AGREEMENT
This Agreement is made on 24 December 2003 between WINTERTHUR SWISS INSURANCE
COMPANY, a joint stock company incorporated under the laws of Switzerland
("WINTERTHUR"), AND XL INSURANCE (BERMUDA) LTD, a company incorporated under the
laws of Bermuda ("XL").
WHEREAS Winterthur and XL are parties to the Second Amended and
Restated Agreement for the Sale and Purchase of Winterthur International, dated
as of 15 February 2001 ("SPA"), and capitalized terms used herein shall have the
same meanings as in the SPA (unless otherwise indicated);
WHEREAS: (i) there has not been delivered the Completion Financial
Information as required by paragraph 3.1 of Part 2 of Schedule 5 to SPA; (ii)
Winterthur has delivered certain unaudited financial information for the
Operations as at 30 June 2001; and (iii) Winterthur and XL have been unable to
reach agreement as to the Completion Balance Sheet but have been able to reach
agreement as respects certain other matters as specifically set forth below
solely to settle the Purchase Price, the Initial Net Reserves Amount and the
Initial Net Premium Receivable (as defined in Schedule B hereto).
NOW, THEREFORE, Winterthur and XL hereby agree as follows:
1. DETERMINATION OF PURCHASE PRICE AND INITIAL NET RESERVES AMOUNT
1.1(A) Winterthur and XL agree the following amounts for purposes of
determining the amount of the Purchase Price and establishing
the Initial Net Reserves Amount and the Initial Net Premium
Receivable;
(i) the Pro-Forma Net Asset Value as of 30 June 2001 is US$
234,995,000.
(ii) the Premium (notwithstanding Clause 3.1.5 of the SPA)
is US$ 51,483,700 (after giving effect to the exclusion
of certain accident and health business, the net amount
is US$31,983,700);
(iii) the Purchase Price is US$ 330,157,700;
(iv) the Initial Net Reserves Amount is US$1,509,816,000;
(v) the Initial Net Premium Receivable is US$ 744,266,300;
and
(vi) solely for the purpose of determining the Initial Net
Reserves Amount as contemplated by Schedule A hereto,
the Purchase Price and the Initial Net Premium
Receivable, the line items listed on such Schedule A
shall be deemed to be the amounts set forth in such
Schedule A;
provided, however, that nothing in this Agreement (other than
the determination of the Initial Net Reserves Amount and the
Initial Net Premium Receivable) shall affect the determination
the Seasoned Net Reserves Amount or the Seasoned Net Premiums
of Receivable Balance, including, without limitation,
determination of the date and/or rate to be used for foreign
exchange conversion of any amount in connection therewith.
(b) Winterthur and XL also agree that the Independent Actuary
need not be instructed under Clause 4.3.5 of the SPA.
1.2. Except as expressly provided herein, nothing in this Agreement
shall affect or be used as evidence with respect to
determination of the rights and/or obligations of XL or
Winterthur as respects any Specified Claim or any other claim
under or related to the SPA provided, however, that XL
acknowledges that, upon timely receipt by the parties of the
payments referred to in Section 2 of this Agreement, Winterthur
shall have no continuing obligation under the SPA to deliver
Completion Financial Information (but such acknowledgement is
without prejudice to any Specified Claim or such other claim XL
may have for breach of such provisions prior to such date). For
the avoidance of doubt, this Section is without prejudice to the
double claims provisions in Clauses 8.6 and 8.2.7 of the SPA.
1.3. No agreement has been reached with respect to whether or not
there has been or the extent to which there has been an
adjustment to the Net Asset Value of the relevant Operations
pursuant to Clause 3.6 of the SPA or any other adjustment to the
Purchase Price to take account of any breach of the SPA by any
Seller.
1.4. XL hereby informs Winterthur that, except for the purposes
expressly set forth in Section 1.1 above, XL has not agreed to
the information on Schedule A.
2. PAYMENTS
2.1. Payment Agreement
Winterthur and XL hereby agree that:
(a) all conditions to release of the Retention Amount and the
Income (these terms and other capitalized terms in this
Section 2.1, not otherwise defined, are used as defined in
the Payment Agreement dated 24 July 2001) are satisfied or
waived; and
(b) Winterthur and XL shall deliver to the Escrow Agent, as
soon as possible on or after the date of this Agreement,
the Transfer Notice in the form set out in Schedule E
hereto to effect to the timely realization and distribution
of the Fund to be received no later than noon, Bermuda
time, 31 December 2003, as follows;
(i) 74.84232% of the Retention Amount to XL;
(ii) 25.15768% of the Retention Amount to Winterthur;
(iii) 87.42116% of the Income to XL; and
(iv) 12.57884% of the Income to Winterthur;
(c) Receipt of the payments referred to in Section 2.1(b) above
and Section 2.2 below by Winterthur or XL as appropriate
shall constitute full and final satisfaction of Winterthur
and XL's respective obligations and rights in respect of
the payment of the Purchase Price, without prejudice to
Clause 3.5 of SPA.
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2.2. Payment on Account
Winterthur agrees to pay, so that such payment is received no
later than noon, Bermuda time, 31 December 2003, the sum of US$
40 million (the "Advanced Amount") to XL pending the seasoning
of net reserves set out in the SPA, subject to the following
provisions;
(a) In the event that the Seasoned Net Reserves Payment is
payable by Winterthur to XL and the total of the Seasoned
Net Reserves Payments (the "SNRP TOTAL") is greater than
the Advanced Amount, the Advanced Amount shall be deducted
from the amount of the SNRP Total and the balance (for the
purposes of this Section 2.2, the "Balance") shall be paid
by Winterthur to XL in accordance with the provisions for
payment set out in Clause 4.3.1 of the SPA. (For the
avoidance of doubt, the Balance shall be paid with interest
accruing on the Balance and not on the Seasoned Net
Reserves Payment as a whole at the rate set out in Clause
4.3.1 of the SPA).
(b) In the event that the Seasoned Net Reserves Payment is
payable by Winterthur to XL and the SNRP Total is less than
the Advanced Amount, the Seasoned Net Reserves Payments
shall not be paid by Winterthur to XL and instead XL shall
pay the amount by which the SNRP Total is less than the
Advanced Amount in US$ to Winterthur within five Business
Days of the agreement or determination of the Seasoned Net
Reserves Amount plus interest thereon (from and including
the End Date to but excluding the date such payment is
made) at a non compounding rate per annum of 0.5 per cent
above Base Rate.
(c) In the event that no Seasoned Net Reserves Payment is
payable under the terms of the SPA, XL shall repay to
Winterthur within five Business Days of the agreement or
determination of the Seasoned Net Reserves Amount an amount
in US$ equal to the Advanced Amount plus interest thereon
(from and including the End Date to but excluding the date
such payment is made) at a non-compounding rate per annum
of 0.5 per cent above Base Rate.
(d) In the event that the Seasoned Net Reserves Payment is
payable by XL to Winterthur, the Seasoned Net Reserves
Amount shall be increased by the Advanced Amount and the
aggregate amount shall be paid by XL to Winterthur in
accordance with the provisions for payment set out in
Clause 4.3.3 of the SPA.
