50% Private Passenger Automobile
Quota Share Reinsurance Contract
Effective: July 1, 1997
issued to
Condor Insurance Company
Calabasas, California
Amwest Surety Insurance Company
Omaha, Nebraska
and
Far West Insurance Company
Omaha, Nebraska
(hereinafter referred to collectively as the "Company")
by
The Subscribing Reinsurer(s) Executing the
Interests and Liabilities Agreement(s)
Attached Hereto
(hereinafter referred to as the "Reinsurer")
Article I - Classes of Business Reinsured
A. By this Contract, the Company obligates itself to cede to the Reinsurer
and the Reinsurer obligates itself to accept quota share reinsurance of
the Company's net liability under policies, contracts and binders of
insurance or reinsurance (hereinafter called "policies") issued or renewed
on or after the effective date hereof, and classified by the Company as
Non-Standard Private Passenger Automobile business.
B. It is understood that the classes of business reinsured under this
Contract are deemed to include:
1. Coverages required for non-resident drivers under the motor vehicle
financial responsibility law or the motor vehicle compulsory
insurance law or any similar law of any state or province, following
the provisions of the Company's policies when they include or are
deemed to include so-called "Out of State Insurance" provisions;
2. Coverages required under Section 30 of the Motor Carrier Act of 1980
and/or any amendments thereto.
C. "Net liability" as used herein is defined as the Company's gross liability
remaining after cessions, if any, to reinsurance which inures to the
benefit of this Contract.
D. The liability of the Reinsurer with respect to each cession hereunder
shall commence obligatorily and simultaneously with that of the Company,
subject to the terms, conditions and limitations hereinafter set forth.
Article II - Commencement and Termination
A. This Contract shall become effective on July 1,1997 with respect to losses
arising out of occurrences commencing on or after that date, and shall
continue in force thereafter until terminated.
B. Either party may terminate this Contract at the end of any contract year
by giving the other party not less than 90 days prior notice by certified
mail.
C. Unless the Company elects to reassume the ceded unearned premium in force
on the effective date of termination, and so notifies the Reinsurer prior
to or as promptly as possible after the effective date of termination,
reinsurance hereunder on business in force on the effective date of
termination shall remain in full force and effect until expiration,
cancellation or next premium anniversary of such business, whichever first
occurs, but in no event beyond 12 months following the effective date of
termination.
D. Notwithstanding the provisions of paragraph C above, in the event the
Company is prohibited or precluded by the appropriate regulatory
authorities, or by law (in those states where applicable and enforced),
from arranging mid-term cancellation or non-renewal of any policies
subject to this Contract beyond their natural expiry, the Reinsurer agrees
to extend reinsurance coverage until such policies may be terminated by
the Company, but in no event beyond 36 months after the effective date of
termination.
E. "Contract year" as used herein shall mean the period from July 1, 1997,
through June 30, 1998, both days inclusive, and each respective 12-month
period thereafter that this Contract continues in force. However, if this
Contract is terminated, the final contract year shall be from the
beginning of the then current contract year through the date of
termination if this Contract is terminated on a "cutoff" basis, or the end
of the runoff period if this Contract is terminated on a "runoff" basis.
Article III - Assignments
A. The provisions of Article VI shall apply to risks assigned to the Company
under any Assigned Risk Plan if, in the opinion of the Company, such risks
were assigned to the Company because of the business written and reinsured
hereunder. Any assignments shall be allocated to the contract year upon
which the basis of assignments were calculated.
B. In the event this Contract is terminated, notwithstanding the provisions
of paragraph C of Article II, the provisions of this Article shall
continue to apply for as long as the Company is required to accept
assignments because of the business reinsured hereunder.
Article IV - Territory
The liability of the Reinsurer shall be limited to policies issued to insureds
domiciled in the State of Arizona; but this limitation shall not apply to losses
if the Company's policies provide coverage outside the aforesaid territorial
limits.
Article V - Exclusions
A. This Contract does not apply to and specifically excludes the following:
1. All classifications of business not included in Article I.
2. All excess of loss reinsurance assumed by the Company.
3. Reinsurance assumed by the Company under obligatory reinsurance
agreements, except agency reinsurance where the policies involved
are to be reunderwritten in accordance with the underwriting
standards of the Company and reissued as Company policies at the
next anniversary or expiration date.
4. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
Physical Damage - Reinsurance" and the "Nuclear Incident Exclusion
Clause - Liability - Reinsurance" attached to and forming part of
this Contract.
5. Automobile Liability coverage with respect to all commercial
vehicles and any vehicle used principally as:
a. An ambulance, fire department or law enforcement vehicle;
b. A racing or exhibition vehicle;
c. A long-haul public freight carrier operating regularly and
frequently beyond a 300-mile radius from its terminal location;
d. A transporter of explosives, munitions, ammonium nitrate,
gasoline or liquefied petroleum gas, including butane and
propane.
6. Taxi or livery vehicles; vehicles weighing more than 20,000 pounds;
newspaper or mail carriers.
B. Notwithstanding the foregoing, any reinsurance falling within the scope of
one or more of the exclusions set forth in subparagraphs 5 and/or 6 of
paragraph A that is specially accepted by the Reinsurer from the Company
shall be covered under this Contract and be subject to the terms hereof,
except as such terms shall be modified by the special acceptance.
Furthermore, any exclusion set forth in subparagraph 5 or 6 of paragraph A
shall be waived automatically when in the opinion of the Company, the
exposure excluded therein is incidental to the principal exposure on the
risk in question.
C. If the Company is bound, without the knowledge and contrary to the
instructions of the Company's supervisory underwriting personnel, on any
business falling within the scope of one or more of the exclusions set
forth in subparagraphs 5 and/or 6 of paragraph A, the exclusion shall be
suspended with respect to such business until 30 days after an
underwriting supervisor of the Company acquires knowledge thereof.
D. If the Company is required to accept an assigned risk which conflicts with
one or more of the exclusions set forth in subparagraphs 5 and/or 6 of
paragraph A, reinsurance shall apply, but in no event shall the
Reinsurer's liability exceed the applicable limits set forth in Article
VI.
Article VI - Retention and Limit
A. As respects business subject to this Contract, the Company shall retain
and be liable for 50% of its net liability. The Company shall cede to the
Reinsurer and the Reinsurer agrees to accept 50% of the Company's net
liability.
B. Notwithstanding the provisions of paragraph A above, in the event that the
Company's net written premium during the first contract year exceeds
$4,500,000, the percentage of the Company's net liability ceded hereunder,
as respects business issued or renewed during that period, may, at the
option of the Reinsurer, be reduced to not less than the proportion that
$4,500,000 bears to the Company's total net written premium for the first
contract year. In the event this Contract is terminated before the end of
the first contract year, the "premium cap" amount above shall be reduced
proportionately before applying the provisions of this paragraph. In the
event of a reduction of the cession percentage under this paragraph, the
premiums and losses paid hereunder for the first contract year, and the
ceding commission allowed on said premium, shall be adjusted retroactively
to the inception of this Contract.
C. The Company shall purchase or be deemed to have purchased inuring
reinsurance to limit its loss from loss in excess of policy limits or
extra contractual obligations to $250,000 per occurrence.
D. The Company shall purchase or be deemed to have purchased inuring excess
facultative reinsurance to limit its loss subject hereto from any one
coverage, any one policy (exclusive of loss in excess of policy limits or
extra contractual obligations) to the following amounts:
1. Automobile Bodily Injury Liability, $15,000 each person, $30,000
each occurrence;
2. Automobile Property Damage Liability, $10,000 each occurrence;
3. Uninsured Motorists, $15,000 each person, $30,000 each occurrence;
4. Automobile No-Fault, statutory required or required to be offered
limits;
5. Automobile Physical Damage, $30,000 each risk, each occurrence;
E. The Automobile Liability amounts shown in paragraph E shall be extended to
follow the Company's policy if the Company's loss is greater than one or
more of said amounts because its policy includes or is deemed to include:
1. So-called "Out of State Insurance" provisions;
2. Limits of liability required under Section 30 of the Motor Carrier
Act of 1980 and/or any amendments thereto.
F. "Net written premium" as used herein is defined as gross written premium
of the Company for the classes of business subject hereto (excluding
policy fees), less cancellations and return premiums, and less premiums
ceded by the Company for reinsurance which inures to the benefit of this
Contract.
