REINSURANCE COVER NOTE
Agreement No: 960006
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 AND COMMERCIAL AUTOMOBILE PHYSICAL DAMAGE
- ---- QUOTA SHARE REINSURANCE AGREEMENT
PERIOD: Continuous from December 31, 1996 at 12:01 a.m., Eastern
- ------ Standard Time, subject to cancellation at any December 31
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 Physical Damage and
Commercial Automobile Physical Damage (including
Collision), except Private Passenger business written in
Connecticut, Florida and Georgia.
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REINSURANCE COVER NOTE
Agreement No: 960006
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 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 - Physical Damage
- Reinsurance - USA and Canada."
3. Financial Guarantee and Insolvency.
4. Insolvency Funds.
5. War Risks.
6. 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. Bodily Injury and Property Damage Liability, including
Personal Injury Liability and Medical Payments.
8. Personal Accident and Health.
TERRITORIAL
SCOPE: As per the Company's original policies.
- -----
QUOTA SHARE
PARTICIPATION: 40% of the Company's net liability, not to exceed 40% of
- ------------- $85,000, any one vehicle for Private Passenger Automobile
Physical Damage business and not to exceed 40% of $125,000,
any one vehicle, for Commercial Automobile Physical Damage
business.
PREMIUM: 40% of original written premium. 1997 estimated ceded
- ------- written premium is $19,352,600.
CEDING
COMMISSION: Provisional commission of 34.000% of ceded premiums,
- ---------- subject to adjustment on earned-to-incurred basis, as
follows:
Minimum Ceding Commission of 27.500% at a Loss Ratio of
64.500% or higher; Increasing 1.000% for each 1.000%
reduction in Loss Ratio; SEC:vs 1/8/97 2
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REINSURANCE COVER NOTE
Agreement No: 960006
CEDING
COMMISSION
(Continued): Provisional Ceding Commission of 34.000% at a Loss Ratio of
- ----------- 58.000%; Increasing 1.000% for each 1.000% reduction in
Loss Ratio; Ceding Commission of 45.000% at a Loss Ratio of
47.000%; Increasing 0.750% for each 1.000% reduction in
Loss Ratio; Maximum Ceding Commission of 60.000% at a
27.000% Loss Ratio. Loss Corridor: The Company will retain
net 5.0 loss ratio points attaching at a ceded loss ratio
of 68.5% and ending at 73.5%.
Annual adjustments at the end of each Agreement period
based on losses incurred during each calendar 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.
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 commission allowed on the reinsurance premium for
the month;
c. Less Reinsurers' share of paid loss and paid loss
adjustment expenses during the month;
d. Plus Reinsurers' share of all salvage recovered during
the month;
e. 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.
GENERAL
CONDITIONS: The Company shall have permission to purchase excess of
- ---------- loss protection, recoveries under which shall inure to the
benefit of this Agreement.
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REINSURANCE COVER NOTE
Agreement No: 960006
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 expiring Reinsurance Agreements 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. 45%
Philadelphia, Pennsylvania
16-0366830 22314 Underwriters Reinsurance Company 45%
Concord, New Hampshire
63-0598629 11762 Vesta Fire Insurance Corporation 10%
Birmingham, Alabama --
TOTAL PLACEMENT: 100%
====
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REINSURANCE COVER NOTE
Agreement No: 960006
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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