K:\GIG\98PERM\AMRECONT.DOC
Property Facultative Binding Agreement
between
Associated International Insurance Company
and any other company authorized to issue
for and on behalf of the Company
and
American Re-Insurance Company
Table of Contents
ARTICLE PAGE
1. General Conditions 1
2. Business Reinsured 1
3. Agency Agreement 2
4. Territory 2
5. Retention and Limit 2
6. Exclusions 2
7. Special Acceptances 3
8. Definition of Loss 4
9. Definition of Loss Occurrence 4
10. Reinsurance Premium 5
11. Reports and Remittances 6
12. Knowledge of Loss 7
13. Audits 7
14. Offset and Security Clause 7
15. Insolvency Clause 8
16. Commencement and Termination 8
Property Facultative Binding Agreement
American Re-Insurance Company
American Re Plaza
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The Binding Agreement made and entered into by and between
Associated International Insurance Company of Woodland Hills,
California, and any other company authorized to issue policies
for and on behalf of the Company (hereinafter collectively
referred to as "Company") and participating reinsurers
subscribing to the respective Interests and Liabilities Contract
to which this Agreement is attached (hereinafter collectively
referred to as "Reinsurer").
Witnesseth:
Facultative Reinsurance is provided by the Reinsurer to the
Company wherein the Company shall cede to the Reinsurer and the
Reinsurer shall accept from the Company property insurance to the
extent on the terms and conditions hereinafter set forth.
This Binding Agreement authorizes the Company to bind the
Reinsurer on Property Facultative risks for a period of 60 days
commencing not earlier that 60 days prior to the mailing of the
binding information shall be mutually agreed to between the
Company and the Reinsurer.
If the risk is unacceptable to the Reinsurer, the Reinsurer
shall notify the Company in writing of its declination within 30
days after receipt of the binding information from the Company
and the Company shall terminate the Reinsurer's liability on the
risk within 30 days after the receipt by the Company of the
notice of declination.
In addition to the above terms, the reinsurance provided for
risks reinsured hereunder shall be subject to the terms ,
conditions and limitations set forth herein:
1. General Conditions
All risks are subject to the General Conditions of the
Property Facultative Reinsurance Certificate as of the
effective date of this Agreement, a copy of which is
attached to and made part of this Agreement , except as such
General Conditions may be modified by the terms of this
Agreement.
2. Business Reinsured
This reinsurance shall indemnify the Company in respect of
excess liability incurred by the Company as a result of loss
or losses arising from policies issued by the Company during
the term of this Agreement and as respects property business
classified by the Company as Fire and Allied Liens, Inland
Marine, Commercial Multiple Peril (property section) and
Homeowners (property section), and Difference in Conditions
including flood and earthquake that is underwritten by the
Company's DIC Division and General Excess and Surplus
Division.
3. Agency Agreement
a) The business reinsured hereunder shall include policies
issued by the Company and any other company authorized to issue
policies for and on behalf of the Company.
b) The Agreement is solely between the Company and the
Reinsurer. When more than one Company is named as a party to
this Agreement, the first company named shall be the agent of the
other companies as to all matters pertaining to this Agreement.
Performance of the obligations of each party to this Agreement
shall be rendered solely to the other party; however, if the
Company becomes insolvent, the liability of the Reinsurer shall
be modified to the extent set forth in Article 15, Insolvency
Clause.
4. Territory
This Agreement shall apply to the territorial limits set
forth in the Company's policies reinsured hereunder.
5. Retention and Limit
a) As respects risk located along the Newport-Inglewood Fault
line:
The Company shall retain and be liable for the first $5,000,000
of loss per risk each loss occurrence. The Reinsurer shall then
be liable for the loss amount that exceeds the Company's
retention but the liability of the Reinsurer shall not exceed
$2,500,000 per risk each loss occurrence.
b) As respects risks located at all other locations:
The Company shall retain and be liable for the first $7,500,000
of loss per risk each loss occurrence. The Reinsurer shall be
then liable for the loss amount that exceeds the Company's
retention but the liability of the Reinsurer shall not exceed
$2,500,000 per risk each loss occurrence.
c) It is understood and agreed that the Reinsurer's liability
shall not exceed $10,000,000 per loss occurrence for all losses
under paragraphs (a) and (b) above.
