EMPLOYERS MUTUAL COMPANIES
REINSURANCE POOLING AGREEMENT
BETWEEN
EMPLOYERS MUTUAL CASUALTY COMPANY
AND
CERTAIN OF ITS AFFILIATED COMPANIES
REWRITTEN EFFECTIVE JANUARY 1, 1987
111
REINSURANCE POOLING AGREEMENT
This Agreement made by and between Employers Mutual Casualty Company and
certain of its affiliated or subsidiary companies such as are signatory hereto
by means of exhibits setting forth the interests and liabilities of the
parties, attached hereto and made a part of this Agreement. Employers Mutual
Casualty Company is hereinafter referred to as "EMC", and the other companies
signatory hereto are hereinafter referred to as the "Affiliated Companies" or
as the "Affiliated Company", as the context requires.
EMC and each Affiliated Company signatory to the Pooling Agreement agree
to honor the terms set forth herein as if this Agreement were solely between
EMC and each such Affiliated Company. Balances payable to or recoverable from
EMC and any such Affiliated Company shall not serve to offset any balances
payable to or recoverable from any other Affiliated Company signatory to this
Agreement. Reports and remittances between EMC and each Affiliated Company
shall be in sufficient detail to identify the individual premium and loss
obligation of each party to the other.
ARTICLE I
---------
The Companies are engaged in the insurance business and maintain a mutual
business relationship having certain incidents of common management, and desire
to bring about for each other added economies of operation, uniform underwriting
results, diversification as respects the classes of insurance business written,
and maximization of capacity. To accomplish the aforesaid, the Companies do by
means of this Agreement, pool all of their insurance business then in force as
of 12:01 A.M. of the date signatory hereto, and thereafter to share in the
fortunes of their pooled insurance business.
ARTICLE II
----------
EMC hereby reinsures and the Affiliated Company hereby cedes and transfers
to EMC all liabilities incurred under or in connections with all contracts and
policies of insurance issued by the Affiliated Company outstanding and in force
as of 12:01 A.M. of the date signatory hereto, or thereafter issued by it.
Such liabilities shall include the Affiliated Company's reserves for unearned
premiums, outstanding losses and loss expenses (including unreported losses)
and all other underwriting and administrative expenses as evidenced by the
Affiliated Company's books and records, but shall not include inter-company
balances, liabilities for Corporate Taxes including Federal or State Income
Taxes, or liabilities incurred in connection with their respective investment
transactions.
ARTICLE III
-----------
The Affiliated Company hereby assigns and transfers to EMC all right,
title and interest in and to reinsurance outstanding and in force with respect
to the liabilities reinsured by EMC under Article II hereof.
ARTICLE IV
----------
The Affiliated Company assigns and transfers to EMC amounts equal to the
aggregate of all of its liabilities reinsured by EMC under Article II hereof,
less a commission allowance equal to the prepaid expenses of the Affiliated
ratio on a trade basis. Prepaid expenses is defined as those expenses records
in column 2, part 4,
112
of the Underwriting and Expense Exhibit of the Affiliated Company's convention
statement. The trade combined ratio is the ratio of loss and loss adjustment
expense to earned premium, plus the ratio of underwriting expenses to premiums
written.
ARTICLE V
---------
The Affiliated Company hereby reinsures, and EMC hereby cedes and
transfers to the Affiliated Company a portion of its net liabilities under all
contracts and policies of insurance (including those reinsured by EMC under
Article II hereof) on which EMC is subject to liability and which are
outstanding and in force as of 12:01 A.M. of the date signatory hereto, or are
issued thereafter, in accordance with the exhibit attached hereto to which the
Affiliated Company is a signatory party. Such liabilities shall include
reserves for unearned premiums, outstanding losses and loss expenses (including
unreported losses) and all other underwriting and administrative expenses, but
shall not include inter-company balances, liabilities for Corporate Taxes
including Federal or State Income Taxes, or liabilities in connection with
investment transactions.
ARTICLE VI
----------
EMC hereby assigns and transfers to the Affiliated Company amounts equal
to the aggregate of all liabilities of EMC reinsured by the Affiliated Company
under contracts and policies of insurance which are outstanding and in force as
of 12:01 A.M. of the date signatory hereto under Article V hereof, less a
commission allowance equal to the prepaid expenses of EMC but not in excess of
40 percent of EMC's combined ratio on a trade basis. Prepaid expenses is
defined as those expenses recorded in column 2, part 4, of the Underwriting and
Expense Exhibit of EMC's convention statement. The trade combined ratio is the
ratio of loss and loss adjustment expense to earned premium, plus the ratio of
underwriting expenses to premiums written.
