Exhibit 10.3
BINDER OF REINSURANCE
CASUALTY EXCESS OF LOSS REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
between
PHILADELPHIA CONSOLIDATED HOLDING CORPORATION'S
following member Companies:
PHILADELPHIA INDEMNITY INSURANCE COMPANY
PHILADELPHIA INSURANCE COMPANY
both of Bala Cynwyd
(hereinafter referred to as the "Company")
and
SWISS REINSURANCE AMERICA CORPORATION
Armonk, New York
(hereinafter referred to as the "Reinsurer")
BUSINESS COVERED: Classes of Insurance
- Automobile Liability:
Bodily Injury Liability, Property Damage
Liability, Medical Payments, Uninsured
Motorists, Underinsured Motorists and
No-Fault Coverage.
- Liability Other Than Automobile:
Bodily Injury Liability, Property Damage
Liability, Personal and Advertising Injury
Liability, and Medical Payments Coverage
when written as part of a Commercial or
Personal Package Policy or on a monoline
basis. However, Advertising Injury Liability
shall only apply to this Agreement when
written as part of a Commercial Package
Policy or a Commercial General Liability
Coverage Form.
- Commercial Umbrella Liability.
- Professional Liability:
Director's and Officers Liability for For
Profit and Not for Profit risks,
Miscellaneous Errors and Omissions
Liability, Lawyers Professional Liability,
Accountants Professional Liability, Dentists
Professional Liability, Insurance Agents
Professional Liability, Miscellaneous
Professional Liability, Employment Practices
Liability.
1 .
EFFECTIVE DATE
AND TERMINATION: This Agreement shall become effective with
respect to losses occurring within the
period commencing 12:01 a.m., Eastern
Standard Time, January 1, 2004, with respect
to Policies in force as of January 1, 2004,
and new and renewal Policies becoming
effective on or after said date and ending
12:01 a.m., Eastern Standard Time, January
1, 2005.
Upon termination of this Agreement, the
Reinsurer shall be liable for losses
occurring prior to the date of termination;
however, the Reinsurer shall have no
liability for losses occurring subsequent to
the termination of this Agreement.
The term "Policies" shall mean each of the
Company's binders, policies and contracts of
insurance on the business covered hereunder.
TERRITORY: This Agreement applies to Policies issued by
the Company within the United States of
America, its territories and possessions,
and Canada and shall apply to losses covered
hereunder wherever occurring.
LIMIT AND RETENTION: Part I - First Excess of Loss
The Company shall retain the first
$2,000,000 of Ultimate Net Loss as respects
any one Loss Occurrence. The Reinsurer shall
then be liable for the amount by which the
Company's Ultimate Net Loss exceeds the
Company's retention of $2,000,000, but the
liability of the Reinsurer shall never
exceed $3,000,000 with respect to any one
Loss Occurrence. However, in no event shall
the liability of the Reinsurer arising out
of Act(s) of Terrorism exceed $3,000,000
during the term of this Agreement.
Part II - Second Excess of Loss
The Company shall retain the first
$5,000,000 of Ultimate Net Loss as respects
any one Loss Occurrence. The Reinsurer shall
then be liable for the amount by which the
Company's Ultimate Net Loss exceeds the
Company's retention of $5,000,000, but the
liability of the Reinsurer shall never
exceed $5,000,000 with respect to any one
Loss Occurrence. However, in no event
2 .
shall the liability of the Reinsurer arising
out of Act(s) of Terrorism exceed $5,000,000
during the term of this Agreement.
Part III - Third Excess of Loss
The Company shall retain the first
$10,000,000 of Ultimate Net Loss as respects
any one Loss Occurrence. The Reinsurer shall
then be liable for the amount by which the
Company's Ultimate Net Loss exceeds the
Company's retention of $10,000,000, but the
liability of the Reinsurer shall never
exceed $10,000,000, with respect to any one
Loss Occurrence. However, in no event shall
the liability of the Reinsurer arising out
of Act(s) of Terrorism exceed $10,000,000
during the term of this Agreement.
An "Act of Terrorism" for purposes of this
Agreement shall mean:
1. Any actual or threatened violent act
or act harmful to human life, tangible
or intangible property or
infrastructure directed towards or
having the effect of (a) influencing
or protesting against any de jure or
de facto government or policy thereof,
(b) intimidating, coercing or putting
in fear a civilian population or
section thereof for the purpose of
establishing or advancing a specific
ideological, religious or political
system of thought, perpetrated by a
specific individual or group directly
or indirectly through agents acting on
behalf of said individual or group or
(c) retaliating against any country
for direct or vicarious support by
that country of any other government
or political system.
2. Any act declared pursuant to the
Terrorism Risk Insurance Act of 2002
shall also be considered an "Act of
Terrorism" for purposes of this
Agreement.
It is deemed that inuring Casualty Excess of
Loss Reinsurance for limits greater than
$1,000,000 per occurrence/per claim and
inuring Corporate Errors and Omission
Insurance coverages that are in effect at
the inception of this agreement shall be
maintained without change during the term of
this agreement.
3 .
It is further warranted that Policies
subject to this Agreement with inuring
coverage as deemed above, shall not exceed a
combined limit for both the Primary Policy
and Umbrella Policy of $11,000,000 per
occurrence.
It is also warranted that there are no known
or reported losess as March 23, 2004 for the
business covered hereunder.
REINSTATEMENT: Part I - First Excess of Loss
One reinstatement calculated at pro-rata
amount, 100% as to time.
