▇▇▇▇▇ INSURANCE COMPANY
WORKERS COMPENSATION QUOTA SHARE REINSURANCE AGREEMENT
FINAL PLACEMENT SLIP
COMPANY: ▇▇▇▇▇ Insurance Company
a California corporation
and/or any Company hereafter affiliated with
▇▇▇▇▇ Insurance Company
EFFECTIVE: Losses occurring during the period beginning
12:01 a.m., Pacific Standard Time, October 1,
1998, and ending 12:01 a.m., Pacific Standard
Time, October 1, 2000, under policies in force at
12:01 a.m., Pacific Standard Time, October 1,
1998, and written and renewed with effective
dates during the term of this Agreement.
If, at any time, the Reinsurer ceases
underwriting operations or loses the whole or
part of its paid up capital, becomes insolvent,
or is placed in conservation, rehabilitation, or
liquidation, has a receiver appointed, or is
acquired, controlled by, merged with, or
reinsures its entire business with any other
company or corporation, the Company will have the
right to cancel this Agreement by giving 15 days
notice by certified or registered mail.
BUSINESS
COVERED: All business classified by the Company as Workers
Compensation and Employers Liability.
EXCLUSIONS: Per attached.
TERRITORY: Worldwide.
LIMIT: 25% Quota Share of the first $10,000 of ultimate net
loss, each and every occurrence, regardless of the
number of policies involved.
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"Occurrence" (except for losses arising from
Occupational Disease or Cumulative Trauma as
defined below) will mean any one accident,
disaster, casualty, or loss or series of
accidents, disasters, casualties, or losses
arising out of or caused by one event.
With respect to Occupational Disease or
Cumulative Trauma, all losses arising from each
employee will be deemed a separate "occurrence".
The date of loss for each occurrence will be the
date when the compensable disability of the
employee commences, or if there is no such
disability, when the medical treatment commences.
The terms "Occupation Disease" and "Cumulative
Trauma" as used in this Agreement will be as
defined by applicable state statutes,
regulations, or Federal Law.
LOSS EXPENSES: Loss expense included within the ultimate net loss in
satisfying Retention and Limit hereon.
"Loss expense" will mean expense assignable to
the investigation, defense, and settlement of
specific claims, including litigation expense,
interest on judgments, staff counsel expense, and
declaratory judgment expense, but not including
salaries and benefits of the Company's directors,
officers, and employees, nor the Company's office
expenses, overhead, and other fixed expenses of
the Company. Any expenses paid to a company that
is part of or affiliated with the Company, or to
an economically-related enterprise, or to any
enterprise which has common ownership with a
company or affiliate of the Company, will not be
included in loss expense. Any commission or other
compensation paid to the Company by a company
providing service on the business subject to this
Agreement will be deducted from the allowable
loss expense hereunder.
PREMIUM: Pro-Rata of GNEP, payable monthly as earned.
Gross Net Earned Premium is defined as the
Company's Premium for the business covered
hereunder less 28.7%.
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Monthly bordereaux within 45 days of the end of
each month of premiums and losses; loss
bordereaux to delineate claims for occupational
disease, cumulative trauma, employers liability,
extra contractual obligations, and excess limits
liability claims. Bordeaux to include GNEP
associated with class codes with a "D" or "E"
modifier. Settlement with bordereaux if balance
is due the Reinsurer; if balance is due the
Company, settlement due from the Reinsurer within
15 days after receipt of bordereaux.
CEDING
COMMISSION: Company allowed a ceding commission of [redacted]% on
GNEP ceded.
ESTIMATED
SUBJECT
PREMIUM: $162,500,000 - First twelve-months
$162,500,000 - Second twelve-months
ORIGINAL The liability of the Reinsurer will be subject in all
CONDITIONS: respects to the same interpretations, terms, rates,
conditions, waivers, modifications, and alterations as
the respective policies of the Company to which this
Agreement relates. However, in no event will this be
construed in any way to provide coverage outside
the terms and conditions set forth in this
Agreement.
The Company will be the sole judge as to what
will constitute a claim or loss covered under the
Company's policy and as to the Company's
liability thereunder and will, at its sole
discretion, adjust, settle, or compromise all
claims and losses. All such adjustments,
settlements, or compromises will be
unconditionally binding on the Reinsurer in
proportion to its participation, provided they
are within the terms and conditions of this
Agreement. The Company will, likewise, at its
sole discretion, commence, continue, defend, or
withdraw from actions, suits, or proceedings and
generally handle all matters related to all
claims and losses, and all payments made and
costs and expenses incurred in connection
therewith or taking legal advice therefor will be
shared by the Reinsurer.
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When so requested, however, the Company will
afford the Reinsurer, at the Reinsurer's own
expense, an opportunity to be associated with the
Company in the defense of any claim, suit, or
proceeding involving this Agreement, and the
Company and the Reinsurer will cooperate in every
respect in such defense.
