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Exhibit 10.32
Agreement No.973676001
INTERESTS AND LIABILITIES AGREEMENT
IT IS HEREBY MUTUALLY AGREED BY
TRENWICK AMERICA REINSURANCE CORPORATION
of Stamford, Connecticut
(hereinafter referred to as the "Company")
and
CERTAIN INSURANCE AND/OR REINSURANCE COMPANIES
(hereinafter referred to as the "Retrocessionaire")
That the Retrocessionaire shall have a 30.00% participation in the interests and
liabilities of the Company as set forth in the instrument attached hereto
entitled FIRST CASUALTY RETROCESSIONAL EXCESS OF LOSS REINSURANCE AGREEMENT.
Such participation shall be several and not joint with the participation of
other retrocessionaires and the retrocessionaires shall under no circumstances
participate in the interests and liabilities, (if any) of the other
retrocessionaires in the said instrument.
This interest and liabilities agreement shall attach January 1, 1997 and is
subject to the term and cancellation provisions, if any, contained in Article VI
of the attached instrument (FIRST CASUALTY RETROCESSIONAL EXCESS OF LOSS
REINSURANCE AGREEMENT) which are hereby incorporated by reference into this
agreement and which shall apply as though they had been specifically provided
for herein.
The instrument to which this agreement is attached, and therefore the interests
and liabilities of the retrocessionaires, may be changed, altered and amended as
the parties may agree, provided such change, alteration and amendment is
evidenced by endorsement to this agreement executed by the Company and the
retrocessionaire.
In witness whereof, the parties hereto have executed this agreement in duplicate
by their duly authorised representatives as of the undermentioned dates.
At this day of 19
For and on behalf of :
TRENWICK AMERICA REINSURANCE CORPORATION
By _________________________________________________
2
and in London, England, this day of 1997
For and on behalf of :
CERTAIN INSURANCE AND/OR REINSURANCE COMPANIES
(as per the schedule attached)
Hereon: 30.00%
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INDEX
to the
FIRST CASUALTY RETROCESSIONAL EXCESS OF LOSS
REINSURANCE AGREEMENT
Page Number
-----------
ARTICLE I - BUSINESS COVERED 1
ARTICLE II - EXCLUSIONS 1, 2
ARTICLE III - AMOUNT OF COVER 3
ARTICLE IV - ULTIMATE NET LOSS 3, 4
ARTICLE V - COSTS 4
ARTICLE VI - TERM AND CANCELLATION 4, 5
ARTICLE VII - LIABILITY OF RETROCESSIONAIRE 5
ARTICLE VIII - ERRORS & OMISSIONS 5
ARTICLE IX - NET RETAINED LINES 5
ARTICLE X - TERRITORY 6
ARTICLE XI - PREMIUM 6
ARTICLE XII - OFFSET 6
ARTICLE XIII - LETTER OF CREDIT 7
ARTICLE XIV - NOTICE OF LOSS AND
- LOSS SETTLEMENTS 8
ARTICLE XV - AUTOMATIC REINSTATEMENT 8
ARTICLE XVI - EXCESS OF ORIGINAL POLICY
LIMITS 8, 9
ARTICLE XVII - EXTRA CONTRACTUAL OBLIGATIONS 9
4
ARTICLE XVIII - ACCESS TO RECORDS 9
ARTICLE XIX - CURRENCY 9, 10
ARTICLE XX - ARBITRATION 10
ARTICLE XXI - SERVICE OF SUIT 10, 11
ARTICLE XXII - INSOLVENCY 11, 12
ARTICLE XXIII - INTERMEDIARY 12
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Agreement No.973676001
FIRST CASUALTY RETROCESSIONAL EXCESS OF LOSS REINSURANCE
AGREEMENT
between
TRENWICK AMERICA REINSURANCE CORPORATION
of Stamford, Connecticut
(hereinafter referred to as the "Company")
and
the Retrocessionaires
Subscribing to the Interests and Liabilities Agreements
to which this Agreement is attached
(hereinafter referred to as the "Retrocessionaire")
ARTICLE I
BUSINESS COVERED
This Agreement is to indemnify the Company as set forth in the AMOUNT OF COVER
ARTICLE, in respect of the excess liability which may accrue to the Company
under all reinsurance binders, acceptances, cover notes, certificates or
policies (hereinafter referred to as "Policies") underwritten by the Company and
classified by the Company as Casualty facultative business.
