MIDWEST MEDICAL
INSURANCE COMPANY
Agreement No. A190B
INTERESTS AND LIABILITIES AGREEMENT
NO. A190B
to the
PROFESSIONAL LIABILITY
AGREEMENT OF REINSURANCE
between
MIDWEST MEDICAL INSURANCE COMPANY
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(herein referred to as the "Company")
and
GENERAL REINSURANCE CORPORATION
a Delaware Corporation
having its principal offices at
Financial Centre
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ P.O. Box 10350
Stamford, Connecticut 06904-2350
(herein referred to as the "Subscribing Reinsurer")
The Subscribing Reinsurer agrees to assume 85% of the Liability of the
Reinsurers under the Professional Liability Agreement of Reinsurance attached
hereto.
As consideration the Subscribing Reinsurer shall receive an identical share
of the premiums named therein.
The share of the Subscribing Reinsurer shall be separate and apart from the
shares of the other Reinsurers, and the Subscribing Reinsurer shall in no event
participate in the Interests and Liabilities of the other Reinsurers.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate,
this 17th day of April, 1995,
MIDWEST MEDICAL INSURANCE COMPANY
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Attest: /s/ ▇▇▇ ▇▇▇▇
and this 4th day of April, 1995.
GENERAL REINSURANCE CORPORATION
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
Attest: [ILLEGIBLE]
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PROFESSIONAL LIABILITY
AGREEMENT OF REINSURANCE
between
MIDWEST MEDICAL INSURANCE COMPANY
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(herein referred to as the "Company")
and
The Subscribing Reinsurers executing the
Interests and Liabilities Agreements
attached to this Agreement
(herein collectively referred to as the "Reinsurers")
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In consideration of the promises set forth in this Agreement, the parties agree
as follows:
ARTICLE I - SCOPE OF AGREEMENT
As a condition precedent to the Reinsurers' obligations under this
Agreement, the Company shall cede to the Reinsurers the professional liability
business described in this Agreement, and the Reinsurers shall accept such
business as reinsurance from the Company. The terms of this Agreement shall
determine the rights and obligations of the parties.
ARTICLE II - PARTIES TO THE AGREEMENT
This Agreement is solely between the Company and the Reinsurers. 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 under this Agreement
shall be rendered solely to the other party. However, if the Company becomes
insolvent, the liability of the Reinsurers shall be modified to the extent set
forth in the article entitled INSOLVENCY OF THE COMPANY. In no
instance shall any insured of the Company or any claimant against an insured of
the Company have any rights under this Agreement.
ARTICLE III - LIABILITY OF THE REINSURERS AND COMPANY RETENTION
The Reinsurers shall pay to the Company, with respect to each insured under
each professional liability policy written by the Company, the amount of net
loss each claim or each occurrence, as applicable, in excess of the Company
Retention but not exceeding the Limits of Liability of the Reinsurers as set
forth in the Schedule of Reinsurance.
SCHEDULE OF REINSURANCE
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Company
Class of Business Retention Limits of Liability of the Reinsurers
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Professional Liability $750,000 each First Excess Cover: The difference
claim/$4,000,000 between $2,000,000 each claim/
annual aggregate $4,000,000 annual aggregate and
the Company Retention
Second Excess Cover: The difference
between $5,000,000 each claim/
$5,000,000 annual aggregate and
$2,000,000 each claim/$4,000,000
annual aggregate
Professional Premises $750,000 each First Excess Cover: The next
Liability occurrence $250,000 each occurrence
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ARTICLE IV - ALLOCATION OF ADJUSTMENT EXPENSE
In addition to payments for its share of net loss, the Reinsurers shall pay
to the Company a share of adjustment expenses proportionate to the Reinsurers'
share of net loss.
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Should the amount of a judgment be reduced by any process other than by a
trial court or should a judgment be reversed outright, the adjustment expenses
incurred in securing such reduction or reversal shall be apportioned between the
Company and the Reinsurers in the ratio that each party benefits from such
reduction or reversal.
ARTICLE V - COMBINATION COVER
If a claim is made or an occurrence takes place which involves:
(a) Two or more insureds under policies reinsured hereunder;
(b) Two or more insureds under policies written by the Company for
hospitals and reinsured under Facultative Certificates issued by
General Reinsurance Corporation; or
(c) A combination of one or more insureds described in (a) above and one
or more insureds described in (b) above;
the Reinsurers shall pay to the Company the amount of net loss in excess of a
Combination Company Retention of $1,250,000 with respect to such occurrence or
claim, but not exceeding a Limit of Liability of the Reinsurers equal to the
difference between the sum of the separate Company Retentions applicable to each
insured involved in such occurrence or claim and $1,250,000, but in no event
more than $2,000,000. The Limit of Liability of the Reinsurers in this Article
shall be in addition to the Limits of Liability of the Reinsurers set forth in
the article entitled LIABILITY OF THE REINSURERS AND COMPANY RETENTION.
ARTICLE VI - LOSS IN EXCESS OF POLICY LIMITS
Notwithstanding the provisions of the article entitled MANAGEMENT OF CLAIMS
AND LOSSES, if a third party claimant is awarded an amount in excess of the
Company's policy limit and, as a result of the Company's failure to settle
within the policy limit or of the Company's alleged or actual negligence 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 in the preparation
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or prosecution of an appeal consequent upon such action, an action is taken by
the insured or assignee and an obligation is imposed upon the Company by
judgment or decree for an amount in excess of the Company's policy limit, the
Reinsurers shall afford additional reinsurance to the Company for 75% of only
that portion of the award made to the third party claimant which is in excess of
the greater of the Company's policy limit or the Company Retention. The
liability of the Reinsurers with respect to the loss in excess of the Company's
policy limit and any extra contractual obligation as afforded by the article
entitled EXTRA CONTRACTUAL OBLIGATIONS, shall not exceed $2,000,000.
However, this Article shall not apply where the loss has been incurred due
to the fraud or criminal conduct of a member of the Board of Directors, a
corporate officer of the Company, or any other employee 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.
Any insurance or reinsurance, whether collectible or not, which indemnifies
or protects the Company against claims which are the subject matter of this
Article and any contribution, subrogation or recovery shall inure to the benefit
of the Reinsurers and shall be deducted to arrive at the amount of the Company's
net loss.
ARTICLE VII - EXTRA CONTRACTUAL OBLIGATIONS
Notwithstanding the provisions of the article entitled MANAGEMENT OF CLAIMS
AND LOSSES, if the Company incurs an extra contractual obligation, the
Reinsurers shall afford additional reinsurance to the Company for 75% of that
portion of the extra contractual obligation which is in excess of the Company
Retention, subject to the conditions of the following paragraphs. The liability
of the Reinsurers with respect to the extra contractual obligation and any loss
in excess of the Company's policy limit as afforded by the article entitled LOSS
IN EXCESS OF POLICY LIMITS, shall not exceed $2,000,000.
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For purposes of this Article, the term "extra contractual obligation" shall
mean an obligation imposed upon the Company by judgment or decree which is not
covered under any other provision of this Agreement and which arises from the
Company's handling of any claim on the policies reinsured hereunder which have
limits of liability or amounts of insurance greater than the Company Retention.
The date on which an extra contractual obligation is incurred by the
Company shall be deemed in all circumstances, to be the date of the original
occurrence.
This Article shall not apply where the extra contractual obligation has
been incurred due to the fraud or criminal conduct of a member of the Board of
Directors, a corporate officer of the Company, or any other employee of the
Company, acting individually or collectively or in collusion with any individual
or corporation or any other organization or party involved in the investigation,
defense or settlement of any claim covered hereunder.
Any insurance or reinsurance, whether collectible or not, which indemnifies
or protects the Company against claims which are the subject matter of this
Article and any contribution, subrogation, or recovery shall inure to the
benefit of the Reinsurers and shall be deducted to arrive at the amount of the
Company's net loss.
ARTICLE VIII - COMPANY POLICY AMOUNTS
For the purpose of determining the Company Retention and the Limits of
Liability of the Reinsurers, the limits of liability of the Company with respect
to any one insured under any one policy shall be deemed not to exceed:
(a) Professional Liability $5,000,000 each claim
$5,000,000 annual aggregate
(b) Professional Premises Liability $1,000,000 each occurrence.
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ARTICLE IX - DEFINITIONS
(a) PROFESSIONAL LIABILITY BUSINESS
This term shall mean physicians', surgeons' and dentists' professional
liability policies issued by the Company to cover professional
liability on a claims made basis and professional premises liability
on an occurrence basis for insureds practicing in the States of Iowa,
Minnesota, North Dakota and South Dakota.
(b) INSURED
This term shall mean each physician, surgeon, paramedical employee, or
position as respects position coverage as afforded by the Company's
Additional Insured - Blanket Position Coverage Separate Limits of
Liability endorsement.
(c) COMPANY RETENTION
This term shall mean the amount the Company shall retain for its own
account; however, this requirement shall be satisfied if this amount
is retained by the Company or its affiliated companies under common
management or common ownership.
(d) NET LOSS
This term shall mean all payments by the Company within the limits of
its policies in settlement of claims or losses, payment of benefits,
or satisfaction of judgments or awards after deduction of recoveries
and after deduction of amounts due from all other reinsurance, whether
collectible or not. This term shall not include adjustment expense. If
the Company becomes insolvent, this definition shall be modified to
the extent set forth in the article entitled INSOLVENCY OF THE
COMPANY.
(e) ADJUSTMENT EXPENSE
This term shall mean expenditures by the Company within the terms of
its policies allocated to an individual claim or loss, other than for
office expenses and for the salaries and expenses of employees of the
Company or of any subsidiary or related or wholly owned company of the
Company, made in connection with the disposition of a claim, loss, or
legal proceeding including investigation, negotiation, and legal
expenses; court costs; statutory penalties; prejudgment interest or
delayed damages; and interest on any judgment or award. If the Company
becomes insolvent,
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this definition shall be modified to the extent set forth in the
article entitled INSOLVENCY OF THE COMPANY.
(f) PREJUDGMENT INTEREST OR DELAYED DAMAGES
This term shall mean interest or damages added to a settlement,
verdict, award, or judgment based on the amount of time prior to the
settlement, verdict, award, or judgment whether or not made part of
the settlement, verdict, award, or judgment.
