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Exhibit 10.2
AGENCY AND
INSURANCE SERVICES AGREEMENT
(hereinafter referred to as "Agreement")
by and between
THE AETNA CASUALTY AND SURETY COMPANY
and
EXECUTIVE RISK MANAGEMENT ASSOCIATES
Dated as of January 1, 1997
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AGENCY AND INSURANCE
SERVICES AGREEMENT
This AGENCY AND INSURANCE SERVICES AGREEMENT (the "Agreement")
is made and entered into as of January 1, 1997 by and between The Aetna Casualty
and Surety Company, a Connecticut insurance corporation ("Aetna"), having its
principal office at Hartford, Connecticut, and Executive Risk Management
Associates, a Connecticut general partnership ("▇▇▇▇"), having its principal
office at Simsbury, Connecticut.
In consideration of the promises herein contained, the parties
agree as follows:
I.
APPOINTMENT OF ▇▇▇▇
Aetna hereby appoints ▇▇▇▇ (and will appoint such employees of
▇▇▇▇ as may be necessary or appropriate for ▇▇▇▇ to conduct the Covered Business
(as hereinafter defined) hereunder) as its agent, on a non-exclusive basis, with
the authority, pursuant to and subject to law and the terms and conditions of
this Agreement, to conduct the Covered Business.
▇▇▇▇ shall perform all of its responsibilities hereunder
directly and shall not have the right, without Aetna's express written consent,
to delegate any such responsibilities to any other person, including, without
limitation, any Subsidiary or Affiliate (as such terms are hereinafter defined)
of ▇▇▇▇.
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▇▇▇▇ shall remain licensed and authorized in all jurisdictions
where required or advisable to perform its functions under this Agreement.
For purposes of this Agreement, the term "Covered Business"
shall mean, collectively, (i) stand alone policies of directors and officers
liability/indemnity insurance ("D&O") insuring companies, or groups of companies
including a parent company, incorporated or having corporate headquarters
anywhere in the United States, its territories or possessions, (ii) renewals of
policies in other lines of insurance, and renewals of D&O policies insuring
companies, or groups of companies including a parent company, incorporated or
having corporate headquarters in Canada, written under the 1994 Agency Agreement
(as hereinafter defined) and identified in Schedule A hereto (such renewal
policies, the "Renewal Business") and (iii) policies, other than those referred
to in (i) or (ii) of this paragraph, issued, or with respect to which quotes or
binders were issued, prior to February 13, 1997 in accordance with the 1994
Agency Agreement (provided that no later than May 13, 1997, and once again no
later than August 13, 1997, ▇▇▇▇ shall update Schedule A to include all such
policies issued prior to February 13, 1997 and policies issued subsequent to
February 13, 1997 with respect to such quotes or binders), and renewals of those
policies.
For purposes of this Agreement, the term "1994 Agency
Agreement" shall mean the Insurance Services Agreement, dated December 24, 1986
between Aetna and ▇▇▇▇, as amended by an Amended and Restated
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Insurance Services Agreement, dated as of May 1, 1991, between Aetna and ▇▇▇▇,
as amended by an Amended and Restated Agency and Insurance Services Agreement,
dated January 1, 1994, among Aetna, Executive Risk Inc. ("ERI") and ▇▇▇▇, as
amended by the First Amendment thereto, dated as of January 1, 1995, and as
further supplemented by the Letter Agreement, dated May 26, 1995, among ERI,
Executive Risk Indemnity Inc. ("ERII"), ▇▇▇▇, Aetna and Aetna Casualty & Surety
Company of Canada.
For purposes of this Agreement, the term "Subsidiary" shall
mean, with respect to any person, (i) any corporation of which shares of stock
having ordinary voting power (other than stock having such power only by reason
of the happening of a contingency) to elect a majority of the board of directors
of such corporation are at the time owned, directly or indirectly through one or
more intermediaries, by such person or (ii) in the case of unincorporated
entities, any such entity with respect to which such person has the power,
directly or indirectly, to designate more than 50% of the individuals exercising
functions similar to a board of directors.
