75% California Homeowners Multiple Line
Quota Share Reinsurance Contract
Effective: July 1, 1997
issued to
Condor Insurance Company
Calabasas, California
Amwest Surety Insurance Company
Omaha, Nebraska
and
Far West Insurance Company
Omaha, Nebraska
(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 Company obligates itself to cede to the Reinsurer and
the Reinsurer obligates itself to accept quota share reinsurance of the
Company's net liability under policies, contracts and binders of insurance
or reinsurance (hereinafter called "policies") in force at the effective
date, or issued or renewed on or after the effective date hereof, and
classified by the Company as Homeowners Multiple Peril (Sections I and
II), Inland Marine and Earthquake business written in conjunction with the
California homeowners program.
B. "Net liability" as used herein is defined as the Company's gross liability
remaining after cessions, if any, to other pro rata reinsurers.
C. The liability of the Reinsurer with respect to each cession hereunder
shall commence obligatorily and simultaneously with that of the Company,
subject to the terms, conditions and limitations hereinafter set forth.
Article II - Commencement and Termination
A. This Contract shall become effective on July 1, 1997, with respect to
losses under policies allocated to underwriting years commencing on or
after that date, and shall continue in force thereafter until terminated.
B. Either party may terminate this Contract on June 30, 1999, or any June 30
or December 31 thereafter by giving the other party not less than 90 days
prior notice by certified mail.
C. Notwithstanding the foregoing, in the event that the ratio of the
Reinsurer's losses incurred (as defined in Article XI) to premiums earned
(as defined in Article XI) for the then current underwriting year or
immediately preceding underwriting year is equal to or exceeds 75.0%, it
is agreed that the Reinsurer may terminate this Contract at any time after
July 1, 1998, by giving the Company not less than 60 days prior notice by
certified mail.
D. Unless the Company elects to reassume the ceded unearned premium in force
on the effective date of termination, and so notifies the Reinsurer prior
to or as promptly as possible after the effective date of termination,
reinsurance hereunder on business in force on the effective date of
termination shall remain in full force and effect until expiration,
cancellation or next premium anniversary of such business, whichever first
occurs, but in no event beyond 12 months plus odd time (not exceeding 15
months in all) following the effective date of termination.
E. Notwithstanding the provisions of paragraph C above, in the event the
Company is prohibited or precluded by the appropriate regulatory
authorities, or by law, from arranging mid-term cancellation or
non-renewal of any policies subject to this Contract beyond their natural
expiry, the Reinsurer agrees to extend coverage hereunder with respect to
such policies until such policies may be terminated by the Company, but in
no event beyond 24 months after the effective date of termination.
F. "Underwriting year" as used herein shall mean the period from July 1, 1997
through June 30, 1998, and each subsequent 12-month period shall be a
separate underwriting year. All premiums and losses from policies
allocated to an underwriting year shall be credited or charged,
respectively, to such underwriting year, regardless of the date said
premiums earn or such losses occur. It is understood that a policy will be
allocated to the underwriting year which is in effect as of:
1. As respects all new policies, the effective date of such policies;
2. As respects renewals of one year or less term policies, the renewal
date of such policies;
3. As respects continuous or greater than one year term policies, the
premium anniversary date of such policies.
Notwithstanding the foregoing, it is understood that policies in force on
July 1, 1997, shall be allocated to the first underwriting year hereunder.
Policies shall remain in the same underwriting year, as originally
allocated, until the next renewal date or premium anniversary date, at
which time such policies shall be reallocated to the underwriting year in
effect of such date as provided in subparagraphs 2 and 3 above.
Article III - Territory
This Contract shall only apply to policies issued to insureds domiciled in the
State of California, but this limitation shall not apply to losses if the
Company's policies provide coverage outside the aforesaid territorial limits.
Article IV - Exclusions
This Contract does not apply to and specifically excludes the following:
1. All business not included in Article I.
2. All excess of loss reinsurance assumed by the Company.
3. Reinsurance assumed by the Company under obligatory reinsurance
agreements, except agency reinsurance where the policies involved
are to be reunderwritten in accordance with the underwriting
standards of the Company and reissued as Company policies at the
next anniversary or expiration date.
4. Financial guarantee and insolvency.
5. Flood and/or earthquake when written on a stand-alone basis.
6. Mortgage Impairment insurances and similar kinds of insurances,
however styled.
