Exhibit 10.2
(SWISS LOGO)
ADDENDUM NO. 3
to the
PROPERTY EXCESS OF LOSS
AGREEMENT OF REINSURANCE
NO. TP1600E,F
(hereinafter referred to as the "Agreement")
between
PHILADELPHIA INDEMNITY COMPANY
PHILADELPHIA INSURANCE COMPANY
One Bala Plaza, Suite 100
Bala Cynwyd, Pennsylvania 19004
(hereinafter referred to as the "Company")
and
SWISS REINSURANCE AMERICA CORPORATION
Armonk, New York
(hereinafter referred to as the "Reinsurer")
It is understood and agreed that as respects policies in force at 12:01 a.m.,
Eastern Standard Time, January 1, 2006, and new and renewal policies becoming
effective on and after said date, this Agreement is amended as follows:
1. Agreement No. TP1600E,F shall be renumbered as Agreement No.
POR-376354/376357.
2. Paragraph C is added to Article III - Commencement And Termination:
C. If this Agreement expires while a Loss Occurrence covered hereunder is
in progress, the Reinsurer's liability hereunder shall, subject to the
other terms and conditions of this Agreement, be determined as if the
entire Loss Occurrence had occurred prior to the expiration of this
Agreement, provided that no part of such Loss Occurrence is claimed
against any renewal or replacement of this Agreement.
3. Paragraph C. of Article V - Definitions is revised to read:
C. Adjustment Expense
This term shall mean expenditures by the Company within the terms of
its policies in the direct defense of claims and in connection with
Losses in Excess of Policy Limits and in connection with Extra
Contractual Obligations and as allocated
1. No. TP1600E,F
Addendum No. 3
(SWISS LOGO)
to an individual claim or loss (other than for office expenses and for
the salaries and expenses of employees of the Company or of any
subsidiary or related or wholly owned company of the Company) made in
connection with the disposition of a claim, loss, or legal proceeding
including investigation, negotiation, and legal expenses; court costs;
prejudgment interest; and postjudgment interest.
Notwithstanding the provisions of the article entitled Management of
Claims and Losses, this term shall also be deemed to include
Declaratory Judgment Expenses incurred by the Company in connection
with a declaratory judgment action brought to determine the Company's
defense and/or indemnification obligations that are allocable to a
specific claim under a policy (or coverage part thereof) reinsured
hereunder. However, the amount of any declaratory judgment expense
that may be included in computation of Adjustment Expense shall not
exceed the lesser of the amount of insurance under the policy or the
Reinsurer's Limit of Liability for each Risk under this Agreement.
The date on which a declaratory judgment expense is incurred by the
Company shall be deemed, in all circumstances, to be the date of the
original Occurrence.
4. Paragraph D. of Article V - Definitions is revised to read:
D. Losses in Excess of Policy Limits and Extra Contractual Obligations
1. The term "Loss in Excess of Policy Limits" shall mean a payment
made to a third party claimant in excess of policy limit which
the Company is legally obligated to pay resulting from an action
taken by the insured or assignee arising from a third party
claimant being awarded an amount in excess of the Company's
policy limit as a result of the Company's failure to settle
within the policy limit of the Company's alleged or actual
negligence 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 in the preparation or prosecution of an
appeal consequent upon such action.
2. The term "Extra Contractual Obligation" shall mean a loss which
the Company is legally obligated to pay, which is not covered
under any other provision of this Agreement and which arises from
the Company's handling of any claim on the policies reinsured
hereunder which have limits of liability greater than the Company
Retention.
2. No. TP1600E,F
Addendum No. 3
(SWISS LOGO)
The date on which a Loss in Excess of Policy Limits or an Extra
Contractual Obligation is incurred by the Company shall be deemed, in
all circumstances, to be the date of the original Occurrence.
There shall be no coverage hereunder where the Loss in Excess of the
Policy Limit or the Extra Contractual Obligation has been incurred due
to the fraud or criminal conduct of a member of the Board of
Directors, a corporate officer of the Company, or any other employee
of the Company, acting individually or collectively or in collusion
with any individual or corporation or any other organization or party
involved in the investigation, defense or settlement of any claim
covered hereunder.
Any insurance or reinsurance, whether collectible or not, which
indemnifies or protects the Company against claims which are the
subject matter of this definition and any contribution, subrogation,
or recovery shall inure to the benefit of the Reinsurer and shall be
deducted to arrive at the amount of the Company's Net Loss.
If any provision of this Paragraph D. shall be rendered illegal or
unenforceable by the laws, regulations or public policy of any
jurisdiction, such provision shall be considered void in such
jurisdiction, but this shall not affect the validity or enforceability
of any other provision of this Paragraph D. or the enforceability of
such provision in any other jurisdiction.
5. Exclusions Y and Z, as amended by Addendum No. 1, are deleted in their
entirety.
6. Paragraph A. of Article VIII - Reinsurance Premium is revised to read:
A. The Company shall pay to the Reinsurer a premium for the reinsurance
provided under the First and Second Excess of Loss Layers at a rate
set forth below. Such rates shall be applied to the Company's Subject
Earned Premium for the calendar year under calculation.
Rate
----
First Excess (Accounting Code No. POR376354) .60%
Second Excess (Accounting code No. POR376357) .67%
3. No. TP1600E,F
Addendum No. 3
(SWISS LOGO)
7. Article XX - Participation is added to and made a part of the Agreement:
ARTICLE XX - PARTICIPATION
A. This Agreement obligates the Reinsurer for the following shares in the
of the interests and liabilities set forth under this Agreement.
First Excess (Accounting Code No. POR376354) 50%
Second Excess (Accounting Code No. POR376357) 50%
B. The participation of the Reinsurer in the interests and liabilities of
this Agreement shall be separate and apart from the participations of
other reinsurers and shall not be joint with those other reinsurers,
and the Reinsurer shall in no event participate in the interests and
liabilities of other reinsurers.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
4. No. TP1600E,F
Addendum No. 3
(SWISS LOGO)
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed
in duplicate, by their duly authorized representatives as of the following
dates:
In Bala Cynwyd, Pennsylvania, this 25th day of September, 2006.
ATTEST: PHILADELPHIA INDEMNITY COMPANY
PHILADELPHIA INSURANCE COMPANY
/s/ William A. Mckenna /s/ Christopher J. Maguire
- ------------------------------------- ----------------------------------------
Name William A. Mckenna Name Christopher J. Maguire
Title Assistant Vice President Title Executive Vice President &
Chief Reinsurance Underwriting
Officer
And in Armonk, New York, this 15th day of September, 2006.
ATTEST: SWISS REINSURANCE AMERICA CORPORATION
/s/ Peter Thomson /s/ Gregory Schiffer
- ------------------------------------- ----------------------------------------
Name Peter Thomson Name Gregory Schiffer
Title Vice President Title Vice President
Member of Management Member of Senior Management
bh
PHILPOR376354-A3
5. No. TP1600E,F
Addendum No. 3