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Exhibit 10.30
RETROCESSION AGREEMENT
PERSONAL ACCIDENT &
OCCUPATIONAL ACCIDENT
QUOTA SHARE REINSURANCE AGREEMENT
BETWEEN
TRENWICK AMERICA REINSURANCE CORPORATION
(hereinafter referred to as the "Company")
AND
THE MEMBERS OF THE
AMERICAN ACCIDENT REINSURANCE GROUP
(hereinafter referred to as the "Retrocessionaires")
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WHEREAS, TRENWICK AMERICA REINSURANCE CORPORATION ("Company") is the issuing
Company for the American Accident Reinsurance Group under a Participation and
Management Agreement between the Company and the manager of the American
Accident Reinsurance Group, DUNCANSON & HOLT (the "Contract Operator"); and
WHEREAS, the Company desires to retrocede a portion of their liability as the
issuing Company in such Personal Accident and Occupational Accident reinsurance
business produced, underwritten and administered by the Contract Operator; and
WHEREAS, the RETROCESSIONAIRES, as members of the American Accident Reinsurance
Group, desire to reinsure the Company in those amounts designated as their
participation percentage in Schedule "A" of the Participation and Management
Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
Company, the Retrocessionaires, and the Contract Operator agree as follows:
ARTICLE I - INSURING CLAUSE
The Company agrees to cede and the Retrocessionaires agree to accept
automatically, on an obligatory basis, 100% of the Company's Personal Accident
and Occupational Accident Treaty reinsurance business which is produced,
underwritten, bound and administered by the Contract Operator. The terms,
conditions, and limitations of this Agreement and the Participation and
Management Agreement shall determine the rights and obligations of the parties.
The Participation and Management Agreement is incorporated herein by reference
and binding upon the Retrocessionaires as if they were the Company to the extent
of their participation percentage described in Schedule "A" of such Agreement.
The Contract Operator agrees to furnish the Retrocessionaires with any material
changes in the Participation and Management Agreement.
ARTICLE II - SCOPE OF AGREEMENT
This Agreement is solely between the Company and the Retrocessionaires.
Performance of the respective obligations of each party under this Agreement
shall be rendered solely to the other parties. However, in the instance of the
insolvency of the Company, the liability of the Retrocessionaires shall be
modified to the extent set forth in Article X entitled, "Insolvency." In no
instance shall any Reinsured of the Company or any claimant against a Reinsured
of the Company have any rights under this Agreement.
ARTICLE III - GENERAL CONDITIONS, DEFINITIONS, AND INTERPRETATIONS
a. Personal Accident and Occupational Accident reinsurance business - The
term "business" shall have the meaning
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described in Article II of the Participation and Management Agreement.
The term "policy(ies)" shall mean the contracts, both treaty and
facultative, of the Company affording reinsurance with respect to such
business.
b. Reinsured - The term "Reinsured" shall mean original ceding client of
the Company.
c. Errors and Omissions - The Retrocessionaires shall not be relieved of
liability by reason of an error or omission by the Company or the
Contract Operator in reporting any claim or loss on any business
reinsured under this Agreement, provided the Company or Contract
Operator attempts to rectify such error or omission after discovery.
d. Special Acceptance - Business which is beyond the terms, conditions or
limitations of this Agreement may be submitted to the Retrocessionaires
for special acceptance hereunder and such business, if accepted by the
Retrocessionaires, shall be subject to all of the terms, conditions and
limitations of this Agreement except as modified by the special
acceptance.
e. Contract Operator - It is understood and agreed that the business
subject hereunder is produced, underwritten, administered, and
otherwise managed by Duncanson & Holt on behalf of the Company and the
American Accident Reinsurance Group. It is further understood and
agreed that this Agreement has been entered into in contemplation of
the continuation of the Contract Operator performing the aforementioned
duties.
f. Participation and Management Agreement - The contract and any exhibits,
schedules, amendments and supplements thereto, entered into between the
Company and the Contract Operator dated as of December 1, 1996 for
reinsurance management services relating to the business reinsured by
the Company and retroceded to the Retrocessionaires.
