Exhibit 10.04
PROPERTY CATASTROPHE OVERLYING EXCESS OF LOSS
REINSURANCE CONTRACT
EFFECTIVE JULY 1, 2002
PROPERTY CATASTROPHE OVERLYING EXCESS OF LOSS
REINSURANCE CONTRACT
ISSUED TO
STATE AUTOMOBILE MUTUAL INSURANCE COMPANY
MILBANK INSURANCE COMPANY
STATE AUTO NATIONAL INSURANCE COMPANY
STATE AUTO INSURANCE COMPANY OF WISCONSIN
FARMERS CASUALTY INSURANCE COMPANY
MID-PLAINS INSURANCE COMPANY
STATE AUTO INSURANCE COMPANY OF OHIO
MERIDIAN SECURITY INSURANCE COMPANY
MERIDIAN CITIZENS MUTUAL INSURANCE COMPANY
BY
STATE AUTOMOBILE MUTUAL INSURANCE COMPANY
MILBANK INSURANCE COMPANY
STATE AUTO NATIONAL INSURANCE COMPANY
STATE AUTO INSURANCE COMPANY OF WISCONSIN
FARMERS CASUALTY INSURANCE COMPANY
MID-PLAINS INSURANCE COMPANY
STATE AUTO INSURANCE COMPANY OF OHIO
MERIDIAN SECURITY INSURANCE COMPANY
MERIDIAN CITIZENS MUTUAL INSURANCE COMPANY
PROPERTY CATASTROPHE OVERLYING EXCESS OF LOSS
REINSURANCE CONTRACT
TABLE OF CONTENTS
ARTICLE NO. TITLE PAGE
- ----------- ----- ----
ARTICLE I BUSINESS COVERED 1
ARTICLE II EXCLUSIONS 1 - 3
ARTICLE III TERM 3
ARTICLE IV TERRITORY 3
ARTICLE V AMOUNT OF LIMIT AND RETENTION 3
ARTICLE VI ULTIMATE NET LOSS 4
ARTICLE VII NET RETAINED LINES 4
ARTICLE VIII UNDERLYING EXCESS 4
ARTICLE IX DEFINITION OF LOSS OCCURRENCE 4 - 6
ARTICLE X NOTICE OF LOSS AND LOSS SETTLEMENT 6
ARTICLE XI PREMIUM 6
ARTICLE XII CURRENCY 6
ARTICLE XIII OFFSET 7
ARTICLE XIV ACCESS TO RECORDS 7
ARTICLE XV ERRORS AND OMISSIONS 7
ARTICLE XVI TAXES 7
ARTICLE XVII INSOLVENCY 7 - 8
ARTICLE XVIII ARBITRATION 8 - 9
PROPERTY CATASTROPHE OVERLYING EXCESS OF LOSS
REINSURANCE CONTRACT
BETWEEN
STATE AUTOMOBILE MUTUAL INSURANCE COMPANY
MILBANK INSURANCE COMPANY
STATE AUTO NATIONAL INSURANCE COMPANY
STATE AUTO INSURANCE COMPANY OF WISCONSIN
FARMERS CASUALTY INSURANCE COMPANY
MID-PLAINS INSURANCE COMPANY
STATE AUTO INSURANCE COMPANY OF OHIO
MERIDIAN SECURITY INSURANCE COMPANY
MERIDIAN CITIZENS MUTUAL INSURANCE COMPANY
(HEREINAFTER COLLECTIVELY REFERRED TO AS THE "COMPANY")
AND
STATE AUTO PROPERTY AND CASUALTY INSURANCE COMPANY
(HEREINAFTER REFERRED TO AS THE SUBSCRIBING "REINSURER")
ARTICLE I
BUSINESS COVERED:
The Reinsurer shall indemnify the Company for the net excess liability
as hereinafter provided and specified, which may accrue to the Company
as a result of any loss or losses which may occur during the currency
of the Contract under any and all policies, contracts, binders and
other evidence of insurance and reinsurance, oral or written
(hereinafter referred to as "Policies") heretofore or hereafter issued
or entered into by or on behalf of the Company and classified by the
Company as Fire, Allied Lines, Homeowners (property coverages),
Farmowners (property coverages), Commercial Multiple Peril policies
(property coverages), Ocean Marine, Inland Marine and Automobile
Physical Damage.
