Exhibit 10.46
Contract No.: E25538.05
and signed in Farmington, Connecticut, this day of , 2006.
DARWIN NATIONAL ASSURANCE COMPANY DARWIN SELECT
INSURANCE COMPANY CAPITOL INDEMNITY CORPORATION,
PLATTE RIVER INSURANCE COMPANY AND/OR ANY OTHER
ASSOCIATED, AFFILIATED OR SUBSIDIARY COMPANIES OF
ALLEGHANY INSURANCE HOLDING LLC, BUT ONLY IN RESPECT
OF BUSINESS UNDERWRITTEN BY DARWIN PROFESSIONAL
UNDERWRITERS, INC.
BY /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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TITLE President & CEO
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attaching to and forming part of
EXCESS OF LOSS REINSURANCE AGREEMENT
EFFECTIVE NOVEMBER 1, 2005
DARWIN NATIONAL ASSURANCE COMPANY
DARWIN SELECT INSURANCE COMPANY
CAPITOL INDEMNITY CORPORATION,
PLATTE RIVER INSURANCE COMPANY
AND/OR ANY OTHER ASSOCIATED, AFFILIATED OR
SUBSIDIARY COMPANIES OF ALLEGHANY INSURANCE HOLDING LLC,
BUT ONLY IN RESPECT OF BUSINESS UNDERWRITTEN BY DARWIN
PROFESSIONAL UNDERWRITERS, INC.
EXCESS OF LOSS REINSURANCE AGREEMENT
EFFECTIVE NOVEMBER 1, 2005
INDEX
ARTICLE SUBJECT PAGE
------- ------- ----
PREAMBLE................................................. 1
I BUSINESS COVERED......................................... 1
II EXCLUSIONS............................................... 1
III LIMIT AND RETENTION...................................... 2
IV TERRITORIAL SCOPE........................................ 2
V PERIOD................................................... 2
VI SPECIAL TERMINATION...................................... 3
VII ULTIMATE NET LOSS........................................ 4
VIII EXCESS OF ORIGINAL POLICY LIMITS......................... 5
IX EXTRA-CONTRACTUAL OBLIGATIONS............................ 6
X NET RETAINED LINES....................................... 6
XI PREMIUM.................................................. 7
XII NOTICE OF LOSS AND LOSS SETTLEMENTS...................... 7
XIII UNEARNED PREMIUM AND OUTSTANDING LOSS RESERVES........... 8
XIV INTEREST PENALTY......................................... 10
XV COMMUTATION.............................................. 11
XVI CURRENCY................................................. 12
XVII TAX PROVISIONS........................................... 12
XVIII INSOLVENCY OF THE REASSURED.............................. 12
XIX OFFSET................................................... 13
XX DELAYS, ERRORS AND OMISSIONS............................. 13
XXI AMENDMENTS AND ALTERATIONS............................... 14
XXII ACCESS TO RECORDS AND CLAIMS REVIEW...................... 14
XXIII ARBITRATION.............................................. 14
XXIV SERVICE OF SUIT.......................................... 15
XXV CONFIDENTIALITY.......................................... 16
XXVI REGULATORY COMPLIANCE.................................... 16
XXVII INTERMEDIARY............................................. 16
XXVIII GOVERNING LAW............................................ 17
XXIX PARTICIPATION............................................ 17
XXX SEVERAL LIABILITY NOTICE................................. 17
ATTACHMENTS: NUCLEAR INCIDENT EXCLUSION CLAUSES - LIABILITY - REINSURANCE -
U.S.A / CANADA NUCLEAR ENERGY RISKS EXCLUSION CLAUSE -
REINSURANCE - 1994 (WORLDWIDE excluding U.S.A. AND CANADA)
DARWIN NATIONAL ASSURANCE COMPANY
DARWIN SELECT INSURANCE COMPANY
CAPITOL INDEMNITY CORPORATION,
PLATTE RIVER INSURANCE COMPANY
AND/OR ANY OTHER ASSOCIATED, AFFILIATED OR
SUBSIDIARY COMPANIES OF ALLEGHANY INSURANCE HOLDING LLC,
BUT ONLY IN RESPECT OF BUSINESS UNDERWRITTEN BY DARWIN
PROFESSIONAL UNDERWRITERS, INC.
EXCESS OF LOSS REINSURANCE AGREEMENT
EFFECTIVE NOVEMBER 1, 2005
PREAMBLE
This Contract is made and entered into between Darwin National Assurance
Company, Darwin Select Insurance Company, Capitol Indemnity Corporation, Capitol
Specialty Insurance Corporation, Platte River Insurance Company and/or any other
associated, affiliated or subsidiary companies of Alleghany Insurance Holding
LLC, (hereinafter referred to as "the Reassured") and the Reinsurers signatory
hereto (hereinafter referred to as "the Reinsurers") on the following terms and
conditions.
ARTICLE I -- BUSINESS COVERED
This Contract applies to policies of insurance classified by the Reassured as
Psychiatrists Professional and Office Liability, produced and underwritten by
American Professional Agency, Inc. for and on behalf of Darwin Professional
Underwriters arising from any claims or claims which are made on risks that
attach during the Contract period under its claims made, extended reporting
endorsement and retroactive coverage.
For the purposes of this Contract, the terms "policy", "policies" or "original
policies" as used herein shall be understood to mean all binders, policies,
contracts, endorsements or other evidence of insurance issued in the name of the
Reassured.
ARTICLE II -- EXCLUSIONS
This Contract does not apply to and absolutely excludes the following:
1. Nuclear Incidents, in accordance with the Nuclear Incident Exclusion
Clauses - Liability - Reinsurance - U.S.A./Canada - as attached.
2. Nuclear Energy Risks, in accordance with the Nuclear Energy Risks
Exclusion Clause (Reinsurance) (1994) (Worldwide excluding U.S.A. and
Canada) - as attached.
3. All liability of the Reassured arising by contract, operation of law,
or otherwise, from its participation or membership, whether voluntary
or involuntary, in any
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Insolvency Fund. "Insolvency Fund" includes any guarantee fund,
insolvency fund, plan, pool, association, fund or other arrangement,
howsoever denominated, established or governed, which provides for any
assessment of or payment or assumption by the Reassured 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.
4. Liability assumed by the Reassured as a Member or Reinsurer of any
Pool, Association or Syndicate.
5. Financial Guarantee and Insolvency Insurance.
6. Surety Business.
7. Reinsurance Assumed Business, other than policies "fronted" by another
carrier and individually underwritten by Darwin Professional
Underwriters, Inc, and Inter-Company Pooling Arrangements.
ARTICLE III -- LIMIT AND RETENTION
The Reinsurers shall be liable under this Contract in respect of each and every
loss, each insured, for the Reassured's Ultimate Net Loss in excess of $250,000
each and every loss, each insured, subject to a limit of liability to the
Reinsurers of up to $1,750,000 Ultimate Net Loss each and every loss, each
insured.
The Reassured shall retain the aforementioned $250,000 net and unreinsured,
except for internal reinsurance and/or Catastrophe Excess of Loss Reinsurance.
It is understood and agreed that the limits hereon apply separately to each
original coverage and/or section thereof as applicable, issued by the Reassured,
unless written on a combined, shared limit basis, as per the original policies.
The meaning of "each and every loss", "claim", and "claim made" shall follow the
definitions in the policies covered hereunder, as finally determined by the
Reassured. The Reassured shall also be the determinant of what constitutes "each
Insured.
ARTICLE IV -- TERRITORIAL SCOPE
This contract shall cover whenever the original policies cover.
ARTICLE V -- PERIOD
This Contract covers all claims made, on original policies written or renewed
with effective dates during the period November 1, 2005 12:01 a.m. Standard Time
to November 1, 2006 12:01 a.m. Standard Time at the place and location of risks
insured.
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The maximum original policy period shall be twelve (12) months plus odd time not
to exceed eighteen (18) months in all, plus extended reporting period coverage
or endorsements, as original.
For the purposes of this Contract, any extension, discovery period or extended
reporting endorsement attaching to a policy covered hereunder shall be
considered as part of the period of the said policy, subject to the provision
that a separate limit of liability will not apply in respect thereof unless
required by statute.
Upon expiry of this Contract, policies in force at the effective time and date
of expiration hereof shall continue to be covered hereunder until their
individual natural expiration or termination dates, whichever sooner, including
extensions, discovery periods, DDR (death, disability or retirement), or other
similar extended reporting endorsements attaching to such policies. The
Reassured may however, subject to agreement by Reinsurers hereon, terminate the
liability of the Reinsurers for claims made, as original, after the effective
time and date of expiration hereof and, in such event, the unearned premium at
that date applicable to in force policies, including extensions, discovery
periods, DDR, or other similar extended reporting endorsements attached thereto,
shall be deducted from the Subject Gross Net Written Premium Income for the
purpose of the premium rating hereunder.
ARTICLE VI -- SPECIAL TERMINATION
A. Either party may terminate this Contract upon thirty (30) days notice
in the event that the other party's surplus has been reduced by 30% or
more of the mount of surplus at September 30, 2003.
B. The Reassured may terminate the Reinsurer's participation hereon at any
time by giving thirty (30) days' prior written notice to the Reinsurer
in the event that:
(1) A State Insurance Department or other legal authority has
ordered the subscribing Reinsurer to cease writing business;
or
(2) The Reinsurer has become insolvent or has been placed into
liquidation or receivership or proceedings have been
instituted against the subscribing Reinsurer for the
appointment of a receiver, liquidator, rehabilitator,
conservator or trustee in bankruptcy, or other agents known by
whatever name, to take possession of its assets or control of
its operation; or
(3) The Reinsurer has reinsured its entire liability under this
Contract without the Reassured's prior written consent.
However, the Reinsurer shall be at liberty to effect
catastrophe excess and/or aggregate stop loss excess
reinsurance; or
(4) The Reinsurer has ceased assuming new and renewal treaty
reinsurance business; or
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(5) The Reinsurer experiences a downgrading in their financial
strength rating from Standard and Poor's Group below BBB or a
downgrading in rating from A.M. Best Company below A-.
