EXHIBIT 10.28
Execution Copy
PLATINUM UNDERWRITERS REINSURANCE, INC.
RUN-OFF SERVICES AGREEMENT
This Agreement, dated as of November 1, 2002 is entered into by and
between Platinum Underwriters Reinsurance, Inc., a Maryland insurance company
("Platinum"), and St. Paul Fire and Marine Insurance Company, a Minnesota
insurance company ("Fire and Marine") and Mountain Ridge Insurance Company, a
Vermont insurance company ("Mountain Ridge", and together with Fire and Marine,
the "St. Paul Parties").
RECITALS:
WHEREAS, The St. Paul Companies, Inc., a Minnesota corporation and
the ultimate parent of the St. Paul Parties ("St. Paul"), and Platinum
Underwriters Holdings, Ltd., a Bermuda company and the ultimate parent of
Platinum ("Parent"), have entered into a Formation and Separation Agreement,
dated as of October 28, 2002 (the "Formation and Separation Agreement"),
pursuant to which St. Paul and Parent have set forth terms governing St. Paul's
sponsorship of the organization of Parent and its subsidiaries, actions to be
taken in respect of Parent's initial public offering of its common shares (the
"Public Offering"), and the ongoing relationships between St. Paul and its
subsidiaries and Parent and its subsidiaries following the effective date of the
Public Offering (the "Closing Date");
WHEREAS, the St. Paul Parties have issued certain reinsurance
contracts, which contracts will not be renewed following the Closing Date (the
"Run-off Contracts") and have issued and may issue or renew certain reinsurance
contracts (the "Reinsurance Contracts") which will be one hundred percent (100%)
reinsured by Platinum pursuant to the Quota Share Retrocession Agreements (as
defined in the Formation and Separation Agreement);
WHEREAS, pursuant to Section 3.01(c) of the Formation and Separation
Agreement, St. Paul and Parent have agreed that Parent's Post-closing
Subsidiaries shall, at the request of St. Paul and its Post-closing
Subsidiaries, provide to St. Paul and its Post-closing Subsidiaries, following
the Closing Date, certain services reasonably necessary to administer the
Run-off Contracts and the Reinsurance Contracts.
NOW, THEREFORE, in furtherance of the transactions contemplated by
the Formation and Separation Agreement and in consideration of the premises and
the mutual covenants and agreements contained therein and herein and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. RUN-OFF SERVICES TO BE PROVIDED.
(a) Description of Run-off Services. Platinum shall provide from time to
time after the Closing Date, at the reasonable request of the St. Paul Parties,
the services of
senior personnel with appropriate expertise and experience that are reasonably
acceptable to the St. Paul Parties as may be reasonably necessary to oversee the
administration of the Run-off Contracts and the Reinsurance Contracts by the St.
Paul Parties, including such services as specified in Exhibit A hereto (the
"Run-off Services").
(b) Standard for Run-off Services. Platinum shall provide each of the
Run-off Services in such manner as the St. Paul Parties may reasonably request
from time to time for purposes of this Agreement; provided that Platinum shall
not be required to provide, or cause to be provided, the Run-off Services at a
standard materially higher than the standard generally provided by Platinum in
respect of other business of Platinum. Platinum shall maintain all licenses and
authorizations required for it to provide the Run-off Services pursuant to this
Agreement.
(c) Period of Run-off Services. (i) Platinum hereby agrees to provide
Run-off Services for up to a period of two years following the date hereof;
provided that Platinum shall in good faith consider requests by the St. Paul
Parties to reasonably extend the time period for Run-off Services in light of
the circumstances at the time of such request. Platinum and the St. Paul Parties
shall agree upon the terms that will govern the provision of Run-off Services to
be so provided at the time the St. Paul Parties makes such request; and
(ii) Platinum or the St. Paul Parties may terminate this Agreement
for cause.
(d) Price of Run-off Services. With respect to the provision of Run-off
Services, each of the St. Paul Parties, severally but not jointly, shall pay to
Platinum or the Platinum Subsidiary designated by Platinum the "actual cost" to
Platinum or its Subsidiary (which shall consist of Platinum's or such
Subsidiary's direct and reasonable indirect costs), as the case may be, as
certified in good faith by Platinum. For greater certainty, the parties agree
that "actual cost" will include any incremental and out-of-pocket costs incurred
by Platinum in connection with the Run-off Services, including the conversion,
acquisition and disposition cost of software and equipment acquired for the
purposes of providing the Run-off Services and the cost of establishing
requisite systems and data feeds and hiring necessary personnel.