OTHER Access to Records Clause
PROVISIONS: Aon Re Inc. Intermediary Clause
Arbitration Clause
Currency (U.S. Dollars) Clause
Delays, Errors, or Omissions Clause
90%ECO/90% ELL (counsel and concur) - included
within ultimate net loss
Entire Agreement and Amendments Clause
Insolvency Clause
Settlements Clause
Salvage & Subrogation Clause
Net Retained Liability Clause
Offset Clause
Tax Clause
Ultimate Net Loss Clause -- UNL to include any
deductible under the insured's policy
* * * * *
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We ask that you review the terms and conditions set forth hereon. Assuming that
you find everything in order, please indicate your acceptance and approval by
signing and returning one (1) copy of this Placement Slip to Aon Re Inc., ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
REINSURER: RELIANCE INSURANCE COMPANY_________________________________________
SIGNED LINE: 100% BEING $2,500________________________________________________
REFERENCE NO.:_________________________________________________________________
ACCEPTED AND
APPROVED BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇__________________ DATED: January 11,1999____
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EXCLUSIONS
No reinsurance indemnity will be afforded under this Agreement for:
A. Loss arising out of operations employing the process of
nuclear fission or fusion or handling radioactive material,
which operations include but are not limited to:
1. The use of nuclear reactors such as atomic piles,
particle accelerators, or generators, or
2. The use, handling, or transportation of radioactive
materials, or
3. The use, handling, or transportation of any weapon of
war or explosive device employing nuclear fission or
fusion.
Subsections 1., 2., and 3. above do not apply to:
a. The exclusive use of particle accelerators incidental
to ordinary industrial or educational research
pursuits, or
b. The exclusive use, handling, or transportation of
radioisotopes for medical or industrial use, or
c. Radium or radium compounds.
The term "any weapon of war or explosive device employing
nuclear fission or fusion" will not apply to a device not
equipped for intended explosive purposes, which employs
nuclear fission or fusion for propulsion only.
B. Class code with a "D" or "E" modifier (except on an incidental
basis, i.e., less than 20% of total book).
C. Class code nos. 1164 and 1165.
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D. Second Injury Funds or Residual Market Assessments.
▇. ▇▇▇▇▇ Act.
F. Loss Portfolio Transfers.
G. Insolvency Funds.
▇. ▇▇▇▇▇▇▇▇▇ Workers' Compensation Policies.
I. Liability assumed by the Company under any form of treaty or
facultative reinsurance; however, this exclusion does not
apply to policies written by another carrier at the Company's
request and reinsured 100% by the Company.
The above Exclusions (other than Exclusion A, C, D, E, F, G, and H) will not
apply when they are merely incidental to the main operations of the insured
provided such main operations are covered by the Company and are not themselves
excluded from the scope of this Agreement. The Company will be the sole judge
(except as respects exclusion B) as to what constitutes "incidental."
Furthermore, should any judicial, regulatory, or legislative entity having
jurisdiction invalidate any exclusion of the Company's policy, any amount of
loss for which the Company would not be liable except for such invalidation will
not be subject to the Exclusions hereunder.
Should the Company, by reason of an inadvertent act, error, or omission, be
bound to afford coverage excluded hereunder or should an existing insured extend
its operations to include coverage excluded hereunder, the Reinsurer will waive
the exclusion(s) with the exception of Exclusion A, C, D, E, F, G, and H. The
duration of said waiver will not extend beyond the time that notice of such
coverage has been received by the responsible underwriting authority of the
Company plus the minimum time period required thereafter for the Company to
terminate such coverage.
The Company may submit in writing to the Reinsurer, for special acceptance
hereunder, business not covered by this Agreement. If said business is accepted
in writing by the Reinsurer, it will be subject to the terms of this Agreement,
except as such terms are modified by such acceptance. Any special acceptance
business covered under the reinsurance Agreement being replaced by this
Agreement will be automatically covered hereunder. Further, should Reinsurers
become a party to this Agreement subsequent to the acceptance of any business
not normally covered hereunder, they will automatically accept same as being a
part of this Agreement.
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ACCESS TO RECORDS
The Reinsurer or its duly-accredited representatives will have the
right, upon prior notice to the Company, to inspect the books and records of the
Company relating to the subject matter of this Agreement at all reasonable times
while this Agreement is in force and subsequent to its termination so long as
any claim or premium matters remain outstanding.
The inspecting party will have the right, at its own expense, to make
copies of any relevant information in the Company's files. At the conclusion of
the inspection the inspecting party will meet with and discuss the review with
the Company and will provide a written report of its findings.
All non-public information provided in the course of the inspection
will be kept confidential by the Reinsurer as against third parties, except as
respects any obligation to do so by law or contract to retrocessionaires of the
Reinsurer, to counsel retained by the Reinsurer, or to external accounting or
compliance auditors.
DEFINITIONS
"Ultimate net loss" will mean the actual loss or losses paid or payable
by the Company under its policies, after deduction of all salvages and
recoveries that are actually received, and inuring reinsurance whether
recoverable or not. Ultimate net loss will be inclusive of loss expense, any
deductible under the insureds' policies, and 90% of any claims-related extra
contractual obligations and excess limits liability. All salvages, recoveries,
or reinsurance received subsequent to any loss settlement hereunder will be
applied as if received prior to the settlement, and all necessary adjustments
will be made by the parties hereto. Nothing in this definition, however, should
be construed to mean that losses under this Agreement are not recoverable until
the Company's ultimate net loss has been ascertained. In the event a verdict or
judgment is reduced by an appeal or a settlement, subsequent to the entry of the
judgment, however, resulting in an ultimate saving on such verdict or judgment,
or a judgment is reversed outright, the loss expense incurred in securing such
final reduction or reversal will be prorated between the Reinsurer and the
Company in the proportion that each benefits from such reduction or reversal.
"Declaratory judgment expense" will mean all expenses incurred by the
Company in connection with declaratory judgment actions brought to determine the
Company's defense and indemnification obligations that are allocable to specific
policies and claims subject to this Agreement. Declaratory judgment expense will
be deemed to have been fully incurred by the Company on the date of the actual
or alleged loss giving rise to the action under the Company's policy.
OFFSET
The Company and each Reinsurer hereunder may offset any paid claims
against ceded premiums due from one party to the other under this Agreement or
any other agreement entered into between them.
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