Part II - Second Excess of Loss
One reinstatement calculated at pro-rata
amount, 100% as to time.
Part III - Third Excess of Loss
One reinstatement calculated at pro-rata
amount, 100% as to time.
EXCLUSIONS: As per the attached.
REINSURANCE PREMIUM: The rates set forth below shall be applied
to the Company's Subject Earned Premium, as
per the attached Clause. The estimated
Subject Earned Premium for the term of this
agreement is $623,000,000.
The Deposit Premiums set forth below shall
be payable in four installments on January
1, April 1, July 1 and October 1 and
adjusted within 60 days after termination
subject to the Annual Minimum Premium.
Annual Annual Quarterly
Rate Minimum Deposit Deposit
---- ------- ------- --------
Part I .056% $279,104 $279,104 $ 69,776
Part II .068% $338,912 $338,912 $ 84,728
Part III .131% $652,904 $652,904 $163,226
REPORTS AND
REMITTANCES: As per the attached Clause.
OTHER CLAUSES: - Access to Records (as attached)
- Amendments
- Claims
- Currency
4 .
- Dispute Resolution (as attached)
- Errors or Omissions
- Extra Contractual Obligations - 90%
(as attached)
- Insolvency (as attached)
- Loss In Excess of Policy Limits - 90%
(as attached)
- Loss Occurrence (as attached)
- Offset (as attached)
- Salvage and Subrogation
- Special Acceptance
- Special Termination
- Taxes
- Terrorism Excess Recovery (as
attached)
- Ultimate Net Loss (as attached)
Upon signature by duly authorized representatives of the Reinsurer and the
Company, this Binder of Reinsurance shall be effective until superseded by an
Agreement of Reinsurance signed by duly authorized representatives of the
Reinsurer and the Company.
SRA Participation Accepted Hereon:100% (Being $18,000,000)
SRA Reference #TC1573
SWISS REINSURANCE AMERICA CORPORATION
Authorized Signature_Peter ▇▇▇▇▇▇▇▇, Account Executive
Date: 4/9/2004
PHILADELPHIA CONSOLIDATED HOLDING
CORPORATION'S
following member companies:
PHILADELPHIA INDEMNITY INSURANCE COMPANY
PHILADELPHIA INSURANCE COMPANY
Authorized Signature ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Executive Vice President and Chief
Underwriting Officer
Date: 4/23/2004
DS philcasmar29
5 .
EXCLUSIONS
THIS AGREEMENT DOES NOT COVER:
A. THE FOLLOWING GENERAL CATEGORIES
1. Ex-gratia payments.
2. Risks subject to a deductible or a self-insured retention excess of
$25,000.
3. Loss or damage caused directly or indirectly by: (a) enemy attack by
armed forces including action taken by military, naval or air forces
in resisting an actual or an immediately impending enemy attack; (b)
invasion; (c) insurrection; (d) rebellion; (e) revolution; (f)
intervention; (g) civil war; and (h) usurped power.
4. Reinsurance assumed by the Company.
5. Business derived from any Pool, Association, including Joint
Underwriting Association, Syndicate, Exchange, Plan, Fund or other
facility directly as a member, subscriber or participant, or
indirectly by way of reinsurance or assessments; provided this
exclusion shall not apply to Automobile or Workers Compensation
assigned risks which may be currently or subsequently covered
hereunder.
6. Pollution Liability as per the attached Pollution Liability
Exclusion Clause - Reinsurance.
7. Insolvency Funds as per the attached Insolvency Funds Exclusion
Clause.
8. Nuclear Incident Exclusion Clauses which are attached and made part
of this Agreement:
a. Nuclear Incident Exclusion Clause - Liability - Reinsurance -
U.S.A.
b. Nuclear Incident Exclusion Clause - Liability - Reinsurance -
Canada.
c. Nuclear Incident Exclusion Clause - Reinsurance - No. 4.
9. Any actual or alleged liability whatsoever for any claim or claims
in respect of loss or losses, directly or indirectly arising out of,
resulting from, or in consequence of asbestos, in whatever form or
quantity.
10. Any liability, loss, cost or expense of whatsoever nature directly
or indirectly caused by, contributed to by, resulting from, arising
out of or in connection with the use or release, or threat thereof,
of any nuclear weapon or device or chemical
6 .
or biological agent, regardless of any other cause or event
contributing concurrently or in any other sequence to the loss.
B. THE FOLLOWING INSURANCE COVERAGES
1. Fiduciary Liability.
2. Fidelity and Surety.
3. Credit and Financial Guarantee.
4. Securities and Exchange Liability.
5. Retroactive coverage.
6. Personal Excess or Umbrella Liability.
7. Medical Malpractice for Doctors, Physicians, Surgeons, Nurses,
Hospitals and Clinics.
8. Advertisers,' Broadcasters' and Telecasters' Liability as respects
Personal Injury Liability except as provided under Commercial
Package Policies or Commercial General Liability Coverage Forms.
9. Liquor Law Liability except Host Liquor Law Liability.
10. Kidnap, Extortion and ▇▇▇▇▇▇ Liability.
11. Boiler and Machinery Insurance.
12. Protection and Indemnity (Ocean Marine). 13. Workers Compensation
and Employers Liability Insurance.
14. Business classified by the Company as Primary Rental Liability and
Supplemental Liability.
15. New and Renewal business classified by the Company as Nursing Home
or Assisted Living General Liability or Professional Liability.
However, this exclusion shall not apply if the Company is required
by the applicable regulatory authority(ies) to renew any insured(s)
policy.
