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EXHIBIT 10.38
Casualty Excess of Loss Reinsurance Agreement effective January 1, 1997,
together with Property Per Risk Excess of Loss Reinsurance Agreement effective
January 1, 1997 and Property Facultative Excess of Loss Automatic Reinsurance
Agreement effective January 1, 1997.
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SWISS RE AMERICA
CASUALTY EXCESS OF LOSS
REINSURANCE AGREEMENT
NO. TC407A,B,C-R97
EFFECTIVE JANUARY 1, 1997
between
PHILADELPHIA CONSOLIDATED HOLDING CORPORATION'S
following member companies:
PHILADELPHIA INDEMNITY INSURANCE COMPANY
PHILADELPHIA INSURANCE COMPANY
both of Bala Cynwyd, Pennsylvania
and
SWISS REINSURANCE AMERICA CORPORATION
New York, New York
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SWISS RE AMERICA
CASUALTY EXCESS OF LOSS REINSURANCE AGREEMENT NO. TC407A,B,C-R97
ARTICLE CONTENTS PAGE
------- -------- ----
PREAMBLE 1
I BUSINESS COVERED 1
II EFFECTIVE DATE AND TERMINATION 2
III TERRITORY 3
IV LIMIT AND RETENTION 3
V ULTIMATE NET LOSS 4
VI LOSS IN EXCESS OF POLICY LIMITS 5
VII EXTRA CONTRACTUAL OBLIGATIONS 5
VIIII EXCLUSIONS 6
IX LOSS OCCURRENCE 10
X REINSURANCE PREMIUM 11
xi CONTINGENT COMMISSION 13
XII REPORTS AND REMITTANCES 15
XIII CLAIMS 15
XIV SALVAGE AND SUBROGATION 16
XV ACCESS TO RECORDS 16
XVI TAXES 17
XVII CURRENCY 17
XVI-I I OFFSET 17
XIX ERRORS OR OMISSIONS 17
XX DISPUTE RESOLUTION 18
XXI INSOLVENCY 20
XXII SPECIAL TERMINATION 20
XXIII AMENDMENTS 21
SIGNATURES 22
ATTACHMENTS: INSOLVENCY FUNDS EXCLUSION CLAUSE
NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY -
REINSURANCE - U.S.A.
NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY -
REINSURANCE - CANADA
NUCLEAR INCIDENT EXCLUSION CLAUSE -
REINSURANCE - ▇▇. ▇
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▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
CASUALTY EXCESS OF LOSS
REINSURANCE AGREEMENT
NO. TC407A,B,C-R97
(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, Pennsylvania
(hereinafter referred to as the "Company")
and
SWISS REINSURANCE AMERICA CORPORATION
New York, New York
(hereinafter referred to as the "Reinsurer")
ARTICLE I - BUSINESS COVERED
A. The Reinsurer shall indemnify the Company on an excess of loss basis in
respect of the Company's Ultimate Net Loss paid or to be paid by the
Company as a result of losses occurring during the term of this Agreement,
for Policies in force as of January 1, 1997, and new and renewal Policies
becoming effective on or after said date, subject to the terms and
conditions contained herein.
B. This Agreement is solely between the Company and the Reinsurer, and
nothing contained in this Agreement shall create any obligations or
establish any rights against the Reinsurer in favor of any person or
entity not a party hereto.
C. The performance of obligations by both parties under this Agreement shall
be in accordance with a fiduciary standard of good faith and fair dealing.
D. The term "Policies" shall mean each of the Company's binders, policies
and contracts of insurance or reinsurance on the business covered
hereunder.
E. Under this Agreement, the indemnity for reinsured loss applies only to
the following Classes of Insurance, except as excluded under Article VIII
- Exclusions of this Agreement.
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SWISS RE AMERICA
CLASSES OF INSURANCE
1. Automobile Liability:
Bodily Injury Liability, Property Damage Liability, Medical Payments,
Uninsured Motorists, Underinsured Motorists and No-Fault Coverage.
2. Liability Other Than Automobile:
Bodily Injury Liability, Property Damage Liability, Kidnap and ▇▇▇▇▇▇
Liability, Fiduciary 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,
Kidnap and ▇▇▇▇▇▇ Liability shall only apply to this Agreement when
written as part of a Commercial Package Policy or a Commercial General
Liability Coverage Form.
3. Professional Liability:
Directors and Officers Liability, Employment Related Practices
Liability, Errors and Omissions Liability and Professional Liability.
ARTICLE II - EFFECTIVE DATE AND TERMINATION
A. This Agreement shall become effective with respect to losses occurring on
and after 12:01 a.m., Eastern Standard Time, January 1 1997, and shall
remain in full force until terminated. This Agreement may be terminated at
the close of any calendar year by either party giving to the other 90 days
prior written notice by certified mail of its intention to do so.
B. In the event of termination of this Agreement, the Company shall have the
option of continuing or terminating the liability in force at the date of
termination as set forth below. The Company may exercise such option
provided written notice of the Company's election is given by certified
mail to the Reinsurer prior to the date of termination.
1. All Policies covered hereunder and in force at the date of
termination of this Agreement shall continue until their natural
expiry, cancellation or next anniversary of such business, whichever
first occurs; but in no case shall this reinsurance be extended for
longer than one year, plus odd time, after the termination date.
2. All reinsurance hereunder shall be automatically cancelled as of the
date of termination and the Reinsurer shall be released of all
liability as respects losses occurring subsequent to the date of
termination.
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C. If the Company chooses to exercise the option of continuing the liability,
the Company and the Reinsurer shall renegotiate the terms and conditions
relating to such option.
ARTICLE III - 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.
ARTICLE IV - LIMIT AND RETENTION
A. The limits and retentions provided under this Agreement are set forth in
the following Parts I, II and III:
Part I - First Excess of Loss (Accounting Code No. TC407A-R97)
The Company shall retain the first $500,000 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 $500,000, but the liability of the Reinsurer shall never
exceed $500,000 with respect to any one Loss Occurrence, except as set
forth below.
In the event of a loss involving a combination of the Casualty business
subject to this Agreement and Property business subject to the Company's
Property Per Risk Excess of Loss Reinsurance Agreement No. TP1308A-R97,
further reinsurance is provided when the Company's combined retention
under these two referenced Agreements, resulting from one occurrence,
exceeds $500,000. In regard to such a combination loss, the Company will
retain the first $500,000 of its combined retention each occurrence and
the Reinsurer will reimburse the Company for the amount in excess of
$500,000 subject to a maximum reimbursement under this provision of
$2,000,000 for each occurrence. Such additional reinsurance will be
pro-rated between this Agreement and the Company's Property Per Risk
Excess of Loss Reinsurance Agreement No. TP1308A-R97 in the amount that
the Ultimate Net Loss under each Agreement bears to the combined Ultimate
net Loss, subject to a maximum combined recovery of $2,000,000.
Part II - Second Excess of Loss (Accounting Code No. TC407B-R97) Clash
Layer
The Company shall retain the first $1,000,000 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 $1,000,000, but the liability of the Reinsurer shall never
exceed $1,000,000 with respect to any one Loss Occurrence.
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SWISS RE AMERICA
Part III - Third Excess of Loss (Accounting Code No. TC407C-R97) Clash
Layer
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 $4,000,000 with respect to any one Loss Occurrence.
B. The Company's retention and the Reinsurer's limit of liability for each
Loss Occurrence, set forth in Parts I, II and III above, shall apply
irrespective of the number of Policies affected or number of hazards in
one Policy and regardless of the number of Classes of Insurance involved.
C. Reinsurance of the Company's retention, set forth above, shall not be
deducted in arriving at the Company's Ultimate Net Loss herein.
D. The Company warrants that each Policy subject to this Agreement
shall be deemed to have inuring reinsurance coverage for limits greater
than $1,000,000 per occurrence.
ARTICLE V - ULTIMATE NET LOSS
A. The term "Ultimate Net Loss" shall mean the actual sum paid or to be 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 Allocated Loss Adjustment Expenses
incurred by the Company.
B. The term "Ultimate Net Loss" shall include 100% of Extra Contractual
Obligations, as defined herein, but only as respects business covered
under this Agreement.
C. The term "Ultimate Net Loss shall also include Ex-gratia Payments as
defined in Paragraph D. below, subject to the terms and conditions of
this Agreement.
D. The term "Ex-gratia Payments" shall mean payments made as an accommodation
by the Company in settlement of a claim for which no coverage exists under
the Policy reinsured hereunder, subject to the prior approval of the
Reinsurer.
E. The term "Allocated Loss Adjustment Expenses" shall mean all allocated
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
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Declaratory Judgment Expenses. However, the term "Allocated Losses
Adjustment Expenses" shall not include the salaries of Company employees,
office expenses or any other unallocated expenses.
F. 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 covered by Policies reinsured
under this Agreement. In addition, the Company shall promptly notify the
Reinsurer of any Declaratory Judgment Expenses subject to this Agreement.
G. 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 adjustments to the loss
settlement shall be made by the parties hereto.
H. 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.
ARTICLE VI - LOSS IN EXCESS OF POLICY LIMITS
A. In the event the Company is liable to a policyholder as the result of a
settlement or judgment rendered against the policyholder which is in
excess of the Policy limit, 100% of that portion of the award made to the
third party claimant which is in excess of the Company's Policy limit
shall be added to the amount of the Company's Policy limit and the sum
thereof shall be considered one loss, subject to the provision in
Paragraph B. below and all other provisions set forth in this Agreement.
B. With respect to coverage provided under this Article, recoveries from any
insurance or reinsurance other than this Agreement, shall inure to the
benefit of the Reinsurer and shall be deducted to arrive at the amount of
the Company's Ultimate Net Loss.
ARTICLE VII - EXTRA CONTRACTUAL OBLIGATIONS
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 reinsured or in the preparation or prosecution of an
appeal consequent upon such action.
5. ▇▇. ▇▇▇▇▇▇,▇,▇-▇▇▇
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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. Extra Contractual Obligations shall not include loss arising out
of engineering or other services or any other non-claims related
activity provided to the insured by the Company.
E. 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.
ARTICLE VIII - EXCLUSIONS
THIS AGREEMENT DOES NOT COVER:
A. THE FOLLOWING GENERAL CATEGORIES
1. Ex-gratia payments greater than $500,000, except with
Reinsurer's prior consent.
2. Risks subject to a deductible or a self-insured retention
excess of $250,000.
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 except reinsurance assumed
from an affiliated 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 assigned risks which may be currently or
subsequently covered hereunder.
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SWISS RE AMERICA
6. Pollution to the extent excluded in the Company's original
Policies. It is warranted that the Reinsurer's prior approval
is required for all changes to the Company's Policy pollution
wording.
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.
B. THE FOLLOWING INSURANCE COVERAGES
1 Fidelity and Surety.
2. Credit and Financial Guarantee.
3. Securities and Exchange Liability except for liability provided for
in the Company's Directors and Officers Program.
4. Retroactive coverage except as respects claims made policies.
5. Personal and Commercial Excess or Umbrella Liability.
6. Medical Malpractice for Doctors, Physicians, Surgeons, Hospitals
and Clinics.
7. Advertisers,' Broadcasters' and Telecasters' Liability as respects
Personal Injury Liability except as provided under Commercial
Package Policies, Commercial General Liability Coverage Forms or
when written for the Miscellaneous Consultants Errors and Omissions
Program.
8. Kidnap, Extortion and ▇▇▇▇▇▇ Liability when written as such except
when written for the Executive Safeguard Program.
9. Boiler and Machinery Insurance.
10. Protection and Indemnity (Ocean Marine).
11. Workers Compensation.
C. THE FOLLOWING RISKS AS RESPECTS AUTOMOBILE LIABILITY
1. Vehicles used in or while in practice or preparation for, a
prearranged racing, speed, exhibition or demolition contest.
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SWISS RE AMERICA
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. Logging trucks.
6. Vehicles regularly used to haul property of others and
operating beyond a 200 mile radius except when written for
the Lessor's Contingent Liability and Excess Coverage
Program.
7. Newspaper delivery trucks.
8. Vehicles engaged in the transportation or distribution of
fireworks, fuses, explosives, ammunitions, natural or
artificial fuel gas, or liquefied petroleum gases or
gasoline except when written for the Lessor's Contingent
Liability and Excess Coverage Program.
D. THE FOLLOWING AS RESPECTS LIABILITY OTHER THAN AUTOMOBILE
1. The manufacturing, mining, refining, processing,
distribution, installation, removal or encapsulment of
asbestos.
2. Risks involving known exposure to the following substances:
a. dioxin.
b. polychlorinated biphenols.
c. asbestos.
3. Liability as respects Products and Completed Operations:
a. The manufacture, labeling or re-labeling,
importation or resale 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.
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▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
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.
4. Ownership, operation or use of vessels exceeding 50 feet in
length.
5. All railway operations except sidetrack agreements.
6. Amusement parks, carnivals or circuses.
7. Public assembly exposure in excess of 5,000.
8. Gas, electric and water utility companies.
9. Subaqueous operations.
10. Mining.
11. Blasting operations.
12. Demolition of buildings or structures in excess of two
stories.
13. Shoring, underpinning or moving of buildings or structures.
14. Manufacture, sale, rental, lease, erection or repair of
scaffolds.
15. Construction of bridges, tunnels or dams.
16. 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.
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SWISS RE AMERICA
17. Manufacture, production, refining, storage, wholesale
distribution or transportation of natural or artificial fuel
gas, butane, propane or liquefied petroleum gases or
gasoline.
18. Onshore and offshore gas and oil drilling operations.
19. Ownership, maintenance or use of any airport or aircraft,
including fueling, or any device or machine intended for
and/or aiding in the achievement of atmospheric flight,
projection or orbit.
20. Municipalities.
E. Those exclusions, set forth under Items 6. and 17. of Section D. shall
not apply if the exposure is incidental to the regular operations of
the insured covered hereunder.
