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Exhibit 10.24
REINSURANCE AGREEMENT
(hereinafter called this "AGREEMENT")
between
MANUFACTURER'S INDEMNITY AND INSURANCE COMPANY OF AMERICA
(hereinafter called "MIICA")
and
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA.
(hereinafter called the "REINSURER")
In consideration of the mutual covenants hereinafter contained and upon the
terms and conditions hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
TERM
This AGREEMENT is effective at 12:01 a.m. eastern standard time, the 31st day
March 1998.
ARTICLE II
TERRITORY
This AGREEMENT shall cover ULTIMATE NET LOSS occurring within the territorial
limits provided by the POLICIES reinsured hereunder.
ARTICLE III
BUSINESS REINSURED
A. Name of Insured: Manufacturer's Indemnity Insurance Company of America
B. Coverage Period: 12:01 a.m. eastern standard time May 1, 1997 to
11:59 p.m. eastern standard time, March 31, 1998.
C. Coverage(s): Per Coverage as described in the POLICIES attached hereto,
subject to per occurrence limits and a total aggregate limit as stated in
Article V of this AGREEMENT.
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ARTICLE IV
DEFINITIONS
A. The term "POLICIES" as used in this Agreement shall mean the Policies listed
in Schedule A, which is attached hereto.
B. The term "LOSSES" as used in this AGREEMENT shall mean obligations to make
payments to claimants under the POLICIES reinsured hereunder.
C. The term "LOSSES PAID" as used in this AGREEMENT shall mean LOSSES actually
paid by or on behalf of MICCA.
D. The term "ALE" as used in this AGREEMENT shall have the same meaning as
ALLOCATED LOSS ADJUSTMENT EXPENSE which shall include all court costs, fees and
detective services; fees of independent adjusters or attorneys for investigation
or adjustment of claims beyond initial investigation; cost of employing experts
for preparation of maps, photographs, diagrams, chemical or physical analysis or
for advice, opinion or testimony concerning claims under investigation, in
litigation, or for which a Declaratory Judgment is sought; costs for legal
transcripts of testimony taken at coroner's inquests, criminal or civil
proceedings; costs for copies of any public records; costs of depositions and
court reported or recorded statements, and any other similar fees, costs or
expenses reasonably chargeable to the investigation, negotiation, settlement or
defense of a claim or loss or to the protection and perfection of the
subrogation rights of any insured covered by a policy issued hereunder. ALE
shall not include fees for adjusters or attorneys who are employees of MICCA or
its designated claims adjuster or fees for adjusters or attorneys on permanent
retainer.
E. The term "ALE PAID" as used in this AGREEMENT shall mean ALE actually paid by
or on behalf of MICCA.
F. The term "ULTIMATE NET LOSS" as used in this AGREEMENT shall mean LOSSES PAID
plus ALE PAID, but salvages and all other recoveries, excluding recoveries under
all reinsurance shall be deducted from ULTIMATE NET LOSS to arrive at the amount
of liability, if any, attached hereunder.
All salvages, recoveries, or payments recovered or received subsequent to loss
settlement hereunder, shall be applied as if recovered or received prior to any
aforesaid settlement and all necessary adjustments shall be made by the parties
hereto. Nothing in this clause shall be construed to mean that LOSSES PAID and
ALE are not recoverable hereunder, until MICCA `s ULTIMATE NET LOSS has been
ascertained.
G. The term "OUTSTANDING LOSS RESERVES" as used in this AGREEMENT shall mean
LOSSES and ALE reported to MICCA which have been reserved but unpaid at any
specified date.
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H. The term "IBNR" (Incurred But Not Reported) as used in this AGREEMENT shall
mean a reserve for liability for future payment on LOSSES which have already
occurred but have not yet been reported to MICCA and ALE applicable to such
LOSSES and shall also include expected future developments of OUTSTANDING LOSS
RESERVES.
I. The term "EXTRA CONTRACTUAL OBLIGATIONS" as used in this AGREEMENT shall mean
damages awarded by a court against MICCA or the REINSURER that are outside the
provisions of the POLICIES and such damages are due to MICCA or its designated
representative's bad faith, fraud, or gross negligence in the handling of a
loss.
