Exhibit 10.78
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 ADDITIONAL COMPANY ESTABLISHED OR ACQUIRED BY THE COMPANY
CASUALTY EXCESS OF LOSS
REINSURANCE CONTRACT
PREPARED BY
WILLIS RE INC.
(WILLIS LOGO)
TABLE OF CONTENTS
ARTICLE PAGE
- ------- ----
I BUSINESS COVERED 1
II TERM 2
III SPECIAL TERMINATION 2
IV DEFINITIONS 4
Ultimate Net Loss 4
Policy or Policies 4
Gross Net Earned Premium Income 5
V LOSS IN EXCESS OF POLICY LIMITS 5
VI EXTRA CONTRACTUAL OBLIGATIONS 5
VII TERRITORY 6
VIII EXCLUSIONS 6
IX ADDITIONAL PROVISIONS 8
X AMOUNT OF COVERAGE AND RETENTION 8
XI PREMIUM 9
XII NOTICE OF LOSS AND LOSS SETTLEMENTS 9
XIII AGENCY AGREEMENT (WAGE1) 10
XIV ERRORS AND OMISSIONS 10
XV OFFSET 10
XVI CURRENCY (BRMA 12A) 10
XVII TAXES (BRMA 50C) 10
XVIII FEDERAL EXCISE TAX (BRMA 17A) 11
XIX UNAUTHORIZED REINSURANCE (BRMA 55A) 11
XX NET RETAINED LINES 13
XXI THIRD PARTY RIGHTS (BRMA 52C) 13
XXII SEVERABILITY 13
XXIII GOVERNING LAW (BRMA 71A) 13
XXIV ACCESS TO RECORDS 14
XXV INSOLVENCY 14
XXVI ARBITRATION 15
XXVII CONFIDENTIALITY 16
XXVIII SERVICE OF SUIT 16
XXIX TERRORISM RISK INSURANCE ACT OF 2002 17
XXX INTERMEDIARY (WINT8) 17
Schedule A
(WILLIS LOGO)
Nuclear Incident Exclusion Clause - Liability - Reinsurance - U.S.A.
Nuclear Incident Exclusion Clause - Liability - Reinsurance - Canada
Terrorism Exclusion Endorsement (Reinsurance)
War Exclusion (WEXC212)
(WILLIS LOGO)
CASUALTY EXCESS OF LOSS
REINSURANCE CONTRACT
(the "Contract")
between
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 ADDITIONAL COMPANY ESTABLISHED OR ACQUIRED BY THE COMPANY
(the "Company")
and
THE SUBSCRIBING REINSURER EXECUTING THE
INTERESTS AND LIABILITIES AGREEMENT
ATTACHED TO THIS CONTRACT
(the "Reinsurer")
ARTICLE I
BUSINESS COVERED
A. This Contract is to indemnify the Company in respect of the net excess
liability as a result of any loss or losses, which may occur during the
term of this Contract under any Policies in force at the effective time and
date hereof or issued or renewed after that time and date by or on behalf
of the Company and classified by the Company as Casualty, Fidelity,
Professional Liability and/or Fiduciary Liability. It is understood and
agreed, as respects Policies on a claims-made or losses-discovered basis,
any extended reporting period coverages provided thereunder shall be
reinsured hereunder, provided the date of loss is during the term of this
Contract.
B. With respect to business classified by the Company as Professional
Liability and written out of the Company's Specialty Lines Division, the
following product lines of business, as defined by the Company, shall be
covered under the scope of this Contract:
Directors and Officers Liability for For-Profit and Not-For-Profit
risks Miscellaneous Errors and Omissions Liability
Lawyers Professional Liability
Accountants Professional Liability
Page 1 (WILLIS LOGO)
Dentists Professional Liability
Insurance Agents Professional Liability
Miscellaneous Medical Professional Liability
Employment Practices Liability
C. Furthermore, it is agreed that the Company may add other Professional
Liability product lines of business to the scope of this Contract with
prior approval of the Reinsurer.
ARTICLE II
TERM
A. The term of this Contract shall be from 12:01 a.m., Eastern Standard Time,
January 1, 2005, to 12:01 a.m., Eastern Standard Time, January 1, 2006.
B. The Reinsurer shall cease to be liable for Loss Occurrences after the time
and date of expiration of this Contract but shall remain liable for
Ultimate Net Loss incurred by the Company with respect to Loss Occurrences
under the Company's Policies with the date of loss prior to the termination
date of this Contract.
C. The Company shall have the option to elect run-off coverage for Policies in
force at the expiration of this Contract. If the Company chooses to run off
liability, the Company will notify the Reinsurer prior to January 31, 2006.
If run-off of liability is chosen, the Reinsurer shall continue to be
liable for Ultimate Net Loss incurred by the Company under all Policies in
force at the time and date of expiration until each Policy's next
anniversary, renewal or expiration, but in no event shall the Reinsurer's
liability continue for more than 12 months after the expiration date plus
odd time, not to exceed a total of 18 months. The premium for the run-off
coverage shall be 10% applied to the unearned subject premium for the
Policies in force as of December 31, 2005, and the run-off coverage shall
be subject to a maximum recoverable limit equal to 200% of the associated
ceded earned premium.
ARTICLE III
SPECIAL TERMINATION
A. The Company may terminate this Contract at any time by the giving of 10
days' notice in writing to the Reinsurer upon the happening of any one of
the following circumstances:
1. A State Insurance Department or other legal authority orders the
Reinsurer to cease writing business; or
2. The Reinsurer has become insolvent or has been placed into liquidation
or receivership (whether voluntary or involuntary), or there has been
instituted against it proceedings for the appointment of a receiver,
liquidator, rehabilitator, conservator, trustee in bankruptcy or other
agent known by whatever name, to take possession of its assets or
control of its operations; or
Page 2 (WILLIS LOGO)
3. The Reinsurer's policyholders' surplus has been reduced by whichever
is greater, either 25% of the amount of surplus at the inception of
this Contract or 25% of the amount at the latest anniversary, or has
lost any part of, or has reduced its paid in capital; or
4. The Reinsurer has become merged with, acquired or controlled by any
company, corporation or individual(s) not controlling the party's
operations at the inception of this Contract; or
5. The Reinsurer has reinsured its entire liability under this Contract
without the terminating party's prior written consent; or
6. The Reinsurer ceases writing new or renewal business.
7. The Reinsurer has been assigned an A.M. Best's rating of less than
"A-" or a Standard & Poor's Insurer Financial Strength Rating of less
than "A-".
B. Notwithstanding any other termination provision of this Contract, if this
Contract is terminated under the provisions of this Article, the Company
shall have the right to terminate liability for losses occurring subsequent
to termination of this Contract. In such event, the Reinsurer shall return
the unearned portion, if any, less any commission allowed thereon, of
premiums paid hereunder and the minimum premium provisions, if any, shall
be waived.
