EXHIBIT 10.16
INTERESTS AND LIABILITIES AGREEMENT
of
Platinum Underwriters Reinsurance, Inc.
Baltimore, Maryland
(hereinafter referred to as the "Subscribing Reinsurer")
with respect to the
PROPERTY CATASTROPHE EXCESS OF LOSS
REINSURANCE CONTRACT
EFFECTIVE: JULY 1, 2003
issued to and duly executed by
Glencoe Group of Companies
and its Quota Share Reinsurers, if any
including
Glencoe Insurance Ltd.
Hamilton, Bermuda
Stonington Insurance Company
Dallas, Texas
Stonington Lloyds Insurance Company
Dallas, Texas
and
Lantana Insurance Ltd.
Hamilton, Bermuda
The Subscribing Reinsurer hereby accepts the following percentage shares in the
interests and liabilities of the "Reinsurer" as set forth in the attached
Contract captioned above:
5.00% of the First Property Catastrophe Excess of Loss Reinsurance
5.00% of the Second Property Catastrophe Excess of Loss Reinsurance
5.00% of the Third Property Catastrophe Excess of Loss Reinsurance
5.00% of the Fourth Property Catastrophe Excess of Loss Reinsurance
This Agreement shall become effective at 12:01 a.m., Local Standard Time, July
1, 2003, and shall continue in force until 12:01, Local Standard Time, July 1,
2004, unless earlier terminated in accordance with the provisions of the
attached Contract.
The Subscribing Reinsurer's share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.
IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the undermentioned at:
New York, New York, this the 25th day of September in the year 2003.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. (Vice President)
-------------------------------------------
Platinum Underwriters Reinsurance, Inc.
PROPERTY CATASTROPHE EXCESS OF LOSS
REINSURANCE CONTRACT
EFFECTIVE: JULY 1, 2003
issued to
Glencoe Group of Companies
and its Quota Share Reinsurers, if any
including
Glencoe Insurance Ltd.
Hamilton, Bermuda
Stonington Insurance Company
Dallas, Texas
Stonington Lloyds Insurance Company
Dallas, Texas
and
Lantana Insurance Ltd.
Hamilton, Bermuda
TABLE OF CONTENTS
PAGE
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ARTICLE
I Classes of Business Reinsured 1
II Commencement and Termination 2
III Territory 3
IV Exclusions 3
V Retention and Limit 5
VI Reinstatement 5
VII Definitions 7
VIII Other Reinsurance 9
IX Loss Occurrence 9
X Loss Notices and Settlements 11
XI Salvage and Subrogation 12
XII Reinsurance Premium 12
XIII Offset (BRMA 36C) 13
XIV Access to Records 13
XV Liability of the Reinsurer 13
XVI Net Retained Lines (BRMA 32E) 13
XVII Errors and Omissions (BRMA 14E) 13
XVIII Currency (BRMA 12A) 14
XIX Taxes (BRMA 50C) 14
XX Federal Excise Tax (BRMA 17A) 14
XXI Reserves and Letters of Credit 14
XXII Insolvency 17
XXIII Arbitration 17
XXIV Service of Suit (BRMA 49C) 18
XXV Entire Agreement 19
XXVI Agency Agreement 19
XXVII Intermediary (BRMA 23A) 19
Schedule A
PROPERTY CATASTROPHE EXCESS OF LOSS
REINSURANCE CONTRACT
EFFECTIVE: JULY 1, 2003
issued to
Glencoe Group of Companies
and its Quota Share Reinsurers, if any
including
Glencoe Insurance Ltd.
Hamilton, Bermuda
Stonington Insurance Company
Dallas, Texas
Stonington Lloyds Insurance Company
Dallas, Texas
and
Lantana Insurance Ltd.
Hamilton, Bermuda
(hereinafter referred to collectively as the "Company")
by
The Subscribing Reinsurer(s) Executing the
Interests and Liabilities Agreement(s)
Attached Hereto
(hereinafter referred to as the "Reinsurer")
ARTICLE I - CLASSES OF BUSINESS REINSURED
A. By this Contract the Reinsurer agrees to reinsure the excess liability
which may accrue to the Company under its policies, contracts, binders,
certificates and other obligations, whether written or oral, of insurance
or reinsurance (hereinafter called "policies") in force at the effective
date hereof or issued or renewed on or after that date, and classified by
the Company as Property business, including quota share treaties and
excess facultative reinsurance, subject to the terms, conditions and
limitations set forth herein and in Schedule A attached to and forming
part of this Contract.
B. Notwithstanding the provisions of paragraph A above, the Company shall
have the right to exclude specific programs, including quota share
treaties and excess facultative reinsurance, subject to appropriate file
notation at the time of writing.
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ARTICLE II - COMMENCEMENT AND TERMINATION
A. This Contract shall become effective at 12:01 a.m., Local Standard Time,
July 1, 2003, with respect to losses arising out of loss occurrences
commencing at or after that time and date, and shall remain in force until
12:01 a.m., Local Standard Time, July 1, 2004.
B. Notwithstanding the provisions of paragraph A above, the Company may
terminate a Subscribing Reinsurer's percentage share in this Contract at
any time by giving written notice to the Subscribing Reinsurer in the
event any of the following circumstances occur:
1. The Subscribing Reinsurer's policyholders' surplus at the inception
of this Contract has been reduced by more than 25.0% of the amount
of surplus (or stamp capacity, in respect of Lloyds Syndicates) 12
months prior to that date; or
2. The Subscribing Reinsurer's policyholders' surplus at any time
during the term of this Contract has been reduced by more than 25.0%
of the amount of surplus (or stamp capacity, in respect of Lloyds
Syndicates) at the date of the Subscribing Reinsurer's most recent
financial statement filed with regulatory authorities and available
to the public as of the inception of this Contract; or
3. The Subscribing Reinsurer's A.M. Best's rating has been assigned or
downgraded below A- and/or Standard and Poor's rating has been
assigned or downgraded below BBB+; or
4. The Subscribing Reinsurer has become merged with, acquired by or
controlled by any other company, corporation or individual(s) not
controlling the Subscribing Reinsurer's operations previously; or
5. A State Insurance Department or other legal authority has ordered
the Subscribing Reinsurer to cease writing business; or
6. The Subscribing Reinsurer has become insolvent or has been placed
into liquidation or receivership (whether voluntary or involuntary)
or proceedings have been instituted against the Subscribing
Reinsurer for the appointment of a receiver, liquidator,
rehabilitator, conservator or trustee in bankruptcy, or other agent
known by whatever name, to take possession of its assets or control
of its operations; or
7. The Subscribing Reinsurer has reinsured its entire liability under
this Contract without the Company's prior written consent, except
that this provision shall not apply to any intercompany reinsurance
or intercompany pooling arrangements entered into by the Subscribing
Reinsurer; or
8. The Subscribing Reinsurer has ceased assuming new and renewal
property and casualty treaty reinsurance business.
