EMPIRE INSURANCE COMPANY
CENTURION INSURANCE COMPANY
50% QUOTA SHARE REINSURANCE
AGREEMENT
ADDENDUM NO. 1
This Addendum No. 1 is attached to and made a part of
the Quota Share Reinsurance Treaty (the "Treaty") entered
into by and between CENTURION INSURANCE COMPANY (the
"Reassured") and EMPIRE INSURANCE COMPANY (the "Reinsurer")
on January 27, 1997.
This Addendum No. 1 shall be effective for all Inforce,
new and renewal business attaching on or after July 1, 1997.
Addendum No. 1 hereby amends Article VI of the Treaty
entitled "Quota Share Participation" to reads as follow:
ARTICLE VI
QUOTA SHARE PARTICIPATION
1. The Reassured shall cede and the Reinsurer shall
accept 75% of the Reassured's net liability in written
premium in any one contract year on risks under all policies
covered hereunder.
2. "Net Liability" shall mean the liability which the
Reassured retains net for its own account and unreinsured
in any way. Net liability shall include allocated loss
adjustment expenses and the Reinsurer shall be liable
for its proportionate share of all such expenses,
irrespective of the amount of the cession or the limit
hereunder applying to any one risk, any one loss
occurrences.
3. The Reassured shall be the sole judge of what
constitutes one risk.
All other terms and conditions of the Treaty
remained unchanged.
IN WITNESS WHEREOF, the parties have caused this
Addendum No. 1 to be executed by their duly authorized
officers as of the 31st day of July, 1997.
EMPIRE INSURANCE COMPANY
By: FRANCIS M. COLALUCCI
Title: Senior Vice President,
CFO and Treasurer
CENTURION INSURANCE COMPANY
By: BRUCE OSTERMAN
Title: Vice President
1. CENTURION INSURANCE COMPANY
QUOTA SHARE REINSURANCE TREATY
EFFECTIVE JANUARY 1, 1997
PREAMBLE
The Centurion Insurance Company hereinafter referred to
as "the Reassured", shall cede and the Empire Insurance
Company, hereinafter referred to as "the Reinsurer", shall
accept a 50% quota share of the Reassured's net liability in
written premium in any one contract year resulting from any
loss or losses under the Reassured's policies, subject to
the following conditions.
ARTICLE I
TERM AND CANCELLATION
1. A. This Treaty shall be effective for all
business written on or after January 1, 1997 and shall
remain continuously in force until terminated by either
party giving to the other at least 60 days prior written
notice by registered mail, or at any time by mutual consent.
B. In the event of termination of this Treaty,
at the option of the Reassured:
(1) The Reinsurer shall be liable for their share
of the liability under all policies or
portions thereof in force as of the date of termination, up
to the natural expiration or prior termination date of said
policies, but not to exceed a further
twelve month period.
(2) The Reassured shall have the option, by
giving 60 days' notice to the Reinsurer, of effecting cancellation
of all cessions in force hereunder, such cancellation
to be effective on the date of termi-
nation of this Treaty. In such event, Reinsurer shall
return to the Reassured the full
unearned premium reserve applicable to the
unexpired liability, computed on the monthly pro rata basis,
less provision for commissions as
provided for herein.
ARTICLE II
TERRITORY
1. The territorial limits of this Treaty shall be the
same as that in the Reassured's original policies, contracts
or binders of insurance.
ARTICLE III
BUSINESS COVERED
1. This Treaty shall cover policies written or
renewed by or on behalf of the Reassured during the term of
this Treaty.
2.
ARTICLE IV
EXCLUSIONS
1. This Treaty shall not cover:
A. Nuclear Incident Exclusion Clause - Liability
- - Reinsurance as per attached.
B. Nuclear Incident Exclusion Clause - Physical
Damage - Reinsurance as per attached.
C. Pools Exclusion Clause as per attached.
ARTICLE V
DEFINITION OF POLICIES
1. The term "policies", whenever used herein, shall mean
all binders, policies, contracts, certificates and other
obligations, whether oral or written, of insurance or
reinsurance.
ARTICLE VI
QUOTA SHARE PARTICIPATION
1. The Reassured shall cede and the Reinsurer shall accept
50% of the Reassured's net liability in written premium in
any one contract year on risks under all policies covered
hereunder.
2. "Net Liability" shall mean the liability which the
Reassured retains net for its own account and unreinsured in
any way. Net liability shall include allocated loss
adjustment expenses and the Reinsurer shall be liable for
its proportionate share of all such expenses, irrespective
of the amount of the cession or the limit hereunder applying
to any one risk, any one loss occurrence.
3. The Reassured shall be the sole judge of what
constitutes one risk.
ARTICLE VII
ORIGINAL CONDITIONS
1. All amounts ceded hereunder shall be subject to the
same gross rates and to the same clauses, conditions, and
modifications of the Reassured's policies and the Reinsurer
shall pay losses as may be paid thereon and shall follow the
settlements of the Reassured, subject always to the limits,
terms and conditions of this treaty.
