EXHIBIT 10.13
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WORKERS' COMPENSATION QUOTA SHARE
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2001
issued to
American Compensation Insurance Company
Bloomington, Minnesota
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TABLE OF CONTENTS
<Table>
<Caption>
ARTICLE PAGE
I Classes of Business Reinsured 1
II Commencement and Termination 1
III Territory 2
IV Exclusions 2
V Retention and Limit 3
VI Definitions 4
VII Loss in Excess of Policy Limits/ECO 6
VIII Claims and Allocated Loss Adjustment Expense 6
IX Salvage and Subrogation 7
X Original Conditions (BRMA 37B) 7
XI Commission 7
XII Experience Account 7
XIII Reports and Remittances 8
XIV Offset (BRMA 36C) 9
XV Access to Records (BRMA 1D) 9
XVI Errors and Omissions (BRMA 14F) 9
XVII Taxes (BRMA 50B) 10
XVIII Currency (BRMA 12A) 10
XIX Unauthorized Reinsurers 10
XX Insolvency 11
XXI Arbitration 12
XXII Maximum Per Occurrence Limits 13
XXIII Service of Suit (BRMA 49C) 13
XXIV Governing Law 14
XXV Intermediary (BRMA 23A) 14
</Table>
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WORKERS' COMPENSATION QUOTA SHARE
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2001
issued to
American Compensation Insurance Company
Bloomington, Minnesota
(hereinafter referred to as the "Company")
by
The Subscribing Reinsurer(s) Executing the
Interests and Liabilities Agreement(s)
Attached Hereto
(hereinafter referred to as the "Reinsurer")
ARTICLE I - CLASSES OF BUSINESS REINSURED
A. By this Contract the Company obligates itself to cede to the Reinsurer and
the Reinsurer obligates itself to accept quota share reinsurance of the
Company's ultimate net loss under any binder, policy or contract of
insurance issued, accepted or held covered provisionally or otherwise, by
or on behalf of the Company (hereinafter called "policies") in force at
the effective date hereof or issued or renewed on or after that date, and
classified by the Company as Workers' Compensation and/or Employers
Liability business.
B. The liability of the Reinsurer with respect to each cession hereunder
shall commence obligatorily and simultaneously with that of the Company,
subject to the terms, conditions and limitations hereinafter set forth.
ARTICLE II - COMMENCEMENT AND TERMINATION
A. This Contract shall become effective at 12:01 a.m., Central Standard Time,
January 1, 2001, with respect to losses occurring on or after that time
and date, and shall continue in force thereafter until terminated.
B. Either party may terminate this Contract on any December 31 by giving the
other party not less than 90 days prior notice by certified mail. The
Company shall have the option to terminate this Contract at the end of any
month by giving the Reinsurer not less than 30 days prior notice by
certified mail.
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C. The Reinsurer may terminate or renegotiate this Contract at any time in
the event any of the following circumstances occur:
1. The Company's policyholders' surplus is reduced by 30.0% or more
from the amount of surplus at the date of the Subscribing
Reinsurer's most recent financial statement available at the
inception or most recent anniversary date of this Contract; or
2. The Company's A.M. Best's rating is assigned or downgraded to B- or
less; or
3. The Company has a change in ownership (as hereinafter defined);
and/or
4. The Company has a change in management (as hereinafter defined).
D. Unless the Company elects to reassume the ceded unearned premium in force
on the effective date of termination, and so notifies the Reinsurer prior
to or as promptly as possible after the effective date of termination,
this Contract shall terminate on a runoff basis and therefore, reinsurance
hereunder on business in force on the effective date of termination shall
remain in full force and effect until expiration, cancellation or next
premium anniversary of such business, whichever first occurs.
E. "Change in ownership" as used herein shall mean a change of 50.0% or more
in the ownership of the voting stock of the Company.
F. "Change in management" as used herein shall mean that four or more
individuals within the Company's senior management team (Team S) who make
the critical Company decisions leave the Company during the same contract
year (as defined in Article VI).
ARTICLE III - TERRITORY
This Contract shall only apply to policies issued to insureds domiciled in the
United States of America, its territories and possessions, Puerto Rico and the
District of Columbia; but this limitation shall not apply to losses if the
Company's policies provide coverage outside the aforesaid territorial limits.