ARTICLE II
EXCLUSIONS:
The following shall be excluded from the scope of this Contract:
1. Business written and classified by the Company as:
a) Aviation Insurance;
b) Casualty Insurance (i.e. Accident, Health, Third
Party Liability, Workers Compensation and Employers
Liability, Fidelity, Plate Glass and Burglary and
Theft when written as such);
c) Credit Insurance;
d) Financial Guarantee Insurance;
e) Insolvency Insurance;
f) Life Insurance;
g) Mortgage Impairment Insurance;
h) Title Insurance;
i) Surety;
j) Flood Insurance when written as such;
k) Earthquake Insurance when written as such;
l) Difference in Conditions Insurance;
m) Ocean Marine Insurance, except yachts;
n) Boiler and Machinery;
o) Multiple Peril policies other than the Property
coverages as included in the Business Covered
Section, hereof;
p) Reinsurance, but not to exclude so-called agency
reinsurance, reinsurance of an individual risk or
policy, or any intercompany pooling arrangements.
2. Wind and Hail on growing and standing crops.
3. Manufacture, processing, storage, filling or breaking down of
explosives.
4. Oil and petrochemical refineries and pipelines and oil or gas
drilling rigs.
5. Excess of Loss insurance or reinsurance where the deductible
exceeds $99,999.
6. Bridges and Tunnels where the Total Insured Value over all
interests exceeds $250,000,000.
7. Extra Contractual Obligations and Losses in Excess of Policy
Limits as per attached Exclusion Clause.
8. Loss/or Damage/or Costs/or Expenses arising from seepage
and/or Pollution and/or Contamination, other than
Contamination from Smoke Damage. Nevertheless, this exclusion
does not preclude payment of the cost of removal of debris of
property damaged by a loss otherwise covered hereunder, but
subject always to a limit of 25% of the Company's property
loss under the original policy.
9. Loss in respect of overhead transmission and distribution
lines and their supporting structure other than those on or
within 150 meters (or 500 feet) of the insured premises. It is
understood and agreed that public utilities extension and/or
suppliers extension and/or contingent business interruption
coverages are not subject to this exclusion, provided that
these are not part of a transmitters' or distributors' policy.
10. Insolvency Fund Exclusion Clause.
11. War Risk Exclusion Clause.
12. Pools and Associations Exclusion Clause.
13. Nuclear Incident Exclusion Clauses - Physical Damage -
Reinsurance - U.S.A. and Canada.
14. Biological, Nuclear, and Chemical Terrorism as per the
"Terrorism Exclusion" (NMA 2930b) attached hereto.
ARTICLE III
TERM:
The term of this Contract shall be from 12:01 A.M. Standard Time, July
1, 2002 to 12:01 A.M. Standard Time, July 1, 2003.
If the liability of the Reinsurer under this Contract terminates while
a loss occurrence giving rise to a claim hereunder is in progress, then
the Reinsurer shall be liable as if the whole loss occurrence had
occurred during the term of this Contract, provided that no part of
that loss occurrence is claimed against any renewal or replacement of
this Contract.
ARTICLE IV
TERRITORY:
This Contract shall cover wherever the Company's Policies cover.
ARTICLE V
AMOUNT OF LIMIT AND RETENTION:
No claim shall be made hereunder unless and until the Company and other
members of the State Auto Insurance Companies Group, being State
Automobile Mutual Insurance Company, State Auto Property and Casualty
Insurance Company, Milbank Insurance Company, State Auto National
Insurance Company, Midwest Security Insurance Company, Farmers Casualty
Insurance Company, Mid-Plains Insurance Company, State Auto Insurance
Company, Meridian Security Insurance Company, Meridian Citizens Mutual
Insurance Company, hereinafter referred to as the "Group", on a pooled
basis where applicable, shall first have sustained an Ultimate Net Loss
in excess of $120,000,000, regardless of the number of Policies under
which such loss is payable or the number of interests insured. The
Reinsurer shall then be liable for the amount of Ultimate Net Loss for
the Company in excess of $120,000,000 Ultimate Net Loss each
occurrence, but the sum recoverable from the Reinsurer in respect of
each loss occurrence shall not exceed $100,000,000, nor more than
$100,000,000 in respect of all loss occurrences during the term of this
contract.
The amount of coverage is subject to at least two risks being involved
in the same loss occurrence.
ARTICLE VI
ULTIMATE NET LOSS:
The term "ultimate net loss" shall mean the amount that the Company
pays, such loss to include all expenses incurred by the Company in
connection with the settlement of losses or resistance to or
negotiations concerning a loss, including salaries and expenses of
employees of the Company while diverted from their normal duties to the
service of field adjustment but shall not include any office expenses
of the Company. However, nothing in this Article shall be construed to
prevent
the Company from including all such amounts defined as ultimate net
loss attributable to the Group on a pooled basis for the first
$120,000,000 of ultimate net loss.