(g) CLAIM
This term shall mean any one claim or suit or all claims or suits due
to the injury to or death of any one person arising out of the
performance of professional services rendered or which should have
been rendered by the insured.
(h) OCCURRENCE
This term shall mean an accident, including injurious exposure to
conditions, which results in bodily injury, property damage or
personal injury neither expected nor intended from the standpoint of
the insured, as respects the professional premises liability reinsured
hereunder.
ARTICLE X - EXCLUSIONS
This Agreement shall not apply to:
(a) Business accepted by the Company as reinsurance from other insurers;
(b) Nuclear incident per the Nuclear Incident Exclusion Clause -
Liability - Reinsurance attached hereto;
(c) Any loss or liability accruing to the Company directly or indirectly
from any insurance written by or through any pool or association
including pools and associations in which membership by the Company is
required under any statutes or regulations;
(d) Any liability of the Company arising from its participation or
membership in any insolvency fund;
(e) Any loss or damage which is occasioned by war, invasion, hostilities,
acts of foreign enemies, civil war, rebellion, insurrection, military
or usurped
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power, or martial law or confiscation by order of any government or
public authority;
(f) Business written on a co-indemnity basis;
(g) Pollution under any policy written by the Company which does not
contain the pollution exclusion set forth in ISO Commercial General
Liability Coverage Form CG 00 01 (Ed. 11/88) or as subsequently
amended; however, this exclusion does not apply to any risk located in
a jurisdiction which has not approved the Insurance Services Office
exclusion or where other regulatory constraints prohibit the Company
from implementing such exclusion. If the Company elects to implement
an exclusion different from that of ISO, such exclusion will be deemed
a suitable substitute provided the Company has submitted the wording
to the Reinsurers and received the Reinsurers' prior approval;
(h) Any policy with a deductible greater than $250,000.
ARTICLE XI - MANAGEMENT OF CLAIMS AND LOSSES
The Company shall investigate and settle or defend all claims and losses.
When requested by the Reinsurers, the Company shall permit the Reinsurers, at
the expense of the Reinsurers, to be associated with the Company in the defense
or control of any claim, loss, or legal proceeding which involves or is likely
to involve the Reinsurers. All payments of claims or losses by the Company
within the limits of its policies which are within the limits set forth in this
Agreement shall be binding on the Reinsurers, subject to the terms of this
Agreement.
ARTICLE XII - RECOVERIES
The Company shall pay to or credit the Reinsurers with the Reinsurers'
portion of any recovery obtained from salvage, subrogation, or other insurance.
Adjustment expenses for recoveries shall be deducted from the amount recovered.
The Reinsurers shall be subrogated to the rights of the Company to the
extent of its loss payments to the Company against any person or other entity
who may be legally respon-
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sible in damages for said loss. The Company agrees to enforce its rights of
salvage, subrogation, and its rights against insurers or to assign these rights
to the Reinsurers.
Recoveries shall be distributed to the parties in an order inverse to that
in which their respective liabilities accrued.
ARTICLE XIII - REINSURANCE PREMIUM AND COMMISSION
The Company shall pay to the Reinsurers:
(a) For the First Excess Cover including coverage set forth in the
articles entitled COMBINATION COVER, LOSS IN EXCESS OF POLICY LIMITS,
and EXTRA CONTRACTUAL OBLIGATIONS, 17.52% of the Company's gross
earned premium for the first $2,000,000 each claim/$4,000,000 annual
aggregate or the first $1,000,000 each occurrence, as applicable,
subject to an annual deposit reinsurance premium of $5,000,000.
(b) For the Second Excess Cover:
(1) For the layer of $1,000,000 each claim/$1,000,000 annual
aggregate in excess of $2,000,000 each claim/$4,000,000 annual
aggregate, 60% of the Company's gross earned premium for the
layer of $1,000,000 each claim/$1,000,000 annual aggregate in
excess of $1,000,000 each claim/$3,000,000 annual aggregate.
(2) For the layer of $1,000,000 each claim in excess of $3,000,000
each claim/$ 5,000,000 annual aggregate, 65% of the Company's
gross earned premium for the layer of $1,000,000 each
claim/$1,000,000 annual aggregate in excess of $2,000,000 each
claim/ $4,000,000 annual aggregate.
(3) For the layer of $1,000,000 each claim in excess of $4,000,000
each claim/$5,000,000 annual aggregate, 70% of the Company's
gross earned premium for the layer of $1,000,000 each claim in
excess of $3,000,000 each claim/$5,000,000 annual aggregate.
(c) As respects the reinsurance coverage afforded for reporting
endorsements, 100% of the Company's actual premiums for limits in
excess of the Company Retention for each reporting endorsement issued
by the
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Company, calculated in accordance with the Company's rates, which
rates are on file with the Reinsurers.
The reinsurance premiums set forth in sub-paragraph (b) above shall be
subject to a fixed commission allowance of 15%.
The reinsurance premium set forth in sub-paragraph (a) above is provisional
and shall be adjusted in accordance with the provisions of the article entitled
ADJUSTMENT OF REINSURANCE PREMIUM.
ARTICLE XIV - ADJUSTMENT OF REINSURANCE PREMIUM
The adjusted reinsurance premium for the First Excess Cover for each
experience period shall be not more than 115% nor less than 28% of the net
provisional reinsurance premium earned during the experience period and, subject
to such limitations, shall be equivalent to 117.5% of the reinsurance loss
incurred for the experience period. Calculation of the adjusted reinsurance
premium for each experience period shall be independent of the results of any
other experience period.
With respect to the adjusted reinsurance premium and the calculation
thereof, the following interpretations and reporting provisions shall apply:
(a) EXPERIENCE PERIOD
The initial experience period shall be from January 1, 1995, through
December 31, 1997, and thereafter each experience period shall consist
of 36 months to begin concurrently with the expiration of the previous
experience period; however,
(1) Should the date of termination of this Agreement coincide with
the completion of an experience period, such experience period
and the period from the date of termination until expiration or
termination of the reinsurance, if any, then in effect shall be
combined and shall constitute a single experience period;
(2) Should the date of termination of this Agreement not coincide
with the completion of an experience period, the following
periods shall be combined and shall constitute a single
experience period:
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(i) the last experience period completed prior to the date of
termination, and
(ii) the period from the last completed experience period until
the date of termination, and
(iii) the period from the date of termination until expiration
or termination of the reinsurance, if any, then in effect.
(b) NET PROVISIONAL REINSURANCE PREMIUM EARNED
This term shall mean the First Excess Cover reinsurance premium
earned, net of commission, if any, during the experience period.
(c) REINSURANCE LOSS INCURRED
This term shall mean the sum of the Reinsurers' payments and reserves
for claims, losses and adjustment expense (including reserves for
claims and losses incurred but not reported, as set forth in
sub-paragraph (d) below), less the Reinsurers' portion of salvage
recovered, resulting from professional liability claims made to the
Company during the experience period and professional premises
liability occurrences taking place during the experience period and
allocated to the First Excess Cover including coverage set forth in
the articles entitled COMBINATION COVER, LOSS IN EXCESS OF POLICY
LIMITS, and EXTRA CONTRACTUAL OBLIGATIONS.
(d) RESERVES FOR CLAIMS AND LOSSES INCURRED BUT NOT REPORTED
The reserves for claims and losses incurred but not reported (IBNR)
shall be determined separately for each twelve month period within
each experience period. IBNR will be determined by multiplying the net
provisional reinsurance premium earned for each twelve month period by
the appropriate factor based on the maturity of the twelve month
period from its expiration date.
MATURITY IN MONTHS ▇▇▇▇ ▇▇▇▇▇▇
▇▇ 17.1%
48 10.1%
60 6.2%
72 3.8%
84 2.1%
96 1.3%
108 0.4%
120 and subsequent 0%
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(e) INTERIM ADJUSTMENTS (ANNUALLY)
As soon as practicable after the third anniversary of the end of the
first calendar year in each experience period, the Reinsurers shall
render to the Company a statement of adjusted reinsurance premium for
such calendar year. The amount thereof shall be balanced against the
portion of the First Excess Cover net reinsurance premium previously
paid the Reinsurers for such calendar year, and the difference due
either party shall be remitted promptly.
As soon as practicable after the third anniversary of the end of the
second calendar year in each experience period, the Reinsurers shall
render to the Company a statement of adjusted reinsurance premium for
the first and second calendar years in the experience period. The
amount thereof shall be balanced against the portion of the First
Excess Cover net reinsurance premium previously paid the Reinsurers
for such calendar years, and the difference due either party shall be
remitted promptly.
(f) STATEMENTS OF ADJUSTED PREMIUM (ENTIRE EXPERIENCE PERIOD)
As soon as practicable after the third anniversary of the end of an
experience period, the Reinsurers shall render to the Company a
statement of the adjusted reinsurance premium for the entire
experience period. The amount thereof shall be balanced against the
portion of the First Excess Cover net reinsurance premium previously
paid the Reinsurers for the experience period, and the amount due
either party shall be remitted promptly. Annually thereafter, revised
statements shall be rendered to the Company reflecting changes in the
original statement until all claims and losses resulting from
professional liability claims made to the Company during the
experience period and from professional premises liability occurrences
taking place during the experience period are fully discharged, and
the difference due either party shall be remitted promptly.
ARTICLE XV - REPORTS AND REMITTANCES
(a) SUMMARY REPORTS
On or before each April 30, July 31, October 31, and January 31,
the Company shall render to the Reinsurers a report summarizing
premiums written by limit and by state for policies of the Company
becoming effective during the preceding calendar quarter and reinsured
hereunder. The Company shall also include a summary of the earned
premium by limit
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and by state for the preceding calendar quarter for policies reinsured
hereunder.
(b) FIRST EXCESS REINSURANCE PREMIUM
On or before each April 30, July 31, October 31, and January 31,
the Company shall pay to the Reinsurers one quarter of the annual
deposit reinsurance premium stipulated in sub-paragraph (a) of the
article entitled REINSURANCE PREMIUM AND COMMISSION.
On or before February 15, 1996 and each February 15 thereafter, the
Company shall calculate the reinsurance premium for the First Excess
Cover for the prior calendar year in accordance with said
sub-paragraph (a), shall balance such amount against the annual
deposit reinsurance premium previously paid for such calendar year,
and the difference due either party shall be remitted promptly.
