Exhibit 10.23
QUOTA SHARE
REINSURANCE AGREEMENT
(HEREINAFTER REFERRED TO AS THE "AGREEMENT")
BETWEEN
TOWER INSURANCE COMPANY OF NEW YORK
NEW YORK, NEW YORK
(HEREINAFTER REFERRED TO AS THE "COMPANY")
AND
THE REINSURERS SUBSCRIBING THEIR RESPECTIVE INTERESTS AND
LIABILITES AGREEMENTS ATTACHED HERETO
(HEREINAFTER REFERRED TO AS THE "REINSURERS")
ARTICLE 1
BUSINESS COVERED
This Agreement shall indemnify the Company in respect of the net excess
liability as herein provided and specified which may accrue to the Company as a
result of Ultimate Net Loss and Loss Adjustment Expenses subject to this
Agreement, under Policies written by the Company and classified as Property or
Liability, following the Company's original Policies, including: Fire and Allied
Lines, Commercial Multiple Peril, Homeowners Multiple Peril and Liability,
Workers' Compensation, Inland Marine and Automobile Liability and Physical
Damage, all subject to the terms, conditions and exclusions of this Agreement.
ARTICLE 2
FOLLOW THE FORTUNES
The Reinsurers' liability shall attach simultaneously with that of the Company
and shall be subject in all respects to the same risks, terms, conditions,
interpretations, waivers and to the same modifications, alterations, and
cancellations as the respective Policies issued by the Company, the true intent
of this Agreement being that the Reinsurers shall, in every case to which this
Agreement applies, follow the fortunes of the Company, subject always to the
limits, terms, conditions and exclusions set forth in this Agreement.
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ARTICLE 3
TERM
A. This Agreement shall take effect 12:01 a.m., Eastern Standard Time,
January 1, 2004 and shall apply to all losses occurring on or after
12:01 a.m., Eastern Standard Time, January 1, 2004 in respect of all
new and renewal Policies written on and after 12:01 a.m., Eastern
Standard Time, January 1, 2004 until 12:01 a.m., Eastern Standard Time,
January 1, 2005.
At 12:01 a.m., Eastern Standard Time, January 1, 2005, the Reinsurers
shall be liable for all losses occurring in respect of all inforce
Policies until the earlier of the expiration or the anniversary date of
the Company's Policies, but not to exceed 12 (twelve) months plus odd
time. In the event that any Policy is required by statute or regulation
or order to be continued in force, the Reinsurers will continue to
remain liable with respect to each such Policy until the Company may
legally cancel, non-renew or otherwise eliminate liability under such
Policy.
B. The Company and the Reinsurers may agree to terminate this Agreement or
some portion of the Business Covered on a cut-off basis. Upon such
termination, the Reinsurers shall incur no liability for losses
occurring subsequent to the effective date of termination and the
Reinsurers shall return to the Company the Reinsurers' portion of the
unearned premium reserve for all inforce Policies less previously paid
Ceding Commissions on such unearned premium reserve.
ARTICLE 4
TERRITORY
In respect of Business Covered by the Company, this Agreement shall apply to New
York, New Jersey, Pennsylvania and Connecticut.
To the extent that the Company becomes authorized to transact insurance in any
jurisdiction in addition to those set forth above, the Company may request that
the Reinsurers amend this Agreement to include Policies issued in such
jurisdictions. With respect to Policies issued in New Jersey, Pennsylvania and
Connecticut ("Non-New York Policies"), the maximum overall New Written Premium
that may be ceded by the Company to this Agreement shall be 10% (ten percent) of
Net Written Premium in the aggregate for these states (the "Premium Cap"). To
the extent that the Company's overall Net Written Premium for Non-New York
Policies exceeds the Premium Cap, the Cession Percentage for Non-New York
Policies shall be adjusted by dividing 10% (ten percent) of Net Written Premium
by the actual percentage of Net Written Premium and multiplying that result by
the Cession Percentage elected in the Article 7, Definitions, definition A.
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ARTICLE 5
EXCLUSIONS
This Agreement shall not apply to and specifically excludes:
A. Nuclear Incident, in accordance with the following clauses attached
hereto:
1. Nuclear Incident Exclusion Clause - Physical Damage -
Reinsurance - U.S.A. - ▇▇▇ ▇▇▇▇;
2. Nuclear Incident Exclusion Clause - Liability - Reinsurance -
U.S.A. - ▇▇▇ ▇▇▇▇;
B. War Risks, in accordance with the War Risks Exclusion Clause attached
hereto;
C. Insolvency, in accordance with the Insolvency Funds Exclusion Clause
attached hereto;
D. Liability assumed by the Company as a member of any pool, association
or syndicate, in accordance with the Pools, Associations and Syndicates
Exclusion Clause attached hereto;
E. Earthquake, when written as such;
F. Liability arising out of ownership, maintenance or use of any aircraft
or flight operations;
G. Professional Liability, when written as such, however not to exclude
when written as part of a package Policy or when written in conjunction
with other Policies issued by the Company;
H. Insolvency and Financial Guarantee;
I. Any acquisitions of companies or books of business outside of the
normal course of business ("agent rollovers") without the prior written
consent of the Reinsurers hereon;
J. Asbestos liabilities of any nature;
K. Pollution liabilities of any nature;
L. Assumed reinsurance with the exception of inter-affiliate reinsurance;
M. Ex gratia payments in excess of $3,000 (three thousand dollars).
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ARTICLE 6
COVERAGE, RETENTION, PER RISK-PER LOSS OCCURRENCE LIMITS AND AGGREGATE LIMIT
A. Coverage - The Reinsurers shall indemnify the Company for the Cession
Percentage of the net retained liability of the Company for all
Ultimate Net Loss and Loss Adjustment Expenses billed by in-house
adjusters, defense attorneys, and other claims personnel of Tower
Insurance Company of New York/Tower Risk Management who ▇▇▇▇ the
Company for their services on an hourly basis, subject to the terms,
conditions, and exclusions of this Agreement, the Retention, Per Risk -
Per Loss Occurrence Limits and the Aggregate Limit hereon. The
Reinsurers shall only be obligated to indemnify the Company for
underlying Policies where the Reinsurers has been paid respective
premiums for such underlying Policies by the Company.
B. Retention - The Company shall retain net and unreinsured such portion
of all Ultimate Net Loss in respect of the first 95.0% (ninety five
point zero percent) of Ultimate Net Loss Ratio as shall equal 100% (one
hundred percent) less the Cession Percentage and shall retain 100% (one
hundred percent) of Ultimate Net Loss in excess of the first 95.0%
(ninety five point zero percent) of Ultimate Net Loss Ratio.
C. Per Risk - Per Loss Occurrence Limits - In no event shall the
Reinsurers' limit of liability exceed its pro rata share of $1,000,000
(one million dollars) per risk, per Loss Occurrence in respect of
property business and $1,000,000 (one million dollars) per Loss
Occurrence for liability business. In addition, in no event shall the
Reinsurers' aggregate limit of liability exceed 10% (ten percent) of
Reinsurance Premium earned for the Term in respect of any one Loss
Occurrence in respect of ceded property catastrophe Ultimate Net Loss
plus associated Loss Adjustment Expenses. Furthermore, in no event
shall the Reinsurers' aggregate limit of liability exceed 10% (ten
percent) of Reinsurance Premium earned for the Term in respect of the
combined amounts of property and casualty Ultimate Net Loss plus
associated Loss Adjustment Expenses emanating from Terrorist Acts
whether one or multiple Terrorist Acts.
D. Aggregate Limit- The Reinsurers' maximum overall aggregate Ultimate Net
Loss and Loss Adjustment Expense liability under this Agreement shall
be 95.0% (ninety five point zero percent) of ultimate Reinsurance
Premium earned by the Reinsurers.
ARTICLE 7
DEFINITIONS
A. "Cession Percentage" as used in this Agreement shall be 60% (sixty
percent) for the new and renewal Business Covered written during the
period January 1, 2004 through December 31, 2004, both days inclusive.
However, the Cession Percentage may be reduced to a minimum cession
percentage of 25% (twenty five percent) for each quarter starting with
the calendar quarter beginning July 1, 2004 and only if the Company has
increased its December 31, 2003 Statutory Surplus Level by more than
20% (twenty percent) on or before June 30, 2004. The Company must
advise the Reinsurers, with 30 (thirty) days advance written notice, of
its election to reduce the Cession Percentage for the forthcoming
quarter.
