EXHIBIT 10.15
UNDERWRITING AGENCY AGREEMENT
THIS AGREEMENT is made effective December 1, 2001 between ALLIED WORLD ASSURANCE
COMPANY, LTD, (hereinafter referred to as the "Company") and IPCRe UNDERWRITING
SERVICES LIMITED (hereinafter referred to as the "Underwriting Agent").
WHEREAS,
A. The Company has been incorporated in Bermuda and is licensed
under The Insurance Xxx 0000 as a Class 4 Insurer; and
B. The Underwriting Agent has been incorporated in Bermuda and is
licensed under The Insurance Xxx 0000 as an Insurance Agent;
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. APPOINTMENT
Subject to the terms and conditions of this Agreement, the Underwriting Agent is
hereby appointed by the Company to solicit, bind, write and administer the
business described in Section
2. hereof. The Underwriting Agent hereby accepts such appointment and agrees to
perform faithfully the duties thereof to the best of its professional ability,
in accordance with the standard of care of a professional insurance underwriter,
and with that degree of knowledge, skill and judgment which is exercised by it
with respect to its own business and the business of its parent and insurance
and reinsurance affiliates. The word "Agreement" herein shall be understood to
include any and all Addenda attached in accordance with the terms and conditions
herein specified.
2. AUTHORITY OF THE UNDERWRITING AGENT
Subject to compliance with the Underwriting Guidelines (as defined in Section
2.2) and the IPCRe Co-Insurance Limitations (as defined in Section 2.3), the
Underwriting Agent shall have the power to bind the Company on the Subject
Business described in Section 2.1 and, except as expressly limited elsewhere
herein, the Underwriting Agent shall have the authority to do, outside of the
United States of America (which, for purposes of this Agreement, shall mean the
50 states and the District of Columbia), all things reasonably necessary in the
conduct of such business in order to fulfill its obligations under this
Agreement.
2.1 The business to be underwritten on behalf of the Company shall
be limited to property catastrophe treaty reinsurance
pertaining to losses wheresoever arising (the "Subject
Business").
2.2 The Underwriting Agent may not bind the Company to any Subject
Business unless such Subject Business complies with each of
the following guidelines (the "Underwriting Guidelines"):
A. The annual original premium written (excluding
reinstatement premium) for Subject Business ceded to the
Company pursuant to reinsurance treaties entered into by the
Underwriting Agent on behalf of the Company shall not exceed
$60 million, in the aggregate, without the prior consent of an
executive officer of the Company;
B. The types of risks that may be included in the Subject
Business assumed by the Company pursuant to reinsurance
treaties entered into by the Underwriting Agent on behalf of
the Company are limited to property catastrophe treaty
reinsurance, and specifically excludes inward retrocessions
and per-risk business;
C. The maximum limit of liability under reinsurance treaties
entered into by the Underwriting Agent on behalf of the
Company will be $12.5 million per program, it being understood
that where multiple programs are written for a single client
group of companies, the limit shall be applied separately to
each separate segment of risk, based on geographic zone or
line of business, provided that applying such separate limits
will not result in any significant correlation leading to
additional accumulation of risks related to any such client
group, and provided further that in no event shall the
aggregate risk limit associated with any individual geographic
zone (which zones are described in Addendum A to this
agreement) in which Subject Business risks are located exceed
$200 million per zone (the "Zonal Limit");
D. The reinsurance treaties entered into by the Underwriting
Agent on behalf of the Company must contain customary
exclusions no less favorable to the Company than the
exclusions contained in similar treaties underwritten on
behalf of IPCRe Limited;
E. The risks assumed by the Company pursuant to reinsurance
treaties entered into by the Underwriting Agent on behalf of
the Company may be located wheresoever arising, subject to no
territorial limits (other than the Zonal Limits); and
F. The maximum treaty period for any reinsurance treaty
entered into by the Underwriting Agent on behalf of the
Company is 3 years, and any treaty that is proposed to be
entered into for a longer period must be approved by an
executive officer of the Company.