7. Workers' Compensation except as respects domestic employees.
8. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
Physical Damage - Reinsurance" and the "Nuclear Incident Exclusion
Clause - Liability - Reinsurance" attached to and forming part of
this Contract.
9. 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.
10. This Contract excludes loss and/or damage and/or costs and/or
expenses arising from asbestos presence and/or 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 not more than $10,000 plus
25% of the Company's property loss under the applicable original
policy. However, this exclusion will not apply where there has been
a final court ruling that the Company's asbestos and/or seepage
and/or pollution and/or contamination exclusion is invalid or
unenforceable.
Article V - Retention and Limit
A. As respects business subject to this Contract, the Company shall retain
and be liable for 25.0% of its net liability.The Company shall cede to the
Reinsurer and the Reinsurer agrees to accept 75.0% of the Company's net
liability.
B. As respects policies allocated to any one underwriting year, in no event
shall the Reinsurer's liability under this Contract exceed $7,500,000 in
all with respect to any one occurrence.
C. The Company shall purchase or be deemed to have purchased inuring
reinsurance to limit its loss to the following amounts:
1. Homeowners Multiple Peril (Section I), $200,000 each risk;
2. Homeowners Multiple Peril (Section II), $300,000 each risk;
3. Inland Marine and Earthquake, $406,500 each risk.
D. The Company shall be the sole judge of what constitutes "one risk".
E. The Company shall purchase or be deemed to have purchased inuring
reinsurance to limit its loss from loss in excess of policy limits or
extra contractual obligations to $250,000 any one occurrence.
Article VI - Assessments
A. The provisions of Article V shall apply to a proportion of any assessments
made against the Company pursuant to those laws and regulations creating
obligatory funds (including insurance guaranty and insolvency funds to the
extent that such costs are transferable to the policyholder), pools, joint
underwriting associations, FAIR plans and similar plans, said proportion
to be the proportion of the Company's total premiums causing the
assessment which were or are subject to this Contract, subject to a
maximum of 20.0% of the premiums earned hereunder for each underwriting
year. 80.0% of any FAIR plan disbursements received by the Company will be
counted as subject premium hereunder. Any assessments shall be allocated
to the underwriting year upon which the basis of assessments were
calculated.
B. In the event this Contract is terminated, the provisions of this Article
shall continue to apply for as long as the Company is required to accept
assignments and/or assessments because of the business reinsured
hereunder.
Article VII - Loss in Excess of Policy Limits/ECO
A. In the event the Company pays or is held liable to pay an amount of loss
in excess of its policy limit, but otherwise within the terms of its
policy (hereinafter called "loss in excess of policy limits") or any
punitive, exemplary, compensatory or consequential damages, other than
loss in excess of policy limits (hereinafter called "extra contractual
obligations") because of alleged or actual bad faith or negligence on its
part in rejecting a settlement within policy limits, or in discharging its
duty to defend or prepare the defense in the trial of an action against
its policyholder, or in discharging its duty to prepare or prosecute an
appeal consequent upon such an action, or in otherwise handling a claim
under a policy subject to this Contract, the loss in excess of policy
limits and/or the extra contractual obligations shall be added to the
Company's loss (including loss adjustment expense), if any, under the
policy involved, and the sum thereof shall be subject to the provisions of
Article V.
B. An extra contractual obligation shall be deemed to have occurred on the
same date as the loss covered or alleged to be covered under the policy.
C. 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.
D. Recoveries from any form of insurance or reinsurance which protects the
Company against claims the subject matter of this Article shall inure to
the benefit of this Contract.
Article VIII - Claims and Loss Adjustment Expense
A. Losses shall be reported by the Company in summary form as hereinafter
provided, but the Company shall notify the Reinsurer immediately when a
specific case involves unusual circumstances or large loss possibilities.
The Reinsurer shall have the right to participate, at its own expense, in
the defense or control of any claim or suit or proceeding involving this
reinsurance.
B. All loss settlements made by the Company, whether under strict policy
conditions or by way of compromise, shall be binding upon the Reinsurer,
and the Reinsurer agrees to pay or allow, as the case may be, its
proportion of each such settlement in accordance with Article XII.