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 60 days thereafter, and shall then cease unless within the 60
day period, the Company has received from the Reinsurer written notice
of its approval of such risk:
1. As respects Automobile Liability:
Items 2. through 8. of Section C. of this Article.
2. As respects Liability Other Than Automobile:
Items 3. through 20. of Section D. of this Article.
ARTICLE IX - LOSS OCCURRENCE
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.
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SWISS RE AMERICA
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.
ARTICLE X - REINSURANCE PREMIUM
A. The Company shall pay to the Reinsurer a premium for the reinsurance
provided under the First Excess of Loss Layer at a rate set forth
below. Such rates shall be applied to the Company's Subject Earned
Premium for the quarterly period being reported.
Net Rate
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First Excess (Accounting Code No. TC407A-R97)
Commercial Package Business 3.50%
Specialty Business 10.00%
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Net Rate
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Rental Supplemental Liability Business:
(i) Private Passenger and light trucks - $0.33 per vehicle,
Gross rate of $6.63 per vehicle, per day, subject to per day
a fixed commission allowance of 95.02%
(ii) Medium trucks and heavy trucks - $1.10 per vehicle,
Gross rate of $9.20 per vehicle, per day, subject to a per day
fixed commission allowance of 88.04%
B. A deposit premium for the Second and Third Excess Layers set forth
below shall be payable in advance 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 end of the calendar year 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 30 days upon receipt of said
statement. However, in no event shall the annual adjusted premium be
less than the minimum premium for each layer, set forth below.
Annual Annual Quarterly
Rate Minimum Deposit Deposit
---- ------- ------- -------
Second Excess 0.096% $110,000 $110,000 $27,500
(Accounting Code
No. TC407B-R97)
Third Excess 0.121% $140,000 $140,000 $35,000
(Accounting Code
No. TC407C-R97)
C. In the event this Agreement is terminated prior to the end of the calendar
year, it is understood that the annual minimum premium stated above shall
be pro rated accordingly and such annual minimum premium shall be
calculated based on the fraction of expired time subject to the
calculations set forth in Paragraph A. for said period.
D. 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 a monthly pro rata basis.
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E. The term "Net Premiums Written" shall mean gross premiums written less
returns, allowances and reinsurances which inure to the benefit of the
Reinsurer.
ARTICLE XI - CONTINGENT COMMISSION
Applicable solely to Part I - First Excess of Loss (Code No. TC407A-R97)
A. The Reinsurer shall allow the Company a contingent commission of
50.00% of the net profit, if any, accruing to the Reinsurer hereunder,
such profit to be computed on the following formula:
CONTINGENT COMMISSION COMPUTATION FOR THE PERIOD
INCOME
1. Premiums received by the Reinsurer as determined under
Article X - Reinsurance Premium of this Agreement, during
the Accounting Period.
OUTGO
2. Losses incurred by the Reinsurer during the Accounting
Period.
3. Allowance for Reinsurer's management expenses during the
Accounting Period of 15% of the Premiums received by the
Reinsurer, as determined under Article X - Reinsurance
Premium of this Agreement, during the Accounting Period.
4. Deficit, or underwriting loss, if any, brought forward from
the preceding period.
The amount by which INCOME exceeds OUTGO is profit.
The amount by which OUTGO exceeds INCOME is deficit.
B. The term "Accounting Period" means the actual time covered by each
adjustment of commission.
C. The term "losses incurred" means losses and loss adjustment expenses
paid less salvages recovered during each Accounting Period, or part
thereof, as respects losses which occurred during the Accounting
Period, plus the reserve for losses outstanding at the end of the
current period for which computation is being made. The reserve for
losses outstanding at the end of each Accounting Period shall include
a reserve for incurred but not reported losses.
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D. The phrase "reserve for incurred but not reported losses" as respects
provisional calculations in each Accounting Period under this
Agreement shall mean the total sum produced by multiplying the
Premiums received by the Reinsurer, as determined under Article X -
Reinsurance Premium of this Agreement, in each Accounting Period for
which calculation is being made by the applicable percentages set
forth in the table below:
Provisional Calculations Percentages Applicable
Each Accounting Period for Each Accounting Period
lst 60%
2nd 40%
3rd 30%
4th 20%
5th 10%
6th and subsequent 0%
E. If for any Accounting Period, the total of Premiums received by the
Reinsurer as shown under "INCOME" of the plan exceeds the total of the
items shown under "OUTGO" of the plan, the Reinsurer shall pay to the
Company 50.00% of the difference. If, for any Accounting Period, the
total of the items shown under "OUTGO" of the plan exceeds the total
of Premiums received by the Reinsurer as shown under "INCOME" of the
plan, the difference shall be carried forward to the next Accounting
Period's calculation of profit or loss as a deficit.
F. The first calculation of profit or loss shall cover the Accounting
Period beginning January 1997 and ending December 31, 1997. Each
subsequent calculation shall cover an Accounting Period of one year,
January 1 through December 31.
G. Provisional computations of profit or loss shall be made by the
Reinsurer within six months after the close of each Accounting Period.
Subsequent calculations of profit or loss for each Accounting Period
shall be made by the Reinsurer annually until all losses occurring
during each Accounting Period have been finally settled.
H. The Reinsurer, upon verification by the Company, shall promptly pay
to the Company the amount of contingent commission, if any, shown in
each provisional calculation and final calculation for each Accounting
Period, less any contingent commission previously paid for the
Accounting Period. If the contingent commission previously paid for
the Accounting Period exceeds the amount of contingent commission, if
any, shown in any calculation for the Accounting Period the Company
shall promptly refund the difference to the Reinsurer.
14. No. TC407A,B,C-R97
18
SWISS RE AMERICA
I. In case notice of termination of this Agreement shall be given by
either party, calculations and adjustments of profit or loss shall
continue to be made until the termination, expiration, or
cancellation of all liability and the settlement of all losses covered
under this Agreement.
J. In the event this Agreement is terminated at a date other than the end
of an Accounting Period, the fractional part of the last Accounting
Period shall be combined with the previous Accounting Period and such
combined period shall be considered one Accounting Period for which
the calculations of profit or loss shall be made.
ARTICLE XII - REPORTS AND REMITTANCES
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. Within 30 days after the close of each calendar quarter, the Company
shall submit an account to the Reinsurer summarizing Subject Earned
Premium for the First Excess of Loss (Code TC407A-R97) by annual
statement line of business, company program, company business group
and the reinsurance premium due. Such reinsurance premium shall be
remitted within 45 days after the close of each calendar quarter.
C. Payment by the Reinsurer of its portion of loss and Allocated 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.
ARTICLE XIII - CLAIMS
A. The Company shall promptly notify the Reinsurer of each claim which
may involve the reinsurance provided hereunder and of all subsequent
developments relating thereto, stating the amount claimed and estimate
of the Company's Ultimate Net Loss and Allocated Loss Adjustment
Expenses.
B. The Company shall advise the Reinsurer of all claims which:
1. Are reserved by the Company for an amount in excess of 50%
of its retention;
2. Originate from fatal injuries;
3. Originate from the following kinds of bodily injury:
a. Brain injuries resulting in impairment of physical
function;
15. ▇▇. ▇▇▇▇▇▇,▇,▇-▇▇▇
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
b. Spinal injuries resulting in a partial or total
paralysis of upper or lower extremities;
c. Amputation or permanent loss of use of upper or
lower extremities;
d. Severe burn injuries;
e. Loss of sight in one or both eyes;
f. All other injuries likely to result in a permanent
disability rate of 50% or more.
C. The Company shall have the responsibility to investigate, defend or
negotiate settlements of all claims and lawsuits related to Policies
written by the Company and reinsured under this Agreement. The
Reinsurer, at its own expense, may associate with the Company in the
defense or control of any claim, suit or other proceeding which
involves or is likely to involve the reinsurance provided under this
Agreement, and the Company shall cooperate in every respect in the
defense of any such claim, suit or proceeding.
ARTICLE XIV - SALVAGE AND SUBROGATION
A. In the event of the payment of any indemnity by the Reinsurer under
this Agreement, the Reinsurer shall be subrogated, to the extent of
such payment, to all of the rights of the Company against any person
or entity legally responsible for damages of the loss. The Company
agrees to enforce such rights; but, in case the Company refuses or
neglects to do so, the Reinsurer is hereby authorized and empowered to
bring any appropriate action in the name of the Company or their
policyholders or otherwise to enforce such rights.
B. From any amount recovered by subrogation, salvage or other means,
there shall first be deducted the expenses incurred in effecting the
recovery. The balance shall then be used to reimburse the excess
carriers in the inverse order to that in which their respective
liabilities attached, before being used to reimburse the Company for
its primary loss.
ARTICLE XV - ACCESS TO RECORDS
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.
16. No. TC407A,B,C-R97
20
SWISS RE AMERICA
ARTICLE XVI - TAXES
The Company shall be liable for all taxes on premiums paid to the Reinsurer
under this Agreement, except income or profit taxes of the Reinsurer, and shall
indemnify and hold the Reinsurer harmless for any such taxes which the Reinsurer
may become obligated to pay to any local, state or federal taxing authority.
ARTICLE XVII - CURRENCY
Wherever the word "dollars" or the "$" symbol is used in this Agreement, it
shall mean dollars of the United States of America, excepting in those cases
where the Policy is issued by the Company in Canadian dollars, in which case it
shall mean dollars of Canada. In the event the Company is involved in a loss
requiring payment in United States and Canadian currency, the Company's
retention and the limit of liability of the Reinsurer shall be apportioned
between the two currencies in the same proportion as the amount of net loss in
each currency bears to the total amount of net loss paid by the Company. For the
purposes of this Agreement, where the Company receives premiums or pays losses
in currencies other than United States or Canadian currency, such premiums and
losses shall be converted into United States dollars at the actual rates of
exchange at which the premiums and losses are entered in the Company's books.
ARTICLE XVIII - OFFSET
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.
ARTICLE IX - ERRORS OR OMISSIONS
Errors or omissions of a ministerial nature on the part of the Company shall not
invalidate the reinsurance under this Agreement, provided such errors or
omissions are corrected promptly after discovery thereof; but the liability of
the Reinsurer under this Agreement or any exhibits, addenda, or endorsements
attached hereto shall in no event exceed the limits specified herein nor be
extended to cover any risks, perils,
17. ▇▇. ▇▇▇▇▇▇,▇,▇-▇▇▇
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
lines of business or classes of insurance generally or specifically excluded
herein.
ARTICLE XX - DISPUTE RESOLUTION
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 of 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 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
18. ▇▇. ▇▇▇▇▇▇,▇,▇-▇▇▇
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
the remaining two by drawing lots. The name of the individual first
drawn shall be the umpire.
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. Involvement of Other Reinsurers - 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 Company to each of the reinsurers constituting the one
party; provided, however, nothing herein shall impair the right 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 Agreement from several to joint.
F. If the Company is involved in a dispute under the terms of this
Agreement and in one or more separate disputes with one or more other
reinsurers in which common questions of law or fact are in issue, the
Company or the Reinsurer, at its option, may join with such other
reinsurers in a common arbitration proceeding under the terms of this
Article. If the Company and such other reinsurers have commenced
arbitration, the Reinsurer may at its option join such proceeding for
the determination of the dispute between the Company and the
Reinsurer.
G. 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.
H. 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.
I. 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.
J. 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.
19. No. TC407A,B,C-R97
23
SWISS RE AMERICA
ARTICLE XXI - INSOLVENCY
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 XVIII -
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.
ARTICLE XXII - SPECIAL TERMINATION
A. Notwithstanding the termination provisions set forth in Article II -
Effective Date and Termination, this Agreement may be:
1. Terminated by either party upon the happening of any of the
following events:
20. ▇▇. ▇▇▇▇▇▇,▇,▇-▇▇▇
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
a. Entry of an order of liquidation, rehabilitation,
receivership or conservatorship with respect to
the Company or the Reinsurer by any court or
regulatory authority;
b. Assignment of this Agreement by either party;
c. Any transfer of control of either party by change
in ownership or otherwise;
d. General reinsurance of any portion of the
Company's business it retains net for its own
account, as determined under the provisions of
this Agreement without prior consent of the
Reinsurer.
2. Terminated in accordance with the provisions set forth in
this Paragraph, upon the discovery of the following event:
A reduction of 50% or more of the Company's
policyholders surplus during any calendar year.
Such reduction shall be determined by calculating
the difference between the Company's prior year
annual statement and each subsequent quarterly
statutory statement within such current calendar
year.
As respects the event set forth in this Paragraph A.2., the
Company shall be obligated to notify the Reinsurer in
writing within 30 days after the filing of its quarterly
statement. Upon receipt of such notification the Reinsurer
shall have the right to terminate this Agreement, by giving
not less than 30 days notice of its intention to do so.
B. Any notice of termination pursuant to provisions set forth in
Paragraph A.2. above shall be sent by certified mail, return receipt
requested. Such notice period shall commence upon the other party's
receipt of the notice of termination.
C. In the event of termination, the Reinsurer shall not be liable for
losses occurring subsequent to the date of termination.
ARTICLE XXIII - AMENDMENTS
This Agreement may be amended by mutual consent of the parties expressed in an
addendum; and such addendum, when executed by both parties, shall be deemed to
be an integral part of this Agreement and binding on the parties hereto.
21. No. TC407A,B,C-R97
25
SWISS RE AMERICA
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the following dates:
In Bala Cynwyd, Pennsylvania, this 28th day of September, 1997.
ATTEST: PHILADELPHIA CONSOLIDATED HOLDING
CORPORATION'S
following member companies:
PHILADELPHIA INDEMNITY INSURANCE COMPANY
PHILADELPHIA INSURANCE COMPANY
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------- -------------------------------------
And in New York, New York, this 18th day of September, 1997.
ATTEST: SWISS REINSURANCE AMERICA CORPORATION
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------- -------------------------------------
Member of Management Member of Senior Management
22. No. TC407A,B,C-R97
26
SWISS RE AMERICA
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.
27
SWISS RE AMERICA
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.
