EXHIBIT 10.13
IGF/ACCEPTANCE RETROCESSION AGREEMENT
THIS IGF/ACCEPTANCE RETROCESSION AGREEMENT ("Retrocession Agreement") is
made and entered into as of May 23, 2001 by and between Acceptance Insurance
Company, a Nebraska domestic insurance company ("Reinsurer"), and IGF Insurance
Company ("IGF"), an Indiana domestic insurance company, for itself and for
Continental Casualty Insurance Company (sometimes referred to collectively with
IGF in this Retrocession Agreement as "Ceding Companies.")
W I T N E S S E T H :
WHEREAS, IGF, Reinsurer and others have entered into a certain Asset
Purchase Agreement (the "Asset Purchase Agreement") dated as of May 23, 2001;
and
WHEREAS, IGF is a party to an SRA, as defined in the Asset Purchase
Agreement ("Outside Reinsurance"); and
WHEREAS, the Ceding Companies and the Reinsurer jointly intend that all
Outside Reinsurance will inure to the benefit of the Reinsurer; and
WHEREAS, subject to the terms and conditions set forth in this
Retrocession Agreement, Ceding Companies desire to cede to Reinsurer, and
Reinsurer desires to accept from Ceding Companies and to reinsure 100%, net of
all other valid and collectible reinsurance, all rights, benefits and
obligations associated with all of Ceding Companies' contracts of insurance
identified on Asset Purchase Agreement Schedule 3.05A respecting risks located
within the United States ("Reinsured Obligations").
NOW, THEREFORE, in consideration of the premises and the mutual promises
of the parties hereto, they hereby covenant and agree as follows:
ARTICLE I
EFFECTIVE TIME
This Retrocession Agreement shall be effective as of 12:01 a.m. Eastern
Standard Time ("Effective Time") on the date of the Closing as defined in the
Asset Purchase Agreement. If the Asset Purchase Agreement is terminated pursuant
to its terms and conditions, this Retrocession Agreement shall terminate
concurrently with the Asset Purchase Agreement and never shall be effective.
ARTICLE II
REINSURED OBLIGATIONS; REPRESENTATIONS OF PARTIES
Section 2.01. Description of Reinsured Obligations. Subject to the
provisions of this Retrocession Agreement, Ceding Companies hereby assign,
transfer, set over, cede and reinsure to Reinsurer, and Reinsurer hereby
reinsures on a 100% quota share basis from the Ceding
Companies, net of all other valid and collectible reinsurance, all liabilities
and obligations for losses occurring prior to the Effective Time associated with
the Reinsured Contracts.
SECTION 2.02. REPRESENTATIONS OF CEDING COMPANIES. IGF represents, to the
best of its knowledge and belief, that as of the Effective Time:
(a) IGF is a corporation duly organized and validly existing in good
standing under the laws of the State of Indiana. The Ceding Companies have
the corporate power and authority to carry on their business substantially
as it is now being conducted.
(b) IGF has the requisite corporate power and authority to take, and
has taken, all corporate action necessary to execute and deliver this
Retrocession Agreement on its own behalf and on behalf of Continental
Casualty Insurance Company, and to consummate the transactions
contemplated hereby. This Retrocession Agreement has been validly executed
and delivered by IGF, and is a valid and binding agreement of the Ceding
Companies, enforceable against the Ceding Companies in accordance with its
terms.
SECTION 2.03. REPRESENTATIONS OF REINSURER. Reinsurer represents, to the
best of its knowledge and belief, that as of the Effective Time:
(a) Reinsurer is a corporation duly organized and validly existing
in good standing under the laws of the State of Nebraska and is an
authorized insurer in Nebraska. Reinsurer has the corporate power and
authority to carry on its business substantially as it is now being
conducted.
(b) Reinsurer has the requisite corporate power and authority and
has taken all corporate action necessary to execute and deliver this
Retrocession Agreement and to consummate the transactions contemplated
hereby. This Retrocession Agreement has been validly executed and
delivered by Reinsurer and is a valid and binding agreement of Reinsurer,
enforceable against Reinsurer in accordance with its terms.
SECTION 2.04. QUOTA SHARE BASIS. Ceding Companies and Reinsurer
acknowledge and agree that the reinsurance provided herein is on a 100% quota
share basis. Reinsurer agrees to assume all obligations and liabilities of
Ceding Companies under the Reinsured Contracts, net of all other valid and
collectible reinsurance, all of which shall inure to the benefit of Reinsurer;
subject, however, to the same rights, offsets, counterclaims, cross-actions and
defenses that are or may be possessed by the Ceding Companies. It is expressly
understood that no such offsets, counterclaims, cross-actions or defenses are or
shall be waived, but that the same are expressly preserved and that the
Reinsurer shall be duly subrogated thereto, whether the same be known to exist
or are hereafter discovered.
