CHARTWELL REINSURANCE COMPANY
UNDERWRITING YEAR
AGGREGATE EXCESS OF LOSS
REINSURANCE TREATY
EFFECTIVE JANUARY 1, 1998
ARTICLE SUMMARY PAGE
1 Business Covered 2
2 Term and Territory 3
3 Basis of Coverage 3
4 Exclusions 3
5 Coverage and Aggregate Lim 4
6 Definitions 4
7 Net Retained Lines 7
8 Base Premium, Additional Premium and
Reinsurers' Expense 7
9 Ceding Commission 8
10 Profit Sharing, Funds Held Account and
Interest Credit 8
11 Currency 9
12 Taxes 9
13 Accounts, Remittances and Loss Settlements 10
14 Loss Reserve Funding 10
15 Excess of Policy Limits 11
16 Extra Contractual Obligation 11
17 Offset and Security 12
18 Commutation 12
19 Errors and Omissions 13
20 Access to Records 13
21 No Assignment 14
22 Insolvency 14
23 Arbitration 15
24 Service of Suit 15
25 Intermediary 16
UNDERWRITING YEAR
AGGREGATE EXCESS OF LOSS
REINSURANCE TREATY
(hereinafter referred to as "Treaty")
between
CHARTWELL REINSURANCE COMPANY
Stamford, Connecticut
and
DAKOTA SPECIALTY INSURANCE COMPANY
Stamford, Connecticut
and
THE INSURANCE CORPORATION OF NEW YORK
Jericho, New York
and
DRAYTON COMPANY LIMITED
Hamilton, Bermuda
and
CHARTWELL RE HOLDINGS CORPORATION
Stamford, Connecticut
(hereinafter referred to collectively as "Ceding Company")
and
THE REINSURERS SUBSCRIBING THEIR RESPECTIVE INTERESTS
AND LIABILITIES AGREEMENTS ATTACHED HERETO
(hereinafter referred to as "Reinsurers")
Article 1: Business Covered
---------------------------
The Reinsurers agree to indemnif the Ceding Company with respect to the Ultimate
Net Losses which may accrue to the Ceding Company in respect of all policies,
contracts, binders of insurance and reinsurance (all hereinafter referred to as
"Contracts"). Business Covered is defined to include all Contracts, including
Contracts underwritten by the Ceding Company's Lloyds corporate capital vehicles
including but not limited to Oak Dedicated Limited and Archer Dedicated Limited
as respects all classes of business assumed and underwritten by the Ceding
Company, prior to the Term and in force including both Contracts with prior
written premiums, which are unearned at January 1, 1998, and Contracts written
prior to the Term which have written and earned premiums to be recorded during
the Term as of the January 1, 1998 effective date and Contracts underwritten
during the Term, all subject to the terms and conditions of this Treaty.
Article 2: Term and Territory
-----------------------------
This Treaty Term shall January 1, 1998 through December 31, 1998, both days
inclusive. Coverage will extend beyond December 31, 1998 in respect of
underlying Contracts in force as of December 31, 1998 until natural expiration.
This Treaty applies to losses occurring worldwide with respect to Business
Covered.
Article 3: Basis of Coverage
----------------------------
As respects Business Covered pertaining to Contracts underwritten prior to the
Term and in force, Reinsurers shall indemnify the Ceding Company in respect of
Loss Occurrences or claims made or losses discovered as per underlying coverage
form of the Ceding Company's Contracts during the period for which Reinsurers
received their respective share of underlying earned premiums.
As respects Business Covered pertaining to Contracts underwritten during the
Term, Reinsurers shall indemnify the Ceding Company in respect of all Contracts
underwritten during the Term regardless of when the Loss Occurrences or claims
made or losses discovered occur. Coverage for Loss Occurrences or claims made or
losses discovered shall in all cases follow the underlying coverage form of the
Ceding Company's Contracts.
Article 4: Exclusions
---------------------
This Treaty shall not apply to and specifically excludes:
A. Nuclear Incident, in accordance with the following clauses attached
hereto: Liability;
1. Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance-
U.S.A. - NMA 1119;
2. Nuclear Incident Exclusion Clause - Physical Damage and Liability
(Boiler and Machinery Policies) - Reinsurance - U.S.A. - NMA 1166;
3. Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance
- Canada - NMA 1980;
4. Nuclear Incident Exclusion Clause - Physical Damage and Liability
(Boiler and Machinery Policies) Reinsurance - Canada - NMA 1251;
5. Nuclear Incident Exclusion Clause - Liability - Reinsurance - U.S.A
- NMA 1590;
6. Nuclear Incident Exclusion Clause - Liability - Reinsurance -
Canada - NMA 1979;
7. Nuclear Energy Risks Exclusion Clause (Reinsurance) (1984)
Worldwide Excluding U.S.A. and Canada - NMA 1975.
B. War risks, in accordance with the War Risks Exclusion clause attached
hereto;
C. Insolvency funds, in accordance with the Insolvency Exclusion Clause
attached hereto;
D. Assessments of any kind, from any source, and whether voluntary or
involuntary;
E. Unallocated Loss Adjustment Expenses (unless covered by the Ceding
Company per the underlying treaties and facultative business);
F. Business classified as assumed Finite or Non-traditional Reinsurance
Agreements;
G. State income and excise taxes, if any, reported hereunder;
H. Financial guaranty and Insolvency. This exclusion shall not apply to
residual value insurance.
Article 5: Coverage and Aggregate Limit
---------------------------------------
A. Coverage - Should the Ceding Company's Ultimate Net Loss Ratio
hereunder exceed the Retention, as defined in Article 6, Section H.,
the Reinsurers shall be liable for 100% (one hundred percent) of the
amount by which the paid portion of Ultimate Net Losses exceed the
Retention, subject to a maximum limit of liability to the Reinsurers of
100% (one hundred percent) of 28.55% (twenty eight point fifty five
percent) of SNWPI.
B. Aggregate Limit - The Reinsurers' maximum liability shall in all cases
be the lesser of 28.55% (twenty eight point fifty five percent) of
SNWPI or $143,200,000 (one hundred forty three million, two hundred
thousand dollars) in the aggregate for this Treaty.
Article 6: Definitions
----------------------
A. "Subject Net Written Premium Income (SNWPI)" shall be comprised of
three components of Business Covered:
1. Earned premium during the Term in respect of Contracts
underwritten prior to the Term on written premium previously
accounted for and unearned as reported by the Ceding Company
as of January 1, 1998 as respects Business Covered less ceded
earned premiums in respect of all other inuring reinsurances;
plus
2. Written premium as recorded by the Ceding Company which is
earned during the Term in respect of Contracts underwritten
prior to the Term as respects Business Covered less ceded
written premium in respect of all other inuring reinsurances;
plus
3. Written premium in respect of Contracts underwritten during
the Term as respects Business Covered less ceded written
premiums in respect of all other inuring reinsurances.