Article VII - Loss in Excess of Policy Limits/ECO
A. In the event the Company pays or is held liable to pay an amount of loss
in excess of its policy limit, but otherwise within the terms of its
policy (hereinafter called "loss in excess of policy limits") or any
punitive, exemplary, compensatory or consequential damages, other than
loss in excess of policy limits (hereinafter called "extra contractual
obligations") because of alleged or actual bad faith or negligence on its
part in rejecting a settlement within policy limits, or in discharging its
duty to defend or prepare the defense in the trial of an action against
its policyholder, or in discharging its duty to prepare or prosecute an
appeal consequent upon such an action, or in otherwise handling a claim
under a policy subject to this Contract, the loss in excess of policy
limits and/or the extra contractual obligations, if any, under the policy
involved, shall be subject to the provisions of paragraph C of Article VI.
B. An extra contractual obligation shall be deemed to have occurred on the
same date as the loss covered or alleged to be covered under the policy.
C. Notwithstanding anything stated herein, this Contract shall not apply to
any loss in excess of policy limits or any extra contractual obligation
incurred by the Company as a result of any fraudulent and/or criminal act
by any officer or director of the Company acting individually or
collectively or in collusion with any individual or corporation or any
other organization or party involved in the presentation, defense or
settlement of any claim covered hereunder.
D. Recoveries from any form of insurance or reinsurance which protects the
Company against claims the subject matter of this Article shall inure to
the benefit of this Contract.
Article VIII - Losses and Loss Adjustment Expenses
A. Losses shall be reported by the Company in summary form as hereinafter
provided. The Reinsurer shall have the right to participate in the
adjustment of losses subject to this Contract at its own expense.
B. All loss settlements made by the Company, whether under strict policy
conditions or by way of compromise (excluding ex gratia payments made by
the Company), shall be binding upon the Reinsurer, and the Reinsurer
agrees to pay or allow, as the case may be, its proportion of each such
settlement in accordance with the provisions of Article XII.
C. In the event of a claim under a policy subject hereto, the Reinsurer shall
be liable for its proportionate share of loss adjustment expenses incurred
by the Company in connection therewith (including litigation expenses,
prejudgment interest and postjudgment interest, but not including office
expenses or salaries of the Company's regular employees), and shall be
credited with its proportionate share of any recoveries of such expense.
Article IX - Salvage and Subrogation
The Reinsurer shall be credited with its proportionate share of salvage (i.e.,
reimbursement obtained or recovery made by or on behalf of the Company, less the
actual cost, excluding salaries of officials and employees of the Company and
sums paid to attorneys as retainer, of obtaining such reimbursement or making
such recovery) on account of claims and settlements involving reinsurance
hereunder. The Company hereby agrees to enforce its rights to salvage or
subrogation relating to any loss, a part of which loss was sustained by the
Reinsurer, and to prosecute all claims arising out of such rights.
Article X - Original Conditions
A. All reinsurance under this Contract shall be subject to the same rates,
terms, conditions, waivers and interpretations and to the same
modifications and alterations as the respective policies of the Company.
However, in no event shall this be construed in any way to provide
coverage outside the terms and conditions set forth in this Contract. The
Reinsurer shall be credited with its exact proportion of the original
premiums received by the Company (net of policy fees or equivalent charges
and other service fees or brokerage fees), prior to disbursement of any
dividends, but after deduction of premiums, if any, ceded by the Company
for inuring reinsurance, and taking into account additional and return
premiums.
B. Nothing herein shall in any manner create any obligations or establish any
rights against the Reinsurer in favor of any third party or any persons not
parties to this Contract.
Article XI - Sliding Scale Commission
A. The Reinsurer shall allow the Company a 25.0% provisional commission on
all premiums ceded to the Reinsurer hereunder. The Company shall allow the
Reinsurer return commission on return premiums at the same rate.
B. The provisional commission allowed the Company shall be adjusted
periodically in accordance with the provisions set forth herein. The first
adjustment period shall be from the effective date of this Contract
through June 30, 1998, and each subsequent contract period shall be a
separate adjustment period. However, if this Contract is terminated, the
final adjustment period shall be from the beginning of the then current
adjustment period through the date of termination if this Contract is
terminated on a "cutoff" basis, or the end of the runoff period if this
Contract is terminated on a "runoff" basis.