For purposes of this Agreement, the term "Affiliate" shall
mean, with respect to any person, any other person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such person. For purposes of this definition, the term "control" (including,
with correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any person, shall mean the possession, directly
or indirectly, of
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the power to direct or cause the direction of the management or policies of such
person, whether through the ownership of voting securities or by agreement or
otherwise.
II.
LIMITS ON COVERED BUSINESS
1 Premium and Policy Limits
(a) Total gross premiums written by ▇▇▇▇ hereunder in 1997
shall not exceed $25,000,000. In each of 1998 and 1999, total gross premiums
written by ▇▇▇▇ hereunder shall not exceed the lesser of (i) ten percent (10%)
of the amount of Direct Written D&O Insurance (as defined below) for the
calendar year last preceding, as established on or before March 1 of each
calendar year, or (ii) $25,000,000. For purposes of this Section 2.1(a), "Direct
Written D&O Insurance" shall mean the sum of (x) the total direct gross D&O
premiums written by ERII, Executive Risk Specialty Insurance Company and any
other insurance company Subsidiary of ERI and (y) the total direct gross D&O
premiums written by ▇▇▇▇ on policies of Aetna under this Agreement.
(b) ▇▇▇▇ shall not write Aetna policies with limits of
liability exceeding $20,000,000 per policy, or $20,000,000 per insured, with the
following exceptions:
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(i) renewals of policies having limits of liability of up to
$25,000,000 per policy, which policies were issued under the 1994 Agency
Agreement and are identified in Schedule C hereto; and
(ii) in addition to policies described in paragraph (i)
above, ▇▇▇▇ may during the period commencing January 1, 1997 and ending at the
termination of this Agreement write up to six policies of D&O insurance having
limits of liability of up to $25,000,000 per policy; and
(iii) any policy written pursuant to this Section 2.1(b) may
be renewed during the term hereof up to the limit of liability existing at the
time of such renewal.
2 Underwriting Guidelines and Rating Rules
Notwithstanding the foregoing, ▇▇▇▇ shall have no authority to
bind or issue Aetna policies that are not underwritten in accordance with the
terms and conditions of: (a) the underwriting guidelines, attached as Schedule B
hereto, as in effect on the date hereof and as subsequently amended from time to
time (such underwriting guidelines, as so amended, are hereinafter referred to
as the "Underwriting Guidelines"), (b) the policy forms and such endorsements
and policy term extension provisions attached thereto as may be permitted in
accordance with the Underwriting Guidelines and Section 5.1 of this Agreement
and (c) the rating rules, schedules and manuals, identified in Schedule B
hereto, and any amendments thereto as may be provided or approved by Aetna (the
"Rating Rules").
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III.
DUTIES, POWERS AND AUTHORITY OF ▇▇▇▇
The duties, powers and authority of ▇▇▇▇ shall, with respect
to all Covered Business transacted by Aetna pursuant to this Agreement, consist
of the following:
1 Insurance Underwriting and Production
(a) Underwriting authority as granted by this Agreement and
exercised (and limited) pursuant to Article V of this Agreement.
(b) Receipt and giving, on behalf of Aetna, of notices under
Aetna policies of Covered Business issued by ▇▇▇▇ on behalf of Aetna.
(c) Collection of, and issuance of receipts for, premiums on
behalf of Aetna.
2 Loss Investigation
(a) Investigation of losses under policies of D&O and
financial institution trust department errors and omissions insurance
("Financial E&O") issued on behalf of Aetna under the 1994 Agency Agreement and
this Agreement in accordance with the claims guidelines, attached hereto as
Schedule D (the "Claims Guidelines"). Upon termination of this Agreement,
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▇▇▇▇ shall retain all settlement and payment authority with respect to such D&O
and Financial E&O policies consistent with the Claims Guidelines (as may be
amended by Aetna in writing).
