EXHIBIT 10.78
UNDERLYING EXCESS CATASTROPHE AND REINSTATEMENT PREMIUM PROTECTION
REINSURANCE CONTRACT
EFFECTIVE: JULY 1, 2004
issued to
Liberty American Insurance Company
Pinellas Park, Florida
Mobile USA Insurance Company
Pinellas Park, Florida
and
any and all other companies which are now
or may hereafter become member companies of
Liberty American Insurance Group, Inc.
TABLE OF CONTENTS
ARTICLE PAGE
I Classes of Business Reinsured 1
II Term 1
III Concurrency of Conditions 2
IV Territory 2
V Exclusions 2
VI Retention and Limit 4
VII Reinstatement 5
VIII Definitions 5
IX Other Reinsurance 6
X Loss Occurrence 7
XI Loss Notices and Settlements 8
XII Salvage and Subrogation 8
XIII Florida Hurricane Catastrophe Fund 8
XIV Reinsurance Premium 9
XV Late Payments 10
XVI Offset (BRMA 36D) 11
XVII Access to Records (BRMA 1D) 12
XVIII Liability of the Reinsurer 12
XIX Net Retained Lines (BRMA 32E) 12
XX Errors and Omissions (BRMA 14F) 12
XXI Currency (BRMA 12A) 12
XXII Taxes (BRMA 50C) 13
XXIII Federal Excise Tax (BRMA 17A) 13
XXIV Unauthorized Reinsurers 13
XXV Insolvency 15
XXVI Arbitration 16
XXVII Service of Suit 17
XXVIII Agency Agreement 17
XXIX Governing Law 17
XXX Confidentiality 18
XXXI Intermediary (BRMA 23A) 18
Schedule A
UNDERLYING EXCESS CATASTROPHE AND REINSTATEMENT PREMIUM PROTECTION
REINSURANCE CONTRACT
EFFECTIVE: JULY 1, 2004
issued to
Liberty American Insurance Company
Pinellas Park, Florida
Mobile USA Insurance Company
Pinellas Park, Florida
and
any and all other companies which are now
or may hereafter become member companies of
Liberty American Insurance Group, Inc.
(hereinafter referred to collectively as the "Company")
by
The Subscribing Reinsurer(s) Executing the
Interests and Liabilities Agreement(s)
Attached Hereto
(hereinafter referred to as the "Reinsurer")
ARTICLE I - CLASSES OF BUSINESS REINSURED
By this Contract the Reinsurer agrees to reinsure the excess liability which may
accrue to the Company under its policies, contracts and binders of insurance or
reinsurance (hereinafter called "policies") in force at the effective date
hereof or issued or renewed on or after that date, and classified by the Company
as Property business, subject to the terms, conditions and limitations set forth
herein and in Schedule A attached to and forming part of this Contract.
ARTICLE II - TERM
A. This Contract shall become effective on July 1, 2004, with respect to
losses arising out of loss occurrences commencing on or after that date,
and shall remain in force until May 31, 2005, both days inclusive.
B. If this Contract expires while a loss occurrence covered hereunder is in
progress, the Reinsurer's liability hereunder shall, subject to the other
terms and conditions of this Contract, be determined as if the entire loss
occurrence had occurred prior to the expiration of this Contract, provided
that no part of such loss occurrence is claimed against any renewal or
replacement of this Contract.
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ARTICLE III - CONCURRENCY OF CONDITIONS
A. As respects Section II of Article VI only, it is agreed that this Contract
shall follow the terms, conditions, exclusions, definitions, warranties
and settlements of the Company under Section I of Article VI and under the
Company's Florida Only Excess Catastrophe Reinsurance Contract, effective
June 1, 2004, and $50,000,000 Excess $90,000,000 Florida Only Catastrophe
Reinsurance Contract, effective June 1, 2004 (hereinafter referred to
collectively as the "Underlying Contracts" and described in Schedule A
attached to and forming part of this Contract) which are not inconsistent
with the provisions of this Contract.
B. The Company shall advise the Reinsurer of any material changes in the
Underlying Contracts which may affect the liability of the Reinsurer under
this Contract.
ARTICLE IV - TERRITORY
The liability of the Reinsurer shall be limited to losses under policies
covering property located within the territorial limits of the State of Florida
or extra territorial limits of the Company's policies.
ARTICLE V - EXCLUSIONS
This Contract does not apply to and specifically excludes the following:
1. Financial guarantee and insolvency.
2. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
Physical Damage - Reinsurance (U.S.A.)" and the "Nuclear Incident
Exclusion Clause - Physical Damage - Reinsurance (Canada)" attached
to and forming part of this Contract.
3. Loss or damage caused by or resulting from 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, but
this exclusion shall not apply to loss or damage covered under a
standard policy with a standard War Exclusion Clause.
4. Loss or liability excluded under the provisions of the "Pools,
Associations and Syndicates Exclusion Clause" attached to and
forming part of this Contract.
5. All liability of the 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 guaranty fund, insolvency fund, plan, pool,
association, fund or other arrangement, however denominated,
established or governed, which provides for any assessment of or
payment or assumption by the 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.
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6. Losses in respect of overhead transmission and distribution lines
and their supporting structures other than those on or within 300
meters (or 1,000 feet) of the insured premises. It is understood and
agreed that public utilities extension and/or suppliers extension
and/or contingent business interruption coverages are not subject to
this exclusion, provided that these are not part of a transmitters'
or distributors' policy.
7. Accident and Health, Casualty, Fidelity and/or Surety business.
8. Pollution and seepage coverages excluded under the provisions of the
"Pollution and Seepage Exclusion Clause (▇▇▇▇ ▇▇▇)" attached to and
forming part of this Contract.
9. Notwithstanding any other provision to the contrary within this
Contract or any amendment thereto, it is agreed that this Contract
excludes loss, damage, cost or expense directly or indirectly caused
by, contributed to by, resulting from, or arising out of or in
connection with any act of terrorism, as defined herein, regardless
of any other cause or event contributing concurrently or in any
other sequence to the loss.
An "act of terrorism" includes any act, or preparation in respect of
action, or threat of action, designed to influence the government de
jure or de facto of any nation or any political division thereof, or
in pursuit of political, religious, ideological or similar purposes
to intimidate the public or a section of the public of any nation by
any person or group(s) of persons, whether acting alone or on behalf
of or in connection with any organization(s) or government(s) de
jure or de facto, and which:
a. Involves violence against one or more persons; or
b. Involves damage to property; or
c. Endangers life other than that of the person committing the
action; or
d. Creates a risk to health or safety of the public or a section
of the public; or
e. Is designed to interfere with or to disrupt an electronic
system.
This Contract also excludes loss, damage, cost or expense directly
or indirectly caused by, contributed to by, resulting from, or
arising out of or in connection with any action in controlling,
preventing, suppressing, retaliating against, or responding to any
act of terrorism.
