Exhibit (c)(6)
INTERESTS AND LIABILITIES AGREEMENT
to the
CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT
between
SCOR REINSURANCE COMPANY
(hereinafter referred to as "Company")
and
SCOR Reassurance
Paris, France
(hereinafter referred to as "Subscribing Retrocessionaire")
It is hereby mutually agreed by and between the Company on the one part and
the Subscribing Retrocessionaire on the other part that the Subscribing
Retrocessionaire's share in the Interests and Liabilities of the
Retrocessionaires as set forth in the Exhibits attached to and forming an
integral part of the CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT shall
be for
12.50% of Exhibit A
19.16% of Exhibit B
7.50% of Exhibit C
15.00% of Exhibit D
25.00% of Exhibit E
The share of the Subscribing Retrocessionaire in the Interests and
Liabilities of the Retrocessionaires in respect of the said Contract shall
be separate and apart from the shares of the other Subscribing
Retrocessionaires to the said Contract, and the Interests and Liabilities
of the Subscribing Retrocessionaire shall not be joint with those of the
other Subscribing Retrocessionaires and in no event shall the Subscribing
Retrocessionaire participate in the Interests and Liabilities of the other
Subscribing Retrocessionaires.
This Interests and Liabilities Agreement shall take effect at 12:01 a.m.,
Eastern Standard Time, January 1, 1995 and shall remain in force until
12:01 a.m., Eastern Standard Time, January 1, 1996 but may be terminated in
accordance with the provisions of the paragraph of ARTICLE 3, COMMENCEMENT
AND TERMINATION, of the Catastrophe Excess of Loss Reinsurance Contract
attached hereto.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed, in duplicate, by their duly authorized representatives this
day of 1995.
For and on behalf of:
SCOR REINSURANCE COMPANY
----------------------------------------------------------------
Sr. Vice President Assistant Vice President
And on this day of , 1995.
For and on behalf of:
SCOR Reassurance
Paris, France
----------------------------------------------------------------
CATASTROPHE EXCESS OF LOSS
REINSURANCE CONTRACT
TABLE OF CONTENTS
-----------------
Article Page
------- ----
1 Business Covered 1
2 Exclusions 1
3 Commencement and Termination 5
4 Extended Expiration 5
5 Insuring Clause 5
6 Premium 5
7 Reinstatement 5
8 Definition of "Loss Occurrence" 6
9 Extra Contractual Obligations Clause 6
10 Ultimate Net Loss 6
11 Warranty 7
12 Excess of Original Policy Limits 8
13 Net Retained Lines 8
14 War Inclusion Clause (Ocean Marine Only) 8
15 Notice of Loss and Loss Settlements 9
16 Loss Reserves 9
17 Reinsurance Tax 11
Federal Excise Tax 11
18 Currency 12
19 Access to Records 12
20 Service of Suit Clause 12
21 Indemnification and Errors and Omission 13
22 Insolvency 13
23 Arbitration 14
Exhibits: A1-A2, B1-B2, C1-C2, D1-D2 and El-E2.
Attachments: Pools, Associations and Syndicates Exclusion Clause;
Nuclear Energy Risks Exclusion Clause (Reinsurance) (1984)
(Worldwide Excluding U.S.A. & Canada);
Nuclear Incident Exclusion Clause - Liability - Reinsurance
- U.S.A. and Canada;
Nuclear Incident Exclusion Clause - Physical Damage and
Liability (Boiler and Machinery Policies) - Reinsurance;
- U.S.A. and Canada;
Nuclear Incident Exclusion Clause - Physical Damage -
Reinsurance - U.S.A. and Canada;
Insolvency Funds Exclusion Clause.
Several Liability Notice.
CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT
(hereinafter referred to as "Contract")
In consideration of the mutual covenants hereinafter contained and subject
to all the terms and conditions hereinafter set forth
VARIOUS INSURANCE AND/OR REINSURANCE COMPANIES
AND/OR UNDERWRITING MEMBERS OF LLOYD'S
(hereinafter collectively referred to as "Retrocessionaires")
do hereby indemnify, as herein provided and specified, the
SCOR REINSURANCE COMPANY
(hereinafter referred to as "Company")
ARTICLE 1
---------
BUSINESS COVERED
----------------
This Contract shall indemnify the Company as set forth in the attached
Exhibit(s) in respect of the excess liability which may accrue to the
Company under all policies, bonds, binders and contracts, oral or written,
(hereinafter referred to as "policy" or "policies" and/or "contract" or
"contracts") covering all Treaty and Facultative reinsurance assumed by the
Company including but not limited to the following classes of business:
Fire, Extended coverage, other Allied Lines, Homeowners or Farmowners
Multiple Peril, Commercial Multiple Peril, Earthquake, Boiler & Machinery,
Automobile Physical Damage (excluding Collision), Inland Marine business
(including pleasure watercraft classified as Inland Marine), Ocean Marine,
and Workers Compensation and/or Employers Liability arising out of the
Company's Property/Multi-line portfolio, subject to the exclusions set
forth in ARTICLE 2, EXCLUSIONS and the other terms and conditions of this
agreement as set forth herein.
ARTICLE 2
---------
EXCLUSIONS
----------
This Contract does not apply to and excludes from coverage hereunder:
1. Business written on behalf of, or as a member or direct reinsurer
of any pools, syndicates and associations as per the "Pools
Exclusions Clause". This exclusion shall not, however, apply as
respects the Company's interest in the following:
a) Allendale Mutual Insurance Company and its subsidiary
companies;
b) Arkwright Mutual Insurance Company and Arkwright Insurance
Company;
c) Improved Risk Mutuals;
d) Industrial Risk Insurers;
e) Protection Mutual Insurance Company;
f) Starr Technical Risks Agency, Inc.;
g) California Reinsurance Management Corporation;
It is, however, understood and agreed that the amount of the
Retrocessionaires' liability hereunder shall not be increased by
reason of the failure of any other participant in any of the
above-named pools, syndicates, or associations to meet its
liability, nor shall any such liability be included in the
Company's net retained liability for purposes of claim hereunder.