3.
ARTICLE VIII
LOSSES
1. The Reinsurer shall be liable for its proportionate
share of the amount payable by the Reassured in settlement
of losses or liability covered hereunder after deducting all
recoveries, all salvage, and all amounts due from any other
Reinsurers (whether collected or not). The Reinsurer shall
also be liable for proportionate share of all allocated loss
adjustment and legal expenses in connection with the
adjustment and defense of claims covered hereunder, other
than office expenses of the Reinsured and salaries of its
regular employees.
ARTICLE IX
EXTRA CONTRACTUAL OBLIGATIONS
1. The reinsurer shall reinsure the Reassured, subject to
the limit of this Treaty, for 50% of the Reassured's Extra
Contractual Obligations losses. Such losses are defined as
those liabilities (whether they constitute compensatory,
incidental, exemplary or punitive damages) not covered under
any other provision of this Treaty 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 Reassured to settle within the
policy limit or by reason of alleged or actual negligence,
fraud or bad faith in rejecting an offer of settlement, in
the preparation of the defense or in the trial of any action
against its insured or reassured or in the preparation or
prosecution of an appeal consequent upon such action.
2. The date on which any Extra Contractual Obligation is
incurred by the Reassured shall be deemed, in all
circumstances, to be the date of the original accident,
casualty, disaster or loss occurrence. Any loss under this
Article shall be deemed to be part of the original accident,
casualty, disaster, or loss occurrence which gave rise to
the claim by the insured under the original policy; in no
event shall the Reinsurer's limit of liability for any
accident, casualty, disaster or loss occurrence, including
Extra Contractual Obligations, exceed the limit of the
Treaty.
3. However, this Article shall not apply where the loss
has been incurred due to the fraud of a member of the Board
of Directors, or a corporate officer of the Reassured,
acting individually or collectively or in collusion with a
member of the Board of Directors, a corporate officer or a
partner of any other corporation or partnership.
4. If any provisions of this contract shall be rendered
illegal or unenforceable by the laws, regulations or public
policy of any state, such provision shall be considered void
in such state, but this shall not affect the validity or
enforceability of any other provision of this contract or
the enforceability of such provision in any other
jurisdiction.
4.
ARTICLE X
NET LOSS
1. The term "net loss" shall mean the actual loss incurred
by the Reassured under policies covered hereunder. Such
loss shall include sums paid in settlement of claims and
suits and in satisfaction of judgments, including
prejudgment interest when added to judgment. Such loss also
shall include any Losses in Excess of Policy Limits and any
Extra Contractual Obligations incurred by the Reassured but
shall exclude allocated loss adjustment expenses.
2. All salvages, recoveries payments and reversals or
reductions of verdicts or judgments whether recovered,
received or obtained prior or subsequent to loss settlement
under this Treaty, including amounts recoverable under other
reinsurance whether collected or not, shall be applied as if
recovered, received or obtained prior to the aforesaid
settlement and shall be deducted from the actual losses
sustained to arrive at the amount of the net loss. Nothing
in this article shall be construed to mean losses are not
recoverable until the net loss to the Reassured finally has
been ascertained.
3. All allocated loss adjustment expenses paid by the
Reassured as a result of net losses covered hereunder shall
be divided between the Reassured and the Reinsurer, without
regard to the limit of this Treaty, in proportion to their
share of the net loss. Allocated loss adjustment expenses
shall include without limitation expenses sustained in
connection with settlement and litigation of claims and
suits, satisfaction of judgments, resistance to or
negotiations concerning a loss, all interest on judgments
other than prejudgment interest when added to a judgment and
expenses sustained to obtain recoveries, salvages and other
reimbursements, or to secure the reversal or reduction of a
verdict or judgment.
4. In the event there are any recoveries, salvages, or
reimbursements recovered subsequent to a loss settlement, or
in the event a verdict or judgment is reversed or reduced,
the allocated loss adjustment expenses incurred in obtaining
the recovery, salvage or reimbursement or in securing the
reduction or reversal shall be divided between the Reassured
and the Reinsurer in proportion to their share of the
benefit therefrom, with the expenses incurred up to the time
of the loss settlement or the original verdict or judgment
being divided in proportion to the share of the Reassured
and the Reinsurer in the original loss settlement or verdict
or judgment.
5. The Reinsurer shall be subrogated, as respects any loss
for which the Reinsurer shall actually pay or become liable,
but only to the extent of the amount of payment by or the
amount of liability to the Reinsurer, to all the rights of
the Reassured against any person or other entity who may be
legally responsible in damages for said loss. Should the
Reassured elect not to enforce such rights, the Reinsurer
are hereby authorized and empowered to bring any appropriate
action in the name of the Reassured or its policy-holders,
or otherwise to enforce such rights. The Reinsurer shall
promptly remit to the Reassured the amount of any judgment
awarded in such an action in excess of the amount of payment
by, or the amount of liability to, the Reinsurer hereunder.
