1
EXHIBIT 10.18
FLOOD INSURANCE PROGRAM SERVICES AGREEMENT AMONG
INSURANCE MANAGEMENT INFORMATION SERVICES, INC.,
AMERICAN ALTERNATIVE INSURANCE CORPORATION, AND
CORPORATE INSURANCE AGENCY SERVICES
FOR THE NATIONAL FLOOD INSURANCE PROGRAM
THIS FLOOD INSURANCE PROGRAM SERVICES AGREEMENT (Agreement) is entered into
by and among Insurance Management Information Services, Inc. (IMIS), a
corporation organized and existing under the laws of Florida; American
Alternative Insurance Corporation (AAIC), an insurer organized and existing
under the laws of New York; and Corporate Insurance Agency Services (CIS), a
licensed producer in the State of Pennsylvania.
WHEREAS, the Federal Emergency Management Agency (FEMA) and the Federal
Insurance Administration (FIA) administer the National Flood Insurance Program
(NFIP). AAIC is an insurance company duly licensed to write flood insurance in
all states of the United States and the District of Columbia, and has been
approved by FIA to act as a Write Your Own Flood Carrier (WYO Carrier) under the
Write Your Own Flood Insurance Program (WYO Flood Program), a program offered
under the National Flood Insurance Program (NFIP); and
WHEREAS, IMIS has been designated by FIA as a Qualified Performer for the
provision of services to WYO Carriers under the NFIP; and
WHEREAS, AAIC wishes to engage the services of IMIS to administer certain of
AAIC's obligations as a WYO Carrier as set forth herein; and
WHEREAS, IMIS is a subsidiary of Bankers Insurance Group, a national
multi-line insurance group and guarantor of this Agreement, which Guaranty is
attached hereto as Exhibit A; and
WHEREAS, CIS has developed a plan for the marketing of WYO Flood Insurance
Coverage, and intends to contract with financial institutions to provide flood
zone determinations to these institutions, residential mortgage customers and on
these institutions; residential mortgage portfolios. AAIC has appointed or
intends to appoint CIS as its agent for the solicitation, determination of
eligibility and premiums, binding of coverage, collection of premiums, and
delivery of WYO Flood Insurance Policies as set forth in the Agency Agreement
entered into between AAIC and CIS attached hereto as Exhibit B (Agency
Agreement). AAIC now desires to engage the services of CIS to manage and
supervise the activities of IMIS hereunder.
NOW, THEREFORE, in consideration of the mutual promises, agreements,
covenants and conditions hereinafter set forth, and intending to be legally
bound hereby, the parties hereto agree as follows:
2
ARTICLE I - AUTHORITY OF IMIS
1.1 AAIC hereby engages IMIS to administer certain of AAIC's obligations as a
WYO Carrier for the FNIP in the state(s) agreed upon between AAIC and CIS in
the Agency Agreement attached as Exhibit B.
1.2 AAIC hereby grants IMIS the authority to act for and on behalf of AAIC in
matters required for IMIS to conduct the aforesaid flood insurance business,
as more particularly set forth in Article II below, including the authority
to receive, distribute, and remit premiums as more particularly set forth
herein, process applications and other forms, issue policies, and process
claims, all in a manner consistent with and pursuant to and as authorized by
the provisions of the National Flood Insurance Act of 1968, as amended; the
Flood Disaster Protection Act of 1973, as amended; the regulations of the
National Flood Insurance Program (NFIP) Write Your Own Program (WYO)
administered by the Federal Insurance Administration (FIA) and the Federal
Emergency Management Agency (FEMA) (collectively called the "WYO Flood
Program"); and the terms of this Agreement.
1.3 IMIS hereby accepts such grant of authority, and agrees to carry out such
duties and responsibilities to the best of its ability, knowledge, skill and
judgment, and in accordance with the highest reasonably attainable
standards of quality generally utilized in the insurance and data
processing industries.
