AGGREGATE EXCESS OF LOSS REINSURANCE AGREEMENT
BETWEEN
ASSOCIATED GENERAL CONTRACTORS SELF INSURERS TRUST FUND (FUND ID #00-0000000)
(the Company)
AND
RELIANCE INSURANCE COMPANY
(the Reinsurer)
TYPE: Aggregate Excess of Loss Reinsurance
REINSURER'S SHARE: One-hundred percent (100%).
EFFECTIVE DATE: December 31, 1991.
COVERAGE: In consideration of the premium payment from the Company,
the Reinsurer agrees to indemnify the Company for
Ultimate Net Loss in the Subject Business in excess of the
Company's Retention occurring in the Coverage Period,
regardless of when reported, for which the Company is or
becomes obligated to pay.
SUBJECT BUSINESS: Workers' Compensation and Employers' Liability coverages
provided by the Company effective during the Coverage
Period.
COVERAGE PERIOD: January 1, 1985, through December 31, 1991.
COMPANY'S The Company's Retention is the Company's liabilities for
RETENTION: Ultimate Net Loss, whether or not paid or payable by the
Company, less the Aggregate Limit of the reinsurance. The
Company's Retention as of December 31, 1991 shall be * .
The Company's Retention shall be adjusted annually
thereafter to reflect loss development and a new Retention
shall be established. Adjustments shall be made in
accordance with the Settlement Account to reflect changes in
the Company's Retention as it may affect payment made or due
in accordance with Remittances.
Any adjustment to the Company's Retention will be used in
settling losses hereunder in accordance with the
provision for Remittances.
* As reflected per Shores and Company's final audited
financial statements.
AGGREGATE LIMIT: Twenty-one million dollars ($21,000,000).
REINSURANCE Thirteen million, nine hundred twenty-five thousand dollars
PREMIUM: ($13,925,000), including commissions and applicable
taxes, payable no later than July 31, 1992. The Company
shall pay to the Reinsurer accrued interest at the rate of
one percent (1%) per month from
Page 1 of 13
December 31, 1991 to the date the Reinsurance Premium is
paid.
ULTIMATE NET LOSS: The Company's Ultimate Net Loss includes all claims
arising from occurrences in the Subject Business during the
Coverage Period, and expenses directly related to the
adjustment of claims incurred, regardless of when reported,
during the coverage period. Such expenses shall include, but
not to be limited to, expenses and costs associated with
policy coverage disputes, pre-judgment interest, and
expenses incurred in connection with subrogation. Ultimate
Net Loss shall be adjusted to reflect recoverables, either
collected or uncollected, under specific excess insurance,
and subrogation recoveries, but shall not be adjusted to
include recoverables, either collected or uncollected, under
the Special Disability Fund (SDF). Judgments in Excess of
Policy Limits and Extra Contractual Obligations are included
in determining the Company's Ultimate Net Loss.
COMMUTATION: At any time the Company has the option to commute the
Reinsurers' liability and relieve the Reinsurer of all
further liability. In the event the Company elects to
commute this Agreement, the Reinsurer shall pay to the
Company the balance in the Experience Account.
EXPERIENCE ACCOUNT: An Experience Account shall be established by the
Reinsurer and maintained during the term of this Agreement.
The Experience Account shall consist of (a) ninety percent
(90%) of the Reinsurance Premium received, less (b) actual
losses paid by the Reinsurer, plus (c) interest on the
average account balance calculated and credited at each
December 31 at the rate of ninety percent (90%) of the last
published One Year U.S. Treasury Xxxx Rate (as published in
The Wall Street Journal) on the date the Reinsurance Premium
is received by the Reinsurer and annually thereafter.
REPORTS: The Company shall report monthly to the Reinsurer the
Company's account of losses and expenses paid and
outstanding, under the Subject Business coverage. Such
account statement shall include a Summary Report by policy
year on a monthly basis and a detailed report by policy year
on a quarterly basis, containing all relevant information as
per the attached CRIMS Reports.
