Exhibit 10.64
WHOLE ACCOUNT NET QUOTA SHARE
REINSURANCE CONTRACT
EFFECTIVE: APRIL 1, 2003
issued to
Philadelphia Insurance Company
Bala Cynwyd, Pennsylvania
Philadelphia Indemnity Insurance Company
Bala Cynwyd, Pennsylvania
Mobile USA Insurance Company
Pinellas Park, Florida
Liberty American Insurance Company
Pinellas Park, Florida
and
any and all other companies which are now
or may hereafter become member companies of
Philadelphia Consolidated Holding Corporation
and are approved by the Reinsurer
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TABLE OF CONTENTS
ARTICLE PAGE
I Classes of Business Reinsured 1
II Commencement and Termination 2
III Territory (BRMA 51A) 4
IV Exclusions 4
V Retention and Limit 6
VI Loss in Excess of Policy Limits/ECO 7
VII Other Reinsurance 8
VIII Claims and Loss Adjustment Expense 8
IX Salvage and Subrogation 9
X Original Conditions 9
XI Sliding Scale Commission 9
XII Reports and Remittances 11
XIII Reinsurer's Expense Allowance 12
XIV Funds Withheld Account 12
XV Funds Withheld Account in Trust 12
XVI Maintenance Fees 13
XVII Commutation 13
XVIII Profit Sharing 13
XIX Late Payments 13
XX Offset (BRMA 36C) 14
XXI Access to Records (BRMA 1D) 14
XXII Errors and Omissions (BRMA 14F) 15
XXIII Currency (BRMA 12A) 15
XXIV Taxes (BRMA 50C) 15
XXV Unauthorized Reinsurers 15
XXVI Insolvency 16
XXVII Arbitration 17
XXVIII Service of Suit 17
XXIX Governing law 18
XXX Entire Agreement 19
XXXI Agency Agreement 19
XXXII Intermediary (BRMA 23A) 19
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WHOLE ACCOUNT NET QUOTA SHARE
REINSURANCE CONTRACT
EFFECTIVE: APRIL 1, 2003
issued to
Philadelphia Insurance Company
Bala Cynwyd, Pennsylvania
Philadelphia Indemnity Insurance Company
Bala Cynwyd, Pennsylvania
Mobile USA Insurance Company
Pinellas Park, Florida
Liberty American Insurance Company
Pinellas Park, Florida
and
any and all other companies which are now
or may hereafter become member companies of
Philadelphia Consolidated Holding Corporation
and are approved by the Reinsurer
(hereinafter referred to collectively as the "Company")
by
The Subscribing Reinsurer(s) Executing the
Interests and Liabilities Agreement(s)
Attached Hereto
(hereinafter referred to as the "Reinsurer")
ARTICLE I - CLASSES OF BUSINESS REINSURED
A. This Contract shall indemnify the Company in respect of its net liability
which may accrue to the Company as the result of any loss with a date of
loss during the term of this Contract arising out of the Company's
policies, bonds, binders, certificates, contracts of insurance or
reinsurance, or other evidences of liability, whether issued on a losses
occurring, claims-made, or losses discovered basis, now in force or which
may hereinafter come into force, issued by or contracted for by the Company
in respect of all business written and classified by the Company as
Property and Casualty and included in the Company's Statutory Annual
Statement, subject to the exclusions and warranties contained herein.
B. It is understood that the classes of business reinsured under this Contract
are deemed to include:
1. Coverages required for non-resident drivers under the motor vehicle
financial responsibility law or the motor vehicle compulsory insurance
law or any similar law of any state or province, following the
provisions of the Company's policies when they include or are deemed
to include so-called "Out of State Insurance" provisions;
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2. Coverages required under Section 30 of the Motor Carrier Act of 1980
and/or any amendments thereto.
C. This Contract includes coverage for any new line of business written by the
Company if the Company's cumulative net written premium collected for the
line of business does not exceed $20,000,000. The Reinsurer's approval is
required to allow coverage for any new line of business that exceeds
$20,000,000 of net written premium collected. If such approval is not
granted, the line of business shall be excluded from coverage.
D. "Net liability" is defined as the Company's gross liability remaining after
cessions to inuring treaty and facultative reinsurance, less limitations as
set forth in paragraphs B and C of Article V, and less exclusions as set
forth in Article IV. The cost of such inuring reinsurance will not exceed
20.0% of the Company's gross earned premium for any contract year, or so
deemed, unless otherwise agreed by the Reinsurer.
E. The liability of the Reinsurer with respect to each cession hereunder shall
commence obligatorily and simultaneously with that of the Company, subject
to the terms, conditions and limitations hereinafter set forth.
ARTICLE II - COMMENCEMENT AND TERMINATION
A. This Contract shall become effective on April 1, 2003, with respect to
losses arising out of occurrences commencing on or after that date, and
shall continue in force thereafter until terminated.
B. Either party may terminate this Contract on December 31, 2003, or on any
subsequent December 31 by giving the other party not less than 60 days
prior written notice by certified mail, return receipt requested.
C. Notwithstanding the provisions of paragraph A above, the Company may
terminate a Subscribing Reinsurer's percentage share in this Contract, on a
cutoff or runoff basis, by giving the Subscribing Reinsurer not less than
30 days prior written notice by certified mail, return receipt requested,
in the event any of the following circumstances occur:
1. The Company has not received payment of any loss amount due from the
Reinsurer on or before the quarterly due date; or
2. The Subscribing Reinsurer's policyholders' surplus at any time during
any contract year has been reduced by more than 20.0% of the amount of
surplus at the date of the Subscribing Reinsurer's most recent
financial statement filed with regulatory authorities and available to
the public as of the beginning of that contract year; or
3. The Subscribing Reinsurer has become insolvent or has been placed into
liquidation or receivership (whether voluntary or involuntary) or
proceedings have been instituted against the Subscribing Reinsurer for
the appointment of a receiver, liquidator, rehabilitator, conservator
or trustee in bankruptcy, or other agent known by whatever name, to
take possession of its assets or control of its operations; or
4. The Subscribing Reinsurer has been placed under the supervision or
control of a State Insurance Department; or
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5. The Subscribing Reinsurer has ceased assuming new and renewal property
and casualty treaty reinsurance business; or
6. The Subscribing Reinsurer's A.M. Best's rating is A- with negative
watch or has been assigned or downgraded below A- and/or Standard and
Poor's rating is BBB+ with negative watch or has been assigned or
downgraded below BBB+; or
7. The Subscribing Reinsurer has become merged with, acquired by or
controlled by any other company, corporation or individual(s) not
controlling the Subscribing Reinsurer's operations previously.