Retrospective premium adjustments related to swing-rated business
written prior to 1997 and nonstandard automobile assumed reinsurance
business with The Insurance Corporation of New York shall be excluded
from Business Covered SNWPI.
Notwithstanding the above, all property catastrophe reinstatement
premium, if any, in respect of both assumed and ceded business shall be
excluded from SNWPI.
B. "Subject Net Earned Premium Income (SNEPI)" for any inception to date
period applicable to this Treaty shall mean the SNWPI of the Ceding
Company's Business Covered, net of business excluded by the Ceding
Company, during the inception to date period less the respective Net
Premium Income Unearned as of the end of the calculation period.
C. "Net Premium Income Unearned" shall be determined by the Ceding Company
following its standard practices and calculations as respects the
subject Business Covered.
D. "Loss Occurrence" 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. All losses having a common
origin or traceable to the same act, omission, mistake, occurrence or
causative incident shall be considered one accident, disaster,
casualty or occurrence. For the purposes of establishing the date when
a loss has occurred, the following will apply: on reinsurance
contracts that attach on a losses occurring during basis, the Loss
Occurrence date(s) applicable shall apply; and on reinsurance
contracts that attach on a claims made basis, the claims made date(s)
applicable shall apply; and on reinsurance contracts that attach on a
losses sustained and/or losses discovered basis, the date(s) a loss is
sustained or discovered shall apply. The Ceding Company shall
establish the proper allocation of reinsurance contracts that are
written on a risks attaching basis to the appropriate Loss Occurrence
periods. The Reinsurers shall accept such Loss Occurrence Accident
Year allocations as determined by the Ceding Company.
E. "Ultimate Net Losses" shall mean the sum of losses (including loss in
Excess of Policy Limits in accordance with Article 15:Excess of Policy
Limits and Extra Contractual Obligations in accordance with Article
16: Extra Contractual Obligations) and Allocated Loss Adjustment
Expenses arising out of Business Covered hereunder. Property
catastrophe losses shall be limited to $20,000,000 (twenty million
dollars) of Ultimate Net Losses of the Ceding Company not including
the Lloyd's corporate capital vehicles and $10,000,000 (ten million
dollars) of Ultimate Net Losses for the Lloyd's corporate capital
vehicles including but not limited to Oak Dedicated Limited and Archer
Dedicated Limited. Total property catastrophe losses shall be limited
to a combined maximum of $25,000,000 (twenty five million dollars) of
Ultimate Net Losses in the aggregate. All such amounts shall be net of
all recoveries, salvages, subrogations and all claims on inuring
reinsurance whether collectible or not; provided, however, that in the
event of the Insolvency of the Ceding Company, payment by the
Reinsurers shall be made in accordance with the provisions of the
Insolvency article. Nothing herein shall be construed to mean that
losses under this Treaty are not recoverable until the Ceding
Company's Ultimate Net Losses have been ascertained.
Said Ultimate Net Losses may be paid, outstanding, or incurred, as
referenced in this Treaty. In the event the reference is to Ultimate
Net Losses outstanding, the Term shall include the Ceding Company's
loss reserves for reported losses, losses incurred but not reported and
reserves for Allocated Loss Adjustment Expense for both reported losses
and losses incurred but not reported as of the calculation date; in the
event the reference is to Ultimate Net Losses incurred, the term shall
comprise the sum of Ultimate Net Losses paid and Ultimate Net Losses
outstanding.
Ultimate Net Loss shall also include all net commissions, brokerage
expenses and premium related expenses of the Ceding Company. All net
commissions, brokerage expenses, and premium related expenses of the
Ceding Company shall be subject to a maximum of 27.0% (twenty seven
point zero percent) of SNWPI. Ultimate Net Losses shall exclude both
unallocated loss adjustment expenses and all other general operating
expenses (overhead) of the Ceding Company, but shall include any
unallocated loss adjustment expenses where the underlying treaties and
facultative business with the Ceding Company client's provide for such
coverage. The Ceding Company shall determine net commissions and
brokerage based on the overall commissions and brokerage ratio for the
underwriting year of the underlying Contracts. For purposes of the
Lloyds corporate capital vehicles, a flat ceding commission of 20%
(twenty percent) will apply to gross up the premium, which will also
determine SNWPI. In all cases, Ceding Company definitions of premiums,
net commissions and brokerage in respect of Business Covered shall be
used for all purposes hereon.
F. "Allocated Loss Adjustment Expense" shall mean the Ceding Company's
share of costs and expenses allocable to specific claims which are
incurred by the Ceding Company in the investigation, appraisal,
adjustment, settlement, litigation, defense or appeal of specific
claims, including court costs and costs of supersedeas and appeal
bonds, and including:
a) pre-judgment interest, unless included as
part of the award or judgment;
b) post-judgment interest; and
c) legal expenses and costs incurred in connection
with coverage questions and legal actions connected
thereto (including declaratory judgment expense).
Allocated Loss Adjustment Expense does not include Unallocated Loss
Adjustment Expense unless covered by the Ceding Company per the
underlying treaties and facultative business. Unallocated Loss
Adjustment Expense includes, but is not limited to, salaries and
expenses of employees, and office and other overhead expenses of the
Ceding Company.
G. "Ultimate Net Loss Ratio" shall mean the ratio of Ultimate Net Losses
incurred divided by SNEPI as of the date of calculation.
H. "Retention" shall equal 79.4%(seventy nine point four percent)of SNEPI.
I. "Reinsurers' Expense" shall equal 6.5% (six point five percent) of Base
Premium less Ceding Commissions plus 4.0% (four percent) of Additional
Premium, if any. Reinsurers' Expense amounts in respect of Base
Premiums less Ceding Commissions shall be subject to a minimum of
$2,275,000 (two million, two hundred seventy five thousand dollars).
J. "Finite or Non-traditional Reinsurance Agreements" shall mean any
assumed reinsurance agreement which allows for Profit Sharing (or any
other form of contractual adjustment) exceeding 75% (seventy five
percent) of initial reinsurance premium paid.
K. "Contracts" shall mean any and all original policies, contracts and
binders of insurance or reinsurance underwritten by the Ceding Company
whether facultative or treaty.