The Company shall furnish to the Reinsurer within statutory
filing time after the close of each calendar year an
actuarially-certified projection of the Company's Ultimate
Net Loss. This projection must be certified by an Associate
of the Casualty Actuarial Society. The Ultimate Net Loss
must be based on paid and incurred loss data valued through
December 31st of the most recent year.
REMITTANCES: The Reinsurers' payments under this Agreement will be made
within forty-five (45) days of the receipt of the calendar
quarterly account statements once the Company's Retention
has been exceeded.
Page 2 of 13
ADJUSTMENTS TO Any remittances determined by the projection of Ultimate
REMITTANCES: Net Loss made hereunder shall not be final as regards future
Company Retention levels. Such remittances shall be
reconciled through the Settlement Account.
SETTLEMENT ACCOUNT: An account shall be maintained by the Reinsurer for the
purpose of reconciling adjustments to the Company's
Retention subsequent to reinsurance remittances.
Adjustments shall be made as follows: (1) Additional
remittance payments plus interest credit shall be made at
the next remittance payment period; (2) Over-remittance
to date plus interest credit shall offset subsequent
reinsurance payments.
The interest applied to (1) or (2) above shall be based
on the average prime rate plus 200 basis points for that
payment period.
DISCLOSURES With respect to this Agreement and the transactions
AND APPROVALS: hereunder, the Company represents and agrees that it has
made or obtained, or will make or obtain, all disclosures
and approvals that are, in the opinion of its counsel,
necessary and appropriate under applicable law.
INSOLVENCY: The Insolvency Clause attached hereto (Exhibit 1) is
incorporated herein.
EXCLUSIONS: A. Reinsurance Assumed
(Exhibit 2) B. Pools, Syndicates and Associations
C. Insolvency Funds
D. Medical Malpractice Liability
E. War
F. Member Assessments
OTHER: A. Access to Records
(Exhibit 3) B. Agreement not assignable
C. Arbitration
D. Choice of Law: Florida
E. Entire Agreement
F. Errors and Omissions
G. Right of Offset
H. Headings
Page 3 of 13
IN WITNESS WHEREOF, the parties hereto have caused this Binder of
Reinsurance to be executed by their duly authorized representatives in
Orlando, Florida this 27th day of JULY, 1992.
ASSOCIATED GENERAL CONTRACTORS SELF INSURERS TRUST FUND (FUND ID
#00-0000000)
BY: /s/ Xxxxxx X. Xxxxxxx BY: /s/ Xxxxx X. Xxxxxxxxx
-------------------------- --------------------------
NAME: Xxxxxx X. Xxxxxxx NAME: Xxxxx X. Xxxxxxxxx
------------------------ ------------------------
TITLE: Chairman TITLE: Administrator
----------------------- -----------------------
This 27th day of July, 1992.
RELIANCE INSURANCE COMPANY
ATTEST: /s/ (illegible) BY: /s/ Xxxxxxx XxXxxxx
---------------------- --------------------------
NAME: (illegible) NAME: Xxxxxxx XxXxxxx
------------------------ ------------------------
TITLE: Asst Gen Counsel TITLE: Vice President
----------------------- -----------------------
Page 4 of 13
EXHIBIT 1
INSOLVENCY
In the event of the insolvency of the Company, this reinsurance shall be
payable directly to the Company, or to its liquidator, receiver, conservator
or statutory successor on the basis of the liability of the Reinsurer to the
Company, within the timing and terms of this Agreement, and without
diminution because of the insolvency of the Company or without diminution
because the liquidator, receiver, conservator or statutory successor of the
Company has failed to pay all or a portion of any claim, not withstanding any
provisions of this Agreement to the contrary.
The liquidator, receiver, conservator or statutory successor of the Company
shall give written notice to the Reinsurer of the pendency of a claim against
the Company which would involve a possible liability on the part of the
Reinsurer, such notice to be given within a reasonable time after such claim
is filed in the conservation or liquidation proceeding or in the
receivership, and that during the pendency of such claim, the Reinsurer may
investigate such claim and interpose, at its own expense, in the proceeding
where such claim is to be adjudicated, any defense or defenses that the
Reinsurer deems available to the Company, or its liquidator, receiver,
conservator or statutory successor. The expense thus incurred by the
Reinsurer shall be chargeable, subject to the approval of the court, against
the Company as part of the expense of conservation or liquidation to the
extent of a pro rata share of the benefit which may accrue to the Company
solely as a result of the defense undertaken by the Reinsurer.