D. Notwithstanding the provisions of paragraph A and B above, a Subscribing
Reinsurer may terminate this Contract, on a cutoff or runoff basis, by
giving the Company not less than 30 days prior written notice by certified
or registered mail, return receipt requested, in the event any of the
following circumstances occur:
1. The Subscribing Reinsurer has not received payment of any premium
amount due from the Company on or before the quarterly due date; or
2. The Company's consolidated policyholders' surplus at any time during
any contract year has been reduced by more than 20.0% of the amount of
surplus at the beginning of the contract year, or the policyholders'
surplus of one or more of the reinsured companies hereunder has been
reduced by more than 25.0% since the beginning of the contract year;
or
3. One or more of the reinsured companies hereunder has become insolvent
or has been placed into liquidation or receivership (whether voluntary
or involuntary) or proceedings have been instituted against the
company for the appointment of a receiver, liquidator, rehabilitator,
conservator or trustee in bankruptcy, or other agent known by whatever
name, to take possession of its assets or control of its operations;
or
4. One or more of the reinsured companies hereunder has been placed under
the supervision or control of a State Insurance Department; or
5. One or more of the reinsured companies hereunder has ceased writing
new business; or
6. The Company's A.M. Best's rating becomes A- or less and/or Standard
and Poor's rating is BBB+ or less, or if the Company is not rated by
Standard and Poor's but is rated by Moodys, its Moodys rating becomes
Baa1 or less; or
7. The Company has become merged with, acquired by or controlled by any
other company, corporation or individual(s) not controlling the
Company's operations previously.
E. Unless the Company elects to reassume the ceded unearned premium in force
on the effective time and date of termination, and so notifies the
Reinsurer prior to or as promptly as possible after the effective date of
termination, reinsurance hereunder on business in force on the effective
date of termination shall remain in full force and effect until expiration,
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cancellation or next premium anniversary of such business, whichever first
occurs, but in no event beyond 12 months plus odd time (not exceeding 18
months in all) following the effective date of termination.
F. If this Contract is terminated while an occurrence covered hereunder is in
progress, the Reinsurer's liability hereunder shall, subject to the other
terms and conditions of this Contract, be determined as if the entire
occurrence had occurred prior to the termination of this Contract, provided
that no part of such occurrence is claimed against any renewal or
replacement of this Contract.
G. Notwithstanding the foregoing, in the event that an original policy covered
hereunder is written in a jurisdiction in which the cancellation, renewal
or non-renewal of a policy in force is regulated by the properly authorized
insurance authorities of the jurisdiction involved, the Company shall be
bound by the regulations and statutes for said jurisdiction, and the
Reinsurer shall be liable for its proportionate share as stated in the
Contract in the same manner as the Company until such policy may be
cancelled or non-renewed by the Company to a maximum of 24 months. The
Company will make its best effort to cancel or non-renew at its earliest
possible time.
H. "Contract year" as used herein shall be the period from April 1, 2003
through December 31, 2003, and each subsequent 12-month period (or portion
thereof) that this Contract is in force. If this Contract is terminated,
the final contract year shall be from the beginning of the then current
contract year through the effective date of termination if this Contract is
terminated on a "cutoff" basis, or through the end of the runoff period if
this Contract is terminated on a "runoff" basis.
ARTICLE III - TERRITORY (BRMA 51A)
The territorial limits of this Contract shall be identical with those of the
Company's policies.
ARTICLE IV - EXCLUSIONS
A. This Contract does not apply to and specifically excludes the following:
1. Liability assumed by the Company under any form of treaty reinsurance
or retrocession; however, group intercompany reinsurance (if
applicable), local agency reinsurance accepted in the normal course of
business, policies written by another carrier on the Company's behalf
and reinsured by the Company, and/or business assumed by the Company
from a ceding insurer for whom the Company acted as a Managing General
Agent, will not be excluded hereunder.
2. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
Physical Damage - Reinsurance" and the "Nuclear Incident Exclusion
Clause - Liability - Reinsurance" attached to and forming part of this
Contract.
3. Loss from biological or chemical risks or events.
4. All liability of the Company arising by contract, operation of law, or
otherwise, from its participation or membership, whether voluntary or
involuntary, in any insolvency fund.
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"Insolvency fund" includes any guaranty fund, insolvency fund, plan,
pool, association, fund or other arrangement, however denominated,
established or governed, which provides for any assessment of or
payment or assumption by the Company 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.
5. Loss, damage, cost or expense of whatsoever nature arising out of any
of the following:
a. Any "insured loss" as defined in the Terrorism Risk Insurance Act
of 2002;
b. Any act of terrorism involving the use of any biological,
chemical or nuclear agent, material, device or weapon;
c. Any other act of terrorism.
6. Loss or damage caused by or resulting from war, invasion, hostilities,
acts of foreign enemies, civil war, rebellion, insurrection, military
or usurped power, or martial law or confiscation by order of any
government or public authority, but this exclusion shall not apply to
loss or damage covered under a standard policy with a standard War
Exclusion Clause.
7. Liability as a member, subscriber or reinsurer of any Pool, Syndicate
or Association, including FAIR Plans, Coastal Pools, Beach Plans,
Assigned Risk Plans or similar plans.
8. Pollution and seepage coverages excluded under the provisions of the
"Pollution and Seepage Exclusion Clause (BRMA 39A)" attached to and
forming part of this Contract.
9. Loss or liability in any way or to any extent arising out of the
actual or alleged presence or actual, alleged or threatened presence
of fungi including, but not limited to, mold, mildew, mycotoxins,
microbial volatile organic compounds or other "microbial
contaminations." This includes:
a. Any supervision, instruction, recommendations, warnings or advice
given or which should have been given in connection with the
above; and
b. Any obligation to share damages with or repay someone else who
must pay damages because of such injury or damage.
For purposes of this exclusion, "microbial contamination" means any
contamination, either airborne or surface, which arises out of or is
related to the presence of fungi, mold, mildew, mycotoxins, microbial
volatile organic compounds or spores, including, without limitation,
Penicillium, Aspergillus, Fusarium, Aspergillus Flavus and
Stachybotrys chartarum.
Losses resulting from the above causes do not in and of themselves
constitute an event unless arising out of one or more of the following
perils, in which case this exclusion does not apply:
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Fire, lightning, explosion, aircraft or vehicle impact, falling
objects, windstorm, hail, tornado, cyclone, hurricane,
earthquake, volcano, tsunami, flood, freeze or weight of snow.