6. Exclusions
The following are excluded from coverage under this
Agreement:
a) Casualty.
b) Boiler and Machinery.
c) Fidelity.
d) Surety.
e) Credit insurance and all forms of financial guarantees.
f) Ocean Marine.
g) Aviation.
h) Risks assumed by participation in or reinsurance of pools or
syndicates.
i) All reinsurance assumed by the Company. This does not apply
to intra-company pooling.
j) Growing or standing crops.
k) Loss or liability excluded by the provisions of Nuclear
Incident Exclusion Clause, Physical Damage Reinsurance Number 2
and Reinsurance Number 4, attached hereto.
l) War risks as excluded under a standard policy containing a
war risk exclusion clause.
m) Bridges, dams, tunnels.
n) Jewelers Block, Fine Arts and Furriers' Customers.
o) Loss or liability excluded by the provisions of Pollution,
Contamination, Debris Removal Exclusion Clause Number 1, attached
hereto.
p) Loss in respect of overhead transmission and distribution
lines and their supporting structures, other than those on or
within 300 meters (or 2,000 feet) of the Insured's premises.
q) Mortgage Impairment insurance, except this exclusion shall
not apply to Lender's Single Interest Mortgage insurance.
r) Business classified by the Company as Railroads and
Engineered Course of Construction risks.
s) Risks located outside of the territorial limits of the United
States of America, except this exclusion shall not apply to such
risk which total insured value is less than 20% of the total
insured values of the account.
7. Special Acceptances
Risks which are specifically excluded by this Agreement may
be individually submitted by the Company to the Reinsurer
for inclusion hereunder, and, if accepted by the Reinsurer,
such business shall then be covered under the terms of this
Agreement, except as such terms may be modified by such
acceptance.
8. Definition of Loss
a) The term "loss" as used herein shall mean the actual loss
incurred by the Company under policies reinsured hereunder. Such
loss shall include sums paid in settlement of claims and suits,
including allocated loss adjustment expenses (as defined
hereinafter), and in satisfaction of judgments, including
prejudgment interest when added to a judgment.
All salvages, recoveries, payments and reversals or reductions of
verdicts or judgments whether recovered, received or obtained
prior or subsequent to loss settlements under Agreement,
including amounts recoverable under other reinsurance whether
collected or not, shall be applied as if recovered, received or
obtained prior to the aforesaid settlement and shall be applied
as if recovered, received or obtained prior to the aforesaid
settlement and shall be deducted from the actual losses sustained
to arrive at the amount of the net loss. Nothing herein shall be
construed to mean losses are not recoverable until the loss to
the Company finally has been ascertained.
b) The term "allocated loss adjustment expenses" as used herein
shall mean expenses sustained in connection with settlement and
litigation of claims and suits, satisfaction of judgments,
resistance to or negotiations concerning a loss (which shall
include the pro rata share of the Company's outside employees
according to the time occupied in adjusting such loss and
salaries and expenses of the Company's employees while diverted
from their normal duties to the service of field adjustment, but
shall not include any salaries of officers nor normal overhead
expenses of the Company's), legal expenses and costs incurred in
connection with coverage questions and legal actions, including
declaratory judgment actions, connected thereto, interest on
judgments other than prejudgment interest when added to a
judgment, and expenses sustained to obtain recoveries, salvages
and other reimbursements, or to secure the reversal of reduction
of a verdict or judgment.
9. Definition of Loss Occurrence
a) The term "loss occurrence" shall mean the sum of all
individual losses directly occasioned by any one disaster,
accident or loss or series of disasters, accidents or losses
arising out of one event.
b) As respects property catastrophe loss occurrence, the term
"loss occurrence" shall mean the sum of all individual losses
directly occasioned by any one disaster, accident or loss or
series of disasters, accidents or losses arising out of one event
which occurs within the area of one state of the United States or
province of Canada and states or provinces contiguous thereto and
to one another. However, the duration and extent of any one
"loss occurrence" shall be limited to all individual losses
sustained by the Company occurring during any period of 168
consecutive hours arising out of and directly occasioned by the
same event except that the terms "loss occurrence" shall be
further defined as follows:
i) As regards windstorm, hail, tornado, hurricane, cyclone,
including ensuing collapse and water damage, all individual
losses sustained by the Company occurring during any period of 72
consecutive hours arising out of and directly occasioned by the
same event. However, the event need not be limited to one state
or province or states or provinces contiguous thereto.
ii) As regards riot, riot attending a strike, civil commotion,
vandalism and malicious mischief, all individual losses sustained
by the Company occurring during any period of 72 consecutive
hours within the area of one municipality or county and the
municipalities or counties contiguous thereto arising out of and
directly occasioned by the same event. The maximum duration of
72 consecutive hours may be extended in respect of individual
losses which occur beyond such 72 consecutive hours during the
continued occupation of an assured's premises by strikers,
provided such occupation commenced during the aforesaid period.
iii) As regards earthquake (the epicenter of which need not
necessarily by within the territorial confines referred to in the
opening paragraph of this Article) and fire following directly
occasioned by the earthquake, only those individual fire losses
which commence during the period of 168 consecutive hours may be
included in the Company's "loss occurrence".
iv) As regards "Freeze", only individual losses directly
occasioned by collapse, breakage of glass and water damage
(caused by bursting of frozen pipes and tanks) may be included in
the Company's "loss occurrence".
c) The Company may choose the date and time when any such period
of consecutive hours commences provided that it is not earlier
than the date and time of the occurrence of the first recorded
individual loss sustained by the Company arising out of that
disaster, accident or loss and provided that only one such period
of 168 consecutive hours shall apply with respect to one event,
except for those "loss occurrences" referred to in subparagraphs
(i) and (ii) above where only one such period of 72 consecutive
hours shall apply with respect to one event, regardless of the
duration of the event.
d) No individual losses occasioned by an event that would be
covered by 72 hours clauses may be included in any "loss
occurrence" claimed under the 168 hours provision.
