REINSURANCE COVER NOTE
Agreement No: 970008
MEMORANDUM OF REINSURANCE EFFECTED ON BEHALF OF:
REINSURED: HOME STATE INSURANCE GROUP
- ---------
HOME STATE INSURANCE COMPANY
Red Bank, New Jersey
QUAKER CITY INSURANCE COMPANY
Trevose, Pennsylvania
NEW YORK MERCHANT BAKERS INSURANCE COMPANY
Binghamton, New York
HOME MUTUAL INSURANCE COMPANY OF BINGHAMTON, NEW YORK
Binghamton, New York
PINNACLE INSURANCE COMPANY
Carrollton, Georgia
WESTBROOK INSURANCE COMPANY
Wallingford, Connecticut
(hereinafter referred to as the "Company")
TYPE: SECOND PERSONAL AUTOMOBILE LIABILITY
- ---- EXCESS OF LOSS REINSURANCE AGREEMENT
PERIOD: Continuous from 12:01 a.m., Eastern Standard Time,
- ------ January 1, 1997, subject to cancellation at any January 1
anniversary thereafter, by either party giving ninety (90)
days' prior written notice. Agreement originally effective
November 1, 1989.
In the event of cancellation, the Company shall have the
option to cancel on a cut-off basis or a run-off basis.
If run-off is chosen, the Reinsurers shall remain liable
for their share of all policies in force hereunder at the
effective date of cancellation until the natural expiration
or prior cancellation of said policies at expiring terms,
not to exceed twelve (12) months after the effective date
of cancellation. The additional premium to Reinsurers for
run-off shall be the expired rate applied to the unearned
premium in force at the time of cancellation.
Should this Agreement terminate while a loss occurrence is
in progress, the Reinsurers shall be liable for their share
of all individual losses resulting from such loss
occurrences whether any such individual losses take place
before or after such termination.
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REINSURANCE COVER NOTE
Agreement No: 970008
CLASS: All in-force, new and renewal business classified by the
- ----- Company as Personal Automobile Liability.
EXCLUSIONS: This Agreement shall not apply to:
1. Assumed Reinsurance other than business assumed via
intra-company reinsurance and Delaware private
passenger business written as a 100% Quota Share of
companies with whom Quaker City Insurance Company has
entered into rollover agreements;
2. Loss or liability excluded by the provision of the
"Nuclear Incident Exclusion Clauses - Liability -
Reinsurance - USA and Canada";
3. Financial Guarantee and Insolvency;
4. Insolvency Funds;
5. War Risks, as described in the North American War Risk
Exclusion Clause;
6. All business derived directly or indirectly from any
Pool, Association or Syndicate, except that individual
losses from Assigned Risk Plans or similar plans are
not excluded;
7. Speed Contests; and
8. Ambulances.
TERRITORIAL
SCOPE: As per the Company's original policies.
- -----
LIMIT AND
RETENTION: $1,100,000 Ultimate Net Loss each and every loss occurrence
- --------- in excess of $100,000 Ultimate Net Loss each and every loss
occurrence.
RATE: Gross Rate: 13.5%; Net Rate: 9.1%
- ----
Rate applies to the Company's Gross Net Earned Premium
Income, estimated to be $76,534,700 for 1997.
REPORTS AND
ACCOUNTS: Accounts and premium are due and payable quarterly thirty
- -------- (30) days after the close of each calendar quarter.
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REINSURANCE COVER NOTE
Agreement No: 970008
CEDING
COMMISSION: 32.5% of gross ceded premium.
CONTINGENT
COMMISSION: Three-Year Block: January 1, 1997 - December 31, 1999
- ---------- ------------------------------------------------------
Net Earned Reinsurance Premium; Less 17.5% of Net Earned
Reinsurance Premium; Less Incurred Losses, including IBNR;
Less Deficit, if any, from preceding period; Balance times
100% equals Contingent Commission.
Payable annually within ninety (90) days after the close of
each year. Unlimited deficit carry forward. Annual
calculations at each December 31 thereafter until all
losses are settled.
Incurred Losses to include IBNR factors as follows: 50% of
net earned reinsurance premium at the first calculation at
12/31/97; 30% of net earned reinsurance premium at the
second calculation at 12/31/98; 10% of net earned
reinsurance premium at the third calculation at 12/31/99
and 0% at subsequent calculations.
Calculation of this Contingent Commission shall apply
collectively for all Companies reinsured under this
Agreement, and not individually.
GENERAL
CONDITIONS: The Company shall have permission to purchase Pennsylvania
- ---------- catastrophic personal injury protection excess of loss
reinsurance, recoveries under which shall inure to the
benefit of this Agreement.
CLAUSES: Parties to the Agreement.
- ------- Net Retained Lines.
Ultimate Net Loss - Loss Adjustment Expenses pro rata in
addition to the limits of the Agreement.
Extra Contractual Obligations on a 90%/10% basis within the
limit of the Agreement.
Loss in Excess of Policy Limits on a 90%/10% basis within
the limit of the Agreement.
Subrogation.
Salvage and Recoveries.
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REINSURANCE COVER NOTE
Agreement No: 970008
CLAUSES
(Continued): Definition of Loss Occurrence.
- ----------- Loss Notice and Settlements.
Funding of Reserves.
Currency.
Taxes.
Access to Records.
Errors and Omissions not to override Loss Notice and
Settlements, and not to apply to Exclusions.
Original Conditions.
Insolvency.
Arbitration.
Federal Excise Tax.
Service of Suit - NMA 1998 - Mendes & Mount (where
applicable).
Offset.
Severability.
Minet Re North America, Inc. Intermediary.
WORDING: As per expiring Reinsurance Agreement as far as applicable
- ------- and as noted herein, which complies with the requirements
of the State of New York Insurance Department.
REINSURERS:
- ----------
NAIC
FEIN No. No. Through Minet Re North America Share
-------- ----- ------------------------------ -----
23-0580680 24457 Reliance Insurance Company
through Reliance Reinsurance Corp. 25%
Philadelphia, Pennsylvania
16-0366830 22314 Underwriters Reinsurance Company 25%
Concord, New Hampshire --
TOTAL PLACEMENT: 50%
===
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REINSURANCE COVER NOTE
Agreement No: 970008
We will periodically provide a list of those companies with which Minet Re North
America, Inc. is affiliated, which may be parties to this placement. This list
is available on request.
FOR AND ON BEHALF OF:
MINET RE NORTH AMERICA, INC.
___________________________ DATE: _______________
Senior Vice President
AGREED TO:
HOME STATE INSURANCE GROUP
HOME STATE INSURANCE COMPANY
QUAKER CITY INSURANCE COMPANY
NEW YORK MERCHANT BAKERS INSURANCE COMPANY
HOME MUTUAL INSURANCE COMPANY OF BINGHAMTON, NEW YORK
PINNACLE INSURANCE COMPANY
WESTBROOK INSURANCE COMPANY
___________________________ DATE: _______________
Authorized Signature
Please examine this document carefully and advise us immediately if any of the
details on the security used are not in accordance with your order or
requirements.
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