10. Loss or liability excluded by the "Absolute Asbestos Exclusion"
attached to and forming part of this Contract.
11. Loss or liability excluded under the provisions of the "Electronic
Data Endorsement B" (N.M.A. 2915) attached to and forming part of this
Contract.
12. Unallocated loss adjustment expense (i.e., office expenses and
salaries of the Company's regular employees).
13. Non-collectible reinsurance.
14. Ex gratia payments.
15. The following lines of business:
a. Residual Value;
b. Workers' Compensation;
c. Financial Guarantee;
d. Accident and Health;
e. Medical Malpractice;
f. Publicly traded Insurance Agents' Errors and Omissions;
g. Publicly traded Insurance Agents' Directors and Officers
Liability;
h. Para Transit;
i. Assigned Risk;
j. Any new line of business written by the Company for which the
Company's cumulative net written premium collected for the line
of business exceeds $20,000,000, unless such line of business has
been approved by the Reinsurer for coverage hereunder.
k. Fidelity and Surety, with the exception of Crime business when
written as part of a package policy.
ARTICLE V - RETENTION AND LIMIT
A. As respects business subject to this Contract, the Company shall retain and
be liable for 78.0% of its net liability. The Company shall cede to the
Reinsurer and the Reinsurer agrees to accept 22.0% of the Company's net
liability.
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B. The Reinsurer's liability under this Contract for loss from any one or any
combination of the following sources shall not exceed its pro rata share of
$2,000,000 per insured or $4,000,000 in all during any one contract year:
1. Extra contractual obligations and loss in excess of policy limits;
2. Flood;
3. Catastrophe events which are assigned a number by the Property Claims
Services Division of the American Insurance Services, Inc.;
4. Class action lawsuits;
5. Construction defect claims;
6. Mold.
The Company will retain and be liable for any loss in excess of these
amounts.
C. The Reinsurer's ratio of losses incurred to premiums earned (as defined in
Article XI) for any one contract year shall not exceed any of the
following, or so deemed:
1. 100% for Lawyers Errors and Omissions Liability;
2. 100% for all other Errors and Omissions Liability, Directors and
Officers Liability, Leasing, or GAPP business;
3. 63.0% for Umbrella Liability business;
4. 95.0% for all business subject to this Contract.
The Company will retain and be liable for any loss in excess of these
amounts.
ARTICLE VI - LOSS IN EXCESS OF POLICY LIMITS/ECO
A. In the event the Company pays or is held liable to pay an amount of loss in
excess of its policy limit, but otherwise within the terms of its policy
(hereinafter called "loss in excess of policy limits") or any punitive,
exemplary, compensatory or consequential damages, other than loss in excess
of policy limits (hereinafter called "extra contractual obligations")
because of alleged or actual bad faith, negligence or fraud on its part in
rejecting an offer of settlement within policy limits, or in the
preparation of the defense or in the trial of an action against its insured
or reinsured or in the preparation or prosecution of an appeal consequent
upon such an action, or in otherwise handling a claim under a policy
subject to this Contract, 80.0% of the loss in excess of policy limits
and/or the 80.0% of the extra contractual obligations shall be added to the
Company's loss, if any, under the policy involved, and the sum thereof
shall be subject to the provisions of Article V.
B. An extra contractual obligation shall be deemed to have occurred on the
same date as the loss covered or alleged to be covered under the policy.
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C. Notwithstanding anything stated herein, this Contract shall not apply to
any loss in excess of policy limits or any extra contractual obligation
incurred by the Company as a result of any fraudulent and/or criminal act
by any officer or director of the Company acting individually or
collectively or in collusion with any individual or corporation or any
other organization or party involved in the presentation, defense or
settlement of any claim covered hereunder.
D. Recoveries from any form of insurance or reinsurance which protects the
Company against claims the subject matter of this Article shall inure to
the benefit of this Contract.
E. If any provision of this Article 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.
F. Savings Clause (Applicable only if the Subscribing Reinsurer is domiciled
in the State of New York): In no event shall coverage be provided to the
extent that such coverage is not permitted under New York law.
ARTICLE VII - OTHER REINSURANCE
A. The Company shall maintain or be deemed to maintain in force reinsurance,
recoveries under which shall inure to the benefit of this Contract.
B. The Company shall purchase or be deemed to have purchased inuring excess
reinsurance to limit its loss subject hereto from any one coverage, any one
policy (exclusive of loss in excess of policy limits or extra contractual
obligations) to $1,000,000 for excess Casualty policies and $2,000,000 for
Commercial Property policies.
ARTICLE VIII - CLAIMS AND LOSS ADJUSTMENT EXPENSE
A. Losses shall be reported by the Company in summary form as hereinafter
provided, but the Company shall notify the Reinsurer immediately when a
specific case involves unusual circumstances or large loss possibilities.
B. All loss settlements made by the Company, whether under strict policy
conditions or by way of compromise, shall be binding upon the Reinsurer,
and the Reinsurer agrees to pay or allow, as the case may be, its
proportion of each such settlement in accordance with Article XII.
C. In the event of a claim under a policy subject hereto, the Reinsurer shall
be liable for its proportionate share of loss adjustment expense incurred
by the Company in connection therewith, and shall be credited with its
proportionate share of any recoveries of such expense.
D. "Loss adjustment expense" as used herein shall mean expenses assignable to
the investigation, appraisal, adjustment, settlement, litigation, defense
and/or appeal of specific claims, regardless of how such expenses are
classified for statutory reporting purposes. Loss adjustment expense shall
include, but not be limited to, interest on judgments,
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expenses of outside adjusters, and declaratory judgment expenses or other
legal expenses and costs incurred in connection with coverage questions and
legal actions connected thereto, but shall not include office expenses or
salaries of the Company's regular employees.
ARTICLE IX - SALVAGE AND SUBROGATION
The Reinsurer shall be credited with its proportionate share of salvage (i.e.,
reimbursement obtained or recovery made by the Company, less the actual cost,
excluding salaries of officials and employees of the Company and sums paid to
attorneys as retainer, of obtaining such reimbursement or making such recovery)
on account of claims and settlements involving reinsurance hereunder. The
Company hereby agrees to enforce its rights to salvage or subrogation relating
to any loss, a part of which loss was sustained by the Reinsurer, and to
prosecute all claims arising out of such rights.