(c) SECOND EXCESS AND REPORTING ENDORSEMENTS REINSURANCE PREMIUM
On or before each May 15, August 15, November 15, and February 15, the
Company shall calculate the reinsurance premium for the Second Excess
Cover and for reporting endorsements for the preceding calendar
quarter in accordance with the provisions of sub-paragraphs (b) and
(c) of the article entitled REINSURANCE PREMIUM AND COMMISSION and
remit such amounts to the Reinsurers.
(d) CLAIMS AND LOSSES
The Company shall report promptly to the Reinsurers each claim or loss
for which the Company's estimated amount of net loss is 50% or more of
the amount of the Company Retention and shall also report all cases of
serious injury which, regardless of considerations of liability or
coverage, might involve this reinsurance, including but not limited to
the following:
(1) Brain injury;
(2) Spinal cord injury and/or other damage resulting in significant
sensory and/or motor loss;
(3) Fatalities of wage earners, women with minor children and all
fatalities in jurisdictions where mental anguish and/or emotional
distress are recoverable;
(4) Blindness;
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(5) Amputation of a significant portion of limb(s);
(6) Serious physical and/or psychiatric residuals;
(7) Significant ▇▇▇▇▇, including over-exposure to radiation;
(8) Significantly diminished life expectancy;
(9) Any other serious injury which, in the judgment of the Company,
might involve the Reinsurers.
The Company shall advise the Reinsurers of the estimated amount of net
loss and adjustment expense in connection with each such claim or loss
and of any subsequent changes in such estimates.
Upon receipt of a definitive statement of net loss from the Company,
the Reinsurers shall pay promptly to the Company the Reinsurers'
portion of net loss and the Reinsurers' portion of adjustment expense,
if any. Any subsequent changes shall be reported by the Company to the
Reinsurers and the amount due either party shall be remitted promptly.
(e) COMPANY FORMS
The Company has furnished the Reinsurers with the materials listed
below and shall inform the Reinsurers in advance before making any
material or substantial changes therein:
(1) Specimen copies of the Company's policies and all special
endorsements used in conjunction therewith;
(2) A copy of the Company's underwriting rules and rates.
(f) OTHER INFORMATION
In addition to the reports required in (a) through (e) above, the
Company shall furnish such other information as may be required by the
Reinsurers for the completion of the Reinsurers' quarterly and annual
statements and internal records.
All reports shall be rendered on forms acceptable to the Company and
the Reinsurers.
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ARTICLE XVI - RESERVES AND TAXES
The Reinsurers shall maintain the required reserves as to the Reinsurers'
portion of unearned premium, claims, losses, and adjustment expense.
The Company shall be liable for all premium taxes on premium ceded to the
Reinsurers under this Agreement. If the Reinsurers are obligated to pay any
premium taxes on this premium, the Company shall reimburse the Reinsurers;
however, the Company shall not be required to pay taxes twice on the same
premium.
Article XVII - REASSURANCE OVER THIS AGREEMENT
The Company shall advise the Reinsurers of any reinsurance of the Company
that would apply over and beyond the limit of liability of the Reinsurers under
this Agreement.
Article XVIII - OFFSET
The Company or the Reinsurers may offset any balance, whether on account of
premium, commission, claims or losses, adjustment expense, recoveries, or
otherwise, due from one party to the other under this Agreement or under any
other agreement heretofore or hereafter entered into between the Company and the
Reinsurers.
Article XIX - SPECIAL ACCEPTANCES
Business not within the terms of this Agreement may be submitted to the
Reinsurers for special acceptance and, if accepted by the Reinsurers, shall be
subject to all of the terms of this Agreement except as modified by the special
acceptance.
ARTICLE XX - COMMENCEMENT AND TERMINATION
This Agreement shall apply to professional liability claims made to the
Company at and after 12:01 A.M., January 1, 1995 under new and renewal policies
of the Company becoming effective at and after such time and date and under
policies of the Company in force at such
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time and date, provided that the injury which results in each such claim occurs
on or after the retroactive date indicated in each such policy. However, this
Agreement shall not apply to professional liability claims made to the Company
during any Extended Reporting Period in force at such time and date. This
Agreement shall also apply to professional premises liability claims and losses
resulting from occurrences taking place at and after 12:01 A.M., January 1, 1995
and insured under new and renewal policies of the Company becoming effective at
and after such time and date and under policies of the Company in force at such
time and date.
This Agreement may be terminated by either party sending to the other, by
registered mail to its principal office, notice stating the time and date when,
not less than 90 days after the date of mailing of such notice, termination
shall be effective. As respects professional liability, the Reinsurers shall not
be liable for claims made to the Company at and after the effective time and
date of termination, unless such claim is made to the Company during an Extended
Reporting Period in force at the time and date of termination. As respects
professional premises liability, the Reinsurers shall not be liable for claims
and losses resulting from occurrences taking place at and after the effective
time and date of termination.
ARTICLE XXI - ERRORS AND OMISSIONS
The Reinsurers shall not be relieved of liability because of an error or
accidental omission of the Company in reporting any claim or loss or any
business reinsured under this Agreement, provided that the error or omission is
rectified promptly after discovery. The Reinsurers shall be obligated only for
the return of the premium paid for business reported but not reinsured under
this Agreement.
ARTICLE XXII - INSPECTION OF RECORDS
The Company shall allow the Reinsurers to inspect, at reasonable times, the
records of the Company relevant to the business reinsured under this Agreement,
including Company
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files concerning claims, losses, or legal proceedings which involve or are
likely to involve the Reinsurers.
ARTICLE XXIII - ARBITRATION
Any unresolved difference of opinion between the Reinsurers and the Company
shall be submitted to arbitration by three arbitrators. One arbitrator shall be
chosen by the Reinsurers, and one shall be chosen by the Company. The third
arbitrator shall be chosen by the other two arbitrators within ten (10) days
after they have been appointed. If the two arbitrators cannot agree upon a third
arbitrator, each arbitrator shall nominate three persons of whom the other shall
reject two. The third arbitrator shall then be chosen by drawing lots. If either
party fails to choose an arbitrator within thirty (30) days after receiving the
written request of the other party to do so, the latter shall choose both
arbitrators, who shall choose the third arbitrator. The arbitrators shall be
impartial and shall be present or former officials of property or casualty
insurance or reinsurance companies.
The party requesting arbitration (the "Petitioner") shall submit its
brief to the arbitrators within thirty (30) days after notice of the
selection of the third arbitrator. Upon receipt of the Petitioner's brief,
the other party (the "Respondent") shall have thirty (30) days to file a
reply brief. On receipt of the Respondent's brief, the Petitioner shall have
twenty (20) days to file a rebuttal brief. Respondent shall have twenty (20)
days from the receipt of Petitioner's rebuttal brief to file its rebuttal
brief. The arbitrators may extend the time for filing of briefs at the
request of either party.
The arbitrators are relieved from judicial formalities and, in addition to
considering the rules of law and the customs and practices of the insurance and
reinsurance business, shall make their award with a view to effecting the intent
of this Agreement. The decision of the majority shall be final and binding upon
the parties. The costs of arbitration, including the fees of the arbitrators,
shall be shared equally unless the arbitrators decide otherwise. The arbitration
shall be held at the times and places agreed upon by the arbitrators.
-17-
ARTICLE XXIV - INSOLVENCY OF THE COMPANY
In the event of the insolvency of the Company, the reinsurance proceeds
will be paid to the Company or the liquidator on the basis of the amount of the
claim allowed in the insolvency proceeding without diminution by reason of the
inability of the Company to pay all or part of the claim.
The Reinsurers shall be given written notice of the pendency of each claim
against the Company on the policy(ies) reinsured hereunder within a reasonable
time after such claim is filed in the insolvency proceedings. The Reinsurers
shall have the right to investigate each such claim and to interpose, at their
own expense, in the proceeding where such claim is to be adjudicated, any
defenses which it may deem available to the Company or its liquidator. The
expense thus incurred by the Reinsurers shall be chargeable, subject to court
approval, against the insolvent Company as part of the expense of liquidation to
the extent of a proportionate share of the benefit which may accrue to the
Company solely as a result of the defense undertaken by the Reinsurers.
-18-
NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - USA
(1) This Agreement does not cover any loss or liability accruing to the
Company as a member of, or subscriber to, any association of insurers or
reinsurers formed for the purpose of covering nuclear energy risks or as a
direct or indirect reinsurer of any such member, subscriber or association.
(2) Without in any way restricting the operation of paragraph (1) of this
Clause it is understood and agreed that for all purposes of this Agreement all
the original policies of the Company (new, renewal and replacement) of the
classes specified in Clause (ii) of this paragraph (2) from the time specified
in Clause (iii) in this paragraph (2) shall be deemed to include the following
provision (specified as the Limited Exclusion Provision):
Limited Exclusion Provision*
(i) It is agreed that the policy does not apply under any liability
coverage, to INJURY, SICKNESS, DISEASE. DEATH OR DESTRUCTION bodily
injury or property damage with respect to which an insured under the
policy is also an insured under a nuclear energy liability policy
issued by Nuclear Energy Liability Insurance Association, Mutual
Atomic Energy Liability Underwriters or Nuclear Insurance Association
of Canada, or would be an insured under any such policy but for its
termination upon exhaustion of its limit of liability.
(ii) Family Automobile Policies (liability only), Special Automobile
Policies (private passenger automobiles, liability only) Farmers
Comprehensive Personal Liability Policies (liability only),
Comprehensive Personal Liability Policies (liability only) or policies
of a similar nature; and the liability portion of combination forms
related to the four classes of policies stated above, such as the
Comprehensive Dwelling Policy and the applicable types of Homeowners
Policies.
(iii) The inception dates and thereafter of all original policies as
described in (ii) above, whether new, renewal or replacement, being
policies which either
(a) become effective on or after lst May, 1960, or
(b) become effective before that date and contain the Limited
Exclusion Provision set out above;
provided this paragraph (2) shall not be applicable to Family
Automobile Policies, Special Automobile Policies, or policies or
combination policies of a similar nature, issued by the Company on New
York risks, until 90 days following approval of the Limited Exclusion
Provision by the Governmental Authority having jurisdiction thereof.