Where two or more reinsurers are involved in the same claim and a majority in
interest elect to interpose defense to such claim, the expense shall be
apportioned in accordance with the terms of the reinsurance Agreement as
though such expense had been incurred by the Company.
The reinsurance shall be payable by the Reinsurer to the Company or to its
liquidator, receiver, conservator or statutory successor, (except as provided
by applicable Insurance Law or) except (a) where the Agreement specifically
provides another payee of such reinsurance in the event of the insolvency of
the Company, and (b) where the Reinsurer with the consent of the direct
insured or insureds has assumed such policy obligations of the Company as
direct obligations of the Reinsurer to the payees under such policies and in
substitution for the obligations of the Company to such payees.
Page 5 of 13
EXHIBIT 2
EXCLUSIONS
A. REINSURANCE ASSUMED BY THE COMPANY
This Agreement does not apply to any reinsurance assumed by the Company
whether directly or indirectly.
B. POOLS, SYNDICATES AND ASSOCIATIONS
This Agreement does not apply to any liabilities assumed (whether
voluntarily or involuntarily) from any Pool, Association, Syndicate or
other facility (other than the liabilities of the Company itself) that
maintain their own underwriting facilities.
C. INSOLVENCY FUNDS
This Agreement does not apply to any liabilities arising by contract,
operation of law, or otherwise, from the Company's participation in any
Insolvency Fund. "Insolvency Fund" shall mean any guarantee fund,
insolvency fund, plan, pool, association or other arrangement however
denominated or established that provides for any assessment of or payment
or assumption by the Company of all or part of any claim, debt, charge,
fee, or other obligation of an insurer, fund or employer, or any of their
successors or assigns, that is unable to meet any claim, debt, charge,
fee or other obligation in whole or in part due to its insolvency or due
to it having been declared insolvent or bankrupt.
D. MEDICAL MALPRACTICE LIABILITY
This Agreement shall not apply to any liabilities arising out of the
rendering or failing to render any medical services by a physician or
other providers of medical services, or arising out of any error or
omission in the performance thereof by a physician or other providers of
medical services.
E. WAR
This Agreement shall not apply to any claim which is occasioned by war,
invasion, hostilities, acts of foreign enemies, civil war, rebellion,
insurrection, military or usurped power, or martial law. This shall not
apply to riots, strikes, civil commotion, vandalism, or malicious mischief.
F. MEMBER ASSESSMENTS
This Agreement does not apply to member assessments under Section
38F-5.065 (5) of the Rules for Self-Insurers under the Workers'
Compensation Act in the State of Florida.
Page 6 of 13
EXHIBIT 3
OTHER
A. ACCESS TO RECORDS
Reinsurer shall have the right at any reasonable time upon five (5)
working days prior notice during or at any time after the expiration of
this Agreement, and as frequently as deemed reasonably necessary by
Reinsurer, to visit the offices of Company to inspect, examine, audit, and
verify any of the policy or claim files ("records") relating to the
business reinsured under this Agreement. Reinsurer shall have the right to
make, at its own expense, copies or extracts of any records.
Notwithstanding the above, Reinsurer shall not have any right of access to
the records of Company if it is not current in all payments due to Company
and Company shall have no right to reimbursement under this Agreement if
it fails or refuses to provide the reasonable access required by this
section other than by reason of Reinsurer's failure to pay. Reinsurer
shall keep confidential all information and reports derived from the
records of Company to which it has received access and shall not publish or
communicate that information or report(s) to any other person or reinsurer
without Company's express prior written consent. Reinsurer shall promptly
upon Company's request deliver a complete copy of any report(s) concerning
the records and information to which it has received access.