(b) Subject to the Claims Guidelines, enforcement of
subrogation and recovery rights of Aetna under any policy issued on behalf of
Aetna under this Agreement.
(c) Notwithstanding anything in this Agreement to the
contrary, the parties hereto understand and acknowledge that all of the claims
functions relating to all policies of Aetna other than D&O insurance and
Financial E&O insurance, including, without limitation, the functions and
responsibilities referred to in this Section 3.2, shall be performed exclusively
by Aetna.
3 Administration
(a) Maintenance of an office.
(b) Maintenance of books and records of all business
transactions of or with Aetna.
(c) Preparation of regular reports to Aetna (as more
specifically described in the Claims Guidelines and the Reporting and Accounting
Convention attached as Exhibit C to the Restructuring Agreement, dated February
13, 1997, by and among ERI, Aetna and the other parties thereto (the
"Restructuring Agreement")) with respect to the accounts and transactions of or
with Aetna.
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(d) Compliance with all provisions of law with respect to the
conduct of the business of ▇▇▇▇ hereunder, including, but not limited to:
applicable laws relating to rating plans, insurance agent licensing,
countersignature and advertising, claims handling and the preparation and filing
of any necessary tax returns of ▇▇▇▇; provided, however, this provision shall
not include the preparation and filing with regulatory authorities on behalf of
Aetna of reports, policy forms (including endorsements), application forms,
rating information or any other documents, all of which shall be performed
solely by Aetna pursuant to Section 5.3 below.
(e) Notwithstanding anything in this Agreement to the
contrary, ▇▇▇▇ shall indemnify and hold Aetna and its Subsidiaries and
Affiliates harmless from and against any and all penalties or fines assessed
against Aetna or any of its Subsidiaries or Affiliates due to ERMA's failure to
comply with any provisions of law, except for such penalties or fines that
result from actions or inactions of Aetna or any Subsidiary or Affiliate of
Aetna, for which Aetna shall be solely liable.
(f) Notwithstanding anything in this Agreement to the
contrary, Aetna shall indemnify and hold ▇▇▇▇ and its Subsidiaries and
Affiliates harmless from and against any and all penalties or fines assessed
against ▇▇▇▇ or any of its Subsidiaries or Affiliates due to Aetna's failure to
comply with any provisions of law, except for such penalties or fines that
result
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from actions or inactions of ▇▇▇▇ or any Subsidiary or Affiliate of ▇▇▇▇, for
which ▇▇▇▇ shall be solely liable.
ARTICLE II.
PRODUCERS
▇▇▇▇ shall be responsible for the payment of all producers'
commissions with respect to the Covered Business and reporting such payments to
Aetna. Aetna shall have no obligation to pay any such commission to any such
insurance producer, and ▇▇▇▇ shall indemnify Aetna and hold Aetna harmless
against any loss or liability incurred by Aetna in respect of any such
commission.
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IV.
UNDERWRITING
1 Underwriting Guidelines, Policy Forms and Rating Rules
Aetna shall have the right to approve all amendments to the
Underwriting Guidelines, and no such amendment shall be made to such
underwriting guidelines without the prior written approval of Aetna. Aetna shall
have the right to approve all endorsements and extensions attached to its policy
forms to be issued hereunder if and to the extent such endorsements and
extensions would render such policy forms outside the Underwriting Guidelines.
Such endorsements and extensions shall not be attached to such an Aetna policy
form without the prior consent of Aetna (such Aetna policy forms, endorsements
and extensions are hereinafter referred to as the "Policy Forms"). ▇▇▇▇ is
authorized to approve applications for, bind, write, non-renew, cancel and
endorse the Covered Business on behalf of Aetna in any manner ▇▇▇▇, in its
discretion, deems reasonable and appropriate, provided ▇▇▇▇ performs all such
activities in accordance with the applicable Underwriting Guidelines, Policy
Forms and Rating Rules as then in effect.