(e) Run-off Services Coordinators. (i) Platinum and each of the St. Paul
Parties each agrees to assign a Run-off Services coordinator as set forth in
paragraph (ii) below and to provide other reasonably necessary assistance to
cooperate in determining the extent of Run-off Services to be provided.
(ii) Platinum and each of the St. Paul Parties shall each designate
one Run-off Services coordinator having skills and experience acceptable to the
other party who will provide continuous oversight and coordination of, and
communicate concerning disputes with respect to, the Run-off Services, who will
be available to Platinum and the St. Paul Parties during normal business hours
and who will be responsible for providing for or delegating the provision of
assistance regarding the Run-off Services. The Run-off
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Services coordinators will cooperate on a regular basis to plan for the delivery
of Run-off Services, including the timetable for the provision of such services
and the incurring of related costs. Platinum and the St. Paul Parties may from
time to time substitute the persons serving as Run-off Services coordinators
with other persons qualified to serve in those positions.
(f) Cooperation. Upon the terms and subject to the conditions and other
agreements set forth herein, each party agrees to use its commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other party in doing, all
things necessary or advisable to perform the transactions contemplated by this
Agreement. In particular, the St. Paul Parties shall permit (but shall not
require) Platinum to place one or more of its employees on-site at the St. Paul
Parties, and shall provide such employees with the facilities reasonably
necessary to administer the Run-off Contracts and the Reinsurance Contracts as
contemplated in Section 1(a) and Exhibit A. The St. Paul Parties shall have the
right to review the qualifications and experience of Platinum's employees prior
to providing them with access to the St. Paul Parties' facilities. Such
facilities shall include providing Platinum's employees with workspace
reasonably requested at the site where the St. Paul Parties are servicing their
reinsurance run-off operations and the Reinsurance Contracts to the extent such
workspace is available to be provided to Platinum, and access to the St. Paul
Parties' reinsurance and accounting systems to the extent necessary, provided,
however, that the St. Paul Parties shall not be required to provide such access
to the extent such reinsurance and accounting systems relate to other than the
Run-off Contracts and the Reinsurance Contracts. All such access shall be during
the normal working hours of the St. Paul Parties and shall be required to be
provided only in such a manner as not to unreasonably interfere with the normal
operations of the St. Paul Parties. Platinum agrees that the employees who will
have access to the St. Paul Parties' facilities and information are limited to
using such facilities and information solely and exclusively for the purposes of
providing administration of the Run-off Contracts and the Reinsurance Contracts
as contemplated hereunder, and fulfilling its obligations under this Agreement.
Platinum also agrees that the employees shall not attempt to gain access to any
information relating to contracts other than the Run-off Contracts and the
Reinsurance Contracts. Any non-public information that is not related to the
Run-off Contracts and the Reinsurance Contracts shall be considered confidential
information and proprietary and Platinum and its employees agree not to use such
information for any purpose and not to disclose the information to any third
parties except as required by applicable law or governmental authority.
(g) Regulatory Matters. Platinum will cooperate, and will cause each of
its Post-closing Subsidiaries providing Run-off Services hereunder to cooperate,
with each of St. Paul and its Post-closing Subsidiaries and any regulatory
authorities to satisfy any regulatory requirements applicable to entities that
provide Run-off Services to St. Paul or its Post-closing Subsidiaries.
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(h) Licenses. St. Paul will grant to Platinum and/or its Post-closing
Subsidiaries licenses to use any service marks, trademarks and other
intellectual property rights necessary for Platinum and its Post-closing
Subsidiaries to provide the Run-off Services in accordance with the provisions
of this Agreement.
(i) Retention of Agreement. This Agreement will be retained as part of the
official records of Platinum and the St. Paul Parties for the term of the
Agreement and five years thereafter.