5.
ARTICLE XI
LOSSES IN EXCESS OF POLICY LIMITS
1. The Reinsurer shall reinsure the Reassured, subject to
the limit of this Treaty, for 50% of any loss in excess of
the limit of its policy, such loss in excess of the limit
having been incurred because of the failure by it to settle
within the policy limit or by reason of alleged or actual
negligence, fraud or bad faith in rejecting a offer of
settlement, in the preparation of the defense or in the
trial of any action against its insured or reassured or in
the preparation or prosecution of an appeal consequent upon
such action.
2. For the purposes of Paragraph 1. of this Article, the
word "loss" shall mean any amounts for which the Reassured
would have been contractually liable to pay had it not been
for the limit of the policy.
3. However, this Article shall not apply where the loss
has been incurred due to the fraud of a member of the Board
of Directors, or a corporate officer of the Reassured,
acting individually or collectively or in collusion with a
member of the Board of Directors, a corporate officer or a
partner of any other corporation or partnership.
ARTICLE XII
PREMIUM AND COMMISSION
1. A. The premium payable to the Reinsurer hereunder
shall be calculated at the same gross rates and on the
same basis as the premiums received by the Reassured on
its original policies.
B. The Reinsurer agrees to allow the Reassured a
commission subject to a provisional rate of 20% on a
sliding scale basis as follows: The provisional commission
of 20% will be charged at a 75% loss ratio. The Reassured's
commission will decrease .25% for each 1.0% increase in the
loss ratio, to a minimum of 15% at a loss ratio of 95.0%.
The Reassured's commission will increase .25% for each
1.0% decrease in the loss ratio, to a maximum of 25% at a
55% loss ratio.
The initial commission adjustment period will be
from January 1, 1997 to December 31, 1997. Thereafter, the
commission adjustment period will be defined as each
twelve consecutive calendar months during the term this
Treaty remains in force. Commission adjustments will be
computed at the end of the first consecutive fourteen
month period. Thereafter, the commission adjustments will
be computed annually, until all losses occurring during
the respective commission adjustment period have been
settled.
C. The adjusted or final percentage of commission for
any commission adjustment period shall be applied to the
earned premiums hereunder for such period and the
difference, if any, between the adjusted commission so
determined and the provisional commission of 20.0% of
written premiums for the period shall be paid by the debtor
to the creditor.
6.
D. The loss ratio for each commission adjustment
period shall be determined by dividing losses
(including losses in Excess of Policy Limits and Extra
Contractual Obligations) and allocated loss adjustment
expenses, incurred during the period by premiums earned
during the period.
E. The period from the inception hereof through
December 31, 1997 shall constitute the first commission
adjustment period hereunder. Each subsequent 12 month
period shall constitute a further commission adjustment
period hereunder. Adjustment period, the period from
the end of the last complete commission adjustment period,
or the inception of this Treaty if cancelled during the
first commission adjustment period, to the date of
cancellation, shall constitute a commission adjustment
period hereunder.
F. Notwithstanding the provisions of Paragraph E. of
this Article, interim commission adjustment calculations
shall be made December 31, 1997 and each period and
annually each December 31 after the close of each period
until all losses occurring during the period have been
settled and all premiums earned during the period have been
adjusted.
ARTICLE XIII
REPORTS AND ACCOUNTS
1. Within 30 days after the close of each calendar month,
the Reassured shall furnish the Reinsurer with the following
reports:
A. Written premiums ceded during the month being
reported, for all business covered hereunder.
B. Losses (including Losses in Excess of Policy
Limits and Extra Contractual Obligations) and loss
adjustment expenses paid, and salvage amounts collected,
during the month, by year or occurrence.
C. Reserves for outstanding losses (including Losses
in Excess of Policy limits and Extra Contractual
Obligations) and loss adjustment expenses at the end of the
month, by year of occurrence.
2. In addition to the reports in Paragraph 1. of this
Article, after the close of each calendar quarter the
Reassured shall furnish the Reinsurer with a report of
unearned premiums as of the end of the quarter being
reported.
3. Within 30 days after the close of each calendar month,
the Reassured shall furnish the Reinsurer with an account
showing the written premiums ceded during the month, less
the commission allowed hereunder on premiums ceded, and less
Reinsurer's share of the losses (including Losses in Excess
of Policy Limits and Extra Contractual Obligations) and
loss adjustment expenses during the month being reported.
The balance due shall be payable by the debtor party within
30 days of the submission of the monthly account.
7.
ARTICLE XIV
ERRORS AND OMISSIONS
1. Inadvertent delays, errors or omissions made in
connection with this Treaty shall not relieve either party
from any liability which would have attached had such delay,
error or omission not occurred, provided always that such
delay, error or omission shall be rectified as soon as
possible after discovery by the Reassured's Home Office.