10. Reinsurance Premium
a) As consideration for the reinsurance provided by this
Agreement the Company shall pay the Reinsurer 10% of the Net
Written Premium, as defined in paragraph (d) of this Article, as
respects the business reinsured during the term of this
Agreement, however, subject to a minimum reinsurance premium of
$1,000,000.
b) Within 30 days after the end of each calendar quarter, the
Company shall provide a report to the Reinsurer setting forth
the premium due hereunder, computed in accordance with paragraph
(a) of this Article and if the premium so computed is greater
than the deposit premium paid, as set forth in paragraph (c) of
this Article, the balance shall be remitted by the Company with
its report.
c) The Company shall pay the Reinsurer a deposit premium of
$200,000 payable on or before the inception of this Agreement.
d) "Net Written Premium" as used herein is defined as gross
written premium of the Company for the classes of business
reinsured hereunder, less cancellations and return premiums on
policies reinsured hereunder, and less premiums ceded by the
Company for reinsurance inures to the benefit of this Agreement.
11. Reports and Remittances
a) The Company will provide the Reinsurer with all necessary
data respecting premiums and losses, including reserves thereon,
on forms mutually acceptable to the Company and the Reinsurer.
b) Within 30 days after the end of each month, the Company shall
render to the Reinsurer a monthly account summarizing the
following information relating to the business reinsured under
this Agreement during said month:
1) Named of Insured;
2) Policy Number;
3) Effective and expiration dates of Policy;
4) Policy Limit of Liability;
5) Policy attachment point;
6) Original Gross Written Premium;
7) Net written premium due hereunder.
c) Reinsurance premium due the Reinsurer shall be paid and
reported by the Company in accordance with provisions set forth
in Article 10, Reinsurance Premium.
d) Within 30 days after the end of each calendar quarter the
Company shall provide and report to the Reinsurer IRAS data.
e) The Company shall advise the Reinsurer promptly of all claims
and any subsequent developments pertaining thereto which may
reasonably be expected to develop into losses involving
reinsurance hereunder, including reserves for outstanding losses
and allocated loss adjustment expenses.
12. Knowledge of Loss
The Company shall have no direct or indirect knowledge or
information of any loss or impending loss under any risk to
be reinsured affecting or threatening adversely the interest
of the Reinsurer.
13. Audits
The Company shall place at the disposal of the Reinsurer and
the Reinsurer shall have the right to inspect, through its
authorized representatives, at all reasonable times during
the currency of this Agreement and thereafter, the books,
records and papers of the Company pertaining to the
reinsurance provided hereunder and all claims made in
connection therewith.
14. Offset and Security Clause
a) Each party hereto has the right, which may be exercised at
any time, to offset any amounts, whether on account or premiums
or losses or otherwise, due from such party to another party
under this Agreement or any other reinsurance agreement
heretofore or hereafter entered into between them, against any
amounts, whether on account of premiums or losses or otherwise
due from the latter party to the former party. The party
asserting the right of offset may exercise this right, whether as
assuming or ceding insurer or in both roles in the relevant
agreement or agreements.
b) Each party hereby assigns and pledges to the other party (or
to each other party, if more than one) all of its rights under
this Agreement to receive premium or loss payments at any time
forms such other party ("Collateral"), to secure its premium or
loss obligations to such other party at any time under this
Agreement and any other reinsurance agreement heretofore or
hereinafter entered into by and between them ("Secured
Obligations"). If at any time a party is in default under any
Secured Obligation or shall be subject to liquidation,
rehabilitation, reorganization or conservation proceeding, each
other party shall be entitled in its discretion, to apply, or to
withhold for the purpose of applying in due course, any
Collateral assigned and pledged to it by the former party and
otherwise to realize upon such Collateral as security for such
Secured Obligations.
c) The security interest described herein, and the term
"Collateral", shall apply to all payments and other proceeds in
respect of the rights assigned and pledged. A party's security
interest in Collateral shall be deemed evidenced only by the
counterpart of this Agreement delivered to such party.
d) Each right under this Article is a separate and independent
right, exercisable, without notice or demand, alone or together
with other rights, in the sole election of the party entitled
thereto, and no waiver, delay, or failure to exercise, in respect
of any right, shall constitute a waiver of any other right. The
provisions of this Article shall survive any cancellation or
other termination of this Agreement.