Article 7: Net Retained Lines
-----------------------------
This Treaty applies only to that portion of any policy which the Ceding Company
retains net for its own account, and in calculating the amount of any loss
hereunder and also in computing the amount and amounts in excess of which this
Treaty attaches, only loss or losses in respect of that portion of any policy
which the Ceding Company retains net for its own account shall be included.
The amount of the Reinsurers' liability hereunder in respect of any loss or
losses shall not be increased by reason of the inability of the Ceding Company
to collect from any other reinsurer, whether specific or general, any amounts
which may have become due from such reinsurer, whether such inability arises
from the insolvency of such other reinsurer or otherwise.
Article 8: Base Premium, Additional Premium and Reinsurers' Expense
--------------------------------------------------------------------
A. Base Premium - The Ceding Company shall pay to the Reinsurers
Base Premium of 10.548% (ten point five four eight percent) of
Business Covered SNWPI within 60 (sixty) days from the end of each
calendar quarter. Base Premiums shall be credited to the Funds Held
Account as of each respective calendar quarter that applicable
Business Covered SNWPI is recorded by the Ceding Company. The Base
Premiums shall not be less than $41,400,000 (forty one million, four
hundred thousand dollars) and shall not be greater than $52,900,000
(fifty two million, nine hundred thousand dollars). For purposes of
reporting and payment timing, SNWPI shall be based upon the respective
calendar quarter wherein written premium is recorded by the Ceding
Company. In accordance with Article 6: Definitions, Section A. SNWPI,
Component 1. shall be deemed recorded in the first calendar quarter of
1998.
B. Additional Premium - Within 60 days from the end of each calendar
quarter, the Ceding Company shall pay to the Reinsurers Additional
Premium equal to 73.5% (seventy three point five percent) of Ultimate
Net Losses ceded in excess of 212.86% (two hundred twelve point eight
six percent) of the net result of Base Premium less Ceding Commission.
Additional Premium shall be the lesser of 8.01% (eight point zero one
percent) of SNWPI or $40,200,000 (forty million, two hundred thousand
dollars) in the aggregate. Net Additional Premium (additions less
deductions) shall be deemed credited 100% (one hundred percent) to the
Funds Held Account as of January 1, 1998 for all purposes including
Interest Credit.
C. Reinsurers' Expense - The Reinsurers' Expense amounts shall be paid
within 60 (sixty) days in arrears of each respective calendar quarter.
Reinsurers' Expense amounts in respect of Additional Premiums, if any,
shall be paid within 75 (seventy five) days in arrears of the
respective calendar quarter end for which such calculation is being
made. Such amounts shall be deducted from the Funds Held Account.
Article 9: Ceding Commission
----------------------------
A. The Reinsurers shall pay the Ceding Company Ceding Commission equal to
23.91% (twenty three point nine one percent) of Base Premiums. There
shall be no Ceding Commission in respect of Additional Premium.
B. Ceding Commissions are payable by the Reinsurers to the Ceding Company
at the time final settlement of all Ultimate Net Losses hereunder or at
commutation, whichever occurs first. Payment shall be made by deduction
from the Funds Held Account until and unless depleted. If exhausted,
payment shall be made out of other funds of the Reinsurers.
Article 10: Profit Sharing, Funds Held Account
and Interest Credit
----------------------------------------------
A. Profit Sharing
Upon finalization of the payment of all Ultimate Net Losses recoverable
hereon and/or Commutation, the Reinsurers will relinquish to the Ceding
Company 100% (one hundred percent) of the remaining Funds Held Account
balance, if any. Payment of Profit Sharing in accordance with this
Article shall release the Reinsurers from all current and future
liability under this Treaty.
B. Funds Held Account
For purposes of this Article, the Ceding Company shall maintain a
cumulative Funds Held Account comprised of the following:
1. The Funds Held Account at December 31, 1997 shall be equal to
zero;
2. The Funds Held Account at each subsequent calendar quarter end
shall be equal to:
a. The Funds Held Account at the end of the prior
calendar quarter; plus
b. Base Premiums and Additional Premiums, if any;
less
c. Ceding Commissions paid by Reinsurers; less
d. Reinsurers' Expense; plus
e. Interest Credit; less
f. Ultimate Net Losses due from the Reinsurers for
the prior calendar quarter in accordance with
Article 5: Coverage and Aggregate Limit,
(including Commutation payments).
The Ceding Company shall report balances quarterly to the Reinsurers as
soon as practicable but no later than 75 (seventy five) days in arrears
of each calendar quarter end.
The Reinsurers shall not transfer or assign its rights to the Funds
Held Account hereon unless this Treaty is surrendered and a new Treaty
is issued. Under any and all circumstances, the Ceding Company must
make a book entry of a transfer or assignment in order for such
transfer or assignment to be valid.
C. Interest Credit
As of the end of each calendar quarter, the Ceding Company shall credit
the Funds Held Account with an Interest Credit determined by
multiplying the balance of the Funds Held Account at the end of the
respective calendar quarter by 1.8481% (one point eight four eight one
percent) to achieve an effective annual rate of 7.6% (seven point six
percent).
Interest Credit shall continue even in the event of the Ceding
Company's Insolvency.
Article 11: Currency
--------------------
All of the provisions of this Treaty involving dollar amounts are expressed in
terms of United States of America Dollars and all Premiums and loss and
Allocated Loss Adjustment Expense payments shall be made in United States of
America Dollars.
Article 12: Taxes
-----------------
A. In consideration of the terms under which this Treaty is issued, the
Ceding Company undertakes not to claim any deduction of the Premium
hereon when making Canadian tax returns or when making tax returns
other than income or profit tax returns to any state or territory of
the United States or to the District of Columbia.
B. The Ceding Company is solely liable for any Federal Excise Tax (FET)
applicable to this Treaty. Any FET payable shall be paid directly by
the Ceding Company to the taxing authorities and is in addition to
premiums. No deduction shall be made from the Funds Held Account.
Article 13: Accounts, Remittances and Loss Settlements
------------------------------------------------------
A. Within 60 (sixty) days following the end of each calendar quarter, the
Ceding Company shall report to the Reinsurers the amount of:
1. Cumulative Business Covered SNWPI and Retention;
2. Cumulative Ultimate Net Losses paid;
3. Ultimate Net Losses outstanding;
4. Ceded Ultimate Net Losses paid and outstanding under this
Treaty, in accordance with Article 5: Coverage and
Aggregate Limit;
5. Base Premium and Additional Premium, if any, in accordance
with Article 8: Base Premium, Additional Premium and
Reinsurers' Expense.
