NET QUOTA SHARE
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2005
issued to
▇▇▇▇▇ River Insurance Company
Richmond, Virginia
TABLE OF CONTENTS
ARTICLE PAGE
I Definitions 1
II Classes of Business Reinsured 2
III Commencement and Termination 2
IV Territory (BRMA 51A) 4
V Exclusions 4
VI Special Acceptances 5
VII Retention and Limit 5
VIII Other Reinsurance 6
IX Reinsurer Expense 6
X Loss in Excess of Policy Limits/ECO 7
XI Claims and Loss Adjustment Expense 7
XII Salvage and Subrogation 8
XIII Original Conditions 8
XIV Commission 8
XV Funds Withheld Account 9
XVI Reports and Remittances 9
XVII Commutation 10
XVIII Late Payments 10
XIX Offset (BRMA 36C) 11
XX Access to Records 11
XXI Errors and Omissions (BRMA 14F) 11
XXII Currency (BRMA 12A) 12
XXIII Taxes (BRMA 50C) 12
XXIV Federal Excise Tax 12
XXV Reserves 12
XXVI Insolvency 14
XXVII Arbitration 14
XXVIII Service of Suit (BRMA 49C) 15
XXIX Governing Law 16
XXX Confidentiality (BRMA 69E) 16
XXXI Agency Agreement 16
XXXII Integration 16
XXXIII Approval 16
XXXIV Intermediary (BRMA 23A) 17
NET QUOTA SHARE
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2005
(hereinafter referred to as the "Contract")
issued to
▇▇▇▇▇ River Insurance Company
Richmond, Virginia
(hereinafter referred to as the "Company")
by
The Reinsurer Executing the
Interests and Liabilities Agreement
Attached Hereto
(hereinafter referred to as the "Reinsurer")
ARTICLE I - DEFINITIONS
A. "Net Liability" as used herein is defined as the Company's gross liability
remaining after cessions, if any, to other reinsurance inuring to the
benefit of this Contract.
B. "Policies" as used herein shall mean policies, contracts and binders of
insurance or reinsurance in force on the effective date hereof or issued
or renewed on or after the effective date hereof, and classified by the
Company as General Casualty, Manufacturers & Contractors and Primary
Property business.
C. "Contract Year" as used herein shall mean the period from January 1, 2005
through December 31, 2005, both days inclusive, Local Standard Time, and
each subsequent 12-month period (or portion thereof) shall be a separate
Contract Year.
D. "Contract Quarter" as used herein shall mean the period from January 1
through March 31, both days inclusive, Local Standard Time; each
subsequent three-month period during any Contract Year shall be a separate
Contract Quarter.
E. "Occurrence" as used herein shall be the same as the definition of
Occurrence contained in the Policy or Policies, provided the Occurrence
takes place during the term of this Contract.
F. "Loss Adjustment Expense" as used herein shall mean expenses assignable to
the investigation, defense and/or settlement of specific claims,
regardless of how such expenses are classified for statutory reporting
purposes. Loss Adjustment Expense shall include, but not be limited to,
litigation expenses, claims adjusting expenses, expert witnesses expenses,
consultants, interest on settlements or judgments and Declaratory
Judgment Expenses. Loss Adjustment Expense shall not include office
expenses or salaries of the Company's regular employees.
G. "Declaratory Judgment Expense" as used herein shall mean the legal
expenses and costs incurred in connection with coverage questions and
legal actions connected thereto relating directly to a specific claim
brought against a Policy reinsured under this Contract, subject to all of
the other terms and conditions of this Contract. The date on which any
expense covered hereunder is incurred by the Company will be deemed, in
all instances, to be the date of the incident giving rise to the claim
being contested. Nothing herein shall be construed to create a separate or
distinct Occurrence apart from the original claim brought against the
Policy.
H. "Incurred Losses" as used herein shall mean losses and Loss Adjustment
Expense paid as of the effective date of calculation, plus the case
reserves for losses and Loss Adjustment Expense outstanding as of the same
date.
I. "Ultimate Losses" as used herein shall mean Incurred Losses as of the
effective date of calculation, plus the incurred but not reported reserves
for losses and Loss Adjustment Expense as of the same date.