ARTICLE X - ORIGINAL CONDITIONS
A. All reinsurance under this Contract shall be subject to the same rates,
terms, conditions, waivers and interpretations and to the same
modifications and alterations as the respective policies of the Company.
However, in no event shall this be construed in any way to provide coverage
outside the terms and conditions set forth in this Contract. The Reinsurer
shall be credited with its exact proportion of the net written premium
collected by the Company, prior to disbursement of any dividends, but after
deduction of premiums, if any, ceded by the Company for inuring
reinsurance.
B. The net written premium collected (including unearned premium at inception)
ceded to this Contract shall not exceed the Reinsurer's pro rata share of
$1,000,000,000 unless otherwise agreed by the Reinsurer. It is understood
the net written premium collected excludes MGA fees, DRST fees and policy
surcharges to recoup residual market deficit assessments.
C. Nothing herein shall in any manner create any obligations or establish any
rights against the Reinsurer in favor of any third party or any persons not
parties to this Contract.
ARTICLE XI - SLIDING SCALE COMMISSION
A. The Reinsurer shall allow the Company a 33.00% provisional commission on
all premiums ceded to the Reinsurer hereunder. The Company shall allow the
Reinsurer return commission on return premiums at the same rate.
B. The provisional commission allowed the Company shall be adjusted
periodically for each contract year in accordance with the provisions set
forth herein. The adjusted commission rate shall be calculated as follows
and be applied to premiums earned for the contract year under
consideration:
1. If the ratio of losses incurred to premiums earned is 69.67% or
greater, the adjusted commission rate for the contract year under
consideration shall be 28.00%;
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2. If the ratio of losses incurred to premiums earned is less than
69.67%, but not less than 45.67%, the adjusted commission rate for the
contract year under consideration shall be 28.00%, plus three-fourths
of the difference in percentage points between 69.67% and the actual
ratio of losses incurred to premiums earned;
3. If the ratio of losses incurred to premiums earned is 45.67% or less,
the adjusted commission rate for the contract year under consideration
shall be 46.00%.
C. If the ratio of losses incurred to premiums earned for any contract year is
greater than 69.67%, the difference in percentage points between the actual
ratio of losses incurred to premiums earned and 69.67% shall be multiplied
by premiums earned for the contract year and the product shall be carried
forward to the next contract year as a debit to losses incurred. If the
ratio of losses incurred to premiums earned for any contract year is less
than 45.67%, the difference in percentage points between 45.67% and the
actual ratio of losses incurred to premiums earned shall be multiplied by
premiums earned for the contract year and the product shall be carried
forward to the next contract year as a credit to losses incurred.
D. The Company shall calculate and report the adjusted commission on premiums
earned within 60 days after the end of each contract year (or, as respects
the final contract year, within 60 days after the effective date of
termination), and within 60 days after the end of each 12-month period
thereafter until all losses subject hereto have been finally settled. Each
such calculation shall be based on cumulative transactions hereunder from
the beginning of the contract year through the date of adjustment,
including, as respects losses incurred, any debit or credit from the
preceding contract year. If the adjusted commission on premiums earned for
the contract year as of the date of adjustment is less than commissions
previously allowed by the Reinsurer on premiums earned for the same period,
the difference shall be due the Reinsurer as of the date of the Company's
report. If the adjusted commission on premiums earned for the contract year
as of the date of adjustment is greater than commissions previously allowed
by the Reinsurer on premiums earned for the same period, the difference
shall be due the Company as of the date of the Company's report. Any ceding
commission adjustments due will be added to (or deducted from) the funds
withheld account, and the funds withheld account (including interest
credits) shall be maintained as if such adjustments were made during the
applicable contract year.
E. "Losses incurred" as used herein shall mean ceded losses and loss
adjustment expense paid as of the effective date of calculation, plus the
ceded reserves, including incurred but not reported loss reserves, for
losses and loss adjustment expense outstanding as of the same date, all as
respects losses arising out of occurrences commencing during the contract
year under consideration, plus the debit or minus the credit from the
preceding contract year. Losses incurred shall be net of any adjustments
set forth in Articles IV and V.
F. "Premiums earned" as used herein shall mean ceded net unearned premiums at
the beginning of the contract year, plus ceded net written premium
collected during the contract year, less ceded net unearned premiums at the
end of the contract year. All amounts are net of premiums paid for
reinsurances that inure to the benefit of this Contract, subject to a
maximum as set forth in Article V.
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G. It is expressly agreed that the ceding commission allowed the Company
includes provision for all dividends, commissions, taxes, assessments, and
all other expenses of whatever nature, except loss adjustment expense.
ARTICLE XII - REPORTS AND REMITTANCES
A. At inception the Company shall cede to the Reinsurer the Reinsurer's share
of the unearned premium (less provisional commission) applicable to subject
business in force at the effective date of this Contract, but said amount
less 4.0% of the ceded unearned premium may be withheld from payment by the
Company and deposited in a funds withheld account. The Company shall remit
4.0% of the ceded unearned premium to the Reinsurer at inception.
B. Within 30 days after the end of each calendar quarter, the Company shall
report to the Reinsurer:
1. Cumulative ceded net written premium collected from the inception of
this Contract to the end of the quarter;
2. Cumulative gross written premium from the inception of this Contract
to end of the quarter;
3. Provisional commission on (1) above plus any ceding commission
adjustments for prior quarters;
4. Cumulative ceded loss and loss adjustment expense paid from the
inception of this Contract to the end of the quarter;
5. Ceded unearned premium as of the end of the quarter;
6. Ceded outstanding losses and loss adjustment expense as of the end of
the quarter.
The positive balance of (1) less (3) less (4) shall be due the Reinsurer,
but the Company may withhold from payment such amount less a Reinsurer's
expense allowance on (1) above, and the Company shall pay the Reinsurer the
Reinsurer's expense allowance on (1) above with its report. The balance of
(1) less (3) less Reinsurer's expense allowance shall be credited to the
funds withheld account in the middle of the respective quarter being
reported upon. Ceded loss and loss adjustment expense paid shall be debited
to the funds withheld account at the latter of the middle of the respective
quarter or 75 days prior to the report date. Any negative balance shall be
first released to the Company from the funds withheld account, and any
remaining amount shall be remitted by the Reinsurer within 30 days after
receipt and verification of the Company's report.
C. "Net written premium collected" as used herein is defined as gross written
premium collected by the Company for the classes of business reinsured
hereunder, less cancellations and return premiums, and less premiums ceded
by the Company for reinsurance which inures to the benefit of this
Contract.