C. Additionally, the Company, at its sole discretion, may elect to commute the
Reinsurer's liabilities for loss and Loss Adjustment Expenses, whether
known and unknown, on Policies covered under this Contract. In the event
the Company and the Reinsurer cannot agree on the capitalized value of the
Reinsurer's liabilities on the Policies covered under this Contract, the
two parties shall mutually appoint an actuary to resolve the matter of
valuation. If the two parties cannot agree on the appointment of an
actuary, a selection process based on the ARBITRATION ARTICLE will be
employed. Payment by the Reinsurer of the amount ascertained will
constitute full and final release of the Reinsurer's liabilities hereunder.
D. The Company may request special funding for any Reinsurer's participation
if this Contract is terminated for reasons set forth in subparagraph A.1-7
above. If the Company elects to exercise its special funding option, said
Reinsurer will, within 30 calendar days of the date of the Company's
request to do so, provide the Company with a cash advance, trust agreement,
escrow account for the benefit of the Company, letter of credit, or a
combination thereof acceptable to the Company to fund the Reinsurer's share
of the reserves hereunder for losses (including loss and loss expense paid
by the Company but not recovered from the Reinsurer, loss and loss expense
reported and outstanding, loss and loss expenses incurred but not reported)
and unearned premium, as if it were an unauthorized Reinsurer and subject
to the UNAUTHORIZED REINSURANCE ARTICLE. This paragraph D shall not apply
to Reinsurers who, at the inception of this Contract, have been assigned an
A.M. Best's Financial Strength Rating of A+ or higher or a Standard &
Poor's rating of A+ or higher or to Underwriting Members of Lloyd's,
London.
Page 3 (WILLIS LOGO)
ARTICLE IV
DEFINITIONS
A. Ultimate Net Loss
"Ultimate Net Loss," as used in this Contract, shall mean the actual loss
paid by the Company or for which the Company becomes liable to pay, such
loss shall include 100% of any Loss in Excess of Policy Limits as defined
in the LOSS IN EXCESS OF POLICY LIMITS ARTICLE, 100% of any Extra
Contractual Obligations as defined in the EXTRA CONTRACTUAL OBLIGATIONS
ARTICLE, ex-gratia payments subject to prior approval, expenses of
litigation and interest, claim-specific declaratory judgment expenses, and
all other loss expense of the Company including subrogation, salvage, and
recovery expenses (office expenses and salaries of officials and employees
not classified as loss adjusters are not chargeable as expenses for
purposes of this paragraph), but salvages and all recoveries, including
recoveries under all reinsurances, which inure to the benefit of this
Contract (whether recovered or not), shall be first deducted from such loss
to arrive at the amount of liability attaching hereunder.
The phrase "ex-gratia payments" shall mean payments made as an
accommodation by the Company in settlement of a claim for which no coverage
exists under the Policy reinsured hereunder, subject to the prior approval
of the Reinsurer.
The phrase "claim-specific declaratory judgment expenses," as used in this
Contract will mean all expenses incurred by the Company in connection with
declaratory judgment actions brought to determine the Company's defense
and/or indemnification obligations that are allocable to specific Policies
and claims subject to this Contract. Declaratory judgment expenses will be
deemed to have been incurred by the Company on the date of the original
loss (if any) giving rise to the declaratory judgment action.
All salvages, recoveries or payments recovered or received subsequent to
loss settlements hereunder shall be applied as if recovered or received
prior to the aforesaid settlement, and all necessary adjustments shall be
made by the parties hereto.
For purposes of this definition, the phrase "becomes liable to pay" shall
mean the existence of a judgment, which the Company does not intend to
appeal, or a release has been obtained by the Company, or the Company has
accepted a proof of loss.
Nothing in this clause shall be construed to mean that losses are not
recoverable hereunder until the Company's Ultimate Net Loss has been
ascertained.
B. Policy or Policies
"Policy" or "Policies," as used in this Contract, shall mean any binder,
policy, or contract of insurance or reinsurance issued, accepted or held
covered provisionally or otherwise, including any extended reporting
periods, by or on behalf of the Company.
Page 4 (WILLIS LOGO)
C. Gross Net Earned Premium Income
"Gross Net Earned Premium Income," as used in this Contract, shall mean
gross earned premium income during the term of this Contract on business
the subject of this Contract less earned premium income paid for
reinsurances, recoveries under which would inure to the benefit of this
Contract.
ARTICLE V
LOSS IN EXCESS OF POLICY LIMITS
A. This Contract shall protect the Company, within the limits hereof, in
connection with the Ultimate Net Loss in excess of the limit of its
original Policy, such loss in excess of the limit having been incurred
because of failure by it to settle within the Policy limit or by reason of
alleged or actual negligence, criminal act or fraud, or bad faith in
rejecting an offer of settlement or in the preparation of the defense or in
the trial of any action against its insured or reinsured or in the
preparation or prosecution of an appeal consequent upon such action.
B. For the purpose of this Article, the word "loss" shall mean any amounts for
which the Company would have been contractually liable to pay had it not
been for the limit of the original Policy. However, this Article shall not
apply where the loss has been incurred due to fraud by a member of the
Board of Directors or a corporate officer 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.
ARTICLE VI
EXTRA CONTRACTUAL OBLIGATIONS
A. This Contract shall protect the Company within the limits hereof, where the
Ultimate Net Loss includes any Extra Contractual Obligations. The term
"Extra Contractual Obligations" is defined as those liabilities not covered
under any other provision of this Contract and which arise from the
handling of any claim on business covered hereunder, such liabilities
arising because of, but not limited to, the following: failure by the
Company to settle within the Policy limit, or by reason of alleged or
actual negligence, criminal act or fraud, or bad faith in rejecting an
offer of settlement or in the preparation of the defense or in the trial of
any action against its insured or reinsured or in the preparation or
prosecution of an appeal consequent upon such action.
B. The date on which any Extra Contractual Obligation is incurred by the
Company shall be deemed, in all circumstances, to be the date of the
original disaster and/or casualty.
C. However, this Article shall not apply where the loss has been incurred due
to fraud by a member of the Board of Directors or a corporate officer of
the Company acting individually or collectively or in collusion with any
individual or corporation or any other
Page 5 (WILLIS LOGO)
organization or party involved in the presentation, defense or settlement
of any claim covered hereunder.
ARTICLE VII
TERRITORY
This Contract shall cover wherever the Company's original Policies cover.
ARTICLE VIII
EXCLUSIONS
This Contract does not cover and specifically excludes:
A. Policies with per claim or per occurrence limits of $1,000,000 and less.
When the Company writes a primary Policy and an umbrella Policy for the
same Insured, and the sum of the per claim or per occurrence limits of the
two Policies is greater than $1,000,000, this exclusion shall not apply to
either Policy.
B. Pools, Associations or Syndicates, except losses from Assigned Risk Plans
or similar plans are not excluded.
C. Nuclear Incident pursuant to the "Nuclear Incident Exclusion Clause -
Liability - Reinsurance - U.S.A." attached hereto.
D. Nuclear Incident pursuant to the "Nuclear Incident Exclusion Clause -
Liability - Reinsurance - Canada" attached hereto.
E. 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. "Insolvency fund" includes any guarantee 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 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.