2 Binders and Policies
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▇▇▇▇ shall not issue any binder, policy, non-renewal, cancellation or
endorsement of the Covered Business except in accordance with this Agreement.
3 Form and Rate Filings
Aetna shall have sole discretion with respect to filing with insurance
regulatory authorities all rates, forms, endorsements and extensions with
respect to the Covered Business and ▇▇▇▇ shall have no rights or
responsibilities with respect thereto, except as provided by Sections 3.3(d) and
(e) and Section 5.1 hereof. Aetna shall provide ▇▇▇▇ with written notice of any
changes made by it to such rates and forms, such written notice to be delivered
to ▇▇▇▇ as soon as practicable, but in no event later than five days before the
filing of such rates and forms with the appropriate regulatory authorities. ▇▇▇▇
may request that Aetna file with the appropriate state regulatory authorities
such forms and rates as ▇▇▇▇ ▇▇▇▇▇ reasonable and appropriate for the conduct of
the Covered Business. Aetna shall consider each such filing request in good
faith; however, Aetna has no obligation hereunder to make such form and rate
filings at the request of ▇▇▇▇.
In the event that Aetna files with one or more state insurance
departments new or additional rates or forms, ▇▇▇▇ may use either the existing
rates or forms or such new or additional rates or forms, unless and to the
extent the use of the existing rates or forms is prohibited by law.
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4 Closed Claim Reports
▇▇▇▇ will file closed claim reports with respect to claims on Covered
Business written hereunder and claims with respect to business written under the
1994 Agency Agreement where required by law.
V.
REPORTS AND ACCOUNTS
▇▇▇▇ shall render to Aetna accounts and reports with respect
to the Covered Business, and remit to Aetna all amounts owed to Aetna hereunder,
in accordance with the Reporting and Accounting Convention attached as Exhibit C
to the Restructuring Agreement.
VI.
PROPERTY, RECORDS AND SYSTEMS
1 Interests in Property, Records and Systems
All records and data produced in the performance of this Agreement
(other than such records or data developed or purchased by Aetna), including all
media on which such records and data are or shall be stored (other than such
media developed or purchased by Aetna), whether or not in the custody of ▇▇▇▇,
shall be the property of, and proprietary to, ▇▇▇▇; provided that upon any
termination of this Agreement for any reason, ▇▇▇▇ (x) shall deliver to Aetna
copies of the policies and the corresponding applications
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concerning the Covered Business written by ▇▇▇▇ under this Agreement on behalf
of Aetna which have not previously been furnished to Aetna and (y) shall furnish
to Aetna all such other historical information concerning the Covered Business
written by ▇▇▇▇ hereunder as reasonably may be requested by Aetna in order to
allow Aetna to prepare financial statements and fulfill legal and regulatory
requirements.
2 Inspection
All records, data, files and other material relating to the business of
Aetna hereunder and maintained by ▇▇▇▇ shall be available for inspection by
Aetna at the office of ▇▇▇▇ at reasonable times and on reasonable advance
requests therefor by Aetna. Each of Aetna and ▇▇▇▇ shall bear its own expenses
in connection with any such inspection.
VII.
COMMISSIONS; PAYMENTS
▇▇▇▇ shall be entitled to no fees or commissions from Aetna
with respect to Covered Business underwritten pursuant to this Agreement. Upon
issuing any Aetna policy for any Covered Business in accordance with this
Agreement, ▇▇▇▇ shall pay to Aetna, on behalf of ERII, an amount equal to 3.5%
of the gross written premiums, less return premiums, for each such policy as an
allowance for premium taxes and all other costs and expenses whatsoever as
required under Article 7 of the 1997 Quota Share Reinsurance Agreement (as
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defined in Article X hereof). ▇▇▇▇ shall pay Aetna all amounts to which Aetna is
entitled under this Agreement, and Aetna shall pay ▇▇▇▇ all amounts to which
ERII is entitled with respect to return premiums under this Agreement, in
accordance with the terms of the Reporting and Accounting Convention attached as
Exhibit C to the Restructuring Agreement.