15. Insolvency Clause
a) In the event of the insolvency of the Company and the
appointment of a conservator, liquidator or statutory successor
of the Company, the reinsurance provided by this Agreement shall
be payable to such conservator, liquidator or statutory successor
immediately upon demand, subject to the right of offset and with
reasonable provisions for verification of the Reinsurer's
liability, on the basis of claim allowed against the insolvent
Company by any court if competent jurisdiction or by any
conservator, liquidator, or statutory successor of the Company
having the authority to allow such claims, with diminution
because of such insolvency or because such conservator,
liquidator or statutory successor has failed to pay all or a
portion of any claims. Payments by the Reinsurer as above set
forth shall be made directly to the Company or to its
conservator, liquidator or statutory successor, except where this
Agreement specifically provides another payee of such reinsurance
in the event of the insolvency of the Company.
b) In the event of the insolvency of the Company, the
liquidator, conservator or statutory successor of the Company
shall give the Reinsurer written notice of the pendency of each
claim against the Company on a policy or bond reinsured within a
reasonable time after such claim is filed in the insolvency
proceeding. During the pendency of such claim, the Reinsurer
may, at its own expense, investigate such claim and interpose in
the proceeding where such claim is to be adjudicated any defense
or defenses which it may deem available to the Company, its
conservator, liquidator or statutory successor. Subject to court
approval, any expense thus incurred by the Reinsurer shall be
chargeable against the Company as part of the expense of
liquidation to the extent of such proportionate share of the
benefit as shall accrue to the Company solely as a result of the
defense undertaken by the Reinsurer.
16. Commencement and Termination
a) This Agreement shall take effect as of 12:01 a.m., Standard
Time, June 1, 1996 and continue in force until 12:01 a.m.,
Standard Time, June 1, 1997. The term "Standard Time" as used
herein shall mean the Standard Time as specified in the original
policy of insurance.
b) The Reinsurer shall not be liable for losses arising under
Policies incepting on or after the expiration date of this
Agreement. The Reinsurer shall remain liable for losses
occurring under Policies in force at the expiration date of this
Agreement until the earlier of the Policy's next anniversary or
renewal date, natural expiration or the Policy's prior
termination date.
c) Notwithstanding the expiration of this Agreement, the
provisions of this Agreement shall continue to apply to all
unfinished business hereunder to the end that all obligations and
liabilities incurred by each party hereunder prior to said date
is fully performed and discharged.
GENERAL CONDITIONS
The Reinsurer agrees to indemnify the Company against losses or
damages which the Company is legally obligated to pay with
respect to which insurance is afforded during the term of this
Certificate under the policy reinsured, subject to the
reinsurance limits and coverages shown in the Declarations. The
Reinsurer shall not indemnify the Company for liability beyond
circumscribed policy provisions, including but not limited to
punitive, exemplary, consequential or compensatory damages
resulting from an action of an insured or assignee against the
Company. The Company warrants the copy of the policy forwarded
to the Reinsurer to be a true and complete copy of the said
policy, and agrees to notify the Reinsurer promptly of any
changes made therein, provided that such changes shall not be
binding upon the Reinsurer until accepted thereby. Nothing
contained herein shall in any manner create any obligations of
the Reinsurer or establish any rights against the Reinsurer in
favor of the direct insured or any third parties or any persons
not parties to this Certificate of Reinsurance.
The Company shall settle all claims under its policy in
accordance with the terms and conditions thereof. If the
reinsurance hereunder is pro rata, the Reinsurer shall be liable
for its pro rata proportion of settlements made by the Company.
If the reinsurance hereunder is excess, the Reinsurer shall be
liable for its excess proportion of settlements made by the
Company after deduction of any recoveries from pro rata
reinsurance inuring to the benefit of the Reinsurer.
The Reinsurer shall be liable for its proportion of allocated
loss expenses incurred by the Company in the same ratio that the
Reinsurer's share of the settlement of judgment bears to the
total amount of such settlement or judgment under the policy
reinsured. The term "allocated loss expense" means all expenses
incurred in the investigation and settlement of claims or suits,
including the salaries and expenses of staff adjusters but
excluding other Company salaries and office expenses. It also
includes court costs and interest on any judgment or award
provided the Reinsurer's prior consent to trial court proceedings
has been obtained. Allocated loss expenses shall not include
expenses incurred by the Company in regard to any actual or
alleged liability that it not within the circumscribed provisions
of the policy reinsured.
The Company shall advise the Reinsurer promptly of any claim
and any subsequent developments pertaining thereto which, in the
opinion of the Company, may involve the reinsurance hereunder.