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ARTICLE XIII - REINSURER'S EXPENSE ALLOWANCE
A. The Reinsurer's expense allowance shall be 4.0% of ceded net written
premium collected plus ceded net unearned premium at the inception of this
Contract, subject to a minimum of $7,250,000 as respects each contract year
hereunder.
B. If this Contract is not commuted by January 31, 2005, the Reinsurer's
expense allowance percentage shall increase to 7.5%, and the Company shall
pay the Reinsurer the additional amount due on January 31, 2005 for the
period April 1, 2003 through January 31, 2005, plus 4.0% interest from the
original payment due dates.
C. If this Contract is not commuted by January 31, 2006, the Reinsurer's
expense allowance percentage shall increase to 11.5%, and the Company shall
pay the Reinsurer the additional amount due on January 31, 2006 for the
period April 1, 2003 through January 31, 2006, plus 4.0% interest from the
original payment due dates.
ARTICLE XIV - FUNDS WITHHELD ACCOUNT
A. The Company will maintain a funds withheld account equal to:
1. 100% of ceded net written premium collected from the inception of this
Contract (including the ceded unearned premium at the inception of
this Contract), less
2. Reinsurer's expense allowance from the inception of this Contract;
less
3. Provisional commission allowed on (1) plus any ceding commission
adjustments from the inception of this Contract; plus
4. Interest credit of 4.0% (credited at the end of each quarter based on
the average daily balance during the quarter) from the inception; less
5. Ceded losses and loss adjustment expense paid from the inception of
this Contract.
B. Ceded net written premium collected will be credited to the funds withheld
account in the middle of the quarter in which it is written.
C. The funds withheld account shall be credited by the Company with a 4.0%
interest credit at the end of each quarter based on the average daily
balance of the fund during the quarter.
ARTICLE XV - FUNDS WITHHELD ACCOUNT IN TRUST
A. The Reinsurer may request and the Company shall agree to place the funds
withheld account into a separate trust account, for the benefit of the
Reinsurer, if any of the conditions are triggered as outlined in paragraph
D of Article II. The Company shall designate the Reinsurer as the sole
beneficiary of the trust.
B. The Company shall also place into trust the present value of estimated
future interest credits in excess of a 90 day U.S. Treasury-Bill rate and
the present value of future maintenance fees.
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C. The Company shall maintain securities in the trust account with market
value at least equal to the funds withheld account plus future interest
credits plus future maintenance fees and shall make quarterly adjustments
to the funds withheld account balance as required.
ARTICLE XVI - MAINTENANCE FEES
A. The Company shall pay the Reinsurer a maintenance fee equal to the greater
of $600,000 or 30 basis points times cumulative ceded net written premium
collected under this Contract on January 1, 2006 and every January 1
thereafter through and including January 1, 2013.
B. Notwithstanding the above, maintenance fees shall not be payable after such
time as the ratio of ceded losses paid over premiums earned (as defined in
Article XI) on business subject to this Contract is greater than 85.0%.
C. Maintenance fees shall not be deducted from the funds withheld account.
ARTICLE XVII - COMMUTATION
The Company may elect to commute this Contact at any time after December 31,
2003, if the funds withheld account is positive. Commutation may also occur
under any other conditions by mutual agreement.
ARTICLE XVIII - PROFIT SHARING
Upon commutation of this Contract, 100% of the positive balance of the funds
withheld account shall be released to the Company as profit sharing.
ARTICLE XIX - LATE PAYMENTS
A. The provisions of this Article shall not be implemented unless specifically
invoked, in writing, by one of the parties to this Contract.
B. In the event any premium, loss or other payment due either party is not
received by the intermediary named in Article XXXII (hereinafter referred
to as the "Intermediary") by the payment due date, the party to whom
payment is due, may, by notifying the Intermediary in writing, require the
debtor party to pay, and the debtor party agrees to pay, an interest
penalty on the amount past due calculated for each such payment on the last
business day of each month as follows:
1. The number of full days which have expired since the due date or the
last monthly calculation, whichever the lesser; times
2. 1/365ths of the six-month United States Treasury Bill rate as quoted
in The Wall Street Journal on the first business day of the month for
which the calculation is made; times
3. The amount past due, including accrued interest.
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It is agreed that interest shall accumulate until payment of the original
amount due plus interest penalties have been received by the Intermediary.
C. The establishment of the due date shall, for purposes of this Article, be
determined as follows:
1. As respects any routine payment, adjustment or return due either
party, the due date shall be as provided for in the applicable section
of this Contract. In the event a due date is not specifically stated
for a given payment, it shall be deemed due 10 business days after the
date of transmittal by the Intermediary of the initial billing for
each such payment.
2. As respects any payment, adjustment or return due either party not
otherwise provided for in subparagraph 1 of paragraph C above, the due
date shall be deemed as 10 business days following transmittal of
written notification that the provisions of this Article have been
invoked.
For purposes of interest calculations only, amounts due hereunder shall be
deemed paid upon receipt by the Intermediary.
D. Nothing herein shall be construed as limiting or prohibiting a Subscribing
Reinsurer from contesting the validity of any claim, or from participating
in the defense of any claim or suit, or prohibiting either party from
contesting the validity of any payment or from initiating any arbitration
or other proceeding in accordance with the provisions of this Contract. If
the debtor party prevails in an arbitration or other proceeding, then any
interest penalties due hereunder on the amount in dispute shall be null and
void. If the debtor party loses in such proceeding, then the interest
penalty on the amount determined to be due hereunder shall be calculated in
accordance with the provisions set forth above unless otherwise determined
by such proceedings. If a debtor party advances payment of any amount it is
contesting, and proves to be correct in its contestation, either in whole
or in part, the other party shall reimburse the debtor party for any such
excess payment made plus interest on the excess amount calculated in
accordance with this Article.
E. Interest penalties arising out of the application of this Article that are
$100 or less from any party shall be waived unless there is a pattern of
late payments consisting of three or more items over the course of any
12-month period.
ARTICLE XX - OFFSET (BRMA 36C)
The Company and the Reinsurer shall have the right to offset any balance or
amounts due from one party to the other under the terms of this Contract. The
party asserting the right of offset may exercise such right any time whether the
balances due are on account of premiums or losses or otherwise.
ARTICLE XXI - ACCESS TO RECORDS (BRMA 1D)
The Reinsurer or its designated representatives shall have access at any
reasonable time to all records of the Company which pertain in any way to this
reinsurance.