ARTICLE II
EXCLUSIONS
This Agreement does not apply to and specifically excludes:
1. Business classified by the Company as Surety.
2. Insolvency and Financial Guaranty.
3. Business classified by the Company as Aviation.
4. Business classified by the Company as Credit Insurance.
5. War risks.
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6. Nuclear Energy Risks for those territories as appropriate in accordance
with the clauses set out below and as are attached hereto:-
(a) NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE -
U.S.A. - NMA 1590.
(b) NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE -
CANADA - NMA 1979.
(c) NUCLEAR ENERGY RISKS EXCLUSION CLAUSE (REINSURANCE) (1994) -
WORLDWIDE EXCLUDING U.S.A. AND CANADA - NMA 1975A.
7. Business classified by the Company as Directors and Officers Liability.
8. Business classified by the Company as Securities Exchange Act Liability.
9. Class I Railroads.
10. Surplus relief.
11. Funding plans.
12. Business classified by the Company as ocean marine. This exclusion,
however, shall not apply with respect to legal liability arising out of
the ownership, operation use of or navigation of ships or vessels:
A. Classified as yachts, small pleasure crafts or sports fishing
vessels; or
B. Operating exclusively in inland and/or coastal waters.
13. Insolvency Funds as per the Insolvency Funds Exclusion Clause, attached
hereto.
14. Aggregate Stop Loss business
Nevertheless, in the event the Company becomes liable for a risk excluded above
without its knowledge, either by an existing insured extending its operations,
automatic provisions of policy or as imposed by law, or by inadvertent
acceptance, this Agreement shall apply in respect of such risk (except as
regards exclusions 2, 5, 6 and 13) but only until discovery by the Company and,
pending cancellation of such risk, for a period of 10 days in addition to the
time permitted for cancellation in the Company's reinsurance policy, such total
period not to exceed 120 days in all.
As respects casualty reinsurance accepted under this Agreement, if the insured's
main operations are not excluded hereunder, exclusions listed above (except nos.
2, 5, 6 and 13) shall not apply provided such operations or perils are
incidental to the insured's main operation. The Company shall be the sole judge
of the meaning of the word "Incidental".
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ARTICLE III
AMOUNT OF COVER
No claim shall be made under this Agreement unless and until the Company shall
have first sustained, as a result of any one risk, and/or in the aggregate where
applicable, an ultimate net loss in excess of $500,000 and the Retrocessionaires
shall be liable for the amount in excess of $500,000 ultimate net loss, any one
risk, and/or in the aggregate where applicable; but the sum recoverable shall
not exceed $1,500,000 ultimate net loss any one risk and/or in the aggregate
where applicable.
It is agreed that the Retrocessionaire shall follow the definitions contained in
the policies issued by the Company concerning any references made herein to the
term "loss".
Notwithstanding the foregoing, it is further understood and agreed that within
any contract year the Company shall retain, as a deductible, aggregate loss that
would otherwise be recoverable hereunder, equal to 3% of the Company's Gross Net
Written Premium Income, withheld for each contract year.
However, the sum recoverable by the Company shall not exceed 275.0% of the
premium hereunder or $10,000,000, whichever is greater.
The Company shall bear a further retention in respect of Section B of the TERM
AND CANCELLATION ARTICLE of up to 5% of the Estimated Premium under the 1987 and
1988 Reinsurance Agreement separately but only after paid losses under this
Agreement exceed 17% of the Subject Matter Gross Net Written Premium Income.
The Company is permitted to purchase facultative, share, or surplus reinsurance
in respect of any loss provided that such reinsurance shall inure to the benefit
of the Company and/or the Retrocessionaire.
It is further understood and agreed that the Company is permitted to have share
reinsurance on a ground up basis for special accounts which will be underwritten
outside the scope of this Agreement.
ARTICLE IV
ULTIMATE NET LOSS
The term "ultimate net loss" shall mean the sum actually paid by the Company
(including 80% of any Extra Contractual Obligations as defined in the EXTRA
CONTRACTUAL OBLIGATIONS ARTICLE hereof and 80% of any Loss in Excess of Original
Policy Limits as defined in the EXCESS OF ORIGINAL POLICY LIMITS ARTICLE hereof)
in settlement of losses or liability under its original policies after making
deductions for all recoveries, all salvages and all claims
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upon other reinsurance whether collected or not and shall not include adjustment
expenses arising from the settlement of losses except for settlement of claims
where the original policy or reinsurance agreement include such expense within
the limit of indemnity.