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ARTICLE III
INSOLVENCY
SECTION 3.01. INSOLVENCY.
(a) In the event of the insolvency of the Ceding Companies, it is
agreed that the liquidator, receiver, conservator or statutory successor
of the Ceding Companies shall give written notice to the Reinsurer of the
pendency of a claim against the Ceding Companies indicating the policy
reinsured which claim would involve a possible liability on the part of
the Reinsurer within a reasonable time after such claim is filed in the
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 the Ceding Companies or its liquidator, receiver, conservator
or statutory successor. The expense thus incurred by the Reinsurer shall
be chargeable, subject to the approval of the Court, against the Ceding
Companies as part of the expense of conservation or liquidation to the
extent of a pro rata share of the benefit which may accrue to the Ceding
Companies solely as a result of the defense undertaken by the Reinsurer.
(b) Where two or more reinsurers are involved in the same claim and
a majority in interest elect to interpose defense to such claim, the
expense shall be apportioned in accordance with the terms of this
Agreement as though such expense had been incurred by the Ceding
Companies.
(c) It is further understood and agreed that, in the event of the
insolvency of the Ceding Companies, the reinsurance under this Agreement
shall be payable directly by the Reinsurer to the Ceding Companies or to
its liquidator, receiver or statutory successor, except (1) where this
Agreement specifically provides another payee of such reinsurance in the
event of the insolvency of the Ceding Companies or (2) where the Reinsurer
with the consent of the direct insured or insureds has assumed such policy
obligations of the Ceding Companies as direct obligations of the Reinsurer
to the payees under such policies and in substitution for the obligations
of the Ceding Companies to such payees.
ARTICLE IV
CONSIDERATION FOR RETROCESSION CONTRACTS
SECTION 4.01. CONSIDERATION. For and in consideration for this
Retrocession Agreement Ceding Companies will remit to Reinsurer all gross
written premium with respect to the Reinsured Contracts, and IGF shall be deemed
to have a fiduciary responsibility to Reinsurer with respect to all such
premium. Written premium with respect to the Reinsured Contracts paid to Ceding
Companies before the Effective Time will be remitted to Reinsurer on the date of
the Closing. All gross written premiums with respect to the Reinsured Contracts
paid to Ceding Companies after Closing will be remitted to Reinsurer not less
often than once each month.
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SECTION 4.02. COMMISSION AND TAXES. Reinsurer and IGF agree that from the
premiums due on all crop hail policies reinsured hereunder, IGF shall be paid
all agents commission advanced and unpaid by Reinsurer. The Reinsurer on behalf
of IGF shall remit to agents from premium payable after closing all agents
commissions due. The premium taxes and boards, bureaus and fees to associations
shall be paid to IGF from premiums paid or payable on policies covered under
this Agreement.
ARTICLE V
LIABILITY
SECTION 5.01. PAYMENT OF CLAIMS AND BENEFITS. From and after the Effective
Time, Reinsurer shall be responsible for (a) paying all benefits and amounts due
under the Reinsured Contracts in accordance with the terms of thereof; (b)
arranging for or providing benefits under the Reinsured Contracts; (c) paying
all premium refunds with respect to premiums received under the Reinsured
Contracts; and (d) paying all expenses in connection with the investigations,
adjustment, appraisal or settlement of all claims or benefits under the
Reinsured Contracts on or after the Effective Time.
SECTION 5.02. ACTIONS ON OR AFTER EFFECTIVE TIME. If any legal or
regulatory actions are threatened or filed in connection with any of the
Reinsured Contracts on or after the Effective Time, the parties agree to provide
each other with prompt notice thereof, within such time period as would allow
the appropriate party the opportunity to answer, appear or to take any action
necessary or to avoid a default judgment. The parties agree to cooperate with
each other with respect to any such legal or regulatory actions, whether
threatened or actual.
SECTION 5.03. TAXES. The Ceding Companies shall retain full responsibility
for any tax liability relating to the Reinsured Contracts for all taxable
periods or portions thereof prior to the Effective Time. Reinsurer shall also
have full responsibility for any tax liability or benefit relating to the
Reinsured Contracts for all taxable periods or portions thereof beginning on the
Effective Time, with appropriate adjustments, if any, made annually between the
parties.