ARTICLE II - RESPONSIBILITIES AND COMMITMENTS OF IMIS
2.1 IMIS shall perform the following WYO Program responsibilities on AAIC's
behalf;
a. Policy Administration, including:
i. Community Eligibility/Rating Criteria;
ii. Policyholder Eligibility Determination;
iii. Policy Issuance;
iv. Policy Endorsements;
v. Policy Cancellations; provided however, that CIS shall also have
authority to make policy cancellations, subject to the same laws,
regulations, and Program Requirements;
vi. Policy Correspondence; and
vii. The receipt of funds collected by CIS, recording, control, and
timely disbursement of WYO Program funds in accordance with the WYO
("Financial Control Plan") requirements established by FIA and the
Agreements of the parties.
- 2 -
3
Gross premiums deposited by CIS in the custodial account are
remitted weekly to FIA by IMIS, net of the established NFIP
Allowable Expenses equal to 32.6% of premiums written. "Allowable
Expenses" means a WYO Flood Insurance carrier's operating and
administrative expenses, including agent commissions management
fees, service provider fees, fees payable to Participating Financial
Institutions, production of policy documents taxes, dividends, and
board or bureau assessments.
viii. IMIS shall distribute the Allowable Expenses as follows:
a. CIS will receive a flat commission of 13.6% of written premiums
for all services rendered pursuant to this Agreement, unless
otherwise adjusted pursuant to Section 2.3(a) above or Section
9.1(b)(ii) below.
b. AAIC will receive 9.0% of written premiums calculated as
follows:
i. 5% WYO Carrier profit;
ii. 3% for premium taxes and board or bureau assessments,
subject to reconciliation annually based on actual payments
made in the Arrangement Year. If the actual payments made
during an Arrangement Year are less than 3%, then AAIC
shall remit the difference to CIS as additional commission.
If the amount paid exceeds 3%, then CIS shall forward the
difference to AAIC; and
iii. 1% AAIC's other overhead.
c. AAIC Service" Provider, as identified in Section 2.2, will
receive a flat service fee of 8%.
b. Claims Processing, in accordance with general AAIC standards and
the WYO Financial Control Plan. IMIS may also rely on
information contained in the WYO Claims Manual, the FEMA
Adjuster Manual, the FIA/NFIP Policy Issuance Handbook, the WYO
Operations Overview, or other WYO Program instructional
material.
c. Preparing and submitting to FIA monthly financial and
statistical reports, reconciliations, certifications, and
statistical tapes on AAIC'S behalf, in accordance with the WYO
Program Accounting Procedures. IMIS shall also supply AAIC and
CIS with such financial and statistical information as
reasonably needed for AAIC's and CIS' business purposes.
- 3 -
4
2.2 IMIS shall cooperate with FIA and shall comply with all audit requirements
of the WYO Program
2.3 Whenever a Flood Insurance Catastrophe Office is established by FIA, IMIS
shall coordinate activities and shall provide information to FIA or its
designee.
2.4 IMIS shall keep appropriate records in accordance with Internal Revenue
Service regulations and shall handle Form 1099 reporting on behalf of AAIC,
when applicable.
2.5 IMIS shall use its best efforts to adhere to the following WYO Program time
standards for performance when processing documents, claims, requests or
inquiries (consistent with WYO Proven guidelines, elapsed time shown is from
day of receipt through and including day of mail-out, and shall not include
any Saturday, Sunday, or state or national legal holiday):
a. Application Processing - 15 days provided, however, that if the policy
cannot be mailed due to insufficient or erroneous information or
insufficient funds, a request for correction or additional moneys
shall be mailed within 10 days;
b. Renewal Processing - 7 days;
c. Endorsement Processing - 7 days;
d. Cancellation Processing - 15 days;
e. Simple Correspondence and Status Inquiries - 7 days;
f. Complex Correspondence and Inquiries - 20 days;
g. Requests for Supplies, Materials, and Manuals - 7 days;
h. Claims Draft Processing - 7 days from completion of file examination,
and
i. Claims Adjustment - 45 days average from receipt of Notice of Loss (or
equivalent) through completion of examination.
2.6 IMIS commits that it shall promptly comply with the instructions and
directions of CIS in its role as agent for AAIC with authority to manage and
supervise IMIS' activities on AAIC's behalf under the terms of this
Agreement and pursuant to the Program Requirements. Further, IMIS shall
immediately notify CIS and AAIC of any objections has to any instruction or
direction issued by CIS; provided however, that IMIS shall still comply with
those portions of the directions or instructions to which it does not
object.