All salvages, recoveries, 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 shall be made by
the parties hereto. These amounts shall be applied in the inverse order to which
liability applies. Nothing in this Article shall be construed to mean that
losses under this Agreement are not recoverable until the Company's ultimate net
loss has been ascertained.
ARTICLE V
COSTS
In the event of a loss arising to which the Retrocessionaires hereon may be
liable to contribute, they shall contribute to the adjustment costs incurred by
the Company in the ratio that their proportion of the loss as finally settled
bears to that total of the whole amount of such Ultimate Net Loss.
Adjustment costs shall exclude all office expense of the Company, all expenses
for salaried employees and general retainer fees for counsel normally paid by
the Company.
ARTICLE VI
TERM AND CANCELLATION
Section A
This Agreement shall cover losses on new and renewal policies of the Company
becoming effective during the period commencing 1st January, 1997 and ending
31st December, 1997 Local Standard Time.
Upon expiry the liability of the Retrocessionaires, with respect to policies in
force on the expiry date, shall continue until the expiration, cancellation or
next anniversary date of each such policy, whichever occurs first, but in no
event shall the period of run-off exceed twelve months plus odd time. Odd time
is defined as an additional twelve months.
Alternatively, the Company shall have the option to take back the in force
business at the expiry date hereof with return of unearned Reinsurance Premium
hereunder. Furthermore, contrary to the AMOUNT OF COVER ARTICLE the Company
shall retain an amount of 3% of the earned Gross Net Written Premium Income
rather than 3% of the Gross Net Written Premium Income and the dollar maximum
recoverable will be reduced pro rata by the percentage that unearned Gross Net
Written Premium Income bears to the Gross Net Written Premium Income.
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With respect to General liability business written on an occurrence basis, all
losses and claims shall be reported with full particulars by the Company to the
Retrocessionaire within five years of the first loss report to the Company. No
liability shall attach hereunder for any such loss or claim not reported within
this period.
Section B
This Agreement shall also cover losses occurring on risks attaching during the
period commencing 1st January, 1987 and ending 31st December, 1988, but only in
respect of General Liability written on an occurrence basis where the loss is
first reported to the Retrocessionaires during the period commencing 1st
January, 1997 and ending 31st December, 1997.
ARTICLE VII
LIABILITY OF THE RETROCESSIONAIRE
The Liability of the Retrocessionaire shall, subject always to the terms and
conditions of this Agreement, begin and end simultaneously with that of the
Company and shall be subject otherwise to the same general and special
stipulations, clauses, waivers and modifications of the Company's policies and
any endorsements thereon.
ARTICLE VIII
ERRORS AND OMISSIONS
Any inadvertent delay, omission or error shall not be held to relieve either
party hereto from any liability which would attach to it hereunder if such
delay, omission or error had not been made, provided such delay, omission or
error is rectified within a reasonable time after discovery. Nevertheless, the
Article shall not apply with respect to loss reports rendered to the Reinsurer
beyond the period required to afford coverage in accordance with the TERM AND
CANCELLATION ARTICLE.
ARTICLE IX
NET RETAINED LINES
This Agreement applies only to that portion of any reinsurance which the Company
retains net for its own account, and in calculating the amount of any loss
hereunder and also in computing the amount or amounts in excess of which this
Agreement attaches, only loss or losses in respect of that portion of any
reinsurances which the Company retains net for its own account shall be
included.
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The amount of the Retrocessionaire's liability hereunder in respect of any loss
or losses shall not be increased by reason of the inability of the Company to
collect from any other Reinsurer, whether specific or general, any amount which
may have become due from them, whether such inability arises from the insolvency
of such other Reinsurer or otherwise.
ARTICLE X
TERRITORY
This Agreement shall apply wherever the Company's policies apply.
ARTICLE XI
PREMIUM
The Company shall pay to the Retrocessionaire a Deposit Premium of $918,000
payable $183,600 on 31st March, 1997, $183,600 on 30th June, 1997, $275,400 on
30th September, 1997 and $275,400 on 31st December, 1997.
At the end of each calendar quarter the Company shall report to the
Retrocessionaire the accumulated Gross Net Written Premium Income.
The Reinsurance Premium hereunder shall be calculated by applying a gross
cession rate of 20%, less the 3% rate withheld as an aggregate loss deductible,
as outlined in the AMOUNT OF COVER ARTICLE, for a net cession rate of 17% to be
applied to the Gross Net Written Premium Income for each quarter.