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B. "Declaratory Judgment Expenses" as used in this Agreement shall mean
legal expenses paid by the Company in the investigation, analysis,
evaluation or litigation of a coverage action between the Company and
any other party to determine if there is coverage under a Policy or
Policies issued by the Company for a specific claim or specific claims
reinsured under this Agreement or which would be reinsured under this
Agreement had the Company not been successful in the coverage action.
C. "Loss Adjustment Expenses" as used in this Agreement shall mean all
costs and expenses allocable to a specific claim that are incurred by
the Company in the investigation, appraisal, adjustment, settlement,
litigation, defense or appeal of a specific claim, including court
costs and costs of supersedeas and appeal bonds and including a)
pre-judgment interest, unless included as part of the award or
judgment; b) post-judgment interest and c) legal expenses and costs
incurred in connection with coverage questions and legal actions
connected thereto, including pro rata Declaratory Judgment Expenses.
Loss Adjustment Expenses shall include in-house adjusters, defense
attorneys, and other claims personnel of Tower Insurance Company of New
York/Tower Risk Management who ▇▇▇▇ the Company for their services on
an hourly basis.
D. "Loss Occurrence" shall have the following meanings:
1. As respects property losses, "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 (one hundred sixty
eight) consecutive hours arising out of and directly
occasioned by the same event except that the term "Loss
Occurrence" shall be further defined as follows:
a. 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 (seventy two) 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.
b. 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
(seventy two) 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 (seventy
two) consecutive hours may be extended in respect of
individual losses which occur beyond such 72 (seventy two)
consecutive hours during the continued occupation of an
assured's premises by strikers, provided such occupation
commenced during the aforesaid period.
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c. As regards earthquake (the epicenter 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 (one hundred sixty eight) consecutive hours
may be included in the Company's "Loss Occurrence".
d. 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".
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 (one hundred sixty
eight) consecutive hours shall apply with respect to one event
except for those "Loss Occurrences" referred to in
sub-paragraphs 1 and 2 of this Article where only one such
period of 72 (seventy two) consecutive hours shall apply with
respect to one event.
No individual losses occasioned by an event that would be
covered by 72 (seventy two) hours clauses may be included in
any "Loss Occurrence" claimed under the 168 (one hundred sixty
eight) hours provision.
2. As respects casualty losses, "Loss Occurrence" shall mean any
one accident, disaster, casualty or happening, or series of
accidents, disasters, casualties or happenings arising out of
or following on one event, regardless of the number of
interests insured or the number of Policies responding.
Except where specifically provided otherwise in this
Agreement, each Loss Occurrence shall be deemed to take place
as of the earliest date of loss as determined by any original
Policy responding to the Loss Occurrence.
3. As respects liability losses (bodily injury and property
damage) other than Automobile and Products, and at the option
of the Company, "Loss Occurrence" shall mean the sum of all
damages sustained by each insured during a period of twelve
consecutive months arising out of a continuous or repeated
injurious exposure to substantially the same general
conditions. For purposes of this definition, the date of loss
shall be deemed to be the inception or renewal date of the
original Policy of insurance to which payment is charged.
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As respects occupational disease and cumulative trauma:
a. In case the Company shall, within one original Policy
year, sustain several losses arising out of such and
occupational or other disease or cumulative trauma of
a specific kind or class, suffered by several
employees of one original insured, all such losses
shall be deemed to arise out of one `occurrence' and
the date of the occurrence for reinsurance purposes
shall be deemed to be the inception, anniversary or
renewal date of the Company's original Policy.
b. With respect to an occupational disease or other
disease suffered by more than one employee of one or
more employers, such occupational disease or other
disease shall be covered under this Agreement if
resulting from a sudden and accidental event not
exceeding 48 (forty eight) hours in duration. For
purposes of this Agreement, a 48 (forty eight) hour
event will be deemed as one Loss Occurrence. All such
losses subsequently arising out of such event and not
otherwise classified except as occupational disease
or other disease shall be considered as one Loss
Occurrence or may be combined with losses classified
as other than occupational disease or other disease
which arise out of the same event, and the
combination of such losses shall be considered as one
Loss Occurrence within the meaning hereof.
E. "Net Earned Premium" shall mean the Net Written Premium of the
Company's Business Covered less the unearned premium reserve at the
respective date of calculation.
F. "Net Written Premium" shall mean gross premium of the Company's
Business Covered less cancellations and returns and less premium paid
for specific excess of loss reinsurance above $1,000,000 (one million
dollars) and facultative reinsurances, if any.
G. "Policy" or "Policies" shall mean all policies, binders, contracts,
certificates, or agreements of insurance, whether written or oral, in
accordance with Business Covered hereunder.
H. "Terrorist Acts" shall mean any act, or preparation in respect of
action, or threat of action designed to influence the government de
jure or de facto of any nation or any political division thereof, or in
pursuit of political, religious, ideological, or similar purposes to
intimidate the public or a section of the public of any nation by any
person or group(s) of persons whether acting alone or on behalf of or
in connection with any organization(s) or government(s) de jure or de
facto, and which:
(i) involves violence against one or more persons; or
(ii) involves damage to property; or
(iii) endangers life other than that of the person committing the
action; or
(iv) creates a risk to health or safety of the public or a section
of the public; or
(v) is designed to interfere with or to disrupt an electronic
system.
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Loss, damage, cost or expense arising out of or in connection with any
action in controlling, preventing, suppressing, retaliating against, or
responding to any act of terrorism shall be considered part of
terrorism Ultimate Net Loss.
I. "Ultimate Net Loss" shall mean, subject to all limitations in this
Agreement including the Per Risk - Per Loss Occurrence Limits in
Article 6, Coverage, Retention, Per Risk-Per Loss Occurrence Limits and
Aggregate Limit, section C, actual loss or losses, arising out of
Business Covered hereunder sustained by the Company in respect of
losses occurring during the Term, including 100% (one hundred percent)
of Extra Contractual Obligations and 100% (one hundred percent) of
Excess Policy Limits, subject to the limitations in Article 19, Excess
Policy Limits and Article 20, Extra Contractual Obligations, after
making deductions for all recoveries and salvages and inuring specific
and facultative reinsurance, whether collectible or not. The Reinsurers
shall not be liable for more than $1,000,000 (one million dollars)
additional subject Ultimate Net Loss for any one claim in respect of
Excess of Policy Limits/Extra Contractual Obligations liability and
$5,000,000 (five million dollars) in the aggregate for all Excess of
Policy Limits/Extra Contractual Obligations liability.
J. "Ultimate Net Loss Ratio" shall mean the ratio of aggregate Ultimate
Net Losses incurred plus aggregate Loss Adjustment Expenses divided by
Net Earned Premium as of the date of calculation.
ARTICLE 8
NET RETAINED LINES
This Agreement applies only to that portion of Business Covered which the
Company retains net for its own account, and in calculating the amount of any
Ultimate Net Loss and Loss Adjustment Expenses hereunder and also in computing
the amounts in Article 6, Coverage, Retention, Per Risk-Per Loss Occurrence
Limits and Aggregate Limit, to which this Agreement applies, only Ultimate Net
Loss and Loss Adjustment Expenses in respect of that portion of Business Covered
which the Company retains net for its own account shall be included. The Company
warrants that it will have a maximum net retained line in accordance with
Article 6, Coverage, Per Risk-Per Loss Occurrence Limits and Aggregate Limit for
any one risk.
Recoveries from any form of insurance or reinsurance that protects the Company
against claims which are Subject Business shall inure to the benefit of the
Reinsurers and shall be deducted to arrive at the amount of the Company's
Ultimate Net Loss and Loss Adjustment Expenses.
The amount of the Reinsurers' liability hereunder in respect of any Ultimate Net
Loss and Loss Adjustment Expenses shall not be increased by reason of the
inability of the Company to collect from any other reinsurer, whether specific
or general, any amounts which may have become due from such reinsurer, whether
such inability arises from the insolvency of such reinsurer or otherwise.
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ARTICLE 9
REINSURANCE PREMIUM AND REINSURERS' MARGIN
A. Reinsurance Premium - The Company shall pay to the Reinsurers the
Cession Percentage of the Net Written Premium as collected for the Term
of the Agreement (the "Reinsurance Premium"). The Company shall retain
any and all Reinsurance Premium on a funds withheld basis. A notional
Funds Withheld Account/Profit Sharing Account shall be calculated by
the Company and maintained until there is a complete and final release
of all the Reinsurers' past, present and future obligations and
liabilities to the Company of any nature whatsoever arising under or
related to this Agreement. The Company shall credit Net Written Premium
to the Funds Withheld Account/Profit Sharing Account on a monthly
basis, and settlements shall be made in accordance with Article 13,
Accounts, Remittances and Loss Settlements.