2.7 IMIS warrants that it and any personnel engaged by it have adequate licenses
to properly perform under this Agreement and further that it agrees to
provide AAIC, upon request why copies of all licenses required of IMIS. In
the event (a) that IMIS, license in its resident state expires or is revoked
or suspended, for any
- 4 -
5
reason, IMIS shall immediately notify AAIC and this Agreement shall
automatically terminate as of the date of such license's expiration, revocation
or suspension unless within one week from the date AAIC receives such notice
from IMIS, AAIC agreed in writing, to modify the provisions set forth in this
Paragraph; or (b) that IMIS' license expires or is revoked or suspended, for any
reason, in any other state, IMIS shall notify AA1C and IMIS' authority to
transact business in that state shall be automatically suspended as to that
state.
ARTICLE III - PREMIUM COLLECTION AND ARRANGEMENT
3.1 The parties shall establish a banking arrangement which complies with
the FEMA/FIA Financial Assistance/Subsidy Arrangement entered into between
AAIC and FIA ("Arrangement") and other applicable WYO Flood Program
requirements, which provide for the establishment of a custodial account by
AAIC as custodian for the NFIP, for (1) the collection, retention and
disbursement of premiums pursuant to this Agreement and the Agency
Agreement, less WYO Program allowable expenses; and (2) the operation of the
Letter of Credit, established on behalf of AAIC under the WYO Program.
Additional accounts, as needed to facilitate operations, may be established
in conformity with WYO Program guidelines.
3.2 AAIC shall grant specific IMIS employees check-signing authority on
accounts and the authority to initiate appropriate drawdowns against AAIC's
Letter of Credit, in order for IMIS to act on AAIC's behalf in making
disbursements for AAIC's liabilities arising under the Arrangement, the WYO
Program, and this Agreement. All such authorizations shall be in writing and
may be revoked, amended or modified at any time by AAIC, upon ninety (90)
days advance written notice to IMIS, and further, shall be granted only to
the number and type of employees who need such authority to perform on
behalf of IMIS under this Agreement.
3.3 IMIS shall be liable to FIA for any and all premiums IMIS has received on
business written under this Agreement. IMIS shall establish procedures for
the timely deposit and remittance of funds to the U.S. Treasury via the
authorized automatic clearinghouse mechanism.
3.4 IMIS shall maintain supporting documentation for any bank account over
which it has authority pursuant to this Agreement. On a monthly basis, IMIS
shall prepare and forward to AAIC and CIS financial data, by state,
reflecting all debits and credits with respect to flood insurance business
written, including agents' commissions and IMIS' servicing fees paid, during
the preceding quarter.
- 5 -
6
ARTICLE IV - EXPENSES AND FEES
4.1 AAIC and CIS shall pay to IMIS to be shared equally between them, a set-up
fee often thousand dollars ($10,000), which includes the following:
a. Developing and inputting AAIC Data into IMIS' policy, claims, and
general ledger systems;
b. Establishing agent master files;
c. Assisting with obtaining the Letter of Credit, restricted bank account,
and funds transfer arrangement;
d. Designing and ordering forms;
e. Developing any necessary customized procedures;
f. Initial training (excluding travel expenses);
g. Coordination and installation of the necessary equipment for a
telecommunication link with IMIS' data center,
h. Assisting with a compatible configuration to work with AAIC's
environment;
i. Coordinating the purchase and installation of the necessary hardware
(all costs incurred for hardware will be reimbursed to IMIS by AAIC);
and
j. Consulting with AAIC's personnel to develop a work plan.
4.2 AAIC shell pay IMIS a monthly services fee equal to 8% of monthly written
premiums hereunder. IMIS shall pay the general expenses of processing flood
insurance business pursuant to this Agreement, including those of policy
administration, claims processing, and financial and transactional reporting
from this monthly servicing fee.
4.3 AAIC shall be responsible for the payment of all taxes, including state
premiums taxes and fees, municipal taxes and fees, dividends, agents'
commissions, or any board, exchange or bureau assessment.
