Exhibit 10.27
GRANITE REINSURANCE COMPANY LIMITED
/ACCEPTANCE CROP HAIL RETROCESSION AGREEMENT
THIS RETROCESSION AGREEMENT ("Crop Hail Agreement") is made and entered into as
of May 23, 2001 by and between Acceptance Insurance Company, a Nebraska domestic
insurance company ("Acceptance") and Granite Reinsurance Company Limited, a
Barbados insurance company ("Granite").
W I T N E S S E T H :
WHEREAS, affiliates of Acceptance and others have entered into a certain Asset
Purchase Agreement (the "Asset Purchase Agreement") dated as of May 23, 2001;
and
WHEREAS, in conjunction with the Asset Purchase Agreement, Acceptance and others
entered into a certain IGF/Acceptance Retrocession Agreement and an
IGF/Acceptance Quota Share Reinsurance Agreement, both dated as of May 23, 2001
and attached hereto ("Acceptance's Assumption Agreements"); and
WHEREAS, subject to the terms and conditions set forth in this Crop Hail
Agreement, Acceptance desires to cede to Granite and desires to accept from
Acceptance and to reinsure 100% of all risks reinsured by Acceptance under
Acceptance's Assumption Agreements except MPCI risks reinsured by the Federal
Crop Insurance Corporation and located within the United States ("Reinsured
Contracts").
NOW, THEREFORE, in consideration of the premises and the mutual promises of the
parties hereto, they hereby covenant and agree as follows:
ARTICLE I
EFFECTIVE TIME
This Crop Hail Agreement shall be effective as of 12:01 a.m. Eastern Standard
Time ("Effective Time") on the date of the Closing as defined in the Asset
Purchase Agreement. If the Asset Purchase Agreement is terminated pursuant to
its terms and conditions, this Retrocession Agreement shall terminate
concurrently with the Asset Purchase Agreement and never shall be effective.
ARTICLE II
REINSURED OBLIGATIONS; REPRESENTATIONS OF PARTIES
SECTION 2.01. DESCRIPTION OF REINSURED OBLIGATIONS. Subject to the
provisions of this Crop Hail Agreement, Acceptance hereby assigns, transfers,
sets over, cedes and reinsures to Granite, and Granite hereby reinsures on a
100% quota share basis from Acceptance, all liabilities and obligations for
losses associated with the Reinsured Obligations.
SECTION 2.02. REPRESENTATIONS. Granite represents, to the best of its
knowledge and belief, that as of the Effective Time:
(a) Granite is a corporation duly organized and validly existing in
good standing under the laws of Barbados. Granite has the corporate power and
authority to carry on their business substantially as it is now being conducted.
(b) Granite has the requisite corporate power and authority to take,
and has taken, all corporate action necessary to execute and deliver this Crop
Hail Agreement, and to consummate the transactions contemplated hereby. This
Crop Hail Agreement has been validly executed and delivered by Granite, and is a
valid and binding agreement, enforceable against Granite in accordance with its
terms.
SECTION 2.03. REPRESENTATIONS. Acceptance represents, to the best of its
knowledge and belief, that as of the Effective Time:
(a) Acceptance is a corporation duly organized and validly existing in
good standing under the laws of the State of Nebraska and is an authorized
insurer in Nebraska and has the corporate power and authority to carry on its
business substantially as it is now being conducted.
(b) Acceptance has the requisite corporate power and authority and has taken
all corporate action necessary to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been
validly executed and delivered and is a valid and binding agreement of
Acceptance, enforceable against Acceptance in accordance with its terms.
SECTION 2.04. QUOTA SHARE BASIS. The parties acknowledge and agree that
the reinsurance provided herein is on a 100% quota share basis. Granite agrees
to assume all obligations and liabilities of Acceptance under the Reinsured
Contracts, subject, however, to the same rights, offsets, counterclaims,
cross-actions and defenses that are or may be possessed by the parties. It is
expressly understood that no such offsets, counterclaims, cross-actions or
defenses are or shall be waived, but that the same are expressly preserved and
that the parties shall be duly subrogated thereto, whether the same be known to
exist or are hereafter discovered.