Notwithstanding any provision in this Agreement to the contrary, the
Company shall assume 100% of the credit risk associated with all
Reinsurance Premium amounts that it fails to collect from its insureds
("Delinquent Premium Amounts"). The Company shall include all
Delinquent Premium Amounts in the Reinsurance Premium amounts that it
pays the Reinsurers (or credits to the Funds Withheld Account/Profit
Sharing Account, as applicable) on a monthly basis pursuant to Article
13, Accounts, Remittances and Loss Settlements, section C.
The Company shall have the option, subject to the Reinsurers' consent,
to terminate this Agreement on a cut-off basis. If the Company elects,
and the Reinsurers consents, to terminate this Agreement on a cut-off
basis, in accordance with Article 3, Term, then the Reinsurers shall
return to the Company the respective unearned premium less previously
paid Reinsurers' Margin and Ceding Commissions on such unearned
premium.
The maximum overall Net Written Premium for this Agreement shall be
$200,000,000 (two hundred million dollars) or so deemed. The maximum
overall ceded Net Written Premium shall be $120,000,000 (one hundred
twenty million dollars) (the "Aggregate Premium Cap"). To the extent
the Company's overall ceded Net Written Premium exceeds the Aggregate
Premium Cap, the Cession Percentage shall be reduced by dividing
$200,000,000 (two hundred million dollars) by the actual Net Written
Premium and multiplying that result by the Cession Percentage elected
in Article 6, Coverage, Retention, Per Risk-Per Occurrence Limits and
Aggregate Limit.
B. Reinsurers' Margin - The Company shall pay to the Reinsurers a
Reinsurers' Margin equal to 8.0% (eight point zero percent) of
Reinsurance Premium. The Company shall pay the Reinsurers the full
amount of the Reinsurers' Margin due each month on the date when
Reinsurance Premium is reported each month. The Company shall effect
payment of the Reinsurers' Margin due each month by direct wire
transfer to the Intermediary to pay the Reinsurers.
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In the event the Company fails to pay the full amount of any
Reinsurers' Margin due within 30 (thirty) business days of the payment
due date, the Reinsurers shall provide the Company with a written
demand for such outstanding Reinsurers' Margin. The Company shall have
an additional 45 (forty five) days from the date the Reinsurers
provides the written demand in which to pay to the Reinsurers the
outstanding Reinsurers' Margin (the "Cure Period"). If the Company
fails to pay the full amount of any Reinsurers' Margin by the end of
the Cure Period, this Agreement shall be cancelled retroactively for
nonpayment of premium, effective as of the date of the last day of the
month preceding for which the Reinsurers received actual payment of its
Reinsurers' Margin and the Reinsurers shall incur no liability for
losses occurring subsequent to the effective date of cancellation.
ARTICLE 10
CEDING COMMISSION
The Reinsurers shall allow the Company a provisional Ceding Commission equal to
39.1% (thirty nine point one percent) of the Reinsurance Premium hereon. The
provisional Ceding Commission shall be debited/credited, as applicable, to/from
the Funds Withheld Account/Profit Sharing Account as Reinsurance Premiums are
settled monthly and adjusted as the Ultimate Net Loss Ratio is re-determined
quarterly.
The first adjustment of Actual Ceding Commission for purposes of crediting the
interest due and owing to the Funds Withheld Account/Profit Sharing Account
shall be calculated no later than February 28, 2005 for the quarter ended
December 31, 2004. Thereafter the Actual Ceding Commission shall be recalculated
each quarter and based upon the Ultimate Net Loss Ratio re-determined each
quarter, in accordance with the following table which Ceding Commission may be
reduced by the provisions in Article 12, Trust Account:
Ceding Commission Rate Ultimate Net Loss Ratio
---------------------- -----------------------
Maximum 48.1% 47.0% or Lower
.9 for 1
Provisional 39.1% 57.0%
.9 for 1
Minimum 29.2% 68.0% or Higher
If the Ultimate Net Loss Ratio exceeds 47.0% (forty seven point zero
percent), the Ceding Commission shall be reduced .9% (point nine
percent) and any portion thereof for each 1% (one percent) and any
portion thereof that the Ultimate Net Loss Ratio exceeds 47.0% (forty
seven point zero percent), down to a Ceding Commission of 39.1% (thirty
nine point one percent) at a 57% (fifty seven percent) Ultimate Net
Loss Ratio. If the Ultimate Net Loss Ratio exceeds 57% (fifty seven
percent), the Ceding Commission shall be reduced .9% (point nine
percent) and any portion thereof for each 1% (one percent) and any
portion thereof that the Ultimate Net Loss Ratio exceeds 57% (fifty
five percent), subject to a minimum Ceding Commission of 29.2% (twenty
nine point two percent) at a 68.0% (sixty eight point zero percent) or
higher Ultimate Net Loss Ratio.
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Beginning with the calendar quarter ending March 31, 2005, any
adjustments to Ceding Commission shall result in a special interest
credit calculation from the time of adjustment back to December 31,
2004 at the annual Interest Credit of 2.5% (two point five percent).
Such special interest credit shall be debited or credited, as
applicable, to or from the Funds Withheld Account/Profit Sharing
Account at the time of calculation.
The Reinsurers shall remain liable for payment of Ceding Commission whether or
not the Funds Withheld Account/Profit Sharing Account becomes depleted.
ARTICLE 11
FUNDS WITHHELD ACCOUNT/PROFIT SHARING ACCOUNT AND INTEREST CREDIT
A. Funds Withheld Account/Profit Sharing Account - For purposes of this
Agreement, the Company shall establish on its books and maintain a
cumulative Funds Withheld Account/Profit Sharing Account comprised of
the following:
1. The Funds Withheld Account/Profit Sharing Account at December
31, 2003 shall be equal to $0 (zero dollars);
2. The Funds Withheld Account/Profit Sharing Account at each
subsequent month end shall be comprised of the following
cumulative amounts:
a) The Funds Withheld Account/Profit Sharing Account at
the end of the prior month; plus
b) Reinsurance Premium paid by the Company for such
month; less
c) Ceding Commission for such month, when paid by the
Reinsurers, excluding the Return Ceding Commission as
per Article 12, Trust Account; plus or less (as
applicable)
d) Special interest credit adjustments on Ceding
Commission Adjustments for such month; less
e) Reinsurers' Margin for such month; less
f) Ceded Ultimate Net Losses and Loss Adjustment
Expenses paid by the Reinsurers for such month; plus
g) Interest Credit for such month.
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The Company shall determine and report the balance and activity of the
Funds Withheld Account/Profit Sharing Account monthly within 45 (forty
five) days of the month end.
B. Interest Credit - The Funds Withheld Account/Profit Sharing Account
shall be credited monthly, as of the end of the each month, with an
Interest Credit rate equal to .206% (point two zero six percent)
multiplied by the beginning monthly balance of the Funds Withheld
Account/Profit Sharing Account for the respective month, to achieve an
annual effective yield of 2.5% (two point five percent). In calculating
the beginning monthly balance, all amounts due to either party shall be
deemed settled, effective as of the actual date when such items were
due pursuant to the terms of this Agreement in accordance with Article
13, Accounts, Remittances and Loss Settlements.
Interest Credit shall continue even in the event of the Company's
insolvency.
ARTICLE 12
TRUST ACCOUNT
The Company shall establish a segregated account (the "Segregated Account")
pursuant to a Segregated Account Trust Agreement acceptable to the Reinsurers
and maintain in such account assets with a market value equal to the balance of
the Funds Withheld Account/Profit Sharing Account. The Company shall deposit to
the Segregated Account Reinsurance Premium less provisional Ceding Commission,
plus downward adjustments of the provisional ceding commission, less Reinsurers'
Margin, all as contractually due hereunder. The Company shall be permitted to
withdraw assets from the Segregated Account for the following purposes only:
payment of Ceding Commission adjustments and ceded paid portion of Ultimate Net
Loss and Loss Adjustment Expense amounts when contractually due from the
Reinsurers. The Company shall be liable for all of the expenses arising out of
the Trust Account, including but not limited to, all expenses incurred by the
Trustee in administering the Trust Account and all compensation payable to the
Trustee (collectively, the "Trust Expenses").
If the market value of the assets in the Segregated Account at any calendar
quarter end is less than the Funds Withheld Account/Profit Sharing Account
balance at such calendar quarter end, the Company shall deposit assets to
achieve the required Funds Withheld Account/Profit Sharing Account balance at
such quarter end. If the market value of assets in the Segregated Account at any
calendar quarter end exceeds the balance of the Funds Withheld Account/Profit
Sharing Account at such calendar quarter end, such excess amount shall remain in
the Funds Withheld Account/Profit Sharing Account.