All salvages and recoveries and payments (net of the cost of obtaining
any salvage, recovery or payment), whether recovered or received prior
or subsequent to loss settlement under this Contract, including amounts
recoverable under all Reinsurances whether collected or not, shall be
applied as if recovered or received prior to the aforesaid settlement
and shall be deducted from the actual loss incurred to arrive at the
amount of ultimate net loss. Nothing in this Article shall be construed
to mean losses are not recoverable until the ultimate net loss to the
Company has been ascertained.
ARTICLE VII
NET RETAINED LINES:
This Contract applies to only that portion of any policy which the
Company and the other members of the Group, on a pooled basis where
applicable, retains net for its own account.
The amount of the Reinsurer's liability hereunder in respect of any
loss shall not be increased by reason of the inability of the Company
to collect from any other Reinsurer, whether specific or general, any
amounts which may have become due whether such inability arises from
the insolvency of such other Reinsurer or otherwise.
ARTICLE VIII
UNDERLYING EXCESS:
The Company has in force underlying catastrophe excess of loss
reinsurance and recoveries thereunder shall be disregarded for all
purposes of this Contract and shall inure to the sole benefit of the
Company.
ARTICLE IX
DEFINITION OF LOSS OCCURRENCE:
The term "loss occurrence" shall mean the sum of all individual losses
directly occasioned by any one disaster, accident or loss or series of
disasters, accidents or losses arising out of one event which occurs
within the area of one state of the United States or province of Canada
and states or provinces contiguous thereto and to one another. However,
the duration and extent of any one "loss occurrence" shall be limited
to all individual losses sustained by the Company occurring during any
period of one hundred sixty-eight (168) consecutive hours arising out
of and directly occasioned by the same event except that the term "loss
occurrence" shall be further defined as follows:
A. As regards windstorm, hail, tornado, hurricane,
cyclone, including ensuing collapse and water damage,
all individual losses sustained by the Company
occurring during any period of seventy-two (72)
consecutive hours arising out of and directly
occasioned by the same event. However, the event need
not be limited to one state or province or states or
provinces contiguous thereto.
B. As regards riot, riot attending a strike, civil
commotion, vandalism and malicious mischief, all
individual losses sustained by the Company occurring
during any period of seventy-two (72) consecutive
hours within the area of one municipality or county
and the municipalities or counties contiguous thereto
arising out of and directly occasioned by the same
event. The maximum duration of seventy-two (72)
consecutive hours may be extended in respect of
individual losses which occur beyond such seventy-two
(72) consecutive hours during the continued
occupation of an insured's premises by strikers,
provided such occupation commenced during the
aforesaid period.
C. As regards earthquake (the epicentre of which need
not necessarily be within the territorial confines
referred to in the opening paragraph of this Article)
and fire following directly occasioned by the
earthquake, only those individual fire losses which
commence during the period of one hundred and
sixty-eight (168) consecutive hours may be included
in the Company's "loss occurrence."
D. As regards "freeze", only individual losses directly
occasioned by collapse, breakage of glass and water
damage (caused by bursting of frozen pipes and tanks)
may be included in the Company's "loss occurrence."
For all "loss occurrences" except as referred to under
sub-paragraph B, the Company may choose the date and time when
any such period of consecutive hours commences, provided that
it is not earlier than the date and time of the occurrence of
the first recorded individual loss sustained by the Company
arising out of that disaster, accident, or loss and provided
that only one such period of one hundred and sixty-eight (168)
consecutive hours shall apply with respect to one event,
except for those "loss occurrences" referred to in
sub-paragraph A above, where only one such period of
seventy-two (72) consecutive hours shall apply with respect to
one event, regardless of the duration of the event.
As respect those "loss occurrences" referred to in
sub-paragraph B above, if the disaster, accident or loss
occasioned by the event is of greater duration than
seventy-two (72) consecutive hours, then the Company may
divide that disaster, accident or loss into two or more "loss
occurrences" provided no two periods overlap and no individual
loss is included in more than one such period and provided
that no period commences earlier than the date and time of the
occurrence of the first recorded individual loss sustained by
the Company arising out of that disaster, accident or loss.
No individual losses occasioned by an event that would be
covered by seventy-two (72) hours clauses may be included in
any "loss occurrence" claimed under the one hundred and
sixty-eight (168) hours provision.
ARTICLE X
NOTICE OF LOSS AND LOSS SETTLEMENT:
The Company shall adjust, settle, or compromise all claims and losses
hereunder.
All loss settlements by the Company which comply with the terms hereof
shall be unconditionally binding upon the Reinsurer.
The Company shall advise the Reinsurer promptly of all claims and any
subsequent developments pertaining thereto, which may, in the Company's
opinion, develop into losses involving Reinsurance hereunder.
Inadvertent omission or oversight in dispatching such advices shall in
no way affect the liability of the Reinsurer under this Contract
provided the Company informs the Reinsurer of such omission or
oversight promptly upon its discovery.
The Reinsurer shall tender all loss payments as soon as practicable
after receipt of any proof of loss.
ARTICLE XI
PREMIUM:
The premium to be paid to the Reinsurer shall be $3,450,000, payable in
four equal quarterly installments. Each company shall pay a percentage
of the premium based on its share of written premiums of the subject
lines of businesss as estimated in Exhibit A.
ARTICLE XII
CURRENCY:
All retentions, limits and premiums referenced in this Contract are
expressed in United States Dollars and all payments made by either
party shall be made in United States Dollars.
Amounts paid or received by the Company in any other currency shall be
converted to United States Dollars at the rate of exchange at the date
such transaction is entered on the books of the Company.
ARTICLE XIII
OFFSET:
The Company and the Reinsurer, each at its option, may offset any
balance or balances, whether on account of premiums, claims and losses,
loss expenses or salvages due from one party to the other under this
Contract; provided, however, that in the event of the insolvency of a
party hereto, offsets shall only be allowed in accordance with
applicable statutes and regulations.
ARTICLE XIV
ACCESS TO RECORDS:
The Company shall place at the disposal of the Reinsurer at all
reasonable times, and the Reinsurer shall have the right to inspect
through its designated representatives, during the term of this
Contract and thereafter, all books, records and papers of the Company
in connection with any reinsurance hereunder, or the subject matter
hereof.
ARTICLE XV
ERRORS AND OMISSIONS:
Any inadvertent delay, omission or error shall not be held to relieve
either party hereto from any liability which would attach to either
party if such delay, omission or error had not been made, provided such
delay, omission or error is rectified as soon as practicable after
discovery.
ARTICLE XVI
TAXES:
In consideration of the terms under which this Contract is issued, the
Company undertakes not to claim any deduction of the premium hereon
when making Canadian tax returns, or when making tax returns, other
than income or profits tax returns, to any state or territory of the
United States of America or to the District of Columbia.
ARTICLE XVII
INSOLVENCY:
The reinsurance under this Contract shall be payable by the Reinsurer
on the basis of the liability of one or more of the Companies under the
Policy or Policies reinsured without diminution because of the
insolvency of one or more of the Companies reinsured or because the
liquidator, receiver, conservator or statutory successor of the
Company(ies) has failed to pay all or a portion of any claim.
In the event of the insolvency of one or more of the Companies
reinsured, the liquidator, receiver, conservator or statutory successor
of the Company(ies) shall give written notice to the Reinsurer of the
pendency of a claim against the insolvent Company(ies) on the Policy or
Policies reinsured within a reasonable time after such claim is filed
in the insolvency proceeding and during the pendency of such claim the
Reinsurer may investigate such claim and interpose, at its own expense,
in the proceeding where such claim is to be adjudicated any defense or
defenses which it may deem available to the Company(ies) or its
liquidator, receiver, conservator or statutory successor. The expense
thus incurred by the Reinsurer shall be chargeable subject to court
approval against the insolvent Company(ies) as part of the expense of
liquidation to the extent of a proportionate share of the benefit which
may accrue to the Company(ies) solely as a result of the defense
undertaken by the Reinsurer.
Where two or more Reinsurers are involved in the same claim and a
majority in interest elect to interpose defense to such claim, the
expense shall be apportioned in accordance with the terms of this
Contract as though such expense had been incurred by the Company(ies).
In the event of the insolvency of one or more of the Companies
reinsured, the reinsurance under this Contract shall be payable by the
Reinsurer directly to the Company(ies) or to the liquidator, receiver,
conservator or statutory successor, except as provided by subsection
(A) of section 4118 of the Insurance Law of New York or except where
(I) the Contract specifies another payee of such Reinsurance in the
event of the insolvency of the Company(ies) and (II) the Reinsurer with
the consent of the direct insureds and, with the prior approval of the
Superintendent of Insurance of New York to the certificate of
assumption issued to New York direct insureds, has assumed
such policy obligations of the Company(ies) as its direct obligations
to the payees under such policies, in substitution for the obligations
of the Company(ies) to such payees.
ARTICLE XVIII
ARBITRATION:
If any dispute shall arise between the parties to this Contract, either
before or after its termination, with reference to the interpretation
of this Contract or the rights of either party with respect to any
transactions under this Contract, including the formation or validity
thereof, the dispute shall be referred to three (3) arbitrators as a
condition precedent to any right of action arising under this Contract.
The arbitrators shall be active or retired disinterested officers of
insurance or reinsurance companies or Lloyd's Underwriters other than
the parties or their affiliates. One arbitrator shall be chosen by each
party and the third by the two so chosen. If either party refuses or
neglects to appoint an arbitrator within thirty (30) days after the
receipt of written notice from the other party requesting it to do so,
the requesting party may nominate two (2) arbitrators who shall choose
the third.
In the event the arbitrators do not agree on the selection of the third
arbitrator within thirty (30) days after both arbitrators have been
named, the Company shall petition the American Arbitration Association
to appoint the third arbitrator. If the American Arbitration
Association fails to appoint the third arbitrator within thirty (30)
days after it has been requested to do so, either party may request a
justice of a court of general jurisdiction of the state in which the
arbitration is to be held, to appoint an officer or retired officer of
an insurance or reinsurance company or Lloyd's Underwriter as the third
arbitrator. In the event both parties request the appointment of the
third arbitrator, the third arbitrator shall be the soonest named in
writing by the justice of the court.
Each party shall submit its case to the arbitrators within thirty (30)
days of the appointment of the arbitrators. The arbitrators shall
consider this Contract an honorable engagement rather than merely a
legal obligation; they are relieved of all judicial formalities and may
abstain from following the strict rules of law. The decision of a
majority of the arbitrators shall be final and binding on both the
Company and the Reinsurer. Judgment may be entered upon the award of
the arbitrators in any court having jurisdiction.
Each party shall bear the fee and expenses of its own arbitrator, one
half of the fee and the expenses of the third arbitrator and one half
of the other expenses of the arbitration. In the event both arbitrators
are chosen by one party, the fees of the arbitrators shall be equally
divided between the parties.
Any such arbitration shall take place in Columbus, Ohio unless some
other location is mutually agreed upon by the parties.
INTERESTS AND LIABILITIES AGREEMENT
BETWEEN
STATE AUTOMOBILE MUTUAL INSURANCE COMPANY
MILBANK INSURANCE COMPANY
STATE AUTO NATIONAL INSURANCE COMPANY
STATE AUTO INSURANCE COMPANY OF WISCONSIN
FARMERS CASUALTY INSURANCE COMPANY
MID-PLAINS INSURANCE COMPANY
STATE AUTO INSURANCE COMPANY OF OHIO
MERIDIAN SECURITY INSURANCE COMPANY
MERIDIAN CITIZENS MUTUAL INSURANCE COMPANY
(THE "COMPANY")
AND
STATE AUTO PROPERTY AND CASUALTY INSURANCE COMPANY
(THE SUBSCRIBING "REINSURER")
It is hereby mutually agreed by and between the Company on the one part, and the
Subscribing Reinsurer on the other part that effective July 1, 2002, the
Subscribing Reinsurer's share of the Interests and Liabilities of the PROPERTY
CATASTROPHE OVERLYING EXCESS OF LOSS REINSURANCE CONTRACT attached hereto and
forming part of this Agreement, shall be for ONE HUNDRED PERCENT (100%).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
in duplicate by their authorized representatives.
Signed in Columbus, Ohio this 11th day of February, 2003.
STATE AUTO PROPERTY AND CASUALTY INSURANCE COMPANY
By /s/ John R. Lowther
--------------------------------------------------
Title Senior Vice President, Secretary and General Counsel
Signed in Columbus, Ohio this 11th day of February, 2003.
STATE AUTOMOBILE MUTUAL INSURANCE
COMPANY MILBANK INSURANCE COMPANY STATE
AUTO NATIONAL INSURANCE COMPANY STATE
AUTO INSURANCE COMPANY OF WISCONSIN
FARMERS CASUALTY INSURANCE COMPANY
MID-PLAINS INSURANCE COMPANY STATE AUTO
INSURANCE COMPANY OF OHIO MERIDIAN
SECURITY INSURANCE COMPANY MERIDIAN
CITIZENS MUTUAL INSURANCE COMPANY
By /s/ John R. Lowther
---------------------------------
INSOLVENCY FUNDS EXCLUSIONS CLAUSE
This Agreement excludes: All liability of the Company arising, by contract,
operation of law, or otherwise, from its participation or membership, whether
voluntary or involuntary, in any insolvency fund. "Insolvency Fund" includes any
guaranty fund, insolvency fund, plan, pool, association, fund or other
arrangement, howsoever denominated, established or governed, which provides for
any assessment of or payment or assumption by the Company of part or all of any
claim, debt, charge, fee or other obligation of an insurer, or its successors or
assigns, which has been declared by any competent authority to be insolvent, or
which is otherwise deemed unable to meet any claim, debt, charge, fee, or other
obligation in whole or in part.