The reports outlined in this section shall continue until final
settlement of all losses hereunder or Commutation in accordance with
Article 18: Commutation.
B. Remittance of premium amounts due shall be in the manner outlined under
Article 8: Base Premium, Additional Premium and Reinsurers' Expense.
C. Settlement of Ultimate Net Losses paid in excess of the Retention shall
be made by the Reinsurers to the Ceding Company quarterly within 15
(fifteen) days of receipt of the report by the Reinsurers or 75
(seventy five) days after the end of the quarter, whichever is later.
Ultimate Net Losses due from Reinsurers shall be deducted from the
Funds Held Account until depleted. Thereafter, the Reinsurers shall pay
Ultimate Net Losses due from other funds of the Reinsurers. Reinsurers
payment of Ultimate Net Losses shall be subject to the Aggregate Limit
hereunder as detailed in Article 5: Coverage and Aggregate Limit,
Section B.
Article 14: Loss Reserve Funding
--------------------------------
The Reinsurers will maintain appropriate reserves with respect to its share of
the loss reserves ceded and required under the terms of this Treaty which are
reported by the Ceding Company on the Business Covered of this Treaty.
The Reinsurers agrees to provide a clean, irrevocable and unconditional Letter
of Credit in favor of the Ceding Company issued by a bank acceptable to the
Ceding Company adjusted to at all times be equal to the ceded cumulative
Ultimate Net Losses outstanding hereunder less the Funds Held Account balance at
such dates. Such Letter of Credit shall be in the form, amount, and with an
acceptable NAIC bank required to allow the Ceding Company to take full statutory
credit for amounts recoverable under this Treaty.
The Ceding Company shall reimburse the Reinsurers for the actual annual security
cost subject to a maximum of .45% (point four five percent) of the amount of
Letter of Credit issued or maintained hereon as of each December 31st. The
Reinsurers shall request such reimbursement whereupon the Ceding Company shall
make payment by direct wire transfer to the Reinsurers. All such amounts shall
not be deducted from the Funds Held Account.
Article 15: Excess of Policy Limits
-----------------------------------
A. This Treaty shall protect the Ceding Company, within the limits hereof,
for 100% (one hundred percent) of loss in Excess of Policy Limits
emanating from underlying treaties of the Ceding Company's clients and
for 80% (eighty percent) of loss in excess of the limit of its original
treaties, such loss in excess of the limit having been incurred because
of failure by it to settle within the Treaty 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 reinsured or in the preparation or
prosecution of an appeal consequent upon such action.
However, this Article shall not apply where the loss has been incurred
due to fraud by a member of the Board of Directors or a corporate
officer of the Ceding 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 Ceding Company would have been contractually liable to
pay had it not been for the limit of the original policy.
Article 16: Extra Contractual Obligations
-----------------------------------------
A. This Treaty shall protect the Ceding Company for 100% (one hundred
percent) of Extra Contractual Obligations emanating from underlying
treaties of the Ceding Company's clients and for 80% (eighty) of any
Extra Contractual Obligations within the limits hereof. The term
"Extra Contractual Obligations" is defined as those liabilities not
covered under any other provision of the Ceding Company's original
treaties and which arise from the handling of any claim on business
covered hereunder, such liabilities arising because of, but not
limited to, the following: failure by the Ceding Company to settle
within the treaty 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 reinsured 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
Ceding Company shall be deemed, in all circumstances, to be the date
of the original disaster and/or casualty.
However, this Article shall not apply where the loss has been incurred
due to fraud by a member of the Board of Directors or a corporate
officer of the Ceding 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 17: Offset and Security
-------------------------------
A. The Ceding Company or the Reinsurers shall have and may exercise, at
any time and from time to time, the right to offset any balance or
balances whether on account of Base Premium, Additional Premium,
Interest Credit, or on account of ceded Ultimate Net Losses paid or
otherwise, due from one party to the other party hereto under the terms
of this Treaty.
B. Each party hereby assigns and pledges to the other party (or to each
other party, if more than one), all of its rights under this Treaty to
receive Premiums or loss payments at any time from such other party
("Collateral", as further defined in C. below) to secure its Premiums
or loss obligations to such other party at any time under this Treaty
("Secured Obligations"). If at any time a party is in default under any
Secured Obligation or shall be subject to any liquidation,
rehabilitation, reorganization or conservation proceeding, each other
party shall be entitled in its discretion, to apply or to withhold for
the purpose of applying in due course, any Collateral assigned and
pledged to it by the former party and otherwise to realize upon such
Collateral as security for such Secured Obligations.
C. The security interest described herein, and the term "Collateral",
shall apply to all payments and other proceeds in respect of the rights
assigned and pledged. A party's security interest in Collateral shall
be deemed evidenced only by the counterpart of this Treaty delivered to
such party.
D. Each right under this Article is a separate and independent right,
exercisable, without notice or demand, alone or together with other
rights ,in the sole election of the party entitled thereto, and no
waiver, delay, or failure to exercise, in respect of any right, shall
constitute a waiver of any right. The provisions of this Article shall
survive any cancellation or other termination of this Treaty.
Article 18: Commutation
-----------------------
A. The Ceding Company shall have the sole option, effective at any
calendar quarter ending on or after December 31, 1998 to commute all
ceded Ultimate Net Losses outstanding hereunder. The date that the
Ceding Company elects to commute shall be deemed the Commutation date.
At Commutation, the Reinsurers shall pay to the Ceding Company the
lesser of:
1. The present value (calculated at the Interest Credit rate as
per Article 10: Profit Sharing, Funds Held Account and
Interest Credit) of ceded Ultimate Net Losses outstanding as
of the Commutation date as determined by the Ceding Company,
subject to the Reinsurers' agreement. Should the Reinsurers
fail to agree, a present value analysis will be conducted by
an independent actuarial firm acceptable to both the Ceding
Company and the Reinsurers, with the Ceding Company bearing
the costs of such analysis; or
2. The existing value of the Funds Held Account (as defined in
Article 10: Profit Sharing, Funds Held Account and Interest
Credit) as of the Commutation date.
Said payments shall constitute, together with any Profit Sharing
payment, a full and final settlement of all terms of this Treaty; the
Ceding Company will execute a hold harmless agreement so stating and
the Reinsurers will be thereby released from all current and future
liability under this Treaty.
B. Commutation payments in accordance with this Article shall be treated
as Ultimate Net Losses paid under this Treaty for determination of the
Funds Held Account.