Notwithstanding the above and subject otherwise to the terms,
conditions and limitations of this Contract, in respect only of
personal lines this Contract will pay actual loss or damage (but not
related cost or expense) caused by any act of terrorism provided
such act is not directly or indirectly caused by, contributed to by,
resulting from, or arising out of or in connection with biological,
chemical or nuclear pollution or contamination.
10. Loss or liability in any way or to any extent arising out of the
actual or alleged presence or actual, alleged or threatened presence
of fungi including, but not limited to, mold, mildew, mycotoxins,
microbial volatile organic compounds or other "microbial
contamination." This includes:
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a. Any supervision, instruction, recommendations, warnings or
advice given or which should have been given in connection
with the above; and
b. Any obligation to share damages with or repay someone else who
must pay damages because of such injury or damage.
For purposes of this exclusion, "microbial contamination" means any
contamination, either airborne or surface, which arises out of or is
related to the presence of fungi, mold, mildew, mycotoxins,
microbial volatile organic compounds or spores, including, without
limitation, Penicillium, Aspergillus, Fusarium, Aspergillus Flavus
and Stachybotrys chartarum.
Losses resulting from the above causes do not in and of themselves
constitute an event unless arising out of one or more of the
following perils, in which case this exclusion does not apply:
Fire, lightning, explosion, aircraft or vehicle impact,
falling objects, windstorm, hail, tornado, cyclone, hurricane,
earthquake, volcano, tsunami, flood, freeze or weight of snow.
Notice of any claims for mold-related losses must be given by the
Company to the Reinsurer, in writing, within 24 months after the
commencement date of the loss occurrence to which such claims
relate.
11. Loss or liability excluded under the provisions of the "Electronic
Data Endorsement B" (N.M.A. 2915) attached to and forming part of
this Contract.
ARTICLE VI - RETENTION AND LIMIT
A. Section I - Underlying Excess Catastrophe Reinsurance:
1. The Company shall retain and be liable for the first $3,500,000 of
ultimate net loss arising out of each loss occurrence. The
Reinsurer shall then be liable for the amount by which such
ultimate net loss exceeds the Company's retention, but the
liability of the Reinsurer shall not exceed $3,500,000 as respects
any one loss occurrence.
2. No claim shall be made under Section I as respects any one loss
occurrence unless at least two risks insured or reinsured by the
Company are involved in such loss occurrence. For purposes of this
Contract, the Company shall be the sole judge of what constitutes
one risk.
B. Section II - Reinstatement Premium Protection Reinsurance
The Reinsurer shall be liable for any reinstatement premium which the
Company pays or becomes liable to pay as a result of loss occurrences
commencing during the term of this Contract under paragraph A above and
the Underlying Contracts. However, the liability of the Reinsurer shall
not exceed $12,247,500 for the term of this Contract.
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ARTICLE VII - REINSTATEMENT
A. As respects Section I of Article VI, in the event all or any portion of
the reinsurance hereunder is exhausted by loss, the amount so exhausted
shall be reinstated immediately from the time the loss occurrence
commences hereon. For each amount so reinstated the Company agrees to pay
additional premium equal to the product of the following:
1. The percentage of the Section I occurrence limit reinstated (based
on the loss paid by the Reinsurer under Section I); times
2. The final adjusted reinsurance premium under Section I, as
calculated in accordance with paragraph A of Article XIV, for the
term of this Contract (exclusive of reinstatement premium).
B. Whenever the Company requests payment by the Reinsurer of any loss under
Section I, the Company shall submit a statement to the Reinsurer of
reinstatement premium due the Reinsurer. If the final adjusted reinsurance
premium under Section I for the term of this Contract has not been
determined as of the date of any such statement, the calculation of
reinstatement premium due shall be based on the annual deposit premium
under Section I and shall be readjusted when the final adjusted
reinsurance premium under Section I for the term of this Contract has been
determined. Any reinstatement premium shown to be due the Reinsurer as
reflected by any such statement (less prior payments, if any) shall be
payable by the Company concurrently with payment by the Reinsurer of the
requested loss. Any return reinstatement premium shown to be due the
Company shall be remitted by the Reinsurer as promptly as possible after
receipt and verification of the Company's statement.
C. Notwithstanding anything stated herein, the liability of the Reinsurer
under Section I of Article VI shall not exceed $3,500,000 as respects loss
or losses arising out of any one loss occurrence, nor shall it exceed
$7,000,000 in all during the term of this Contract.
ARTICLE VIII - DEFINITIONS
A. "Ultimate net loss" as used herein is defined as the sum or sums
(including loss in excess of policy limits, extra contractual obligations
and loss adjustment expense, as hereinafter defined) paid or payable by
the Company in settlement of claims and in satisfaction of judgments
rendered on account of such claims, after deduction of all salvage, all
recoveries and all claims on inuring insurance or reinsurance, whether
collectible or not. Nothing herein shall be construed to mean that losses
under this Contract are not recoverable until the Company's ultimate net
loss has been ascertained.
B. "Loss in excess of policy limits" and "extra contractual obligations" as
used herein shall be defined as follows:
1. "Loss in excess of policy limits" shall mean 90.0% of any amount
paid or payable by the Company in excess of its policy limits, but
otherwise within the terms of its policy, such loss in excess of
the Company's policy limits having been incurred because of, but
not limited to, failure by the Company to settle within the policy
limits or by reason of the Company's 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
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insured or reinsured or in the preparation or prosecution of an
appeal consequent upon such an action.
2. "Extra contractual obligations" shall mean 90.0% of any punitive,
exemplary, compensatory or consequential damages paid or payable
by the Company, not covered by any other provision of this
Contract and which arise from the handling of any claim on
business subject to this Contract, such liabilities arising
because of, but not limited to, failure by the Company to settle
within the policy limits or by reason of the Company's 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 an action. An
extra contractual obligation shall be deemed, in all
circumstances, to have occurred on the same date as the loss
covered or alleged to be covered under the policy.
Notwithstanding anything stated herein, the amount included in the
ultimate net loss for any one loss occurrence as respects loss in excess
of policy limits and extra contractual obligations shall not exceed 25.0%
of the Company's indemnity loss hereunder arising out of that loss
occurrence.
Notwithstanding anything stated herein, this Contract shall not apply to
any loss in excess of policy limits or any extra contractual obligation
incurred by the Company as a result of any fraudulent and/or criminal act
by any officer or director of the 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.
If any provision of this paragraph B shall be rendered illegal or
unenforceable by the laws, regulations or public policy of any state, such
provision shall be considered void in such state, but this shall not
affect the validity or enforceability of any other provision of this
Contract or the enforceability of such provision in any other
jurisdiction.
C. "Loss adjustment expense" as used herein shall mean expenses assignable to
the investigation, appraisal, adjustment, settlement, litigation, defense
and/or appeal of specific claims, regardless of how such expenses are
classified for statutory reporting purposes. Loss adjustment expense shall
include, but not be limited to, declaratory judgments, interest on
judgments, expenses of outside adjusters, and a pro rata share of the
salaries and expenses of the Company's field employees according to the
time occupied adjusting such losses and expenses of the Company's
officials incurred in connection with the losses, but shall not include
office expenses or salaries of the Company's regular employees.