F. Financial Guarantee or Insolvency, when written as such.
However, the liability of the Company under any bond covering losses due to
negligence of any person or failure of any person to faithfully perform his
duty or failure to account for and pay over money or other property in his
custody shall not be considered Financial Guarantee or Insolvency.
Page 6 (WILLIS LOGO)
Notwithstanding the foregoing, no claim is to attach hereto in respect of
any loss or losses arising as a result of:
1. The insolvency of any financial institution at which trust moneys are
deposited or insolvency of any person, firm or company, or
2. The fall in the market value of investments unless such loss is the
direct result of a) a dishonest, fraudulent, criminal or negligent act
on the part of the bonded person or b) a dishonest, fraudulent or
criminal act on the part of any other person or persons or c) unless
such loss is solely created by a physical damage loss to property
other than where such physical damage loss could have been recovered
from a third party but for the insolvency of such third party.
The above shall not apply as respects claims made under Specialty Lines
Division Policies issued by the Company.
G. Pollution liability to the extent excluded in the Company's original
Policies. However, this exclusion shall not apply:
1. When a judicial entity having legal jurisdiction invalidates the
Company's Pollution exclusion, thereby obligating the Company for
liability when such liability for Pollution was intended to be
excluded by the Company's exclusion.
2. In respect of any Policy written in a state whose insurance regulatory
authorities have prohibited the Company from including a Pollution
liability exclusion in its Policies.
H. Fidelity business, except when written in conjunction with a Director's and
Officers' Liability Policy.
I. Business classified by the Company as Primary Rental Liability and
Supplemental Liability.
J. Liability assumed by the Company under any form of treaty reinsurance;
however, group intra-company reinsurance (if applicable), local agency
reinsurance accepted in the normal course of business and/or Policies
written by another carrier at the Company's request and reinsured 100% by
the Company, as well as Policies written for the captive of the Company's
insured, will not be excluded hereunder.
K. Terrorism pursuant to the "Terrorism Exclusion Endorsement (Reinsurance)"
attached hereto.
L. Loss or liability excluded under the provisions of the "War Exclusion"
attached hereto.
M. Any losses arising out of the manufacturing of tobacco or tobacco products,
when written as such.
N. Any losses arising out of the manufacturing of latex gloves or latex
products, when written as such.
Page 7 (WILLIS LOGO)
O. Business classified by the Company as Nursing Home General Liability or
Umbrella Liability.
ARTICLE IX
ADDITIONAL PROVISIONS
A. The Company will include, as part of their original Policies, a Mold
exclusion for business classified as Architects and Engineers, Property
Managers and Real Estate, as determined by the Company. However, this
provision will not apply wherever the Company's exclusion has not been
filed and approved.
B. Any Policies classified by the Company as Public Directors and Officers
Liability insurance for insured companies with a market capitalization at
the time of binding that is more than $200,000,000 shall be submitted to
the Reinsurer for acceptance into the Contract.
C. Business classified by the Company as Specialty Lines Excess shall be
limited to a maximum of 3.0% of the total Gross Net Earned Premium Income
subject to this Contract. Any Policies that are specially accepted in
accordance with paragraph B, above, shall not be subject to this condition.
D. Business classified by the Company as First Party Cyber-Liability, when
written as such and in conjunction with Miscellaneous Professional
Liability Policies, shall be subject to a sub-limit in the Company's
original Policies of $1,000,000 or so deemed.
E. New and renewal Policies classified by the Company as Miscellaneous
Professional Liability shall contain a sub-limit of $1,000,000 for
Copyright, Patent and Trademark coverages, when written as such or so
deemed. However this provision will not apply whenever the Company is not
permitted to do so by the applicable regulatory authority(ies).
ARTICLE X
AMOUNT OF COVERAGE AND RETENTION
A. With respect to all business covered other than as in paragraph B below,
the Reinsurer will be liable for $10,000,000 of Ultimate Net Loss in
respect of each Loss Occurrence, each Insured, in excess of the Company's
retention of $1,000,000 Ultimate Net Loss, each Loss Occurrence, each
Insured.
B. When the Company writes an umbrella Policy, other than umbrella business
written through McGowan and Associates, Rocky River, Ohio, the Reinsurer
will be liable for $9,000,000 of Ultimate Net Loss in respect of each Loss
Occurrence, each Insured, in excess of the Company's retention of
$2,000,000 Ultimate Net Loss, each Loss Occurrence, each Insured, where the
Ultimate Net Loss is inclusive of any primary Policy written by the
Company.
Page 8 (WILLIS LOGO)
C. However, in no event will the Reinsurer be liable for more than
$140,000,000 in the aggregate for the term of this Contract.
D. The term "Loss Occurrence" and the term "Insured" as used herein shall have
the same meaning as in the Company's Policies. However, in the event of any
ambiguity or dispute relating to these terms, the Company shall be the sole
judge of what constitutes one Loss Occurrence and one Insured.
ARTICLE XI
PREMIUM
A. The premium to be paid by the Company to the Reinsurer for reinsurance
provided by this Contract shall be calculated by applying the appropriate
rate from the attached Schedule A to the Gross Net Earned Premium Income
for the term of this Contract on all business the subject matter hereof,
subject to a minimum premium of $47,171,000.
B. The Company shall pay to the Reinsurer an annual deposit premium of
$58,964,000 payable in quarterly installments of $14,741,000 due April 1;
July 1; and October 1, 2005; and January 1, 2006.
C. Within 90 days following the expiration of this Contract, the Company shall
render to the Reinsurer a statement of premium due in accordance with the
first paragraph of this Article. An adjustment of premium shall thereupon
be made in accordance with the statement submitted by the Company.
ARTICLE XII
NOTICE OF LOSS AND LOSS SETTLEMENTS
A. The Company will advise the Reinsurer promptly of all claims which in the
opinion of the Company may involve the Reinsurer and of all subsequent
developments on these claims which may materially affect the position of
the Reinsurer, such advices to include any claim for which the amount
incurred is 50% or more of the Company's retention.
B. The Reinsurer agrees to abide by the loss settlements of the Company
provided that retroactive extension of Policy terms or coverages made
voluntarily by the Company and not in response to court decisions (whether
such court decision is against the Company or other companies affording the
same or similar coverages) will not be covered under this Contract.
C. When so requested, the Company will afford the Reinsurer an opportunity to
be associated with the Company, at the expense of the Reinsurer, in the
defense of any claim or suit or proceeding involving this reinsurance, and
the Company will cooperate in every respect in the defense of such claim,
suit or proceeding.
D. The Reinsurer will pay its share of loss settlements within 15 days upon
receipt and verification of proof of loss from the Company.
Page 9 (WILLIS LOGO)
ARTICLE XIII
AGENCY AGREEMENT (WAGE1)
If more than one reinsured company is named as a party to this Contract, the
first named company will 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 XIV
ERRORS AND OMISSIONS
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, providing such delay, omission or
error is rectified upon discovery.