Article 19: Errors and Omissions
--------------------------------
Any inadvertent delay, omission or error 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, providing such delay, omission or
error is rectified upon discovery.
Article 20: Access to Records
-----------------------------
The Ceding Company shall place at the disposal of the Reinsurers at all
reasonable times, and the Reinsurers shall have the right to inspect, through
its authorized representatives, all books, records and papers of the Ceding
Company in connection with any reinsurance hereunder or claims in connection
herewith.
The Reinsurers agrees that it will not disclose any confidential information
obtained by it hereunder to parties not subject to this Treaty except under the
following circumstances and then only as necessary.
A. When disclosure of such information is required in the normal course of
Reinsurers' business; or
B. With the prior written consent of the Ceding Company; or
C. When Reinsurers is required by a subpoena or court order to disclose
such information. The Reinsurers shall promptly notify the Ceding
Company of any attempt by a third party to obtain from it any such
confidential information.
The Reinsurers will provide the Ceding Company or its designated representative
with such information as the Reinsurers and Ceding Company may agree is
necessary to the Ceding Company's handling of business reinsured herein.
The obligation contained in the provision shall survive termination of this
Treaty.
Article 21: No Assignment
-------------------------
The Ceding Company and the Reinsurers hereby agree that neither party shall have
the right to assign its respective interests and liabilities, including the
Funds Held Account, under this Treaty. Notwithstanding the above, this Article
shall not restrict the Ceding Company from making investments it deems
appropriate.
Article 22: Insolvency
----------------------
A. In the event of the Insolvency of the Ceding Company, reinsurance under
this Treaty shall be payable by the Reinsurers (on the basis of the
liability of the Ceding Company under the policy or policies reinsured
without diminution because of the Insolvency of the Ceding Company) to
the Ceding Company or to its liquidator, receiver or statutory
successor, except as provided by Section 4118a of the New York
Insurance Law or except:
1. Where the Treaty specifically provides another payee of such
reinsurance in the event of the Insolvency of the Ceding
Company.
2. Where the Reinsurers, with the consent of the direct insured
or insureds, has assumed such policy obligations of the Ceding
Company as direct obligations of the Reinsurers to the payees
under such policies and in substitution for the obligations of
the Ceding Company to such payees.
B. It is agreed, however, that the liquidator or receiver or
statutory successor of the insolvent Ceding Company shall give written
notice to the Reinsurers of the pendency of a claim against the
insolvent Ceding 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 Reinsurers may
investigate such claim and interpose, at their own expense, in the
proceeding where such claim is to be adjudicated, any defense or
defenses which they may deem available to the Ceding Company or its
liquidator or receiver or statutory successor. The expense thus
incurred by the Reinsurers shall be chargeable, subject to court
approval, against the insolvent Ceding Company as part of the expense
of liquidation to the extent or a proportionate share of the benefit
which may accrue to the Ceding Company solely as a result of the
defense undertaken by the Reinsurers.
C. Should the Ceding Company go into liquidation or should a receiver be
appointed, the Reinsurers shall be entitled to deduct from any sums
which may be or may become due to the Ceding Company under this Treaty
any sums which are due to the Reinsurers by the Ceding Company under
this Treaty and which are payable at a fixed or stated date, as well as
any other sums due the Reinsurers which are permitted to be offset
under applicable law.
Article 23: Arbitration
-----------------------
A. As a condition precedent to any right of action hereunder, if
any dispute shall arise between the Ceding Company and the Reinsurers
with reference to the interpretation of this Treaty or their rights
with respect to any transaction involved, whether such dispute arises
before or after termination of this Treaty, such dispute, upon the
written request of either the Ceding Company or the Reinsurers, shall
be submitted to three arbitrators, one to be chosen by the Ceding
Company, one to be chosen by the Reinsurers, and the third by the two
arbitrators so chosen. If either the Ceding Company or the Reinsurers
refuse or neglect to appoint an arbitrator within 30 (thirty) days
after the receipt of written notice from the other party requesting it
do so, the requesting party may appoint two arbitrators. If the two
arbitrators fail to agree on the selection of a third arbitrator
within 30 (thirty) days of their appointment, each of them shall name
two, of whom each shall decline one and the decision shall be made by
the American Arbitration Association. All arbitrators shall be active
or retired disinterested officers of insurance or reinsurance
companies not under the management or control of any party to this
Treaty.
B. The arbitrators are relieved of all judicial formalities and may
abstain from following the strict rules of law; they shall make their
award with a view to effecting the general purpose of this Treaty in
accordance with a literal interpretation of the language. Each of the
Ceding Company and the Reinsurers shall submit its case to its
arbitrator within 30 (thirty) days of the appointment of the third
arbitrator.
C. The decision in writing of any two arbitrators, when filed with the
parties hereto, shall be final and binding on all parties to this
Treaty. Judgment may be entered upon the final decision of the
arbitrators in any court having jurisdiction. Each of the Ceding
Company and the Reinsurers shall bear the expense of their respective
chosen arbitrator and shall jointly and equally bear with the other
party the expense of the third arbitrator and of the arbitration. Said
arbitration shall take place in Stamford, Connecticut, unless some
other place is mutually agreed upon by the Ceding Company and the
Reinsurers.
Article 24: Service of Suit
---------------------------
It is agreed that in the event of the failure of the Reinsurers hereon to pay
any amount claimed to be due to the Ceding Company hereunder, the Reinsurers, at
the request of the Ceding Company, will submit to the jurisdiction of a court of
competent jurisdiction within the United States. The foregoing shall not
constitute a waiver of the right of the Reinsurers to commence any suit in, or
to remove, remand or transfer any suit to any other court of competent
jurisdiction in accordance with the applicable statutes of the state or United
States thereto. It is further agreed that this Treaty shall be governed by the
laws of the State of Connecticut.
It is further agreed that service of process in such suit may be made upon Kroll
& Tract, Fifth Floor, 520 Madison Avenue, New York, New York, 10022-4235, United
States of America and that in any suit instituted against any one of them upon
this Treaty, the Reinsurers will abide by the final decision of such Court 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 Reinsurers in any
suit and/or upon request of the Ceding Company to give a written undertaking to
the Ceding Company that they will enter a general appearance upon the
Reinsurers' 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 Reinsurers hereby designates
the Superintendent, Commissioner or Director of Insurance or other officer
specified for that purpose in the statute, or his successor or successors n
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
Ceding Company or any beneficiary hereunder arising out of this Treaty, and
hereby designate the above named as the person to whom said officer is
authorized to mail such process or a true copy thereof.