ARTICLE IX - OTHER REINSURANCE
The Company shall be permitted to carry excess catastrophe reinsurance,
recoveries under which shall inure solely to the benefit of the Company. The
Company shall also carry 15.0% quota share reinsurance on its direct personal
lines business, recoveries under which shall inure to the benefit of this
Contract, or so deemed.
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ARTICLE X - LOSS OCCURRENCE
A. The term "loss occurrence" shall mean the sum of all individual losses
directly occasioned by any one disaster, accident or loss or series of
disasters, accidents or losses arising out of one event which occurs
within the area of one state of the United States or province of Canada
and states or provinces contiguous thereto and to one another. However,
the duration and extent of any one "loss occurrence" shall be limited to
all individual losses sustained by the Company occurring during any period
of 168 consecutive hours arising out of and directly occasioned by the
same event, except that the term "loss occurrence" shall be further
defined as follows:
1. As regards windstorm, hail, tornado, hurricane, cyclone, including
ensuing collapse and water damage, all individual losses sustained
by the Company occurring during any period of 72 consecutive hours
arising out of and directly occasioned by the same event. However,
the event need not be limited to one state or province or states
or provinces contiguous thereto.
2. As regards riot, riot attending a strike, civil commotion,
vandalism and malicious mischief, all individual losses sustained
by the Company occurring during any period of 72 consecutive hours
within the area of one municipality or county and the
municipalities or counties contiguous thereto arising out of and
directly occasioned by the same event. The maximum duration of 72
consecutive hours may be extended in respect of individual losses
which occur beyond such 72 consecutive hours during the continued
occupation of an insured's premises by strikers, provided such
occupation commenced during the aforesaid period.
3. As regards earthquake (the epicentre of which need not necessarily
be within the territorial confines referred to in the introductory
portion of this paragraph) and fire following directly occasioned
by the earthquake, only those individual fire losses which
commence during the period of 168 consecutive hours may be
included in the Company's "loss occurrence."
4. As regards "freeze," only individual losses directly occasioned by
collapse, breakage of glass and water damage (caused by bursting
frozen pipes and tanks) may be included in the Company's "loss
occurrence."
5. As regards firestorms, brush fires, and other fires or series of
fires, irrespective of origin (except as provided in subparagraphs
2 and 3 above), which spread through trees, grassland or other
vegetation, all individual losses sustained by the Company which
occur during any period of 168 consecutive hours within a 100-mile
radius of any one fixed point selected by the Company may be
included in the Company's "loss occurrence." However, an
individual loss subject to this subparagraph cannot be included in
more than one "loss occurrence."
B. For all those "loss occurrences," other than those referred to in
subparagraph 2 of paragraph A above, the Company may choose the date and
time when any such period of consecutive hours commences, provided that it
is not earlier than the date and time of the occurrence of the first
recorded individual loss sustained by the Company arising out of that
disaster, accident or loss, and provided that only one such period of 168
consecutive hours shall apply with respect to one event, except for any
"loss occurrence" referred to in
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subparagraph 1 of paragraph A above where only one such period of 72
consecutive hours shall apply with respect to one event, regardless of the
duration of the event.
C. As respects those "loss occurrences" referred to in subparagraph 2 of
paragraph A above, if the disaster, accident or loss occasioned by the
event is of greater duration than 72 consecutive hours, then the Company
may divide that disaster, accident or loss into two or more "loss
occurrences," provided no two periods overlap and no individual loss is
included in more than one such period and provided that no period
commences earlier than the date and time of the occurrence of the first
recorded individual loss sustained by the Company arising out of that
disaster, accident or loss.
D. No individual losses occasioned by an event that would be covered by 72
hours clauses may be included in any "loss occurrence" claimed under the
168 hours provision.
ARTICLE XI - LOSS NOTICES AND SETTLEMENTS
A. Whenever losses sustained by the Company appear likely to result in a
claim hereunder, the Company shall notify the Reinsurer, and the Reinsurer
shall have the right to participate in the adjustment of such losses at
its own expense.
B. All loss settlements made by the Company, provided they are within the
terms of this Contract, shall be binding upon the Reinsurer, and the
Reinsurer agrees to pay all amounts for which it may be liable upon
receipt of reasonable evidence of the amount paid (or scheduled to be
paid) by the Company.
ARTICLE XII - SALVAGE AND SUBROGATION
The Reinsurer shall be credited with salvage (i.e., reimbursement obtained or
recovery made by the Company, less the actual cost, excluding salaries of
officials and employees of the Company and sums paid to attorneys as retainer,
of obtaining such reimbursement or making such recovery) on account of claims
and settlements involving reinsurance hereunder. Salvage thereon shall always be
used to reimburse the excess carriers in the reverse order of their priority
according to their participation before being used in any way to reimburse the
Company for its primary loss. The Company hereby agrees to enforce its rights to
salvage or subrogation relating to any loss, a part of which loss was sustained
by the Reinsurer, and to prosecute all claims arising out of such rights.
ARTICLE XIII - FLORIDA HURRICANE CATASTROPHE FUND
A. Any loss reimbursement paid or payable to the Company under the Florida
Hurricane Catastrophe Fund (FHCF) as a result of loss occurrences
commencing during the term of this Contract shall inure to the benefit of
this Contract. Further, any FHCF loss reimbursement shall be deemed to be
paid to the Company in accordance with the reimbursement contract between
the Company and the State Board of Administration of the State of Florida
at the full payout level set forth therein and will be deemed not to be
reduced by any reduction or exhaustion of the FHCF's claims paying
capacity.
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B. Prior to the determination of the Company's FHCF retention and payout, if
any, under the reimbursement contract, the Reinsurer's liability hereunder
will be determined provisionally based on the projected payout, determined
in accordance with the provisions of the reimbursement contract. Following
determination of the payout under the reimbursement contract, the ultimate
net loss under this Contract will be recalculated. If, as a result of such
calculation, the loss to the Reinsurer in any one loss occurrence is less
than the amount previously paid by the Reinsurer, the Company shall
promptly remit the difference to the Reinsurer. If the loss to the
Reinsurer in any one loss occurrence is greater than the amount previously
paid by the Reinsurer, the Reinsurer shall promptly remit the difference
to the Company.
C. If an FHCF reimbursement amount is based on the Company's losses in more
than one loss occurrence and the FHCF does not designate the amount
allocable to each loss occurrence, the FHCF reimbursement amount shall be
prorated in the proportion that the Company's losses in each loss
occurrence bear to the Company's total losses arising out of all loss
occurrences to which the FHCF reimbursement applies.
D. Any reimbursement premiums or emergency assessment paid by the Company
under the FHCF shall be deemed to be premiums paid for inuring
reinsurance.
