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EXHIBIT 10.53
AMCO INSURANCE COMPANY
ALLIED PROPERTY AND CASUALTY INSURANCE COMPANY
DEPOSITORS INSURANCE COMPANY
MOTOR CLUB OF IOWA INSURANCE COMPANY
PROPERTY SPECIAL CATASTROPHE EXCESS CONTRACT
EFFECTIVE 12:01 A.M., CENTRAL STANDARD TIME, JANUARY 1, 1993
PREAMBLE
The Reinsurers hereby reinsure the excess liability of the Reassured
resulting from losses which may occur during the term of this contract under the
Reassured's policies, subject to the following conditions:
TERM
1. A. The term of this contract shall be from 12:01 A.M., Central Standard
Time, January 1,1993 until cancelled per the conditions of termination
contained in this Agreement.
B. Should this contract terminate while a loss occurrence is in progress, the
Reinsurers shall nevertheless be liable, to the extent oftheir interest and
subject to the other conditions of this contract, for all losses resulting
from such loss occurrence, whether such losses occur before or after such
termination.
TERRITORY
2. The territorial limits of this contract shall be identical with those of
the Reassured's policies.
EXCLUSIONS
3. A. This contract shall not apply to:
(1) All pro rata and excess of loss reinsurance assumed by the Reassured. This
exclusion, however, shall not apply to agency reinsurance, reinsurance
assumed between the member companies of the ALLIED Insurance Group
(Inter-Company Reinsurance), nor to business reinsured 100% by the
Reassured.
(2) Policies or portions thereof classified by the Reassured as: Automobile
(except Automobile Physical Damage (excluding Collision), Casualty (but not
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the mandatory coverages under the Property portion of package policies),
fidelity, Surety and Ocean Marine;
(3) Perils of Flood and rising waters when written as such;
(4) Financial guarantee and Insolvency;
(5) Difference in conditions insurance when written as such;
(6) All insurance on growing or standing crops;
(7) Mortgage impairment insurance and similar kinds of insurance,
however styled, providing coverage to be insured as respects its
mortgagee interest in property or its owner interest in foreclosed
property;
(8) Loss or Liability excluded by the provisions of the "Nuclear
Incident Exclusion Clause - Physical Damage - Reinsurance" attached
to and forming part of this contract;
(9) Pool, Association or Syndicate business as excluded by the
provisions of the "Pools Exclusion Clause" attached to and forming
part of this contract. Nevertheless, it is specifically agreed that
liability accruing to the Reassured from its participation in
a. The following so-called "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
and,
b. All "FAIR Plan" business for all perils, including riot and
civil disorder,otherwise protected hereunder shall not be
excluded except, however, that this contract does not include
any increase in such liability resulting from:
i the inability of any other participant in such FAIR Plan or
Coastal Pool to meet its liability
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ii any claim against such FAIR Plan or Coastal Pool, 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 contract);
(10) Loss and/or Damage and/or Costs and/or Expenses arising from Seepage
and/or Pollution and/or Contamination, other than Contamination from
Smoke Damage. Nevertheless, this exclusion does not preclude payment
of the costs of the removal of debris of property damaged or
expenses for extraction of pollutants from land or water caused by
aloss otherwise covered hereunder as follows:
As respects amounts paid by the Reassured subject to this contract
for debris removal, other than for extraction of pollutants from
land or water or the removal, restoration or replacement of polluted
land or water, as respects business classified as Commercial
Property, Reinsurers shall be liable for an amount not to exceed 25%
of the direct physical loss or damage, plus the deductible
applicable to said loss or damage, paid by the Reassured, for any
one loss, any one location, any one insured, plus an additional
amount paid by the Reassured, not to exceed $5,000 for any one loss,
any one location, any one insured, where the sum of loss or damage
and debris removal expense exceeds the Reassured's original policy
limit or the debris removal expense exceeds the amount payable under
the 25% debris removal limitation.