In the event of such termination, the liability of the Reinsurer shall be
terminated as follows:
Policies in force at the effective time and date of termination of this Contract
shall continue to be covered hereunder until their individual expiration dates,
including extensions, discovery periods, Death, Disability or Retirement or
other such similar reporting endorsements or provisions attached thereto. For
rating purposes, the applicable Subject Gross Net Written Premium Income shall
be calculated on policies issued or renewed from the inception date of this
Contract to the effective time and date of termination of this Contract.
The Reassured may however terminate the liability of the Reinsurer for claims
made as original, after the effective time and date of termination of this
Contract and, in such event, the unearned premium at the termination date
applicable to in force policies, including extensions, discovery periods, Death,
Disability or Retirement or other similar extended reporting endorsements or
provisions attached thereto, shall be deducted from the Subject Gross Net
Written Premium Income for the purpose of the premium rating hereunder.
The Reassured shall have the right at the time of termination of this Contract
or at any time following the termination of the Reinsurer, provided the rate at
that time is strictly below the Maximum hereon, to commute losses at their
discretionary reserves, which for clarification purposes may be zero. The
Reassured will then give Reinsurers a full and final release of all future
liabilities under this Contract. It is understood and agreed that unearned
premium at the termination date applicable to in force policies, including
extensions, discovery periods or other similar extended reporting endorsements
or provisions attached thereto, shall be deducted from the Subject Gross Net
Written Premium Income for the purpose of the premium rating hereunder.
ARTICLE VII -- ULTIMATE NET LOSS
The term "Ultimate Net Loss" as used in this Contract shall mean the sum
actually paid or payable by the Reassured in settlement of any losses under its
original policies and/or 100% of any additional liability incurred by the
Reassured as a result of an award in excess of policy limits, and/or 100% of any
liability incurred by the Reassured from any extra-contractual obligation, both
as more fully defined in EXCESS OF ORIGINAL POLICY LIMITS and EXTRA-CONTRACTUAL
OBLIGATIONS. In the event that the Reassured's original policies and/or specific
coverage parts of their original policies are issued on a cost inclusive basis,
such loss adjustment expenses shall be included within the Reassured's Ultimate
Net Loss for the purposes of recovery hereunder.
Where the Reassured's original policies and/or specific coverage parts of their
original policies provide for loss adjustment expenses in addition to limit, all
loss adjustment
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expenses paid by the Reassured shall be apportioned in proportion to the
respective interests in the loss of the parties hereto as such interests finally
appear, provided that in the event a verdict or judgment is reduced by an appeal
or a settlement, subsequent to the entry of the judgment, resulting in an
ultimate saving on such verdict or judgment, or a judgment is reversed outright,
the expense incurred in securing such final reduction or reversal shall be pro
rata between the Reinsurers and the Reassured in the proportion that each
benefits from such reduction or reversal; and the expenses incurred up to the
time and date of the original verdict or judgment shall be pro-rated in
proportion to each party's interest in such verdict or judgment.
In the event of external legal or external adjustment expenses, including
outside monitoring counsel expenses, rescission expenses and declaratory
judgment expenses, which are incurred by the Reassured in connection with a
claim or potential claim hereunder and which are not the subject of the
Reassured's original policy, then Reinsurers shall also be liable for their
proportion of such expenses in addition to their share of the loss recoverable
hereunder.
For the purposes of this Contract loss adjustment expenses shall include all
expenses of litigation, including post judgment interest, but shall exclude the
salaries of regular employees and all office expenses of the Reassured.
All salvages and recoveries shall first be deducted from such loss to arrive at
the amount of the Reassured's Ultimate Net Loss for the purposes of this
Contract. All salvages, recoveries or payments recovered or received subsequent
to a loss settlement under this Contract shall be applied as if recovered or
received prior to the aforesaid settlement and all necessary adjustments shall
be made by the parties hereto. However, nothing in the foregoing shall be
construed as meaning that losses are not recoverable hereunder until the
Reassured's Ultimate Net Loss has been ascertained,
ARTICLE VIII -- EXCESS OF ORIGINAL POLICY LIMITS
As provided in ULTIMATE NET LOSS, this Contract shall protect and indemnify the
Reassured for up to one additional policy limit in respect of 100% of any
additional liability incurred by the Reassured as the result of an award in
excess of the original policy limit as more fully defined below. The Reinsurers
agree that the said 100% of the additional liability so incurred, plus the
Reassured's contractual loss, shall be considered as one combined loss for the
purposes of the Reassured's retention and of the recovery under this Contract
subject always, however, to the amount recoverable hereunder not exceeding the
limit of recovery under this Contract as provided in LIMIT, AND RETENTION, as
applicable.
Awards in excess of the original policy limit are defined as contractual losses
which the Reassured may be legally liable to pay, but in excess of the original
policy limit, such losses in excess of the original policy limit having been
incurred because of, but not limited to, the following: failure by the Reassured
to settle within the original policy limit or by reason of alleged or actual
negligence, fraud or bad faith in rejecting an offer of
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settlement or in the preparation of the defense or in the trial of any action
against an insured or in the preparation or prosecution of an appeal consequent
upon such action.
The date on which any liability in excess of original policy limits is incurred
by the Reassured shall be deemed, in all circumstances, to be the date the
original claim was made or occurred.
However, this Article shall not apply where such awards in excess of original
policy limit have been incurred due to the fraud of a member of the Board of
Directors or a corporate officer of the Reassured 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.
ARTICLE IX -- EXTRA-CONTRACTUAL OBLIGATIONS
As provided in ULTIMATE NET LOSS, this Contract shall protect and indemnify the
Reassured for up to one additional policy limit in respect of 100% of any
additional liability incurred by the Reassured as the result of any
extra-contractual obligation, as more fully defined below. The Reinsurers agree
that the said 100% of the additional liability so incurred, plus the Reassured's
contractual loss, shall be considered as one combined loss for the purposes of
the Reassured's retention and of the recovery under this Contract subject
always, however, to the amount recoverable hereunder not exceeding the limit of
recovery under this Contract as provided in LIMIT, AND RETENTION, as applicable.
"Extra-contractual obligations" are defined as those liabilities not covered
under any other provision of this Contract and which arise from the handling of
any claim on business covered hereunder, such liabilities arising because of,
but not limited to, the following: failure by the Reassured to settle within the
policy limit, or by reason of alleged or actual negligence, fraud or bad faith
in rejecting an offer of settlement or in the preparation of the defense or in
the trial of any action against an insured or in the preparation or prosecution
of an appeal consequent upon such action.
The date on which any extra-contractual obligation is incurred by the Reassured
shall be deemed, in all circumstances, to be the date the original claim was
made or occurred.
However, this Article shall not apply where such extra-contractual obligations
have been incurred due to the fraud of a member of the Board of Directors or a
corporate officer of the Reassured 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.
ARTICLE X -- NET RETAINED LINES
This Contract applies only to that portion of any insurance covered by this
Contract which the Reassured retains net for its own account and in calculating
the amount of any loss hereunder and also in computing the amount in excess of
which this Contract
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attaches, only loss or losses in respect of that portion of any insurance which
the Reassured retains net for its own account shall be included.
It is understood and agreed that the amount of the Reinsurers' liability
hereunder in respect of any loss or losses shall not be increased by reason of
the inability of the Reassured to collect from any other reinsurers, whether
specific or general, any amounts which may have become due from them, whether
such inability arises from the insolvency of such other reinsurers or otherwise.
ARTICLE XI -- PREMIUM
In consideration of the liabilities undertaken by the Reinsurers in accordance
with the terms of this Contract, the Reassured shall pay to the Reinsurers their
share of the following premium:
A. A provisional premium of $2,800,000 shall be payable in equal quarterly
installments of $700,000 in arrears on February 1, May 1, August 1 and
November 1, 2006.
B. Within 60 days of expiry of this Contract, the Reassured shall render a
statement of its Subject Gross Net Written Premium Income (as defined
below) and the Reassured shall pay, or be paid by the Reinsurers, the
difference between the Deposit Premium and a premium determined by
applying a provisional rate of 14% to the said Subject Gross Net
Written Premium Income.
C. Twenty-four months after the expiry of this Contract and annually
thereafter until all losses are finally settled or commuted, the
premium hereunder shall be adjusted at a rate equivalent to 107.5% of
the Case Incurred Loss Cost plus a minimum rate of 10% applied to the
Subject Gross Net Written Premium Income. In no event, however shall
the premium developed exceed a maximum rate equal to 31% of the Subject
Gross Net Written Premium Income (hereinafter referred to as the
"experience adjustment").
D. A bordereaux of risks to be rendered by the Reassured within 45 days
from end of each calendar quarter. The bordereaux shall contain the
following information: policy number, insured name, premium, policy
term, class of business.
ARTICLE XII -- NOTICE OF LOSS AND LOSS SETTLEMENTS
A paid and outstanding loss bordereaux for all claims with incurred amounts
(indemnity, defense and expense combined), established by the Reassured of
$125,000 or more shall be rendered by the Reassured within 45 days of the end of
each contract quarter beginning with January 31st, 2006 and quarterly
thereafter.
It is understood and agreed, both by the Reassured and the Reinsurers, that all
paid and outstanding losses shall be advised to Reinsurers solely by quarterly
bordereaux and that no individual loss reports are to be provided unless
specifically requested by Reinsurers.
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The bordereaux shall solely comprise numerical details of the paid and
outstanding amounts of each loss together with other data to identify the claim,
all as shown on the example bordereaux format(s) attached hereto as Appendix A
to this Contract and which have been mutually agreed by the Reassured and
Reinsurers. It is clearly understood and agreed that such bordereaux shall not
provide any other details of the claim and that there shall be no requirement to
provide assessment of potential liability or other evaluations of each claim.
The Reinsurers agree to abide by all loss settlements of the Reassured which at
its sole discretion shall adjust, settle or compromise all losses and all such
adjustments, settlements or compromises shall be binding upon the Reinsurers
subject to the terms, conditions and limitations of the original policies and
this Contract.