J. The term "EXCESS OF POLICY LIMITS" as used in this AGREEMENT shall mean
damages awarded by a court against MICCA in favor of an Insured, due to MICCA's
or its designated representative's actual or alleged failure to settle a third
party claim against the Insured within the POLICIES limits by reason of bad
faith, fraud, or gross negligence.
ARTICLE V
INSURING CLAUSE
1. MICCA hereby obligates itself to cede to the REINSURER and the REINSURER
hereby obligates itself to accept as reinsurance One Hundred Percent (100%) of
the ULTIMATE NET LOSS (subject to the restrictions of aggregate limit, coverage
periods and ALE as stated below and excepting ULTIMATE NET LOSS specifically
excluded under Article VI of this AGREEMENT) for those amounts for which MICCA
is obligated under the POLICIES.
Coverage for ULTIMATE NET LOSS under this AGREEMENT shall be limited LOSSES PAID
after the effective date of this AGREEMENT and to those expenses for ALE
occurring or performed after the effective date of this AGREEMENT.
ULTIMATE NET LOSS under this AGREEMENT is subject to a per OCCURRENCE Limits and
Policy Aggregate Limits as stated in Schedule A.
ULTIMATE NET LOSS under this AGREEMENT is subject to a Total Program Aggregate
as specified in the Indemnity Agreement which is attached hereto.
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ARTICLE VI
EXCLUSIONS
This AGREEMENT does not cover:
A. Any risk not covered by the POLICIES.
B. EXTRA CONTRACTUAL OBLIGATIONS;
C. EXCESS OF POLICY LIMITS;
D. Any ex gratia payments.
ARTICLE VII
PREMIUM
The Premium due the REINSURER for the Reinsurance hereunder shall be thirty six
million two hundred sixty nine thousand three hundred twenty one dollars
($36,269,321.00) and is due at the inception of this Agreement. Payment of
Premium is a condition precedent to coverage under this AGREEMENT. The entire
Premium is fully earned as of the inception date and is not subject to return or
refund for any reason.
ARTICLE VIII
CLAIMS
The REINSURER agrees to abide by the loss settlements of MICCA, it being
understood, however, that when so requested, MICCA will afford the REINSURER an
opportunity to be associated with MICCA, at the expense of the REINSURER, in the
defense of any claim or suit or proceeding involving this reinsurance, and that
the REINSURER may cooperate in every respect in the defense or control of such
claim, suit or proceeding.
The REINSURER agrees that the LOSS settlements of MICCA are to be considered as
satisfactory proofs of LOSSES PAID. MICCA shall record and advise the REINSURER
as provided in the REPORTS AND REMITTANCES ARTICLE below.
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ARTICLE IX
REPORTS AND REMITTANCES
MICCA shall promptly notify the REINSURER of any event, development, accident,
occurrence or "disaster" which might result in a claim against the REINSURER for
which MICCA has established reserves in the amount of or in excess of two
hundred fifty thousand dollars ($250,000).
In addition, claims involving the following injuries or issues shall be reported
to the REINSURER immediately, regardless of any question of liability or
coverage under the policy: (1) fatalities; (2) paraplegia and quadriplegia; (3)
serious burns; (4) alleged brain damages or injuries; (5) amputation of an
extremity; (6) loss of hearing, sight, taste or smell; (7) loss of use of or
loss of function of vital organs; (8) multiple fractures; (9) cosmetic
deformities; (10) birth injuries; (11) all suits against MICCA alleging EXTRA
CONTRACTUAL OBLIGATION or EXCESS OF POLICY LIMITS exposure.
MICCA shall furnish to the REINSURER within 15 days after the end of each annual
quarter the following information:
1. Current accounts of the Gross and Net LOSSES PAID and Outstanding LOSSES,
including separately ALE.
2. A current statement of account indicating ULTIMATE NET LOSS due from the
REINSURER.
MICCA shall also periodically update and furnish to the REINSURER such other
reports or information as may reasonably be required by the REINSURER and
reasonably available to MICCA.
The REINSURER shall directly remit to MICCA amounts due for ULTIMATE NET LOSS,
within thirty business days after receiving the statement of account.