28
SWISS RE AMERICA
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 -
29
SWISS RE AMERICA
(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
- 2 -
N.M.A. 1590
30
SWISS RE AMERICA
(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 question 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.
- 3 -
N.M.A. 1590
31
SWISS RE AMERICA
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.
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
N.M.A. 1590 - 4 -
32
SWISS RE AMERICA
(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 -
33
SWISS RE AMERICA
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 -
34
SWISS RE AMERICA
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 -
35
SWISS RE AMERICA
(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 -
36
SWISS RE AMERICA
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.
37
SWISS RE AMERICA
PROPERTY PER RISK EXCESS OF LOSS
REINSURANCE AGREEMENT
NO. TP1308A-R97
EFFECTIVE January 1, 1997
between
PHILADELPHIA CONSOLIDATED HOLDING CORPORATION'S
following member companies:
PHILADELPHIA INDEMNITY INSURANCE COMPANY
PHILADELPHIA INSURANCE COMPANY
both of Bala Cynwyd, Pennsylvania
and
SWISS REINSURANCE AMERICA CORPORATION
New York, New York
38
SWISS RE AMERICA
PROPERTY PER RISK EXCESS OF LOSS REINSURANCE AGREEMENT NO. TP1308A-R97
ARTICLE CONTENTS PAGE
PREAMBLE 1
I BUSINESS COVERED 1
II EFFECTIVE DATE AND TERMINATION 2
III TERRITORY 3
IV LIMIT AND RETENTION 3
V ULTIMATE NET LOSS 4
VI LOSS IN EXCESS OF POLICY LIMITS 5
VII EXTRA CONTRACTUAL OBLIGATIONS 5
VIII DEFINITION OF RISK 6
IX EXCLUSIONS 6
X LOSS OCCURRENCE 8
XI REINSURANCE PREMIUM 9
XII CONTINGENT COMMISSION 9
XIII REPORTS AND REMITTANCES 11
XIV CLAIMS 12
XV SALVAGE AND SUBROGATION 12
XVI ACCESS TO RECORDS 12
XVII TAXES 12
XVIII CURRENCY 13
XIX OFFSET 13
XX ERRORS OR OMISSIONS 13
XXI DISPUTE RESOLUTION 14
XXII INSOLVENCY 16
XXIII SPECIAL TERMINATION 16
XXIV AMENDMENTS 17
SIGNATURES 18
ATTACHMENTS: INSOLVENCY FUNDS EXCLUSION CLAUSE
POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE
TOTAL INSURED VALUE EXCLUSION CLAUSE
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE -
REINSURANCE - U.S.A.
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE -
REINSURANCE - CANADA
NUCLEAR INCIDENT EXCLUSION CLAUSE - REINSURANCE ▇▇. ▇
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PROPERTY PER RISK EXCESS OF LOSS
REINSURANCE AGREEMENT
NO. TP1308A-R97
(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, Pennsylvania
(hereinafter referred to individually or collectively as the "Company")
and
SWISS REINSURANCE AMERICA CORPORATION
New York, New York
(hereinafter referred to as the "Reinsurer")
ARTICLE I - BUSINESS COVERED
A. The Reinsurer shall indemnify the Company on an excess of loss basis in
respect of the Company's Ultimate Net Loss paid or to be paid by the
Company as a result of losses occurring during the term of the
Agreement, for Policies in force as of January 1, 1997, and new and
renewal Policies becoming effective on or after said date, subject to
the terms and conditions contained herein.
B. This Agreement is solely between the Company and the Reinsurer, and
nothing contained in this Agreement shall create any obligations or
establish any rights against the Reinsurer in favor of any person or
entity not a party hereto.
C. The performance of obligations by both parties under this Agreement
shall be in accordance with a fiduciary standard of good faith and fair
dealing.
D. The term "Policies" shall mean each of the Company's binders, policies
and contracts of insurance or reinsurance on the business covered
hereunder.
E. Under this Agreement, the indemnity for reinsured loss applies to those
Policies issued by the Company with respect to the following Lines of
Business as classified in the Company's Annual Statement, subject to
the exclusions set forth in Article IX - Exclusions.
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NAIC
CODE: LINES OF BUSINESS:
01 Fire
02 Allied Lines
21 Commercial Auto Physical Damage -
Comprehensive (coverage written on a garage open lot basis)
09 Inland Marine
05 Commercial Multiple Peril (Section I only)
ARTICLE II - EFFECTIVE DATE AND TERMINATION
A. This Agreement shall become effective with respect to losses occurring
on and after 12:01 a.m., Eastern Standard Time, January 1, 1997, and
shall remain in full force until terminated. This Agreement may be
terminated at the close of any calendar year by either party giving to
the other 90 days prior written notice by certified mail of its
intention to do so.
B. In the event of termination of this Agreement, the Company shall have
the option of continuing or terminating the liability in force at the
date of termination as set forth below. The Company may exercise such
option provided written notice of the Company's election is given by
certified mail to the Reinsurer prior to the date of termination.
1. All Policies covered hereunder and in force at the date of
termination of this Agreement shall continue until their
natural expiry, cancellation or next anniversary of such
business, whichever first occurs; but in no case shall this
reinsurance be extended for longer than one year, plus odd
time, after the termination date.
2. All reinsurance hereunder shall be automatically cancelled as
of the date of termination and the Reinsurer shall be released
of all liability as respects losses occurring subsequent to
the date of termination.
C. If the Company chooses to exercise the option of continuing the
liability, the Company and the Reinsurer shall renegotiate the terms
and conditions relating to such option.
D. If this Agreement shall terminate while a loss covered hereunder is in
progress, it is agreed that, subject to the other conditions of this
Agreement, the Reinsurer shall indemnify the Company as if the entire
loss had occurred during the time this Agreement is in force provided
the loss covered hereunder started before the date of termination.
2.
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ARTICLE III - TERRITORY
This Agreement applies to risks located in the United States of America, its
territories and possessions, and Canada, except that with respect to Inland
Marine and Multiple Peril Policies covered hereunder, the territorial limits of
this Agreement shall be those of the original Policies when such Policies are
written to cover risks primarily located in the United States of America, its
territories and possessions, and Canada.
ARTICLE IV - LIMIT AND RETENTION
A. The limit and retention provided under this Agreement is set forth
below:
(i) As respects one or more than one Line of Business covered
under this Agreement, the Company shall retain the first
$500,000 of Ultimate Net Loss as respects each risk in 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 $500,000, but the liability of the
Reinsurer shall never exceed $1,500,000 each risk any one Loss
Occurrence, nor shall the Reinsurer's liability from all risks
in each Loss Occurrence exceed $3,500,000.
(ii) Notwithstanding the provisions set forth in Paragraph B. of
Article V - Ultimate Net Loss, the Reinsurer shall provide
coverage for 100% of losses arising out of Extra Contractual
Obligations as defined herein in addition to the Company's
retention and Reinsurer's limit of liability set for in (i)
above, subject to a maximum limit of liability of $4,500,000.
(iii) However, in the event an Ultimate Net Loss exceeds $500,000 as
respects each risk in any one Loss Occurrence, the liability
of the Reinsurer shall be increased to $1,700,000 each risk
any one Loss Occurrence and the retention of the Company shall
be reduced to $300,000 each risk any one Loss Occurrence as
respects subsequent losses resulting from that same Loss
Occurrence, however, in no event shall the Reinsurer's
liability from all risks in such Loss Occurrence exceed
$3,500,000.
B. In the event of a loss involving a combination of the Property business
subject to this agreement and Casualty business subject to the
Company's Casualty Excess of Loss Reinsurance Agreement No.
TC407A,B,C-R97, further reinsurance is provided when the Company's
combined retention under these two referenced agreements, resulting
from one occurrence, exceeds $500,000. In regard to such a combination
loss, the Company will retain the first $500,000 of its combined
retention each occurrence and the Reinsurer will reimburse the Company
for the amount in excess of $500,000 subject to a
3.
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maximum reimbursement under this provision of $2,000,000 for each
occurrence. Such additional reinsurance will be pro-rated between this
agreement and the Company's Casualty Excess of Loss Reinsurance
Agreement No. TC407A,B,C-R97 in the amount that the Ultimate Net Loss
under each agreement bears to the combined Ultimate Net Loss, subject
to a maximum combined recovery of $2,000,000.
C. Reinsurance of the Company's retention, set forth above, shall not be
deducted in arriving at the Company's Ultimate Net Loss herein.
ARTICLE V - ULTIMATE NET LOSS
A. The term "Ultimate Net Loss" shall mean the actual sum paid or to be
paid by the Company in settlement of losses or liability 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
Allocated Loss Adjustment Expenses incurred by the Company.
B. The term "Ultimate Net Loss" shall include 100% of Extra Contractual
obligations, as defined herein, but only as respects business covered
under this Agreement.
C. The term "Ultimate Net Loss" shall also include "Ex-gratia Payments" as
defined in Paragraph D. below, subject to the terms and conditions of
this Agreement.
D. The term "Ex-gratia Payments" shall mean payments made as an
accommodation by the Company in settlement of a claim for which no
coverage exists under the Policy reinsured hereunder, subject to the
prior approval of the Reinsurer.
E. The term "Allocated Loss Adjustment Expenses" shall mean all allocated
expenses incurred by the Company in connection with the investigation,
settlement, defense or litigation of any claim or loss covered by the
Policies reinsured under this Agreement, and shall exclude the salaries
of Company employees, office expenses or any other unallocated
expenses.
F. 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.
G. 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.
4.
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ARTICLE VI - LOSS IN EXCESS OF POLICY LIMITS
A. In the event the Company is liable to a policyholder as the result of a
settlement or judgment rendered against the policyholder which is in
excess of the Policy limit, 100% of that portion of the award made to
the third party claimant which is in excess of the Company's Policy
limit shall be added to the amount of the Company's Policy limit and
the sum thereof shall be considered one loss, subject to the provision
in Paragraph B. below and all other provisions set forth in this
Agreement.
B. With respect to coverage provided under this Article, recoveries from
any insurance or reinsurance other than this Agreement, shall inure to
the benefit of the Reinsurer and shall be deducted to arrive at the
amount of the Company's Ultimate Net Loss.
ARTICLE VII - EXTRA CONTRACTUAL OBLIGATIONS
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 reinsured 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. Extra Contractual Obligations shall not include loss arising out of
engineering or other services or any other non-claims related activity
provided to the insured by the Company.
E. 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.
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ARTICLE VIII - DEFINITION OF RISK
The Company shall be the sole judge of what constitutes one risk provided,
however, that:
A. A risk shall never be less than all insurable values at one general
location regardless of the number of policies involved, and whether
there is a single, multiple or unrelated named insureds involved in
such risk.
B. A risk shall be determined from the standpoint of the predominant peril
and such peril shall be noted in the Company's records.
ARTICLE IX - EXCLUSIONS
THIS AGREEMENT DOES NOT COVER:
A. THE FOLLOWING GENERAL CATEGORIES
1. All Lines of Business not specifically listed in Article I -
Business Covered.
2. Policies issued with a deductible of $100,000 or more;
provided this exclusion shall not apply to Policies which
customarily provide a percentage deductible on the perils of
earthquake or windstorm.
3. Reinsurance assumed, except pro rata local agency reinsurance
on specific risks and except reinsurance assumed from an
affiliated company.
4. Ex-gratia Payments greater than $500,000, except with
Reinsurer's prior consent.
5. Loss or damage occasioned by war, invasion, revolution,
bombardment, hostilities, acts of foreign enemies, civil war,
rebellion, insurrection, military or usurped power, martial
law, or confiscation by order of any government or public
authority, but not excluding loss or damage which would be
covered under a standard form of policy containing a standard
war exclusion clause.
6. Insolvency Funds as per the attached Insolvency Funds
Exclusion Clause, which is made part of this Agreement.
7. Pool, Association and Syndicate business as per the attached
Pools, Associations and Syndicates Exclusion Clause, which is
made part of this Agreement.
8. Risks where the Total Insured Value, per risk, exceeds the
figure specified as per the attached Total Insured Value
Exclusion Clause, which is made part of this Agreement.
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B. THE FOLLOWING CLASSES OF BUSINESS AND TYPES OF RISKS
1. Mortgage Impairment.
2. Growing and/or standing crops.
3. Mortality and Health covering birds, animals or fish.
4. All onshore and offshore gas and oil drilling rigs.
5. Petrochemical operations engaged in the production, refining
or upgrading of petroleum or petroleum derivatives or natural
gas.
6. Satellites.
7. All railroad business.
8. As respects Inland Marine business:
a. Registered Mail and Armored Car Policies.
b. Jeweler's Block Policies.
▇. ▇▇▇▇▇▇▇'▇ Customers Policies.
d. Rolling Stock.
e. Parcel Post when written to cover banks and financial
institutions.
f. Commercial Negative Film Insurance.
g. Garment Contractors Policies.
h. Mining Equipment while underground.
i. Radio and Television Broadcasting Towers.
j. Motor Truck Cargo Insurance written for common
carriers operating beyond a radius of 200 miles.
9. Overhead transmission and distribution lines and their
supporting structures other than those on or within 1,000 feet
of the insured premises.
It is understood and agreed that public utilities extension
and/or suppliers extension and/or contingent business
interruption coverages are not subject to this exclusion,
provided that these are not part of a transmitters' or
distributors' policy.
C. THE FOLLOWING PERILS
1. Flood and/or Earthquake when written as such.
2. Difference in Conditions, however styled.
3. Pollution to the extent excluded in the Company's original
Policies. It is warranted that the Reinsurer's prior approval
is required for all changes to the Company's Policy pollution
wording.
4. Nuclear Incident Exclusion Clauses which are attached and made
part of this Agreement:
a. Nuclear Incident Exclusion Clause - Physical Damage -
Reinsurance - U.S.A.
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b. Nuclear Incident Exclusion Clause - Physical Damage -
Reinsurance - Canada
c. Nuclear Incident Exclusion Clause - Reinsurance - No.
4.