Article 25: Intermediary
------------------------
Pegasus Advisors, Inc., 35 Tower Lane, Avon, CT 06001, is hereby recognized as
the Intermediary negotiating this Treaty for all business hereunder and through
whom all communications, in respect of London Life and Casualty Reinsurance
Corporation only, relating hereto (including but not limited to notices,
statements and reports) shall be transmitted to both parties. It is understood,
as regards remittances due either party hereunder, that payment by the Ceding
Company to the Intermediary shall constitute payment to the Reinsurers but
payment by the Reinsurers to the Intermediary shall only constitute payment to
the Ceding Company to the extent such payments are actually received by the
Ceding Company. Notwithstanding the foregoing, it is agreed that all payments
will be direct from the Reinsurers to the Ceding Company, or from the Ceding
Company to the Reinsurers, as appropriate.
NUCLEAR INCIDENT EXCLUSION CLAUSE
PHYSICAL DAMAGE - REINSURANCE - USA
-----------------------------------
1. This Contract does not cover any loss or liability accruing to the
Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any
Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or
Nuclear Energy risks.
2. Without in any way restricting the operation of paragraph (1) of
this Clause, this Contract does not cover any loss or liability accruing to the
Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any
insurance against Physical Damage (including business interruption or
consequential loss arising out of such Physical Damage) to:
I. Nuclear reactor power plants including all auxiliary propert
on the site, or
II. Any other nuclear reactor installation, including laboratories
handling radioactive materials in connection with reactor
installations, and "critical facilities" as such, or
III. Installations for fabricating complete fuel elements or for
processing substantial quantities or "special nuclear
material", and for reprocessing, salvaging, chemically
separating, storing or disposing of "spent" nuclear fuel or
waste materials, or
IV. Installations other than those listed in paragraph (2) III
above using substantial quantities of radioactive isotopes or
other products of nuclear fission.
3. Without in any way restricting the operations of paragraphs (1) and
(2) hereof, this Contract does not cover any loss or liability by radioactive
contamination accruing to the Reassured, directly or indirectly, and whether as
Insurer or Reinsurer, from any insurance on property which is on the same site
as a nuclear reactor power plant or other nuclear installation and which
normally would be insured therewith except that this paragraph (3) shall not
operate
(a) where the Reassured does not have knowledge of such nuclea
reactor power plant or nuclear installation, or
(b) where said insurance contains a provision excluding coverage
for damage to property caused by or resulting from radioactive
contamination, however caused. However on and after 1st
January 1960, this sub-paragraph (b) shall only apply provided
the said radioactive contamination exclusion provision has
been approved by the Governmental Authority having
jurisdiction thereof.
4. Without in any way restricting the operations of paragraphs (1), (2)
and (3) hereof, this Contract does not cover any loss or liability by
radioactive contamination accruing to the Reassured, directly or indirectly, and
whether as Insurer or Reinsurer, when such radioactive contamination is a named
hazard specifically insured against.
5. It is understood and agreed that this Clause shall not extend to
risks using radioactive isotopes in any form where the nuclear exposure is not
considered by the Reassured to be the primary hazard.
6. The term "special nuclear material" shall have the meaning given it
in the Atomic Energy Act of 1954 or by any law amendatory thereof.
7. The Reassured to be sole judge of what constitutes:
(a) substantial quantities, and
(b) the extent of installation, plant or site
NOTE: Without in any way restricting the operation of paragraph (1) hereof, it
is understood and agreed that
(a) all policies issued by the Reassured on or before
31st December 1957 shall be free from the application
of the other provisions of this Clause until expiry
date or 31st December 1960 whichever first occurs
whereupon all the provisions of this Clause shall
apply.
(b) with respect to any risk located in Canada, policies
issued by the Reassured on or before 31st December
1958 shall be free from the application of the other
provisions of this Clause until expiry date or 31st
December 1960 whichever first occurs whereupon all
the provisions of this Clause shall apply.
NUCLEAR INCIDENT EXCLUSION CLAUSE -
PHYSICAL DAMAGE AND LIABILITY
(BOILER AND MACHINERY POLICIES) - REINSURANCE - USA
1. This Contract 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 Contract all original
Boiler and Machinery Insurance or Reinsurance contracts of the Reassured shall
be deemed to include the following provisions of this paragraph:
This Policy does not apply to "loss", whether it be direct or indirect,
proximate or remote
(a) from an Accident caused directly or indirectly by nuclear
reaction, nuclear radiation or radioactive contamination, all
whether controlled or uncontrolled; or
(b) from nuclear reaction, nuclear radiation or radioactive
contamination, all whether controlled or uncontrolled, caused
directly or indirectly by, contributed to or aggravated by an
Accident.
3. However, it is agreed that loss arising out of the use of Radioactive
Isotopes in any form is not hereby excluded from reinsurance protection.
4. Without in any way restricting the operation of paragraph (a) hereof, it is
understood and agreed that
(a) all policies issued by the Reassured effective on or before
30th April 1958, shall be free from the application of the
other provisions of this Clause until expiry date or 30th
April, 1961, whichever first occurs, whereupon all the
provisions of this Clause shall apply,
(b) with respect to any risk located in Canada, policies issued by
the Reassured, effective on or before 30th June, 1958, shall
be free from the application of the other provisions of this
Clause until expiry date or 30th June, 1961, whichever first
occurs, whereupon all the provisions of this Clause shall
apply.
NUCLEAR INCIDENT EXCLUSION CLAUSE
PHYSICAL DAMAGE - REINSURANCE - CANADA
1. This Agreement does not cover any loss or liability accruing to the
Reinsured, directly or indirectly, and whether as Insurer or Reinsurer, from any
Pool of Insureres or Reinsurers formed for the purpose of covering Atomic or
Nuclear Energy Risks.
2. Without in any way restricting the operation of paragraph 1 of this
Clause, this Agreement does not cover any loss or liability accruing to the
Reinsured, directly or indirectly, and whether as Insurer or Reinsurer, from any
insurance against Physical Damage (including business interruption or
consequential loss arising out of such Physical Damage) to:
(1) Nuclear reactor power plants including all auxiliary property
on the site, or
(2) Any other nuclear reactor installation, including laboratories
handling radioactive materials in connection with reactor
installations, and critical facilities as such, or
(3) Installations for fabricating complete fuel elements or for
processing substantial quantities of prescribed substances,
and for reprocessing, salvaging, chemically separating,
storing or disposing of spent nuclear fuel or waste materials,
or
(4) Installations other than those listed in (3) above using
substantial quantities of radioactive isotopes or other
products of nuclear fission.
