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Exhibit 10.26
CARVILL REINSURANCE BROKERS
R.K. CARVILL & CO. LTD.
St. Helen's, 1 Undershaft
London EC3A8JT & at Lloyd's
Tel: 0171-9292800
Fax: 0171-9291604
27th September, 1996
Intermed Insurance Co
1903 E Battlefield
Springfield, Missouri 65804
USA
REINSURANCE COVER NOTE: 96/1212/RM
This is to certify that, in accordance with your instructions, we have effected
the following placement. Please examine this Cover Note carefully and advise us
immediately if it is in any way incorrect or does not otherwise meet your
requirements.
RESSURED: INTERMED INSURANCE COMPANY and/or INTERLEX INSURANCE COMPANY
1903 E. Battlefield
Springfield, MO 65804
U.S.A. (NAIC Code 33367)
PERIOD: Annual re-signing at 1st October, 1996, of continuous Contract
commencing 1st February 1995, covering Awards Made against the
Reassured on and after that date, arising out of policies issued
by the Reassured on and after 1st January, 1977.
Contract to be re-signed annually, but may be cancelled at any 1st
October anniversary date, subject to at least 90 days prior notice.
At the option of the Reassured, providing such option is
exercised prior to anniversary date, the current period of this
Contract may be extended at its anniversary date by 90 days, at
pro rata additional premium: with reinstatement conditions
remaining unchanged but to apply to entire extended period,
reinstatement additional premium being based on final earned
premium for entire extended period.
TYPE: CATASTROPHE "AWARDS MADE" EXCESS OF LOSS REINSURANCE CONTRACT.
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CLASS: Covering Medical Practitioners' Liability policies (including
Dentists' Liability) and all other ancillary coverages as
original, and Lawyers' Professional Liability policies and all
other incurred as a result of coverages as original; but only to
indemnify that portion of their the Reassured in respect of
liability Ultimate Net Loss relating to awards in excess of their
original policy limit and/or relating to claims related
extra-contractual obligations on such business.
TERRITORIAL
SCOPE: As per the Reassured's original policies.
LIMIT: Section (A)
In respect of original losses to Intermed Insurance Company
with claims made dates on or after 1st October, 1993:
To pay up to US$5,000,000 Ultimate Net Loss each and every loss
occurrence, excess of US$250,000 Ultimate Net Loss each and every
loss occurrence, which in turn in excess of the Reassured's
applicable reinsurance programme.
Reinsurers hereon shall have the benefit of all recoveries under
all Excess of Loss Contracts effected by the Reassured in respect
of all original losses coming within the scope of this Section, as
such Contracts apply to the limit of the original policy against
which the Award is made: but only to the extent of the limits of
the Reassured's applicable reinsurance programmes, whether
commuted exhausted or otherwise, which for the purposes of this
Section are deemed to be in full force.
Section (B) In respect of original losses to Intermed Insurance Company with
claims made dates prior to 1st October, 1993:
To pay up to US$5,000,000 Ultimate Net Loss each and every loss
occurrence, excess of US$250,000 Ultimate Net Loss each and every
loss occurrence, which in turn in excess of the original policy
limit issued by the Reassured.
Section (C) In respect of original losses to Interlex Insurance Company with
claims made dates on or after 1st July 1995:
To pay up to US$5,000,000 Ultimate Net Loss each and every loss
occurrence, excess of US$250,000 Ultimate Net Loss each and every
loss occurrence, which in turn in excess of the Reassured's
applicable reinsurance programme.
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Reinsurers hereon shall have the benefit of all recoveries
under all Excess of Loss Contracts effected by the Reassured
in respect of all original losses coming within the scope of
this Section, as such Contracts apply to the limit of the
original policy against which the Award is made: but only to
the extent of the limits of the Reassured's applicable
reinsurance programmes, whether commuted exhausted or
otherwise, which for the purposes of this Section are deemed to
be in full force.
However, the maximum limit recoverable hereunder in respect
of Sections (A), (B) and (C) combined shall not exceed
US$5,000,000 each and every loss occurrence.
CO-REINSURANCE
WARRANTY: Warranted that the Reassured retain 10% of the premium and of
any loss recoverable hereunder, net and unreinsured in any way.
REINSTATEMENT: One full reinstatement at 100% additional premium (pro rata as
to amount).
Annual Minimum and Deposit Premium $160,000 payable quarterly
in advance in equal installments.
Adjustable within 60 days of the expiry hereof at 1.6% of the
Reassured's subject matter Premium Income for the period
hereon.
For adjustment purposes hereon, the above rate is calculated
on the sum of Intermed Insurance Company's Gross Net Earned
Premium Income for original policies up to US$1,000,000 or so
deemed, and Interlex Insurance Company's Gross Net Written
Premium Income for original policies up to US$1,000,000 or so
deemed, including Premium in respect of Defence Costs Allowance
Rider on policy limits up to $1,000,000.
U. S. CLASS-
IFICATION: U.S. Reinsurance
TAXES: 1% Federal Excise Tax where applicable
LOSS RESERVES: Letter of Credit (Citibank NA Scheme) in respect of known and
reported losses only, excluding any losses Incurred But Not
Reported ("I.B.N.R"), or any application thereto, in compliance
with Statutory/Regulatory requirements, as required by the
Reassured from all Reinsurers hereon (including Lloyd's).