The Reinsurers agree to settle their share of such loss payments within 45 days
of receipt of the quarterly bordereaux; the bordereaux being the sole billing
documentation necessary to effect settlements from Reinsurers.
It is understood and agreed that requests for individual loss reports by
Reinsurers hereon shall not delay their payment of a claim once billing of the
claim has been presented by the Reassured to the Reinsurers. In addition,
responses to requests for individual loss reports shall not be delayed or
withheld by the Reassured.
Notwithstanding such quarterly bordereaux settlements, the Reassured may request
an immediate cash loss settlement from the Reinsurers in the event that the
amount due from the Reinsurers in respect of an individual claim is $250,000 or
more. Such cash loss ▇▇▇▇▇▇▇▇ shall be made solely utilizing the same format as
the quarterly bordereaux collections.
ARTICLE XIII -- UNEARNED PREMIUM AND OUTSTANDING LOSS RESERVES
This Article applies only to those Reinsurers signatory hereto who do not
qualify for credit under the regulations of the State insurance authorities or
departments which have jurisdiction over the Reassured's reserves.
The Reassured agrees that when, for its Annual Convention Statement purposes, it
files with the authorities or departments mentioned above or sets up in its
books statutory reserves for known outstanding losses and allocated loss
expenses reinsured by this Contract, for unearned premium in respect of business
coming within the scope of this Contract, or for incurred but not reported
losses (IBNR), hereinafter "The Stated Reserves", it shall forward to the
Reinsurers a clear statement of the Reinsurers' proportion of The Stated
Reserves detailing separately the amounts involved for known outstanding losses
and allocated loss expenses, unearned premium and IBNR, and also how those
amounts are calculated. Reserves for IBNR shall not exceed the actual amount of
IBNR carried on the books of the Reassured for statutory reporting purposes.
The Reinsurers, promptly upon receipt of the Reassured's statement, shall apply
for, and secure delivery to the Reassured of, clean irrevocable and
unconditional Letters of Credit
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or such equivalent funding acceptable to the Reassured, for the benefit of the
Reassured in amounts equal to their proportion of The Stated Reserves.
In the event that the Provisional Premium adjustment and/or experience
adjustment calculation hereon results in a reduced level of collateral funding
hereunder, the Reassured agrees to return such excess collateral to Reinsurers
within ninety (90) days of the date the adjustment is made.
All Letters of Credit procured pursuant to this Contract shall be issued by a
Bank which is a Member of the Federal Reserve and acceptable to the authorities
or departments mentioned in the first paragraph of this Article current at the
date of the Reassured's statement. Such Letter of Credit shall be in full
conformity with the requirements of such authorities or departments.
Further, all such Letters of Credit shall be "Evergreen" in that they shall be
issued for an initial period of not less than one year and shall be
automatically extended for one year from their original expiration dates and
subsequently from their extended expiration dates unless and until, at least
thirty days before any expiration date, the issuing bank gives notice to the
Reassured by registered mail that the issuing bank elects not to extend the life
of the Letter of Credit in question beyond its forthcoming expiration date.
In consideration of the contract of the Reinsurers to furnish such Letters of
Credit to the Reassured to enable it to obtain credit for the reinsurance
provided under this Contract, the Reassured hereby undertakes to hold such
Letters of Credit and the proceeds of any drawings made upon them in trust for
the Reinsurers and to use and apply the proceeds of any such drawings for the
following purposes only:
a. To pay the Reinsurers' share or to reimburse the Reassured for
that share of any liability for loss or allocated loss expense
reinsured by this Contract or for unearned premium in respect
of business coming within the scope of this Contract;
b. To refund to the Reinsurers any balance by which the amount of
the Letter of Credit exceeds the Reinsurers' proportion of any
liability for loss or allocated loss expense reinsured by this
Contract, incurred but not reported losses (IBNR) or for
unearned premium in respect of business coming within the
scope of this Contract.
c. In the event that one or more of the Reinsurers participating
in the Letter of Credit gives timely notice of cancellation or
non-renewal of their participation in the Letter of Credit and
provided that the obligations secured by the Letter of Credit
remain unliquidated and undischarged at the time of receipt by
the Reassured of such notice, the Reassured shall create a
cash deposit account, separate from its own assets, in an
amount equal to the participation of the canceling or
non-renewing Reinsurer(s) in the Letter of Credit. That cash
deposit account may then be used as in sub-paragraphs a. and
b. above. It is understood and agreed that this procedure
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may only be implemented before the expiry of the notice period
in respect of cancellation or non-renewal and that if it is
implemented, the Reassured will ensure that a rate of interest
is obtained for the Reinsurers on such a deposit account that
is at least equal to the rate which would be paid by Citibank
N.A. in New York, and further that the Reassured will account
to the Reinsurers on an annual basis for all interest accruing
on the cash deposit account for the benefit of the Reinsurers.
The issuing bank shall have no responsibility whatsoever in connection with the
propriety of drawings made by the Reassured on the Letters of Credit issued
under this Contract or in connection with the disposition of any funds so
withdrawn, except to ensure that drawings are made only upon the order of
properly authorized representatives of the Reassured.
All Letters of Credit procured for the Reassured under this Contract shall be
adjusted at annual intervals, or more frequently as agreed (but never more
frequently than quarterly), to reflect the current balance of the Reinsurers'
proportion of the Reassured's known outstanding loss and allocated loss expense
reserves and unearned premium reserves, and the Reassured shall produce a
statement for this purpose detailed in the same way as the original statement on
the basis of which such Letters of Credit were first issued. If the statement
shows that the Reinsurers' proportion of such losses and allocated expenses,
IBNR or unearned premium reserves exceeds the current amount of the Letters of
Credit, the Reinsurers shall, within thirty days after receipt of the statement,
secure the amendment of the Letters of Credit increasing their amount to the
amount of the current balance of these items. If, however, the statement shows
that the Reinsurers' proportion of the current balance of those items is less
than the amount of the Letters of Credit the Reassured shall, within thirty days
of receipt of a written request from the Reinsurers to do so, facilitate the
release of the excessive security by authorizing the amendment of the Letters of
Credit so as to reduce their amount to the current balance required.
All expenses incurred in the establishment or maintenance of such Letters of
Credit shall be paid by the Reinsurers.
ARTICLE XIV -- INTEREST PENALTY
The provisions of this Article shall not be implemented unless specifically
invoked, in writing, by the Reassured or Reinsurer. The interest amounts
provided for in this Article will apply to the Reinsurer or to the Reassured in
the following circumstances:
1. Loss payment owed by the Reinsurer to the Reassured shall have a due
date to the Reassured of forty-five (45) calendar days following the
date of the Reinsurer's receipt of the billing, but no later than
ninety (90) days from the Reassured's date of the billing.
2. Payment of any premium installments shall be due to the Reinsurer
within thirty (30) calendar days of the date specified in this
Contract. Any premium
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adjustments will be due by the debtor party within sixty (60) calendar
days of the date specified in this Contract.
3. Payment of return premiums, commissions, profit sharing, or any other
amounts not provided in paragraphs 1 or 2 above, shall be due by the
debtor party within sixty (60) calendar days of the due date specified
in this Contract. If no due date is specified, the due date shall be
sixty (60) days following the date of the debtor party's receipt of the
billing, but no later than ninety (90) days from the creditor party's
date of the billing.
4. Failure by the Reinsurer or Reassured to comply with their respective
payment obligations within the time periods as herein provided will
result in a compound interest penalty payable at a rate equal to the
ninety (90) day Treasury ▇▇▇▇ rate as published in the Money Rate
Section or any successor section of the Wall Street Journal on the
first business day following the date a remittance becomes due, plus 2%
per annum, to be compounded and adjusted quarterly. Any interest which
occurs pursuant to this Article shall he calculated by the party to
which it is owed. The accumulation of the number of days that any
payment is past due will stop on the date the Intermediary, where
applicable, receives payment.
5. The validity of any claim or payment may be contested under the
provisions of this Contract. If the debtor party prevails in such
action, there shall be no interest penalty due. Otherwise, any interest
will be calculated and due as outlined above.
6. If a Reinsurer advances payment of any claim it is contesting, and
prevails such action, the Reassured shall return such payment plus pay
interest on same, calculated as per the provisions of this Article.
7. Any interest which occurs pursuant to this Article may be waived by the
party to which it is owed. Further, any interest which is calculated
pursuant to this Article that is $100 or less shall be waived. Waiver
of such interest, however, shall not affect the waiving party's right
to similar interest for any other failure by the other party to make
payment when due under this Article.
8. Nothing in this Article shall diminish any legal remedies which either
party may have against the other.
ARTICLE XV -- COMMUTATION
One year after the expiry of this Contract, or at any time thereafter, the
Reassured may, at its option, commute all losses outstanding under this
Contract.
The Reinsurers agree to accept the Reassured's discretionary reserves, (which
may be deemed to be zero for the purpose of commutation), at the time of
commutation in consideration of which premiums shall be immediately adjusted,
and in consideration of which the Reinsurers shall be given a full and final
release of all future liability in respect of this Contract.
11
The option to commute may only be exercised by the Reassured provided that the
adjusted rate for the Contract, at that time, is less than the maximum rate.
ARTICLE XVI -- CURRENCY
The currency to be used for all purposes of this Contract shall be United States
Dollars. All amounts paid or received by the Reassured in any other currency
shall be converted into United States Dollars at the rates of exchange at which
such transactions are converted in the books of the Reassured.
ARTICLE XVII -- TAX PROVISIONS
The Reassured shall be liable for all taxes (except Federal Excise Tax) levied
on it with respect to premiums payable to the Reinsurers hereunder. Federal
Excise Tax applies only to those Reinsurers, excepting Underwriters at Lloyd's,
London and other Reinsurers exempt from the Federal Excise Tax, who are
domiciled outside the United States of America.