Within 60 (sixty) days of each calendar quarter end, beginning with the quarter
ending March 31, 2004, if the Company fails to maintain the Segregated Account
equal to the Funds Withheld Account/Profit Sharing Account required level, then
the cumulative amount of the shortfall shall be deemed "Return Ceding
Commission" due the Reinsurers. Such actual amount shall be paid in cash by the
Company to the Reinsurers within 60 (sixty) days of the respective calendar
quarter end to reduce the Ceding Commission that otherwise would have been due
at the respective Ultimate Net Loss Ratio as per the Ceding Commission table in
Article 10, Ceding Commission. The Company shall calculate the cumulative
shortfall, if any, and re-determine the Return Ceding Commission due, within 60
(sixty) days of each subsequent calendar quarter end until all liability under
this Agreement is finalized. The Company shall pay to the Reinsurers any
additional Return Ceding Commission due in excess of any previously paid Return
Ceding Commission and the Reinsurers shall pay to the Company any reduction of
Return Ceding Commission due over the previously paid Return Ceding Commission
within 60 (sixty) days of the calendar quarter end.
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Upon the occurrence of a Triggering Event, the Company shall, at the Reinsurers'
sole option, withdraw all assets from the Segregated Account and transfer such
assets to a New York Regulation No. 114 compliant Trust Account established by
the Reinsurers. Notwithstanding the above, the Company is required to deposit
additional assets into such Trust Account to guarantee an investment return
equivalent to the .206% (point two zero six percent) monthly yield.
A "Triggering Event" is any of the following:
1. A.M. Best Rating of the Company falls below B+; or
2. a reduction of more than 20% (twenty percent) of the Company's
statutory surplus from the Company's statutory surplus level
at December 31, 2003; or
3. Insolvency, Rehabilitation, or Regulatory Supervision of the
Company; or
4. Company ceases underwriting new property and casualty
business;
5. Company fails to maintain the Trust Account at the minimum
balance required by this Agreement for a period of 75 (seventy
five) days;
6. Company sells 50% (fifty percent) or more of its assets or
reinsures 50% (fifty percent) or more of its Net Written
Premium or net liabilities (all as of January 1, 2004) to an
unaffiliated third party; or
7. An insurance regulatory authority or governmental entity in
any United States jurisdiction revokes, suspends or forces the
Company to withdraw its certificate of authority in such
jurisdiction
8. Company fails to pay Reinsurers' Margin in accordance with
Article 9, Reinsurance Premium and Reinsurers' Margin, section
B.
13
ARTICLE 13
ACCOUNTS, REMITTANCES AND LOSS SETTLEMENTS
A. Within 45 (forty five) days following the end of each month, the
Company shall report to the Reinsurers the amount of the following with
regards to such month and on a cumulative basis:
1. Net Written Premium and ceded Net Written Premium by line of
business;
2. Net Earned Premium and ceded Net Earned Premium by line of
business;
3. Ceding Commissions paid and unpaid;
4. Ceded Ultimate Net Loss and Loss Adjustment Expenses paid by
line of business;
5. Ceded Ultimate Net Loss and Loss Adjustment Expenses
outstanding by line of business (including IBNR);
6. Salvage recovered and ceded Salvage recovered by line of
business;
7. Premium amounts calculated in accordance with Article 9,
Reinsurance Premium and Reinsurers' Margin, including
applicable Reinsurers' Margin;
8. The balance of the Funds Withheld Account/Profit Sharing
Account as of that month end and activity in the Funds
Withheld Account/Profit Sharing Account during the month.
9. Ceded Net Written Premium and Ceded Net Earned Premium, Ceded
Ultimate Net Loss and Loss Adjustment Expenses paid and Ceded
Ultimate Net Loss and Loss Adjustment Expenses outstanding
(including IBNR) specifically allocable to Non-New York
Policies.
Reports shall continue until the earlier of final settlement of all
Ultimate Net Loss hereunder, or upon Commutation in accordance with
Article 14, Commutation.
B. In the event the Company fails to furnish the Reinsurers complete
reports containing the information and data specified in this
Agreement, within 45 (forty five) days after the end of the month, the
Company shall have an additional 45 (forty five) days in which to
furnish such reports to the Reinsurers (the "Cure Period"). Such Cure
Period shall commence on the date that the Reinsurers provide the
Company with a written demand for such outstanding reports. If the
Company fails to provide such reports to the Reinsurers by the end of
the Cure Period, the Company shall pay an interest penalty to the
Reinsurers, utilizing an annual percentage rate of 200 (two hundred)
basis points, that shall be applied to the cumulative amount of all
payments/credits to the Funds Withheld Account/Profit Sharing Account
that would have been set forth in the outstanding report. The interest
penalty shall be calculated from the date such outstanding report was
originally contractually due until the date of Reinsurers' actual
receipt of the outstanding report. The interest penalty shall be in
addition to the normal Interest Credit that is applied to the Funds
Withheld Account/Profit Sharing Account in accordance with the Article
11, Funds Withheld Account/Profit Sharing Account and Interest Credit,
section B. of this Agreement. The Company shall pay the Reinsurers the
interest penalty in cash by direct wire transfer to the Intermediary to
pay the Reinsurers and such interest penalty amount shall not be
credited to the Funds Withheld Account/Profit Sharing Account.
14
C. The Company shall credit or debit the Funds Withheld Account/Profit
Sharing Account by the amount of the balance of the monthly account.
Such monthly account shall equal the Cession Percentage of Net Written
Premiums collected for new and renewal business for the month, less
Reinsurer's Margin due for the month, less applicable Ceding Commission
due for the month (including all Delinquent Premium Amounts), less all
reinsurance premiums due from the Company in respect of the inuring
reinsurances, less the Cession Percentage of Ultimate Net Loss and Loss
Adjustment Expenses paid for the month, plus the Cession Percentage of
Salvage Recovered for the month. Such remittances shall be deemed
settled by the debtor party to the creditor party 60 (sixty) days in
arrears from the month end, except that amounts owed by the Reinsurer
to the Company shall be paid the later of 60 (sixty) days in arrears
from the month end or 15 (fifteen) days following the Reinsurer's
receipt of the monthly report.
D. Notwithstanding the above, the Company shall advise the Reinsurer
promptly of all Ultimate Net Losses and Loss Adjustment Expenses, which
in the opinion of the Company, may result in a claim hereunder and of
all subsequent developments thereto which, in the opinion of the
Company, may materially affect the position of the Reinsurer.
Inadvertent omission or oversight in dispatching such advises shall in
no way affect the liability of the Reinsurer. However, the Company
shall notify the Reinsurer of such omission or oversight promptly upon
its discovery.
E. All Ultimate Net Loss settlements made by the Company on Business
Covered, with exception of ex gratia payments, whether under Policy
terms and conditions or by way of compromise, shall be in the sole
discretion of the Company and shall be unconditionally binding on the
Reinsurer, subject always to the terms conditions and exclusions of
this Agreement. Upon satisfactory proof of loss, the Reinsurer shall
pay or allow, as applicable, its proportional share of each such
settlement in accordance with this Agreement. All Ultimate Net Loss and
Loss Adjustment Expense amounts due to the Company from the Reinsurer
under this Agreement shall first be paid by way of offset against the
Funds Withheld Account/Profit Sharing Account consistent with Article
13, Accounts, Remittances, and Loss Payments, section C. and such
offset shall constitute payment under this Agreement. Only upon the
exhaustion of the Funds Withheld Account/Profit Sharing Account shall
the Company be entitled to receive cash payment from the Reinsurer.
15
ARTICLE 14
COMMUTATION
The Company shall have the option, only with the consent of the Reinsurers,
effective at any calendar quarter end on or after the calendar quarter of
termination of this Agreement, to commute all ceded Ultimate Net Loss and ceded
Loss Adjustment Expenses outstanding hereunder. The date that the Company and
the Reinsurers mutually elect to commute shall be deemed the commutation date.
Upon Commutation, the Company shall retain 100% (one hundred percent) of the
balance of the Funds Withheld Account/Profit Sharing Account and shall be
entitled to the balance of the Segregated Account or such funds transferred into
a New York Regulation 114 complaint trust account, as applicable. Upon
Commutation, the Reinsurers shall be released from all past, current and future
liability under this Agreement.