B. AGREEMENT NOT ASSIGNABLE
This Agreement shall be binding upon and inure to the benefit of Company
and Reinsurer and their respective successors and assigns provided,
however, that this Agreement may not be assigned by either Company or
Reinsurer without the prior written consent of the other which consent may
be withheld by either party in its sole unfettered discretion. Except as
expressly provided for in the Clause entitled INSOLVENCY, the provisions of
this Agreement are intended solely for the benefit of Company and
Reinsurer. Nothing in this Agreement shall in any manner create or be
construed to create any obligations to or establish any rights against any
party to this Agreement in favor of any other persons not party to this
Agreement.
C. ARBITRATION
As a condition precedent to any cause of action, any and all disputes
between Company and Reinsurer arising out of, relating to, or concerning
this Agreement, whether sounding in contract or tort and whether arising
during or after termination of this Agreement, shall be submitted to the
decision of a board of arbitration composed of two arbitrators and an
umpire ("Board") meeting at a site in Orange County, Florida. The
arbitration shall be conducted under the Federal Arbitration Act and shall
proceed as follows:
Page 7 of 13
1. SUBMISSION TO ARBITRATION. A notice requesting arbitration, or any
other notice made in connection therewith, shall be in writing and shall be
sent certified or registered mail, return receipt requested to the affected
parties. The notice requesting arbitration shall state in particulars all
issues to be resolved in the view of the claimant, shall appoint the
arbitrator selected by the claimant and shall set a tentative date for the
hearing, which date shall be no sooner than ninety (90) days and no later
than one hundred fifty (150) days from the date that the notice requesting
arbitration is mailed. Within thirty (30) days of receipt of claimant's
notice, the respondent shall notify claimant of any additional issues to be
resolved in the arbitration and of the name of its appointed arbitrator.
2. ARBITRATION BOARD MEMBERSHIP. Unless otherwise mutually agreed, the
members of the Board shall be impartial and disinterested and shall be
active or retired lawyers, familiar with insurance and reinsurance, or
active or retired officers of property-casualty insurance companies,
reinsurance companies, or Lloyds Underwriters. Company and Reinsurer as
aforesaid shall each appoint an arbitrator and the two (2) arbitrators
shall choose an umpire before instituting the hearing. As time is of the
essence, if the respondent fails to appoint its arbitrator within thirty
(30) days after having received claimant's written request for arbitration,
the claimant is authorized to and shall appoint the second arbitrator if
the two arbitrators fail to agree upon the appointment of an umpire within
thirty (30) days after notification of the appointment of the second
arbitrator, within ten (10) days thereof, the two (2) arbitrators shall
request the American Arbitration Association ("AAA") to appoint an umpire
for the arbitration with the qualifications set forth above in this
Article. If the AAA fails to name an umpire, either party may apply to the
court named below to appoint an umpire with the above required
qualifications. The umpire shall promptly notify in writing all parties to
the arbitration of his selection and of the scheduled date for the hearing.
Upon resignation or death of any member of the Board, a replacement shall
be appointed in the same fashion as the resigning or decreased member was
appointed.
3. SUBMISSION OF BRIEFS. The claimant and respondent shall each submit
initial briefs to the Board outlining the issues in dispute and the basis,
authority, and reasons for their respective positions within thirty (30)
days of the date of notice of appointment of the umpire. The claimant and
the respondent may submit reply briefs to the Board within ten (10) days
after filing of the initial briefs(s). Initial and reply briefs may be
amended by the submitting party at any time, but not later than ten (10)
days prior to the date of commencement of the arbitration hearing.
Reasonable responses shall be allowed at the arbitration hearing to new
material contained in any amendments filed to the briefs but not previously
responded to.