ARTICLE XIV - REINSURANCE PREMIUM
A. As respects Section I:
1. As premium for reinsurance coverage provided under Section I, the
Company shall pay the Reinsurer the greater of a minimum premium
of $1,050,000 or the sum of the following:
a. 1.637% of the Company's gross earned premium for
Condominium, Dwelling and Homeowners business during the
term of this Contract; and
b. 2.062% of the Company's gross earned premium for
Manufactured Homeowners business during the term of this
Contract.
2. The Company shall pay the Reinsurer a deposit premium of
$1,312,500 in four equal installments of $328,125 on July 1,
September 1 and December 1 of 2004 and March 1, 2005.
3. Within 45 days after the expiration of this Contract, the Company
shall provide a report to the Reinsurer setting forth the premium
due under Section I, computed in accordance with paragraph A, and
any additional premium due the Reinsurer or return premium due the
Company shall be remitted promptly.
4. "Gross earned premium" as used herein is defined as earned premium
of the Company for the classes of business reinsured hereunder,
before the deduction of any premiums ceded by the Company for
reinsurance which inures to the benefit of this Contract. Gross
earned premium will not include the Company's earned premium for
Homeowners, Manufactured Homeowners, Dwelling and Condominium
policies that include a "No Wind/No Water" exclusion. It is
understood that gross earned
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premium shall include catastrophe fees, but shall exclude MGA fees,
DRST fees and policy surcharges to recoup residual market deficit
assessments.
B. As respects Section II:
1. As premium for the reinsurance provided under Section II, the
Company shall pay the Reinsurer the sum of the following:
a. As respects Section I of this Contract, $437,500.
b. As respects the Florida Only Excess Catastrophe Reinsurance
Contract, effective June 1, 2004, $1,105,650 for the First
layer, $582,750 for the Second layer, $223,200 for the Third
layer and $116,000 for the Fourth layer.
c. As respects the $50,000,000 excess $90,000,000 Florida Only
Catastrophe Reinsurance Contract, effective June 1, 2004,
$54,250.
2. The Company shall pay the Reinsurer the sum of the amounts in (a)
through (c) of subparagraph 1 above in four equal installments of
$629,837.50 on July 1, 2004, September 1, 2004, December 1, 2004
and March 1, 2005.
ARTICLE XV - LATE PAYMENTS
A. The provisions of this Article shall not be implemented unless
specifically invoked, in writing, by one of the parties to this Contract.
B. In the event any premium, loss or other payment due either party is not
received by the intermediary named in Article XXXI (hereinafter referred
to as the "Intermediary") by the payment due date, the party to whom
payment is due, may, by notifying the Intermediary in writing, require the
debtor party to pay, and the debtor party agrees to pay, an interest
penalty on the amount past due calculated for each such payment on the
last business day of each month as follows:
1. The number of full days which have expired since the due date or
the last monthly calculation, whichever the lesser; times
2. 1/365ths of the six-month United States Treasury ▇▇▇▇ rate, as
quoted in The Wall Street Journal on the first business day of the
month for which the calculation is made; times
3. The amount past due, including accrued interest.
It is agreed that interest shall accumulate until payment of the original
amount due plus interest penalties have been received by the Intermediary.
C. The establishment of the due date shall, for purposes of this Article, be
determined as follows:
1. As respects the payment of routine deposits and premiums due the
Reinsurer, the due date shall be as provided for in the applicable
section of this Contract. In the event a
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due date is not specifically stated for a given payment, it shall
be deemed due 30 days after the date of transmittal by the
Intermediary of the initial billing for each such payment.
2. Any claim or loss payment due the Company hereunder shall be deemed
due 10 business days after the proof of loss or demand for payment
is transmitted to the Reinsurer. If such loss or claim payment is
not received within the 10 days, interest will accrue on the payment
or amount overdue in accordance with paragraph B above, from the
date the proof of loss or demand for payment was transmitted to the
Reinsurer.
3. As respects any payment, adjustment or return due either party not
otherwise provided for in subparagraphs 1 and 2 of paragraph C
above, the due date shall be as provided for in the applicable
section of this Contract. In the event a due date is not
specifically stated for a given payment, it shall be deemed due 10
business days following transmittal of written notification that the
provisions of this Article have been invoked.
For purposes of interest calculations only, amounts due hereunder shall be
deemed paid upon receipt by the Intermediary.
D. Nothing herein shall be construed as limiting or prohibiting a Subscribing
Reinsurer from contesting the validity of any claim, or from participating
in the defense or control of any claim or suit, or prohibiting either
party from contesting the validity of any payment or from initiating any
arbitration or other proceeding in accordance with the provisions of this
Contract. If the debtor party prevails in an arbitration or other
proceeding, then any interest penalties due hereunder on the amount in
dispute shall be null and void. If the debtor party loses in such
proceeding, then the interest penalty on the amount determined to be due
hereunder shall be calculated in accordance with the provisions set forth
above unless otherwise determined by such proceedings. If a debtor party
advances payment of any amount it is contesting, and proves to be correct
in its contestation, either in whole or in part, the other party shall
reimburse the debtor party for any such excess payment made plus interest
on the excess amount calculated in accordance with this Article.
E. Interest penalties arising out of the application of this Article that are
$100 or less from any party shall be waived unless there is a pattern of
late payments consisting of three or more items over the course of any
12-month period.
ARTICLE XVI - OFFSET (BRMA 36D)
The Company and the Reinsurer, each at its option, may offset any balance or
balances, whether on account of premiums, claims and losses, loss expenses or
salvages due from one party to the other under this Contract; provided, however,
that in the event of the insolvency of a party hereto, offsets shall only be
allowed in accordance with applicable statutes and regulations.
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ARTICLE XVII - ACCESS TO RECORDS (BRMA 1D)
The Reinsurer or its designated representatives shall have access at any
reasonable time to all records of the Company which pertain in any way to this
reinsurance.
ARTICLE XVIII - LIABILITY OF THE REINSURER
A. The liability of the Reinsurer shall follow that of the Company in every
case and be subject in all respects to all the general and specific
stipulations, clauses, waivers and modifications of the Company's policies
and any endorsements thereon. However, in no event shall this be construed
in any way to provide coverage outside the terms and conditions set forth
in this Contract.
B. Nothing herein shall in any manner create any obligations or establish any
rights against the Reinsurer in favor of any third party or any persons
not parties to this Contract.
ARTICLE XIX - NET RETAINED LINES (BRMA 32E)
A. This Contract applies only to that portion of any policy which the Company
retains net for its own account (prior to deduction of any underlying
reinsurance specifically permitted in this Contract), and in calculating
the amount of any loss hereunder and also in computing the amount or
amounts in excess of which this Contract attaches, only loss or losses in
respect of that portion of any policy which the Company retains net for
its own account shall be included.
B. The amount of the Reinsurer's liability hereunder in respect of any loss
or losses shall not be increased by reason of the inability of the Company
to collect from any other reinsurer(s), whether specific or general, any
amounts which may have become due from such reinsurer(s), whether such
inability arises from the insolvency of such other reinsurer(s) or
otherwise.