The Company has the obligation to investigate and defend claims
or suits affecting this reinsurance and to pursue such claims or
suits to final determination. The Company, when so requested,
will afford the Reinsurer an opportunity to be associated with
the Company, at the expense of the Reinsurer, in the defense or
control of any claim, suit or proceeding involving this
reinsurance, and the Company and the Reinsurer shall cooperate in
every respect in the defense and control of such claim, suit or
proceeding.
The Reinsurer shall be paid or credited with its proportion of
salvages (i.e., recoveries or reimbursements made or obtained by
the Company) less the cost of obtaining such salvage, excluding
the office expenses of the Company and the salaries and expenses
of all employees of the Company. If the reinsurance hereunder is
excess, salvage shall be applied in the inverse order in which
liability attaches, otherwise salvage shall be applied on a pro
rata basis.
The Company shall furnish proof that payment of a loss and loss
expense has actually been made by the Company and payment by the
Reinsurer of its proportion thereof shall be made promptly;
provided however, in the event of insolvency of the Company
payment by the Reinsurer of its proportion of loss and loss
expense which the Company has incurred or for which it is liable,
shall be made to the liquidator, receiver or statutory successor
of the Company in accordance with the provisions of Section 8 of
these general conditions.
The Company shall place at the disposal of the Reinsurer and
the Reinsurer shall have the right to inspect, through its
authorized representative, at all reasonable times during the
currency of this Certificate and thereafter, the books, records
and papers of the Company pertaining to the reinsurance provided
hereunder and all claims made in connection therewith.
The reinsurance provided by this Certificate shall be payable
by the Reinsurer directly to the Company or to its liquidator,
receiver or statutory successor on the basis of the liability of
the Company under the policy reinsured without diminution because
of the insolvency of the Company. In the event of the insolvency
of the Company, the liquidator, receiver or statutory successor
of the Company shall give written notice of the pendency of each
claim against the Company on the policy reinsured hereunder
within a reasonable time after such claim is filed in the
insolvency proceeding and 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 defenses or defenses which it may deem available to the
Company, its liquidator, receiver or statutory successor. The
expense thus incurred by the Reinsurer shall be chargeable,
subject to court approval against the insolvent company as part
of the expense of liquidation to the extent of such proportionate
share of the benefit which may accrue to the Company solely as
the result of the defense undertaken by the Reinsurer. The
reinsurance shall be payable as hereinbefore in this paragraph
provided except (a) where this Certificate specifically provides
another payee of such reinsurance in the event of the insolvency
of the Company and (b) 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 payee under such policy and in substitution for the
oblations of the Company to such payee.
Each party hereto shall have, and may exercise at any time and
from time to time, the right to offset any balance or balances,
whether on account of premiums or on account of losses or
otherwise, due from such party to the other (or, if more that
one, any other) party hereto under this Certificate or under any
other reinsurance certificate or agreement heretofore or
hereafter entered into by and between them, and may offset the
same against any balance or balances due or to become due to the
former from the latter under the same or any other reinsurance
certificate or agreement between them; and the party asserting
the right to offset shall have and may exercise such right
whether the balance or balances due or to become due to such
party form the other are on account of premiums or on account of
losses or otherwise and regardless of the capacity, whether as
assuming insurer or as ceding insurer, in which each party acted
under the certificate or agreement or if more that one, the
different certificates and agreement involved, provided, however,
that, in the event of the insolvency of a party hereto, offset
shall only be allowed in accordance with the provisions of
Section 538 of the Insurance Law of the State of New York.
This Certificate may be canceled by either party giving not
less than thirty days' notice in writing by registered mail to
the other party. If canceled by the Reinsurer, adjustment of
premium shall be on the pro rata basis. If canceled by the
Company, with simultaneous cancellation of the original policy
reinsured, adjustment of premium shall be on the short rate
basis. However, if the Company's original policy reinsured is
canceled, same shall constitute simultaneous cancellation of this
certificate and calculation of the reinsurance premium hereunder
shall follow the Company's calculation in the use of the short
rate or pro rata tables.
IN WITNESS WHEREOF THE AMERICAN RE-INSURANCE COMPANY has caused
this Certificate to be signed by its Vice President and
Secretary, but same shall not be binding upon the Reinsurer
unless countersigned by an authorized representative of the
Reinsurer.
NUCLEAR INCIDENT EXCLUSION CLAUSE
PHYSICAL DAMAGE -- REINSURANCE -- NO. 2
(1)This Reinsurance does not cover any loss or liability
accruing to the Reassured, directly or indirectly and whether as
Insurer or Reinsurer, from any Pool of Insurers or Reinsurers
formed for the purpose of covering Atomic or Nuclear Energy
risks.