D. In the event the Company is inadvertently bound on any risk which is
excluded under this Agreement 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 60 days
thereafter, and shall then cease unless within the 60 day period, the
Company has received from the Reinsurer written notice of its approval
of such risk.
ARTICLE X - LOSS OCCURRENCE
A. The term "Loss Occurrence" shall mean the sum of all individual losses
directly occasioned by any one disaster, accident or loss or series of
disasters, accidents or losses arising out of one event which occurs
within the area of one state of the United States or province of Canada
and states or provinces contiguous thereto and to one another. However,
the duration and extent of any one Loss Occurrence shall be limited to
all individual losses sustained by the Company occurring during any
period of 168 consecutive hours arising out of and directly occasioned
by the same event except that the term "Loss Occurrence" shall be
further defined as follows:
1. As regards windstorm, hail, tornado, hurricane, cyclone,
including ensuing collapse and water damage, all individual
losses sustained by the Company occurring during any period of
72 consecutive hours arising out of and directly occasioned by
the same event. However, the event need not be limited to one
state or province or states or provinces contiguous thereto.
2. As regards riot, riot attending a strike, civil commotion,
vandalism and malicious mischief, all individual losses
sustained by the Company, occurring during any period of 72
consecutive hours within the area of one municipality or
county and the municipalities or counties contiguous thereto
arising out of and directly occasioned by the same event. The
maximum duration of 72 consecutive hours may be extended in
respect of individual losses which occur beyond such 72
consecutive hours during the continued occupation of an
assured's premises by strikers, provided such occupation
commenced during the aforesaid period.
3. As regards earthquake (the epicentre of which need not
necessarily be within the territorial confines referred to in
the opening paragraph of this Article) and fire following
directly occasioned by the earthquake, only those individual
fire losses which commence during the period of 168
consecutive hours may be included in the Company's Loss
Occurrence.
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4. As regards Freeze, only individual losses directly occasioned
by collapse, breakage of glass and water damage (caused by
bursting of frozen pipes and tanks) may be included in the
Company's Loss Occurrence.
B. For all Loss Occurrences the Company may choose the date and time when
any such period of consecutive hours commences provided that it is not
earlier than the date and time of the occurrence of the first recorded
individual loss sustained by the Company arising out of that disaster,
accident or loss and provided that only one such period of 168
consecutive hours shall apply with respect to one event except for
those Loss Occurrences referred to in 1. and 2. above, where only one
such period of 72 consecutive hours shall apply with respect to one
event, regardless of the duration of the event.
C. No individual losses occasioned by an event that would be covered by
'72 hours clauses may be included in any Loss Occurrence claimed under
the 168 hours provision.
ARTICLE XI - REINSURANCE PREMIUM
A. The premium to the Reinsurer for this Agreement shall be calculated by
applying a rate of 5.00% to the Subject Earned Premium by the Company
for the quarterly period being reported on the Lines of Business
reinsured by this Agreement.
B. The term "Subject Earned Premium" as used herein is equal to the sum of
the Net Premiums Written on the Lines of 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 the
monthly pro rata basis.
C. The term "Net Premiums Written" shall mean gross premiums written less
returns, allowances and reinsurances that inure to the benefit of the
Reinsurer.
ARTICLE XII - CONTINGENT COMMISSION
A. The Reinsurer shall allow the Company a contingent commission of 50% of
the profit, if any, accruing to the Reinsurer hereunder, such profit
shall be computed on the following formula:
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CONTINGENT COMMISSION COMPUTATION FOR THE PERIOD
INCOME
1. Earned Premium received by the Reinsurer during the
Period.
OUTGO
2. Losses Incurred of the Reinsurer during the Period.
3. Allowance for Reinsurer's management expenses during
the Period of 15% of the Earned Premium received by
the Reinsurer during the Period.
4. Deficit, if any, brought forward from the preceding
Period.
The amount by which Income exceeds Outgo is profit.
The amount by which Outgo exceeds Income is deficit.
B. The term "Losses Incurred" means losses and loss adjustment expenses
paid less salvages recovered during each Accounting Period, or part
thereof, as respects losses which occurred during the Accounting
Period, plus the reserve for losses outstanding at the end of the
current period for which computation is being made.
C. The term "Earned Premium" means the total of the Net Premiums Written,
ceded during the current Period plus the unearned premiums at the close
of the preceding Period less the unearned premiums at the close of the
current Period, said unearned premiums to be calculated on a monthly
pro rata basis.
D. The term "Period" means the actual time covered by each adjustment of
commission.
E. Within 90 days after the close of each Period, the Company shall
calculate the commission adjustment for such Period. The first
calculation of commission adjustment shall cover the Period January
1, 1997 through December 31, 1999, and thereafter adjustments shall be
made annually for each subsequent Period commencing January 1 and
ending the following December 31.
F. If, for any Period, the Income of the plan exceeds the total of the
Items shown under Outgo of the plan, the Reinsurer shall pay to the
Company, within 30 days after verification of the Company's
calculations, 50% of the difference. If, for any Period, the total of
the Items shown under Outgo of the plan exceeds the Income of the plan,
the difference shall be carried forward to the next Period's
calculation of commission adjustment as a deficit.
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G. The Reinsurer, upon verification by the Company, shall promptly pay to
the Company the amount of contingent commission, if any, shown in each
provisional calculation and final calculation for each Accounting
Period, less any contingent commission previously paid for the
Accounting Period. If the contingent commission previously paid for the
Accounting Period exceeds the amount of contingent commission, if any,
shown in any calculation for the Accounting Period the Company shall
promptly refund the difference to the Reinsurer.
H. In case notice of termination has been given, no further adjustments of
commission shall be made until the expiration of all liability and the
settlement of all losses covered under this Agreement.
ARTICLE XIII - REPORTS AND REMITTANCES
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. Within 30 days after the close of each calendar quarter, the Company
shall submit an account to the Reinsurer summarizing Subject Earned
Premium by Line of Business, and the reinsurance premium due. Such
reinsurance premium shall be remitted within 45 days after the close of
each calendar quarter.
C. Payment by the Reinsurer of its portion of loss and Allocated 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.
D. The Company shall furnish the following to the Reinsurer with respect
to occurrences designated as catastrophes by Property Claim Services:
1. Prompt preliminary estimate of amount recoverable from the
Reinsurer;
2. Within 30 days after the close of each quarter the amount of
losses and Allocated Loss Adjustment Expenses paid, less all
recoveries, including salvage and subrogation, at the end of
each quarter segregated by Line of Business;
3. Within 30 days after the close of each quarter the amount of
losses and Allocated Loss Adjustment Expenses outstanding at
the end of each quarter segregated by Line of Business.
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ARTICLE XIV - CLAIMS
A. The Company shall promptly notify the Reinsurer of each claim which may
involve the reinsurance provided hereunder and of all subsequent
developments relating thereto, stating the amount claimed and estimate
of the Company's Ultimate Net Loss and Allocated Loss Adjustment
Expenses.
B. The Company shall have the responsibility to investigate, defend or
negotiate settlements of all claims and lawsuits related to Policies
written by the Company and reinsured under this Agreement. The
Reinsurer, at its own expense, may associate with the Company in the
defense or control of any claim, suit or other proceeding which
involves or is likely to involve the reinsurance provided under this
Agreement, and the Company shall cooperate in every respect in the
defense of any such claim, suit or proceeding.
ARTICLE XV - SALVAGE AND SUBROGATION
A. In the event of the payment of any indemnity by the Reinsurer under
this Agreement, the Reinsurer shall be subrogated, to the extent of
such payment, to all of the rights of the Company against any person or
entity legally responsible for damages of the loss. The Company agrees
to enforce such rights; but, in case the Company refuses or neglects to
do so, the Reinsurer is hereby authorized and empowered to bring any
appropriate action in the name of the Company or their policyholders or
otherwise to enforce such rights.
B. From any amount recovered by subrogation, salvage or other means, there
shall first be deducted the expenses incurred in effecting the
recovery. The balance shall then be used to reimburse the excess
carriers in the inverse order to that in which their respective
liabilities attached, before being used to reimburse the Company for
its primary loss.
ARTICLE XVI - ACCESS TO RECORDS
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.
ARTICLE XVII - TAXES
The Company shall be liable for all taxes on premiums paid to the Reinsurer
under this Agreement, except income or profit taxes of the Reinsurer, and shall
indemnify and hold the Reinsurer harmless for any
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such taxes which the Reinsurer may become obligated to pay to any local, state
or federal taxing authority.
ARTICLE XVIII - CURRENCY
Wherever the word "dollars" or the "$" symbol is used in this Agreement, it
shall mean dollars of the United States of America, excepting in those cases
where the Policy is issued by the Company in Canadian dollars, in which case it
shall mean dollars of Canada. In the event the Company is involved in a loss
requiring payment in United States and Canadian currency, the Company's
retention and the limit of liability of the Reinsurer shall be apportioned
between the two currencies in the same proportion as the amount of net loss in
each currency bears to the total amount of net loss paid by the Company. For the
purposes of this Agreement, where the Company receives premiums or pays losses
in currencies other than United States or Canadian currency, such premiums and
losses shall be converted into United States dollars at the actual rates of
exchange at which the premiums and losses are entered in the Company's books.
ARTICLE XIX - OFFSET
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.
ARTICLE XX - ERRORS OR OMISSIONS
Errors or omissions of a ministerial nature on the part of the Company shall not
invalidate the reinsurance under this Agreement, provided such errors or
omissions are corrected promptly after discovery thereof; but the liability of
the Reinsurer under this Agreement or any exhibits, addenda, or endorsements
attached hereto shall in no event exceed the limits specified herein nor be
extended to cover any risks, perils, lines of business or classes of insurance
generally or specifically excluded herein.
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ARTICLE XVIII - DISPUTE RESOLUTION
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 of 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 non binding mediation, before resorting to arbitration.
Part III - Arbitration
A. Resolution of Disputes - As a condition precedent to any right 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 his 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.
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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. Involvement of Other Reinsurers - 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 Company to each of the reinsurers constituting the one
party; provided, however, nothing herein shall impair the right 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 Agreement from several to joint.
F. If the Company is involved in a dispute under the terms of this
Agreement and in one or more separate disputes with one or more other
reinsurers in which common questions of law or fact are in issue, the
Company or the Reinsurer, at its option, may join with such other
reinsurers in a common arbitration proceeding under the terms of this
Article. If the Company and such other reinsurers have commenced
arbitration, the Reinsurer may at its option join such proceeding for
the determination of the dispute between the Company and the Reinsurer.
G. 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.
H. 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.
I. 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.
J. 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.
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ARTICLE XXII - INSOLVENCY
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 XVIII -
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.
ARTICLE XXIII - SPECIAL TERMINATION
A. Notwithstanding the termination provisions set forth in Article II -
Effective Date and Termination, this Agreement may be:
1. Terminated by either party upon the happening of any of the
following events:
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a. Entry of an order of liquidation, rehabilitation,
receivership or conservatorship with respect to the
Company or the Reinsurer by any court or regulatory
authority;
b. Assignment of this Agreement by either party;
c. Any transfer of control of either party by change in
ownership or otherwise;
d. General reinsurance of any portion of the Company's
business it retains net for its own account, as
determined under the provisions of this Agreement
without prior consent of the Reinsurer.
2. Terminated in accordance with the provisions set forth in this
Paragraph, upon the discovery of the following event:
A reduction of 50% or more of the Company's
policyholders surplus during any calendar year. Such
reduction shall be determined by calculating the
difference between the Company's prior year annual
statement and each subsequent quarterly statutory
statement within such current calendar year.
As respects the event set forth in this Paragraph A.2., the
Company shall be obligated to notify the Reinsurer in writing
within 30 days after the filing of its quarterly statement.
Upon receipt of such notification the Reinsurer shall have the
right to terminate this Agreement, by giving not less than 30
days notice of its intention to do so.
B. Any notice of termination pursuant to provisions set forth in Paragraph
A.2. above shall be sent by certified mail, return receipt requested.
Such notice period shall commence upon the other party's receipt of the
notice of termination.
C. In the event of termination, the Reinsurer shall not be liable for
losses occurring subsequent to the date of termination.
ARTICLE XXIV - AMENDMENTS
This Agreement may be amended by mutual consent of the parties expressed in an
addendum; and such addendum, when executed by both parties, shall be deemed to
be an integral part of this Agreement and binding on the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Contract to be executed
in duplicate, by their duly authorized representatives.
In Bala Cynwyd, Pennsylvania, this 25th day of September, 1997.
ATTEST: PHILADELPHIA CONSOLIDATED HOLDING
CORPORATION'S
following member companies:
PHILADELPHIA INDEMNITY INSURANCE COMPANY
PHILADELPHIA INSURANCE COMPANY
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------- ---------------------------
And in New York, New York, this 18th day of September, 1997.
ATTEST: SWISS REINSURANCE AMERICA CORPORATION
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------- ---------------------------
Member of Management Member of Senior Management
MC:sb
MA130897
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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.
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.
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POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE
SECTION A
Excluding:
(a) All Business derived directly or indirectly from any Pool, Association or
Syndicate which maintains its own reinsurance facilities.
(b) Any Pool or Scheme (whether voluntary or mandatory) formed after March 1,
1968, for the purpose of insuring Property whether on a country-wide basis
or in respect of designated areas. This Exclusion shall not apply to
so-called Automobile Insurance Plans or other Pools formed to provide
coverage for Automobile Physical Damage.
SECTION B
It is agreed that business, written by the Company for the same perils, which is
known at the time to be insured by or in excess of underlying amounts placed in
the following Pools, Associations or Syndicates, whether by way of insurance or
reinsurance is excluded hereunder:
Industrial Risk Insurers (successor to Factory Insurance Association and Oil
Insurance Association); Associated Factory Mutuals; Improved Risk Mutuals.
Any Pool, Association or Syndicate formed for the purpose of writing Oil,
Gas or Petro-Chemical Plants and/or Oil or Gas Drilling Rigs.