ARTICLE IV - RETROCESSIONAIRES' LIABILITY
All reinsurance provided hereunder shall be subject to the same clauses, terms
and conditions, and endorsements as the Company's original reinsurance binders,
certificates, policies or contracts, including any amendments, modifications,
alterations and interpretations thereof, insofar as they relate to the business
underwritten, produced, bound and administered by the Contract Operator pursuant
to Article II, Section 3(a) and (b) of the Participation and Management
Agreement covered hereunder. Each Subscribing Retrocessionaire shall follow the
fortunes of the Company and shall be liable unconditionally for its quota share
participation percentage (stated in Schedule "A" of the Participation and
Management Agreement) of all claims, settlements, awards and loss adjustment
expenses including declaratory judgment expenses under the terms and conditions
or by way of compromise, including "ex gratia" payments, of business reinsured
during the period this Agreement remains in force, including amounts assessed
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as extra-contractual damages against the Reinsured or the Company. The intent of
this Agreement is that it shall apply to each Retrocessionaire to the extent of
their proportion of liability as specified herein, and that each
Retrocessionaires' liability to the Company under this Agreement is several and
not joint.
ARTICLE V - REINSURANCE PREMIUM AND COMMISSION
The premium for the reinsurance provided hereunder shall be remitted by the
Contract Operator and divided among the Retrocessionaires in the same proportion
as their quota share participation percentage of the Company's liability less
the following allowances due the company:
1. a 1.5% override commission on the total premium ceded hereunder; and
2. the Retrocessionaires' quota share participation percentage of the: (i)
original brokerage commission paid by the Company; (ii)
governmental/regulatory assessments and surcharges; (iii) premium and
other governmental taxes; and (iv) all fees, commissions and expenses
charged by the Contract Operator.
ARTICLE VI - REPORTS AND REMITTANCES
Within sixty calendar days following completion of each quarter, the Contract
Operator shall render accounts to the Retrocessionaires and the Company showing
the gross participation of the Company, the identity of the Retrocessionaires
for gross written premiums, the name of the Reinsured, the payment period
corresponding with the premium collected by account (cash collected basis),
losses paid and outstanding, date of loss, loss expenses paid and outstanding,
salvage and subrogation, brokerage and override commissions. The Contract
Operator will pay to the Retrocessionaires sixty days after the close of each
quarter the net balance of the premium collected due the Retrocessionaires less
applicable ceding allowances and Retrocessionaires' portion of paid losses at
the same time the reports are rendered. Should there be a negative balance, the
Retrocessionaires will pay such balance within sixty days from receipt of the
report.
In addition, the Contract Operator shall furnish such other information as may
be required by the Company and Retrocessionaires for the completion of their
quarterly and annual statements and internal records. All reports shall be
rendered on forms mutually acceptable to the Company and the Retrocessionaires.
ARTICLE VII - CLAIMS PAYMENTS AND LOSS ADJUSTMENT EXPENSE
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All payments of claims or losses by the Contract Operator under the terms and
conditions of the reinsurance Agreements(s) of the Company, or by way of
compromise, including ex gratia payments, shall be unconditionally binding on
the Retrocessionaires. The Retrocessionaires shall reimburse the Company through
the Contract Operator for the Retrocessionaires' portion of each payment in
settlement of claims or losses made by the Contract Operator together with the
Retrocessionaires' portion of the Company's loss adjustment expense payments, if
any, all as apportioned between the parties in accordance with their
participation percentage set forth in Schedule "A" of the Participation and
Management Agreement. However, in the instance of the insolvency of the Company,
the liability of the Retrocessionaires shall be modified to the extent set forth
in Article X entitled, "Insolvency." The Contract Operator shall investigate and
settle or defend all claims and losses.
Loss adjustment expense shall mean all expenses allocated by the Company, or the
Contract Operator, to an individual claim or loss, in connection with the
disposition of claims, losses or legal proceedings including investigation,
negotiation and legal expenses (including expenses associated with policy
coverage and declaratory judgment actions), court costs, and accrued interest.
The Retrocessionaires' liability for payments of claims or losses shall include
any extra contractual, consequential, punitive, statutory, compensatory or
exemplary damages awarded against the reinsured or the Company and legal
expenses incurred by the reinsured or the Company in defense of action taken in
connection therewith.