C. The adjusted commission rate shall be calculated as follows and be applied
to premiums earned for the period under consideration:
1. If the ratio of losses incurred to premiums earned is 74.0% or
greater, the adjusted commission rate for the period under
consideration shall be 20.0%;
2. If the ratio of losses incurred to premiums earned is less than
74.0%, but not less than 69.0%, the adjusted commission rate for the
period under consideration shall be 20.0%, plus the difference in
percentage points between 74.0% and the actual ratio of losses
incurred to premiums earned;
3. If the ratio of losses incurred to premiums earned is less than
69.0%, but not less than 49.0%, the adjusted commission rate for the
period under consideration shall be 25.0%, plus one-half of the
difference in percentage points between 69.0% and the actual ratio
of losses incurred to premiums earned;
4. If the ratio of losses incurred to premiums earned is 49.0% or less,
the adjusted commission rate for the period under consideration
shall be 35.0%.
D. If the ratio of losses incurred to premiums earned for any period is
greater than 74.0%, the difference in percentage points between the actual
ratio of losses incurred to premiums earned and 74.0% shall be multiplied
by premiums earned for the period and the product shall be carried forward
to the next adjustment period as a debit to losses incurred. If the ratio
of losses incurred to premiums earned for any period is less than 49.0%,
the difference in percentage points between 49.0% and the actual ratio of
losses incurred to premiums earned shall be multiplied by premiums earned
for the period and the product shall be carried forward to the next
adjustment period as a credit to losses incurred.
E. Except as provided in the next paragraph, the Company shall calculate
and report the adjusted commission on premiums earned within 45 days
after the end of each adjustment period, and within 45 days after the
end of each 12-month period thereafter until all losses subject hereto
have been finally settled. Each such calculation shall be based on
cumulative transactions hereunder from the beginning of the adjustment
period through the date of adjustment, including, as respects losses
incurred, any debit or credit from the preceding adjustment period. If
the adjusted commission on premiums earned for the adjustment period
as of the date of adjustment is less than commissions previously
allowed by the Reinsurer on premiums earned for the same period, the
Company shall remit the difference to the Reinsurer with its report.
If the adjusted commission on premiums earned for the adjustment
period as of the date of adjustment is greater than commissions
previously allowed by the Reinsurer on premiums earned for the same
period, the Reinsurer shall remit the difference to the Company as
promptly as possible after receipt and verification of the Company's
report.
F. As respects the final adjustment period, the Company shall
calculate and report the adjusted commission on premiums earned within
45 days after the date of termination, and within 45 days after the
end of each 12-month period thereafter until all losses subject hereto
have been finally settled. Each such calculation shall be based on
cumulative transactions hereunder from the beginning of the final
adjustment period through the date of adjustment, including, as
respects losses incurred, any debit or credit from the preceding
adjustment period. If the adjusted commission on premiums earned for
the final adjustment period as of the date of adjustment is less than
commissions previously allowed by the Reinsurer on premiums earned for
the same period, the Company shall remit the difference to the
Reinsurer with its report. If the adjusted commission on premiums
earned for the final adjustment period as of the date of adjustment is
greater than commissions previously allowed by the Reinsurer on
premiums earned for the same period, the Reinsurer shall remit the
difference to the Company as promptly as possible after receipt and
verification of the Company's report.
G. "Losses incurred" as used herein shall mean ceded losses and loss
adjustment expense paid as of the effective date of calculation, plus the
ceded reserves for losses and loss adjustment expense outstanding as of
the same date, all as respects losses occurring during the adjustment
period under consideration, plus the debit or minus the credit from the
preceding adjustment period.
H. "Premiums earned" as used herein shall mean ceded unearned premiums at the
beginning of the adjustment period under consideration, plus ceded net
written premiums during the period, less ceded unearned premiums at the
end of the period.
I. It is expressly agreed that the ceding commission allowed the Company
includes provision for all dividends, commissions, taxes, assessments, and
all other expenses of whatever nature, except loss adjustment expense.
Article XII - Reports and Remittances
A. Within 45 days after the end of each month, the Company shall report to
the Reinsurer:
1. Ceded net written premium for the month;
2. Ceding commission on (1) above;
3. Ceded losses paid during the month;
4. Ceded loss adjustment expenses paid during the month.
The positive balance of (1) less (2) less (3) less (4) shall be remitted
by the Company within 45 days after the end of the month of account. Any
balance shown to be due the Company shall be remitted by the Reinsurer
within 60 days after the end of the month of account.
B. Within 45 days after the end of each month, the Company shall report to
the Reinsurer the ceded unearned premiums and ceded outstanding loss
reserves as of the end of the month.
C. Annually, the Company shall furnish the Reinsurer with such information as
the Reinsurer may require to complete its Annual Convention Statement.