(3) Except for those classes of policies specified in Clause (ii) of
paragraph (2) and without in any way restricting the operation of paragraph (1)
of this Clause, it is understood and agreed that for all purposes of this
Agreement the original liability policies of the Company (new, renewal and
replacement) affording the following coverages:
Owners, Landlords and Tenants Liability, Contractual Liability, Elevator
Liability, Owners or Contractors (including railroad) Protective Liability,
Manufacturers and Contractors Liability, Product Liability, Professional and
Malpractice Liability, Storekeepers Liability, Garage Liability, Automobile
Liability (including Massachusetts Motor Vehicle or Garage Liability)
shall be deemed to include, with respect to such coverages, from the time
specified in Clause (v) of this paragraph (3), the following provision
(specified as the Broad Exclusion Provision):
Broad Exclusion Provision*
It is agreed that the policy does not apply:
(i) Under any Liability Coverage, to INJURY, SICKNESS, DISEASE, DEATH OR
DESTRUCTION bodily injury or property damage:
(a) with respect to which an insured under the policy is also an
insured under a nuclear energy liability policy issued by Nuclear
Energy Liability Insurance Association, Mutual Atomic Energy
Liability Underwriters or Nuclear Insurance Association of
Canada, or would be an insured under any such policy but for its
termination upon exhaustion of its limit of liability; or
(b) resulting from the hazardous properties of nuclear material and
with respect to which (1) any person or organization is required
to maintain financial protection pursuant to the Atomic Energy
Act of 1954, or any law amendatory thereof, or (2) the insured
is, or had this policy not been issued would be, entitled to
indemnity from the United States of America, or any agency
thereof, under any agreement entered into by the United States of
America, or any agency thereof, with any person or organization.
(ii) Under any Medical Payments Coverage, or under any Supplementary
Payments Provision relating to IMMEDIATE MEDICAL OR SURGICAL RELIEF
first aid to expenses incurred with respect to BODILY INJURY,
SICKNESS, DISEASE OR DEATH bodily injury resulting from the hazardous
properties of nuclear material and arising out of the operation of a
nuclear facility by any person or organization.
(iii) Under any Liability Coverage, to INJURY, SICKNESS, DISEASE, DEATH OR
DESTRUCTION bodily injury or property damage resulting from the
hazardous properties of nuclear material if
(a) the nuclear material (1) is at any nuclear facility owned by, or
operated by or on behalf of, an insured or (2) has been
discharged or dispersed therefrom;
(b) the nuclear material is contained in spent fuel or waste at any
time possessed, handled, used, processed, stored, transported or
disposed of by or on behalf of an insured; or
(c) the INJURY, SICKNESS, DISEASE, DEATH OR DESTRUCTION bodily injury
or property damage arises out of the furnishing by an insured of
services, materials, parts or equipment in connection with the
planning, construction, maintenance, operation or use of any
nuclear facility, but if such facility is located within the
United States of America, its territories, or possessions or
Canada, this exclusion (c) applies only to INJURY TO OR
DESTRUCTION OF PROPERTY AT SUCH NUCLEAR FACILITY property damage
to such nuclear facility and any property thereat.
(iv) As used in this endorsement:
"hazardous properties" include radioactive, toxic or explosive
properties; "nuclear material" means source material, special nuclear
material or byproduct material; "source material", "special nuclear
material", and "byproduct material" have the meanings given them in
the Atomic Energy Act of 1954 or in any law amendatory thereof; "spent
fuel" means any fuel element or fuel component, solid or liquid, which
has been used or exposed to radiation in a nuclear reactor; "waste"
means any waste material (1) containing byproduct material and (2)
resulting from the operation by any person or organization of any
nuclear facility included within the definition of nuclear facility
under paragraph (a) or (b) thereof; "nuclear facility" means
(a) any nuclear reactor,
(b) any equipment or device designed or used for (1) separating the
isotopes of uranium or plutonium, (2) processing or utilizing
spent fuel, or (3) handling, processing or packaging waste,
(c) any equipment or device used for the processing, fabricating or
alloying of special nuclear material if at any time the total
amount of such material in the custody of the insured at the
premises where such equipment or device is located consists of or
contains more than 25 grams of plutonium or uranium 233 or any
combination thereof, or more than 250 grams of uranium 235,
(d) any structure, basin, excavation, premises or place prepared or
used for the storage or disposal of waste
and includes the site on which any of the foregoing is located, all
operations conducted on such site and all premises used for such
operations; "nuclear reactor" means any apparatus designed or used to
sustain nuclear fission in a self-supporting chain reaction or to
contain a ▇▇▇▇▇▇▇▇ ▇▇▇▇ of fissionable material;
WITH RESPECT TO INJURY TO OR DESTRUCTION OF PROPERTY THE WORD "INJURY"
OR "DESTRUCTION" includes all forms of radioactive contamination of
property.
"Property damage" includes all forms of radioactive contamination of
property.
(v) The inception dates and thereafter of all original policies affording
coverages specified in this paragraph (3), whether new, renewal or
replacement, being policies which become effective on or after lst
May, 1960, provided this paragraph (3) shall not be applicable to
1. Garage and Automobile Policies issued by the Company on New York
risks, or
2. statutory liability insurance required under Chapter 90, General
Laws of Massachusetts, until 90 days following approval of the Broad
Exclusion Provision by the Governmental Authority having jurisdiction
thereof.
(4) Without in any way restricting the operation of paragraph (1) of this
Clause, it is understood and agreed that paragraphs (2) and (3) above are not
applicable to original liability policies of the Company in Canada and that with
respect to such policies this Clause shall be deemed to include the Nuclear
Energy Liability Exclusion Provisions adopted by the Canadian Underwriters'
Association or the Independent Insurance Conference of Canada.
*NOTE. The words underlined in the Limited Exclusion Provision and in
the Broad Exclusion Provision shall apply only in relation to original liability
policies which include a Limited Exclusion Provision or a Broad Exclusion
Provision containing those words.
N.M.A. 1590
Page 2 of 2
ADDENDUM NO. 1
Attached to and made a part of
INTERESTS AND LIABILITIES AGREEMENT
NO. A190B
between
MIDWEST MEDICAL INSURANCE COMPANY
and
GENERAL REINSURANCE CORPORATION
The Subscribing Reinsurer acknowledges and accepts the attachment of
Endorsement No. 1 to the Professional Liability Agreement of Reinsurance.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed in duplicate,
this 2nd day of January, 1996,
MIDWEST MEDICAL INSURANCE COMPANY
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Attest: /s/ ▇▇▇ ▇▇▇▇
and this 28th day of December, 1995.
GENERAL REINSURANCE CORPORATION
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
Attest: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
GENERAL REINSURANCE CORPORATION
ENDORSEMENT NO. 1
Attached to and made a part of
AGREEMENT OF REINSURANCE
NO. A190B
between
GENERAL REINSURANCE CORPORATION
and
MIDWEST MEDICAL INSURANCE COMPANY
IT IS MUTUALLY AGREED that, retroactive to its inception date, this
Agreement is amended as follows:
I - The Schedule of Reinsurance set forth in ARTICLE III - LIABILITY OF
THE REINSURER AND COMPANY RETENTION is amended to read:
SCHEDULE OF REINSURANCE
----------------------------------------------------------------------------------
Company
Class of Business Retention Limits of Liability of the Reinsurers
----------------------------------------------------------------------------------
Professional Liability $750,000 each First Excess Cover: The difference
claim/$4,000,000 between $2,000,000 each claim/
annual aggregate $4,000,000 annual aggregate and
the Company Retention
Second Excess Cover: The difference
between the Policy Limit and
$2,000,000 each claim/$4,000,000
annual aggregate, subject to the
provisions of the article entitled
COMPANY POLICY AMOUNTS
Professional Premises $750,000 each First Excess Cover: The next
Liability occurrence $250,000 each occurrence"
----------------------------------------------------------------------------------
II - Sub-paragraph (a) of ARTICLE VIII - COMPANY POLICY AMOUNTS is
amended to read:
"(a) Professional Liability
(1) As respects policies issued $5,000,000 each claim
in the State of Iowa $7,500,000 annual aggregate
(2) As respects policies issued $5,000,000 each claim
in all other states $5,000,000 annual aggregate"
III - Sub-paragraph (b) of ARTICLE XIII - REINSURANCE PREMIUM AND
COMMISSION is amended to read:
"(b) For the Second Excess Cover:
(1) For the layer of $1,000,000 each claim in excess of $2,000,000
each claim/$4,000,000 annual aggregate, 60% of the Company's
gross earned premium for the layer of $1,000,000 each
claim/$1,000,000 annual aggregate in excess of $1,000,000 each
claim/$3,000,000 annual aggregate.
(2) For the layer of $1,000,000 each claim in excess of $3,000,000
each claim, 65% of the Company's gross earned premium for the
layer of $1,000,000 each claim in excess of $2,000,000 each
claim/ $4,000,000 annual aggregate.
(3) For the layer of $1,000,000 each claim in excess of $4,000,000
each claim, 70% of the Company's gross earned premium for the
layer of $1,000,000 each claim in excess of $3,000,000 each
claim."
IN WITNESS WHEREOF, the parties hereto have caused this Endorsement to be
executed in duplicate this 28th day of December, 1995.
GENERAL REINSURANCE CORPORATION
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
Attest: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
MIDWEST MEDICAL INSURANCE COMPANY
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Attest: /s/ ▇▇▇ ▇▇▇▇
-2-
Endorsement No. 1
Agreement No. A190B
Company, calculated in accordance with the Company's rates, which
rates are on file with the Reinsurers.
The reinsurance premiums set forth in sub-paragraph (b) above shall be
subject to a fixed commission allowance of 15%.
The reinsurance premium set forth in sub-paragraph (a) above is provisional
and shall be adjusted in accordance with the provisions of the article entitled
ADJUSTMENT OF REINSURANCE PREMIUM.
ARTICLE XIV - ADJUSTMENT OF REINSURANCE PREMIUM
The adjusted reinsurance premium for the First Excess Cover for each
experience period shall be not more than 115% nor less than 28% of the net
provisional reinsurance premium earned during the experience period and, subject
to such limitations, shall be equivalent to 117.5% of the reinsurance loss
incurred for the experience period. Calculation of the adjusted reinsurance
premium for each experience period shall be independent of the results of any
other experience period.