ARTICLE II - 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 the Policies.
B. 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 III - COMMENCEMENT AND TERMINATION
A. This Contract shall become effective on January 1, 2005, with respect to
losses arising out of occurrences on or after that date, and shall
continue in force thereafter until terminated.
B. Either party may terminate this Contract on any December 31 by giving the
other party not less than 15 days prior written notice by certified mail.
C. Notwithstanding the provisions of paragraph B above, the Company may
terminate the Reinsurer's percentage share in this Contract at any time by
giving written notice to the Reinsurer in the event any of the following
circumstances occur:
1. The Reinsurer's policyholders' surplus at the beginning of any
Contract Year has been reduced by more than 30.0% of the amount of
surplus 12 months prior to that date; or
2. The Reinsurer's policyholders' surplus at any time during any
Contract Year has been reduced by more than 30.0% of the amount of
surplus at the date of the Reinsurer's
most recent financial statement filed with regulatory authorities
and available to the public as of the beginning of that Contract
Year; or
3. The Reinsurer's A.M. Best's rating has been assigned an initial A.M.
Best's rating below A- or has had an existing A.M. Best's rating
downgraded below A- and/or its A.M. Best's financial size category
has been initially assigned below VIII or has had an existing A.M.
Best's financial size category downgraded below VIII and/or its
Standard & Poor's rating has been assigned an initial rating below
BBB+ or has had an existing rating downgraded below BBB+ and/or its
A.M. Best's rating or Standard & Poor's rating has been assigned
"Not Rated;" or
4. The Reinsurer has become merged with, acquired by or controlled by
any other company, corporation or individual(s) not controlling the
Reinsurer's operations previously; or
5. A State Insurance Department or other legal authority has ordered
the Reinsurer to cease writing business; or
6. The Reinsurer has become insolvent or has been placed into
liquidation or receivership (whether voluntary or involuntary) or
proceedings have been instituted against the Reinsurer for the
appointment of a receiver, liquidator, rehabilitator, conservator or
trustee in bankruptcy, or other agent known by whatever name, to
take possession of its assets or control of its operations; or
7. The Reinsurer has reinsured its entire liability under this Contract
without the Company's prior written consent; or
8. The Reinsurer has ceased assuming new and renewal property and
casualty treaty reinsurance business.
D. Notwithstanding the provisions of paragraph B above, the Reinsurer may
terminate this Contract at any time by giving written notice to the
Company in the event any of the following circumstances occur:
1. The Company's policyholders' surplus at the beginning of any
Contract Year has been reduced by more than 30.0% of the amount of
surplus 12 months prior to that date; or
2. The Company's policyholders' surplus at any time during any Contract
Year has been reduced by more than 30.0% of the amount of surplus at
the date of the Company's most recent financial statement filed with
regulatory authorities and available to the public as of the
beginning of that Contract Year; or
3. The Company's A.M. Best's rating has been downgraded below B++; or
4. There is a material change in key personnel without the written
consent of the Reinsurer. A material change shall be deemed to have
occurred if more than two people herein defined leave the Company:
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇; or
5. A State Insurance Department or other legal authority has ordered
the Company to cease writing business; or
6. The Company has become insolvent or has been placed into liquidation
or receivership (whether voluntary or involuntary) or proceedings
have been instituted against the Company for the appointment of a
receiver, liquidator, rehabilitator, conservator or trustee in
bankruptcy, or other agent known by whatever name, to take
possession of its assets or control of its operations.
E. In the event that any Policy is required by statute or departmental
regulation or order to be continued in force, the Reinsurer shall 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 or Policies.
ARTICLE IV - TERRITORY (BRMA 51A)
The territorial limits of this Contract shall be identical with those of the
Company's Policies.
ARTICLE V - EXCLUSIONS
A. This Contract does not apply to and specifically excludes the following:
1. Premium and losses associated with lines of business 17.2 (Other
liability - claims-made), 18.1 (Products liability - occurrence) and
18.2 (Products liability - claims-made) as defined in the Annual
Statement.