2. BILLING; TAXES.
No later than 30 days following the last day of each calendar
quarter, Platinum shall provide each of the St. Paul Parties with a report
setting forth an itemized list of the Run-off Services provided to each of the
St. Paul Parties during such last calendar quarter, in a form agreed to by the
parties. Each of the St. Paul Parties shall promptly (and in no event later than
30 days after receipt of such report, unless that St. Paul Party is contesting
the amount set forth in the report in good faith) pay to Platinum by wire
transfer in immediately payable funds all amounts payable as set forth in such
report. Each party will pay all taxes for which it is the primary obligor as a
result of the provision of Run-off Services under this Agreement; provide, that
the St. Paul Parties shall be solely responsible for, and shall reimburse
Platinum in respect of any sales, gross receipts or transfer tax payable with
respect to the provision of any Run-off Service under this Agreement, and any
such reimbursement obligation shall be in addition to the St. Paul Parties'
obligation to pay for such Service.
3. CONFIDENTIAL INFORMATION.
Platinum agrees to be bound to the provisions of Section 11.03 of
the Formation and Separation Agreement as if it were the Company thereunder.
4. RELATIONSHIPS AMONG THE PARTIES, RECIPIENTS AND PROVIDERS.
Nothing in this Agreement shall cause the relationship between
Platinum on the one hand and the St. Paul Parties on the other to be deemed to
constitute an agency, partnership or joint venture. The terms of this Agreement
are not intended to constitute any of the parties and their Affiliates a joint
employer for any purpose. Each of the parties agrees that the provisions of this
Agreement as a whole are not intended to, and do not, constitute control of the
other party (or any Affiliates thereof) or provide it with the ability to
control such other party (or any Affiliates thereof), and each party hereto
expressly disclaims any right or power under this Agreement to exercise any
power whatsoever over the management or policies of the other (or any Affiliates
thereof). Nothing in this Agreement shall oblige either party hereto to act in
breach of the requirements of any law, rule or regulation applicable to it,
including securities and insurance laws, written policy statements of securities
commissions, insurance and other regulatory authorities, and the by-laws, rules,
regulations and written policy statements of relevant securities and
self-regulatory organizations.
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5. INDEMNIFICATION.
(a) Each of the St. Paul Parties, severally but not jointly, shall
indemnify and hold harmless, to the full extent permitted by law, Platinum, its
Post-closing Subsidiaries and their respective officers, directors and employees
("Platinum Indemnities") from and against any and all Losses of any of the
Platinum Indemnitees arising out of or based upon any actions taken or refrained
from being taken by any such Platinum Indemnitee at the direction of such St.
Paul Party pursuant to this Agreement, or any breach by such St. Paul Party of
any of its covenants under this Agreement.
(b) Platinum shall indemnify and hold harmless, to the full extent
permitted by law, the St. Paul Parties and their officers, directors and
employees (the "St. Paul Parties' Indemnitees") from and against any and all
Losses of any of the St. Paul Parties' Indemnitees arising out of or based upon
the negligence or willful misconduct of any person providing Run-off Services,
or any breach by Platinum of any of its covenants under this Agreement.
Notwithstanding anything to the contrary in this Agreement, the maximum amount
of indemnifiable losses which may be recovered from Platinum hereunder shall
under no circumstances exceed the aggregate fees paid to Platinum by St. Paul
pursuant to Section 1(d).
(c) Except with respect to claims relating to actual fraud, the
indemnification provisions set forth in this section are the sole and exclusive
remedy of the parties hereto for any and all claims for indemnification under
this Agreement.
6. FORCE MAJEURE/DELAY.
No party will be responsible if it is prevented from complying,
either totally or in part, with any of the terms or provisions of this Agreement
by reason of an Event of Force Majeure (as defined below), and such party shall
have no liability to the other party in connection therewith; provided, that
such party shall have a duty reasonably to mitigate, or cause to be mitigated,
any such failure to comply. As used in the Agreement, an "Event of Force
Majeure" means any of the following: fires, floods, earthquakes, elements of
nature or acts of God; acts of war, terrorism, riots, civil disorders,
rebellions or revolutions; strikes, lockouts or labor difficulties; power
outages, equipment failures, computer viruses or malicious acts of third
parties; and laws, orders, proclamations, regulations, ordinances, demands or
requirements of governmental authorities.
7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS
CONFLICT OF LAWS PRINCIPLES.