With respect to the adjusted reinsurance premium and the calculation
thereof, the following interpretations and reporting provisions shall apply:
(a) EXPERIENCE PERIOD
The initial experience period shall be from January 1, 1995, through
December 31, 1997, and thereafter each experience period shall consist
of 36 months to begin concurrently with the expiration of the previous
experience period; however,
(1) Should the date of termination of this Agreement coincide with
the completion of an experience period, such experience period
and the period from the date of termination until expiration
or termination of the reinsurance, if any, then in effect
shall be combined and shall constitute a single experience
period;
(2) Should the date of termination of this Agreement not coincide
with the completion of an experience period, the following
periods shall be combined and shall constitute a single experi
ence period:
-10-
and by state for the preceding calendar quarter for policies reinsured
hereunder.
(b) FIRST EXCESS REINSURANCE PREMIUM
On or before each April 30, July 31, October 31, and January 31,
the Company shall pay to the Reinsurers one quarter of the annual
deposit reinsurance premium stipulated in sub-paragraph (a) of the
article entitled REINSURANCE PREMIUM AND COMMISSION.
On or before the February 15 after the third anniversary of the end of
each calendar year, the Company shall calculate the reinsurance
premium for the First Excess Cover for such calendar year in
accordance with said sub-paragraph (a), shall balance such amount
against the annual deposit reinsurance premium previously paid for
such calendar year, and the difference due either party shall be
remitted promptly.
(c) SECOND EXCESS AND REPORTING ENDORSEMENTS REINSURANCE PREMIUM
On or before each May 15, August 15, November 15, and February 15, the
Company shall calculate the reinsurance premium for the Second Excess
Cover and for reporting endorsements for the preceding calendar
quarter in accordance with the provisions of sub-paragraphs (b) and
(c) of the article entitled REINSURANCE PREMIUM AND COMMISSION and
remit such amounts to the Reinsurers.
(d) CLAIMS AND LOSSES
The Company shall report promptly to the Reinsurers each claim or
loss for which the Company's estimated amount of net loss is 50% or
more of the amount of the Company Retention and shall also report all
cases of serious injury which, regardless of considerations of
liability or coverage, might involve this reinsurance, including but
not limited to the following:
(1) Brain injury;
(2) Spinal cord injury and/or other damage resulting in significant
sensory and/or motor loss;
(3) Fatalities of wage earners, women with minor children and all
fatalities in jurisdictions where mental anguish and/or emotional
distress are recoverable;
(4) Blindness;
-13-
ENDORSEMENT NO. 2
Attached to and made a part of
PROFESSIONAL LIABILITY
AGREEMENT OF REINSURANCE
between
MIDWEST MEDICAL INSURANCE COMPANY
and
The Subscribing Reinsurers executing the
Interests and Liabilities Agreements
attached to this Agreement
IT IS MUTUALLY AGREED that, retroactive to its inception date, this
Agreement is amended as follows:
I - Sub-paragraph (a) of ARTICLE XIII - REINSURANCE PREMIUM AND
COMMISSION is amended to read:
"(a) For the First Excess Cover including coverage set forth in the
articles entitled COMBINATION COVER, LOSS IN EXCESS OF POLICY LIMITS,
and EXTRA CONTRACTUAL OBLIGATIONS, 75% of 17.52% of the Company's
gross earned premium for the first $2,000,000 each claim/$4,000,000
annual aggregate or the first $1,000,000 each occurrence, as
applicable, subject to an annual deposit reinsurance premium of
$5,000,000."
II - Sub-paragraph (b) of ARTICLE XIV - ADJUSTMENT OF REINSURANCE PREMIUM
is amended to read:
"(b) NET PROVISIONAL REINSURANCE PREMIUM EARNED
This term shall mean 17.52% of the Company's gross earned premium for
the first $2,000,000 each claim/$4,000,000 annual aggregate or the
first $1,000,000 each occurrence, as applicable."
ENDORSEMENT NO. 3
Attached to and made a part of
PROFESSIONAL LIABILITY
AGREEMENT OF REINSURANCE
between
MIDWEST MEDICAL INSURANCE COMPANY
and
The Subscribing Reinsurers executing the
Interests and Liabilities Agreements
attached to this Agreement
IT IS MUTUALLY AGREED that, retroactive to its inception date, this
Agreement is amended as follows:
I - Sub-paragraph (a) of ARTICLE XIII - REINSURANCE PREMIUM AND
COMMISSION is amended to read:
"(a) For the First Excess Cover including coverage set forth in the
articles entitled COMBINATION COVER, LOSS IN EXCESS OF POLICY
LIMITS, and EXTRA CONTRACTUAL OBLIGATIONS, 75% of 17.52% of the
Company's gross earned premium for the first $2,000,000 each
claim/$4,000,000 annual aggregate or the first $1,000,000 each
occurrence, as applicable, subject to an annual deposit reinsurance
premium of $5,000,000."
II - Sub-paragraph (b) of ARTICLE XIV - ADJUSTMENT OF REINSURANCE PREMIUM
is amended to read:
"(b) NET PROVISIONAL REINSURANCE PREMIUM EARNED
This term shall mean 17.52% of the Company's gross earned premium
for the first $2,000,000 each claim/$4,000,000 annual aggregate or
the first $1,000,000 each occurrence, as applicable."
ENDORSEMENT NO. 3
Attached to and made a part of
PROFESSIONAL LIABILITY
AGREEMENT OF REINSURANCE
between
MIDWEST MEDICAL INSURANCE COMPANY
and
The Subscribing Reinsurers executing the
Interests and Liabilities Agreements
attached to this Agreement
IT IS MUTUALLY AGREED that, as respects new and renewal policies of the
Company becoming effective at and after 12:01 A.M., January 1, 1996, this
Agreement is amended as follows:
I - The Schedule of Reinsurance set forth in ARTICLE III - LIABILITY OF
THE REINSURERS AND COMPANY RETENTION is amended to read:
"SCHEDULE OF REINSURANCE
---------------------------------------------------------------------------------------
Company
Class of Business Retention Limits of Liability of the Reinsurers
---------------------------------------------------------------------------------------
(a) Professional Liability $750,000 each First Excess Cover: The difference
(including the claim/$4,000,000 between $2,000,000 each claim/
Physicians Coverage annual aggregate $4,000,000 annual aggregate and
Endorsement - the Company Retention
Separate Limits of
Liability under Health Second Excess Cover: The difference
Care Systems Professional between the Policy Limit and $2,000,000
Liability policies) each claim/$4,000,000 annual aggregate,
subject to the provisions of the article
entitled COMPANY POLICY AMOUNTS
(b) Professional Premises $750,000 each First Excess Cover: The next $250,000
Liability occurrence each occurrence
ADDENDUM NO. 2
Attached to and made a part of
INTERESTS AND LIABILITIES AGREEMENT
NO. A190B
between
MIDWEST MEDICAL INSURANCE COMPANY
and
GENERAL REINSURANCE CORPORATION
The Subscribing Reinsurer acknowledges and accepts the attachment of
Endorsement No. 2 to the Professional Liability Agreement of Reinsurance.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed in duplicate,
this 20th day of May, 1996,
MIDWEST MEDICAL INSURANCE COMPANY
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Attest: /s/ ▇▇▇ ▇. ▇▇▇▇
and this 12th day of April, 1996.
GENERAL REINSURANCE CORPORATION
/s/ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
Vice President
Attest: /s/ [ILLEGIBLE]
GENERAL REINSURANCE CORPORATION
SCHEDULE OF REINSURANCE (CONT'D.)
--------------------------------------------------------------------------------------------
Company
Class of Business Retention Limits of Liability of the Reinsurers
--------------------------------------------------------------------------------------------
(c) Health Care System $500,000 each First Excess Cover: The difference
Professional Liability claim or occurrence/ between $2,000,000 each claim or
(except as provided $3,000,000 annual occurrence/$3,000,000 annual
in (a) above) aggregate aggregate and the Company Retention
Second Excess Cover: The difference
between the Policy Limit and $2,000,000
each claim or occurrence/$3,000,000
annual aggregate, subject to the
provisions of the article entitled
COMPANY POLICY AMOUNTS"
--------------------------------------------------------------------------------------------
II - The following sub-paragraph (c) is added to ARTICLE VIII - COMPANY
POLICY AMOUNTS:
"(c) Health Care Systems Professional $6,000,000 each claim or
Liability occurrence/
$8,000,000 annual aggregate"
III - Sub-paragraphs (a), (b) and (h) of ARTICLE IX - DEFINITIONS are
amended to read and sub-paragraph (1) is added to said ARTICLE as
follows:
"(a) PROFESSIONAL LIABILITY BUSINESS
This term shall mean physicians', surgeons' and dentists'
professional liability policies issued by the Company to cover
professional liability on a claims made basis and professional
premises liability on an occurrence basis for insureds practicing in
the States of Iowa, Minnesota, Nebraska, North Dakota, South Dakota
and Wisconsin."
"(b) INSURED
This term shall mean each insured who is provided a separate limit
of liability under the Company's policy(ies)."
-2-
"(h) OCCURRENCE
This term shall have the same meaning as in the applicable Company
policy form."
"(i) HEALTH CARE SYSTEMS PROFESSIONAL LIABILITY BUSINESS
This term shall mean the primary healthcare systems liability
protection policies issued by the Company to health care systems
located in the States of Iowa, Minnesota, Nebraska, North Dakota,
South Dakota and Wisconsin. Such primary policies provide
professional liability coverage on a claims-made basis, general
liability coverage on an occurrence basis, and employee benefits
liability on a claims-made basis. This term shall also mean the
umbrella/excess healthcare systems liability protection policies
issued by the Company to health care systems located in the
aforementioned states. Such umbrella/excess policies provide
professional liability and employee benefits liability coverage on a
claims-made basis and umbrella coverage on an occurrence basis in
excess of:
(1) Primary healthcare systems liability policies written by the
Company with minimum limits of liability of $1,000,000 each
claim or occurrence/$1,000,000 annual aggregate;
(2) Automobile liability policies with minimum limits of liability
of $1,000,000 each accident, combined single limit;
(3) Employers liability coverage written under workers compensation
and employers liability policies with minimum limits of
liability of $100,000 each accident bodily injury by accident,
$500,000 policy limit bodily injury by disease, $100,000 each
employee bodily injury by disease.