ARTICLE VI
ERRORS AND OVERSIGHTS
Each party to this Retrocession Agreement will act reasonably to comply
with its terms. Clerical errors and oversights occasioned in good faith in
carrying out this Retrocession Agreement will not prejudice either party and
will be rectified promptly on an equitable basis.
ARTICLE VII
ARBITRATION
SECTION 7.1 COMPULSORY ARBITRATION.
(a) The parties intend this article to be enforceable in accordance
with the Federal Arbitration Act (9 U.S.C. Section 1, et seq.), including
any amendments to that
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Act which are subsequently adopted, notwithstanding any other choice of
law provision set forth in this Agreement. In the event that either party
refuses to submit to arbitration as required herein, the other party may
request a United States Federal District Court to compel arbitration in
accordance with the Federal Arbitration Act. Both parties consent to the
jurisdiction of such court to enforce this article and to confirm and
enforce the performance of any award of the arbitrators.
(b) Any dispute or other matter in question between the Reinsurer
and the Ceding Companies arising out of or relating to the formation,
interpretation, performance, or breach of this Agreement, whether such
dispute arises before or after termination of this Agreement, shall be
resolved by arbitration if the parties are unable to resolve the dispute
through negotiation. Arbitration shall be initiated by the delivery of a
written demand for arbitration by one party to the other.
SECTION 7.2. PROCEDURE.
(a) Each party shall appoint an individual as arbitrator and the two
so appointed shall then appoint an umpire. If either party refuses or
neglects to appoint an arbitrator within forty-five (45) days after the
initial delivery of the demand for arbitration, the other party may
appoint the second arbitrator. If the two arbitrators do not agree on an
umpire within forty-five (45) days of their appointment, the parties shall
petition the American Arbitration Association to appoint an umpire with
the qualifications set forth below. The arbitrators shall be active or
retired officers of insurance or reinsurance companies, Lloyd's of London
Underwriters or reinsurance brokers; the arbitrators shall not have a
personal or financial interest in the result of the arbitration.
(b) The arbitration hearing shall be held in Omaha, Nebraska or such
other place as may be mutually agreed. Each party shall submit its case to
the arbitrators within forty-five (45) days of the selection of the umpire
or within such longer period as may be agreed by the arbitrators. The
arbitrators shall not be obliged to follow judicial formalities or the
rules of evidence except to the extent required by law of the state of New
York; they shall make their decisions according to the practice of the
reinsurance business. The decision rendered by a majority of the
arbitrators shall be final and binding on both parties. Such decision
shall be a condition precedent to any right of legal action arising out of
the arbitrated dispute which either party may have against the other.
Judgment upon the award rendered may be entered in any court having
jurisdiction thereof. The Company shall abide by the final decision of
such Court or of any appellate court in the event of an appeal.
(c) Except as provided above, arbitration shall be based, insofar as
applicable, upon the Commercial Arbitration Rules of the American
Arbitration Association.
SECTION 7.3. COSTS. Each party shall bear its own costs in connection with
any such arbitration including, without limitation, (i) all legal, accounting,
and any other professional fees and expenses, (ii) the fees and expenses of its
own arbitrator, and (iii) all other costs and expenses each party incurs to
prepare for such arbitration. Other than set forth above, each side
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shall pay (iv) one-half of the fee and expenses of the umpire, and (v) one-half
of the other expenses that the parties jointly incur directly related to the
arbitration proceeding.
ARTICLE VIII
TERMINATION
SECTION 8.01. TERMINATION DATE. This Agreement can only be terminated by
mutual consent of the Ceding Companies and Reinsurer.
SECTION 8.02. APPROVALS. If the approval of any state insurance department
is necessary for the effectiveness of this Retrocession Agreement, the Ceding
Companies and Reinsurer will cooperate and use their best efforts to obtain such
approvals.
SECTION 8.03. COSTS OF TERMINATION. If this Retrocession Agreement is
terminated pursuant to Section 8.01, neither party shall be liable to the other
for any costs, expenses, causes of actions, fees or claims of any type due with
respect to such termination.
ARTICLE IX
REGULATORY COMPLIANCE AND APPROVALS
SECTION 9.01. COMPLIANCE. The parties agree to comply with all laws,
regulations or directions of appropriate state insurance departments with regard
to (a) any notification to policyholders under the Reinsured Contracts
(including without limitation all content, description, timing or other
requirements), (b) this Retrocession Agreement and (c) all service requirements
to policyholders under the Reinsured Contracts.