C. In the event of a claim under a policy subject hereto, the Reinsurer shall
be liable for its proportionate share of loss adjustment expense incurred
by the Company in connection therewith, and shall be credited with its
proportionate share of any recoveries of such expense. Loss adjustment
expense shall include litigation expenses, both prejudgment and
postjudgment interest, and legal expenses incurred in direct connection
with legal actions, including but not limited to declaratory judgment
actions. "Declaratory judgment actions" are defined as those actions
brought to determine the Company's defense and/or indemnification
obligations that are allocable only to specific policies and claims
covered under this Contract. Any declaratory judgment expense shall be
deemed to have been fully incurred on the same date as the original loss
(if any) giving rise to the action. Loss adjustment expense shall not
include office expenses or salaries of the Company's regular employees.
Article IX - Salvage and Subrogation
The Reinsurer shall be credited with its proportionate share of 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. 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 X - Original Conditions
A. All reinsurance under this Contract shall be subject to the same rates,
terms, conditions, waivers and interpretations and to the same
modifications and alterations as the respective policies of the Company.
However, in no event shall this be construed in any way to provide
coverage outside the terms and conditions set forth in this Contract. The
Reinsurer shall be credited with its exact proportion of the original
premiums received by the Company (net of rebates, policy fees or
equivalent charges, other service fees or brokerage fees), prior to
disbursement of any dividends, but after deduction of premiums, if any,
ceded by the Company for inuring reinsurance.
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 XI - Sliding Scale Commission
A. The Reinsurer shall allow the Company a 27.5% provisional commission on
all premiums ceded to the Reinsurer hereunder. The Company shall allow the
Reinsurer return commission on return premiums at the same rate. The
provisional commission allowed the Company shall be adjusted periodically
in accordance with the provisions set forth herein.
B. The adjusted commission rate shall be calculated as follows and be applied
to premiums earned for the underwriting year under consideration:
1. If the ratio of losses incurred to premiums earned is 64.0% or
greater, the adjusted commission rate for the underwriting year
under consideration shall be 23.5%
2. If the ratio of losses incurred to premiums earned is less than
64.0%, but not less than 60.0%, the adjusted commission rate for the
underwriting year under consideration shall be 23.5%, plus the
difference in percentage points between 64.0% and the actual ratio
of losses incurred to premiums earned;
3. If the ratio of losses incurred to premiums earned is less than
60.0%, but not less than 47.5%, the adjusted commission rate for the
underwriting year under consideration shall be 27.5% plus 60.0% of
the difference in percentage points between 60.0% and the actual
ratio of losses incurred to premiums earned;
4. If the ratio of losses incurred to premiums earned is 47.5% or less,
the adjusted commission rate for the underwriting year under
consideration shall be 35.0%.
D. If the ratio of losses incurred to premiums earned for any underwriting
year is greater than 64.0%, the difference in percentage points between
the actual ratio of losses incurred to premiums earned and 64.0% shall be
multiplied by premiums earned for the underwriting year and the product
shall be carried forward to the next underwriting year as a debit to
losses incurred. If the ratio of losses incurred to premiums earned for
any period is less than 47.5%, the difference in percentage points between
47.5% and the actual ratio of losses incurred to premiums earned shall be
multiplied by premiums earned for the underwriting year and the product
shall be carried forward to the next underwriting year as a credit to
losses incurred.
E. Within 30 days after the end of each underwriting year the Company shall
calculate and report the adjusted commission on premiums earned for the
underwriting year. If the adjusted commission on premiums earned is less
than commissions previously allowed by the Reinsurer on premiums earned
for the underwriting year, the Company shall remit the difference to the
Reinsurer with its report. If the adjusted commission on premiums earned
is greater than commissions previously allowed by the Reinsurer on
premiums earned for the underwriting year, the Reinsurer shall remit the
difference to the Company as promptly as possible after receipt and
verification of the Company's report.
F. In the event the adjusted commission calculation for any underwriting year
is based partly on ceded reserves for losses and/or loss adjustment
expense, the adjusted commission shall be recalculated within 30 days
after the end of each subsequent underwriting year until all losses under
policies with effective or renewal dates during the underwriting year have
been settled. Any balance shown to be due either party as a result of any
such recalculation shall be remitted promptly by the other party.
G. "Losses incurred" as used herein shall mean ceded losses and loss
adjustment expense paid as of the effective date of calculation, plus the
ceded reserves for losses and loss adjustment expense outstanding as of
the same date, plus the debit or minus the credit from the preceding
underwriting year, it being understood and agreed that all losses and
related loss adjustment expense under policies with effective or renewal
dates during an underwriting year shall be charged to that underwriting
year, regardless of the date said losses actually occur, unless this
Contract is terminated on a "cutoff" basis, in which event the Reinsurer
shall have no liability for losses occurring after the effective date of
termination.