For the purposes of this Agreement, the combination of the Company's
primary and umbrella/excess policies issued to any one healthcare
systems shall be considered one policy."
IV - ARTICLE XIII is amended to read:
"ARTICLE XIII - REINSURANCE PREMIUM AND COMMISSION
The Company shall pay to the Reinsurers:
(a) For the First Excess Cover including coverage set forth in the
articles entitled COMBINATION COVER, LOSS IN EXCESS OF POLICY
-3-
LIMITS, and EXTRA CONTRACTUAL OBLIGATIONS, 75% of 17.52% of the
Company's gross earned premium for the first:
(1) $2,000,000 each claim/$4,000,000 annual aggregate as respects
professional liability business;
(2) $1,000,000 each occurrence as respects professional premises
liability business;
(3) $2,000,000 each claim/$3,000,000 annual aggregate as respects
health care system professional liability business,
subject to an annual deposit reinsurance premium of $5,000,000.
(b) For the Second Excess Cover:
(1) As respects professional liability business:
(i) For the layer of $1,000,000 each claim/$1,000,000 annual
aggregate in excess of $2,000,000 each claim/$4,000,000
annual aggregate, 60% of the Company's gross earned
premium for the layer of $1,000,000 each claim/$1,000,000
annual aggregate in excess of $1,000,000 each
claim/$3,000,000 annual aggregate;
(ii) For the layer of $1,000,000 each claim in excess of
$3,000,000 each claim/$5,000,000 annual aggregate, 65% of
the Company's gross earned premium for the layer of
$1,000,000 each claim/$1,000,000 annual aggregate in
excess of $2,000,000 each claim/ $4,000,000 annual
aggregate;
(iii) For the layer of $1,000,000 each claim in excess of
$4,000,000 each claim/$ 5,000,000 annual aggregate, 70%
of the Company's gross earned premium for the layer of
$1,000,000 each claim in excess of $3,000,000 each
claim/$5,000,000 annual aggregate.
(2) As respects health care system professional liability business:
(i) For the layer $1,000,000 each claim excess of $2,000,000
each claim, 50% of the Company's gross earned premium for
the layer $1,000,000 each claim in excess of $1,000,000
each claim;
-4-
(ii) For the layer $1,000,000 each claim excess of $3,000,000
each claim, 55% of the Company's gross earned premium for
the layer $1,000,000 each claim in excess of $2,000,000
each claim;
(iii) For the layer $1,000,000 each claim excess of $4,000,000
each claim, 60% of the Company's gross earned premium for
the layer $1,000,000 each claim in excess of $3,000,000
each claim;
(iv) For the layer $1,000,000 each claim excess of $5,000,000
each claim, 65% of the Company's gross earned premium for
the layer $1,000,000 each claim in excess of $4,000,000
each claim,
subject to a minimum reinsurance premium of $2,500 per
$1,000,000 layer.
(c) As respects the reinsurance coverage afforded for reporting
endorsements, 100% of the Company's actual premiums for limits in
excess of the Company Retention for each reporting endorsement
issued by the Company, calculated in accordance with the Company's
rates, which rates are on file with the Reinsurers.
The reinsurance premiums set forth in sub-paragraph (b)(1) above shall be
subject to a fixed commission allowance of 15%. The reinsurance premiums and
minimum reinsurance premiums set forth in (b)(2) above shall be subject to a
fixed commission allowance of 20%.
The reinsurance premium set forth in sub-paragraph (a) above is provisional
and shall be adjusted in accordance with the provisions of the article entitled
ADJUSTMENT OF REINSURANCE PREMIUM."
V - Sub-paragraph (b) of ARTICLE XIV - ADJUSTMENT OF REINSURANCE PREMIUM
is amended to read:
"(b) NET PROVISIONAL REINSURANCE PREMIUM EARNED
This term shall mean 17.52% of the Company's gross earned premium
for the first:
(1) $2,000,000 each claim/$4,000,000 annual aggregate as respects
professional liability business;
-5-
(2) $1,000,000 each occurrence as respects professional premises
liability business;
(3) $2,000,000 each claim/$3,000,000 annual aggregate as respects
health care system professional liability business."
VI - The second paragraph of ARTICLE XX - COMMENCEMENT AND TERMINATION is
amended to read:
"This Agreement may be terminated by either party sending to the other, by
registered mail to its principal office, notice stating the time and date when,
not less than 90 days after the date of mailing of such notice, termination
shall be effective. As respects insurance coverages written on a claims-made
basis, the Reinsurers shall not be liable for claims first made in accordance
with the policy provisions at and after the effective time and date of
termination, unless such claim is first made during an Extended Reporting Period
in force at the time and date of termination. As respects insurance coverages
written on an occurrence basis, the Reinsurers shall not be liable for claims
and losses resulting from occurrences taking place at and after the effective
time and date of termination."
-6-
Endorsement No. 3
ENDORSEMENT NO. 4
Attached to and made a part of
PROFESSIONAL LIABILITY
AGREEMENT OF REINSURANCE
between
MIDWEST MEDICAL INSURANCE COMPANY
and
The Subscribing Reinsurers executing the
Interests and Liabilities Agreements
attached to this Agreement
IT IS MUTUALLY AGREED that, as respects new and renewal policies of the
Company becoming effective at and after 12:01 A.M., January 1, 1997, this
Agreement is amended as follows:
II - Sub-paragraphs (a), (c), (d) and (i) of ARTICLE IX - DEFINITIONS are
amended to read and sub-paragraph j) is added to said ARTICLE as
follows:
"(a) PROFESSIONAL LIABILITY BUSINESS
This term shall mean physicians', surgeons' and dentists'
professional liability policies issued by the Company to cover
professional liability on a claims made basis and professional
premises liability on an occurrence basis for insureds practicing in
the States of Illinois, Iowa, Minnesota, Nebraska, North Dakota,
South Dakota and Wisconsin."
"(c) COMPANY RETENTION
This term shall mean the amount the Company shall retain for its own
account; however, this requirement shall be satisfied if this amount
is retained by the Company or its affiliated companies under common
management or common ownership or by an insured under a deductible
or self-insured retention of up to $250,000 each claim or
occurrence."
"(d) NET LOSS
This term shall mean all payments by the Company within the limits
of its policies in settlement of claims or losses, payment of
benefits, or satisfaction of judgments or awards after deduction of
recoveries and after
deduction of amounts due from all other reinsurance, whether
collectible or not. This term shall include payments by the Company
or the insured under deductibles and self-insured retentions of up
to $250,000 each claim or occurrence. This term shall not include
adjustment expense. If the Company becomes insolvent, this
definition shall be modified to the extent set forth in the article
entitled INSOLVENCY OF THE COMPANY."
"(i) HEALTH CARE SYSTEMS PROFESSIONAL LIABILITY BUSINESS
This term shall mean the primary healthcare systems liability
protection policies issued by the Company to health care systems
located in the States of Illinois, Iowa, Minnesota, Nebraska, North
Dakota, South Dakota and Wisconsin. Such primary policies provide
professional liability coverage on a claims-made basis, general
liability coverage on an occurrence basis, and employee benefits
liability on a claims-made basis. This term shall also mean the
umbrella/excess healthcare systems liability protection policies
issued by the Company to health care systems located in the
aforementioned states. Such umbrella/excess policies provide
professional liability and employee benefits liability coverage on a
claims-made basis and umbrella coverage on an occurrence basis in
excess of:
(1) Primary healthcare systems liability policies written by the
Company with minimum limits of liability of $1,000,000 each
claim or occurrence/$1,000,000 annual aggregate;
(2) Automobile liability policies with minimum limits of liability
of $1,000,000 each accident, combined single limit;
(3) Employers liability coverage written under workers compensation
and employers liability policies with minimum limits of
liability of $100,000 each accident bodily injury by accident,
$500,000 policy limit bodily injury by disease, $100,000 each
employee bodily injury by disease.
For the purposes of this Agreement, the combination of the Company's
primary and umbrella/excess policies issued to any one healthcare
systems shall be considered one policy."
"(j)" COMPANY'S GROSS EARNED PREMIUM
This term shall mean the earned premium of the Company before
application of deductible and self-insured retention credits."
-2-
II - Exclusion (h) of ARTICLE X - EXCLUSIONS is amended to read:
"(h) Any policy with a deductible or self-insured retention greater than
$250,000 each claim or occurrence."
-3-
Endorsement ▇▇. ▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇
Attached to and made a part of
PROFESSIONAL LIABILITY
AGREEMENT OF REINSURANCE
between
MIDWEST MEDICAL INSURANCE COMPANY
and
The Subscribing Reinsurers executing the
Interests and Liabilities Agreements
attached to this Agreement
IT IS MUTUALLY AGREED that, as respects new and renewal policies of the
Company becoming effective at and after 12:01 A.M., January 1, 1996, this
Agreement is amended as follows:
I - The Schedule of Reinsurance set forth in ARTICLE III - LIABILITY OF
THE REINSURERS AND COMPANY RETENTION is amended to read:
"SCHEDULE OF REINSURANCE
----------------------------------------------------------------------------------------
Company
Class of Business Retention Limits of Liability of the Reinsurers
----------------------------------------------------------------------------------------
(a) Professional Liability $750,000 each First Excess Cover: The difference
(including the claim/$4,000,000 between $2,000,000 each claim/
Physicians Coverage annual aggregate $4,000,000 annual aggregate and
Endorsement - the Company Retention
Separate Limits of
Liability under Health Second Excess Cover: The difference
Care Systems Professional between the Policy Limit and $2,000,000
Liability policies) each claim/$4,000,000 annual aggregate,
subject to the provisions of the article
entitled COMPANY POLICY AMOUNTS
(b) Professional Premises $750,000 each First Excess Cover: The next $250,000
Liability occurrence each occurrence
SCHEDULE OF REINSURANCE (CONT'D.)