ARTICLE XX - ERRORS AND OMISSIONS (BRMA 14F)
Inadvertent delays, errors or omissions made in connection with this Contract or
any transaction hereunder shall not relieve either party from any liability
which would have attached had such delay, error or omission not occurred,
provided always that such error or omission is rectified as soon as possible
after discovery.
ARTICLE XXI - CURRENCY (BRMA 12A)
A. Whenever the word "Dollars" or the "$" sign appears in this Contract, they
shall be construed to mean United States Dollars and all transactions
under this Contract shall be in United States Dollars.
B. Amounts paid or received by the Company in any other currency shall be
converted to United States Dollars at the rate of exchange at the date
such transaction is entered on the books of the Company.
Page 12
ARTICLE XXII - TAXES (BRMA 50C)
In consideration of the terms under which this Contract is issued, the Company
will not claim a deduction in respect of the premium hereon when making tax
returns, other than income or profits tax returns, to any state or territory of
the United States of America, the District of Columbia or Canada.
ARTICLE XXIII - FEDERAL EXCISE TAX (BRMA 17A)
(Applicable to those reinsurers, excepting Underwriters at Lloyd's London and
other reinsurers exempt from Federal Excise Tax, who are domiciled outside the
United States of America.)
A. The Reinsurer has agreed to allow for the purpose of paying the Federal
Excise Tax the applicable percentage of the premium payable hereon as
imposed under Section 4371 of the Internal Revenue Code to the extent such
premium is subject to the Federal Excise Tax.
B. In the event of any return of premium becoming due hereunder the Reinsurer
will deduct the applicable percentage from the return premium payable
hereon and the Company or its agent should take steps to recover the tax
from the United States Government.
ARTICLE XXIV - UNAUTHORIZED REINSURERS
A. If the Reinsurer is unauthorized in any state of the United States of
America or the District of Columbia, the Reinsurer agrees to fund, on or
before December 31, 2004, as respects Section I of Article VI, its share
of the Company's ceded United States unearned premium and outstanding loss
and loss adjustment expense reserves (including all case reserves plus any
reasonable amount estimated to be unreported, as determined by the
Company, from known loss occurrences) and, as respects Section II of
Article VI, its share of the Company's ceded United States unearned
premium and outstanding loss reserves (being the sum of all reinstatement
premiums paid by the Company under the Underlying Contracts but not yet
recovered from the Reinsurer, plus the Company's reserves for
reinstatement premiums due under the Underlying Contracts, if any) by:
1. Clean, irrevocable and unconditional letters of credit issued and
confirmed, if confirmation is required by the insurance regulatory
authorities involved, by a bank or banks meeting the NAIC
Securities Valuation Office credit standards for issuers of
letters of credit and acceptable to said insurance regulatory
authorities; and/or
2. Escrow accounts for the benefit of the Company; and/or
3. Cash advances;
if, without such funding, a penalty would accrue to the Company on any
financial statement it is required to file with the insurance regulatory
authorities involved. The Reinsurer, at its sole option, may fund in other
than cash if its method and form of funding are acceptable to the
insurance regulatory authorities involved.
Page 13
B. If the Reinsurer is unauthorized in any province or jurisdiction of
Canada, the Reinsurer agrees to fund, on or before December 31, 2004, as
respects Section I of Article VI, 115% of its share of the Company's ceded
Canadian unearned premium and outstanding loss and loss adjustment expense
reserves (including all case reserves plus any reasonable amount estimated
to be unreported, as determined by the Company, from known loss
occurrences) and, as respects Section II of Article VI, 115% of its share
of the Company's ceded Canadian unearned premium and outstanding loss
reserves (being the sum of all reinstatement premiums paid by the Company
under the Underlying Contracts but not yet recovered from the Reinsurer,
plus the Company's reserves for reinstatement premiums due under the
Underlying Contracts, if any) by:
1. A clean, irrevocable and unconditional letter of credit issued and
confirmed, if confirmation is required by the insurance regulatory
authorities involved, by a Canadian bank or banks meeting the NAIC
Securities Valuation Office credit standards for issuers of
letters of credit and acceptable to said insurance regulatory
authorities, for no more than 15/115ths of the total funding
required; and/or
2. Cash advances for the remaining balance of the funding required;
if, without such funding, a penalty would accrue to the Company on any
financial statement it is required to file with the insurance regulatory
authorities involved.
C. With regard to funding in whole or in part by letters of credit, it is
agreed that each letter of credit will be in a form acceptable to
insurance regulatory authorities involved, will be issued for a term of at
least one year and will include an "evergreen clause," which automatically
extends the term for at least one additional year at each expiration date
unless written notice of non-renewal is given to the Company not less than
30 days prior to said expiration date or longer where required by
insurance regulatory authorities. The Company and the Reinsurer further
agree, notwithstanding anything to the contrary in this Contract, that
said letters of credit may be drawn upon by the Company or its successors
in interest at any time, without diminution because of the insolvency of
the Company or the Reinsurer, but only for one or more of the following
purposes:
1. As respects Section I , to reimburse itself for the Reinsurer's
share of unearned premiums returned to insureds on account of
policy cancellations and, as respects Section II, to reimburse
itself for the Reinsurer's share of reinstatement premiums paid by
the Company under the terms of the Underlying Contracts, unless
paid in cash by the Reinsurer;
2. As respects Section I, to reimburse itself for the Reinsurer's
share of losses and/or loss adjustment expense paid under the
terms of policies reinsured hereunder, unless paid in cash by the
Reinsurer;
3. As respects Sections I and II, to reimburse itself for the
Reinsurer's share of any other amounts claimed to be due
hereunder, unless paid in cash by the Reinsurer;
4. To fund a cash account in an amount equal to the Reinsurer's
share, as respects Section I, of any ceded unearned premium and/or
outstanding loss and loss adjustment expense reserves (including
all case reserves plus any reasonable amount estimated to be
unreported, as determined by the Company, from known loss
Page 14
occurrences) and as respects Section II, any ceded outstanding loss
reserves (being the sum of all reinstatement premiums paid by the
Company under the Underlying Contracts but not yet recovered from
the Reinsurer, plus the Company's reserves for reinstatement premium
due under the Underlying Contracts, if any) funded by means of a
letter of credit which is under non-renewal notice, if said letter
of credit has not been renewed or replaced by the Reinsurer 10 days
prior to its expiration date;
5. To refund to the Reinsurer any sum in excess of the actual amount
required to fund the Reinsurer's share, as respects Section I, of
the Company's ceded unearned premium and/or outstanding loss and
loss adjustment expense reserves (including all case reserves plus
any reasonable amount estimated to be unreported, as determined by
the Company, from known loss occurrences) and, as respects Section
II, the Reinsurer's share of the Company's ceded unearned premium
and/or outstanding loss reserves (being the sum of all reinstatement
premiums paid by the Company under the Underlying Contracts but not
yet recovered from the Reinsurer, plus the Company's reserves for
reinstatement premium due under the Underlying Contracts, if any) if
so requested by the Reinsurer.