8. DISPUTE RESOLUTION.
(a) Mandatory Arbitration. The parties hereto shall promptly submit any
dispute, claim, or controversy arising out of or relating to this Agreement
and/or the
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provision of Services hereunder, including effect, validity, breach,
interpretation, performance, or enforcement (collectively, a "Dispute") to
binding arbitration in New York, New York at the offices of Judicial Arbitration
and Mediation Services, Inc. ("JAMS") before an arbitrator (the "Arbitrator") in
accordance with JAMS' Comprehensive Arbitration Rules and Procedures and the
Federal Arbitration Act, 9 U.S.C. Sections 1 et seq. The Arbitrator shall be a
former judge selected from JAMS' pool of neutrals. The parties agree that,
except as otherwise provided herein respecting temporary or preliminary
injunctive relief, binding arbitration shall be the sole means of resolving any
Dispute. Judgment on any award of the Arbitrators may be entered by any court of
competent jurisdiction.
(b) Costs. The costs of the arbitration proceeding and any proceeding in
court to confirm or to vacate any arbitration award or to obtain temporary or
preliminary injunctive relief as provided in paragraph (c) below, as applicable
(including, without limitation, actual attorneys' fees and costs), shall be
borne by the unsuccessful party and shall be awarded as part of the Arbitrator's
decision, unless the Arbitrator shall otherwise allocate such costs in such
decision.
(c) Injunctive Relief. The parties hereto may seek or obtain temporary or
preliminary injunctive relief in a court for any breach or threatened breach of
any provision hereof pending the hearing before and determination of the
Arbitrator. The St. Paul Parties hereby agree that they shall continue to
provide, or cause their Affiliates to provide, any and all Services pending the
hearing before and determination of the Arbitrator, it being agreed and
understood that the failure to so provide may cause irreparable harm to the St.
Paul Parties and their Affiliates and that the putative breaching party has
assumed all of the commercial risks associated with such breach or threatened
breach of any provision hereof by such party.
(d) Courts. The parties agree that the State and Federal courts in The
City of New York shall have jurisdiction for purposes of enforcement of their
agreement to submit Disputes to arbitration and of any award of the Arbitrator.
9. ASSIGNMENT.
Neither this Agreement nor the rights or obligations hereunder shall
be assignable by either party hereto, by operation of law or otherwise, without
the prior written consent of the other party hereto, and any purported
assignment shall be null and void. Subject to the foregoing, this Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns.
10. ENTIRE AGREEMENT.
This Agreement and the Formation and Separation Agreement constitute
the entire agreement, and supersede all prior agreements and understandings
(oral and written), by and among the parties hereto with respect to the subject
matter hereof.
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11. NO THIRD PARTY RIGHTS.
Nothing contained in this Agreement, express or implied, establishes
or creates, or is intended or will be construed to establish or create, any
right in or remedy of, or any duty or obligation to, any third party.
12. NOTICES.
All notices, requests, claims, demands, and other communications
hereunder will be in writing and shall be deemed to have been duly given if
delivered by hand (with receipt confirmed), or by certified mail, postage
prepaid and return receipt requested, or by facsimile addressed as follows (or
to such other address as a party may designate by written notice to the others)
and shall be deemed given on the date on which such notice is received:
If to the St. Paul Parties:
The St. Paul Companies, Inc.
385 Washington Street
St. Paul, Minnesota 55102
Attn.: General Counsel
Facsimile: (410) 205-6967
With a copy to:
Donald R. Crawshaw
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Facsimile: (212) 558-3588
If to Platinum:
Platinum Underwriters Holdings, Ltd.
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
Attn.: Secretary
Facsimile: (441) 292-4720
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With a copy to:
Linda E. Ransom
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Facsimile: (212) 259-6576
13. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
14. AMENDMENT; MODIFICATION.
The parties may by written agreement, subject to any regulatory
approval as may be required, (a) extend the time for the performance of any of
the obligations or other acts of the parties hereto (b) waive any inaccuracies
in the documents delivered pursuant to this Agreement, and (c) waive compliance
with or modify, amend or supplement any of the agreements contained in this
Agreement or waive or modify performance of any of the obligations of any of the
parties hereto. This Agreement may not be amended or modified except by an
instrument in writing duly signed on behalf of the parties hereto.
15. WAIVER.
No failure by any party to take any action or assert any right
hereunder shall be deemed to be a waiver of such right in the event of the
continuation or repetition of the circumstances giving rise to such right,
unless expressly waived in writing.
16. SEVERABILITY.
To the extent any provision of this Agreement shall be invalid or
unenforceable, it shall be considered deleted herefrom and the remaining
provisions of this Agreement shall be unaffected and shall continue in full
force and effect.