SECTION 9.02. REGULATORY APPROVALS. The parties agree that where formal
approval is required by any state insurance regulatory agency, this Retrocession
Agreement shall not be effective as to any and all Reinsured Contracts in effect
in such state until such approval is obtained.
ARTICLE X
CONFIDENTIALITY
SECTION 10.01. CONFIDENTIAL INFORMATION. During the course of performance
under this Retrocession Agreement, the parties and their respective agents,
employees and representatives will obtain or have access to certain proprietary
or confidential information. The parties undertake and covenant, one to the
other, that they will, and they will cause their respective agents, employees
and representatives to, maintain the confidential information in a confidential
manner in accordance with applicable local, state or federal laws, and in
accordance with this Retrocession Agreement.
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ARTICLE XI
RELATIONSHIP OF PARTIES
SECTION 11.01. NO EMPLOYMENT RELATIONSHIP. The relationships between the
parties hereto shall be that of independent contractors. Nothing herein shall be
construed to create the relationship of employer and employee between Reinsurer,
the Ceding Companies or any of their respective agents or employees.
ARTICLE XII
OTHER PROVISIONS
SECTION 12.01. PARAGRAPH HEADINGS. The headings of the provisions of this
Retrocession Agreement are for reference purposes and have no legal force or
effect.
SECTION 12.02. GOVERNING LAW. This Retrocession Agreement shall be
construed and interpreted according to the laws of the State of Iowa.
SECTION 12.03. OTHER ACTIONS. The Ceding Companies and Reinsurer will use
their best efforts to cause the reinsurance contemplated under this Retrocession
Agreement to be consummated and approved by all necessary regulatory bodies and
to do such further acts, matters and deeds, and execute any and all additional
instruments and agreements, that may be mutually agreed as necessary or
reasonably required in order to carry this Retrocession Agreement into full
effect.
SECTION 12.04. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. For
purposes of this Agreement, facsimile signatures shall be deemed originals, and
the parties agree to exchange original signatures as promptly as possible.
SECTION 12.05. SET OFF. IGF and Reinsurer shall have the right to offset
any balance or amounts due from one party to the other under the terms of this
Agreement. The party asserting the right of offset may exercise such right any
time whether the balances due are on account of premiums or losses or otherwise.
SECTION 12.06. NOTICES. Until otherwise notified, all formal notices,
requests, demands and other communications between the parties shall be directed
to the parties at their respective addresses as follows:
If to Reinsurer:
Acceptance Insurance Company
535 West Broadway
Council Bluffs, Iowa 51503
Attn: President
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If to Ceding Companies:
IGF Insurance Company
4720 Kingsway Drive
Indianapolis, Indiana 46205
Attn: President
SECTION 12.07. ASSIGNMENT. This Retrocession Agreement is not assignable
by either party without prior written consent of the other party and, where
required, the prior approval of any appropriate state insurance department.
Neither party's consent under this Section shall be unreasonably withheld.
SECTION 12.08. WAIVER. Failure of Reinsurer or Ceding Companies to enforce
any of its rights or remedies under this Retrocession Agreement shall not
constitute a waiver of such rights or remedies exercisable hereunder.
SECTION 12.09. SEVERABILITY. If any provision of this Retrocession
Agreement should be determined to be invalid or otherwise unenforceable under
law, the remainder of this Retrocession Agreement shall not be affected thereby.
SECTION 12.10. AGREEMENT BINDING. This Retrocession Agreement is binding
upon the parties hereto, their respective representatives, successors and
assigns.
SECTION 12.11. MULTIPLE COPIES. This Retrocession Agreement may be
executed in multiple copies, and each shall have the same force and effect of
the original.
SECTION 12.11 JOINT AND SEVERAL LIABILITY. All rights and obligations of
the Ceding Companies created under the terms of this Retrocession Agreement
shall be joint and several.
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IN WITNESS WHEREOF, this Retrocession Agreement has been duly executed.
CEDING COMPANIES:
IGF INSURANCE COMPANY, for itself and
for CONTINENTAL CASUALTY
INSURANCE COMPANY
By: /s/ Alan G. Symons
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Name: Alan G. Symons
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Title: Vice Chairman, CEO, President
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REINSURER:
ACCEPTANCE INSURANCE COMPANY
By: /s/ John E. Martin
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Name: John E. Martin
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Title: President
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