EXHIBIT 10.124
PROPERTY QUOTA SHARE REINSURANCE CONTRACT
issued to
UNITED PROPERTY AND CASUALTY INSURANCE COMPANY
St. Petersburg, Florida
Effective: December 31, 2020
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PROPERTY QUOTA SHARE REINSURANCE CONTRACT TABLE OF CONTENTS
Article | Preamble | Page |
|
| 3 |
1 | Business Covered | 3 |
2 | Retention and Limit | 3 |
3 | Term | 4 |
4 | Special Termination | 4 |
5 | Territory | 5 |
6 | Exclusions | 5 |
7 | Special Acceptance | 6 |
8 | Premium | 6 |
9 | Ceding Commission | 6 |
10 | Reports and Remittances | 7 |
11 | Definitions | 8 |
12 | Extra Contractual Obligations/Excess of Policy Limits | 11 |
13 | Net Retained Liability | 12 |
14 | Original Conditions | 12 |
15 | No Third Party Rights | 12 |
16 | Loss Settlements | 12 |
17 | Commutation | 13 |
18 | Salvage and Subrogation | 13 |
19 | Currency | 14 |
20 | Security | 14 |
21 | Taxes | 16 |
22 | Access to Records | 17 |
23 | Confidentiality | 17 |
24 | Indemnification and Errors and Omissions | 18 |
25 | Insolvency | 18 |
26 | Arbitration | 19 |
27 | Governing Law | 20 |
28 | Entire Agreement | 20 |
29 | Non-Waiver | 21 |
30 | Mode of Execution | 21 |
| Company Signing Block | 22 |
Exhibit A |
|
|
| Trust Agreement | 23 |
Effective: December 31, 2020
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PROPERTY QUOTA SHARE REINSURANCE CONTRACT
issued to
UNITED PROPERTY AND CASUALTY INSURANCE COMPANY
St Petersburg, Florida
(the "Company")
by
HOMEOWNERS CHOICE PROPERTY AND CASUALTY INSURANCE COMPANY
(the "Reinsurer")
ARTICLE 1
BUSINESS COVERED
This Contract is to indemnify the Company in respect of the liability that may accrue to the Company as a result of loss or losses under Policies classified by the Company as Northeast Property, in force at the inception of this Contract, or written or renewed during the term of this Contract by or on behalf of the Company, subject to the terms and conditions herein contained.
ARTICLE 2
RETENTION AND LIMIT
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ARTICLE 3
TERM
ARTICLE 4
SPECIAL TERMINATION
A. The Company may terminate a Reinsurer's percentage share in this Contract at any time by giving written notice to the Reinsurer in the event of any of the following circumstances:
B. Termination shall be effected on a run-off or cut-off basis as set forth in the Term Article, at the sole discretion of the Company. The reinsurance premium due the Reinsurer hereunder
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shall be pro rated based on the period of the Reinsurer's participation hereon, and the Reinsurer shall immediately return any unearned reinsurance premium received.
ARTICLE 5
TERRITORY
The territorial limits of this Contract shall be identical with those of the Company's Policies.
ARTICLE 6
EXCLUSIONS
A. This Contract shall not apply to and specifically excludes:
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c. Equipment Breakdown
ARTICLE 7
SPECIAL ACCEPTANCE
Business that is not within the scope of this Contract may be submitted to the Reinsurer for special acceptance hereunder, and such business, if accepted by the Reinsurer shall be covered hereunder, subject to the terms and conditions of this Contract, except as modified by the special acceptance.
ARTICLE 8
PREMIUM
The Company shall cede to the Reinsurer its exact proportion of the unearned portion of the Subject Written Premium for business in force at the inception of this Contract, and the Subject Written Premium of the Company for Policies written or renewed after said inception.
ARTICLE 9
CEDING COMMISSION
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ARTICLE 10
TRUST ACCOUNT
ARTICLE 11
REPORTS AND REMITTANCES
A. 1. As promptly as possible after the effective date of this Contract, but no later than 30 days thereafter, the Company shall remit to the Trust Account, established in accordance with the Trust Account Article, the Reinsurer's share of the unearned portion of the Subject Written Premium, less provisional commission thereon and less the Catastrophe Cost Allowance thereon applicable to subject business in force at the effective time and date of this Contract.
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2. As promptly as possible after the effective date of this Contract, but no later than 30 days thereafter, the Reinsurer will pay $6,000,000 into the Trust Account.
B. 1. Within 15 calendar days following the end of each month, the Company shall furnish
the Reinsurer with a report summarizing:
ARTICLE 12
DEFINITIONS
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"Loss Adjustment Expense" does not include salaries and expenses of the Company's employees, except as provided in subparagraph (7) above, and office and other overhead expenses.
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H. "Named Storm" means any storm or storm system that has been declared by the Reporting Service (by being given a name or a number) to be a hurricane and/or a tropical storm and/or a tropical depression and/or extra-tropical cyclone and/or post tropical cyclone and/or subtropical cyclone at any time and any place (whether inside or outside the territorial limits set forth in the Territory Article, and including the merging with one or more separate storms or storm systems into a combined storm or storm system). The duration of the Named Storm includes the time period:
I. "Reporting Service" means the National Hurricane Center, Weather Prediction Center or other support center or agency of the National Weather Service or its successor(s).