ARTICLE XV
CURRENCY
1. The net liability of the Reassured and the Reinsurer's
cession amount shall be considered in terms of United States
currency and all premiums and losses hereunder shall be
payable in United States currency.
ARTICLE XVI
TAXES
1. In consideration of the terms under which this Treaty
is issued, the Reassured undertakes not to claim any
deduction of the premium hereon when making Canadian Tax
returns or when making tax returns, other than Income or
Profits Tax returns, to any State or Territory of the United
States of America or to the District of Columbia.
ARTICLE XVII
ACCESS TO REASSURED'S RECORDS
1. Upon reasonable notice being given to the Reassured,
the Reinsurer or their designed representative shall have
free access at any reasonable time during the term of this
Treaty and subsequent to its termination to all records of
the Reassured which pertain in any way to this reinsurance.
ARTICLE XVIII
SERVICE OF SUIT
(Paragraphs 1. and 2. of this Clause only apply to a
Reinsurer domiciled outside of the United States and/or
unauthorized in the State of New York.
1. 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
Reassured, 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 Reinsurer's rights to commence an
action in any Court of competent jurisdiction in the United
States, to remove and 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 Mendes and Mount, 3
Park Avenue, New York, N.Y. 10016, and that in any suit
instituted against it upon this Treaty, the Reinsurer will
abide by the final decision of such Court or of any
Appellate Court in the event of an appeal.
8.
2. The above-named are authorized and directed to accept
service of process on behalf of the Reinsurer in any such
suite and/or upon the request of the Reassured to give a
written undertaking to the Reassured that they will enter a
general appearance upon the Reinsuer's behalf in the event
such a suit shall be instituted.
3. Further, pursuant to any statute of any state,
territory or district of the United States which makes
provision therefore, the Reinsurer hereon hereby designate
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 their 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 Reassured or any beneficiary hereunder arising out of
this Treaty of reinsurance, and hereby designate the above-
named as the person to whom the said officer is authorized
to mail such process or a true copy thereof.
ARTICLE XIX
ARBITRATION
1. Any dispute or other matter in question between the
Reassured and the Reinsurer arising out of or relating to
the information, interpretation, performance, or breach of
this Treaty, whether such dispute arises before or after
termination of this Treaty, shall be settled by arbitration.
Arbitration shall be initiated by the delivery of a written
notice of demand for arbitration by one party to the other
within a reasonable time after the dispute has arisen.
2. Each party shall appoint an individual as arbitrator
and the two so appointed shall then appoint a third
arbitrator. If either party refuses or neglects to appoint
an arbitrator within sixty days, the other party may appoint
the second arbitrator. If the two arbitrators do not agree
on a third arbitrator within sixty days of their
appointment, each of the arbitrators shall nominate three
individuals. Each arbitrator shall then decline two of the
nominations presented by the other arbitrator. The third
arbitrator shall then be chosen from the remaining two
nominations by drawing lots. The arbitrators shall be
active or retired officers of insurance or reinsurance
companies or Lloyd's London Underwriters; the arbitrators
shall not have a personal or financial interest in the
result of the arbitration.
3. The arbitration hearings shall be held in New York, New
York or such other place as may be mutually agreed. Each
party shall submit its case to the arbitrators within sixty
days of the selection of the third arbitrator or within such
longer period as may be agreed b the arbitrators. The
arbitrators shall not be obliged to follow judicial
formalities or the rules of evidence except to the extent
required by governing law, that is, the state law of the
situs of the arbitration as herein agreed; they shall
make their decisions according to
9.
the practice of the reinsurance business. The decision
rendered by a majority of the arbitrators shall be final and
binding on both parties. Such decision shall be a condition
precedent to any right of legal action arising out of the
arbitrated dispute which either party may have against the
other. Judgment upon the award rendered may be entered in
any court having jurisdiction thereof.
4. Each party shall pay the fee and expenses of its own
arbitrator and one-half of the fee and expenses of the third
arbitrator. All other expenses of the arbitration shall be
equally divided between the parties.
5. Except as provided above, arbitration shall be based,
insofar as applicable, upon the procedures of the American
Arbitration Association.
ARTICLE XX
INSOLVENCY
1. In the event of the insolvency of the Reassured and the
appointment of a liquidator, receiver, conservator or
statutory successor, this reinsurance shall be payable on
the basis of the liability of the Reassured as a result of
claims allowed against the Reassured by any court of
competent jurisdiction or any liquidator, receiver,
conservator or statutory successor having authority to allow
such claims, without diminution because of such insolvency
or because such liquidator, receiver, conservator or
statutory successor has failed to pay all or a portion of
any claims.
2. Payments by the Reinsurer as above set forth shall be
made directly to the Reassured or to its liquidator,
receiver, conservator or statutory successor, except as
provided by subsection (a) of section 4118 of the New York
Insurance Laws or except (a) where this Treaty specifies
another payee in the event of the insolvency of the
Reassured, and (b) the Reinsurer with the consent of the
direct insures, and, as respects New York risks, the
approval of the Superintendent of the New York Insurance
Department has assumed such policy obligations of the
Reassured as its direct obligations to the payees under such
policies, in substitution for the obligations of the
Reassured to such payees.