ARTICLE VII
-----------
EMC agrees to pay to the Affiliated Company it respective participation of
all premiums written by the companies after first deducting premiums on all
reinsurance ceded to reinsurers (other than the parties hereto). Similarly, it
is further agreed that all losses, loss expense and other underwriting and
administrative expenses (with the exceptions noted in Articles II and V hereof)
of the companies, less all losses and expense recovered and recoverable under
reinsurance ceded to reinsurers (other than the parties hereto), shall be pro-
rated between the parties on the basis of their respective participations as
reflected in the aforesaid exhibit.
ARTICLE VIII
------------
The obligation of the companies under this Agreement to exchange
reinsurance between themselves may be offset by reciprocal obligation so that
the net amount only shall be required to be transferred, except no offset shall
be valid under circumstances prohibited by Section 7472, New York Insurance
Laws. An accounting on all transactions shall be rendered quarterly, and the
settling of balances shall be made within 30 days after the rendering of the
quarterly reports. Except as otherwise required by the context of this
Agreement, the amount of all payments between the companies under this
statements of the companies. Notwithstanding anything herein contained, this
Agreement shall not apply to the investment operations of the companies.
113
ARTICLE IX
----------
The conditions of reinsurance hereunder shall in all cases be identical
with the conditions of the original insurance or as changed during the term of
insurance.
ARTICLE X
---------
This Agreement is a continuing one and is unlimited as to duration but may
be terminated upon mutual consent or by 30 day prior written notice by either
party.
ARTICLE XI
----------
Each of the companies hereto, as the assuming insurer, hereby agrees that
all reinsurance made, ceded, renewed or otherwise becoming effective under this
Agreement shall be payable by the assuming insurer on the basis of the
liability of the ceding insurer under the policy or contract reinsured without
diminution because of insolvency of the ceding insurer; provided that such
reinsurance shall be payable directly to the ceding insurer or to its
liquidator, receiver or other statutory successor,except as provided by Section
4118 of New York Insurance Law or except (a) where the contract specifically
provides another payee for such reinsurance in the event of the insolvency of
the ceding insurer and (b) where the assuming insurer, with consent of the
direct insured or insureds, has assumed such policy obligations of the ceding
insurer as direct obligations of the assuming insurer to the payees under such
policies and in substitution for the obligations of the ceding insurer to such
payee; and further provided that the liquidator, receiver or statutory
successor of the ceding insurer shall give written notice of the pendency of
any claim against the insolvent ceding insurer on the policy or contract
reinsured within a reasonable time after such claim; and the assuming insurer
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 ceding insurer or it liquidator, receiver or statutory
successor, the expense thus incurred by the assuming insurer to be chargeable,
subject to court approval against the insolvent ceding insurer as part of the
expense of liquidation to the extent of proportionate share of the benefit
which may accrue to the ceding insurer solely as a result of the defense
undertaken by the assuming insurer.
ARTICLE XII
-----------
Each party shall allow the other party to inspect, at reasonable times,
the records of the Company relevant to the business reinsured under this
Agreement, including files concerning claims, losses, or legal proceedings
which involve or are likely to involve the other party.
ARTICLE XIII
------------
A. As a condition precedent to any right of action hereunder, any dispute
arising out of this Agreement shall be submitted to the decision of a
board of arbitration composed of two arbitrators and an umpire, meeting
in Des Moines, Iowa, unless otherwise agreed.
114
B. The memebers of the board of arbitration shall be active or retired
disinterested officials of insurance or reinsurance companies. Each
party shall appoint its arbitrator and the two arbitrators shall choose
an umpire before instituting the hearing. If the respondent fails to
appoint its arbitrator within four weeks
after being requested to do
so by the claimant, the latter shall also appoint the second arbitrator.
If the two arbitrators fail to agree upon the appointment of an umpire
within four weeks after their nominations, each of them shall name three,
of whom the other shall decline two and the decision shall be made by
drawing lots.
C. The claimant shall submit its initial brief within 20 days from
appointment of the umpire. The respondent shall submit its brief within
20 days after receipt of the claimant's brief and the claimant may submit
a reply brief within 10 days after receipt of the respondent's brief.
D. The board shall make its decision with regard to the custom and usage of
the insurance and reinsurance business. The board shall issue its
decision in writing based upon a hearing in which evidence may be
introduced without following strict rules of evidence but in which cross
examination and rebuttal shall be allowed. The board shall make its
decision within 60 days following the termination of the hearings unless
the parties consent to an extension. The majority decision of the board
shall be final and binding upon all parties to the proceeding. Judgment
may be entered upon the award of the board in any court having
jurisdiction thereof.
