REINSURANCE COVER NOTE
Agreement No: 970044
MEMORANDUM OF REINSURANCE EFFECTED ON BEHALF OF:
REINSURED: HOME STATE INSURANCE GROUP
---------
HOME STATE INSURANCE COMPANY
Red Bank, New Jersey
QUAKER CITY INSURANCE COMPANY
Trevose, Pennsylvania NEW YORK
MERCHANT BAKERS INSURANCE COMPANY
Binghamton, New York
HOME MUTUAL INSURANCE COMPANY OF BINGHAMTON, NEW YORK
Binghamton, New York
PINNACLE INSURANCE COMPANY
Carrollton, Georgia
XXXXXXXXX INSURANCE COMPANY
Wallingford, Connecticut
(hereinafter referred to as the "Company")
TYPE: FIRST PERSONAL AND COMMERCIAL AUTOMOBILE LIABILITY EXCESST
---- OF LOSS REINSURANCE AGREEMEN
PERIOD: Continuous from 12:01 a.m., Eastern Standard Time,
------ January 1, 1997, subject to cancellation at any January 1
anniversary thereafter by either party giving ninety (90)
days' prior written notice. Agreement originally effective
July 1, 1993.
In the event of cancellation, the Company shall have the
option to cancel on a cut-off basis or on a run-off basis.
If run-off is chosen, the Reinsurers shall remain liable
for their share of all policies in force hereunder at the
effective date of cancellation until the natural expiration
or prior cancellation of said policies at expiring terms,
not to exceed twelve (12) months after the effective date
of cancellation. The additional premium to Reinsurers for
run-off shall be the expired rate applied to the unearned
premium in force at the time of cancellation.
Should this Agreement terminate while a loss occurrence is
in progress, the Reinsurers shall be liable for their share
of all individual losses resulting from such loss
occurrence whether any such individual losses take place
before or after such termination.
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REINSURANCE COVER NOTE
Agreement No: 970044
CLASS: All in-force, new and renewal business classified by the
Company as Personal Automobile Liability in all states,
except business written in Connecticut, Florida and
Georgia, and Commercial Automobile Liability, including
No-Fault, Uninsured and Underinsured Motorists and Medical
Payments plus Garagekeepers Legal Liability and Garage
Liability, except Black Car and Silver Car business.
EXCLUSIONS: This Agreement shall not apply to:
----------
1. Assumed reinsurance other than business assumed via
intra-company reinsurance, United Pacific Insurance
Company and Reliance Insurance Company, facultative
commercial automobile liability reinsurance in
connection with business originally produced by the
Company and specifically reported to working layer
Reinsurers, and Delaware private passenger business
written as a 100% Quota Share of companies with whom
Quaker City Insurance Company has entered into
rollover agreements;
2. Loss or liability excluded by the provisions of the
"Nuclear Incident Exclusion Clauses - Liability
-Reinsurance - USA and Canada";
3. Financial Guarantee and Insolvency;
4. Insolvency Funds;
5. War Risks, as described in the North American War Risk
Exclusion Clause;
6. All business derived directly or indirectly from any
Pool, Association or Syndicate, except that individual
losses from Assigned Risk Plans or similar plans are
not excluded;
7. Speed Contests; and
8. Ambulances.
TERRITORIAL
SCOPE: As per the Company's original policies.
-----
LIMIT AND
RETENTION: A. Business classified as Private Passenger Automobile
--------- $50,000 Ultimate Net Loss each and every loss
occurrence in excess of $50,000 Ultimate Net Loss
each and every loss occurrence.
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REINSURANCE COVER NOTE
Agreement No: 970044
LIMIT AND
RETENTION
(Continued): B. Business classified as Commercial Automobile,
---------- Garagekeepers Legal Liability and Garage Liability
$50,000 Ultimate Net Loss each and every loss
occurrence in excess of $50,000 Ultimate Net Loss each
and every loss occurrence.
Notwithstanding any other provisions of this Agreement, the
aggregate total of all loss payments made by the Reinsurer
shall not exceed 200% of the net earned reinsurance premium
received by the Reinsurer during the cumulative period this
Agreement remains in effect. In addition, the maximum
amount payable by the Reinsurer as respects the 1997 year
shall not exceed the greater of 225% of the net earned
reinsurance premium or $35,000,000.