United States Aircraft Insurance Group, Canadian Aircraft Insurance Group,
Associated Aviation Underwriters, American Aviation Underwriters.
SECTION B does not apply:
(a) Where the Total Insured Value over all interests of the risk in question is
less than $250,000,000.
(b) To interests traditionally underwritten as Inland Marine or Stock and/or
Contents written on a Blanket basis.
(c) To Contingent Business Interruption, except when the Company is aware that
the key location is known at the time to be insured in any Pool, Association
or Syndicate named above.
(d) To risks as follows: Offices, Hotels, Apartments, Hospitals, Educational
Establishments, Public Utilities (other than Railroad Schedules) and
Builders Risks on the classes of risks specified in this subsection (d)
only.
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SECTION C
NEVERTHELESS the Reinsurer specifically agrees that Liability accruing to the
Company from its participation in:
(a) The following so-called "Coastal Pools":
ALABAMA INSURANCE UNDERWRITING ASSOCIATION
FLORIDA WINDSTORM UNDERWRITING ASSOCIATION
GEORGIA UNDERWRITING ASSOCIATION
LOUISIANA INSURANCE UNDERWRITING ASSOCIATION
MISSISSIPPI WINDSTORM INSURANCE UNDERWRITING ASSOCIATION
NORTH CAROLINA INSURANCE UNDERWRITING ASSOCIATION
SOUTH CAROLINA WINDSTORM AND HAIL UNDERWRITING ASSOCIATION
TEXAS CATASTROPHE PROPERTY INSURANCE ASSOCIATION
and
(b) All "Fair Plan" and "Rural Risk Plan" Business
for all perils otherwise protected hereunder will not be excluded, except
however, that this reinsurance does not include any increase in such liability
resulting from:
(1) The inability for any other participant in such "Coastal Pool" and/or
"Fair Plan" and/or "Rural Risk Plan" to meet its liability.
(2) Any Claim against such "Coastal Pool" and/or "Fair Plan" and/or "Rural
Risk Plan" or any participant therein, including the Company, whether by
way of subrogation or otherwise, brought by or on behalf of any
insolvency fund (as defined in the Insolvency Funds Exclusion Clause
incorporated in this agreement).
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TOTAL INSURED VALUE EXCLUSION CLAUSE
It is the mutual intention of the parties to exclude risks, other than Offices,
Hotels, Apartments, Hospitals, Educational Establishments, Public Utilities
(except Railroad schedules) and Builders Risk on the above classes where, at the
time of the cession, the Total Insured Value over all interests exceeds
$250,000,000. However, the Company shall be protected hereunder, subject to the
other terms and conditions of this Agreement, if subsequently to cession being
made the Company becomes acquainted with the true facts of the case and
discovers that the mutual intention has been inadvertently breached, the Company
shall at the first opportunity, and certainly by next anniversary of the
original policy, exclude the risk in question.
It is agreed that this mutual intention does not apply to Contingent Business
Interruption or to interest traditionally underwritten as Inland Marine or to
Stock and/or Contents written on a blanket basis except where the Company is
aware that the Total Insured Value of $250,000,000 is already exceeded for
buildings, machinery, equipment and direct use and occupancy at the key
location.
It is understood and agreed that this Clause shall not apply hereunder where the
Company writes 100% of the risk.
Notwithstanding anything contained herein to the contrary, it is the mutual
intention of the parties in respect of bridges and tunnels to exclude such risks
where the Total Insured Value over all interests exceeds $250,000,000.
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SWISS RE AMERICA
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE - U.S.A.
N.M.A. 1119
1. This Reinsurance does not cover any loss or liability accruing to the
Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from
any Pool of Insurers or Reinsurers formed for the purpose of covering Atomic
or Nuclear Energy risks.
2. Without in any way restricting the operation of paragraph 1. of this Clause,
this Reinsurance does not cover any loss or liability accruing to the
Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from
any insurance against Physical Damage (including business interruption or
consequential loss arising out of such Physical Damage) to:
I. Nuclear reactor power plants including all auxiliary property on the
site, or
II. Any other nuclear reactor installation, including laboratories handling
radioactive materials in connection with reactor installations, and
critical facilities as such, or
III. Installations for fabricating complete fuel elements or for processing
substantial quantities of "special nuclear material," and for
reprocessing, salvaging, chemically separating, storing or disposing of
spent nuclear fuel or waste materials, or
IV. Installations other than those listed in paragraph 2. III. above using
substantial quantities of radioactive isotopes or other products of
nuclear fission.
3. Without in any way restricting the operation of paragraphs 1. and 2. of this
Clause, this Reinsurance does not cover any loss or liability by radioactive
contamination accruing to the Reassured, directly or indirectly, and whether
as Insurer or Reinsurer, from any insurance on property which is on the same
site as a nuclear reactor power plant or other nuclear installation and
which normally would be insured therewith, except that this paragraph 3.
shall not operate:
(a) where the Reassured does not have knowledge of such nuclear reactor
power plant or nuclear installation, or
(b) where the said insurance contains a provision excluding coverage for
damage to property caused by or resulting from radioactive
contamination, however caused. However, on and after 1st January,
1960, this sub-paragraph (b) shall only apply provided the said
radioactive contamination exclusion provision has been approved by
the Governmental Authority having jurisdiction thereof.
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4. Without in any way restricting the operation of paragraphs 1., 2. and 3. of
this Clause, this Reinsurance does not cover any loss or liability by
radioactive contamination accruing to the Reassured, directly or indirectly,
and whether as Insurer or Reinsurer, when such radioactive contamination is
a named hazard specifically insured against.
5. It is understood and agreed this Clause shall not extend to risks using
radioactive isotopes in any form where the nuclear exposure is not
considered by the Reassured to be the primary hazard.
6. The term "special nuclear material" shall have the meaning given to it by
the Atomic Energy Act of 1954 or by any law amendatory thereof.
7. Reassured to be sole judge of what constitutes:
(a) substantial quantities, and
(b) the extent of installation, plant or site.
NOTE: - Without in any way restricting the operation of paragraph 1. hereof, it
is understood and agreed that
(a) all policies issued by the Reassured on or before 31st December, 1957
shall be free from the application of the other provisions of this
Clause until expiry date or 31st December, 1960 whichever first occurs
whereupon all the provisions of this Clause shall apply,
(b) with respect to any risk located in Canada policies issued by the
Reassured on or before 31st December, 1958 shall be free from the
application of the other provisions of this Clause until expiry date or
31st December, 1960 whichever first occurs whereupon all the provisions
of this Clause shall apply.
N.M.A. 1119
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SWISS RE AMERICA
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE -
CANADA
N.M.A. 1980
1. This Agreement does not cover any loss or liability accruing to the Company
directly or indirectly, and whether as Insurer or Reinsurer, from any Pool
of Insurers or Reinsurers formed for the purpose of covering Atomic or
Nuclear Energy risks.
2. Without in any way restricting the operation of paragraph 1. of this clause,
this Agreement does not cover any loss or liability accruing to the Company,
directly or indirectly, and whether as Insurer or Reinsurer, from any
insurance against Physical Damage (including business interruption or
consequential loss arising out of such Physical Damage) to:
a. Nuclear reactor power plants including all auxiliary property on the
site, or
b. Any other nuclear reactor installation, including laboratories handling
radioactive materials in connection with reactor installations, and
critical facilities as such, or
c. Installations for fabricating complete fuel elements or for processing
substantial quantities of prescribed substances, and for reprocessing,
salvaging, chemically separating, storing or disposing of spent nuclear
fuel or waste materials, or
d. Installations other than those listed in c. above using substantial
quantities of radioactive isotopes or other products of nuclear fission.
3. Without in any way restricting the operation of paragraphs 1. and 2. of this
clause, this Agreement does not cover any loss or liability by radioactive
contamination accruing to the Company, directly or indirectly, and whether
as Insurer or Reinsurer, from any insurance on property which is on the same
site as a nuclear reactor power plant or other nuclear installation and
which normally would be insured therewith, except that this paragraph 3.
shall not operate:
a. where the Company does not have knowledge of such nuclear reactor power
plant or nuclear installation, or
b. where the said insurance contains a provision excluding coverage for
damage to property caused by or resulting from radioactive
contamination, however caused.
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4. Without in any way restricting the operation of paragraphs 1., 2. and 3. of
this clause, this Agreement does not cover any loss or liability by
radioactive contamination accruing to the Company, directly or indirectly,
and whether as Insurer or Reinsurer, when such radioactive contamination is
a named hazard specifically insured against.
5. This clause shall not extend to risks using radioactive isotopes in any form
where the nuclear exposure is not considered by the Company to be the
primary hazard.
6. The term "prescribed substances" shall have the meaning given to it by the
Atomic Energy Control Act R.S.C. 1974 or by any law amendatory thereof.
7. Company to be sole judge of what constitutes:
a. substantial quantities, and
b. the extent of installation, plant or site.
8. Without in any way restricting the operation of paragraphs 1., 2., 3. and 4.
of this clause, this Agreement does not cover any loss or liability accruing
to the Company, directly or indirectly, and whether as Insurer or Reinsurer,
caused by any nuclear incident as defined in The Nuclear Liability Act,
nuclear explosion or contamination by radioactive material.
NOTE: Without in any way restricting the operation of paragraphs 1., 2., 3.
and 4. of this clause, paragraph 8. of this clause shall apply to all
original contracts of the Company whether new, renewal or replacement
which become effective on or after December 31, 1984.
N.M.A. 1980
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SWISS RE AMERICA
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.
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SWISS RE AMERICA
PROPERTY FACULTATIVE EXCESS OF LOSS
AUTOMATIC REINSURANCE AGREEMENT
NO. PSA-31
between
PHILADELPHIA CONSOLIDATED HOLDING CORPORATION'S
following member companies:
PHILADELPHIA INDEMNITY INSURANCE COMPANY
PHILADELPHIA INSURANCE COMPANY
Both of Bala Cynwyd, Pennsylvania
and
SWISS REINSURANCE AMERICA CORPORATION
New York, New York
67
SWISS RE AMERICA
PROPERTY FACULTATIVE EXCESS OF LOSS AUTOMATIC REINSURANCE AGREEMENT
NO. PSA-31
ARTICLE CONTENTS PAGE
------- -------- ----
I PREAMBLE 1
II TERM 2
III TERRITORY 2
IV LIMITS AND RETENTION 2
V ULTIMATE NET LOSS 2
VI SPECIAL ACCEPTANCES 3
VII BINDING METHOD AND DECLINATIONS 3
VIII PREMIUM AND COMMISSIONS 3
IX EXCLUSIONS 4
X REPORTS AND REMITTANCES 6
XI LOSS PROCEDURE 7
XII SALVAGE AND SUBROGATION 7
XIII CANCELLATION 8
XIV LOSS OCCURRENCE 8
XV ACCESS TO RECORDS 9
XVI TAXES 10
XVII INSOLVENCY 10
XVIII ARBITRATION 10
XIX ERRORS AND OMISSIONS 11
XX AMENDMENT PROVISIONS 11
XXI REINSURER CERTIFICATE PROVISION 11
SIGNATURES 11
ATTACHMENTS: INSOLVENCY FUNDS EXCLUSION CLAUSE
POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE
TOTAL INSURED VALUE EXCLUSION CLAUSE
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE -
REINSURANCE - U.S.A.
POLLUTION AND SEEPAGE EXCLUSION CLAUSE
COASTAL PROPERTY UNDERWRITING GUIDELINES
GENERAL CONDITIONS
68
SWISS RE AMERICA
PROPERTY FACULTATIVE EXCESS OF LOSS
AUTOMATIC REINSURANCE AGREEMENT
NO. PSA-31
(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, Pennsylvania
(hereinafter referred to as the "Company")
and
SWISS REINSURANCE AMERICA CORPORATION
New York, New York
(hereinafter referred to as the "Reinsurer")
ARTICLE I - PREAMBLE
A. This is a property facultative reinsurance agreement which provides
reinsurance of policies written or renewed by the Company and ceded in
accordance with the terms and conditions of this Agreement.
B. The Reinsurer shall indemnify the Company on an excess of loss basis in
respect of the Company's Ultimate Net Loss paid or to be paid by the
Company as a result of losses occurring during the term of the
Agreement, for Policies ceded on or after January 1, 1997, subject to
the terms and conditions contained herein.
C. Cessions to this Agreement may be made only on an excess of loss basis.
The Reinsurer's liability shall attach excess of the Company's net
retained liability as outlined in Article IV - Limits and Retention.
D. Under this Agreement, the indemnity for reinsured loss applies to those
Policies issued by the Company with respect to the following Lines of
Business as classified in the Company's Annual Statement, subject to
the exclusions set forth in Article IX - Exclusions.
NAIC
CODE: LINES OF BUSINESS
01 Fire
02 Allied Lines
21 Commercial Auto Physical Damage - Comprehensive (coverage
written on a garage open lot basis)
09 Inland Marine
05 Commercial Multiple Peril (Section I only)
1. No. ▇▇▇-▇▇
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ARTICLE 11 - TERM
This Agreement applies to policies written, bound or renewed by the Company and
ceded to the Reinsurer on or after 12:01 a.m., January 1, 1997, and shall remain
in force until cancelled or terminated as provided in accordance with Article
XIII - Cancellation.
ARTICLE III - TERRITORY
This Agreement shall follow the territorial limits of the Company's original
policies but is limited to policies issued covering property located in the
United States of America, its territories and possessions.
ARTICLE IV - LIMITS AND RETENTION
A. The Company shall retain the first $2,000,000 of Ultimate Net Loss as
respects any one risk, 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 $18,000,000 any one: risk, any one loss
occurrence.
B. The Company shall be the sole judge of what constitutes one risk.
C. Reinsurance of the Company's retention, set forth above, shall not be
deducted in arriving at the Company's Ultimate Net Loss herein.
ARTICLE V - ULTIMATE NET LOSS
A. The term "Ultimate Net Loss" shall mean the actual sum paid or to be
paid by the Company in settlement of losses or liability 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
Allocated Loss Adjustment Expenses incurred by the Company.