ARTICLE 15
SPECIAL TERMINATION CLAUSE
Either the Company or the Reinsurers may terminate this Agreement on a cut-off
basis upon the happening of any one of the following circumstances at any time
by the giving of 60 (sixty) days prior written notice to the other party:
1. The Company's A.M. Best rating drops below a "B+"; or
2. The Reinsurers' A.M. Best ratings drops below an "A-"; or
3. A reduction of more than 20% (twenty percent) of the Company's
statutory surplus from the Company's Statutory Surplus Level
at December 31, 2003; or
4. There is a change in the office of President and CEO of the
Company; or
5. Insolvency, Rehabilitation, or Regulatory Supervision of the
Company; or
6. Company ceases underwriting new property and casualty
business;
7. Company fails to maintain the Trust Account at the minimum
balance required by this Agreement for a period of
seventy-five (75) days;
8. Company sells 50% (fifty percent) or more of its assets or
reinsures 50% (fifty percent) or more of its Net Written
Premium or net liabilities (all as of January 1, 2004) to an
unaffiliated third party; or
16
9. An insurance regulatory authority or governmental entity in
any United States jurisdiction revokes, suspends or forces the
Company to withdraw its certificate of authority in such
jurisdiction; or
10. Company fails to pay Reinsurers' Margin in accordance with
Article 9, Reinsurance Premium and Reinsurers' Margin.
Upon election of Special Termination, the Reinsurers shall incur no liability
for losses occurring subsequent to the effective date of termination.
ARTICLE 16
CURRENCY
A. Whenever the word "dollars" or the "$" appears in this Agreement, they
shall be construed to mean United States Dollars and all transactions
under this Agreement shall be in United States Dollars.
B. Amounts paid or received by the Company in any other currency shall be
converted to United States Dollars at the rate of exchange at the date
such transaction is entered on the books of the Company.
ARTICLE 17
TAXES AND FEDERAL EXCISE TAX
A. Taxes - In consideration of the terms under which this Agreement is
issued, the Company undertakes not to claim any deduction of the
Premium hereon when making Canadian tax returns or when making tax
returns other than Income or Profits Tax returns, to any State or
Territory of the United States of America or to the District of
Columbia.
B. Federal Excise Tax - (Applicable to those reinsurers, excepting
Underwriters at Lloyd's London and other reinsurers exempt from Federal
Excise Tax, who are domiciled outside the United States of America.)
The Reinsurers has agreed to allow for the purpose of paying the
Federal Excise Tax the applicable percentage of the Premium payable
hereon (as imposed under Section 4371 of the Internal Revenue Code)
from Reinsurers' Margin to the extent such Premium is subject to the
Federal Excise Tax.
In the event of any return of Premium becoming due hereunder, the
Reinsurers shall deduct the applicable percentage from the return
Premium payable hereon and the Company or its agent should take steps
to recover the tax from the United States Government.
17
ARTICLE 18
RESERVES
(This Clause only applies to Reinsurers domiciled outside the United States
and/or unauthorized in any state, territory or district of the United States
having jurisdiction over the Company.)
A. If a jurisdiction of the United States shall not permit the Company, in
the statements required to be filed with its regulatory authority(ies),
to receive full credit as admitted reinsurance for any Reinsurers'
share of obligations, the Company shall forward to such Reinsurers a
statement of the Reinsurers' share of such obligations. Upon receipt of
such statement, the Reinsurers shall promptly apply for and provide the
Company with a "clean", unconditional and irrevocable Letter of Credit
or alternative Trust Account pursuant to the trust agreement meeting
the requirements of New York Regulation 114, in either event in the
amount specified in the statement submitted in excess of the Funds
Withheld Account/Profit Sharing Account, with terms and bank acceptable
to the regulatory authority(ies) having jurisdiction over the Company.
The form of collateral to be provided under this clause in excess of
the Funds Withheld Account/Profit Sharing Account shall be solely at
the option of the Reinsurers.
B. "Obligations" as used in this Article, shall mean the sum of losses
paid and Loss Adjustment Expenses paid by the Company but not yet
recovered from the Reinsurers, plus reserves for reported losses, Loss
Adjustment Expenses, losses incurred but not reported and premiums
unearned, if any.
C. If the Reinsurers choose to provide a Letter of Credit, the following
shall be applicable:
1. The Reinsurers hereby agrees that the Letter of Credit shall
provide for automatic extension of the Letter of Credit
without amendment for one year from the date of expiration of
said Letter or any future expiration date unless 30 (thirty)
days prior to any expiration the issuing bank shall notify the
Company by registered mail that the issuing bank elects not to
consider the Letter of Credit renewed for any additional
period. An issuing bank, not a "qualified bank" as defined by
Regulation 133 promulgated by the Insurance Department of the
State of New York, shall provide 60 (sixty) days notice to the
Company prior to any expiration.
2. Notwithstanding any other provision of this Agreement, the
Company or any successor by operation of law of the Company
including, without limitation, any liquidator, rehabilitator,
receiver or conservator of the Company may draw upon such
credit, without diminution because of the insolvency of any
party hereto, at any time and undertakes to use and apply such
credit for one or more of the following purposes only:
i. to pay the Reinsurers' share or to reimburse the
Company for the Reinsurers' share of any obligations,
as stipulated in the statement submitted by the
Company to the Reinsurers, which is due to the
Company and not otherwise paid by the Reinsurers;
18
ii. in the event the Company has received effective
notice of non-renewal of the Letter of Credit and the
Reinsurers' liability remains unliquidated and
undischarged 30 (thirty) days prior to the expiry
date of the Letter of Credit to withdraw the balance
of the Letter of Credit and place such sums in an
interest bearing trust account (separate and apart
from any assets of the Company) to secure the
continuing liabilities of the Reinsurers under this
Agreement until a renewal Letter of Credit acceptable
to the regulatory authority(ies) having jurisdiction
over the Company, or a substitute in lieu thereof
acceptable to the regulatory authority(ies) having
jurisdiction over the Company, has been received by
the Company. The Company shall provide to the
Reinsurers payment of any interest thereon accruing
from such account.
iii. to make refund of any sum which is in excess of the
actual amount required for sections 1 and 2 of this
paragraph.
In the event that any amounts drawn down (and any interest or
other earnings thereon) on the Letter of Credit are either in
excess of the actual amounts required under subparagraphs (i)
and (ii) above or subsequently determined not to be due under
this Agreement, such amounts shall constitute assets of the
Reinsurer for all purposes and shall be held by the Company in
trust (separate and apart from any assets of the Company). The
Company shall return all such amounts to the Reinsurer,
including interest accrued from the date drawn and calculated
at a rate not in excess of the prime rate of interest on the
amounts held pursuant to subparagraphs (i) and (ii) above.
3. At annual intervals or more frequently as determined by the
Company, but never more frequently than quarterly, the Company
shall prepare a specific statement, for the sole purpose of
amending the Letter of Credit, of the Reinsurers' share of any
Obligations. If the statement shows that the Reinsurers' share
of Obligations exceeds the balance of credit as of the
statement date, the Reinsurers shall, within 30 (thirty) 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 by the amount of such difference. If the
statement shows, however, that the Reinsurers' share of
Obligations is less than the balance of credit as of the
statement date, the Company shall, within 30 (thirty) days
after receipt of written request from the Reinsurers, 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.
4. The bank shall have no responsibility whatsoever in connection
with the propriety of withdrawals made by the Company or the
disposition of funds withdrawn, except to assure that
withdrawals are made only upon the order of properly
authorized representatives of the Company. The Company shall
incur no obligation to the bank in acting upon the credit,
other than as appears in the express terms thereof.
19
D. If the Reinsurers choose to provide a Trust Account the following shall
be applicable:
1. The Reinsurers shall enter into a trust agreement and
establish a trust account (the "Trust Account") for the
benefit of the Company with respect to the Reinsurers' share
of Obligations with a bank (the "Trustee") acceptable to the
Superintendent of Insurance of the State of New York and the
Company.
2. The Reinsurers agree to deposit, and maintain in the Trust
Account, assets to be held in trust by the Trustee for the
benefit of the Company as security for the payment of the
Reinsurers' Obligations to the Company under this Agreement.
3. The parties agree that the assets so deposited shall be valued
according to their current fair market value and shall consist
only of cash (United States legal tender), certificates of
deposit (issued by a United States bank and payable in United
States legal tender), and other admitted assets of a
character, maturity, and value to fulfill the intent of this
Agreement; provided that such investments are issued by an
institution that is not the parent, subsidiary or affiliate of
either the Company or the Reinsurers; and provided, further
that such assets are of the type specified in paragraphs (1),
(2), (3), (8) and (10) of Section 1404(a) of the New York
Insurance Law ("Eligible Securities").
4. The Reinsurers, prior to depositing assets with the Trustee,
shall execute all assignments and endorsements in blank, or
transfer legal title to the Trustee of all shares, obligations
or any other assets requiring assignments, in order that the
Company, or the Trustee upon direction of the Company, may
whenever necessary negotiate any such assets without consent
or signature from the Reinsurers or any other entity.