VIII.
OTHER ACTIVITIES
The parties acknowledge and agree that ▇▇▇▇ currently serves as the
agent, broker, representative and underwriting manager of other insurance
companies, including ERII and its affiliated insurance companies, and nothing
herein shall be construed to limit or restrict in any manner whatsoever ERMA's
right, power or authority to continue to do so, or to serve as the agent,
broker, representative and/or underwriting manager for any other insurance
company or entity in the future.
The parties acknowledge and agree that, subject to the terms of this
Agreement, Aetna may conduct the Covered Business and any other business
directly or through agents or brokers other than ▇▇▇▇.
IX.
TERMINATION
1 Termination
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This Agreement shall terminate on December 31, 1999. The
parties acknowledge, however, the mutually beneficial relationship that has
existed between them, and agree to meet in good faith to discuss the possibility
of entering into another agency relationship with respect to D&O insurance
beyond December 31, 1999. The parties further agree that such discussion shall
take place between December 1, 1999 and December 15, 1999. It is expressly
understood that if an agreement is reached, the terms and conditions may differ
from those set forth herein.
This Agreement may be terminated prior to December 31, 1999 as
follows:
(a) Upon the written consent of the parties hereto.
(b) At any time by ▇▇▇▇ upon 30 days prior written notice of
such termination to Aetna.
(c) In the event of a breach by ▇▇▇▇ of an obligation under
this Agreement (other than a breach described in paragraph (d) to this Section
10.1), which breach has not been cured by ▇▇▇▇ within 30 days of notice thereof
by Aetna, Aetna has the right to seek termination of this Agreement by
instituting an arbitration proceeding in accordance with Section 11.3 hereof. In
conducting such arbitration, the arbitrator may grant remedies other than
termination and in administering any remedy thereunder, the arbitrator shall
consider the following factors: (i) materiality, (ii) nature and severity of
conduct, (iii) pattern and practice of violations, (iv) harm caused or likely to
be caused to
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Aetna as a result of the breach and (v) harm caused or likely to be caused to
▇▇▇▇ as a result of the termination of this Agreement and the appropriateness of
such remedy.
(d) In the event of a breach by ▇▇▇▇ of an obligation under
this Agreement, which breach has Material Regulatory Exposure to Aetna (as
hereinafter defined), or in the event of a Willful Breach (as hereinafter
defined), Aetna may terminate this Agreement by written notice of such
termination to ▇▇▇▇, effective upon delivery of such notice.
For purposes of this Section 10.1(d), the term "Material
Regulatory Exposure to Aetna" means: (i) fines imposed against Aetna in an
aggregate amount which exceeds $250,000 or (ii) a cease and desist order issued
by any regulator to Aetna with respect to the Covered Business which is
continuing and which materially adversely affects Aetna's ability to conduct any
line of insurance business in any state.
For purposes of this Section 10.1(d), the term "Willful
Breach" means: (i) the failure of ERII to deliver to Aetna the Letter of Credit
(as defined in Article 10 of the Quota Share Reinsurance Agreement by and
between Aetna and ERII dated as of January 1, 1997 (the "1997 Quota Share
Reinsurance Agreement")), or any renewal, extension or increase in the amount
thereof, within 30 days of the date such delivery is due, (ii) the willful,
repeated disregard by ▇▇▇▇ of the restrictions on Aetna policy limits imposed
under Section 2.1(b) of this Agreement, (iii) the repeated issuance by ▇▇▇▇ of
Aetna policies that do
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not come within the definition of Covered Business ("Nonconforming Policies"),
but only if (a) such policies were issued by an underwriter or underwriters who
acted with willful disregard of the fact that such policies constituted
Nonconforming Policies or (b) issuance of such policies resulted from ERMA's
failure to maintain commercially reasonable underwriting controls, including
communication to underwriters of the Underwriting Guidelines and the definition
of the Covered Business which may be written hereunder, or (iv) the action or
inaction of ▇▇▇▇ constituting a willful, repeated disregard by ▇▇▇▇ of a written
ruling, directive or other writing of an insurance regulatory authority finding
that ERMA's issuance or servicing of Aetna policies hereunder is in violation of
state insurance laws or regulations, unless ▇▇▇▇ has promptly made a good faith
challenge with respect to such ruling, directive or other writing and then only
so long as such good faith challenge is continuing.