C. If this Contract is terminated or expires while a loss occurrence covered
hereunder is in progress, the Reinsurer's liability hereunder shall,
subject to the other terms and conditions of this Contract, be determined
as if the entire loss occurrence had occurred prior to the
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termination or expiration of this Contract, provided that no part of such
loss occurrence is claimed against any renewal or replacement of this
Contract.
ARTICLE III - TERRITORY
The liability of the Reinsurer shall be limited to losses under policies
covering property located within the territorial limits of the United States of
America, its territories or possessions, Puerto Rico, the District of Columbia,
Canada, and the Islands of the Caribbean; but this limitation shall not apply to
moveable property if the Company's policies provide coverage when said moveable
property is outside the aforesaid territorial limits.
ARTICLE IV - EXCLUSIONS
This Contract does not apply to and specifically excludes business classified by
the Company as follows:
1. Insolvency and Mortgage Impairment insurances and reinsurances.
2. Loss or liability excluded under the provisions of the "Pools,
Associations and Syndicates Exclusion Clause" attached to and
forming part of this Contract.
3. All liability of the Company arising by contract, operation of law,
or otherwise, from its participation or membership, whether
voluntary or involuntary, in any insolvency fund. "Insolvency fund"
includes any guaranty fund, insolvency fund, plan, pool,
association, fund or other arrangement, however denominated,
established or governed, which provides for any assessment of or
payment or assumption by the Company of part or all of any claim,
debt, charge, fee or other obligation of an insurer, or its
successors or assigns, which has been declared by any competent
authority to be insolvent, or which is otherwise deemed unable to
meet any claim, debt, charge, fee or other obligation in whole or in
part.
4. Loss or damage caused by or resulting from war, invasion,
hostilities, acts of foreign enemies, civil war, rebellion,
insurrection, military or usurped power, or martial law or
confiscation by order of any government or public authority, but
this exclusion shall not apply to loss or damage covered under a
standard policy with a standard War Exclusion Clause.
5. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
Physical Damage - Reinsurance (U.S.A.)" and the "Nuclear Incident
Exclusion Clause - Physical Damage - Reinsurance (Canada)" attached
to and forming part of this Contract.
6. Loss and/or damage and/or costs and/or expenses arising from seepage
and/or pollution and/or contamination, other than contamination from
smoke. Nevertheless, this exclusion does not preclude payment of the
cost of removing debris of property damaged by a loss otherwise
covered hereunder, subject always to a limit of 25% of the Company's
property loss under the applicable original policy.
7. Financial Guarantee.
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8. Losses in respect of transmission and distribution lines and their
supporting structures other than those on or within 150 meters (or
500 feet) of the insured's premises.
9. Retrocessional business.
10. Loss, damage, cost or expense directly or indirectly caused by,
contributed to by, resulting from or arising out of or in connection
with any "act of terrorism" as defined in the Terrorism Risk
Insurance Act of 2002 (the "Act"), regardless of any other cause or
event contributing concurrently or in any sequence to the loss.
Notwithstanding the above and subject otherwise to the terms,
conditions and limitations of this Contract, this Contract will pay
actual loss or damage (but not related cost or expense) caused by
any act of terrorism which does not meet the definition of "act of
terrorism" set forth in the Act or meets the definition of "act of
terrorism" as set forth in the Act but results in loss under a
policy that is not included in "property and casualty insurance" as
defined in the Act, provided, in either case, (a) such loss or
damage occurs in a line of insurance otherwise covered by this
Contract, and (b) in no event will this Contract provide coverage
for loss, damage, cost or expense directly or indirectly caused by,
contributed to by, resulting from, or arising out of or in
connection with biological, chemical or nuclear explosion,
pollution, contamination and/or fire following thereon.
ARTICLE V - RETENTION AND LIMIT
A. As respects each excess layer of reinsurance coverage provided by this
Contract, the Company shall retain and be liable for the first amount of
ultimate net loss, shown as "Company's Retention" for that excess layer in
Schedule A attached hereto, arising out of each loss occurrence. The
Reinsurer shall then be liable, as respects each excess layer, for the
amount by which such ultimate net loss exceeds the Company's applicable
retention, but the liability of the Reinsurer under each excess layer
shall not exceed the amount, shown as "Reinsurer's Per Occurrence Limit"
for that excess layer in Schedule A attached hereto, as respects any one
loss occurrence.
B. As respects each excess layer of reinsurance coverage provided by this
Contract, the Company shall retain at least 5.0% part of a 100% share in
the interests and liabilities of the "Reinsurer" under each excess layer
of this Contract.
C. It is warranted that no claim shall be made under any excess layer of
coverage provided by this Contract in any one loss occurrence unless at
least two risks insured or reinsured by the Company are involved in such
loss occurrence. For purposes hereof, the Company shall be the sole judge
of what constitutes one risk, but in no event shall a building and its
contents be considered more than one risk.
ARTICLE VI - REINSTATEMENT
A. In the event all or any portion of the reinsurance under any excess layer
of reinsurance coverage provided by this Contract is exhausted by loss,
the amount so exhausted shall be reinstated immediately from the time the
loss occurrence commences hereon. For each amount so reinstated the
Company agrees to pay additional premium equal to the product of the
following:
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1. The percentage of the occurrence limit for the excess layer
reinstated (based on the loss paid by the Reinsurer under that
excess layer); times
2. The earned reinsurance premium for the excess layer reinstated for
the term of this Contract (exclusive of reinstatement premium).
B. Whenever the Company requests payment by the Reinsurer of any loss under
any excess layer hereunder, the Company shall submit a statement to the
Reinsurer of reinstatement premium due the Reinsurer for that excess
layer. If the earned reinsurance premium for any excess layer for the term
of this Contract has not been finally determined as of the date of any
such statement, the calculation of reinstatement premium due for that
excess layer shall be based on the annual deposit premium for that excess
layer and shall be readjusted when the earned reinsurance premium for that
excess layer for the term of this Contract has been finally determined.