2. Nuclear Energy risks Exclusion Clause (Worldwide Excluding U.S.A.
& Canada), N.M.A. 1975
Nuclear Incident Exclusion Clause - Liability - Reinsurance
Nuclear Incident Exclusion Clause - Physical Damage and Liability
(Boiler and Machinery Policies) - Reinsurance
Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance
Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance -
Canada
Nuclear Incident Exclusion Clause - Physical Damage and Liability
(Boiler and Machinery Policies) - Reinsurance - Canada
Nuclear Incident Exclusion Clause - Liability - Reinsurance -
Canada
(as per clauses attached).
3. Business written under policies, contracts, and binders of
reinsurance which the Company elects to exclude hereunder,
provided, however, that the Company shall properly identify each
such policy, contract, and binder or reinsurance on its records
at the time it is written (this Exclusion applies primarily to
Banking and Funding Plans);
2
4. Loss or damage occasioned by war, invasion, hostilities, acts of
foreign enemies, civil war, rebellion, insurrection, military or
usurped power, martial law or confiscation by order of any
government or public authority, but the foregoing shall not apply
to:
(1) Workers' Compensation, Employers' Liability, Registered Mail
or any other classes of business which are traditionally
written without a War Exclusion Clause.
(2) Ocean Marine business when war is an included peril, subject
to the war inclusion clause of 1977 per ARTICLE 14, WAR
INCLUSION CLAUSE IN RESPECT OCEAN MARINE.
(3) Original Reinsurance Contracts or Original Policies
containing a standard War Exclusion Clause.
5. Life Business.
6. Aviation business (including satellites). This exclusion shall
not, however, exclude aviation business when assumed by the
Company as an incidental portion of a multiple-line reinsurance
contract that is otherwise covered hereunder;
7. Business classified as Surety, Financial Guarantee, Insolvency
and Credit.
8. The Company's interest either direct or by way of reinsurance in
loss arising from another party or parties.
Notwithstanding the foregoing, this Contract shall not exclude:
(a) Workers' Compensation and/or Employers' Liability arising
from the following perils:
Fire, Lightning, Explosion, Structural Collapse, Windstorm,
Hail, Flood, Falling Objects, Seismic Activity, Volcanic
Eruption, Collision, Riot, Strikes, Civil Commotion,
Malicious Damage.
(b) Any Physical Damage and/or Consequential Loss coverage
contingent thereon effected by an insured on behalf of
another party (this applies principally to care, custody and
control exposures under bailee coverages).
9. Crop Hail business.
10. Losses arising, by contract, operation of law, or otherwise,
whether voluntary or involuntary, under any insolvency fund.
"Insolvency Fund" includes any
3
insolvency fund, guaranty fund, plan, pool, association, or other
arrangement, howsoever 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.
11. LMX and reinsurance assumed business.
12. All losses which may be sustained by the Company howsoever and
wheresoever arising including all Business Interruption,
Consequential Loss and/or other contingent losses proximately
caused by a peril insured in respect of the Company's exposures
from:
a. All marine business when written as such, howsoever not to
exclude such exposures if they emanate from a multiline
insurance contract and/or policy.
b. All Offshore exposures arising from business of any
description connected with the oil and/or gas and/or sulphur
and/or uranium exploration and production industries in all
their phases and including all associated support and/or
service industries.
"Offshore" shall be defined as:
(1) That area encompassing locations covered by oceans or seas
in which the water ebbs and flows
and/or
(2) Other navigable waters or waterways which shall mean any
water which is in fact navigable by ships or vessels,
whether or not the tide ebbs and flows there, and whether or
not there is a public right of navigation in that water.
13. Losses from overhead transmission and distribution lines on a new
and renewal basis.
14. All business of reassureds domiciled outside the United States,
Canada and Bermuda and their possessions. However, not to exclude
reassureds domiciled outside of these areas where the exposures
are predominantly derived from the United States, Canada and
Bermuda and their territories and possessions.
4
ARTICLE 3
---------
COMMENCEMENT AND TERMINATION
----------------------------
The term of this Contract shall be from 12:01 a.m., Eastern Standard Time,
January 1, 1995 to 12:01 a.m., Eastern Standard Time, January 1, 1996.
In respect to all business covered hereunder except as provided for in the
following paragraphs of this Article and except as provided for in Section
I, Insuring Clause of the Exhibit(s), this Contract shall apply to all loss
occurrences taking place during the term of this Contract.
In the case of a missing vessel or aircraft the date of the loss occurrence
shall be deemed to be the date on which the vessel or aircraft is posted as
missing at Lloyd's or, in the case of a missing vessel or aircraft not so
posted, the last known safe date.
If any law or regulation of the federal, state or local government of any
jurisdiction in which the Company is doing business shall render illegal
the arrangements made in this Contract, this Contract can be terminated
immediately, insofar as it applies to such jurisdiction, by the Company
giving notice to the Retrocessionaires to such effect.
ARTICLE 4
---------
EXTENDED EXPIRATION
-------------------
If this Contract terminates while a loss covered hereunder is in progress,
it is agreed that, subject to the other conditions of this Contract, the
Retrocessionaires shall indemnify the Company as if the entire loss had
occurred during the term of this Contract.
ARTICLE 5
---------
INSURING CLAUSE
---------------
See Section I of the Exhibit(s) attached hereto.
ARTICLE 6
---------
PREMIUM
-------
See Section II of the Exhibit(s) attached hereto.
ARTICLE 7
---------
REINSTATEMENT
-------------
See Section III of the Exhibit(s) attached hereto.
5
ARTICLE 8
---------
DEFINITION OF "LOSS OCCURRENCE"
-------------------------------
The term "loss occurrence" as used herein shall mean any one accident,
casualty, disaster or occurrence, or series of accidents, casualties,
disasters or occurrences arising out of or caused by one event regardless
of the number of interests reinsured or the number of policies or contracts
involved or the number or kinds of perils involved, subject to the
warranties set forth in ARTICLE 11, WARRANTY. Furthermore, all losses
arising out of or resulting from the same occurrence or disaster shall be
considered one occurrence or one disaster.
ARTICLE 9
---------
EXTRA CONTRACTUAL OBLIGATIONS CLAUSE
------------------------------------
This Contract shall protect the Company within the limits hereof, where the
ultimate net loss includes any extra contractual obligations. The term
"extra contractual obligations" is defined as those liabilities not covered
under any other provision of this Contract and which arise from the
handling of any claim on business covered hereunder, such liabilities
arising because of, but not limited to, the following: failure by the
Company to settle within the policy limit, or by reason of alleged or
actual negligence, fraud or bad faith in rejecting an offer of settlement
or in the preparation of the defense or in the trial of any action against
its insured or reinsured or in the preparation or prosecution of an appeal
consequent upon such action. In no event shall coverage be provided to the
extent that such coverage is not permitted under New York State Insurance
Law.