(e) This Agreement shall terminate automatically without any further
notice upon the effective date of any termination of the 1997 Quota Share
Reinsurance Agreement.
(f) Aetna shall have the right to terminate this Agreement by written
notice of such termination to the other parties, effective upon delivery of such
notice, if:
(ii) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
immediately prior to the execution of this Agreement, is or
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becomes the "beneficial owner" (as defined in the Exchange Act, except that a
person shall be deemed to have "beneficial ownership" of all shares that any
such person has the right to acquire without condition, other than the passage
of time, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of 50% or more of the voting stock of ERI,
after giving effect to the exercise of all outstanding options, warrants and
other securities exercisable for, or convertible into, such voting stock, or
(iii) Executive Risk Inc. ("ERI") ceases to own, directly or
indirectly, all of the voting stock or partnership interests of ▇▇▇▇ or ERII, as
the case may be, after giving effect to the exercise of all outstanding options,
warrants and other securities exercisable for, or convertible into, such voting
stock or partnership interests, as the case may be, or
(iv) individuals who on the date hereof constitute the Board
of Directors of ERI (together with any new directors whose election by such
Board of Directors, or whose nomination for election by the respective
shareholders, as the case may be, of ERI was approved by a vote of 66 2/3% of
the directors of ERI then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) shall cease for any reason to constitute 66 2/3% of the
members of the Board of Directors of ERI.
Upon termination of this Agreement, ▇▇▇▇ shall retain all settlement
and payment authority with respect to the Covered Business
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consisting solely of policies of D&O and Financial E&O business, consistent with
the applicable Claims Guidelines (as may be amended by Aetna in writing), and
Aetna shall retain all settlement and payment authority with respect to all
other Covered Business written hereunder.
2 Accounting
In the event of termination of this Agreement, ▇▇▇▇ shall continue to
provide reports pursuant to the terms of the Reporting and Accounting convention
attached as Exhibit C to the Restructuring Agreement.
3 Cooperation
In the event of termination of this Agreement, the parties shall
cooperate with one another to ensure the performance of the terms of this
Agreement.
ARTICLE II.
MISCELLANEOUS
1 No Admission of Liability
Except as otherwise provided in Section 3.2(a), ▇▇▇▇ is not authorized
to and shall not admit liability on the part of Aetna, except as communicated in
writing to ▇▇▇▇ by Aetna.
2 Confidentiality
All copies of the Underwriting Guidelines, Claims Guidelines, and any
other non-public written materials supplied by or on behalf of Aetna, ERI, ▇▇▇▇
or ERII or their respective Subsidiaries or Affiliates shall be preserved as
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confidential by the parties hereto and their respective Subsidiaries and
Affiliates. Notwithstanding the foregoing, nothing contained in this Agreement
shall prevent any party hereto or any Subsidiary or Affiliate thereof at any
time from furnishing any information pursuant to court order or to any
governmental entity required for compliance by such entity with its legal
obligations or from furnishing to an insured or prospective insured or
controlling insurance producer such insured's or prospective insured's premium
or premium quotation with respect to business hereunder.