2. The Company's liability as a member, subscriber or reinsurer of or
participant in any Pool, Syndicate, Association or other combination
of insurers (but not excluding the Company's participation in any
mandatory insurance plans required by law, except as stipulated in
subparagraph 5).
3. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
Liability - Reinsurance (U.S.A.)" attached to and forming part of
this Contract.
4. Reinsurance assumed by the Company under obligatory reinsurance
agreements, except agency reinsurance where the Policies involved
are to be re-underwritten in accordance with the underwriting
standards of the Company and reissued as Company Policies at the
next anniversary or expiration date.
5. All liability of the Company arising, by Contract, operation of law,
or otherwise, from its participation or membership whether voluntary
or involuntary, in any Insolvency Fund. "Insolvency Fund" includes
any guaranty fund, insolvency fund, plan, pool, association, fund or
other arrangement, however denominated, established or governed,
which provides for any assessment of or payment or assumption by the
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.
6. 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;
however, this exclusion shall not apply to any Policy which contains
a standard war exclusion.
B. Nevertheless, in the event of the Company being bound on one or more of
the prohibited risks set forth in paragraph A, other than subparagraph 3,
without its knowledge, either by an existing insured extending its
operations or by an inadvertent acceptance by an agent or otherwise, this
Contract shall attach in respect of such prohibited risk but only until
discovery by the Company and for a period not exceeding five days plus
time required to cancel the original Policy thereafter. Furthermore, any
exclusion set forth in paragraph A, other than subparagraph 3 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. "Incidental" shall be defined as 30.0% or less of the insured's
revenue subject to this Contract.
ARTICLE VI - SPECIAL ACCEPTANCES
The Company may request a special acceptance of reinsurance falling outside the
scope of the provisions set forth in this Contract. For purposes of this
Contract, in the event the Reinsurer agrees to a special acceptance, such
special acceptance shall be binding. However, if the Reinsurer does not respond
to the Company's request for a special acceptance within five full business days
of the request, the Reinsurer is deemed to have agreed to such special
acceptance. Any special acceptance business covered under the reinsurance
contract being replaced by this Contract will be automatically covered
hereunder. Further, should a reinsurer become a party to this Contract
subsequent to the acceptance of any business not normally covered hereunder,
such reinsurer will automatically accept same as being a part of this Contract.
ARTICLE VII - RETENTION AND LIMIT
A. The Company shall cede to the Reinsurer and the Reinsurer agrees to accept
a pro rata percentage of the Company's Net Liability such that the ceded
earned premium for the Contract Quarter of January 1, 2005 to March 31,
2005 is $10,000,000.
B. The Company shall cede to the Reinsurer and the Reinsurer agrees to accept
a pro rata percentage of the Company's Net Liability where such cession
percentage is selected by the Company ten or more business days before
commencement of each Contract Quarter commencing April 1, 2005, such that
the ceded earned premium for the Contract Quarter shall be at least
$5,000,000 but shall not exceed $13,333,000.
C. Notwithstanding the provisions of paragraphs A and B, the ceded earned
premium in any one Contract Year shall not exceed $40,000,000 in the event
the Incurred Losses equal or
exceed 38.0% of the premium earned as of September 30 in the
aforementioned Contract Year.
D. Notwithstanding the provisions of paragraphs C, in the event the Incurred
Losses equal or exceed 38.0% of the premium earned as of September 30 in
any one Contract Year then the ceded earned premium for the aforementioned
Contract Year may exceed $40,000,000, but shall not exceed $45,000,000, if
such cession amount above $40,000,000 is required by the Company to
maintain an A. M. Best's rating of A-.
E. Notwithstanding the provisions of paragraphs A and B, the Company shall
retain 100% of losses and Loss Adjustment Expense greater than 115% of
premiums earned in any one Contract Year.
F. 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. General Liability, $1,000,000 each Occurrence.
2. Manufacturers & Contractors, $1,000,000 each Occurrence.
3. Primary Property, $15,000,000 each Occurrence excluding terrorism,
$10,000,000 each Occurrence arising from terrorism.