Should the Reinsurance Premium so calculated exceed the accumulated Deposit
Premium already paid, then the Company shall remit the balance due to the
Retrocessionaire within sixty days from expiry. Should the final Reinsurance
Premium so calculated be less than the premium already paid, but only after the
Gross Net Written Premium Income has fully developed, then the Retrocessionaire
shall remit the balance due to the Company immediately upon receipt of the
report.
The term "Gross Net Written Premium Income" shall mean the written premiums on
business covered under this Agreement, less cancellations and returns and less
any premiums paid for reinsurance, recoveries under which would inure to the
Retrocessionaire's benefit.
ARTICLE XII
OFFSET
The Company and any Retrocessionaires may offset any balances, whether on
account of premium, claims, losses, adjustment expense, salvage or any other
amount due from one party to the other under this Agreement.
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ARTICLE XIII
LETTER OF CREDIT
(This Clause is only applicable to those Retrocessionaires who cannot qualify
for credit by the State having jurisdiction over the Company's loss reserves and
unearned premium reserves).
As regards policies or bonds issued by the Company coming within the scope of
this Agreement, the Company agrees that when they shall file with the Insurance
Department or set up on its books reserves for losses covered hereunder or
unearned premium reserves on policies subject to this Agreement, which it shall
be required to set up by law it will forward to the Retrocessionaires a
statement showing the proportion of such loss reserves and unearned premium
reserves which is applicable to them.
The Retrocessionaires hereby agree that they will apply for and secure delivery
to the Company a clean irrevocable and unconditional Letter of Credit issued by
a bank chosen by the Retrocessionaire and acceptable to the appropriate
insurance authorities, in an amount equal to the Retrocessionaires' proportion
of the loss reserves calculated in accordance with a formula agreed with
Retrocessionaires, and allocated loss expenses relating thereto or unearned
premium reserves as shown in the statement prepared by the Company.
The Letter of Credit shall be "Evergreen" and shall be issued for a period of
not less than one year, and shall be automatically extended for one year from
its date of expiration or any future expiration date unless thirty (30) days
prior to any expiration date, the bank shall notify the Company by certified or
registered mail that it elects not to consider the Letter of Credit extended for
any additional period.
The bank chosen for the issuance of the Letter of Credit shall have no
responsibility whatsoever in connection with the proprietary of withdrawals made
by the Company or the disposition of funds withdrawn, except to ensure that
withdrawals are made only upon the order of properly authorised representatives
of the Company.
At annual intervals, or more frequently as agreed but never more frequently than
semiannually, the Company shall prepare a specific statement, for the sole
purpose of amending the Letter of Credit, of the Retrocessionaire's share of
outstanding losses and allocated expenses relating thereto or unearned premium
reserves on policies subject to this Agreement. If the statement shows that the
Retrocessionaire's share of such losses and allocated loss expenses and/or the
unearned premium reserves, exceeds the balance of credit as of the statement
date, the Retrocessionaire shall, within thirty (30) days after receipt of
notice of such excess, secure delivery to the Company of an amendment of the
Letter of Credit increasing the amount of credit
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by the amount of such difference. If, however, the statement shows that the
Retrocessionaire's share of outstanding losses plus allocated loss expenses or
unearned premium reserves, relating thereto is less than the balance of credit
as of the statement date, the Company shall, within thirty (30) days after
receipt of written request from the Retrocessionaire, release such excess credit
by agreeing to secure an amendment to the Letter of Credit reducing the amount
of credit available by the amount of such excess credit.
ARTICLE XIV
NOTICE OF LOSS AND LOSS SETTLEMENTS
In the event of a loss which in the Company's opinion is likely to give rise to
a claim hereunder, and which exceeds 50% of the deductible of $500,000 prompt
notice thereof shall be given to the Retrocessionaire through Ballantyne, ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ Limited, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇.
All loss settlements made by the Company, provided same are within the terms of
this Agreement, shall be unconditionally binding upon the Retrocessionaire and
amounts falling to the share of the Retrocessionaire shall be immediately
payable by it upon reasonable evidence of the amount paid or to be paid being
given by the Company.
ARTICLE XV
AUTOMATIC REINSTATEMENT
In the event of any claim arising or payments made under this Agreement, the
indemnity provided hereby shall be automatically reinstated to the original
amount without the payment of any additional premium.