As respects amounts paid by the Reassured subject to this contract
for extraction of pollutants from land or water, the release,
discharge or dispersal of which is caused by or results from a
covered cause of loss as respects business classified as Commercial
Property, Reinsurers shall be liable for an amount not to exceed
$10,000 each location, for the sum of all such expenses paid by the
Reassured arising out of covered causes of loss occurring during
each separate 12 months period of the Reassured's original policy.
The word "pollutant" as used herein shall mean any solid, liquid,
gaseous, or thermal irritant or contaminant, including, but not
limited to smoke, vapor, soot, fumes, acids, alkalis, chemicals and
waste. Waste includes materials to be recycled, reconditioned or
reclaimed.
B. Regarding interests which at time of loss or damage are on shore, no
liability shall attach hereto for any loss or damage which is
occasioned by 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.
This War Exclusion Clause shall not, however, apply to interests
which at time of loss or damage are within the territorial limits of
the United States of America (comprising the fifty States of the
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Union and the District of Columbia and including Bridges between the
U.S.A. and Mexico, provided they are under United States ownership),
Canada, St. Pierre and Miquelon, provided such interests are insured
under policies, endorsements, or binders containing a standard war
or hostilities or warlike operations exclusion clause.
Nevertheless, this clause shall not be construed to apply to riots,
strikes, civil commotion, vandalism, malicious damage, including
acts committed by the agent of any government, party, or faction
engaged in war, hostilities, or other warlike operations, providing
such agent is acting secretly and not in connection with any
operation of military or naval armed forces in the county where the
interest insured is situated.
C. This contract shall exclude all liability of the Reassured arising,
by contract, operation of law, or otherwise, from its participation
or membership, whether voluntary or involuntary, in any insolvency
fund. "Insolvency fund" includes any guaranty fund, insolvency fund,
plan, pool, association, fund or other arrangement, howsoever
denominated, established or governed, which provides for any
assessment of or payment or assumption by the Reassured of part or
all of any claim, debt, charge, fee, or other obligation of an
insurer, or its successors or assigns, which has been declared by
any competent authority to be insolvent, or which is otherwise
deemed unable to meet any claim, debt, charge, fee or other
obligation in whole or in part.
DEFINITION OF POLICIES
4. The term "policies", wherever used herein, shall mean all binders,
policies, contracts, and other obligations of insurance and
reinsurance heretofore issued or which hereafter may be issued by
the Reassured.
RETENTION AND LIMIT
5. A. The Reinsurers shall be liable in each and every loss occurrence,
irrespective of the number and kinds of risks and perils involved,
for 100% of the excess net loss above an initial net loss to the
Reassured and ALLIED Mutual Insurance Company, who together are
partners to an Amended and Restated Reinsurance Pooling Agreement
(which establishes the "Reinsurance Pool") of $5,000,000; but the
Reinsurers shall not be liable for more than the Reassured's
percentage of the Reinsurance Pool at the time of loss multiplied by
$5,000,000 in each and every such loss occurrence, not for more than
the Reassured's percentage of the Reinsurance Pool multiplied by
$10,000,000 in the aggregate during the term of this contract.
REINSTATEMENT PROVISION
6. A. In the event of a claim under this contract, it is agreed that
the amount of liability hereunder is reduced from the time of the
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occurrence of the loss by the sum payable on such a claim. However,
the amount so exhausted is immediately reinstated from the time of
the occurrence of the loss.
B. For each amount so reinstated, the Reassured agrees to pay an
additional premium calculated at pro rata of the annual earned
reinsurance premium hereon, being pro rata both as to the fraction
of the face value of this contract so reinstated and as to the
fraction of the unexpired term hereunder at the time of the loss
occurrence subject to a minimum of 50% as to time. Nevertheless, the
liability of the Reinsurers shall not exceed the amounts stated in
5.A above per occurrence and in the aggregate.