In the event the amount drawn by the Company on any letter of credit is in
excess of the actual amount required for C(1), C(2) or C(4), or in the
case of C(3), the actual amount determined to be due, the Company shall
promptly return to the Reinsurer the excess amount so drawn.
ARTICLE XXV - INSOLVENCY
A. In the event of the insolvency of one or more of the reinsured companies,
this reinsurance shall be payable directly to the company or to its
liquidator, receiver, conservator or statutory successor on the basis of
the liability of the company without diminution because of the insolvency
of the company or because the liquidator, receiver, conservator or
statutory successor of the company has failed to pay all or a portion of
any claim. It is agreed, however, that the liquidator, receiver,
conservator or statutory successor of the company shall give written
notice to the Reinsurer of the pendency of a claim against the company
indicating the policy or bond 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 company 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 company 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
company 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 Contract as though such
expense had been incurred by the company.
C. It is further understood and agreed that, in the event of the insolvency
of one or more of the reinsured companies, the reinsurance under this
Contract shall be payable directly by the Reinsurer to the company or to
its liquidator, receiver or statutory successor, except as
Page 15
provided by Section 4118(a) of the New York Insurance Law or except (1)
where this Contract specifically provides another payee of such
reinsurance in the event of the insolvency of the company or (2) where the
Reinsurer with the consent of the direct insured or insureds has assumed
such policy obligations of the company as direct obligations of the
Reinsurer to the payees under such policies and in substitution for the
obligations of the company to such payees.
ARTICLE XXVI - ARBITRATION
A. As a condition precedent to any right of action hereunder, any dispute or
difference between the Company and any Reinsurer relating to the
interpretation or performance of this Contract, including its formation or
validity, or any transaction under this Contract, whether arising before
or after termination, shall be submitted to arbitration.
B. If more than one reinsurer is involved in the same dispute, all such
reinsurers shall constitute and act as one party for purposes of this
Article provided that communication shall be made by the Company to each
of the reinsurers constituting the one party, and provided, however, that
nothing therein shall impair the rights of such reinsurers to assert
several, rather than joint, defenses or claims, nor be construed as
changing the liability of the Reinsurer under the terms of this Contract
from several to joint.
C. Upon written request of any party, each party shall choose an arbitrator
and the two chosen shall select a third arbitrator. If either party
refuses or neglects to appoint an arbitrator within 30 days after receipt
of the written request for arbitration, the requesting party may appoint a
second arbitrator. If the two arbitrators fail to agree on the selection
of a third arbitrator within 30 days of their appointment, the Company
shall petition the American Arbitration Association to appoint the third
arbitrator. If the American Arbitration Association fails to appoint the
third arbitrator within 30 days after it has been requested to do so,
either party may request a justice of a court of general jurisdiction of
the state in which the arbitration is to be held to appoint the third
arbitrator. All arbitrators shall be active or retired officers of
insurance or reinsurance companies, or Lloyd's London Underwriters, and
disinterested in the outcome of the arbitration. Each party shall submit
its case to the arbitrators within 30 days of the appointment of the third
arbitrator.
D. The parties hereby waive all objections to the method of selection of the
arbitrators, it being the intention of both sides that all the arbitrators
be chosen from those submitted by the parties.
E. The arbitrators shall have the power to determine all procedural rules for
the holding of the arbitration including but not limited to inspection of
documents, examination of witnesses and any other matter relating to the
conduct of the arbitration. The arbitrators shall interpret this Contract
as an honorable engagement and not as merely a legal obligation; they are
relieved of all judicial formalities and may abstain from following the
strict rules of law. The arbitrators may award interest and costs. Each
party shall bear the expense of its own arbitrator and shall share equally
with the other party the expenses of the third arbitrator and of the
arbitration.
F. The decision in writing of the majority of the arbitrators shall be final
and binding upon both parties. Judgment may be entered upon the final
decision of the arbitrators in any court
Page 16
having jurisdiction. The arbitration shall take place in Pinellas Park,
Florida, unless otherwise mutually agreed between the Company and the
Reinsurer.
G. This Article shall remain in full force and effect in the event any other
provision of this Contract shall be found invalid or non-binding.
H. All time limitations stated in this Article may be amended by mutual
consent of the parties, and will be amended automatically to the extent
made necessary by any circumstances beyond the control of the parties.
ARTICLE XXVII - SERVICE OF SUIT
(Applicable if the Reinsurer is not domiciled in the United States of America,
and/or is not authorized in any State, Territory or District of the United
States where authorization is required by insurance regulatory authorities. This
Article is not intended to conflict with or override the parties obligations to
arbitrate their disputes in accordance with Article XXVI.)
A. It is agreed that in the event the Reinsurer fails to pay any amount
claimed to be due hereunder, the Reinsurer, at the request of the Company,
will submit to the jurisdiction of a court of competent jurisdiction
within the United States. Nothing in this Article constitutes or should be
understood to constitute a waiver of the Reinsurer's rights to commence an
action in any court of competent jurisdiction in the United States, to
remove an action to a United States District Court, or to seek a transfer
of a case to another court as permitted by the laws of the United States
or of any state in the United States.
B. Further, pursuant to any statute of any state, territory or district of
the United States which makes provision therefor, the Reinsurer hereby
designates the party named in its Interests and Liabilities Agreement, or
if no party is named therein, the Superintendent, Commissioner or Director
of Insurance or other officer specified for that purpose in the statute,
or his successor or successors in 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 Company or any beneficiary
hereunder arising out of this Contract.
ARTICLE XXVIII - AGENCY AGREEMENT
If more than one reinsured company is named as a party to this Contract, the
first named company shall be deemed the agent of the other reinsured companies
for purposes of sending or receiving notices required by the terms and
conditions of this Contract, and for purposes of remitting or receiving any
monies due any party.
ARTICLE XXIX - GOVERNING LAW
This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Florida exclusive of the rules with
respect to conflicts of law, except as to rules with respect to credit for
reinsurance in which case the applicable rules of all the states shall apply.
Page 17
ARTICLE XXX - CONFIDENTIALITY
The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly communicate, disclose or divulge to any third
party any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions as outlined in this Article shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, retrocessionaires, legal counsel, arbitrators involved in
any arbitration procedures under this Contract or disclosures required upon
subpoena or other duly-issued order of a court or other governmental agency or
regulatory authority.
ARTICLE XXXI - INTERMEDIARY (BRMA 23A)
▇▇▇▇▇▇▇▇ Inc. is hereby recognized as the Intermediary negotiating this Contract
for all business hereunder. All communications (including but not limited to
notices, statements, premium, return premium, commissions, taxes, losses, loss
adjustment expense, salvages and loss settlements) relating thereto shall be
transmitted to the Company or the Reinsurer through ▇▇▇▇▇▇▇▇ Inc. Payments by
the Company to the Intermediary shall be deemed to constitute payment to the
Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed to
constitute payment to the Company only to the extent that such payments are
actually received by the Company.