NORTH AMERICAN WAR EXCLUSION CLAUSE (REINSURANCE)
Approved by Lloyd's Underwriters' Fire and Non-Marine Association
"As regards interests which at time of loss or damage are on shore, no liability
shall attach hereto in respect of any loss or damage which is occasioned by war,
invasion, hostilities, acts of foreign enemies, civil war, rebellion,
insurrection, military or usurped power, or martial law or confiscation by order
of any government or public authority.
This War Exclusion Clause shall not, however, apply to interests which at time
of loss or damage are within the territorial limits of the United States of
America (comprising the fifty States of the Union and the District of Columbia,
its territories and possessions including Panama Canal Zone and the Commonwealth
of Puerto Rico and including Bridges between the U.S.A. and Mexico provided they
are under United States ownership), Canada, St. Pierre and Miquelon, provided
such interests are insured under policies, endorsements or binders containing a
standard war or hostilities or warlike operations exclusion clause."
Nevertheless, this Clause shall not be construed to apply to riots, strikes,
civil commotion, vandalism, malicious damage including acts committed by the
agent of any government, party or faction engaged in war, hostilities, or other
warlike operation, providing such agent is acting secretly and not in connection
with any operations of military or naval armed forces in the country where the
interest insured is situated.
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE -
REINSURANCE - CANADA
APPLICABLE TO POLICIES BECOMING EFFECTIVE ON AND AFTER
JANUARY 1, 1985
(SEE NOTE)
1. This Agreement does not cover any loss or liability accruing to the
Reinsured, directly or indirectly, and whether as Insurer or Reinsurer, from any
Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or
Nuclear Energy risks.
2. Without in any way restricting the operation of paragraph 1 of this Clause,
this Agreement does not cover any loss or liability accruing to the Reinsured,
directly or indirectly, and whether as Insurer or Reinsurer, from any insurance
against Physical Damage (including business interruption or consequential loss
arising out of such Physical Damage) to:
(A) Nuclear reactor power plants including all auxiliary property
on the site, or
(B) Any other nuclear reactor installation, including laboratories
handling radioactive materials in connection with reactor
installations, and critical facilities as such, or
(C) Installations for fabricating complete fuel elements or for
processing substantial quantities of prescribed substances,
and for reprocessing, salvaging, chemically separating,
storing or disposing of spent nuclear fuel or waste materials,
or
(D) Installations other than those listed in (C) above using
substantial quantities of radioactive isotopes or other
products of nuclear fission.
3. Without in any way restricting the operations of paragraphs 1 and 2 of this
Clause, this Agreement does not cover any loss or liability by radioactive
contamination accruing to the Reinsured, directly or indirectly, and whether as
Insurer or Reinsurer from any insurance on property which is on the same site as
a nuclear reactor power plant or other nuclear installations and which normally
would be insured therewith, except that this paragraph 3 shall not operate
(A) Where the Reinsured does not have knowledge of such nuclear
reactor power plant or nuclear installation, or
(B) Where the said insurance contains a provision excluding
coverage for damage to property caused by or resulting from
radioactive contamination, however caused.
4. Without in any way restricting the operation of paragraphs 1, 2, and 3 of
this Clause, this Agreement does not cover any loss or liability by radioactive
contamination accruing to the Reinsured, directly or indirectly, and whether as
Insurer or Reinsurer, when such radioactive contamination is a named hazard
specifically insured against.
5. This Clause shall not extend to risks using radioactive isotopes in any form
where the nuclear exposure is not considered by the Reinsured to be the primary
hazard.
6. The term "prescribed substances" shall have the meaning given it by the
Atomic Energy Control Act R.S.C. 1974, or by any law amendatory thereof.
7. The Reinsured to be sole judge of what constitutes:
(A) substantial quantities, and
(B) the extent of installation, plant or site.
8. Without in any way restricting the operation of paragraphs 1, 2, 3 and 4 of
this Clause, this Agreement does not cover any loss or liability accruing to the
Reinsured, directly or indirectly, and whether as Insurer or Reinsurer caused by
any nuclear incident as defined in the Nuclear Liability Act, nuclear explosion
or contamination by radioactive material.
NOTE: In addition, this Clause is applicable to all original contracts of the
Reinsured in effect prior to January 1, 1985 whether new, renewal or
replacement which incorporate a Nuclear Incident/Radioactive
Contamination Exclusion as contained in form IBC 1105 1-82.
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE -
REINSURANCE - U.S.A.
1. This Reinsurance does not cover any loss or liability accruing to
the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from
any Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or
Nuclear Energy risks.