To the extent that such premium is subject to Federal Excise Tax, the Reinsurers
hereby agree to allow as a deduction from the premium, for the purpose of paying
Federal Excise Tax, all applicable percentages of the premium payable hereon.
In the event of any return premium becoming due hereunder the Reinsurers will
deduct all applicable percentages from the amount of the return, and the
Reassured or its agents shall take steps to recover the tax from the Government
of the United States of America.
In consideration of the terms under which this Contract is issued, the Reassured
undertakes not to claim any deduction in respect of premium payable hereon when
making tax returns, other than Income or Profits tax returns, to any fiscal
authority of the United States of America or any State or Territory thereof.
ARTICLE XVIII -- INSOLVENCY OF THE REASSURED
Amounts due to the Reassured under this Contract shall be payable by the
Reinsurers on the basis of the liability of the Reassured under the original
policies reinsured hereunder without diminution because of the insolvency of any
one or all of the Reassured Companies.
In the event of the insolvency of the Reassured and the appointment of a
Liquidator, Receiver, Conservator or Statutory Successor, the Liquidator or
Receiver or Conservator or Statutory Successor of the Reassured shall give
written notice to the Reinsurers of the pendency of any claim against the
insolvent Reassured on the original policies reinsured hereunder within a
reasonable time after such claim is filed in the insolvency proceedings. During
the pendency of such claim the Reinsurers may investigate such claim and
intervene, at their own expense, in the proceedings where such claim is to be
adjudicated and interpose any defense or defenses which they may deem available
to the
12
Reassured or its Liquidator or Receiver or Conservator or Statutory Successor.
The expense thus incurred by the Reinsurers shall be chargeable, subject to
court approval, against the insolvent Reassured as part of the expense of
liquidation to the extent of a proportionate share of the benefit which may
accrue to the Reassured solely as a result of the defense so undertaken by the
Reinsurers.
When two or more Reinsurers are involved in the same claim and a majority in
interest elect to investigate the claim and/or to interpose defense to such
claim, the expense shall be apportioned in accordance with the terms of the
above paragraph as though such expense had been incurred by the Reassured.
Should the Reassured go into liquidation or should a receiver be appointed, the
Reinsurers shall be entitled to deduct from any sums which may be or may become
due to the Reassured under this Contract any sums which are due to the
Reinsurers from the Reassured under this Contract and which are payable at a
fixed or stated date, as well as any other sums due to the Reinsurers which are
permitted to be offset under applicable law.
In the event of the insolvency of the Reassured, the amounts due to the
Reassured under this Contract shall be payable by the Reinsurers directly to the
Reassured or to its Liquidator, Receiver or Conservator or Statutory Successor.
It is the mutual intent of the parties that, in the event of the insolvency of
the Reassured, this Article shall be read to conform with the state or
regulatory requirements of the jurisdiction in which the liquidation or
receivership is conducted In the event that any provision of this Article is in
conflict with such state or regulatory requirements, then such provision shall
be reformed to be in compliance with such state or regulatory requirements.
ARTICLE XIX -- OFFSET
Each party hereto shall have, and may exercise in the event of insolvency of the
other or the non-payment by the other of obligations when due hereunder, the
right to offset any balance or balances whether on account of premiums,
commissions, claims or losses, adjustment expenses, salvage or any amount due
from that party to the other party hereto under this Contract only against any
balance or balances due or to become due to the offsetting party from the other
party under this Contract only. The terms of this Article shall apply separately
to this Contract and to each successive renewal of this Contract.
ARTICLE XX -- DELAYS, ERRORS AND OMISSIONS
No inadvertent delay, error or omission shall be held to relieve either party
hereto of any liability which would have attached to them under this Contract if
such delay, error or omission had not been made, provided that rectification is
made immediately upon discovery.
13
ARTICLE XXI -- AMENDMENTS AND ALTERATIONS
The terms herein contained comprise the whole Contract between the Reassured and
the Reinsurers and may only be changed in writing, signed by or on behalf of
both parties.
ARTICLE XXII -- ACCESS TO RECORDS AND CLAIMS REVIEW
All documents and records in the possession of the Reassured concerning this
Contract shall be made available upon reasonable notice at the request of the
Reinsurers for inspection at the Reassured's offices by the Reinsurers or their
nominated representatives for the purposes of obtaining information concerning
this Contract or the subject matter hereof.
Specifically, the Reinsurers shall be entitled to nominate a representative to
assess the Reassured's claims and claims procedures.
For the avoidance of doubt, it is hereby expressly agreed that the rights given
to the Reinsurers by this Article shall continue in effect notwithstanding the
expiration of this Contract and shall be exercised at the Reinsurers' own
expense.
ARTICLE XXIII -- ARBITRATION
As a condition precedent to any right of action hereunder, all disputes or
differences arising out of or connected with this Contract (whether or not
arising before or after expiration) its interpretation or implementation, shall
be referred to arbitration in Farmington, Connecticut, U.S.A., the city in which
the Reassured's principal office is located.
Arbitration shall be initiated by the delivery of a written notice of demand for
arbitration by one party to the other within a reasonable time after the dispute
has arisen stating the nature of the dispute and the remedy sought. Those
Reinsurers involved in the dispute or other matter in controversy shall be
considered as one party for the purpose of allocating the cost of the
arbitration.
Each party shall appoint an individual as arbitrator and the two so appointed
shall then appoint a third arbitrator. If either party refuses or neglects to
appoint an arbitrator within sixty (60) days, the other party may appoint the
second arbitrator. If the two arbitrators do not agree on a third arbitrator
within sixty (60) days of their appointment, within ten (10) days thereafter the
two arbitrators will request the American Arbitration Association ("AAA") to
appoint a third arbitrator with the qualifications set forth below in this
Article without regard to the AAA's Commercial Arbitration Rules. If the AAA
fails to appoint a third arbitrator within thirty (30) days after its receipt of
the two arbitrators' request, either party may apply to a court of competent
jurisdiction to appoint a third arbitrator with the qualifications set forth
below in this Article. The third arbitrator will immediately notify each party
of his selection. In the event of the resignation or death of any member of the
arbitrator panel, a replacement will be appointed in the same manner as the
resigning or deceased member was appointed.
14
Each arbitrator shall be an active or retired officer of an insurance or
reinsurance company or Underwriter at Lloyd's London; no arbitrator shall have a
personal or financial interest in the result of the arbitration, and shall not
be a present or former officer, attorney, or consultant of the Reassured or the
Reinsurer or either's affiliates.
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, and shall make any award
with a view to effecting the general purpose of this Contract in a reasonable
manner with due regard to the custom and usage of the insurance and reinsurance
business.
The arbitrators shall have full discretion to make such orders as they think fit
in connection with all procedural matters in the Arbitration, including but not
limited to the conduct of the reference by written or oral submissions, the
production of documents, the examination of witnesses, and the imposition of
time limits for the taking of necessary procedural steps. The arbitrators shall
also have full discretion to make such orders as they think fit with regard to
the payment of the costs of the Arbitration including attorneys' costs and fees.
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 and
communications shall be made by the Reassured to each of the Reinsurers
constituting the one party, provided that nothing herein 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 Reinsurers under the terms of this
Contract from several to joint.
Any Award or order of the arbitrators or a majority thereof shall be binding on
the parties and there shall be no right of appeal there from.
Except as provided above, arbitration shall be based, insofar as applicable,
upon the procedures of the American Arbitration Association.
ARTICLE XXIV -- SERVICE OF SUIT
This Article applies only to those Reinsurers signatory hereto who are domiciled
outside the United States of America or, should the Reassured be authorized to
do business in the State of New York, those Reinsurers who are unauthorized in
New York as respects suits instituted in New York.
It is agreed that in the event of the failure of the Reinsurers hereon to pay
any amount claimed to be due hereunder, the Reinsurers hereon, at the request of
the Reassured, will submit to the jurisdiction of a Court of competent
jurisdiction within the United States. Nothing in this Clause constitutes or
should be understood to constitute a waiver of Reinsurers' 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.
15
It is further agreed that service of process in such suit may be made upon
Mendes & Mount, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and that in any
suit instituted against any one of them upon this contract, Reinsurers will
abide by the final decision of such Court or of any Appellate Court in the event
of an appeal.
The above-named are authorized and directed to accept service of process on
behalf of Reinsurers in any such suit and/or upon the request of the Reassured
to give a written undertaking to the Reassured that they will enter a general
appearance upon Reinsurers' behalf in the event such a suit shall be instituted.
Further, pursuant to any statute of any state, territory or district of the
United States which makes provision therefor, Reinsurers hereon hereby designate
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 their 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
Reassured or any beneficiary hereunder arising out of this contract of
reinsurance, and hereby designate the above-named as the person to whom the said
officer is authorized to mail such process or a true copy thereof.
NMA 1998
ARTICLE XXV -- CONFIDENTIALITY
The confidential nature of this Contract is acknowledged by all parties.
Moreover, the Reinsurers will only disclose to third parties, such as
regulators, auditors, rating agencies, shareholders, reinsurers and the like,
such details of this Contract as are necessary to comply with their obligations
to such third parties as part of their normal business practice.
It is a condition binding on Reinsurers hereon that they may not disclose any
details of this Contract at any time to any other third party without the
agreement of the Reassured.
ARTICLE XXVI -- REGULATORY COMPLIANCE
If any provision of this Contract shall be rendered illegal or unenforceable by
the laws, regulations or public policy of any State in the United States, 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
validity or enforceability of such provision in any other jurisdiction.
ARTICLE XXVII -- INTERMEDIARY
Towers ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Inc. ("Towers ▇▇▇▇▇▇") 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
16
shall be transmitted to the Reassured or the Reinsurers through Towers ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇.
Payments by the Reassured to the Intermediary shall be deemed to constitute
payment to the Reinsurers. Payments by the Reinsurers to the Intermediary shall
be deemed to constitute payment to the Reassured only to the extent that such
payments are actually received by the Reassured.
ARTICLE XXVIII -- GOVERNING LAW
This Contract shall be governed by and construed in accordance with the laws of
the State of Connecticut.
ARTICLE XXIX -- PARTICIPATION
This Contract obligates each of the Reinsurers for their proportion of the
interests and liabilities set forth under this Contract, such proportions being
shown in the attached Schedules.
ARTICLE XXX -- SEVERAL LIABILITY NOTICE
The subscribing Reinsurers' obligations under contracts of reinsurance to which
they subscribe are several and not joint and are limited solely to the extent of
their individual subscriptions. The subscribing Reinsurers are not responsible
for the subscription of any co-subscribing Reinsurer who for any reason does not
satisfy all or part of its obligations.
17
NUCLEAR INCIDENT EXCLUSION CLAUSE-LIABILITY-REINSURANCE (U.S.A.)
(1) This reinsurance does not cover any loss or liability accruing to the
Reassured as a member of, or subscriber to, any association of insurers
or reinsurers formed for the purpose of covering nuclear energy risks
or as a direct or indirect reinsurer of any such member, subscriber or
association.
(2) Without in any way restricting the operation of paragraph (1) of this
Clause it is understood and agreed that for all purposes of this
reinsurance all the original policies of the Reassured (new, renewal
and replacement) of the classes specified in Clause II of this
paragraph (2) from the time specified in Clause III in this paragraph
(2) shall he deemed to include the following provision (specified as
the Limited Exclusion Provision).
LIMITED EXCLUSION PROVISION:
I. It is agreed that the policy does not apply under any
liability coverage, to: injury, sickness, disease, death or
destruction bodily injury or property damage with respect to
which an insured under the policy is also an insured under a
nuclear energy liability policy issued by Nuclear Energy
Liability Insurance Association, Mutual Atomic Energy
Liability Underwriters or Nuclear Insurance Association of
Canada, or would be an insured under any such policy but for
its termination upon exhaustion of its limit of liability.
II. Family Automobile Policies (liability only), Special
Automobile Policies (private passenger automobiles, liability
only), Farmers Comprehensive Personal Liability Policies
(liability only), Comprehensive Personal Liability Policies
(liability only) or policies of a similar nature; and the
liability portion of combination forms related to the four
classes of policies stated above, such as the Comprehensive
Dwelling Policy and the applicable types of Homeowners
Policies.
III. The inception dates and thereafter of all original policies as
described in II above, whether new, renewal or replacement,
being policies which either
(a) become effective on or after 1st May, 1960, or
(b) become effective before that date and contain the
Limited Exclusion Provision set out above;
provided this paragraph (2) shall not be applicable to Family
Automobile Policies, Special Automobile Policies, or policies
or combination policies of a similar nature, issued by the
Reassured on New York risks, until 90 days following approval
of the Limited Exclusion Provision by the Governmental
Authority having jurisdiction thereof.
(3) Except for those classes of policies specified in Clause
II of paragraph (2) and without in any way restricting the
operation of paragraph (1) of this Clause, it is understood
and agreed that for all purposes of this reinsurance the
original liability policies of the Reassured (new, renewal and
replacement) affording the following coverages:
Owners, Landlords and Tenants Liability, Contractual
Liability, Elevator Liability, Owners or Contractors
(including railroad) Protective Liability, Manufacturers
and Contractors Liability, Product Liability, Professional
and Malpractice Liability, Storekeepers Liability, Garage
Liability, Automobile Liability (including Massachusetts
Motor Vehicle or Garage Liability) shall be deemed to
include, with respect to such coverages, from the time
specified in Clause V of this paragraph (3), the following
provision (specified as the Broad Exclusion Provision):
18
road Exclusion Provision.*
B
It is agreed that the policy does not apply:
I. Under any Liability Coverage, to injury, sickness, disease,
death or destruction bodily injury or property damage
(a) with respect to which an insured under the policy is
also an insured under a nuclear energy liability policy
issued by Nuclear Energy Liability Insurance
Association, Mutual Atomic Energy Liability Underwriters
or Nuclear Insurance Association of Canada, or would be
an insured under any such policy but for its termination
upon exhaustion of its limit of liability;
or
(b) resulting from the hazardous properties of nuclear
material and with respect to which (1) any person or
organization is required to maintain financial
protection pursuant to the Atomic Energy Act of 1954, or
any law amendatory thereof, or (2) the insured is, or
had this policy not been issued would be, entitled to
indemnity from the United States of America, or any
agency thereof, under any agreement entered into by the
United States of America, or any agency thereof, with
any person or organization.
II. Under any Medical Payments Coverage, or under any
Supplementary Payments Provision relating to immediate medical
or surgical relief, first aid, to expenses incurred with
respect to bodily injury, sickness, disease or death bodily
injury resulting from the hazardous properties of nuclear
material and arising out of the operation of a nuclear
facility by any person or organization.
III. Under any Liability Coverage, to injury, sickness, disease,
death or destruction bodily injury or property damage
resulting from the hazardous properties of nuclear material,
if
(a) the nuclear material (1) is at any nuclear facility
owned by, or operated by or on behalf of, an insured or
(2) has been discharged or dispersed therefrom;
(b) the nuclear material is contained in spent fuel or waste
at any time possessed, handled, used, processed, stored,
transported or disposed of by or on behalf of an
insured; or
(c) the injury, sickness, disease, death or destruction
bodily injury or property damage arises out of the
furnishing by an insured of services, materials, parts
or equipment in connection with the planning,
construction, maintenance, operation or use of any
nuclear facility, but if such facility is located within
the United States of America, its territories, or
possessions or Canada, this exclusion (c) applies only
to injury to or destruction of property at such nuclear
facility, property damage to such nuclear facility and
any property thereat.
IV. As used in this endorsement:
"HAZARDOUS PROPERTIES" include, radioactive, toxic or
explosive properties; "NUCLEAR MATERIAL" means source
material, special nuclear material or byproduct material;
"SOURCE MATERIAL", "SPECIAL NUCLEAR MATERIAL", and "BYPRODUCT
MATERIAL" have the meanings given them in the Atomic Energy
Act of 1954 or in any law amendatory thereof; "SPENT FUEL"
means any fuel element or fuel component, solid or liquid,
which has been used or exposed to radiation in a nuclear
reactor; "WASTE" means any waste material (1) containing by
product material and (2) resulting from the operation by any
19
person or organization of any nuclear facility included within
the definition of nuclear facility under paragraph (a) or (b)
thereof; "NUCLEAR FACILITY" means
(a) any nuclear reactor,
(b) any equipment or device designed or used for (1)
separating the isotopes of uranium or plutonium, (2)
processing or utilizing spent fuel, or (3) handling,
processing or packaging waste,
(c) any equipment or device used for the processing,
fabricating or alloying of special nuclear material if
at any time the total amount of such material in the
custody of the insured at the premises where such
equipment or device is located consists of or contains
more than 25 grams of plutonium or uranium 233 or any
combination thereof, or more than 250 grams of uranium
235,
(d) any structure, basin, excavation, premises or place
prepared or used for the storage or disposal of waste,
and includes the site on which any of the foregoing is
located, all operations conducted on such site and all
premises used for such operations; "NUCLEAR REACTOR" means any
apparatus designed or used to sustain nuclear fission in a
self-supporting chain reaction or to contain a ▇▇▇▇▇▇▇▇ ▇▇▇▇
of fissionable material;
With respect to injury to or destruction of property, the
word "injury" or "destruction", "property damage" includes
all forms of radioactive contamination of property,
includes all forms of radioactive contamination of
property.
V. The inception dates and thereafter of all original policies
affording coverages specified in this paragraph (3), whether
new, renewal or replacement, being policies which become
effective on or after 1st May, 1960, provided this paragraph
(3) shall not be applicable to
(i) Garage and Automobile Policies issued by the Reassured
on New York risks
or
(ii) statutory liability insurance required under Chapter 90,
General Laws of Massachusetts, until 90 days following
approval of the Broad Exclusion Provision by the
Governmental Authority having jurisdiction thereof.
(4) Without in any way restricting the operation of paragraph
( 1 ) of this Clause, it is understood and agreed that
paragraphs (2) and (3) above are not applicable to original
liability policies of the Reassured in Canada and that with
respect to such policies this Clause shall be deemed to
include the Nuclear Energy Liability Exclusion Provisions
adopted by the Canadian Underwriters' Association or the
Independent Insurance Conference of Canada.
*NOTE. The words printed in italics in the Limited Exclusion Provision
and in the Broad Exclusion Provision shall apply only in relation to
original liability policies which include a Limited Exclusion Provision
or a Broad Exclusion Provision containing those words.
21/9/67
N.M.A. 1590
20
NUCLEAR INCIDENT EXCLUSION CLAUSE-LIABILITY-REINSURANCE-CANADA
1. This Agreement does not cover any loss or liability accruing to the
Reinsured as a member of, or subscriber to, any association of insurers
or reinsurers formed for the purpose of covering nuclear energy risks
or as a direct or indirect reinsurer of any such member, subscriber or
association.
2. Without in any way restricting the operation of paragraph I of this
clause it is agreed that for all purposes of this Agreement all the
original liability contracts of the Reinsured, whether new, renewal or
replacement, of the following classes, namely,
Personal Liability.
Farmers' Liability.
Storekeepers' Liability.
which become effective on or after 31st December 1992, shall be deemed
to include, from their inception dates and thereafter, the following
provision:-
Limited Exclusion Provision.
This Policy does not apply to bodily injury or property damage with
respect to which the Insured is also insured under a contract of
nuclear energy liability insurance (whether the Insured is unnamed in
such contract and whether or not it is legally enforceable by the
Insured) issued by the Nuclear Insurance Association of Canada or any
other group or pool of insurers or would be an Insured under any such
policy but for its termination upon exhaustion of its limits of
liability.
With respect to property, loss of such property shall be deemed to be
property damage.
3. Without in any way restricting the operation of paragraph I of this
clause it is agreed that for all purposes of this Agreement all the
original liability contracts of the Reinsured, whether new, renewal or
replacement, of any class whatsoever (other than Personal Liability,
Farmers' Liability, Storekeepers' Liability or Automobile Liability
contracts), which become effective on or after 31st December 1992,
shall be deemed to include from their inception dates and thereafter,
the following provision:
Broad Exclusion Provision.
It is agreed that this Policy does not apply:
(a) to liability imposed by or arising from any nuclear liability
act, law or statute or any law amendatory thereof; nor
(b) to bodily injury or property damage with respect to which an
Insured under this policy is also insured under a contract of
nuclear energy liability insurance (whether the Insured is
unnamed in such contract and whether or not it is legally
enforceable by the Insured) issued by the Nuclear Insurance
Association of Canada or any other insurer or group or pool of
insurers or would be an Insured under any such policy but for
its termination upon exhaustion of its limit or liability; nor
(c) to bodily injury or property damage resulting directly or
indirectly from the nuclear energy hazard arising from:
(i) the ownership, maintenance, operation or use of a
nuclear facility by or on behalf of an Insured;
21
(ii) the furnishing by an Insured of services, materials,
parts or equipment in connection with the planning,
construction, maintenance, operation or use of any
nuclear facility; and
(iii) the possession, consumption, use, handling, disposal or
transportation of fissionable substances, or of other
radioactive material (except radioactive isotopes, away
from a nuclear facility, which have reached the final
stage of fabrication so as to be usable for any
scientific, medical, agricultural, commercial or
industrial purpose) used, distributed, handled or sold
by an Insured.
As used in this Policy:
1. The term "nuclear energy hazard" means the radioactive, toxic,
explosive, or other hazardous properties of radioactive material;
2. 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 law amendatory
thereof as being prescribed substances capable of releasing atomic
energy, or as being requisite for the production, use of application of
atomic energy;
3. The term "nuclear facility" means:
(a) any apparatus designed or used to sustain nuclear fission in
self-supporting chain reaction or to contain a ▇▇▇▇▇▇▇▇ ▇▇▇▇
of plutonium, thorium or uranium or any one or more of them;
(b) any equipment or device designed or used for (i) separating
the isotopes of plutonium, thorium and uranium or any one or
more of them, (ii) processing or utilizing spent fuel, or
(iii) handling, processing or packaging waste;
(c) any equipment or device used for the processing, fabricating
or alloying of plutonium, thorium or uranium enriched in the
isotope uranium 233 or in the isotope uranium 235, or any one
or more of them if at any time the total amount of such
material in the custody of the Insured at the premises where
such equipment or device is located consists of or contains
more than 25 grams of plutonium or uranium 233 or any
combination thereof, or more than 250 grams of uranium 235;
(d) any structure, basin, excavation, premises or place prepared
or used for the storage or disposal of waste radioactive
material;
and includes the site on which any of the foregoing is located,
together with all operations conducted thereon and all premises used
for such operations.
4. The term "fissionable substance" means any prescribed substance that
is, or from which can be obtained, a substance capable of releasing
atomic energy by nuclear fission.
5. With respect to property, loss of use of such property shall be deemed
to be property damage.
NMA 1979a (01/04/96) Form approved by Lloyd's Underwriters' Non-Marine
Association Limited
22
NUCLEAR ENERGY RISKS EXCLUSION CLAUSE (REINSURANCE) (1994)
(WORLDWIDE EXCLUDING U.S.A. & CANADA)
This agreement shall exclude Nuclear Energy Risks whether such risks are written
directly and/or by way of reinsurance and/or via Pools and/or Associations.
For all purposes of this agreement Nuclear Energy Risks shall mean all first
party and/or third party insurances or reinsurances (other than Workers'
Compensation and Employers' Liability) in respect of: -
(I) All Property on the site of a nuclear power station. Nuclear Reactors,
reactor buildings and plant and equipment therein on any site other
than a nuclear power station.
(II) All Property, on any site (including but not limited to the sites referred
to in (I) above) used or having been used for: -
a) The generation of nuclear energy; or
b) The Production, Use or Storage of Nuclear Material.
(III) Any other Property eligible for insurance by the relevant local Nuclear
Insurance Pool and/or Association but only to the extent of the
requirements of that local Pool and/or Association.
(IV) The supply of goods and services to any of the sites, described in (I)
to (III) above, unless such insurances or reinsurances shall exclude
the perils of irradiation and contamination by Nuclear Material.
Except as undernoted, Nuclear Energy Risks shall not include: -
(i) Any insurance or reinsurance in respect of the construction or erection
or installation or replacement or repair or maintenance or
decommissioning of Property as described in (I) to (III) above
(including contractors' plant and equipment);
(ii) Any Machinery Breakdown or other Engineering insurance or reinsurance
not corning within the scope of (I) above;
Provided always that such insurance or reinsurance shall exclude the perils of
irradiation and contamination by Nuclear Material.
However, the above exemption shall not extend to: -
(1) The provision of any insurance or reinsurance whatsoever in respect of:
(a) Nuclear Material;
(b) Any Property in the High Radioactivity Zone or Area of any
Nuclear Installation as from the introduction of Nuclear
Material or - for reactor installations - as from fuel loading
or first criticality where so agreed with the relevant local
Nuclear Insurance Pool and/or Association.
(2) The provision of any insurance or reinsurance for the undernoted perils: -
- Fire, lightning, explosion;
- Earthquake;
- Aircraft and other aerial devices or articles dropped therefrom;
- Irradiation and radioactive contamination;
- Any other peril insured by the relevant local Nuclear Insurance Pool
and/or Association;
23
in respect of any other Property not specified in (1) above which
directly involves the Production, Use or Storage of Nuclear Material as
from the introduction of Nuclear Material into such Property.
Definitions
"Nuclear Material" means: -
(i) Nuclear fuel, other than natural uranium and depleted uranium, capable
of producing energy by a self-sustaining chain process of nuclear
fission outside a Nuclear Reactor, either alone or in combination with
some other material; and
(ii) Radioactive Products or Waste.
"Radioactive Products or Waste" means any radioactive material produced in, or
any material made radioactive by exposure to the radiation incidental to the
production or utilization of nuclear fuel, but does not include radioisotopes
which have reached the final stage of fabrication so as to be usable for any
scientific, medical, agricultural, commercial or industrial purpose.
"Nuclear Installation" means: -
(i) Any Nuclear Reactor;
(ii) Any factory using nuclear fuel for the production of Nuclear Material,
or any factory for the processing of Nuclear Material, including any
factory for the reprocessing of irradiated nuclear fuel; and
(iii) Any facility where Nuclear Material is stored, other than storage
incidental to the carriage of such material.
"Nuclear Reactor" means any structure containing nuclear fuel in such an
arrangement that a self-sustaining chain process of nuclear fission can occur
therein without an additional source of neutrons.
"Production, Use or Storage of Nuclear Material" means the production,
manufacture, enrichment, conditioning, processing, reprocessing, use, storage,
handling and disposal of Nuclear Material.
"Property" shall mean all land, buildings, structures, plant, equipment,
vehicles, contents (including but not limited to liquids and gases) and all
materials of whatever description whether fixed or not.
"High Radioactivity Zone or Area" means: -
(i) For nuclear power stations and Nuclear Reactors, the vessel or
structure which immediately contains the core (including its supports
and shrouding) and all the contents thereof, the fuel elements, the
control rods and the irradiated fuel store; and
(ii) For non-reactor Nuclear Installations, any area where the level of
radioactivity requires the provision of a biological shield.
24
Contract No. PUSNA0500666
ENDORSEMENT NO. 1
EFFECTIVE NOVEMBER 1, 2005
to
EXCESS OF LOSS REINSURANCE AGREEMENT
EFFECTIVE NOVEMBER 1, 2005
issued to
DARWIN NATIONAL ASSURANCE COMPANY
DARWIN SELECT INSURANCE COMPANY
CAPITOL INDEMNITY CORPORATION,
PLATTE RIVER INSURANCE COMPANY
AND/OR ANY OTHER ASSOCIATED, AFFILIATED OR
SUBSIDIARY COMPANIES OF ALLEGHANY INSURANCE HOLDING LLC,
BUT ONLY IN RESPECT OF BUSINESS UNDERWRITTEN BY DARWIN
PROFESSIONAL UNDERWRITERS, INC.
(hereinafter called the "Reassured")
by
THE UNDERWRITERS AT LLOYD'S, LONDON,
who are signatories hereto, each for the
proportion underwritten and not one for another
(hereinafter called, with other participants, the "Reinsurers")
FOR VALUE RECEIVED, the receipt and sufficiency of which is hereby acknowledged,
and intending to be legally bound, effective November 1, 2005 12:01 a.m.,
Standard Time, (the "Effective Date"),
1. The Reassured and the Reinsurer hereby agree to amend this Contract as
follows:
a). The Reassured's name is amended to read as follows:
DARWIN NATIONAL ASSURANCE COMPANY
DARWIN SELECT INSURANCE COMPANY
CAPITOL INDEMNITY CORPORATION,
CAPITOL SPECIALTY INSURANCE CORPORATION
PLATTE RIVER INSURANCE COMPANY
AND/OR ANY OTHER ASSOCIATED, AFFILIATED OR
SUBSIDIARY COMPANIES OF ALLEGHANY INSURANCE HOLDING LLC,
BUT ONLY IN RESPECT OF BUSINESS UNDERWRITTEN BY AMERICAN
PROFESSIONAL AGENCY INCORPORATED FOR AND ON BEHALF OF
DARWIN PROFESSIONAL UNDERWRITERS
25
b). Paragraph A, of Article VI - Special Termination is
amended to read as follows:
"VI. A. Either party may terminate this Contract upon thirty
(30) days written notice in the event that the other party's
surplus has been reduced by 30% or more of the amount of
surplus at September 30, 2003."
c). The first paragraph of Article VII - Ultimate Net Loss is
amended to read as follows:
"The term "Ultimate Net Loss" as used in this Contract shall
mean the sum actually paid by the Reassured in settlement of any losses
under its original policies and/or 100% of any additional liability
incurred by the Reassured as a result of an award in excess of policy
limits, and/or 100% of any liability incurred by the Reassured from any
extra-contractual obligation, both as more fully defined in EXCESS OF
ORIGINAL POLICY LIMITS and EXTRA-CONTRACTUAL OBLIGATIONS. In the event
that the Reassured's original policies and/or specific coverage parts
of their original policies are issued on a cost inclusive basis, such
loss adjustment expenses shall be included within the Reassured's
Ultimate Net Loss for the purposes of recovery hereunder."
d). Paragraph B, Article XI - Premium is amended to read as
follows:
"XI. B. Within 60 days of expiry of this Contract, the
Reassured shall render a statement of its Subject Gross Net
Written Premium Income and the Reassured shall pay, or be paid
by the Reinsurers, the difference between the Deposit Premium
and a premium determined by applying a provisional rate of 14%
to the said Subject Gross Net Written Premium Income. "
e). The third paragraph of Article XII - Notice of Loss and
Loss Settlements is amended to read as follows:
"The bordereaux shall solely comprise numerical details of the
paid and outstanding amounts of each loss together with other data to
identify the claim. It is clearly understood and agreed that such
bordereaux shall not provide any other details of the claim and that
there shall be no requirement to provide assessment of potential
liability or other evaluations of each claim. "
f). The first paragraph of Article XXV - Confidentiality is
amended to read as follows:
"The confidential nature of this Contract is acknowledged by
all parties. Moreover, the Reinsurers will only disclose to third
parties, such as regulators, legal counsel, auditors, rating agencies,
shareholders, reinsurers and the like, such details of this Contract as
are necessary to comply with their obligations to such third parties as
part of their normal business practice. "
2. All other terms and conditions not inconsistent with the above remain
unchanged.
IN WITNESS WHEREOF, the parties intending to be legally bound hereto have
executed this Endorsement on the date indicated below by their duly authorized
representatives.
Signed in London, England, this day of , 2006,
26
and signed in Farmington, Connecticut, this day of , 2006.
DARWIN NATIONAL ASSURANCE COMPANY
DARWIN SELECT INSURANCE COMPANY
CAPITOL INDEMNITY CORPORATION,
CAPITOL SPECIALTY INSURANCE CORPORATION
PLATTE RIVER INSURANCE COMPANY
AND/OR ANY OTHER ASSOCIATED, AFFILIATED OR
SUBSIDIARY COMPANIES OF ALLEGHANY INSURANCE HOLDING LLC,
BUT ONLY IN RESPECT OF BUSINESS UNDERWRITTEN BY AMERICAN
PROFESSIONAL AGENCY INCORPORATED FOR AND ON BEHALF OF
DARWIN PROFESSIONAL UNDERWRITERS
BY /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
TITLE President & CEO
----------------------------------
Doc#: 196635 04/18/2006
ENDORSEMENT NO. 1
EFFECTIVE NOVEMBER 1, 2005
to
EXCESS OF LOSS REINSURANCE AGREEMENT
EFFECTIVE NOVEMBER 1, 2005
27
Contract No. PUSNA0500666
ENDORSEMENT NO. 1
EFFECTIVE NOVEMBER 1, 2005
to
EXCESS OF LOSS REINSURANCE AGREEMENT
EFFECTIVE NOVEMBER 1, 2005
issued to
DARWIN NATIONAL ASSURANCE COMPANY
DARWIN SELECT INSURANCE COMPANY
CAPITOL INDEMNITY CORPORATION,
PLATTE RIVER INSURANCE COMPANY
AND/OR ANY OTHER ASSOCIATED, AFFILIATED OR
SUBSIDIARY COMPANIES OF ALLEGHANY INSURANCE HOLDING LLC,
BUT ONLY IN RESPECT OF BUSINESS UNDERWRITTEN BY DARWIN
PROFESSIONAL UNDERWRITERS, INC.
(hereinafter called the "Reassured")
by
ASPEN INSURANCE U.K. LIMITED
(hereinafter called, with other participants, the "Reinsurers")
FOR VALUE RECEIVED, the receipt and sufficiency of which is hereby acknowledged,
and intending to be legally bound, effective November 1, 2005 12:01 a.m.,
Standard Time, (the "Effective Date"),
1. The Reassured and the Reinsurer hereby agree to amend this Contract as
follows:
a). The Reassured's name is amended to read as follows:
DARWIN NATIONAL ASSURANCE COMPANY
DARWIN SELECT INSURANCE COMPANY
CAPITOL INDEMNITY CORPORATION,
CAPITOL SPECIALTY INSURANCE CORPORATION
PLATTE RIVER INSURANCE COMPANY
AND/OR ANY OTHER ASSOCIATED, AFFILIATED OR
SUBSIDIARY COMPANIES OF ALLEGHANY INSURANCE HOLDING LLC,
BUT ONLY IN RESPECT OF BUSINESS UNDERWRITTEN BY AMERICAN
PROFESSIONAL AGENCY INCORPORATED FOR AND ON BEHALF OF
DARWIN PROFESSIONAL UNDERWRITERS
28
b). Paragraph A, of Article VI - Special Termination is
amended to read as follows:
"VI. A. Either party may terminate this Contract upon thirty
(30) days written notice in the event that the other party's
surplus has been reduced by 30% or more of the amount of
surplus at September 30, 2003."
c). The first paragraph of Article VII - Ultimate Net Loss is
amended to read as follows:
"The term "Ultimate Net Loss" as used in this Contract shall
mean the sum actually paid by the Reassured in settlement of any losses
under its original policies and/or 100% of any additional liability
incurred by the Reassured as a result of an award in excess of policy
limits, and/or 100% of any liability incurred by the Reassured from any
extra-contractual obligation, both as more fully defined in EXCESS OF
ORIGINAL POLICY LIMITS and EXTRA-CONTRACTUAL OBLIGATIONS. In the event
that the Reassured's original policies and/or specific coverage parts
of their original policies are issued on a cost inclusive basis, such
loss adjustment expenses shall be included within the Reassured's
Ultimate Net Loss for the purposes of recovery hereunder."
d). Paragraph B, Article XI - Premium is amended to read as
follows:
"XI. B. Within 60 days of expiry of this Contract, the
Reassured shall render a statement of its Subject Gross Net
Written Premium Income and the Reassured shall pay, or be paid
by the Reinsurers, the difference between the Deposit Premium
and a premium determined by applying a provisional rate of 14%
to the said Subject Gross Net Written Premium Income. "
e). The third paragraph of Article XII - Notice of Loss and
Loss Settlements is amended to read as follows:
"The bordereaux shall solely comprise numerical details of the
paid and outstanding amounts of each loss together with other data to
identify the claim. It is clearly understood and agreed that such
bordereaux shall not provide any other details of the claim and that
there shall be no requirement to provide assessment of potential
liability or other evaluations of each claim. "
f). The first paragraph of Article XXV - Confidentiality is
amended to read as follows:
"The confidential nature of this Contract is acknowledged by
all parties. Moreover, the Reinsurers will only disclose to third
parties, such as regulators, legal counsel, auditors, rating agencies,
shareholders, reinsurers and the like, such details of this Contract as
are necessary to comply with their obligations to such third parties as
part of their normal business practice. "
2. All other terms and conditions not inconsistent with the above remain
unchanged.
IN WITNESS WHEREOF, the parties intending to be legally bound hereto have
executed this Endorsement on the date indicated below by their duly authorized
representatives.
Signed in London, England, this day of , 2006,
29
and signed in Farmington, Connecticut, this day of , 2006.
DARWIN NATIONAL ASSURANCE COMPANY
DARWIN SELECT INSURANCE COMPANY
CAPITOL INDEMNITY CORPORATION,
CAPITOL SPECIALTY INSURANCE CORPORATION
PLATTE RIVER INSURANCE COMPANY
AND/OR ANY OTHER ASSOCIATED, AFFILIATED OR
SUBSIDIARY COMPANIES OF ALLEGHANY INSURANCE HOLDING LLC,
BUT ONLY IN RESPECT OF BUSINESS UNDERWRITTEN BY AMERICAN
PROFESSIONAL AGENCY INCORPORATED FOR AND ON BEHALF OF
DARWIN PROFESSIONAL UNDERWRITERS
BY /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
TITLE President & CEO
----------------------------------
Doc#: 196635 04/18/2006
ENDORSEMENT NO. 1
EFFECTIVE NOVEMBER 1, 2005
to
EXCESS OF LOSS REINSURANCE AGREEMENT
EFFECTIVE NOVEMBER 1, 2005
30
Contract No.
ENDORSEMENT NO. 1
EFFECTIVE NOVEMBER 1, 2005
to
EXCESS OF LOSS REINSURANCE AGREEMENT
EFFECTIVE NOVEMBER 1, 2005
issued to
DARWIN NATIONAL ASSURANCE COMPANY
DARWIN SELECT INSURANCE COMPANY
CAPITOL INDEMNITY CORPORATION,
PLATTE RIVER INSURANCE COMPANY
AND/OR ANY OTHER ASSOCIATED, AFFILIATED OR
SUBSIDIARY COMPANIES OF ALLEGHANY INSURANCE HOLDING LLC,
BUT ONLY IN RESPECT OF BUSINESS UNDERWRITTEN BY DARWIN
PROFESSIONAL UNDERWRITERS, INC.
(hereinafter called the "Reassured")
by
ACE PROPERTY & CASUALTY INSURANCE COMPANY
Through ACE TEMPEST RE USA, LLC
(hereinafter called, with other participants, the "Reinsurers")
FOR VALUE RECEIVED, the receipt and sufficiency of which is hereby acknowledged,
and intending to be legally bound, effective November 1, 2005 12:01 a.m.,
Standard Time, (the "Effective Date"),
1. The Reassured and the Reinsurer hereby agree to amend this Contract as
follows:
a). The Reassured's name is amended to read as follows:
DARWIN NATIONAL ASSURANCE COMPANY
DARWIN SELECT INSURANCE COMPANY
CAPITOL INDEMNITY CORPORATION,
CAPITOL SPECIALTY INSURANCE CORPORATION
PLATTE RIVER INSURANCE COMPANY
AND/OR ANY OTHER ASSOCIATED, AFFILIATED OR
SUBSIDIARY COMPANIES OF ALLEGHANY INSURANCE HOLDING LLC,
BUT ONLY IN RESPECT OF BUSINESS UNDERWRITTEN BY AMERICAN
PROFESSIONAL AGENCY INCORPORATED FOR AND ON BEHALF OF
DARWIN PROFESSIONAL UNDERWRITERS
31
b). Paragraph A, of Article VI - Special Termination is
amended to read as follows:
"VI. A. Either party may terminate this Contract upon thirty
(30) days written notice in the event that the other party's
surplus has been reduced by 30% or more of the amount of
surplus at September 30, 2003."
c). The first paragraph of Article VII - Ultimate Net Loss is
amended to read as follows:
"The term "Ultimate Net Loss" as used in this Contract shall
mean the sum actually paid by the Reassured in settlement of any losses
under its original policies and/or 100% of any additional liability
incurred by the Reassured as a result of an award in excess of policy
limits, and/or 100% of any liability incurred by the Reassured from any
extra-contractual obligation, both as more fully defined in EXCESS OF
ORIGINAL POLICY LIMITS and EXTRA-CONTRACTUAL OBLIGATIONS. In the event
that the Reassured's original policies and/or specific coverage parts
of their original policies are issued on a cost inclusive basis, such
loss adjustment expenses shall be included within the Reassured's
Ultimate Net Loss for the purposes of recovery hereunder."
d). Paragraph B, Article XI - Premium is amended to read as
follows:
"XI. B. Within 60 days of expiry of this Contract, the
Reassured shall render a statement of its Subject Gross Net
Written Premium Income and the Reassured shall pay, or be paid
by the Reinsurers, the difference between the Deposit Premium
and a premium determined by applying a provisional rate of 14%
to the said Subject Gross Net Written Premium Income. "
e). The third paragraph of Article XII - Notice of Loss and
Loss Settlements is amended to read as follows:
"The bordereaux shall solely comprise numerical details of the
paid and outstanding amounts of each loss together with other data to
identify the claim. It is clearly understood and agreed that such
bordereaux shall not provide any other details of the claim and that
there shall be no requirement to provide assessment of potential
liability or other evaluations of each claim. "
f). The first paragraph of Article XXV - Confidentiality is
amended to read as follows:
"The confidential nature of this Contract is acknowledged by
all parties. Moreover, the Reinsurers will only disclose to third
parties, such as regulators, legal counsel, auditors, rating agencies,
shareholders, reinsurers and the like, such details of this Contract as
are necessary to comply with their obligations to such third parties as
part of their normal business practice. "
2. All other terms and conditions not inconsistent with the above remain
unchanged.
32
IN WITNESS WHEREOF, the parties intending to be legally bound hereto have
executed this Endorsement on the date indicated below by their duly authorized
representatives.
Signed in Stamford, Connecticut, this 21st day of April, 2006,
ACE PROPERTY & CASUALTY INSURANCE COMPANY
Through ACE TEMPEST RE USA, LLC
BY
-----------------------------------
TITLE
-----------------------------------
Doc#: 196635 04/18/2006
33
and signed in Farmington, Connecticut, this day of , 2006.
DARWIN NATIONAL ASSURANCE COMPANY
DARWIN SELECT INSURANCE COMPANY
CAPITOL INDEMNITY CORPORATION,
CAPITOL SPECIALTY INSURANCE CORPORATION
PLATTE RIVER INSURANCE COMPANY
AND/OR ANY OTHER ASSOCIATED, AFFILIATED OR
SUBSIDIARY COMPANIES OF ALLEGHANY INSURANCE HOLDING LLC,
BUT ONLY IN RESPECT OF BUSINESS UNDERWRITTEN BY AMERICAN
PROFESSIONAL AGENCY INCORPORATED FOR AND ON BEHALF OF
DARWIN PROFESSIONAL UNDERWRITERS
BY /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
TITLE President & CEO
-----------------------------------
Doc#: 196635 04/18/2006
ENDORSEMENT NO. 1
EFFECTIVE NOVEMBER 1, 2005
to
EXCESS OF LOSS REINSURANCE AGREEMENT
EFFECTIVE NOVEMBER 1, 2005
34
Contract No. 611365 / 206
ENDORSEMENT NO. 1
EFFECTIVE NOVEMBER 1, 2005
to
EXCESS OF LOSS REINSURANCE AGREEMENT
EFFECTIVE NOVEMBER 1, 2005
issued to
DARWIN NATIONAL ASSURANCE COMPANY
DARWIN SELECT INSURANCE COMPANY
CAPITOL INDEMNITY CORPORATION,
PLATTE RIVER INSURANCE COMPANY
AND/OR ANY OTHER ASSOCIATED, AFFILIATED OR
SUBSIDIARY COMPANIES OF ALLEGHANY INSURANCE HOLDING LLC,
BUT ONLY IN RESPECT OF BUSINESS UNDERWRITTEN BY DARWIN
PROFESSIONAL UNDERWRITERS, INC.
(hereinafter called the "Reassured")
by
AXIS REINSURANCE COMPANY
NEW YORK
(hereinafter called, with other participants, the "Reinsurers")
FOR VALUE RECEIVED, the receipt and sufficiency of which is hereby acknowledged,
and intending to be legally bound, effective November 1, 2005 12:01 a.m.,
Standard Time, (the "Effective Date"),
1. The Reassured and the Reinsurer hereby agree to amend this Contract as
follows:
a). The Reassured's name is amended to read as follows:
DARWIN NATIONAL ASSURANCE COMPANY
DARWIN SELECT INSURANCE COMPANY
CAPITOL INDEMNITY CORPORATION,
CAPITOL SPECIALTY INSURANCE CORPORATION
PLATTE RIVER INSURANCE COMPANY
AND/OR ANY OTHER ASSOCIATED, AFFILIATED OR
SUBSIDIARY COMPANIES OF ALLEGHANY INSURANCE HOLDING LLC,
BUT ONLY IN RESPECT OF BUSINESS UNDERWRITTEN BY AMERICAN
PROFESSIONAL AGENCY INCORPORATED FOR AND ON BEHALF OF
DARWIN PROFESSIONAL UNDERWRITERS
35
b). Paragraph A, of Article VI - Special Termination is
amended to read as follows:
"VI. A. Either party may terminate this Contract upon thirty
(30) days written notice in the event that the other party's
surplus has been reduced by 30% or more of the amount of
surplus at September 30, 2003."
c). The first paragraph of Article VII - Ultimate Net Loss is
amended to read as follows:
"The term "Ultimate Net Loss" as used in this Contract shall
mean the sum actually paid by the Reassured in settlement of any losses
under its original policies and/or 100% of any additional liability
incurred by the Reassured as a result of an award in excess of policy
limits, and/or 100% of any liability incurred by the Reassured from any
extra-contractual obligation, both as more fully defined in EXCESS OF
ORIGINAL POLICY LIMITS and EXTRACONTRACTUAL OBLIGATIONS. In the event
that the Reassured's original policies and/or specific coverage parts
of their original policies are issued on a cost inclusive basis, such
loss adjustment expenses shall be included within the Reassured's
Ultimate Net Loss for the purposes of recovery hereunder."
d). Paragraph B, Article XI - Premium is amended to read as
follows:
"XI. B. Within 60 days of expiry of this Contract, the
Reassured shall render a statement of its Subject Gross Net
Written Premium Income and the Reassured shall pay, or be paid
by the Reinsurers, the difference between the Deposit Premium
and a premium determined by applying a provisional rate of 14%
to the said Subject Gross Net Written Premium Income. "
e). The third paragraph of Article XII - Notice of Loss and
Loss Settlements is amended to read as follows:
"The bordereaux shall solely comprise numerical details of the
paid and outstanding amounts of each loss together with other data to
identify the claim. It is clearly understood and agreed that such
bordereaux shall not provide any other details of the claim and that
there shall be no requirement to provide assessment of potential
liability or other evaluations of each claim. "
f). The first paragraph of Article XXV - Confidentiality is
amended to read as follows:
"The confidential nature of this Contract is acknowledged by
all parties. Moreover, the Reinsurers will only disclose to third
parties, such as regulators, legal counsel, auditors, rating agencies,
shareholders, reinsurers and the like, such details of this Contract as
are necessary to comply with their obligations to such third parties as
part of their normal business practice. "
2. All other terms and conditions not inconsistent with the above remain
unchanged.
36
IN WITNESS WHEREOF, the parties intending to be legally bound hereto have
executed this Endorsement on the date indicated below by their duly authorized
representatives.
Signed in New York, New York, this 21st day of April, 2006,
AXIS REINSURANCE COMPANY
BY
----------------------------------
TITLE
----------------------------------
Doc#: 196635 04/18/2006
37
and signed in Farmington, Connecticut, this day of , 2006.
DARWIN NATIONAL ASSURANCE COMPANY
DARWIN SELECT INSURANCE COMPANY
CAPITOL INDEMNITY CORPORATION,
CAPITOL SPECIALTY INSURANCE CORPORATION
PLATTE RIVER INSURANCE COMPANY
AND/OR ANY OTHER ASSOCIATED, AFFILIATED OR
SUBSIDIARY COMPANIES OF ALLEGHANY INSURANCE HOLDING LLC,
BUT ONLY IN RESPECT OF BUSINESS UNDERWRITTEN BY AMERICAN
PROFESSIONAL AGENCY INCORPORATED FOR AND ON BEHALF OF
DARWIN PROFESSIONAL UNDERWRITERS
BY /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
TITLE President & CEO
----------------------------------
Doc#: 196635 04/18/2006
ENDORSEMENT NO. 1
EFFECTIVE NOVEMBER 1, 2005
to
EXCESS OF LOSS REINSURANCE AGREEMENT
EFFECTIVE NOVEMBER 1, 2005
38