ARTICLE XVI
EXCESS OF ORIGINAL POLICY LIMITS
This Agreement shall protect the Company, within the limits hereof, in
connection with any loss in excess of the limit of its original policy, such
loss in excess of the limit having been incurred because of failure by it to
settle within the policy limit or by reason of alleged or actual negligence 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.
The date on which an Excess of Policy Limit amount is incurred by the Company
shall be deemed, in all circumstances, to be the date of the original accident,
casualty, disaster or loss occurrence and furthermore, for the purposes hereof
be deemed to follow the Loss Reporting
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provisions of this Agreement. With regard to policies issued on a claims made
basis such date shall be the date the claim was first made.
However, this Article 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.
For the purposes of this Article, the word 'loss' shall mean any amounts for
which the Company would have been contractually liable to pay had it not been
for the limit of the original Policy.
ARTICLE XVII
EXTRA CONTRACTUAL OBLIGATIONS
This Agreement shall protect the Company within the limits hereof, where the
ultimate net loss includes any Extra Contractual Obligations. "Extra Contractual
Obligations" are defined as those liabilities not covered under any other
provision of this Agreement and which arise from the handling of any claim on
business covered hereunder, such liabilities arising because of, but not limited
to, the following: failure by the Company to settle within the policy limit, or
by reason of alleged or actual negligence, fraud or bad faith in rejecting an
offer of settlement or in the preparation of the defense or in the trial of any
action against its Insured or in the preparation or prosecution of an appeal
consequent upon such action.
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 and furthermore, for the purposes hereof
be deemed to follow the Loss Reporting provisions of this Agreement. With regard
to policies issued on a claims made basis such date shall be the date the claim
was first made.
However, this Article shall not apply where the loss has been incurred due to
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 organisation or party involved in the presentation,
defense or settlement of any claim covered hereunder.
ARTICLE XVIII
ACCESS TO RECORDS
The Retrocessionaire or its duly accredited representatives shall have the right
after providing reasonable notice to inspect the books and records of the
Company at all reasonable times for the purpose of obtaining information
concerning this Agreement or the subject matter thereof.
ARTICLE XIX
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CURRENCY
All accounts shall be rendered and payments made in United States dollars. For
the purpose of converting foreign currency into United States dollars, the rates
of exchange shall be the rates stipulated from time to time by the Treasurer of
the Company in accordance with the mean rates of exchange ruling in New York,
New York and used within the Company as the basis of all currency transactions.
Notwithstanding the above, the Company shall be obligated:
1. In the event of blocked currencies, to notify the Retrocessionaire of
their existence and to adjust subsequent accounts to reflect exchange
rates realized when currencies become unblocked.
2. In the event of significant changes in exchange rates between recording
dates of premium and collection thereof to notify the Retrocessionaire
and adjust subsequent accounts accordingly.
3. In the administration of the two preceding paragraphs to deal
impartially with any such adjustment.
ARTICLE XX
ARBITRATION
Any difference of opinion between the Company and the Retrocessionaires with
respect to the interpretation of this Agreement or the performance of the
obligations under this Agreement shall be submitted to arbitration. Each party
shall select an arbitrator within thirty days after written request for
arbitration has been received from the party requesting arbitration. If either
party refuses or neglects to appoint an arbitrator within thirty days after
receipt of written notice from the other party requesting it to do so, the
requesting party may appoint two arbitrators. The two arbitrators shall select a
third arbitrator within ten days after both have been appointed. Should the
arbitrators fail to agree on a third arbitrator, then the third arbitrator shall
be selected pursuant to the commercial arbitration rules of the American
Arbitration Association. The arbitrators shall be officials or former officials
of other insurance or reinsurance companies, or disinterested Underwriters at
Lloyd's, London.
The decision in writing of any two arbitrators, when filed with the parties
hereto, shall be final and binding on both parties. Judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. The arbitration proceedings are to be governed by the rules of the
American Arbitration Association and the New York State arbitration law. The
arbitration is to take place in New York, New York unless another location is
mutually agreed upon between the Company and the Retrocessionaires.
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ARTICLE XXI
SERVICE OF SUIT (U.S.A.)
(Applicable only to those Retrocessionaires who are domiciled outside the United
States of America).