(2)Without in any way restricting the operation of paragraph
(1) of this Clause, this Reinsurance does not cover any loss or
liability accruing to the Reassured, directly or indirectly and
whether as Insurer or Reinsurer, form any insurance against
Physical Damage (including business interruption or consequential
loss arising out of such Physical Damage) to:
I.Nuclear reactor power plants including all auxiliary
property on the site, or
II. Any other nuclear reactor installation, including
laboratories handling radioactive materials in connection
with reactor installations and "critical facilities" as
such, or
III.Installations for fabricating complete fuel elements or
for processing substantial quantities of "special nuclear
material," and for reprocessing, salvaging, chemically
separating, storing or disposing of "spent" nuclear fuel or
waste materials, or
IV. Installations other than those listed in paragraph (2) III
above using substantial quantities of radioactive isotopes
or other products of nuclear fission.
(3)Without in any way restricting the operations of paragraphs
(1) and (2) hereof, this Reinsurance does not cover any loss or
liability by radioactive contamination accruing to the Reassured,
directly or indirectly, and whether as Insurer or Reinsurer, from
any insurance on property which is on the same site as a nuclear
reactor power plant or other nuclear installation and which
normally would be insured therewith except that this paragraph
(3) shall not operate:
(a) where Reassured does not have knowledge of such nuclear
reactor power plant or nuclear installation, or
(b) where said insurance contains a provision excluding
coverage for damage to property caused by or resulting from
radioactive contamination, however caused. However on and
after 1st January 1960 this sub-paragraph (b) shall only
apply provided the said radioactive contamination exclusion
provision has been approved by the Governmental Authority
having jurisdiction thereof.
(4)Without in any way restricting the operations of paragraphs
(1), (2) and (3) hereof, this Reinsurance does not cover any loss
or liability by radioactive contamination accruing to the
Reassured, directly or indirectly, and whether as Insurer or
Reinsure, when such radioactive contamination is a named hazard
specifically insured against.
(5)It is understood and agreed that this Clause shall not
extend to risks using radioactive isotopes in any form where the
nuclear exposure is not considered by the Reassured to be the
primary hazard.
(6)The term "special nuclear material" shall have the meaning
given it in the Atomic Energy Act of 1954 or by any law
amendatory thereof.
(7)Reassured to be sole judge of what constitutes:
(a) substantial quantities, and
(b) the extent of installation, plant or site.
Note. -- Without in any way restricting the operation of
paragraph (1) hereof, it is understood and agreed that:
(a) All policies issued by the Reassured on or before
31st December 1957 shall be free from the application of the
other provisions of this Clause until expiry date or
31st December 1960 whichever first occurs whereupon all the
provision of this Clause shall apply,
(b) With respect to any risk located in Canada policies
issued by the Reassured on or before 31st December 1958
shall be free from the application of the other provisions
of this Clause until expiry date or 31st December 1960
whichever first occurs whereupon all the provisions of this
Clause shall apply.
NUCLEAR INCIDENT EXCLUSION CLAUSE - REINSURANCE - NO. 4
(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 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 operations of Nuclear
Incident Exclusion Clause No. 1B - Liability, No. 2 - Physical
Damage, No. 3 - Boiler and Machinery and paragraph (1) of this
clause, it is understood and agreed that for all purposes as
respects the reinsurance assumed by the Reinsurer from the
Reassured, all original insurance policies or contracts of the
Reassured (new, renewal and replacement) shall be deemed to
include the applicable existing Nuclear Clause and/or Nuclear
Exclusion Clause(s) in effect at that time and any subsequent
revisions thereto as agreed upon and approved by the Insurance
Industry and/or a qualified Advisory or Rating Bureau.
POLLUTION, CONTAMINATION, DEBRIS REMOVAL
EXCLUSION CLAUSE - NO. 1
I. DEFINITION
"CONTAMINATION" means any unclean or unsafe or damaging or
injurious or unhealthful condition arising out of the
presence of pollutants, whether permanent or transient in
any environment;
"ENVIRONMENT" includes any person, any real or personal
property, animals, crops and vegetation, land including land
under which the building is placed, bodies of water,
underground water or water table supplies, air and any other
feature of the earth or its atmosphere, whether or not
altered, developed or cultivated, including, but not limited
to, any of the above owned, controlled or occupied by an
insured;
"POLLUTANTS" means smoke, vapors, soot, fumes, acids,
sounds, alkalies, chemicals, liquids, solids, gases, thermal
pollutants, waste, and all other irritants, or contaminants.
Waste includes material to be recycled, reconditioned or
reclaimed;
II. POLLUTION AND CONTAMINATION EXCLUSION
This Reinsurance does not cover:
Loss or damage caused by the release, discharge or
dispersal of pollutants or contaminants (as defined in
Section I above) into the environment anywhere, anytime,
in anyway, whether accidental or intentional, sudden or
intermittent or continuous, unless the release, discharge
or dispersal is itself caused by any of the following
"specified causes of loss": fire, lightning, aircraft,
explosion, riot, civil commotion, smoke, vehicles,
windstorm or hail to property contained in any building,
vandalism, malicious mischief or leakage or accidental
discharge form automatic fire protection systems. The
term "Loss or Damage" is understood to also include any
claim arising from loss of use. If loss or damage by
the above "specified causes of loss" results, then the
Reinsurer under this Certificate shall be liable for the
resulting loss or damage caused by the "specified cause
of loss."