C. THE FOLLOWING RISKS AS RESPECTS AUTOMOBILE LIABILITY AND AUTOMOBILE
COLLISION
1. Vehicles used in or while in practice or preparation for, a
prearranged racing, speed, exhibition or demolition contest.
7 .
2. All vehicles classified as "Public Automobiles" except church buses,
social service agency automobiles, van pools and vehicles used for
the transportation of employees.
3. Fire, police, emergency or municipal vehicles.
4. Motorcycles.
5. The rental or leasing of vehicles to others.
6. Logging trucks.
7. Vehicles regularly used to haul property of others and operating
beyond a 200 mile radius.
8. Newspaper delivery trucks.
9. Vehicles engaged in the transportation or distribution of fireworks,
fuses, explosives, ammunitions, natural or artificial fuel, gas, or
liquefied petroleum gases or gasoline.
D. THE FOLLOWING AS RESPECTS LIABILITY OTHER THAN AUTOMOBILE
1. Risks involving known exposure to the following substances:
a. dioxin.
b. polychlorinated biphenols.
2. Liability as respects Products and Completed Operations:
a. The manufacture, labeling or re-labeling, importation or
wholesale distribution of:
(i) Drugs or pharmaceuticals.
(ii) Cosmetics.
(iii) Herbicides, insecticides or pesticides.
(iv) Petrochemical or electrical equipment used for
heating, lighting or cooking.
(v) Industrial or toxic chemicals.
(vi) Valves, gaskets or seals of a hydraulic, petrochemical
or high pressure nature.
(vii) Medical supplies.
(viii) Heavy machinery and equipment.
(ix) Power tools.
(x) Medical equipment used for diagnostic or life
sustaining purposes.
b. The manufacture or importing of motorized or self-propelled
vehicles and equipment.
c. The manufacturing, importing, packing, canning, bottling or
processing of foodstuffs.
d. The blending, mixing, processing or importing of animal feed.
e. The manufacture, sale, distribution, handling, servicing or
maintenance of aircraft, aerospacecraft, missiles, satellites
or any component or components thereof.
8 .
3. Ownership, operation or use of vessels exceeding 50 feet in length.
4. All railway operations except sidetrack agreements.
5. Amusement parks, carnivals or circuses.
6. Public assembly exposure in excess of 5,000.
7. Gas, electric and water utility companies.
8. Subaqueous operations.
9. Mining.
10. Blasting operations.
11. Demolition of buildings or structures in excess of two stories.
12. Shoring, underpinning or moving of buildings or structures.
13. Manufacture, sale, rental, lease, erection or repair of scaffolds.
14. Construction of bridges, tunnels or dams.
15. a. Manufacturers or importers of fireworks, fuses, or any
substance, as defined and noted below, intended for use as an
explosive.
b. Loading of fireworks, fuses, or any explosive substance
defined below into containers for use as explosive objects,
propellant charges or detonation devices and the storage
thereof.
c. Manufacturers or importers of any product in which fireworks,
fuses, or any explosive substance defined below is an
ingredient.
d. Handling, storage, transportation or use of fireworks, fuses,
or any explosive substance defined below.
NOTE: An explosive substance is defined as any substance
manufactured for the express purpose of exploding as differentiated
from commodities used industrially and which are only incidentally
explosive.
16. Manufacture, production, refining, storage, wholesale distribution
or transportation of natural or artificial fuel, gas, butane,
propane or liquefied petroleum gases or gasoline.
17. Onshore and offshore gas and oil drilling operations.
18. Ownership, maintenance or use of any airport or aircraft, including
fueling, or any device or machine intended for and/or
9 .
aiding in the achievement of atmospheric flight, projection or orbit
19. Municipalities.
20. Liability as respects companies identified in the attached
Pharmaceutical / Medical Company Exclusion Listing, including all
affiliates and subsidiaries thereof.
E. Those exclusions set forth under Items 5. and 16. of Section D. shall not
apply if the exposure is incidental to the regular operations of the
insured covered hereunder. An exposure shall be considered incidental if
it comprises 15% or less of the insured's exposure base.
F. In the event the Company is inadvertently bound on any risk which is
excluded under this Agreement and identified below, the reinsurance
provided under this Agreement shall apply to such risk until discovery by
the Company within its Home Office of the existence of such risk and for
30 days thereafter, and shall then cease unless within the 30 day period,
the Company has received from the Reinsurer written notice of its approval
of such risk:
1. As respects Automobile Liability And Collision:
Items 2. through 9. of Section C.
2. As respects Liability Other Than Automobile:
Items 2. through 19. of Section D.
10 .
SUPPLEMENT TO THE ATTACHMENTS
DEFINITION OF IDENTIFICATION TERMS USED WITHIN THE ATTACHMENTS
A. Wherever the term "Company" or "Reinsured" or "Reassured" or whatever
other term is used to designate the reinsured company or companies within
the various attachments to the reinsurance agreement, the term shall be
understood to mean Company or Reinsured or Reassured or whatever other
term is used in the attached reinsurance agreement to designate the
reinsured company or companies.
B. Wherever the term "Agreement" or "Contract" or "Policy" or whatever other
term is used to designate the attached reinsurance agreement within the
various attachments to the reinsurance agreement, the term shall be
understood to mean Agreement or Contract or Policy or whatever other term
is used to designate the attached reinsurance agreement.
C. Wherever the term "Reinsurer" or "Reinsurers" or "Underwriters" or
whatever other term is used to designate the reinsurer or reinsurers in
the various attachments to the reinsurance agreement, the term shall be
understood to mean Reinsurer or Reinsurers or Underwriters or whatever
other term is used to designate the reinsuring company or companies.