In the event of the failure of Retrocessionaires hereon to pay any amount
claimed to be due hereunder, Retrocessionaires hereon, at the request of the
Company, will submit to the jurisdiction of any court of competent jurisdiction
within the United States of America. Nothing in this
Article constitutes or should be understood to constitute a waiver of
Retrocessionaires rights to commence an action in any Court of competent
jurisdiction in the United States, to remove an action to a United States
District Court, or to seek a transfer of a case to another Court as permitted by
the laws of the United States or of any State in the United States. It is
Further agreed that service of process in such suit may be made upon Messrs
Mendes and Mount, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇, and that in any
suit instituted against any one of them upon this Agreement, Retrocessionaires
will abide by the final decision of such Court or of any Appellate Court in the
event of an appeal.
The above-named are authorised and directed to accept service of process on
behalf of Retrocessionaires in any such suit and/or upon the request of the
Company to give a written undertaking to the Company that they will enter a
general appearance on behalf of Retrocessionaires in the event such a suit shall
be instituted.
Further pursuant to any statute of any state, territory or district of the
United States of America which makes provision therefor Retrocessionaires hereby
designate the Superintendent, Commissioner or Director of Insurance or other
officer, specified for that purpose in the statute, or his successor or
successors in office, as their true and lawful attorney upon whom may be served
any lawful process in action, suit or proceeding instituted by or on behalf of
the Company or any beneficiary hereunder arising out of this Agreement, and
hereby designate the above-named as the firm to whom the said officer is
authorized to mail such process or a true copy thereof.
ARTICLE XXII
INSOLVENCY
In the event of the insolvency of the Company, this reinsurance shall be payable
directly to the Company, or to its liquidator, receiver, conservator or
statutory successor on the basis of the liability of the Company without
diminution because of the insolvency of the Company or because the liquidator,
receiver, conservator
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or statutory successor of the Company has failed to pay all or a portion of any
claim. It is agreed, however, that the liquidator, receiver, conservator, or
statutory successor of the Company shall give written notice to the
Retrocessionaire of the pendency of a claim against the Company indicating the
policy or bond reinsured which claim would involve a possible liability on the
part of the Retrocessionaires within a reasonable time after such claim is filed
in the conservation or liquidation proceeding or in the receivership, and that
during the pendency of such claim the Retrocessionaire may investigate such
claim and interpose, at their own expense in the proceeding where such claim is
to be adjudicated, any defense or defenses that they may deem available to the
Company or its liquidator, receiver, conservator or statutory successor. The
expense thus incurred by the Retrocessionaires shall be chargeable, subject to
the approval of the Court, against the Company as part of the expense of
conservation or liquidation to the extent of a pro rata share of the benefit
which may accrue to the Company solely as a result of the defense undertaken by
the Retrocessionaires.
Where two or more Retrocessionaires on this Agreement are involved in the same
claim and a majority in interest elect to interpose defense to such claim, the
expense shall be apportioned in accordance with the terms of the reinsurance
Agreement as though such expense has been incurred by the Company.
ARTICLE XXIII
INTERMEDIARY
Ballantyne, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Ltd., ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇, is hereby recognised as the Intermediary negotiating this Agreement for all
business hereunder. All communications (including but not limited to notices,
statements, premiums, return premiums, commissions, taxes, losses, loss
adjustment expense, salvages and loss settlements) relating thereto shall be
transmitted to the Company or the Retrocessionaires through Ballantyne, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ Ltd. Payments by the Company to the Intermediary shall be deemed to
constitute payment to the Retrocessionaires. Payments by the Retrocessionaires
to the Intermediary shall be deemed only to constitute payment to the Company to
the extent that such payments are actually received by the Company.
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INSOLVENCY FUNDS EXCLUSION CLAUSE
This Contract excludes all liability of the Reinsured arising, by contract,
operation of law, or otherwise from its participation or membership, whether
voluntary or involuntary, in any insolvency fund. "Insolvency fund" includes any
guaranty fund, insolvency fund, plan, pool, association, fund or other
arrangement, howsoever denominated, established or governed, which provides for
any assessment of or payment or assumption by the Reinsured 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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NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - U.S.A.
(1) This Contract 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 contract all the
original policies of the Reassured (new, renewal and replacement) of the classes
specified in Clause II of this paragraph (2) from the time specified in Clause
III in this paragraph (2) shall 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 Liability Policies (liability only),
Comprehensive Personal Liability Policies (liability only) or policies
of a similar nature; and the liability portion of combination forms
related to the four classes of policies stated above, such as the
Comprehensive Dwelling Policy and the applicable types of Homeowners
Policies.