ARTICLE VIII - OTHER REINSURANCE
A. As respects Primary Property business subject to this Contract, the
Company shall purchase or be deemed to have purchased the following
reinsurance program which shall inure to the benefit of this Contract:
1. Per risk, excluding terrorism, $14,500,000 excess $500,000 placed
100% at 23.0% rate; and
2. Catastrophe, $5,000,000 excess $2,000,000 placed 100% at 1.5926%
rate; and
3. Terrorism per risk, $9,500,000 excess $500,000 placed 100% at 75.0%
rate.
B. Notwithstanding the provisions of paragraph A, the Company may
unilaterally change the inuring reinsurance program if such change does
not decrease coverage and does not increase rate. The Company may change
the inuring reinsurance program under any circumstances with the mutual
agreement of the Reinsurer.
ARTICLE IX - REINSURER EXPENSE
A. The Reinsurer's expense is 4.5% of ceded earned premium and shall be
deducted from, not in addition to, the ceded earned premium (the
"Reinsurer's Expense").
B. If commutation has not been effected on or before January 1, 2010 and
Ultimate Losses equal or exceed 75.0% of the premiums earned then the
Company shall remit to the Reinsurer an amount equal to 0.25% of the
premium earned plus investment income on said amount credited since
inception of this Contract at an annual rate of 3.75%.
ARTICLE X - 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, 90% of the loss in excess of
Policy limits and/or 90% of the Extra Contractual Obligations shall be
added to the Company's loss, if any, under the Policy involved. However,
in no event shall the Loss in Excess of Policy Limits and/or the Extra
Contractual Obligations exceed $5,000,000 in any one Contract Year.
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 under the Company's primary Errors and Omissions insurance
which indemnifies or protects the Company against claims that are the
subject matter of this Article, and any contribution or subrogation under
such insurance, shall inure to the benefit of the Company and the
Reinsurer and their respective quota share portions under this Contract.
E. If any provision of this Article shall be rendered illegal or
unenforceable by the laws, regulations or public Policy of any state, such
provision shall be considered void in such state, but this shall not
affect the validity or enforceability of any other provision of this
Contract or the enforceability of such provision in any other
jurisdiction.
ARTICLE XI - CLAIMS AND LOSS ADJUSTMENT EXPENSE
A. Losses shall be reported by the Company in summary form as hereinafter
provided, but the Company shall notify the Reinsurer immediately when, in
the sole judgment of the Company, a specific case involves unusual
circumstances or large loss possibilities.
Further, the Company shall notify the Reinsurer whenever a claim involves
a fatality, amputation, spinal cord damage, brain damage, blindness and/or
extensive ▇▇▇▇▇, regardless of liability. The Reinsurer shall have the
right to participate, at its own expense, in the adjustment of any such
losses.
B. All loss settlements made by the Company, whether under strict Policy
conditions or by way of compromise, 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 Article XVI.
C. In the event of a claim under a Policy subject hereto, the Reinsurer shall
be liable for its proportionate share of Loss Adjustment Expense incurred
by the Company in connection therewith, and shall be credited with its
proportionate share of any recoveries of such expense.
ARTICLE XII - SALVAGE AND SUBROGATION
The Reinsurer shall be credited with its proportionate share of salvage (i.e.,
reimbursement obtained or recovery made by 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, where economically feasible, all claims arising out of such rights.
ARTICLE XIII - ORIGINAL CONDITIONS
A. All reinsurance under this Contract shall be subject to the same rates,
terms, conditions, waivers and interpretations, including reformation, and
to the same modifications and alterations as the respective Policies of
the Company. The Reinsurer shall be credited with its exact proportion of
the original premiums received by the Company, prior to disbursement of
any dividends, but after deduction of premiums, if any, ceded by the
Company for inuring reinsurance.
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 XIV - COMMISSION
A. The Reinsurer shall allow the Company a 25.0% commission on all premiums
ceded to the Reinsurer hereunder (the "Ceding Commission"). The Company
shall allow the Reinsurer return commission on return premiums at the same
rate.