POLLUTION LIABILITY EXCLUSION CLAUSE - REINSURANCE
This Reinsurance excludes:
(1) Any loss occurrence arising out of the actual, alleged or threatened
discharge, dispersal, release or escape of pollutants:
a) At or from premises owned, rented or occupied by an original
assured; or
b) At or from any site or location used for the handling,
storage, disposal, processing or treatment of waste; or
c) Which are at any time transported, handled, stored, treated,
disposed of, or processed as waste; or
d) At or from any site or location on which any original assured
is performing operations:
(i) If the pollutants are brought on or to the site or
location in connection with such operations; or
(ii) If the operations are to test for, monitor, clean up,
remove, contain, treat, detoxify or neutralize the
pollutants.
(2) Any liability, loss, cost or expense arising out of any governmental
direction or request to test for, monitor, clean up, remove,
contain, treat, detoxify or neutralize pollutants.
"Pollutants" means any solid, liquid, gaseous or thermal irritant or
contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and
waste. Waste includes materials to be recycled, reconditioned or reclaimed.
Subparagraphs a) and d)(i) of paragraph (1) of this exclusion do not apply to
loss occurrences caused by heat, smoke or fumes from a hostile fire. As used
herein, "hostile fire" means one which becomes uncontrollable or breaks out from
where it was intended to be.
"Original assured" as used herein means all insureds as defined in the policy
issued by the Company.
INSOLVENCY FUNDS EXCLUSION CLAUSE
This Agreement excludes 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 or from reimbursement of any
person for any such liability. "Insolvency fund" includes any guaranty 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 any person 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.
NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - U.S.A.
N.M.A. 1590
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. in this paragraph 2.
from the time specified in Clause III. in this paragraph 2. shall be
deemed to include the following provision (specified as the Limited
Exclusion Provision):
LIMITED EXCLUSION PROVISION*
I. It is agreed that the policy does not apply under any
liability coverage, to INJURY, SICKNESS, DISEASE, DEATH OR
DESTRUCTION, bodily injury or property damage with respect to
which an insured under the policy is also an insured under a
nuclear energy liability policy issued by Nuclear Energy
Liability Insurance Association, Mutual Atomic Energy
Liability Underwriters or Nuclear Insurance Association of
Canada, or would be an insured under any such policy but for
its termination upon exhaustion of its limit of liability.
II. Family Automobile Policies (liability only), Special
Automobile Policies (private passenger automobiles, liability
only), Farmers Comprehensive Personal Liabilities 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
- 1 -
(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):
BROAD EXCLUSION PROVISION*
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 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
N.M.A. 1590 - 2 -
(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.
N.M.A. 1590 - 3 -
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 byproduct material other than
the tailings or wastes produced by the extraction or
concentration of uranium or thorium from any ore processed for
its source material content and (2) resulting from the
operation by any person or organization of any nuclear
facility included within the definition of nuclear facility
under paragraph (a) or (b) thereof; "nuclear facility" means
(a) any nuclear reactor,
(b) any equipment or device designed or used for (1)
separating the isotopes of uranium or plutonium, (2)
processing or utilizing spent fuel, or (3) handling,
processing or packaging waste,
(c) any equipment or device used for the processing,
fabricating or alloying of special nuclear material if
at any time the total amount of such material in the
custody of the insured at the premises where such
equipment or device is located consists of or contains
more than 25 grams of 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"
INCLUDES ALL FORMS OF RADIOACTIVE CONTAMINATION OF PROPERTY;
"property damage" includes all forms of radioactive
contamination of property.
N.M.A. 1590 - 4 -
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 operations 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 BOLD TYPE 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.
N.M.A. 1590 - 5 -
NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - CANADA
N.M.A. 1979
1. This Agreement does not cover any loss or liability accruing to the
Company as a member of, or subscriber to, any association of insurers or
reinsurers formed for the purpose of covering nuclear energy risks or as a
direct or indirect reinsurer of any such member, subscriber or
association.
2. Without in any way restricting the operation of Paragraph 1. of this
Clause, it is agreed that for all purposes of this Agreement all the
original liability contracts of the Company, whether new, renewal or
replacement, of the following classes, namely,
Personal Liability
Farmers' Liability
Storekeepers' Liability
which become effective on or after 31st December 1984, shall be deemed to
include, from their inception dates and thereafter, the following
provision:
Limited Exclusion Provision -
This Policy does not apply to bodily injury or property damage with
respect to which the Insured is also insured under a contract of nuclear
energy liability insurance (whether the Insured is 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 use of such property shall be deemed to
be property damage.
3. Without in any way restricting the operation of Paragraph 1. of this
Clause, it is agreed that for all purposes of this Agreement all the
original liability contracts of the Company, whether new, renewal or
replacement, of any class whatsoever (other than Personal Liability,
Farmers' Liability, Storekeepers' Liability or Automobile Liability
contracts), which become effective on or after 31st December 1984, shall
be deemed to include, from their inception dates and thereafter, the
following provision:
- 1 -
Broad Exclusion Provision -
It is agreed that this Policy does not apply:
(a) to liability imposed by or arising under the Nuclear Liability Act;
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 Association of Canada or any other insurer or group
or pool of insurers or would be an Insured under any such policy but
for its termination upon exhaustion of its limit of liability; 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;
(ii) the furnishing of 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 that the Atomic
Energy Control Board may, by regulation, designate as being
prescribed substances capable of releasing atomic energy, or as
being requisite for the production, use or application of atomic
energy;
N.M.A. 1979 - 2 -
(3) The term "nuclear facility" means:
(a) any apparatus designed or used to sustain nuclear fission in a
self-supporting chain reaction or to contain a ▇▇▇▇▇▇▇▇ ▇▇▇▇
of plutonium, thorium and uranium or any one or more of them;
(b) any equipment or device designed or used for (i) separating
the isotopes of plutonium, thorium and uranium or any one or
more of them, (ii) processing 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.
N.M.A. 1979 - 3 -
NUCLEAR INCIDENT EXCLUSION CLAUSE - REINSURANCE - NO. 4
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 operations of Nuclear Incident
Exclusion Clauses, - Liability, - Physical Damage, - Boiler and Machinery
and paragraph 1. of this Clause, it is understood and agreed that for all
purposes of the reinsurance assumed by the Reinsurer from the Reinsured,
all original insurance policies or contracts of the Reinsured (new,
renewal and replacement) shall be deemed to include the applicable
existing Nuclear Clause and/or Nuclear Exclusion Clause(s) in effect at
the time and any subsequent revisions thereto as agreed upon and approved
by the Insurance Industry and/or a qualified Advisory or Rating Bureau.
PHARMACEUTICAL / MEDICAL COMPANY EXCLUSION LISTING
▇▇▇▇▇▇ LABORATORIES MYLAN LABORATORIES
AKZO NOBEL NOVARTIS
ALLERGAN NOVO NORDISK
ALPHARMA OTSUKA PHARMACEUTICAL
ALTANA AG PFIZER
AMERISOURCE BERGEN ▇▇▇▇▇▇ ▇▇▇▇▇
AMERSHAM PROCTER & ▇▇▇▇▇▇
AMGEN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ / PRA HOLDING
ASTRAZENECA ROCHE
AVENTIS SANKYO
▇▇▇▇ LABORATORIES SANOFI-SYNTHELABO
▇▇▇▇▇▇ INTERNATIONAL SCHERING ▇▇
▇▇▇▇▇ SCHERING-PLOUGH
BEAUFOUR IPSEN ▇▇▇▇▇▇▇ PHARMA
BECTON, ▇▇▇▇▇▇▇▇▇ AND COMPANY SERONO
BOEHRINGER INGELHEIM KG SHIONOGI
BOSTON SCIENTIFIC CORPORATION SHIRE PHARMACEUTICALS
▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB ▇▇▇▇▇ & NEPHEW
CARDINAL HEALTH SOLVAY
CELLTECH (former MEDEVA) STRYKER
CENTERPULSE SUMITOMO PHARMACEUTICALS
CHIRON SYNTHES-STRATEC
CHUGAI PHARMACEUTICAL TAKEDA CHEMICAL INDUSTRIES
DAIICHI PHARMACEUTICAL TANABE
DAINIPPON PHARMACEUTICAL TAP PHARMACEUTICAL PRODUCTS
▇▇▇▇▇▇▇ LIFESCIENCES TEVA PHARMACEUTICAL
EISAI UCB
▇▇▇▇ ▇▇▇▇▇▇ PHARMACEUTICAL
FOREST LABORATORIES WYETH
FUJISAWA PHARMACEUTICAL YAMANOUCHI PHARMACEUTICAL
GENENTECH ZIMMER
GLAXOSMITHKLINE
GUIDANT
IVAX
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
KYOWA HAKKO KOGYO
LABORATOIRE ▇▇▇▇▇▇▇▇
LABORATOIRE SERVIER
LILLY (▇▇▇)
MEDTRONIC
MERCK & CO
MERCK KGAA
MINNESOTA MINING & MANUFACTURING
MITSUBISHI PHARMACEUTICAL
GROUP PM CASUALTY/2003 JULY
REINSURANCE PREMIUM CLAUSE
A. The Company shall pay to the Reinsurer a premium for the reinsurance
provided under the First, Second and Third Excess of Loss Layers at a rate
set forth in Paragraph B. below. Such rates shall be applied to the
Company's Subject Earned Premium for the term of this Agreement.
B. A deposit premium for each layer set forth below, shall be payable by the
Company to the Reinsurer in four equal installments each due January 1,
April 1, July 1 and October 1. Within 60 days after the termination of
this Agreement, the Company shall render a statement to the Reinsurer
showing the actual reinsurance premiums due hereunder. If such premium
calculations differ from the deposit previously paid, the debtor party
shall pay the outstanding balance within 60 days after the termination of
this Agreement. However, in no event shall the adjusted premium be less
than the minimum premium for each layer, set forth below.
Minimum Deposit Quarterly
Rate Premium Premium Deposit
----- -------- -------- ---------
First Excess Layer .056% $279,104 $279,104 $ 69,776
Second Excess Layer .068% $338,912 $338,912 $ 84,728
Third Excess Layer .131% $652,904 $652,904 $163,226
C. The term "Subject Earned Premium" as used herein is equal to the sum of
the Net Premiums Written on the business covered hereunder during the
period under consideration, plus the unearned premium reserve as respects
premiums in force at the beginning of such period, less the unearned
premium reserve as respects premiums in force at the end of the period,
said unearned premium is to be calculated on an actual daily basis or in
accordance with the Company's methodology, as agreed.
D. The term "Net Premiums Written" shall mean gross premiums written less
returns, allowances and reinsurances which inure to the benefit of the
Reinsurer.
REPORTS AND REMITTANCES CLAUSE
A. The Company shall furnish the Reinsurer with all necessary data respecting
premiums and losses for as long as one of the parties hereto has a claim
against the other arising from this Agreement.
B. All checks and supporting documentation shall be sent via wire transfer to
the Reinsurer through one of the options set forth below:
a. WIRE TRANSFER
(i) All wires should be sent to:
The Bank of New York
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Name: Swiss Reinsurance America Corporation
Account Number: 8900489197
ABA Number: ▇▇▇▇▇▇▇▇▇ (SWIFT: ▇▇▇▇▇▇▇▇)
(ii) All supporting documentation should be sent to:
Swiss Reinsurance America Corporation
Accounting Department
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
b. LOCK BOX
Both checks and supporting documentation shall be sent to:
Swiss Reinsurance America Corporation
▇.▇. ▇▇▇ ▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
C. Premium Bordereau as respects each Policy covered under this Agreement -
Within 30 days after the close of each calendar quarter, the Company shall
submit a premium bordereau to the Reinsurer segregated by underwriting
year, the following information as respects each Policy covered under this
Agreement:
1. Name of Insured,
2. Policy Number,
3. Effective and Expiration Dates,
4. Line of Business.
1.
D. Payment by the Reinsurer of its portion of loss and Loss Adjustment
Expenses paid by the Company shall be made by the Reinsurer to the Company
within 15 days after proof of payment is received by the Reinsurer.
2.
ACCESS TO RECORDS CLAUSE
The Reinsurer or its duly authorized representatives shall have the right to
examine, at the offices of the Company at a reasonable time, during the currency
of this Agreement or anytime thereafter, all books and records of the Company
relating to business which is the subject of this Agreement.
DISPUTE RESOLUTION CLAUSE
Part I - Choice Of Law And Forum
Any dispute arising under this Agreement shall be resolved in the State of
Pennsylvania, and the laws of the State Pennsylvania shall govern the
interpretation and application of this Agreement.
Part II - Mediation
If a dispute between the Company and the Reinsurer, arising out of the
provisions of this Agreement or concerning its interpretation or validity and
whether arising before or after termination of this Agreement has not been
settled through negotiation, both parties agree to try in good faith to settle
such dispute by nonbinding mediation, before resorting to arbitration.
Part III - Arbitration
A. Resolution of Disputes - As a condition precedent to any right of action
arising hereunder, any dispute not resolved by mediation between the
Company and the Reinsurer arising out of the provisions of this Agreement
or concerning its interpretation or validity, whether arising before or
after termination of this Agreement, shall be submitted to arbitration in
the manner hereinafter set forth.
B. Composition of Panel - Unless the parties agree upon a single arbitrator
within 15 days after the receipt of a notice of intention to arbitrate,
all disputes shall be submitted to an arbitration panel composed of two
arbitrators and an umpire chosen in accordance with Paragraph C. hereof.
C. Appointment of Arbitrators - The members of the arbitration panel shall be
chosen from persons knowledgeable in the insurance and reinsurance
business. Unless a single arbitrator is agreed upon, the party requesting
arbitration (hereinafter referred to as the "claimant") shall appoint an
arbitrator and give written notice thereof by certified mail, to the other
party (hereinafter referred to as the "respondent") together with its
notice of intention to arbitrate. Within 30 days after receiving such
notice, the respondent shall also appoint an arbitrator and notify the
claimant thereof by certified mail. Before instituting a hearing, the two
arbitrators so appointed shall choose an umpire. If, within 20 days after
the appointment of the arbitrator chosen by the respondent, the two
arbitrators fail to agree upon the appointment of an umpire, each of them
shall nominate three individuals to serve as umpire, of whom the other
shall decline two and the umpire shall be chosen from the remaining two by
drawing lots. The name of the individual first drawn shall be the umpire.
1.
D. Failure of Party to Appoint an Arbitrator - If the respondent fails to
appoint an arbitrator within 30 days after receiving a notice of intention
to arbitrate, the claimant's arbitrator shall appoint an arbitrator on
behalf of the respondent, such arbitrator shall then, together with the
claimant's arbitrator, choose an umpire as provided in Paragraph C. of
Part III of this Article.
E. Submission of Dispute to Panel - Unless otherwise extended by the
arbitration panel or agreed to by the parties, each party shall submit its
case to the panel within 30 days after the selection of the umpire.
F. Procedure Governing Arbitration - All proceedings before the panel shall
be informal and the panel shall not be bound by the formal rules of
evidence. The panel shall have the power to fix all procedural rules
relating to the arbitration proceeding. In reaching any decision, the
panel shall give due consideration to the customs and usages of the
insurance and reinsurance business.
G. Arbitration Award - The arbitration panel shall render its decision within
60 days after termination of the proceeding, which decision shall be in
writing, stating the reasons therefor. The decision of the majority of the
panel shall be final and binding on the parties to the proceeding.
H. Cost of Arbitration - Unless otherwise allocated by the panel, each party
shall bear the expense of its own arbitrator and shall jointly and equally
bear with the other parties the expense of the umpire and the arbitration.
2.
EXTRA CONTRACTUAL OBLIGATIONS CLAUSE
A. "Extra Contractual Obligations" are defined as those liabilities not
covered under any other provision of this Agreement 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
Company 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
its insured or in the preparation or prosecution of an appeal consequent
upon such action.
B. The date on which an Extra Contractual Obligation is incurred by the
Company shall be deemed, in all circumstances, to be the date of the
original accident, casualty, disaster or loss occurrence.
C. However, coverage hereunder as respects Extra Contractual Obligations
shall not apply where the loss has been incurred due to the fraud of a
member of the Board of Directors or a corporate officer 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.
D. Recoveries, collectibles or retention from any other form of insurance or
reinsurance including deductibles or self-insured retention which protect
the Company against Extra Contractual Obligations shall inure to the
benefit of the Reinsurer and shall be deducted from the total amount of
Extra Contractual Obligations for purposes of determining the loss
hereunder.
INSOLVENCY CLAUSE
A. In the event of insolvency of the Company, the reinsurance provided by
this Agreement shall be payable by the Reinsurer on the basis of the
liability of the Company as respects Policies covered hereunder, without
diminution because of such insolvency, directly to the Company or its
liquidator, receiver, conservator or statutory successor except as
provided in Sections 4118(a)(1)(A) and 1114(c) of the New York Insurance
Law.
B. The Reinsurer shall be given written notice of the pendency of each claim
or loss which may involve the reinsurance provided by this Agreement
within a reasonable time after such claim or loss is filed in the
insolvency proceedings. The Reinsurer shall have the right to investigate
each such claim or loss and interpose, at its own expense, in the
proceedings where the claim or loss is to be adjudicated, any defense
which it may deem available to the Company, its liquidator, receiver,
conservator or statutory successor. The expense thus incurred by the
Reinsurer shall be chargeable, subject to court approval, against the
insolvent Company as part of the expense of liquidation to the extent of a
proportionate share of the benefit which may accrue to the Company solely
as a result of the defense undertaken by the Reinsurer.
C. In addition to the offset provisions set forth in Article - Offset, any
debts or credits, liquidated or unliquidated, in favor of or against
either party on the date of the receivership or liquidation order (except
where the obligation was purchased by or transferred to be used as an
offset) are deemed mutual debts or credits and shall be set off with the
balance only to be allowed or paid. Although such claim on the part of
either party against the other may be unliquidated or undetermined in
amount on the date of the entry of the receivership or liquidation order,
such claim will be regarded as being in existence as of such date and any
claims then in existence and held by the other party may be offset against
it.
D. Nothing contained in this Article is intended to change the relationship
or status of the parties to this Agreement or to enlarge upon the rights
or obligations of either party hereunder except as provided herein.
LOSS IN EXCESS OF POLICY LIMITS CLAUSE
A. "Loss in Excess of Policy Limits" is defined as loss in excess of the
limit of the original Policy, such loss in excess of the limit having been
incurred because of failure by the Company 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 its insured or in the preparation or
prosecution of an appeal consequent upon such action.
B. However, this Article shall not apply where the loss has been incurred due
to fraud by a member of the Board of Directors or a corporate officer of
the 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.
C. For the purposes of this Article, the word "loss" shall mean any amounts
which the Company would have been contractually liable to pay had it not
been for the limit of the original Policy.
D. With respect to coverage provided under this Article, recoveries from any
insurance or reinsurance other than this Agreement shall be deducted to
arrive at the amount of the Company's Ultimate Net Loss.
LOSS OCCURRENCE CLAUSE
The term "Loss Occurrence" shall mean any accident or occurrence or series of
accidents or occurrences arising out of any one event and happening within the
term and scope of this Agreement. Without limiting the generality of the
foregoing, the term "Loss Occurrence" shall be held to include:
A. As respects Products Bodily Injury and Products Property Damage Liability,
injuries to all persons and all damage to property of others occurring
during a Policy Period and proceeding from or traceable to the same
causative agency shall be deemed to arise out of one Loss Occurrence, and
the date of such Loss Occurrence shall be deemed to be the commencing date
of the Policy Period. For the purpose of this provision, each annual
period of a Policy which continues in force for more than one year shall
be deemed to be a separate Policy Period.
B. As respects Bodily Injury Liability (other than Automobile and Products),
said term shall also be understood to mean, as regards each original
assured, injuries to one or more than one person resulting from infection,
contagion, poisoning, or contamination proceeding from or traceable to the
same causative agency.
C. As respects Property Damage Liability (other than Automobile and
Products), said term shall also, subject to Provisions 1. and 2. below, be
understood to mean loss or losses caused by a series of operations,
events, or occurrences arising out of operations at one specific site and
which cannot be attributed to any single one of such operations, events or
occurrences, but rather to the cumulative effect of the same. In assessing
each and every Loss Occurrence within the foregoing definition, it is
understood and agreed that:
1. the series of operations, events or occurrences shall not extend
over a period longer than 12 consecutive months; and
2. the Company may elect the date on which the period of not exceeding
12 consecutive months shall be deemed to have commenced.
In the event that the series of operations, events or occurrences extend
over a period longer than 12 consecutive months, then each consecutive
period of 12 months, the first of which commences on the date elected
under 2. above, shall form the basis of claim under this Agreement.
D. As respects those Policies of the Company which provide aggregate limits
of liability, the total of all individual losses occurring during any one
Policy year which proceed from or are traceable to the same causative
agency.
OFFSET CLAUSE
Each party to this Agreement together with their successors or assigns shall
have and may exercise, at any time, the right to offset any balance or balances
due the other (or, if more than one, any other). Such offset may include
balances due under this Agreement and any other agreements heretofore or
hereafter entered into between the parties regardless of whether such balances
arise from premiums, losses or otherwise, and regardless of capacity of any
party, whether as assuming insurer and/or ceding insurer, under the various
agreements involved, provided however, that in the event of insolvency of a
party hereto, offsets shall only be allowed in accordance with the provisions of
Section 7427 of the Insurance Law of the State of New York to the extent such
statute or any other applicable law, statute or regulation governing such offset
shall apply.
TERRORISM EXCESS RECOVERY CLAUSE
A. For purposes of this Article:
1. "Act" shall mean the Terrorism Risk Insurance Act of 2002, any
amendments thereto and any regulations promulgated thereunder.
2. "Affiliate," "Insured Losses," and "Program Year" shall have the
meanings provided in the Act.
3. "Company" shall include the Company and all affiliates.
B. This reinsurance shall not apply to any fines, civil penalties or
surcharges assessed pursuant to the Act.
C. To the extent that the Company allocates Insured Losses and/or federal
assistance under the Act among affiliates, claims, contracts or otherwise
in any manner which impacts the reinsurance provided hereunder, the
Company shall apply a reasonable allocation method acceptable to the
Reinsurer.
D. To the extent that an Insured Loss is otherwise payable hereunder, the
reinsurance provided by this Agreement shall apply only to the portion of
liability, loss, cost and/or expense retained by the Company net of any
federal assistance pursuant to the Act. For each Program Year, the
liability of the Reinsurer for Insured Losses under this Agreement shall
be reduced by the ratio that the financial assistance under the Act
allocated to Policies subject to this Agreement bears to the Company's
total Insured Losses subject to this Agreement. If the Company does not
make such allocation, the liability of the Reinsurer for Insured Losses in
any Program Year under this Agreement shall be reduced by the ratio that
the financial assistance available to the Company under the Act for that
Program Year bears to the Company's total Insured Losses for the same
Program Year.
E. The parties recognize that, for any Program Year, the Reinsurer may
without waiver of the foregoing Paragraphs make payments for Insured
Losses which, together with available financial assistance under the Act
and the Company retentions and/or deductibles hereunder, exceed the
Company's Insured Losses. In such event, the Reinsurer's proportional
share of all such excess recovery (hereafter "Reinsurer's Excess Share")
shall inure to the benefit of the Reinsurer. All excess recovery described
in this Paragraph shall be allocated to the Reinsurer and the Company in
proportion to the respective liability of each for Insured Losses, net of
federal assistance under the Act, salvage, subrogation and other similar
recoveries, as applicable.
1.
F. In the event of a Reinsurer's Excess Share, the Company shall:
1. Promptly pay the Reinsurer's Excess Share to the Reinsurer; or
2. Upon request of the Reinsurer at any time and at the Reinsurer's
sole discretion, instead assign to the Reinsurer its rights to
recover directly from the federal government any portion of
Reinsurer's Excess Share not already paid to the Reinsurer. The
Company shall cooperate with and assist the Reinsurer, at its own
expense, to the extent reasonably necessary for the Reinsurer to
exercise those rights. If the Reinsurer is unable, for any reason,
to exercise any right assigned to it by the Company pursuant to this
Article, the Company shall pay the Reinsurer's Excess Share to the
Reinsurer as if no assignment had taken place to the extent that the
Company has not been deemed to have forfeited the right to financial
assistance under the Act by virtue of the attempted assignment.
G. In the event of an Insured Loss, the Company shall provide the Reinsurer
with a monthly report detailing claim settlement activities and financial
assistance under the Act. Calculations for each Program Year shall
continue to be made until the settlement of all Insured Losses covered
hereunder.
2.
ULTIMATE NET LOSS CLAUSE
A. The term "Ultimate Net Loss" shall mean the actual sum paid by the Company
in settlement of losses or liability including interest accrued prior to
judgment after making deductions for all recoveries, including
subrogation, salvages, and claims upon other reinsurances, whether
collectible or not, which inure to the benefit of the Reinsurer under this
Agreement, and shall include Loss Adjustment Expenses incurred by the
Company; provided, however, that in the event of the insolvency of the
Company, Ultimate Net Loss shall mean the amount of loss and Loss
Adjustment Expenses for which the Company is liable, and payment by the
Reinsurer shall be made to the liquidator, receiver, conservator or
statutory successor of the Company in accordance with the provisions of
Article - Insolvency of this Agreement.
B. The term "Ultimate Net Loss" shall include 90% of Loss In Excess of Policy
Limits and 90% of Extra Contractual Obligations, as defined herein, but
only as respects business covered under this Agreement.
C. The term "Loss Adjustment Expenses" shall mean all expenses incurred by
the Company in connection with the investigation, settlement, defense or
litigation, including court costs and post-judgment interest, of any claim
or loss covered by the Policies reinsured under this Agreement, and shall
include Declaratory Judgment Expenses. However, the term "Loss Adjustment
Expenses" shall not include the salaries and expenses of Company
employees, office expenses and other overhead expenses.
D. The term "Declaratory Judgment Expenses" shall mean all legal expenses,
incurred in the representation of the Company in litigation brought to
determine the Company's defense and/or indemnification obligations, that
are allocable to any specific claim or loss applicable to Policies subject
to this Agreement. In addition, the Company shall promptly notify the
Reinsurer of any Declaratory Judgment Expenses subject to this Agreement.
E. All recoveries, salvages or payments recovered or received subsequent to a
loss settlement under this Agreement shall be applied as if recovered or
received prior to the aforesaid settlement and all necessary adjustments
to the loss settlement shall be made by the parties hereto.
F. Nothing in this Article shall be construed to mean that losses are not
recoverable hereunder until the Ultimate Net Loss of the Company has been
ascertained.