III. The inception dates and thereafter of all original policies as
described in II above, whether new, renewal or replacement, being
policies which either
(a) become effective on or after 1st May, 1960, or
19
(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 Contract 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 a nuclear energy liability policy issued by
Nuclear Energy Liability Insurance Association, Mutual Atomic
Energy Liability Underwriters or Nuclear Insurance Association
of Canada, or would be an insured under any such policy but for
its termination upon exhaustion of its limit of liability; or
20
(b) resulting from the hazardous properties of nuclear material and
with respect to which (1) any person or organization is
required to maintain financial protection pursuant to the
Atomic Energy Act of 1954, or any law amendatory thereof, or
(2) the insured is, or had this policy not been issued would
be, entitled to indemnity from the United States of America, or
any agency thereof, under any agreement entered into by the
United States of America, or any agency thereof, with any
person or organization.
II. Under any Medical Payments Coverage, or under any Supplementary
Payments Provision relating to immediate medical or surgical relief,
first aid, to expenses incurred with respect to bodily injury,
sickness, disease or death bodily injury resulting from the hazardous
properties of nuclear material and arising out of the operation of a
nuclear facility by any person or organisation.
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
21
possessions or Canada, this exclusion (c) applies only to
injury to or destruction of property at such nuclear facility.
property damage to such nuclear facility and any property
thereat.
IV. As used in this endorsement:
"HAZARDOUS PROPERTIES" include radioactive, toxic or explosive
properties; "NUCLEAR MATERIAL" means source material, special nuclear
material or byproduct material; "SOURCE MATERIAL", "SPECIAL NUCLEAR
MATERIAL", and "BYPRODUCT MATERIAL" have the meanings given them in the
Atomic Energy Act of 1954 or in any law amendatory thereof; "SPENT
FUEL" means any fuel element or fuel component, solid or liquid, which
has been used or exposed to radiation in a nuclear reactor; "WASTE"
means any waste material (1) containing byproduct material 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
22
"property damage" includes all forms of contamination of
property
V. The inception dates and thereafter of all original policies affording
coverages specified in this paragraph (3), whether new, renewal or
replacement, being policies which become effective on or after 1st May,
1960, provided this paragraph (3) shall not be applicable to
(i) Garage and Automobile Policies issued by the Reassured on New York
risks, or
(ii) statutory liability insurance required under Chapter 90, General
Laws of Massachusetts,
until 90 days following approval of the Broad Exclusion Provision by
the Governmental Authority having jurisdiction thereof.
(4) Without in any way restricting the operation of paragraph (1) of this
Clause, it is understood and agreed that paragraphs (2) and (3) above
are not applicable to original liability policies of the Reassured in
Canada and that with respect to such policies this Clause shall be
deemed to include the Nuclear Energy Liability Exclusion Provisions
adopted by the Canadian Underwriters' Association or the Independent
Insurance Conference of Canada.
*NOTE. The words contained between asterisks 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.
AMENDMENT TO DEFINITION OF WASTE
It is agreed that the definition of "Waste" contained in this Clause is amended
to read as follows:
"WASTE" MEANS ANY MATERIAL
(a) containing by-product material other than the tailings or wastes
produced by the extraction or concentration of uranium or thorium from
any ore processed primarily for its source material content, and
(b) resulting from the operation by any person or organisation of any
nuclear facility
23
included under the first two paragraphs of the definition of nuclear
facilitiy.
In accordance with NMA 1590 (21/9/67)
24
NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - CANADA
1. This Contract 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 agreed that for all purposes of this Contract all the
original liability contracts of the Reassured 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 enforcible 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 Contract all the
original liability contracts of the Reassured, 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
25
inception dates and thereafter, the following provision:-
Broad Exclusion Provision
It is agreed that this Policy does not apply:
(a) To liability imposed by or arising 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
enforcible by the Insured) issued by the Nuclear Insurance
Association of Canada or any other insurer or group or pool of
insurers or would be an Insured under any such policy but for
its termination upon exhaustion of its limit 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 by an Insured of services, materials, parts
or equipment in connection with the planning, construction,
maintenance, operation or use of any nuclear facility; and
(iii) the possession, consumption, use, handling, disposal or
transportation of fissionable substances, or of other
radioactive material (except radioactive isotopes, away from a
nuclear facility, which have reached the final stage of
fabrication so as to be useable 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;
26
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;
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.
