTIES: Each party to this Agreement represents and
warrant that:
A. it is a duly organized corporation,
validly existing and in good standing under
the laws of the nation or state of its
incorporation, and is duly license or
qualified to conduct business in all
jurisdictions where the nature of its
operations, such licensing or qualification
is required,
B. it is duly authorized to execute and
deliver this Agreement and is and will
continue to be authorized to perform its
obligations under this Agreement,
C. this Agreement has been duly authorized,
executed and delivered by it and constitutes
a valid and legally binding agreement
enforceable with its terms, except as
enforcement may be limited by bankruptcy,
insolvency or other similar laws relating to
or affecting the enforcement of creditors'
or insurance or reinsurance claimants'
rights generally or by general equity
principals,
D. no consent, approval, authorization or
order of, registration or filing with, or
notice to, any governmental authority or
court is required, under applicable laws,
for the execution, delivery and performance
of this Agreement,
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except for those consents, approvals,
authorizations or orders which previously
have been obtained, and
E. no brokerage fees are due in connection
with this Agreement.
SALVAGE AND SUBROGATION: The Reinsured shall pay to the Reinsurer its
pro rata share of any recoveries, salvages
or reimbursements on account of any Loss
paid by the Reinsurer hereunder within ten
(10) days of the last day of the calendar
quarter of receipt by Reinsured thereof. In
the event there are any recoveries, salvage
or reimbursements recovered subsequent to a
Loss payment, it is agreed that the amount
recovered shall first be applied to the
reimbursement of the expense of recovery and
then in proportion to the liability of each
party for the Loss before such recovery had
been obtained. Expenses hereunder shall
exclude all office expenses and salaries of
officials and employees of the Reinsured.
Notwithstanding anything herein to the
contrary, this article shall remain in
effect until all recoveries, salvages or
reimbursements on account of any Loss paid
by the Reinsurer hereunder shall have been
obtained.
NOTICE: As used in this Agreement, notice shall mean
any and all notices, requests, demands or
other communications required or permitted
to be given hereunder, and all notices shall
be given or mailed by first class certified
mail, return receipt requested, by an
overnight delivery service or by confirmed
telecopy, to the parties at the addresses
set forth below:
If to Reinsurer, to:
Capital Mortgage Reinsurance Company
1325 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Corporate Secretary and Chief
Financial Officer
If to Reinsured, to:
Commonwealth Mortgage Assurance Company
Eight Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Corporate Secretary and Chief
Financial Officer
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The Reinsured and Reinsurer shall provide
each other with wiring instructions for
monies to be transferred under this
Agreement promptly after execution of this
Agreement and at the time of any change in
such instructions.
SEVERABILITY: Wherever possible, each provision of this
Agreement shall be interpreted in such
manner as to be effective and valid under
applicable law, but if any provision of this
Agreement shall be prohibited or invalid
under applicable law, such provision shall
be ineffective to the extent of such
prohibition or invalidity, without
invalidating the remainder of such provision
or the remaining provisions of this
Agreement.
COUNTERPARTS: This Agreement may be executed in any number
of counterparts and by different parties
hereto in separate counterparts, each of
which when so executed shall be deemed to be
an original and all of which taken together
shall constitute one and the same agreement.
SECTION HEADINGS: The section headings contained in this
Agreement are for convenience of reference
only, are without substantive meaning or
content of any kind whatsoever, and are not
a part of the agreement between the parties
hereto.
PENALTY INTEREST: Any amounts due under this Agreement that
are overdue by more than thirty days from
the date those amounts are due to be paid
shall accrue interest at the rate of ten
percent interest per annum from the date
due.
ENTIRE AGREEMENT: This Agreement contains the entire
understanding of the parties with respect to
the subject matter hereto. There are no
restrictions, promises, warranties,
covenants or undertakings with respect to
such subject matter, other than those
expressly set forth herein. This Agreement
is binding on and shall inure to the benefit
of the parties hereto and their successors
and permitted assigns.
ASSIGNMENT: This Agreement and the respective
obligations of the parties hereunder may not
be assigned, in whole or in part, by either
party hereto without the prior written
consent of the other party.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers and delivered as of the date first written
above.
Reinsured: Commonwealth Mortgage Assurance Company
By: ______________________________
Title: ______________________________
Reinsurer: Capital Mortgage Reinsurance Company
By: ______________________________
Title: ______________________________
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