B. The term "Ultimate Net Loss" shall include 90% of Extra Contractual
Obligations, as defined herein, but only as respects business covered
under this Agreement.
C. The term "Allocated Loss Adjustment Expenses" shall mean all allocated
expenses incurred by the Company in connection with the investigation,
settlement, defense or litigation of any claim or loss covered by the
Policies reinsured under this Agreement, and shall exclude the salaries
of Company employees, office expenses or any other unallocated
expenses.
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SWISS RE AMERICA
D. 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.
E. 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.
ARTICLE VI - SPECIAL ACCEPTANCES
Risks which are beyond the terms, conditions or limitations of this Agreement
may be submitted to the Reinsurer as Special Acceptances. Reporting of such
risks and premium, therefore, shall be subject to the terms, conditions or
limitations of this Agreement.
ARTICLE VII - BINDING METHOD AND DECLINATIONS
A. The liability of the Reinsurer shall attach at the time the Company
marks the reinsurance in its records. Each cession, after being bound,
is to be reported to the Reinsurer on a monthly bordereau. If the
reinsurance inception is prior to the date on which the cession is made
(or revised), the cession must be made on the basis "Warranted No Known
or Reported Losses" as of the date on which the cession was made. No
cession shall be made when the inception of the "Reinsurance Term" is
more than forty-five (45) days prior to the date on which the
reinsurance is bound.
B. If the reinsurance is unacceptable to the Reinsurer for any reason, the
Reinsurer shall so notify the Company in writing of its declination
within fifteen (15) days of the Reinsurer's receipt of the bordereau.
The Company shall replace the reinsurance promptly, but within a period
not to exceed thirty (30) days after receipt by the Company of the
notice of declination from the Reinsurer, or as soon as practicable
under applicable state regulation, but in no event to exceed sixty (60)
days.
ARTICLE VIII - PREMIUM AND COMMISSIONS
The Company shall rate each submission to this Agreement in accordance with
either the Swiss Reinsurance America Corporation Electronic Rating software,
where applicable, or the hard copy Swiss Reinsurance America Corporation Rating
Scales, but in all cases in accordance with instructions provided by Swiss
Reinsurance America Corporation concerning the applicability of "Sprinklered" or
"Non-Sprinklered" scales. The Company shall deduct 30% commission allowance from
the calculated gross reinsurance premium to determine the excess premium for
each risk. However, in no case will the final rate for calculation of excess
premium be less than .04 gross of commission per $100 of exposure.
3. No. ▇▇▇-▇▇
▇▇
▇▇▇▇▇ RE AMERICA
Excess of Loss policies shall be ceded on a net premium basis with no ceding
commission allowed to the Company.
ARTICLE IX - EXCLUSIONS
THIS AGREEMENT DOES NOT COVER:
A. THE FOLLOWING GENERAL CATEGORIES
1. All Lines of Business not specifically listed in Article I -
Business Covered.
2. Policies issued with a deductible of $100,000 or more;
provided this exclusion shall not apply to Policies which
customarily provide a percentage deductible on the perils of
earthquake or windstorm.
3. Reinsurance assumed, except pro rata local agency reinsurance
on specific risks and except reinsurance assumed from an
affiliated company.
4. Ex-gratia Payments greater than $500,000, except with
Reinsurer's prior consent.
5. The Company's liability for all damages, including but not
limited to punitive, exemplary, compensatory or consequential
damages, to an insured or any other party resulting from any
legal proceeding by an insured or any other party against the
Company.
6. Loss or damage occasioned by war, invasion, revolution,
bombardment, hostilities, acts of foreign enemies, civil war,
rebellion, insurrection, military or usurped power, martial
law, or confiscation by order of any government or public
authority, but not excluding loss or damage which would be
covered under a standard form of policy containing a standard
war exclusion clause.
7. Insolvency Funds as per the attached Insolvency Funds
Exclusion Clause, which is made part of this Agreement.
8. Pool, Association and Syndicate business as per the attached
Pools, Associations and Syndicates Exclusion Clause, which is
made part of this Agreement.
9. Risks where the Total Insured Value, per risk, exceeds the
figure specified as per the attached Total Insured Value
Exclusion Clause, which is made part of this Agreement.
B. THE FOLLOWING CLASSES OF BUSINESS AND TYPES OF RISKS
1. Mortgage Impairment.
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SWISS RE AMERICA
2. Growing and/or standing crops.
3. Mortality and Health covering birds, animals or fish.
4. Contingent Business Interruption.
5. All onshore and offshore gas and oil drilling rigs.
6. Petrochemical operations engaged in the production, refining
or upgrading of petroleum or petroleum derivatives or natural
gas.
7. Satellites.
8. All railroad business.
9. As respects Inland Marine business:
a. Registered Mail and Armored Car Policies.
b. Jeweler's Block Policies.
▇. ▇▇▇▇▇▇▇'▇ Customers Policies.
d. Rolling Stock.
e. Parcel Post when written to cover banks and financial
institutions.
f. Commercial Negative Film Insurance.
g. Garment Contractors Policies.
h. Mining Equipment while underground.
i. Radio and Television Broadcasting Towers.
j. Motor Truck Cargo Insurance written for common
carriers operating beyond a radius of 200 miles.
10. Overhead transmission and distribution lines and their
supporting structures other than those on or within 1,000 feet
of the insured premises.
It is understood and agreed that public utilities extension
and/or suppliers extension and/or contingent business
interruption coverages are not subject to this exclusion,
provided that these are not part of a transmitters' or
distributors' policy.
C. THE FOLLOWING PERILS
1. Flood and/or Earthquake when written as such.
2. Difference in Conditions, however styled.
3. Pollution to the extent excluded in the Company's original
Policies. It is warranted that the Reinsurer's prior approval
is required for all changes to the Company's Policy pollution
wording.
4. Nuclear Incident Exclusion Clauses which are attached and made
part of this Agreement:
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SWISS RE AMERICA
a. Nuclear Incident Exclusion Clause - Physical Damage -
Reinsurance - U.S.A.
b. Nuclear Incident Exclusion Clause - Physical Damage -
Reinsurance - Canada
c. Nuclear Incident Exclusion Clause - Reinsurance - No.
4.
5. Risks in wind exposed areas as per the attached Coastal
Property Underwriting Guidelines.
D. In the event the Company is inadvertently bound on any risk which is
excluded under this Agreement 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 60 days
thereafter, and shall then cease unless within the 60 day period, the
Company has received from the Reinsurer written notice of its approval
of such risk.
ARTICLE X - REPORTS AND REMITTANCES
A. The Company shall keep sufficient records for the express purpose of
recording therein the amounts and other particulars of reinsurance
ceded hereunder.
B. Payment by the Reinsurer of its portion of loss and Allocated 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.
C. The Company shall furnish the Reinsurer with the following reports:
1. Monthly:
Monthly account current consisting of total written premiums,
less return premiums, on transactions accounted for during the
month in question.
2. Annually:
As soon as practical following the close of each calendar
year, the Company will furnish the Reinsurer with unearned
premiums and losses and allocated loss adjustment expenses
outstanding.
3. Payment of Balances:
Within 30 days after the close of each month, the Company
shall render the monthly account current specified above, for
such month and the balance due thereunder shall be payable by
the debtor within 60 days after the close of the month under
adjustment. It is agreed, however, that the Reinsurer will
immediately pay upon request any loss, their share of which
exceeds $50,000, arising from any one event. Nevertheless, the
Reinsurer shall have the right to reduce any such payment by
the amount, if any, standing in its favor per current account.
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SWISS RE AMERICA
4. Losses:
The Company shall report all losses to the Reinsurer on an
individual case basis.
ARTICLE XI - LOSS PROCEDURE
A. The Company shall promptly notify the Reinsurer of each claim which may
involve the reinsurance provided hereunder and of all subsequent
developments relating thereto, stating the amount claimed and estimate
of the Company's Ultimate Net Loss and Allocated Loss Adjustment
Expenses. Notwithstanding the provisions set forth in any other
Article herein, prompt notification of loss shall be considered a
condition precedent to liability under this Agreement.
B. The Company shall have the responsibility to investigate, defend or
negotiate settlements of all claims and lawsuits related to Policies
written by the Company and reinsured under this Agreement. The
Reinsurer, at its own expense, may associate with the Company in the
defense or control of any claim, suit or other proceeding which
involves or is likely to involve the reinsurance provided under this
Agreement, and the Company shall cooperate in every respect in the
defense of any such claim, suit or proceeding.
C. Payment of Reinsurance Recoveries
Recoveries under this Agreement shall be made on an individual case
basis for all claims settlements and the Reinsurer will remit forthwith
its share of any loss covered hereunder upon receipt of satisfactory
evidence of such loss having been paid by the Company unless otherwise
mutually agreed.
ARTICLE XII - SALVAGE AND SUBROGATION
A. In the event of the payment of any indemnity by the Reinsurer under
this Agreement, the Reinsurer shall be subrogated, to the extent of
such payment, to all of the rights of the Company against any person or
entity legally responsible for damages of the loss. The Company agrees
to enforce such rights; but, in case the Company refuses or neglects to
do so, the Reinsurer is hereby authorized and empowered to bring any
appropriate action in the name of the Company or their policyholders or
otherwise to enforce such rights.
B. From any amount recovered by subrogation, salvage or other means, there
shall first be deducted the expenses incurred in effecting the
recovery. The balance shall then be used to reimburse the excess
carriers in the inverse order to that in which their respective
liabilities attached, before being used to reimburse the Company for
its primary loss.
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SWISS RE AMERICA
ARTICLE XIII - CANCELLATION
A. Cancellation
1. This Agreement may be terminated at the close of any calendar
quarter by either party giving to the other 90 days prior
written notice by certified mail of its intention to do so.
2. 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.
3. If this Agreement shall terminate while a loss covered
hereunder is in progress, it is agreed that, subject to the
other conditions of this Agreement, the Reinsurer shall
indemnify the Company as if the entire loss had occurred
during the time this Agreement is in force provided the loss
covered hereunder started before the date of termination.
B. Termination
Notwithstanding any other provisions of this Agreement to the contrary,
this Agreement shall automatically terminate upon the happening of the
following events:
1. Insolvency of the Company or Reinsurer which results in the
intervention of insurance regulatory authorities; or
2. Entry of an order of liquidation, rehabilitation, receivership
or conservation with respect to the Company or Reinsurer by
any court of regulatory authority.
ARTICLE XIV - LOSS OCCURRENCE
A. The term "Loss Occurrence" shall mean the sum of all individual losses
directly occasioned by any one disaster, accident or loss or series of
disasters, accidents or losses arising out of one event which occurs
within the area of one state of the United States or province of Canada
and states or provinces contiguous thereto and to one another. However,
the duration and extent of any one Loss Occurrence shall be limited to
all individual losses sustained by the Company occurring during any
period of 168 consecutive hours arising out of and directly occasioned
by the same event except that the term "Loss Occurrence" shall be
further defined as follows:
1. As regards windstorm, hail, tornado, hurricane, cyclone,
including ensuing collapse and water damage, all individual
losses sustained by the Company occurring during any period of
72 consecutive hours arising out of and directly occasioned by
the same event. However, the event need not be limited to one
state or province or states or provinces contiguous thereto.
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SWISS RE AMERICA
2. As regards riot, riot attending a strike, civil commotion,
vandalism and malicious mischief, all individual losses
sustained by the Company, occurring during any period of 72
consecutive hours within the area of one municipality or
county and the municipalities or counties contiguous thereto
arising out of and directly occasioned by the same event. The
maximum duration of 72 consecutive hours may be extended in
respect of individual losses which occur beyond such 72
consecutive hours during the continued occupation of an
assured's premises by strikers, provided such occupation
commenced during the aforesaid period.
3. As regards earthquake (the epicentre of which need not
necessarily be within the territorial confines referred to in
the opening paragraph of this Article) and fire following
directly occasioned by the earthquake, only those individual
fire losses which commence during the period of 168
consecutive hours may be included in the Company's Loss
Occurrence.
4. As regards Freeze, only individual losses directly occasioned
by collapse, breakage of glass and water damage (caused by
bursting of frozen pipes and tanks) may be included in the
Company's Loss Occurrence.
B. For all Loss Occurrences the Company may choose the date and time when
any such period of consecutive hours commences provided that it is not
earlier than the date and time of the occurrence of the first recorded
individual loss sustained by the Company arising out of that disaster,
accident or loss and provided that only one such period of 168
consecutive hours shall apply with respect to one event except for
those Loss Occurrences referred to in 1. and 2. above, where only one
such period of 72 consecutive hours shall apply with respect to one
event, regardless of the duration of the event.
C. No individual losses occasioned by an event that would be covered by 72
hours clauses may be included in any Loss Occurrence claimed under the
168 hours provision.
ARTICLE XV - ACCESS TO RECORDS
The Reinsurer shall have the right to examine, at any reasonable time, all
papers, books, accounts, documents and other records in the possession of the
Company related to the business effected hereunder. Upon request, the Company
shall supply the Reinsurer with copies of such records. The Reinsurer's right of
inspection shall continue to exist after termination of this Agreement as long
as one of the parties hereto has a claim against the other.
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ARTICLE XVI - TAXES
A. The Company shall be responsible for paying all taxes (other than
income or profit taxes levied on the Reinsurer) on reinsurance effected
under this Agreement.
B. If the Reinsurer is obligated to pay taxes (other than income or profit
taxes) on reinsurance effected hereunder, the Company shall reimburse
the Reinsurer. However, the Company shall not be required to pay the
same tax twice.
ARTICLE XVII - INSOLVENCY
In the event of the insolvency of the Company, reinsurance under this Agreement
shall be payable by the Reinsurer on the basis of the liability of the Company
without diminution because of such insolvency, directly to the Company or its
liquidator, receiver or statutory successor. Nothing contained herein shall in
any manner create any obligations of the Reinsurer or establish any rights
against the Reinsurer in favor of the Company's policyholder or any other
person not party to the Agreement. The Reinsurer shall be given written notice
of the pendency of each claim which may involve the reinsurance afforded by this
Agreement within a reasonable time after such claim is filed in the insolvency
proceeding. The Reinsurer shall have the right to investigate each such claim
and interpose, at its own expense, in the proceeding where the claim is to be
adjudicated, any defense which it may deem available to the Company or its
liquidator, receiver 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.