3. Without in any way restricting the operation of paragraphs 1 and 2 of
this Clause, this Agreement does not cover any loss or liability by radioactive
contamination accruing to the Reinsured directly or indirectly, and whether as
Insurer or Reinsurer, from any insurance on property which is on the same site
as a nuclear reactor power plant or other nuclear installation and which
normally would be insured therewith, except that this paragraph 3 shall not
operate
(a) where the Reinsured does not have knowledge of such nuclear
reactor power plant or nuclear installation, or
(b) where the said insurance contains a provisions excluding
coverage for damage to property caused by or resulting from
radioactive contamination, however caused.
4. Without in any way restricting the operation of paragraphs 1, 2 and 3 of
this clause, this Agreement does not cover any loss or liability by radioactive
contamination accruing to the Reinsured, directly or indirectly, and whether as
Insurer or Reinsurer, when such radioactive contamination is a named hazard
specifically insured against.
5. This Clause shall not extend to risks using radioactive isotopes in any
form where the nuclear exposure is not considered by the Reinsured to be the
primary hazard.
6. The term "prescribed substances" shall have the meaning given to it by
the Atomic Energy Control Act R.S.C. 1974 or by any law amendatory thereof.
7. Reinsured to be sole judge of what constitutes: (a) substantial
quantities, and (b) the extent of installation, plant or site.
8. Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
of this Clause, this Agreement does not cover any loss or liability accruing to
the Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
caused by any nuclear incident as defined in The Nuclear Liability Act, nuclear
explosion or contamination by radioactive material.
Note: Without in any way restricting the operation of paragraphs 1, 2, 3 and
4 of this clause, paragraph 8 of this Clause shall only apply to all
original contracts of the Reinsured whether new, renewal or replacement
which become effective on or after December 31, 1984.
NUCLEAR INCIDENT EXCLUSION CLAUSE -
PHYSICAL DAMAGE AND LIABILITY
(BOILER AND MACHINERY POLICIES) - REINSURANCE - CANADA
1. This Contract 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 Contract all
original Boiler and Machinery Insurance or Reinsurance contracts of the
Reassured shall be deemed to include the following provisions of this paragraph:
This policy does not apply to loss, whether it be direct or indirect,
proximate or remote
(a) from an Accident caused directly or indirectly by nuclear
reaction, nuclear radiation or radioactive contamination, all
whether controlled or uncontrolled; or
(b) from nuclear reaction, nuclear radiation or radioactive
contamination, all whether controlled or uncontrolled, caused
directly or indirectly by, contributed to or aggravated by an
Accident.
3. However, it is agreed that loss arising out of the use of Radioactive
Isotopes in any form is not hereby excluded from reinsurance protection.
4. Without in any way restricting the operation of paragraph (1) hereof, it
is understood and agreed that policies issued by the Reassured effective on or
before 31st December, 1958, shall be free from the application of the other
provisions of this Clause until expiry date or 31st December, 1961, whichever
first occurs, whereupon all the provisions of this Clause shall apply.
NUCLEAR INCIDENT EXCLUSION CLAUSE
LIABILITY - REINSURANCE - U.S.A.
---------------------------------
1. This Agreement does not cover any loss or liability accruing to the
Cedent 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 Agreement all
the original policies of the Cedent (new, renewal and replacement) of the
classes specified in Clause II of this paragraph (2) from the time specified in
Clause III of 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 limits 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 a 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 Cedent on New York risks, until 90 days
following 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 Agreement the
original liability policies of the Cedent (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 an 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
or liability; or
(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 Payment
Provision relating to
(immediate medical or surgical relief, (first aid, to expenses 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 or by or
on behalf of an insured; or
(c) (the injury, sickness, disease, death or destruction
(the bodily injury or property damage
arises out of 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, 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
by-product material; "source material", "special nuclear material" and
"by-product material" have the meanings given to 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 by-product material and (2) resulting from the operation by any
person or organization of any nuclear facility included within the
definition of nuclear facility under paragraph (a) or (b) thereof; "nuclear
facility" means
(a) any nuclear reactor,
(b) any equipment or device designed or used for (1) separating the
isotopes of uranium or 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 device is located consists of or
contains more than 25 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.
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 Cedent 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 Cedent in
Canada and that with respect of 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.
NUCLEAR INCIDENT EXCLUSION CLAUSE
LIABILITY - REINSURANCE - CANADA
---------------------------------
1. This Contract 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 Contract 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 named in such
contract or not 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 limit 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 Contract 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:
Broad Exclusion Provision
It is agreed that this Policy does not apply:
(a) to liability imposed by or arising under the Nuclear
Liability Act; or
(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 named in such contract or not 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; or
(c) to bodily injury or property damage resulting directly or
indirectly from the nuclear energy hazard arising from:
(1) the ownership, maintenance, operation or use of a
nuclear facility by or on behalf of an Insured;
(2) 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
(3) 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 usable for any scientific, medical
agricultural, commercial or industrial purpose) used,
distributed, handled or sold by an Insured.
As used in this Policy:
(I) The term "nuclear energy hazard" means the radioactive,
toxic, explosive or other hazardous properties of
radioactive material;
(II) 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 Stomic 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;
(III) 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 o
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 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.
(IV) 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.
(V) with respect to property, loss of use of such property
shall be deemed to be property damage.
NUCLEAR ENERGY RISKS EXCLUSION CLAUSE (REINSURANCE) 1984
(WORLDWIDE EXCLUDING U.S.A. & CANADA)
--------------------------------------------------------
This Agreement shall exclude Nuclear Energy Risks whether such risks are written
directly and/or by way of reinsurance and/or via Pools and/or Associations.
For all purposes of this agreement, Nuclear Energy Risks shall be defined as all
first party and/or third party insurances (other than Workers' Compensation
and/or Employers' Liability) in respect of:
(i) nuclear reactors and nuclear power stations or plant
(ii) any other premises or facilities whatsoever related to or
concerned with:
(a) the production of nuclear energy or
(b) the production or storage or handling of nuclear fuel
or nuclear wastes
(iii) any other premises or facilities eligible for insurance by any
local Nuclear Pool and/or Association but only to the extent of
the requirements of the local Pool and/or Association, it being
the intention always that Reinsurers shall follow the fortunes of
the Reinsured insofar as the Reinsured complies with the
requirements of any such local Pool and/or Association.
However, this Exclusion shall not apply
(a) to any insurance or reinsurance in respect of the construction,
erection or installation of buildings, plant and other property
(including contractor's plant and equipment used in connection
therewith)
(i) for the storage of nuclear fuel - prior to the
commencement of storage.
