REINSURANCE COVER NOTE
Agreement No: 970063
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: PRIVATE PASSENGER AUTOMOBILE LIABILITY AND PHYSICAL DAMAGE
- ---- QUOTA SHARE REINSURANCE AGREEMENT
PERIOD: Continuous from January 1, 1997 at 12:01 a.m., Eastern
- ------ Standard Time, subject to cancellation at any January 1
anniversary thereafter by either party giving ninety (90)
days' prior written notice.
In the event of cancellation, at the Company's option:
1. 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
termination date of said policies.
2. The Company shall reassume the unexpired liability for
all in-force business as of the date of cancellation and
the Reinsurers shall return their share of the unearned
premium less ceding commission.
CLASS: All in-force, new and renewal business classified by the
- ----- Company as Private Passenger Automobile Liability and Physical
Damage (Comprehensive and Collision), including No-Fault,
Uninsured and Underinsured Motorists and Medical Payments, in
the states of Connecticut, Florida and Georgia.
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EXCLUSIONS: This Agreement shall not apply to:
- ----------
1. Assumed reinsurance other than business assumed via
intra-company reinsurance.
2. Loss or liability excluded by the provision of the
"Nuclear Incident Exclusion Clauses - Liability and
Physical Damage - 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. As respects Physical
Damage business, loss or liability excluded by the
provisions of the "Pools, Associations, Syndicates
Exclusion Clause." It is understood and agreed that this
exclusion shall not apply to individual risks assigned to
the Company under an Assigned Risk Plan or similar plan.
7. Speed Contests.
8. Ambulances.
TERRITORIAL
SCOPE: As per the Company's original policies.
- -----
QUOTA SHARE
PARTICIPATION: A. 50% of the Company's net automobile liability losses, not
- ------------- to exceed 50% of $100,000 each and every loss occurrence.
B. 50% of the Company's net automobile physical damage
losses, not to exceed 50% of $85,000, any one vehicle.
PREMIUM: 50% of original net written premium. Premium ceded shall
- ------- be net of the cost of the Private Passenger Second Automobile
Liability Excess of Loss net earned reinsurance premium.
CEDING
COMMISSION: Provisional commission of 26.00% of ceded premiums, subject to
- ---------- adjustment on earned-to-incurred basis, as follows:
Minimum Ceding Commission of 23.00% at a Loss Ratio of 70.00%
or higher; Increasing 1.00% for each 1.00% reduction in Loss
Ratio; Provisional Ceding Commission of 26.00% at a Loss Ratio
of 67.00%; Increasing 1.00% for each 1.00% reduction in Loss
Ratio;
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CEDING
COMMISSION
(Continued): Ceding Commission of 29.00% at a Loss Ratio of 64.00%;
- ----------- Increasing 0.50% for each 1.00% reduction in Loss Ratio;
Maximum Ceding Commission of 32.00% at a 58.00% Loss Ratio.
Loss Corridor: The Company will retain net 5.0 loss ratio
points attaching at a ceded loss ratio of 72.0% and ending at
77.0%.
Annual adjustments at the end of each Agreement
period based on losses incurred during each accident
year. No upward adjustment until twelve (12) months
after the end of each year.
Deficit/Credit carry forward not to exceed three (3) years.
Calculation of this Commission adjustment shall apply
collectively for all Companies reinsured under this Agreement,
and not individually.
WARRANTY: Reinsurers hereon to have the benefit of recoveries from the
- -------- Company's Second Private Passenger Automobile Liability Excess
of Loss Reinsurance Agreement with limits of 100% of
$1,100,000 each occurrence (unlimited reinstatements) excess
$100,000 each occurrence.
REPORTS AND
ACCOUNTS: Within sixty (60) days after the close of each month, the
- -------- Company shall render to the Reinsurers the following:
a. Reinsurance premium written for the month;
b. Less net ceded earned second excess of loss private
passenger automobile liability reinsurance premium for the
month; c. Less commission allowed on the reinsurance
premium for the month; d. Less Reinsurers' share of paid
loss and paid loss adjustment expenses during the month;
e. Plus Reinsurers' share of all salvage recovered during
the month; f. Net balance due.
The Company shall advise the unearned premium and outstanding
losses by line of business and remit the Reinsurers' net
balance within sixty (60) days after the end of each month.
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REINSURANCE COVER NOTE
Agreement No.: 970063
CLAUSES: Net Liability.
- ------- Parties to the Agreement.
Reinsurers Liability.
Losses and Loss Settlements.
Extra Contractual Obligations on a 100% basis within the
Agreement limit. Loss in Excess of Policy Limits on a 100%
basis within the Agreement limit.
Funding of Reserves.
Currency.
Taxes.
Access to Records.
Errors and Omissions, 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 existing 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. 50%
Philadelphia, Pennsylvania
16-0366830 22314 Underwriters Reinsurance Company 50%
Concord, New Hampshire --
TOTAL PLACEMENT: 100%
====
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REINSURANCE COVER NOTE
Agrement No.: 970063
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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