DEFINITION OF LOSS OCCURRENCE
7. The term "Loss Occurrence" shall mean the sum of all individual
losses directly occasioned by any one disaster, accident or loss or
series of disasters, accidents or losses arising out of one event
which occurs within the area of one state of the United States or
province of Canada and states or provinces contiguous thereto and to
one another. However, the duration and extent of any one "Loss
Occcurrence" shall be limited to all individual losses sustained by
the Reassured occurring during any period of 168 consecutive hours
arising out of and directly occasioned by the same event except that
the term "Loss Occurrence" shall be further defined as follows:
(A) As regards windstorm, hail, tornado, hurricane, cyclone,
including ensuing collapse and water damage, all individual
losses sustained by the Reassured occurring during any period
of 72 consecutive hours arising out of and directly occasioned
by the same event. However, the event need not be limited to
one state or province or states or provinces contiguous
thereto.
(B) As regards riot, riot attending a strike, civil commotion,
vandalism and malicious mischief, all individual losses
sustained by the Reassured occurring during any period of 72
consecutive hours within the area of one municipality or
county and the municipalities or counties contiguous thereto
arising out of and directly occasioned by the same event. The
maximum duration of 72 consecutive hours may be extended in
respect of individual losses which occur beyond such 72
consecutive hours during the continued occupation of an
assured's premises by strikers, provided such occupation
commenced during the aforesaid period.
(C) As regards earthquake (the epicentre of which need not
necessarily be within the territorial confines referred to in
the opening paragraph of this article) and fire following
directly occasioned by the earthquake, only those individual
fire losses which commence during the period of 168
consecutive hours may be included in the Reassured's "Loss
Occurrence".
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(D) As regards "Freeze", only individual losses directly
occasioned by collapse, breakage of glass and water damage
(caused by bursting of frozen pipes and tanks) may be included
in the Reassured's "Loss Occurrence".
Except for those "Loss Occurrences" referred to in (A) and (B) the
Reassured may choose the date and time when any such period of consecutive
hours commences provided that it is not earlier than the date and time of
the occurrence of the first recorded individual loss sustained by the
Reassured arising out of that disaster, accident or loss and provided that
only one such period of 168 consecutive hours shall apply with respect to
one event.
However, as respects those "Loss Occurrences" referred to in (A) and
(B), if the disaster, accident or loss occasioned by the event is of
greater duration than 72 consecutive hours, then the Reassured may divide
that disaster, accident or loss into two or more "Loss Occurrences"
provided no two periods overlap and no individual loss is included in more
than one such period and provided that no period commences earlier than the
date and time of the occurrence of the first recorded individual loss
sustained by the Reassured arising out of that disaster, accident or loss.
No individual losses occasioned by an event that would be covered by
72 hours clauses may be included in any "Loss Occurrence" claimed under the
168 hours provision.
NET RETAINED LINES
8. A. This contract applies only to that portion of any insurance or
reinsurance which the Reassured retains net for its own account; and, in
calculating the amount of loss hereunder and also in computing the
amount or amounts in excess of which this contract attaches, only loss
in respect of that portion of any insurance or reinsurance which the
Reassured retains net for its own account shall be included.
B. The amount of the Reinsurers' liability hereunder in any loss occurrence
shall not be increased by reason of the inability of the Reassured to
collect from any other reinsurers, whether specific or general, any
amount which may have become due from them, whether such inability
arises from the insolvency of such other reinsurers or not.
DEFINITION OF NET LOSS
9. A. The term "net loss" shall mean only such amounts as are actually paid
or payable by the Reassured in settlement of claim or in satisfaction of
judgments and including court costs, interest upon judgments, and
allocated investigation, adjustment, and legal expenses paid by the
Reassured. Nothing in this clause, however, shall be construed to mean
that losses under this contract are not recoverable until the
Reassured's net loss has been ascertained.
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B. All salvages, recoveries or payments recovered or received subsequent to
a loss settlement under this contract shall be applied as if recovered
or received prior to loss settlement, and all necessary adjustments
shall be made between the Reassured and the Reinsurers.
LOSSES
10. A The Reassured shall advise the Reinsurers promptly of all loss
occurrences which, in the opinion of the Reassured, may result in a
claim hereunder and of all subsequent developments thereto which, in the
opinion of the Reassured, may materially affect the position of the
Reinsurers.