RATE: A. Private Passenger Automobile
----
19.30% Gross Rate, 13.00% Net Rate. Rate applies to the
Company's Gross Net Earned Premium, estimated to be
$70,076,900 for 1997.
B. Commercial Automobile, Garagekeepers Legal Liability
and Garage Liability
19.30% Gross Rate, 13.00% Net Rate. Rate applies to the
Company's Gross Net Earned Premium, estimated to be
$50,358,250 for 1997.
REPORTS AND
ACCOUNTS: Accounts and premiums are due and payable quarterly thirty
--------- (30) days after the close of each calendar quarter.
CEDING
COMMISSION: 32.5% of gross ceded premium.
----------
CONTINGENT
COMMISSION: Three-Year Block: January 1, 1997 - December 31, 1999
---------- ------------------------------------------------------
Cumulative Net Earned Reinsurance Premium less Cumulative
Incurred Losses plus Pro Rata Loss Adjustment Expenses
occurring on and after January 1, 1997 to the termination
of the Agreement, plus deficit, if any, from the preceding
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REINSURANCE COVER NOTE
Agreement No: 970044
period, and less Reinsurers' Margin shall equal the
Cumulative Net Balance. Balance times 100% equals
Contingent Commission. SEC:vs 1/7/97 4
CONTINGENT
COMMISSION
(Continued): Incurred Losses in this calculation to include IBNR
----------- factors of 50% of net earned reinsurance premium at the
first calculation at 12/31/97; 30% of net earned
reinsurance premium at the second calculation at 12/31/98;
10% of net earned reinsurance premium at the third
calculation at 12/31/99 and 0% at subsequent calculations.
Reinsurers' Margin shall be 17.5% of the Net Earned
Reinsurance Premium.
Payable annually within ninety (90) days after the close of
each year. Unlimited deficit carry forward. Annual
calculations until all losses are settled. Annual
calculations at each December 31 thereafter until all
losses are settled.
Calculation of this Contingent Commission shall apply
collectively for all Companies reinsured under this
Agreement, and not individually.
CLAUSES: Parties to the Agreement.
------- Net Retained Lines.
Ultimate Net Loss - Loss Adjustment Expenses pro rata
in addition to the limits of the Agreement.
Extra Contractual Obligations on a 90%/10% basis within
the limits of the Agreement.
Loss in Excess of Policy Limits on a 90%/10% basis within
the limits of the Agreement.
Subrogation.
Salvage and Recoveries.
Definition of Loss Occurrence.
Loss Notice and Settlements.
Funding of Reserves.
Currency.
Taxes.
Access to Records.
Errors and Omissions not to override Loss Notice and
Settlements, and not to apply to Exclusions.
Original Conditions.
Insolvency.
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REINSURANCE COVER NOTE
Agreement No: 970044
CLAUSES
(Continued): Arbitration.
----------- Federal Excise Tax.
Service of Suit - NMA 1998- Mendes & Mount (where
applicable).
Offset.
Severability.
Minet Re North America, Inc. Intermediary.
WORDING: As per expiring Reinsurance Agreement as far as applicable
------- and as noted herein, which complies with the requirements
of the State of New York Insurance Department.
REINSURERS:
----------
NAIC
FEIN No. No. Through Minet Re North America Share
00-0000000 24457 Reliance Insurance Company
through Reliance Reinsurance Corp. 25%
Philadelphia, Pennsylvania
00-0000000 22314 Underwriters Reinsurance Company25%
Concord, New Hampshire --
TOTAL PLACEMENT: 50%
===
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REINSURANCE COVER NOTE
Agreement No: 970044
We will periodically provide a list of those companies with which Minet Re North
America, Inc. is affiliated, which may be parties to this placement. This list
is available on request.
FOR AND ON BEHALF OF:
MINET RE NORTH AMERICA, INC.
___________________________ DATE: _______________
Senior Vice President
AGREED TO:
HOME STATE INSURANCE GROUP
HOME STATE INSURANCE COMPANY
QUAKER CITY INSURANCE COMPANY
NEW YORK MERCHANT BAKERS INSURANCE COMPANY
HOME MUTUAL INSURANCE COMPANY OF BINGHAMTON, NEW YORK
PINNACLE INSURANCE COMPANY
XXXXXXXXX INSURANCE COMPANY
___________________________ DATE: _______________
Authorized Signature
Please examine this document carefully and advise us immediately if any of the
details on the security used are not in accordance with your order or
requirements.
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