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ARTICLE XXII - ERRORS AND OMISSIONS (BRMA 14F)
Inadvertent delays, errors or omissions made in connection with this Contract or
any transaction hereunder shall not relieve either party from any liability
which would have attached had such delay, error or omission not occurred,
provided always that such error or omission is rectified as soon as possible
after discovery.
ARTICLE XXIII - CURRENCY (BRMA 12A)
A. Whenever the word "Dollars" or the "$" sign appears in this Contract, they
shall be construed to mean United States Dollars and all transactions under
this Contract shall be in United States Dollars.
B. Amounts paid or received by the Company in any other currency shall be
converted to United States Dollars at the rate of exchange at the date such
transaction is entered on the books of the Company.
ARTICLE XXIV - TAXES (BRMA 50C)
In consideration of the terms under which this Contract is issued, the Company
will not claim a deduction in respect of the premium hereon when making tax
returns, other than income or profits tax returns, to any state or territory of
the United States of America, the District of Columbia or Canada.
ARTICLE XXV - UNAUTHORIZED REINSURERS
A. If the Reinsurer is unauthorized in any state of the United States of
America or the District of Columbia, the Reinsurer agrees to fund its share
of the Company's ceded unearned premium and outstanding loss and loss
adjustment expense reserves (including incurred but not reported loss
reserves) by:
1. Clean, irrevocable and unconditional letters of credit issued and
confirmed, if confirmation is required by the insurance regulatory
authorities involved, by a bank or banks meeting the NAIC Securities
Valuation Office credit standards for issuers of letters of credit and
acceptable to said insurance regulatory authorities; and/or
2. Escrow accounts for the benefit of the Company; and/or
3. Cash advances;
if, without such funding, a penalty would accrue to the Company on any
financial statement it is required to file with the insurance regulatory
authorities involved. The Reinsurer, at its sole option, may fund in other
than cash if its method and form of funding are acceptable to the insurance
regulatory authorities involved.
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B. With regard to funding in whole or in part by letters of credit, it is
agreed that each letter of credit will be in a form acceptable to insurance
regulatory authorities involved, will be issued for a term of at least one
year and will include an "evergreen clause," which automatically extends
the term for at least one additional year at each expiration date unless
written notice of non-renewal is given to the Company not less than 30 days
prior to said expiration date. The Company and the Reinsurer further agree,
notwithstanding anything to the contrary in this Contract, that said
letters of credit may be drawn upon by the Company or its successors in
interest at any time, without diminution because of the insolvency of the
Company or the Reinsurer, but only for one or more of the following
purposes:
1. To reimburse itself for the Reinsurer's share of unearned premiums
returned to insureds on account of policy cancellations, unless paid
in cash by the Reinsurer;
2. To reimburse itself for the Reinsurer's share of losses and/or loss
adjustment expense paid under the terms of policies reinsured
hereunder, unless paid in cash by the Reinsurer;
3. To reimburse itself for the Reinsurer's share of any other amounts
claimed to be due hereunder, unless paid in cash by the Reinsurer;
4. To fund a cash account in an amount equal to the Reinsurer's share of
any ceded unearned premium and/or outstanding loss and loss adjustment
expense reserves (including incurred but not reported loss reserves)
funded by means of a letter of credit which is under non-renewal
notice, if said letter of credit has not been renewed or replaced by
the Reinsurer 10 days prior to its expiration date;
5. To refund to the Reinsurer any sum in excess of the actual amount
required to fund the Reinsurer's share of the Company's ceded unearned
premium and/or outstanding loss and loss adjustment expense reserves
(including incurred but not reported loss reserves), if so requested
by the Reinsurer.
In the event the amount drawn by the Company on any letter of credit is in
excess of the actual amount required for B(1), B(2) or B(4), or in the case
of B(3), the actual amount determined to be due, the Company shall promptly
return to the Reinsurer the excess amount so drawn.
ARTICLE XXVI - INSOLVENCY
A. In the event of the insolvency of one or more of the reinsured companies,
this reinsurance shall be payable directly to the company or to its
liquidator, receiver, conservator or statutory successor on the basis of
the liability of the company without diminution because of the insolvency
of the company or because the liquidator, receiver, conservator or
statutory successor of the company has failed to pay all or a portion of
any claim. It is agreed, however, that the liquidator, receiver,
conservator or statutory successor of the company shall give written notice
to the Reinsurer of the pendency of a claim against the company indicating
the policy or bond reinsured which claim would involve a possible liability
on the part of the Reinsurer within a reasonable time after such claim is
filed in the conservation or liquidation proceeding or in the receivership,
and that during the pendency of such claim, the Reinsurer may investigate
such claim and interpose, at its own expense, in the proceeding where such
claim is to be adjudicated, any defense or defenses that it
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may deem available to the company or its liquidator, receiver, conservator
or statutory successor. The expense thus incurred by the Reinsurer shall be
chargeable, subject to the approval of the Court, against the company as
part of the expense of conservation or liquidation to the extent of a pro
rata share of the benefit which may accrue to the company solely as a
result of the defense undertaken by the Reinsurer.
B. Where two or more reinsurers are involved in the same claim and a majority
in interest elect to interpose defense to such claim, the expense shall be
apportioned in accordance with the terms of this Contract as though such
expense had been incurred by the company.
C. It is further understood and agreed that, in the event of the insolvency of
one or more of the reinsured companies, the reinsurance under this Contract
shall be payable directly by the Reinsurer to the company or to its
liquidator, receiver or statutory successor, except as provided by Section
4118(a) of the New York Insurance Law or except (1) where this Contract
specifically provides another payee of such reinsurance in the event of the
insolvency of the company or (2) where the Reinsurer with the consent of
the direct insured or insureds has assumed such policy obligations of the
company as direct obligations of the Reinsurer to the payees under such
policies and in substitution for the obligations of the company to such
payees.
ARTICLE XXVII - ARBITRATION
A. As a condition precedent to any right of action hereunder, any dispute or
difference between the Company and any Reinsurer relating to the
interpretation or performance of this Contract, including its formation or
validity, or any transaction under this Contract, whether arising before or
after termination, shall be submitted to arbitration.
B. If more than one reinsurer is involved in the same dispute, all such
reinsurers shall constitute and act as one party for purposes of this
Article provided that communication shall be made by the Company to each of
the reinsurers constituting the one party, and provided, however, that
nothing therein 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 Reinsurer under the terms of this Contract
from several to joint.
C. Upon written request of any party, each party shall choose an arbitrator
and the two chosen shall select a third arbitrator. If either party refuses
or neglects to appoint an arbitrator within 30 days after receipt of the
written request for arbitration, the requesting party may appoint a second
arbitrator. If the two arbitrators fail to agree on the selection of a
third arbitrator within 30 days of their appointment, the Company shall
petition the American Arbitration Association to appoint the third
arbitrator. If the American Arbitration Association fails to appoint the
third arbitrator within 30 days after it has been requested to do so,
either party may request a justice of a court of general jurisdiction of
the state in which the arbitration is to be held to appoint the third
arbitrator. All arbitrators shall be active or retired officers of
insurance or reinsurance companies, or Lloyd's London Underwriters, and
disinterested in the outcome of the arbitration. Each party shall submit
its case to the arbitrators within 30 days of the appointment of the third
arbitrator.
D. The parties hereby waive all objections to the method of selection of the
arbitrators, it being the intention of both sides that all the arbitrators
be chosen from those submitted by the parties.
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E. The arbitrators shall have the power to determine all procedural rules for
the holding of the arbitration including but not limited to inspection of
documents, examination of witnesses and any other matter relating to the
conduct of the arbitration. The arbitrators shall interpret this Contract
as an honorable engagement and not as merely a legal obligation; they are
relieved of all judicial formalities and may abstain from following the
strict rules of law. The arbitrators may award interest and costs. Each
party shall bear the expense of its own arbitrator and shall share equally
with the other party the expenses of the third arbitrator and of the
arbitration.
F. The decision in writing of the majority of the arbitrators shall be final
and binding upon both parties. Judgment may be entered upon the final
decision of the arbitrators in any court having jurisdiction. The
arbitration shall take place in Bala Cynwyd, Pennsylvania, unless otherwise
mutually agreed between the Company and the Reinsurer.
G. This Article shall remain in full force and effect in the event any other
provision of this Contract shall be found invalid or non-binding.
H. All time limitations stated in this Article may be amended by mutual
consent of the parties, and will be amended automatically to the extent
made necessary by any circumstances beyond the control of the parties.
ARTICLE XXVIII - SERVICE OF SUIT
(Applicable if the Reinsurer is not domiciled in the United States of America,
and/or is not authorized in any State, Territory or District of the United
States where authorization is required by insurance regulatory authorities. This
Article is not intended to conflict with or override the parties obligations to
arbitrate their disputes in accordance with Article XXV.)
A. It is agreed that in the event the Reinsurer fails to pay any amount
claimed to be due hereunder, the Reinsurer, at the request of the Company,
will submit to the jurisdiction of a court of competent jurisdiction within
the United States. Nothing in this Article constitutes or should be
understood to constitute a waiver of the Reinsurer's rights to commence an
action in any court of competent jurisdiction in the United States, to
remove an action to a United States District Court, or to seek a transfer
of a case to another court as permitted by the laws of the United States or
of any state in the United States.
B. Further, pursuant to any statute of any state, territory or district of the
United States which makes provision therefor, the Reinsurer hereby
designates the party named in its Interests and Liabilities Agreement, or
if no party is named therein, the Superintendent, Commissioner or Director
of Insurance or other officer specified for that purpose in the statute, or
his successor or successors in office, as its true and lawful attorney upon
whom may be served any lawful process in any action, suit or proceeding
instituted by or on behalf of the Company or any beneficiary hereunder
arising out of this Contract.
ARTICLE XXIX - GOVERNING LAW
This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Pennsylvania, exclusive of its rules
with respect to conflicts of law, except
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as to state rules with respect to credit for reinsurance in which case the rules
of all applicable states shall apply.
ARTICLE XXX - ENTIRE AGREEMENT
This written Contract constitutes the entire agreement between the parties
hereto with respect to the business being reinsured hereunder, and there are no
understandings between the parties hereto other than as expressed in this
Contract. Any change or modification to this Contract will be made by amendment
to this Contract and signed by the parties.
ARTICLE XXXI - AGENCY AGREEMENT
If more than one reinsured company is named as a party to this Contract, the
first named company shall be deemed the agent of the other reinsured companies
for purposes of sending or receiving notices required by the terms and
conditions of this Contract, and for purposes of remitting or receiving any
monies due any party.
ARTICLE XXXII - INTERMEDIARY (BRMA 23A)
Benfield Inc. is hereby recognized as the Intermediary negotiating this Contract
for all business hereunder. All communications (including but not limited to
notices, statements, premium, return premium, commissions, taxes, losses, loss
adjustment expense, salvages and loss settlements) relating thereto shall be
transmitted to the Company or the Reinsurer through Benfield Inc., 3600 West
80th Street, Minneapolis, Minnesota 55431. Payments by the Company to the
Intermediary shall be deemed to constitute payment to the Reinsurer. Payments by
the Reinsurer to the Intermediary shall be deemed to constitute payment to the
Company only to the extent that such payments are actually received by the
Company.
IN WITNESS WHEREOF, the Company by its duly authorized representative has
executed this Contract as of the date undermentioned at:
Bala Cynwyd, Pennsylvania, this 12th day of December in the year 2003.
/s/ Christopher Maguire
--------------------------------------
Christopher Maguire, Executive Vice President
& Chief Underwriting Officer
Philadelphia Insurance Company
Philadelphia Indemnity Insurance Company
Mobile USA Insurance Company
Liberty American Insurance Company
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NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (U.S.A.)
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
contamination 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 named 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:
(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
or 31st December 1960 whichever first occurs whereupon all the
provisions of this Clause shall apply.
12/12/57
N.M.A. 1119
BRMA 35B
NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE (U.S.A.)
(Approved by Lloyd's Underwriters' Fire and Non-Marine Association)
(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.*
I. It is agreed that the policy does not apply under any liability
coverage, to
(injury, sickness, disease, death or destruction
(bodily injury or property damage
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.
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.*
It is agreed that the policy does not apply:
I. Under any Liability Coverage to
(injury, sickness, disease, death or destruction
(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.
Page 1 of 2
II. Under any Medical Payments Coverage, or under any Supplementary
Payments Provision relating to
(immediate medical or surgical relief
(first aid,
to expenses incurred with respect to
(bodily injury, sickness, disease or death
(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.
III. Under any Liability Coverage to
(injury, sickness, disease, death or destruction
(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
(c) the
(injury, sickness, disease, death or destruction
(bodily injury or property damage
arises out of the furnishing by an insured of services,
materials, parts or equipment in connection with the
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, this exclusion (c) applies only to
(injury to or destruction of property at such nuclear
facility (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 byproduct material; "source material",
"special nuclear material", and "byproduct 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 byproduct material and (2) resulting from
the operation by any person or organization of any nuclear
facility included within the definition of nuclear facility under
paragraph (a) or (b) thereof; "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 at 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.
