Exhibit 10(TT)
Fourth Amendment to State Auto Reinsurance Pooling Agreement,
Amended and Restated as of
January 1, 2000
FOURTH AMENDMENT TO THE
REINSURANCE POOLING AGREEMENT
AMENDED AND RESTATED AS OF
JANUARY 1, 2000
This Fourth Amendment (this "Fourth Amendment") to the Reinsurance Pooling
Agreement, Amended and Restated as of January 1, 2000 as heretofore amended (the
"2000 Pooling Agreement") by and among State Automobile Mutual Insurance Company
("State Auto Mutual"), State Auto Property and Casualty Insurance Company
("State Auto P&C"), Milbank Insurance Company ("Milbank"), State Auto Insurance
Company of Wisconsin (formerly known as Midwest Security Insurance Company)
("State Auto Wisconsin"), Farmers Casualty Insurance Company ("Farmers
Casualty") and State Auto Insurance Company of Ohio (formerly known as State
Auto Insurance Company) ("State Auto Ohio") (collectively, the "Pooled
Companies") is made this ___ day of ______2002, but is effective as of 12:01
a.m. Columbus, Ohio time January 1, 2003.
BACKGROUND INFORMATION
State Auto Florida Insurance Company ("SAFIC" or "State Auto Florida") which was
incorporated in December 2001 as a Florida domiciled corporation, has received a
certificate of authority dated August 1, 2002, from the Florida Department of
Insurance licensing SAFIC as a property casualty insurer in the state of
Florida.
SAFIC is a wholly owned subsidiary of State Auto Mutual and it desires that
SAFIC become a participant in the 2000 Pooling Agreement.
The Independent Committee of the Board of Directors of State Auto Mutual has
approved the addition of State Auto Florida to the 2000 Pooling Agreement at the
pooling percentage indicated.
The purpose of this Fourth Amendment is to add State Auto Florida as a party to
the 2000 Pooling Agreement at the Respective Percentage indicated below and to
amend the Respective Percentage (as defined in the 2000 Pooling Agreement) of
State Auto Mutual, as indicated below and to make other conforming amendments to
the 2000 Pooling Agreement.
STATEMENT OF AGREEMENT
In consideration of the mutual covenants set forth herein and INTENDING
TO BE LEGALLY BOUND HEREBY, the Pooled Companies agree to amend the 2000 Pooling
Agreement as follows:
1. Capitalized terms used in this Fourth Amendment (including the
Background Information) which are not otherwise defined herein
shall be
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defined as in the 2000 Pooling Agreement, and those
definitions shall apply in this Fourth Amendment.
2. State Auto Florida is hereby made a party to the 2000 Pooling
Agreement and as such is hereby designated a Pooled Company
and it hereby accepts all the terms and provisions of the 2000
Pooling Agreement, as amended by the First Amendment, the
Second Amendment, the Third Amendment, heretofore adopted by
the parties and this Fourth Amendment.
3. The following sentence is hereby added to the first paragraph
under Background Information: In addition to the foregoing
management agreements, State Auto Florida has entered into a
management agreement with State Auto P&C and State Auto Mutual
to be effective January 1, 2003, pursuant to which State Auto
Florida's business operations will be conducted in a manner
similar to that described for the other Pooled Companies.
4. Section 1c. of the 2000 Pooling Agreement is hereby amended in
its entirety to read as follows:
"Respective Percentage" shall be
As to State Auto Ohio 1%
As to Farmers Casualty 3%
As to State Auto Wisconsin 1%
As to Milbank 17%
As to State Auto P&C 59%
As to State Auto Mutual 18.3%
As to State Auto Florida 0.7%
5. Section 2, CESSION, is amended by the addition of the
following subsection (f):
(f) State Auto Florida Cession: State Auto Mutual hereby
reinsures and assumes and State Auto Florida hereby cedes and
transfers to State Auto Mutual all Net Liabilities incurred
under or in connection with all contracts and policies of
insurance issued by State Auto Florida outstanding and in
force as of and subsequent to 12:01 a.m. EST, January 1, 2003.
Such liabilities shall include State Auto Florida's reserves
for unearned premiums, outstanding losses and loss expenses
(including unreported losses) and all other outstanding
underwriting and administrative expenses as evidenced by State
Auto Florida's books and records at the close of business on
December 31, 2002, but shall not include intercompany
balances, liabilities incurred in connection with the
investment transactions of State Auto Florida, liabilities for
dividends to stockholders declared and unpaid, other
liabilities not incurred in
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connection with underwriting operations and liabilities
arising out of the State Auto Mutual Reinsurance Book. It is
further agreed that State Auto Mutual shall receive the Net
Premiums for said contracts and policies.