ARTICLE XVIII - ARBITRATION
Any dispute between the Company and the Reinsurer arising out of the provisions
of this Agreement or concerning its interpretation or validity shall be
submitted to arbitration. Any party may initiate arbitration by giving written
notice to the other party of its intention to arbitrate together with the name
of its selected arbitrator. Within thirty (30) days of receiving such notice,
the other party shall appoint an arbitrator. In the event that any party fails
to appoint an arbitrator within the time specified, the other party shall have
the right to appoint the said arbitrator forthwith. The two arbitrators named
shall select a third arbitrator. The arbitrators shall be officials or former
officials of insurance or reinsurance companies not under the control or
management of any party to this Agreement. The arbitrators shall not be bound
by judicial formalities or formal rules of evidence and shall give due
consideration to the customs and usage of the insurance and reinsurance
business. A majority decision in writing shall be final and binding. Unless
otherwise allocated by the
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SWISS RE AMERICA
arbitrators, all costs of the arbitration proceeding, including the fees of the
arbitrators, shall be borne equally by the parties.
ARTICLE XIX - ERRORS AND OMISSIONS
Errors or omissions made in connection with the reporting of any premium, or
with the reporting of any business reinsured hereunder, shall not relieve either
party from any liability which would have attached had such error or omission
not occurred, and provided such error or omission is rectified promptly upon
discovery.
ARTICLE XX - AMENDMENT PROVISIONS
This Agreement may, by mutual consent, be altered in any of its terms and
conditions by a signed addendum thereto.
ARTICLE XXI - REINSURER CERTIFICATE PROVISION
Each cession shall be subject to the General Conditions of the Reinsurer's
certificate of facultative reinsurance which is attached to and made part
hereof, except where in conflict with this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives, as of the following dates:
In Bala Cynwyd, Pennsylvania this 5th day of February, 1998.
ATTEST: PHILADELPHIA CONSOLIDATED HOLDING
CORPORATION'S
following member companies:
PHILADELPHIA INDEMNITY INSURANCE COMPANY
PHILADELPHIA INSURANCE COMPANY
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ V.P. Underwriting
-------------------- ---------------------------------------------
And in New York, New York, this 23rd day December, 1997.
ATTEST: SWISS REINSURANCE AMERICA CORPORATION
/s/ ▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. Hilcox
-------------------- --------------------------------------------
Member of Management Member of Management Committee
MC:sb
PHIL-PSA31-97
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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.
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.
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SWISS RE AMERICA
POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE
SECTION A
Excluding:
(a) All Business derived directly or indirectly from any Pool, Association
or Syndicate which maintains its own reinsurance facilities.
(b) Any Pool or Scheme (whether voluntary or mandatory) formed after March
1, 1968, for the purpose of insuring Property whether on a country-wide
basis or in respect of designated areas. This Exclusion shall not apply
to so-called Automobile Insurance Plans or other Pools formed to
provide coverage for Automobile Physical Damage.
SECTION B
It is agreed that business, written by the Company for the same perils, which is
known at the time to be insured by or in excess of underlying amounts placed in
the following Pools, Associations or Syndicates, whether by way of insurance or
reinsurance is excluded hereunder:
Industrial Risk Insurers (successor to Factory Insurance Association
and Oil Insurance Association); Associated Factory Mutuals; Improved
Risk Mutuals.
Any Pool, Association or Syndicate formed for the purpose of writing
Oil, Gas or Petro-Chemical Plants and/or Oil or Gas Drilling Rigs.
United States Aircraft Insurance Group, Canadian Aircraft Insurance
Group, Associated Aviation Underwriters, American Aviation
Underwriters.
SECTION B does not apply:
(a) Where the Total Insured Value over all interests of the risk in
question is less than $250,000,000.
(b) To interests traditionally underwritten as Inland Marine or Stock
and/or Contents written on a Blanket basis.
(c) To Contingent Business Interruption, except when the Company is aware
that the key location is known at the time to be insured in any Pool,
Association or Syndicate named above.
(d) To risks as follows: Offices, Hotels, Apartments, Hospitals,
Educational Establishments, Public Utilities (other than Railroad
Schedules) and Builders Risks on the classes of risks specified in this
subsection (d) only.
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SWISS RE AMERICA
TOTAL INSURED VALUE EXCLUSION CLAUSE
It is the mutual intention of the parties to exclude risks, other than Offices,
Hotels, Apartments, Hospitals, Educational Establishments, Public Utilities
(except Railroad schedules) and Builders Risk on the above classes where, at the
time of the cession, the Total Insured Value over all interests exceeds
$250,000,000. However, the Company shall be protected hereunder, subject to the
other terms and conditions of this Agreement, if subsequently to cession being
made the Company becomes acquainted with the true facts of the case and
discovers that the mutual intention has been inadvertently breached, the Company
shall at the first opportunity, and certainly by next anniversary of the
original policy, exclude the risk in question.
It is agreed that this mutual intention does not apply to Contingent Business
Interruption or to interest traditionally underwritten as Inland Marine or to
Stock and/or Contents written on a blanket basis except where the Company is
aware that the Total Insured Value of $250,000,000 is already exceeded for
buildings, machinery, equipment and direct use and occupancy at the key
location.
It is understood and agreed that this Clause shall not apply hereunder where the
Company writes 100% of the risk.
Notwithstanding anything contained herein to the contrary, it is the mutual
intention of the parties in respect of bridges and tunnels to exclude such risks
where the Total Insured Value over all interests exceeds $250,000,000.
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SWISS RE AMERICA
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE - U.S.A.
N.M.A. 1119
1. This Reinsurance does not cover any loss or liability accruing to the
Reassured, directly or indirectly, and whether as Insurer or Reinsurer,
from any Pool of Insurers or Reinsurers formed for the purpose of
covering Atomic or Nuclear Energy risks.
2. Without in any way restricting the operation of paragraph 1. of this
Clause, this Reinsurance does not cover any loss or liability accruing
to the Reassured, directly or indirectly, and whether as Insurer or
Reinsurer, from any insurance against Physical Damage (including
business interruption or consequential loss arising out of such
Physical Damage) to:
I. Nuclear reactor power plants including all auxiliary property
on the site, or
II. Any other nuclear reactor installation, including laboratories
handling radioactive materials in connection with reactor
installations, and critical facilities as such, or
III. Installations for fabricating complete fuel elements or for
processing substantial quantities of "special nuclear
material," and for reprocessing, salvaging, chemically
separating, storing or disposing of spent nuclear fuel or
waste materials, or
IV. Installations other than those listed in paragraph 2. III.
above using substantial quantities of radioactive isotopes or
other products of nuclear fission.
3. Without in any way restricting the operation of paragraphs 1. and 2. of
this Clause, this Reinsurance does not cover any loss or liability by
radioactive contamination accruing to the Reassured, directly or
indirectly, and whether as Insurer or Reinsurer, from any insurance on
property which is on the same site as a nuclear reactor power plant or
other nuclear installation and which normally would be insured
therewith, except that this paragraph 3. shall not operate:
(a) where the Reassured does not have knowledge of such nuclear
reactor power plant or nuclear installation, or
(b) where the said insurance contains a provision excluding
coverage for damage to property caused by or resulting from
radioactive contamination, however caused. However, on and
after 1st January, 1960, this sub-paragraph (b) shall only
apply provided the said radioactive contamination exclusion
provision has been approved by the Governmental Authority
having jurisdiction thereof.
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SWISS RE AMERICA
4. Without in any way restricting the operation of paragraphs 1., 2. and
3. of this Clause, this Reinsurance does not cover any loss or
liability by radioactive contamination accruing to the Reassured,
directly or indirectly, and whether as Insurer or Reinsurer, when such
radioactive contamination is a named hazard specifically insured
against.
5. It is understood and agreed this Clause shall not extend to risks using
radioactive isotopes in any form where the nuclear exposure is not
considered by the Reassured to be the primary hazard.
6. The term "special nuclear material" shall have the meaning given to it
by the Atomic Energy Act of 1954 or by any law amendatory thereof.
7. Reassured to be sole judge of what constitutes:
(a) substantial quantities, and
(b) the extent of installation, plant or site.
NOTE: - Without in any way restricting the operation of paragraph 1. hereof, it
is understood and agreed that
(a) all policies issued by the Reassured on or before 31st
December, 1957 shall be free from the application of the other
provisions of this Clause until expiry date or 31st December,
1960 whichever first occurs whereupon all the provisions of
this Clause shall apply,
(b) with respect to any risk located in Canada policies issued by
the Reassured on or before 31st December, 1958 shall be free
from the application of the other provisions of this Clause
until expiry date or 31st December, 1960 whichever first
occurs whereupon all the provisions of this Clause shall
apply.
N.M.A. 1119
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84
SWISS RE AMERICA
POLLUTION AND SEEPAGE EXCLUSION CLAUSE
This Reinsurance does not apply to:
1. Pollution, seepage, contamination or environmental impairment
insurances (hereinafter collectively referred to as
"pollution"), however styled;
2. Loss or damage caused directly or indirectly by pollution,
unless said loss or damage follows as a result of a loss
caused directly by a peril covered hereunder;
3. Expenses resulting from any governmental direction or request
that material present in or part of or utilized on an
insured's property be removed or modified, except as provided
in 5. below;
4. Expenses incurred in testing for and/or monitoring pollutants;
5. Expenses incurred in removing debris, unless (A) the debris
results from a loss caused directly by a peril covered
hereunder, and (B) the debris to be removed is itself covered
hereunder, and (C) the debris is on the insured's premises,
subject, however, to a limit of $5,000 plus 25% of (i) the
property damage loss, any risk, any one location, any one
original insured, and (ii) any deductible applicable to the
loss;
6. Expenses incurred to extract pollutants from land or water at
the insured's premises unless (A) the release, discharge, or
dispersal of pollutants results from a loss caused directly by
a peril covered hereunder, and (B) such expenses shall not
exceed $10,000;
7. Loss of income due to any increased period of time required to
resume operations resulting from enforcement of any law
regulating the prevention, control, repair, clean-up or
restoration of environmental damage;
8. Claims under 5. and/or 6. above, unless notice thereof is
given to the Company within 180 days after the date of the
loss occurrence to which such claims relate.
"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.
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SWISS RE AMERICA
Where no pollution exclusion has been accepted or approved by an insurance
regulatory authority for use in a policy that is subject to this Agreement or
where a pollution exclusion that has been used in a policy is overturned, either
in whole or in part, by a court having jurisdiction, there shall be no recovery
for pollution under this Agreement unless said pollution loss or damage follows
as a result of a loss caused directly by a peril covered hereunder.
Nothing herein shall be deemed to extend the coverage afforded by this
reinsurance to property or perils specifically excluded or not covered under the
terms and conditions of the original policy involved.
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SWISS RE AMERICA
COASTAL PROPERTY UNDERWRITING GUIDELINES
Miles Maximum
Construction From Coast Gross Line
------------ ---------- ----------
1. Frame 10 $ 150,000
2. Joisted Masonry 5 $ 500,000
3. Non-Combustible 5 $1,000,000
4. Masonry Non-Combustible 3 $1,000,000
5. Modified Fire Resistive 2 $2,000,000
6. Fire Resistive 2 $2,000,000
DEDUCTIBLES
Minimum
Miles Minimum Contents
From Coast Bldg. Ded. (only) Ded.
---------- ---------- -----------
10 or more $1,000 $ 500
5 or more $1,500 $ 500
2 or more $2,500 $1,000
If a % deductible is available, the maximum % deductible will apply.
- No windstorm coverage will be written if risk is eligible for a
windstorm pool.
- No blanket coverage in coastal counties.
- Risks with multiple locations within a four-mile radius should have
facultative per reinsurance.
MC:sb
PHIL-PSA31-97
87
SWISS RE AMERICA
This Certificate is an Agreement of Facultative Reinsurance under which the
Reinsurer, in consideration of the payment of the reinsurance premium and
subject to the terms, conditions and limits stated herein, indemnifies the
Company with respect to its insurance liability for payments made by the
Company on the policy reinsured hereunder. In no event shall anyone other than
the Reinsurer, the Company, its or their receiver, liquidator or statutory
successor have any rights under this Certificate.
REINSURER'S OBLIGATION. The Reinsurer's obligation to indemnify the Company
shall follow the terms and conditions of this Certificate and of the Company's
policy furnished to the Reinsurer at the effective date of this Certificate,
unless otherwise specifically provided herein by endorsement made a part of this
Certificate. Any change in the terms and/or conditions of the policy
reinsured hereunder, subsequent to the effective date of the Certificate, shall
not increase or extend the Reinsurer's liability hereunder unless such change
is made a part of this Certificate by endorsement issued by the Reinsurer.
B. RETENTION OF THE COMPANY. This Certificate is issued in reliance of the
Company's not reducing its net interest in the policy reinsured hereunder as
determined by the amount specified in Item 3 (Company Retention). Should the
Company Retention be reduced by reinsurance or otherwise without notice to the
Reinsurer (except as the Company Retention may be covered by nonspecific excess
of loss catastrophe reinsurance applying to more than one of the Company's
policies in a single event) the Reinsurer shall in no event be liable for a
larger proportion of any loss otherwise fully collectible hereunder than the
percentage which the actual amount of the Company Retention at the time of loss
bears to the amount stipulated in Item 3; and there shall be no return premium
to the Company on account of any such reduction in the Reinsurer's liability
for loss.
C. COOPERATION OF THE COMPANY. The Company shall furnish the Reinsurer with a
copy of its policy reinsured hereunder and all endorsements thereto, which in
any manner affect this Certificate, and shall make available for inspection and
place at the disposal of the Reinsurer at reasonable times, at the office of
the Company during business hours, any of its records relating to this
reinsurance or claims in connection therewith.
