EXHIBIT 10.59
FIRST EXCESS OF LOSS REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
entered into by and between
SCPIE HOLDINGS, INC., and/or
S.C.P.I.E. INDEMNITY COMPANY and/or
AMERICAN HEALTHCARE INDEMNITY COMPANY, and/or
AMERICAN HEALTHCARE SPECIALTY COMPANY, and/or
S.C.P.I.E. INSURANCE SERVICES, INC., and/or
S.C.P.I.E. MANAGEMENT SERVICES, INC.
Beverly Hills, California
(hereinafter collectively referred to as the "Company")
and
The Subscribing Reinsurer(s) executing the
Interests and Liabilities Contract(s)
attached to and forming a part
of this Agreement
(hereinafter referred to as the "Reinsurer")
WITNESSETH:
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The Reinsurer hereby reinsures the Company to the extent and on the terms and
conditions and subject to the exceptions, exclusions and limitations hereinafter
set forth. Nothing hereinafter shall in any manner create any obligations or
establish any rights against the Reinsurer in favor of any third parties or any
persons not parties to this Agreement, except as provided for in the Insolvency
Article of this Agreement.
ARTICLE I.
BUSINESS COVERED
The Reinsurer agrees to reimburse the Company, on an excess of loss basis, for
the amounts of ultimate net loss which the Company may pay as a result of claims
made during the term of this Agreement under binders, policies and contracts of
insurance (hereinafter called "policies"), hereafter issued or entered into by
or on behalf of the Company, covering the types of policy forms set forth below
as written by the Company, except as excluded under the Exclusions Article of
this Agreement, subject to the limitations set forth in the Limit and Retention
Article:
1. Professional and Business Liability Insurance Policy - Modified Claims Made
Coverage Hospitals and Medical Centers (Primary and Excess).
2. Professional and Business Liability Insurance Policy - Claims Made Coverage
Hospitals and Medical Centers (Primary and Excess).
3. Excess Automobile Liability and Excess Employers Liability associated with
the policy forms outlined above.
ARTICLE II.
TERM
A. This Agreement shall commence October 1, 1998 and shall remain in full force
and effect for twelve (12) consecutive months to expire September 30, 1999,
both days inclusive, as respects all risks attaching during said twelve (12)
months period.
B. It is agreed that Modified Claims Made Policies include an Automatic Pre-Paid
Extended Reporting Period for a period not exceeding eighty-four (84) months.
It is understood and agreed that, to preserve the claims made nature of this
reinsurance, subject to availability of markets to renew this Agreement
sufficiently at its expiry, the Reinsurers hereon will be relieved of all
liability for any claims not made in the First Annual Reporting Period of
each policy. In consideration the Reinsurers hereon will release to renewing
markets Premium equivalent to 65% of the total Net Ceded Premium (Gross Ceded
Premium less applicable ceding commission) derived from such Modified Claims
Made Policies attaching during the term of this Agreement.
C. In the event of non-renewal, and at the option of the Company, the Reinsurers
agree to run off policies in force until natural expiration; in respect of
Claims Made Policies, such period not to exceed twelve (12) months plus odd
time not exceeding twenty-four (24) months in all from the expiration date
hereon; in respect of Modified Claims Made Policies, such period not to
exceed ninety-six (96) months from the expiration date hereon.
D. In the event that an Original Insured's policy is canceled or non-renewed, a
further Extended Reporting Period Endorsement for an unlimited period my be
purchased by an Original Insured provided the purchase is made within the
ninety (90) day period prior to the expiration of the eighty-four (84) months
Extended Reporting Period Endorsement and subject to the payment of an
Additional Premium of 25% of the last Annual Modified Claims Made Premium
applicable prior to the date of cancellation or non-renewal of the Original
Policy. Any such Additional Premium shall be payable on the date that the
original eighty-four (84) months Extended Reporting Period Endorsement
expires and shall be deemed fully earned on that day. Any claim reported
under any further unlimited Extended Reporting Period Endorsement shall be
deemed to have been made on the date of expiration of the original eighty-
four (84) months Extended Reporting Period Endorsement.
E. Further, at the option of the Company, non renewal may be effected on a cut
off basis as of the expiration date hereon and the Reinsurers shall return to
the Company their respective share of the unearned premium reserve at that
time.
F. Notwithstanding the expiration of this Agreement as hereinabove provided, the
provisions of this Agreement shall continue to apply to all unfinished
business hereunder to the end that all obligations and liabilities incurred
by each party hereunder prior to such expiration shall be fully performed and
discharged.