E. Each party shall bear the expense of its own arbitrator and shall jointly
and equally bear with the other party the expense of the umpire. The
remaining costs of the arbitration proceedings shall be allocated by the
board.
ARTICLE XIV
-----------
By execution of this Agreement, the parties hereto simultaneously
terminate any and all reinsurance agreements by and between them heretofore
existing, upon the understanding that this Agreement shall supersede and exist
in substitution for any such prior agreements.
Executed by the parties hereto the day and year as reflected in the
exhibit attached hereto.
115
INTEREST AND LIABILITIES EXHIBIT #II
TO EMPLOYERS MUTUAL COMPANIES
REINSURANCE POOLING AGREEMENT
In consideration of the covenants and agreements as reflected in the
Reinsurance Pooling Agreement to which this exhibit is attached, by and between
EMC and the Affiliated Company which is signatory to this exhibit, EMC hereby
cedes and transfers to the Affiliated Company, and the Affiliated Company
hereby accepts reinsurance thereon, 3% of EMC's net liabilities, pursuant to
Article V, effective January 1, 1987.
The Affiliated Companies signatory to this Agreement and their assumed
portions of the net liabilities of EMC are, as of the date of this Addendum, as
follows:
American Liberty Insurance Company 5 %
Dakota Fire Insurance Company 3 %
EMCASCO Insurance Company 8 %
Illinois EMCASCO Insurance Company 6 %
Union Mutual Insurance Company of
Providence 2.5%
-----
24.5%
EMC's Net Retained Portions of 75.5%
its Net Liabilities is -----
100.0%
Executed by the parties hereto this 25th day of November, 1986.
Employers Mutual Casualty Company
By:/s/Richard E. Haskins
------------------------------
Dakota Fire Insurance Company
By:/s/Robb B. Kelley
--------------------------------
116
INTEREST AND LIABILITIES EXHIBIT # II
TO EMPLOYERS MUTUAL COMPANIES
REINSURANCE POOLING AGREEMENT
In consideration of the covenants and agreements as reflected in the
Reinsurance Pooling Agreement to which this exhibit is attached, by and
between EMC and the Affiliated Company which is signatory to this exhibit, EMC
hereby cedes and transfers to the Affiliated Company,and the Affiliated Company
hereby accepts reinsurance thereon, 5% of EMC's net liabilities, pursuant to
Article V, effective January 1, 1992.
The Affiliated Companies signatory to this Agreement and their assumed
portions of the net liabilities of EMC are, as of the effective date of this
Amendment, as follows:
American Liberty Insurance Company 5 %
Dakota Fire Insurance Company 5 %
EMCASCO Insurance Company 9 %
Illinois EMCASCO Insurance Company 8 %
Union Mutual Insurance Company 2.5%
of Providence 2.5%
-----
29.5%
EMC's Net Retained Portions of 70.5%
its Net Liabilities is ------
100.0%
Executed by the parties hereto this 20th day of December, 1991.
Employers Mutual Casualty Company
By:/s/Richard E. Haskins
------------------------------
Dakota Fire Insurance Company
By:/s/Bruce G. Kelley
------------------------------
117
ENDORSEMENT NO. I
TO
REINSURANCE POOLING AGREEMENT BETWEEN
DAKOTA FIRE INSURANCE CO. AND EMPLOYERS MUTUAL CASUALTY COMPANY
Whereby Dakota Fire Insurance Company does not desire to become licensed
in the State of Iowa which disallows credits taken by Employers Mutual Casualty
Company in their financial statements for unearned premium reserve and loss
reserve for reinsurance ceded to Dakota Fire Insurance Company.
In consideration of continuing with a reinsurance program between the
companies, Dakota Fire Insurance Company does place the Bond and Corporate Note
portion of their Custodial Account Number 1929009 at the Bankers Trust Company,
Des Moines, Iowa, under the control of Employers Mutual Casualty Company. The
market value of the account exceeds $9,000,000 and that amount or a greater
amount will be maintained there during the life of this Agreement.
It is further agreed that there will be no bonds cashed by Employers
Mutual casualty Company for their benefit unless Dakota Fire Insurance Company
defaults on the reinsurance contract.
This contract may be terminated by either party at such a time as may be
mutually agreeable.
Executed by the parties hereto 25th Day of November 1986.