The date on which any extra contractual obligation is incurred by the
Company shall be deemed, in all circumstances, to be the date of the
original disaster and/or casualty.
However, this Article shall not apply where the loss has been incurred due
to fraud of a member of the Board of Directors or a corporate officer of
the Company acting individually or collectively or in collusion with any
individual or corporation of any other organization or party involved in
the presentation, defense or settlement of any claim covered hereunder.
ARTICLE 10
----------
ULTIMATE NET LOSS
-----------------
The term "ultimate net loss" shall be understood to mean the actual loss or
losses paid or payable by the Company under its contracts of reinsurance,
and 80% of extra contractual obligations as defined in ARTICLE 9, EXTRA
CONTRACTUAL OBLIGATIONS CLAUSE, and 100% of excess of policy limits losses
as defined in ARTICLE 12, EXCESS OF ORIGINAL POLICY LIMITS CLAUSE, such
loss or losses to include the Company's expenses of litigation
6
if any, and all other loss expenses covered under the Company's original
policies, (including a pro rata share of salaries and expenses of the
Company's field employees according to the time occupied in adjusting such
loss and expenses of the Company's officials incurred in connection with
the loss but salaries of officials and any office expenses of the Company
shall not be included) less proper deductions for all recoveries (including
amounts recoverable under other reinsurance except as stated in the
following paragraph). All salvages, recoveries, and payments recovered or
received subsequent to a loss settlement under this Contract shall be
applied as if recovered or received prior to the said settlement and all
necessary adjustments shall be made by the parties hereto.
Notwithstanding the preceding paragraph, recoveries from Reinsurance
afforded under the Company's Contingency Excess of Loss Cover and/or Per
Risk Excess of Loss Cover shall be deducted when arriving at the ultimate
net loss hereunder. Recoveries afforded from Aggregate or Stop Loss
reinsurances, if any, as well as underlying catastrophe excess of loss
covers, if any, shall be disregarded when arriving at the ultimate net loss
hereunder.
Whenever the Company or its ceding companies issue a lost instrument bond
or a loss instrument letter of indemnity for salvage purposes or in lieu of
loss payment under its policy, Retrocessionaires agree to accept liability
under such bond or letter of indemnity in accordance with the terms of this
Contract.
ARTICLE 11
----------
WARRANTY
--------
It is warranted that Retrocessionaires shall not be liable under this
Contract unless two or more original risks are involved in the same loss
occurrence.
It is warranted that as respects Treaty business assumed by the Company,
the maximum net line will be $2,000,000 any one program or so deemed.
It is warranted the maximum amount of loss any one occurrence to be
included in the Ultimate Net Loss hereon as respects each individual
proportional treaty participation is limited to 2.5 times the premium
income for each individual proportional treaty participation, or so deemed.
The Company will be the sole judge as to what constitutes one risk and/or
program.
It is further warranted that the Company will retain net for its own
account and unreinsured not less that 5% of the ultimate net loss covered
hereunder, not including the Company's first loss retention hereunder.
7
ARTICLE 12
----------
EXCESS OF ORIGINAL POLICY LIMITS
--------------------------------
This Contract shall protect the Company, within the limits hereof, in
connection with ultimate net loss in excess of the limit of its original
policy, such loss in excess of the limit having been incurred because of
failure by it to settle within the policy limit or by reason of alleged or
actual negligence, fraud or bad faith in rejecting an offer of settlement
or in the preparation of the defense or in the trial of any action against
its insured or reinsured or in the preparation or prosecution of an appeal
consequent upon such action. In no event shall coverage be provided to the
extent that such coverage is not permitted under New York State Insurance
Law.
However, this Article shall not apply where the loss has been incurred due
to fraud by a member of the Board of Directors or a corporate officer of
the Company acting individually or collectively or in collusion with any
individual or corporation or any other organization or party involved in
the presentation, defense or settlement of any claim covered hereunder.
For the purposes of this Article, the word "loss" shall mean any amounts
for which the Company would have been contractually liable to pay had it
not been for the limit of the original policy.
ARTICLE 13
----------
NET RETAINED LINES
------------------
This Contract applies only to that portion of any reinsurance which the
Company retains net for its own account and in calculating the amount of
any loss hereunder and also in computing the amount or amounts in excess of
which this Contract attaches, only loss or losses in respect of that
portion of any reinsurance which the Company retains net for its own
account shall be included.
The amount of Retrocessionaires' liability hereunder in respect of any loss
or losses shall not be increased by reason of the inability of the Company
to collect from any other Retrocessionaires whether specific or general,
any amounts which may have become due from them whether such inability
arises from the insolvency of such other Retrocessionaires or otherwise.
ARTICLE 14
----------
WAR INCLUSION CLAUSE IN RESPECT OF OCEAN MARINE ONLY
----------------------------------------------------
This Contract includes loss, damage, liability or expense caused by or
resulting from the risks of War as covered in the original policy(ies)
provided that such loss, damage, liability or expense would be recoverable
under the terms and conditions of the Institute War Clauses in current use
at the inception of this Contract or at the time when the War risks cover
would have commenced under the original insurance within the terms of these
clauses, whichever is the
8
earlier; except that if the risks of War are covered in the original
policy(ies) under clauses approved by the London Hull War Risks Joint Sub-
Committee, or in respect of Cargo interests, under the Standard War Risk
Clause of any country which complies with the limitations of the United
Kingdom Waterborne Agreement, the foregoing provision shall not apply.
In the event of loss or losses occurring under War Inclusion Clause the
indemnity under this Contract shall be automatically reinstated to its full
amount from the time of such loss or losses until the next succeeding of
the Contract Anniversary in accordance with the general reinstatement
conditions (if any) of the Contract. Nevertheless, and irrespective of any
other reinstatement conditions of the Contract, the Retrocessionaires shall
never be liable for more than the indemnity provided hereunder in respect
of any one loss occurring and in respect of all losses occurring during the
term of this Contract.
ARTICLE 15
----------
NOTICE OF LOSS AND LOSS SETTLEMENTS
-----------------------------------
In the event of a loss occurrence which either results in or appears to be
of serious enough nature as probably to result in a loss involving this
Contract, the Company shall give notice as soon as reasonably practicable
to Retrocessionaires.