Article XIII - Late Payments
A. The provisions of this Article shall not be implemented unless
specifically invoked, in writing, by one of the parties to this Contract.
B. In the event any premium, loss or other payment due either party is not
received by the intermediary named in Article XXIII (hereinafter referred
to as the "Intermediary") by the payment due date, the party to whom
payment is due, may, by notifying the Intermediary in writing, require the
debtor party to pay, and the debtor party agrees to pay, an interest
penalty on the amount past due calculated for each such payment on the
last business day of each month as follows:
1. The number of full days which have expired since the due date or the
last monthly calculation, whichever the lesser, times
2. 1/365ths of the 6-month United States Treasury ▇▇▇▇ rate, as quoted
in the Wall Street Journal on the first business day of the month
for which the calculation is made; times
3. The amount past due, including accrued interest.
It is agreed that interest shall accumulate until payment of the original
amount due plus interest penalties have been received by the Intermediary.
C. The establishment of the due date shall, for purposes of this Article, be
determined as follows:
1. As respects the payment of routine deposits and premiums due the
Reinsurer, the due date shall be as provided for in the applicable
section of this Contract. In the event a due date is not
specifically stated for a given payment, it shall be deemed due 30
days after the date of transmittal by the Intermediary of the
initial billing for each such payment.
2. Any claim or loss payment due the Company hereunder shall be deemed
due 5 business days after the proof of loss or demand for payment is
transmitted to the Reinsurer. If such loss or claim payment is not
received within the 5 days, interest will accrue on the payment or
amount overdue in accordance with paragraph B above, from the date
the proof of loss or demand for payment was transmitted to the
Reinsurer.
3. As respects any payment, adjustment or return due either party not
otherwise provided for in subparagraphs 1 and 2 of paragraph C
above, the due date shall be as provided for in the applicable
section of this Contract. In the event a due date is not
specifically stated for a given payment, it shall be deemed due 10
business days following transmittal of written notification that the
provisions of this Article have been invoked.
For purposes of interest calculations only, amounts due hereunder shall be
deemed paid upon receipt by the Intermediary.
D. Nothing herein shall be construed as limiting or prohibiting a
Subscribing Reinsurer from contesting the validity of any claim, or
from participating in the defense or control of any claim or suit, or
prohibiting either party from contesting the validity of any payment
or from initiating any arbitration or other proceeding in accordance
with the provisions of this Contract. If the debtor party prevails in
an arbitration or other proceeding, then any interest penalties due
hereunder on the amount in dispute shall be null and void. If the
debtor party loses in such proceeding, then the interest penalty on
the amount determined to be due hereunder shall be calculated in
accordance with the provisions set forth above unless otherwise
determined by such proceedings. If a debtor party advances payment of
any amount it is contesting, and proves to be correct in its
contestation, either in whole or in part, the other party shall
reimburse the debtor party for any such excess payment made plus
interest on the excess amount calculated in accordance with this
Article.
E. Interest penalties arising out of the application of this Article that are
$100.00 or less from any party shall be waived unless there is a pattern
of late payments consisting of three or more items over the course of any
12-month period.
Article XIV - Offset
The Company or the Reinsurer shall have, and may exercise at any time and from
time to time, the right to offset any balance or balances, whether on account of
premiums or on account of losses or otherwise, due from one party to the other
under the terms of this Contract or any other contract heretofore or hereafter
entered into by and between them, whether as ceding company or assuming
reinsurer. However, in the event of the insolvency of any party hereto, offset
shall only be allowed in accordance with the statutes and/or regulations of the
state having jurisdiction over the insolvency.
Article XV - Access to Records
The Reinsurer, by its duly appointed representatives, shall have the right at
any reasonable time to examine all papers in the possession of the Company
referring to business effected hereunder.
Article XVI - Errors and Omissions
Inadvertent delays, errors or omissions made in connection with this Contract or
any transaction hereunder shall not relieve either party from any liability
which would have attached had such delay, error or omission not occurred,
provided always that such error or omission will be rectified as soon as
possible after discovered and brought to the attention of the Company's
management.
Article XVII - Taxes (BRMA 50B)
In consideration of the terms under which this Contract is issued, the Company
will not claim a deduction in respect of the premium hereon when making tax
returns, other than income or profits tax returns, to any state or territory of
the United States of America or the District of Columbia.