DAKOTA FIRE INSURANCE COMPANY
By:/s/Robb B. Kelley
--------------------------
EMPLOYERS MUTUAL CASUALTY COMPANY
By:/s/Richard E. Haskins
--------------------------
118
ENDORSEMENT NO. II
TO
REINSURANCE POOLING AGREEMENT BETWEEN DAKOTA FIRE AND
EMPLOYERS MUTUAL CASUALTY COMPANY
Endorsement No. I is hereby deleted from this Agreement.
Executed by the Parties this 4th day of March, 1993.
Employers Mutual Casualty Company
By:/s/Fred A. Schiek
------------------------------
Dakota Fire Insurance Company
By:/s/Bruce G. Kelley
------------------------------
119
INTEREST AND LIABILITIES EXHIBIT #III
TO EMPLOYERS MUTUAL COMPANIES
REINSURANCE POOLING AGREEMENT
In consideration of the covenants and agreements as reflected in the
Reinsurance Pooling Agreement to which this exhibit is attached, by and between
EMC and the Affiliated Company which is signatory to this exhibit, EMC hereby
cedes and transfer to the Affiliated Company, and the Affiliated Company hereby
accepts reinsurance thereon, 6% of EMC's net liabilities, pursuant to Article
V, effective January 1, 1987.
The Affiliated Companies signatory to this Agreement and their assumed
portions of the net liabilities of EMC are, as of the date of this Addendum, as
follows:
American Liberty Insurance Company 5 %
Dakota Fire Insurance Company 3 %
EMCASCO Insurance Company 8 %
Illinois EMCASCO Insurance Company 6 %
Union Mutual Insurance Company 2.5%
of Providence -----
24.5%
EMC's Net Retained Portions of 75.5%
------
100.0%
Executed by the parties hereto this 25th day of November, 1986.
EMPLOYERS MUTUAL CASUALTY COMPANY
By:/s/Richard E. Haskins
------------------------------
ILLINOIS EMCASCO INSURANCE COMPANY
By:/s/Robb B. Kelley
-------------------------------
120
AMENDMENT #I TO
INTEREST AND LIABILITIES EXHIBIT # III
TO EMPLOYERS MUTUAL COMPANIES
REINSURANCE POOLING AGREEMENT
In consideration of the covenants and agreements as reflected in the
Reinsurance Pooling Agreement to which this exhibit is attached, by and between
EMC and the Affiliated Company which is signatory to this exhibit, EMC hereby
cedes and transfers to the Affiliated Company, and the Affiliated Company
hereby accepts reinsurance thereon, 8% of EMC's net liabilities, pursuant to
Article V, effective January 1, 1992.
The Affiliated Companies signatory to this Agreement and their assumed
portions of the net liabilities of EMC are, as of the effective date of this
Amendment, as follows:
American Liberty Insurance Company 5 %
Dakota Fire Insurance Company 5 %
EMCASCO Insurance Company 9 %
Illinois EMCASCO Insurance Company 8 %
Union Mutual Insurance Company 2.5%
of Providence -----
29.5%
EMC's Net Retained Portions of 70.5%
its Net Liabilities is ------
100.0%
Executed by the parties hereto this 20th day of December, 1991.
Employers Mutual Casualty Company
By:/s/Richard E. Haskins
------------------------------
Illinois EMCASCO Insurance Company
By:/s/Bruce G. Kelley
------------------------------
121
INTEREST AND LIABILITIES EXHIBIT #IV
TO EMPLOYERS MUTUAL COMPANIES
REINSURANCE POOLING AGREEMENT
In consideration of the covenants and agreements as reflected in the
Reinsurance Pooling Agreement to which this exhibit is attached, by and between
EMC and the Affiliated Company which is signatory to this exhibit, EMC hereby
cedes and transfers to the Affiliated Company, and the Affiliated Company
hereby accepts reinsurance thereon, 8% of EMC's net liabilities, pursuant to
Article V, effective January 1, 1987. The Affiliated Companies signatory to this
Agreement and their assumed portions of the net liabilities of EMC are, as of
the date of this Addendum, as follows:
American Liberty Insurance Company 5 %
Dakota Fire Insurance Company 3 %
EMCASCO Insurance Company 8 %
Illinois EMCASCO Insurance Company 6 %
Union Mutual Insurance Company 2.5%
of Providence -----
24.5%
EMC's Net Retained Portions of 75.5%
its Net Liabilities is ------
100.0%
Executed by the parties hereto this 25th day of November, 1986.