ARTICLE III
INSOLVENCY
SECTION 3.01. INSOLVENCY.
(a) In the event of the insolvency of Acceptance, it is agreed that the
liquidator, receiver, conservator or statutory successor of Acceptance shall
give written notice to Granite of the pendency of a claim against Acceptance
indicating the policy reinsured which claim would involve a possible liability
on the part of Granite 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, Granite 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 Acceptance or its liquidator,
receiver, conservator or statutory successor. The expense thus incurred by
Granite shall be chargeable, subject to the approval of the Court, against
Acceptance as part of the expense of conservation or liquidation to the extent
of a pro rata share of the benefit which may accrue to Acceptance solely as a
result of the defense undertaken by Granite.
(b) It is further understood and agreed that, in the event of the insolvency
of Acceptance, the reinsurance under this Agreement shall be payable directly by
Granite to Acceptance or to its liquidator, receiver or statutory successor,
except (1) where this Agreement specifically provides another payee of such
reinsurance in the event of the insolvency of Acceptance or (2) where Granite
with the consent of the direct insured or insureds has assumed such policy
obligations of Acceptance as direct obligations of Granite to the payees under
such policies and in substitution for the obligations of Acceptance to such
payees.
ARTICLE IV
CONSIDERATION FOR RETROCESSION CONTRACTS
SECTION 4.01. CONSIDERATION. For and in consideration for this
Retrocession Agreement Acceptance will remit to Granite all gross written
premium with respect to the Reinsured Contracts, and Acceptance shall be deemed
to have a fiduciary responsibility to Granite with respect to all such premium.
Written premium with respect to the Reinsured Contracts paid to Acceptance
before the Effective Time will be remitted to Granite on the date of the
Closing. All gross written premiums with respect to the Reinsured Contracts
paid to Acceptance after Closing will be remitted to Granite not less often than
once each month.
SECTION 4.02. COMMISSION AND TAXES. Acceptance's Assumption Agreements contain
clauses that recover for companies ceding to Acceptance under such agreements
all commissions due independent agents, premium tax paid or due and payable and
all amounts due for bureau, boards and fees to associations. To the same extent
that these amounts are deducted or paid then the net premium payable under this
Crop Hail Agreement will be reduced accordingly.
SECTION 4.03. LOSS ADJUSTMENT AND CLAIMS SETTLEMENT COSTS. Acceptance will
manage and administrate the claims handling on behalf of companies ceding to
Acceptance under Acceptance's Assumption Agreements. The cost associated
thereto as per the Management and Service Agreement entered into as of May 23,
2001 by and between Acceptance and IGF Insurance Company.
ARTICLE V
LIABILITY
SECTION 5.01. PAYMENT OF CLAIMS AND BENEFITS. From and after the
Effective Time, Granite shall be responsible for (a) paying all losses due under
the Reinsured Contracts in accordance with the terms of thereof; (b) paying all
premium refunds with respect to premiums received under the Reinsured Contracts;
and (c) paying all expenses in connection with the investigations, adjustment,
appraisal or settlement of all claims under the Reinsured Contracts on or after
the Effective Time.
SECTION 5.02. ACTIONS ON OR AFTER EFFECTIVE TIME. If any legal or regulatory
actions are threatened or filed in connection with any of the Reinsured
Contracts on or after the Effective Time, the parties agree to provide each
other with prompt notice thereof, within such time period as would allow the
appropriate party the opportunity to answer, appear or to take any action
necessary or to avoid a default judgment. The parties agree to cooperate with
each other with respect to any such legal or regulatory actions, whether
threatened or actual.
SECTION 5.03. TAXES. Acceptance shall retain full responsibility for any tax
liability relating to the Reinsured Contracts for all taxable periods or
portions thereof.
ARTICLE VI
ERRORS AND OVERSIGHTS
Each party to this Retrocession Agreement will act reasonably to comply
with its terms. Clerical errors and oversights occasioned in good faith in
carrying out this Retrocession Agreement will not prejudice either party and
will be rectified promptly on an equitable basis.
ARTICLE VII
ARBITRATION
SECTION 7.1 COMPULSORY ARBITRATION.