B. 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 XV - FUNDS WITHHELD ACCOUNT
A. The Company shall establish and maintain a notional account (the "Funds
Withheld Account") of the following items on a cumulative paid basis:
1. Ceded earned premium; minus
2. Reinsurer Expense; minus
3. Ceding commission; minus
4. Ceded losses and Loss Adjustment Expense; plus
5. Interest credit as calculated in paragraph C below.
B. The amounts in subparagraphs 1 through 5 in paragraph A shall be deemed to
have been paid in accordance with Article XVI.
C. The balance of the Funds Withheld Account shall be credited by the Company
at the end of each Contract Quarter at a quarterly rate, that when
compounded, will result in an annual rate equal to 3.75%. Such quarterly
rate will be multiplied by the average daily Funds Withheld Account
balance, if positive, for the Contract Quarter.
ARTICLE XVI - REPORTS AND REMITTANCES
A. Within 45 days after the end of each Contract Quarter, the Company shall
report to the Reinsurer:
1. Ceded earned premium for the Contract Quarter;
2. Ceding commission thereon;
3. Ceded losses paid during the Contract Quarter;
4. Ceded Loss Adjustment Expense paid during the Contract Quarter.
The Reinsurer's Expense due on (1) shall be remitted by the Company with
its report. Any balance shown to be due the Company shall be remitted by
the Reinsurer as promptly as possible after receipt and verification of
the Company's report. Payment by the Reinsurer to the Company shall first
be made out of the Funds Withheld Account and then out of other funds of
the Reinsurer.
B. Annually, the Company shall furnish the Reinsurer with such information as
the Reinsurer may require in order to complete its Annual Statement.
Within 45 days after the end of each calendar quarter, the Company shall
report to the Reinsurer the ceded unearned premiums and ceded outstanding
loss reserves as of the end of the calendar quarter.
ARTICLE XVII - COMMUTATION
A. The Company has the unilateral right to commute this Contract after its
expiration and on or before January 1, 2008, in exchange for releasing the
Reinsurer from all current and future obligations and liabilities. The
Company shall receive 100% of the Funds Withheld Account, if positive. The
Reinsurer and Intermediary shall each remit to the Company an amount equal
to 0.125% of the ceded earned premium.
B. Mutual agreement is required to commute this Contract if the effective
date of commutation is on or after January 2, 2008.
C. In the event of commutation on or after January 2, 2008, but on or before
January 1, 2010, if the Ultimate Losses equal or exceed 75.0% of the
premiums earned then the Company shall remit to the Reinsurer an amount
equal to 0.25% of the premium earned plus investment income on said amount
credited since inception of this Contract at an annual rate of 3.75%.
D. If the ratio of Ultimate Losses to premium earned cannot be mutually
agreed between the Company and Reinsurer at commutation then it shall be
determined by an independent third-party actuary who is mutually agreeable
to the Company and Reinsurer.
ARTICLE XVIII - 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
and may only apply on or after February 25, 2005.
B. In the event any premium, loss or other payment due either party is not
received by the intermediary named in Article XXXIV (hereinafter referred
to as the "Intermediary") by the payment due date, the party to which
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. 0.0001; 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 any routine payment, adjustment or return due either
party, 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 45
business days after the date of transmittal by the Intermediary of
the initial billing for each such payment.
2. As respects any payment, adjustment or return due either party not
otherwise provided for in subparagraphs 1 and 2 of this paragraph C,
the due date shall be deemed as 30 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. Any loss settlement made by the Company, whether under the Company's
strict Policy conditions or by way of compromise, shall be binding on the
Reinsurer in proportion to its participation. Any requests for further
claims information, investigations, disagreements with settlements or
reserves or any other matter relating to any claim shall not in any way
change or delay the Reinsurer's settlement and payment obligations set
forth in this Contract.
E. Interest penalties arising out of the application of this Article that are
$100 or less from any party shall be waived unless there is a pattern of
late payments consisting of three or more items over the course of any
12-month period.
ARTICLE XIX - OFFSET (BRMA 36C)
The Company and the Reinsurer shall have the right to offset any balance or
amounts due from one party to the other under the terms of this Contract. The
party asserting the right of offset may exercise such right any time whether the
balances due are on account of premiums or losses or otherwise.