3 Arbitration
(a) Any dispute arising out of this Agreement shall be
submitted to the decision of a Board of Arbitration composed of two arbitrators
and an umpire (hereafter referred to as the "Board"), meeting in Hartford,
Connecticut unless otherwise agreed. The majority decision of the Board shall be
final and binding on the parties to the proceeding and judgment may be entered
upon the award of the Board in any court having jurisdiction thereof.
(b) The members of the Board shall be active or retired
disinterested officials of insurance or reinsurance companies. Each of Aetna and
▇▇▇▇ shall appoint an arbitrator and the two arbitrators shall choose an umpire
before instituting the hearing. If either party fails to appoint its arbitrator
within 15 days after being requested to do so by the claimant, the other party
shall also appoint the second arbitrator. If the two arbitrators fail to agree
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upon the appointment of an umpire within 15 days after their nominations, the
umpire shall be appointed by the American Arbitration Association.
(c) Except as otherwise provided in paragraph (d) of this
Section 11.3, any and all arbitration proceedings commenced under this Agreement
shall be conducted in accordance with the rules and procedures of the American
Arbitration Association, as then in effect.
(d) In the case of any dispute arising out of Section 10.1(c)
of this Agreement which is submitted to arbitration, the following rules and
procedures shall apply.
The claimant shall submit its initial brief within 20 days
from appointment of the umpire. The respondent shall submit its brief within 20
days after receipt of the claimant's brief and the claimant shall submit a reply
brief within 10 days after receipt of the respondent's brief. A hearing shall be
conducted as soon as practicable, but in no event later than 30 days following
receipt of all briefs in accordance with this schedule. The Board shall issue
its decision in writing based upon a hearing in which evidence may be introduced
without following strict rules of evidence but in which cross examination and
rebuttal shall be allowed. The Board shall make its decision within 30 days
following the termination of the hearings unless the parties consent to an
extension. Each party shall bear the expense of its own arbitrators and shall
equally bear with the other party the expense of the umpire. The remaining costs
of the arbitration proceedings shall be allocated by the Board.
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4 Notice of Breach
Each of ▇▇▇▇ and Aetna will give prompt notice to the other of any
breach by such party of any of the provisions of this Agreement applicable to
it.
2 Notices
Except as otherwise provided in this Agreement, all notices and other
communications hereunder shall be in writing, and shall be considered deemed
given (i) upon delivery if delivered personally, (ii) upon receipt if sent by
facsimile transmission, or (iii) if sent by an overnight delivery service, one
business day after sending by such service, to the parties at the following
addresses or at such other address for a party as may have been specified to the
other parties by like notice:
(a) if to ▇▇▇▇, at:
Executive Risk Management Associates
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Deutsch
Assistant Secretary
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(a) if to Aetna, at:
The Aetna Casualty and Surety Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief
Executive Officer, Bond
3 Amendment and Waiver
The parties hereto may amend any provision of this Agreement only by
written instrument executed by each party.
Any party may grant consents or waive any of its rights under this
Agreement; provided, however, that each such consent or waiver shall be in
writing.
4 Governing Law
This Agreement shall be construed and enforced in accordance with the
internal laws of the State of Connecticut.
5 Severability
If any term or provision of this Agreement is for any reason deemed
illegal or invalid, such illegality shall not affect the validity of the
remainder of this Agreement, and each such term or provision shall be valid and
enforceable to the fullest extent permitted by law. In the event Aetna or ▇▇▇▇
becomes subject to any legal requirement, including, without limitation, any
regulation or administrative interpretation of any insurance or other regulatory
agency having authority over it, which materially adversely affects its ability
to enjoy its rights
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under this Agreement, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties with respect to
such rights as closely as possible in an acceptable manner.
6 Binding Effect; Assignment
This Agreement will be binding upon, inure to the benefit of and be
enforceable by, the parties and their respective successors and permitted
assigns; provided that neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by either of the parties hereto
without the prior written consent of the other party.