ARTICLE XV
OFFSET
The Company and the Reinsurer, each at its option, may offset any balance or
balances, whether on account of premiums, claims and losses, loss expenses or
salvages due from one party to the other under this Contract; provided, however,
that in the event of the insolvency of a party hereto, offsets shall only be
allowed in accordance with applicable statutes and regulations.
ARTICLE XVI
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 XVII
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.
Page 10 (WILLIS LOGO)
ARTICLE XVIII
FEDERAL EXCISE TAX (BRMA 17A)
(Applicable to those Reinsurers, excepting Underwriters at Lloyd's London and
other Reinsurers exempt from Federal Excise Tax, who are domiciled outside the
United States of America.)
A. The Reinsurer has agreed to allow, for the purpose of paying the Federal
Excise Tax, the applicable percentage of the premium payable hereon (as
imposed under Section 4371 of the Internal Revenue Code) to the extent such
premium is subject to the Federal Excise Tax.
B. In the event of any return of premium becoming due hereunder, the Reinsurer
will deduct the applicable percentage from the return premium payable
hereon, and the Company or its agent should take steps to recover the tax
from the United States Government.
ARTICLE XIX
UNAUTHORIZED REINSURANCE (BRMA 55A)
(Applies only to a Reinsurer who does not qualify for full credit with any
insurance regulatory authority having jurisdiction over the Company's reserves.)
A. As regards Policies or bonds issued by the Company coming within the scope
of this Contract, the Company agrees that when it shall file with the
insurance regulatory authority or set up on its books reserves for losses
covered hereunder which it shall be required by law to set up, it will
forward to the Reinsurer a statement showing the proportion of such
reserves which is applicable to the Reinsurer. The Reinsurer hereby agrees
to fund such reserves in respect of known outstanding losses that have been
reported to the Reinsurer and allocated loss adjustment expense relating
thereto, losses and allocated loss adjustment expense paid by the Company
but not recovered from the Reinsurer, plus reserves for losses incurred but
not reported, as shown in the statement prepared by the Company
(hereinafter referred to as "Reinsurer's Obligations") by funds withheld,
cash advances or a Letter of Credit. The Reinsurer shall have the option of
determining the method of funding provided it is acceptable to the
insurance regulatory authorities having jurisdiction over the Company's
reserves.
B. When funding by a Letter of Credit, the Reinsurer agrees to apply for and
secure timely delivery to the Company of a clean, irrevocable and
unconditional Letter of Credit issued by a bank and containing provisions
acceptable to the insurance regulatory authorities having jurisdiction over
the Company's reserves in an amount equal to the Reinsurer's proportion of
said reserves. Such Letter of Credit shall be issued for a period of not
less than one year and shall be automatically extended for one year from
its date of expiration or any future expiration date unless 30 days (60
days where required by insurance regulatory authorities) prior to any
expiration date the issuing bank shall notify the Company by certified or
registered mail that the issuing bank elects not to consider the Letter of
Credit extended for any additional period.
Page 11 (WILLIS LOGO)
C. The Reinsurer and Company agree that the Letters of Credit provided by the
Reinsurer pursuant to the provisions of this Contract may be drawn upon at
any time, notwithstanding any other provision of this Contract, and be
utilized by the Company or any successor, by operation of law, of the
Company including, without limitation, any liquidator, rehabilitator,
receiver or conservator of the Company for the following purposes, unless
otherwise provided for in a separate Trust Agreement:
1. to reimburse the Company for the Reinsurer's Obligations, the payment
of which is due under the terms of this Contract and which has not
been otherwise paid;
2. to make refund of any sum which is in excess of the actual amount
required to pay the Reinsurer's Obligations under this Contract;
3. to fund an account with the Company for the Reinsurer's Obligations.
Such cash deposit shall be held in an interest bearing account
separate from the Company's other assets, and interest thereon not in
excess of the prime rate shall accrue to the benefit of the Reinsurer;
4. to pay the Reinsurer's share of any other amounts the Company claims
are due under this Contract.
In the event the amount drawn by the Company on any Letter of Credit is in
excess of the actual amount required for 1 or 3 or, in the case of 4, the
actual amount determined to be due, the Company shall promptly return to
the Reinsurer the excess amount so drawn. All of the foregoing shall be
applied without diminution because of insolvency on the part of the Company
or the Reinsurer.
D. The issuing bank shall have no responsibility whatsoever in connection with
the propriety of withdrawals made by the Company or the disposition of
funds withdrawn, except to ensure that withdrawals are made only upon the
order of properly authorized representatives of the Company.
E. At annual intervals or more frequently as agreed, but never more frequently
than quarterly, the Company shall prepare a specific statement of the
Reinsurer's Obligations, for the sole purpose of amending the Letter of
Credit, in the following manner:
1. If the statement shows that the Reinsurer's Obligations exceed the
balance of credit as of the statement date, the Reinsurer shall,
within 30 days after receipt of notice of such excess, secure delivery
to the Company of an amendment to the Letter of Credit increasing the
amount of credit by the amount of such difference.
2. If, however, the statement shows that the Reinsurer's Obligations are
less than the balance of credit as of the statement date, the Company
shall, within 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.
Page 12 (WILLIS LOGO)
ARTICLE XX
NET RETAINED LINES
A. This Contract applies only to that portion of any insurances or
reinsurances covered by this Contract, which the Company retains net for
its own account and, in calculating the amount of any loss hereunder and
also in computing the amount in excess of which this Contract attaches,
only loss or losses in respect of that portion of any insurances or
reinsurances which the Company retains net for its own account shall be
included.
B. The Company reserves the right to maintain reinsurance agreement(s) in
respect of its net retention under this Contract, and recoveries under said
reinsurance(s) shall be entirely disregarded in determining the Ultimate
Net Loss hereunder.
C. The amount of the Reinsurer's liability hereunder in respect of any loss or
losses shall not be increased by reason of the inability of the Company to
collect from any other reinsurers, whether specific or general, any amounts
which may have become due from them whether such inability arises from the
insolvency of such other reinsurers or otherwise.
ARTICLE XXI
THIRD PARTY RIGHTS (BRMA 52C)
This Contract is solely between the Company and the Reinsurer, and in no
instance shall any other party have any rights under this Contract except as
expressly provided otherwise in the INSOLVENCY ARTICLE.
ARTICLE XXII
SEVERABILITY
If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.
ARTICLE XXIII
GOVERNING LAW (BRMA 71A)
This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Pennsylvania, exclusive of the rules
with respect to conflicts of law, except as to rules with respect to credit for
reinsurance, in which case the applicable rules of all states shall apply.
Page 13 (WILLIS LOGO)
ARTICLE XXIV
ACCESS TO RECORDS
The Company shall place at the disposal of the Reinsurer at all reasonable
times, and the Reinsurer shall have the right to inspect through its designated
representatives, all books, records and papers of the Company in connection with
any reinsurance hereunder or claims in connection herewith. Rights of access to
records shall survive the termination or expiration of this Contract.
ARTICLE XXV
INSOLVENCY
A. In the event of the insolvency of the Company, 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 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 insolvent Company.