3. In the event of the insolvency of the Reassured, the
liquidator, receiver, conservator or statutory successor of
the Reassured shall give written notice to the Reinsurer of
the pendency of a claim against the insolvent Reassured on
the policy or policies reinsured within a reasonable time
after 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
which it may deem available to the Reassured or its
liquidator, receiver, or statutory successor. The expense
thus incurred by the Reinsurer shall be chargeable subject
to court approval against the insolvent Reassured as part of
the expense of liquidation to the extent of a proportionate
share of the benefit which may accrue to the Reassured
solely as a result of the defense undertaken by the
Reinsurer.
10.
ARTICLE XXI
RESERVES
1. If a jurisdiction of the United States will not permit
the Reassured, in the statements required to be filed with
its regulatory authority(ies), to receive full credit as
admitted reinsurance for the Reinsurer's share of
obligations, the Reassured shall forward to the Reinsurer a
statement of the Reinsurer's share of such obligations.
Upon receipt of such statement the Reinsurer shall promptly
apply for, and provide the Reassured with, a "clean,"
unconditional and irrevocable Letter of Credit, in the
amount specified in the statement submitted, with terms and
bank acceptable to the regulatory authority(ies) having
jurisdiction over the Reassured.
2. "Obligations," as used in this Article, shall mean the
sum of losses paid and allocated loss adjustment expenses
paid by the Reassured but not yet recovered from the
Reinsured, plus reserves for reported losses, allocated loss
adjustment expenses and losses incurred but not reported.
3. The Reinsurer hereby agrees that the Letter of Credit
will provide for automatic extension of the Letter of Credit
without amendment for one year from the date of expiration
of said Letter or any future expiration date unless
thirty(30) days prior to any expiration the issuing bank
shall notify the Reassured by registered mail that the
issuing bank elects not to consider the Letter of Credit
renewed for any additional period. An issuing bank, not a
"qualified Bank" as defined by Regulation No. 133
promulgated by the Insurance Department of the State of New
York, shall provide sixty(60) days notice to the Reassured
prior to any expiration.
4. Notwithstanding any other provision of this Treaty, the
Reassured or any successor by operation of law of the
Reassured including, without limitation, any liquidator,
rehabilitator, receiver or conservator of the Reassured may
draw upon such credit, without diminution because of the
insolvency of any party hereto, at any time and undertakes
to use and apply such credit for one or more of the
following purposes only:
A. To pay the Reinsurer's share or to reimburse the
Reassured for the Reinsurer's share of any
obligations, as stipulated in the statement
submitted by the Reassured to the Reinsurer, which is due to
the Reassured and not otherwise paid by the Reinsurer.
B. In the event the Reassured has received effective
notice of non-renewal of the Letter of Credit
and the Reinsurer's liability remains unliquidated and
undischarged thirty(30) days prior to the expiry date of the
Letter of Credit, to withdraw the balance of
the Letter of Credit and place such sums in an
interest bearing trust account to secure the continuing
liabilities of the Reinsurer under this Treaty until a
renewal Letter of Credit acceptable
11.
to the regulatory authority(ies) having jurisdiction
over the Reassured, or a substitute in lieu thereof
acceptable to the regulatory authority(ies) having
jurisdiction over the Reassured, has been received by the
Reassured. The Reassured shall provide to the
Reinsurer payment of any interest thereon
accruing from such account.
C. To make refund of any sum which is in excess f the
actual amount required for Sections A. and B. of
this paragraph.
5. At annual intervals or more frequently as determined by
the Reassured, but never more frequently than quarterly, the
Reassured shall prepare a specific statement, for the sole
purpose of amending the Letter of Credit, of the Reinsurer's
share of any obligations. If the statement shows that the
Reinsurer's share of obligations exceeds 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 Reassured of an amendment of the
Letter of Credit increasing the amount of credit by the
amount of such difference. If the statement shows, however,
that the Reinsurer's share of obligations is less than the
balance of credit as of the statement date, the Reassured
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.
6. The bank shall have no responsibility whatsoever in
connection with the propriety of withdrawals made by the
Reassured or the disposition of funds withdrawn, except to
assure that withdrawals are made only upon the order of
properly authorized representatives of the Reassured. The
Reassured shall incur no obligation to the bank in acting
upon the credit, other than as appears in the express terms
thereof.,
POOLS EXCLUSION CLAUSE
SECTION A
It is agreed that the following is excluded hereunder:
(1) All business derived directly or indirectly from any
Pool, Association or Syndicate which maintains its own
reinsurance facilities.
(2) Any Pool or Scheme, (whether voluntary or mandatory)
formed after 1st March, 1968 for the purpose of insuring
property whether on a country-wide basis or in respect of
designated areas. This exclusion shall not apply to so-
called Automobile Insurance Plans or other Pools formed to
provide coverage for Automobile Physical Damage.