Employers Mutual Casualty Company
By:/s/Richard E. Haskins
------------------------------
EMCASCO Insurance Company
By:/s/Robb B. Kelley
------------------------------
122
AMENDMENT #I TO
INTEREST AND LIABILITIES EXHIBIT # IV
TO EMPLOYERS MUTUAL COMPANIES
REINSURANCE POOLING AGREEMENT
In consideration of the covenants and agreements as reflected in the
Reinsurance Pooling Agreement to which this exhibit is attached, by and between
EMC and the Affiliated Company which is signatory to this exhibit, EMC hereby
cedes and transfers to the Affiliated Company, and the Affiliated Company
hereby accepts reinsurance thereon, 9% of EMC's net liabilities, pursuant to
Article V, effective January 1, 1992.
The Affiliated Companies signatory to this Agreement and their assumed
portions of the net liabilities of EMC are, as of the effective date of this
Amendment, as follows:
American Liberty Insurance Company 5 %
Dakota Fire Insurance Company 5 %
EMCASCO Insurance Company 9 %
Illinois EMCASCO Insurance Company 8 %
Union Mutual Insurance Company 2.5%
of Providence -----
29.5%
EMC's Net Retained Portions of 70.5%
its Net Liabilities is ------
100.0%
Executed by the parties hereto this 20th day of December, 1991.
Employers Mutual Casualty Company
By:/s/Richard E. Haskins
------------------------------
EMCASCO Insurance Company
By:/s/Bruce G. Kelley
------------------------------
123
ADDENDUM #I TO
EMC INSURANCE COMPANIES
REINSURANCE POOLING AGREEMENT
BETWEEN
EMPLOYERS MUTUAL CASUALTY COMPANY
AND
CERTAIN OF ITS AFFILIATED COMPANIES
This Pooling Agreement is amended by adding Article XV thereto, with effect
from January 1, 1993, as follows:
ARTICLE XV
----------
Notwithstanding the wording of this Agreement as contained
in Articles II through VIII, it is agreed and understood
that the voluntary reinsurance assumed business written by
EMC and heretofore ceded to the Affiliated Companies under
this Pooling Agreement, is hereafter not "contracts and
policies of insurance" as used in this agreement, and is
not business subject to cession and transfer by EMC to the
Affiliated Companies.
On January 1, 1993, EMC and the Affiliated Companies shall make such asset
and reserve transfers as are required to give effect to the provisions of
this Article XV.
This Pooling Agreement is further amended by substituting "EMC Insurance
Companies" for "Employers Mutual Companies" wherever it appears, consistent
with and pursuant to action of the Board of Directors effecting this name
change.
124
AMENDMENT #II TO INTERESTS AND LIABILITY EXHIBIT II
TO EMC INSURANCE COMPANIES
REINSURANCE POOLING AGREEMENT
In consideration of the covenants and agreements as reflected in
Addendum #I to the Reinsurance Pooling Agreement to which this
Exhibit is attached, EMC and the affiliated company which is
signatory to this Exhibit each do hereby ratify Addendum #I as
a part of the Pooling Agreement effective from January 1, 1993.
Executed by the parties this 23rd day of December, 1992.
Employers Mutual Casualty Company
By:/s/Bruce G. Kelley
------------------------------
Dakota Fire Insurance Company
By:/s/Fred A. Schiek
------------------------------
125
AMENDMENT #II TO INTERESTS AND LIABILITY EXHIBIT III
TO EMC INSURANCE COMPANIES
REINSURANCE POOLING AGREEMENT
In consideration of the covenants and agreements as reflected in
Addendum #I to the Reinsurance Pooling Agreement to which this
Exhibit is attached, EMC and the affiliated company which is
signatory to this Exhibit each do hereby ratify Addendum #I as
a part of the Pooling Agreement effective from January 1, 1993.
Executed by the parties this 23rd day of December, 1992.
Employers Mutual Casualty Company
By:/s/Bruce G. Kelley
------------------------------
Illinois EMCASCO Insurance Company
By:/s/Fred A. Schiek
------------------------------
126
AMENDMENT #II TO INTERESTS AND LIABILITY EXHIBIT IV
TO EMC INSURANCE COMPANIES
REINSURANCE POOLING AGREEMENT
In consideration of the covenants and agreements as reflected in
Addendum #I to the Reinsurance Pooling Agreement to which this
Exhibit is attached, EMC and the affiliated company which is
signatory to this Exhibit each do hereby ratify Addendum #I as
a part of the Pooling Agreement effective from January 1, 1993.
Executed by the parties this 23rd day of December, 1992.
Employers Mutual Casualty Company
By:/s/Bruce G. Kelley
------------------------------
EMCASCO Insurance Company
By:/s/Fred A. Schiek
------------------------------
127