(a) The parties intend this article to be enforceable in accordance with the
Federal Arbitration Act (9 U.S.C. Section 1, et seq.), including any amendments
to that Act which are subsequently adopted, notwithstanding any other choice of
law provision set forth in this Agreement. In the event that either party
refuses to submit to arbitration as required herein, the other party may request
a United States Federal District Court to compel arbitration in accordance with
the Federal Arbitration Act. Both parties consent to the jurisdiction of such
court to enforce this article and to confirm and enforce the performance of any
award of the arbitrators.
(b) Any dispute or other matter in question between Granite and Acceptance
arising out of or relating to the formation, interpretation, performance, or
breach of this Agreement, whether such dispute arises before or after
termination of this Agreement, shall be resolved by arbitration if the parties
are unable to resolve the dispute through negotiation. Arbitration shall be
initiated by the delivery of a written demand for arbitration by one party to
the other.
SECTION 7.2. PROCEDURE.
(a) Each party shall appoint an individual as arbitrator and the two so
appointed shall then appoint an umpire. If either party refuses or neglects to
appoint an arbitrator within forty-five (45) days after the initial delivery of
the demand for arbitration, the other party may appoint the second arbitrator.
If the two arbitrators do not agree on an umpire within forty-five (45) days of
their appointment, the parties shall petition the American Arbitration
Association to appoint an umpire with the qualifications set forth below. The
arbitrators shall be active or retired officers of insurance or reinsurance
companies or Lloyd's of London Underwriters or reinsurance brokers; the
arbitrators shall not have a personal or financial interest in the result of the
arbitration.
(b) The arbitration hearing shall be held in Omaha, Nebraska or such other
place as may be mutually agreed. Each party shall submit its case to the
arbitrators within forty-five (45) days of the selection of the umpire or within
such longer period as may be agreed by the arbitrators. The arbitrators shall
not be obliged to follow judicial formalities or the rules of evidence except to
the extent required by law of the state of New York; they shall make their
decisions according to the practice of the reinsurance business. The decision
rendered by a majority of the arbitrators shall be final and binding on both
parties. Such decision shall be a condition precedent to any right of legal
action arising out of the arbitrated dispute which either party may have against
the other. Judgment upon the award rendered may be entered in any court having
jurisdiction thereof. Both parties shall abide by the final decision of such
Court or of any appellate court in the event of an appeal.
(c) Except as provided above, arbitration shall be based, insofar as
applicable, upon the Commercial Arbitration Rules of the American Arbitration
Association.
SECTION 7.3. COSTS. Each party shall bear its own costs in connection with
any such arbitration including, without limitation, all legal, accounting, and
any other professional fees and expenses, the fees and expenses of its own
arbitrator, and all other costs and expenses each party incurs to prepare for
such arbitration. Other than set forth above, each side shall pay one-half of
the fee and expenses of the umpire, and one-half of the other expenses that the
parties jointly incur directly related to the arbitration proceeding.
ARTICLE VIII
TERMINATION
SECTION 8.01. TERMINATION DATE. This Agreement can only be terminated by
mutual consent.
SECTION 8.02. APPROVALS. If the approval of any state insurance department is
necessary for the effectiveness of this Retrocession Agreement, the parties will
cooperate and use their best efforts to obtain such approvals.
SECTION 8.03. COSTS OF TERMINATION. If this Retrocession Agreement is
terminated pursuant to Section 8.01, neither party shall be liable to the other
for any costs, expenses, causes of actions, fees or claims of any type due with
respect to such termination.
ARTICLE IX
REGULATORY COMPLIANCE AND APPROVALS
SECTION 9.01. COMPLIANCE. The parties agree to comply with all laws,
regulations or directions of appropriate state insurance departments with regard
to (a) any notification to policyholders under the Reinsured Contracts
(including without limitation all content, description, timing or other
requirements), (b) this Retrocession Agreement and (c) all service requirements
to policyholders under the Reinsured Contracts.
SECTION 9.02. REGULATORY APPROVALS. The parties agree that where formal
approval is required by any state insurance regulatory agency, this Retrocession
Agreement shall not be effective as to any and all Reinsured Contracts in effect
in such state until such approval is obtained.