4. ARBITRATION AWARD. The Board shall make a decision and award with
regard to the terms of this Agreement, the original intentions of the
parties to the extent reasonably ascertainable, and the custom and usage
of the property and casualty insurance and reinsurance business which
decision and award shall be in writing and shall state the factual and
legal basis for the decision and award. The decision and award shall be
based upon a hearing in which evidence shall be allowed and which the
formal rules of evidence shall not strictly apply but in which cross
examination and rebuttal shall be allowed. At its own election or at
Page 8 of 13
the request of the Board, either party may submit a post-hearing brief
for consideration of the Board within twenty (20) days of the close of the
hearing. The Board shall make its decision and award within thirty (30)
days following the close of the hearing or the submission of post-hearing
briefs, whichever is later, unless the parties consent to an extension.
Every decision by the Board shall be by a majority of the members of the
Board and each decision and award by the majority of the members of the
board shall be final and binding upon all parties to the proceeding.
Either party may apply to the Circuit Court in and for Orange County,
Florida for an order confirming any decision and the award; a judgment of
that Court shall thereupon be entered on any decision or award. If such an
order is issued, the attorneys' fees of the party so applying and court
costs will be paid by the party against whom confirmation is sought. The
Board may award interest at a rate of two hundred (200) basis points
above the prime rate as published in The Wall Street Journal on the date of
the award of the Board calculated from the date the Board determines that
any amounts due the prevailing party should have been paid to the
prevailing party should have been paid to the prevailing party but may not
award punitive, exemplary, or treble damages.
5. ARBITRATION EXPENSE. Each party shall bear the expense of the one
arbitrator appointed by it and shall jointly and equally bear with the
other party the expense of any stenographer requested, and of the umpire.
The remaining costs of the arbitration proceedings shall be finally
allocated by the Board.
6. EVIDENCE. Subject to customary and recognized legal rules of
privilege, each party participating in the arbitration shall have the
obligation to produce those documents and as witnesses to the arbitration
those of its employees, those of its affiliates, and those of any
intermediary or underwriting manager as any other participating party
reasonably requests providing always that the same witnesses and documents
be obtainable and relevant to the issues before the arbitration and not be
unduly burdensome or excessive. The parties may mutually agree as to
pre-hearing discovery prior to the arbitration hearing and in the absence
of agreement, upon the request of any party, pre-hearing discovery may be
conducted as the umpire shall determine in his/her sole discretion to be in
the interest of fairness, full disclosure, and a prompt hearing, decision
and award by the Board. The umpire shall be the final judge of the
procedures of the Board, the conduct of the arbitration, of the rules of
evidence, the rules of privilege and production and of excessiveness and
relevancy of any witnesses and documents upon the petition of any
participating party. To the extent permitted by law, the Board and the
umpire shall have the authority to issue subpoenas and other orders to
enforce their decisions.
7. EQUITABLE RELIEF. Nothing herein shall be construed to prevent any
participating party from applying to the Circuit Court in and for Orange
County, Florida to issue a restraining order or other equitable relief to
maintain the "status quo" of the parties participating in the arbitration
pending the decision and award by the Board or to prevent any party from
incurring irreparable harm or damage at any time prior to the decision and
award of the Board. The Board shall also have the authority to issue
interim decisions or awards in the interest of fairness, full disclosure,
and a prompt and orderly hearing and decision and award by the Board.
Page 9 of 13
D. CHOICE OF LAW
This Agreement shall be construed according to the laws of the State of
Florida with venue in Orange County, Florida.
E. ENTIRE AGREEMENT
This Agreement supersedes and merges with any and all previous
agreements, whether written or oral, between Company and Reinsurer, or
their predecessors with respect to this reinsurance of Company by Reinsurer
effective December 31, 1991 and constitutes the full and complete Agreement
between the parties with respect to that reinsurance. No amendment to this
Agreement shall be valid unless in writing and signed by both parties.
F. ERRORS OR OMISSIONS
Any inadvertent act, neglect, delay, omission, or error by either party
to this Agreement, including its representatives, will not be held to
relieve either party to this Agreement from any liability that would attach
to it under this Agreement if that act, neglect, delay, omission, or error
had not been made, providing that act, neglect, delay, omission, or error
is sought to be rectified immediately upon discovery.