The reporting obligations under this section shall terminate at such date on
which the parties mutually agree that all losses under the POLICIES reinsured
hereunder have been paid or otherwise adjusted and closed, and there is no
further possibility that any future claims may arise (all applicable statutes of
limitation have expired); provided, however, that if thereafter any claim under
the reinsured POLICIES should be newly asserted or reopened, the obligations
under this section shall be reactivated by the parties and shall continue to
apply until such newly asserted or reopened claim(s) shall be finally
adjudicated.
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ARTICLE X
ERRORS AND OMISSIONS
Any inadvertent error, omission or delay in complying with the terms and
conditions of this AGREEMENT shall not be held to relieve either party hereto
from any liability which would attach to it hereunder if such delay, omission or
error had not been made, provided such delay, omission or error is rectified
immediately upon discovery.
ARTICLE XI
INSPECTION
MICCA shall place at the disposal of the REINSURER, and the REINSURER shall have
the right to inspect, at all reasonable times, through its authorized
representatives, all books, records and papers of MICCA in connection with the
reinsurance hereunder, or any claims in connection herewith.
ARTICLE XII
FOLLOW THE FORTUNES CLAUSE
The REINSURER's liability shall attach simultaneously with that of MICCA and
shall be subject in all respects to the same risks, terms, conditions,
interpretations, waivers, and to the same modification, alterations and
cancellations of the POLICIES, the true intent of this AGREEMENT being that the
REINSURER shall, in every case to which this AGREEMENT applies, follow the
underwriting fortunes of MICCA.
Nothing shall in any manner create any obligations or establish any rights
against the Reinsured in favor of any third parties or any person not a party to
this AGREEMENT.
ARTICLE XIII
INSOLVENCY
In the event of the insolvency of MICCA, all sums payable by the REINSURER under
this AGREEMENT shall be payable directly to MICCA or to its liquidator,
receiver, administrator or conservator on the basis of the liability of MICCA
under the AGREEMENT without diminution because of the insolvency of MICCA or
because the liquidator, receiver, administrator or conservator of MICCA has
failed to pay all or a portion of any claim. It is agreed, however, that the
liquidator, receiver, administrator or conservator of MICCA shall give written
notice to the REINSURER of the pendency of all claims against MICCA indicating
the policy reinsured, where any such claims would involve a possible liability
on the part of the REINSURER within a reasonable time after
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such claim is filed in the administration, conservation or liquidation
proceeding or in the receivership and that during the pendency of such claim the
REINSURER may investigate such claim and interpose, at its own expense, in the
proceeding where such claim is to be adjudicated any defense or defenses that it
may deem available to MICCA or its liquidator, receiver, administrator or
conservator. The expense thus incurred by the REINSURER shall be chargeable,
subject to the approval of the Court, against MICCA as part of the expense of
administration, conservation or liquidation to the extent of a pro rata share of
the benefit which may accrue to MICCA solely as a result of the defense
undertaken by the REINSURER.
Where two or more REINSURERS are involved in the same claim and a majority in
interest elect to interpose any defense to such claim, the expense shall be
apportioned in accordance with the terms the reinsurance contracts as though
such expense had been incurred by MICCA.
As to all reinsurance made, ceded, renewed or otherwise becoming effective under
this AGREEMENT, sums payable by the REINSURER under this AGREEMENT shall be
payable as set forth above by the REINSURER to MICCA or to its administrator,
conservator, liquidator or statutory successor, except as provided by Section
4118 of the New York Insurance Law or except (a) where any underlying contract
of insurance or reinsurance specifically provides another payee in the event of
the insolvency of MICCA and (b) where the REINSURER with the consent of the
direct insured(s) has assumed such policy obligations of MICCA as direct
obligations of the REINSURER to the payees under such POLICIES and in
substitution for the obligations of MICCA to such payees.
ARTICLE XIV
ARBITRATION CLAUSE
All disputes or differences arising out of the interpretation of this AGREEMENT
shall be submitted to the decision of two (2) Arbitrators, one to be chosen by
each party, and in the event the Arbitrators fail to agree, to the decision of
an Umpire to be chosen by the Arbitrators. The Arbitrators and Umpire shall be
disinterested active or retired executive officials of Fire or Casualty
Insurance or Reinsurance Companies. If either of the parties fails to appoint an
Arbitrator within one (1) month after being required by the other party in
writing to do so, or if the Arbitrators fail to appoint an Umpire, within one
(1) month of a request in writing by either of them to do so, such Arbitrator or
Umpire, as the case may be, shall at the request of either of them to do so,
such Arbitrator or Umpire, as the case may be, shall at the request of either
party be appointed by a Judge of the State Court of New York.