IN WITNESS WHEREOF, the Company by its duly authorized representative has
executed this Contract as of the date undermentioned at:
Pinellas Park, Florida, this 13th day of November in the year____2004____.
▇▇▇▇▇ Meyer_Sr. Vice President and CFO
_____________________________________________________
Liberty American Insurance Group, Inc. (for and on
behalf of the "Company")
Page 18
SCHEDULE A
UNDERLYING EXCESS CATASTROPHE AND
REINSTATEMENT PREMIUM PROTECTION
REINSURANCE CONTRACT
EFFECTIVE: JULY 1, 2004
issued to
Liberty American Insurance Company
Pinellas Park, Florida
Mobile USA Insurance Company
Pinellas Park, Florida
and
any and all other companies which are now
or may hereafter become member companies of
Liberty American Insurance Group, Inc.
$50M
UNDERLYING FIRST SECOND THIRD FOURTH EXCESS
EXCESS EXCESS EXCESS EXCESS EXCESS $90M
Company's Retention $ 3,500,000 $ 7,000,000 $ 20,000,000 $ 35,000,000 $ 50,000,000 $ 90,000,000
Reinsurer's Per Occurrence Limit $ 3,500,000 $ 13,000,000 $ 15,000,000 $ 15,000,000 $ 40,000,000 $ 50,000,000
Reinsurer's Annual Limit $ 7,000,000 $ 26,000,000 $ 30,000,000 $ 30,000,000 $ 80,000,000 $100,000,000
Annual Minimum Premium $ 1,050,000 $ 2,808,000 $ 2,220,000 $ 1,200,000 $ 1,280,000 $ 1,240,000
Condominium, Dwelling and Homeowners
Premium Rate 1.637% 4.203% 3.323% 1.796% 1.916% 1.856%
Manufactured Homeowners Premium Rate 2.062% 5.046% 3.990% 2.157% 2.300% 2.228%
Annual Deposit Premium $ 1,312,500 $ 3,510,000 $ 2,775,000 $ 1,500,000 $ 1,600,000 $ 1,550,000
Quarterly Deposit Premium $ 328,125 $ 877,500 $ 693,750 $ 375,000 $ 400,000 $ 387,500
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (U.S.A.)
1. This Reinsurance 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 Reinsurance 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 property 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 of "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 Reinsurance 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 Reassured does not have knowledge of such nuclear 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 Reinsurance 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. 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.
12/12/57
N.M.A. 1119
BRMA 35B
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 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 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:
(a) nuclear reactor power plants including all auxiliary property on the
site, or
(b) any other nuclear reactor installation, including laboratories
handling radioactive materials in connection with reactor
installations, and critical facilities as such, or
(c) installations for fabricating complete fuel elements or for
processing substantial quantities of radioactive materials, and for
reprocessing, salvaging, chemically separating, storing or disposing
of spent nuclear fuel or waste materials, or
(d) installations other than those listed in (c) 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 provision 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 "radioactive material" means uranium, thorium, plutonium,
neptunium, their respective derivatives and compounds, radioactive
isotopes of other elements and any other substances which may be
designated by or pursuant to any law, act or statute, or any law
amendatory thereof as being prescribed substances capable of releasing
atomic energy, or as being requisite for the production, use or
application of atomic energy.
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:
(1) by any nuclear incident, as defined in or pursuant to the Nuclear
Liability Act or any other nuclear liability act, law or statute, or
any law amendatory thereof or nuclear explosion, except for ensuing
loss or damage which results directly from fire, lightning or
explosion of natural, coal or manufactured gas;
(2) by 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, 1992.
N.M.A. 1980a (1/4/96)
POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE
SECTION A:
Excluding:
(a) All business derived directly or indirectly from any Pool,
Association or Syndicate which maintains its own reinsurance
facilities.
(b) Any Pool or Scheme (whether voluntary or mandatory) formed after
March 1, 1968 for the purpose of insuring property whether on a
country-wide basis or in respect of designated areas. This exclusion
shall not apply to so-called Automobile Insurance Plans or other
Pools formed to provide coverage for Automobile Physical Damage.
SECTION B:
It is agreed that business written by the Company for the same perils, which is
known at the time to be insured by, or in excess of underlying amounts placed in
the following Pools, Associations or Syndicates, whether by way of insurance or
reinsurance, is excluded hereunder:
Industrial Risk Insurers,
Associated Factory Mutuals,
Improved Risk Mutuals,
Any Pool, Association or Syndicate formed for the purpose of writing
Oil, Gas or Petro-Chemical Plants and/or Oil or Gas Drilling Rigs,
United States Aircraft Insurance Group,
Canadian Aircraft Insurance Group,
Associated Aviation Underwriters,
American Aviation Underwriters.
Section B does not apply:
(a) Where The Total Insured Value over all interests of the risk in
question is less than $250,000,000.
(b) To interests traditionally underwritten as Inland Marine or stock
and/or contents written on a blanket basis.
(c) To Contingent Business Interruption, except when the Company is
aware that the key location is known at the time to be insured in
any Pool, Association or Syndicate named above, other than as
provided for under Section B(a).
(d) To risks as follows:
Offices, Hotels, Apartments, Hospitals, Educational Establishments,
Public Utilities (other than railroad schedules) and builder's risks
on the classes of risks specified in this subsection (d) only.
Where this clause attaches to Catastrophe Excesses, the following Section C is
added:
SECTION C:
Nevertheless the Reinsurer specifically agrees that liability accruing to the
Company from its participation in residual market mechanisms including but not
limited to:
(1) The following so-called "Coastal Pools":
Alabama Insurance Underwriting Association
Louisiana Insurance Underwriting Association
Mississippi Windstorm Underwriting Association
North Carolina Insurance Underwriting Association
South Carolina Windstorm and Hail Underwriting Association
Texas Windstorm Insurance Association
AND
(2) All "Fair Plan" and "Rural Risk Plan" business
Page 1 of 2
AND
(3) Citizens Property Insurance Corporation ("CPIC") and the California
Earthquake Authority ("CEA")
for all perils otherwise protected hereunder shall not be excluded, except,
however, that this reinsurance does not include any increase in such liability
resulting from:
(i) The inability of any other participant in such "Coastal Pool" and/or
"Fair Plan" and/or "Rural Risk Plan" and/or Residual Market
Mechanisms to meet its liability.
(ii) Any claim against such "Coastal Pool" and/or "Fair Plan" and/or
"Rural Risk Plan" and/or Residual Market Mechanisms, or any
participant therein, including the Company, whether by way of
subrogation or otherwise, brought by or on behalf of any insolvency
fund (as defined in the Insolvency Fund Exclusion Clause
incorporated in this Contract).