H. "Premiums earned" as used herein shall mean ceded net written premiums for
policies with effective or renewal dates during the underwriting year,
less the unearned portion thereof as of the effective date of calculation,
it being understood and agreed that all premiums for policies with
effective or renewal dates during an underwriting year shall be credited
to that underwriting year, unless this Contract is terminated on a
"cutoff" basis, in which event the unearned reinsurance premium (less
previously allowed ceding commission) as of the effective date of
termination shall be returned by the Reinsurer to the Company.
I. 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 - Reports and Remittances
A. As promptly as possible after the effective date of this Contract, the
Company shall remit the Reinsurer's share of the unearned premium (less
provisional commission thereon) applicable to subject business in force at
the effective date of this Contract.
B. Within 30 days after the end of each month, the Company shall report to
the Reinsurer:
1. Ceded net written premium for the month;
2. Ceded net collected premium for the month;
3. Provisional commission on (2) above;
4. Ceded losses and loss adjustment expense paid during the month;
5. Ceded unearned premiums and ceded outstanding loss reserves as of
the end of the month.
Within 45 days after the end of each month, the positive balance of (2)
less (3) less (4) shall be remitted by the Company. Any balance shown to
be due the Company shall be remitted by the Reinsurer within 45 days after
the end of the month of account.
B. Annually, the Company shall furnish the Reinsurer with such information as
the Reinsurer may require to complete its Annual Convention Statement.
Article XIII - Late Payments
A. The provisions of this Article shall not be implemented unless
specifically invoked, in writing, by one of the parties to this Contract.
B. In the event any premium, loss or other payment due either party is not
received by the intermediary named in Article XXIII (hereinafter referred
to as the "Intermediary") by the payment due date, the party to whom
payment is due, may, by notifying the Intermediary in writing, require the
debtor party to pay, and the debtor party agrees to pay, an interest
penalty on the amount past due calculated for each such payment on the
last business day of each month as follows:
1. The number of full days which have expired since the due date or the
last monthly calculation, whichever the lesser, times
2. 1/365ths of the 6-month United States Treasury Xxxx rate as quoted
in The Wall Street Journal on the first business day of the month
for which the calculation is made; times
3. The amount past due, including accrued interest.
It is agreed that interest shall accumulate until payment of the original
amount due plus interest penalties have been received by the Intermediary.
C. The establishment of the due date shall, for purposes of this Article, be
determined as follows:
1. As respects the payment of routine deposits and premiums due the
Reinsurer, the due date shall be as provided for in the applicable
section of this Contract. In the event a due date is not
specifically stated for a given payment, it shall be deemed due 30
days after the date of transmittal by the Intermediary of the
initial billing for each such payment.
2. Any claim or loss payment due the Company hereunder shall be deemed
due 5 business days after the proof of loss or demand for payment is
transmitted to the Reinsurer. If such loss or claim payment is not
received within the 5 days, interest will accrue on the payment or
amount overdue in accordance with paragraph B above, from the date
the proof of loss or demand for payment was transmitted to the
Reinsurer.
3. As respects any payment, adjustment or return due either party not
otherwise provided for in subparagraphs 1 and 2 of paragraph C
above, the due date shall be as provided for in the applicable
section of this Contract. In the event a due date is not
specifically stated for a given payment, it shall be deemed due 10
business days following transmittal of written notification that the
provisions of this Article have been invoked.
For purposes of interest calculations only, amounts due hereunder shall be
deemed paid upon receipt by the Intermediary.
D. Nothing herein shall be construed as limiting or prohibiting a
Subscribing Reinsurer from contesting the validity of any claim, or
from participating in the defense or control of any claim or suit, or
prohibiting either party from contesting the validity of any payment
or from initiating any arbitration or other proceeding in accordance
with the provisions of this Contract. If the debtor party prevails in
an arbitration or other proceeding, then any interest penalties due
hereunder on the amount in dispute shall be null and void. If the
debtor party loses in such proceeding, then the interest penalty on
the amount determined to be due hereunder shall be calculated in
accordance with the provisions set forth above unless otherwise
determined by such proceedings. If a debtor party advances payment of
any amount it is contesting, and proves to be correct in its
contestation, either in whole or in part, the other party shall
reimburse the debtor party for any such excess payment made plus
interest on the excess amount calculated in accordance with this
Article.