(ii) as regards reactor installations - prior to the
commencement of loading of nuclear fuel into the
reactor, or prior to the initial criticality,
depending on the commencement of the insurance or
reinsurance of the relevant local Nuclear Pool and/or
Association.
(b) to any Machinery Breakdown or other Engineering insurance or
reinsurance not coming within the scope of (a) above, nor
affording coverage in the "higher radioactivity" zone
WAR RISK EXCLUSION CLAUSE (REINSURANCE)
As regards interests which at time of loss or damage are on
shore, no liability shall attach hereto in respect of any loss or
damage which is occasioned by war, invasion, hostilities, acts of
foreign enemies, civil war, rebellion, insurrection, military or
usurped power, or martial law or confiscation by order of any
government or public authority.
This War Exclusion Clause shall not, however, apply to
interest which at time of loss or damage are within the territorial
limits of the United States of America (comprising the fifty States of
the Union and the District of Columbia, its territories and
possessions, including the Panama Canal Zone and the Commonwealth of
Puerto Rico and including Bridges between the United States of America
and Mexico provided they are under United States ownership), Canada,
St. Pierre and Miquelon, provided such interests are insured under
original policies, endorsements or binders containing a standard war or
hostilities or warlike operations exclusion clause.
Nevertheless, this clause shall not be construed to apply to
loss or damage occasioned by riots, strikes, civil commotion,
vandalism, malicious damage, including acts committed by agents of any
government, party or faction engaged in war, hostilities or other
warlike operation, provided such agents are acting secretly and not in
connection with any operations of military or naval armed forces in the
country where the insured are situated.
INSOLVENCY FUND EXCLUSION CLAUSE
This Agreement excludes all liability o the Ceding 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 Ceding 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.
INTERESTS AND LIABILITIES AGREEMENT
to the
UNDERWRITING YEAR
AGGREGATE EXCESS OF LOSS REINSURANCE TREATY
Effective: January 1, 1998
(hereinafter referred to as "Reinsurance Treaty")
between
CHARTWELL REINSURANCE COMPANY
Stamford, Connecticut
and
DAKOTA SPECIALTY INSURANCE COMPANY
Stamford, Connecticut
and
THE INSURANCE CORPORATION OF NEW YORK
Jericho, New York
and
DRAYTON COMPANY LIMITED
Hamilton, Bermuda
and
CHARTWELL RE HOLDINGS CORPORATION
Stamford, Connecticut
(hereinafter referred to collectively as "Ceding Company")
and
LONDON LIFE AND CASUALTY REINSURANCE CORPORATION
Wildey, St. Michael, Barbados, W.I.
(hereinafter referred to as the "Reinsurer")
It is hereby mutually agreed that the interests and liabilities of the companies
referred to herein collectively as the Ceding Company, arising under the terms
and conditions of the Treaty, are joint and not several. It is agreed that all
communications and payments to or from the Ceding Company may be made
respectively to or from Chartwell Reinsurance Company, which will act as
paymaster and agent for all transactions and communications under this Treaty.
It is hereby mutually agreed that the Reinsurer shall have a 75.00% share in the
interests and liabilities as set forth in the captioned Reinsurance Contract and
Addendum No.1 attaching to and forming part of the Reinsurance Contract. The
share of the Reinsurer shall be separate and apart from the shares of the other
reinsurers and shall not be joint with those of the other reinsurers and
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.
In Witness Whereof, the parties hereto, by their duly authorized officers, have
executed this Agreement, in triplicate, as of the dates undermentioned.
In Stamford, Connecticut, this
1st day of October, 1998,
for and on behalf of Chartwell Reinsurance Company, Dakota Specialty Insurance
Company, The Insurance Corporation of New York, Drayton Company Limited and
Chartwell Re Holdings Corporation
By: /s/ Peter W. Wildman
--------------------------------
Peter W. Wildman
Title: Senior Vice President
--------------------------------
In Wildey, St. Michael,
Barbados, W.I., this 4th day of
September, 1998
for and on behalf of London Life and Casualty Reinsurance Corporation
By: /s/ John F. Cartwright
--------------------------------
John F. Cartwright
Title: President
-------------------------------
INTERESTS AND LIABILITIES AGREEMENT
to the
UNDERWRITING YEAR
AGGREGATE EXCESS OF LOSS REINSURANCE TREATY
Effective: January 1, 1998
(hereinafter referred to as "Reinsurance Treaty")
between
CHARTWELL REINSURANCE COMPANY
Stamford, Connecticut
and
DAKOTA SPECIALTY INSURANCE COMPANY
Stamford, Connecticut
and
THE INSURANCE CORPORATION OF NEW YORK
Jericho, New York
and
DRAYTON COMPANY LIMITED
Hamilton, Bermuda
and
CHARTWELL RE HOLDINGS CORPORATION
Stamford, Connecticut
(hereinafter referred to collectively as "Ceding Company")
and
WESTERN GENERAL INSURANCE LTD.
Hamilton, Bermuda
(hereinafter referred to as the "Reinsurer")
It is hereby mutually agreed that the interests and liabilities of the companies
referred to herein collectively as the Ceding Company, arising under the terms
and conditions of the Treaty, are joint and not several. It is agreed that all
communications and payments to or from the Ceding Company may be made
respectively to or from Chartwell Reinsurance Company, which will act as
paymaster and agent for all transactions and communications under this Treaty.
It is hereby mutually agreed that the Reinsurer shall have a 25.00% share in the
interests and liabilities as set forth in the captioned Reinsurance Contract and
Addendum No.1 attaching to and forming part of the Reinsurance Contract. The
share of the Reinsurer shall be separate and apart from the shares of the other
reinsurers and shall not be joint with those of the other reinsurers and
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.
In Witness Whereof, the parties hereto, by their duly authorized officers, have
executed this Agreement, in triplicate, as of the dates undermentioned.
In Stamford, Connecticut, this
1st day of October, 1998,
for and on behalf of Chartwell Reinsurance Company, Dakota Specialty Insurance
Company, The Insurance Corporation of New York, Drayton Company Limited and
Chartwell Re Holdings Corporation
By: /s/ Peter W. Wildman
---------------------------------
Peter W. Wildman
Title: Senior Vice President
-------------------------------
In Hamilton, Bermuda, this 1st
day of September, 1998,
for and on behalf of Western General Insurance Ltd.
By: /s/ John L. Marion
---------------------------------
John L. Marion
Title: President & Managing Director
-------------------------------