Subject to all the terms and conditions of this Contract, the
Retrocessionaires agree to abide by the loss settlements of the Company,
including any award resulting from an arbitration between the Company and
its ceding companies under the terms of any underlying policies or
contracts, such settlements to be considered as satisfactory proofs of
loss, and amounts falling to the share of the Retrocessionaires shall be
immediately payable to the Company by them upon reasonable evidence of the
amount paid or payable by the Company being presented to Retrocessionaires.
ARTICLE 16
----------
LOSS RESERVES
-------------
(This clause applies to those Retrocessionaires who do not qualify for
credit by any state or any other governmental authority having jurisdiction
over the Company's loss reserves.)
A: Where a Letter of Credit Trust Agreement is used, the following clause
shall apply:
It is agreed that when the Company files with the Insurance Department
or establishes reserves for claims covered hereunder, as required by
law, the Company will forward to the Retrocessionaires a statement
showing the proportion of such loss reserves which is applicable to
Retrocessionaires. The Retrocessionaires hereby agree to apply for and
secure delivery to the Company of a clean, irrevocable and
unconditional Letter of Credit, with a minimum term of one year,
issued by Citibank, N.A., in a format acceptable to the governmental
authority having jurisdiction over the Company's loss reserves in an
amount equal to the Retrocessionaires' proportion of said loss
reserves.
9
Under no circumstances shall any amount relating to reserves in respect of
incurred but not reported losses be funded in the amount of the Letter of
Credit. The foregoing shall not affect the Company's authority to draw upon
the Letter of Credit to cover all obligations due or which become due to
the Company under this Contract, including losses incurred but not
reported, in the event that a nonrenewal or nonextension notice is received
from the issuing bank.
The Company and the Retrocessionaires agree that such Letter of Credit will
be subject to the terms of a separate Letter of Credit Trust Agreement, and
that said trust agreement shall be in a form acceptable to the governmental
authority having jurisdiction over the Company's loss reserves.
Citibank, N.A., shall have no responsibility whatsoever in connection with
the propriety of withdrawals made by the Company or the disposition of
funds withdrawn, except to see that withdrawals are made only upon the
order of properly authorized representatives of the Company.
B: Where a Letter of Credit Trust Agreement is not used, the following
clause shall apply:
It is agreed that when the Company files with the Insurance Department
or establishes reserves for claims covered under this Contract, as
required by law, the Company will forward to the Retrocessionaires a
statement showing the proportion of such loss reserves which is
applicable to Retrocessionaires. The Retrocessionaires hereby agree to
apply for and secure delivery to the Company of a clean, irrevocable
and unconditional Letter of Credit, with a minimum term of one year,
issued by Citibank, N.A., in a format acceptable to the governmental
authority having jurisdiction over the Company's loss reserves in an
amount equal to the Retrocessionaires' proportion of said loss
reserves. Under no circumstances shall any amount relating to reserves
in respect of incurred but not reported losses be funded in the amount
of the Letter of Credit. The foregoing shall not affect the Company's
authority to draw upon the Letter of Credit to cover all obligations
due or which become due to the Company under this Contract, including
losses incurred but not reported, in the event that a nonrenewal or
nonextension notice is received from the issuing bank.
The Company and the Retrocessionaires agree that the Letter of Credit
provided by the Retrocessionaires under this provision may be drawn
upon at any time, notwithstanding any other provisions in this
Contract, and be utilized by the Company or any successor by operation
of law of the Company, including, without limitation, any liquidator,
rehabilitator, receiver or conservator of such insurer for the
following purposes:
(a) to reimburse the Company for the Retrocessionaires' share of
surrenders and benefits or losses paid by the Company under the
terms and provisions of the policies reinsured under this
Contract,
(b) to fund an account with the Company in an amount at least equal
to the
10
deduction, for reinsurance ceded, from the Company's liabilities
for policies ceded under this Contract. Such amount shall
include, but not be limited to, amounts for policy reserves,
reserves for claims and losses incurred (including losses
incurred but not reported), and loss adjustment expenses,
(c) to pay any other amounts the Company claims are due under this
Contract,
(d) to return any amounts drawn down on Letters of Credit in excess
of the actual amounts required for (a) and (b) above, or in case
of (c) above, any amounts which are subsequently determined not
to be due.
All of the foregoing should be applied without diminution because of
insolvency on the part of the Company or Retrocessionaires.
Citibank, N.A., shall have no responsibility whatsoever in connection
with the propriety of withdrawals made by the Company or the
disposition of funds withdrawn, except to see that withdrawals are
made only upon the order of properly authorized representatives of the
Company.
ARTICLE 17
----------
REINSURANCE TAX
---------------
In consideration of the terms under which this Contract is issued, the
Company undertakes not to claim any deduction of the premium hereon when
making Canadian tax returns or when making tax returns, other than Income
or Profits Tax returns, to any State or Territory of the United States of
America or to the District of Columbia.
FEDERAL EXCISE TAX
------------------
(This clause applies only to those Retrocessionaires, domiciled outside the
United States of America who are not exempt from the Federal Excise Tax.)
The Retrocessionaires have agreed to allow for the purpose of paying the
Federal Excise Tax the percentage specified by United States law of the
premium payable hereon to the extent such premium is subject to Federal
Excise Tax.
In the event of any return of premium becoming due hereunder, the
Retrocessionaires will deduct the percentage specified by United States law
from the amount of the return and the Company or its agent should take
steps to recover the Tax from the United States Government.
11
ARTICLE 18
----------
CURRENCY
--------
Wherever the word "Dollars" or the sign "$" appear in this Contract they
shall be construed to mean United States Dollars.
For purposes of this Contract, where the Company receives premiums or pays
losses in currencies other than United States currency, such premiums and
losses shall be converted into United States Dollars at the actual rates of
exchange at which these premiums and losses are entered in the Company's
books.
ARTICLE 19
----------
ACCESS TO RECORDS
-----------------
The Retrocessionaires or their duly designated representative shall have
access to the books and records of the Company at all reasonable times for
the purpose of obtaining information concerning this Contract or the
subject matter thereof.
ARTICLE 20
----------
SERVICE OF SUIT CLAUSE
----------------------
(This clause applies only to those Retrocessionaires not domiciled in the
United States of America, and/or not authorized in any state, territory
and/or district of the United States where authorization is required by
insurance regulatory authorities.)