The Arbitration proceedings shall take place New York, New York. The applicant
shall submit its case within one (1) month after the appointment of the Court of
Arbitration, and the respondent shall submit his reply within one (1) month
after receipt of a claim. The Arbitrators and Umpire are relieved from all
judicial formality and may abstain from following the strict rules of law.
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The Arbitrators and the Umpire shall not award punitive damages. They shall
settle any dispute under this AGREEMENT according to an equitable rather than a
strictly legal interpretation of its terms and their decision shall be provided
to the parties in writing and shall be final and not subject to appeal.
Judgement may be entered upon the award of the Arbitrators in any court having
jurisdiction thereof.
Each party shall bear the expenses of its Arbitrator and shall jointly and
equally share with the other the expense of the Umpire and of the Arbitration.
This Article shall survive the termination of this AGREEMENT.
ARTICLE XV
TERMINATION
This Agreement will terminate upon execution of an Assumption Agreement of
MIICA's policies by National Union Fire Insurance Company of Pittsburgh, PA.
ARTICLE XVI
RESERVES
The REINSURER will maintain legal reserves for OUTSTANDING LOSS RESERVES, IBNR,
and future ALE.
ARTICLE XVII
OFFSET
The REINSURER shall have the right to offset any balance(s) due from MICCA under
this AGREEMENT. The REINSURER may exercise such right at any time whether the
balance(s) due are on account of premiums or losses or otherwise.
ARTICLE XVIII
NOTICE
Any notice or other communication required to be given hereunder shall be
effective only if in writing and shall be deemed sufficiently given only if sent
to the respective address shown below unless a change in address is received by
the notifying party.
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NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA.
attn: Risk Finance
Operations Unit
70 Pine Street, 5th Floor
New York, NY 10270
MANUFACTURER'S INDEMNITY AND INSURANCE COMPANY OF AMERICA
5775 Flatiron Parkway
Suite 205
Boulder, Colorado 80301
Attn: Nancy Schwencke
ARTICLE XIX
WARRANTIES
By accepting this Policy, the Insured agrees:
A. The statements in the Application and any other attached agreements or
endorsements, are accurate and complete. Those statements are based upon
representations MICCA has made to the REINSURER;
B. The loss portfolio submission package (including but not limited to, loss
data, historical incurred and paid loss triangles and historical claim count
triangles) provided by MICCA or the named insured under the POLICIES to the
REINSURER was prepared in good faith and on the basis of assumptions, methods,
data, tests and information believed by MICCA or the named insured to be valid
and accurate in all materials respects at the time such projections were
furnished to the REINSURER. Furthermore, MICCA and the named insured represent
that the loss portfolio submission package included loss data information that
accurately reflects the most current loss data for ULTIMATE NET LOSS within the
Coverage Period.
C. The REINSURER has issued this Policy in reliance upon the MICCA'S
representations.
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ARTICLE XX
MISCELLANEOUS
A. This AGREEMENT shall not be deemed to give any right or remedy to any third
party whatsoever unless said right or remedy is specifically granted to such
third party by the terms hereof.
B. This AGREEMENT shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
C. Nothing contained in this AGREEMENT shall be construed so as to require the
commission of any act contrary to law, and wherever there is any conflict
between any provisions(s) of this AGREEMENT and any statute, law, ordinance or
regulation contrary to which the parties hereto have no legal right to contract,
the latter shall prevail; provided, however, that in such event the provision(s)
of this AGREEMENT so affected shall be curtailed and limited only to extent
necessary to permit compliance with the minimum legal requirement, and no other
provisions of this AGREEMENT shall be affected thereby, and all such other
provisions of this AGREEMENT shall continue in full force and effect.
D. This AGREEMENT contains the full and complete understanding and agreement
between the parties hereto with respect to the subject matter hereof, and the
parties acknowledge that neither is entering into this AGREEMENT in reliance
upon any term, condition, representation or warranty not stated herein and that
this AGREEMENT replaces any and all prior agreements whether oral or written,
pertaining to the subject matter hereof.