---------------------------------------------------------------------------------------------
Company
Class of Business Retention Limits of Liability of the Reinsurers
---------------------------------------------------------------------------------------------
(c) Health Care System $500,000 each First Excess Cover: The difference
Professional Liability claim or occurrence/ between $2,000,000 each claim or
(except as provided $3,000,000 annual occurrence/$3,000,000 annual
in (a) above) aggregate aggregate and the Company Retention
Second Excess Cover: The difference
between the Policy Limit and $2,000,000
each claim or occurrence/$3,000,000
annual aggregate, subject to the
provisions of the article entitled
COMPANY POLICY AMOUNTS"
---------------------------------------------------------------------------------------------
II - The following sub-paragraph (c) is added to ARTICLE VIII - COMPANY
POLICY AMOUNTS:
"(c) Health Care Systems Professional $6,000,000 each claim or
Liability occurrence/$8,000,000 annual
aggregate"
III - Sub-paragraphs (b) and (h) of ARTICLE IX - DEFINITIONS are amended
to read and sub-paragraph (i) is added to said ARTICLE as follows:
"(b) INSURED
This term shall mean each insured who is provided a separate limit
of liability under the Company's policy(ies)."
"(h) OCCURRENCE
This term shall mean have the same meaning as in the applicable
Company policy form."
"(i) HEALTH CARE SYSTEMS PROFESSIONAL LIABILITY BUSINESS
This term shall mean the primary healthcare systems liability
protection policies issued by the Company to health care systems
located in the States of Iowa, Minnesota, North Dakota and South
Dakota. Such
-2-
primary policies provide professional liability coverage on a
claims-made basis and general liability coverage on an occurrence
basis. This term shall also mean the umbrella/excess healthcare
systems liability protection, policies issued by the Company to
health care systems located in the State of Minnesota. Such
umbrella/excess policies provide professional liability coverage on
a claims-made basis and umbrella coverage on an occurrence basis in
excess of:
(1) Primary healthcare systems liability policies written by the
Company with minimum limits of liability of $1,000,000 each
claim or occurrence/$1,000,000 annual aggregate;
(2) Automobile liability policies with minimum limits of liability
of $1,000,000 each accident, combined single limit;
(3) Employers liability coverage written under workers compensation
and employers liability policies with minimum limits of
liability of $100,000 each accident bodily injury by accident,
$500,000 policy limit bodily injury by disease, $100,000 each
employee bodily injury by disease.
For the purposes of this Agreement, the combination of the Company's
primary and umbrella/excess policies issued to any one healthcare
systems shall be considered one policy."
IV - The following paragraph is added as the last paragraph to ARTICLE
XIII - REINSURANCE PREMIUM AND COMMISSION:
"The reinsurance premium and commission provisions set forth above do not
apply to the healthcare systems professional liability business reinsured
hereunder. As respects such business, the Company shall pay to the Reinsurers an
appropriate percentage of the Company's earned premium for the First Excess
Cover and for the Second Excess Cover, as separately agreed to by the Company
and the Reinsurers and as kept on file with the Reinsurers. Such First Excess
Cover reinsurance premium as respects healthcare system medical professional and
general liability is provisional and shall be adjusted in accordance with the
provisions of the article entitled ADJUSTMENT OF REINSURANCE PREMIUM. Such
Second Excess Cover reinsurance premium shall be subject to a fixed commission
allowance of 20%."
-3-
V - The following sub-paragraph (g) is added to ARTICLE XIV - ADJUSTMENT
OF REINSURANCE PREMIUM:
"(g) FIRST EXCESS COVER
For purposes of this Article, whenever the term First Excess Cover
is used, as respects the health care systems professional liability
business reinsured hereunder, such term shall include only
healthcare system medical professional and general liability."
VI - The second paragraph of ARTICLE XX - COMMENCEMENT AND TERMINATION is
amended to read:
"This Agreement may be terminated by either party sending to the other,
by registered mail to its principal office, notice stating the time and date
when, not less than 90 days after the date of mailing of such notice,
termination shall be effective. As respects insurance coverages written on a
claims-made basis, the Reinsurers shall not be liable for claims first made
in accordance with the policy provisions at and after the effective time and
date of termination, unless such claim is first made during an Extended
Reporting Period in force at the time and date of termination. As respects
insurance coverages written on an occurrence basis, the Reinsurers shall not
be liable for claims and losses resulting from occurrences taking place at
and after the effective time and date of termination."
-4-
Endorsement No. 2
ADDENDUM NO. 3
Attached to and made a part of
INTERESTS AND LIABILITIES AGREEMENT
NO. A190B
between
MIDWEST MEDICAL INSURANCE COMPANY
and
GENERAL REINSURANCE CORPORATION
The Subscribing Reinsurer acknowledges and accepts the attachment of
Endorsement No. 3 to the Professional Liability Agreement of Reinsurance.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed in duplicate,
this 20th day of May, 1996,
MIDWEST MEDICAL INSURANCE COMPANY
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Attest:
and this 10th day of April, 1996.
GENERAL REINSURANCE CORPORATION
/s/ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
Vice President
Attest: /s/ [ILLEGIBLE]
GENERAL REINSURANCE CORPORATION
ADDENDUM NO. 4
Attached to and made a part of
INTERESTS AND LIABILITIES AGREEMENT
NO. A190B
between
MIDWEST MEDICAL INSURANCE COMPANY
and
GENERAL REINSURANCE CORPORATION
The Subscribing Reinsurer acknowledges and accepts the attachment of
Endorsement No. 4 to the Professional Liability Agreement of Reinsurance.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed in duplicate,
this 30th day of January, 1997,
MIDWEST MEDICAL INSURANCE COMPANY
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
Attest:
and this 13th day of January, 1997.
GENERAL REINSURANCE CORPORATION
/s/ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
Vice President
Attest: /s/ [ILLEGIBLE]
GENERAL REINSURANCE CORPORATION
ADDENDUM NO. 5
Attached to and made a part of
INTERESTS AND LIABILITIES AGREEMENT
NO. A190B
between
MIDWEST MEDICAL INSURANCE COMPANY
and
GENERAL REINSURANCE CORPORATION
The Subscribing Reinsurer acknowledges and accepts the attachment of
Endorsement No. 5 to the Professional Liability Agreement of Reinsurance.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed in duplicate,
this 2 day of July, 1997,
MIDWEST MEDICAL INSURANCE COMPANY
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Attest:
and this 26th day of June, 1997.
GENERAL REINSURANCE CORPORATION
/s/ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
Vice President
Attest:
GENERAL REINSURANCE CORPORATION
ENDORSEMENT NO. 5
Attached to and made a part of
PROFESSIONAL LIABILITY
AGREEMENT OF REINSURANCE
between
MIDWEST MEDICAL INSURANCE COMPANY
and
The Subscribing Reinsurers executing the
Interests and Liabilities Agreements
attached to this Agreement
IT IS MUTUALLY AGREED that, as respects new and renewal policies of the
Company becoming effective at and after 12:01 A.M., January 1, 1996 and
notwithstanding the provisions of Endorsement No. 3 to contrary, Sub-paragraph
(b) of ARTICLE XIV - ADJUSTMENT OF REINSURANCE PREMIUM is amended to read:
"(b) NET PROVISIONAL REINSURANCE PREMIUM EARNED
This term shall mean 17.52% of the Company's gross earned premium
for the first:
(1) $2,000,000 each claim/$4,000,000 annual aggregate as respects
professional liability business;
(2) $1,000,000 each occurrence as respects professional premises
liability business;
(3) $2,000,000 each claim/$3,000,000 annual aggregate as respects
health care system professional liability business.
However, this term shall not include any portion of the Company's
gross earned premium in the State of Nebraska."
ADDENDUM NO. 2
Attached to and made part of the
INTERESTS AND LIABILITIES AGREEMENT
between
Midwest Medical Insurance Company
Minneapolis, Minnesota
and
Hannover Ruckversicherungs-Aktiengesellschaft
and
▇▇▇▇▇ und ▇▇▇▇▇ Ruckversicherungs-Aktiengesellschaft
both of Hannover, Germany
(HEREINAFTER REFERRED TO AS THE "SUBSCRIBING REINSURER")
The SUBSCRIBING REINSURER acknowledges and accepts the attachment of Endorsement
No. 2 to the Professional Liability Agreement of Reinsurance, effective
January 1, 1995.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed
in duplicate.
Minneapolis, Minnesota, this 10 day of March 1997.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇ VP Underwriting
--------------------------------------------------
Midwest Medical Insurance Company
Hannover, Germany, this 3rd day of February 1997.
Hannover Ruckversicherungs-Aktiengesellschaft 80.0%
▇▇▇▇▇ und ▇▇▇▇▇ Ruckversicherungs-Aktienceselischaft 20.0%
Total 100.0%
Each company participating to the extent of the respective proportions of the
liability assumed severally and not jointly.
---------------------------------------------------------
Hannover Ruckversicherungs-Aktiengesellschaft
▇▇▇▇▇ und ▇▇▇▇▇ Ruckversicherungs-Aktiengeselischaft
ADDENDUM NO. 3
Attached to and made part of the
INTERESTS AND LIABILITIES AGREEMENT
between
MIDWEST MEDICAL INSURANCE COMPANY
Minneapolis, Minnesota
and
HANNOVER RUCKVERSICHERUNGS-AKTIENGESELISCHAFT
and
▇▇▇▇▇ UND ▇▇▇▇▇ RUCKVERSICHERUNGS-AKTIENGESELLSCHAFT
both of Hannover, Germany
(HEREINAFTER REFERRED TO AS THE "SUBSCRIBING REINSURER")
The SUBSCRIBING REINSURER acknowledges and accepts the attachment of Endorsement
No. 3 to the Professional Liability Agreement of Reinsurance, effective January
1, 1996.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed
in duplicate.
Minneapolis, Minnesota, this 10 day of March 1997.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇ VP Underwriting
----------------------------------------
Midwest Medical Insurance Company
Hannover, Germany, this 3rd day of February 1997.
Hannover Ruckversicherungs-Aktiengesellschaft 80.0%
▇▇▇▇▇ und ▇▇▇▇▇ Ruckversicherungs-Aktiengesellschaft 20.0%
Total 100.0%
Each company participating to the extent of the respective proportions of the
liability assumed severally and not jointly.