27
In accordance with NMA 1979 (11/10/84)
28
NUCLEAR ENERGY RISKS EXCLUSION CLAUSE (REINSURANCE) (1994)
(WORLDWIDE EXCLUDING U.S.A. & CANADA)
This Contract shall exclude Nuclear Energy Risks whether such risks are written
directly and/or by way of reinsurance and/or via Pools and/or Associations.
For all purposes of this Contract Nuclear Energy Risks shall mean all first
party and/or third party insurances or reinsurances (other than Workers'
Compensation and Employers' Liability) in respect of:-
(I) All Property on the site of a nuclear power station.
Nuclear Reactors, reactor buildings and plant and equipment therein
on any site other than a nuclear power station.
(II) All Property, on any site (including but not limited to the
sites referred to in (I) above) used or having been used for :-
(a) The generation of nuclear energy; or
(b) The production Use or Storage of Nuclear Material.
(III) Any other Property eligible for insurance by the relevant local
Nuclear Insurance Pool and/or Association but only to the extent of
the requirements of that local Pool and/or Association.
(IV) The supply of goods and services to any of the sites, described
in (I) to (III), above unless such insurances or reinsurances shall
exclude the perils of irradiation and contamination by Nuclear
Material.
Except as undernoted, Nuclear Energy Risks shall not include
(I) Any insurance or reinsurance in respect of the construction or
erection or installation or replacement or repair or maintenance or
decommissioning of Property as described in (I) to (III) above
(including contractors' plant and equipment).
(II) Any Machinery Breakdown or other Engineering insurance or
reinsurance not coming within the scope of (I) above.
Provided always that such insurance or reinsurance shall exclude the
perils of irradiation and contamination by Nuclear Material.
29
However, the above exemption shall not extend to :-
(1) The provision of any insurance or reinsurance whatsoever in
respect of :
(a) Nuclear Material;
(b) any Property in the High Radioactivity Zone or Area of any
Nuclear Installation as from the introduction of Nuclear
Material or for reactor installations - as from fuel loading
or first criticality where so agreed with the relevant local
Nuclear Insurance Pool and/or Association.
(2) The provision of any insurance or reinsurance for the undernoted
perils:
-fire, lightning, explosion;
-earthquake;
-aircraft and other aerial devices or articles dropped
therefrom;
-irradiation and radioactive contamination; -any other peril
insured by the relevant local Nuclear Insurance Pool and/or
Association.
in respect of any other Property not specified in (1) above
which directly involves the production, use or storage of
Nuclear Material as from the introduction of Nuclear Material
into such Property.
Definitions
"Nuclear Material" means:
(I) nuclear fuel, other than natural uranium and depleted
uranium, capable of producing energy by a self-sustaining
chain process of nuclear fission outside a Nuclear Reactor,
either alone or in combination with some other material; and
(ii) Radioactive Products or Waste.
"Radioactive Products or Waste" means any radioactive material
produced in, or any material made radioactive by exposure to
the radiation incidental to the production or utilisation of
nuclear fuel, but does not include radioisotopes which have
reached the final stage of fabrication so as to be usable for
any scientific, medical, agricultural, commercial or
industrial purpose.
"Nuclear Installation" means
(i) any Nuclear Reactor;
30
(ii) any factory using nuclear fuel for the production of
Nuclear Material, or any factory for the processing of Nuclear
Material, including any factory for the reprocessing of
irradiated nuclear fuel: and
(iii) any facility where Nuclear Material is stored, other
than storage incidental to the carriage of such material.
"Nuclear Reactor" means any structure containing nuclear fuel
in such arrangement that a self sustaining chain process of
nuclear fission can occur therein without an additional source
of neutrons.
"Production, Use or Storage of Nuclear Material" means the
production, manufacture, enrichment, conditioning, processing,
reprocessing, use, storage, handling and disposal of Nuclear
Material.
"Property" shall mean all land, buildings, structures, plant,
equipment, vehicles, contents (including but not limited to
liquids and gases) and all materials of whatever description
whether fixed or not.
"High Radioactivity Zone or Area" means:
(i) for nuclear power stations and Nuclear Reactors, the
vessel or structure which immediately contains the core
(including its supports and shrouding) and all the contents
thereof, the fuel elements, the control rods and the
irradiated fuel store; and
(ii) for non reactor Nuclear Installations, any area where the
level of radioactivity requires the provision of a biological
shield.
In accordance with NMA 1975A (1/4/94)