4.4 WYO Program Reimbursements made pursuant to the Arrangement, including, but
not limited to, those for unallocated loss adjustment expenses, allocated
loss adjustment expenses, and for approved special allocated loss expenses,
shall be payable to IMIS.
ARTICLE V - AUTHORITY AND COMMITMENTS OF CIS
CIS is engaged to manage and supervise the activities of IMIS in IMIS'
performance of the duties set forth herein. To the extent any of these
activities involve standards, rules or
- 6 -
7
other guidelines ("Program Requirements") established by FIA for the WYO
Program, CIS shall be responsible for knowledge of these Program Requirements
and shall be obligated to review IMIS' compliance with these Program
Requirements. Further, CIS shall have the authority to direct and instruct IMIS
on any aspect of these activities which CIS reasonably believes is not in
compliance with the Program Requirements and this Agreement, and CIS shall
report such noncompliance to AAIC. Any disagreement between CIS and IMIS over
compliance with Program Requirements shall be referred to AAIC for resolution.
ARTICLE VI - ADDITIONAL SERVICES AND FEES
6.1 Agent or AAIC Training. Upon request, IMIS will provide one training session
per quarter, or four training sessions per year, to AAIC or AAIC's agents
who have been appointed hereunder, including CIS. AAIC shall provide the
training facility and shall reimburse IMIS for travel expenses incurred.
6.2 Marketing Material. With IMIS' written approval, AAIC may use IMIS
previously developed marketing or promotional materials, which IMIS shall
customize and produce for AAIC, at AAIC's expense.
6.3 Any fees and services not defined in this Agreement may be mutually agreed
upon between AAIC and IMIS as required, and documented by an addendum
attached hereto.
ARTICLE VII - CONFIDENTIALITY OF DATA AND INFORMATION
7.1 The parties acknowledge that during the term or this Agreement, they will
have access to and become acquainted with Confidential Information of the
others. Accordingly, no party shall permit the duplication, use, or
disclosure of any such Confidential Information to any person other than its
own employees, agents or representatives who must have such information for
the performance of obligations hereunder, unless such duplication, use, or
disclosure is specifically authorized in writing by the other party.
"Confidential Information" is not meant to include any information which, at
the time of disclosure, is generally known to the general public and/or the
insurance industry.
7.2 No party shall use or duplicate the name(s), trademark(s), servicemark(s),
or trade name(s) (whether registered or not) of any other party in public
releases or advertising or in any other manner unless such use or
duplication is specifically authorized in writing by the other party, except
that IMIS and CIS may include AAIC's name in a list of clients/customers
without such authorization.
7.3 No party shall disclose information as to specific work performed or
services fees under this Agreement without prior written consent of the
other party.
- 7 -
8
7.4 IMIS shall take all reasonable precautions available to maintain system
integrity and data security necessary to protect AAIC's and CIS' records
and data from loss and damage and to protect against unauthorized
disclosure of AAIC's and CIS' confidential and proprietary data as
described in this Article.
7.5 The disclosure restrictions provided in this Article shall be extinguished
at the time and to the extent that the confidential information becomes
generally available to the public domain without the fault of IMIS.
ARTICLE VIII - COMMENCEMENT AND TERMINATION
8.1 Term of Agreement. This Agreement shad become exclusive on the date that
this document is executed by all parties. The initial term of this Agreement
shall expire on the last day of the Arrangement Year, and thereafter, is
automatically renewable for additional one-year terms beginning on October 1
of each year, subject to the termination provisions set forth below. The
Arrangement Year refers to the annual policy issuing period established
under the Arrangement commencing on October 1 of one year and concluding on
September 30 the following year.
8.2 Termination Based on Non-Continued Participation in Program: In the event
AAIC intends not to resubscribe to be a WYO Carrier, and consequently does
not intend to notify FIA by July 1 of such year of its intent to
resubscribe, as required to resubscribe, AAIC shall notify the other parties
by April 1 of such year that the contract with FIA will not be renewed. This
Agreement will then expire on the last day of the Arrangement Year as
specified in Section 8.1; provided, however, that the requirements of
Section 9.1 shall apply.