6. Section 3, ASSETS TRANSFER TO STATE AUTO MUTUAL, is amended by
the addition of the following subsection (f):
(f) State Auto Florida: In consideration of the agreements
herein contained, State Auto Florida hereby agrees that there
has been or will be assigned and transferred to State Auto
Mutual an amount, in cash or other assets, equal to the
aggregate of all liabilities of State Auto Florida assumed by
State Auto Mutual under paragraph 2(f) hereof, less a ceding
commission equal to the sum of the acquisition expenses
associated with the unearned premium reserves which are
transferred as provided herein. There shall be included among
the assets assigned and transferred to State Auto Mutual by
State Auto Florida all of the right, title and interest of
State Auto Florida in and to all assets relative to the
underwriting operations of State Auto Florida due or that may
become due as evidenced by its books and records at the close
of business on December 31, 2002, not including investments,
accrued investment income, intercompany balances and bank
deposits.
7. Section 4, ASSUMPTION OF REINSURANCE, is hereby amended by the
addition of the following subsection (f):
(f) State Auto Florida: State Auto Florida hereby reinsures
and assumes and State Auto Mutual hereby cedes and transfers
to State Auto Florida its Respective Percentage of all Net
Liabilities under all contracts and policies of insurance,
(including those ceded by State Auto Florida and reinsured by
State Auto Mutual as provided in paragraph 2(f)), on which
State Auto Mutual is subject to liability and which are
outstanding and in force on or after the effective date of the
Fourth Amendment.
Such liabilities shall include reserves for unearned
premiums, outstanding losses (including unreported losses) and
loss expenses and all other underwriting and administrative
expenses, but shall not include intercompany balances,
liabilities for federal income taxes, liabilities incurred in
connection with investment transactions, liabilities for
dividends to stockholders declared and unpaid, other
liabilities not incurred in connection with underwriting
operations and liabilities arising out of the State Auto
Mutual Reinsurance Book.
8. Section 5, ASSET TRANSFER BY STATE AUTO MUTUAL, is hereby
amended by the addition of the following subsection (f):
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(f) State Auto Florida: In consideration of the agreements
herein contained, State Auto Mutual hereby agrees that there
has been or will be assigned and transferred to State Auto
Florida an amount, in cash or other assets, equal to the
aggregate of all liabilities of State Auto Mutual assumed by
State Auto Florida under paragraph 4(f) hereof, less a ceding
commission equal to the sum of the acquisition expenses
associated with the unearned premium reserves which are
transferred as provided herein. There shall be included among
the assets assigned and transferred to State Auto Florida by
State Auto Mutual all of the right, title and interest of
State Auto Mutual in and to all assets relative to the
underwriting operations of State Auto Mutual, due or that may
become due, as evidenced by its books and records at the close
of business on December 31, 2002, not including investments,
accrued investment income, intercompany balances and bank
deposits.
9. Section 6, PREMIUM COLLECTION AND PAYMENT OF LOSSES, is hereby
amended by the addition of the following:
As of the effective date of this Fourth Amendment, and
pursuant to the terms of the Management Agreement in place
between State Auto Florida, State Auto P&C, and State Auto
Mutual, State Auto Florida hereby authorizes and empowers
State Auto Mutual to collect and receive all premiums and to
take charge of, adjust and administer the payment of all
losses with respect to any and all contracts and policies of
insurance previously or thereafter issued by State Auto
Florida and to reinsure or terminate all such contracts and
policies, and in all respects to act as though said contracts
and policies were issued by State Auto Mutual. State Auto
Mutual agrees to administer the payment of all losses and loss
adjustment expenses in connection with such contracts and
policies. None of the foregoing is intended to affect or
impair the direct obligation of State Auto Florida to its
insureds under policies issued by State Auto Florida.
10. Section 7, PREMIUM PAYABLE BY STATE AUTO MUTUAL, is amended by
the addition of the following subsection (f):
(f) State Auto Florida: Commencing with the effective date of
this Fourth Amendment, State Auto Mutual hereby agrees to pay
State Auto Florida its Respective Percentage of the Net
Premiums written by the parties hereto. Similarly, commencing
with the effective date of this Fourth Amendment, all losses,
loss expenses, underwriting expenses, and administrative
expenses chargeable to underwriting of the parties hereto
(except for losses, loss expenses, underwriting expenses and
administrative expenses chargeable to the State Auto Mutual
Reinsurance Book), including policyholder dividends, less all
losses and expenses recovered and recoverable under
reinsurance ceded to reinsurers other
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than the parties hereto, (except for the State Auto P&C
Catastrophe Assumption Agreement) shall be prorated among the
parties on the basis of the Respective Percentage of each.
Accounts shall be rendered at quarterly intervals and shall be
settled within sixty (60) days thereafter.
11. Section 9, GENERAL STATEMENT OF INTENT, is amended by the
addition of the following subsection (h):
(h) State Auto Florida shall be liable as a reinsurer to State
Auto Mutual, State Auto P&C, Milbank, State Auto Wisconsin,
Farmers Casualty and State Auto Ohio on the policies and
contracts of State Auto Mutual, State Auto P&C, Milbank, State
Auto Wisconsin, Farmers Casualty, and State Auto Ohio
respectively, issued and in force at 12:01 a.m., EST, January
1, 2003 or on which there were, at that time, unsettled claims
or losses, and on policies and contracts thereafter issued by
State Auto Mutual, State Auto P&C, Milbank, State Auto
Wisconsin, Farmers Casualty, and State Auto Ohio to the extent
of State Auto Florida's Respective Percentage. Premiums,
losses, loss expenses, underwriting expenses and
administrative expenses chargeable to the State Auto Mutual
Reinsurance Book from and after 12:01 a.m. EST January 1, 2000
are excluded from the scope of the 2000 Pooling Agreement.