It is agreed, where this clause is attached to Catastrophe
Reinsurance Agreements, the following, as respects all
perils otherwise protected hereunder, shall not be excluded
from the protection afforded by the said Catastrophe
Reinsurance Agreement:
(a) All Fair Plan business.
(b) Liability accruing to the Reassured from its
participation in the following "Coastal
Pools".
Alabama Insurance Underwriting Association
Florida Windstorm Underwriting Association
Louisiana Insurance Underwriting Association
Mississippi Insurance Underwriting Association
North Carolina Insurance Underwriting Association
South Carolina Windstorm and Hail Underwriting
Association
Texas Catastrophe Property Insurance Association
However this reinsurance does not include any increase in
liability resulting from:
(i) The inability of any other participant in such
"Coastal Pool" or Fair Plan to meet its
liability.
(ii) Any claim against such "Coastal Pool" or Fair
Plan, or any Participant therein,
including the Reassured, whether by way of subrogation or
otherwise, brought by or on behalf of any Insolvency Fund
(as defined in the Insolvency Funds
Exclusion Clause incorporated in this agreement).
SECTION B
It is agreed that business written by the Reassured for the
same perils, which is known at the time to be insured by, or
in excess of underlying amounts placed in the following
Pools, Associations or Syndicates, whether by way of
insurance or reinsurance, is excluded hereunder.
Industrial Risk Insurers
Associated Factory Mutuals
Improved Risk Mutuals
Any Pool, Association or Syndicate formed for, the
purpose of writing oil, gas or petro- chemical
plants and/or oil or gas drilling rigs.
SECTION B (Cont'd)
United States Aircraft Insurance Group
Canadian Aircraft Insurance Group
Associated Aviation Underwriters
American Aviation Underwriters
Section B does not apply:
(1) Where the Total Insured Value over all interests of the
risk in question is less than $250,000,000.
(2) to interests traditionally underwritten as Inland
Marine or Stock and/or Contents written on a Blanket
Basis.
(3) to Contingent Business Interruption, except when the
Reassured is aware that the key location is known at the
time to be insured in any Pool, Association or Syndicate
named above.
(4) to risks as follows:
offices, hotels, apartments, hospitals, educational
establishments, public utilities (other than railroad
schedules) and builder's risks on the above classes.
CENTURION INSURANCE COMPANY
50% QUOTA SHARE REINSURANCE TREATY
EFFECTIVE JANUARY 1, 1997
(hereinafter call the "Reassured")
by
EMPIRE INSURANCE COMPANY
NEW YORK, NEW YORK
(hereinafter called the "Reinsurer")
Under the terms of this Treaty the above
Reinsurer agrees to assume a 50% share of the
liability described in the attached Treaty and,
as consideration, the Reinsurer shall receive a
50% share of the premium named therein.
Signed in New York, New York this 27th day of March, 1997
EMPIRE INSURANCE COMPANY
By: FRANCIS M. COLALUCCI
Title: SENIOR VICE PRESIDENT AND CFO
and in New York, New York, this 27th day of March, 1997
CENTURION INSURANCE COMPANY
By: BRUCE OSTERMAN
Title: VICE PRESIDENT AND CONTROLLER
U.S.A.
Nuclear Incident Exclusion Clause - Physical Damage -
Reinsurance
1.This reinsurance does not cover any loss or liability
accruing to the Reassured, directly or indirectly and
whether as Insurer or Reinsurer, from any Pool of
Insurers or Reinsurers formed for the purpose of covering
Atomic or Nuclear Energy risks.
2.Without in any way restricting the operation of paragraph
(1) of this Clause, this reinsurance does not cover any
loss or liability accruing to the Reassured, directly or
indirectly and whether as Insurer or Reinsurer, from any
insurance against Physical Damage (including business
interruption or consequential loss arising out of such
Physical Damage) to:
I. Nuclear reactor power plants including all
auxiliary property on the site, or
II. Any other nuclear reactor installation,
including laboratories handling radioactive materials
in connection with reactor installations, and "critical
facilities" as such, or
III. Installations for fabricating complete fuel
elements or for processing substantial quantities
of "special nuclear material," and for reprocessing,
salvaging, chemically separating, storing
or disposing of "spent" nuclear fuel or waste materials, or
IV. Installations other than those listed in
paragraph (2) III above using substantial quantities of
radioactive isotopes or other products of nuclear fission.
3.Without in any way restricting the operations of
paragraphs (1) and (2) hereof, this reinsurance does not
cover any loss or liability by radioactive contamination
accruing to the Reassured, directly or indirectly, and
whether as Insurer or Reinsurer, from any insurance on
property which is on the same site as a nuclear reactor
power plant or other nuclear installation and which
normally would be insured therewith except that this
paragraph (3) shall not operate.