C. In the event of the insolvency of the Company, the reinsurance under this
Contract shall be payable directly by the Reinsurer to the Company or to
its liquidator, receiver, conservator or statutory successor, except as
provided by Section 4118(a) of the New York Insurance Law or except (a)
where this Contract specifically provides another payee of such reinsurance
in the event of the insolvency of the Company or (b) 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.
D. Should the Company go into liquidation or should a receiver be appointed,
all amounts due either Company or Reinsurer under this or any other
agreement, whether by reason of
Page 14 (WILLIS LOGO)
premium, losses or otherwise under this Contract, shall be subject to the
right of offset at any time and from time to time and, upon the exercise of
the same, only the net balance shall be due.
E. In the event of the insolvency of any company or companies included in the
designation of "Company," this clause will apply only to the insolvent
company or companies.
ARTICLE XXVI
ARBITRATION
A. As a condition precedent to any right of action hereunder, any
irreconcilable dispute between the parties to this Contract will be
submitted for decision to a board of arbitration composed of two
arbitrators and an umpire meeting in Bala Cynwyd, Pennsylvania.
B. 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.
C. The members of the board of arbitration shall be active or former,
disinterested officials of insurance or reinsurance companies or
Underwriters at Lloyd's, London, not under the control or management of
either party to this Contract. Each party shall appoint its arbitrator, and
the two arbitrators shall choose an umpire before instituting the hearing.
If the respondent fails to appoint its arbitrator within 4 weeks after
being requested to do so by the claimant, the latter shall also appoint the
second arbitrator.
D. If the two arbitrators are unable to agree upon the umpire within 30 days
of their appointment, the umpire shall be selected by a judge of any court
of competent jurisdiction.
E. The claimant shall submit its initial brief within 45 days from appointment
of the umpire. The respondent shall submit its brief within 45 days
thereafter, and the claimant may submit a reply brief within 30 days after
filing of the respondent's brief.
F. The board shall make its decision with regard to the custom and usage of
the insurance and reinsurance business. The board shall issue its decision
in writing based upon a hearing in which evidence may be introduced without
following strict rules of evidence but in which cross-examination and
rebuttal shall be allowed. The board shall make its decision within 60 days
following the termination of the hearings unless the parties consent to an
extension. The majority decision of the board shall be final and binding
upon all parties to the proceeding. Judgment may be entered upon the award
of the board in any court having jurisdiction.
G. 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
clause, and communications shall be made by the Company to each of the
reinsurers constituting the one party 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 reinsurers under the terms of this Contract from several to joint.
Page 15 (WILLIS LOGO)
H. Each party shall bear the expense of its own arbitrator and shall jointly
and equally bear with the other party the expense of the umpire. The
remaining costs of the arbitration proceedings shall be allocated by the
board.
ARTICLE XXVII
CONFIDENTIALITY
The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly communicate, disclose or divulge to any third
party, any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions, as outlined in this Article, shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, parent company, retrocessionaires, potential
retrocessionaires, legal counsel, arbitrators involved in any arbitration
procedures under this Contract or disclosures required upon subpoena or other
duly-issued order of a court or other governmental agency or regulatory
authority.
ARTICLE XXVIII
SERVICE OF SUIT
(This Article only applies to reinsurers domiciled outside of the United States
and/or unauthorized in any state, territory, or district of the United States
having jurisdiction over the Company).
A. It is agreed that, in the event of the failure of the Reinsurer hereon to
pay any amount claimed to be due hereunder, the Reinsurer hereon, at the
request of the 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. It is further agreed that service of process in such suit may be made upon
Mendes and Mount, 750 Seventh Avenue, New York, New York 10019, and that in
any suit instituted the Reinsurer will abide by the final decision of such
court or of any appellate court in the event of an appeal.
C. The above-named are authorized and directed to accept service of process on
behalf of the Reinsurer in any such suit and/or upon the request of the
Company to give a written undertaking to the Company that they will enter a
general appearance upon the Reinsurer's behalf in the event such a suit
shall be instituted.
D. Further, pursuant to any statute of any state, territory or district of the
United States which makes provision therefor, the Reinsurer hereon hereby
designates 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
Page 16 (WILLIS LOGO)
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 of reinsurance and hereby designates the
above-named as the person to whom the said officer is authorized to mail
such process or a true copy thereof.
ARTICLE XXIX
TERRORISM RISK INSURANCE ACT OF 2002
A. Any financial assistance the Company receives under the Terrorism Risk
Insurance Act of 2002 ("TRIA") shall apply as follows:
1. Except as provided in subparagraph 2 below, any such financial
assistance shall inure solely to the benefit of the Company and shall
be entirely disregarded in applying all of the provisions of this
Contract.
2. If losses occurring hereunder result in recoveries made by the Company
both under this Contract and under TRIA, and such recoveries, together
with any other reinsurance recoveries made by the Company applicable
to said losses, exceed the amount permitted by TRIA, any amount in
excess thereof shall reduce the Ultimate Net Loss subject to this
Contract for the losses to which the TRIA financial assistance
applies.
B. Nothing herein shall be construed to mean that losses under this Contract
are not recoverable until the Company has received financial assistance
under TRIA.
ARTICLE XXX
INTERMEDIARY (WINT8)
Willis Re Inc., 1835 Market Street, Suite 2700, Philadelphia, Pennsylvania
19103, is hereby recognized as the intermediary negotiating this Contract and
through whom all communications relating thereto shall be transmitted to the
Company or the Reinsurer. However, all communications concerning accounts, claim
information, funds and inquiries related thereto shall be transmitted to the
Company or the Reinsurer through Willis Re Inc., 5420 Millstream Road, Suite
200, P.O. Box 3000, McLeansville, North Carolina, 27301-3000. Payments by the
Company to Willis Re Inc. shall be deemed to constitute payment to the Reinsurer
and payments by the Reinsurer to Willis Re Inc. shall be deemed to constitute
payment to the Company only to the extent that such payments are actually
received by the Company.
Page 17 (WILLIS LOGO)
IN WITNESS WHEREOF, the Company by its duly authorized representative has
executed this Contract as of the date specified below:
Signed this 16th day of March, 2005.
PHILADELPHIA INSURANCE COMPANY
PHILADELPHIA INDEMNITY INSURANCE COMPANY
MOBILE USA INSURANCE COMPANY
LIBERTY AMERICAN INSURANCE COMPANY
By /s/ Christopher Maguire
----------------------------------
Christopher Maguire,
Executive VP &
Chief Underwriting Officer
Page 18 (WILLIS LOGO)
SCHEDULE A
ADJUSTABLE
PRODUCT LINE % RATE
- ------------ ----------
AUTO LIABILITY 0.200
GENERAL LIABILITY 0.200
UMBRELLA 33.053
SPECIALTY LINES
Agents E & O 9.263
Non-Profit and Flexi Plus 5 D & O Liability 27.203
Lawyers E & O 3.559
Professional Liability Excess 15.000
Non-Profit Professional Liability 9.263
Consultant's Liability 9.263
Private Company Protection Plus 27.203
Mental Health Counselors 9.263
Corporate D & O 27.203
Health Care Professionals Liability 9.263
Accountants E & O 9.263
New Programs Professional 9.263
SCHEDULE A (WILLIS LOGO)
NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - U.S.A.