ARTICLE III.
EXCLUSIONS
This Agreement does not cover and specifically excludes the following:
1. Insolvency Funds, per the attached "Insolvency Fund Exclusion Clause".
2. Nuclear Incidents, per the attached "Nuclear Incident Exclusion Clause -
Liability -Reinsurance".
3. Assumed Reinsurance other than for Licensing or Financial Rating purposes.
4. Other Exclusions to follow the Company's Original Policies as interpreted by
Regulatory or Judicial Authorities.
5. Financial Guarantee Business.
ARTICLE IV.
TERRITORY
This Agreement will apply as per the Company's Original Policies.
ARTICLE V.
LIMIT AND RETENTION
A. The Company shall retain for its own account and pay under one or more of the
Company's policies the first $1,000,000 ultimate net loss, each and every
claim made for indemnity only during the term of this Agreement and the
Reinsurer agrees to reimburse the Company for the amount of ultimate net loss
paid in excess of $1,000,000, each and every claim made for indemnity only
during the term of this Agreement, but the Reinsurer's maximum liability
shall not exceed 100% of $9,000,000 resulting from each and every claim made
for indemnity only during the term of this Agreement.
B. The term "claim made" shall be as defined in the Company's Original Policies.
C. The Company's retention shall be the difference between $1,000,000 each and
every claim made for indemnity only and the underlying Self Insured Retention
(S.I.R.) where applicable but always subject to a minimum retention of
$500,000 each and every claim made for indemnity only.
D. As respects Medical Staff Members, including any other Associated Individuals
or Entities, added by Endorsement to the policies subject to this Agreement
under a Unification Plan, the following shall apply:
1. When a Hospital or any of their Insured Medical Staff Members, including
any other Associated Individuals or Entities, are determined by the
Company to be jointly involved in any claim or suit, the Total Limits of
Liability issued to the Hospital shall be shared by the Hospital and by
all of its Insured Medical Staff Members, including any other Associated
Individuals or Entities.
2. When a Hospital is determined by the Company not to be involved in any
claim or suit, the Total Limits of Liability available to all Insured
Medical Staff Members, including any other Associated Individuals or
Entities, shall be limited to $5,000,0000 each and every loss.
E. The term "Unification Plan" is understood to mean where coverage is provided
on a shared limit basis to a Hospital or any of their Insured Medical Staff
Members, including any other Associated Individuals or Entities for the
purpose of obtaining a common defense.
F. In determining if a Hospital is jointly involved in any claim or suit, the
Hospital shall be deemed to be jointly involved if the medical incident which
gave rise to the claim or suit occurring on the Hospital premises, including
any Insured Affiliated locations, or if members of the Insured Medical Staff
were acting on behalf of the Hospital. The mere naming of the Hospital as a
defendant in a claim or suit shall not, in itself, determine if the Hospital
was involved in the claim or suit.
G. The maximum amount of losses recoverable hereunder during the term of this
Agreement, including but not limited to indemnity, loss in Excess of Original
Policy Limits (XPL), and Extra Contractual Obligations (ECO) shall not exceed
$50,000,000 or 400% of Gross Premium Ceded hereunder, whichever is the
greater.
H. The Company shall co-participate for 10% of the ultimate net loss hereunder,
net and unreinsured.
ARTICLE VI.
NOTICE OF LOSS AND LOSS SETTLEMENTS
A. In the event of a claim arising hereunder which either results in or appears
to be of serious enough nature as probably to result in a loss involving this
Agreement, the Company shall give notice as soon as reasonably practicable to
Reinsurers and the
Company shall keep the Reinsurer advised of all subsequent developments in
connection therewith.
B. The Company shall also promptly notify the Reinsurers of all incidents
involving the following injuries for which the Company has established an
indemnity reserve of $500,000 or greater and with policy limits to affect
Reinsurers:
1. Death.
2. Brain Injury.
3. Nerve Injury.
4. Paralysis - cord injury.
5. Amputations.
6. Internal injuries which require continuous treatment (e.g. Dialysis,
Hyperalimentation, failure to diagnose).
7. Loss of Sight of one or both eyes.
C. The Company has the obligation to investigate and, to the extent that may be
required by the policies reinsured, defend any claim affecting this
reinsurance and to pursue such claim to final determination.