8.3 Termination by Any Party Without Cause. Notwithstanding any other
provisions of this Article, any party may terminate this Agreement to be
effective on the last day of any Arrangement Year as specified in Section
8.1, without cause, upon written notice to the other parties by April 1 or
the Arrangement Year. Provided, however, that the requirements of Section
9.1 shall still apply.
8.4 Termination Based on Actions By FIA. This Agreement shall terminate
concurrently with termination by FIA as hereunder described:
a. With thirty (30) days written notice from FIA to AAIC on the basis of
fraud or misrepresentation by AAIC, its agent(s) or service provider(s)
subsequent to the inception of a policy;
b. With thirty (30) days written notice from FIA to AAIC on the basis of
nonpayment to FIA of any amount due FIA by AAIC, its agent(s) or service
provider(s);
c. On a date established by FIA due to the loss of funding for the NFIP; or
- 8 -
9
d. With 180 days written notice from AAIC to CIS and IMIS based on a
material change in the terms under which FIA will act as guarantor of
WYO Flood Insurance Policies under the NFIP.
8.5 Termination by Any Party. Any party may immediately terminate this Agreement
upon written notice to the other parties in the event of
a. Upon the expiration, revocation or suspension of any license required of
IMIS, pursuant to the terms of Section 2.7 above;
b. A significant change in the ownership, control or management, or in the
event of the execution of an Agreement of sale, transfer or merger of
any party or guarantor hereof;
c. Any misappropriation or use in violation of this Agreement, of funds or
property of any party by any other party,
d. Bankruptcy, receivership, common law composition of creditors of any
card or guarantors hereof, regardless of whether any of these occur
voluntarily or involuntarily, or
e. Failure by any party to fulfill a material obligation under this
Agreement, provided that such party has been notified in writing by the
terminating party of such failure and has not cured such failure after
having a reasonable opportunity to cure after receipt of such written
notice.
8.6 Upon termination of this Agreement, IMIS shall fully account to AAIC for all
of its responsibilities and activities pursuant to this Agreement.
ARTICLE IX - CONTINUING RIGHTS & DUTIES OF IMIS AFTER TERMINATION
9.1 Subject to requirements imposed by FIA under the WYO Program and subsequent
to termination pursuant to Article VIII, IMIS will perform all of the duties
necessary for the proper servicing of policies bound or written under this
Agreement and any successor policies required to be issued by law until
those policies shall have expired or been terminated. Such services shall
include all those set forth in Article II. The compensation of IMIS shall
remain as stated herein for the performance of such services after
termination.
9.2 IMIS specifically understands and agrees that the duties of Section 9.1 will
apply in the event AAIC does not resubscribe to be a WYO Flood Insurance
Carrier, as set forth in Article VIII, but AAIC is required by FIA at FlA's
option, to act as such for one (1) additional year.
- 9 -
10
ARTICLE X - ERRORS AND OMISSIONS AND FIDELITY COVERAGES
10.1 IMIS agree to maintain Errors and Omissions coverage throughout the term of
this Agreement and thereafter upon termination or cancellation until all
claims and payments have been resolved and paid and all annual adjustments
finalized and paid. The limits of the Errors and Omissions coverage will be
in an amount as follows:
a. Not less than $1 million per occurrence and in a form and from an
insurer acceptable to AAIC, which acceptance shall not be unreasonably
withheld, when gross written premiums for WYO Flood Insurance are equal
to or less than $3,000,000;
b. When gross written premiums for WYO Flood Insurance Coverage are greater
than $3,000,000, the amount equal to one-third of such gross written
premiums on the date the liability occurs up to a maximum of $5,000,000
of liability for $15,000,000 in gross written premiums;
c. If gross written premiums $15,000,000, the parties shall negotiate in
good faith to set an amount for the amount of maximum liability, and
shall document the amount by attaching an addendum to this Agreement;
provided, however, that at no time when gross written premiums exceed
$15,000,000 shall the maximum liability be less than $5,000,000;
d. The amount of liability coverage shall be reviewed on an annual basis
prior to expiration of the current Arrangement Year, and IMIS agrees to
obtain and have in force any required additional limits of liability
under its Errors and Omissions policy by the start of the next
Arrangement year, and
e. IMIS agrees to make AAIC an additional insured under such policy, which
may be limited to the activities arising under this Agreement. Upon
request, evidence of such insurance coverage will be provided to AAIC.
At least thirty (30) days prior to the expiration, cancellation, or
modification or such insurance, IMIS or its insurer shall provide notice
of AAIC.
10.2 IMIS agrees to maintain a fidelity bond throughout the term of this
Agreement and thereafter upon termination until all claims and payments
have been resolved and paid and all annual adjustments finalized and paid.
The limits of the fidelity bond shall be in an amount not less that
$1,500,000 per occurrence and in a form and from a surety acceptable to
AAIC. At least (30) days prior to the expiration, cancellation or
modification of such insurance, each party or its insurer shall provide
notice to AAIC.
- 10 -
11
ARTICLE XI - INDEMNIFICATION
11.1 CIS will indemnify, defend and hold harmless IMIS, its directors, officers,
and employees from any Liability, cost, loss, file, penalty, claim, demand,
damage or expense, including attorneys' fees, resulting from any act, error
or omission, or failure to properly supervise CIS's employees, its agents,
sub-agents, or other representatives, or resulting from any breach of CIS'
obligations under this Agreement.
11.2 IRIS will indemnify, defend and hold harmless AAIC and CIS, their
directors, officers and employees from any liability, cost, loss, fine,
penalty, claim, demand, damage or expense, including attorneys' fees,
resulting from any act, error or omission of IMIS, its employees, or other
representatives, or resulting from any breach of AAIC's obligations under
this Agreement.
11.3 AAIC will indemnify, defend and hold harmless IMIS, its directors, officers
and employees from any liability, cost, loss, fine, penalty, claim, demand,
damage or expense, including attorneys' fees, resulting from any act, error
or omission of AAIC or its employees, or resulting from any breach of
AAIC's obligations under this Agreement.
11.4 All parties agree to immediately give the others notice upon being notified
of a claim which could give rise to a claim under this Article.
11.5 This Article shall survive termination or cancellation of this Agreement.
ARTICLE XII - MISCELLANEOUS
12.1 If any party should bring a Court action alleging breach of this Agreement
or seeking to enforce, rescind, renounce, declare void or terminate this
Agreement or any provisions thereof, then the prevailing party shall be
entitled to recover all or its legal expenses, including reasonable
attorney's fees and costs (including legal expenses for any appeals taken)
and to have the same awarded as part of the judgment in the proceeding in
which such legal expenses and attorney's fees were incurred. Further, it is
understood and agreed that should AAIC or IMIS institute any Court action
against CIS, that the Court action shall be brought in Pennsylvania and
this Agreement shall be construed in accordance with the laws of the State
of Pennsylvania. Likewise, it is understood and agreed that should IMIS or
CIS institute any Court action against AAIC, this action shall be brought
in New Jersey and the Agreement shall be construed in accordance with the
laws of the State of New Jersey. In like manner, it is understood and
agreed that should AAIC or CIS institute any Court action against IMIS,
such action shall be brought in Florida and the Agreement shall be
construed in accordance with the laws of the State of Florida.
- 11 -
12
12.2 IMIS agrees to permit FIA, AAIC or its representatives, during the term of
this Agreement and as long thereafter as AAIC or FIA considers necessary,
to visit, inspect, examine, copy and verify, at IMIS' offices or elsewhere,
during reasonable hours and upon prior notice to IMIS, and at the expense
of the examining party, any of the properties, accounts, files, documents,
books, reports and other records in possession or control of IMIS relating
to business covered by this Agreement. Any insurance department
commissioner so entitled shall also have access to these records.
12.3 This Agreement, and any exhibits, schedules or addenda attached hereto
contains all of the prior oral and/or previously written agreements,
representations, and arrangements among the parties hereto. There are no
representations or warranties other than those set forth herein.
12.4 AAIC agrees to comply with applicable laws of the state or states covered
by this Agreement and with the rules and regulations of any regulatory
authority having jurisdiction over AAIC's activities, and shall, whenever
necessary, maintain at its own expense all required licenses to transact
business in such states.