III. ASBESTOS EXCLUSION
This reinsurance does not cover:
1.Asbestos, dioxin or polychlorinated biphenols
(hereinafter all referred to as "Materials") removal from
any good, product or structure unless the asbestos is
itself damaged by fire, lightning, aircraft impact,
explosion, riot, civil commotion, smoke, vehicle impact,
windstorm or hail, vandalism, malicious mischief, leakage
or accidental discharge from automatic fire protective
systems.
2.Demolition or increased cost of reconstruction, repair,
debris removal or loss of use necessitated by the
enforcement of any law or ordinance regulating such
Materials.
3.Any governmental direction or request declaring that such
Materials present in or part of or utilized on any
undamaged portion of the insured's property can no longer
be used for the purpose for which it was intended or
installed and must be removed or modified.
The coverage afforded does not apply to payment for the
investigation or defense of any loss, damage or any cost,
loss of use expense, fine or penalty or for any expense or
claim or suit related to any of the above.
IV. DEBRIS REMOVAL EXCLUSION
Notwithstanding any other exclusion listed in this
reinsurance, this reinsurance shall only cover the expense
to remove debris of insured property damaged or destroyed by
an insured peril during the policy term and, then, only up
to an amount equal to 25% of the amount payable under this
Reinsurance.
This Reinsurance does not cover any expense involved to:
1.Extract contaminants or pollutants, as defined in Section
I, from the debris; or
2.Extract contaminants or pollutants, as defined in Section
I, from land or water; or
3.Remove, restore or replace contaminated or polluted land
or water; or
4.Remove or transport any property or debris to a site for
storage or decontamination required because the property
or debris is affected by pollutants or contaminants,
whether or not such removal, transport, or
decontamination is required by law or regulation.
IT IS CONDITION PRECEDENT TO RECOVERY UNDER THIS CERTIFICATION
THAT THE COMPANY SHALL HAVE PAID [OR AGREED TO PAY] FOR DIRECT
PHYSICAL LOSS OR DAMAGE TO THE PROPERTY REINSURED HEREUNDER AND
THAT THE COMPANY RECEIVED WRITTEN NOTICE OF INTENT TO CLAIM FOR
COST OF REMOVAL OF DEBRIS OR COST TO CLEAN UP NOT LATER THAN
TWELVE MONTHS AFTER THE DATE OF SUCH PHYSICAL LOSS OR DAMAGE.
ENDORSEMENT
Attached to and forming part of Property Facultative Binding
Agreement No. 428-0016 made and entered into by and between
ASSOCIATED INTERNATIONAL INSURANCE COMPANY of Woodland Hills,
California, and any other company for which the Company is
authorized to issue policies for and on behalf of the Company
(hereinafter collectively referred to as "Company") and the
Subscribing Reinsurer executing the Addendum to the Interests and
Liability Contract attached hereto (hereinafter referred to as
the "Reinsurer")
It is mutually understood and agreed that effective
12:01 a.m. Standard Time July 1, 1997, the provisions of this
Agreement are revised as follows:
A. Article 5 - Retention and Limit is amended as follows:
5. (a) As respects risks written by the
Company's General Excess and Surplus
Division:
The Company shall retain and be liable for
the first $10,000,000 of loss per risk net
and treaty each loss occurrence. The
Reinsurer shall then be liable for the loss
amount that exceeds the Company's retention
but the liability of the Reinsurer shall not
exceed $2,5000,000 per risk each loss
occurrence.
(b) As respects risks written by the
Company's Pacific Coast DIC Division:
The Company shall retain and be liable for
the first $5,000,000 of loss per risk net and
treaty each loss occurrence. The Reinsurer
shall then be liable for the loss amount that
exceeds the Company's retention but the
liability of the Reinsurer shall not exceed
$2,5000,000 per risk each loss occurrence.
(c) It is understood and agreed that the
Reinsurer's liability shall not exceed
$10,000,000 per loss occurrence for all
losses under paragraphs (a) and (b) of this
Article.
B. Article 10 - Reinsurance Premium is amended as follows:
10. REINSURANCE PREMIUM
(a) As consideration for the reinsurance
provided by this Agreement the Company shall
pay the Reinsurer 10% of the Net Written
Premium, as defined in paragraph (c) of this
Article, as respects the business reinsured
during the term of this Agreement.
(b) Within 30 days after the end of each
calendar quarter, the Company shall provide a
report to the Reinsurer setting forth the
premium due hereunder, computed in accordance
with paragraph (a) of this Article.