D. All loss settlements made by the Company, provided they are within the terms
and conditions of the original policies (or as provided for in Excess of
Original Policy Limits or Extra Contractual Obligations Articles contained in
this Agreement) and within the terms of this Agreement shall be
unconditionally binding upon the Reinsurer, and amounts falling due to the
share of the Reinsurer shall be payable by the Reinsurer immediately in
accordance with the provisions set forth in paragraph D. of the Reports and
Remittances Article.
E. It is understood that when so requested the Company will afford the Reinsurer
an opportunity to be associated with the Company, at the expense of the
Reinsurer, in the defense of any claim or suit or proceeding involving this
reinsurance; and the Company will cooperate in every respect in the defense
of such claim, suit or proceeding.
ARTICLE VII.
NET RETAINED LINES
A. This Agreement applies only to that portion of any policy which the Company
retains net for its own account, and in calculating the amount of any loss
hereunder and also in computing the amount or amounts in excess of which this
Agreement 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 VIII.
ULTIMATE NET LOSS
The term "ultimate net loss" means the actual loss, including 90% of loss in
Excess of Original Policy Limits and 90% of Extra Contractual Obligations in
accordance with the provisions of the respectively titled Articles herein, but
excluding loss adjustment expense, paid or to be paid by the Company on its net
retained lines after making deductions for all recoveries, salvages,
subrogations and all claims on inuring reinsurance, whether collectible or not;
provided, however, that in the event of the insolvency of the Company, payment
by the Reinsurer shall be made in accordance with the provisions of the
Insolvency Article. Nothing herein shall be construed to mean that losses under
this Agreement are not recoverable until the Company's ultimate net loss has
been ascertained.
ARTICLE IX.
EXCESS OF ORIGINAL POLICY LIMITS
A. This Agreement shall protect the Company, within the limits hereof, in
respect of policies ceded to this Agreement in connection with ultimate net
loss in excess of the limit of its original policy, such loss in excess of
the limit having been incurred because of failure by it to settle within the
policy limit or by reason of 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 reinsured or in the
preparation or prosecution of an appeal consequent upon such action.
B. However, this Article shall not apply where the loss has been incurred due to
fraud by a member of the Board of Directors or a corporate officer 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.
C. For the purpose of this Article, the word "loss" shall mean any amounts for
which the Company would have been contractually liable to pay had it not been
for the limit of the original policy.
ARTICLE X.
EXTRA CONTRACTUAL OBLIGATIONS
A. This Agreement shall protect the Company within the limits hereof, in respect
of policies ceded to this Agreement where the ultimate net loss includes any
Extra Contractual Obligations. The term "Extra Contractual Obligations" is
defined as those liabilities not covered under any other provision of this
Agreement and which arise from the handling of any claim on business covered
hereunder, such liabilities arising because of, but not limited to, the
following: failure by the Company to settle within the policy limit, or by
reason of 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 reinsured, or in the preparation or
prosecution of an appeal consequent upon such action.
B. The date on which any Extra Contractual Obligation is incurred by the Company
shall be deemed, in all circumstances, to be the date of the original
disaster and/or casualty.
C. However, this Article shall not apply where the loss has been incurred due to
fraud by a member of the Board of Directors or a corporate officer 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.
ARTICLE XI.
CEDING COMMISSION (BRMA 10A - FLAT COMMISSION) AMENDED TO 15% PLUS ORIGINAL
ACQUISITION COST NOT TO EXCEED 25% IN ALL
A. The Reinsurer shall allow the Company a 15% commission plus original
acquisition cost not to exceed 25% in all on all premiums ceded to the
Reinsurer hereunder. The Company shall allow the Reinsurer return commission
on return premiums at the same rate.
B. It is expressly agreed that the ceding commission allowed the Company
includes provision for all dividends, commissions, taxes, assessments, and
all other expenses of whatever nature, except loss adjustment expense.
ARTICLE XII.
REINSURANCE PREMIUM
A. As premium for the reinsurance provided hereunder, the Company shall pay the
Reinsurer 100% of its Original Gross Excess Limit Premium and Extended
Reporting Period Endorsement Premium calculated by the Company.
B. The term "Original Gross Excess Limit Premium" as used herein shall mean
premiums calculated by the Company for policy limits excess of $1,000,000 up
to $10,000,000 after application of scheduled rating credits/debits and
experience credits only.
ARTICLE XIII.
REPORTS AND REMITTANCES
A. The Company will provide the Reinsurer with all necessary data respecting
premiums, losses and recoveries on forms mutually acceptable to the Company
and the Reinsurer.
B. Within forty-five (45) days after the close of each fiscal month the Company
shall pay to the Reinsurer an amount equal to the Ceded Excess Limit Premium
less Ceding Commission.
C. The Company shall provide to the Reinsurer, as promptly as possible after the
close of each year the information necessary for Annual Statement purposes.
D. Payment by the Reinsurer of its portion of loss and loss expenses paid by the
Company will be made by the Reinsurer to the Company immediately upon receipt
of satisfactory proof of loss being given to it by the Company.
ARTICLE XIV.
FOLLOW THE FORTUNES
The Reinsurer shall follow the fortunes of the Company in respect of all
business hereunder. All loss and expense payments or settlements made by the
Company are unconditionally binding upon the Reinsurer if such payments or
settlements were made within the terms and conditions of the Company's policies
and within the terms and conditions of this Agreement.
ARTICLE XV.
OFFSET (BRMA 36C - OFFSET UNDER THIS AGREEMENT ONLY.)
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 Agreement. 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 XVI.
COMMUTATION CLAUSE
The Company or the Reinsurer may, at any time express their desire to the other
party to commute all losses which are applicable to any Agreement year and which
are still unsettled. In such event the Company and the Reinsurer shall mutually
determine and evaluate such losses and the payment by the Reinsurer of their
proportion of the amount so ascertained and mutually agreed to be the value of
such losses shall relieve them of all further liability, in respect of that
Agreement year both in respect of known or unknown losses.
ARTICLE XVII.
CONFIDENTIALITY CLAUSE
A. This Agreement and the pre Agreement documentation may contain confidential
or proprietary information of either party to this Agreement. All parties
shall maintain the confidentiality of this information and shall not disclose
such information to any third party without both parties approval.
B. Notwithstanding the above, any party may disclose such information without
further approval from the other party in answer to interrogations, subpoenas
or other legal/arbitration process as well as to the Company's reinsurance
intermediary hereon, the Reinsurer's retrocessionaires or in response to
requests by governmental and regulatory agencies. In addition the parties may
disclose such information to their accountants and outside legal counsel as
may be necessary.
ARTICLE XVIII.
ACCESS TO RECORDS
The Company shall place at the disposal of the Reinsurer at all reasonable
times, and the Reinsurer shall have the right to inspect through its designated
representatives, during the term of this Agreement and thereafter, all books,
records and papers of the Company in connection with any reinsurance hereunder,
or the subject matter hereof.
ARTICLE XIX.
ERRORS AND OMISSIONS
Errors and omissions on the part of the Company shall not invalidate the
reinsurance under this Agreement, provided such errors and omissions are
corrected promptly after discovery thereof, but the liability of the Reinsurer
under this Agreement shall in no event exceed the limits specified herein.
ARTICLE XX.
TAXES
In consideration of the terms under which this Agreement 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 or the District of Columbia.
ARTICLE XXI.
FEDERAL EXCISE TAX
(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 XXII.
UNAUTHORIZED REINSURANCE (BRMA 55A - COVERS UNEARNED PREMIUM, OUTSTANDING LOSSES
AND IBNR)
(Applies only to a Reinsurer who does not qualify for full credit with any
insurance regulatory authority having jurisdiction over the Company's reserves.)
A. As regards policies or bonds issued by the Company coming within the scope of
this Agreement, the Company agrees that when it shall file with the insurance
regulatory authority or set up on its books reserves for unearned premium and
losses covered hereunder which it shall be required by law to set up, it will
forward to the Reinsurer a statement showing the proportion of such reserves
which is applicable to the Reinsurer. The Reinsurer hereby agrees to fund
such reserves in respect of unearned premium, known outstanding losses that
have been reported to the Reinsurer and allocated loss adjustment expense
relating thereto, losses and allocated loss adjustment expense paid by the
Company but not recovered from the Reinsurer, plus reserves for losses
incurred but not reported, as shown in the statement prepared by the Company
(hereinafter referred to as "Reinsurer's
Obligations") by funds withheld, cash advances or a Letter of Credit. The
Reinsurer shall have the option of determining the method of funding provided
it is acceptable to the insurance regulatory authorities having jurisdiction
over the Company's reserves.
B. When funding by a Letter of Credit, the Reinsurer agrees to apply for and
secure timely delivery to the Company of a clean, irrevocable and
unconditional Letter of Credit issued by a bank and containing provisions
acceptable to the insurance regulatory authorities having jurisdiction over
the Company's reserves in an amount equal to the Reinsurer's proportion of
said reserves. Such Letter of Credit shall be issued for a period of not less
than one year, and shall be automatically extended for one year from its date
of expiration or any future expiration date unless thirty (30) days (sixty
(60) days where required by insurance regulatory authorities) prior to any
expiration date the issuing bank shall notify the Company by certified or
registered mail that the issuing bank elects not to consider the Letter of
Credit extended for any additional period.
C. The Reinsurer and Company agree that the Letters of Credit provided by the
Reinsurer pursuant to the provisions of this Agreement may be drawn upon at
any time, notwithstanding any other provision of this Agreement, and be
utilized by the Company or any successor, by operation of law, of the Company
including, without limitation, any liquidator, rehabilitator, receiver or
conservator of the Company for the following purposes, unless otherwise
provided for in a separate Trust Agreement:
1. to reimburse the Company for the Reinsurer's Obligations, the payment of
which is due under the terms of this Agreement and which has not been
otherwise paid;
2. to make refund of any sum which is in excess of the actual amount
required to pay the Reinsurer's Obligations under this Agreement;
3. to fund an account with the Company for the Reinsurer's Obligations. Such
cash deposit shall be held in an interest bearing account separate from
the Company's other assets, and interest thereon not in excess of the
prime rate shall accrue to the benefit of the Reinsurer;
4. to pay the Reinsurer's share of any other amounts the Company claims are
due under this Agreement.
D. In the event the amount drawn by the Company on any Letter of Credit is in
excess of the actual amount required for 1. or 3., or in the case of 4., the
actual amount determined to be due, the Company shall promptly return to the
Reinsurer the excess amount so drawn. All of the foregoing shall be applied
without diminution because of insolvency on the part of the Company or the
Reinsurer.
E. The issuing bank shall have no responsibility whatsoever in connection with
the propriety of withdrawals made by the Company or the disposition of funds
withdrawn, except to ensure that withdrawals are made only upon the order of
properly authorized representatives of the Company.
F. At annual intervals, or more frequently as agreed but never more frequently
than quarterly, the Company shall prepare a specific statement of the
Reinsurer's Obligations, for the sole purpose of amending the Letter of
Credit, in the following manner:
1. If the statement shows that the Reinsurer's Obligations exceed the
balance of credit as of the statement date, the Reinsurer shall, within
thirty (30) days after receipt of notice of such excess, secure delivery
to the Company of an amendment to the Letter of Credit increasing the
amount of credit by the amount of such difference.
2. If, however, the statement shows that the Reinsurer's Obligations are
less than the balance of credit as of the statement date, the Company
shall, within thirty (30) days after receipt of written request from the
Reinsurer, release such excess credit by agreeing to secure an amendment
to the Letter of Credit reducing the amount of credit available by the
amount of such excess credit.
ARTICLE XXIII.
ARBITRATION
A. As a condition precedent to any right of action hereunder, any dispute
arising out of the interpretation, performance or breach of this Agreement,
including the formation or validity thereof, shall be submitted for decision
to a panel of three arbitrators. Notice requesting arbitration will be in
writing and sent certified or registered mail, return receipt requested.
B. One arbitrator shall be chosen by each party and the two arbitrators shall,
before instituting the hearing, choose an impartial third arbitrator who
shall preside at the hearing. If either party fails to appoint its arbitrator
within thirty (30) days after being requested to do so by the other party,
the latter, after ten (10) days notice by certified or registered mail of its
intention to do so, may appoint the second arbitrator.
C. If the two arbitrators are unable to agree upon the third arbitrator within
thirty (30) days of their appointment, the deficiency shall be supplied on
the application of the party requesting arbitration by an appointment made by
the American Arbitration Association. Notwithstanding the appointment of any
third Arbitrator by the American Arbitration Association, the arbitration
proceedings shall not be governed by the American Arbitration Association's
commercial arbitration rules.
D. All arbitrators shall be disinterested active or former executive officers of
insurance or reinsurance companies or Underwriters at Lloyd's, London.
E. Within thirty (30) days after notice of appointment of all arbitrators, the
panel shall meet and determine timely periods for briefs, discovery
procedures and schedules for hearings.
F. The panel shall be relieved of all judicial formality and shall not be bound
by the strict rules of procedure and evidence. Unless the panel agrees
otherwise, arbitration shall take place in Beverly Hills, California, but the
venue may be changed when deemed by the panel to be in the best interest of
the arbitration proceeding. Insofar as the arbitration panel looks to
substantive law, it shall consider the law of the State of California. The
decision of any two arbitrators when rendered in writing shall be final and
binding. The panel is empowered to grant interim relief as it may deem
appropriate.
G. The panel shall interpret this Agreement as if it were an honorable
engagement rather than as merely a legal obligation and shall make its
decision considering the custom and practice of the applicable insurance and
reinsurance business within sixty (60) days following the termination of the
hearings. Judgment upon the award may be entered in any court having
jurisdiction thereof.
H. Each party shall bear the expense of its own arbitrator and shall jointly and
equally bear with the other party the cost of the third arbitrator. The
remaining costs of the arbitration shall be allocated by the panel. The panel
may, at its discretion, award such further costs and expenses as it considers
appropriate, including but not limited to attorneys fees, to the extent
permitted by law.
I. If more than one reinsurer is involved in arbitration where there are common
questions of law or fact and a possibility of conflicting awards or
inconsistent results, all such reinsurers may 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 the one party; provided, however, that
nothing therein 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 under the terms of this Agreement from several to
joint.
ARTICLE XXIV.
SERVICE OF SUIT
(This Article only applies to Reinsurers domiciled outside of the United States
and/or unauthorized in any state, territory or district of the United States
having jurisdiction over the Company.)
A. It is agreed that in the event of the failure of the Reinsurer hereon to pay
any amount claimed to be due hereunder, the Reinsurer hereon, 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. It is further agreed that service of process in such suit may be made
upon Messrs. Mendes & Mount, 000 Xxxxx Xxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX
00000, and that in any suit instituted, the Reinsurer will abide by the final
decision of such court or of any appellate court in the event of an appeal.
B. The above-named are authorized and directed to accept service of process on
behalf of the Reinsurer in any such suit and/or upon the request of the
Company to give a written undertaking to the Company that they will enter a
general appearance upon the Reinsurer's behalf in the event such a suit shall
be instituted.
C. Further, pursuant to any statute of any state, territory or district of the
United States which makes provision therefore, the Reinsurer hereon hereby
designates 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
Agreement of reinsurance, and hereby designates the above-named as the person
to whom the said officer is authorized to mail such process or a true copy
thereof.
ARTICLE XXV.
INSOLVENCY
A. In the event of the insolvency of one or more than one of the Companies
reinsured hereunder, this reinsurance shall be payable directly to the
Company(ies) or to its liquidator, receiver, conservator or statutory
successor immediately upon demand, with reasonable provision for
verification, on the basis of the liability of the Company(ies) without
diminution because of the insolvency of one or more than one of the Companies
or because the liquidator, receiver, conservator or statutory successor of
the Company(ies) 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(ies) shall give written notice to the Reinsurer of
the pendency of a claim against the Company(ies) indicating the policy or
bond reinsured 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(ies) 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(ies) 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(ies) 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 Agreement as though such
expense had been incurred by the Company(ies).
C. It is further understood and agreed that, in the event of the insolvency of
one or more than one of the Companies, the reinsurance under this Agreement
shall be payable directly by the Reinsurer to the Company(ies) or to its
liquidator, receiver or statutory successor, except where this Agreement
specifically provides another payee of such reinsurance in the event of the
insolvency of the Company(ies).
ARTICLE XXVI.
INTERMEDIARY
Xxx Xxxxxxxxx & Company, Inc. is hereby recognized as the Intermediary
negotiating this Agreement 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 Xxx Xxxxxxxxx & Company, Inc., 0 Xxxxx Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000. 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.
ARTICLE XXVII.
GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with the laws
of the State of California, U.S.A.
ARTICLE XXVIII.
SEVERAL LIABILITY NOTICE (LSW 1001 REINSURANCE)
The subscribing reinsurer's obligations under contracts of reinsurance to which
they subscribe are several and not joint and are limited solely to the extent of
their individual subscriptions. The subscribing reinsurers are not responsible
for the subscription of any co-subscribing reinsurer who for any reason does not
satisfy all or part of its obligations.
INFORMATION
The factors to be used in calculating the Earned Premium as respects Modified
Claims Made risks attaching during the term of this Agreement and subsequent
agreements shall be as follows:
Reporting Period Earned Premium Factors
1st 12 months 35%
2nd 12 months 15%
3rd 12 months 15%
4th 12 months 10%
5th 12 months 10%
6th 12 months 5%
7th 12 months 5%
8th 12 months 5%