It is agreed that in the event of the failure of the Retrocessionaires to
pay any amount claimed to be due under this Contract, the
Retrocessionaires, at the request of the Company, will submit to the
jurisdiction of any court of competent jurisdiction within the United
States of America and will comply with all requirements necessary to give
such court jurisdiction; and all matters arising hereunder shall be
determined in accordance with the law and practice of such court. Nothing
in this Clause constitutes or should be understood to constitute a waiver
of Retrocessionaires' rights to commence an action in any court of
competent jurisdiction in the United States, to remove an action to a
United States District Court, or to seek a transfer of a case to another
court as permitted by the laws of the United States or of any state in the
United States.
Service of process in such suit may be made upon Messrs. Mendes and Mount,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (hereinafter, "agent for
service of process") and in any suit instituted against any
Retrocessionaire(s) upon this Contract, Retrocessionaire(s) will abide by
the final decision of such court or of any appellate court in the event of
an appeal.
The above named are authorized and directed to accept service of process on
behalf of Retrocessionaires in any such suit and/or upon the request of the
Company to give a written
12
undertaking to the Company that the agent for service of process will enter
a general appearance on behalf of Retrocessionaires in the event such a
suit shall be instituted.
Further, pursuant to any statute of any state, territory or district of the
United States of America which makes provision therefor, the
Retrocessionaires hereby designate the Superintendent, Commissioner or
Director of Insurance or other officer specified for that purpose in the
statute, or his successor or successors in office, as their true and lawful
attorney upon whom may be served any lawful process in any action, suit or
proceeding instituted by or on behalf of the Company or any beneficiary
hereunder arising out of this Contract and hereby designate the agent for
service of process as the firm to whom the said officer is authorized to
mail such process or a true copy thereof.
ARTICLE 21
----------
INDEMNIFICATION AND ERRORS AND OMISSIONS
----------------------------------------
Any recitals in this Contract of the terms and provisions of the original
policy or policies are merely descriptive and the Retrocessionaires are
reinsuring, to the amounts herein provided, the obligations of the Company
under the original policy or policies. The Company shall be the sole judge
as to what shall constitute a claim or loss covered under its policy or
policies and as to its liability thereunder and as to amount or amounts
which it shall be proper for the Company to pay thereunder and the
Retrocessionaires shall be bound by the judgment of the Company as to the
liability and obligation of the Company under its policy or policies.
Any inadvertent delay, omission or error shall not be held to relieve
either party hereto from any liability which would attach to it hereunder
if such delay, omission or error had not been made, provided such delay,
omission or error is rectified immediately upon discovery.
ARTICLE 22
----------
INSOLVENCY
----------
In the event of the insolvency of the Company, this reinsurance shall be
payable directly to the Company, or to its liquidator, receiver,
conservator or statutory successor on the basis of the liability of the
Company without diminution because of the insolvency of the Company or
because the liquidator, receiver, conservator 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 Retrocessionaires of the
pendency of a claim against the Company indicating the policy or bond
reinsured, which claim would involve a possible liability on the part of
the Retrocessionaires within a reasonable time after such claim is filed in
the conservation or liquidation proceeding or in the receivership, and that
during the pendency of such claim, the Retrocessionaires may investigate
such claim and interpose, at their own expense, in the proceeding where
such claim is to be adjudicated any defense or defenses that they may deem
available to the Company or its liquidator, receiver, conservator or
statutory successor. The expense thus incurred by the
13
Retrocessionaires shall be chargeable, subject to the approval of the
court, against the Company as part of the expense of conservation or
liquidation to the extent of a pro rata share of the benefit which may
accrue to the Company solely as a result of the defense undertaken by the
Retrocessionaires.
Where two or more Retrocessionaires are involved in the same claim and a
majority in interest elect to interpose defense to such claim, the expense
shall be apportioned in accordance with the terms of the reinsurance
Contract as though such expense had been incurred by the Company.
As to all reinsurance made, ceded, renewed or otherwise becoming effective
under this Contract, the reinsurance shall be payable as set forth above by
the Retrocessionaires to the Company or to its liquidator, receiver,
conservator or statutory successor, except as provided by Sections
4118(a)(1)(A) and 1114(c) of the New York Insurance Law or except (1) where
the Contract specifically provides another payee in the event of the
insolvency of the Company, and (2) where the Retrocessionaires, with the
consent of the direct insured or insureds, have assumed such policy
obligations of the Company as direct obligations of the Retrocessionaires
to the payees under such policies and in substitution for the obligations
of the Company to such payees. Then, and in that event only, the Company,
with the prior approval of the certificate of assumption on New York risks
by the Superintendent of Insurance of the State of New York, is entirely
released from its obligation and the Retrocessionaires pay any loss
directly to payees under such policy.
ARTICLE 23
----------
ARBITRATION
-----------
As a precedent to any right of action hereunder, if any dispute shall arise
between the parties to this Contract with reference to the interpretation
of this Contract or their rights with respect to any transaction involved,
whether such dispute arises before or after termination of this Contract,
such dispute, upon the written request of either party, shall be submitted
to three arbitrators, one to be chosen by each party, and the third by the
two so chosen. If either party refuses or neglects to appoint an arbitrator
within thirty days after the receipt of written notice from the other party
requesting it to do so, the requesting party may appoint two arbitrators.
If the two arbitrators fail to agree in the selection of a third arbitrator
within thirty days of their appointment, each of them shall name two, of
whom the other shall decline one and the decision shall be made by drawing
lots. All arbitrators shall be executive officers of insurance or
reinsurance companies or Underwriters at Lloyd's, London or their appointed
representatives not under the control of either party to this Contract.
The arbitrators shall interpret this Contract as an honorable engagement
and not as merely a legal obligation; they are relieved of all judicial
formalities and may abstain from following the strict rules of law, and
they shall make their award with a view to effecting the general purpose of
this Contract in a reasonable manner rather than in accordance with a
literal interpretation of the language. Each party shall submit its case to
its arbitrator within thirty days of the appointment of the third
arbitrator.
14
The decision in writing of any two arbitrators, when filed with the parties
hereto, shall be final and binding on both parties. Judgment may be entered
upon the final decision of the arbitrators in any court having
jurisdiction. Each party shall bear the expense of its own arbitrator and
shall jointly and equally bear with the other party the expense of the
third arbitrator and of the arbitration. Said arbitration shall take place
in the city in which the Company's Head Office is located unless some other
place is mutually agreed upon by the parties to this Contract.