12.5 Should any part of this Agreement for any reason be declared invalid, such
decision shall not effect the validity or any remaining portion, which
remaining portion shall remain in full force and effect as if the Agreement
had been executed with the invalid portion thereof eliminated. It is,
therefore, declared the intention of the parties hereto that each of them
will have executed the remaining portion of this Agreement without
including therein any such part, parts or portion which may, for any
reason be hereafter declared void.
12.6 No change or modification of this shall be valid unless the same shall be
in writing and signed by all of the parries hereto
12.7 Any and all notices, designations, consents, offers, acceptances, or any
other communication provided for herein shall be given in writing by hand
delivery, by overnight carrier, by registered or certified mail or by
facsimile transmission and shall be addressed as follows:
AAIC: American Alternative Insurance Corporation
American Re - Plaza I
555 College Road East
Princeton, New Jersey 08543
Attn: General Counsel and Senior Vice President
CIS: Corporate Insurance Agency Services
1098 Washington Crossing Road, Suite 5
Washington Crossing, PA 18977
Attn: Mark Blasch, President
- 12 -
13
IMIS: Insurance Management Information Services, Inc.
360 Central Avenue
St. Petersburg, FL 33701
Attn: Kathleen M. Batson, Senor Vice President
Notices sent by hand delivery shall be deemed effective on the date of
hand delivery. Notices sent by overnight carrier shall be deemed
effective on the next business day after being placed into the hands of
the overnight carrier. Notices sent by registered or certified mail
shall be deemed effective on the third business day after being
deposited into the post office. Notices sent by facsimile transmission
shall be deemed to be effective on day when sent if sent prior to 4:30
p.m. (the time being determined by the time zone of the recipient)
otherwise they shall be deemed effective on the next business day.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed effective as of the date and year first above written.
CORPORATE INSURANCE AGENCY SERVICES
By: /s/ Mark E. Blasch
-------------------------------------
Name Printed: Mark E. Blasch
Title: President
AMERICAN ALTERNATIVE INSURANCE CORPORATION
By: /s/ Ralph M. Serio
-------------------------------------
Name Printed: Ralph M. Serio
Title: Senior Vice President
INSURANCE MANAGEMENT INFORMATION SERVICES, INC.
By: /s/ Kathleen M. Batson
-------------------------------------
Name Printed: Kathleen M. Batson
Title: President
-13-
14
EXHIBIT A
CORPORATE GUARANTY OF BANKERS INSURANCE GROUP
- 14 -
15
EXHIBIT B
AGENCY AGREEMENT BETWEEN
AMERICAN ALTERNATIVE INSURANCE CORPORATION
AND
CORPORATE INSURANCE AGENCY SERVICES
FOR THE NATIONAL FLOOD INSURANCE PROGRAM
- 15 -
16
EXHIBIT A
CORPORATE GUARANTY OF CAU
- 16 -
17
GUARANTEE
Guarantee, made this _____day of 19__, by Bankers Insurance Group, Inc., a
corporation organized and existing under the laws of the State of Florida, with
its principal place of business in St. Petersburg, Florida, hereinafter referred
to "Guarantor", to American Alternative Insurance Corporation, a corporation
organized and existing under the laws of the State of New York with its
principal place of business in Princeton, New Jersey, hereinafter referred to as
"Obligee".
RECITALS
WHEREAS, Obligee is prepared to execute a Flood Insurance Program Services
Agreement with Insurance Management Information Services, Inc., a corporation
organized and existing under the laws of the State of Florida, with its
principal place of business in St. Petersburg, Florida, hereinafter referred to
as "Obligor", for the purpose of having Obligor administer certain of Obligee's
obligations as a WYO Carrier under the NFIP Program. A copy of the Proposed
Contract is attached hereto as Exhibit "A".
WHEREAS, Obligee will execute the contract only if performance thereof will
be guaranteed by the Guarantor. Guarantor is willing to guarantee a performance
of the contract under the terms and conditions set forth below.
NOW, THEREFORE, based on the agreements contained herein and other good and
valuable consideration, Guarantor agrees as follows:
Section 1 - Statement of Guarantor.