Subsection (g) of Section 9 is deleted and replaced by the
following:
(g) The parties hereto shall, on and after 12:01 a.m.,
Columbus, Ohio time, January 1, 2003, participate on the basis
of 18.3% for State Auto Mutual, 59% for State Auto P&C, 17%
for Milbank, 1% for State Auto Wisconsin, 3% for Farmers
Casualty, 1% for State Auto Ohio and 0.7% for State Auto
Florida in all of the underwriting operations of each of the
seven parties hereto. Premiums, losses, loss expenses,
underwriting expenses and administrative expenses chargeable
to the State Auto Mutual Reinsurance Book from and after 12:01
a.m. EST January 1, 2000 are excluded from the scope of the
2000 Pooling Agreement.
12. Section 11, LIABILITIES EXCLUDED, is deleted and replaced by
the following:
In addition to the liabilities set forth in paragraphs 2(a),
2(b), 2(c), 2(d), 2(e), 2(f) and 10 above, this Agreement
shall not apply to the investment operation or liabilities for
federal income tax or other liabilities excluded by this
Agreement.
13. Section 13, METHODS AND PROCEDURES, is deleted and replaced by
the following:
The president of State Auto Mutual, State Auto P&C, Milbank,
State Auto Wisconsin, Farmers Casualty, State Auto Ohio and
State Auto Florida or
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any officer of any of these companies designated by said
president, shall determine the methods and procedures,
including accounting transactions, by which the terms of this
Agreement shall be performed by and on behalf of the parties
hereto.
14. Section 14, AMENDMENTS, is deleted and replaced by the
following:
This Agreement may be modified from time to time, so as to
adapt its provisions to the varying conditions of the business
of the Pooled Companies, by a mutual agreement in writing of
the parties hereto, subject to ratification by the Board of
Directors of each party and with the approval of the insurance
regulatory officials from the State of Ohio, the State of
South Carolina, the State of South Dakota, the State of
Wisconsin, the State of Iowa, and the State of Florida, as
required by law.
15. Section 18, ARBITRATION, is deleted and replaced by the
following:
In the event of any dispute hereafter arising with respect to
this Agreement, State Auto Mutual, State Auto P&C, Milbank,
State Auto Wisconsin, Farmers Casualty, State Auto Ohio and
State Auto Florida hereby agree that such dispute shall, upon
the request of the one of the parties, be submitted to
arbitration. One arbitrator shall be chosen by each party and
those arbitrators shall then select an umpire who shall hear
and decide the issues to be arbitrated. If one party fails to
name an arbitrator within thirty (30) days after receipt of a
written request to do so, the party initiating the arbitration
may choose the arbitrators. The decision of the umpire shall
be final and binding on the parties. Each party shall bear the
expense of its arbitrator and the cost of the umpire shall be
shared equally. The arbitration shall take place at Columbus,
Ohio or such other location upon which the parties may
mutually agree.
16. The Fourth Amendment is effective as of 12:01 a.m. Columbus,
Ohio time January 1, 2003, provided that it is not disapproved
by any insurance regulator with jurisdiction over any party to
the 2000 Pooling Agreement, as amended heretofore and hereby.
If the Fourth Amendment is disapproved as indicated, the
Fourth Amendment shall be deemed null and void and shall not
be deemed to have amended the 2000 Pooling Agreement in any
manner whatsoever. This Fourth Amendment shall terminate when
the 2000 Pooling Agreement terminates, absent the earlier
termination hereof by the written consent of all parties
hereto.
Except as expressly amended hereby, the 2000 Pooling Agreement shall
continue in full force and effect for the balance of the term thereof.
IN WITNESS WHEREOF, by their signatures hereon the parties hereto
hereby agree to the foregoing Fourth Amendment as of the foregoing effective
date and time.
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State Automobile Mutual Insurance Company
By: /s/ Robert H. Moone
---------------------------------
Robert H. Moone, President
State Auto Property and Casualty Insurance Company
By: /s/ Robert H. Moone
---------------------------------
Robert H. Moone, President
Milbank Insurance Company
By: /s/ Robert H. Moone
---------------------------------
Robert H. Moone, President
State Auto Insurance Company of Wisconsin
By: /s/ Robert H. Moone
---------------------------------
Robert H. Moone, President
Farmers Casualty Insurance Company
By: /s/ Robert H. Moone
---------------------------------
Robert H. Moone, President
State Auto Insurance Company of Ohio
By: /s/ Robert H. Moone
---------------------------------
Robert H. Moone, President
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State Auto Florida Insurance Company
By: /s/ Robert H. Moone
---------------------------------
Robert H. Moone, President
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