5. All settlements of account under the trust agreement between
the Company and the Reinsurers shall be made in cash or its
equivalent.
6. The aggregate fair market value of the assets held in the
Trust Account (the "Market Value") shall at all times be at
least equal to the Reinsurers' share of Obligations. The
amount of the Trust Account shall be adjusted on a quarterly
basis so as to equal the Reinsurer's share of Obligations. On
a quarterly basis, the Reinsurer shall prepare a specific
statement of the Reinsurer's share of Obligations and deliver
such report to the Company. If the statement shows that the
Reinsurer's share of Obligations exceed 100% (one hundred
percent) of the balance of the Trust Account as of the
statement date, the Reinsurer shall, within 10 (ten) days
after delivery of such notice of excess, secure delivery to
the Trustee of additional cash or Eligible Securities having a
current fair market value equal to such difference. If the
statement shows that the Reinsurers' share of Obligations are
less than 102% (one hundred two percent) of the balance of the
Trust Account as of the statement date, the Company shall,
within 10 (ten) days after receipt of such statement from the
Reinsurers, deliver a notice of withdrawal to the Trustee
directing the Trustee to withdraw from the Trust Account and
deliver to the Reinsurers assets from the Trust Account having
a current fair market value equal to such excess amount.
20
ARTICLE 19
EXCESS OF POLICY LIMITS
This Agreement shall protect the Company, within the limits hereof, for 100%
(one hundred percent) of loss in excess of the limit of its original Policies of
insurance, such loss in excess of the limit having been incurred because of
failure by the Company or Tower Risk Management to settle within the Policies of
insurance 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 Reinsurers shall not
be liable for more than $1,000,000 (one million dollars) additional subject
Ultimate Net Loss for any one claim in respect of Excess of Policy Limits/Extra
Contractual Obligations liability and $5,000,000 (five million dollars) in the
aggregate for all Excess of Policy Limits/Extra Contractual Obligations
liability.
However, this Article shall not apply where the loss has been incurred due to a
fraud by a member of the board of directors or a corporate officer of the
Company or Tower Risk Management 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 purpose 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 20
EXTRA CONTRACTUAL OBLIGATIONS
This Agreement shall protect the Company for 100% (one hundred percent) of any
Extra Contractual Obligations. The term "Extra Contractual Obligations" is
defined as those liabilities not covered under any other provision of the
Company's original Policies of insurance 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 or Tower Risk
Management to settle within the Policies of insurance 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 Reinsurers shall not be liable for more than
$1,000,000 (one million dollars) additional subject Ultimate Net Loss for any
one claim in respect of Excess of Policy Limits/Extra Contractual Obligations
liability and $5,000,000 (five million dollars) in the aggregate for all Excess
of Policy Limits/Extra Contractual Obligations liability.
21
The date on which any Extra Contractual Obligation is incurred by the Company
shall be deemed, in all circumstances, to be the date of the original loss
event. However, this Article shall not apply where the loss has been incurred
due to fraud by a member of the board of directors or a corporate officer of the
Company or Tower Risk Management 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.
ARTICLE 21
OFFSET
The Company and the Reinsurers shall have the right to offset any balance or
amounts due from one party to the other under the terms of this Agreement or any
other agreement between the Company and the Reinsurers. The party asserting the
right of offset may exercise such right any time whether the balances due are on
account of Reinsurance Premiums, Ceding Commissions, Return Ceding Commissions,
Ultimate Net Losses, Interest Credit or any other balances due or owed between
the Company and the Reinsurers. In the event of insolvency of either party to
this agreement, then offsets shall only be allowed to the extent permitted by
the provisions of New York Insurance Law Section 7427.
ARTICLE 22
ERRORS AND OMISSIONS
Inadvertent delays, errors or omissions made by the Company in connection with
this Agreement shall not relieve the Reinsurers from any liability which would
have attached had such delay, error or omission not occurred, provided always
that such delay, error or omission shall be rectified as soon as possible after
discovery by the Company's home office.
ARTICLE 23
ACCESS TO RECORDS
The Company shall place at the disposal of the Reinsurers at all reasonable
times, and the Reinsurers shall have the right to inspect through its designated
representatives, during the Term of this Agreement and thereafter, all books,
records and papers of the Company in connection with any reinsurance hereunder,
or the subject matter hereof. Such right shall continue to exist as long as one
party has a claim against the other party arising out of this Agreement.
22
ARTICLE 24
INSOLVENCY
A. 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 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
Reinsurers of the pendency of a claim against the Company indicating
the Policy insured which claim would involve a possible liability on
the part of the Reinsurers with a reasonable time after such claims is
filed in the conservation or liquidation proceeding or in the
receivership, and that during the pendency of such claim, the
Reinsurers may investigate such claim and interpose, at its own
expense, in the proceeding where such claim is to be adjudicated, any
defense or defenses that they may deem available to the Company or its
liquidator, receiver, conservator or statutory successor. The expense
thus incurred by the Reinsurers 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 Reinsurers.
B. Where two or more reinsurers are involved in the same claim and a
majority in interest elect to interpose defense to such claim, the
expense shall be apportioned in accordance with the terms of this
Agreement as though such expense had been incurred by the insolvent
Company.
ARTICLE 25
CONFIDENTIALITY
The parties acknowledge there may be portions of this Agreement, the Reinsurance
Agreement submission or the marketing package that may contain confidential,
proprietary information of the Company. The Reinsurers shall maintain the
confidentiality of such information concerning the Company and its business and
shall not disclose it to any third person without prior approval; provided,
however, that the Reinsurers may be required and are permitted under this
Agreement to disclose such information in answers to interrogatories, subpoenas
or other legal/arbitration processes as well as to the Company's Intermediaries,
to the Reinsurers' retrocessionaire, the Reinsurers' affiliates, and applicable
intermediaries, or in response to requests by governmental and regulatory
agencies. In addition, the Reinsurers may disclose such information to its
rating agencies, auditors, advisors and to its outside legal counsel as may be
necessary.
23
ARTICLE 26
ARBITRATION
A. Any dispute or other matter in question between the Company and the
Reinsurers arising out of, or relating to, the formation,
interpretation, performance or breach of this Agreement, whether such
dispute arises before or after termination of this Agreement, shall be
settled by arbitration. Arbitration shall be initiated by the delivery
of a written notice of demand for arbitration by one party to the other
within a reasonable time after the dispute has arisen.
B. If more than one reinsurer is involved in the same dispute, all such
reinsurers shall constitute and act as one party for the purposes of
this Article, provided, however, that nothing herein shall impair the
rights of such reinsurers to assert several, rather than joint,
defenses or claims, nor be construed as changing the liability of the
reinsurers under the terms of this Agreement from several to joint.
C. Each party shall appoint an individual as arbitrator and the two so
appointed shall then appoint a third arbitrator. If either party
refuses or neglects to appoint an arbitrator within 60 (sixty) days,
the other party may appoint the second arbitrator. If the two
arbitrators do not agree on a third arbitrator within 60 (sixty) days
of their appointment, each of the arbitrators shall nominate 3 (three)
individuals. Each arbitrator shall then decline two of the nominations
presented by the other arbitrator. The third arbitrator shall then be
chosen form the remaining two nominations by drawing lots. The
arbitrators shall be active or former officers of insurance or
reinsurance companies or Lloyd's Underwriters; the arbitrators shall
not have a personal or financial interest in the result of the
arbitration.
D. The arbitration hearings shall be held in New York, New York or such
other place as may be mutually agreed. Each party shall submit its case
to the arbitrators within 60 (sixty) days of the selection of the third
arbitrator or within such longer period as may be agreed by the
arbitrators. The arbitrators shall not be obliged to follow judicial
formalities or the rules of evidence except to the extent required by
governing law, that is, the state law of the situs of the arbitration
as herein agreed; they shall make their decisions according to the
practice of the reinsurance business. The decision rendered by a
majority of the arbitrators shall be final and binding on both parties.
Such decision shall be a condition precedent to any right of legal
action arising out of the arbitrated dispute which either party may
have against the other. Judgment upon the award rendered may be entered
in any court having jurisdiction thereof.
E. Each party shall pay the fee and expenses of its own arbitrator and
one-half of the fee and expenses of the third arbitrator. All other
expenses of the arbitration shall be equally divided between the
parties.
F. Except as provided above, arbitration shall be based, insofar as
applicable, upon the procedures of the American Arbitration
Association.