(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.
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.
Page 1 of 2 (WILLIS LOGO)
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 damages 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
threat.
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 of 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 (WILLIS LOGO)
NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - CANADA
1. This Agreement does not cover any loss or liability accruing to the
Reinsured 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 his clause
it is agreed that for all purposes of this Agreement all the original
liability contracts of the Reinsured, whether new, renewal or replacement,
of the following classes, namely,
Personal Liability.
Farmers' Liability.
Storekeepers' Liability.
which become effective on or after 31st December 1984, shall be deemed to
include, from their inception dates and thereafter, the following
provision:
Limited Exclusion Provision.
This Policy does not apply to bodily injury or property damage with respect
to which the Insured is also insured under a contract of nuclear energy
liability insurance (whether the Insured is unnamed in such contract and
whether or not it is legally enforceable by the Insured) issued by the
Nuclear Insurance Association of Canada or any other group or pool of
insurers or would be an Insured under any such policy but for its
termination upon exhaustion of its limits of liability.
With respect to property, loss of use of such property shall be deemed to
be property damage.
3. Without in any way restricting the operation of paragraph 1 of this clause
it is agreed that for all purposes of this Agreement all the original
liability contracts of the Company, whether new, renewal or replacement, of
any class whatsoever (other than Personal Liability, Farmers' Liability,
Storekeepers' Liability or Automobile Liability contracts), which become
effective on or after 31st December 1984, shall be deemed to include, from
their inception dates and thereafter, the following provision:
Broad Exclusion Provision.
It is agreed that this Policy does not apply:
(a) to liability imposed by or arising under The Nuclear Liability Act;
nor
(b) to bodily injury or property damage with respect to which an Insured
under this Policy is also insured under a contract of nuclear energy
liability insurance (whether the Insured is unnamed in such contract
and whether or not it is legally enforceable by the Insured) issued by
the Nuclear Insurance Association of Canada or any other insurer or
group or pool of insurers or would be an Insured under any such policy
but for its termination upon exhaustion of its limit of liability; nor
(c) to bodily injury or property damage resulting directly or indirectly
from the nuclear energy hazard arising from:
(i) the ownership, maintenance, operation or use of a nuclear
facility by or on behalf of an Insured;
(ii) 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; and
(iii) the possession, consumption, use, handling, disposal or
transportation of fissionable substances or of other radioactive
material (except radioactive isotopes, away from a nuclear
facility, which have reached the final stage of fabrication so as
to be usable for any scientific, medical, agricultural,
commercial or industrial purpose) used, distributed, handled or
sold by an Insured.
Page 1 of 2 (WILLIS LOGO)
As used in this Policy:
1. The term "nuclear energy hazard" means the radioactive, toxic, explosive or
other hazardous properties of radioactive material;
2. The term "radioactive material" means uranium, thorium, plutonium,
neptunium, their respective derivatives and compounds, radioactive isotopes
of other elements and any other substances that the Atomic Energy Control
Board may, by regulation, designate as being prescribed substances capable
of releasing atomic energy, or as being requisite for the production, use
or application of atomic energy;
3. The term "nuclear facility" means:
(a) any apparatus designed or used to sustain nuclear fission in a
self-supporting chain reaction or to contain a critical mass of
plutonium, thorium and uranium or any one or more of them;
(b) any equipment or device designed or used for (i) separating the
isotopes of plutonium, thorium and uranium or any one or more of them,
(ii) processing or utilizing spent fuel, or (iii) handling, processing
or packaging waste;
(c) any equipment or device used for the processing, fabricating or
alloying of plutonium, thorium or uranium enriched in the isotope
uranium 233 or in the isotope uranium 235, or any one or more of them
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 radioactive material; and
includes the site on which any of the foregoing is located, together
with all operations conducted thereon and all premises used for such
operations.
4. The term "fissionable substance" means any prescribed substance that is, or
from which can be obtained, a substance capable of releasing atomic energy
by nuclear fission.
5. With respect to property, loss of use of such property shall be deemed to
be property damage.
N.M.A. 1979A
01/04/96
Page 2 of 2 (WILLIS LOGO)
TERRORISM EXCLUSION ENDORSEMENT (REINSURANCE)
Notwithstanding any provision to the contrary within this reinsurance or any
endorsement thereto it is agreed that this reinsurance excludes loss, damage,
cost or expense of whatsoever nature directly or indirectly caused by, resulting
from or in connection with any act of terrorism regardless of any other cause or
event contributing concurrently or in any other sequence to the loss.
For the purpose of this endorsement an act of terrorism means an act, including
but not limited to the use of force or violence and/or the threat thereof, of
any person or group(s) of persons, whether acting alone or on behalf of or in
connection with any organization(s) or government(s), committed for political,
religious, ideological or similar purposes including the intention to influence
any government and/or to put the public, or any section of the public, in fear.
This endorsement also excludes loss, damage, cost or expense of whatsoever
nature directly or indirectly caused by, resulting from or in connection with
any action taken in controlling, preventing, suppressing or in any way relating
to any act of terrorism.
If the Reinsurers allege that by reason of this exclusion, any loss, damage,
cost or expense is not covered by this reinsurance the burden of proving the
contrary shall be upon the Reassured.
In the event any portion of this endorsement is found to be invalid or
unenforceable, the remainder shall remain in full force and effect.
Notwithstanding the above, this terrorism exclusion shall only apply to
liability losses arising directly from the following classes of business, when
written as such.
Class of Business Coverage
- ----------------- --------
Airports (Including Any Related Services or Operations) CGL/UMB
Amusement Parks CGL/UMB
Animal Feed Mills CGL/UMB
Bridges and Tunnels CGL/UMB
Buildings in which U.S. Government is Owner or Largest Tenant CGL/UMB
Chemical Manufacturing, Wholesale or Storage CGL/UMB
Convention Centers CGL/UMB
Concert Halls > or = 1,000 person capacity CGL/UMB
Dams CGL/UMB
Drug Manufacturing CGL/UMB
Electrical Generating Facilities CGL/UMB
Explosives - Manufacture, Distribution or Storage CGL/UMB
Mass Transit Systems - Subways, Railways, etc. CGL/UMB
Oil & Gas Pipelines CGL/UMB
Oil Refineries & Storage Tank Farms CGL/UMB
Pesticides, Herbicides, Insecticides - Manufacture CGL/UMB
Ports (Including Any Related Services or Operations) CGL/UMB
Security Services CGL/UMB
Stadiums and Sports Arenas CGL/UMB
Telecommunications Services - Telephone, Radio, TV, Internet CGL/UMB
Water & Sewage Treatment Plants CGL/UMB
However, the maximum liability to the Reinsurer for all Terrorism losses during
the term of this Contract shall be limited to $10,000,000.
(WILLIS LOGO)
WAR EXCLUSION (WEXC212)
As regards interests which at time of loss or damage are on shore, no liability
shall attach hereto in respect of 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 Union and the District of Columbia,
its territories and possessions, including the Commonwealth of Puerto Rico and
including Bridges between the United States of America and Mexico provided they
are under United States ownership), Canada, St. Pierre and Miquelon, provided
such interests are insured under original 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 loss or damage
occasioned by riots, strikes, civil commotion, vandalism, malicious damage.
(WILLIS LOGO)
INTERESTS AND LIABILITIES AGREEMENT
(the "Agreement")
of
ACE PROPERTY & CASUALTY INSURANCE COMPANY
(the "Subscribing Reinsurer")
with respect to the
CASUALTY EXCESS OF LOSS
REINSURANCE CONTRACT
(the "Contract")
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 ADDITIONAL COMPANY ESTABLISHED OR ACQUIRED BY THE COMPANY
(the "Company")
The Subscribing Reinsurer shall have a 25.00% share in the interests and
liabilities of the "Reinsurer" as set forth in the Contract attached hereto and
executed by the Company.
This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1,
2005, and shall continue in force until 12:01 a.m., Eastern Standard Time,
January 1, 2006.
The share of the Subscribing Reinsurer in the interests and liabilities of the
"Reinsurer" shall be several and not joint with the share of any other
subscribing reinsurer. In no event shall the Subscribing Reinsurer participate
in the interests and liabilities of the other subscribing reinsurers.
IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date specified below:
Signed this 5th day of May, 2005.
ACE PROPERTY & CASUALTY INSURANCE COMPANY
By /s/ John Davis
---------------------------------
John Davis
Vice President
(WILLIS LOGO)
INTERESTS AND LIABILITIES AGREEMENT
(the "Agreement")
of
ALLIED WORLD ASSURANCE COMPANY, LTD.
(the "Subscribing Reinsurer")
with respect to the
CASUALTY EXCESS OF LOSS
REINSURANCE CONTRACT
(the "Contract")
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 ADDITIONAL COMPANY ESTABLISHED OR ACQUIRED BY THE COMPANY
(the "Company")
The Subscribing Reinsurer shall have a 30.00% share in the interests and
liabilities of the "Reinsurer" as set forth in the Contract attached hereto and
executed by the Company.
This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1,
2005, and shall continue in force until 12:01 a.m., Eastern Standard Time,
January 1, 2006.
The share of the Subscribing Reinsurer in the interests and liabilities of the
"Reinsurer" shall be several and not joint with the share of any other
subscribing reinsurer. In no event shall the Subscribing Reinsurer participate
in the interests and liabilities of the other subscribing reinsurers.
IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date specified below:
Signed this 21st day of March, 2005.
ALLIED WORLD ASSURANCE COMPANY, LTD.
By /s/ Stephen O'Flynn
---------------------------------
Stephen O'Flynn
Assistant Vice President
(WILLIS LOGO)
INTERESTS AND LIABILITIES AGREEMENT
(the "Agreement")
of
LIBERTY MUTUAL INSURANCE COMPANY
(the "Subscribing Reinsurer")
with respect to the
CASUALTY EXCESS OF LOSS
REINSURANCE CONTRACT
(the "Contract")
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 ADDITIONAL COMPANY ESTABLISHED OR ACQUIRED BY THE COMPANY
(the "Company")
The Subscribing Reinsurer shall have a 30.00% share in the interests and
liabilities of the "Reinsurer" as set forth in the Contract attached hereto and
executed by the Company.
This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1,
2005, and shall continue in force until 12:01 a.m., Eastern Standard Time,
January 1, 2006.
The share of the Subscribing Reinsurer in the interests and liabilities of the
"Reinsurer" shall be several and not joint with the share of any other
subscribing reinsurer. In no event shall the Subscribing Reinsurer participate
in the interests and liabilities of the other subscribing reinsurers.
IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date specified below:
Signed this 29th day of April, 2005.
LIBERTY MUTUAL INSURANCE COMPANY
By /s/ Susan Colford
---------------------------------
Susan Colford
Vice President
(WILLIS LOGO)
INTERESTS AND LIABILITIES AGREEMENT
(the "Agreement")
of
MAX RE LTD.
(the "Subscribing Reinsurer")
with respect to the
CASUALTY EXCESS OF LOSS
REINSURANCE CONTRACT
(the "Contract")
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 ADDITIONAL COMPANY ESTABLISHED OR ACQUIRED BY THE COMPANY
(the "Company")
The Subscribing Reinsurer shall have a 15.00% share in the interests and
liabilities of the "Reinsurer" as set forth in the Contract attached hereto and
executed by the Company.
This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1,
2005, and shall continue in force until 12:01 a.m., Eastern Standard Time,
January 1, 2006.
The share of the Subscribing Reinsurer in the interests and liabilities of the
"Reinsurer" shall be several and not joint with the share of any other
subscribing reinsurer. In no event shall the Subscribing Reinsurer participate
in the interests and liabilities of the other subscribing reinsurers.
IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date specified below:
Signed this 3rd day of May, 2005.
MAX RE LTD.
By /s/ David Kalainoff
---------------------------------
David Kalainoff
Chief Underwriting Officer,
Traditional Reinsurance
(WILLIS LOGO)
ENDORSEMENT NO. 1
to the
CASUALTY EXCESS OF LOSS
REINSURANCE CONTRACT
(the "Contract")
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 additional company established or acquired by the Company
(the "Company")
IT IS HEREBY AGREED, effective 12:01 a.m., Eastern Standard Time, January 1,
2005, with respect to business in force on that date or issued or renewed on or
after that date, that the following paragraph D shall be added to the
DEFINITIONS ARTICLE of the Contract.
D. Extended Reporting Period Coverage
"Extended Reporting Period Coverage" as used herein shall mean coverage for
claims made after termination or expiration of the Company's Policy on
losses that would have been covered under the terminated or expired Policy
had the claims been made during the term of that Policy. All claims made
against or reported to the Company during an extended reporting period
shall be deemed to have been made against or reported to the Company on the
last full day of the Policy period to which the extended reporting period
applies. For purposes of this Contract, the date of loss for any claim
coming within Extended Reporting Period Coverage, whether such coverage is
automatically extended under the Policy or whether a specific endorsement
is issued, will be the termination or expiration date of the Policy.
IT IS FURTHER AGREED, effective 12:01 a.m., Eastern Standard Time, January 1,
2005, with respect to business in force on that date or issued or renewed on or
after that date, that the TERRORISM EXCLUSION ENDORSEMENT (REINSURANCE), as
attached to the Contract, shall be amended to read as follows:
Page 1 of 3 (WILLIS LOGO)
TERRORISM EXCLUSION ENDORSEMENT (REINSURANCE)
Notwithstanding any provision to the contrary within this reinsurance or any
endorsement thereto it is agreed that this reinsurance excludes loss, damage,
cost or expense of whatsoever nature directly or indirectly caused by, resulting
from or in connection with any act of terrorism regardless of any other cause or
event contributing concurrently or in any other sequence to the loss.