J. "Earthquake" means any Earthquake reported by the United States Geological Survey or any successor thereto and/or the Global Seismic Network.
K. "Earthquake Event" means an Earthquake (including an Earthquake occurring outside the territorial limits set forth in the Territory Article) selected by the Company (hereinafter the "Principal Earthquake") that commences during the term of this Contract and results in loss under one or more Policies during the Earthquake Period caused by, occasioned by, arising out of or resulting from the peril of earth shake and further includes all ensuing damage
caused therefrom, or as a consequence thereof (including, without limitation, damage from fire following, sprinkler leakage, tsunami, landslide and/or volcanic eruption), if such
ensuing events/perils are caused by, occasioned by, arising out of or resulting from the Principal Earthquake. The Company may deem one or more subsequent Earthquakes to be part of the Principal Earthquake, provided that such subsequent Earthquakes and aftershocks occur within the applicable Earthquake Period.
L. "Earthquake Period" means the period beginning on the date reported by the United States Geological Survey or any successor thereto and/or the Global Seismic Network (as adjusted
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to the date in the Eastern Time Zone, if applicable) of the Principal Earthquake which commenced during the Term of this Contract (or, at the Company's discretion, on the date of any foreshock assigned to said Principal Earthquake), as selected by the Company in its sole discretion, and ending seven consecutive days following such date.
M. "Catastrophe Cost Allowance" as used herein means an allowance equal to 11.528% of the Company's Subject Written Premiums ceded, subject to a maximum ceded amount of $4,400,000.
ARTICLE 13
EXTRA CONTRACTUAL OBLIGATIONS/EXCESS OF POLICY LIMITS
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corporation or any other organization or party involved in the presentation, defense or settlement of any claim covered hereunder.
G. In no event shall coverage be provided to the extent not permitted under law.
ARTICLE 14
NET RETAINED LIABILITY
ARTICLE 15
ORIGINAL CONDITIONS
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.
ARTICLE 16
NO THIRD PARTY RIGHTS
This Contract is solely between the Company and the Reinsurer, and in no instance shall any insured, claimant or other third party have any rights under this Contract except as may be expressly provided otherwise herein.
ARTICLE 17
LOSS SETTLEMENTS
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the Reinsurer agrees to pay or allow, as the case may be, its share of each such settlement in accordance with this Contract.
ARTICLE 18
COMMUTATION
ARTICLE 19
SALVAGE AND SUBROGATION
A. Salvages and all recoveries (including amounts due from all reinsurances that inure to the benefit of this Contract, whether recovered or not), shall be first deducted from any loss to
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the extent received prior to loss settlement hereunder to arrive at the amount of liability attaching hereunder.
B. All salvages, recoveries or payments recovered or received subsequent to loss settlement hereunder shall be applied as if recovered or received prior to the aforesaid settlement, and all necessary adjustments shall be made by the parties hereto.
ARTICLE 20
CURRENCY
ARTICLE 21
SECURITY
A. This Article applies only to the extent a Reinsurer does not qualify for credit with any insurance regulatory authority having jurisdiction over the Company's reserves
B. The Company agrees, in respect of its Policies or bonds falling within the scope of this Contract, that when it files with its insurance regulatory authority, or sets up on its books liabilities as required by law, it shall forward to the Reinsurer a statement showing the proportion of such liabilities applicable to the Reinsurer. The "Reinsurer's Obligations" shall be defined as follows:
C. The Reinsurer's Obligations shall be funded by funds withheld, cash advances, Trust Agreement or a Letter of Credit (LOC). The Company shall have the option of determining
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the method of funding provided it is acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves.
D. When funding by Trust Agreement, the Reinsurer shall ensure that the Trust Agreement complies with the provisions of the "Trust Agreement Requirements Clause" attached hereto. When funding by an LOC, the Reinsurer agrees to apply for and secure timely delivery to the Company of a clean, irrevocable and unconditional LOC 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 Obligations. Such LOC 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 30 days (or such other time period as may be 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 LOC extended for any additional period.
E. The Reinsurer and the Company agree that any funding provided by the Reinsurer pursuant to the provisions of this Contract may be drawn upon at any time, notwithstanding any other provision of this Contract, 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:
F. If the amount drawn by the Company is in excess of the actual amount required for E(1) or E(3), or in the case of E(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.
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G. 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.