24
ARTICLE 27
SERVICE OF SUIT
(This Article only applies to reinsurers domiciled outside the United States
and/or unauthorized in any state, territory or district of the United States
having jurisdiction over the Company.)
A. It is agreed that in the event of the failure of the Reinsurers hereon
to pay any amount claimed to be due hereunder, the Reinsurers hereon,
at the request of the Company, shall submit to the jurisdiction of a
court of competent jurisdiction within the United States. Nothing in
this Article constitutes or should be understood to constitute a waiver
of the Reinsurers' right 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 Lovells, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and that in any suit instituted, the Reinsurers
shall abide by the final decision of such court or of any Appellate
Court in the event of an appeal.
B. The above-named are authorized and directed to accept service of
process on behalf of the Reinsurers in any such suit and/or upon the
request of the Company to give a written undertaking to the Company
that they shall enter a general appearance upon the Reinsurers' behalf
in the event such a suit shall be instituted.
C. Further, pursuant to any statute of any state, territory or district of
the United States which makes provision therefor, the Reinsurers hereon
hereby designate the Superintendent, Commissioner or Director of
Insurance or other officer specified for that purpose in the statute,
or his successor or successors in office, as their true and lawful
attorney upon whom may be served any lawful process in any action, suit
or proceeding instituted by or on behalf of the Company or any
beneficiary hereunder arising out of this Agreement of reinsurance, and
hereby designates the above-named as the person to whom the said
officer is authorized to mail such process or a true copy thereof.
ARTICLE 28
INTERMEDIARY
Tower Risk Management Corporation and Pegasus Advisors - Towers ▇▇▇▇▇▇
Reinsurance are hereby recognized as the Intermediaries negotiating this
Agreement for all business hereunder and through whom all communications
relating hereto (including but not limited to notices, statements and reports)
shall be transmitted to both parties. It is understood, as regards remittances
due either party hereunder, that payment by the Company to the Intermediaries,
shall constitute payment to the Reinsurers but payment by the Reinsurers to the
Intermediaries shall only constitute payment to the Company to the extend such
payments are actually received by the Company.
25
NUCLEAR INCIDENT EXCLUSION CLAUSE
PHYSICAL DAMAGE - REINSURANCE - USA
1. This Contract 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 Contract does not cover any loss or liability accruing to the
Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any
insurance against Physical Damage (including business interruption or
consequential loss arising out of such Physical Damage) to:
I. Nuclear reactor power plants including all auxiliary property
on the site, or
II. Any other nuclear reactor installation, including laboratories
handling radioactive materials in connection with reactor
installations, and "critical facilities" as such, or
III. Installations for fabricating complete fuel elements or for
processing substantial quantities of "special nuclear
material", and for reprocessing, salvaging, chemically
separating, storing or disposing of "spent" nuclear fuel or
waste materials, or
IV. Installations other than those listed in paragraph (2) III
above using substantial quantities of radioactive isotopes or
other products of nuclear fission.
3. Without in any way restricting the operations of paragraphs (1) and
(2) hereof, this Contract 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 said insurance contains a provision excluding
coverage for damage to property caused by or
resulting from radioactive contamination, however
caused. However on and after 1st January 1960, this
sub-paragraph (b) shall only apply provided the said
radioactive contamination exclusion provision has
been approved by the Governmental Authority having
jurisdiction thereof.
4. Without in any way restricting the operations of paragraphs
(1), (2) and (3) hereof, this
26
Contract does not cover any loss or liability by radioactive contamination
accruing to the Reassured, directly or indirectly, and whether as Insurer or
Reinsurer, when such radioactive contamination is a named hazard specifically
insured against.
5. It is understood and agreed that this Clause shall not extend to
risks using radioactive isotopes in any form where the nuclear exposure is not
considered by the Reassured to be the primary hazard.
6. The term "special nuclear material" shall have the meaning given it
in the Atomic Energy Act of 1954 or by any law amendatory thereof.
7. The 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.
27
NUCLEAR INCIDENT EXCLUSION CLAUSE
LIABILITY - REINSURANCE - U.S.A.
1. This Agreement does not cover any loss or liability accruing to the
Cedent 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
Agreement all the original Policies of the Cedent (new, renewal and
replacement) of the classes specified in Clause II of this paragraph
(2) from the time specified in Clause III of 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 limits of
liability.
II. Family Automobile Policies (liability only), Special
Automobile Policies (private passenger automobiles, liability
only), Farmers Comprehensive Personal Liability Policies
(liability only), Comprehensive Personal Liability Policies
(liability only) or Policies of a similar nature; and the
liability portion of combination forms related to the four
classes of Policies stated above, such as the Comprehensive
Dwelling Policy and the applicable types of Homeowners
Policies.
III. The inception dates and thereafter of all original Policies as
described in II above, whether new, renewal or replacement,
being Policies which either
(a) become effective on or after 1st May, 1960, or
(b) become effective before that date and contain the Limited
Exclusion Provision set out above; provided this paragraph (2)
shall not be applicable to Family Automobile Policies, Special
Automobile Policies or Policies or combination Policies of a
similar nature, issued by the Cedent 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 Agreement the original liability Policies of the
Cedent (new, renewal and replacement) affording the following
coverages:
28
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
(b) resulting from the hazardous properties of nuclear
material and with respect to which (1) any person or
organization is required to maintain financial
protection pursuant to the Atomic Energy Act of 1954,
or any law amendatory thereof, or (2) the insured is,
or had this Policy not been issued would be, entitled
to indemnity from the United States of America, or
any agency thereof, under any agreement entered into
by the United States of America, or any agency
thereof, with any person or organization.
II. Under any Medical Payments Coverage, or under any
Supplementary Payments Provision relating to
(immediate medical or surgical relief,
(first aid,
to expenses incurred with respect to
(bodily injury, sickness, disease or death
(bodily injury
resulting from the hazardous properties of nuclear material
and arising out of the operation of a nuclear facility by any
person or organization.
III. Under any Liability Coverage, to
(injury, sickness, disease, death or destruction
(bodily injury or property damage
resulting from the hazardous properties of nuclear material if
(a) the nuclear material (1) is at any nuclear facility
owned by, or operated by or on behalf of, an insured
or (2) has been discharged or dispersed therefrom;
29
(b) the nuclear material is contained in spent fuel or
waste at any time possessed, handled, used,
processed, stored, transported or disposed or by or
on behalf of an insured; or
(c) (the injury, sickness, disease, death or destruction
(the bodily injury or property damage
arises out of the furnishing by an insured of services, materials,
parts or equipment in connection with the planning, construction,
maintenance, operation or use of any nuclear facility, but if such
facility is located within the United States of America, its
territories, or possessions or Canada, this exclusion (c) applies only
to
(injury to or destruction of property at such nuclear facility
(property damage to such nuclear facility and any property thereat.
IV. As used in this endorsement:
"hazardous properties" include radioactive, toxic or explosive
properties; "nuclear material" means source material, special
nuclear material or by-product material; "source material",
"special nuclear material" and "by-product material" have the
meanings given to them in the Atomic Energy Act of 1954 or in
any law amendatory thereof; "spent fuel" means any fuel
element or fuel component, solid or liquid, which has been
used or exposed to radiation in a nuclear reactor; "waste"
means any waste material (1) containing by-product material
and (2) resulting from the operation by any person or
organization of any nuclear facility included within the
definition of nuclear facility under paragraph (a) or (b)
thereof; "nuclear facility" means
(a) any nuclear reactor,
(b) any equipment or device designed or used for (1)
separating the isotopes of uranium or plutonium, (2)
processing or utilizing spent fuel, or (3) handling,
processing or packaging waste,
(c) any equipment or device used for the processing,
fabricating or alloying of special nuclear material
if at any time the total amount of such material in
the custody of the Insured at the premises where such
equipment or device is located consists of or
contains more than 25 grams of plutonium or uranium
233 or any combination thereof, or more than 250
grams of uranium 235,
(d) any structure, basin, excavation, premises or place
prepared or used for the storage or disposal of
waste,
and includes the site on which any of the foregoing is
located, all operations conducted on such site and all
premises used for such operations; "nuclear reactor" means any
apparatus designed or used to sustain nuclear fission in a
self-supporting chain reaction or to contain a ▇▇▇▇▇▇▇▇ ▇▇▇▇
of fissionable material;
(with respect to injury to or destruction of property, the
word "injury" or "destruction"
("property damage" includes all forms of radioactive
contamination of property.
(includes all forms of radioactive contamination of property.