CLAIMS
ARRANGEMENTS: Individual loss advices and settlements
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GENERAL
CONDlTIONS: Ultimate Net Loss Clause:
(1) excluding all loss adjustment expenses and costs
incurred up to the time an award is made. However
such expenses and costs (net of all amounts recoverable
from more specific Reinsurances) shall be included within
and have first priority in contributing:
a) Where the applicable underlying Reinsurances provide
for pro-rata costs in addition, to the Reassured's
applicable retention of US$250,000 for Sections (A)
or (B) or (C) hereon only, but;
b) Where the applicable underlying Reinsurances are on
a costs-inclusive basis, to the retentions and
limits of the said underlying reinsurances and
thereafter to the Reassured's applicable retention
of US$250,000 for Sections (A) or (B) or (C) hereon
only.
(2) including, once an award is made, all further expenses
and costs/appeal costs for excess of original policy
limits and/or extra-contractual obligations awards, net
of all amounts recoverable from more specific Reinsurers.
Reassured's co-reinsurances in their applicable underlying
reinsurance programme to be disregarded for the purpose of
determining the Ultimate Net Loss hereunder
Second Generation Awards Clause.
Insolvency Clause.
Errors and Omissions Clause.
Amendments and Alterations Clause.
Currency Clause (U.S. Dollars only)
Access to Records Clause.
Arbitration Clause.
Service of Suit Clause (U.S.A. - NMA 1998).
Insolvency Funds Exclusion Clause.
Nuclear Incident Exclusion Clause - Liability - Reinsurance
U.S.A.
Confidentiality Clause.
Carvill Intermediary Clause.
Several Liability Notice
The subscribing reinsurers' obligations under contracts of
reinsurance to which they subscribe are several and not joint
and are limited solely to the extent of their individual
subscriptions. The subscribing reinsurers are not responsible
for the subscription of any co-subscribing reinsurer who for
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any reason does not satisfy all or part of its obligations. -
Ref: LSW 1001 (Reinsurance).
WORDING: To be agreed by Underwriters.
INFORMATION: In years immediately prior to 1st October, 1993 Intermed
purchased a layer of $2million xs $1million (Claims Made Basis)
covering Clash and ECO/XPL. Recoveries, if applicable, to inure
to benefit of Section B.
HEREON: 100.00% of 90.00% of the above LIMIT and PREMIUM.
EFFECTED WITH: Security as per Schedule A attached hereto.
R.K. CARVILL & COMPANY LIM1TED
Director
E. & O.E.
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Attaching to and forming part of Cover Note Number: 96/1212/RM
100.00% LLOYD'S UNDERWR1TERS
London, England.
100.00% OF 90.00%
The breakdown of Lloyd's Syndicates is as follows:
Share Syndicate No. Pseudonym NAIC Id.No.
7.50% 435 DPM AA 1126435
9.36% 1007 SVH AA 1127007
3.75% 623 AFB AA 1126623
3.75% 623 AFB AA 1126623
7.49% 672 IAM AA 1126672
7.49% 190 FRW AA 1126190
5.62% 219 RAE AA 1126219
5.62% 205 HGJ AA 1126205
2.09% 1027 MFN AA 1127027
0.91% 2027 MFN AA 1128027
5.62% 362 WEH AA 1126362
2.62% 470 GNR AA 1126470
1.26% 376 JHV AA 1126376
0.24% 2376 JHV AA 1128376
3.39% 861 MEB AA 1126861
1.10% 1209 MEB AA 1127209
1.80% 1212 SJB AA 1127212
2.70% 1212 SJB AA 1127212
2.22% 1003 SJC AA 1127003
0.78% 2003 SJC AA 1128003
0.75% 727 SAM AA 1126727
0.56% 990 BAR AA 1126990
0.56% 991 AEG AA 1126991
0.33% 724 SAH AA 1126724
0.61% 2724 SAH AA 1128724
1.03% 227 ROS AA 1126227
0.09% 2227 CMP AA 1128227
0.94% 1096 RAS AA 1127096
0.75% 314 CFP AA 1126314
1.12% 529 HLM AA 1126529
0.94% 51 ANT AA 1126051
0.56% 122 RJH AA 1126122
0.75% 958 GSC AA 1126958
1.87% 510 RJK AA 1126510
0.46% 590 COX AA 1126590
0.10% 2591 COX AA 1128591
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0.75% 484 JSM AA 1126484
0.75% 47 JRR AA 1126047
0.50% 947 CBK AA 1126947
0.12% 2947 CBK AA 1128947
0.25% 923 FCD AA 1126923
0.06% 2923 FCD AA 1128923
1.12% 183 DFB AA 1126183
1.87% 1047 RGW AA 1127047
0.75% 780 BFC AA 1126780
0.37% 114 DER AA 1126114
1.87% 79 PJE AA 1126079
1.12% 204 FLD AA 1126204
1.12% ll41 JEM AA 1127141
2.62% 1215 BHB AA 1127215
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100.00% of 90.00%