(a) where Reassured does not have knowledge of
such nuclear reactor power plant or nuclear
installation, or
(b) where said insurance contains a provision
excluding coverage for damage to property caused by
or resulting from radioactive contamination, however caused.
However on and after 1st January 1960
this sub-paragraph (b) shall only apply provided the said
radioactive contami- nation exclusion
provision has been approved by the Governmental Authority
having jurisdiction thereof.
4.Without in any way restricting the operations of
paragraphs (1), (2) and (3) hereof, this reinsurance does
not cover any loss or liability by radioactive
contamination accruing to the Reassured, directly or
indirectly, and whether as Insurer or Reinsurer, when
such radioactive contamination is a name hazard
specifically insured against.
5.It is understood and agreed that this Clause shall not
extend to risks using radioactive isotopes in any form
where the nuclear exposure is not considered by the
Reassured to be the primary hazard.
6.The term "special nuclear material" shall have the
meaning given it in the Atomic Energy Act of 1954 or by
any law amendatory thereof.
7.Reassured to be sole judge of what constitutes:
Nuclear Incident Exclusion Clause - Physical Damage -
Reinsurance (CONT'D)
(a) substantial quantities, and
(b) the extent of installation, plant or site.
NOTE - Without in any way restricting the operation of
paragraph (1) hereof, it is understood and agreed that
(a) all policies issued by the Reassured on or before
31st December 1957 shall be free from the application
of the other provisions of this Clause until expiry
date or 31st December 1960 whichever first occurs
whereupon all the provisions of this Clause shall apply.
(b) with respect to any risk located in Canada policies
issued by the Reassured on or before 31st December
1958 shall be free from the application of the other
provisions of this Clause until expiry date 31st
December 1960 whichever first occurs whereupon all the
provisions of this Clause shall apply.
Nuclear Incident Exclusion Clause - LIABILITY - Reinsurance
1.This reinsurance does not cover any loss or liability
accruing to the Reassured as a member of, or subscriber
to, any association of insurers or reinsurers formed for
the purpose of covering nuclear energy risks or as a
direct or indirect reinsurer of any such member,
subscriber or association.
2.Without in any way restricting the operation of paragraph
1 of this Clause it is understood and agreed that for all
purposes of this reinsurance all the original policies of
the Reassured (new, renewal and replacement) of the
classes specified in Clause II of this paragraph 2 from
the time specified in Clause III in this paragraph 2
shall be deemed to include the following provision
(specified as the Limited Exclusion Provision):
Limited Exclusion Provision.*
{injury,
sickness,
{disease, death or
{destruction
I. It is agreed that the policy does not apply
under any liability coverage, to {bodily injury or
property damage with respect to which an insurer under
the policy is also an insured under a nuclear energy
liability policy issued by Nuclear Energy Liability
Insurance Association, Mutual Atomic Energy
Liability Underwriters or Nuclear Insurance Association
of Canada, or would be an insured under any such policy
but for its termination upon exhaustion of its limit of
liability.
II. Family Automobile Policies (liability only), Special
Automobile Policies (private passenger automobiles,
liability only), Farmers Comprehensive Personal Liability
Policies (liability only), Comprehensive Personal
Liability Policies (liability only) or policies of a
similar nature; and the liability portion of combination
forms related to the four classes of policies stated
above, such as the Comprehensive Dwelling Policy and
the applicable types of Homeowners Policies.
III. The inception dates and thereafter of all original
policies as described in II above, whether new, renewal
or replacement, being policies which either
(a) become effective on or after 1st May, 1960 or
(b) become effective before that date and contain the
Limited Exclusion Provision set out above;
provided this paragraph 2 shall not be applicable to
Family Automobile Policies, Special Automobile Policies,
or policies or combination policies of a similar nature,
issued by the Reassured on New York risks, until 90 days
following approval of the Limited Exclusion Provision by
the Governmental Authority having jurisdiction thereof.
3.Except for those classes of policies specified in Clause
II of paragraph 2 and without in any way restricting the
operation of paragraph 1 of this Clause, it is understood
and agreed that for all purposes of this reinsurance the
original liability policies of the Reassured (new,
renewal and replacement; affording the following
coverages:
Owners, Landlords and Tenants Liability, Contractual
Liability, Elevator Liability, Owners or (Contractors
(including railroad) Protective Liability, Manufacturers and
Contractors Liability, Product Liability, Professional and
Malpractice Liability, Storekeepers Liability, Garage
Liability, Automobile Liability (including Massachusetts
Motor Vehicle or Garage Liability)
shall be deemed to include, with respect to such
coverages, from the time specified in Clause V of this
paragraph 3, the following provision (specified as the
Broad Exclusion Provision):
Broad Exclusion Provision.*
Nuclear Incident Exclusion Clause - LIABILITY - Reinsurance
(CONT'D)
It is agreed that the policy does not apply:
{injury, sickness,
disease, death or destruction
I. Under any Liability Coverage, to {bodily injury
or property damage
(a) with respect to which an insured under
the policy is also an insured under a nuclear
energy liability policy issued by Nuclear Energy Liability
Insurance Association. Mutual Atomic Energy
Liability Underwriters or Nuclear Insurance Association of
Canada, or would be an insured under any such policy but for
its termination upon exhaustion of its limit
of liability; or
(b) resulting from the hazardous properties
of nuclear material and with respect to which
(1) any person or organization is required to maintain
financial protection pursuant to the Atomic
Energy Act of 1954, or any law amendatory thereof, or (2)
the insured is, or had this policy not been
issued would be entitled to indemnity from the United States
of America, or any agency thereof, under any
agreement entered into by the United States of
America, or any agency thereof, with any person or
organization.