ARTICLE VIII - INSPECTION OF RECORDS
The Contract Operator shall allow the Retrocessionaires to inspect at all
reasonable times during normal business hours those records of the Contract
Operator relating to the business reinsured under this Agreement with respect to
claims or losses which involve or are likely to involve the Retrocessionaires.
ARTICLE IX - INSOLVENCY
In the event of the insolvency of the Company, this reinsurance shall be payable
directly to the Company, or 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 claims. It is agreed, however, that the liquidator, receiver,
conservator or statutory successor of the Company shall give written notice to
the Retrocessionaires of the pendency of a claim against the Company indicating
the policy reinsured which claim would involve a possible liability on the part
of the Retrocessionaires within a reasonable time after such
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claim is filed in the conservation or liquidation proceeding or in the
receivership, and that during the pendency of such claim, the Retrocessionaires
may investigate such claim and interpose, at their own expense, in the
proceedings where such claim is to be adjudicated any defense or defenses that
they may deem available to the Company or its liquidator, receiver, conservator,
or statutory successor. The expense thus incurred by the Retrocessionaires 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 Retrocessionaires.
The reinsurance shall be payable by the Retrocessionaires 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 the
Agreement specifically provided another payee of such reinsurance in the event
of the insolvency of the Company, and (b) where the Retrocessionaires with the
consent of the direct reinsured or reinsureds have assumed such policy
obligations of the Company as direct obligations of the Retrocessionaires to the
payees under such policies and in substitution for the obligations of the
Company to such payees.
ARTICLE X - TERM AND CANCELLATION
This Agreement shall take effect for the twelve month period commencing 12:01
A.M. Eastern Standard Time on December 1, 1996 and shall remain in full force
and effect until December 31, 1997 and, thereafter, it shall be automatically
renewed for annual periods unless canceled as provided in this Agreement. This
Agreement may be cancelled effective 12:01 AM Eastern Standard Time on January
1, 1998 or any subsequent January 1st by either party giving to the other at
least one hundred fifty (150) days prior written notice by registered mail.
Unless otherwise agreed to by the parties hereto, in the event of termination,
reinsurance coverage under this Agreement shall remain in force and the
Retrocessionaires shall remain liable to the Company for all losses, including
losses with a date of loss after the termination dates on all covered business
in force at termination date. It is also agreed that the reinsurance with
respect to all covered business in force on the date of termination of this
Agreement shall continue until their natural expiration and/or any run-off. The
Retrocessionaires shall remain liable for their share of losses on such covered
business which commenced prior to the termination date of this Agreement.
In the event of cancellation by either of the parties, after a
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period of sixty (60) months from the cancellation date, the future disposition
of the business reinsured under this Agreement will be determined by the
Company. If the Company elects to portfolio transfer the business reinsured
hereunder, the amount payable shall be a dollar for dollar transfer from the
Retrocessionaires to the Company in an amount which is equal to the sum of: (I)
100% of the outstanding loss reserves, including incurred but not reported
reserves and loss expense reserves, and (ii) unearned premium reserves net of
acquisition costs. The amount payable upon a portfolio transfer shall be
determined as of the termination date of the Agreement and the valuation of all
liabilities surrendered shall be jointly determined by the Company and the
Retrocessionaire and shall be binding on all parties.
ARTICLE XI - SERVICE OF SUIT
In the event of the failure of a Retrocessionaire to pay any amount claimed to
be due hereunder, that Retrocessionaire, at the request of the Company, will
submit to the jurisdiction of any court of competent jurisdiction within the
United States of America and will comply with all requirements necessary to give
such court jurisdiction and all matter arising hereunder shall be determined in
accordance with the law and practice of such court.
It is further agreed that service of process in such suit may be made upon the
Contract Manager or the corporate secretary of any United States parent,
affiliate or subsidiary companies of the Retrocessionaires (hereinafter, "agent
for service of process"), and in suit instituted against a Retrocessionaire upon
this Agreement, that Retrocessionaire will abide by the final decision of such
court or of any appellate court in the event of an appeal. Service of suit upon
the Contract Manager shall be deemed service on all Retrocessionaires named as
parties in such suit.