Any reinstatement premium shown to be due the Reinsurer for any excess
layer as reflected by any such statement (less prior payments, if any, for
that excess layer) shall be payable by the Company concurrently with
payment by the Reinsurer of the requested loss for that excess layer. Any
return reinstatement premium shown to be due the Company shall be remitted
by the Reinsurer as promptly as possible after receipt and verification of
the Company's statement.
C. Notwithstanding anything stated herein, the liability of the Reinsurer
under any excess layer of reinsurance coverage provided by this Contract
shall not exceed either of the following:
1. The amount, shown as "Reinsurer's Per Occurrence Limit" for that
excess layer in Schedule A attached hereto, as respects loss or
losses arising out of any one loss occurrence; or
2. The amount, shown as "Reinsurer's Annual Limit" for that excess
layer in Schedule A attached hereto, in all during the term of this
Contract.
ARTICLE VII - DEFINITIONS
A. "Ultimate net loss" as used herein is defined as the sum or sums
(including loss in excess of policy limits, extra contractual obligations
and loss adjustment expense, as hereinafter defined) paid or payable by
the Company in settlement of claims and in satisfaction of judgments
rendered on account of such claims, after deduction of all salvage, all
recoveries and all claims on inuring insurance or reinsurance, whether
collectible or not. With respect to losses arising out of mycotoxins, mold
or other fungi (hereinafter together referred to as "mold-related
losses"), only those mold-related losses directly arising out of loss
occurrences covered hereunder will be included in ultimate net loss.
Mold-related losses, in and of themselves, shall not be considered an
event. Nothing herein shall be construed to mean that losses under this
Contract are not recoverable until the Company's ultimate net loss has
been ascertained.
All salvages and recoveries made or received subsequent to a loss
settlement under this Contract shall be applied as if recovered or
received prior to the said settlement, and all necessary adjustments shall
be made by the parties hereto.
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B. "Loss in excess of policy limits" and "extra contractual obligations" as
used herein shall be defined as follows:
1. "Loss in excess of policy limits" shall mean 80.0% of any amount
paid or payable by the Company in excess of its policy limits, but
otherwise within the terms of its policy and within the terms of
this Contract, such loss in excess of the Company's policy limits
having been incurred because of, but not limited to, failure by the
Company to settle within the policy limits or by reason of the
Company's alleged or actual negligence, fraud or bad faith in
rejecting an offer of settlement or in the preparation of the
defense or in the trial of an action against its insured or in the
preparation or prosecution of an appeal consequent upon such an
action. For purposes of this Contract, loss in excess of policy
limits arising out of any one loss occurrence shall not exceed 25.0%
of the contractual loss under all policies involved in the loss
occurrence.
2. "Extra contractual obligations" shall mean 80.0% of any punitive,
exemplary, compensatory or consequential damages paid or payable by
the Company, not covered by any other provision of this Contract and
which arise from the handling of any claim on business subject to
this Contract, such liabilities arising because of, but not limited
to, failure by the Company to settle within the policy limits or by
reason of the Company's alleged or actual negligence, fraud or bad
faith in rejecting an offer of settlement or in the preparation of
the defense or in the trial of any action against its insured or in
the preparation or prosecution of an appeal consequent upon such an
action. For purposes of this Contract, extra contractual obligations
arising out of any one loss occurrence shall not exceed 25.0% of the
contractual loss under all policies involved in the loss occurrence.
An extra contractual obligation shall be deemed, in all
circumstances, to have occurred on the same date as the loss covered
or alleged to be covered under the policy.
Notwithstanding anything stated herein, this Contract shall not apply to
any loss in excess of policy limits or any extra contractual obligation
incurred by the Company as a result of any fraudulent and/or criminal act
by any officer or director of the Company acting individually or
collectively or in collusion with any individual or corporation or any
other organization or party involved in the presentation, defense or
settlement of any claim covered hereunder.
If any provision of this paragraph B shall be rendered illegal or
unenforceable by the laws, regulations or public policy of any state, such
provision shall be considered void in such state, but this shall not
affect the validity or enforceability of any other provision of this
Contract or the enforceability of such provision in any other
jurisdiction.
C. "Loss adjustment expense" as used herein shall mean expenses assignable to
the investigation, appraisal, adjustment, settlement, litigation, defense
and/or appeal of specific claims, regardless of how such expenses are
classified for statutory reporting purposes. Loss adjustment expense shall
include, but not be limited to, court costs, costs of supersedeas and
appeal bonds, prejudgment interest, postjudgment interest, expenses of
outside adjusters, legal expenses and costs incurred in connection with
coverage questions and legal actions connected thereto, and a pro rata
share of salaries and expenses of the
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Company's field employees and expenses of other employees who have been
temporarily diverted from their normal and customary duties and assigned
to the field adjustment of losses covered by this Contract. Loss
adjustment expense shall not include salaries and expenses of the
Company's regular employees, except as provided above, or office and
overhead expenses.
ARTICLE VIII - OTHER REINSURANCE
The Company shall be permitted to carry the following:
1. Catastrophe excess of loss, including but not limited to catastrophe
excess of loss as classified by the Company as index, Original Loss
Warranty (OLW), swaps, and cat-linked covers;
2. Any other underlying reinsurance;
recoveries under which shall inure solely to the benefit of the Company
and be entirely disregarded in applying all of the provisions of this
Contract.
ARTICLE IX - LOSS OCCURRENCE
A. The term "loss occurrence" shall mean the sum of all individual losses
directly occasioned by any one disaster, accident or loss or series of
disasters, accidents or losses arising out of one event which occurs
within the area of one state of the United States or province of Canada
and states or provinces contiguous thereto and to one another, and the
Islands of the Caribbean. However, the duration and extent of any one
"loss occurrence" shall be limited to all individual losses sustained by
the Company occurring during any period of 168 consecutive hours arising
out of and directly occasioned by the same event, except that the term
"loss occurrence" shall be further defined as follows:
1. As regards windstorm, hail, tornado, hurricane, cyclone, including
ensuing collapse and water damage, all individual losses sustained
by the Company occurring during any period of 72 consecutive hours
arising out of and directly occasioned by the same event. However,
the event need not be limited to one state or province or states or
provinces contiguous thereto.
2. As regards riot, riot attending a strike, civil commotion, vandalism
and malicious mischief, all individual losses sustained by the
Company occurring during any period of 72 consecutive hours within
the area of one municipality or county and the municipalities or
counties contiguous thereto arising out of and directly occasioned
by the same event. The maximum duration of 72 consecutive hours may
be extended in respect of individual losses which occur beyond such
72 consecutive hours during the continued occupation of an assured's
premises by strikers, provided such occupation commenced during the
aforesaid period.
3. As regards earthquake (the epicenter of which need not necessarily
be within the territorial confines referred to in paragraph A of
this Article) and fire following directly
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occasioned by the earthquake, only those individual fire losses
which commence during the period of 168 consecutive hours may be
included in the Company's "loss occurrence."
4. As regards "freeze," only individual losses directly occasioned by
collapse, breakage of glass and water damage (caused by bursting
frozen pipes and tanks) may be included in the Company's "loss
occurrence."
B. For all "loss occurrences" other than those referred to in subparagraph 2
of paragraph A above, the Company may choose the date and time when any
such period of consecutive hours commences, provided that it is not
earlier than the date and time of the occurrence of the first recorded
individual loss sustained by the Company arising out of that disaster,
accident or loss, and provided that only one such period of 168
consecutive hours shall apply with respect to one event, except for any
"loss occurrence" referred to in subparagraph 1 of paragraph A above where
only one such period of 72 consecutive hours shall apply with respect to
one event.
C. As respects those "loss occurrences" referred to in subparagraph 2 of
paragraph A above, the Company may choose the date and time when any such
period of consecutive hours commences. If the disaster, accident or loss
occasioned by the event is of greater duration than 72 consecutive hours,
then the Company may divide that disaster, accident or loss into two or
more "loss occurrences," provided that no two periods overlap and no
individual loss is included in more than one such period, and provided
that no period commences earlier than the date and time of the occurrence
of the first recorded individual loss sustained by the Company arising out
of that disaster, accident or loss.
D. No individual losses occasioned by an event that would be covered by 72
hours clauses may be included in any "loss occurrence" claimed under the
168 hours provision.
E. Losses directly or indirectly occasioned by:
1. Loss of, alteration of, or damage to; or
2. A reduction in the functionality, availability or operation of;
a computer system, hardware, program, software, data, information
repository, microchip, integrated circuit, or similar device in computer
equipment or non-computer equipment, whether the property of the
policyholder of the Company or not, do not in and of themselves constitute
an event unless arising out of one or more of the following perils:
fire, lightning, explosion, aircraft or vehicle impact, falling
objects, windstorm, hail, tornado, cyclone, hurricane, earthquake,
volcano, tsunami, flood, freeze or weight of snow.
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ARTICLE X - LOSS NOTICES AND SETTLEMENTS
A. Whenever losses sustained by the Company appear likely to result in a
claim hereunder, the Company shall notify the Reinsurer, and the Reinsurer
shall have the right to participate in the adjustment of such losses at
its own expense.
B. All loss settlements made by the Company, provided they are within the
terms of this Contract, shall be binding upon the Reinsurer, and the
Reinsurer agrees to pay all amounts
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for which it may be liable upon receipt of reasonable evidence of the
amount paid (or scheduled to be paid) by the Company.
ARTICLE XI - SALVAGE AND SUBROGATION
The Reinsurer shall be credited with salvage (i.e., reimbursement obtained or
recovery made by the Company, less the actual cost, excluding salaries of
officials and employees of the Company and sums paid to attorneys as retainer,
of obtaining such reimbursement or making such recovery) on account of claims
and settlements involving reinsurance hereunder. Salvage thereon shall always be
used to reimburse the excess carriers in the reverse order of their priority
according to their participation before being used in any way to reimburse the
Company for its primary loss. The Company hereby agrees to enforce its rights to
salvage or subrogation relating to any loss, a part of which loss was sustained
by the Reinsurer, and to prosecute all claims arising out of such rights.
ARTICLE XII - REINSURANCE PREMIUM
A. As premium for each excess layer of reinsurance coverage provided by this
Contract, the Company shall pay the Reinsurer the greater of the
following:
1. The amount, shown as "Annual Minimum Premium" for that excess layer
in Schedule A attached hereto (or a pro rata portion thereof if the
term of this Contract is less than 12 months as set forth in Article
II - Commencement and Termination); or
2. The percentage, shown as "Premium Rate" for that excess layer in
Schedule A attached hereto, of the Company's net earned premium for
the term of this Contract.
B. The Company shall pay the Reinsurer an annual deposit premium for each
excess layer of the amount, shown as "Annual Deposit Premium" for that
excess layer in Schedule A attached hereto, in four equal installments of
the amount, shown as "Quarterly Deposit Premium" for that excess layer in
Schedule A attached hereto, on July 1, 2003, October 1, 2003, January 1,
2004 and April 1, 2004. However, if this Contract is terminated prior to
July 1, 2004, no deposit premium installments shall be due after the
effective date of termination.
C. As promptly as possible after the effective date of termination or
expiration of this Contract, the Company shall provide a report to the
Reinsurer setting forth the premium due hereunder for each excess layer,
computed in accordance with paragraph A, and any additional premium due
the Reinsurer or return premium due the Company for each such excess layer
shall be remitted promptly.
D. "Net earned premium" as used herein is defined as gross earned premium of
the Company for the classes of business reinsured hereunder, less the
earned portion of premiums ceded by the Company for reinsurance which
inures to the benefit of this Contract.
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ARTICLE XIII - OFFSET (BRMA 36C)
The Company and the Reinsurer shall have the right to offset any balance or
amounts due from one party to the other under the terms of this Contract. The
party asserting the right of offset may exercise such right any time whether the
balances due are on account of premiums or losses or otherwise.
ARTICLE XIV - ACCESS TO RECORDS
The Reinsurer or its designated representatives shall have access at any
reasonable time, with prior notice to the Company, to all records of the Company
which pertain in any way to this reinsurance.
ARTICLE XV - LIABILITY OF THE REINSURER
A. The liability of the Reinsurer shall follow that of the Company in every
case and be subject in all respects to all the general and specific
stipulations, clauses, waivers and modifications of the Company's policies
and any endorsements thereon. However, in no event shall this be construed
in any way to provide coverage outside the terms and conditions set forth
in this Contract.
B. Nothing herein shall in any manner create any obligations or establish any
rights against the Reinsurer in favor of any third party or any persons
not parties to this Contract.
ARTICLE XVI - NET RETAINED LINES (BRMA 32E)
A. This Contract applies only to that portion of any policy which the Company
retains net for its own account (prior to deduction of any underlying
reinsurance specifically permitted in this Contract), and in calculating
the amount of any loss hereunder and also in computing the amount or
amounts in excess of which this Contract attaches, only loss or losses in
respect of that portion of any policy which the Company retains net for
its own account shall be included.
B. The amount of the Reinsurer's liability hereunder in respect of any loss
or losses shall not be increased by reason of the inability of the Company
to collect from any other reinsurer(s), whether specific or general, any
amounts which may have become due from such reinsurer(s), whether such
inability arises from the insolvency of such other reinsurer(s) or
otherwise.
ARTICLE XVII - ERRORS AND OMISSIONS (BRMA 14E)
Any inadvertent delay, omission or error shall not be held to relieve either
party hereto from any liability which would attach to it hereunder if such
delay, omission or error had not been made, provided such delay, omission or
error is rectified upon discovery.
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▇▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇▇▇▇ (▇▇▇▇ ▇▇▇)
A. Whenever the word "Dollars" or the "$" sign appears in this Contract, they
shall be construed to mean United States Dollars and all transactions
under this Contract shall be in United States Dollars.
B. Amounts paid or received by the Company in any other currency shall be
converted to United States Dollars at the rate of exchange at the date
such transaction is entered on the books of the Company.
ARTICLE XIX - TAXES (BRMA 50C)
In consideration of the terms under which this Contract is issued, the Company
will not claim a deduction in respect of the premium hereon when making tax
returns, other than income or profits tax returns, to any state or territory of
the United States of America, the District of Columbia or Canada.
ARTICLE XX - FEDERAL EXCISE TAX (BRMA 17A)
(Applicable to those reinsurers, excepting Underwriters at Lloyd's London and
other reinsurers exempt from Federal Excise Tax, who are domiciled outside the
United States of America.)
A. The Reinsurer has agreed to allow for the purpose of paying the Federal
Excise Tax the applicable percentage of the premium payable hereon as
imposed under Section 4371 of the Internal Revenue Code to the extent such
premium is subject to the Federal Excise Tax.
B. In the event of any return of premium becoming due hereunder the Reinsurer
will deduct the applicable percentage from the return premium payable
hereon and the Company or its agent should take steps to recover the tax
from the United States Government.
ARTICLE XXI - RESERVES AND LETTERS OF CREDIT
A. If the Reinsurer is unauthorized in any state of the United States of
America or the District of Columbia, or in the event the Reinsurer's A.M.
Best's rating has been assigned or downgraded below A-, the Reinsurer
agrees to fund its share of the Company's ceded United States outstanding
loss and loss adjustment expense reserves (including all case reserves
plus any reasonable amount estimated to be unreported from known loss
occurrences) by:
1. Clean, irrevocable and unconditional letters of credit issued and
confirmed, if confirmation is required by the insurance regulatory
authorities involved, by a bank or banks meeting the NAIC Securities
Valuation Office credit standards for issuers of letters of credit
and acceptable to said insurance regulatory authorities; and/or
2. Escrow accounts for the benefit of the Company; and/or
Page 12
3. Cash advances;
The Reinsurer, at its sole option, may fund in other than cash if its
method and form of funding are acceptable to the Company.
B. If the Reinsurer is unauthorized in any province or jurisdiction of
Canada, the Reinsurer agrees to fund 115% of its share of the Company's
ceded Canadian outstanding loss and loss adjustment expense reserves
(including all case reserves plus any reasonable amount estimated to be
unreported from known loss occurrences) by:
1. A clean, irrevocable and unconditional letter of credit issued and
confirmed, if confirmation is required by the insurance regulatory
authorities involved, by a Canadian bank or banks meeting the NAIC
Securities Valuation Office credit standards for issuers of letters
of credit and acceptable to said insurance regulatory authorities,
for no more than 15/115ths of the total funding required; and/or
2. Cash advances for the remaining balance of the funding required;
C. With regard to funding in whole or in part by letters of credit, it is
agreed that each letter of credit will be in a form acceptable to the
Company, will be issued for a term of at least one year and will include
an "evergreen clause," which automatically extends the term for at least
one additional year at each expiration date unless written notice of
non-renewal is given to the Company not less than 30 days prior to said
expiration date. The Company and the Reinsurer further agree,
notwithstanding anything to the contrary in this Contract, that said
letters of credit may be drawn upon by the Company or its successors in
interest at any time, without diminution because of the insolvency of the
Company or the Reinsurer, but only for one or more of the following
purposes:
1. To reimburse itself for the Reinsurer's share of losses and/or loss
adjustment expense paid under the terms of policies reinsured
hereunder, unless paid in cash by the Reinsurer;
2. To reimburse itself for the Reinsurer's share of any other amounts
which are due hereunder, unless paid in cash by the Reinsurer;
3. To fund a cash account in an amount equal to the Reinsurer's share
of any ceded outstanding loss and loss adjustment expense reserves
(including all case reserves plus any reasonable amount estimated to
be unreported from known loss occurrences) funded by means of a
letter of credit which is under non-renewal notice, if said letter
of credit has not been renewed or replaced by the Reinsurer 10 days
prior to its expiration date;
4. To refund to the Reinsurer any sum in excess of the actual amount
required to fund the Reinsurer's share of the Company's ceded
outstanding loss and loss adjustment expense reserves (including all
case reserves plus any reasonable amount estimated to be unreported
from known loss occurrences), if so requested by the Reinsurer.
In the event the amount drawn by the Company on any letter of credit is in
excess of the actual amount required for C(1) or C(3), or in the case of
C(2), the actual amount
Page 13
determined to be due, the Company shall promptly return to the Reinsurer
the excess amount so drawn.
ARTICLE XXII - INSOLVENCY
A. In the event of the insolvency of one or more of the reinsured companies,
this reinsurance shall be payable directly to the company, or to its
liquidator, receiver, conservator or statutory successor on the basis of
the liability of the company without diminution because of the insolvency
of the company or because the liquidator, receiver, conservator or
statutory successor of the company has failed to pay all or a portion of
any claim. It is agreed, however, that the liquidator, receiver,
conservator or statutory successor of the company shall give written
notice to the Reinsurer of the pendency of a claim against the company
indicating the policy insured which claim would involve a possible
liability on the part of the Reinsurer within a reasonable time after such
claim is filed in the conservation or liquidation proceeding or in the
receivership, and that during the pendency of such claim, the Reinsurer
may investigate such claim and interpose, at its own expense, in the
proceeding where such claim is to be adjudicated, any defense or defenses
that it may deem available to the company or its liquidator, receiver,
conservator or statutory successor. The expense thus incurred by the
Reinsurer shall be chargeable, subject to the approval of the court,
against the company as part of the expense of conservation or liquidation
to the extent of a pro rata share of the benefit which may accrue to the
company solely as a result of the defense undertaken by the Reinsurer.
B. Where two or more reinsurers are involved in the same claim and a majority
in interest elect to interpose defense to such claim, the expense shall be
apportioned in accordance with the terms of this Contract as though such
expense had been incurred by the insolvent company.
ARTICLE XXIII - ARBITRATION
A. As a condition precedent to any right of action hereunder, in the event of
any dispute or difference of opinion hereafter arising with respect to
this Contract, it is hereby mutually agreed that such dispute or
difference of opinion shall be submitted to arbitration. One Arbiter shall
be chosen by the Company, the other by the Reinsurer, and an Umpire shall
be chosen by the two Arbiters before they enter upon arbitration, all of
whom shall be active or retired disinterested executive officers of
insurance or reinsurance companies or Lloyd's London Underwriters. In the
event that either party should fail to choose an Arbiter within 30 days
following a written request by the other party to do so, the requesting
party may choose two Arbiters who shall in turn choose an Umpire before
entering upon arbitration. If the two Arbiters fail to agree upon the
selection of an Umpire within 30 days following their appointment, the two
Arbiters shall request the American Arbitration Association to appoint the
Umpire. If the American Arbitration Association fails to appoint the
Umpire within 30 days after it has been requested to do so, either party
may request a justice of a Court of general jurisdiction of the state in
which the arbitration is to be held to appoint the Umpire.
B. Each party shall present its case to the Arbiters within 30 days following
the date of appointment of the Umpire. The Arbiters shall consider this
Contract as an honorable
Page 14
engagement rather than merely as a legal obligation and they are relieved
of all judicial formalities and may abstain from following the strict
rules of law. The decision of the Arbiters shall be final and binding on
both parties; but failing to agree, they shall call in the Umpire and the
decision of the majority shall be final and binding upon both parties.
Judgment upon the final decision of the Arbiters may be entered in any
court of competent jurisdiction.
C. If more than one reinsurer is involved in the same dispute, all such
reinsurers shall constitute and act as one party for purposes of this
Article and communications shall be made by the Company to each of the
reinsurers constituting one party, provided, however, that nothing herein
shall impair the rights of such reinsurers to assert several, rather than
joint, defenses or claims, nor be construed as changing the liability of
the reinsurers participating under the terms of this Contract from several
to joint.
D. Each party shall bear the expense of its own Arbiter, and shall jointly
and equally bear with the other the expense of the Umpire and of the
arbitration. In the event that the two Arbiters are chosen by one party,
as above provided, the expense of the Arbiters, the Umpire and the
arbitration shall be equally divided between the two parties.
E. Any arbitration proceedings shall take place at a location mutually agreed
upon by the parties to this Contract, but notwithstanding the location of
the arbitration, all proceedings pursuant hereto shall be governed by the
law of the State of New York.
ARTICLE XXIV - SERVICE OF SUIT (BRMA 49C)
(Applicable if the Reinsurer is not domiciled in the United States of America,
and/or is not authorized in any State, Territory or District of the United
States where authorization is required by insurance regulatory authorities)
A. It is agreed that in the event the Reinsurer fails to pay any amount
claimed to be due hereunder, the Reinsurer, at the request of the Company,
will submit to the jurisdiction of a court of competent jurisdiction
within the United States. Nothing in this Article constitutes or should be
understood to constitute a waiver of the Reinsurer's rights to commence an
action in any court of competent jurisdiction in the United States, to
remove an action to a United States District Court, or to seek a transfer
of a case to another court as permitted by the laws of the United States
or of any state in the United States.
B. Further, pursuant to any statute of any state, territory or district of
the United States which makes provision therefor, the Reinsurer hereby
designates the party named in its Interests and Liabilities Agreement, or
if no party is named therein, the Superintendent, Commissioner or Director
of Insurance or other officer specified for that purpose in the statute,
or his successor or successors in office, as its true and lawful attorney
upon whom may be served any lawful process in any action, suit or
proceeding instituted by or on behalf of the Company or any beneficiary
hereunder arising out of this Contract.
Page 15
ARTICLE XXV - ENTIRE AGREEMENT
This written Contract constitutes the entire agreement between the parties
hereto with respect to the business being reinsured hereunder, and there are no
understandings between the parties hereto other than as expressed in this
Contract. Any change or modification to this Contract will be made by amendment
to this Contract and signed by the parties.
ARTICLE XXVI - AGENCY AGREEMENT
If more than one reinsured company is named as a party to this Contract, Glencoe
Insurance Ltd. shall be deemed the agent of the other reinsured companies for
purposes of sending or receiving notices required by the terms and conditions of
this Contract, and for purposes of remitting or receiving any monies due any
party.
ARTICLE XXVII - INTERMEDIARY (BRMA 23A)
▇▇▇▇▇▇▇▇ Inc. is hereby recognized as the Intermediary negotiating this Contract
for all business hereunder. All communications (including but not limited to
notices, statements, premium, return premium, commissions, taxes, losses, loss
adjustment expense, salvages and loss settlements) relating thereto shall be
transmitted to the Company or the Reinsurer through ▇▇▇▇▇▇▇▇ Inc., ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Payments by the Company to the
Intermediary shall be deemed to constitute payment to the Reinsurer. Payments by
the Reinsurer to the Intermediary shall be deemed to constitute payment to the
Company only to the extent that such payments are actually received by the
Company.
IN WITNESS WHEREOF, the Company by its duly authorized representative has
executed this Contract as of the date undermentioned at:
▇▇▇▇▇▇▇▇, Bermuda, this 18th day of September in the year 2003.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
Glencoe Insurance Ltd. (for and on behalf of the "Company")
Page 16
SCHEDULE A
PROPERTY CATASTROPHE EXCESS OF LOSS
REINSURANCE CONTRACT
EFFECTIVE: JULY 1, 2003
issued to
Glencoe Group of Companies
and its Quota Share Reinsurers, if any
including
Glencoe Insurance Ltd.
Hamilton, Bermuda
Stonington Insurance Company
Dallas, Texas
Stonington Lloyds Insurance Company
Dallas, Texas
and
Lantana Insurance Ltd.
Hamilton, Bermuda
FIRST SECOND THIRD FOURTH
EXCESS EXCESS EXCESS EXCESS
------------ ------------ ------------ ------------
Company's Retention $ 35,000,000 $ 50,000,000 $ 75,000,000 $100,000,000
Reinsurer's Per Occurrence Limit $ 15,000,000 $ 25,000,000 $ 25,000,000 $ 50,000,000
Reinsurer's Annual Limit $ 30,000,000 $ 50,000,000 $ 50,000,000 $100,000,000
Annual Minimum Premium $ 3,600,000 $ 4,800,000 $ 3,800,000 $ 6,000,000
Premium Rate 1.8% 2.4% 1.9% 3.0%
Annual Deposit Premium $ 4,500,000 $ 6,000,000 $ 4,750,000 $ 7,500,000
Quarterly Deposit Premium $ 1,125,000 $ 1,500,000 $ 1,187,500 $ 1,875,000
The figures listed above for each excess layer shall apply to each Subscribing
Reinsurer in the percentage share for that excess layer as expressed in its
Interests and Liabilities Agreement attached hereto.
POOLS, ASSOCIATIONS & SYNDICATES EXCLUSION CLAUSE
SECTION A:
Excluding:
(a) All business derived directly or indirectly from any Pool,
Association or Syndicate which maintains its own reinsurance
facilities.
(b) Any Pool or Scheme (whether voluntary or mandatory) formed after
March 1, 1968 for the purpose of insuring property whether on a
country-wide basis or in respect of designated areas. This exclusion
shall not apply to so-called Automobile Insurance Plans or other
Pools formed to provide coverage for Automobile Physical Damage.
SECTION B:
It is agreed that business written by the Company for the same perils,
which is known at the time to be insured by, or in excess of underlying amounts
placed in the following Pools, Associations or Syndicates, whether by way of
insurance or reinsurance, is excluded hereunder:
Any Pool, Association or Syndicate formed for the purpose of writing
Oil, Gas or Petro-Chemical Plants and/or Oil or Gas Drilling Rigs,
United States Aircraft Insurance Group,
Canadian Aircraft Insurance Group,
Associated Aviation Underwriters,
American Aviation Underwriters.
Section B does not apply:
(a) Where The Total Insured Value over all interests of the risk in
question is less than $300,000,000.
(b) To interests traditionally underwritten as Inland Marine or stock
and/or contents written on a blanket basis.
(c) To Contingent Business Interruption, except when the Company is
aware that the key location is known at the time to be insured in
any Pool, Association or Syndicate named above, other than as
provided for under Section B(a).
(d) To risks as follows:
Offices, Hotels, Apartments, Hospitals, Educational Establishments,
Public Utilities (other than railroad schedules) and builder's risks
on the classes of risks specified in this subsection (d) only.
Page 1 of 3
Where this clause attaches to Catastrophe Excesses, the following
Section C and D are added:
SECTION C:
Nevertheless the Reinsurer specifically agrees that liability accruing to
the Company from its participation in residual market mechanisms including but
not limited to:
(1) The following so-called "Coastal Pools":
Alabama Insurance Underwriting Association
Louisiana Insurance Underwriting Association
Mississippi Windstorm Underwriting Association
North Carolina Insurance Underwriting Association
South Carolina Windstorm and Hail Underwriting Association
Texas Windstorm Insurance Association
AND
(2) All "Fair Plan" and "Rural Risk Plan" business
AND
(3) The California Earthquake Authority ("CEA")
for all perils otherwise protected hereunder shall not be excluded, except,
however, that this reinsurance does not include any increase in such liability
resulting from:
(i) The inability of any other participant in such "Coastal Pool" and/or
"Fair Plan" and/or "Rural Risk Plan" and/or Residual Market
Mechanisms to meet its liability.
(ii) Any claim against such "Coastal Pool" and/or "Fair Plan" and/or
"Rural Risk Plan" and/or Residual Market Mechanisms, or any
participant therein, including the Company, whether by way of
subrogation or otherwise, brought by or on behalf of any insolvency
fund (as defined in the Insolvency Fund Exclusion Clause
incorporated in this Contract).
SECTION D:
(1) Notwithstanding Section C above, in respect of the CEA, where an
assessment is made against the Company by the CEA, the Company may
include in its Ultimate Net Loss only that assessment directly
attributable to each separate loss occurrence covered hereunder. The
Company's initial capital contribution to the CEA shall not be
included in the Ultimate Net Loss.
(2) Notwithstanding Section C above, in respect of any residual market
mechanism, where an assessment is made against the Company by such
residual market mechanism, or any combination thereof, the maximum
loss that the Company may include in the Ultimate Net
Page 2 of 3
Loss in respect of any loss occurrence hereunder shall not exceed the
lesser of:
(a) The Company's assessment from the relevant entity for the
accounting year in which the loss occurrence commenced, or
(b) The product of the following:
(i) The Company's percentage participation in the relevant entity
for the accounting year in which the loss occurrence
commenced; and
(ii) The relevant entity's total losses in such loss occurrence.
Any assessments for accounting years subsequent to that in which
the loss occurrence commenced may not be included in the Ultimate
Net Loss hereunder. Moreover, notwithstanding Section C above, in
respect of any residual market mechanism, the Ultimate Net Loss
hereunder shall not include any monies expended to purchase or
retire bonds as a consequence of being a member of such residual
market mechanism. For the purposes of this Contract, the Company
may not include in the Ultimate Net Loss any assessment or any
percentage assessment levied by any residual market mechanism to
meet the obligations of an insolvent insurer member or other party,
or to meet any obligations arising from the deferment by any
residual market mechanism of the collection of monies.
NOTES: Wherever used herein the terms:
"Company" shall be understood to mean "Company," "Reinsured,"
"Reassured" or whatever other term is used in the
attached reinsurance document to designate the reinsured
company or companies.
"Agreement" shall be understood to mean "Agreement," "Contract,"
"Policy" or whatever other term is used to designate the
attached reinsurance document.
"Reinsurers" shall be understood to mean "Reinsurers," "Underwriters"
or whatever other term is used in the attached
reinsurance document to designate the reinsurer or
reinsurers.
Page 3 of 3
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (U.S.A.)
1. This Reinsurance does not cover any loss or liability accruing to the
Reassured, directly or indirectly and whether as Insurer or Reinsurer,
from any Pool of Insurers or Reinsurers formed for the purpose of covering
Atomic or Nuclear Energy risks.
2. Without in any way restricting the operation of paragraph (1) of this
Clause, this Reinsurance does not cover any loss or liability accruing to
the Reassured, directly or indirectly and whether as Insurer or Reinsurer,
from any insurance against Physical Damage (including business
interruption or consequential loss arising out of such Physical Damage)
to:
I. Nuclear reactor power plants including all auxiliary property on the
site, or
II. Any other nuclear reactor installation, including laboratories
handling radioactive materials in connection with reactor
installations, and "critical facilities" as such, or
III. Installations for fabricating complete fuel elements or for
processing substantial quantities of "special nuclear material," and
for reprocessing, salvaging, chemically separating, storing or
disposing of "spent" nuclear fuel or waste materials, or
IV. Installations other than those listed in paragraph (2) III above
using substantial quantities of radioactive isotopes or other
products of nuclear fission.
3. Without in any way restricting the operations of paragraphs (1) and (2)
hereof, this Reinsurance does not cover any loss or liability by
radioactive contamination accruing to the Reassured, directly or
indirectly, and whether as Insurer or Reinsurer, from any insurance on
property which is on the same site as a nuclear reactor power plant or
other nuclear installation and which normally would be insured therewith
except that this paragraph (3) shall not operate
(a) where Reassured does not have knowledge of such nuclear reactor
power plant or nuclear installation, or
(b) where said insurance contains a provision excluding coverage for
damage to property caused by or resulting from radioactive
contamination, however caused. However on and after 1st January 1960
this sub-paragraph (b) shall only apply provided the said
radioactive contamination exclusion provision has been approved by
the Governmental Authority having jurisdiction thereof.
4. Without in any way restricting the operations of paragraphs (1), (2) and
(3) hereof, this Reinsurance does not cover any loss or liability by
radioactive contamination accruing to the Reassured, directly or
indirectly, and whether as Insurer or Reinsurer, when such radioactive
contamination is a named hazard specifically insured against.
5. It is understood and agreed that this Clause shall not extend to risks
using radioactive isotopes in any form where the nuclear exposure is not
considered by the Reassured to be the primary hazard.
6. The term "special nuclear material" shall have the meaning given it in the
Atomic Energy Act of 1954 or by any law amendatory thereof.
7. Reassured to be sole judge of what constitutes:
(a) substantial quantities, and
(b) the extent of installation, plant or site.
Note.-Without in any way restricting the operation of paragraph (1) hereof, it
is understood and agreed that
(a) all policies issued by the Reassured on or before 31st December 1957
shall be free from the application of the other provisions of this
Clause until expiry date or 31st December 1960 whichever first
occurs whereupon all the provisions of this Clause shall apply.
(b) with respect to any risk located in Canada policies issued by the
Reassured on or before 31st December 1958 shall be free from the
application of the other provisions of this Clause until expiry date
or 31st December 1960 whichever first occurs whereupon all the
provisions of this Clause shall apply.
12/12/57
N.M.A. 1119
BRMA 35B
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (CANADA)
1. This Agreement does not cover any loss or liability accruing to the
Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
from any Pool of Insurers or Reinsurers formed for the purpose of covering
Atomic or Nuclear Energy risks.
2. Without in any way restricting the operation of paragraph 1 of this
clause, this Agreement does not cover any loss or liability accruing to
the Reinsured, directly or indirectly, and whether as Insurer or
Reinsurer, from any insurance against Physical Damage (including business
interruption or consequential loss arising out of such Physical Damage)
to:
(a) nuclear reactor power plants including all auxiliary property on the
site, or
(b) any other nuclear reactor installation, including laboratories
handling radioactive materials in connection with reactor
installations, and critical facilities as such, or
(c) installations for fabricating complete fuel elements or for
processing substantial quantities of prescribed substances, and for
reprocessing, salvaging, chemically separating, storing or disposing
of spent nuclear fuel or waste materials, or
(d) installations other than those listed in (c) above using substantial
quantities of radioactive isotopes or other products of nuclear
fission.
3. Without in any way restricting the operation of paragraphs 1 and 2 of this
clause, this Agreement does not cover any loss or liability by radioactive
contamination accruing to the Reinsured, directly or indirectly, and
whether as Insurer or Reinsurer, from any insurance on property which is
on the same site as a nuclear reactor power plant or other nuclear
installation and which normally would be insured therewith, except that
this paragraph 3 shall not operate:
(a) where the Reinsured does not have knowledge of such nuclear reactor
power plant or nuclear installation, or
(b) where the said insurance contains a provision excluding coverage for
damage to property caused by or resulting from radioactive
contamination, however caused.
4. Without in any way restricting the operation of paragraphs 1, 2 and 3 of
this clause, this Agreement does not cover any loss or liability by
radioactive contamination accruing to the Reinsured, directly or
indirectly, and whether as Insurer or Reinsurer, when such radioactive
contamination is a named hazard specifically insured against.
5. This clause shall not extend to risks using radioactive isotopes in any
form where the nuclear exposure is not considered by the Reinsured to be
the primary hazard.
6. The term "prescribed substances" shall have the meaning given to it by the
Atomic Energy Control Act R.S.C. 1985(c), A-16 or by any law amendatory
thereof.
7. Reinsured to be sole judge of what constitutes:
(a) substantial quantities, and
(b) the extent of installation, plant or site.
8. Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
of this clause, this Agreement does not cover any loss or liability
accruing to the Reinsured, directly or indirectly, and whether as Insurer
or Reinsurer, caused:
(1) by any nuclear incident, as defined in the Nuclear Liability Act or
any other nuclear liability act, law or statute, or any law
amendatory thereof or nuclear explosion, except for ensuing loss or
damage which results directly from fire, lightning or explosion of
natural, coal or manufactured gas;
(2) by contamination by radioactive material.
NOTE: Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
of this clause, paragraph 8 of this clause shall only apply to all
original contracts of the Reinsured, whether new, renewal or replacement,
which become effective on or after December 31, 1992.
N.M.A. 1980 (2/19/93)