G. RIGHT OF OFFSET
All amounts due either Company or Reinsurer, whether by reason of
premium, commission, loss, ultimate net loss or allocated loss expense, or
otherwise, under this Agreement or any other Agreement later in force
between Reinsurer and Company, whether as ceding company, reinsurer or
otherwise, shall be subject to the right of recoupment and offset and upon
the exercise of the same, only the net balance shall be due. All claims for
amounts of premium, commission, loss, ultimate net loss or allocated loss
expense, whether or not fixed in amount at the time of the insolvency of
any party to this Agreement, arising from coverage placed in effect under
this Agreement prior to the insolvency of any party to this Agreement shall
be deemed pre-liquidation debts and subject to this Article. In the event
of insolvency of Company, offset shall be in accord with applicable law.
H. HEADINGS
The headings preceding the text of the Clauses and paragraphs of this
Agreement are intended and inserted solely for the convenience of
references and shall not affect the meaning, interpretation, construction
or effect of this Agreement.
Page 10 of 13
CRIMS
1 UNDERWRITING REPORT
FUND: 880 ASSOCIATED GENERAL CONTRACTORS SELF INSURERS FUND
FUND YEAR: 1989
----------------------------------------------------------------------------------------------------------------------------------
OUT-
IN- IN- STAND-
JURY JURY CODES LOST DATE COMPEN- TOTAL TOTAL ING
EMPLR DIV CASE CLAIMANT SOC SEC DATE O/C NAT PRT CAU TIME RECEIVED SATION MEDICAL OTHER PAID INCURRED RES
----------------------------------------------------------------------------------------------------------------------------------
419 507202 XXXXXX, XXXXXXX ###-##-#### 9/28/89 C 81 32 11 N 10/04/89 .00 .00 .00 .00 .00 .00
----------------------------------------------------------------------------------------------------------------------------------
1444 507767 STADFELD ###-##-#### 10/18/89 C 81 32 11 N 11/20/89 .00 165.09 .00 165.09 165.09 .00
----------------------------------------------------------------------------------------------------------------------------------
1 Report information to be reconciled by Agreement.
Page 11 of 13
CRIMS
1 REFUND REPORT
FUND: 880 ASSOCIATED GENERAL CONTRACTORS SELF INSURERS FUND FUND YEAR: 1989
----------------------------------------------------------------------------------------------------------------------------------
ACCEPTED CLAIMS
-----------------------------------
XXXX- UNFILED UNFILED
DATE BURSEMENTS FROM EST. EST.
ACCIDENT TOTAL NOTIFIED/ REFUND STATUS XXXX- XXXX- AMOUNT AMOUNT
EMPLR DIV CASE NAME DATE INCURRED ACCEPTED CODE SDF ATTORNEY BURSEMENT BURSEMENT UNCOLLECTED COLLECTED
----------------------------------------------------------------------------------------------------------------------------------
630 507602 XXXXXX, XXXXXX 10/30/89 127,000.00 0/00/00 09 SPECIAL DISA- 50,800.00 .00
BILITY FUND
MERGER
----------------------------------------------------------------------------------------------------------------------------------
106 506453 XXXXXXX, XXXXX 7/27/89 94,677.37 2/22/91 05 SPECIAL DISA- 75,000.00
BILITY FUND
AFFIDAVIT/
MERGER
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1 Report information to be reconciled by Agreement
Page 12 of 13
1 SPECIFIC EXCESS CLAIMS
AGC 1/1/89 - 1/1/90
AS OF
DEC 31, 1991
Individual Excess Over
Claimant Paid Reserve Total Retention Retention
X. XXXXXXX 379,840.92 1,150,159.08 1,530,000.00 500,000.00 1,030,000.00
505474
D/A 5/3/89
X. XXXXXXX 356,819.76 227,180.24 584,000.00 500,000.00 84,000.00
508187
D/A 10/16/89
---------- ------------ ------------ ---------- ------------
379,840.92 1,150,159.08 1,530,000.00 500,000.00
SPECIFIC EXCESS OVER RETENTION 1,114,000.00
1 Report information to be reconciled by Agreement
Page 13 of 13