21/9/67
N.M.A. 1590
Page 2 of 2
POLLUTION AND SEEPAGE EXCLUSION CLAUSE
This Contract excludes loss and/or damage and/or costs and/or expenses arising
from seepage and/or pollution and/or contamination, other than contamination
from smoke. Nevertheless, this exclusion does not preclude payment of the cost
of removing debris of property damaged by a loss otherwise covered hereunder,
subject always to a limit of 25% of the Company's property loss under the
applicable original policy.
BRMA 39A
ABSOLUTE ASBESTOS EXCLUSION
In consideration of the premium paid and notwithstanding anything contained in
this Contract to the contrary, it is agreed as follows:
The coverage afforded by this Contract does not apply to bodily injury, personal
injury or property damage arising out of but not limited to:
1. Inhaling, ingesting or prolonged physical exposure to asbestos or
goods or products containing asbestos; and/or
2. The use of asbestos in constructing or manufacturing any good, product
or structure; and/or
3. The removal of asbestos from any good, product or structure; and/or
4. The manufacture, transportation, storage or disposal of asbestos or
goods or products containing asbestos.
The coverage afforded by this Contract does not apply to payment for the
investigation or defense of any loss, injury or damage or any cost, fine or
penalty or of any expense or claim or suit related to any of the above.
Also, this Contract does not reinsure loss or expense resulting from:
a. Demolition or increased cost of reconstruction, repair, debris removal
or loss of use necessitated by the enforcement of any law or ordinance
regulating asbestos material.
b. Any governmental direction or request declaring that asbestos material
present in or part of or utilized on any undamaged portion of the
insured's property can no longer be used for the purpose for which it
was intended or installed and must be removed or modified.
ELECTRONIC DATE RECOGNITION CLAUSE EDRC (B)
SECTION 1
This reinsurance does not cover any loss, damage, cost, claim or expense,
whether preventative, remedial or otherwise, directly or indirectly arising out
of or relating to:
a) the calculation, comparison, differentiation, sequencing or processing
of data involving the date change to the year 2000, or any other date
change, including leap year calculations, by any computer system,
hardware, programme or software and/or any microchip, integrated
circuit or similar device in computer equipment or non-computer
equipment, whether the property of the insured or not; or
b) any change, alteration or modification involving the date change to
the year 2000 or any other date change, including leap year
calculations, to any such computer system, hardware, programme or
software or any microchip, integrated circuit or similar device in
computer equipment or non-computer equipment, whether the property of
the insured or not.
This clause applies regardless of any other cause or event that contributes
concurrently or in any sequence to the loss, damage, cost, claim or expense.
However, this section shall not apply in respect of physical damage occurring at
the insured's premises arising out of the perils of fire, lightning, explosion,
aircraft or vehicle impact, falling objects, windstorm, hail tornado, hurricane,
cyclone, riot, strike, civil commotion, vandalism, malicious mischief,
earthquake, volcano, tsunami, freeze or weight of snow.
SECTION 2
Notwithstanding Section 1 above, this reinsurance does not cover any costs and
expenses, whether preventative, remedial or otherwise, arising out of or
relating to change, alteration or modification of any computer system, hardware,
programme or software or any microchip, integrated circuit or similar device in
computer or non-computer equipment, whether the property of the insured or not.
SECTION 3
The date change to the year 2000, or any other date change, including leap year
calculations, shall not in and of itself be regarded as an event for the purpose
of this reinsurance.
INTERESTS AND LIABILITIES AGREEMENT
of
Federal Insurance Company
Warren, New Jersey
through
Chubb Re, Inc.
(hereinafter referred to as the "Subscribing Reinsurer")
with respect to the
WHOLE ACCOUNT NET QUOTA SHARE
REINSURANCE CONTRACT
EFFECTIVE: APRIL 1, 2003
issued to and duly executed by
Philadelphia Insurance Company
Bala Cynwyd, Pennsylvania
Philadelphia Indemnity Insurance Company
Bala Cynwyd, Pennsylvania
Mobile USA Insurance Company
Pinellas Park, Florida
Liberty American Insurance Company
Pinellas Park, Florida
and
any and all other companies which are now
or may hereafter become member companies of
Philadelphia Consolidated Holding Corporation
and are approved by the Reinsurer
The Subscribing Reinsurer hereby accepts a 45.0% share in the interests and
liabilities of the "Reinsurer" as set forth in the attached Contract captioned
above.
This Agreement shall become effective on April 1, 2003, and shall continue in
force until terminated in accordance with the provisions of the attached
Contract.
The Subscribing Reinsurer's share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.
IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date undermentioned at:
Bernardsville, New Jersey, this 23 day of December in the year 2003.
/s/ Brian B. Hegarty
-----------------------------------
Brian B. Hegarty, Managing Director
Chubb Re, Inc. (for and on behalf of Federal
Insurance Company)
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INTERESTS AND LIABILITIES AGREEMENT
of
Swiss Reinsurance America Corporation
Armonk, New York
through
Swiss Re Underwriters Agency, Inc.
Calabasas, California
(hereinafter referred to as the "Subscribing Reinsurer")
with respect to the
WHOLE ACCOUNT NET QUOTA SHARE
REINSURANCE CONTRACT
EFFECTIVE: APRIL 1, 2003
issued to and duly executed by
Philadelphia Insurance Company
Bala Cynwyd, Pennsylvania
Philadelphia Indemnity Insurance Company
Bala Cynwyd, Pennsylvania
Mobile USA Insurance Company
Pinellas Park, Florida
Liberty American Insurance Company
Pinellas Park, Florida
and
any and all other companies which are now
or may hereafter become member companies of
Philadelphia Consolidated Holding Corporation
and are approved by the Reinsurer
The Subscribing Reinsurer hereby accepts a 55.0% share in the interests and
liabilities of the "Reinsurer" as set forth in the attached Contract captioned
above.
This Agreement shall become effective on April 1, 2003, and shall continue in
force until terminated in accordance with the provisions of the attached
Contract.
The Subscribing Reinsurer's share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.
IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date undermentioned at:
Calabasas, California, this 29th day of December in the year 2003.
/s/ Jim Ehman
--------------------------------------
Jim Ehman, Senior Vice President
Swiss Re Underwriters Agency, Inc.
(for Swiss Reinsurance America Corporation)
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