17. SPECIFIC PERFORMANCE AND OTHER EQUITABLE RIGHTS.
Each of the parties recognizes and acknowledges that neither the St.
Paul Parties nor Platinum would contemplate the provision of Run-off Services
hereunder unless this Agreement was executed and that a breach by a party of any
covenants or other commitments contained in this Agreement will cause the other
party to sustain injury for which it would not have an adequate remedy at law
for money damages. Therefore, each of the parties agrees that in the event of
any such breach, the aggrieved
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party shall be entitled to the remedy of specific performance of such covenants
or commitments and preliminary and permanent injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or in
equity, and the parties further agree to waive any requirement for the securing
or posting of any bond in connection with the obtaining of any such injunctive
or other equitable relief.
18. HEADINGS.
Headings contained in this Agreement are for reference purposes
only. They shall not affect in any way the meaning or interpretation of this
Agreement.
19. DEFINITIONS; FORMATION AND SEPARATION AGREEMENT.
Capitalized terms used but not defined in this Agreement have the
meanings specified in the Formation and Separation Agreement.
20. EFFECTIVENESS.
This Agreement shall become effective contingent upon the
consummation of the Public Offering, without any further action by either of the
parties hereto.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
ST. PAUL FIRE AND MARINE INSURANCE COMPANY
By: /s/ Thomas A. Bradley
-----------------------------------------
Name: Thomas A. Bradley
Title: Executive Vice President and Chief
Financial Officer
MOUNTAIN RIDGE INSURANCE COMPANY
By: /s/ James M. Conway
-----------------------------------------
Name: James M. Conway
Title: Secretary
PLATINUM UNDERWRITERS REINSURANCE, INC.
By: /s/ Michael D. Price
-----------------------------------------
Name: Michael D. Price
Title: President and Chief Underwriting
Officer
EXHIBIT A
Run-Off Services
- ------------------------- -------------------- ------- ------- ---------------- -------------- ---------------
DESCRIPTION OF
FACILITIES AND
ASSETS TO BE MAXIMUM
USED IN LEVEL QUALITY SERVICE
DESCRIPTION OF PROVIDING OF OF PERIOD FROM PRICE OF CONTACT
RESPONSIBILITIES SERVICES SERVICE SERVICE CLOSING SERVICES PERSON
- ------------------------- -------------------- ------- ------- ---------------- -------------- ---------------
CONTRACT WORDING
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1) Initial contract Platinum employees December 31, Actual costs Cathy Keeley
wording review for will have access to 2003 as allocated
2002 Platinum existing SPRe among parties
Reinsured Business systems and files as through July
2) Initial contract needed Consultation as 2003
wording review for needed
2002 excluded business Actual Cost,
3) Contract wording hourly rate
review and
consultation for Actual Cost,
pre-2002 business. hourly rate
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LEGAL
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1) Contract wording
assistance and
oversight as needed,
including legal review
of certain contract
clauses (mold and
terrorism).
2) Coordination with
Claims with respect to
significant disputes;
provide legal
analysis, and
retain/supervise
outside counsel in
connection with any
claims related
litigations/
arbitrations.
3) Consult on various MGA
disputes (Redhawk,
Vicko, Clarke,
Fortress).
4) Assistance with
non-party discovery,
on-going branch
closings, and certain
other transition
matters.
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A-1
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DESCRIPTION OF
FACILITIES AND
ASSETS TO BE MAXIMUM
USED IN LEVEL QUALITY SERVICE
DESCRIPTION OF PROVIDING OF OF PERIOD FROM PRICE OF CONTACT
RESPONSIBILITIES SERVICES SERVICE SERVICE CLOSING SERVICES PERSON ISSUES
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Information Systems
- ------------------------- -------------------- ------- ------- ---------------- -------------- --------------- --------------
1. Provide help 4 months, or Actual cost Fernando Mavri
desk/hands-on until either (Operator)
technical support for party stops
"Second Shift" occupying the German
computer room premises at 195 Bolistavsky
operations, database Broadway, New (DBA)
administration York, NY (the
(specifically during "Premises"), Patrick Rene
last week of November which ever is (DBA alternate
02 through December earlier. for German)
02, where Platinum
will be providing full
support).