SECTION D:
(1) Notwithstanding Section C above, in respect of the CEA, where an
assessment is made against the Company by the CEA, the Company may
include in its Ultimate Net Loss only that assessment directly
attributable to each separate loss occurrence covered hereunder. The
Company's initial capital contribution to the CEA shall not be
included in the Ultimate Net Loss.
(2) Notwithstanding Section C above, in respect of CPIC, where an
assessment is made against the Company by CPIC, the maximum loss
that the Company may include in the Ultimate Net Loss in respect of
any loss occurrence hereunder shall not exceed the lesser of:
(a) The Company's assessment from CPIC for the accounting year in
which the loss occurrence commenced, or
(b) The product of the following:
(i) The Company's percentage participation in CPIC for the
accounting year in which the loss occurrence commenced;
and
(ii) CPIC's total losses in such loss occurrence.
Any assessments for accounting years subsequent to that in which the loss
occurrence commenced may not be included in the Ultimate Net Loss hereunder.
Moreover, notwithstanding Section C above, in respect of CPIC, the Ultimate Net
Loss hereunder shall not include any monies expended to purchase or retire bonds
as a consequence of being a member of CPIC. For the purposes of this Contract,
the Company may not include in the Ultimate Net Loss any assessment or any
percentage assessment levied by CPIC to meet the obligations of an insolvent
insurer member or other party, or to meet any obligations arising from the
deferment by CPIC of the collection of monies.
NOTES: Wherever used herein the terms:
"Company" shall be understood to mean "Company," "Reinsured,"
"Reassured" or whatever other term is used in the
attached reinsurance document to designate the
reinsured company or companies.
"Agreement" shall be understood to mean "Agreement," "Contract,"
"Policy" or whatever other term is used to designate
the attached reinsurance document.
"Reinsurers" shall be understood to mean "Reinsurers,"
"Underwriters" or whatever other term is used in the
attached reinsurance document to designate the
reinsurer or reinsurers.
Page 2 of 2
POLLUTION AND SEEPAGE EXCLUSION CLAUSE
This Contract excludes loss and/or damage and/or costs and/or expenses arising
from seepage and/or pollution and/or contamination, other than contamination
from smoke. Nevertheless, this exclusion does not preclude payment of the cost
of removing debris of property damaged by a loss otherwise covered hereunder,
subject always to a limit of 25% of the Company's property loss under the
applicable original policy.
BRMA 39A
ELECTRONIC DATA ENDORSEMENT B
1. ELECTRONIC DATA EXCLUSION
Notwithstanding any provision to the contrary within the Contract or any
endorsement thereto, it is understood and agreed as follows:-
a) This Contract does not insure loss, damage, destruction, distortion,
erasure, corruption or alteration of ELECTRONIC DATA from any cause
whatsoever (including but not limited to COMPUTER VIRUS) or loss of
use, reduction in functionality, cost, expense of whatsoever nature
resulting therefrom, regardless of any other cause or event
contributing concurrently or in any other sequence to the loss.
ELECTRONIC DATA means facts, concepts and information converted to a
form useable for communications, interpretation or processing by
electronic and electromechanical data processing or electronically
controlled equipment and includes programs, software and other coded
instructions for the processing and manipulation of data or the
direction and manipulation of such equipment.
COMPUTER VIRUS means a set of corrupting, harmful or otherwise
unauthorized instructions or code including a set of maliciously
introduced unauthorized instructions or code, programmatic or
otherwise, that propagate themselves through a computer system or
network of whatsoever nature. COMPUTER VIRUS includes but is not
limited to "Trojan Horses," "worms" and "time or logic bombs."
b) However, in the event that a peril listed below results from any of
the matters described in paragraph a) above, this Contract, subject
to all its terms, conditions and exclusions, will cover physical
damage occurring during the Contract period to property insured by
this Contract directly caused by such listed peril.
Listed Perils
Fire
Explosion
2. ELECTRONIC DATA PROCESSING MEDIA VALUATION
Notwithstanding any provision to the contrary within the Contract or any
endorsement thereto, it is understood and agreed as follows:-
Should electronic data processing media insured by this Contract suffer
physical loss or damage insured by this Contract, then the basis of
valuation shall be the cost of the blank media plus the costs of copying
the ELECTRONIC DATA from back-up or from originals of a previous
generation. These costs will not include research and engineering nor any
costs of recreating, gathering or assembling such ELECTRONIC DATA. If the
media is not repaired, replaced or restored the basis of valuation shall
be the cost of the blank media. However this Contract does not insure any
amount pertaining to the value of such ELECTRONIC DATA to the Assured or
any other party, even if such ELECTRONIC DATA cannot be recreated,
gathered or assembled.
N.M.A. 2915 (25.1.01)
Form approved by Lloyd's Underwriters' Non-Marine Association Limited
UNDERLYING EXCESS CATASTROPHE AND REINSTATEMENT PREMIUM PROTECTION
REINSURANCE CONTRACT
EFFECTIVE: JULY 1, 2004
issued to
Liberty American Insurance Company
Pinellas Park, Florida
Mobile USA Insurance Company
Pinellas Park, Florida
and
any and all other companies which are now
or may hereafter become member companies of
Liberty American Insurance Group, Inc.
Underlying Excess Catastrophe Reinsurance
REINSURER PARTICIPATION
Swiss Re Underwriters Agency, Inc.
(for Swiss Reinsurance America Corporation) 100%
TOTAL 100%
Reinstatement Premium Protection Reinsurance
REINSURER PARTICIPATION
Swiss Re Underwriters Agency, Inc.
(for Swiss Reinsurance America Corporation) 100%
TOTAL 100%
INTERESTS AND LIABILITIES AGREEMENT
of
Swiss Reinsurance America Corporation
Armonk, New York
through
Swiss Re Underwriters Agency, Inc.
Calabasas, California
(hereinafter referred to as the "Subscribing Reinsurer")
with respect to the
UNDERLYING EXCESS CATASTROPHE AND REINSTATEMENT PREMIUM PROTECTION
REINSURANCE CONTRACT
EFFECTIVE: JULY 1, 2004
issued to and duly executed by
Liberty American Insurance Company
Pinellas Park, Florida
Mobile USA Insurance Company
Pinellas Park, Florida
and
any and all other companies which are now
or may hereafter become member companies of
Liberty American Insurance Group, Inc.
The Subscribing Reinsurer hereby accepts the following percentage shares in the
interests and liabilities of the "Reinsurer" as set forth in the attached
Contract captioned above:
100% of Section I - Underlying Excess Catastrophe Reinsurance
100% of Section II - Reinstatement Premium Protection Reinsurance
This Agreement shall become effective on July 1, 2004, and shall continue in
force until May 31, 2005, both days inclusive.
The Subscribing Reinsurer's share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.
IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date undermentioned at:
Calabasas, California, this __19th__day of____November____in the year___2004___.
_____Daniel ▇▇▇▇▇▇▇▇, Vice President_______________
Swiss Re Underwriters Agency, Inc.
(for Swiss Reinsurance America Corporation)