2.3 The Underwriting Agent shall authorize treaty participations
to brokers and other producers of Subject Business only:
A. On the condition that IPCRe Limited will assume at least an
equal amount of the identical risk on any treaty as will the
Company, and subject to contractual terms (including rates,
limits, net retention provisions, and other contractual terms)
that are no more favorable to IPCRe Limited than those
applicable to the Company, it being understood that (i) if the
broker or producer refuses, despite the Underwriting Agent's
reasonable best efforts, to accept such authorization, the
Underwriting Agent shall nevertheless be free to accept the
Subject Business on behalf of the Company so long as the terms
on which it is accepted otherwise comply with the terms of
this Agreement and (ii) where IPCRe Limited, for itself, is
precluded from entering into a given treaty because of
geographic or other limitations that would not preclude the
Company from entering into such treaty, the Underwriting Agent
may bind the Company to such treaty; and
B. To the extent that any such treaty would reflect the best
efforts of the Underwriting Agent to achieve consistent
proportionality, on a per treaty basis, between the overall
composition of the property catastrophe treaty reinsurance
businesses of the Company and of IPCRe Limited.
Clauses A. and B. above are referred to as the "IPCRe Co-Insurance
Limitations".
2.4 Except as provided in Section 2.3A., the net retention of
IPCRe in respect of any Subject Business to which the Company
is bound pursuant to a treaty entered into by the Underwriting
Agent in accordance with this Agreement shall at all times
equal or exceed the net retention of the Company.
3. LIMITATIONS OF AUTHORITY
The Underwriting Agent shall have no power or authority other than as granted
and set forth herein and no other or greater power shall be implied from the
grant or denial of powers specifically mentioned herein.
3.1 In addition to the other limitations expressly contained in
this Agreement, the Underwriting Agent has no authority to:
A. make, accept or endorse notes or otherwise incur any
liability which is not incurred in the ordinary course of
business of the Underwriting Agent on behalf of the Company
pursuant to the terms and conditions of this Agreement;
B. issue a guaranty, other than as permitted expressly in
writing by the Company; or
C. hold itself out as an agent of the Company in any other
manner, or for any other purposes, than as specifically
prescribed in this Agreement.
3.2 The Underwriting Agent shall use no advertising material,
prospectus, proposal, or representation, either in general or
in relation to a particular product of the Company, unless
furnished by the Company for that purpose.
3.3 The Underwriting Agent shall have no authority to appoint
sub-agents for the Company without prior written approval of
the Company, except that the Underwriting Agent may employ
American International Company Limited at its own expense to
assist it in the performance of any ancillary duties under
this Agreement.
3.4 The Underwriting Agent shall have no authority to produce and
bind Subject Business for the Company to the extent that doing
so would result in the Company's having any "related person
insurance income" or "RPII" (as defined in Section 953(c)(2)
of the United States Internal Revenue Code of 1986, as amended
(the "Code")). In order to effectuate the foregoing, the
Underwriting Agent, in its capacity as agent for the Company,
will: (A) not write reinsurance for insurers that are "United
States shareholders" (as defined in Section 953(c) of the
Code; (B) in a case where the person or persons insured under
insurance policies that are to be reinsured cannot be
identified, reinsure risks affecting large populations in
order to minimize the portion of the Company's reinsurance
premiums that are attributable (directly or indirectly) to the
risks of any particular person that may be a United States
shareholder or persons related to such shareholder (within the
meaning of Section 953(c) of the Code); and (C), except with
the express written consent of the Company (which consent
shall be granted or withheld in the Company's sole and
absolute discretion), not write any reinsurance policy if the
Underwriting Agent knows, or has reason to know, that such
policy may (directly or indirectly) reinsure risks of a United
States shareholder or persons related to such shareholder
(within the meaning of Section 953(c) of the Code). If, and to
the extent that, any reinsurance treaty to which the
Underwriting Agent has bound the Company would otherwise
result in the Company's having any RPII, the Underwriting
Agent, on behalf of IPCRe Limited, hereby accepts retrocession
of the reinsured risk to the extent that the risk is (directly
or indirectly) the risk of a United States shareholder or a
person related to such a shareholder (within the meaning of
Section 953(c) of the Code).
4. UNDERWRITING AGENT'S RECOMMENDATIONS
The Underwriting Agent will recommend to the Company the institution,
prosecution, defense or maintenance of any legal proceedings in connection with
any matter pertaining to the Subject Business produced by the Underwriting Agent
on behalf of the Company.
5. TERRITORY
The territory within which the Underwriting Agent shall operate is intended to
be principally Bermuda. This Agreement shall be performed and services provided
hereunder shall be rendered in all material respects in Bermuda, it being
understood that the Underwriting Agent may also perform certain functions under
this agreement through affiliates located in other jurisdictions outside of the
United States of America. The Underwriting Agent shall be the exclusive agent of
the Company for the Subject Business. The Underwriting Agent shall not, however,
have any right to represent the Company or act on its behalf within the United
States of America and shall not discharge any of its rights, duties and
obligations set forth in this Agreement from within the United States of
America. Furthermore, nothing contained in this Agreement shall prevent the
Company from soliciting, binding, writing and administering Subject Business by
and on its own behalf.
6. UNDERWRITING SERVICES
The Underwriting Agent shall perform, from outside the United States of America,
the following underwriting services on behalf of the Company:
6.1 Process submissions for property catastrophe treaty
reinsurance.
6.2. Rate, quote and execute property catastrophe reinsurance
treaties in accordance with the authority granted herein and
in conformity with Section 2, and, if appropriate, terminate
or cancel policies and issue notices of cancellation.
6.3 Develop and maintain underwriting files, in customary form, on
behalf of the Company and which become the property of the
Company.
6.4 Use the best of its professional ability and good faith,
acting in accordance with the standard of care of a
professional insurance underwriter, in the selection of risks
to be underwritten by the Company.
6.5 Approve or deny any claim made against the Company under
property catastrophe reinsurance treaties executed by the
Underwriting Agent on behalf of the Company. All claims must
be reported to the Company by the Underwriting Agent in a
timely manner, and a copy of the claim file will be sent to
the Company at its request, or as soon as it becomes known
that the claim (A) has the potential to exceed $5 million or
(B) involves a coverage dispute.
7. REPORTS & ACCOUNTS
7.1 The Underwriting Agent shall provide the Company with access
to its management information systems, for the purpose of
reviewing data which relates to business transacted under this
Agreement.
7.2 Monthly, the Underwriting Agent shall allow American
International Company Limited, or any other administrative
services provider to the Company, to take an extract from its
underwriting system to populate an accounting or other
analytical system selected by the Company or such
administrative services provider. The Underwriting Agent shall
maintain data on catastrophe accumulations relating to the
Subject Business in a customary form and shall provide such
information to the Company, as and when requested.
7.3 The Underwriting Agent shall use its best efforts to provide
other reports or analyses as may be reasonably requested by
the Company.
7.4 Not later than 30 days after the last day of each calendar
quarter, the Underwriting Agent shall deliver to the Company a
computation of the unearned premium and outstanding loss
reserves, including reserves for losses incurred but not
reported ("IBNR") required to be maintained by the Company
with respect to business produced by the Underwriting Agent.
Such computations shall be made in accordance with Bermuda
statutory accounting principles and in the manner specified by
the Company. In addition, the Underwriting Agent shall furnish
semi-annually such supplementary underwriting and actuarial
statistics as may be required by the Company.
7.5 The Underwriting Agent will instruct the producer of any
Subject Business produced for the Company to cause the premium
relating to such Subject Business to be deposited directly to
a premium account established by the Company.
7.6 The Company shall pay any claims presented to it for payment
by the Underwriting Agent within 2 business days of receipt of
written notice from the Underwriting Agent stating the nature
and amount of the claim to be paid, and identifying the treaty
to which the claim relates.
8. RECORDS
8.1 The Underwriting Agent shall keep, in a manner and form
approved by or acceptable to the Company, true and complete
Books and Records of all the Company's business conducted
under and pursuant to this Agreement, including, but not
limited to, reinsurance treaties or contracts, underwriting,
reserves, premium and claim records. The Underwriting Agent
shall maintain all records with regard to the Company's
business separately from the records of other businesses for
which it may act as underwriting agent or any similar
capacity.
8.2 The Company shall have the right at all times during the
Underwriting Agent's business hours, and at its own expense,
to inspect and to make copies of the Books and Records of the
Underwriting Agent (or any sub-agent employed by the
Underwriting Agent) relating to the services provided
hereunder. The term "Books and Records" shall mean all
materials, books and records and data in whatever form or
medium (i) furnished by the Company to the Underwriting Agent
in connection with the performance by the Underwriting Agent
of its obligations under this Agreement; (ii) generated by the
Underwriting Agent in connection with the performance by the
Underwriting Agent of its obligations under this Agreement;
(iii) that may be accessed by the Company or its
administrative agent or provided by the Underwriting Agent to
the Company or its administrative agent pursuant to Section
7.1, 7.2, 7.3 or 7.4; or (iv) that in any way pertain to the
performance of the obligations of the Underwriting Agent under
this Agreement, including books of account, reinsurance
treaties and other contracts entered into by the Underwriting
Agent on behalf of the Company and all correspondence related
thereto, underwriting files, claim and reserving files, data
on premium and claim payments and any and all
materials, books and records and data relating to the
reinsurance treaties entered into by the Underwriting Agent on
behalf of the Company.
8.3 All Books and Records kept by the Underwriting Agent in
connection with the reinsurance treaties entered into by the
Underwriting Agent on behalf of the Company shall be and
remain the sole property of the Company and will remain the
property of the Company following termination of this
Agreement, including all databases maintained by the
Underwriting Agent relating to the Companies' accounting,
insurance or other records and whether or not such data is
maintained on information systems owned by the Underwriting
Agent or the Companies or neither. The Underwriting Agent
shall create and maintain underwriting records on behalf of
Company in hard copy form and shall deliver such records to
the Company whenever requested by the Company or periodically
when the Underwriting Agent deems them to be no longer
required to perform its duties under this Agreement. All such
Books and Records shall be delivered to the Companies upon
termination of this Agreement. All data related to the
business of the Company and entered by the Underwriting Agent
into its computer systems shall be delivered to the Company in
electronic form.
8.4 The provisions of this Section shall survive the termination
of this Agreement until all obligations are fully discharged.
9. CURRENCY
All records of business transacted pursuant to this Agreement shall be
maintained in original currency.
10. COMPENSATION
The Underwriting Agent's remuneration for all services performed under this
Agreement shall be its commission ("Agency Commission") calculated at the rate
of 6.5% of the gross premiums written (less return premiums and commissions) on
behalf of the Company. Prior to the end of each month, the Underwriting Agent
shall provide to the Company a statement of gross premiums written during the
prior month, converted into United States dollars at the then prevailing rates,
together with a calculation of the Agency Commission. The Company shall pay the
Agency Commission to the Underwriting Agent promptly thereafter.
11. RELATIONSHIP
The Company and the Underwriting Agent are independent of one another, and as an
independent agent, the Underwriting Agent is acting in the ordinary course of
its business. Nothing in this Agreement shall be deemed to create: (i) a joint
venture or partnership between the parties; (ii) a relationship of employer and
employee; (iii) a relationship of principal and agent; or (iv) any relationship
other than independent parties contracting with each other solely for the
purpose of carrying out the provisions of this Agreement.
12. LICENSING
The Underwriting Agent warrants that it now has and shall maintain during the
term of this Agreement the license or licenses necessary to administer the
business described in this Agreement. In the event that any license the
Underwriting Agent utilizes to fulfill the requirements of the Agreement
expires, terminates or is suspended for any reason, this Agreement may be
terminated immediately by the Company the Company may avail itself of any rights
provided under Section 13.
13. TERM & TERMINATION
13.1 The term of this Agreement shall commence on December 1, 2001
and shall continue in force until December 2, 2004 (the
"Initial Term"). Thereafter, this Agreement shall continue in
force for successive one-year periods (each, a "One-Year
Renewal Term"), unless prior written notice to terminate shall
have been delivered by one party to the other party at least
90 days prior to the expiration date of the Initial Term or
any One-Year Renewal Term.
13.2 Except as otherwise provided herein, this Agreement shall
terminate automatically upon the effective date of the sale,
transfer or merger of the Underwriting Agent's business.
13.3 Termination of this Agreement shall not affect the rights and
obligations of the parties hereto as to transactions, acts or
things done by either party prior to the effective date of
termination.
14. CONFIDENTIALITY
14.1 The Underwriting Agent hereby acknowledges that, as a result
of its performance of services for the Company under this
Agreement, it has and will acquire non-public information with
respect to the Company and its affairs, including: (a)
information relating to the business, finances, methods of
operation, business plans, marketing strategies and other
information relating to the Company and (b) other trade
secrets and proprietary information of the Company
(hereinafter collectively referred to as "Confidential
Information").
14.2 During the term of this Agreement, and at all times
thereafter, the Underwriting Agent shall, and shall cause each
of its directors, officers, employees and agents (such
Persons, collectively "Covered Persons") to, keep confidential
(to the extent required hereby) all Confidential Information
that any of them may obtain and not to use such Confidential
Information for any purpose other than in the course of the
performance of this Agreement.