Article XVIII - Unearned Premium and Loss Reserves
A. If the Reinsurer is unauthorized in any state of the United States of
America or the District of Columbia or rated B+ or less by A.M. Best, the
Reinsurer agrees to fund its share of the Company's ceded unearned premium
and outstanding loss and loss adjustment expense reserves (including
incurred but not reported loss reserves) by:
1. Clean, irrevocable and unconditional letters of credit issued and
confirmed, if confirmation is required by the insurance regulatory
authorities involved, by a bank or banks meeting the NAIC Securities
Valuation Office credit standards for issuers of letters of credit
and acceptable to said insurance regulatory authorities; and/or
2. Escrow accounts for the benefit of the Company; and/or
3. Cash advances;
if, without such funding, a penalty would accrue to the Company on any
financial statement it is required to file with the insurance regulatory
authorities involved. The Reinsurer, at its sole option, may fund in other
than cash if its method and form of funding are acceptable to the
insurance regulatory authorities involved.
B. With regard to funding in whole or in part by letters of credit, it is
agreed that each letter of credit will be in a form acceptable to
insurance regulatory authorities involved, will be issued for a term of at
least one year and will include an "evergreen clause," which automatically
extends the term for at least one additional year at each expiration date
unless written notice of non-renewal is given to the Company not less than
30 days prior to said expiration date. The Company and the Reinsurer
further agree, notwithstanding anything to the contrary in this Contract,
that said letters of credit may be drawn upon by the Company or its
successors in interest at any time, without diminution because of the
insolvency of the Company or the Reinsurer, but only for one or more of
the following purposes:
1. To reimburse itself for the Reinsurer's share of unearned premiums
returned to insureds on account of policy cancellations, unless paid
in cash by the Reinsurer;
2. To reimburse itself for the Reinsurer's share of losses and/or loss
adjustment expenses paid under the terms of policies reinsured
hereunder, unless paid in cash by the Reinsurer;
3. To reimburse itself for the Reinsurer's share of any other amounts
claimed to be due hereunder, unless paid in cash by the Reinsurer;
4. To fund a cash account in an amount equal to the Reinsurer's share
of any ceded unearned premium and/or outstanding loss and loss
adjustment expense reserves (including incurred but not reported
loss reserves) funded by means of a letter of credit which is under
non-renewal notice, if said letter of credit has not been renewed or
replaced by the Reinsurer 10 days prior to its expiration date;
5. To refund to the Reinsurer any sum in excess of the actual amount
required to fund the Reinsurer's share of the Company's ceded
unearned premium and/or outstanding loss and loss adjustment expense
reserves (including incurred but not reported loss reserves), if so
requested by the Reinsurer.
In the event the amount drawn by the Company on any letter of credit is in
excess of the actual amount required for B(1), B(2) or B(4), or in the
case of B(3), the actual amount determined to be due, the Company shall
promptly return to the Reinsurer the excess amount so drawn.
Article XIX - Insolvency
A. In the event of the insolvency of one or more of the reinsured
companies, this reinsurance shall be payable directly to the company
or to its liquidator, receiver, conservator or statutory successor
immediately upon demand, with reasonable provision for verification,
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 Reinsurer 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
Reinsurer 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 Reinsurer 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 it may
deem available to the company or its liquidator, receiver, conservator
or statutory successor. The expense thus incurred by the Reinsurer
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 Reinsurer.
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 Contract as though such
expense had been incurred by the company.
C. It is further understood and agreed that, in the event of the insolvency
of one or more of the reinsured companies, the reinsurance under this
Contract shall be payable directly by the Reinsurer to the company or to
its liquidator, receiver or statutory successor, except as provided by
Section 4118(a) of the New York Insurance Law or except (1) where this
Contract specifically provides another payee of such reinsurance in the
event of the insolvency of the company or (2) where the Reinsurer with the
consent of the direct insured or insureds has assumed such policy
obligations of the company as direct obligations of the Reinsurer to the
payees under such policies and in substitution for the obligations of the
company to such payees.
Article XX - Arbitration
A. As a condition precedent to any right of action hereunder, in the
event of any dispute or difference of opinion hereafter arising with
respect to this Contract, it is hereby mutually agreed that such
dispute or difference of opinion shall be submitted to arbitration.
