REINSURANCE COVER NOTE
Agreement No: 970018/19/35
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: COMMERCIAL AUTOMOBILE LIABILITY
- ---- EXCESS OF LOSS REINSURANCE AGREEMENT
PERIOD: Continuous from January 1, 1997, Eastern Standard Time,
- ------ subject to cancellation at any January 1 anniversary
thereafter by either party giving ninety (90) days' prior
written notice. Agreement originally effective November 1,
1990.
In the event of cancellation the Company shall have the
option to cancel on a cut-off basis or on 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
occurrence whether any such individual losses take place
before or after such termination.
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REINSURANCE COVER NOTE
Agreement No: 970018/19/35
CLASS: All in-force, new and renewal business classified by the
- ----- Company as Commercial Automobile Liability, including
No-Fault, Uninsured and Underinsured Motorists and Medical
Payments plus Garagekeepers Legal Liability and Garage
Liability except Black Car and Silver Car business.
EXCLUSIONS: This Agreement shall not apply to:
- ----------
1. Assumed reinsurance other than business assumed via
intra-company reinsurance, United Pacific Insurance
Company and Reliance Insurance Company, and
facultative commercial automobile liability
reinsurance in connection with business originally
produced by the Company and specifically reported to
working layer Reinsurers;
2. Loss or liability excluded by the provisions 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.
TERRITORIAL
SCOPE: As per the Company's original policies.
- -----
LIMIT AND
RETENTION: See attached Exhibits A, B and C.
- ---------
RATE: See attached Exhibits A, B and C. Rate applies to the
- ---- Company's Gross Net Earned Premium Income estimated to be
$50,358,250 for 1997.
REPORTS AND
ACCOUNTS: Accounts and premium are due and payable quarterly thirty
- -------- (30) days after the close of each calendar quarter.
CEDING
COMMISSION: 32.5% of ceded earned premium.
- ----------
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1/7/97 2
REINSURANCE COVER NOTE
Agreement No: 970018/19/35
PROFIT
COMMISSION: See attached Exhibits B and C. This provision is not
- ---------- applicable to Exhibit A.
GENERAL
CONDITIONS: The Company shall have permission to purchase facultative
- ---------- excess of loss reinsurance, as well as public
transportation 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.
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.
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1/7/97 3
REINSURANCE COVER NOTE
Agreement No: 970018/19/35
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.
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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REINSURANCE COVER NOTE
Agreement No: 970018/19/35
EXHIBIT A
SECOND COMMERCIAL AUTOMOBILE LIABILITY
EXCESS OF LOSS REINSURANCE AGREEMENT
------------------------------------
(BN970018)
LIMIT AND
RETENTION: 100% of $400,000 each and every loss occurrence in excess
- --------- of $100,000 each and every loss occurrence.
GROSS
RATE: 4.4% Minimum; 22.2% Provisional; 29.6% Maximum.
- ----
NET
RATE: 3.0% Minimum; 15.0% Provisional; 20.0% Maximum.
- ----
RATE
ADJUSTMENT: Losses loaded at 3.0%; adjusted annually at each December
- ---------- 31 until all losses are settled.
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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1/7/97
REINSURANCE COVER NOTE
Agreement No: 970018/19/35
EXHIBIT B
THIRD COMMERCIAL AUTOMOBILE LIABILITY
EXCESS OF LOSS REINSURANCE AGREEMENT
------------------------------------
(BN970019)
LIMIT AND
RETENTION: 100% of $1,000,000 each and every loss occurrence in excess
- --------- of $500,000 each and every loss occurrence.
GROSS RATE: 9.6%.
- ----------
NET RATE: 6.5%.
- --------
CONTINGENT
COMMISSION: Three-Year Block: January 1, 1997 - December 31, 1999
- ---------- ------------------------------------------------------
Cumulative Net Earned Reinsurance Premium less Cumulative
Incurred Losses plus Pro Rata Loss Adjustment Expenses
occurring on and after January 1, 1997 to the termination
of the Agreement, plus deficit, if any, from the preceding
period, and less Reinsurers' Margin shall equal the
Cumulative Net Balance. Balance times 100% equals
Contingent Commission.
Incurred Losses in this calculation to include IBNR factors
of 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. Reinsurers'
Margin shall be 17.5% of the Net Earned Reinsurance
Premium.
Payable annually within ninety (90) days after the close of
each year. Unlimited deficit carry forward. Annual
calculations until all losses are settled. Annual
calculations at each December 31 thereafter until all
losses are settled.
Calculation of this Contingent Commission shall apply
collectively for all Companies reinsured under this
Agreement, and not individually.
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REINSURANCE COVER NOTE
Agreement No: 970018/19/35
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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1/7/97 B-2
REINSURANCE COVER NOTE
Agreement No: 970018/19/35
EXHIBIT C
---------
FOURTH COMMERCIAL AUTOMOBILE LIABILITY
EXCESS OF LOSS REINSURANCE AGREEMENT
------------------------------------
(BN970035)
LIMIT AND
RETENTION: 100% of $3,500,000 each and every loss occurrence in excess
- --------- of $1,500,000 each and every loss occurrence.
GROSS RATE: 5.9%.
- ----------
NET RATE: 4.0%
- --------
CONTINGENT
COMMISSION: Three-Year Block: January 1, 1997 - December 31, 1999
- ---------- ------------------------------------------------------
Cumulative Net Earned Reinsurance Premium less Cumulative
Incurred Losses plus Pro Rata Loss Adjustment Expenses
occurring on and after January 1, 1997 to the termination
of the Agreement, plus deficit, if any, from the preceding
period, and less Reinsurers' Margin shall equal the
Cumulative Net Balance. Balance times 100% equals
Contingent Commission.
Incurred Losses in this calculation to include IBNR factors
of 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. Reinsurers'
Margin shall be 17.5% of the Net Earned Reinsurance
Premium.
Payable annually within ninety (90) days after the close of
each year. Unlimited deficit carry forward. Annual
calculations until all losses are settled. Annual
calculations at each December 31 thereafter until all
losses are settled.
Calculation of this Contingent Commission shall apply
collectively for all Companies reinsured under this
Agreement, and not individually.
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REINSURANCE COVER NOTE
Agreement No: 970018/19/35
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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1/7/97 C-2