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2. Provide knowledge 4 months or Actual cost Omar Fazal
transferregarding Data until either (Notes,
Center issues on an as party Terminal
needed basis for the stops occupying Server,
following areas: the Premises, General)
which ever is
- -LAN Administration earlier. Mike Finamore
(including Novel and (LAN,
Windows 2000) Applications
- -Terminal Server Deployment,
Administration General)
(including Citrix)
- -Lotus Notes Robert Surma
Administration (LAN,
- -Application Deployment Applications
- -External Communications/ Deployment,
Internet General)
- -Computer Room Operations
- -General Systems Q&A Rafael Rivera
(Applications
Deployment)
Frank Dlugosz
(Computer Room
Operations,
External
Communications,
Internet,
General)
Joe Plasencia
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A-2
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DESCRIPTION OF
FACILITIES AND
ASSETS TO BE MAXIMUM
USED IN LEVEL QUALITY SERVICE
DESCRIPTION OF PROVIDING OF OF PERIOD FROM PRICE OF CONTACT
RESPONSIBILITIES SERVICES SERVICE SERVICE CLOSING SERVICES PERSON ISSUES
- ------------------------- -------------------- ------- ------- ---------------- -------------- --------------- --------------
(General)
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3. Provide knowledge 4 months or Actual cost Nathalie
transfer regarding until either Barrezueta
various Applications party (Oracle
issues on an as needed stops occupying Financials,
basis for the the Premises, CHQ, Finance
following areas: which ever is Processing)
earlier.
-Oracle Financials Raman
-CHQ Reporting Sundarajan
-Finance related (Oracle
processing Financials,
-Data Warehousing CHQ, Finance
-Actuate Reporting Processing)
Architecture
-GRS Security Jack Jagannath
(Oracle
Financials)
Nassir Fazal
(Data
Warehousing)
Katerina
Mavrodis (Data
Warehousing)
German
Bolislavaky
(Actuate)
Patrick Rene
(Actuate, GRS
Security)
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4. Provide knowledge 4 months or Actual cost Joe Plasencia
transfer regarding until either Sonya Toribio
various Applications party
issues on an as needed stops occupying
basis for the the Premises,
following areas: which ever is
earlier.
-Purchasing
-Inventory
-Vendor relations
-Contract
Management
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A-3
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DESCRIPTION OF
FACILITIES AND
ASSETS TO BE MAXIMUM
USED IN LEVEL QUALITY SERVICE
DESCRIPTION OF PROVIDING OF OF PERIOD FROM PRICE OF CONTACT
RESPONSIBILITIES SERVICES SERVICE SERVICE CLOSING SERVICES PERSON ISSUES
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FINANCE
- ------------------------------------------------------------------------------------------------------------------------------------
(A) FINANCIAL OPERATIONS AND REPORTING
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EXHIBIT A
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DESCRIPTION OF
FACILITIES AND
ASSETS TO BE MAXIMUM
USED IN LEVEL QUALITY SERVICE
DESCRIPTION OF PROVIDING OF OF PERIOD FROM PRICE OF CONTACT
RESPONSIBILITIES SERVICES SERVICE SERVICE CLOSING SERVICES PERSON ISSUES
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1. Consultation or Platinum employees Estimated Actual cost Anthony Macri
assistance as needed will have access to service period Dorothea
in the maintenance and and will be required through lst qtr Monteleone
closing of the to use existing Re 2003 close Steve Timpone
official books for St. systems and existing subject to 1E.
Paul Re runoff during and/or new policies
the interim period. & procedures. Note It is expected
Includes the the "or new" is that the Re
following: limited to the run-off
A. Assistance in the tagging, processing personnel can
processing of and reporting of perform some
automated retroactive functions on
transactions, manual reinsurance only. Day 1.
journal entries,
general ledger
maintained, account
reconciliation and
other items as deemed
necessary to prepare
and support financial
statements (GAAP, Tax
and statutory) and
closing feed required
by CHQ. Includes the
proper recording and
reporting of the
retroactive
reinsurance
accounting.
B. Applies to functions
that occur monthly,
quarterly as well as
annually.
C. Applies to all
components of the
underwriting function,
premium, commissions,
case loss and loss
expense reserves, IBNR
loan and Loss expense
reserves and paid loss
and loss expense.
D. Handling of Run-off
Foreign currency
accounting.
E. Training of Re staff
to be able to support
this function in the
endstate.
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Page 2 of 8
EXHIBIT A
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2. Assist in the Estimated Actual cost Anthony Macri
development and service period Dorothea
implementation to tag 3-6 months Monteleone
and properly report subject to staff Steve Timpone
retroactive and training. Claude Chevance
prospective St. Paul
cessions to Platinum
and training of Re
staff to be able to
support this function
in the endstate.
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3. Reconcile St. Paul Re Until task is Actual cost Anthony Macri
general ledger completed Steve Timpone
accounts as of 9/30/02 Tim Fritz
to CHQ and turn over Claude Chevance
to St. Paul Re run-off
and CHQ staff.
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4. Consultation or 1 month duration Actual cost Anthony Macn Accruals will
assistance in the or until Dorothea go to CHQ when
completion of misc. information is Monteleone operating
accounting items turned over. Steve Timpone expense items
currently performed Transfer to CHQ Jim Kopp move. Other
during the interim as listed. Sales Sharon Manning items staff
period. Training of & use tax owner James Watczsk in NY must
St. Paul Re runoff Jim Kopp. perform on
staff to handle Dorothea to executive
functions until they prepare info for compensation
can be turned over to exp audit to until all on
Re staff at a mutually point of CHQ system.
agreed time. This transfer.
includes but is not Dorothea provide
limited to: James W. exp
A. Expense accrual accrual info
B. Expense Sharon M. work
distribution with Anthony on
C. Employee benefit depreciation.
accrual Claude to
D. Deprecation prepare rent tax
E. Sales and use tax
F. Commercial rent tax
G. Expense reports for
highly compensated
executives
H. Banking information
I. Other items that
are required
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Page 3 of 8
EXHIBIT A
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5. Complete management Expected Actual Cost Anthony Macri Assume that
company expense duration 1 month Dorothea CHQ reports
allocations. Monteleone for expense
Service required Steve Timpone reporting and
during the management
period after the meet Mark
close but prior reporting
to turning the needs. If this
general ledger is not the
over to CHQ for approach more
operating exp. training will
items. be required.
- ------------------------- -------------------- ------- ------- ---------------- -------------- --------------- --------------
6. Train staff on 2 months Actual cost Anthony Macri
reporting and consultation as Dorothea
processing required Monteleone
requirements for the Steve Timpone
Vermont captive.
- ------------------------- -------------------- ------- ------- ---------------- -------------- --------------- --------------
7. Train staff on 2 months Actual cost Anthony Macri
reporting and Consultation as Dorothea
processing required Monteleone
requirements for the Steve Timpone
Bermuda captive.
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(b) Treasury
- ------------------------- -------------------- ------- ------- ---------------- -------------- --------------- --------------
8. Consultation as needed Maximum Actual cost Dorothea
for Re run-off staff consultation Monteleone
to complete daily cash period 1 month Robert Fanelli
flow funding analysis
during the interim It is expected
period. Includes the that the Re
following: run-off
Reviewing personnel can
underwriting/claims perform this
experience and any function on
operating expense that Day l
affect the company's
cash flow.
- ------------------------- -------------------- ------- ------- ---------------- -------------- --------------- --------------
9. Consultation as needed Maximum Actual cost Dorothea
for Re run-off staff consultation Monteleone
to enter cash receipts period 1 month Robert Fanelli
into GRS by company,
client, currency and It is expected
CSD staff member for that the Re
matching and clearing run-off
personnel can
perform this
function on
Day l
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Page 4 of 8
EXHIBIT A
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10. Consultation as Maximum Actual cost Dorothea
needed for Re run-off consultation Monteleone
staff to complete all period 1 month Robert Fanelli
necessary underwriting
cash disbursements. It is expected
Includes wires/ACH and that the Re
checks, and can be run-off
denominated in personnel can
multiple currencies. perform this
function on
Day l
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Page 5 of 8
EXHIBIT A
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11. Complete operating Maximum service Actual cost Dorothea Operating
cash disbursements and period 1 month Monteleone expense
travel and expense Kathy Skytland accounts and
accounts until such Paul Munson T&E processing
time as that these will require a
functions are plan for
transferred to CHQ. transition
Provide St. Paul Re that includes
staff an overview of communication,
existing processing training, and
environment to enable deployment of
them to research software to
items as needed. employees
affected in
St. Paul Re
run-off.
Target date is
11/1/2002
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12. Transition payroll Maximum service Actual cost Dorothea Transition G/L
processing to CHQ in period 1 month Monteleone to chq and
an expedient manner. Sharon Manning bank
Ensure complete and Bob Vidmar reconciliation
accurate reporting of on 11/1.
such on St. Paul Re
general ledger. Re Run-off
Transition ledger and employees
bank accounts will be
reconciliation on converted to
11/1. Provide St. Paul new department
Re staff an overview units once the
of existing processing deal is
environment to enable signed.
them to research items Payroll
as needed. register must
go to Dorothea
during the
interim for
proper G/L
posting.
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Page 6 of 8
EXHIBIT A
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13. A. Prepare bank 1 month after Actual cost Dorothea Bank account
account reconciliation transition Monteleone number sent to
for the St. Paul Re Kevin Burke Abe McCarty a
Management Company Joel Campbell week prior to
until such time as St. St. Paul Re conversion.
Paul Re staff is run-off staff Hand off
trained and it is expected the
mutually agreed to Dorothea, second week of
transition effort to Kevin, Joel Nov.
the Re run-off staff. to plan and
document Kevin Burke to
B. Prepare bank account transition receive the
reconciliation for the plan and Management
underwriting accounts approach Company
until such time as St. reconciliation
Paul Re staff is
trained and it is Claude to
mutually agreed to receive the
transition effort to underwriting
the Re run-off staff. reconciliation
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14. Consultation as Maximum service Actual cost Dorothea
needed to transition period 1 month Monteleone
due to and from inter It is expected Joel Campbell
company accounts that the Re
reconciliation to CHQ. run-off
personnel can
perform this
function on
Day l
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15. Consultation as 2 months Actual cost Dorothea Review trial
needed for Re run-off Monteleone balances,
staff to complete the It is expected Investment
monthly foreign that the Re report and
currency position. run-off queries as
personnel can needed.
perform this
function on
Day l
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Page 7 of 8
EXHIBIT A
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16. Assist, consult and 15 months Actual cost Lewis Pulliam
train St. Paul Re Neal Schmitt
runoff staff with Milary Olson
other actuarial
support functions
including:
A. Review and analysis of
data for the purpose
of establishing IBNR
and EBNR reserves as
well as all other
appropriate accruals.
B. Identify the
significant drivers of
the result as well as
explaining the actual
variation from
expectations.
C. Review and
modification to
Schedule P.
D. Update Asbestos and
Environmental reserve
position.
E. Review of underlying
reserving parameters
and assumptions.
F. Maintenance of
Actuarial Reserving
System (ARS).
G. Maintenance of
historical data by
reserving class
detail.
H. Review of actual vs.
expected loss
emergence.
I. Respond to all queries
from retrocessionaries
concerning reserve
position and
development.
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Page 8 of 8
EXHIBIT A
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17. Complete loss reserve 90 days after Actual cost Lewis Pulliam Platinum staff
valuation at the date the close Neal Schmitt will complete
of close as required Milary Olson the valuation
by the retrocession Scott Anderson and St. Paul
agreements. Paul Brehm staff will
approve it
- ------------------------- -------------------- ------- ------- ---------------- -------------- --------------- --------------
18. Assist, consult and 15 months Actual cost Paul Brehm
train St. Paul Re Lewis Pulliam
runoff staff with the Neal Schmitt
calculation of results Milary Olson
(Paid & Ult L/R) by
accident year (99 and
forward) to be used
for the updating of
the Holborn loss
recovery position.
Also assist, consult,
and train St. Paul Re
runoff staff with the
updating of the
Casualty Aggregate
loss recovery.
- ------------------------- -------------------- ------- ------- ---------------- -------------- --------------- --------------
Page 9 of 8
EXHIBIT A
(d) Overall
- ------------------------- -------------------- ------- ------- ---------------- -------------- --------------- --------------
19. Platinum to provide After year end Actual cost - Anthony Macri
assistance to Re close or as hourly rate Dorothea
run-off staff to required Monteleone
respond to requests Steve Timpone
from external Lewis Pulliam
auditors, examiners Neal Schmitt
and regulators related Milary Olson
to St. Paul Re
reporting, including
annual examination of
its financial
statements, or other
required filings. This
could include but is
not limited to State
insurance department
examinations, IRS,
KPMG, Sales and use
tax audits, etc.
- ------------------------- -------------------- ------- ------- ---------------- -------------- --------------- --------------
Page 10 of 8