2. Without in any way restricting the operation of paragraph (1) of
this Clause, this Reinsurance does not cover any loss or liability accruing to
the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from
any insurance against Physical Damage (including business interruption or
consequential loss arising out of such Physical Damage) to:
I. Nuclear reactor power plants including all auxiliary property
on the site, or
II. Any other nuclear reactor installation including laboratories
handling radioactive materials in connection with reactor
installations, and "critical facilities" as such, or
III. Installations for fabricating complete fuel elements or for
processing substantial quantities of "special nuclear
material," and for reprocessing, salvaging, chemically
separating, storing or disposing of "spent" nuclear fuel or
waste materials, or
IV. Installations other than those listed in paragraph (2) III
above using substantial quantities of radioactive isotopes or
other products of nuclear fission.
3. Without in any way restricting the operations of paragraphs (1) and
(2) hereof, this Reinsurance does not cover any loss or liability by radioactive
contamination accruing to the Reassured, directly or indirectly, and whether as
Insurer or Reinsurer, from any insurance on property which is on the same site
as a nuclear reactor power plant or other nuclear installation and which
normally would be insured therewith except that this paragraph (3) shall not
operate:
(A) Where the Reassured does not have knowledge of such nuclear
reactor power plant or nuclear installation, or
(B) Where said insurance contains a provision excluding coverage
for damage to property caused by or resulting from radioactive
contamination, however caused. However on and after 1st
January 1960 this sub-paragraph (B) shall only apply provided
the said radioactive contamination exclusion provision has
been approved by the Governmental Authority having
jurisdiction thereof.
4. Without in any way restricting the operations of paragraphs (1), (2)
and (3) hereof, this Reinsurance does not cover any loss or liability by
radioactive contamination accruing to the Reassured, directly or indirectly, and
whether as Insurer or Reinsurer, when such radioactive contamination is a named
hazard specifically insured against.
5. It is understood and agreed that this Clause shall not extend to
risks using radioactive isotopes in any form where the nuclear exposure is not
considered by the Reassured to be the primary hazard.
6. The term "special nuclear material" shall have the meaning given it
in the Atomic Energy Act of 1954, or by any law amendatory thereof.
7. The Reassured to be sole judge of what constitutes:
(A) substantial quantities, and
(B) the extent of installation, plant or site.
NOTE: Without in any way restricting the operation of paragraph (1) hereof,
it is understood and agreed that:
(A) all policies issued by the Reassured on or before 31st
December 1957 shall be free from the application of the
other provision of this Clause until expiry date or 31st
December 1960, whichever first occurs whereupon all the
provisions of this Clause shall apply,
(B) with respect to any risk located in Canada policies issued
by the Reassured on or before 31st December 1958 shall be
free from the application of the other provisions of this
Clause until expiry date or 31st December 1960, whichever
first occurs whereupon all the provisions of this Clause
shall apply.
POOLS, ASSOCIATIONS & SYNDICATES EXCLUSION CLAUSE
SECTION A:
EXCLUDING:
(1) All Business derived directly or indirectly from any Pool,
Association or Syndicate which maintains its own reinsurance
facilities.
(2) Any Pool or Scheme (whether voluntary or mandatory) formed
after March 1, l968 for the purpose of insuring Property
whether on a country-wide basis or in respect of designated
areas. This exclusion shall not apply to so-called Automobile
Insurance Plans or other Pools formed to provide coverage for
Automobile Physical Damage.
SECTION B:
It is agreed that business written by the Company for the same perils, which is
known at the time to be insured by, or in excess of underlying amounts placed in
the following Pools, Associations, or Syndicates, whether by way of insurance or
reinsurance, is excluded hereunder:
Industrial Risk Insurers; Associated Factory Mutuals; Improved Risk
Mutuals.
Any Pool, Association or Syndicate formed for the purpose of writing
Oil, Gas or Petro-Chemical Plants and/or Oil or Gas Drilling Rigs.
United States Aircraft Insurance Group, Canadian Aircraft Insurance
Group, Associated Aviation Underwriters, American Aviation
Underwriters.
SECTION B does not apply:
(1) Where the Total Insured Value over all interests of the risk
in question is less than $250,000,000.
(2) To interests traditionally underwritten as Inland Marine or
Stock and/or Contents written on a Blanket basis.
(3) To Contingent Business Interruption, except when the Company
is aware that the key location is known at the time to be
insured in any Pool, Association or Syndicate named above,
other than as provided for under Section B (1).
(4) To risks as follows: Offices, Hotels, Apartments, Hospitals,
Educational Establishments, Public Utilities (other than
Railroad Schedules) and Builder's Risks on the classes of
risks specified in this subsection (4) only.