ARTICLE IV - EXCLUSIONS
A. This Contract does not apply to and specifically excludes the following:
1. Jones Act Liability.
2. Radioactive contamination, whether directly or indirectly arising
out of a nuclear incident.
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3. United States Longshore and Harbor Workers' Compensation Act
Liability.
4. Professional sports teams, when written as such, including players,
coaches, trainers and all other personnel who regularly travel with
the team. This exclusion shall not apply to administrative personnel
who do not travel with the team.
5. Commercial airline flight crews.
6. Liability as a member, subscriber or reinsurer of any Pool,
Syndicate or Association, but this exclusion shall not apply to
Assigned Risk Plans or similar plans.
7. Loss or damage caused by or resulting from 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, but
this exclusion shall not apply to loss or damage covered under a
standard policy with a standard War Exclusion Clause.
8. 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, however 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.
B. If the Company provides insurance for an insured with respect to any
exposure classified under subparagraph 3 of paragraph A above, and if such
exposure constitutes only an incidental part of the payroll applicable to
the exposure, such exclusion shall not apply. "Incidental" as used herein
is defined as 20.0% or less of the overall payroll (excluding clerical)
for an insured's policy.
ARTICLE V - RETENTION AND LIMIT
A. As respects business subject to this Contract, the Company shall retain
and be liable for 50.0% of its ultimate net loss. Except as provided in
paragraph B below, the Company shall cede to the Reinsurer and the
Reinsurer agrees to accept 50.0% of the Company's ultimate net loss.
B. As respects losses occurring during each contract year, the Company shall
retain, in addition to its quota share retention set forth above, the
following:
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1. 100% of the ultimate net loss in excess of 60.0% of premiums earned
for the contract year. However, such additional retention shall not
exceed an amount equal to 6.0% of premiums earned for the contract
year, and shall hereinafter be referred to as the "first loss
retention corridor;" and
2. 50.0% of the ultimate net loss in excess of 66.0% of premiums earned
for the contract year. However, such additional retention shall not
exceed an amount equal to 50.0% of 7.5% of premiums earned for the
contract year, and shall hereinafter be referred to as the "second
loss retention corridor;" and
3. 100% of the ultimate net loss in excess 73.5% of premiums earned for
the contract year. However, such additional retention shall not
exceed an amount equal to 6.5% of premiums earned for the contract
year, and shall hereinafter be referred to as the "third loss
retention corridor."
C. The liability of the Reinsurer shall not exceed 90.25% of premiums earned
for the contract year less any amounts retained by the Company in the
first, second and third loss retention corridors. If this Contract is
terminated on a runoff basis, the liability of the Reinsurer for the
runoff contract year shall not exceed 82.0% of premiums earned for the
runoff contract year, less any amounts retained by the Company in the
first, second and third loss retention corridors.
ARTICLE VI - DEFINITIONS
A. "Ultimate net loss" as used herein is defined as the actual loss or losses
paid by the Company or for which the Company is liable to pay, including
allocated loss adjustment expenses. Such loss or losses shall not include
any levies, fees or assessments from any government agency. All salvage,
subrogation and recoveries from reinsurance which inures to this Contract,
whether collected or not, will be deducted from the ultimate net loss.
B. "Allocated loss adjustment expense" as used herein is defined as the
expenses assignable to the investigation, defense and/or settlement of a
specific claim, including litigation expenses, interest on judgments and
declaratory judgment expense, but not including salaries and benefits of
the Company, its directors, officers or employees, office expenses,
overhead, expenses paid to a company that is part of or affiliated with
the Company or is an economically related enterprise, and other fixed
expenses of the Company.
C. As respects occupational disease or cumulative trauma, the date of a loss
for purposes hereof shall be deemed to be the date when the compensable
disability of the employee commences, or if there is no such disability,
the date when the medical treatment commences.
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Notwithstanding the provisions of Article V, the liability of the
Reinsurer for losses arising out of all occupational disease cases
occurring during any one contract year shall not exceed 2.5% of the
Company's ceded earned premium for such contract year.
D. "Occupational disease" as used herein is defined as any abnormal condition
that fulfills all of the following conditions:
1. It is not traceable to a definite compensable accident occurring
during the employee's past or present employment;
2. It has been caused by exposure to a disease producing agent or
agents present in the employee's occupational environment; and
3. It has resulted in disability or death.
E. "Cumulative trauma" as used herein is defined as any injury that fulfills
all of the following conditions:
1. It is not traceable to a definite compensable accident occurring
during the employee's past or present employment;
2. It has occurred from, and has been aggravated by, a repetitive
employment related activity; and
3. It has resulted in disability or death.
F. "Ceded premiums" as used herein is defined as the Reinsurer's share of
subject premium.
G. "Subject premium" as used herein is defined as the Company's gross written
premium hereunder, less cancellations and return premiums, and less
premium ceded for reinsurance which inures to the benefit of this
Contract.
H. "Gross written premium" as used herein is defined as all premiums written
by the Company for the classes of business referred to in Article I.
I. "Contract year" as used herein shall mean the period from January 1, 2001
to December 31, 2001, both days inclusive, and each respective 12-month
period thereafter (or portion thereof, in the event this Contract is
terminated prior to any December 31) that this Contract continues in
force. In the event this Contract is terminated on a "runoff" basis, the
runoff period (as described generally in paragraph D of Article II) shall
be considered a separate contract year and shall herein be referred to as
the "runoff contract year."
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ARTICLE VII - LOSS IN EXCESS OF POLICY LIMITS/ECO
A. In the event the Company pays or is held liable to pay an amount of loss
in excess of its policy limit, but otherwise within the terms of its
policy (hereinafter called "loss in excess of policy limits") or any
punitive, exemplary, compensatory or consequential damages, other than
loss in excess of policy limits (hereinafter called "extra contractual
obligations") because of alleged or actual bad faith, negligence or fraud
on its part in rejecting an offer of settlement within policy limits, or
in the preparation of the defense or in the trial of an action against its
insured or reinsured or in the preparation or prosecution of an appeal
consequent upon such an action, or in otherwise handling a claim under a
policy subject to this Contract, the loss in excess of policy limits
and/or the extra contractual obligations, including any litigation
expenses included in such amounts, shall be added to the Company's loss,
if any, under the policy involved, and the sum thereof shall be subject to
the provisions of Article V.
B. An extra contractual obligation shall be deemed to have occurred on the
same date as the loss covered or alleged to be covered under the policy.
C. Notwithstanding anything stated herein, this Contract shall not apply to
any loss in excess of policy limits or any extra contractual obligation
incurred by the Company as a result of any fraudulent and/or criminal act
directed against the Company by any officer or director of the Company
acting individually or collectively or in collusion with any individual or
corporation or any other organization or party involved in the
presentation, defense or settlement of any claim under a policy subject to
this Contract.
D. Recoveries from any form of insurance or reinsurance which protects the
Company against claims the subject matter of this Article shall inure to
the benefit of this Contract.
ARTICLE VIII - CLAIMS AND ALLOCATED LOSS ADJUSTMENT EXPENSE
A. Losses shall be reported by the Company in summary form as hereinafter
provided, but the Company shall notify the Reinsurer immediately when a
specific case involves unusual circumstances or large loss possibilities.
The Reinsurer shall have the right to participate, at its own expense, in
the defense of any claim or suit or proceeding involving this reinsurance.
B. All loss settlements made by the Company, whether under strict policy
conditions or by way of compromise, shall be binding upon the Reinsurer,
and the Reinsurer agrees to pay or allow, as the case may be, its
proportion of each such settlement in accordance with Article XIII.
C. In the event of a claim under a policy subject hereto, the Reinsurer shall
be liable for its proportionate share of allocated loss adjustment expense
incurred by the Company in connection therewith and shall be credited with
its proportionate share of any recoveries of such expense.
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ARTICLE IX - SALVAGE AND SUBROGATION
The Reinsurer shall be credited with its proportionate share of salvage (i.e.,
reimbursement obtained or recovery made by the Company, less the actual cost,
excluding salaries of officials and employees of the Company and sums paid to
attorneys as retainer, of obtaining such reimbursement or making such recovery)
on account of claims and settlements involving reinsurance hereunder. The
Company hereby agrees to enforce its rights to salvage or subrogation relating
to any loss, a part of which loss was sustained by the Reinsurer, and to
prosecute all claims arising out of such rights.
ARTICLE X - ORIGINAL CONDITIONS (BRMA 37B)
A. All reinsurance under this Contract shall be subject to the same rates,
terms, conditions, waivers and interpretations and to the same
modifications and alterations as the respective policies of the Company.
However, in no event shall this be construed in any way to provide
coverage outside the terms and conditions set forth in this Contract. The
Reinsurer shall be credited with its exact proportion of the original
premiums received by the Company, prior to disbursement of any dividends,
but after deduction of premiums, if any, ceded by the Company for inuring
reinsurance.
B. Nothing herein shall in any manner create any obligations or establish any
rights against the Reinsurer in favor of any third party or any persons
not parties to this Contract.
ARTICLE XI - COMMISSION
A. The Reinsurer shall allow the Company a 41.0% commission on all ceded
premiums to the Reinsurer hereunder. The Company shall allow the Reinsurer
return commission on return premiums at the same rate.
B. It is expressly agreed that the ceding commission allowed the Company
includes provision for all dividends, commissions, taxes, assessments, and
all other expenses of whatever nature, except allocated loss adjustment
expense.
ARTICLE XII - EXPERIENCE ACCOUNT
A. The Reinsurer shall establish and maintain a cumulative Experience Account
balance from the effective date of this Contract until the complete and
final release of each parties' obligations to the other under this
Contract.
B. The Experience Account balance shall, at any point in time, be defined as:
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1. 100% of the cumulative reinsurance premium due from and paid by the
Company and received by the Reinsurer; less
2. Ceding commission on (1) above; less
3. The Reinsurer's margin, equal to 4.75% of (1) above; less
4. The cumulative ultimate net loss paid by the Reinsurer; plus
5. The cumulative Experience Account Interest Credit (as hereinafter
defined).
C. The Company shall have the option to commute this Contract at any time
after the effective date of termination if the Experience Account balance,
as calculated above, is positive, in which event, the Reinsurer shall pay
the Company an amount equal to the Experience Account balance as promptly
as possible. Commutation in accordance with the foregoing shall constitute
a complete and final release of the Reinsurer in respect of the
Reinsurer's obligations to the Company under this Contract. If, after the
effective date of termination, the Experience Account balance as
calculated above is negative, commutation shall be subject to mutual
agreement between the parties hereto.
D. "Experience Account Interest Credit" shall equal the following:
[a times (i - .25%)] times .25
where:
a = the ending quarterly Experience Account balance;
i = the five-year U.S. Treasury Bill rate as of the last business day of
the quarter.
ARTICLE XIII - REPORTS AND REMITTANCES
A. As promptly as possible after the effective date of this Contract, the
Company shall provide the Reinsurer an electronic listing of policies in
force at the effective date of this Contract and the unearned premium on
such policies. The Company shall remit, as promptly as possible, the
Reinsurer's share of the unearned premium (less ceding commission thereon)
applicable to subject business in force at the effective date of this
Contract. In the event the Company fails to remit such unearned premium
within 30 days after binding this coverage, the Reinsurer shall have the
option to terminate this Contract retroactively to inception. Unearned
premium paid more than 30 days after binding this coverage, and premiums
paid more than 60 days after the end of each calendar quarter shall accrue
interest at a compound rate of 0.4% per month.
B. Within 30 days after the end of each calendar quarter, the Company shall
report to the Reinsurer:
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1. Ceded net written premium for the calendar quarter;
2. Commission thereon;
3. Ceded losses and allocated loss adjustment expense paid during the
calendar quarter;
4. Ceded losses and allocated loss adjustment expense known outstanding
as of the end of the calendar quarter;
5. Ceded incurred but not reported loss reserves outstanding as of the
end of the calendar quarter;
6. Open and closed claims counts;
7. Ceded unearned premium reserves as of the end of the quarter.
The positive balance of (1) less (2) less (3) shall be remitted by the
Company within 30 days of its report. Any balance shown to be due the
Company shall be remitted by the Reinsurer within 30 days after receipt
and verification of the Company's report.
C. Annually, the Company shall furnish the Reinsurer with such information as
the Reinsurer may require to complete its Annual Convention Statement.
ARTICLE XIV - OFFSET (BRMA 36C)
The Company and the Reinsurer shall have the right to offset any balance or
amounts due from one party to the other under the terms of this Contract. The
party asserting the right of offset may exercise such right any time whether the
balances due are on account of premiums or losses or otherwise.
ARTICLE XV - ACCESS TO RECORDS (BRMA 1D)
The Reinsurer or its designated representatives shall have access at any
reasonable time to all records of the Company which pertain in any way to this
reinsurance.
ARTICLE XVI - ERRORS AND OMISSIONS (BRMA 14F)
Inadvertent delays, errors or omissions made in connection with this Contract or
any transaction hereunder shall not relieve either party from any liability
which would have attached had such delay, error or omission not occurred,
provided always that such error or omission is rectified as soon as possible
after discovery.
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ARTICLE XVII - TAXES (BRMA 50B)
In consideration of the terms under which this Contract is issued, the Company
will not claim a deduction in respect of the premium hereon when making tax
returns, other than income or profits tax returns, to any state or territory of
the United States of America or the District of Columbia.
ARTICLE XVIII - CURRENCY (BRMA 12A)
A. Whenever the word "Dollars" or the "$" sign appears in this Contract, they
shall be construed to mean United States Dollars and all transactions
under this Contract shall be in United States Dollars.
B. 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 XIX - UNAUTHORIZED REINSURERS
A. If the Reinsurer is unauthorized in any state of the United States of
America or the District of Columbia, the Reinsurer agrees to fund its
share of the Company's ceded unearned premium and outstanding loss and
allocated loss adjustment expense reserves (including incurred but not
reported loss reserves) by:
1. Clean, irrevocable and unconditional letters of credit issued and
confirmed, if confirmation is required by the insurance regulatory
authorities involved, by a bank or banks meeting the NAIC Securities
Valuation Office credit standards for issuers of letters of credit
and acceptable to said insurance regulatory authorities; and/or
2. Escrow accounts for the benefit of the Company; and/or
3. Cash advances;
if, without such funding, a penalty would accrue to the Company on any
financial statement it is required to file with the insurance regulatory
authorities involved. The Reinsurer, at its sole option, may fund in other
than cash if its method and form of funding are acceptable to the
insurance regulatory authorities involved.
B. With regard to funding in whole or in part by letters of credit, it is
agreed that each letter of credit will be in a form acceptable to
insurance regulatory authorities involved, will be issued for a term of at
least one year and will include an "evergreen clause," which
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automatically extends the term for at least one additional year at each
expiration date unless written notice of non-renewal is given to the
Company not less than 30 days prior to said expiration date. The Company
and the Reinsurer further agree, notwithstanding anything to the contrary
in this Contract, that said letters of credit may be drawn upon by the
Company or its successors in interest at any time, without diminution
because of the insolvency of the Company or the Reinsurer, but only for
one or more of the following purposes:
1. To reimburse itself for the Reinsurer's share of unearned premiums
returned to insureds on account of policy cancellations, unless paid
in cash by the Reinsurer;
2. To reimburse itself for the Reinsurer's share of losses and/or
allocated loss adjustment expense paid under the terms of policies
reinsured hereunder, unless paid in cash by the Reinsurer;
3. To reimburse itself for the Reinsurer's share of any other amounts
claimed to be due hereunder, unless paid in cash by the Reinsurer;
4. To fund a cash account in an amount equal to the Reinsurer's share
of any ceded unearned premium and/or outstanding loss and allocated
loss adjustment expense reserves (including incurred but not
reported loss reserves) funded by means of a letter of credit which
is under non-renewal notice, if said letter of credit has not been
renewed or replaced by the Reinsurer 10 days prior to its expiration
date;
5. To refund to the Reinsurer any sum in excess of the actual amount
required to fund the Reinsurer's share of the Company's ceded
unearned premium and/or outstanding loss and allocated loss
adjustment expense reserves (including incurred but not reported
loss reserves), if so requested by the Reinsurer.
In the event the amount drawn by the Company on any letter of credit is in
excess of the actual amount required for B(1), B(2) or B(4), or in the
case of B(3), the actual amount determined to be due, the Company shall
promptly return to the Reinsurer the excess amount so drawn.
ARTICLE XX - INSOLVENCY
A. In the event of the insolvency of the Company, this reinsurance shall be
payable directly to the Company or to its liquidator, receiver,
conservator or statutory successor on the basis of the liability of the
Company without diminution because of the insolvency of the Company or
because the liquidator, receiver, conservator or statutory successor of
the Company has failed to pay all or a portion of any claim. It is agreed,
however, that the liquidator, receiver, conservator or statutory successor
of the Company shall give written notice to the Reinsurer of the pendency
of a claim against the Company indicating the policy or bond reinsured
which claim would involve a possible liability on the part of the
Reinsurer within a reasonable time after such claim is filed in the
conservation or liquidation proceeding or in
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the receivership, and that 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 that it may deem available to the Company or its liquidator,
receiver, conservator or statutory successor. The expense thus incurred by
the Reinsurer shall be chargeable, subject to the approval of the Court,
against the Company as part of the expense of conservation or liquidation
to the extent of a pro rata share of the benefit which may accrue to the
Company solely as a result of the defense undertaken by the Reinsurer.
B. 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.
C. It is further understood and agreed that, in the event of the insolvency
of the Company, the reinsurance under this Contract shall be payable
directly by the Reinsurer to the Company or to its liquidator, receiver or
statutory successor, except as provided by Section 4118(a) of the New York
Insurance Law or except (1) where this Contract specifically provides
another payee of such reinsurance in the event of the insolvency of the
Company or (2) where the Reinsurer with the consent of the direct insured
or insureds has assumed such policy obligations of the Company as direct
obligations of the Reinsurer to the payees under such policies and in
substitution for the obligations of the Company to such payees.
ARTICLE XXI - ARBITRATION
A. As a condition precedent to any right of action hereunder, in the event of
any dispute or difference of opinion hereafter arising with respect to
this Contract, it is hereby mutually agreed that such dispute or
difference of opinion shall be submitted to arbitration. One Arbiter shall
be chosen by the Company, the other by the Reinsurer, and an Umpire shall
be chosen by the two Arbiters before they enter upon arbitration, all of
whom shall be active or retired disinterested executive officers of
insurance or reinsurance companies or Lloyd's London Underwriters. In the
event that either party should fail to choose an Arbiter within 30 days
following a written request by the other party to do so, the requesting
party may choose two Arbiters who shall in turn choose an Umpire before
entering upon arbitration. If the two Arbiters fail to agree upon the
selection of an Umpire within 30 days following their appointment, each
Arbiter shall nominate three candidates within 10 days thereafter, two of
whom the other shall decline, and the decision shall be made by drawing
lots.
B. Each party shall present its case to the Arbiters within 30 days following
the date of appointment of the Umpire. The Arbiters shall consider this
Contract as an honorable engagement rather than merely as a legal
obligation and they are relieved of all judicial formalities and may
abstain from following the strict rules of law. The decision of the
Arbiters shall be final and binding on both parties; but failing to agree,
they shall call in the Umpire and the decision of the majority shall be
final and binding upon both parties.
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Judgment upon the final decision of the Arbiters may be entered in any
court of competent jurisdiction.
C. If more than one reinsurer is involved in the same dispute, all such
reinsurers shall constitute and act as one party for purposes of this
Article and communications shall be made by the Company to each of the
reinsurers constituting one party, provided, however, that nothing herein
shall impair the rights of such reinsurers to assert several, rather than
joint, defenses or claims, nor be construed as changing the liability of
the reinsurers participating under the terms of this Contract from several
to joint.
D. Each party shall bear the expense of its own Arbiter, and shall jointly
and equally bear with the other the expense of the Umpire and of the
arbitration. In the event that the two Arbiters are chosen by one party,
as above provided, the expense of the Arbiters, the Umpire and the
arbitration shall be equally divided between the two parties.
E. Unless otherwise mutually agreed between the Company and the Reinsurer,
any arbitration will take place in Minneapolis, Minnesota and all
proceedings pursuant hereto shall be governed by the law of the State of
Minnesota.
ARTICLE XXII - MAXIMUM PER OCCURRENCE LIMITS
The maximum per occurrence limits as respects each policy subject hereto shall
be as follows, or so deemed:
1. $25,000 (including allocated loss adjustment expense) as respects
all subject policies in force as of the effective date of this
Contract;
2. The Company's low retention with the Workers' Compensation
Reinsurance Association (excluding allocated loss adjustment
expense) as respects subject policies issued to insureds domiciled
in the State of Minnesota and incepting or renewing on or after the
effective date of this Contract;
3. $300,000 (including allocated loss adjustment expense) as respects
subject policies issued to insureds domiciled in states other than
Minnesota and incepting or renewing on or after the effective date
of this Contract.
ARTICLE XXIII - SERVICE OF SUIT (BRMA 49C)
(Applicable if the Reinsurer is not domiciled in the United States of America,
and/or is not authorized in any State, Territory or District of the United
States where authorization is required by insurance regulatory authorities)
A. It is agreed that in the event the Reinsurer fails to pay any amount
claimed to be due hereunder, the Reinsurer, at the request of the Company,
will submit to the jurisdiction of
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any court of competent jurisdiction within the United States. Nothing in
this Article constitutes or should be understood to constitute a waiver of
the Reinsurer's rights to commence an action in any court of competent
jurisdiction in the United States, to remove an action to a United States
District Court, or to seek a transfer of a case to another court as
permitted by the laws of the United States or of any state in the United
States.
B. Further, pursuant to any statute of any state, territory or district of
the United States which makes provision therefor, the Reinsurer hereby
designates the party named in its Interests and Liabilities Agreement, or
if no party is named therein, the Superintendent, Commissioner or Director
of Insurance or other officer specified for that purpose in the statute,
or his successor or successors in office, as its true and lawful attorney
upon whom may be served any lawful process in any action, suit or
proceeding instituted by or on behalf of the Company or any beneficiary
hereunder arising out of this Contract.
ARTICLE XXIV - GOVERNING LAW
This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Minnesota, exclusive of its rules
with respect to conflicts of law, except as to state rules with respect to
credit for reinsurance in which case the rules of all applicable states shall
apply.
ARTICLE XXV - INTERMEDIARY (BRMA 23A)
Benfield Blanch Inc. is hereby recognized as the Intermediary negotiating this
Contract for all business hereunder. All communications (including but not
limited to notices, statements, premium, return premium, commissions, taxes,
losses, allocated loss adjustment expense, salvages and loss settlements)
relating thereto shall be transmitted to the Company or the Reinsurer through
Benfield Blanch Inc., 3600 West 80th Street, Minneapolis, Minnesota 55431.
Payments by the Company to the Intermediary shall be deemed to constitute
payment to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be
deemed to constitute payment to the Company only to the extent that such
payments are actually received by the Company.
IN WITNESS WHEREOF, the Company by its duly authorized representative has
executed this Contract as of the date undermentioned at:
Minneapolis, Minnesota, this 20th day of February in the year 2002.
/s/ ALFRED L. LATENDRESSE
---------------------------------------------------
American Compensation Insurance Company
Original agreement, signed on September 27, 2001 by
Jeffrey B. Murphy, was superceded by this
agreement signed on February 20, 2002.
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INTERESTS AND LIABILITIES AGREEMENT
of
St. Paul Fire and Marine Insurance Company
St. Paul, Minnesota
(hereinafter referred to as the "Subscribing Reinsurer")
with respect to the
WORKERS' COMPENSATION QUOTA SHARE
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2001
issued to and duly executed by
American Compensation Insurance Company
Bloomington, Minnesota
The Subscribing Reinsurer hereby accepts a 100% share in the interests and
liabilities of the "Reinsurer" as set forth in the attached Contract captioned
above.
This Agreement shall become effective at 12:01 a.m., Central Standard Time,
January 1, 2001, and shall continue in force until terminated in accordance with
the provisions of the attached Contract.
This Subscribing Reinsurer's share in the attached Contract shall be separate
and apart from the shares of the other reinsurers, and shall not be joint with
the shares of the other reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.
IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date undermentioned at:
Morristown, New Jersey, this 27th day of September in the year 2001.
/s/ JUDITH S. VOGEL
-----------------------------------------
St. Paul Fire and Marine Insurance
Company
by St. Paul Re, Inc.
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