2.3 Limited Recourse Receivables Financing Facility Agreement
In relation to certain amounts owing to Winterthur:
(a) XL shall procure that Winterthur International (Re) repays
CHF 12,087,422.75 in cash to Winterthur so that such funds
are received no later than noon, Bermuda time, 31 December
2003, which payment shall be deemed to be a payment under
the Limited Recourse Receivables Financing Facility
Agreement, together with interest from 1 July 2002 at a
non-compounding rate per annum of 0.5 per cent above the
Base Rate; and
(b) XL Insurance shall procure that Winterthur International
(Re) repays CHF42,362,474.25 in cash, which payment shall
be deemed to be a payment un-
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der the Limited Recourse Receivables Financing Facility
Agreement, together with interest from 1 July 2002 at a
non-compounding rate per annum of 0.5 per cent above the
Base Rate to Winterthur simultaneously with the entry by
Winterthur and each of WIICL, Winterthur International
(Re); XL Insurance Switzerland, XL Insurance America, Inc.,
XL Select Insurance Company and XL International (Bermuda)
Ltd into reinsurance agreements and related claims handling
agreements relating to certain Asbestos Liabilities (which
agreements shall not amend or vary the terms of the SPA and
the rights or obligations of any person under the SPA,
including, without limitation, under Clauses 9.1.1 and
9.1.2 of the SPA, shall in no way be prejudiced by the
entering into of or the giving effect to such agreements or
by the absence or removal of cover under or termination of
such agreements), all in a form to be agreed between the
parties provided that in the event that such reinsurance
agreements and related claims handling agreements have not
been entered into prior to the making of the payment to be
made under Clause 4.3 of the SPA, such amount shall be
repaid in accordance with the provisions of the Limited
Recourse Receivables Financing Facility Agreement. The
parties agree to use reasonable endeavours to agree and
enter into such reinsurance and related agreements prior to
29 February 2004.
2.4. Commutation of the CAT Tower
(a) Winterthur agrees and XL agrees to procure that the
commutation agreement (the "Commutation Agreement") in the
form set out in SCHEDULE C to this Agreement shall be
entered into as soon as possible but in any event prior to
31 December 2003;
(b) Winterthur agrees and XL (on behalf of Winterthur
International (Re)) agree that the CHF 19,500,000 million
referred to in the Commutation Agreement shall be repaid by
Winterthur (together with interest of CHF 605,522) by way
of set off against the amount to be repaid by or of behalf
of Winterthur International (Re) pursuant to Section 2.3(a)
above.
2.5. The parties shall deliver their respective signed counterparts
of the Transfer Notice to the Escrow Agent as of the opening of
business, London time, on 29 December 2003.
2.6. All payments pursuant this Section 2 shall be made by wire
transfer of immediately available funds.
3. AMENDMENTS TO SPA
Winterthur and XL agree to amend the SPA as follows subject to (i)
timely receipt of payments in accordance with Section 2 except for
section 2.1(b); and (ii) timely delivery of the Transfer Notice in
accordance with Section 2.5:
3.1. The time limit relating to Specified Claims in Clause 8.2.1(ii)
(excluding sub-clauses (a) and(b)) of the SPA are extended from
nine months to eleven months.
3.2. The provisions relating to seasoning of premiums as set forth on
SCHEDULE B hereto are incorporated into the SPA on the basis
that reference therein to "the Agreement of which this Schedule
forms part" shall be deemed to be a reference this Agreement;
and
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3.3 Solely for the purpose of determining the unearned premium
reserve as respects the Seasoned Net Reserves Amount pursuant to
Clause 4.2 of the SPA, the loss ratio is seventy-one percent
(71%) and the definition of "Reserves" in the SPA is amended as
set forth in SCHEDULE D hereto.
4. MISCELLANEOUS
4.1 Winterthur and XL shall and XL shall procure that Winterthur
International (Re) shall enter into a letter in the form set out
in Schedule F (the "SRA AMENDMENT LETTER") relating to each of
the Sellers Retrocession Agreements as soon as possible but in
any event prior to 31 December 2003, and the Sellers
Retrocession Agreements as amended shall be the Sellers
Retrocession Agreement for the purposes of the SPA. The
amendments referred to in the SRA Amendment Letter shall become
effective at the same time as the amendments to the SPA referred
to in Section 3.
4.2 The parties will use their best endeavours to work together in
good faith with a view to agreeing:
(a) a reduction in the "Amount of Cover" as set out in the
schedule to each Sellers Retrocession Agreement;
(b) an adjustment to the "Amount of Deductible" as set out in
the schedule to each Sellers Retrocession Agreement;
(c) a satisfactory solution to the communication of the Sellers
Retrocession Agreements; and
(d) a satisfactory resolution as to whether there should be an
extension in time for seasoning reinsurance receivables.
4.3 Except as expressly provided herein, nothing herein shall affect
Winterthur's or XL's rights or obligations under the SPA or any
agreement entered into pursuant to the SPA or any Local
Agreement, including, without limitation, in respect of any
indemnities, Specified Claims, other claims under or in respect
of the SPA and the Seasoned Net Reserves Amount, or under any
other agreement to which Winterthur and XL are parties or under
any Sellers Retrocession Agreement. For the avoidance of doubt
and notwithstanding any provision to the contrary therein,
nothing herein or any payment made pursuant hereto shall give
rise to commutation or other termination or a release or parties
to either Sellers Retrocession Agreement, which shall continue
in effect.
4.4 Clauses 18.4, 18.8, 18.11 (insofar only as payments required by
this Agreement are made after the date on which such payments
are to be made pursuant to this Agreement), 18.12, 18.15, 18.16,
18.17, 18.18 and 18.19 of the SPA shall apply to this Agreement
as if fully set forth herein (except as respects references
therein to other Clauses of the SPA).
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IN WITNESS WHEREOF this Agreement has been duly executed.
SIGNED by /s/ Xxxx X. Xxxxx /s/ Xxxx Xxxxxxx
-------------------------------------
on behalf of WINTERTHUR SWISS INSURANCE
COMPANY
SIGNED by /s/ Xxxxx Xxxxx
----------------------------------
on behalf of XL INSURANCE (BERMUDA) LTD.
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SCHEDULE A - COMPLETION BALANCE SHEET ITEMS
--------------------------------------------------------------------------------
THE PURCHASE PRICE HAS BEEN CALCULATED AS FOLLOWS (IN THOUSANDS OF US DOLLARS):
June 30, 2001
-------------
Cash and cash equivalents $ 89,372
Portfolio assets 189,673
Fixed interest securities, available for sale, at fair value 694,959
Equity securities, available for sale, at fair value 85,579
Short-term investments, at fair value 446,815
Other investments 315
Accrued interest income 14,580
Deferred acquisition expenses 63,802
Prepaid reinsurance premiums 264,556
Premiums and insurance balances receivable
(net of bad debt provisions) 1,350,587
Reinsurance balances receivable and reinsurance deposits 127,475
Unpaid losses and loss adjustment expenses recoverable 1,317,039
Fixed assets 42,558
Other assets (including due from related parties of $65,918) 246,582
Excluded business (77,563)
Unpaid losses and loss adjustment expenses (2,556,348)
Unearned premiums (824,286)
Provision for future dividends to policyholders (574)
Deposit liabilities (183,229)
Reinsurance balances payable (501,039)
Funds held under reinsurance agreements (6,762)
Other liabilities (including due to related parties of $277,216) (499,552)
Minority interest (2,724)
-----------
NET ASSET VALUE $ 281,815
Proforma Adjustments
Deferred tax assets (1,011)
Intangible assets excluding Genius
and Netherlands (2,130)
Capital Contribution to UK (43,679)
----------
(46,820)
-----------
Proforma Net Asset Value as of 30 June 2001 234,995
Adjusted Premium (including $19,500,000 Goodwill on certain
Accident & Health business) 51,484
Reimbursement of Capital Contribution 43,679
-----------
PURCHASE PRICE 330,158
-----------
INITIAL NET RESERVES AMOUNT AS OF 30 JUNE 2001 HAS BEEN CALCULATED AS FOLLOWS
(IN THOUSANDS OF US DOLLARS):
Unpaid losses and loss adjustment expenses 2,556,348
Unpaid losses and loss adjustment expenses recoverable (1,317,039)
Provision for future dividends 574
----------
1,239,883
Reinsurance balances receivable (127,475)
Unearned premium reserve 824,286
Prepaid reinsurance premiums (264,556)
----------
559,730
71% thereof 397,408
INITIAL NET RESERVES AS OF 30 JUNE 2001 1,509,816
-----------
SCHEDULE B
PREMIUM SEASONING - SPA AMENDMENTS
DEFINITIONS
"SEASONED NET PREMIUMS RECEIVABLE BALANCE" means the sum of:
(i) the INITIAL NET PREMIUM RECEIVABLE, being US $744,266,300, calculated
as follows:
(a) the premiums and insurance balances receivable (net of bad debt
provisions) as shown in Schedule A to the Agreement of which
this Schedule forms part ("Schedule A") less reinsurance
balances payable and funds held under reinsurance agreements as
shown in Schedule A; less
(b) 29% of the aggregate of the unearned premium as shown in
Schedule A less the prepaid reinsurance premiums as shown in
Schedule A; plus
(c) the deferred acquisition costs as shown in Schedule A;
For the avoidance of doubt this is calculated as follows:
US$'000's 1,350,587 - 501,039 - 6,762 - (29% *(824,286-264,556)) +
68,802 = 744,266
(ii) plus any positive, or, as the case may be, less any negative adjustment
calculated as follows:
(a) 71% of the aggregate of:
(i) the unearned premium less the prepaid reinsurance premiums
in each case to the extent solely relating to Relevant
Operations, as determined in accordance with US GAAP and as
identified as at the End Date calculated as at the
Effective Time; less
(ii) the unearned premiums as shown in Schedule A less the
prepaid reinsurance premiums as shown in Schedule A;
plus
(b) the aggregate of:
(i) the premiums and insurance balances receivable (net of bad
debt provisions and, for the avoidance of doubt, net of any
commissions) less reinsurance balances payable and funds
held under reinsurance agreements (and for the avoidance of
doubt, this amount is net of any commissions) in each case
to the extent relating solely to the Relevant Operations,
as determined in accordance with US GAAP identified as at
the End Date; less
(ii) the unearned premium less the prepaid reinsurance premiums
in each case to the extent solely relating to Relevant
Operations, as determined in accordance with US GAAP and as
identified as at the End Date calculated as at the
Effective Time; plus
(iii) the deferred acquisition costs in each case to the extent
solely relating to Relevant Operations, as determined in
accordance with US GAAP and as identified as at the End
Date calculated as at the Effective Time less
(c) US $346,858,000 being the aggregate of
(iv) the premiums and insurance balances receivable (net of bad
debt provisions and, for the avoidance of doubt, net of any
commissions) less reinsurance balances payable and funds
held under reinsurance agreements (and for the avoidance of
doubt, this amount is net of any commissions) as shown in
Schedule A; less
(iv) the unearned premium less the prepaid reinsurance premiums
as shown in Schedule A; plus
(v) the deferred acquisition costs as shown in Schedule A.