II. Under any Medical Payments Coverage, or under any
Supplementary Payments Provision relating to
{immediate medical or surgical relief,
{first aid
{bodily injury, sickness,
disease or death
to expenses incurred with respect to {bodily
injury resulting from the
hazardous properties of nuclear material and arising out of
the operation of a nuclear facility by any
person or organization.
{injury, sickness, disease,
death or destruction
III. Under any Liability Coverage, to {bodily injury
or property damage resulting from the
hazardous properties of nuclear material, if
(a) the nuclear material (1) is at any
nuclear facility owned by, or operated by or on behalf
of, an insured or (2) has been discharged or dispersed
therefrom;
(b) the nuclear material is contained in
spent fuel or waste at any time possessed, handled,
used, processed, stored, transported or disposed of by or on
behalf of an insured; or
{injury, sickness, disease, death or
destruction
(c) the {bodily injury or property damage
arises out of the furnishing by an insured of
services, materials, parts or equipment in connection with
planning, construction,
maintenance, operation or use of any nuclear facility, but
if such facility is located within the United
States of America, its territories, or possessions or
Canada,
{injury to or destruction
of property of such nuclear
{facility.
this exclusion (c) applies only to {property
damage to such nuclear facility and any
property thereat.
IV. As used in this endorsement:
"hazardous properties" include radioactive,
toxic or explosive properties; "nuclear material"
means source material, special nuclear material or by
product material; "source material",
"special nuclear material", and "by product material" have
the meanings given them in the Atomic Energy
Act of 1954 or in any law amendatory thereof; "spent fuel"
means any fuel element or fuel component,
solid or liquid, which has been used or exposed to radiation
in a nuclear reactor; "waste" means any
waste material (1) containing by product material other
Nuclear Incident Exclusion Clause - LIABILITY - Reinsurance
(CONT'D)
than tailings or wastes produced by the
extraction or concentration of uranium or thorium
from any ore processed primarily for its source material
content, and (2) resulting from the
operation by any person or organization of any nuclear
facility included under the first two
paragraphs of the definition of nuclear facility; "nuclear
facility" means
(a) any nuclear reactor,
(b) any equipment or device designed or used for
(1) separating the isotopes of uranium or
plutonium, (2) processing or utilizing spent fuel, or (3)
handling, processing or packaging waste.
(c) any equipment or device used for the
processing, fabricating or alloying of special
nuclear material if any time the total amount of such
material in the custody of the insured at the
premises where such equipment or device is located consists
of or contains more than 25 grams of plutonium or
uranium 233 or any combination thereof, or more
than 250 grams of uranium 235.
(d) any structure, basin, excavation, premises or
place prepared or used for the storage or
disposal of waste,
and includes the site on which any of the foregoing
is located, all operations conducted on such site and
all premises used for such operations; "nuclear
reactor" means any apparatus designed or used to
sustain nuclear fission in a self-supporting chain
reaction or to contain a critical mass of fissionable
material;
{With respect to injury to or destruction of
property, the word "injury" or "destruction"
{"property damage" includes all forms of
radioactive contamination of property,
{includes all forms of radioactive contamination
of property.
V. The inception dates and thereafter of all original
policies affording coverages specified in
this paragraph 3, whether new, renewal or replacement, being
policies which become effective on or after
1st May, 1960, provided this paragraph 3 shall not be
applicable to
(i) Garage and Automobile Policies issued by
the Reassured on New York risks, or
(ii) statutory liability insurance required
under Chapter 90, General Laws of Massachusetts,
until 90 days following approval of the Broad
Exclusion Provision by the Governmental
Authority having jurisdiction thereof.
4.Without in any way restricting the operation of paragraph
1 of this Clause, it is understood and agreed that
paragraphs 2 and 3 above are not applicable to original
liability policies of the Reassured in Canada and that
with respect to such policies this Clause shall be deemed
to include the Nuclear Energy Liability Exclusion
Provisions adopted by the Canadian Underwriters'
Association or the Independent Insurance Conference of
Canada.
*NOTE. The words printed in italics in the Limited
Exclusion Provision and in the Broad Exclusion Provision
shall apply only in relation to original liability
policies which include a Limited Exclusion Provision or a
Broad Exclusion Provision containing those words.