Exhibit 10.14
WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2005
issued to
American Interstate Insurance Company
DeRidder, Louisiana
American Interstate Insurance Company of Texas
Austin, Texas
Silver Oak Casualty, Inc.
DeRidder, Louisiana
and
any other insurance companies which are now or
hereafter come under the ownership, control or management of
Amerisafe Insurance Group
TABLE OF CONTENTS
ARTICLE PAGE
I Classes of Business Reinsured 1
II Commencement and Termination 1
III Territory (BRMA 51A) 3
IV Exclusions 3
V Special Acceptances 7
VI Retention and Limit 7
VII Reinstatement 8
VIII Definitions 9
IX Annuities at Company's Option 11
X Claims 12
XI Sunset 12
XII Special Commutation 12
XIII Salvage and Subrogation 14
XIV Federal Terrorism Coverage 14
XV Reinsurance Premium 15
XVI Late Payments 15
XVII Offset (BRMA 36A) 17
XVIII Access to Records (BRMA 1D) 17
XIX Liability of the Reinsurer 17
XX Net Retained Lines (BRMA 32E) 17
XXI Errors and Omissions 18
XXII Taxes (BRMA 50B) 18
XXIII Reserves and Letters of Credit 18
XXIV Insolvency 20
XXV Arbitration (BRMA 6J) 20
XXVI Service of Suit (BRMA 49C) 21
XXVII Entire Agreement 22
XXVIII Governing Law (BRMA 71B) 22
XXIX Agency Agreement 22
XXX Intermediary 22
Schedule A
WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2005
issued to
American Interstate Insurance Company
DeRidder, Louisiana
American Interstate Insurance Company of Texas
Austin, Texas
Silver Oak Casualty, Inc.
DeRidder, Louisiana
and
any other insurance companies which are now or
hereafter come under the ownership, control or management of
Amerisafe Insurance Group
(hereinafter referred to collectively 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
By this Contract the Reinsurer agrees to reinsure the excess liability which may
accrue to the Company under its policies, contracts and binders of insurance or
reinsurance (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, Employers Liability, including coverage provided under
the U.S. Longshore and Harbor Workers' Compensation Act and the Jones Act, and
General Liability business, subject to the terms, conditions and limitations set
forth herein and in Schedule A attached to and forming part of this Contract.
ARTICLE II - COMMENCEMENT AND TERMINATION
A. This Contract shall become effective at 12:01 a.m., Local Standard Time,
January 1, 2005, with respect to losses arising out of occurrences
commencing at 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 or registered
mail.
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C. Notwithstanding the provisions of paragraph B above, the Company may
terminate a Subscribing Reinsurer's percentage share in this Contract by
giving 90 days prior written notice to the Subscribing Reinsurer in the
event any of the following circumstances occur, or as clarified by public
announcement as respects subparagraphs 1 through 7 below or upon discovery
as respects subparagraph 8 below, effective retroactively to the start of
the calendar quarter preceding such circumstance:
1. The Subscribing Reinsurer's policyholders' surplus at the beginning
of any contract year has been reduced by more than 20.0% of the
amount of surplus 12 months prior to that date; or
2. The Subscribing Reinsurer's policyholders' surplus at any time
during any contract year has been reduced by more than 20.0% of the
amount of surplus at the date of the Subscribing Reinsurer's most
recent financial statement filed with regulatory authorities and
available to the public as of the beginning of the contract year; or
3. The Subscribing Reinsurer's A.M. Best's rating has been assigned or
downgraded below A- (inclusive of "Not Rated" ratings) and/or
Standard & Poor's rating has been assigned or downgraded below BBB+
(inclusive of "Not Rated" ratings); or
4. The Subscribing Reinsurer has become merged with, acquired by or
controlled by any other company, corporation or individual(s) not
controlling the Subscribing Reinsurer's operations previously; or
5. A State Insurance Department or other legal authority has ordered
the Subscribing Reinsurer to cease writing business; or
6. The Subscribing Reinsurer has become insolvent or has been placed
into liquidation or receivership (whether voluntary or involuntary)
or proceedings have been instituted against the Subscribing
Reinsurer for the appointment of a receiver, liquidator,
rehabilitator, conservator or trustee in bankruptcy, or other agent
known by whatever name, to take possession of its assets or control
of its operations; or
7. The Subscribing Reinsurer has reinsured its entire liability under
this Contract without the Company's prior written consent; or
8. The Subscribing Reinsurer has ceased assuming new and renewal treaty
reinsurance business.
D. Unless the Company elects that the Reinsurer have no liability for losses
arising out of occurrences commencing after the effective date of
termination, and so notifies the Reinsurer prior to or as promptly as
possible after the effective date of termination, 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, but in no event
beyond 12 months plus odd time (not exceeding 18 months in all) following
the effective date of termination.
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ARTICLE III - TERRITORY (BRMA 51A)
The territorial limits of this Contract shall be identical with those of the
Company's policies.
ARTICLE IV - EXCLUSIONS
A. This Contract does not apply to and specifically excludes the following:
1. Lines of business not identified in Article I.
2. All excess of loss reinsurance assumed by the Company.
3. Reinsurance assumed by the Company under obligatory reinsurance
agreements, except:
a. Agency reinsurance where the policies involved are to be
reunderwritten in accordance with the underwriting standards
of the Company and reissued as Company policies at the next
anniversary or expiration date; and
b. Intercompany reinsurance between any of the reinsured
companies under this Contract.
4. Business written by the Company on a co-indemnity basis where the
Company is not the controlling carrier.
5. Business written to apply in excess of a deductible of more than
$25,000, and business issued to apply specifically in excess over
underlying insurance. However, if the Company is required, by any
state regulation, to provide a deductible of more than $25,000, this
exclusion shall not apply.
6. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
Liability - Reinsurance (U.S.A.)" attached to and forming part of
this Contract.
7. 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, the District of Columbia, and including
bridges between the United States of America and Mexico provided
they are under United States ownership), Canada, St. Pierre and
Miquelon, provided such interests are insured under policies
containing a standard war or hostilities or warlike operations
exclusion clause.
8. 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.
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9. 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.
10. Workers' Compensation where the principal exposures, as defined by
the governing class code, include:
a. Operation of aircraft but only if the annual estimated policy
premium is $250,000 or more;
b. Railroad, subway, or street railway operations;
c. Operation or navigation of vessels or barges;
d. Manufacture, production, or refining of gas, natural or
artificial fuel, or other liquefied petroleum fuel, but only
if the annual estimated policy premium is $250,000 or more;
e. Manufacturing, assembly, packing, or processing of fireworks,
fuses, nitroglycerine, magnesium, pyroxylin, ammunition, or
explosives. This exclusion does not apply to the assembly,
packing, or processing of explosives when the estimated annual
premium is under $250,000;
f. Wrecking or demolition of structures but only if the annual
estimated policy premium is $250,000 or more;
g. Underground mining.
11. As respects Workers' Compensation and Employers' Liability only,
unless otherwise excluded as set forth above, the reinsurance
provided under this Contract shall not apply to any loss, cost or
expense arising out of or related to, either directly or indirectly,
any "terrorist activity," as defined herein, but this exclusion
shall only apply when the activity includes, involves, or is
associated with the use of any biological, chemical, radioactive, or
nuclear agent, material, device or weapon, or when the predominant
business of the policyholder as defined by the governing class code
is:
a. The operation of: airports and aircraft; flight schools;
bridges, dams, tunnels, or locks; department stores; shopping
malls; chain retail stores; casinos and casino hotels; cruise
lines; railroads; ports/public transit authorities; security
services; stadiums; convention/exhibition centers; or
theme/amusement parks.
b. The manufacture and distribution of: automobiles; chemicals,
petrochemicals, pharmaceuticals; utilities (electric, gas,
water, and sewer); major
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defense/aerospace products; or, high-tech equipment, but only
if the policyholder employs more than 20 personnel at the
location of a terrorist activity at the time of its
occurrence.
c. The management or operation of the following type of
structures, but only if greater than 25 stories in height:
apartments/condominiums/co-ops; hotels/motels; or office
buildings.
d. Businesses primarily engaged in the entertainment, media, or
transportation industry limited to the following: major media
providers (NBC, FOX, ABC, CBS, etc.); television and motion
picture studios; Broadway theaters; major internet companies
(AOL, Yahoo, etc.); professional sports teams; major
telecommunications companies (AT&T, Worldcom/MCI, etc.);
national truck rental companies (Ryder, Penske, UHaul, etc.);
or major national motor freight common carriers (J.B. Hunt,
Red Arrow, etc.).
e. Policyholders primarily located in, or predominantly doing
business as: hospitals; universities; nuclear facilities;
financial institutions; or governmental buildings and national
landmarks.
"Terrorist activity" shall mean any deliberate, unlawful act that:
a. Is declared by any authorized government official to be or to
involve terrorism, terrorist activity or acts of terrorism; or
b. Includes, involves, or is associated with the use or
threatened use of force, violence or harm against any person,
tangible or intangible property, the environment, or any
natural resources, where the act or threatened act is
intended, in whole or in part, to:
i. Promote or further any political, ideological,
philosophical, racial, ethnic, social or religious cause
or objective of the perpetrator or any organization,
association or group affiliated with the perpetrator; or
ii. Influence, disrupt or interfere with any government
related operations, activities or policies; or
iii. Intimidate, coerce or frighten the general public or any
segment of the general public; or
iv. Disrupt or interfere with a national economy or any
segment of a national economy; or
c. Includes, involves, or is associated with, in whole or in
part, any of the following activities, or the threat thereof:
i. Hijacking or sabotage of any form of transportation or
conveyance, including but not limited to spacecraft,
satellite, aircraft, train, vessel, or motor vehicle;
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ii. Hostage taking or kidnapping;
iii. The use of any bomb, incendiary device, explosive or
firearm;
iv. The interference with or disruption of basic public or
commercial services and systems, including but not
limited to the following services or systems:
electricity, natural gas, power, postal, communications,
telecommunications, information, public transportation,
water, fuel, sewer or waste disposal;
v. The injuring or assassination of any elected or
appointed government official or any government
employee;
vi. The seizure, blockage, interference with, disruption of,
or damage to any government buildings, institutions,
functions, events, tangible or intangible property or
other assets; or
vii. The seizure, blockage, interference with, disruption of,
or damage to tunnels, roads, streets, highways, or other
places of public transportation or conveyance.
d. Any of the activities listed in subparagraph c, above, shall
be considered terrorist activity except where the Company can
demonstrate to the Reinsurer that the foregoing activities or
threats thereof were motivated solely by personal objectives
of the perpetrator that are unrelated, in whole or in part, to
any intention to:
i. Promote or further any political, ideological,
philosophical, racial, ethnic, social or religious cause
or objective of the perpetrator or any organization,
association or group affiliated with the perpetrator;
ii. Influence, disrupt or interfere with any
government-related operations, activities or policies;
iii. Intimidate, coerce or frighten the general public or any
segment of the general public; or
iv. Disrupt or interfere with a national economy or any
segment of a national economy.
12. As respects General Liability policies, exposures, other than those
identified below, as included in the General Liability section of
the Company's Commercial Lines Manual:
a. Class 97111 - Logging;
b. Class 58873 - Sawmill;
c. Class 59984 - Woodyard and Drivers;
d. Class 95410 - Grading of Land;
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e. Class 45819 - Lumber Yard;
f. Class 10073 - Repair Shops and Drivers;
g. Class 43822 - Timber Cruiser;
h. Class 99793 - Truckman Not Otherwise Classified;
i. Class 91591 - Contractors - Subcontracted Work Other Than
Construction;
j. Class 49452 - Vacant Land.
B. Any exclusion set forth in subparagraphs 10 and/or 12 of paragraph A shall
be waived automatically when, in the opinion of the Company, the exposure
excluded therein is incidental to the principal exposure on the risk in
question.
C. If the Company is bound, without the knowledge and contrary to the
instructions of the Company's supervisory underwriting personnel, on any
business falling within the scope of one or more of the exclusions set
forth in subparagraphs 10 and/or 12 of paragraph A, the exclusion shall be
suspended with respect to such business until the Company has the first
opportunity to cancel the policy in compliance with governmental
requirements.
D. If the Company is required to accept an assigned risk which conflicts with
one or more of the exclusions set forth in subparagraph 10 of paragraph A,
reinsurance shall apply, but only for the difference between the Company's
retention and the minimum limit required by the applicable state statute,
and in no event shall the Reinsurer's liability exceed the limit set forth
in Article VI.
ARTICLE V - SPECIAL ACCEPTANCES
From time to time the Company may request a special acceptance of reinsurance
falling outside the scope of the provisions set forth herein. As respects each
layer of this Contract separately, if each Subscribing Reinsurer whose share in
the interests and liabilities of the Reinsurer is 20.0% or greater agrees to a
special acceptance, such special acceptance shall be binding on all Subscribing
Reinsurers with respect to their respective shares of each such layer. In the
event agreement is not achieved, such special acceptance shall be made to a
layer or layers of this Contract only with respect to the interests and
liabilities of each Subscribing Reinsurer on such layer or layers who agrees to
such special acceptance. In the event a reinsurer becomes a party to this
Contract subsequent to one or more special acceptances hereunder, the new
reinsurer shall automatically accept such special acceptance(s) as being covered
hereunder.
ARTICLE VI - RETENTION AND LIMIT
A. As respects each excess layer of reinsurance coverage provided by this
Contract, the Company shall retain and be liable for the first amount of
ultimate net loss, shown as "Company's Retention" for that excess layer in
Schedule A attached hereto, arising out of
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each occurrence. The Reinsurer shall then be liable, as respects each
excess layer, for the amount by which such ultimate net loss exceeds the
Company's applicable retention, but the liability of the Reinsurer under
each excess layer shall not exceed the amount shown as "Reinsurer's Per
Occurrence Limit" for that excess layer in Schedule A attached hereto, as
respects any one occurrence.
B. The Company's ultimate net loss, for the purpose of this Contract, shall
be deemed to be a maximum of $5,000,000 any one life.
C. The Company shall be permitted to carry excess of loss and quota share
reinsurance, recoveries under which shall inure solely to the benefit of
the Company and be entirely disregarded in applying all of the provisions
of this Contract.
D. The Company shall be permitted to carry excess of loss reinsurance
applying to Workers' Compensation risks in the State of Minnesota,
recoveries under which shall inure to the benefit of this Contract.
Such coverage shall be provided through the Minnesota Workers'
Compensation Reinsurance Association. It is understood that the liability
of the Reinsurer for Minnesota Workers' Compensation risks is not
released.
In the event the Company accrues liability that is not provided by any
inuring reinsurance, for whatever reason, the Reinsurer agrees to reinsure
such excess liability.
E. In the event this Contract is terminated on a "runoff" basis, additional
reinstatement coverage shall be negotiated on or prior to the effective
date of termination.
ARTICLE VII - REINSTATEMENT
A. In the event all or any portion of the reinsurance under any excess layer
of reinsurance coverage provided by this Contract is exhausted by loss,
the amount so exhausted shall be reinstated immediately from the time the
occurrence commences hereon. For each amount so reinstated the Company
agrees to pay additional premium equal to the product of the following:
1. The percentage of the occurrence limit for the excess layer
reinstated (based on the loss paid by the Reinsurer under that
excess layer); times
2. The earned reinsurance premium for the excess layer reinstated for
the contract year (exclusive of reinstatement premium).
B. Whenever the Company requests payment by the Reinsurer of any loss under
any excess layer hereunder, the Company shall submit a statement to the
Reinsurer of reinstatement premium due the Reinsurer for that excess
layer. If the earned reinsurance premium for any excess layer for the
contract year has not been finally determined as of the date of any such
statement, the calculation of reinstatement premium due for that excess
layer shall be based on the annual deposit premium for that excess layer
and shall be readjusted when the earned reinsurance premium for that
excess layer for the contract year has been finally
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determined. Any reinstatement premium shown to be due the Reinsurer for
any excess layer as reflected by any such statement (less prior payments,
if any, for that excess layer) shall be payable by the Company
concurrently with payment by the Reinsurer of the requested loss for that
excess layer. Any return reinstatement premium shown to be due the Company
shall be remitted by the Reinsurer as promptly as possible after receipt
and verification of the Company's statement.
C. Notwithstanding anything stated herein, the liability of the Reinsurer
under any excess layer of reinsurance coverage provided by this Contract
shall not exceed any of the following:
1. The amount, shown as "Reinsurer's Per Occurrence Limit" for that
excess layer in Schedule A attached hereto, as respects loss or
losses arising out of any one occurrence; or
2. The amount, shown as "Reinsurer's Annual Limit" for that excess
layer in Schedule A attached hereto, in all during the contract
year.
ARTICLE VIII - DEFINITIONS
A. "Ultimate net loss" as used herein is defined as the sum or sums
(including loss in excess of policy limits, extra contractual obligations
and any loss adjustment expense, as hereinafter defined) paid or payable
by the Company in settlement of claims and in satisfaction of judgments
rendered on account of such claims, after deduction of all salvage, all
recoveries and all claims on inuring insurance or reinsurance, whether
collectible or not. Nothing herein shall be construed to mean that losses
under this Contract are not recoverable until the Company's ultimate net
loss has been ascertained.
B. "Loss in excess of policy limits" and "extra contractual obligations" as
used herein shall be defined as follows:
1. "Loss in excess of policy limits" shall mean 90.0% of any amount
paid or payable by the Company in excess of its policy limits, but
otherwise within the terms of its policy, such loss in excess of the
Company's policy limits having been incurred because of, but not
limited to, failure by the Company to settle within the policy
limits or by reason of the Company's alleged or actual negligence,
fraud or bad faith in rejecting an offer of settlement 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.
2. "Extra contractual obligations" shall mean 90.0% of any punitive,
exemplary, compensatory or consequential damages paid or payable by
the Company, not covered by any other provision of this Contract and
which arise from the handling of any claim on business subject to
this Contract, such liabilities arising because of, but not limited
to, failure by the Company to settle within the policy limits or by
reason of the Company's alleged or actual negligence, fraud or bad
faith in rejecting an offer of settlement or in the preparation of
the defense or in the trial of any action against its insured or
reinsured or in the preparation or prosecution of an appeal
consequent upon such an action. An extra contractual obligation
shall be deemed, in all
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circumstances, to have occurred on the same date as the loss covered
or alleged to be covered under the policy.
If any provision of this Article shall be rendered illegal or
unenforceable by the laws, regulations or public policy of any state, such
provision shall be considered void in such state, but this shall not
affect the validity or enforceability of any other provision of this
Contract or the enforceability of such provision in any other
jurisdiction.
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
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 covered hereunder.
C. "Occurrence" as used herein is defined as an accident or occurrence or a
series of accidents or occurrences arising out of or caused by one event,
except that:
1. As respects General Liability policies where the Company's limit of
liability for Products and Completed Operations coverages is
determined on the basis of the insured's aggregate losses during a
policy period, all such losses proceeding from or traceable to the
same causative agency shall, at the Company's option, be deemed to
have been caused by one occurrence commencing at the beginning of
the policy period, it being understood and agreed that each renewal
or annual anniversary date of the policy involved shall be deemed
the beginning of a new policy period;
2. Each occupational disease case or cumulative trauma case contracted
by an employee of an insured shall be deemed to have been caused by
a separate occurrence commencing on:
a. The date of disability for which compensation is payable if
the case is compensable under the Workers' Compensation Law;
b. The date disability due to the disease actually began if the
case is not compensable under the Workers' Compensation Law;
c. The date of cessation of employment if claim is made after
employment has ceased.
3. Notwithstanding the provisions of subparagraph 2 above, as respects
losses resulting from occupational disease or cumulative trauma
suffered by employees of an insured for which the employer is
liable, as a result of a sudden and accidental event not exceeding
72 hours in duration, all such losses shall be considered one
occurrence and may be combined with losses classified as other than
occupational disease or cumulative trauma which arise out of the
same event and the combination of such losses shall be considered as
one occurrence within the meaning hereof.
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D. "Occupational disease" or industrial disease is 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 workers' occupational environment.
3. It has resulted in disability or death.
E. "Cumulative trauma" is an 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.
3. It has resulted in disability or death.
F. "Loss adjustment expense" as used herein shall mean expenses allocable to
the investigation, defense and/or settlement of specific claims, including
litigation expenses, interest on judgments, declaratory judgment expenses
or other legal expenses and costs incurred in connection with coverage
questions and legal actions connected thereto, and salaries and expenses
of salaried adjusters associated with claims covered under policies of the
Company reinsured hereunder but not including office expenses or salaries
of the Company's regular employees.
G. "Contract year" as used in this Contract shall mean the period from
January 1, 2005 to December 31, 2005, both days inclusive, and each
respective 12-month period thereafter that this Contract continues in
force. However, if this Contract is terminated, the final contract year
shall be from the beginning of the then current contract year through the
date of termination if this Contract is terminated on a "cutoff" basis, or
the end of the runoff period if this Contract is terminated on a "runoff"
basis.
ARTICLE IX - ANNUITIES AT COMPANY'S OPTION
A. Whenever the Company is required, or elects, to purchase an annuity or to
negotiate a structured settlement, either in satisfaction of a judgment or
in an out-of-court settlement or otherwise, the cost of the annuity or the
structured settlement, as the case may be, shall be deemed part of the
Company's ultimate net loss.
B. The terms "annuity" or "structured settlement" shall be understood to mean
any insurance policy, lump sum payment, agreement or device of whatever
nature resulting in the payment of a lump sum by the Company in settlement
of any or all future liabilities which may attach to it as a result of an
occurrence.
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C. In the event the Company purchases an annuity which inures in whole or in
part to the benefit of the Reinsurer, it is understood that the liability
of the Reinsurer is not released thereby. In the event the Company is
required to provide benefits not provided by the annuity for whatever
reason, the Reinsurer shall pay its proportional share of any loss.
ARTICLE X - CLAIMS
A. Whenever a claim is reserved by the Company for an amount greater than
50.0% of its retention hereunder and/or whenever a claim appears likely to
result in a claim under this Contract, the Company shall notify the
Reinsurer. Further, the Company shall notify the Reinsurer whenever a
claim involves a fatality, major limb amputation, spinal cord damage,
brain damage, blindness or extensive burns, regardless of liability, if
the policy limits or statutory benefits applicable to the claim are
greater than the Company's retention hereunder. 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 claim settlements made by the Company, provided they are within the
terms of this Contract (including but not limited to ex-gratia payments),
shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all
amounts for which it may be liable upon receipt of satisfactory evidence
of the amount paid by the Company.
ARTICLE XI - SUNSET
Ten years after the effective date of termination of this Contract (or after the
end of the runoff period, if applicable), the Company shall advise the Reinsurer
of any outstanding claims and/or occurrences (each hereinafter referred to as a
"claim") arising during any contract year, which have not been finally settled
and which may cause a recovery under this Contract. Unless mutually agreed, no
liability shall attach hereunder for any claim not reported to the Reinsurer
within 90 days following the 10-year period.
ARTICLE XII - SPECIAL COMMUTATION
A. In the event a Subscribing Reinsurer meets the following conditions, the
Company may require a commutation of that portion of any excess loss
hereunder represented by any outstanding claim or claims, including any
related loss adjustment expense.
1. The Subscribing Reinsurer's A.M. Best's rating has been assigned or
downgraded below A- (inclusive of "Not Rated" ratings) and/or
Standard & Poor's rating has been assigned or downgraded below BBB+
(inclusive of "Not Rated" ratings); or
2. The Subscribing Reinsurer has ceased assuming new and renewal
property and casualty treaty reinsurance business.
"Outstanding claim or claims" shall be defined as known or unknown claims,
including any billed yet unpaid claims. However, unless otherwise mutually
agreed, this paragraph shall not apply unless the outstanding claim or
claims is for an amount not less than $5,000.
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B. If the Company elects to require commutation as provided in paragraph A
above, the Company shall submit a Statement of Valuation of the
outstanding claim or claims as of the last day of the month immediately
preceding the month in which the Company elects to require commutation, as
determined by the Company. Such Statement of Valuation shall include the
elements considered reasonable to establish the excess loss and shall set
forth or attach the information relied upon by the Company and the
methodology employed to calculate the excess loss. The Subscribing
Reinsurer shall then pay the amount requested within 30 calendar days of
receipt of such Statement of Valuation, unless the Subscribing Reinsurer
needs additional information from the Company to assess the Company's
Statement of Valuation or contests such amount.
C. If the Subscribing Reinsurer needs additional information from the Company
to assess the Company's Statement of Valuation or contests the amount
requested, the Subscribing Reinsurer shall so notify the Company within 15
calendar days of receipt of the Company's Statement of Valuation. The
Company shall supply any reasonably requested information to the
Subscribing Reinsurer within 15 calendar days of receipt of the
notification. Within 30 calendar days of the date of the notification or
of the receipt of the information, whichever is later, the Subscribing
Reinsurer shall provide the Company with its Statement of Valuation of the
outstanding claim or claims as of the last day of the month immediately
preceding the month in which the Company elects to require commutation, as
determined by the Subscribing Reinsurer. Such Statement of Valuation shall
include the elements considered reasonable to establish the excess loss
and shall set forth or attach the information relied upon by the
Subscribing Reinsurer and the methodology employed to calculate the excess
loss.
D. In the event the Subscribing Reinsurer's Statement of Valuation of the
outstanding claim or claims is viewed as unacceptable to the Company, the
Company may either abandon the commutation effort, or may seek to settle
any difference by using an independent actuary agreed to by the parties.
E. If the parties cannot agree on an acceptable independent actuary within 15
calendar days of the date of the Subscribing Reinsurer's Statement of
Valuation, then each party shall appoint an actuary as party arbitrators
for the limited and sole purpose of selecting an independent actuary. If
the actuaries cannot agree on an acceptable independent actuary within 15
calendar days of the date of the Subscribing Reinsurer's Statement of
Valuation, the Company shall supply the Subscribing Reinsurer with a list
of at least three proposed independent actuaries, and the Subscribing
Reinsurer shall select the independent actuary from that list.
F. Upon selection of the independent actuary, both parties shall present
their respective written submissions to the independent actuary. The
independent actuary may, at his or her discretion, request additional
information. The independent actuary shall issue his or her decision
within 45 calendar days after the written submissions have been filed and
any additional information has been provided.
G. The decision of the independent actuary shall be final and binding. The
expense of the independent actuary shall be equally divided between the
two parties. For the purposes of
Page 13
this Article, unless mutually agreed otherwise, an "independent actuary"
shall be an actuary who satisfies each of the following criteria:
1. Is regularly engaged in the valuation of claims resulting from lines
of business subject to this Contract; and
2. Is either a Fellow of the Casualty Actuarial Society or of the
American Academy of Actuaries; and
3. Is disinterested and impartial regarding this commutation.
H. Notwithstanding paragraph A, B and C above, in the event that the
Subscribing Reinsurer no longer meets the conditions set forth in
subparagraph 1 or 2 in paragraph A above, this commutation may continue on
a mutually agreed basis.
I. Payment by the Subscribing Reinsurer of the amount requested in accordance
with paragraph B, C or F above, shall release the Subscribing Reinsurer
from all further liability for outstanding claim or claims, known or
unknown, under this Contract, which shall release the Company from all
further liability for payments of salvage or subrogation amounts, known or
unknown, to the Subscribing Reinsurer under this Contract.
J. In the event of any conflict between this Article and any other Article of
this Contract, the terms of this Article shall control.
K. This Article shall survive the termination of this Contract.
ARTICLE XIII - SALVAGE AND SUBROGATION
The Reinsurer shall be credited with 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) or subrogation on
account of claims and settlements involving reinsurance hereunder. Salvage or
subrogation thereon shall always be used to reimburse the excess carriers in the
reverse order of their priority according to their participation before being
used in any way to reimburse the Company for its primary loss. The Company
hereby agrees to enforce its rights to salvage or subrogation where it is
economically reasonable in the judgment of the Company, 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 XIV - FEDERAL TERRORISM COVERAGE
A. Any loss reimbursement the Company receives from the United States
Government under the Terrorism Risk Insurance Act of 2002 (the "Terrorism
Act") as a result of occurrences commencing during the contract year shall
inure to the benefit of this Contract in the proportion that the Company's
insured losses (as defined in the Terrorism Act) in that occurrence under
policies reinsured under this Contract bear to the Company's total insured
losses in that occurrence.
Page 14
B. If a loss reimbursement received by the Company under the Terrorism Act is
based on the Company's insured losses in more than one occurrence and the
United States Government does not designate the amount allocable to each
occurrence, the reimbursement shall be prorated in the proportion that the
Company's insured losses in each occurrence bear to the Company's total
insured losses arising out of all occurrences to which the recovery
applies.
ARTICLE XV - REINSURANCE PREMIUM
A. As premium for each excess layer of reinsurance coverage provided by this
Contract, the Company shall pay the Reinsurer the greater of the
following:
1. The amount, shown as "Annual Minimum Premium" for that excess layer
in Schedule A attached hereto (or a pro rata portion thereof if the
contract year is less than 12 months); or
2. The percentage, shown as "Premium Rate" for that excess layer in
Schedule A attached hereto, of the Company's net earned premium for
the contract year.
B. The Company shall pay the Reinsurer a deposit premium for each excess
layer of the amount, shown as "Annual Deposit Premium" for that excess
layer in Schedule A attached hereto, in four equal installments of the
amount, shown as "Quarterly Deposit Premium" for that excess layer in
Schedule A attached hereto, on January 1, April 1, July 1 and October 1 of
each contract year (except the runoff contract year, if any). However, if
this Contract is terminated, no deposit premium installments shall be due
after the effective date of termination.
C. Within 60 days after the end of each contract year (or within 60 days
after the effective date of termination if this Contract is terminated on
a "runoff" basis), the Company shall provide a report to the Reinsurer
setting forth the premium due hereunder for each excess layer, computed in
accordance with paragraph A, and any additional premium due the Reinsurer
or return premium due the Company for each excess layer shall be remitted
promptly.
D. In the event this Contract is terminated on a "runoff" basis, the deposit
premium shall be calculated by multiplying the unearned portion of premium
in force at the effective date of termination by the percentage, shown as
"Premium Rate" for that excess layer in Schedule A attached hereto, and
paid semi-annually.
E. "Net earned premium" as used herein is defined as the Company's gross
earned premium collected on the classes of business subject to this
Contract, less only the earned portion of premiums, if any, ceded by the
Company for reinsurance which inures to the benefit of this Contract and
less dividends incurred.
ARTICLE XVI - LATE PAYMENTS
A. The provisions of this Article shall not be implemented unless
specifically invoked, in writing, by one of the parties to this Contract.
Page 15
B. In the event any premium, loss or other payment due either party is not
received by the intermediary named in Article XXX (hereinafter referred to
as the "Intermediary") by the payment due date, the party to whom payment
is due, may, by notifying the Intermediary in writing, require the debtor
party to pay, and the debtor party agrees to pay, an interest penalty on
the amount past due calculated for each such payment on the last business
day of each month as follows:
1. The number of full days which have expired since the due date or the
last monthly calculation, whichever the lesser; times
2. 1/365ths of the sum of 400 basis points plus the six-month United
States Treasury Bill rate as quoted in The Wall Street Journal on
the first business day of the month for which the calculation is
made; times
3. The amount past due, including accrued interest.
It is agreed that interest shall accumulate until payment of the original
amount due plus interest penalties have been received by the Intermediary.
C. The establishment of the due date shall, for purposes of this Article, be
determined as follows:
1. As respects the payment of routine deposits and premiums due the
Reinsurer, the due date shall be as provided for in the applicable
section of this Contract. In the event a due date is not
specifically stated for a given payment, it shall be deemed due 30
days after the date of transmittal by the Intermediary of the
initial billing for each such payment.
2. Any claim or loss payment due the Company hereunder shall be deemed
due 45 business days after the proof of loss or demand for payment
is transmitted to the Reinsurer. If such loss or claim payment is
not received within the 45 days, interest will accrue on the payment
or amount overdue in accordance with paragraph B above, from the
date the proof of loss or demand for payment was transmitted to the
Reinsurer.
3. As respects any payment, adjustment or return due either party not
otherwise provided for in subparagraphs 1 and 2 of paragraph C
above, the due date shall be as provided for in the applicable
section of this Contract. In the event a due date is not
specifically stated for a given payment, it shall be deemed due 10
business days following transmittal of written notification that the
provisions of this Article have been invoked.
For purposes of interest calculations only, amounts due hereunder shall be
deemed paid upon receipt by the Intermediary.
D. Nothing herein shall be construed as limiting or prohibiting a Subscribing
Reinsurer from contesting the validity of any claim, or from participating
in the defense of any claim or suit, or prohibiting either party from
contesting the validity of any payment or from initiating any
Page 16
arbitration or other proceeding in accordance with the provisions of this
Contract. If the debtor party prevails in an arbitration or other
proceeding, then any interest penalties due hereunder on the amount in
dispute shall be null and void. If the debtor party loses in such
proceeding, then the interest penalty on the amount determined to be due
hereunder shall be calculated in accordance with the provisions set forth
above unless otherwise determined by such proceedings. If a debtor party
advances payment of any amount it is contesting, and proves to be correct
in its contestation, either in whole or in part, the other party shall
reimburse the debtor party for any such excess payment made plus interest
on the excess amount calculated in accordance with this Article.
E. Interest penalties arising out of the application of this Article that are
$100 or less from any party shall be waived unless there is a pattern of
late payments consisting of three or more items over the course of any
12-month period.
ARTICLE XVII - OFFSET (BRMA 36A)
The Company and the Reinsurer may offset any balance or amount due from one
party to the other under this Contract or any other contract heretofore or
hereafter entered into between the Company and the Reinsurer, whether acting as
assuming reinsurer or ceding company. This provision shall not be affected by
the insolvency of either party to this Contract.
ARTICLE XVIII - 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 XIX - LIABILITY OF THE REINSURER
A. The liability of the Reinsurer shall follow that of the Company in every
case and be subject in all respects to all the general and specific
stipulations, clauses, waivers and modifications of the Company's policies
and any endorsements thereon.
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 XX - NET RETAINED LINES (BRMA 32E)
A. This Contract applies only to that portion of any policy which the Company
retains net for its own account (prior to deduction of any underlying
reinsurance specifically permitted in this Contract), and in calculating
the amount of any loss hereunder and also in computing the amount or
amounts in excess of which this Contract attaches, only loss or losses in
respect of that portion of any policy which the Company retains net for
its own account shall be included.
Page 17
B. The amount of the Reinsurer's liability hereunder in respect of any loss
or losses shall not be increased by reason of the inability of the Company
to collect from any other reinsurer(s), whether specific or general, any
amounts which may have become due from such reinsurer(s), whether such
inability arises from the insolvency of such other reinsurer(s) or
otherwise.
ARTICLE XXI - ERRORS AND OMISSIONS
Except as provided in Article XI, 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.
ARTICLE XXII - 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 XXIII - RESERVES AND LETTERS OF CREDIT
[Applies only to a reinsurer which does not qualify for full credit with any
insurance regulatory authority having jurisdiction over the Company's reserves,
which is or becomes rated "B++" or lower by A.M. Best (inclusive of "Not Rated"
ratings) and/or Standard & Poor's rating is or becomes "BBB+" or lower
(inclusive of "Not Rated" ratings.)]
A. As regards policies or bonds issued by the Company coming within the scope
of this Contract, the Company agrees that when it shall file with the
insurance regulatory authority or set up on its books reserves for losses
covered hereunder which it shall be required by law to set up, it will
forward to the Reinsurer a statement showing the proportion of such
reserves which is applicable to the Reinsurer. The Reinsurer hereby agrees
to fund such reserves in respect of known outstanding losses that have
been reported to the Reinsurer and allocated loss adjustment expense
relating thereto, losses and allocated loss adjustment expense paid by the
Company but not recovered from the Reinsurer, plus reserves for losses
incurred but not reported, as shown in the statement prepared by the
Company (hereinafter referred to as "Reinsurer's Obligations") by funds
withheld, cash advances or a Letter of Credit. The Reinsurer shall have
the option of determining the method of funding provided it is acceptable
to the insurance regulatory authorities having jurisdiction over the
Company's reserves with regards to unauthorized reinsurers; or, should the
Reinsurer be downgraded, the method of funding shall be mutually agreed.
B. When funding by a Letter of Credit, the Reinsurer agrees to apply for and
secure timely delivery to the Company of a clean, irrevocable and
unconditional Letter of Credit issued by a bank meeting the NAIC
Securities Valuation Office credit standards for issuers of Letters of
Credit and containing provisions acceptable to the insurance regulatory
authorities
Page 18
having jurisdiction over the Company's reserves in an amount equal to the
Reinsurer's proportion of said reserves. Such Letter of Credit shall be
issued for a period of not less than one year, and shall contain an
"evergreen" clause, which automatically extends the term for one year from
its date of expiration or any future expiration date unless thirty (30)
days (sixty (60) days where required by insurance regulatory authorities)
prior to any expiration date the issuing bank shall notify the Company by
certified or registered mail that the issuing bank elects not to consider
the Letter of Credit extended for any additional period.
C. The Reinsurer and Company agree that the Letters of Credit provided by the
Reinsurer pursuant to the provisions of this Contract may be drawn upon at
any time, notwithstanding any other provision of this Contract, and be
utilized by the Company or any successor, by operation of law, of the
Company including, without limitation, any liquidator, rehabilitator,
receiver or conservator of the Company for the following purposes, unless
otherwise provided for in a separate Trust Agreement:
1. To reimburse the Company for the Reinsurer's Obligations, the
payment of which is due under the terms of this Contract and which
has not been otherwise paid;
2. To make refund of any sum which is in excess of the actual amount
required to pay the Reinsurer's Obligations under this Contract, if
so requested by the Reinsurer;
3. To fund an account with the Company for the Reinsurer's Obligations.
Such cash deposit shall be held in an interest bearing account
separate from the Company's other assets, and interest thereon not
in excess of the prime rate shall accrue to the benefit of the
Reinsurer;
4. To pay the Reinsurer's share of any other amounts the Company claims
are due under this Contract.
D. In the event the amount drawn by the Company on any Letter of Credit is in
excess of the actual amount required for subparagraphs 1 or 3, or in the
case of subparagraph 4, the actual amount determined to be due, the
Company shall promptly return to the Reinsurer the excess amount so drawn.
All of the foregoing shall be applied without diminution because of
insolvency on the part of the Company or the Reinsurer.
E. The issuing bank shall have no responsibility whatsoever in connection
with the propriety of withdrawals made by the Company or the disposition
of funds withdrawn, except to ensure that withdrawals are made only upon
the order of properly authorized representatives of the Company.
F. At annual intervals, or more frequently as agreed but never more
frequently than quarterly, the Company shall prepare a specific statement
of the Reinsurer's Obligations, for the sole purpose of amending the
Letter of Credit, in the following manner:
1. If the statement shows that the Reinsurer's Obligations exceed the
balance of credit as of the statement date, the Reinsurer shall,
within thirty (30) days after receipt of notice of such excess,
secure delivery to the Company of an amendment to the Letter of
Credit increasing the amount of credit by the amount of such
difference.
Page 19
2. If, however, the statement shows that the Reinsurer's Obligations
are less than the balance of credit as of the statement date, the
Company shall, within thirty (30) days after receipt of written
request from the Reinsurer, release such excess credit by agreeing
to secure an amendment to the Letter of Credit reducing the amount
of credit available by the amount of such excess credit.
ARTICLE XXIV - INSOLVENCY
A. In the event of the insolvency of one or more of the reinsured companies,
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 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 one or more of the reinsured companies, 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 XXV - ARBITRATION (BRMA 6J)
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
Page 20
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. 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. Any arbitration proceedings shall take place at a location mutually agreed
upon by the parties to this Contract, but notwithstanding the location of
the arbitration, all proceedings pursuant hereto shall be governed by the
law of the state in which the Company has its principal office.
ARTICLE XXVI - 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 a 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.
Page 21
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 XXVII - ENTIRE AGREEMENT
This written Contract constitutes the entire agreement between the parties
hereto with respect to the business being reinsured hereunder, and there are no
understandings between the parties hereto other than as expressed in this
Contract. Any change or modification to this Contract will be made by amendment
to this Contract and signed by the parties.
ARTICLE XXVIII - GOVERNING LAW (BRMA 71B)
This Contract shall be governed by and construed in accordance with the laws of
the State of Louisiana.
ARTICLE XXIX - AGENCY AGREEMENT
If more than one reinsured company is named as a party to this Contract, the
first named company shall be deemed the agent of the other reinsured companies
for purposes of sending or receiving notices required by the terms and
conditions of this Contract, and for purposes of remitting or receiving any
monies due any party.
ARTICLE XXX - INTERMEDIARY
Benfield Inc. is hereby recognized as the Intermediary negotiating this Contract
for all business hereunder. All communications relating thereto (including but
not limited to notices, statements, premium, return premium, commissions, taxes,
losses, loss adjustment expense, salvages and loss settlements) relating thereto
shall be transmitted to the Company or the Reinsurer through Benfield Inc.
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:
DeRidder, LA, this 20th day of April in the year 2005.
/s/ Allan E. Farr
------------------------------------------------
American Interstate Insurance Company
American Interstate Insurance Company of Texas
Silver Oak Casualty, Inc.
Page 22
SCHEDULE A
WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2005
issued to
American Interstate Insurance Company
DeRidder, Louisiana
American Interstate Insurance Company of Texas
Austin, Texas
Silver Oak Casualty, Inc.
DeRidder, Louisiana
and
any other insurance companies which are now or
hereafter come under the ownership, control or management of
Amerisafe Insurance Group
FIRST
EXCESS EXCESS SECOND
- -------------------------------- ----------- -----------
Company's Retention $10,000,000 $10,000,000
Reinsurer's Per Occurrence Limit $10,000,000 $20,000,000
Reinsurer's Annual Limit $20,000,000 $20,000,000
Annual Minimum Premium $ 648,000 $ 440,000
Premium Rate 0.300% 0.204%
Annual Deposit Premium $ 810,000 $ 550,000
Quarterly Deposit Premium $ 202,500 $ 137,500
The figures listed above for each excess layer shall apply to each Subscribing
Reinsurer in the percentage share for that excess layer as expressed in its
Interests and Liabilities Agreement attached hereto.
Schedule A
NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE (U.S.A.)
(Approved by Lloyd's Underwriters' Fire and Non-Marine Association)
(1) This reinsurance does not cover any loss or liability accruing to the
Reassured as a member of, or subscriber to, any association of insurers or
reinsurers formed for the purpose of covering nuclear energy risks or as a
direct or indirect reinsurer of any such member, subscriber or
association.
(2) Without in any way restricting the operation of paragraph (1) of this
Clause it is understood and agreed that for all purposes of this
reinsurance all the original policies of the Reassured (new, renewal and
replacement) of the classes specified in Clause II of this paragraph (2)
from the time specified in Clause III in this paragraph (2) shall be
deemed to include the following provision (specified as the Limited
Exclusion Provision):
LIMITED EXCLUSION PROVISION.*
I. It is agreed that the policy does not apply under any liability
coverage, to
(injury, sickness, disease, death or destruction
(bodily injury or property damage
with respect to which an insured under the policy is also an insured
under a nuclear energy liability policy issued by Nuclear Energy
Liability Insurance Association, Mutual Atomic Energy Liability
Underwriters or Nuclear Insurance Association of Canada, or would be
an insured under any such policy but for its termination upon
exhaustion of its limit of liability.
II. Family Automobile Policies (liability only), Special Automobile
Policies (private passenger automobiles, liability only), Farmers
Comprehensive Personal Liability Policies (liability only),
Comprehensive Personal Liability Policies (liability only) or
policies of a similar nature; and the liability portion of
combination forms related to the four classes of policies stated
above, such as the Comprehensive Dwelling Policy and the applicable
types of Homeowners Policies.
III. The inception dates and thereafter of all original policies as
described in II above, whether new, renewal or replacement, being
policies which either
(a) become effective on or after 1st May, 1960, or
(b) become effective before that date and contain the Limited
Exclusion Provision set out above;
provided this paragraph (2) shall not be applicable to Family
Automobile Policies, Special Automobile Policies, or policies or
combination policies of a similar nature, issued by the Reassured on
New York risks, until 90 days following approval of the Limited
Exclusion Provision by the Governmental Authority having
jurisdiction thereof.
(3) Except for those classes of policies specified in Clause II of paragraph
(2) and without in any way restricting the operation of paragraph (1) of
this Clause, it is understood and agreed that for all purposes of this
reinsurance the original liability policies of the Reassured (new, renewal
and replacement) affording the following coverages:
Owners, Landlords and Tenants Liability, Contractual Liability,
Elevator Liability, Owners or Contractors (including railroad)
Protective Liability, Manufacturers and Contractors Liability,
Product Liability, Professional and Malpractice Liability,
Storekeepers Liability, Garage Liability, Automobile Liability
(including Massachusetts Motor Vehicle or Garage Liability)
shall be deemed to include, with respect to such coverages, from the time
specified in Clause V of this paragraph (3), the following provision
(specified as the Broad Exclusion Provision):
BROAD EXCLUSION PROVISION.*
It is agreed that the policy does not apply:
I. Under any Liability Coverage to
(injury, sickness, disease, death or destruction
(bodily injury or property damage
(a) with respect to which an insured under the policy is also an
insured under a nuclear energy liability policy issued by
Nuclear Energy Liability Insurance Association, Mutual Atomic
Energy Liability Underwriters or Nuclear Insurance Association
of Canada, or would be an insured under any such policy but
for its termination upon exhaustion of its limit of liability;
or
(b) resulting from the hazardous properties of nuclear material
and with respect to which (1) any person or organization is
required to maintain financial protection pursuant to the
Atomic Energy Act of 1954, or any law amendatory thereof, or
(2) the insured is, or had this policy not been issued would
be, entitled to indemnity from the United States of America,
or any agency thereof, under any agreement entered into by the
United States of America, or any agency thereof, with any
person or organization.
Page 1 of 2
II. Under any Medical Payments Coverage, or under any Supplementary
Payments Provision relating to
(immediate medical or surgical relief
(first aid,
to expenses incurred with respect to
(bodily injury, sickness, disease or death
(bodily injury
resulting from the hazardous properties of nuclear material and
arising out of the operation of a nuclear facility by any person or
organization.
III. Under any Liability Coverage to
(injury, sickness, disease, death or destruction
(bodily injury or property damage
resulting from the hazardous properties of nuclear material, if
(a) the nuclear material (1) is at any nuclear facility owned by,
or operated by or on behalf of, an insured or (2) has been
discharged or dispersed therefrom;
(b) the nuclear material is contained in spent fuel or waste at
any time possessed, handled, used, processed, stored,
transported or disposed of by or on behalf of an insured; or
(c) the
(injury, sickness, disease, death or destruction
(bodily injury or property damage
arises out of the furnishing by an insured of services, materials,
parts or equipment in connection with the planning, construction,
maintenance, operation or use of any nuclear facility, but if such
facility is located within the United States of America, its
territories, or possessions or Canada, this exclusion (c) applies
only to
(injury to or destruction of property at such nuclear
facility
(property damage to such nuclear facility and any
property thereat.
IV. As used in this endorsement:
"hazardous properties" include radioactive, toxic or explosive
properties; "nuclear material" means source material, special
nuclear material or byproduct material; "source material", "special
nuclear material", and "byproduct material" have the meanings given
them in the Atomic Energy Act of 1954 or in any law amendatory
thereof; "spent fuel" means any fuel element or fuel component,
solid or liquid, which has been used or exposed to radiation in a
nuclear reactor; "waste" means any waste material (1) containing
byproduct material and (2) resulting from the operation by any
person or organization of any nuclear facility included within the
definition of nuclear facility under paragraph (a) or (b) thereof;
"nuclear facility" means
(a) any nuclear reactor,
(b) any equipment or device designed or used for (1) separating
the isotopes of uranium or plutonium, (2) processing or
utilizing spent fuel, or (3) handling processing or packaging
waste,
(c) any equipment or device used for the processing, fabricating
or alloying of special nuclear material if at any time the
total amount of such material in the custody of the insured at
the premises where such equipment or device is located
consists of or contains more than 25 grams of plutonium or
uranium 233 or any combination thereof, or more than 250 grams
of uranium 235,
(d) any structure, basin, excavation, premises or place prepared
or used for the storage or disposal of waste, and includes the
site on which any of the foregoing is located, all operations
conducted on such site and all premises used for such
operations; "nuclear reactor" means any apparatus designed or
used to sustain nuclear fission in a self-supporting chain
reaction or to contain a critical mass of fissionable
material;
(With respect to injury to or destruction of property, the
word "injury" or "destruction,"
("property damage" includes all forms of radioactive
contamination of property,
(includes all forms of radioactive contamination of property.
V. The inception dates and thereafter of all original policies
affording coverages specified in this paragraph (3), whether new,
renewal or replacement, being policies which become effective on or
after 1st May, 1960, provided this paragraph (3) shall not be
applicable to
(i) Garage and Automobile Policies issued by the Reassured
on New York risks, or
(ii) statutory liability insurance required under Chapter 90,
General Laws of Massachusetts, until 90 days following
approval of the Broad Exclusion Provision by the
Governmental Authority having jurisdiction thereof.
(4) Without in any way restricting the operation of paragraph (1) of this
Clause, it is understood and agreed that paragraphs (2) and (3) above are
not applicable to original liability policies of the Reassured in Canada
and that with respect to such policies this Clause shall be deemed to
include the Nuclear Energy Liability Exclusion Provisions adopted by the
Canadian Underwriters' Association or the Independent Insurance Conference
of Canada.
- -----------------
*NOTE. The words printed in italics in the Limited Exclusion Provision and in
the Broad Exclusion Provision shall apply only in relation to original
liability policies which include a Limited Exclusion Provision or a Broad
Exclusion Provision containing those words.
21/9/67
N.M.A. 1590
Page 2 of 2
WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2005
issued to
American Interstate Insurance Company
DeRidder, Louisiana
American Interstate Insurance Company of Texas
Austin, Texas
Silver Oak Casualty, Inc.
DeRidder, Louisiana
and
any other insurance companies which are now or
hereafter come under the ownership, control or management of
Amerisafe Insurance Group
First Workers' Compensation Catastrophe Reinsurance
REINSURERS PARTICIPATIONS
IOA RE, Inc.
(for Catlin Insurance Company Ltd.) 10.0%
Platinum Underwriters Reinsurance, Inc. 10.0
THROUGH BENFIELD LIMITED
Lloyd's Underwriters and Companies
Per Signing Schedule(s) 80.0
TOTAL 100.0%
Second Workers' Compensation Catastrophe Reinsurance
REINSURERS PARTICIPATIONS
Chubb Re, Inc.
(for Federal Insurance Company) 20.0%
IOA RE, Inc.
(for Catlin Insurance Company Ltd.) 10.0
Platinum Underwriters Reinsurance, Inc. 10.0
THROUGH BENFIELD LIMITED
Lloyd's Underwriters and Companies
Per Signing Schedule(s) 60.0
TOTAL 100.0%
INTERESTS AND LIABILITIES AGREEMENT
of
Federal Insurance Company
Indianapolis, Indiana
through
Chubb Re, Inc.
Bernardsville, New Jersey
(hereinafter referred to as the "Subscribing Reinsurer")
with respect to the
WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2005
issued to and duly executed by
American Interstate Insurance Company
DeRidder, Louisiana
American Interstate Insurance Company of Texas
Austin, Texas
Silver Oak Casualty, Inc.
DeRidder, Louisiana
and
any other insurance companies which are now or
hereafter come under the ownership, control or management of
Amerisafe Insurance Group
The Subscribing Reinsurer hereby accepts the following percentage shares in the
interests and liabilities of the "Reinsurer" as set forth in the attached
Contract captioned above:
0% of the First Workers' Compensation Catastrophe Reinsurance
20.0% of the Second Workers' Compensation Catastrophe Reinsurance
This Agreement shall become effective at 12:01 a.m., Local Standard Time,
January 1, 2005, and shall continue in force until terminated in accordance with
the provisions of the attached Contract.
The 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:
Bernardsville, New Jersey, this 1st day of March in the year 2005.
/s/ William Pentony
---------------------------------------------------------------
Chubb Re, Inc. (for and on behalf of Federal Insurance Company)
INTERESTS AND LIABILITIES AGREEMENT
of
Catlin Insurance Company Ltd.
Hamilton, Bermuda
by
IOA RE, Inc.
East Norriton, Pennsylvania
(hereinafter referred to as the "Subscribing Reinsurer")
with respect to the
WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2005
issued to and duly executed by
American Interstate Insurance Company
DeRidder, Louisiana
American Interstate Insurance Company of Texas
Austin, Texas
Silver Oak Casualty, Inc.
DeRidder, Louisiana
and
any other insurance companies which are now or
hereafter come under the ownership, control or management of
Amerisafe Insurance Group
The Subscribing Reinsurer hereby accepts the following percentage shares in the
interests and liabilities of the "Reinsurer" as set forth in the attached
Contract captioned above:
10.0% of the First Workers' Compensation Catastrophe Reinsurance
10.0% of the Second Workers' Compensation Catastrophe Reinsurance
This Agreement shall become effective at 12:01 a.m., Local Standard Time,
January 1, 2005, and shall continue in force until terminated in accordance with
the provisions of the attached Contract.
The 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:
East Norriton, Pennsylvania, this 16th day of February in the year 2005.
/s/ William Reichert
--------------------------------------------------
IOA RE, Inc. (for and on behalf of
Catlin Insurance Company Ltd.)
INTERESTS AND LIABILITIES AGREEMENT
of
Platinum Underwriters Reinsurance, Inc.
Baltimore, Maryland
(hereinafter referred to as the "Subscribing Reinsurer")
with respect to the
WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2005
issued to and duly executed by
American Interstate Insurance Company
DeRidder, Louisiana
American Interstate Insurance Company of Texas
Austin, Texas
Silver Oak Casualty, Inc.
DeRidder, Louisiana
and
any other insurance companies which are now or
hereafter come under the ownership, control or management of
Amerisafe Insurance Group
The Subscribing Reinsurer hereby accepts the following percentage shares in the
interests and liabilities of the "Reinsurer" as set forth in the attached
Contract captioned above:
10.0% of the First Workers' Compensation Catastrophe Reinsurance
10.0% of the Second Workers' Compensation Catastrophe Reinsurance
This Agreement shall become effective at 12:01 a.m., Local Standard Time,
January 1, 2005, and shall continue in force until terminated in accordance with
the provisions of the attached Contract.
The 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:
New York, New York, this 11th day of March in the year 2005.
/s/ Michael Smiley
-------------------------------------------------
Platinum Underwriters Reinsurance, Inc.
INTERESTS AND LIABILITIES AGREEMENT
of
Certain Underwriting Members of Lloyd's
shown in the Signing Schedules attached hereto
(hereinafter referred to as the "Subscribing Reinsurer")
with respect to the
WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2005
issued to and duly executed by
American Interstate Insurance Company
DeRidder, Louisiana
American Interstate Insurance Company of Texas
Austin, Texas
Silver Oak Casualty, Inc.
DeRidder, Louisiana
and
any other insurance companies which are now or
hereafter come under the ownership, control or management of
Amerisafe Insurance Group
The Subscribing Reinsurer hereby accepts the following percentage shares in the
interests and liabilities of the "Reinsurer" as set forth in the attached
Contract captioned above:
60.0% of the First Workers' Compensation Catastrophe Reinsurance
40.0% of the Second Workers' Compensation Catastrophe Reinsurance
This Agreement shall become effective at 12:01 a.m., Local Standard Time,
January 1, 2005, and shall continue in force until terminated in accordance with
the provisions of the attached Contract.
The 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 any action, suit or proceeding to enforce the Subscribing Reinsurer's
obligations under the attached Contract, service of process may be made upon
Mendes & Mount, 750 Seventh Avenue, New York, New York 10019.
Signed for and on behalf of the Subscribing Reinsurer in the Signing Schedules
attached hereto.
INTERESTS AND LIABILITIES AGREEMENT
of
Certain Insurance Companies
shown in the Signing Schedule(s) attached hereto
(hereinafter referred to as the "Subscribing Reinsurer")
with respect to the
WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2005
issued to and duly executed by
American Interstate Insurance Company
DeRidder, Louisiana
American Interstate Insurance Company of Texas
Austin, Texas
Silver Oak Casualty, Inc.
DeRidder, Louisiana
and
any other insurance companies which are now or
hereafter come under the ownership, control or management of
Amerisafe Insurance Group
The Subscribing Reinsurer hereby accepts the following percentage shares in the
interests and liabilities of the "Reinsurer" as set forth in the attached
Contract captioned above:
20.0% of the First Workers' Compensation Catastrophe Reinsurance
20.0% of the Second Workers' Compensation Catastrophe Reinsurance
This Agreement shall become effective at 12:01 a.m., Local Standard Time,
January 1, 2005, and shall continue in force until terminated in accordance with
the provisions of the attached Contract.
The 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 any action, suit or proceeding to enforce the Subscribing Reinsurer's
obligations under the attached Contract, service of process may be made upon
Mendes & Mount, 750 Seventh Avenue, New York, New York 10019.
Signed for and on behalf of the Subscribing Reinsurer in the Signing Schedule(s)
attached hereto.