The above-named are authorized and directed to accept service of process on
behalf of the Retrocessionaire in any such suit and upon the request of the
Company to give a written undertaking to the Company that the agent for service
of process will enter a general appearance on behalf of the Retrocessionaire in
the event such a suit shall be instituted.
Further, pursuant to any statute of any state, territory or district of the
United State of America which make provision therefore, Retrocessionaires hereby
designate the Superintendent, Commissioner or Director of Insurance or other
officers specified for that purpose in the statute or his successor or
successors in office, as their true and lawful attorney upon whom may be served
any lawful process in any action, suit or proceeding instituted by or on behalf
of the Company or any beneficiary hereunder arising out of this Agreement and
hereby designate the agent for service of
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process as the firm to whom the said officer is authorized to mail such process
or a true copy thereof.
ARTICLE XII - LOSS RESERVES
It is agreed that when the Company files with the Insurance Department or
establishes reserves for claims covered hereunder, as required by law, the
Contract Operator will forward to the Retrocessionaires a statement showing the
proportion of such loss reserves which is applicable to Retrocessionaires. The
Retrocessionaires hereby agree to comply with any and all terms or conditions
required by governmental or other regulatory authorities necessary for the
company to take annual statement reserve credit, including but not limited to
furnishing security in such form as required and as acceptable to applicable
governmental or other regulatory authorities including but not limited to cash
or a clean irrevocable Letter of Credit delivered to the Company issued by any
bank acceptable to the governmental or other regulatory authority having
jurisdiction over the Company's loss reserves in an amount equal to
Retrocessionaires' proportion of the loss reserves. The Company agrees to use
and apply any amounts which it may draw upon such security for the following
purposes only:
a. To pay the Retrocessionaires' share or to reimburse the Company for the
Retrocessionaires' share of any liability under this Agreement.
b. To make refund of any sum which is in excess of the actual amount
required to pay Retrocessionaires' share of any liability reinsured by
this Agreement.
The designated 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 see that withdrawals are made only upon the order of
properly authorized representatives of the Company.
ARTICLE XIII - CURRENCY
All payments made hereunder or pursuant to the Participation and Management
Agreement shall be paid in U.S. Dollars.
ARTICLE XIV - ARBITRATION
If any dispute shall arise between the Reinsurer and the Retrocessionaire with
reference to the interpretation of this Agreement or their rights with respect
to any transaction involved, the dispute shall be referred to three arbitrators,
one to be chosen by each party and the third by the two so chosen. If either
party refuses or neglects to appoint an arbitrator within thirty days after the
receipt of written notice from the other party
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requesting it to do so, the requesting party may nominate two arbitrators, who
shall choose the third. In the event that the two arbitrators are unable to
agree upon the third arbitrator, each of them shall name three, of whom the
other declines two, and the decision shall be made by drawing lots. Each party
shall submit its case to the arbitrators within thirty days of the appointment
of the arbitrators. The arbitrators shall be active or retired disinterested
officers of insurance or reinsurance companies domiciled in the United States.
The arbitrators shall consider this Agreement an honorable engagement rather
than merely a legal obligation. They are relieved of all judicial formalities
and may abstain from following the strict rules of law. However, the arbitrators
shall have no authority to consider claims for or to award punitive or exemplary
damages. The decision of a majority of the arbitrators in writing shall be final
and binding on both the Reinsurer and the Retrocessionaire. The expense of the
arbitrators and of the arbitration shall be equally divided between the
Reinsurer and the Retrocessionaire. Any such arbitration shall take place in New
York, New York unless some other location is mutually agreed upon by the
Reinsurer, the Retrocessionaire, and the arbitrators.
ARTICLE XV - GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed on the
date listed below.
DUNCANSON & HOLT, INC. TRENWICK AMERICA REINSURANCE
(American Accident CORPORATION
Reinsurance Group)
By:________________________ By:___________________________
Mary Buono Paul Feldsher
Title:_____________________ Title:________________________
Senior Vice President Executive Vice President
Date:______________________ Date:_________________________
Place:_____________________ Place:________________________
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