SECTION C:
Where this Clause attaches to catastrophe excesses, the following Section C is
added:
NEVERTHELESS the Reinsurer specifically agree that liability accruing to the
Company from its participation in:
(l) The following so-called "Coastal Pools":
ALABAMA INSURANCE UNDERWRITING ASSOCIATION
FLORIDA WINDSTORM UNDERWRITING ASSOCIATION
LOUISIANA INSURANCE UNDERWRITING ASSOCIATION
MISSISSIPPI WINDSTORM UNDERWRITING ASSOCIATION
NORTH CAROLINA INSURANCE UNDERWRITING ASSOCIATION
SOUTH CAROLINA WINDSTORM AND HAIL UNDERWRITING
ASSOCIATION
TEXAS CATASTROPHE PROPERTY INSURANCE ASSOCIATION
and
(2) All "FAIR Plan" and "Rural Risk Plan" business, including the
Florida Residential Property and Casualty Joint Underwriting
Association and the Florida Property and Casualty Joint
Underwriting Association ("JUA").
For all perils otherwise protected hereunder shall not be excluded, except,
however, that this reinsurance does not include any increase in such liability
resulting from:
(1) the inability of any other participant in such "Coastal Pool"
and/or "FAIR Plan" and/or "Rural Risk Plan" and/or Residual
Market Mechanisms to meet its liability.
(2) any claim against such "Coastal Pool" and/or "FAIR Plan"
and/or "Rural Risk Plan" and/or Residual Market Mechanisms or
any participant therein, including the Company, whether by way
of subrogation or otherwise, brought by or on behalf of any
Insolvency Fund (as defined in the Insolvency Fund Exclusion
Clause incorporated in this Contract).
SECTION D:
Notwithstanding Section C above, in respect of the FWUA, FPCJUA and RPCJUA,
where an assessment is made against the Company by the FWUA, the FPCJUA, the
RPCJUA, or any combination thereof, the maximum loss that the Company may
include in the Ultimate Net Loss in respect of any loss occurrence hereunder
shall not exceed the lesser of:
(1) The Company's assessment from the relevant entity (FWUA,
FPCJUA and/or RPCJUA) for the accounting year in which the
loss occurrence commenced, or
(2) The product of the following:
a) The Company's percentage participation in the relevant
entity for the accounting year in which the loss
occurrence commenced; and
b) The relevant entity's total losses in such loss
occurrence.
Any assessments for accounting years subsequent to that in which the loss
occurrence commenced may not be included in the Ultimate Net Loss hereunder.
Moreover, notwithstanding Section C above, in respect of the FWUA, the FPCJUA
and/or the RPCJUA, the Ultimate Net Loss hereunder shall not include any monies
expended to purchase or retire bonds as a consequence of being a member of the
FWUA, the FPCJUA and/or the RPCJUA. For the purposes of this Contract, the
Company may not include in the Ultimate Net Loss any assessment or any
percentage assessment levied by the FWUA, the FPCJUA and/or the RPCJUA to meet
the obligations of an insolvent insurer member or other party, or to meet any
obligations arising from the deferment by the FWUA, FPCJUA and/or RPCJUA of the
collection of monies.
TERRORISM EXCLUSION
Notwithstanding any provision to the contrary within this reinsurance agreement
or any endorsement thereto, it is agreed that this reinsurance agreement
excludes loss, damage, cost, or expense directly or indirectly caused by,
contributed to by, resulting from, or arising out of or in connection with any
act of terrorism, as defined herein, regardless of any other cause or event
contributing concurrently or in any other sequence to the loss.
An act of terrorism includes any act, or preparation in respect of action, or
threat of action designed to influence the government de jure or de facto of any
nation or any political division thereof, or in pursuit of political, religious,
ideological, or similar purposes to intimidate the public or a section of the
public of any nation by any person or group(s) of persons whether acting alone
or on behalf of or in connection with any organization(s) or government(s) de
jure or de facto, and which:
1. Involves violence against one or more persons, or
2. Involves damage to property; or
3. Endangers life other than the person committing the action; or
4. Creates a risk to health or safety of the public or a section of the
public; or
5. Is designed to interfere with or disrupt an electronic system.
This reinsurance agreement also excludes loss, damage, cost, or expense directly
or indirectly caused by, contributed to by, resulting from, or arising out of or
in connection with any action in controlling, preventing, suppressing,
retaliating against, or responding to any act of terrorism.
Notwithstanding the above and subject otherwise to the terms, conditions, and
limitations of this reinsurance agreement, in respect only of personal lines
this reinsurance agreement will pay actual loss or damage (but not related cost
and expense) caused by any act of terrorism provided such act is not directly or
indirectly caused by, contributed to by, resulting from, or arising out of or in
connection with biological, chemical, or nuclear pollution or contamination.
NMA 2930b