For the avoidance of doubt item (ii) (c) has been calculated
using Schedule A as follows:
USD 000s (1,350,587 - 501,039 - 6,762) less (824,286 -
264,556) plus (63,802) = 346,858
for the avoidance of doubt, each of (ii)(a) and (ii)(b) can be
negative as well as positive.
In calculating the Seasoned Net Premiums Receivable Balance, the classification,
characterization or provision of any amount shall be consistent with the
classification, characterization or provision used in calculating the Initial
Net Premium Receivable.
SUBSTANTIVE PROVISION
4.4 DETERMINATION OF THE SEASONED NET PREMIUMS RECEIVABLE BALANCE
4.4.1 Subject to Clause 18.4 from and after Completion and until the
End Date XL Insurance shall make available to Winterthur,
Winterthur's Accountants and Winterthur's Actuary during normal
business hours:
(i) all studies relating to premiums receivable, commissions or
reinsurance premium ceded prepared by or on behalf of XL
Insurance to the extent relating to Relevant Operations;
and
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(ii) all auditor's letters to management to the extent relating
to net premiums subject to the Initial Net Premiums
Receivable Balance which have been completed by or on
behalf of XL Insurance during such period.
4.4.2 Within 30 Business Days following the End Date XL Insurance
shall deliver to Winterthur a written statement setting forth in
reasonable detail its calculation of the Seasoned Net Premiums
Receivable Balance (the "Seasoned Net Premiums Receivable
Statement").
4.4.3 In order to enable Winterthur, Winterthur's Accountants and
Winterthur's Actuary to review the Seasoned Net Premiums
Receivable Statement, XL Insurance shall keep up-to-date and
make available to Winterthur, Winterthur's Accountants and
Winterthur's Actuary its books, records, contracts and
agreements relating to the Relevant Operations during normal
business hours and co-operate with them with regard to their
review of the Seasoned Net Premiums Receivable Statement. XL
Insurance agrees insofar as it is reasonable to do so to make
available the services of the employees of the relevant
Associated Companies of XL Insurance to assist Winterthur,
Winterthur's Accountants and Winterthur's Actuary to undertake
the matters contemplated by this Clause 4.4. XL Insurance shall
procure that after the preparation of the Seasoned Net Premiums
Receivable Statement, XL Insurance's Accountants and XL
Insurance's Actuary shall give Winterthur, Winterthur's
Accountants and Winterthur's Actuary access to XL Insurance's
Accountants' and XL Insurance's Actuary's working papers and
files (with the right to take copies at Winterthur's expense,
subject to Winterthur entering into an acceptable
confidentiality undertaking) and personnel which or who are (and
only to the extent) relevant to the review of the Seasoned Net
Premiums Receivable Statement by Winterthur, Winterthur's
Accountants and Winterthur's Actuary subject to Winterthur
providing or procuring the provision of a hold harmless
undertaking to XL Insurance's Accountants and XL Insurance's
Actuary.
4.4.4 Within 30 Business Days of receipt by Winterthur of the Seasoned
Net Premiums Receivable Statement Winterthur may give written
notice to XL Insurance stating that it disagrees with the
Seasoned Net Premiums Receivable Statement, together with
reasons for the disagreement in reasonable detail and
quantifying the amount of such disagreement (for the purpose of
this Clause 4.4 the "WINTERTHUR DISAGREEMENT NOTICE"). In the
absence of such notice within such period, the Seasoned Net
Premiums Receivable Statement shall be final and binding on the
parties for all purposes.
4.4.5 If Winterthur gives a valid Winterthur Disagreement Notice
within such 30 Business Days Winterthur and XL Insurance shall
attempt in good faith to reach agreement in respect thereto. If
they reach agreement then the agreed amount shall be finally and
conclusively the Seasoned Net Premiums Receivable Balance for
the purpose of this Agreement and if they are unable to do so
within 10 Business Days of receipt by XL Insurance of the
Winterthur Disagreement Notice then either Winterthur or XL
Insurance may by notice in writing to the other require that the
calculation of the Seasoned Net Premiums Receivable Balance be
referred to the Independent Actuary (AN "ACTUARY APPOINTMENT
NOTICE"). Within 10 Business Days of receipt by a party of the
Actuary Appointment No-
-3-
xxxx each of Winterthur and XL Insurance shall give written
notice to the other and to the Independent Actuary of its
proposed Seasoned Net Premiums Receivable Balance.
4.4.6 The Independent Actuary shall be a member of the Casualty
Acturial Society ("CAS") or a Fellow of the Institute of
Actuaries ("FIA") and shall be instructed to independently
determine the Seasoned Net Premiums Receivable Balance in
accordance with the principles and standards of practice of the
CAS or the FIA as the case may be and the American Academy of
Actuaries and to make its determination as soon as is reasonably
practicable. The procedures of the Independent Actuary shall be
determined by the Independent Actuary, but shall:
(i) give the parties a reasonable opportunity to make written
and oral representations to them;
(ii) require that the parties supply each other with a copy of
any written representations at the same time as they are
made to the Independent Actuary; and
(iii) permit each party to be present while oral submissions are
being made by any other party.
4.4.7 The determination of the Independent Actuary shall be made in
writing and sent to the parties at such time as it shall
determine. The Independent Actuary shall act as an expert and
not as an arbitrator and his or her determination shall be final
and binding on the parties as provided in Clause 4.4.8
4.4.8 If the Seasoned Net Premiums Receivable Balance as determined by
the Independent Actuary is closer to the amount proposed by XL
Insurance than the amount proposed by Winterthur (in each case
pursuant to the last sentence of Clause 4.4.5) then for the
purpose of this Agreement the Seasoned Net Premiums Receivable
Balance shall be finally and conclusively deemed to be the
amount so proposed by XL Insurance. If the Seasoned Net Premiums
Receivable Balance as determined by the Independent Actuary is
closer to the amount proposed by Winterthur than the amount
proposed by XL Insurance (in each case pursuant to the last
sentence of Clause 4.4.5) than for the purpose of this Agreement
the Seasoned Net Premiums Receivable Balance shall be finally
and conclusively deemed to be the amount so proposed by
Winterthur.
4.4.9 The parties shall co-operate with the Independent Actuary and
comply with its reasonable requests made in connection with the
carrying out of its duties under this Agreement. In particular
without limitation XL Insurance shall keep up-to-date and
subject to reasonable notice make available to Winterthur,
Winterthur's Accountants, Winterthur's Actuary and the
Independent Actuary its books, records, contracts and agreements
relating to the Relevant Operations during normal business hours
during the period from the appointment of the Independent
Actuary down to the making of the determination by the
Independent Actuary.
4.4.10 Subject to Clause 4.4.11 nothing in this Clause 4.4 shall
entitle a party or the Independent Actuary access to any
information or document which is protected by
-4-
legal professional privilege or any other legal obligation of
confidentiality or which has been prepared by the other party or
its accountants, actuaries and other professional advisers with
a view to assessing the merits of any claim or argument.
4.4.11 A party shall not be entitled by reason of Clause 4.4.10 to
refuse to supply such part or parts of documents as contain only
the facts on which the relevant claim or argument is based.
4.4.12 Each party shall and shall procure that its accountants,
actuaries and other advisers shall and shall instruct the
Independent Actuary to keep all information and documents
provided to them pursuant to this Clause 4.4 confidential and
shall not use the same for any purpose except for use in
connection with the matters contemplated by this Clause 4.
4.5 SEASONED NET PREMIUMS RECEIVABLE PAYMENT
4.5.1 If the Seasoned Net Premiums Receivable Balance as finally
agreed or determined pursuant to Clause 4.4 is greater than 105
per cent of the Initial Net Premiums Receivable Balance XL
Insurance shall or shall procure that other Purchasers as
appropriate pay to Winterthur or other Sellers as appropriate
within five Business Days of such agreement or determination an
amount in US Dollars equal to 100 per cent of the difference
between:
(i) the Seasoned Net Premiums Receivable Balance; and
(ii) 105 per cent of the Initial Net Premiums Receivable
Balance,
plus interest thereon (from and including the End Date, to but
excluding the date such payment is made) at a non-compounding
rate per annum of 0.5 per cent above the Base Rate.
4.5.2 If the Seasoned Net Premiums Receivable Balance as finally
agreed or determined pursuant to Clause 4.4 is less than 95 per
cent of the Initial Net Premiums Receivable Balance Winterthur
shall or shall procure that other Sellers as appropriate pay
to XL Insurance or other Purchasers as appropriate within five
Business Days of such agreement or determination an amount in US
Dollars equal to 100 per cent of the difference between:
(i) 95 per cent of the Initial Net Premiums Receivable Balance;
and
(ii) the Seasoned Net Premiums Receivable Balance,
plus interest thereon (from and including the End Date to but
excluding the date such payment is made) at a non-compounding
rate per annum of 0.5 per cent above the Base Rate.
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SCHEDULE C -- FORM OF COMMUTATION AGREEMENT
X X X X X X X X LIMITED LIABILITY PARTNERSHIP
C H A N C E
VITODURUM REINSURANCE COMPANY LIMITED
AND
WINTERTHUR SWISS INSURANCE COMPANY
--------------------------------------
COMMUTATION AND SETTLEMENT AGREEMENT
--------------------------------------
CONTENTS
CLAUSE PAGE
1. Interpretation...........................................................1
2. Commutation And Release..................................................2
3. Commutation Payment......................................................2
4. Alterations..............................................................2
5. Entire Agreement.........................................................3
6. Sale And Purchase Agreement..............................................3
7. Costs....................................................................3
8. Arbitration..............................................................3
9. Counterparts.............................................................3
ANNEXURE 1 Reinsurance Agreement.........................................1
THIS AGREEMENT is made on the day of 2003
BETWEEN
(A) WINTERTHUR SWISS INSURANCE COMPANY a joint stock company incorporated
under the laws of Switzerland (registered under CH-020.3.928.827-5)
whose registered office is at General Xxxxxx-Xxxxxxx 00, XX-0000,
Xxxxxxxxxx, Xxxxxxxxxxx (the "REINSURER");
(B) VITODURUM REINSURANCE COMPANY LIMITED (formerly known as XL Winterthur
International Re) a company incorporated in Switzerland (registered
number CH-020.3.927.914-5) whose registered office is at
Xxxxxxxxxxxxxxxx 00, XX-0000, Xxxxxxxxxx, Xxxxxxxxxxx (the
"REINSURED").
INTRODUCTION
(A) The Reinsurer and the Reinsured are party to an excess of loss
reinsurance agreement dated 2 May 2002 in terms of which the Reinsurer
reinsures the Reinsured in respect of certain Property Damage and
Business Interruption and Property part of Multiline business.
(B) The parties wish to release and discharge each other from all further
obligations under or in connection with the Reinsurance Agreement.
THE PARTIES AGREE AS FOLLOWS:
1. INTERPRETATION
1.1 In this Agreement:
"BASE RATE" means USD LIBOR being the London Inter-Bank Offer Rate for
six months deposits in US Dollars;
"COMMUTATION PAYMENT" means the payment made by the Reinsurer to the
Reinsured set out in clause 3 below;
"LIABILITIES" means all liabilities, duties, commitments and
obligations of every description, whether deriving from a contract,
common law, statute or otherwise, whether past, present or future,
accrued or unaccrued, actual or contingent, ascertained or
unascertained, agreed or disputed;
"REINSURANCE AGREEMENT" means the reinsurance agreement referred to in
recital (A), a copy of which is annexed to this Agreement as Annexure
1; and
"SALE AND PURCHASE AGREEMENT" means the second amended and restated
agreement for the sale and purchase of Winterthur International dated
as of 15 February 2001 between Winterthur Swiss Insurance Company and
XL Insurance Ltd.
1.2 In this Agreement a reference to:
1.2.1 a "PARTY" is a reference to the Reinsurer or the Reinsured, as
the case may be, and a reference to "PARTIES" shall be construed
accordingly;
1.2.2 a statutory provision includes a reference to the statutory
provision as modified or reenacted or both from time to time
whether before or after the date of this Agreement and any
subordinate legislation made or other thing done under the
statutory provision whether before or after the date of this
Agreement;
1.2.3 a document is a reference to that document as modified or
replaced from time to time;
1.2.4 a person includes a reference to a corporation, body corporate,
association or partnership;
1.2.5 a person includes a reference to that person's legal personal
representatives, successors and permitted assigns;
1.2.6 the singular includes the plural and vice versa (unless the
context otherwise requires);
1.2.7 a time of day is a reference to the time in London, unless the
contrary indication appears; and
1.2.8 a clause, a schedule or an annexure unless the context otherwise
requires, is a reference to a clause of or a schedule or
annexure to this Agreement.
The headings in this Agreement do not affect its interpretation.
2. COMMUTATION AND RELEASE
2.1 In consideration of the grant of the release contained herein and the
making of the Commutation Payment the Reinsurer and the Reinsured
hereby:
(i) irrevocably release and discharge each other from all past,
present and future obligations; and
(ii) agree to terminate forthwith all rights,
which in either case arise directly or indirectly out of or in
connection with the Reinsurance Agreement.
2.2 The parties agree that the release constituted by this Agreement
operates as a full and final settlement of both parties' Liabilities
which arise directly or indirectly out of or in connection with the
Reinsurance Agreement. Subject to the Commutation Payment provided for
in clause 3 below, neither party shall have any Liability to repay to
the other any payment or make good any loss incurred by the other in
respect of any past obligations.
3. COMMUTATION PAYMENT
The Reinsurer shall pay to the Reinsured the sum of CHF 19.5 million in
a manner to be agreed between the parties.
4. ALTERATIONS
A variation of this Agreement is valid only if it is in writing and
signed by or on behalf of each party.
5. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement and supersede any
previous agreements between the parties relating to the subject matter
of this Agreement.
6. SALE AND PURCHASE AGREEMENT
This Agreement shall not vary the rights and remedies of either XL
Insurance (Bermuda) Limited (formerly known as XL Insurance Ltd) or the
Reinsurer under the Sale and Purchase Agreement.
7. COSTS
Each party shall pay its own costs relating to the negotiation,
preparation, execution and implementation by it of this Agreement.
8. ARBITRATION
Any dispute arising out of this Agreement or concerning its
interpretation or validity shall be resolved on a friendly basis and in
accordance with current reinsurance practice rather than strictly
according to the letter of the law. All such disputes shall be referred
to a Court of Arbitration which will take place in Winterthur and which
shall consist of two arbitrators, one to be appointed by each party,
and an umpire who shall be appointed by the arbitrators before they
have studied the case material. The arbitrators and the umpire shall be
active or retired officials of companies or underwriters carrying on a
similar type of insurance and/or reinsurance business to that protected
hereunder.
If either party fails to appoint an arbitrator within four weeks after
being requested in writing by the other party to do so, or in the event
of the arbitrators failing to agree as to the appointment of umpire
within an identical period after their own appointment, such arbitrator
or umpire shall be appointed by the Upper Court of the Canton of
Zurich.
The procedure shall be at the discretion of the Court of Arbitration,
whereby it shall dispense as far as possible with all legal
formalities. It shall pronounce on the distribution between the parties
of costs and charges. The rulings of the Court of Arbitration shall be
in writing, stating the reasons for its decision and be signed. In one
of the arbitrators refuses to sign the decision, this shall have no
bearing on its validity.
The decision shall be reached within three months after the Court of
Arbitration is constituted.
Otherwise the stipulations of the law of Switzerland shall be
applicable to this Agreement.
9. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which is an original and all of which together evidence the same
agreement.
In witness whereof, the parties have executed this agreement on the day and year
stated above.
Signed by [ ] on behalf of )
VITODURUM REINSURANCE )
COMPANY LIMITED )
Signed by [ ] on behalf of )
WINTERTHUR SWISS INSURANCE )
COMPANY )
ANNEXURE 1
Reinsurance Agreement
GENERAL CONDITIONS
WINTERTHUR INTERNATIONAL CATASTROPHE EXCESS OF LOSS
REINSURANCE AGREEMENT 2000
BETWEEN
VITODURUM INSURANCE COMPANY
WINTERTHUR, SWITZERLAND
HERINAFTER CALLED THE -REINSURED-
AND
HEREINAFTER CALLED THE -REINSURER-
General Conditions: WI Catastrophe Excess of Loss
Reinsurance Agreement 2000 Page 2
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ARTICLE 1 PERIOD OF REINSURANCE AGREEMENT
--------------------------------------------------------------------------------
This Reinsurance Agreement shall apply to losses resulting from each and every
loss occurrence occurring on and after the date specified in the Schedule(s) and
shall remain in force for the period specified in the Schedule(s).
Where the original business is issued on another basis, such as "claims made",
"losses discovered", "loss causation", this Reinsurance Agreement shall also
apply on the same basis.
In case the original business makes no special provision for the aggregation of
a series of losses, this Reinsurance Agreement provides that multiple individual
losses arising from a set of related circumstances, determined in light of
time and geographical factors, and furthermore arising from a common cause,
shall be aggregated into one single loss and be attributed to the date of the
last loss, irrespective of the actual dates of each individual loss.
Additional cover details are described in the attached Schedule(s).
ARTICLE 2 BUSINESS COVERED
--------------------------------------------------------------------------------
This Reinsurance Agreement shall apply to all insurance and facultative
reinsurance business accepted by the Reinsured as original and as described in
the attached Schedule(s).
ARTICLE 3 EXCLUSIONS
--------------------------------------------------------------------------------
As per the attached Schedule(s).
ARTICLE 4 TERRITORIAL SCOPE
--------------------------------------------------------------------------------
This Reinsurance Agreement shall cover interests of insureds located within the
territorial scope described in the attached Schedule(s).
ARTICLE 5 REINSURING CLAUSE
--------------------------------------------------------------------------------
The Reinsurer hereby agrees to indemnify the Reinsured for the shares as set out
in the Schedule(s) of that part of the Reinsured's ultimate net loss each and
every loss occurrence which exceeds the amount of the deductible for each and
every loss occurrence as set out in the Schedule(s).
The sum recoverable under this Reinsurance Agreement shall be up to but not
exceeding the amount of cover for ultimate net loss on account of each and every
loss occurrence as set out in the Schedule(s), subject however to the provision
for reinstatement as set out in Article 6 of this Reinsurance Agreement.
Additional cover details as described in the attached Schedule(s).
ARTICLE 6 REINSTATEMENTS
--------------------------------------------------------------------------------
Each loss reduces the amount of the cover hereunder, however the amount
exhausted shall be automatically reinstated from the time of commencement of the
loss occurrence to the next expiry date of this Reinsurance Agreement.
General Conditions: WI Catastrophe Excess of Loss
Reinsurance Agreement 2000 Page 3
--------------------------------------------------------------------------------
An additional premium calculated at the rate set out in the Schedule(s), shall
be paid by the Reinsured based only upon the amount of such recovery.
Nevertheless the Reinsured's liability shall never be more than the amount of
cover set out in the Schedule(s) in respect of any one loss occurrence and no
more than the annual limit of cover set out in the Schedule(s) in all during any
period of twelve months in which the Reinsurance Agreement is in force.
ARTICLE 7 DEFINITION OF "ULTIMATE NET LOSS"
--------------------------------------------------------------------------------
The term "ultimate net loss" shall mean the sum actually paid by the Reinsured
in respect of each and every loss occurrence, including loss expenses. The term
"loss expenses" shall include all the amounts paid for actions, suits or
proceedings and for other matters and things relating to any loss recoverable
hereunder at the discretion of the Reinsured which in its judgement may be
beneficial or expedient and all payments made and costs and expenses incurred
therefor shall be considered. It is furthermore agreed that an allowance may be
included for salaried adjusters or other salaried officials or employees
diverted from their normal duties in connection with the loss hereunder.
Salvages and recoveries, including recoveries from all other reinsurances, other
than the underlying layer(s) of excess of loss reinsurance, shall be deducted
from such loss to arrive at the amount of liability, if any, attaching
hereunder.
All salvages, recoveries or payments recovered or received subsequent to any
loss settlement hereunder shall be applied as if recovered or received prior to
the aforesaid settlement, and all necessary adjustments shall be made by the
parties hereto.
Nothing in the clause shall be construed to mean that losses are not recoverable
hereunder until the Reinsured's ultimate net loss has been ascertained.
ARTICLE 8 DEFINITION OF "LOSS OCCURRENCE"
--------------------------------------------------------------------------------
For the purposes of this Reinsurance Agreement the term "loss occurrence" shall
consist of the sum of all individual insured losses which result from an
accident, disaster, casualty or happening or series of accidents, disasters,
casualties or happenings arising out of one event having the same proximate
cause, regardless of the number of interests insured or the number of policies
responding and which occur during a loss period of:
a) 72 consecutive hours as regards hurricane, typhoon, windstorm,
rainstorm, hailstorm and/or tornado
b) 72 consecutive hours as regards earthquake, seaquake, tidal wave and/or
volcanic eruption
c) 72 consecutive hours and within the limits of one City, Town or Village
as regards riots, civil commotions and malicious damage
d) 72 consecutive hours as regards any "loss occurrence" which includes
individual loss or losses from any of the perils mentioned in (a), (b)
and (c) above
e) 168 consecutive hours as regards flood, however caused
d) 168 consecutive hours as regards any "loss occurrence" which includes
individual loss or losses from any of the perils mentioned in (a) or
(b) or (c) or (d) above when in combination with individual loss or
losses from any of the peril mentioned in (e) above
General Conditions: WI Catastrophe Excess of Loss
Reinsurance Agreement 2000 Page 4
--------------------------------------------------------------------------------
g) 168 consecutive hours as regards any "loss occurrence" of whatsoever
nature which does no include individual loss or losses from any of the
perils mentioned in (a), (b) and (c), (d), (e), or (f) above
and no individual loss from whatever insured peril which occurs outside these
periods or areas shall be included in that "loss occurrence".
The Reinsured may choose the time when any such period of consecutive hours
commences and if any event is of greater duration than the above-mentioned
periods, the Reinsured may divide that event into two or more "loss
occurrences", provided that no two periods overlap and provided no such period
commences earlier than the date and time of the happening of the first recorded
individual loss to the Reinsured in respect of the event in question.
ARTICLE 9 NET RELATED LINES
--------------------------------------------------------------------------------
This Reinsurance Agreement shall only protect that portion of any business which
the Reinsured, acting in accordance with its established practice, retains net
for its own account.
The Reinsured's maximum retention each and every risk for own account shall not
exceed the amount as set out in the Schedule(s). As regards the definition of
"each and every risk", the Reinsured shall be the sole judge of what constitutes
one risk, however this shall not differ from the written Underwriting guidelines
of the Reinsured in this respect.
The liability of the Reinsurer hereunder shall not be increased due to an error
or omission which results in an increase in the Reinsured's normal net
retention, nor by the Reinsured's failure to reinsure in accordance with its
normal practice, nor by the inability of the Reinsured to collect from any other
reinsurers any amounts which may have become due from them, whether such
inability arises from the insolvency of such reinsurers or otherwise.
ARTICLE 10 UNDERWRITING POLICY
--------------------------------------------------------------------------------
The Reinsured undertakes not to introduce any change in its established
acceptance and underwriting policy in respect of the classes of business
protected under this Reinsurance Agreement without prior approval by the
Reinsurer and any reinsurance arrangement related thereto shall be maintained or
deemed to be maintained unaltered for the purpose of this Reinsurance Agreement.
ARTICLE 11 REINSURANCE PREMIUM
--------------------------------------------------------------------------------
The Reinsured shall pay to the Reinsurer the reinsurance premium(s) as set out
in the Schedule(s).
The term "premium income" shall mean the gross retained written premium income
accounted by the Reinsured in the classes of business protected under this
Reinsurance Agreement during the twelve month period for which the excess of
loss premium is being calculated, less cancellations and return premiums as well
as premiums paid for reinsurance which is to the benefit of this Reinsurance
Agreement or as specified in the Schedule(s).
General Conditions: WI Catastrophe Excess of Loss
Reinsurance Agreement 2000 Page 5
--------------------------------------------------------------------------------
ARTICLE 12 TAXES
--------------------------------------------------------------------------------
As original and/or as per attached Schedule(s).
ARTICLE 13 CLAIM ADVICES
--------------------------------------------------------------------------------
The Reinsured shall advise any claim to the Reinsurer immediately on receiving
knowledge thereof, if the estimated amount of any such claim exceeds the claim
advice amount as set out in the Schedule(s). Such claim advices shall contain
also an estimate of the Reinsurer's liability and indicate the amounts paid and
reserved. The Reinsured shall keep the Reinsurer fully informed of any
significant developments in respect of the advised claim(s).
The Reinsured shall supply the Reinsurer with a list of outstanding claims at
the end of each accounting year, however not later than 25 days after this date.
In respect of these claims, the date of the loss event as well as the breakdown
into the paid and outstanding amount for each claim must be provided.
ARTICLE 14 CLAIM PAYMENTS
--------------------------------------------------------------------------------
All loss settlements made by the Reinsured, provided these are within the terms
of the original policies and with the terms of this Reinsurance Agreement, shall
be unconditionally binding upon the Reinsurer and amounts falling to the share
of the Reinsurer shall be payable by him upon reasonable evidence of the amount
paid or shortly due for payment being given by the Reinsured. The Reinsurer
shall have the right to deduct any outstanding balances due to him from the
Reinsured from any loss payment.
ARTICLE 15 ACCOUNTING AND SETTLEMENT OF THE BALANCE
--------------------------------------------------------------------------------
The accounts have been drawn up as instructed by the Reinsurance Accounting
Division of the Reinsurer, and as set out in the Schedule(s).
The settlement of the balances has to be effected as set out in the Schedule(s)
and coordinated via the Treasury Department of the Reinsurer.
ARTICLE 16 ERRORS AND OMISSIONS
--------------------------------------------------------------------------------
It is hereby understood and agreed that any inadvertent delays, omissions or
errors made in connection with this Reinsurance Agreement shall not be held to
relieve either of the parties hereto from any liability which would have
attached to them hereunder if such delay, omission or error had not occurred
provided that rectification is made upon discovery.
ARTICLE 17 EXTENDED EXPIRATION
--------------------------------------------------------------------------------
If this Reinsurance Agreement should expire or be terminated while a loss
occurrence covered hereunder is in progress it is understood and agreed that,
subject to the other conditions of this Reinsurance Agreement, the Reinsurer
hereon is responsible as if the entire loss or damage had occurred prior to the
expiration of this Reinsurance Agreement, provided that no part of that loss
General Conditions: WI Catastrophe Excess of Loss
Reinsurance Agreement 2000 Page 6
--------------------------------------------------------------------------------
occurrence is claimed against any renewal of this Reinsurance Agreement. This
condition shall however not apply to liability losses affecting multiple years.
ARTICLE 18 ACCESS TO RECORDS
--------------------------------------------------------------------------------
The Reinsurer or their designated representatives shall have free access at any
reasonable time to all records of the Reinsured which pertain in any way to this
Reinsurance Agreement.
ARTICLE 19 IMMEDIATE TERMINATION
--------------------------------------------------------------------------------
Either party shall have the right to terminate this Reinsurance Agreement
immediately by tendering notice of termination upon the other party:
a) if the performance of this Reinsurance Agreement is rendered impossible
de Jure or de facto for reasons not the fault of either party;
b) if the other party becomes unable to pay its debts or is insolvent or
goes into liquidation or has its authorisation to do business
withdrawn;
c) if the other party loses all or part of its paid-up capital;
d) if either party amalgamates with another company or comes under the
control of another company;
e) if the other party fails to fulfil its obligations under this
Reinsurance Agreement;
f) if the country in which the other party resides or has its principal
offices or is incorporated is involved in war in any form whatsoever,
whether declared or not.
In the event of this Reinsurance Agreement being terminated at any date other
than the last day in December in any one year then the premium due to the
Reinsurer shall be calculated up to the date of termination on a pro rata basis
of the annual reinsurance premium. The rights and obligations of both parties
under this Reinsurance Agreement shall remain in full force until the effective
date of termination. The Reinsurer shall remain responsible for any losses
incurred prior to termination.
Any notice of termination shall be communicated in writing by registered letter,
telex or telegram and addressed to the other party. In the event of an
interruption of communications any notice of termination shall be deemed to take
effect as soon as it is dispatched or submitted for dispatch.
ARTICLE 20 RATES OF EXCHANGE
--------------------------------------------------------------------------------
In respect of losses in currency(ies) other than that in which the monetary
limit of this Reinsurance Agreement is stated, the losses will be converted into
this currency by using the exchange rate(s) in force on the date the settlement
with the insured is affected (outstanding loss amounts at year end to be
converted as per the exchange rates in the Reinsured's books).
It is furthermore understood that the Reinsured's maximum retentions are
expressed in the currency of the monetary limit of this Reinsurance Agreement or
the equivalent in other currencies at the exchange rate ruling in the
Reinsured's books on the commencement date of each year the Reinsurance
Agreement is in force.
ARTICLE 21 ARBITRATION
--------------------------------------------------------------------------------
Any disputes arising out of this Reinsurance Agreement or concerning its
interpretation or validity shall be resolved on a friendly basis and in
accordance with current reinsurance practice rather than
General Conditions: WI Catastrophe Excess of Loss
Reinsurance Agreement 2000 Page 7
--------------------------------------------------------------------------------
strictly according to the letter of the law. All such disputes shall be referred
to a Court of Arbitration which will take place in Winterthur and which shall
consist of two arbitrators, one to be appointed by each party, and an umpire who
shall be appointed by the arbitrators before they have studied the case
material. The arbitrators and the umpire shall be active or retired officials of
companies or underwriters carrying on a similar type of insurance and/or
reinsurance business to that protected hereunder.
If either party fails to appoint an arbitrator within four weeks after being
requested in writing by the other party to do so, or in the event of the
arbitrators failing to agree as to the appointment of the umpire within an
identical period after their own appointment, such arbitrator or umpire shall be
appointed by the Upper Court of the Canton of Zurich.
The procedure shall be at the discretion of the Court of Arbitration, whereby it
shall dispense as far as possible with all legal formalities. It shall pronounce
on the distribution between the parties of costs and charges. The ruling of the
Court of Arbitration shall be in writing, stating the reasons for its decision
and be signed. If one of the arbitrators refuses to sign the decision, this
shall have no bearing on its validity.
The decision shall be reached within three months after the Court of Arbitration
is constituted.
Otherwise the stipulations of the law of Switzerland shall be applicable to the
Reinsurance Agreement.
ARTICLE 22 INDEX CLAUSE
--------------------------------------------------------------------------------
It is agreed that the amounts of deductible and cover shall be adjusted by the
index as set out in the Schedule(s).
In respect of any loss settlement(s) made under this Reinsurance Agreement the
Reinsured shall submit a list of payments comprising such loss settlement(s)
indicating the amount(s) paid and the date(s) of payment. The amount of each
such payment shall be adjusted by means of the following formula:
actual base index adjusted
amount X ------------------------------ = payment
of payment index on the date of payment value
The above formula shall however only apply in respect of those payments where
there is a variation of more than 10% as between the base index and the index on
the date of payment. In respect of all other payments the "adjusted payment
value" shall always be equal to the "actual amount of payment".
All actual payments and adjusted payment values shall be separately totalled and
the amounts of deductible and cover shall then be multiplied by the following
fraction:
total of actual payments
--------------------------------
total of adjusted payment values
ARTICLE 23 OTHER TERMS AND CONDITIONS
--------------------------------------------------------------------------------
As set out in the Schedule(s).
General Conditions: WI Catastrophe Excess of Loss
Reinsurance Agreement 2000 Page 8
--------------------------------------------------------------------------------
Drawn up in duplicate and signed
in Winterthur, Switzerland, on and in on
for and on behalf of for and on behalf of
the REINSURED the REINSURER
VITODURUM INSURANCE COMPANY
WINTERTHUR SWITZERLAND
REINSURANCE SLIP
WINTERTHUR INTERNATIONAL CATASTROPHE EXCESS OF LOSS REINSURANCE
AGREEMENT 2000
--------------------------------------------------------------------------------
REINSURED Vitodurum Insurance Company, Winterthur, on behalf of:
Winterthur Swiss Insurance Company, Winterthur
Switzerland including their branch offices,
subsidiaries and company groups
REINSURER Winterthur Swiss Insurance Company
Winterthur, Switzerland
PERIOD OF REINSURANCE 12 months as from 1st April 2000 standard local time
AGREEMENT at this location of the risk; Basis: Losses occurring
during the period of reinsurance.
In case of non-renewal of this reinsurance agreement,
policies in force will be covered until natural expiry
at an additional premium to be agreed.
BUSINESS COVERED All property Damage and Business Interruption and the
Property part of Multiline business, including
original, written by the Winterthur International
Division in Winterthur and/or its units in the
Winterthur Group.
EXCLUSIONS -Reinsurance Treaty business other than Captive
Business
-War, Civil War
-Nuclear Energy Risks Exclusion Clause (Reinsurance)
(1994), worldwide excluding U.S. and Canadian Business
-Nuclear Incident Exclusion Clause - Property - USA -
Reinsurance and Nuclear Incident Exclusion Clause -
Liability - USA - Reinsurance for U.S. Business
-Nuclear Incident Exclusion Clause - Property -
Canada - Reinsurance and Nuclear Incident Exclusion
Clause - Liability - Canada - Reinsurance for Canadian
Business
-Oil/Petrochemical risks, written as such
-Underground mining, written as such
-Off Shore Risks
-Swiss Re Market Standards for Property Business as per
Attachment A.
-Other exclusions as per the existing Multiline Quota
Share Reinsurance Agreement.
WI CATASTROPHE XL Page 2
--------------------------------------------------------------------------------
TERRITORIAL SCOPE Worldwide as original
REINSURING CLAUSE
Reinsurer's Share 100% of 600%
Amount of Deductible CHF 30,000,000
in respect of each and
every loss occurrence
Amount of Cover in CHF 270,000,000
respect of each and
every loss occurrence
REINSTATEMENTS
Additional Premium 100% of CHF 8,325,000 (45% of CHF 18,500,000
pro-rata amount only
Amount of Cover in CHF 270,000,000
respect of each and
every loss occurrence
Limit of Cover During CHF 540,000,000
any one period
NET RETAINED LINES
Reinsured Maximum PROPERTY DAMAGE AND BUSINESS INTERRUPTION:
Retention CHF 200,000,000 Probable Maximum Loss or Loss Limit any
one risk (any one location and/or policy(ies) and/or
program) protected by the Property Excess of Loss which
is deemed to be in place.
PROPERTY PART OF MULTILINE:
CHF 200,000,000 Probable Maximum Loss or Loss Limit any
one risk (any location and/or policy(ies) and/or
program) protected by the Multiline Excess of loss
which is deemed to be in place.
Deficiencies due to the occurrence limit cannot be
included in the ultimate net loss hereunder.
REINSURANCE PREMIUM Flat Premium of CHF 8,325,000 (45% of CHF 18,500,000).
Should the actual Gross Net Earned Premium Income
(Property business only) deviate by more than 10% of
the estimated figure (CHF 154,552,500 for the period
WI CATASTROPHE XL Page 3
--------------------------------------------------------------------------------
1st April, 2000 to 31st March, 2000), the flat premium
will be adjusted at 5.39%.
Payable quarterly in equal installments on 30th June,
30th September, 31st December and 31st March.
Claim Advices CHF 15,000,000
Other Terms and
Conditions In exceptional cases special acceptance can be a
granted by the leading reinsurer.
Flood Netherlands limited to CHF 150,000,000 any one
loss occurrence (from ground-up).
Other terms and conditions as per the existing
Multiline Quota Share Reinsurance Agreement.
Other clauses (Ultimate Net Loss, Definition of Loss
Occurrence, Extended Expiration, Currency Fluctuation,
etc.) as per our standard reinsurance wording.
Drawn up in duplicate and signed
in, Winterthur, Switzerland, on 17.4.00 and in Winterthur, Switzerland
on 04, April, 2000
for and on behalf of for and on behalf of
the REINSURED. the REINSURER
VITODURUM INSURANCE COMPANY WINTERTHUR SWISS INSURANCE COMPANY
WINTERHUR, SWITZERLAND WINTERTHUR, SWITZERLAND
/s/ /s/
---------------------------------- ----------------------------------
Ref. No. PAS2144
[WINTERTHUR LOGO]
WINTERTHUR INTERNATIONAL RUN-OFF PROTECTION
--------------------------------------------------------------------------------
It is hereby noted and agreed that the following amendments and terms and
conditions attach to and form part of the Reinsurance Slip Winterthur
International Catastrophe Excess of Loss Agreement 2000, which was ceded from
Winterthur International (WIRE).
REINSURED XL Winterthur International, Winterthur, Switzerland
PERIOD OF REINSURANCE 12 months as from 1st July 2001 standard local time at
AGREEMENT (ARTICLE 1) the location of the risk; Losses occurring during the
period of reinsurance.
BUSINESS COVERED All Property Damage and Business Interruption and
(ARTICLE 2) the Property part of Mulitline business, including
perils as original, written as from 1st April 2000 up
to 30th June 2001 by the Market Unit Winterthur
International in Winterthur and/or its units in
Winterthur Insurance.
REINSURER'S SHARE 100% OF 60%
(ARTICLE 5)
REINSURANCE PREMIUM Flat Premium of CHF 32,500,000
(ARTICLE 11) (CHF 19,500,000 for 60%)
Payable as follows:
CHF 10,000,000 for 60% on 1st September 2001
CHF 4,625,000 for 60% on 1st December 2001
CHF 4,875,000 for 60% on 1st April 2002
All other terms and conditions as per the Reinsurance Slip Winterthur
International Catastrophe Excess of Loss Agreement 2000.
Drawn up in duplicate and signed
in Winterthur, Switzerland, on 02/05/02 and in Witherthur, Switzerland,
on 02 May 2002
for and on behalf of for and on behalf of
the REINSURED the REINSURER
XL WINTERTHUR INTERNATIONAL WINTERTHUR SWISS INSURANCE COMPANY
WINTERTHUR, SWITZERLAND WINTERTHUR, SWITZERLAND
/s/ /s/
---------------------------------- ----------------------------------
SCHEDULE D
The definition of "Reserves" in the SPA shall be amended by replacing the final
sentence thereof with the following sentence:
"In determining the Initial Net Reserves Amount and the Seasoned Net
Reserves Amount, the unearned premium reserve shall be calculated net of
reinsurance prepaid prior to 30 June 2001, which net amount shall then be
adjusted to be equal to 71% of such net amount."
SCHEDULE E
TRANSFER NOTICE
[LETTERHEADS OF WINTERTHUR XL INSURANCE]
Xxxxxxxx Chance LLP
00 Xxxxx Xxxx Xxxxxx
Xxxxxx
X00 0XX
Attention: Xxxxxxxxx Xxxxxx and Xxxxxx Xxxxxx
[Date]
SALE AND PURCHASE OF WINTERTHUR INTERNATIONAL
We, Winterthur Swiss Insurance Company ("WINTERTHUR") and XL Insurance (Bermuda)
Ltd, formerly known as XL Insurance Ltd, ("XL INSURANCE") refer to the second
amended and restated sale and purchase agreement dated as of 15 February 2001
made between us for the sale and purchase of Winterthur International (the
"SPA") and the Payment Agreement dated 24 July 2001 made between Winterthur, XL
Insurance and Xxxxxxxx Chance LLP (the "PAYMENT AGREEMENT").
Capitalised terms in this Transfer Notice have the same meaning as set out in
the Payment Agreement or the SPA unless otherwise defined herein.
Clauses 3.3.1 and 5.1 of the Payment Agreement set out the conditions precedent
to the release of the Retention Amount and the Income (the "CONDITIONS
PRECEDENT") and Clause 3.3.2 of the Payment Agreement sets out the payments to
be made by you following satisfaction of the Conditions Precedent.
We hereby confirm that the Conditions Precedent have been deemed to have been
satisfied or have been waived and that we wish you to make payments otherwise
than as set out in Clause 3.3 of the Payment Agreement. Consequently, we wish
you to implement the payment instructions set out below notwithstanding the
fact that:
i. the Conditions Precedent have not been satisified (although
Purchase Price and the allocation thereof have been agreed between
Winterthur and XL Insurance);
ii. the payments instructed hereby are not in conformity with the
terms of the Payment Agreement; and
iii. this Transfer Notice is not in the form scheduled to the Payment
Agreement.
We hereby instruct you to pay the amount held by you in the Designated Account
together with an amount equal to any tax credit attaching thereto (less any tax
for which you may have to account or any
charges and expenses incurred by you) in the proportions set out below and in
accordance with the payment details set out below.
For the account of Winterthur:
PROPORTION: 25.15768% in respect of the Retention Amount and 12.57884% in
respect of the Income.
METHOD OF PAYMENT:
BANK:
ACCOUNT NAME:
ACCOUNT NUMBER:
REFERENCE:
ACCOUNT:
For the Account of XL Insurance:
PROPORTION: 74.84232% in respect of the Retention Amount and 87.42116% in
respect of the Income.
METHOD OF PAYMENT:
BANK:
ABA NO.
SWIFT CODE:
DDA NO.
FOR CREDIT:
ACCOUNT NAME:
ACCOUNT NUMBER:
This Transfer Notice (which may be signed in any number of counterparts each of
which shall be deemed an original) amends the terms of the Payment Agreement,
but only to the extent set out above. Except as expressly provided herein, this
Transfer Notice shall not alter any rights or obligations of any party under the
Payment Agreement or the SPA.
This Transfer Notice is governed by the laws of England and Wales.
Please confirm, acknowledge and agree to the above by signing and returning a
copy of this Transfer Notice.
Your faithfully,
__________________________________________________
Print name:
For and on behalf of XL Insurance (Bermuda) Limited
__________________________________________________
Print name:
For and on behalf of Winterthur Swiss Insurance Company
__________________________________________________
Print name:
For and on behalf of Xxxxxxxx Chance LLP.
SCHEDULE F - SRA AMENDMENT LETTER
XL Insurance
One Bermudiana Road
Xxxxxxxx
Bermuda
- and -
Vitodorum Reinsurance Company (Formerly Called
Winterthur International)
[Address]
for the Attention of Xxxx Xxxxxxxx
December 2003
SELLERS RETROCESSION AGREEMENTS
--------------------------------------------------------------------------------
Dear Sirs,
We refer to the second amended and restated agreement for the sale and purchase
of Winterthur International (the "SPA") made between us and dated as of 15
February 2001. Capitalised terms in this letter agreement shall have the meaning
as set out in the SPA unless otherwise defined in this letter agreement.
In relation to Article 5 of each of (i) the Sellers Retrocession Agreement (in
respect of the period to 31 December 2000) dated 24 July 2001 and made between
Winterthur International (Re) and Winterthur; and (ii) the Amended and Restated
Sellers Retrocession Agreement (in respect of the period to 30 June 2001) dated
8 February 2002 and made between Winterthur International (Re) and Winterthur
(collectively defined as the "SRAs"), we ask you to agree:
1. to the insertion of the following at the end of the first sentence
immediately after the phase "31.12.2000 Financial Statements)":
"provided that from and after agreement or determination (whichever is
earlier) of the Seasoned Net Reserves Amount but with effect from 30
June 2004 the "ultimate net loss" in respect of losses shall not exceed
the sum provided for in respect of such losses in the agreed or
determined Seasoned Net Reserves Amount except that such excess shall
form part of the "ultimate net loss" to the extent that it is due to
(i) non recoverability of reinsurance receivables or collectables; (ii)
collected reinsurance which has since become repayable; or (iii)
additional sums payable to reinsurers which arise out of discussions as
to the valuation of reinsurance receivables, in each case, to the
extent included as part of the agreed or determined Seasoned Net
Reserves Amount.
To the extent that the amounts of any payments made under this
Reinsurance Agreement between 30 June 2004 and the date of agreement or
determination of the Seasoned Net Reserves Amount would not have been
required to be paid pursuant to the previous paragraph if the Seasoned
Net Reserves Amount had been agreed or determined at that time, such
amounts shall be repaid to the party that made such payment in cash
within five Business Days of such agreement or determination together
with interest at a non-compounding rate per annum of 0.5 per cent above
Base Rate.
and
2. to amend the third paragraph of Article 5 as follows:
(i) so that "in such case" reads "in case of either (i) or (iii) of this
paragraph";
(ii) so that the following words are included at the end of the paragraph
"or under the Seasoned Net Reserves Payment".
Clause 19 of the SRAs applies to this letter agreement.
Kindly consent to the above by signing and returning a copy of this letter
agreement.
Yours faithfully,
-----------------------------------------------------------
For and on behalf of "Winterthur" Swiss Insurance Company
-----------------------------------------------------------
For and on behalf of XL Insurance (Bermuda) Ltd
-----------------------------------------------------------
For and on behalf of Vitodorum Reinsurance Company