Guarantor guarantees prompt and satisfactory performance of the attached
Contract, in accordance with all of its terms, conditions, and obligations,
should Obligor default in the performance of its obligations under the Contract.
Notwithstanding, Guarantor's liability shall be secondary to Obligor's liability
and shall only accrue after Obligee exhausts any and all remedies it may
reasonably pursue against Obligor and its E & O Insurance. Further, Guarantor's
liability for Obligor's default shall be limited to and shall not exceed One
Million Dollars ($1,000,000.00). However, if gross written premium exceeds
Fifteen Million Dollars ($15,000,000.00). the parties shall negotiate in good
faith to amend the amount of maximum liability and shall document that amount by
attaching an addendum to this Guarantee. Any payment made pursuant to
Guarantor's Error and Omissions insurance policy shall be credited to and
proportionately reduce Guarantor's limit of liability under this Guarantee.
Section 2 - Duration.
This Guarantee shall continue in force until all obligations of Obligor under
the attached Contract have been satisfied or until Obligor's liability to
Obligee under the Contract has Contract has
18
been completely discharged. whichever first occurs. Guarantor shall not be
discharged from liability hereunder as long as any claim by Obliges against
Obligor remains Funding, unless the limit of Guarantor's liability has been
reached.
Section 3 - Modification of Guarantee Contract.
Written consent of Guarantor shall be required prior to any modification of the
attached Contract, in particular where the modification would increase the
obligations of the Guarantor in any way, or render prompt and satisfactory
performance by Obligor more difficult.
Section 4 - Notices.
Notice to the Guarantor of default on the part of Obligor is not waived. All
notices shall be in writing and shall be delivered personally or mailed,
certified or registered mail, or faxed, to the Guarantor or Obligee at the
address set forth below.
A. If to AAIC:
Mr. Kenneth I. LeStrange
Executive Vice-President and Chief Operating Officer
Two World Financial Center
225 Liberty Street
New York, NY 10281
B. IF TO BANKERS INSURANCE GROUP, INC.:
Ms. Kathleen Batson
Senior Vice-President
360 Central Avenue
St Petersburg, FL 3701
Section 5 - Entire Agreement.
This instrument embodies the entire agreement between the parties. There are no
promises, terms, conditions, or obligations other than those contained herein,
and this Guarantee shall supersede all previous communications, representations,
or agreements. either verbal or written, between the Guarantor and Obligee.
Section 6 - Parties Bound.
This Guarantee shall be binding upon the Guarantor and its successors and
assigns.
Section 7 - Guarantor Warrants Full Capacity.
The Guarantor warrants that the Guarantor has full power, capacity and legal
right under all applicable laws to enter into this Guarantee. The Guarantor
further warrants that the execution and delivery of this Guarantee:
19
1. Will not contravene any provision of any law or any contractual
agreement or arrangement binding upon the Guarantor; and
2. Has been properly and validly authorized and when executed and
delivered, will be valid and binding and enforceable against the
Guarantor in accordance with its terms.
Section 8 - Miscellaneous.
If any party should bring a Court action alleging breach of this Guarantee or
seeking to enforce, resend, renounce, declare void or terminate this Agreement
or any provisions thereof, then the prevailing party shall be entitled to
recover all of its legal expenses, including reasonable attorney's fees and
costs (including legal expenses for any appeals taken) and to have the same
awarded as part of the Judgment in the proceeding in which such legal expenses
and attorneys fees were incurred. Further, It is understood and agreed that
should Guarantor institute any court action against Obligee, that the Court
action shall be brought in New Jersey and the Agreement shall be construed in
accordance with the laws of the State of New Jersey. In like manner, it is
understood and agreed that should Obligee institute any Court action against
Guarantor, such action shall be brought in Florida and the Agreement shall be
construed in accordance with The laws of the State of Florida.
IN WITNESS WHEREOF, Guarantor has executed this Guarantee at St Petersburg,
Florida, on the day and year first above written.
Bankers Insurance Group, Inc.
BY: /s/ Kathleen M. Batson
--------------------------------
As Its: /s/ Senior Vice President
----------------------------
Attest: /s/ Demont F. Hastings
----------------------------