---------------------------------------------------------
Hannover Ruckversicherungs-Aktiengesellschaft
▇▇▇▇▇ und ▇▇▇▇▇ Ruckversicherungs-Aktiengesellschaft
TERMINATION ADDENDUM
attached to and made part of the
INTERESTS AND LIABILITIES AGREEMENT
between
Midwest Medical Insurance Company
Minneapolis, Minnesota
and
Hannover Ruckversicherungs-Aktiengesellschaft
and
▇▇▇▇▇ und ▇▇▇▇▇ Ruckversicherungs-Aktiengesellschaft
both of Hannover, Germany
(HEREINAFTER REFERRED TO AS THE "SUBSCRIBING REINSURER")
with respect to the
PROFESSIONAL LIABILITY
AGREEMENT OF REINSURANCE
EFFECTIVE: JANUARY 1, 1995
IT IS HEREBY AGREED that this Interests and Liabilities Agreement and the
SUBSCRIBING REINSURER'S 15.0% share in the interests and liabilities of the
"Reinsurers" under the Agreement of Reinsurance shall be terminated at 12:01
a.m., January 1, 1997, with respect to claims first made in accordance with the
policy provisions at and after that time and date, unless such claim is first
made during an Extended Reporting Period in force at that time and date, as
respects insurance coverages written on a claims-made basis and claims and
losses resulting from occurrences taking place at and after that time and date
as respects insurance coverages written on an occurrence basis.
IN WITNESS WHEREOF, the parties hereto by their respective duly authorized
representatives have executed this Addendum as of the dates undermentioned at:
Minneapolis, Minnesota, this _____ day of ______________________ 199__.
----------------------------------------
Midwest Medical Insurance Company
Hannover, Germany, this ____ day of ____________________________ 199__.
Hannover Ruckversicherungs-Aktiengesellschaft 80.0%
▇▇▇▇▇ und ▇▇▇▇▇ Ruckversicherungs-Aktiengesellschaft 20.0%
Total 100.0%
Each company participating to the extent of the respective proportions of the
liability assumed severally and not jointly.
---------------------------------------------------------------
Hannover Ruckversicherungs-Aktiengesellschaft
▇▇▇▇▇ und ▇▇▇▇▇ Ruckversicherungs-Aktiengesellschaft
INTERESTS AND LIABILITIES AGREEMENT
entered into by and between
Midwest Medical Insurance Company
Minneapolis, Minnesota
and
Hannover Ruckversicherungs-Aktiengesellschaft
Hannover, Germany
(HEREINAFTER REFERRED TO AS THE "SUBSCRIBING REINSURER")
IT IS HEREBY AGREED that the SUBSCRIBING REINSURER shall have a 15.0% share in
the interests and liabilities of the "Reinsurers" as set forth in the attached
Agreement of Reinsurance entitled:
PROFESSIONAL LIABILITY
AGREEMENT OF REINSURANCE
EFFECTIVE: JANUARY 1, 1995
(as amended by Endorsement Nos. 1 through 3)
IT IS FURTHER AGREED that this Interests and Liabilities Agreement shall become
effective at 12:01 a.m., January 1, 1997, with respect to claims first made in
accordance with the policy provisions at and after that time and date, unless
such claim is first made during an Extended Reporting Period in force at that
time and date, as respects insurance coverages written on a claims-made basis
and claims and losses resulting from occurrences taking place at and after that
time and date as respects insurance coverages written on an occurrence basis,
and shall continue in force until terminated in accordance with the provisions
of the attached Agreement of Reinsurance.
IT IS ALSO AGREED that the following Articles shall apply to the SUBSCRIBING
REINSURER'S share in the attached Agreement of Reinsurance:
"ARTICLE XXVI - UNAUTHORIZED REINSURERS
A. If the Reinsurers are unauthorized in any state of the United States
of America or the District of Columbia, the Reinsurers agree to fund
their share of the Company's ceded outstanding loss and loss
adjustment expense reserves including incurred but not reported loss
reserves (to be mutually agreed at each December 31) by:
1. Clean, irrevocable and unconditional letters of credit issued
and confirmed, if confirmation is required by the insurance
regulatory authorities involved, by a bank or banks meeting the
NAIC Securities Valuation Office credit standards for issuers
of letters of credit and acceptable to said insurance
regulatory authorities; and/or
Page 1 of 4
2. Escrow accounts for the benefit of the Company; and/or
3. Cash advances;
if, without such funding, a penalty would accrue to the Company on
any financial statement it is required to file with the insurance
regulatory authorities involved. The Reinsurers, at their sole
option, may fund in other than cash if its method and form of
funding are acceptable to the insurance regulatory authorities
involved.
B. With regard to funding in whole or in part by letters of credit, it
is agreed that each letter of credit will be in a form acceptable to
insurance regulatory authorities involved, will be issued for a term
of at least one year and will include an "evergreen clause," which
automatically extends the term for at least one additional year at
each expiration date unless written notice of non-renewal is given
to the Company not less than 30 days prior to said expiration date.
The Company and the Reinsurers further agree, notwithstanding
anything to the contrary in this Contract, that said letters of
credit may be drawn upon by the Company or its successors in
interest at any time, without diminution because of the insolvency
of the Company or the Reinsurers, but only for one or more of the
following purposes:
1. To reimburse itself for the Reinsurers' share of losses and/or
loss adjustment expense paid under the terms of policies
reinsured hereunder, unless paid in cash by the Reinsurers;
2. To reimburse itself for the Reinsurers' share of any other
amounts claimed to be due hereunder, unless paid in cash by the
Reinsurers;
3. To fund a cash account in an amount equal to the Reinsurers'
share of any ceded outstanding loss and loss adjustment expense
reserves including incurred but not reported loss reserves (to
be mutually agreed at each December 31) funded by means of a
letter of credit which is under non-renewal notice, if said
letter of credit has not been renewed or replaced by the
Reinsurers 10 days prior to its expiration date;
4. To refund to the Reinsurers any sum in excess of the actual
amount required to fund the Reinsurers' share of the Company's
ceded outstanding loss and loss adjustment expense reserves
including incurred but not reported loss reserves (to be
mutually agreed at each December 31), if so requested by the
Reinsurers.
In the event the amount drawn by the Company on any letter of credit
is in excess of the actual amount required for B(1) or B(3), or in
the case of B(2), the actual amount determined to be due, the
Company shall promptly return to the Reinsurers the excess amount so
drawn.
Page 2 of 4
ARTICLE XXVII - NET RETAINED LINES (BRMA 32B)
A. This Contract applies only to that portion of any policy 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 policy which the Company
retains net for its own account shall be included.
B. The amount of the Reinsurers' 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 reinsurers, whether specific
or general, any amounts which may have become due from such
reinsurers, whether such inability arises from the insolvency of
such other reinsurers or otherwise.
ARTICLE XXVIII - CURRENCY (BRMA 12A)
A. Whenever the word 'Dollars' or the '$' sign appears in this
Agreement, they shall be construed to mean United States Dollars and
all transactions under this Agreement shall be in United States
Dollars.
B. Amounts paid or received by the Company in any other currency shall
be converted to United States Dollars at the rate of exchange at the
date such transaction is entered on the books of the Company.
ARTICLE XXIX - FEDERAL EXCISE TAX (BRMA 17A)
(Applicable to those reinsurers, excepting Underwriters at Lloyd's London
and other reinsurers exempt from Federal Excise Tax, who are domiciled
outside the United States of America.)
A. The Reinsurers have agreed to allow for the purpose of paying the
Federal Excise Tax the applicable percentage of the premium payable
hereon as imposed under Section 4371 of the Internal Revenue Code to
the extent such premium is subject to the Federal Excise Tax.
B. In the event of any return premium becoming due hereunder the
Reinsurers will deduct the applicable percentage from the return
premium payable hereon and the Company or its agent should take
steps to recover the tax from the United States Government.
ARTICLE XXX - SERVICE OF SUIT (BRMA 49C)
(Applicable if the Reinsurers are not domiciled in the United States of
America, and/or are not authorized in any State, Territory or District of
the United States where authorization is required by insurance regulatory
authorities)
Page 3 of 4
A. It is agreed that in the event the Reinsurers fail to pay any amount
claimed to be due hereunder, the Reinsurers, at the request of the
Company, will submit to the jurisdiction of a court of competent
jurisdiction within the United States. Nothing in this Article
constitutes or should be understood to constitute a waiver of the
Reinsurers' rights to commence an action in a court of competent
jurisdiction in the United States, to remove an action to a United
States District Court, or to seek a transfer of a case to another
court as permitted by the laws of the United States or of any state
in the United States.
B. Further, pursuant to any statute of any state, territory or district
of the United States which makes provision therefor, the Reinsurers
hereby designate the party named in its Interests and Liabilities
Agreement, or if no party is named therein, the Superintendent,
Commissioner or Director of Insurance or other officer specified for
that purpose in the statute, or his successor or successors in
office, as its true and lawful attorney upon whom may be served any
lawful process in any action, suit or proceeding instituted by or on
behalf of the Company or any beneficiary hereunder arising out of
this Agreement.
ARTICLE XXXI - INTERMEDIARY (BRMA 23A)
▇. ▇. ▇▇▇▇▇▇ Co. is hereby recognized as the Intermediary negotiating this
Agreement for all business hereunder. All communications (including but not
limited to notices, statements, premium, return premium, commissions,
taxes, losses, loss adjustment expense, salvages and loss settlements)
relating thereto shall be transmitted to the Company or the Reinsurers
through ▇. ▇. ▇▇▇▇▇▇ Co., Reinsurance Services, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Payments by the Company to the Intermediary
shall be deemed to constitute payment to the Reinsurers. Payments by the
Reinsurers to the Intermediary shall be deemed to constitute payment to the
Company only to the extent that such payments are actually received by the
Company."
IT IS ALSO AGREED that the SUBSCRIBING REINSURER'S share in the attached
Agreement of Reinsurance shall be separate and apart from the shares of the
other reinsurers, and shall not be joint with the shares of the other
reinsurers, it being understood that the SUBSCRIBING REINSURER shall in no
event participate in the interests and liabilities of the other reinsurers.
IN WITNESS WHEREOF, the parties hereto by their respective duly authorized
representatives have executed this Agreement as of the dates undermentioned
at:
Minneapolis, Minnesota, this _____ day of __________________________ 199__.
_____________________________________________
Midwest Medical Insurance Company
Hannover, Germany, this _____ day of _______________________________ 199__.
_____________________________________________
Hannover Ruckversicherungs-Aktiengesellschaft
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