B. All loss settlements made by the Reassured, provided they are within the
terms of this contract, shall be unconditionally binding upon the
Reinsurers, who agree to pay all amounts for which they may be liable
immediately upon being furnished by the Reassured with reasonable
evidence of the amo unt due or to be due.
PREMIUM
11. A. The premium to the Reinsurers for this contract shall be calculated
by applying a rate of 1.15% to the Reassured's plus ALLIED Mutual
Insurance Companies gross net earned premium income during the term of
this contract times the Reassured's pool percentage.
B. The term "gross net earned premium income" shall mean gross net earned
premiums on business covered hereunder less premiums earned on
reinsurance, recoveries under which would reduce the loss under this
contract. As respects Homeowners Multiple Peril policies, 65% of the
gross net earned premium shall be reported hereunder. As respects
Farmowners Multiple Peril policies, 100% of the gross net earned premium
applicable to the property coverages shall be reported hereunder. As
respects Business Owners policies, 62% of the gross net earned premium
shall be reported hereunder.
C. The minimum premium to the Reinsurers shall be $957,375; however, a
deposit premium equal to $2,127,500 multiplied by the Reassured's
percentage of the Reinsurance Pool shall be payable to Reinsurers in
equal quarterly installments as of January 1, April 1, July 1, and
October 1, 1993. If the Reassured's percentage of the Reinsurance Pool
should change during the term of the agreement, the deposit premium will
adjust at the date of the change to reflect the new Reinsurance Pool
percentage. As promptly as possible after the termination of this
contract, the Reassured shall render a statement to the Reinsurers
showing the actual reinsurance premiums due hereunder, calculated as
provided in Paragraph A of this Article; the difference between the
actual reinsurance premium due and the deposit premium shall, subject to
the minimum premium, be paid by the debtor to the creditor.
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CURRENCY
12. The net loss retention of the Reassured and the limit of the Reinsurers'
liability shall be considered in terms of United States currency and all
premiums and losses hereunder shall be payable in United States
currency.
TAXES (Paragraphs A. and B. applicable only to the participation of any
Reinsurers subject to Federal Excise Tax)
13. A. The Reinsurers have agreed to allow, for the purpose of paying the
Federal Excise Tax, one percent of the premium payable hereon to the
extent such premium is subject to Federal Excise Tax.
B. In the event of any return of premium becoming due hereunder, the
Reinsurers will deduct one percent from the amount of the return; the
reassured or its Intermediary hereunder should take steps to recover the
tax from the U.S. Government.
C. In consideration of the terms under which this contract 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.
ERRORS AND OMISSIONS
14. Any inadvertent delay, omission or error shall not be held to relieve
either party hereto from any liability which would attach to it
hereunder if such delay, omission or error had not been made, provided
such delay, omission or error is rectified immediately upon discovery.
ACCESS TO REASSURED'S RECORDS
15. Upon reasonable notice being given to the Reassured, the Reinsurers or
their designated representatives shall have free access at any
reasonable time during the term of this contract and subsequent to its
termination to all records of the Reassured which pertain in any way to
this reinsurance.
INSOLVENCY
16. 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 immediately upon demand, with reasonable
provision for verification, 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
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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.
Payments by the Reinsurers 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 of except (a) where this contract specifies
another payee in the event of the insolvency of the Reassured, and (b)
the Reinsurers with the consent of the direct insureds and, as respects
New York risks, the approval of the Superintendent of the New York
Insurance Department have assumed such policy obligations of the
Reassured as their direct obligations to the payees under such policies,
in substitution for the obligations of the Reassured to such payees.
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 Reinsurers of the pendency of a claim against the
insolvent Reassured on the policy or policies reinsured within a
reasonable time after such claim is filed in the insolvency proceeding
and during the pendency of such claim any 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 of its liquidator, receiver, conservator or
statutory successor. The expense this 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.
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 Reassured.
For the purposes of this Article, the term "Reassured" shall refer to
any one or more of the Companies reinsured hereunder, as applicable.
ARBITRATION
17. Any dispute or other matter in question between the Reassured and the
Reinsurers arising out of or relating to the formation, interpretation,
performance, or breach of this Contract, whether such dispute arises
before or after termination of this Contract, 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.
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If more than one Reinsurer is involved in the same dispute, all such
Reinsurers shall constitute and act as one party for the purposes of
this Article, 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
under the terms of this Contract from several to joint.
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.
The arbitration hearings shall be held in Des Moines, Iowa, 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 by the
arbitrators. The arbitrators shall not be obliged to follow judicial
formalities or the rules of evidence except to the extent required by
governming law, that is, the state law of the situs of the arbitration
as herein agreed; they shall make their decisions according to 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.
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.
Except as provided above, arbitration shall be based, insofar as
applicable, upon the procedures of the American Arbitration Association.
SERVICE OF SUIT (The first two paragraphs of this Clause only apply to
Reinsurers domiciled outside of the United States and/or
unauthorized in the State of New York)
18. It is agreed that in the event of the failure of the Reinsurers hereon
to pay any amount claimed to be due hereunder, the Reinsurers hereon, at
the request of the Reassured, will submit to the jurisdiction of a Court
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of competent jurisdiction within the United States. Nothing in this
Clause constitutes or should be understood to constitute a waiver of
Reinsurers' 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. It is further agreed that in any suit instituted against
any one of them upon this contract, such Reinsurer(s) will abide by the
final decision of such Court or of any Appellate Court in the event of
an appeal.
Further, pursuant to any statute of any state, territory or district of
the United States which makes provision therefore, Reinsurers 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 contract 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.
RESERVES
19. 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 any Reinsurers's
share of obligations, the Reassured shall forward to such 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.
"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 Reinsurer, plus reserves for reported losses
and allocated loss adjustment expenses. It shall not include reserves
for losses incurred but not reported.
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.
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Notwithstanding any other provision of this contract, 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 000stipulated in the
statement submitted by the Reassured to the Reinsurer, which is due
to the Reassured 000and not otherwise paid by the Reinsurer.
B. In the event the Reassured has received effective notice f
nonrenewal 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 contract until a renewal Letter of Credit acceptable 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 of the actual amount
required for Sections A. and B. of this paragraph.
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.
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 withdrawls 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.
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OFFSET CLAUSE
20. Each party hereto shall have, and may exercise at any time and from time
to time, the right to offset any balance or balances, whether on account
of premiums or on account of losses or otherwise, due from such party to
the other (or, if more than one, any other) party hereto under this
Agreement or under any other reinsurance agreement heretofore or
hereafter entered into by and between them, any may offset the same
against any balance or balances due or to become due to the former from
the latter under the same or any other reinsurance agreement between
them; and the party asserting the right of offset shall have and may
exercise such right whether the balance or balances due or to become due
to such party from the other are on account of premiums or on account of
losses or otherwise and regardless of the capacity, whether as assuming
insurer or as ceding insurer, in which each party acted under the
agreement or, if more than one, the different agreements involved,
provided, however, that, in the event of the insolvency of a party
hereto, offsets shall only be allowed in accordance with the provisions
of Section 7427 of the Insurance Law of the State of New York.
COMMENCEMENT & TERMINATION
21. This Agreement shall take effect as of 12:01 A.M. Central Standard Time,
January 1, 1993 and is entered into for an unlimited period but any
parties to this Agreement may terminate their portion of this Agreement
at the end of any Calendar year by giving not less than 90 days notice
in writing by registered letter. Every notice of termination shall be
given by registered letter addressed to the intended recipient at the
recipients primary or home office. In determining whether the requisite
number of days' notice has been given in any case, the date of
termination shall be counted but the date of mailing shall not.
Notwithstanding the termination of this Agreement as hereinabove
provided, the provisions of this Agreement shall continue to apply to
all unfinished business hereunder to the end that all obligations and
liabilities incurred by each party hereunder prior to such termination
shall be fully performed and discharged.