E. Interest penalties arising out of the application of this Article that are
$100 or less from any party shall be waived unless there is a pattern of
late payments consisting of three or more items over the course of any
12-month period.
Article XIV - 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 XV - Access to Records (BRMA 1D)
The Reinsurer or its designated representatives shall have access at any
reasonable time to all records of the Company which pertain in any way to this
reinsurance.
Article XVI - Errors and Omissions (BRMA 14F)
Inadvertent delays, errors or omissions made in connection with this Contract or
any transaction hereunder shall not relieve either party from any liability
which would have attached had such delay, error or omission not occurred,
provided always that such error or omission is rectified as soon as possible
after discovery.
Article XVII - Taxes (BRMA 50B)
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 or the District of Columbia.
Article XVIII - Unauthorized Reinsurers
A. If the Reinsurer is unauthorized in any state of the United States of
America or the District of Columbia or rated B+ or less by A.M. Best, the
Reinsurer agrees to fund its share of the Company's ceded unearned premium
and outstanding loss and loss adjustment expense reserves (including
incurred but not reported loss reserves) 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
3. Cash advances;
if, without such funding, a penalty would accrue to the Company on any
financial statement it is required to file with the insurance regulatory
authorities involved. The Reinsurer, at its sole option, may fund in other
than cash if its method and form of funding are acceptable to the
insurance regulatory authorities involved.
B. 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
insurance regulatory authorities involved, 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 unearned premiums
returned to insureds on account of policy cancellations, unless paid
in cash by the Reinsurer;
2. 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;
3. To reimburse itself for the Reinsurer's share of any other amounts
claimed to be due hereunder, unless paid in cash by the Reinsurer;
4. To fund a cash account in an amount equal to the Reinsurer's share
of any ceded unearned premium and/or outstanding loss and loss
adjustment expense reserves (including incurred but not reported
loss reserves) 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;
5. 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
unearned premium and/or outstanding loss and loss adjustment expense
reserves (including incurred but not reported loss reserves), 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 B(1), B(2) or B(4), or in the
case of B(3), the actual amount determined to be due, the Company shall
promptly return to the Reinsurer the excess amount so drawn.
Article XIX - 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
immediately upon demand, with reasonable provision for verification,
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 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 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 company.
C. It is further understood and agreed that, in the event of the insolvency
of one or more of the reinsured companies, the reinsurance under this
Contract shall be payable directly by the Reinsurer to the company or to
its liquidator, receiver or statutory successor, except as provided by
Section 4118(a) of the New York Insurance Law or except (1) where this
Contract specifically provides another payee of such reinsurance in the
event of the insolvency of the company or (2) where the Reinsurer with the
consent of the direct insured or insureds has assumed such policy
obligations of the company as direct obligations of the Reinsurer to the
payees under such policies and in substitution for the obligations of the
company to such payees.
Article XX - 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, each Arbiter
shall nominate three candidates within 10 days thereafter, two of whom
the other shall decline, and the decision shall be made by drawing
lots.
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 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 El Segundo, California
unless otherwise 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 in which the Company has
its principal office.
Article XXI - 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.
Article XXII - Agency Agreement
If more than one reinsured company is named as a party to this Contract, the
first named company 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 XXIII - Intermediary (BRMA 23A)
X. X. Xxxxxx Co. 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 X. X. Xxxxxx Co.,
Reinsurance Services, 0000 Xxxx 00xx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 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.
In Witness Whereof, the Company by its duly authorized representative has
executed this Contract as of the date undermentioned at:
El Segundo, California, this _______ day of _______________________199___.
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Condor Insurance Company
Table of Contents
Article Page
I Classes of Business Reinsured 1
II Commencement and Termination 1
III Territory 3
IV Exclusions 3
V Retention and Limit 4
VI Assessments 4
VII Loss in Excess of Policy Limits/ECO 5
VIII Claims and Loss Adjustment Expense 5
IX Salvage and Subrogation 6
X Original Conditions 6
XI Sliding Scale Commission 6
XII Reports and Remittances 8
XIII Late Payments 9
XIV Offset (BRMA 36C) 10
XV Access to Records (BRMA 1D) 10
XVI Errors and Omissions (BRMA 14F) 11
XVII Taxes (BRMA 50B) 11
XVIII Unearned Premium and Loss Reserves 11
XIX Insolvency 12
XX Arbitration 13
XXI Service of Suit (BRMA 49C) 14
XXII Agency Agreement 14
XXIII Intermediary (BRMA 23A) 15