ARTICLE XX - ACCESS TO RECORDS
By giving the Company not less than 10 business days prior written notice, the
Reinsurer or its designated representatives shall have access at any reasonable
time to all records of the Company which pertain in any way to this reinsurance.
ARTICLE XXI - ERRORS AND OMISSIONS (BRMA 14F)
Inadvertent delays, errors or omissions made in connection with this Contract or
any transaction hereunder shall not relieve either party from any liability
which would have attached had such
delay, error or omission not occurred, provided always that such error or
omission is rectified as soon as possible after discovery.
ARTICLE XXII - CURRENCY (BRMA 12A)
A. Whenever the word "Dollars" or the "$" sign appears in this Contract, they
shall be construed to mean United States Dollars and all transactions
under this Contract 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 XXIII - TAXES (BRMA 50C)
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 XXIV - FEDERAL EXCISE TAX
A. The Reinsurer 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) to the extent
such premium is subject to the Federal Excise Tax.
B. In the event of any return of premium becoming due hereunder the Reinsurer
will 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.
ARTICLE XXV - RESERVES
A. The Reinsurer agrees to fund its share of the Company's ceded United
States unearned premium and outstanding loss and Loss Adjustment Expense
reserves (including incurred but not reported loss reserves) which are in
excess of the Funds Withheld Account by:
1. Clean, irrevocable and unconditional letters of credit issued or
confirmed by a bank or banks meeting the NAIC Securities Valuation
Office credit standards for issuers of letters of credit and
acceptable to the Company; and/or
2. Escrow accounts (including trust accounts), meeting the NAIC
reinsurance security standards, for the benefit of the Company;
and/or
3. Cash advances;
if the Reinsurer is unauthorized in any state of the United States of
America or the District of Columbia having jurisdiction over the Company
and 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 Company and 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 Expense 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 XXVI - 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 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. It is further understood and agreed that, in the event of the insolvency
of the Company, 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 XXVII - 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 ▇▇▇▇▇'▇ 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. 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. 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.
D. In the event that any arbitration or legal action relating to this
Contract is brought by a party, reasonable attorneys' fees and costs
incurred as a result of such proceeding(s) or action, which shall include
legal fees and costs relating to any appeal(s) (hereinafter referred to as
"Legal Fees"), shall be apportioned and recoverable as follows:
1. As respects the non-prevailing party, the proportion that the Party
Ultimately Prevailing (as defined below) benefits from an award of
monetary damages or other relief shall be paid to such prevailing
party;
2. As respects the prevailing party, the proportion that the
non-prevailing party benefits from an award of monetary damages or
other relief shall be paid to such non-prevailing party.
The term "Party Ultimately Prevailing" shall mean the party awarded the
greater monetary damage or other relief pursuant to the arbitration panel
or judicial determination.
E. Any arbitration proceedings shall take place at Richmond, Virginia, and
shall be governed by the laws of the State of Virginia.
ARTICLE XXVIII - 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 XXIX - GOVERNING LAW
This Contract shall be governed by and construed in accordance with the laws of
the State of Virginia.
ARTICLE XXX - CONFIDENTIALITY (BRMA 69E)
The parties acknowledge there may be portions of this Contract, the treaty
prospectus or the marketing package that may contain confidential, proprietary
information of the Company. The Reinsurer shall maintain the confidentiality of
such information concerning the Company or its business and shall not disclose
it to any third person without prior written approval; provided, however, that
the Reinsurer may be required and is permitted under this Contract to disclose
such information in answers to interrogatories, subpoenas or other
legal/arbitration processes as well as to the Company's Intermediaries, to the
Reinsurer's retrocessionaires, and applicable intermediaries, or in response to
requests by governmental and regulatory agencies. In addition, the Reinsurer may
disclose such information to its accountants and to its outside legal counsel as
may be necessary.