7 Modifications
This Agreement may not be modified verbally, nor may it be modified by
any subsequent practice or course of dealing by the parties, or in any manner
other than in writing signed by the parties hereto. No waiver may modify this
Agreement or affect the rights of one party with respect to any subsequent
default or failure of performance by the other party.
8 Entire Agreement
This Agreement and related documents identified herein set forth the
complete understanding of the parties relating to the specific subject matter
addressed herein.
9 Counterparts
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This Agreement may be signed in any number of counterparts, and each of
the counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute the same Agreement.
10 Financial Information
Any reference in this Agreement to any financial information (including
any financial ratios) relating to any party hereto shall be deemed to refer to
such financial information as it is prepared in accordance with generally
accepted statutory accounting principles and, where applicable, as contained in
the statutory-basis financial documents filed by the applicable insurer with its
state of domicile.
11 Interpretation
This Agreement is a result of arms-length negotiations between parties
hereto and has been prepared jointly by the parties. In applying and
interpreting the provisions of the Agreement, there shall be no presumption that
this Agreement was prepared by any one party or that the Agreement should be
construed by or in favor of any one party.
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IN WITNESS WHEREOF, the parties have executed this Agreement by their
duly authorized representatives as of the date first above written.
THE AETNA CASUALTY AND SURETY COMPANY
By:______________________________________
EXECUTIVE RISK MANAGEMENT ASSOCIATES
By:______________________________________
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TABLE OF CONTENTS
Page
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i
29
ARTICLE I.
APPOINTMENT OF ▇▇▇▇......................................................... 1
ARTICLE II.
LIMITS ON COVERED BUSINESS.................................................. 4
2.1 Premium and Policy Limits................................. 4
2.2 Underwriting Guidelines and Rating Rules.................. 5
ARTICLE III.
DUTIES, POWERS AND AUTHORITY OF ▇▇▇▇........................................ 6
3.1 Insurance Underwriting and Production..................... 6
3.2 Loss Investigation........................................ 6
3.3 Administration............................................ 7
ARTICLE IV.
PRODUCERS................................................................... 8
ARTICLE V.
UNDERWRITING................................................................ 9
5.1 Underwriting Guidelines, Policy Forms and Rating Rules.... 9
5.2 Binders and Policies...................................... 10
5.3 Form and Rate Filings..................................... 10
5.4 Closed Claim Reports...................................... 11
ARTICLE VI.
REPORTS AND ACCOUNTS........................................................ 11
ARTICLE VII.
PROPERTY, RECORDS AND SYSTEMS............................................... 11
7.1 Interests in Property, Records and Systems................ 11
7.2 Inspection................................................ 12
ARTICLE VIII.
COMMISSIONS; PAYMENTS....................................................... 12
ARTICLE IX.
OTHER ACTIVITIES............................................................ 13
ARTICLE X.
TERMINATION................................................................. 13
10.1 Termination............................................... 13
10.2 Accounting................................................ 17
10.3 Cooperation............................................... 18
ARTICLE XI.
MISCELLANEOUS............................................................... 18
11.1 No Admission of Liability................................. 18
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Page
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11.2 Confidentiality.......................................... 18
11.3 Arbitration.............................................. 19
11.4 Notice of Breach......................................... 20
11.5 Notices.................................................. 20
11.6 Amendment and Waiver..................................... 21
11.7 Governing Law............................................ 22
11.8 Severability............................................. 22
11.9 Binding Effect; Assignment............................... 22
11.10 Modifications............................................ 22
11.11 Entire Agreement......................................... 23
11.12 Counterparts............................................. 23
11.13 Financial Information.................................... 23
11.14 Interpretation........................................... 23
SCHEDULES
Schedule A ........................Renewal Business; Policies Written Under 1994
Agency Agreement
Schedule B ........................Underwriting Guidelines; Rating Rules
Schedule C ........................Policies with Limits of Liability of up to
$25,000,000 Issued Under 1994 Agency
Agreement
Schedule D ........................Claims Guidelines
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