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SECOND CASUALTY EXCESS REINSURANCE AGREEMENT
This Agreement is made and entered into by and between AMERICAN INTERSTATE
INSURANCE COMPANY, and SILVER OAK CASUALTY, INC., both of De Ridder, Louisiana
(hereinafter together called the "Company") and the Reinsurer specifically
identified on the signature page of this Agreement (hereinafter called the
"Reinsurer").
ARTICLE 1
BUSINESS REINSURED
This Agreement is to indemnify the Company in respect of the net excess
liability as a result of any loss or losses which may occur during the term of
this Agreement under any Policies covering Casualty Business in force, written
or renewed during the term of this Agreement by or on behalf of the Company,
subject to the terms and conditions herein contained.
ARTICLE 2
COVER
The Reinsurer will be liable in respect of each and every Loss Occurrence,
irrespective of the number and kinds of Policies involved, for the Ultimate Net
Loss over and above an initial Ultimate Net Loss of $500,000 each and every
Loss Occurrence, subject to a limit of liability to the Reinsurer of $1,500,000
each and every Loss Occurrence.
Recoveries from the Company's underlying Casualty Excess Reinsurance
Agreement(s) will not be deducted when establishing Ultimate Net Loss for
purposes of this Article.
ARTICLE 3
COMMENCEMENT AND TERMINATION
This Agreement shall become effective at 12:01 a.m., Central Standard Time,
July 1, 1995, and shall remain in full force and effect until terminated as
provided in the following paragraph.
Either the Company or the Reinsurer shall have the right to terminate this
Agreement as of July 1, 1997, or any July 1 thereafter, by giving 90 days'
prior notice in writing via either Certified or Registered Mail, return receipt
requested.
Notwithstanding the July 1, 1997 anniversary, the Reinsurer will have the
option to terminate this Agreement with 90 days' notice prior to July 1, 1996
for any of the following reasons:
A. The sale, merger, or acquisition of the Company by or with any other
party or the sale or change in controlling interest of the Company so
as to produce a loss in control over conduct of the business by the
current owners and/or management, except any change of control or
ownership within any insurance holding company system which effects no
change in the ultimate controlling party;
B. A reduction of the paid-in capital of the Company for any reason
whatsoever;
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C. The appointment of a receiver, administrator, trustee, or conservator
for the Company or the commencement of any liquidation, rearrangement,
or bankruptcy proceeding against the Company;
D. Should the Company at any time reinsure its minimum or net retention
on any class of business to which this Agreement applies, except as
provided for in this Agreement;
E. The reinsurance loss ratio exceeds 110% as of March 1, 1996. The loss
ratio will be based on reinsurance premium paid and reinsurance losses
incurred as of March 1, 1996.
Upon termination of this Agreement, the entire liability of the Reinsurer for
losses occurring subsequent to termination of this Agreement shall cease
concurrently with the termination date of this Agreement.
Notwithstanding the above, the Company has the option to terminate this
Agreement on a run-off basis in which case the Reinsurer will continue to cover
all Policies coming within the scope of this Agreement, including those written
or renewed during the period of notice, until the natural expiration or
anniversary of such Policies, whichever occurs first, but in no event longer
than 12 months from the date of termination plus odd time, not to exceed 15
months.
ARTICLE 4
TERRITORY
This Agreement applies to losses arising out of Policies written in the United
States of America, its territories and possessions, Puerto Rico and Canada,
wherever occurring.
ARTICLE 5
WARRANTIES
It is warranted for the purpose of this Agreement that as respects Third Party
Liability, the maximum limit issued by the Company any one Policy is $1,000,000
combined single limit (1973 Occurrence Form) or so deemed; or alteratively,
$1,000,000 per occurrence/$3,000,000 general annual aggregate (1986 Occurrence
Form), or so deemed.
It is understood as respects the new ISO Commercial General Liability Policy,
effective January 1, 1986, that the General Annual Aggregate Limit section,
other than products and completed operations, shall be protected hereunder on
an each Loss Occurrence basis.
ARTICLE 6
EXCLUSIONS
This Agreement does not cover:
A. As respects all business:
1. Aggregate Excess Insurance.
2. a. Atomic Energy and Nuclear Risks--all operations and
projects as per Nuclear Incident Exclusion Clauses -
Liability - Reinsurance, Nos. 08-31.1 (U.S.A.) and
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08-32.1 (Canada) in respect of all business other
than Workers' Compensation and Employers' Liability.
b. Atomic Energy and Nuclear Risks--all operations and
projects in respect of Workers' Compensation and
Employers' Liability business.
3. Contamination, Seepage and Pollution, as per the attached
clause.
4. Riot and civil commotion.
5. Reinsurance assumed, except:
a. Agency reinsurance (per risk or portfolio) is not
excluded.
b. Reinsurance of an occasional individual risk or
Policy is not excluded, provided the Company is not
operating as a professional reinsurer.
c. Reinsurance on risks where all servicing, including
claims handling, is done by the Company.
6. Pools, Associations and Syndicates, except losses from
Assigned Risk Plans or similar plans are not excluded.
7. 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 guarantee fund, insolvency
fund, plan, pool, association, fund or other arrangement,
howsoever denominated, established or governed, which provides
for any assessment of or payment or assumption by the Company
of part or all of any claim, debt, charge, fee, or other
obligation of an insurer, or its successors or assigns, which
has been declared by any competent authority to be insolvent,
or which is otherwise deemed unable to meet any claim, debt,
charge, fee or other obligation in whole or in part.
8. Aggregate Workers' Compensation.
9. Policies issued as excess coverage over other insurance or
over a self-insured retention except on risks where all
servicing, including claims handling, is done by the Company.
10. War as excluded by the Standard War Exclusion Clause.
11. Risks with known asbestosis, black lung and brown lung
exposures. Also, risks with silicosis exposures unless such
exposure emanates from an incidental part of the insureds
operations. For the purposes of this exclusion, the term
"incidental" shall mean less than 10% of any employees of an
insured's time is engaged in functions involving a silicosis
exposure.
12. Federal employees.
13. Financial Guarantee and Insolvency.
B. As respects business other than Workers' Compensation and Employers'
Liability:
1. Advertisers Liability--monoline.
2. Airports--all operations.
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3. Amusement parks, carnivals and rides.
4. Amusement devices--manufacturing liability.
5. Anhydrous ammonia--distributing.
6. Animal shows and circuses.
7. Antifreeze products liability.
8. Asylums.
9. Automobile racing of any kind.
10. Automobile racing spectator liability.
11. Automobile third party liability.
12. Aviation and aircraft products and operations.
13. Burglar alarm contractors and manufacturers.
14. Chemical manufacturing, unless incidental to the insured's
overall operations.
15. Construction, repair or maintenance of bridges, conduits,
electric power lines, dams or reservoirs, jetties or
breakwaters, oil or gas pipelines, railroads, ships or boats,
subways and tunnels.
16. Demolition--marine.
17. Dike or revetment construction.
18. Drilling or redrilling of oil or gas wells.
19. Explosives of any kind or nature.
20. Fire alarm--products liability.
21. Fire protection systems--all operations.
22. Grain elevators.
23. Halfway or awareness houses.
24. Homes or schools for the mentally retarded.
25. Marine or offshore operations.
26. Motorcycle distributors.
27. Oil or gas--all classifications.
28. Oil or gas lease operators--all classifications.
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29. Ore dock operations.
30. Products recall liability.
31. Professional Indemnity and/or Errors and Omissions:
architects, engineers, accountants, EDP firms, real estate or
insurance agents, surveyors, travel agents, and all other
miscellaneous.
32. Professional Liability: blood banks, hospitals, clinics,
lawyers, physicians, surgeons, dentists and nurses.
33. Railroads--all classifications.
34. Riding academies.
35. School boards liability.
36. Scuba equipment rental.
37. Scuba equipment manufacturing or distribution.
38. Scuba schools or instructors.
39. Ship building--all classifications.
40. Ski lifts, tows--including ski rental or sales.
41. Steel tanks or pressure vessel manufacturing.
42. Stevedoring and/or longshoremen--all operations.
43. Structural steel manufacturer or importer.
44. Toy manufacturing.
45. Ocean Marine and all forms of legal liability arising out of
the operation or navigation of ships or vessels except for the
operation of small pleasure craft under 28 feet in length.
46. Warehousemen's legal liability.
47. D & O (except for condominium D & O).
48. Day care centers.
49. Electric or gas utilities--all operations including blackouts
and brownouts.
50. Equipment rental.
51. Fire legal liability coverage exceeding limits of $500,000 per
insured.
52. Mining including underground mining, surface mining and
quarrying.
53. Municipalities.
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54. Pharmaceutical manufacturers.
55. Products Liability coverage relating to the production,
manufacture, distribution, or sale of any of the following:
a. Aircraft and instrumentation therefor, including any
component parts of airframes and engines, and any
other on-board parts or accessories that directly
affect the safety, flying characteristics or
communication capability of aircraft;
b. Cosmetics, hair or skin preparations;
c. Drugs, medicines and pharmaceutical products except
by retail drugstores or drug departments of
supermarket and discount stores;
d. Explosives or fireworks;
e. Agricultural business, including but not limited to
pesticides, herbicides, fertilizers;
f. Animal feed.
56. Liquor Law Liability, except for Host Liquor Liability
endorsements to General Liability Policies and Liquor Law
Liability under endorsements attached to General Liability
Policies.
57. Hotels or motels over seven stories in height unless fire
restrictive construction and equipped with smoke detectors in
all rooms and public hallways.
Such reinsurance as would have been afforded but for the foregoing exclusions
will apply to Policies issued to insureds regularly engaged in other
occupations or activities where the prohibited operation is only incidental to
the general conduct of the insured's business, or to Policies issued under an
Assigned Risk Plan, or similar mandatory plan (other than Exclusion Nos. A.2.
(a. and b.), A.3., A.7., A.10., A.13. and B.45., which are absolutely
excluded).
Errors and omissions notwithstanding, if without the knowledge and contrary to
the instructions of its supervisory underwriting personnel, the Company is
bound on a risk specifically excluded hereunder, or by an existing insured
extending its operations (other than Exclusion Nos. A.2. (a. and b.), A.3.,
A.7., A.10., A.13. and B.45., which are absolutely excluded), such reinsurance
as would have been afforded but for the exclusion shall apply for a period of
30 days following receipt by said underwriting personnel of knowledge thereof.
ARTICLE 7
PREMIUM
A. As respects Casualty Business classified by the Company as Logging and
General Liability:
1. The Company will pay the Reinsurer a deposit premium of $XXXX*
for the Agreement Year commencing at July 1, 1995, payable
quarterly in advance in the amount of $XXXX* on July 1, 1995,
October 1, 1995, January 1, 1996, and April 1, 1996.
__________________________________
* Confidential treatment has been requested.
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2. Within 60 days following the end of each Agreement Year, the
Company will calculate a premium at a rate of XXXX%*
multiplied by the Company's Gross Net Earned Premium Income as
respects such business. Should the premium so calculated
exceed the deposit premium paid in accordance with Paragraph
A.1. above, the Company will immediately pay the Reinsurer
the difference. Should the premium so calculated be less than
the deposit premium, the Reinsurer will immediately pay the
Company the difference subject to a minimum premium of $XXXX*.
3. The minimum and deposit premium for subsequent Agreement Years
will be based on the same percentage used to develop the
minimum and deposit premium for the Agreement Year that
commenced at July 1, 1995.
4. Should the Company elect to terminate this Agreement on a
run-off basis, the Company will pay the Reinsurer a premium of
XXXX%* against the unearned premium on Policies in force at
the time of cancellation.
B. As respects all other Casualty Business:
1. Within 45 days following the end of each calendar quarter, the
Company will calculate and pay to the Reinsurer a premium at a
rate of XXXX%* multiplied by the Company's Gross Net Earned
Premium Income as respects such business.
2. Should the Company elect to terminate this Agreement on a
run-off basis, the Company will pay the Reinsurer a premium of
XXXX%* against the unearned premium on Policies in force at
the time of cancellation.
ARTICLE 8
REPORTS
Within 60 days following the end of each Agreement Year, the Company will
furnish the Reinsurer with the following information:
A. Gross Net Earned Premium Income of the Company for the Agreement Year.
B. Any other information which the Reinsurer may require to prepare its
Annual Statement which is reasonably available to the Company.
ARTICLE 9
DEFINITIONS
A. The term "Casualty Business" as used in this Agreement shall mean all
insurances and reinsurances written by the Company and classified by
the Company as casualty.
B. The term "Ultimate Net Loss" as used in this Agreement shall mean the
actual loss paid by the Company or for which the Company becomes
liable to pay, such loss to include 90% of any Extra Contractual
Obligation award (and expense) as defined in the EXTRA CONTRACTUAL
OBLIGATIONS ARTICLE, 90% of any Excess of Policy Limits award as
defined in the EXCESS
__________________________________
* Confidential treatment has been requested.
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OF POLICY LIMITS ARTICLE, expenses of litigation and interest, and all
other loss expense of the Company including subrogation, salvage, and
recovery expenses (office expenses and salaries of officials and
employees not classified as loss adjusters are not chargeable as
expenses for purposes of this paragraph), but salvages and all
recoveries, including recoveries under all reinsurances which inure to
the benefit of this Agreement (whether recovered or not), shall be
first deducted from such loss to arrive at the amount of liability
attaching hereunder.
All salvages, recoveries or payments recovered or received subsequent
to loss settlement hereunder shall be applied as if recovered or
received prior to the aforesaid settlement, and all necessary
adjustments shall be made by the parties hereto.
For purposes of this definition, the phrase "becomes liable to pay"
shall mean the existence of a judgment which the Company does not
intend to appeal, or a release has been obtained by the Company, or
the Company has accepted a proof of loss.
Nothing in this clause shall be construed to mean that losses are not
recoverable hereunder until the Company's Ultimate Net Loss has been
ascertained.
C. The term "Gross Net Earned Premium Income" as used in this Agreement
shall mean gross earned premium income on business the subject of this
Agreement less the earned premium income (if any) paid for
reinsurances, recoveries under which would inure to the benefit of
this Agreement.
D. The term "Policy" as used in this Agreement shall mean any binder,
policy or contract of insurance or reinsurance issued, accepted or
held covered provisionally or otherwise, by or on behalf of the
Company.
E. The term "Loss Occurrence" as used in this Agreement shall mean any
one disaster or casualty or accident or loss or series of disasters or
casualties or accidents or losses arising out of or caused by one
event, except that:
As respects an occupational or other disease or cumulative trauma
suffered by an employee for which the employer is liable, such
occupational or other disease or cumulative trauma shall be deemed a
Loss Occurrence within the meaning hereof. If the Company shall,
within the term of this Agreement, sustain more than one loss arising
from an occupational or other disease or cumulative trauma of one
specific kind or class suffered by more than one employee of one
insured, such losses shall be deemed to have arisen from one Loss
Occurrence. A loss as respects each employee affected by an
occupational or other disease or cumulative trauma shall be deemed to
have been sustained by the Company at the date when compensable
disability of the employee commenced and not any other date.
As respects Products Personal Injury and Products Property Damage
Liability Insurance, it is understood that injuries to all persons and
all damage to property of others occurring during a Policy period and
proceeding from or traceable to the same causative agency shall be
deemed to have arisen out of one Loss Occurrence, and the date of such
Loss Occurrence shall be deemed to be the commencing date of the
Policy period. For the purposes of this provision, each annual period
of a Policy which continues in force for more than one year shall be
deemed to be a separate Policy period. The word "injuries" as used in
this paragraph includes but is not limited to infection, contagion,
poisoning or contamination.
F. The term "Agreement Year" as used in this Agreement shall mean the 12
consecutive months commencing with each July 1. Any period following
termination of this Agreement in which the Reinsurer remains liable
for losses arising out of Policies in force at the date of termination
will be considered as part of the concluding Agreement Year.
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ARTICLE 10
INTERLOCKING
The parties to this Agreement recognize that a Loss Occurrence, as defined
herein, may involve multiple Policies, and by reason of run-off termination
with this Agreement covering in-force Policies and other reinsurances assuming
liability on new and renewal Policies, a portion of the Loss Occurrence may be
ascribed to this Agreement and to other reinsurances covering on substantially
the same basis.
In such event, the Company's retention and the Reinsurer's limit of liability
for the Loss Occurrence shall be proportionate, with the amount of Ultimate Net
Loss to be retained by the Company under this Agreement being reduced to that
percentage which the Company's settled losses attaching to this Agreement bear
to the total of all the Company's settled losses contributing to the same Loss
Occurrence. The Reinsurer's liability shall be arrived at in the same manner.
ARTICLE 11
NET RETAINED LINES
This Agreement applies only to that portion of any insurances or reinsurances
covered by this Agreement which the Company retains net for its own account,
and in calculating the amount of any loss hereunder and also in computing the
amount in excess of which this Agreement attaches, only loss or losses in
respect of that portion of any insurances or reinsurances which the Company
retains net for its own account shall be included, it being understood and
agreed that 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 reinsurers, whether specific or general, any amounts
which may have become due from them, whether such inability arises from the
insolvency of such other reinsurers or otherwise.
However, it is understood that the Company may carry quota share or excess of
loss reinsurance on its net retained liability and such quota share or excess
of loss reinsurance will be disregarded for the purpose of this Agreement.
ARTICLE 12
CURRENCY
The currency to be used for all purposes of this Agreement shall be United
States of America currency.
ARTICLE 13
LOSS FUNDING
With respect to losses, funding will be in accordance with the attached Loss
Funding Clause No. 13-01.2. However, if the above method of funding is
unacceptable to the regulatory body of the jurisdiction where the Company is
domiciled, the Reinsurer will furnish an Outstanding Cash Advance as an
alterative method of funding.
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ARTICLE 14
TAXES
The Company will be liable for taxes (except Federal Excise Tax) on premiums
reported to the Reinsurer hereunder.
Federal Excise Tax applies only to those Reinsurers, excepting Underwriters at
Lloyd's, London and other Reinsurers exempt from the Federal Excise Tax, who
are domiciled outside the United States of America.
The Reinsurer has agreed to allow for the purpose of paying the Federal Excise
Tax 1% of the premium payable hereon to the extent such premium is subject to
Federal Excise Tax.
In the event of any return of premium becoming due hereunder the Reinsurer will
deduct 1% from the amount of the return and the Company or its agent should
take steps to recover the Tax from the U.S. Government.
ARTICLE 15
NOTICE OF LOSS AND LOSS SETTLEMENTS
The Company will advise the Reinsurer promptly of all claims which in the
opinion of the Company may involve the Reinsurer and of all subsequent
developments on these claims which may materially affect the position of the
Reinsurer, such advices to include any claim for which the reserve is 50% or
more of the Company's retention and, irrespective of the reserve or of any
question of liability or coverage, any claim falling within the following
categories:
A. Fatalities
B. Bodily injuries involving:
1. brain injuries resulting in impairment of physical functions,
2. spinal injuries resulting in partial or total paralysis of
upper or lower extremities,
3. amputations or permanent loss of use of upper or lower
extremities,
4. severe burn cases,
5. all other injuries likely to result in a permanent disability
rating of 50% or more.
The Reinsurer agrees to abide by the loss settlements of the Company, provided
that retroactive extension of Policy terms or coverages made voluntarily by the
Company and not in response to court decisions (whether such court decision is
against the Company or other companies affording the same or similar coverages)
will not be covered under this Agreement.
When so requested the Company will afford the Reinsurer an opportunity to be
associated with the Company, at the expense of the Reinsurer, in the defense of
any claim or suit or proceeding involving this reinsurance and the Company will
cooperate in every respect in the defense of such claim, suit or proceeding.
The Reinsurer will pay its share of loss settlements immediately upon receipt
of proof of loss from the Company.
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ARTICLE 16
EXCESS OF POLICY LIMITS
In the event the Ultimate Net Loss includes an amount in excess of the
Company's Policy limit, such amount, as provided for in the definition of
Ultimate Net Loss, in excess of the Company's Policy limit shall be added to
the amount of the Company's Policy limit, and the sum thereof shall be covered
hereunder, subject to the Reinsurer's limit of liability appearing in the COVER
ARTICLE of this Agreement.
However, this Article shall not apply where the loss has been incurred due to
the fraud of a member of the Board of Directors or a corporate officer 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.
For the purpose of this Article, the word "loss" shall mean any amounts for
which the Company would have been contractually liable to pay had it not been
for the limit of the original Policy.
ARTICLE 17
EXTRA CONTRACTUAL OBLIGATIONS
This Agreement shall protect the Company, subject to the Reinsurer's limit of
liability appearing in the COVER ARTICLE of this Agreement, where the loss
includes any Extra Contractual Obligations as provided in the definition of
Ultimate Net Loss. "Extra Contractual Obligations" are defined as those
liabilities not covered under any other provision of this Agreement and which
arise from handling of any claim on business covered hereunder, such
liabilities arising because of, but not limited to, the following: failure by
the Company to settle within the Policy limit, or by reason of 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 in the preparation or prosecution of an appeal consequent upon such
action.
The date on which any Extra Contractual Obligation is incurred by the Company
shall be deemed, in all circumstances, to be the date of the original Loss
Occurrence.
However, this Article shall not apply where the loss has been incurred due to
the fraud of a member of the Board of Directors or a corporate officer 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.
ARTICLE 18
DELAY, OMISSION OR ERROR
Inadvertent delays, errors or omissions made in connection with this Agreement
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 19
INSPECTION
The Company shall place at the disposal of the Reinsurer at all reasonable
times, and the Reinsurer shall have the right to inspect, through its
authorized representatives, all books, records and papers of the Company in
connection with any reinsurance hereunder, or claims in connection herewith.
ARTICLE 20
ARBITRATION
Any irreconcilable dispute between the parties to this Agreement will be
arbitrated in Dallas, Texas in accordance with the attached Arbitration Clause
No. 22-01.1.
ARTICLE 21
SERVICE OF SUIT
The attached Service of Suit Clause No. 20-01.5 - U.S.A., will apply to this
Agreement.
ARTICLE 22
INSOLVENCY
In the event of the insolvency of the Company the attached Insolvency Clause
No. 21-01 will apply.
ARTICLE 23
INTERMEDIARY
Sedgwick Re, Inc. is hereby recognized as the Intermediary negotiating this
Agreement for all business hereunder. All communications including notices,
premiums, return premiums, commissions, taxes, losses, loss adjustment
expenses, salvages and loss settlements relating thereto shall be transmitted
to the Reinsurer or the Company through Sedgwick Re, Inc., 1501 Fourth Avenue,
Suite 1400, Seattle, Washington 98101. 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 only to constitute payment
to the Company to the extent that such payments are actually received by the
Company.
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ARTICLE 24
PARTICIPATION: SECOND CASUALTY EXCESS REINSURANCE AGREEMENT
EFFECTIVE: July 1, 1995
This Agreement obligates the Reinsurer for _______% of the interests and
liabilities set forth under this Agreement.
The participation of the Reinsurer in the interests and liabilities of this
Agreement shall be separate and apart from the participations of other
reinsurers and shall not be joint with those of other reinsurers, and the
Reinsurer shall in no event participate in the interests and liabilities of
other reinsurers.
IN WITNESS WHEREOF, the parties hereto, by their authorized representatives,
have executed this Agreement as of the following dates:
PARTICIPATING REINSURERS
- --------------------------------------------------------------------------------
Reliance Reinsurance Corporation
Reliance Insurance Company 20.00%
St. Paul Re Management Corporation
St. Paul Fire and Marine Insurance Company 25.00%
Skandia America Reinsurance Corporation 25.00%
TIG Reinsurance Company 20.00%
Transatlantic Reinsurance Company 10.00%
-------
Total 100.00%
Upon completion of Reinsurers' signing, fully executed signature pages will be
forwarded to you for the completion of your file.
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ARTICLE 24
PARTICIPATION: SECOND CASUALTY EXCESS REINSURANCE AGREEMENT
EFFECTIVE: July 1, 1995
This Agreement obligates the Reinsurer for 20.00% of the interests and
liabilities set forth under this Agreement.
The participation of the Reinsurer in the interests and liabilities of this
Agreement shall be separate and apart from the participations of other
reinsurers and shall not be joint with those of other reinsurers, and the
Reinsurer shall in no event participate in the interests and liabilities of
other reinsurers.
IN WITNESS WHEREOF, the parties hereto, by their authorized representatives,
have executed this Agreement as of the following dates:
In Philadelphia, Pennsylvania, this ________ day of _____________________, 1995.
RELIANCE INSURANCE COMPANY
(THROUGH RELIANCE REINSURANCE CORP.)
By
-----------------------------------
(signature)
-------------------------------------
(name)
-------------------------------------
(title)
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ARTICLE 24
PARTICIPATION: SECOND CASUALTY EXCESS REINSURANCE AGREEMENT
EFFECTIVE: July 1, 1995
This Agreement obligates the Reinsurer for 25.00% of the interests and
liabilities set forth under this Agreement.
The participation of the Reinsurer in the interests and liabilities of this
Agreement shall be separate and apart from the participations of other
reinsurers and shall not be joint with those of other reinsurers, and the
Reinsurer shall in no event participate in the interests and liabilities of
other reinsurers.
IN WITNESS WHEREOF, the parties hereto, by their authorized representatives,
have executed this Agreement as of the following dates:
In New York, New York, this _________day of ____________________________, 1995.
ST. PAUL FIRE AND MARINE INSURANCE COMPANY
By
---------------------------------------
(signature)
---------------------------------------
(name)
---------------------------------------
(title)
St. Paul Re Management Corporation
Reinsurance Managers
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ARTICLE 24
PARTICIPATION: SECOND CASUALTY EXCESS REINSURANCE AGREEMENT
EFFECTIVE: July 1, 1995
This Agreement obligates the Reinsurer for 25.00% of the interests and
liabilities set forth under this Agreement.
The participation of the Reinsurer in the interests and liabilities of this
Agreement shall be separate and apart from the participations of other
reinsurers and shall not be joint with those of other reinsurers, and the
Reinsurer shall in no event participate in the interests and liabilities of
other reinsurers.
IN WITNESS WHEREOF, the parties hereto, by their authorized representatives,
have executed this Agreement as of the following dates:
In New York, New York, this _________day of_____________________________, 1995.
SKANDIA AMERICA REINSURANCE
CORPORATION
Wilmington, Delaware
By: By:
----------------------------------- -----------------------------------
(signature) (signature)
----------------------------------- -----------------------------------
(name) (name)
----------------------------------- -----------------------------------
(title) (title)
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ARTICLE 24
PARTICIPATION: SECOND CASUALTY EXCESS REINSURANCE AGREEMENT
EFFECTIVE: July 1, 1995
This Agreement obligates the Reinsurer for 20.00% of the interests and
liabilities set forth under this Agreement.
The participation of the Reinsurer in the interests and liabilities of this
Agreement shall be separate and apart from the participations of other
reinsurers and shall not be joint with those of other reinsurers, and the
Reinsurer shall in no event participate in the interests and liabilities of
other reinsurers.
IN WITNESS WHEREOF, the parties hereto, by their authorized representatives,
have executed this Agreement as of the following dates:
In Stamford, Connecticut, this _________day of_________________________, 1995.
TIG REINSURANCE COMPANY
Stamford, Connecticut
By
--------------------------------------
(signature)
--------------------------------------
(name)
--------------------------------------
(title)
-17-
18
ARTICLE 24
PARTICIPATION: SECOND CASUALTY EXCESS REINSURANCE AGREEMENT
EFFECTIVE: July 1, 1995
This Agreement obligates the Reinsurer for 10.00% of the interests and
liabilities set forth under this Agreement.
The participation of the Reinsurer in the interests and liabilities of this
Agreement shall be separate and apart from the participations of other
reinsurers and shall not be joint with those of other reinsurers, and the
Reinsurer shall in no event participate in the interests and liabilities of
other reinsurers.
IN WITNESS WHEREOF, the parties hereto, by their authorized representatives,
have executed this Agreement as of the following dates:
In New York, New York, this __________day of____________________________, 1995.
TRANSATLANTIC REINSURANCE COMPANY
New York, New York
By
--------------------------------------
(signature)
--------------------------------------
(name)
--------------------------------------
(title)
-18-
19
and in De Ridder, Louisiana, this ________day of________________________, 1995.
AMERICAN INTERSTATE INSURANCE COMPANY
For and on behalf of
AMERICAN INTERSTATE INSURANCE COMPANY
SILVER OAK CAUSALTY, INC.
By
--------------------------------------
(signature)
--------------------------------------
(name)
--------------------------------------
(title)
SECOND CASUALTY EXCESS REINSURANCE AGREEMENT
issued to
AMERICAN INTERSTATE INSURANCE COMPANY
SILVER OAK CASUALTY, INC.
-19-
20
NUCLEAR INCIDENT EXCLUSION CLAUSE -
LIABILITY - REINSURANCE - U.S.A.
(Wherever the word "Reassured" appears in this clause, it shall be deemed to
read "Reassured," "Reinsured," "Company," or whatever other word is employed
throughout the text of the reinsurance agreement to which this clause is
attached to designate the company or companies reinsured.)
(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 the 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
21
(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.
II. Under any Medical Payments Coverage, or under any Supplementary
Payments Provision relating
to immediate medical or surgical relief to expenses
first aid, 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, arises out of the
death or destruction bodily furnishing by an
injury or property damage 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 other than tailings or wastes produced by the
extraction or concentration of uranium or thorium from any ore
processed primarily for its source material content, and (2)
resulting from the operation by any person or organization of any
nuclear facility included under the first two paragraphs of the
definition of nuclear facility; "NUCLEAR FACILITY" means
(a) any nuclear reactor,
(b) any equipment or device designed or sued for (1) separating
the isotopes of uranium of 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
devices 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.
22
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.
- --------------------------------------------------------------------------------
23
NUCLEAR INCIDENT EXCLUSION CLAUSE -
LIABILITY - REINSURANCE - CANADA
1. This Agreement does not cover any loss or liability accruing to the
Company 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 agreed that for all purposes of this Agreement all the original
liability contracts of the Company, whether new, renewal or replacement, of the
following classes, namely.
Personal Liability.
Farmers Liability.
Storekeepers Liability.
which become effective on or after 31st December 1984, shall be deemed to
include, from their inception dates and thereafter, the following provision:
LIMITED EXCLUSION PROVISION.
This Policy does not apply to bodily injury or property damage with
respect to which the Insured is also insured under a contract of nuclear
energy liability insurance (whether the insured is unnamed in such contract
and whether or not it is legally enforceable by the Insured) issued by the
Nuclear Insurance Association of Canada or any other group or pool of
insurers or would be an Insured under any such policy but for its
termination upon exhaustion of its limits of liability.
With respect to property, loss of use of such property shall be deemed
to be property damage.
3. Without in any way restricting the operation of paragraph 1 of this
clause it is agreed that for all purposes of this Agreement all the original
liability contracts of the Company, whether new, renewal or replacement, of any
class whatsoever (other than Personal Liability, Farmers Liability,
Storekeepers Liability or Automobile Liability contracts), which become
effective on or after 31st December 1984, shall be deemed to include, from
their inception dates and thereafter, the following provision of:
BROAD EXCLUSION PROVISION.
It is agreed that this Policy does not apply:
(a) to liability imposed by or arising under the Nuclear Liability
Act; nor
(b) to bodily injury or property damage with respect to which an
Insured under this Policy is also insured under a contract of
nuclear energy liability insurance (whether the insured is
unnamed in such contract and whether or not it is legally
enforceable by the Insured) issued by the Nuclear Insurance
Association of Canada or any other insurer or group or pool of
insurers or would be an insured under any such policy but for
its termination upon exhaustion of its limit of liability; nor
(c) to bodily injury or property damage resulting directly or
indirectly from the nuclear energy hazard arising from:
(i) the ownership, maintenance, operation or use of a
nuclear facility by or on behalf of an Insured;
(ii) 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; and
(iii) the possession, consumption, use, handling, disposal
or transportation of fissionable substances, or of
other radioactive material (except radioactive
isotopes, away from a nuclear facility, which have
reached the final stage of fabrication so as to be
useable for any scientific, medical, agricultural,
commercial or industrial purpose) used, distributed,
handled or sold by an Insured.
As used in this Policy:
1. The term "nuclear energy hazard" means the radioactive, toxic,
explosive, or other hazardous properties of radioactive material;
2. The term "radioactive material" means uranium, thorium, plutonium,
neptunium, their respective derivatives and compounds, radioactive
isotopes of other elements and any other substances that the Atomic
Energy Control Board may, by regulation, designate as being
prescribed substances capable of releasing atomic energy, or as
being requisite for the production, use or application of atomic
energy;
3. The term "nuclear facility" means:
(a) any apparatus designed or used to sustain nuclear fission
in a self-supporting chain reaction or to contain a
critical mass of plutonium, thorium and uranium or any one
or more of them;
(b) any equipment or device designed or used for (i) separating
the isotopes of plutonium, thorium and uranium or any one
or more of them, (ii) processing or utilizing spent fuel,
or (iii) handling, processing or packaging waste;
(c) any equipment or device used for the processing,
fabricating or alloying of plutonium, thorium or uranium
enriched in the isotope uranium 233 or in the isotope
uranium 235, or any one or more of them 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
24
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
radioactive material;
and includes the site on which any of the foregoing is located,
together with all operations conducted thereon and all premises
used for such operations.
4. The term "fissionable substance" means any prescribed substance
that is, or from which can be obtained, a substance capable of
releasing atomic energy by nuclear fission.
5. With respect to property, loss of use of such property shall be
deemed to be property damage.
25
LOSS FUNDING
This clause is only applicable to those Reinsurers who cannot qualify for
credit by the State having jurisdiction over the Company's loss reserves.
As regards policies or bonds issued by the Company coming within the scope of
this Agreement, the Company agrees that when it shall file with the insurance
department or set up on its books reserves for losses covered hereunder which
it shall be required to set up by law it will forward to the Reinsurer a
statement showing the proportion of such loss reserves which is applicable to
them.
The Reinsurer hereby agrees that it will apply for and secure delivery to the
Company a clean irrevocable and unconditional Letter of Credit issued by a bank
chosen by the Reinsurer and acceptable to the appropriate insurance
authorities, in an amount equal to the Reinsurer's proportion of the loss
reserves in respect of known outstanding losses that have been reported to the
Reinsurer and allocated loss expenses relating thereto as shown in the
statement prepared by the Company. Under no circumstances shall any amount
relating to reserves in respect of losses or loss expenses Incurred But Not
Reported be included in the amount of the Letter of Credit.
The Letter of Credit shall be "Evergreen" and shall be issued for a period of
not less than one year, and shall be automatically extended for one year from
its date of expiration or any future expiration date unless thirty (30) days
prior to any expiration date, the bank shall notify the Company by certified or
registered mail that it elects not to consider the Letter of Credit extended
for any additional period.
The Company, or its successors in interest, undertakes to use and apply any
amounts which it may draw upon such Credit pursuant to the terms of the
Agreement under which the Letter of Credit is held, and for the following
purposes only:
(a) To pay the Reinsurer's share or to reimburse the Company for the
Reinsurer's share of any liability for loss reinsured by this
Agreement, the payment of which has been agreed by the Reinsurer
and which has not otherwise been paid.
(b) To make refund of any sum which is in excess of the actual amount
required to pay the Reinsurer's share of any liability reinsured by
this Agreement.
(c) In the event of expiration of the Letter of Credit as provided for
above, to establish deposit of the Reinsurer's share of known and
reported outstanding losses and allocated expenses relating thereto
under this Agreement. Such cash deposit shall be held in an
interest bearing account separate from the Company's other assets,
and interest thereon shall accrue to the benefit of the Reinsurer.
It is understood and agreed that this procedure will be implemented
only in exceptional circumstances and that, if it is implemented,
the Company will ensure that a rate of interest is obtained for the
Reinsurers on such a deposit account that is at least equal to the
rate which would be paid by Citibank N.A. in New York, and further
that the Company will account to the Reinsurers on an annual basis
for all interest accruing on the cash deposit account for the
benefit of the Reinsurer.
The bank chosen for the issuance of the Letter of Credit 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.
At annual intervals, or more frequently as agreed but never more frequently
than semiannually, the Company shall prepare a specific statement, for the sole
purpose of amending the Letter of Credit, of the Reinsurer's share of known and
reported outstanding losses and allocated expenses relating thereto. If the
statement shows that the Reinsurer's share of such losses and allocated loss
expenses exceeds 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 of the Letter of Credit increasing the
amount of credit by the amount of such difference. If, however, the statement
shows that the Reinsurer's share of known and reported outstanding losses plus
allocated loss expenses relating thereto is 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.
NOTE: --Wherever used herein the terms:
"Company" shall be understood to mean "Company," "Reinsured," "Reassured"
or whatever other term is used in the attached reinsurance agreement to
designate the reinsured company. "Agreement" shall be understood to mean
"Contract," "Agreement," "Policy" or whatever other term is used to
designate the attached reinsurance document. "State" shall be understood
to mean the state, province or Federal authority having jurisdiction over
the Company's loss reserves.
26
ARBITRATION CLAUSE
As a condition precedent to any right of action hereunder, any irreconcilable
dispute between the parties to this Agreement will be submitted for decision to
a board of arbitration composed of two arbitrators and an umpire.
Arbitration shall be initiated by the delivery of a written notice of demand
for arbitration by one party to the other within a reasonable time after the
dispute has arisen.
The members of the board of arbitration shall be active or retired
disinterested officials of insurance or reinsurance companies, or Underwriters
at Lloyd's, London, not under the control or management of either party to this
Agreement. Each party shall appoint its arbitrator and the two arbitrators
shall choose an umpire before instituting the hearing. If the respondent fails
to appoint its arbitrator within four weeks after being requested to do so by
the claimant, the latter shall also appoint the second arbitrator. If the two
arbitrators fail to agree upon the appointment of an umpire within four weeks
after their nominations, each of them shall name three, of whom the other shall
decline two, and the decision shall be made by drawing lots.
The claimant shall submit its initial brief within 45 days from appointment of
the umpire. The respondent shall submit its brief within 45 days thereafter
and the claimant may submit a reply brief within 30 days after filing of the
respondent's brief.
The board shall make its decision with regard to the custom and usage of the
insurance and reinsurance business. The board shall issue its decision in
writing based upon a hearing in which evidence may be introduced without
following strict rules of evidence but in which cross-examination and rebuttal
shall be allowed. The board shall make its decision within 60 days following
the termination of the hearing unless the parties consent to an extension. The
majority decision of the board shall be final and binding upon all parties to
the proceeding. Judgment may be entered upon the award of the board in any
court having jurisdiction.
Each party shall bear the expense of its own arbitrator and shall jointly and
equally bear with the other party the expense of the umpire. The remaining
costs of the arbitration proceedings shall be allocated by the board.
NOTE: --Wherever used herein, the term "Company" shall be understood to mean
"Reinsured," "Reassured" or whatever other term is used in the attached
Agreement to designate the reinsured company. The term "Agreement" shall
be understood to mean "Contract," "Policy" or whatever other term is used
to designate the attached reinsurance document.
27
SERVICE OF SUIT
This Clause applies only to a reinsurer domiciled outside the United States of
America or should the Company be authorized to do business in the State of New
York, a reinsurer unauthorized in New York as respects suits instituted in New
York.
It is agreed that in the event of the failure of the Reinsurer hereon to pay
any amount claimed to be due hereunder, the Reinsurer hereon, at the request of
the Company, will submit to the jurisdiction of a court of competent
jurisdiction within the United States. Nothing in this Clause constitutes or
should be understood to constitute a waiver of the Reinsurer's right 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 of any
state in the United States.
It is further agreed that service of process in such suit may be made upon
Messrs. Mendes & Mount, 750 Seventh Avenue, New York, New York 10019-6829 and
that in any suit instituted against the Reinsurer upon this Agreement, the
Reinsurer will abide by the final decision of such court or of any appellate
court in the event of an appeal.
The above-named are authorized and directed to accept service of process on
behalf of the Reinsurer in any such suit and/or upon the request of the Company
to give a written undertaking to the Company that they will enter a general
appearance upon the Reinsurer's behalf in the event such a suit shall be
instituted.
Further, pursuant to any statute of any state, territory or district of the
United States which makes provision therefor, the Reinsurer hereon hereby
designates 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 Agreement, and
hereby designates the above-named as the person to whom the said officer is
authorized to mail such process or a true copy thereof.
NOTE: --Wherever used herein the terms:
"Company" shall be understood to mean "Company," "Reinsured," "Reassured"
or whatever other term is used in the attached reinsurance Agreement to
designate the reinsured company. "Agreement" shall be understood to mean
"Contract," "Agreement," "Policy" or whatever other term is used to
designate the attached reinsurance document.
28
INSOLVENCY CLAUSE
In the event of the insolvency of the Company, reinsurance under this Agreement
shall be payable by the Reinsurer on the basis of the liability of the Company
under Policy or Policies reinsured without diminution because of the insolvency
of the Company, 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 when the Agreement specifically provides another payee of such
reinsurance in the event of the insolvency of the Company and when 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.
It is agreed, however, that the liquidator or receiver or statutory successor
of the insolvent Company shall give written notice to the Reinsurer of the
pendency of a claim against the insolvent Company on the Policy or Policies
reinsured within a reasonable time after such claim is filed in the insolvency
proceeding and that during the pendency of such claim, the Reinsurer may
investigate such claim and interpose, at its own expense, in the proceeding
when such claim is to be adjudicated, any defense or defenses which it may deem
available to the Company or its liquidator or receiver or statutory successor.
The expense thus incurred by the Reinsurer shall be chargeable, subject to
court approval, against the insolvent Company as part of the expense of
liquidation to the extent of a proportionate share of the benefit which may
accrue to the Company solely as a result of the defense undertaken by the
Reinsurer.
When 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 Agreement as though such
expense had been incurred by the insolvent Company.
Should the Company go into liquidation or should a receiver be appointed, the
Reinsurer shall be entitled to deduct from any sums which may be due or may
become due to the Company under this reinsurance Agreement any sums which are
due to the Reinsurer by the Company under this reinsurance Agreement and which
are payable at a fixed or stated date as well as any other sums due the
Reinsurer which are permitted to be offset under applicable law.
NOTE: --Wherever used herein the terms:
"Company" shall be understood to mean "Company," "Reinsured," "Reassured"
or whatever other term is used in the attached reinsurance Agreement to
designate the reinsured company. "Agreement" shall be understood to mean
"Contract," "Agreement," "Policy" or whatever other term is used to
designate the attached reinsurance document.