EXHIBIT 10.12
Expense Allocation Agreement between MEEMIC and ProNational Insurance Company
dated July 1,1999
EXPENSE ALLOCATION AGREEMENT
This agreement is made and entered into effective as of the 1st day of July
by and between ProNational Insurance Company and MEEMIC Insurance Company.
RECITALS:
ProNational Insurance Company ("ProNational") is a Michigan stock insurance
company. The principal Business of ProNational is medical malpractice insurance
for health care providers including physicians and clinics;
MEEMIC Insurance Company ("MEEMIC") is a Michigan stock insurance company.
MEEMIC offers personal lines insurance, primarily to educational employees and
their immediate families in the State of Michigan;
ProNational and MEEMIC have determined that they can most efficiently and
economically operate by combining certain portions of their operations;
ProNational and MEEMIC desire to establish a method to allocate certain
expenses for purposes of statutory and financial reporting.
AGREEMENT:
In view of the foregoing recitals and based upon the mutual undertaking set
forth in this Agreement, ProNational and MEEMIC agree as follows:
1. DEFINITIONS: As used in this Agreement, the following terms shall have
the following meaning:
"Direct Expense" means an expense arising from services performed by a
person or entity other than ProNational or MEEMIC that can readily be
identified as applicable to one company only. Examples of direct expenses
are agent's commissions, premium taxes, Board of Directors fees and
attorney fees for services that relate only to one company.
"Indirect Expenses" means expenses arising from services performed at
ProNational or MEEMIC, or by outside vendors, where such services are
performed for the benefit of both companies and are not separately
invoiced. Examples of such services are salaries, benefits and expenses of
staff from various departments such as administration, information systems
and vendor services.
2. ALLOCATION OF DIRECT EXPENSES:
Direct Expenses shall be allocated to the company incurring such expenses.
3. ALLOCATION OF INDIRECT EXPENSES:
Indirect Expenses shall be allocated during each accounting period on a
closely estimated basis. For purposes of developing this estimate,
reference will be made primarily to the relationship of the amount of time
an employee devotes to performing services on behalf of each company. For
developing this estimate with respect to outside vendors, reference will be
made primarily to the time or services rendered by the vendor on behalf of
each company. Use of outside vendor services and allocation of their costs
shall be agreed upon in advance by MEEMIC and ProNational.
With regard to MEEMIC's President and CEO, ▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ salary, bonus,
benefits, etc., 80% will be allocated to MEEMIC and 20% will be allocated
to ProNational. With regard to MEEMIC's Chief Information Officer, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇' salary, bonus, benefits, etc., 60% will be allocated to MEEMIC and
40% will be allocated to ProNational. With regard to Shareholder Relations
Manager, ▇▇▇▇ ▇▇▇▇▇▇▇▇'▇ salary, bonus, benefits, etc., 50% will be
allocated to MEEMIC and 50% will be allocated to ProNational.
4. SETTLEMENT PROVISION:
Allocation of expenses will be settled on a quarterly basis.
5. TERM OF AGREEMENT:
The original term of this Agreement shall be July 1, 1999 through December
31, 1999, inclusive. Unless amended or modified by the parties, this
Agreement shall continue in force for subsequent calendar years.
6. AMENDMENT:
This Agreement cannot be amended except in writing signed by an
authorized representative of ProNational and MEEMIC.
7. SEVERABILITY:
If any part of this Agreement shall be held invalid for any reason (based
upon any applicable insurance statute, rule or regulation or otherwise is
disapproved by a governing Insurance Department) such invalidity shall not
affect any part of this Agreement and the other parts of this Agreement
shall remain in full force and effect.
The parties have entered into this Agreement effective as of the date first
written above.
ATTEST: ProNational Insurance Company
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________ By:___________________________
Chief Financial Officer
Its:___________________________
ATTEST: MEEMIC Insurance Company
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇▇
_________________________ By:___________________________
President
Its:___________________________