V. The inception dates and thereafter of all original Policies affording
coverages specified in this paragraph (3), whether new, renewal or
replacement, being Policies which become effective on or after 1st May,
1960, provided this paragraph (3) shall not be applicable to
(i) Garage and Automobile Policies issued by the Cedent on New
York risks, or
30
(ii) Statutory liability insurance required under Chapter 90,
General Laws of Massachusetts, until 90 days following
approval of the Board 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 Cedent in
Canada and that with respect of such Policies this Clause shall be
deemed to include the Nuclear Energy Liability Exclusion Provisions
adopted by the Canadian Underwriters' Association or the Independent
Insurance Conference of Canada.
--------------------
*Note The words printed in italics in the Limited Exclusion Provision and in
the Broad Exclusion Provision shall apply only in relation to original
liability Policies which include a Limited Exclusion Provision or a
Broad Exclusion Provision containing those words.
31
WAR RISK EXCLUSION CLAUSE (REINSURANCE)
As regards interests which at time of loss or damage are on shore, no
liability shall attach hereto in respect of any loss or damage which is
occasioned by war, invasion, hostilities, acts of foreign enemies, civil war,
rebellion, insurrection, military or usurped power, or martial law or
confiscation by order of any government or public authority.
This War Exclusion Clause shall not, however, apply to interest which
at time of loss or damage are within the territorial limits of the United States
of America (comprising the fifty States of the Union and the District of
Columbia, its territories and possessions, including the Panama Canal Zone and
the Commonwealth of Puerto Rico and including Bridges between the United States
of America and Mexico provided they are under United States ownership), Canada,
St. Pierre and Miquelon, provided such interests are insured under original
Policies, endorsements or binders containing a standard war or hostilities or
warlike operations exclusion clause.
Nevertheless, this clause shall not be construed to apply to loss or
damage occasioned by riots, strikes, civil commotion, vandalism, malicious
damage, including acts committed by agents of any government, party or faction
engaged in war, hostilities or other warlike operation, provided such agents are
acting secretly and not in connection with any operations of military or naval
armed forces in the country where the interests insured are situated.
32
INSOLVENCY FUND EXCLUSION CLAUSE
This Agreement excludes all liability of the Ceding Company arising by contract,
operation of law or otherwise, from its participation or membership, whether
voluntary or involuntary, in any insolvency fund. "Insolvency Fund" includes any
guarantee fund, insolvency fund, plan, pool, association, fund or other
arrangement, howsoever denominated, established or governed, which provides for
any assessment of or payment or assumption by the Ceding Company of part or all
of any claim, debt, charge, fee or other obligation of an insurer or its
successors or assigns which has been declared by any competent authority to be
insolvent or which is otherwise deemed unable to meet any claim, debt, charge,
fee or other obligation in whole or in part.
33
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 insurance property
whether on a country-wide basis or in respect of designated
areas. This exclusion shall not apply to so-called Automobile
Insurance Plans or other Pools formed to provide coverage for
Automobile Physical Damage.
Section B:
It is agreed that business written by the Company for the same perils, which is
known at the time to be insured by, or in excess of underlying amounts placed in
the following Pools, Associations or Syndicates, whether by way of insurance or
reinsurance, is excluded hereunder:
Industrial Risk Insurers,
Associated Factory Mutuals Improved Risk Mutuals
Any Pool, Association or Syndicate formed for the purpose of writing
Oil, Gas or Petro-Chemical Plants and/or Oil or Gas Drilling Rigs,
United States Aircraft Insurance Group, Canadian Aircraft Insurance
Group,
Associated Aviation Underwriters, American Aviation Underwriters
Section B does not apply:
(a) Where the Total Insured Value over all interests of the risk
in question is less than $250,000,000.
(b) To interests traditionally underwritten as Inland Marine or
stock and/or contents written on a blanket basis.
(c) To Contingent Business Interruption, except when the Company
is aware that the key location is known at the time to be
insured in any Pool, Association, or Syndicate named above
other than as provided for under Section B(a).
34
(d) To risks as follows:
Offices, Hotels, Apartments, Hospitals, Educational
Establishments, Public Utilities, (other than railroad
schedules) and builder's risks on the classes of risks
specified in this subsection (d) only. Where this clause
attaches to Catastrophe Excesses, the following Section C is
added:
Section C:
Nevertheless the Reinsurer specifically agrees that liability accruing to the
Company from its participation in:
(1) The following so-called "Coastal Pools":
Alabama Insurance Underwriting Association
Florida Windstorm Underwriting Association
Louisiana Insurance Underwriting Association
Mississippi Windstorm Underwriting Association
North Carolina Insurance Underwriting Association
South Carolina Windstorm and Hail Underwriting Association
Texas Catastrophe Property Insurance Association
AND
(2) All "Fair Plan" and "Rural Risk Plan" business for all perils
otherwise protected hereunder shall not be excluded, except,
however, that this reinsurance does not include any increase
in such liability resulting from:
(i) The inability of any other participant in such
"Coastal Pool" and/or "Fair Plan" and/or "Rural Risk
Plan" to meet its liability.
(ii) 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
Fund Exclusion Clause incorporated in this Contract).
35
Exhibit 10.23A
INTERESTS AND LIABILITIES AGREEMENT
TO THE
QUOTA SHARE
REINSURANCE AGREEMENT
EFFECTIVE JANUARY 1, 2004
(HEREINAFTER REFERRED TO AS THE "REINSURANCE AGREEMENT")
BETWEEN
TOWER INSURANCE COMPANY OF NEW YORK
(HEREINAFTER REFERRED TO AS THE "COMPANY")
AND
TOKIO MILLENNIUM RE LTD.
(HEREINAFTER REFERRED TO AS THE "SUBSCRIBING REINSURER")
It is hereby mutually agreed that the Subscribing Reinsurer shall have a 33.333%
(thirty three point three three three percent) share in the interests and
liabilities as set forth in the captioned Reinsurance Agreement. The share of
the Subscribing Reinsurer shall be separate and apart from the shares of the
other reinsurers and shall not be joint with those of the other reinsurers and
the Subscribing Reinsurer shall in no event participate in the interests and
liabilities of the other reinsurers.
In Witness Whereof, the parties hereto have caused this Interests and
Liabilities Agreement to be signed in triplicate by their duly authorized
representatives.
1
Signed this 20th day of April, 2004, For and on behalf of Tower Insurance
Company of New York
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------------------------------------
Title: Vice President
-----------------------------------------------------------------------
Signed this 26th day of March, 2004, For and on behalf of Tokio Millennium Re
Ltd.
By: /s/ Tatsuhiko Hoshina
-----------------------------------------------------------------------
Title: CUO
-----------------------------------------------------------------------
2
Exhibit 10.23B
INTERESTS AND LIABILITIES AGREEMENT
TO THE
QUOTA SHARE
REINSURANCE AGREEMENT
EFFECTIVE JANUARY 1, 2004
(HEREINAFTER REFERRED TO AS THE "REINSURANCE AGREEMENT")
BETWEEN
TOWER INSURANCE COMPANY OF NEW YORK
(HEREINAFTER REFERRED TO AS THE "COMPANY")
AND
HANNOVER REINSURANCE (IRELAND) LIMITED
AND
E & S REINSURANCE (IRELAND) LIMITED
(HEREINAFTER REFERRED TO COLLECTIVELY AS THE "SUBSCRIBING REINSURER")
It is hereby mutually agreed that the Subscribing Reinsurer shall have a 33.334%
(thirty three point three three four percent) share in the interests and
liabilities as set forth in the captioned Reinsurance Agreement. The share of
the Subscribing Reinsurer shall be separate and apart from the shares of the
other reinsurers and shall not be joint with those of the other reinsurers and
the Subscribing Reinsurer shall in no event participate in the interests and
liabilities of the other reinsurers.
In Witness Whereof, the parties hereto have caused this Interests and
Liabilities Agreement to be signed in triplicate by their duly authorized
representatives.
1
Signed this 20th day of April, 2004, For and on behalf of Tower Insurance
Company of New York
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------------------------------------
Title: Vice President
-----------------------------------------------------------------------
Signed this 13th day of April, 2004,
For and on behalf of Hannover Reinsurance (Ireland) Limited for an 80% (eighty
percent) share of a 33.334% (thirty three point three three four percent) their
participation of the terms and conditions herein.
By: /s/ ▇▇▇▇▇ Olagreir
-----------------------------------------------------------------------
Title: Underwriter
-----------------------------------------------------------------------
Signed this 13th day of April, 2004,
For and on behalf of E+S Reinsurance (Ireland) Limited for a 20% (twenty
percent) share of a 33.334% (thirty three point three three four percent)
participation of the terms and conditions herein.
By: /s/ ▇▇▇▇▇ Olagreir
-----------------------------------------------------------------------
Title: Underwriter
-----------------------------------------------------------------------
2