ARTICLE XXXI - 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 XXXII - INTEGRATION
This agreement supersedes all prior discussions and agreements between the
parties with respect to the subject matter of this Contract. This Contract,
including the schedules attached hereto (if any), contains the sole and entire
Contract between the parties with respect to the subject matter hereof. Any and
all changes to this Contract will not be valid unless and until they are
submitted in writing and are properly executed by all parties.
ARTICLE XXXIII - APPROVAL
The Company warrants that it has obtained any and all statutory and regulatory
approvals required under any applicable laws for the Company to cede the
business covered in this Contract and to assure any accounting benefits
whatsoever that it may wish to take, in its sole discretion, for such cession.
ARTICLE XXXIV - INTERMEDIARY (BRMA 23A)
▇▇▇▇▇▇▇▇ Inc. 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 ▇▇▇▇▇▇▇▇ Inc. 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:
Richmond, Virginia, this __29__ day of __March____ in the year _2005__.
-- ----- ----
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ River Insurance Company
Vice President and Chief Actuary
NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE (U.S.A.)
(Approved by Lloyd's Underwriters' Fire and Non-Marine Association)
(1) This reinsurance does not cover any loss or liability accruing to the
Reassured as a member of, or subscriber to, any association of insurers or
reinsurers formed for the purpose of covering nuclear energy risks or as a
direct or indirect reinsurer of any such member, subscriber or
association.
(2) Without in any way restricting the operation of paragraph (1) of this
Clause it is understood and agreed that for all purposes of this
reinsurance all the original policies of the Reassured (new, renewal and
replacement) of the classes specified in Clause II of this paragraph (2)
from the time specified in Clause III in this paragraph (2) shall be
deemed to include the following provision (specified as the Limited
Exclusion Provision):
LIMITED EXCLUSION PROVISION.*
I. It is agreed that the policy does not apply under any liability
coverage, to
(injury, sickness, disease, death or destruction
(bodily injury or property damage
with respect to which an insured under the policy is also an insured
under a nuclear energy liability policy issued by Nuclear Energy
Liability Insurance Association, Mutual Atomic Energy Liability
Underwriters or Nuclear Insurance Association of Canada, or would be
an insured under any such policy but for its termination upon
exhaustion of its limit of liability.
II. Family Automobile Policies (liability only), Special Automobile
Policies (private passenger automobiles, liability only), Farmers
Comprehensive Personal Liability Policies (liability only),
Comprehensive Personal Liability Policies (liability only) or
policies of a similar nature; and the liability portion of
combination forms related to the four classes of policies stated
above, such as the Comprehensive Dwelling Policy and the applicable
types of Homeowners Policies.
III. The inception dates and thereafter of all original policies as
described in II above, whether new, renewal or replacement, being
policies which either
(a) become effective on or after 1st May, 1960, or
(b) become effective before that date and contain the Limited
Exclusion Provision set out above;
provided this paragraph (2) shall not be applicable to Family
Automobile Policies, Special Automobile Policies, or policies or
combination policies of a similar nature, issued by the Reassured on
New York risks, until 90 days following approval of the Limited
Exclusion Provision by the Governmental Authority having
jurisdiction thereof.
(3) Except for those classes of policies specified in Clause II of paragraph
(2) and without in any way restricting the operation of paragraph (1) of
this Clause, it is understood and agreed that for all purposes of this
reinsurance the original liability policies of the Reassured (new, renewal
and replacement) affording the following coverages:
Owners, Landlords and Tenants Liability, Contractual Liability,
Elevator Liability, Owners or Contractors (including railroad)
Protective Liability, Manufacturers and Contractors Liability,
Product Liability, Professional and Malpractice Liability,
Storekeepers Liability, Garage Liability, Automobile Liability
(including Massachusetts Motor Vehicle or Garage Liability)
shall be deemed to include, with respect to such coverages, from the time
specified in Clause V of this paragraph (3), the following provision
(specified as the Broad Exclusion Provision):
BROAD EXCLUSION PROVISION.*
It is agreed that the policy does not apply:
I. Under any Liability Coverage to
(injury, sickness, disease, death or destruction
(bodily injury or property damage
(a) with respect to which an insured under the policy is also an
insured under 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;
(b) the nuclear material is contained in spent fuel or waste at
any time possessed, handled, used, processed, stored,
transported or disposed of by or on behalf of an insured; or
(c) the
(injury, sickness, disease, death or destruction
(bodily injury or property damage
arises out of the furnishing by an insured of services,
materials, parts or equipment in connection with the planning,
construction, maintenance, operation or use of any nuclear
facility, but if such facility is located within the United
States of America, its territories, or possessions or Canada,
this exclusion (c) applies only to
(injury to or destruction of property at such nuclear
facility
(property damage to such nuclear facility and any
property thereat.