H. At annual intervals, or more frequently at the discretion of the Company, but never more frequently than monthly, the Company shall prepare a specific statement of the Reinsurer's Obligations for the sole purpose of amending the LOC or other method of funding, in the following manner:
I. Should the Company or the Reinsurer be in breach of its obligations under this Article, or any Trust Agreement entered into to collateralize the Reinsurer's Obligations hereunder, notwithstanding anything to the contrary elsewhere in this Contract, including but not limited to the Arbitration Article, the Company or the Reinsurer may seek immediate relief in respect of said breach from any court sitting in Pinellas County, Florida having competent jurisdiction of the parties hereto or the state and federal courts having jurisdiction for disputes from Pinellas County, as determined by the Company, and the parties consent to jurisdiction of such court. The Company and the Reinsurer agree that in addition to obeying the order of such court, each will bear its own costs, including reasonable attorneys' fees and court costs, incurred in seeking the relief sought from such breach. In the alternative, the Company or the Reinsurer may elect to demand arbitration of such dispute pursuant to the provisions of the Arbitration Article hereunder.
ARTICLE 22
TAXES
A. In consideration of the terms under which this Contract is issued, the Company undertakes not to claim any deduction of the premium hereon when making Canadian tax returns.
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B. 1. 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 the Internal Revenue Code) to the extent such premium is subject to Federal Excise Tax.
2. In the event of any return of such premium becoming due hereunder, the Reinsurer shall deduct the applicable percentage of such premium from the amount of the return, and the Company or its agent should take steps to recover the Tax from the U.S. Government.
ARTICLE 23
ACCESS TO RECORDS
The Reinsurer or its duly authorized representatives shall have the right to visit the offices of the Company to inspect, examine, audit, and verify any of the policy, accounting or claim files ("Records") relating to the Policies reinsured under this Contract during regular business hours after giving five working days' prior notice; provided, that the Company shall be permitted to exclude from such inspection, examination or audit information that is not primarily related to the Policies to the extent any such information related to the Policies cannot be segregated or separated, without material cost or effort, from information that the Company believes in good faith is not permitted to be disclosed or transferred to the Reinsurer or its affiliates pursuant to applicable law or that would otherwise reveal sensitive competitive information concerning the business of the Company and its affiliates (other than the Policies). This right shall be exercisable during the term of this Contract or after the expiration of this Contract.
ARTICLE 24
CONFIDENTIALITY
A. The Reinsurer hereby acknowledges that the documents, information and data provided to it by the Company, whether directly or through an authorized agent, in connection with the placement and execution of this Contract ("Confidential Information") are proprietary and confidential to the Company. Confidential Information shall not include documents, information or data that the Reinsurer can show:
B. Absent the written consent of the Company, the Reinsurer shall not disclose any Confidential Information to any third parties, including any affiliated companies, except:
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Further, the Reinsurer agrees not to use any Confidential Information for any purpose not related to the performance of its obligations or enforcement of its rights under this Contract.
ARTICLE 25
INDEMNIFICATION AND ERRORS AND OMISSIONS
A. The Reinsurer is reinsuring, subject to the terms and conditions of this Contract, the obligations of the Company under any Policy. The Company shall be the sole judge as to:
B. The Reinsurer shall be bound by the judgment of the Company as to the obligation(s) and liability(ies) of the Company under any Policy.
C. Any inadvertent error, omission or delay in complying with the terms and conditions of this Contract shall not be held to relieve either party hereto from any liability that would attach to it hereunder if such error, omission or delay had not been made, provided such error, omission or delay is rectified immediately upon discovery.
ARTICLE 26
INSOLVENCY
A. If more than one reinsured company is referenced within the definition of "Company" in the Preamble to this Contract, this Article shall apply severally to each such company. Further,
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this Article and the laws of the domiciliary state shall apply in the event of the insolvency of any company covered hereunder. In the event of a conflict between any provision of this Article and the laws of the domiciliary state of any company covered hereunder, that domiciliary state's laws shall prevail.
ARTICLE 27
ARBITRATION
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ARTICLE 28
GOVERNING LAW
This Contract shall be governed as to performance, administration and interpretation by the laws of the State of Florida, exclusive of conflict of law rules. However, with respect to credit for reinsurance, the rules of all applicable states shall apply.
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ARTICLE 29
ENTIRE AGREEMENT
This Contract sets forth all of the duties and obligations between the Company and the Reinsurer and supersedes any and all prior or contemporaneous written agreements with respect to matters referred to in this Contract. This Contract may not be modified or changed except by an amendment to this Contract in writing signed by both parties. However, this Article shall not be construed as limiting the admissibility of evidence regarding the formation, interpretation, purpose or intent of this Contract.
ARTICLE 30
NON-WAIVER
The failure of the Company or the Reinsurer to insist on compliance with this Contract or to exercise any right or remedy hereunder shall not constitute a waiver of any rights contained in this Contract nor prevent either party from thereafter demanding full and complete compliance nor prevent either party from exercising such remedy in the future.
ARTICLE 31
MODE OF EXECUTION
A. This Contract may be executed by:
B. The use of any one or a combination of these methods of execution shall constitute a legally binding and valid signing of this Contract. This Contract may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original.
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IN WITNESS WHEREOF, the Company has caused this Contract to be executed by its duly authorized representative.
This 18th day of January, 2021.
United Property & Casualty Insurance Company
By:
Name: Bennett Bradford Martz
Title: President & Chief Financial Officer
Homeowners Choice Property & Casualty Insurance Company
By:
Name:
Title:
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EXHIBIT A
TRUST AGREEMENT
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