15
EXHIBIT A
---------
FIRST CATASTROPHE
EXCESS OF LOSS COVER
--------------------
SECTION I - INSURING CLAUSE
---------------------------
1. As respects the ultimate net loss of the Company arising out of each
loss occurrence covered hereunder on which the Company has paid or
advanced, or agreed to pay or advance, or becomes liable to pay to or
on behalf of its reinsured an amount in excess of $20,000,000
ultimate net loss, the Retrocessionaires shall pay to the Company the
amount the excess of $20,000,000 ultimate net loss in respect of each
loss occurrence but the amount recoverable hereunder shall not exceed
$6,000,000 in respect of each such loss occurrence; and the
Retrocessionaires' liability shall be further subject to the
limitations set forth in Section III - Reinstatement.
2. It is further agreed, the term "each loss occurrence" shall also
include all losses under aggregate and/or stop loss contracts assumed
by the Company irrespective of the time of loss or losses occurring
under such contracts providing that all or a portion of said losses
occur during the time of this Contract is in force. The proportion of
such loss or losses that form a part of the Company's ultimate net
loss under this Contract shall be the proportion of the whole
aggregate recovery that the original ceding Reinsured's individual
catastrophe loss bears to its total losses used in arriving at
aggregate loss recoveries.
3. The Company shall have the option to extract from one or more
aggregate policies or contracts the amount of loss sustained by the
Company arising from one occurrence or series of occurrences arising
out of one event in order that such loss can be added to the
Company's losses from accidents or series of accidents arising from
the same event on other policies or contracts provided the loss
occurs during the term of this Contract and subject to the terms of
paragraph 4 below.
4. For the purpose of paragraph 3 above, the amount of loss resulting
from one occurrence or series of occurrences arising out of one event
or cause on an aggregate policy or contract shall be deemed to be
that percentage of the aggregate loss to the Company on the original
policy or contract that the total loss from the particular accident
bears to the total aggregate losses to the original insured or
reinsured on the business protected.
SECTION II - PREMIUM
--------------------
An annual minimum and deposit premium of $2,400,000 shall be paid to the
Retrocessionaires in quarterly installments of $600,000 each payable at
January 1, April 1, July 1, and October 1, 1994 adjustable at a rate of
.425 % of the Company's 1995 calendar year Gross Net Earned
A1
Premium Income for Non-Standard Auto plus rate of 3.20% of 1995 calendar
year Gross Net Earned Premium Income for all other business.
For the purpose of adjusting the premium for each layer of this catastrophe
program, the Net Earned Premium Income shall be the premium as accounted
for during the reinsurance period net after all original deductions and
after deduction of the cost of reinsurance which inures to the benefit of
reinsurers hereunder.
It is furthermore agreed that for the purpose of adjustment, the Earned
Premium Income shall be composed of the premium of all classes underwritten
by the Company except for premiums attributable to casualty business and as
per Exclusion No. 3 in Article 2 of the Contract Wording attached hereto.
It is nevertheless agreed that such exclusion of casualty premiums shall in
no way limit the coverage as respects Workers' Compensation as afforded
under this program.
SECTION III - REINSTATEMENT
---------------------------
Each loss hereon reduces the amount of indemnity provided under this
Contract by the amount paid. Any amount so exhausted shall be automatically
reinstated from the time of occurrence of the loss and for each amount so
reinstated the Company agrees to pay an additional premium calculated at
pro rata of the annual premium as respects the fraction of indemnity
exhausted and 100% of the annual premium as respect the unexpired term of
this Contract, regardless of the time of loss, to be paid simultaneously
with the payment of loss by the Retrocessionaires. Nevertheless,
Retrocessionaires' liability shall not exceed $6,000,000 with respect to
any one loss occurrence and shall not exceed $12,000,000 with respect to
all losses arising during the term of the Contract.
A2
EXHIBIT B
---------
SECOND CATASTROPHE
EXCESS OF LOSS COVER
--------------------
SECTION I - INSURING CLAUSE
---------------------------
1. As respects the ultimate net loss of the Company arising out of each
loss occurrence covered hereunder on which the Company has paid or
advanced, or agreed to pay or advance, or becomes liable to pay to or
on behalf of its reinsured an amount in excess of $26,000,000
ultimate net loss, the Retrocessionaires shall pay to the Company the
amount the excess of $26,000,000 ultimate net loss in respect of each
loss occurrence but the amount recoverable hereunder shall not exceed
$6,000,000 in respect of each such loss occurrence; and the
Retrocessionaires' liability shall be further subject to the
limitations set forth in Section III - Reinstatement.
2. It is further agreed, the term "each loss occurrence" shall also
include all losses under aggregate and/or stop loss contracts assumed
by the Company irrespective of the time of loss or losses occurring
under such contracts providing that all or a portion of said losses
occur during the time of this Contract is in force. The proportion of
such loss or losses that form a part of the Company's ultimate net
loss under this Contract shall be the proportion of the whole
aggregate recovery that the original ceding Reinsured's individual
catastrophe loss bears to its total losses used in arriving at
aggregate loss recoveries.
3. The Company shall have the option to extract from one or more
aggregate policies or contracts the amount of loss sustained by the
Company arising from one occurrence or series of occurrences arising
out of one event in order that such loss can be added to the
Company's losses from accidents or series of accidents arising from
the same event on other policies or contracts provided the loss
occurs during the term of this Contract and subject to the terms of
paragraph 4 below.
4. For the purpose of paragraph 3 above, the amount of loss resulting
from one occurrence or series of occurrences arising out of one event
or cause on an aggregate policy or contract shall be deemed to be
that percentage of the aggregate loss to the Company on the
original policy or contract that the total loss from the particular
accident bears to the total aggregate losses to the original insured
or reinsured on the business protected.
SECTION II - PREMIUM
--------------------
An annual minimum and deposit premium of $2,100,000 shall be paid to the
Retrocessionaires in quarterly installments of $525,000 each payable at
January 1, April 1, July 1 and October 1, 1995 adjustable at a rate of
.40% of the Company's 1995 calendar year Gross Net
B1
Earned Premium Income for Non-Standard Auto business plus rate of 2.8 % of
1995 calendar year Gross Net Earned Premium Income for all other business.