ARTICLE X
CONFIDENTIALITY
SECTION 10.01. CONFIDENTIAL INFORMATION. During the course of performance
under this Retrocession Agreement, the parties and their respective agents,
employees and representatives will obtain or have access to certain proprietary
or confidential information. The parties undertake and covenant, one to the
other, that they will, and they will cause their respective agents, employees
and representatives to, maintain the confidential information in a confidential
manner in accordance with applicable local, state or federal laws, and in
accordance with this Retrocession Agreement.
ARTICLE XI
RELATIONSHIP OF PARTIES
SECTION 11.01. NO EMPLOYMENT RELATIONSHIP. The relationships between the
parties hereto shall be that of independent contractors. Nothing herein shall
be construed to create the relationship of employer and employee between the
parties or any of their respective agents or employees.
ARTICLE XII
OTHER PROVISIONS
SECTION 12.01. PARAGRAPH HEADINGS. The headings of the provisions of this
Retrocession Agreement are for reference purposes and have no legal force or
effect.
SECTION 12.02. GOVERNING LAW. This Retrocession Agreement shall be construed
and interpreted according to the laws of the State of Iowa.
SECTION 12.03. OTHER ACTIONS. The parties will use their best efforts to cause
the reinsurance contemplated under this Retrocession Agreement to be consummated
and approved by all necessary regulatory bodies and to do such further acts,
matters and deeds, and execute any and all additional instruments and
agreements, that may be mutually agreed as necessary or reasonably required in
order to carry this Retrocession Agreement into full effect.
SECTION 12.04. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. For
purposes of this Agreement, facsimile signatures shall be deemed originals, and
the parties agree to exchange original signatures as promptly as possible.
SECTION 12.05. SET OFF. Granite and Acceptance shall have the right to offset
any balance or amounts due from one party to the other under the terms of this
Agreement. The party asserting the right of offset may exercise such right any
time whether the balances due are on account of premiums or losses or otherwise.
SECTION 12.06. NOTICES. Until otherwise notified, all formal notices,
requests, demands and other communications between the parties shall be directed
to the parties at their respective addresses as follows:
If to Reinsurer:
Acceptance Insurance Company
535 West Broadway
Council Bluffs, Iowa 51503
Attn: President
If to Ceding Companies:
IGF Insurance Company
4720 Kingsway Drive
Indianapolis, Indiana 46205
Attn: President
SECTION 12.07. ASSIGNMENT. This Retrocession Agreement is not assignable
by either party without prior written consent of the other party and, where
required, the prior approval of any appropriate state insurance department.
Neither party's consent under this Section shall be unreasonably withheld.
SECTION 12.08. WAIVER. Failure of Reinsurer or Ceding Companies to enforce any
of its rights or remedies under this Retrocession Agreement shall not constitute
a waiver of such rights or remedies exercisable hereunder.
SECTION 12.09. SEVERABILITY. If any provision of this Retrocession Agreement
should be determined to be invalid or otherwise unenforceable under law, the
remainder of this Retrocession Agreement shall not be affected thereby.
SECTION 12.10. AGREEMENT BINDING. This Retrocession Agreement is binding upon
the parties hereto, their respective representatives, successors and assigns.
SECTION 12.11. MULTIPLE COPIES. This Retrocession Agreement may be executed in
multiple copies, and each shall have the same force and effect of the original.
SECTION 12.11 JOINT AND SEVERAL LIABILITY. All rights and obligations of
the Ceding Companies created under the terms of this Retrocession Agreement
shall be joint and several.
SECTION 12.12. INTEREST. Interest on the balance due and payable that is
not paid when due, shall, in addition to the amount due, incur and pay interest
on the amount due at 1 % per month on part thereof.
IN WITNESS WHEREOF, this Retrocession Agreement has been duly executed.
CEDING COMPANIES:
IGF INSURANCE COMPANY, for itself and for CONTINENTAL CASUALTY INSURANCE COMPANY
By
Name
Title
REINSURER:
ACCEPTANCE INSURANCE COMPANY
By
Name
Title __________________________________