D. NOTICE OF LOSS OR CLAIM. The Company shall give prompt written notice to the
Reinsurer (1) of any occurrence or claim in which the Company's estimate of the
value of injuries or damages sought, without regard to liability, might result
in a judgement in an amount sufficient to involve this Certificate; (2) if
this reinsurance is on an excess of loss basis, of any occurrence or claim in
which the Company has created a loss reserve equal to or greater than one-half
of the Company Retention stipulated in Item 3; (3) if this reinsurance is on a
pro rata basis, when notice of claim is received by the Company; and (4) all
material developments pertaining to any notice provided hereunder.
E. DEFENSE OF CLAIMS OR SUITS. The Company shall investigate and defend all
claims involving the reinsurance provided by this Certificate. While the
Reinsurer does not undertake to investigate or defend claims or suits, it shall
nevertheless have the right and be given the opportunity to associate with the
Company and its representatives at its own expense in the defense and control
of any claim, suit or proceeding involving this reinsurance with full
cooperation of the Company.
F. LOSS PAYABLE. The Reinsurer shall indemnify the Company for all losses paid
in accordance with the terms, conditions and limits of this Certificate and the
terms, conditions and limits of the policy reinsured hereunder. The Reinsurer
shall pay to the Company its proportion of such losses promptly following
receipt of satisfactory proof of loss in the following manner:
(1) If this reinsurance is on an excess of loss basis, the amount of the
Reinsurer's liability for loss hereunder shall be its indicated proportion of
the excess amount, if any, by which ultimate loss to the policy reinsured
hereunder exceeds the amount or amounts in excess of which this reinsurance
attaches, after first having deducted all recoveries from any source except
those from such portions of other excess of loss reinsurance which do not
overlap or duplicate this coverage.
(2) If this reinsurance is on a pro rata basis, the amount of the Reinsurer's
liability for each loss shall be in the proportion that the sum reinsured
hereunder bears to the total sum insured by the reinsured policy at the time
this Certificate becomes effective or at the time of loss, whichever proportion
is less (unless otherwise endorsed hereto).
In addition, the Reinsurer shall pay its proportion of expenses which are
within the terms of the policy reinsured hereunder (other than Company
salaries, travel and office expenses) and incurred by the Company in the
investigation and settlement of claims or suits as well as its proportion of
court costs and interest on that part of any judgment or settlement award fixing
the amount of the Company's insurance liability under the reinsured policy as
follows: (i) With respect to reinsurance provided on an excess of loss basis,
in the ratio that the Reinsurer's loss payment bears to the Company's gross
loss payment under the policy reinsured. In the event there is no loss payment
by the Reinsurer, there shall be no expense, court cost or interest payment.
(ii) With respect to reinsurance provided on a pro rata basis, in the ratio
that the Reinsurer's limit of liability bears to the Company's gross limit of
liability under the policy reinsured.
G. SALVAGE. The Reinsurer will be paid or credited by the Company with its
proportion of salvage, i.e. reimbursement obtained or recovery made by the
Company. If the reinsurance afforded by the Certificate is on an excess of loss
basis, salvage shall be applied in the inverse order in which liability
attaches. All costs (other than Company salaries, travel and office expenses) of
such salvage or reimbursement shall be borne by the Company and the Reinsurer in
proportion to the ultimate benefits accruing to each.
H. TAXES. The Company will be liable for all taxes (except income taxes) on
business ceded to the Reinsurer under this Certificate.
I. INSOLVENCY. In the event of the insolvency of the Company, reinsurance under
this Certificate shall be payable by the Reinsurer on the basis of the
liability of the Company without diminution because of such insolvency,
directly to the Company or its liquidator, receiver or statutory successor.
Nothing contained herein shall in any manner create any obligations of the
Reinsurer or establish any rights against the Reinsurer in favor of the
Company's policy holder or any other person not parties to the Certificate. The
Reinsurer shall be given written notice of the pendency of each claim which may
invoke the reinsurance afforded by this Certificate within a reasonable time
after such claim is filed in the insolvency proceeding. It shall have the right
to investigate each such claim and interpose, at its own expense, in the
proceedings where the claim is to be adjudicated, any defense which it may deem
available to the Company or its liquidator, receiver, 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.
J. ARBITRATION. Any dispute between the Company and the Reinsurer arising out
of the provisions of this Certificate or concerning its interpretation or
validity shall be submitted to arbitration. Any party may initiate arbitration
by giving written notice to the other party of its intention to arbitrate
together with the name of its selected arbitrator. Within 30 days of receiving
such notice the other party shall appoint an arbitrator. In the event that any
party fails to appoint an arbitrator within the time specified, the other party
shall have the right to appoint said arbitrator forthwith. The two arbitrators
named shall select a third arbitrator. The arbitrators shall be officials or
former officials of insurance or reinsurance companies not under the control or
management of any part of this Certificate. The arbitrators shall not be bound
by judicial formalities or formal rules of evidence and shall give due
consideration to the customs and usage of the insurance and reinsurance
business. A majority decision in writing shall be final and binding. Unless
otherwise allocated by the arbitrators, all costs of the arbitration
proceedings, including the fees of the arbitrators, shall be borne equally by
the parties.
K. CANCELLATION. Cancellation of the policy reinsured hereunder shall
constitute automatic cancellation of this Certificate. This Certificate may be
cancelled by either the Company or the Reinsurer by mailing written notice
stating when, not less than 30 days thereafter, such cancellation shall be
effective. Proof of mailing shall be deemed proof of notice. If the reinsured
policy is cancelled, the return premium hereunder shall be proportional to
the original premium returned by the Company, subject to the stipulated
Certificate minimum premium. If the Reinsurer cancels, the return premium shall
be on a pro rata basis with the Certificate minimum premium waived.
In Witness Whereof, the Reinsurer has caused the Certificate to be signed by
its Chairman at New York, N.Y. and countersigned by a duly authorized
representative of the Reinsurer.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
CHAIRMAN & CHIEF EXECUTIVE OFFICER
88
SWISS RE AMERICA
This Certificate is an Agreement of Facultative Reinsurance under which the
Reinsurer, in consideration of the payment of the reinsurance premium and
subject to the terms, conditions and limits stated herein, indemnifies the
Company with respect to its insurance liability for payments made by the
Company on the policy reinsured hereunder. In no event shall anyone other than
the Reinsurer, the Company, its or their receiver, liquidator or statutory
successor have any rights under this Certificate.
A. REINSURER'S OBLIGATION. The Reinsurer's obligation to indemnify the Company
shall follow the terms and conditions of this Certificate and of the Company's
policy furnished to the Reinsurer at the effective date of this Certificate,
unless otherwise specifically provided herein by endorsement made a part of this
Certificate. Any change in the terms and/or conditions of the policy reinsured
hereunder, subsequent to the effective date of the Certificate, shall not
increase or extend the Reinsurer's liability hereunder unless such change is
made a part of this Certificate by endorsement issued by the Reinsurer.
B. RETENTION OF THE COMPANY. This Certificate is issued in reliance of the
Company's not reducing its net interest in the policy reinsured hereunder as
determined by the amount specified in Item 3 (Company Retention). Should the
Company Retention be reduced by reinsurance or otherwise without notice to the
Reinsurer (except as the Company Retention may be covered by nonspecific excess
of loss catastrophe reinsurance applying to more than one of the Company's
policies in a single event) the Reinsurer shall in no event be liable for a
larger proportion of any loss otherwise fully collectible hereunder than the
percentage which the actual amount of the Company Retention at the time of loss
bears to the amount stipulated in Item 3; and there shall be no return premium
to the Company on account of any such reduction in the Reinsurer's liability
for loss.
C. COOPERATION OF THE COMPANY. The Company shall furnish the Reinsurer with a
copy of its policy reinsured hereunder and all endorsements thereto, which in
any manner affect this Certificate, and shall make available for inspection and
place at the disposal of the Reinsurer at reasonable times, at the office of
the Company during business hours, any of its records relating to this
reinsurance or claims in connection therewith.
D. NOTICE OF LOSS OR CLAIM. The Company shall give prompt written notice to
the Reinsurer (1) of any occurrence or claim in which the Company's estimate of
the value of injuries or damages sought, without regard to liability, might
result in a judgement in an amount sufficient to involve this Certificate; (2)
if this reinsurance is on an excess of loss basis, of any occurrence or claim
in which the Company has created a loss reserve equal to or greater than
one-half of the Company Retention stipulated in Item 3; (3) if this reinsurance
is on a pro rata basis, when notice of claim is received by the Company; and
(4) all material developments pertaining to any notice provided hereunder.
E. DEFENSE OF CLAIMS OR SUITS. The Company shall investigate and defend all
claims involving the reinsurance provided by this Certificate. While the
Reinsurer does not undertake to investigate or defend claims or suits, it shall
nevertheless have the right and be given the opportunity to associate with the
Company and its representatives at its own expense in the defense and control of
any claim, suit or proceeding involving this reinsurance with full cooperation
of the Company.
F. LOSS PAYABLE. The Reinsurer shall indemnify the Company for all losses paid
in accordance with the terms, conditions and limits of this Certificate and the
terms, conditions and limits of the policy reinsured hereunder. The Reinsurer
shall pay to the Company its proportion of such losses promptly following
receipt of satisfactory proof of loss in the following manner:
(1) If this reinsurance is on an excess of loss basis, the amount of the
Reinsurer's liability for loss hereunder shall be its indicated proportion of
the excess amount, if any, by which ultimate loss to the policy reinsured
hereunder exceeds the amount or amounts in excess of which this reinsurance
attaches, after first having deducted all recoveries from any source except
those from such portions of other excess of loss reinsurance which do not
overlap or duplicate this coverage.
(2) If this reinsurance is on a pro rata basis, the amount of the Reinsurer's
liability for each loss shall be in the proportion that the sum reinsured
hereunder bears to the total sum insured by the reinsured policy at the time
this Certificate becomes effective or at the time of loss, whichever proportion
is less (unless otherwise endorsed hereto).
In addition, the Reinsurer shall pay its proportion of expenses which are
within the terms of the policy reinsured hereunder (other than Company
salaries, travel and office expenses) and incurred by the Company in the
investigation and settlement of claims or suits as well as its proportion of
court costs and interest on that part of any judgment or settlement award
fixing the amount of the Company's insurance liability under the reinsured
policy as follows:
(i) With respect to reinsurance provided on an excess of loss basis, in the
ratio that the Reinsurer's loss payment bears to the Company's gross loss
payment under the policy reinsured. In the event there is no loss payment by the
Reinsurer, there shall be no expense, court cost or interest payment.
(ii) With respect to reinsurance provided on a pro rata basis, in the ratio
that the Reinsurer's limit of liability bears to the Company's gross limit of
liability under the policy reinsured.
G. SALVAGE. The Reinsurer will be paid or credited by the Company with its
proportion of salvage, i.e. reimbursement obtained or recovery made by the
Company. If the reinsurance afforded by the Certificate is on an excess of loss
basis, salvage shall be applied in the inverse order in which liability
attaches. All costs (other than Company salaries, travel and office expenses)
of such salvage or reimbursement shall be borne by the Company and the
Reinsurer in proportion to the ultimate benefits accruing to each.
H. TAXES. The Company will be liable for all taxes (except income taxes) on
business ceded to the Reinsurer under this Certificate.
I. INSOLVENCY. In the event of the insolvency of the Company, reinsurance
under this Certificate shall be payable by the Reinsurer on the basis of the
liability of the Company without diminution because of such insolvency,
directly to the Company or its liquidator, receiver or statutory successor.
Nothing contained herein shall in any manner create any obligations of the
Reinsurer or establish any rights against the Reinsurer in favor of the
Company's policy holder or any other person not parties to the Certificate. The
Reinsurer shall be given written notice of the pendency of each claim which may
invoke the reinsurance afforded by this Certificate within a reasonable time
after such claim is filed in the insolvency proceeding. It shall have the right
to investigate each such claim and interpose, at its own expense, in the
proceedings where the claim is to be adjudicated, any defense which it may deem
available to the Company or its liquidator, receiver, 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.
J. ARBITRATION. Any dispute between the Company and the Reinsurer arising out
of the provisions of this Certificate or concerning its interpretation or
validity shall be submitted to arbitration. Any party may initiate arbitration
by giving written notice to the other party of its intention to arbitrate
together with the name of its selected arbitrator. Within 30 days of receiving
such notice the other party shall appoint an arbitrator. In the event that any
party fails to appoint an arbitrator within the time specified, the other party
shall have the right to appoint said arbitrator forthwith. The two arbitrators
named shall select a third arbitrator. The arbitrators shall be officials or
former officials of insurance or reinsurance companies not under the control or
management of any part of this Certificate. The arbitrators shall not be bound
by judicial formalities or formal rules of evidence and shall give due
consideration to the customs and usage of the insurance and reinsurance
business. A majority decision in writing shall be final and binding. Unless
otherwise allocated by the arbitrators, all costs of the arbitration
proceedings, including the fees of the arbitrators, shall be borne equally by
the parties.
K. CANCELLATION. Cancellation of the policy reinsured hereunder shall
constitute automatic cancellation of this Certificate. This Certificate may be
cancelled by either the Company or the Reinsurer by mailing written notice
stating when, not less than 30 days thereafter, such cancellation shall be
effective. Proof of mailing shall be deemed proof of notice. If the reinsured
policy is cancelled, the return premium hereunder shall be proportional to the
original premium returned by the Company, subject to the stipulated Certificate
minimum premium. If the Reinsurer cancels, the return premium shall be on a pro
rata basis with the Certificate minimum premium waived.
In Witness Whereof, the Reinsurer has caused the Certificate to be signed by
its Chairman at New York, N.Y. and countersigned by a duly authorized
representative of the Reinsurer.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
CHAIRMAN & CHIEF EXECUTIVE OFFICER