IV. As used in this endorsement:
"hazardous properties" include radioactive, toxic or explosive
properties; "nuclear material" means source material, special
nuclear material or byproduct material; "source material", "special
nuclear material", and "byproduct material" have the meanings given
them in the Atomic Energy Act of 1954 or in any law amendatory
thereof; "spent fuel" means any fuel element or fuel component,
solid or liquid, which has been used or exposed to radiation in a
nuclear reactor; "waste" means any waste material (1) containing
byproduct material and (2) resulting from the operation by any
person or organization of any nuclear facility included within the
definition of nuclear facility under paragraph (a) or (b) thereof;
"nuclear facility" means
(a) any nuclear reactor,
(b) any equipment or device designed or used for (1) separating
the isotopes ofuranium 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 Reassured on
New York risks, or
(ii) statutory liability insurance required under Chapter 90,
General Laws of Massachusetts, until 90 days following
approval of the Broad Exclusion Provision by the
Governmental Authority having jurisdiction thereof.
(4) Without in any way restricting the operation of paragraph (1) of this
Clause, it is understood and agreed that paragraphs (2) and (3) above are
not applicable to original liability policies of the Reassured in Canada
and that with respect to such policies this Clause shall be deemed to
include the Nuclear Energy Liability Exclusion Provisions adopted by the
Canadian Underwriters' Association or the Independent Insurance Conference
of Canada.
--------------------------------------------------------------------------------
*NOTE. The words 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.
NET QUOTA SHARE
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2005
issued to
▇▇▇▇▇ River Insurance Company
Richmond, Virginia
REINSURERS PARTICIPATIONS
E+S Reinsurance (Ireland) Limited 20.0%
Hannover Reinsurance (Ireland), Ltd. 80.0%
TOTAL 100.0%
INTERESTS AND LIABILITIES AGREEMENT
of
E+S Reinsurance (Ireland) Limited
Dublin, Ireland
(hereinafter referred to as the "Subscribing Reinsurer")
with respect to the
NET QUOTA SHARE
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2005
issued to and duly executed by
▇▇▇▇▇ River Insurance Company
Richmond, Virginia
The Subscribing Reinsurer hereby accepts a 20.0% share in the interests and
liabilities of the "Reinsurer" as set forth in the attached Contract captioned
above.
This Agreement shall become effective on January 1, 2005, and shall continue in
force until terminated in accordance with the provisions of the attached
Contract.
The Subscribing Reinsurer's share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.
IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date undermentioned at:
Dublin, Ireland, this 8th day of April in the year 2005.
/s/ illegible
----------------------------------------
E+S Reinsurance (Ireland) Limited
INTERESTS AND LIABILITIES AGREEMENT
of
Hannover Reinsurance (Ireland), Ltd.
Dublin, Ireland
(hereinafter referred to as the "Subscribing Reinsurer")
with respect to the
NET QUOTA SHARE
REINSURANCE CONTRACT
EFFECTIVE: JANUARY 1, 2005
issued to and duly executed by
▇▇▇▇▇ River Insurance Company
Richmond, Virginia
The Subscribing Reinsurer hereby accepts an 80.0% share in the interests and
liabilities of the "Reinsurer" as set forth in the attached Contract captioned
above.
This Agreement shall become effective on January 1, 2005, and shall continue in
force until terminated in accordance with the provisions of the attached
Contract.
The Subscribing Reinsurer's share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.
IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date undermentioned at:
Dublin, Ireland, this 8th day of April in the year 2005.
/s/ illegible
------------------------------------------
E+S Reinsurance (Ireland) Limited