E. Any capitalized terms used but not defined herein shall have the same meaning
as defined in the POLICIES.
F. Whenever the text hereof requires the use of a singular or plural term it
shall include the appropriate plural term as the text of the instrument
requires.
G. All changes to this AGREEMENT must be in writing and agreed to by the
parties.
H. This AGREEMENT shall be governed by the laws of the State of New York and the
parties hereto do irrevocably submit to the non-exclusive jurisdiction of the
Courts in the State of New York and to the extent permitted by law the parties
expressly waive all rights to challenge or otherwise limit such jurisdiction.
I. No failure or delay by a party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT to be executed
by their duly authorized representatives 31st day of March, 1998.
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA.
By: /s/
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Title:
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Address: 70 Pine Street New York, New York 10270
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and in , , this day of , 19 .
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MANUFACTURER'S INDEMNITY AND INSURANCE COMPANY OF AMERICA
By: /s/
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Title:
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Address:
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SCHEDULE "A"
PRODUCT LIABILITY POLICIES
EACH AGGREGATE
POLICY NO. POLICY PERIOD OCCURRENCE LIMITS
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MC 15188 May 1, 1988 to May 1, 1989 $250,000 1988 to
$1MM
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MC 15188-1 May 1, 1989 to May 1, 1990 $250,000 1989 to 1990
MC 15188-2 May 1, 1989 to May 1, 1990 $250,000 $1MM
MC 15188-3 May 1, 1989 to May 1, 1990 $250,000
MC 15188-4 May 1, 1989 to May 1, 1990 $250,000
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MC 15190-1 May 1, 1990 to May 1, 1991 $250,000 1990 to 1991
MC 15190-1 May 1, 1990 to May 1, 1991 $250,000 $1MM
MC 15190-3 May 1, 1990 to May 1 ,1991 $250,000
MC 15190-4 May 1, 1990 to May 1, 1991 $250,000
MC 15190-2 May 1, 1990 to May 1, 1991 $250,000
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MC 15191-1 May 1, 1991 to May 1, 1992 $250,000 1991 to 1992
MC 15191-3 May 1, 1991 to May 1, 1992 $250,000 $20MM
MC 15191-4 May 1, 1991 to May 1, 1992 $250,000
MC 15191-2 May 1, 1991 to May 1, 1992 $250,000
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MC 15192-1 May 1, 1992 to May 1, 1993 $1,000,000 1992 to 1993
MC 15192-4 May 1, l992 to May 1, 1993 $1,000,000 $25MM
MC 15192-2 May 1, 1992 to May 1, 1993 $1,000,000
MC 15192-3 May 1, 1992 to May 1, 1993 $1,000,000
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MC 15193-1 May 1, 1993 to May 1, 1994 $1,000,000 1993 to 1994
MC 15193-4 May 1, 1993 to May 1, 1994 $1,000,000 $25MM
MC 15193-2 May 1, 1993 to May 1, 1994 $1,000,000
MC 15193-3 May 1, 1993 to May 1, 1994 $1,000,000
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MC 15194-1 May 1, 1994 to May 1, 1995 $1,000,000 1994 to 1995
MC 15194-4 May 1, 1994 to May 1, 1995 $1,000,000 $30MM
MC 15194-3 May 1, 1994 to May 1, 1995 $1,000,000
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MC 15195-1 May 1, 1995 to May 1, 1996 $1,000,000 1995 to 1996
MC 15195-4 May 1, 1995 to May 1, 1996 $1,000,000 $30MM
MC 15195-3 May 1, 1995 to May 1, 1996 $1,000,000
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MC 15196-1 May 1, 1996 to May 1, 1997 $1,000,000 1996 to 1997
MC 15196-4 May 1, 1996 to May 1, 1997 $1,000,000 $30MM
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MC 15197-1 May 1, 1997 to March 31, 1998 $1,000,000 1997 to 1998
MC 15197-4 May 1, 1997 to March 31, 1998 $1,000,000 $30MM
MC 15197-4 May 1, 1997 to March 31, 1998 $1,000,000
- -------------------------------------------------------------------------------
PPL011 November 1, 1988 to Continuous policies $25,000,000
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PPLO21 November 1, 1989 to Continuous policies $5,000,000
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PPL03l November 1, 1989 to Continuous policies $5,000,000
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