One Arbiter shall be chosen by the Company, the other by the
Reinsurer, and an Umpire shall be chosen by the two Arbiters before
they enter upon arbitration, all of whom shall be active or retired
disinterested executive officers of insurance or reinsurance companies
or Lloyd's London Underwriters. In the event that either party should
fail to choose an Arbiter within 30 days following a written request
by the other party to do so, the requesting party may choose two
Arbiters who shall in turn choose an Umpire before entering upon
arbitration. If the two Arbiters fail to agree upon the selection of
an Umpire within 30 days following their appointment, each Arbiter
shall nominate three candidates within 10 days thereafter, two of whom
the other shall decline, and the decision shall be made by drawing
lots.
B. Each party shall present its case to the Arbiters within 30 days following
the date of appointment of the Umpire. The Arbiters shall consider this
Contract as an honorable engagement rather than merely as a legal
obligation and they are relieved of all judicial formalities and may
abstain from following the strict rules of law. The decision of the
Arbiters shall be final and binding on both parties; but failing to agree,
they shall call in the Umpire and the decision of the majority shall be
final and binding upon both parties. Judgment upon the final decision of
the Arbiters may be entered in any court of competent jurisdiction.
C. If more than one reinsurer is involved in the same dispute, all such
reinsurers shall constitute and act as one party for purposes of this
Article and communications shall be made by the Company to each of the
reinsurers constituting one party, 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 participating under the terms of this Contract from several
to joint.
D. Each party shall bear the expense of its own Arbiter, and shall jointly
and equally bear with the other the expense of the Umpire and of the
arbitration. In the event that the two Arbiters are chosen by one party,
as above provided, the expense of the Arbiters, the Umpire and the
arbitration shall be equally divided between the two parties.
E. Any arbitration proceedings shall take place at El Segundo, California
unless otherwise mutually agreed upon by the parties to this Contract, but
notwithstanding the location of the arbitration, all proceedings pursuant
hereto shall be governed by the law of the state in which the Company has
its principal office.
Article XXI - Service of Suit (BRMA 49C)
(Applicable if the Reinsurer is not domiciled in the United States of America,
and/or is not authorized in any State, Territory or District of the United
States where authorization is required by insurance regulatory authorities)
A. It is agreed that in the event the Reinsurer fails to pay any amount
claimed to be due hereunder, the Reinsurer, at the request of the Company,
will 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 Reinsurer's 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.
B. Further, pursuant to any statute of any state, territory or district of
the United States which makes provision therefor, the Reinsurer hereby
designates the party named in its Interests and Liabilities Agreement, or
if no party is named therein, 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 its 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 Contract.
Article XXII - Agency Agreement
If more than one reinsured company is named as a party to this Contract, the
first named company shall be deemed the agent of the other reinsured companies
for purposes of sending or receiving notices required by the terms and
conditions of this Contract, and for purposes of remitting or receiving any
monies due any party.
Article XXIII - Intermediary (BRMA 23A)
▇. ▇. ▇▇▇▇▇▇ Co. is hereby recognized as the Intermediary negotiating this
Contract for all business hereunder. All communications (including but not
limited to notices, statements, premium, return premium, commissions, taxes,
losses, loss adjustment expense, salvages and loss settlements) relating thereto
shall be transmitted to the Company or the Reinsurer through ▇. ▇. ▇▇▇▇▇▇ Co.,
Reinsurance Services, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Payments by the Company to the Intermediary shall be deemed to constitute
payment to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be
deemed to constitute payment to the Company only to the extent that such
payments are actually received by the Company.
In Witness Whereof, the Company by its duly authorized representative has
executed this Contract as of the date undermentioned at:
El Segundo, California, this _______ day of _______________________199___.
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Condor Insurance Company
Table of Contents
Article Page
I Classes of Business Reinsured 1
II Commencement and Termination 2
III Assignments 2
IV Territory 3
V Exclusions 3
VI Retention and Limit 4
VII Loss in Excess of Policy Limits/ECO 5
VIII Losses and Loss Adjustment Expenses 6
IX Salvage and Subrogation 6
X Original Conditions 7
XI Sliding Scale Commission 7
XII Reports and Remittances 9
XIII Late Payments 9
XIV Offset 11
XV Access to Records 11
XVI Errors and Omissions 11
XVII Taxes (BRMA 50B) 12
XVIII Unearned Premium and Loss Reserves 12
XIX Insolvency 13
XX Arbitration 14
XXI Service of Suit (BRMA 49C) 15
XXII Agency Agreement 15
XXIII Intermediary (BRMA 23A) 16