For the purpose of adjusting the premium for each layer of this catastrophe
program, the Net Earned Premium Income shall be the premium as accounted
for during the reinsurance period net after all original deductions and
after deduction of the cost of reinsurance which inures to the benefit of
reinsurers hereunder.
It is furthermore agreed that for the purpose of adjustment, the Earned
Premium Income shall be composed of the premium of all classes underwritten
by the Company except for premiums attributable to casualty business and as
per Exclusion No. 3 in Article 2 of the Contract Wording attached hereto.
It is nevertheless agreed that such exclusion of casualty premiums shall in
no way limit the coverage as respects Workers' Compensation as afforded
under this program.
SECTION III - REINSTATEMENT
---------------------------
Each loss hereon reduces the amount of indemnity provided under this
Contract by the amount paid. Any amount so exhausted shall be automatically
reinstated from the time of occurrence of the loss and for each amount so
reinstated the Company agrees to pay an additional premium calculated at
pro rata of the annual premium as respects the fraction of indemnity
exhausted and 100% of the annual premium as respects the unexpired term of
this Contract, regardless of the time of loss, to be paid simultaneously
with the payment of loss by the Retrocessionaires. Nevertheless,
Retrocessionaires' liability shall not exceed $6,000,000 with respect to
any one loss occurrence and shall not exceed $12,000,000 with respect to
all losses arising during the term of the Contract.
B2
EXHIBIT C
---------
THIRD CATASTROPHE
EXCESS OF LOSS COVER
--------------------
SECTION I - INSURING CLAUSE
---------------------------
1. As respects the ultimate net loss of the Company arising out of each
loss occurrence covered hereunder on which the Company has paid or
advanced, or agreed to pay or advance, or becomes liable to pay to or
on behalf of its reinsured an amount in excess of $32,000,000
ultimate net loss, the Retrocessionaires shall pay to the Company the
amount the excess of $32,000,000 ultimate net loss in respect of each
loss occurrence but the amount recoverable hereunder shall not exceed
$6,000,000 in respect of each such loss occurrence; and the
Retrocessionaires' liability shall be further subject to the
limitations set forth in Section III - Reinstatement.
2. It is further agreed, the term "each loss occurrence" shall also
include all losses under aggregate and/or stop loss contracts assumed
by the Company irrespective of the time of loss or losses occurring
under such contracts providing that all or a portion of said losses
occur during the time of this Contract is in force. The proportion of
such loss or losses that form a part of the Company's ultimate net
loss under this Contract shall be the proportion of the whole
aggregate recovery that the original ceding Reinsured's individual
catastrophe loss bears to its total losses used in arriving at
aggregate loss recoveries.
3. The Company shall have the option to extract from one or more
aggregate policies or contracts the amount of loss sustained by the
Company arising from one occurrence or series of occurrences arising
out of one event in order that such loss can be added to the
Company's losses from accidents or series of accidents arising from
the same event on other policies or contracts provided the loss
occurs during the term of this Contract and subject to the terms of
paragraph 4 below.
4. For the purpose of paragraph 3 above, the amount of loss resulting
from one occurrence or series of occurrences arising out of one event
or cause on an aggregate policy or contract shall be deemed to be
that percentage of the aggregate loss to the Company on the original
policy or contract that the total loss from the particular accident
bears to the total aggregate losses to the original insured or
reinsured on the business protected.
SECTION II - PREMIUM
--------------------
An annual minimum and deposit premium of $1,950,000 shall be paid to the
Retrocessionaires in quarterly installments of $487,500 each payable at
January 1, April 1, July 1 and October 1, 1995, adjustable at a rate of
.35% of the Company's 1995 calendar year Gross Net
C1
Earned Premium Income for Non-Standard Auto business plus rate of 2.60% of
1995 calendar year Gross Net Earned Premium Income for all other business.
For the purpose of adjusting the premium for each layer of this catastrophe
program, the Net Earned Premium Income shall be the premium as accounted
for during the reinsurance period net after all original deductions and
after deduction of the cost of reinsurance which inures to the benefit of
reinsurers hereunder.
It is furthermore agreed that for the purpose of adjustment, the Earned
Premium Income shall be composed of the premium of all classes underwritten
by the Company except for premiums attributable to casualty business and as
per Exclusion No. 3 in Article 2 of the Contract Wording attached hereto.
It is nevertheless agreed that such exclusion of casualty premiums shall in
no way limit the coverage as respects Workers' Compensation as afforded
under this program.
SECTION III - REINSTATEMENT
---------------------------
Each loss hereon reduces the amount of indemnity provided under this
Contract by the amount paid. Any amount so exhausted shall be automatically
reinstated from the time of occurrence of the loss and for each amount so
reinstated the Company agrees to pay an additional premium calculated at
pro rata of the annual premium as respects the fraction of indemnity
exhausted and 100% of the annual premium as respects the unexpired term of
this Contract, regardless of the time of loss, to be paid simultaneously
with the payment of loss by the Retrocessionaires. Nevertheless,
Retrocessionaires' liability shall not exceed $6,000,000 with respect to
any one loss occurrence and shall not exceed $12,000,000 with respect to
all losses arising during the term of the Contract.
C2
EXHIBIT D
---------
FOURTH CATASTROPHE
EXCESS OF LOSS COVER
--------------------
SECTION I - INSURING CLAUSE
---------------------------
1. As respects the ultimate net loss of the Company arising out of each
loss occurrence covered hereunder on which the Company has paid or
advanced, or agreed to pay or advance, or becomes liable to pay to or
on behalf of its reinsured an amount in excess of $38,000,000
ultimate net loss, the Retrocessionaires shall pay to the Company the
amount the excess of $38,000,000 ultimate net loss in respect of each
loss occurrence but the amount recoverable hereunder shall not exceed
$10,000,000 in respect of each such loss occurrence; and the
Retrocessionaires' liability shall be further subject to the
limitations set forth in Section III - Reinstatement.
2. It is further agreed, the term "each loss occurrence" shall also
include all losses under aggregate and/or stop loss contracts assumed
by the Company irrespective of the time of loss or losses occurring
under such contracts providing that all or a portion of said losses
occur during the time of this Contract is in force. The proportion of
such loss or losses that form a part of the Company's ultimate net
loss under this Contract shall be the proportion of the whole
aggregate recovery that the original ceding Reinsured's individual
catastrophe loss bears to its total losses used in arriving at
aggregate loss recoveries.
3. The Company shall have the option to extract from one or more
aggregate policies or contracts the amount of loss sustained by the
Company arising from one occurrence or series of occurrences arising
out of one event in order that such loss can be added to the
Company's losses from accidents or series of accidents arising from
the same event on other policies or contracts provided the loss
occurs during the term of this Contract and subject to the terms of
paragraph 4 below.
4. For the purpose of paragraph 3 above, the amount of loss resulting
from one occurrence or series of occurrences arising out of one event
or cause on an aggregate policy or contract shall be deemed to be
that percentage of the aggregate loss to the Company on the original
policy or contract that the total loss from the particular accident
bears to the total aggregate losses to the original insured or
reinsured on the business protected.
SECTION II - PREMIUM
--------------------
An annual minimum and deposit premium of $2,950,000 shall be paid to the
Retrocessionaires in quarterly installments of $737,500 each payable at
January 1, April 1, July 1 and October 1, 1994, adjustable at a rate of
.55% of the Company's 1995 calendar year Gross Net
D1
Earned Premium Income for Non-Standard Auto business plus rate of 3.93% of
1995 calendar year Gross Net Earned Premium Income for all other business.
For the purpose of adjusting the premium for each layer of this catastrophe
program, the Net Earned Premium Income shall be the premium as accounted
for during the reinsurance period net after all original deductions and
after deduction of the cost of reinsurance which inures to the benefit of
reinsurers hereunder.
It is furthermore agreed that for the purpose of adjustment, the Earned
Premium Income shall be composed of the premium of all classes underwritten
by the Company except for premiums attributable to casualty business and as
per Exclusion No. 3 in Article 2 of the Contract Wording attached hereto.
It is nevertheless agreed that such exclusion of casualty premiums shall in
no way limit the coverage as respects Workers' Compensation as afforded
under this program.
SECTION III - REINSTATEMENT
---------------------------
Each loss hereon reduces the amount of indemnity provided under this
Contract by the amount paid. Any amount so exhausted shall be automatically
reinstated from the time of occurrence of the loss and for each amount so
reinstated the Company agrees to pay an additional premium calculated at
pro rata of the annual premium as respects the fraction of indemnity
exhausted and 100% of the annual premium as respects the unexpired term of
this Contract, regardless of the time of loss, to be paid simultaneously
with the payment of loss by the Retrocessionaires. Nevertheless,
Retrocessionaires' liability shall not exceed $10,000,000 with respect to
any one loss occurrence and shall not exceed $20,000,000 with respect to
all losses arising during the term of the Contract.
D2
EXHIBIT E
---------
FOURTH CATASTROPHE
EXCESS OF LOSS COVER
--------------------
SECTION I - INSURING CLAUSE
---------------------------
1. As respects the ultimate net loss of the Company arising out of each
loss occurrence covered hereunder on which the Company has paid or
advanced, or agreed to pay or advance, or becomes liable to pay to or
on behalf of its reinsured an amount in excess of $48,000,000
ultimate net loss, the Retrocessionaires shall pay to the Company the
amount the excess of $48,000,000 ultimate net loss in respect of each
loss occurrence but the amount recoverable hereunder shall not exceed
$12,000,000 in respect of each such loss occurrence; and the
Retrocessionaires' liability shall be further subject to the
limitations set forth in Section III - Reinstatement.
2. It is further agreed, the term "each loss occurrence" shall also
include all losses under aggregate and/or stop loss contracts assumed
by the Company irrespective of the time of loss or losses occurring
under such contracts providing that all or a portion of said losses
occur during the time of this Contract is in force. The proportion of
such loss or losses that form a part of the Company's ultimate net
loss under this Contract shall be the proportion of the whole
aggregate recovery that the original ceding Reinsured's individual
catastrophe loss bears to its total losses used in arriving at
aggregate loss recoveries.
3. The Company shall have the option to extract from one or more
aggregate policies or contracts the amount of loss sustained by the
Company arising from one occurrence or series of occurrences arising
out of one event in order that such loss can be added to the
Company's losses from accidents or series of accidents arising from
the same event on other policies or contracts provided the loss
occurs during the term of this Contract and subject to the terms of
paragraph 4 below.
4. For the purpose of paragraph 3 above, the amount of loss resulting
from one occurrence or series of occurrences arising out of one event
or cause on an aggregate policy or contract shall be deemed to be
that percentage of the aggregate loss to the Company on the original
policy or contract that the total loss from the particular accident
bears to the total aggregate losses to the original insured or
reinsured on the business protected.
SECTION II - PREMIUM
--------------------
An annual minimum and deposit premium of $3,000,000 shall be paid to the
Retrocessionaires in quarterly installments of $750,000 each payable at
January 1, April 1, July 1 and October 1, 1994, adjustable at a rate of
.55% of the Company's 1995 calendar year Gross Net
E1
Earned Premium Income for Non-Standard Auto business plus rate of 4.00% of
1995 calendar year Gross Net Earned Premium Income for all other business.
For the purpose of adjusting the premium for each layer of this catastrophe
program, the Net Earned Premium Income shall be the premium as accounted
for during the reinsurance period net after all original deductions and
after deduction of the cost of reinsurance which inures to the benefit of
reinsurers hereunder.
It is furthermore agreed that for the purpose of adjustment, the Earned
Premium Income shall be composed of the premium of all classes underwritten
by the Company except for premiums attributable to casualty business and as
per Exclusion No. 3 in Article 2 of the Contract Wording attached hereto.
It is nevertheless agreed that such exclusion of casualty premiums shall in
no way limit the coverage as respects Workers' Compensation as afforded
under this program.
SECTION III - REINSTATEMENT
---------------------------
Each loss hereon reduces the amount of indemnity provided under this
Contract by the amount paid. Any amount so exhausted shall be automatically
reinstated from the time of occurrence of the loss and for each amount so
reinstated the Company agrees to pay an additional premium calculated at
pro rata of the annual premium as respects the fraction of indemnity
exhausted and 100% of the annual premium as respects the unexpired term of
this Contract, regardless of the time of loss, to be paid simultaneously
with the payment of loss by the Retrocessionaires. Nevertheless,
Retrocessionaires' liability shall not exceed $12,000,000 with respect to
any one loss occurrence and shall not exceed $24,000,000 with respect to
all losses arising during the term of the Contract.
E2