For the purpose of this endorsement an act of terrorism means an act, including
but not limited to the use of force or violence and/or the threat thereof, of
any person or group(s) of persons, whether acting alone or on behalf of or in
connection with any organization(s) or government(s), committed for political,
religious, ideological or similar purposes including the intention to influence
any government and/or to put the public, or any section of the public, in fear.
This endorsement also excludes loss, damage, cost or expense of whatsoever
nature directly or indirectly caused by, resulting from or in connection with
any action taken in controlling, preventing, suppressing or in any way relating
to any act of terrorism.
If the Reinsurers allege that by reason of this exclusion, any loss, damage,
cost or expense is not covered by this reinsurance the burden of proving the
contrary shall be upon the Reassured.
In the event any portion of this endorsement is found to be invalid or
unenforceable, the remainder shall remain in full force and effect.
Notwithstanding the above, this terrorism exclusion shall only apply to
liability losses arising directly from the following classes of business, when
written as such.
Class of Business Coverage
- ----------------- --------
Airports (Including Any Related Services or Operations) CGL/UMB
Amusement Parks CGL/UMB
Animal Feed Mills CGL/UMB
Bridges and Tunnels, with exception to Bridges owned or maintained by
municipalities with less than 75,000 in population. CGL/UMB
Buildings in which U.S. Government is Owner or Largest Tenant CGL/UMB
Chemical Manufacturing, Wholesale or Storage CGL/UMB
Convention Centers, with exception to Convention Centers when written
as a non-profit organization, or as part of a municipality with
less than 75,000 in population. CGL/UMB
Concert Halls equal to or greater than 1,000 person in capacity, with
exception to: 1) Concert Halls when written as a non-profit
organization; 2) Concert Halls when written as part of a
municipality with less than 75,000 in population. CGL/UMB
Dams, with exception to Dams less than fifty feet in height and owned
by municipalities with less than 75,000 in population. CGL/UMB
Drug Manufacturing CGL/UMB
Electrical Generating Facilities CGL/UMB
Explosives - Manufacture, Distribution or Storage CGL/UMB
Mass Transit Systems - Subways, Railways, etc. CGL/UMB
Oil & Gas Pipelines CGL/UMB
Oil Refineries & Storage Tank Farms CGL/UMB
Pesticides, Herbicides, Insecticides - Manufacture CGL/UMB
Page 2 of 3 (WILLIS LOGO)
Ports (Including Any Related Services or Operations) CGL/UMB
Security Services CGL/UMB
Stadiums and Sports Arenas, with exception to Stadiums and Sports
Arenas with less than 10,000 in seating capacity and written as
part of Philadelphia Insurance Company's Amateur Sports Facility
program, or written as part of a municipality with less than
75,000 in population. CGL/UMB
Telecommunications Services - Telephone, Radio, TV, Internet CGL/UMB
Water & Sewage Treatment Plants, with exception to Water & Sewage
Treatment Plants owned by municipalities with less than 75,000 in
population, or Water & Sewage Treatment Authorities serving
populations with less than 250,000 in population. CGL/UMB
However, the maximum liability to the Reinsurer for all Terrorism losses during
the term of this Contract shall be limited to $10,000,000.
The provisions of this Contract shall remain otherwise unchanged.
IN WITNESS WHEREOF, the Company by its duly authorized representative has
executed this Endorsement as of the date specified below:
Signed this 22nd day of September, 2005.
PHILADELPHIA INSURANCE COMPANY
PHILADELPHIA INDEMNITY INSURANCE COMPANY
MOBILE USA INSURANCE COMPANY
LIBERTY AMERICAN INSURANCE COMPANY
By /s/ Christopher J. Maguire
---------------------------------
Christopher J. Maguire
Executive VP & Chief Underwriting Officer
Page 3 of 3 (WILLIS LOGO)
ENDORSEMENT NO. 1
to the
INTERESTS AND LIABILITIES AGREEMENT
(the "Agreement")
of
ACE PROPERTY & CASUALTY INSURANCE COMPANY
(the "Subscribing Reinsurer")
with respect to the
CASUALTY EXCESS OF LOSS
REINSURANCE CONTRACT
(the "Contract")
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 additional company established or acquired by the Company
(the "Company")
The Subscribing Reinsurer hereby accepts Endorsement No. 1 to the Contract as
part of the Contract, effective January 1, 2005.
IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Endorsement as of the date specified below:
Signed this 14th day of September, 2005.
ACE PROPERTY & CASUALTY INSURANCE COMPANY
By /s/ John Davis
---------------------------------
John Davis
Vice President
(WILLIS LOGO)
ENDORSEMENT NO. 1
to the
INTERESTS AND LIABILITIES AGREEMENT
(the "Agreement")
of
ALLIED WORLD ASSURANCE COMPANY, LTD.
(the "Subscribing Reinsurer")
with respect to the
CASUALTY EXCESS OF LOSS
REINSURANCE CONTRACT
(the "Contract")
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 ADDITIONAL COMPANY ESTABLISHED OR ACQUIRED BY THE COMPANY
(the "Company")
The Subscribing Reinsurer hereby accepts Endorsement No. 1 to the Contract as
part of the Contract, effective January 1, 2005.
IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date specified below:
Signed this 11th day of July, 2005.
ALLIED WORLD ASSURANCE COMPANY, LTD.
By /s/ Stephen O'Flynn
---------------------------------
Stephen O'Flynn
Assistant Vice President
(WILLIS LOGO)
ENDORSEMENT NO. 1
to the
INTERESTS AND LIABILITIES AGREEMENT
(the "Agreement")
of
LIBERTY MUTUAL INSURANCE COMPANY
(the "Subscribing Reinsurer")
with respect to the
CASUALTY EXCESS OF LOSS
REINSURANCE CONTRACT
(the "Contract")
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 ADDITIONAL COMPANY ESTABLISHED OR ACQUIRED BY THE COMPANY
(the "Company")
The Subscribing Reinsurer hereby accepts Endorsement No. 1 to the Contract as
part of the Contract, effective January 1, 2005.
IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date specified below:
Signed this 1st day of August, 2005.
LIBERTY MUTUAL INSURANCE COMPANY
By /s/ John Mac Lean
---------------------------------
John Mac Lean
Manager
(WILLIS LOGO)
ENDORSEMENT NO. 1
to the
INTERESTS AND LIABILITIES AGREEMENT
(the "Agreement")
of
MAX RE LTD.
(the "Subscribing Reinsurer")
with respect to the
CASUALTY EXCESS OF LOSS
REINSURANCE CONTRACT
(the "Contract")
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 ADDITIONAL COMPANY ESTABLISHED OR ACQUIRED BY THE COMPANY
(the "Company")
The Subscribing Reinsurer hereby accepts Endorsement No. 1 to the Contract as
part of the Contract, effective January 1, 2005.
IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date specified below:
Signed this 14th day of October, 2005.
MAX RE LTD.
By /s/ David Kalainoff
---------------------------------
David Kalainoff
Chief Underwriting Officer,
Traditional Reinsurance and John P. Doucette,
Executive Vice President
(WILLIS LOGO)