14.3 The foregoing restrictions shall not apply with respect to any
Confidential Information (i) previously known to the
Underwriting Agent through a source not bound by any
obligation to the Company to keep the Confidential Information
confidential, (ii) lawfully obtained by the Underwriting Agent
from a source other than the Company, which source is not
bound by any obligation to keep such Confidential Information
confidential, (iii) the disclosure of which to any director,
officer, employee or agent of the Underwriting Agent is
necessary to carry out the purposes of this Agreement,
provided, however, that such disclosure referred to in this
clause (iii) shall be limited to the extent reasonably
necessary to protect the rights of the Company with respect to
its Confidential Information, and that as a condition to
disclosing any Confidential Information to any person who is
not bound by a duty of confidentiality to the Underwriting
Agent and its clients, the Underwriting Agent shall require
that such person enter into a confidentiality agreement with
the Company on terms satisfactory to the Company, or (iv)
independently developed by the Underwriting Agent without
reference to the Confidential Information.
14.4 The Underwriting Agent may disclose any Confidential
Information if and as required as a result of any governmental
investigation, court order, subpoena, deposition,
interrogatory, request for documents, civil investigative
demand, or similar legal duress, and to the extent reasonably
necessary for the Underwriting Agent or any of its affiliates
to comply with applicable securities laws and regulations and
stock exchange requirements and the applicable regulations of
other regulatory agencies having jurisdiction over the
Underwriting Agent or any of its affiliates.
14.5 Notwithstanding anything provided in this Section 14,
Confidential Information may be disclosed with the prior
written consent of the Board of Directors of the Company.
15. INDEMNIFICATION
The Company hereby agrees to indemnify and hold the Underwriting Agent and each
of its directors, officers, servants, agents and employees, harmless from and
agree to defend each of them (collectively, "Indemnitees") from and against all
and any manner of liabilities, suits, claims, damages and expenses (other than
those arising out of the gross negligence or willful misconduct of any such
Indemnitees in the performance of any of the Underwriting Agent's obligations
hereunder) arising out of or in connection with this Agreement or the good faith
performance by the Underwriting Agent of its obligations hereunder.
16. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be submitted to a panel of three arbitrators, to be
appointed by the American Insurance Association. Each such arbitrator shall be a
current or former senior official of a Bermuda insurance or reinsurance company
but shall not be associated with any of the parties to this Agreement. Any
arbitration hereunder shall take place in Bermuda, and shall be conducted in
accordance with the Rules of the American Arbitration Association. The decision
of a majority of the arbitrators shall be in writing, shall state reasons for
the award, and shall be final and not subject to appeal, and judgment upon the
award or determination rendered by the arbitrators may be entered in any court
having jurisdiction thereof or having jurisdiction over the parties or their
assets.
17. ASSIGNMENT
No assignment of this Agreement by one party shall be valid unless authorized in
advance in writing by the other party hereto.
18. ENTIRE AGREEMENT, AMENDMENT & WAIVER
18.1 This Agreement constitutes the entire agreement between the
parties with respect to the appointment by the Company of the
Underwriting Agent to solicit, bind, write and administer
Subject Business, and supersedes and extinguishes any
warranty, representation or arrangement previously given or
made with respect thereto, other than those expressly set out
herein. The express terms hereof supersede any course of
performance or usage of the trade. This Agreement may not be
amended except in writing signed by each of the parties
hereto.
18.2 Neither the failure nor delay on the part of any party in
exercising any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, power or
privilege preclude any other or further exercise of the same
or of any other right, remedy, power or privilege, nor shall
any waiver of any right or remedy, power or privilege with
respect to any occurrence be construed as a waiver of such
right, remedy, power or privilege with respect to any other
occurrence. No waiver hereunder shall be effective unless it
is in writing and is signed by the party asserted to have
granted such waiver.
19. NOTICES
All notices required or permitted to be given hereunder shall be in writing and
shall be given as follows:
19.1 If given by the Company:
Delivered to the Underwriting Agent at American International Building,
29 Richmond Road, Pembroke HM 08, Attention: President, or to such
other address as the Underwriting Agent may have subsequently specified
to the Company in writing; or
19.2 If given by the Underwriting Agent:
Delivered to the Company at American International Building, 29
Richmond Road, Pembroke HM 08, Attention: President, or to such other
address as the Company may have subsequently specified to the
Underwriting Agent in writing.
20. SERVICE OF PROCESS
In the event any legal process or notice is served on the Underwriting Agent in
a suit or proceeding against the Company, the Underwriting Agent shall forthwith
forward such process or notice to the Company.
21. REGULATORY NOTICES
The Underwriting Agent shall forward promptly to the Company all correspondence
pertaining to this Agreement received from any government regulatory agency.
22. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of
Bermuda, without reference to the principles of conflicts of law thereof. If any
suit is instituted by any of the parties to enforce any of the terms or
conditions of this Agreement, each of the parties hereby submits to the
exclusive jurisdiction of and venue in the courts of Bermuda.
23. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be an original with the same effect as if the signatures thereto and
hereto were upon the same instrument, and such counterparts together shall
constitute one and the same instrument.
24. HEADINGS
The section headings contained herein are for convenience only and shall not
alter or limit or define the provisions hereof.
25. SEVERABILITY
In the event that any word, sentence, paragraph, provision, section, subsection
or article of this Agreement is found to be void or voidable, the remainder of
this Agreement shall nevertheless be legal and binding with the same force and
effect as though the void or voidable parts were deleted.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate in Pembroke, Bermuda, on the date first written above.
For and on behalf of For and on behalf of
IPCRe Underwriting Services Limited Allied World Assurance Company, Ltd
/s/ X.Xxxxxx for /s/ Xxxxxxx Xxxxxxxx
------------------------------ ------------------------------
Xxxxx X. Xxxxx
President President
ADDENDUM A
Geographic Zones
In writing Subject Business, the Underwriting Agent will divide (A) the United
States into eight geographic zones and (B) its other markets, including Europe
and Japan, into ten zones, as follows:
UNITED STATES XXXXX
XXXX # XXXX STATES
------ ---- ------
1 New England Connecticut, Massachusetts, Maine, New
Hampshire, Rhode Island, Vermont
2 Atlantic District of Columbia, Delaware, Florida,
Georgia, Maryland, North Carolina, New Jersey,
New York, Pennsylvania, South Carolina,
Virginia
3 Gulf of Mexico Alabama, Louisiana, Mississippi, Texas
4 North Central Illinois, Indiana, Kentucky, Michigan, Ohio,
Tennessee, Wisconsin, West Virginia
5 Midwest Arkansas, Colorado, Iowa, Kansas, Minnesota,
Missouri, Montana, North Dakota, Nebraska, New
Mexico, Oklahoma, South Dakota, Wyoming
6 West Arizona, Idaho, Nevada, California, Oregon,
Utah, Washington
7 Alaska Alaska
8 Hawaii Hawaii
NON UNITED STATES (OTHER) ZONES
ZONE COUNTRIES
---- ---------
Northern Europe Europe, Scandinavia, UK, Ireland
Japan Japan
Asia Korea, China, Micronesia, Taiwan
Australia/NZ Australia, New Zealand
Central America and Caribbean Belize, Costa Rica, El Salvador, Honduras,
Mexico, Nicaragua, Panama, Bahamas, Bermuda,
Cayman Islands, Greater Antilles, Lesser
Antilles, Leeward Islands, Turks & Caicos,
Windward Islands
South America Argentina, Bolivia, Brazil, Chile, Colombia,
Ecuador, French Guiana, Guyana, Paraguay,
Peru, Surinam, Uruguay, Venezuela
Africa and Middle East Africa, Bahrain, Cyprus, Egypt, Iran, Iraq,
Israel, Jordan, Kuwait, Lebanon, Oman, Qatar,
Saudi Arabia, South Yemen, Syria, UAR, Yemen
Canada Canada
Worldwide WW Inc US, WW X USA
Other East Europe (i.e., Warsaw Pact), any other area
The Underwriting Agent has designated the above geographic zones which, based on
historic catastrophe loss experience reflecting actual catastrophe events and
property development patterns, it believes are most likely to absorb a large
percentage of losses from one catastrophic event. These zones have been
determined using computer modeling techniques and underwriting assessments. The
parameters of these geographic zones will be subject to periodic review and
change and upon any change, the Underwriting Agent shall promptly notify the
Company of such change and the revised geographic composition of each zone.
The Underwriting Agent recognizes that events may affect more than one zone, and
to the extent the Underwriting Agent accepts reinsurance from a ceding insurer
with a loss exposure in more than one zone, the Underwriting Agent will consider
such potential loss in testing the zonal limits in all such affected zones. For
example, the program for a U.S. national insurance company typically will be
subject to limits and exposure in each U.S. zone. A program with worldwide
exposure will also be subject to limits and exposure in U.S. zones and other
zones around the world, as applicable. In instances such as the above, where the
Underwriting Agent accepts reinsurance from a ceding insurer with a loss
exposure in more than one geographic zone, the accepted exposure will be counted
against the zonal limit in each zone where exposure exists, regardless of the
probability of loss from such exposure. The Underwriting Agent and the Company
understand that this method of monitoring and aggregating zonal limit exposure
can result in a substantial "double counting" of exposure in determining the
utilization of zonal limits in each zone.