(c) "Net Written Premium" as used herein is
defined as gross written premium of the
Company for the classes of business reinsured
hereunder, less cancellations and return
premiums on policies reinsured hereunder, and
less premiums ceded by the Company for
reinsurance that inures to the benefit of
this Agreement.
C. Paragraph (a) of Article 16 - Commencement and
Termination is amended as follows:
(a) This agreement shall take effect as of
12:01 a.m., Standard Time June 1, 1996 and
continue in force until 12:01 a.m., Standard
Time December 31, 1998. The term "Standard
Time" as used herein shall mean the Standard
Time as specified in the original policy of
insurance.
All other terms and conditions remain unchanged.
ADDENDUM
Attached to and forming part of the Interests and Liabilities
Contract made and entered into by and between ASSOCIATED
INTERNATIONAL INSURANCE COMPANY of Woodland Hills, California,
and any other company for which the Company is authorized to
issue policies for and on behalf of the Company (hereinafter
collectively referred to as "Company") and AMERICAN RE-INSURANCE
COMPANY, a Delaware Corporation with Administrative Offices in
Princeton, New Jersey (hereinafter referred to as the
"Subscribing Reinsurer").
It is mutually agreed between the Company and the Subscribing
Reinsurer that the Property Facultative Binding Agreement No. 428-
0016 is amended as of 12:01 a.m. Standard Time July 1, 1997, in
accordance with the provisions of attached Endorsement E001.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum
to be signed in duplicate by their duly authorized
representatives in Woodland Hills, California, this 18th day of
November, 1997.
ACCEPTED:
ASSOCIATED INTERNATIONAL INSURANCE COMPANY
and any other company authorized to issue policies for and on
behalf of the Company
_________________________________
_________________________________
Attested by:
and in Princeton, New Jersey, this 13th day of November, 1997,
AMERICAN RE-INSURANCE COMPANY
_________________________________
_________________________________
Attested by:
ENDORSEMENT NO. 2
Attached to and forming part of Reinsurance agreement No. 428-
0016 between ASSOCIATED INTERNATIONAL INSURANCE COMPANY, Woodland
Hills, California and any other company which is authorized to
issue policies for and on behalf of the Company (therein and
herein referred to as the "Company") and the AMERICAN RE-
INSURANCE COMPANY, a Delaware Corporation with Administrative
Offices in Princeton, New Jersey (therein and herein referred to
as the "Reinsurer").
It is hereby understood and agreed between the parties hereto
that effective as of 12:01 a.m., Standard Time, January 1, 1998,
this Agreement is amended as set forth herein.
I. Article 5 -- Retention and Limit is deleted in its entirety
and replaced as follows:
As respects risks written by the Company's General Excess
and Surplus Division and its Pacific Coast DIC Division, the
Reinsurer shall be liable for a one (1) time match of the
Company's net and treaty retention, subject to the
following:
a $1,000,000 minimum attachment point;
a maximum of $2,500,000 in any one layer;
a maximum of $2,500,000 on any one risk, and
a maximum of $10,000,000 in any one loss occurrence.
II. Paragraph (a) of Article 10 -- Reinsurance Premium is
deleted and the subsequent paragraphs re-lettered and
revised to read as follows:
(a) Within 30 days after the end of each calendar quarter,
the Company shall provide a report to the Reinsurer
setting forth the net written premium due hereunder.
(b) "Net Written Premium" as used herein is defined as the
Company's gross written premium for the classes of
business reinsured hereunder, plus any additional
premiums, less cancellations and return premiums on
policies reinsured hereunder and less premiums ceded by
the Company for reinsurance that inures to the benefit
of this Agreement.
III. A new Article 11 -- Commission is added as follows, and all
subsequent Articles are renumbered accordingly.
The Reinsurer will allow the Company a ceding commission of:
(1) 30% on all business ceded by the company's General
Excess and Surplus Division or
(2) 27.5% on all business ceded by the company's
Pacific Coast DIC Division
on all gross premiums ceded on each risk under this
Agreement and said commission allowed shall include
provision for all taxes, assessments and any other expenses
of whatsoever nature except allocated loss adjustment
expenses.
All other terms and conditions remain unchanged.
IN WITNESS WHEREOF, the parties hereto have caused this
Endorsement to be executed in duplicate by their duly authorized
representatives
in Woodland Hills, California, this 16th day of March, 1998.
ACCEPTED:
ASSOCIATED INTERNATIONAL INSURANCE COMPANY
and any other company authorized to issue policies for and on
behalf of the Company
_________________________________
_________________________________
Attested by:
and in Princeton, New Jersey, this 10th day of March, 1998,
AMERICAN RE-INSURANCE COMPANY
_________________________________
_________________________________
Attested by: