x
|
QUARTERLY REPORT PURSUANT
TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Florida
|
|
65-0248866
|
(State or Other Jurisdiction of Incorporation or Organization)
|
|
(IRS Employer Identification Number)
|
14050 N.W. 14
th
Street, Suite 180, Sunrise, Florida 33323
|
Large accelerated filer
o
|
Accelerated filer
o
|
Non-accelerated filer
o
|
Smaller reporting company
x
|
PART I: FINANCIAL INFORMATION
|
PAGE
|
|
|
|
|
ITEM 1
|
3
|
|
|
|
|
ITEM 2
|
36
|
|
|
|
|
ITEM 3
|
57
|
|
|
|
|
ITEM 4
|
60
|
|
|
|
|
PART II: OTHER INFORMATION
|
|
|
|
|
|
ITEM 1
|
61
|
|
|
|
|
ITEM 1A
|
61
|
|
|
|
|
ITEM 2
|
62
|
|
|
|
|
ITEM 3
|
62
|
|
|
|
|
ITEM 4
|
62
|
|
|
|
|
ITEM 5
|
62
|
|
|
|
|
ITEM 6
|
63
|
|
|
|
|
64
|
|
Period Ending
|
|||||||
|
September 30, 2013
|
December 31, 2012
|
||||||
ASSETS
|
(Dollars in Thousands)
|
|||||||
Investments
|
|
|
||||||
Debt maturities, available for sale, at fair value
|
$
|
126,013
|
$
|
101,755
|
||||
Debt maturities, held to maturity, at amortized cost
|
7,295
|
7,359
|
||||||
Equity securities, available for sale, at fair value
|
34,734
|
20,982
|
||||||
|
||||||||
Total investments
|
168,042
|
130,096
|
||||||
|
||||||||
Cash and short term investments
|
46,994
|
21,143
|
||||||
Prepaid reinsurance premiums
|
1,707
|
7,045
|
||||||
Premiums receivable, net of allowance for credit losses of $103 and $69, respectively
|
20,110
|
8,023
|
||||||
Reinsurance recoverable, net
|
2,684
|
3,503
|
||||||
Deferred policy acquisition costs
|
14,360
|
8,479
|
||||||
Deferred income taxes, net
|
852
|
4,338
|
||||||
Income taxes receivable
|
868
|
39
|
||||||
Property, plant and equipment, net
|
915
|
564
|
||||||
Other assets
|
2,488
|
2,658
|
||||||
|
||||||||
Total assets
|
$
|
259,020
|
$
|
185,888
|
||||
|
||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Unpaid losses and LAE
|
$
|
51,950
|
$
|
49,908
|
||||
Unearned premiums
|
116,988
|
59,006
|
||||||
Premiums deposits and customer credit balances
|
3,841
|
2,458
|
||||||
Bank overdraft
|
4,809
|
5,987
|
||||||
Accounts payable and accrued expenses
|
7,409
|
2,624
|
||||||
|
||||||||
Total liabilities
|
184,997
|
119,983
|
||||||
|
||||||||
Shareholders' equity:
|
||||||||
Common stock, $0.01 par value. Authorized 25,000,000 shares; issued and outstanding 8,073,025 and 7,979,488, respectively
|
81
|
80
|
||||||
Preferred stock, $0.01 par value. Authorized 1,000,000 shares; none issued or outstanding
|
-
|
-
|
||||||
Additional paid-in capital
|
52,009
|
51,356
|
||||||
Accumulated other comprehensive income
|
||||||||
Unrealized net gains on investments, available for sale
|
4,273
|
4,067
|
||||||
Total accumulated other comprehensive income
|
4,273
|
4,067
|
||||||
Retained earnings
|
17,660
|
10,402
|
||||||
Total shareholders' equity
|
74,023
|
65,905
|
||||||
Total liabilities and shareholders' equity
|
$
|
259,020
|
$
|
185,888
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
|
(Dollars in Thousands except EPS and share and dividend data)
|
(Dollars in Thousands except EPS and share and dividend data)
|
||||||||||||||
Revenue:
|
|
|
|
|
||||||||||||
Gross premiums written
|
$
|
61,489
|
$
|
25,338
|
$
|
177,623
|
$
|
89,683
|
||||||||
Gross premiums ceded
|
(49,936
|
)
|
(35,733
|
)
|
(78,180
|
)
|
(49,318
|
)
|
||||||||
|
||||||||||||||||
Net premiums written
|
11,553
|
(10,395
|
)
|
99,443
|
40,365
|
|||||||||||
|
||||||||||||||||
Increase in prepaid reinsurance premiums
|
29,318
|
22,797
|
29,870
|
13,218
|
||||||||||||
(Increase) decrease in unearned premiums
|
(12,762
|
)
|
2,686
|
(57,980
|
)
|
(10,983
|
)
|
|||||||||
|
||||||||||||||||
Net change in prepaid reinsurance premiums and unearned premiums
|
16,556
|
25,483
|
(28,110
|
)
|
2,235
|
|||||||||||
|
||||||||||||||||
Net premiums earned
|
28,109
|
15,088
|
71,333
|
42,600
|
||||||||||||
Commission income
|
637
|
400
|
1,989
|
1,101
|
||||||||||||
Finance revenue
|
241
|
122
|
584
|
363
|
||||||||||||
Managing general agent fees
|
884
|
435
|
2,580
|
1,529
|
||||||||||||
Net investment income
|
800
|
953
|
2,382
|
2,849
|
||||||||||||
Net realized investment gains (losses)
|
780
|
145
|
2,480
|
(83
|
)
|
|||||||||||
Other income
|
466
|
118
|
618
|
468
|
||||||||||||
|
||||||||||||||||
Total revenue
|
31,917
|
17,261
|
81,966
|
48,827
|
||||||||||||
|
||||||||||||||||
Expenses:
|
||||||||||||||||
Losses and LAE
|
14,436
|
8,049
|
36,583
|
20,913
|
||||||||||||
Operating and underwriting expenses
|
3,411
|
2,047
|
10,066
|
6,829
|
||||||||||||
Salaries and wages
|
2,709
|
2,079
|
7,375
|
6,285
|
||||||||||||
Policy acquisition costs - amortization
|
6,576
|
3,983
|
15,370
|
9,712
|
||||||||||||
|
||||||||||||||||
Total expenses
|
27,132
|
16,158
|
69,394
|
43,739
|
||||||||||||
|
||||||||||||||||
Income before provision for income tax expense
|
4,785
|
1,103
|
12,572
|
5,088
|
||||||||||||
Provision for income tax expense
|
1,504
|
353
|
4,411
|
1,844
|
||||||||||||
|
||||||||||||||||
Net income
|
$
|
3,281
|
$
|
750
|
$
|
8,161
|
$
|
3,244
|
||||||||
|
||||||||||||||||
Net income per share - basic
|
$
|
0.41
|
$
|
0.09
|
$
|
1.02
|
$
|
0.40
|
||||||||
|
||||||||||||||||
Net income per share - diluted
|
$
|
0.39
|
$
|
0.09
|
$
|
0.99
|
$
|
0.40
|
||||||||
|
||||||||||||||||
Weighted average number of common shares outstanding - basic
|
8,066,773
|
7,948,716
|
8,023,505
|
7,947,459
|
||||||||||||
|
||||||||||||||||
Weighted average number of common shares outstanding - diluted
|
8,345,924
|
8,042,356
|
8,260,435
|
8,008,470
|
||||||||||||
|
||||||||||||||||
Dividends paid per share
|
$
|
0.03
|
$
|
-
|
$
|
0.08
|
$
|
-
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
|
(Dollars in Thousands)
|
(Dollars in Thousands)
|
||||||||||||||
|
|
|
|
|
||||||||||||
Net income
|
$
|
3,281
|
$
|
750
|
$
|
8,161
|
$
|
3,244
|
||||||||
|
||||||||||||||||
Change in net unrealized gains on investments available for sale
|
2,658
|
3,180
|
331
|
6,203
|
||||||||||||
|
||||||||||||||||
Comprehensive income before tax
|
5,939
|
3,930
|
8,492
|
9,447
|
||||||||||||
|
||||||||||||||||
Income tax expense related to items of other comprehensive income
|
(1,000
|
)
|
(1,196
|
)
|
(125
|
)
|
(2,334
|
)
|
||||||||
|
||||||||||||||||
Comprehensive income
|
$
|
4,939
|
$
|
2,734
|
$
|
8,367
|
$
|
7,113
|
|
Nine Months Ended September 30,
|
|||||||
|
2013
|
2012
|
||||||
|
(Dollars in Thousands)
|
|||||||
Cash flow from operating activities:
|
|
|
||||||
Net income
|
$
|
8,161
|
$
|
3,244
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Amortization of investment premium discount, net
|
1,135
|
1,035
|
||||||
Depreciation and amortization of property plant and equipment, net
|
190
|
146
|
||||||
Net realized investment (gains) losses
|
(2,480
|
)
|
83
|
|||||
Non-cash impairment recognition
|
-
|
44
|
||||||
Recovery for credit losses, net
|
-
|
(12
|
)
|
|||||
(Recovery) provision for uncollectible premiums receivable
|
(34
|
)
|
9
|
|||||
Non-cash compensation
|
188
|
140
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Premiums receivable
|
(12,053
|
)
|
(2,530
|
)
|
||||
Prepaid reinsurance premiums
|
5,339
|
2,952
|
||||||
Reinsurance recoverable, net
|
818
|
(118
|
)
|
|||||
Income taxes recoverable
|
(829
|
)
|
(70
|
)
|
||||
Deferred income tax expense, net of other comprehensive income
|
3,361
|
1,796
|
||||||
Policy acquisition costs, net of amortization
|
(5,881
|
)
|
(766
|
)
|
||||
Other assets
|
171
|
427
|
||||||
Unpaid losses and LAE
|
2,042
|
(8,805
|
)
|
|||||
Unearned premiums
|
57,981
|
10,983
|
||||||
Premium deposits and customer credit balances
|
1,383
|
(749
|
)
|
|||||
Income taxes payable
|
-
|
(77
|
)
|
|||||
Bank overdraft
|
(1,177
|
)
|
(1,702
|
)
|
||||
Accounts payable and accrued expenses
|
4,785
|
211
|
||||||
Net cash provided by operating activities
|
63,100
|
6,241
|
||||||
Cash flow used by investing activities:
|
||||||||
Proceeds from sale of investment securities
|
93,079
|
60,711
|
||||||
Purchases of investment securities available for sale
|
(129,349
|
)
|
(71,234
|
)
|
||||
Purchases of property and equipment
|
(542
|
)
|
(81
|
)
|
||||
Net cash used by investing activities
|
(36,812
|
)
|
(10,604
|
)
|
||||
Cash flow (used) provided by financing activities:
|
||||||||
Exercised stock options
|
$
|
358
|
$
|
16
|
||||
Dividends paid
|
(903
|
)
|
-
|
|||||
Tax benefit related to non-cash compensation
|
108
|
77
|
||||||
Net cash (used ) provided by financing activities
|
(437
|
)
|
93
|
|||||
Net increase (decrease) in cash and short term investments
|
25,851
|
(4,270
|
)
|
|||||
Cash and short term investments at beginning of period
|
21,143
|
15,205
|
||||||
Cash and short term investments at end of period
|
$
|
46,994
|
$
|
10,935
|
|
Nine Months Ended September 30,
|
|||||||
(continued)
|
2013
|
2012
|
||||||
|
(Dollars in Thousands)
|
|||||||
Supplemental disclosure of cash flow information:
|
|
|
||||||
Cash paid during the period for:
|
|
|
||||||
Income taxes
|
$
|
1,870
|
$
|
165
|
||||
Non-cash investing and finance activities:
|
||||||||
Accrued dividends payable
|
$
|
250
|
$
|
-
|
(1) | Organization and Business |
· | The Merged Company retained the following licenses: (010) Fire, (020) Allied Lines, (040) Homeowners Multi Peril, (050) Commercial Multi Peril, (090) Inland Marine, (170) Other Liability, (192) Private Passenger Auto Liability, (194) Commercial Auto Liability, (211) Private Passenger Auto Physical Damage and (212) Commercial Auto Physical Damage. |
· | The Merged Company will not write commercial multi peril policy premium without prior approval from the Florida OIR. The Merged Company has no commercial multi peril policy premium in force. |
· | The Merged Company surrendered its surety license. The Merged Company has no surety policy premium in force. |
· | The Merged Company will not write new commercial habitation condominium associations without prior approval from the Florida OIR. The current commercial habitation book of business is fully earned. |
· | The Merged Company agreed to maintain the total number of its homeowners’ policies in Miami-Dade, Broward and Palm Beach counties (the “Tri-County Area”) to no more than 35% of its entire homeowners’ book. As of September 30, 2013, the Company had approximately 18.2% of its homeowners’ policies located within Tri-County Area. |
· | The managing general agency fees payable by the Merged Company to Federated National Underwriters, Inc. (“FNU”), formerly known as Assurance Managing General Agents, Inc., a wholly owned subsidiary of the Company, which were traditionally 6% of gross written premium, were reduced and will not exceed 4% without prior approval from the Florida OIR. The Merged Company has lowered the fee to amounts varying between 2% and 4% of gross written to further support the FNIC results of operations. This will have no impact on the Company’s consolidated financial results. |
· | The claims service fees payable by the Merged Company to Federated National Adjusting, Inc. (“FNA”), formerly known as Superior Adjusting, Inc., were reduced from the traditional 4.5% of gross earned premium to 3.6% of gross earned premium. This will have no impact on the Company’s consolidated financial results. |
Payments
|
||||
|
(Dollars in Thousands)
|
|||
2013
|
96
|
|||
2014
|
392
|
|||
2015
|
400
|
|||
2016
|
408
|
|||
2017
|
156
|
|||
Total
|
$
|
1,452
|
· | rating downgrade or other credit event (eg., failure to pay interest when due); |
· | length of time and the extent to which the fair value has been less than amortized cost; |
· | financial condition and near term prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology or discontinuance of a business segment; |
· | prospects for the issuer’s industry segment; |
· | intent and ability of the Company to retain the investment for a period of time sufficient to allow for anticipated recovery in market value; |
· | historical volatility of the fair value of the security. |
|
September 30, 2013
|
December 31, 2012
|
||||||||||||||
|
Carrying
|
Percent
|
Carrying
|
Percent
|
||||||||||||
|
Amount
|
of Total
|
Amount
|
of Total
|
||||||||||||
|
(Dollars in Thousands)
|
|||||||||||||||
Debt securities, at market:
|
|
|
|
|
||||||||||||
United States government obligations and authorities
|
$
|
23,745
|
14.13
|
%
|
$
|
27,392
|
21.06
|
%
|
||||||||
Obligations of states and political subdivisions
|
23,677
|
14.09
|
%
|
3,939
|
3.03
|
%
|
||||||||||
Corporate
|
75,201
|
44.75
|
%
|
67,313
|
51.74
|
%
|
||||||||||
International
|
3,390
|
2.02
|
%
|
3,111
|
2.39
|
%
|
||||||||||
|
126,013
|
74.99
|
%
|
101,755
|
78.22
|
%
|
||||||||||
Debt securities, at amortized cost:
|
||||||||||||||||
United States government obligations and authorities
|
5,150
|
3.07
|
%
|
6,016
|
4.62
|
%
|
||||||||||
Corporate
|
2,036
|
1.21
|
%
|
1,203
|
0.92
|
%
|
||||||||||
International
|
109
|
0.06
|
%
|
140
|
0.11
|
%
|
||||||||||
|
7,295
|
4.34
|
%
|
7,359
|
5.65
|
%
|
||||||||||
Total debt securities
|
133,308
|
79.33
|
%
|
109,114
|
83.87
|
%
|
||||||||||
|
||||||||||||||||
Equity securities, at market:
|
34,734
|
20.67
|
%
|
20,982
|
16.13
|
%
|
||||||||||
Total investments
|
$
|
168,042
|
100.00
|
%
|
$
|
130,096
|
100.00
|
%
|
|
Three Months Ended September 30,
|
|||||||||||||||
|
2013
|
2012
|
||||||||||||||
|
Gains
|
Fair Value
|
Gains
|
Fair Value
|
||||||||||||
|
(Losses)
|
at Sale
|
(Losses)
|
at Sale
|
||||||||||||
|
(Dollars in Thousands)
|
|||||||||||||||
|
|
|
|
|
||||||||||||
Debt securities
|
$
|
202
|
$
|
6,183
|
$
|
410
|
$
|
9,716
|
||||||||
Equity securities
|
1,274
|
5,619
|
145
|
1,349
|
||||||||||||
Total realized gains
|
1,476
|
11,802
|
555
|
11,065
|
||||||||||||
|
||||||||||||||||
Debt securities
|
(421
|
)
|
14,462
|
(56
|
)
|
1,637
|
||||||||||
Equity securities
|
(275
|
)
|
1,471
|
(354
|
)
|
682
|
||||||||||
Total realized losses
|
(696
|
)
|
15,933
|
(410
|
)
|
2,319
|
||||||||||
|
||||||||||||||||
Net realized gains on investments
|
$
|
780
|
$
|
27,735
|
$
|
145
|
$
|
13,384
|
|
Nine Months Ended September 30,
|
|||||||||||||||
|
2013
|
2012
|
||||||||||||||
|
Gains
|
Fair Value
|
Gains
|
Fair Value
|
||||||||||||
|
(Losses)
|
at Sale
|
(Losses)
|
at Sale
|
||||||||||||
|
(Dollars in Thousands)
|
|||||||||||||||
|
|
|
|
|
||||||||||||
Debt securities
|
$
|
1,595
|
$
|
36,918
|
$
|
958
|
$
|
27,760
|
||||||||
Equity securities
|
2,437
|
10,063
|
805
|
5,437
|
||||||||||||
Total realized gains
|
4,032
|
46,981
|
1,763
|
33,197
|
||||||||||||
|
||||||||||||||||
Debt securities
|
(922
|
)
|
37,493
|
(371
|
)
|
11,050
|
||||||||||
Equity securities
|
(630
|
)
|
3,049
|
(1,475
|
)
|
6,073
|
||||||||||
Total realized losses
|
(1,552
|
)
|
40,542
|
(1,846
|
)
|
17,123
|
||||||||||
|
||||||||||||||||
Net realized gains (losses) on investments
|
$
|
2,480
|
$
|
87,523
|
$
|
(83
|
)
|
$
|
50,320
|
|
|
Gross
|
Gross
|
|
||||||||||||
|
Amortized
|
Unrealized
|
Unrealized
|
Estimated
|
||||||||||||
|
Cost
|
Gains
|
Losses
|
Fair Value
|
||||||||||||
|
(Dollars in Thousands)
|
|||||||||||||||
September 30, 2013
|
|
|
|
|
||||||||||||
Debt Securities - Available-For-Sale:
|
|
|
|
|
||||||||||||
United States government obligations and authorities
|
$
|
23,713
|
$
|
227
|
$
|
195
|
$
|
23,745
|
||||||||
Obligations of states and political subdivisions
|
23,537
|
192
|
52
|
23,677
|
||||||||||||
Corporate
|
74,541
|
1,277
|
617
|
75,201
|
||||||||||||
International
|
3,407
|
6
|
23
|
3,390
|
||||||||||||
|
$
|
125,198
|
$
|
1,702
|
$
|
887
|
$
|
126,013
|
||||||||
|
||||||||||||||||
Debt Securities - Held-To-Maturity:
|
||||||||||||||||
United States government obligations and authorities
|
$
|
5,150
|
$
|
72
|
$
|
255
|
$
|
4,967
|
||||||||
Corporate
|
2,036
|
22
|
13
|
2,045
|
||||||||||||
International
|
109
|
-
|
1
|
108
|
||||||||||||
|
$
|
7,295
|
$
|
94
|
$
|
269
|
$
|
7,120
|
||||||||
|
||||||||||||||||
Equity securities - common stocks
|
$
|
28,697
|
$
|
6,433
|
$
|
396
|
$
|
34,734
|
||||||||
|
||||||||||||||||
December 31, 2012
|
||||||||||||||||
Debt Securities - Available-For-Sale:
|
||||||||||||||||
United States government obligations and authorities
|
$
|
26,825
|
$
|
632
|
$
|
65
|
$
|
27,392
|
||||||||
Obligations of states and political subdivisions
|
3,738
|
202
|
1
|
3,939
|
||||||||||||
Corporate
|
63,553
|
3,794
|
34
|
67,313
|
||||||||||||
International
|
3,005
|
107
|
1
|
3,111
|
||||||||||||
|
$
|
97,121
|
$
|
4,735
|
$
|
101
|
$
|
101,755
|
||||||||
|
||||||||||||||||
Debt Securities - Held-To-Maturity:
|
||||||||||||||||
United States government obligations and authorities
|
$
|
6,016
|
$
|
149
|
$
|
12
|
$
|
6,153
|
||||||||
Corporate
|
1,203
|
61
|
2
|
1,262
|
||||||||||||
International
|
140
|
-
|
1
|
139
|
||||||||||||
|
$
|
7,359
|
$
|
210
|
$
|
15
|
$
|
7,554
|
||||||||
|
||||||||||||||||
Equity securities - common stocks
|
$
|
19,095
|
$
|
2,505
|
$
|
618
|
$
|
20,982
|
|
Unrealized Losses
|
Less than 12 months
|
12 months or longer
|
|||||||||
|
(Dollars in Thousands)
|
|||||||||||
Debt securities:
|
|
|
|
|||||||||
United States government obligations and authorities
|
$
|
195
|
$
|
189
|
$
|
6
|
||||||
Obligations of states and political subdivisions
|
52
|
52
|
-
|
|||||||||
Corporate
|
617
|
617
|
-
|
|||||||||
International
|
23
|
23
|
-
|
|||||||||
|
887
|
881
|
6
|
|||||||||
Equity securities:
|
||||||||||||
Common stocks
|
396
|
250
|
146
|
|||||||||
|
||||||||||||
Total debt and equity securities
|
$
|
1,283
|
$
|
1,131
|
$
|
152
|
|
Unrealized Losses
|
Less than 12 months
|
12 months or longer
|
|||||||||
|
(Dollars in Thousands)
|
|||||||||||
Debt securities:
|
|
|
|
|||||||||
United States government obligations and authorities
|
$
|
65
|
$
|
65
|
$
|
-
|
||||||
Obligations of states and political subdivisions
|
1
|
1
|
-
|
|||||||||
Corporate
|
34
|
34
|
-
|
|||||||||
International
|
1
|
1
|
-
|
|||||||||
|
101
|
101
|
-
|
|||||||||
Equity securities:
|
||||||||||||
Common stocks
|
618
|
430
|
188
|
|||||||||
|
||||||||||||
Total debt and equity securities
|
$
|
719
|
$
|
531
|
$
|
188
|
|
September 30, 2013
|
December 31, 2012
|
||||||||||||||
|
Amortized
|
Estimated
|
Amortized
|
Estimated
|
||||||||||||
|
Cost
|
Fair Value
|
Cost
|
Fair Value
|
||||||||||||
|
(Dollars in Thousands)
|
|||||||||||||||
|
|
|
|
|
||||||||||||
Due in one year or less
|
$
|
4,651
|
$
|
4,689
|
$
|
2,925
|
$
|
2,944
|
||||||||
Due after one through five years
|
81,448
|
82,071
|
49,826
|
51,523
|
||||||||||||
Due after five through ten years
|
45,663
|
45,626
|
35,070
|
37,182
|
||||||||||||
Due after ten years
|
731
|
747
|
16,659
|
17,660
|
||||||||||||
|
||||||||||||||||
Total
|
$
|
132,493
|
$
|
133,133
|
$
|
104,480
|
$
|
109,309
|
|
Three Months Ended September 30,
|
|||||||
|
2013
|
2012
|
||||||
|
(Dollars in Thousands)
|
|||||||
|
|
|
||||||
Interest on debt securities
|
$
|
691
|
$
|
839
|
||||
Dividends on equity securities
|
108
|
113
|
||||||
Interest on cash and cash equivalents
|
1
|
1
|
||||||
|
||||||||
Total investment income
|
$
|
800
|
$
|
953
|
||||
|
||||||||
Net realized gains
|
$
|
780
|
$
|
145
|
|
Nine Months Ended September 30,
|
|||||||
|
2013
|
2012
|
||||||
|
(Dollars in Thousands)
|
|||||||
|
|
|
||||||
Interest on debt securities
|
$
|
2,059
|
$
|
2,563
|
||||
Dividends on equity securities
|
320
|
279
|
||||||
Interest on cash and cash equivalents
|
3
|
7
|
||||||
|
||||||||
Total investment income
|
$
|
2,382
|
$
|
2,849
|
||||
|
||||||||
Net realized gains (losses)
|
$
|
2,480
|
$
|
(83
|
)
|
|
Three Months Ended September 30,
|
|||||||
|
2013
|
2012
|
||||||
|
(Dollars in Thousands)
|
|||||||
Net realized gains
|
|
|
||||||
Debt securities
|
$
|
(219
|
)
|
$
|
354
|
|||
Equity securities
|
999
|
(209
|
)
|
|||||
|
||||||||
Total
|
$
|
780
|
$
|
145
|
||||
|
||||||||
Net unrealized gains
|
||||||||
Debt securities
|
$
|
814
|
$
|
5,682
|
||||
Equity securities
|
6,038
|
1,928
|
||||||
|
||||||||
Total
|
$
|
6,852
|
$
|
7,610
|
|
Nine Months Ended September 30,
|
|||||||
|
2013
|
2012
|
||||||
|
(Dollars in Thousands)
|
|||||||
Net realized gains (losses)
|
|
|
||||||
Debt securities
|
$
|
673
|
$
|
587
|
||||
Equity securities
|
1,807
|
(670
|
)
|
|||||
|
||||||||
Total
|
$
|
2,480
|
$
|
(83
|
)
|
|||
|
||||||||
Net unrealized gains
|
||||||||
Debt securities
|
$
|
814
|
$
|
5,682
|
||||
Equity securities
|
6,038
|
1,928
|
||||||
|
||||||||
Total
|
$
|
6,852
|
$
|
7,610
|
|
As of September 30, 2013
|
|||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
|
(Dollars in Thousands)
|
|||||||||||||||
Debt securities:
|
|
|
|
|
||||||||||||
United States government obligations and authorities
|
$
|
15,468
|
$
|
8,277
|
$
|
-
|
$
|
23,745
|
||||||||
Obligations of states and political subdivisions
|
-
|
23,677
|
-
|
23,677
|
||||||||||||
Corporate
|
67,351
|
7,850
|
-
|
75,201
|
||||||||||||
International
|
-
|
3,390
|
-
|
3,390
|
||||||||||||
|
82,819
|
43,194
|
-
|
126,013
|
||||||||||||
|
||||||||||||||||
Equity securities:
|
||||||||||||||||
Common stocks
|
34,734
|
-
|
-
|
34,734
|
||||||||||||
|
34,734
|
-
|
-
|
34,734
|
||||||||||||
|
||||||||||||||||
Total debt and equity securities
|
$
|
117,553
|
$
|
43,194
|
$
|
-
|
$
|
160,747
|
|
As of December 31, 2012
|
|||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
|
(Dollars in Thousands)
|
|||||||||||||||
Debt securities:
|
|
|
|
|
||||||||||||
United States government obligations and authorities
|
$
|
12,464
|
$
|
14,928
|
$
|
-
|
$
|
27,392
|
||||||||
Obligations of states and political subdivisions
|
-
|
3,939
|
-
|
3,939
|
||||||||||||
Corporate
|
67,313
|
-
|
-
|
67,313
|
||||||||||||
International
|
-
|
3,111
|
-
|
3,111
|
||||||||||||
|
79,777
|
21,978
|
-
|
101,755
|
||||||||||||
|
||||||||||||||||
Equity securities:
|
||||||||||||||||
Common stocks
|
20,982
|
-
|
-
|
20,982
|
||||||||||||
|
20,982
|
-
|
-
|
20,982
|
||||||||||||
|
||||||||||||||||
Total debt and equity securities
|
$
|
100,759
|
$
|
21,978
|
$
|
-
|
$
|
122,737
|
Reinsurer
|
A.M. Best Rating
|
S&P
Rating
|
||||
|
|
|
|
|
|
|
UNITED STATES
|
|
|
|
|
|
|
American Agricultural Insurance Company
|
|
A-
|
|
|
|
NR
|
Everest Reinsurance Company
|
|
A+
|
|
|
|
A+
|
Houston Casualty Company, UK Branch
|
|
A
|
|
|
|
A+
|
Odyssey Reinsurance Company
|
|
A
|
|
|
|
A-
|
|
|
|
|
|
|
|
BERMUDA
|
|
|
|
|
|
|
ACE Tempest Reinsurance Limited
|
|
A+
|
|
|
|
AA-
|
Allied World Assurance Company Limited, Bermuda
|
|
A
|
|
|
|
A
|
Arch Reinsurance Limited
|
|
A+
|
|
|
|
A+
|
Argo Reinsurance Limited
|
|
A
|
|
|
|
NR
|
Ariel Reinsurance Bermuda Ltd for and on Behalf of Ariel Syndicate 1910 (ARE)
|
|
A-
|
|
|
|
NR
|
DaVinci Reinsurance Ltd
|
|
A
|
|
|
|
A+
|
Endurance Specialty Insurance Limited
|
|
A
|
|
|
|
A
|
JC Re Ltd. (aka Pillar Capital and fka Juniperus & Actua Re Ltd.)
|
|
NR
|
*
|
|
**
|
NR
|
Partner Reinsurance Company Limited
|
|
A+
|
|
|
|
A+
|
Platinum Underwriters Bermuda Limited
|
|
A
|
|
|
|
A-
|
Renaissance Reinsurance Ltd
|
|
A+
|
|
|
|
AA-
|
S.A.C. Re, Ltd.
|
|
A-
|
|
|
|
NR
|
XL Re Limited
|
|
A
|
|
|
|
A
|
|
|
|
|
|
|
|
UNITED KINGDOM
|
|
|
|
|
|
|
A.F. Beazley Syndicate No. 623 (AFB)
|
|
A
|
|
|
|
A+
|
A.F. Beazley Syndicate No. 2623 (AFB)
|
|
A
|
|
|
|
A+
|
Amlin Syndicate No. 2001 (AML)
|
|
A
|
|
|
|
A+
|
Ariel Syndicate No. 1910 (ARE)
|
|
A
|
|
|
|
A+
|
ARK Syndicate No. 3902 (NOA)
|
|
A
|
|
|
|
A+
|
Ascot Syndicate No. 1414 (ASC)
|
|
A
|
|
|
|
A+
|
Barbican Syndication No. 1955 (BAR)
|
|
A
|
|
|
|
A+
|
Canopius Syndicate No. 958 (CNP)
|
|
A
|
|
|
|
A+
|
Canopius Syndicate No. 4444 (CNP)
|
|
A
|
|
|
|
A+
|
Cathederal Syndicate No. 2010 (MMX)
|
|
A
|
|
|
|
A+
|
Kiln Syndicate No. 510 (KLN)
|
|
A
|
|
|
|
A+
|
Liberty Syndicates Services Limited, Paris for and on behalf of Lloyd's Syndicate No. 4472 (LIB)
|
|
NR
|
|
|
|
A+
|
MAP Underwriting Syndicate No. 2791 (MAP)
|
|
A
|
|
|
|
A+
|
MAP Underwriting Syndicate No. 2791 (Parallel) (MAP)
|
|
A
|
|
|
|
A+
|
Novae Syndicate No. 2007 (NVA)
|
|
A
|
|
|
|
A+
|
Pembroke Syndicate No. 4000 (PEM)
|
|
A
|
|
|
|
A+
|
Tokio Marine Kiln Syndicate No. 1880 (TMK)
|
|
A
|
|
|
|
A+
|
|
|
|
|
|
|
|
EUROPE
|
|
|
|
|
|
|
Amlin Bermuda (Branch of Amlin AG)
|
|
A
|
|
|
|
A
|
SCOR Global P&C SE
|
|
A
|
|
|
|
A
|
|
|
|
|
|
|
|
* Reinstatement Premium Protection Program Participants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
** Participant will fund a trust agreement for their exposure with cash and U.S. Government obligations of American institutions at fair market value.
|
||||||
|
|
|
|
|
|
|
Reinsurer
|
|
A.M. Best
Rating
|
|
|
|
S&P
Rating
|
|
|
|
|
|
|
|
UNITED STATES
|
|
|
|
|
|
|
American Agricultural Insurance Company
|
|
A-
|
|
|
|
NR
|
Everest Reinsurance Company
|
|
A+
|
|
|
|
A+
|
Houston Casualty Company, (UK Branch)
|
|
A+
|
*
|
|
|
AA
|
Munich Reinsurance America, Inc.
|
|
A+
|
|
|
|
AA-
|
Odyssey Reinsurance Company
|
|
A
|
|
|
|
A-
|
|
|
|
|
|
|
|
BERMUDA
|
|
|
|
|
|
|
ACE Tempest Reinsurance Limited
|
|
A+
|
*
|
|
|
AA-
|
Arch Reinsurance Limited
|
|
A+
|
*
|
|
|
A+
|
Ariel Reinsurance Bermuda Limited for and on Behalf of Ariel Syndicate 1910 (ARE)
|
|
A-
|
*
|
|
|
NR
|
DaVinci Reinsurance Limited
|
|
A
|
*
|
|
|
A+
|
JC Re Limited (Juniperus & fka Actua Re Limited)
|
|
NR
|
*
|
|
**
|
NR
|
Montpelier Reinsurance Limited
|
|
A-
|
|
|
|
A-
|
Nephila (via Allianz Risk Transfer AG, Bermuda Branch)
|
|
NR
|
|
|
|
AA-
|
Platinum Underwriters Bermuda Limited
|
|
A
|
*
|
|
|
A-
|
Renaissance Reinsurance Limited
|
|
A+
|
*
|
|
|
AA-
|
|
|
|
|
|
|
|
UNITED KINGDOM
|
|
|
|
|
|
|
Amlin Syndicate No. 2001 (AML)
|
|
A
|
|
|
|
A+
|
Ariel Syndicate No. 1910 (ARE)
|
|
A
|
*
|
|
|
A+
|
ARK Syndicate No. 3902 (NOA)
|
|
A
|
|
|
|
A+
|
Barbican Syndication No. 1955 (BAR)
|
|
A
|
|
|
|
A+
|
Kiln Syndicate No. 510 (KLN)
|
|
A
|
|
|
|
A+
|
Liberty Syndicates Services Limited Paris, for and on Behalf of Lloyd's Syndicate No. 4472 (LIB)
|
|
NR
|
|
|
|
A+
|
MAP Underwriting Syndicate No. 2791 (Parallel) (MAP)
|
|
A
|
|
|
|
A+
|
Novae Syndicate No. 2007 (NVA)
|
|
A
|
|
|
|
A+
|
Tokio Marine Kiln Syndicate No. 1880 (TMK)
|
|
A
|
|
|
|
A+
|
Torus Syndicate No. 1301 (TUL)
|
|
A
|
|
|
|
A+
|
|
|
|
|
|
|
|
EUROPE
|
|
|
|
|
|
|
Amlin Bermuda (Branch of Amlin AG)
|
|
A
|
|
|
|
A
|
SCOR Global P&C Zurich Branch
|
|
A
|
|
|
|
A
|
|
|
|
|
|
|
|
* Reinstatement Premium Protection Program Participants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
** Participant will fund a trust agreement for their exposure with cash and U.S. Government obligations of American institutions at fair market value.
|
||||||
|
Nine Months
|
Year Ended
|
||||||
|
Ended September 30,
|
December 31,
|
||||||
|
2013
|
2012
|
||||||
|
(Dollars in Thousands)
|
|||||||
Balance at January 1
|
$
|
49,908
|
$
|
59,983
|
||||
Less reinsurance recoverables
|
(3,503
|
)
|
(2,088
|
)
|
||||
Net balance at January 1
|
$
|
46,405
|
$
|
57,895
|
||||
|
||||||||
Incurred related to
|
||||||||
Current year
|
$
|
35,791
|
$
|
31,636
|
||||
Prior years
|
792
|
(1,427
|
)
|
|||||
Total incurred
|
$
|
36,583
|
$
|
30,209
|
||||
|
||||||||
Paid related to
|
||||||||
Current year
|
$
|
14,426
|
$
|
15,892
|
||||
Prior years
|
19,296
|
25,807
|
||||||
Total paid
|
$
|
33,722
|
$
|
41,699
|
||||
|
||||||||
Net balance at period end
|
$
|
49,266
|
$
|
46,405
|
||||
Plus reinsurance recoverables
|
2,684
|
3,503
|
||||||
Balance at period end
|
$
|
51,950
|
$
|
49,908
|
|
1998 Plan
|
2002 Plan
|
2012 Plan
|
|||||||||||||||||||||
|
Number of Shares
|
Weighted Average Option Exercise Price
|
Number of Shares
|
Weighted Average Option Exercise Price
|
Number of Shares
|
Fair Market Value at Grant
|
||||||||||||||||||
Outstanding at January 1, 2011
|
89,750
|
$
|
12.83
|
574,800
|
$
|
9.12
|
-
|
$
|
-
|
|||||||||||||||
Granted
|
-
|
$
|
-
|
179,000
|
$
|
2.45
|
-
|
$
|
-
|
|||||||||||||||
Exercised
|
-
|
$
|
-
|
-
|
$
|
-
|
-
|
$
|
-
|
|||||||||||||||
Cancelled
|
-
|
$
|
-
|
(129,100
|
)
|
$
|
14.29
|
-
|
$
|
-
|
||||||||||||||
Outstanding at January 1, 2012
|
89,750
|
$
|
12.83
|
624,700
|
$
|
6.15
|
-
|
$
|
-
|
|||||||||||||||
Granted
|
-
|
$
|
-
|
181,500
|
$
|
4.40
|
-
|
$
|
-
|
|||||||||||||||
Exercised
|
-
|
$
|
-
|
(33,104
|
)
|
$
|
3.86
|
-
|
$
|
-
|
||||||||||||||
Cancelled
|
(11,250
|
)
|
$
|
13.54
|
(70,499
|
)
|
$
|
12.45
|
-
|
$
|
-
|
|||||||||||||
Outstanding at January 1, 2013
|
78,500
|
$
|
12.73
|
702,597
|
$
|
5.17
|
-
|
$
|
-
|
|||||||||||||||
Granted
|
-
|
$
|
-
|
-
|
$
|
-
|
250,000
|
$
|
5.54
|
|||||||||||||||
Exercised
|
-
|
$
|
-
|
(93,537
|
)
|
$
|
3.83
|
-
|
$
|
-
|
||||||||||||||
Cancelled
|
(40,000
|
)
|
$
|
11.18
|
(10,999
|
)
|
$
|
3.64
|
(500
|
)
|
$
|
5.54
|
||||||||||||
Outstanding at September 30, 2013
|
38,500
|
$
|
14.34
|
598,061
|
$
|
5.41
|
249,500
|
$
|
5.54
|
|
1998 Plan
|
2002 Plan
|
||||||||||||||
Options Exercisable at:
|
Number of Shares
|
Weighted Average Option Exercise Price
|
Number of Shares
|
Weighted Average Option Exercise Price
|
||||||||||||
|
|
|
|
|
||||||||||||
September 30, 2013
|
38,500
|
$
|
14.34
|
383,682
|
$
|
5.41
|
||||||||||
December 31, 2013
|
-
|
$
|
14.34
|
1,333
|
$
|
5.41
|
||||||||||
December 31, 2014
|
-
|
$
|
14.34
|
138,146
|
$
|
5.41
|
||||||||||
December 31, 2015
|
-
|
$
|
14.34
|
74,900
|
$
|
5.41
|
||||||||||
December 31, 2016
|
-
|
$
|
14.34
|
-
|
$
|
5.41
|
||||||||||
December 31, 2017
|
-
|
$
|
14.34
|
-
|
$
|
5.41
|
||||||||||
Thereafter
|
-
|
$
|
14.34
|
-
|
$
|
5.41
|
||||||||||
Total options exercisable
|
38,500
|
598,061
|
· | Compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of FASB issued guidance, and |
· | Compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair-value estimated in accordance with the provisions of FASB issued guidance. Results for prior periods have not been restated, as they are not required to be by the pronouncement. |
|
September 30, 2013
|
September 30, 2012
|
|
Dividend yield
|
N/A
|
N/A
|
|
Expected volatility
|
N/A
|
39.79%
|
|
Risk-free interest rate
|
N/A
|
0.28%
|
|
Expected life (in years)
|
N/A
|
4.45
|
|
|
|
Weighted Average
|
Weighted
|
|
|||||||||||||||
|
Range of
|
Outstanding at
|
Contractual
|
Average
|
Exercisable at
|
|||||||||||||||
|
Exercise Price
|
September 30, 2013
|
Periods in Years
|
Exercise Price
|
September 30, 2013
|
|||||||||||||||
1998 Plan
|
$
|
8.67 - $16.59
|
38,500
|
0.17
|
$
|
14.34
|
38,500
|
|||||||||||||
2002 Plan
|
$
|
2.45 - $13.24
|
598,061
|
5.05
|
$
|
5.41
|
383,682
|
· | rating downgrade or other credit event (eg., failure to pay interest when due); |
· | length of time and the extent to which the fair value has been less than amortized cost; |
· | financial condition and near term prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology or discontinuance of a business segment; |
· | prospects for the issuer’s industry segment; |
· | intent and ability of the Company to retain the investment for a period of time sufficient to allow for anticipated recovery in market value; |
· | historical volatility of the fair value of the security. |
|
Unrealized Gains and (Losses)
|
|||||||
|
September 30, 2013
|
December 31, 2012
|
||||||
|
(Dollars in Thousands)
|
|||||||
Debt securities:
|
|
|
||||||
United States government obligations and authorities
|
$
|
32
|
$
|
567
|
||||
Obligations of states and political subdivisions
|
139
|
201
|
||||||
Corporate
|
660
|
3,760
|
||||||
International
|
(17
|
)
|
106
|
|||||
|
814
|
4,634
|
||||||
|
||||||||
Equity securities:
|
||||||||
Common stocks
|
6,038
|
1,887
|
||||||
|
||||||||
Total debt and equity securities
|
$
|
6,852
|
$
|
6,521
|
|
September 30, 2013
|
December 31, 2012
|
||||||||||||||
|
Carrying
|
Percent
|
Carrying
|
Percent
|
||||||||||||
|
Amount
|
of Total
|
Amount
|
of Total
|
||||||||||||
|
(Dollars in Thousands)
|
|||||||||||||||
Debt securities, at market:
|
|
|
|
|
||||||||||||
United States government obligations and authorities
|
$
|
23,745
|
14.13
|
%
|
$
|
27,392
|
21.06
|
%
|
||||||||
Obligations of states and political subdivisions
|
23,677
|
14.09
|
%
|
3,939
|
3.03
|
%
|
||||||||||
Corporate
|
75,201
|
44.75
|
%
|
67,313
|
51.74
|
%
|
||||||||||
International
|
3,390
|
2.02
|
%
|
3,111
|
2.39
|
%
|
||||||||||
|
126,013
|
74.99
|
%
|
101,755
|
78.22
|
%
|
||||||||||
Debt securities, at amortized cost:
|
||||||||||||||||
United States government obligations and authorities
|
5,150
|
3.07
|
%
|
6,016
|
4.62
|
%
|
||||||||||
Corporate
|
2,036
|
1.21
|
%
|
1,203
|
0.92
|
%
|
||||||||||
International
|
109
|
0.06
|
%
|
140
|
0.11
|
%
|
||||||||||
|
7,295
|
4.34
|
%
|
7,359
|
5.65
|
%
|
||||||||||
Total debt securities
|
133,308
|
79.33
|
%
|
109,114
|
83.87
|
%
|
||||||||||
|
||||||||||||||||
Equity securities, at market:
|
34,734
|
20.67
|
%
|
20,982
|
16.13
|
%
|
||||||||||
Total investments
|
$
|
168,042
|
100.00
|
%
|
$
|
130,096
|
100.00
|
%
|
|
September 30, 2013
|
December 31, 2012
|
||||||
|
(Dollars in Thousands)
|
|||||||
|
|
|
||||||
Accrued interest income receivable
|
$
|
1,115
|
$
|
966
|
||||
Deposits
|
320
|
249
|
||||||
Prepaid expenses
|
738
|
478
|
||||||
Receivable for investments sold
|
-
|
598
|
||||||
Other
|
315
|
367
|
||||||
Total
|
$
|
2,488
|
$
|
2,658
|
|
|
September 30, 2013
|
|
|
December 31, 2012
|
|
||||||||||||||||||
|
Case
|
Bulk
|
Total
|
Case
|
Bulk
|
Total
|
||||||||||||||||||
|
(Dollars in Thousands)
|
(Dollars in Thousands)
|
||||||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||||||
Homeowners'
|
$
|
9,722
|
$
|
12,729
|
$
|
22,451
|
$
|
8,276
|
$
|
6,637
|
$
|
14,913
|
||||||||||||
Commercial General Liability
|
3,649
|
12,858
|
16,507
|
2,956
|
22,310
|
25,266
|
||||||||||||||||||
Automobile
|
8,216
|
4,776
|
12,992
|
3,643
|
6,086
|
9,729
|
||||||||||||||||||
Total
|
$
|
21,587
|
$
|
30,363
|
$
|
51,950
|
$
|
14,875
|
$
|
35,033
|
$
|
49,908
|
|
Three Months Ended September 30,
|
|||||||||||||||
|
2013
|
2012
|
||||||||||||||
|
|
(Dollars in Thousands)
|
|
|||||||||||||
|
Amount
|
Percentage
|
Amount
|
Percentage
|
||||||||||||
|
|
|
|
|
||||||||||||
Homeowners'
|
$
|
54,101
|
87.98
|
%
|
$
|
20,564
|
81.16
|
%
|
||||||||
Commercial General Liability
|
2,598
|
4.23
|
%
|
2,377
|
9.38
|
%
|
||||||||||
Federal Flood
|
1,794
|
2.92
|
%
|
1,559
|
6.15
|
%
|
||||||||||
Automobile
|
2,996
|
4.87
|
%
|
838
|
3.31
|
%
|
||||||||||
Gross written premiums
|
$
|
61,489
|
100.00
|
%
|
$
|
25,338
|
100.00
|
%
|
|
Three Months Ended September 30,
|
|||||||||||||||
|
2013
|
2012
|
||||||||||||||
|
Amount
|
Percentage
|
Amount
|
Percentage
|
||||||||||||
|
(Dollars in Thousands)
|
|||||||||||||||
State
|
|
|
|
|
||||||||||||
Alabama
|
$
|
21
|
0.81
|
%
|
$
|
8
|
0.34
|
%
|
||||||||
Florida
|
2,376
|
91.45
|
%
|
2,184
|
91.88
|
%
|
||||||||||
Louisiana
|
43
|
1.66
|
%
|
72
|
3.03
|
%
|
||||||||||
Texas
|
158
|
6.08
|
%
|
113
|
4.75
|
%
|
||||||||||
Total
|
$
|
2,598
|
100.00
|
%
|
$
|
2,377
|
100.00
|
%
|
|
Three Months Ended September 30,
|
|||||||||||||||
|
2013
|
2012
|
||||||||||||||
|
Amount
|
Percentage
|
Amount
|
Percentage
|
||||||||||||
|
|
(Dollars in Thousands)
|
|
|||||||||||||
|
|
|
|
|
||||||||||||
Homeowners'
|
$
|
24,344
|
86.60
|
%
|
$
|
12,558
|
83.24
|
%
|
||||||||
Commercial General Liability
|
2,403
|
8.55
|
%
|
2,292
|
15.19
|
%
|
||||||||||
Automobile
|
1,362
|
4.85
|
%
|
238
|
1.57
|
%
|
||||||||||
Net premiums earned
|
$
|
28,109
|
100.00
|
%
|
$
|
15,088
|
100.00
|
%
|
|
Three Months Ended September 30,
|
|||||||
|
2013
|
2012
|
||||||
|
(Dollars in Thousands)
|
|||||||
Realized gains:
|
|
|
||||||
Debt securities
|
$
|
202
|
$
|
410
|
||||
Equity securities
|
1,274
|
145
|
||||||
Total realized gains
|
1,476
|
555
|
||||||
|
||||||||
Realized losses:
|
||||||||
Debt securities
|
(421
|
)
|
(56
|
)
|
||||
Equity securities
|
(275
|
)
|
(354
|
)
|
||||
Total realized losses
|
(696
|
)
|
(410
|
)
|
||||
Net realized gains on investments
|
$
|
780
|
$
|
145
|
|
September 30, 2013
|
December 31, 2012
|
||||||||||||||||||||||
|
Case
|
Bulk
|
Total
|
Case
|
Bulk
|
Total
|
||||||||||||||||||
|
(Dollars in Thousands)
|
(Dollars in Thousands)
|
||||||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||||||
Homeowners'
|
$
|
9,722
|
$
|
12,729
|
$
|
22,451
|
$
|
8,276
|
$
|
6,637
|
$
|
14,913
|
||||||||||||
Commercial General Liability
|
3,649
|
12,858
|
16,507
|
2,956
|
22,310
|
25,266
|
||||||||||||||||||
Automobile
|
8,216
|
4,776
|
12,992
|
3,643
|
6,086
|
9,729
|
||||||||||||||||||
Total
|
$
|
21,587
|
$
|
30,363
|
$
|
51,950
|
$
|
14,875
|
$
|
35,033
|
$
|
49,908
|
|
Nine Months Ended September 30,
|
|||||||||||||||
|
2013
|
2012
|
||||||||||||||
|
|
(Dollars in Thousands)
|
|
|||||||||||||
|
Amount
|
Percentage
|
Amount
|
Percentage
|
||||||||||||
|
|
|
|
|
||||||||||||
Homeowners'
|
$
|
156,378
|
88.05
|
%
|
$
|
75,933
|
84.67
|
%
|
||||||||
Commercial General Liability
|
8,018
|
4.51
|
%
|
7,330
|
8.17
|
%
|
||||||||||
Federal Flood
|
4,889
|
2.75
|
%
|
4,090
|
4.56
|
%
|
||||||||||
Automobile
|
8,338
|
4.69
|
%
|
2,330
|
2.60
|
%
|
||||||||||
Gross written premiums
|
$
|
177,623
|
100.00
|
%
|
$
|
89,683
|
100.00
|
%
|
|
Nine Months Ended September 30,
|
|||||||||||||||
|
2013
|
2012
|
||||||||||||||
|
Amount
|
Percentage
|
Amount
|
Percentage
|
||||||||||||
|
(Dollars in Thousands)
|
|||||||||||||||
State
|
|
|
|
|
||||||||||||
Alabama
|
$
|
73
|
0.91
|
%
|
$
|
40
|
0.55
|
%
|
||||||||
Florida
|
7,395
|
92.23
|
%
|
6,799
|
92.75
|
%
|
||||||||||
Louisiana
|
124
|
1.55
|
%
|
170
|
2.32
|
%
|
||||||||||
Texas
|
426
|
5.31
|
%
|
321
|
4.38
|
%
|
||||||||||
Total
|
$
|
8,018
|
100.00
|
%
|
$
|
7,330
|
100.00
|
%
|
|
Nine Months Ended September 30,
|
|||||||||||||||
|
2013
|
2012
|
||||||||||||||
|
Amount
|
Percentage
|
Amount
|
Percentage
|
||||||||||||
|
|
(Dollars in Thousands)
|
|
|||||||||||||
|
|
|
|
|
||||||||||||
Homeowners'
|
$
|
60,769
|
85.19
|
%
|
$
|
35,104
|
82.40
|
%
|
||||||||
Commercial General Liability
|
6,983
|
9.79
|
%
|
6,916
|
16.24
|
%
|
||||||||||
Automobile
|
3,581
|
5.02
|
%
|
580
|
1.36
|
%
|
||||||||||
Net premiums earned
|
$
|
71,333
|
100.00
|
%
|
$
|
42,600
|
100.00
|
%
|
|
Nine Months Ended September 30,
|
|||||||
|
2013
|
2012
|
||||||
|
(Dollars in Thousands)
|
|||||||
Realized gains:
|
|
|
||||||
Debt securities
|
$
|
1,595
|
$
|
958
|
||||
Equity securities
|
2,437
|
805
|
||||||
Total realized gains
|
4,032
|
1,763
|
||||||
|
||||||||
Realized losses:
|
||||||||
Debt securities
|
(922
|
)
|
(371
|
)
|
||||
Equity securities
|
(630
|
)
|
(1,475
|
)
|
||||
Total realized losses
|
(1,552
|
)
|
(1,846
|
)
|
||||
Net realized gains (losses) on investments
|
$
|
2,480
|
$
|
(83
|
)
|
|
|
September 30, 2013
|
|
|
December 31, 2012
|
|
||||||||||||||||||
|
Case
|
Bulk
|
Total
|
Case
|
Bulk
|
Total
|
||||||||||||||||||
|
(Dollars in Thousands)
|
(Dollars in Thousands)
|
||||||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||||||
Homeowners'
|
$
|
9,722
|
$
|
12,729
|
$
|
22,451
|
$
|
8,276
|
$
|
6,637
|
$
|
14,913
|
||||||||||||
Commercial General Liability
|
3,649
|
12,858
|
16,507
|
2,956
|
22,310
|
25,266
|
||||||||||||||||||
Automobile
|
8,216
|
4,776
|
12,992
|
3,643
|
6,086
|
9,729
|
||||||||||||||||||
Total
|
$
|
21,587
|
$
|
30,363
|
$
|
51,950
|
$
|
14,875
|
$
|
35,033
|
$
|
49,908
|
|
September 30, 2013
|
December 31, 2012
|
||||||||||||||
|
Carrying
|
Percent
|
Carrying
|
Percent
|
||||||||||||
|
Amount
|
of Total
|
Amount
|
of Total
|
||||||||||||
|
(Dollars in Thousands)
|
|||||||||||||||
Debt securities, at market:
|
|
|
|
|
||||||||||||
United States government obligations and authorities
|
$
|
23,745
|
14.13
|
%
|
$
|
27,392
|
21.06
|
%
|
||||||||
Obligations of states and political subdivisions
|
23,677
|
14.09
|
%
|
3,939
|
3.03
|
%
|
||||||||||
Corporate
|
75,201
|
44.75
|
%
|
67,313
|
51.74
|
%
|
||||||||||
International
|
3,390
|
2.02
|
%
|
3,111
|
2.39
|
%
|
||||||||||
|
126,013
|
74.99
|
%
|
101,755
|
78.22
|
%
|
||||||||||
Debt securities, at amortized cost:
|
||||||||||||||||
United States government obligations and authorities
|
5,150
|
3.07
|
%
|
6,016
|
4.62
|
%
|
||||||||||
Corporate
|
2,036
|
1.21
|
%
|
1,203
|
0.92
|
%
|
||||||||||
International
|
109
|
0.06
|
%
|
140
|
0.11
|
%
|
||||||||||
|
7,295
|
4.34
|
%
|
7,359
|
5.65
|
%
|
||||||||||
Total debt securities
|
133,308
|
79.33
|
%
|
109,114
|
83.87
|
%
|
||||||||||
|
||||||||||||||||
Equity securities, at market:
|
34,734
|
20.67
|
%
|
20,982
|
16.13
|
%
|
||||||||||
Total investments
|
$
|
168,042
|
100.00
|
%
|
$
|
130,096
|
100.00
|
%
|
|
September 30, 2013
|
December 31, 2012
|
||||||||||||||
|
Carrying
|
Percent
|
Carrying
|
Percent
|
||||||||||||
|
Amount
|
of Total
|
Amount
|
of Total
|
||||||||||||
|
(Dollars in Thousands)
|
|||||||||||||||
|
|
|
|
|
||||||||||||
AAA
|
$
|
15,165
|
11.38
|
%
|
$
|
10,967
|
10.05
|
%
|
||||||||
AA
|
47,477
|
35.61
|
%
|
38,733
|
35.50
|
%
|
||||||||||
A
|
37,420
|
28.07
|
%
|
31,774
|
29.12
|
%
|
||||||||||
BBB
|
33,246
|
24.94
|
%
|
27,640
|
25.33
|
%
|
||||||||||
Not rated
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
||||||||||
|
$
|
133,308
|
100.00
|
%
|
$
|
109,114
|
100.00
|
%
|
|
September 30, 2013
|
December 31, 2012
|
||||||||||||||
|
Carrying
|
Percent
|
Carrying
|
Percent
|
||||||||||||
|
Amount
|
of Total
|
Amount
|
of Total
|
||||||||||||
|
(Dollars in Thousands)
|
|||||||||||||||
Matures In:
|
|
|
|
|
||||||||||||
One year or less
|
$
|
4,685
|
3.51
|
%
|
$
|
2,938
|
2.70
|
%
|
||||||||
One year to five years
|
82,059
|
61.56
|
%
|
51,439
|
47.14
|
%
|
||||||||||
Five years to 10 years
|
45,817
|
34.37
|
%
|
37,111
|
34.01
|
%
|
||||||||||
More than 10 years
|
747
|
0.56
|
%
|
17,626
|
16.15
|
%
|
||||||||||
Total debt securities
|
$
|
133,308
|
100.00
|
%
|
$
|
109,114
|
100.00
|
%
|
|
|
|
|
|
|
|
|
Carrying
|
||||||||||||||||||||||||
|
2014
|
2015
|
2016
|
2017
|
2018
|
Thereafter
|
Total
|
Amount
|
||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||
Principal amount by expected maturity:
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
United States government obligations and authorities
|
$
|
495
|
$
|
3,493
|
$
|
415
|
$
|
1,579
|
$
|
7,017
|
$
|
7,018
|
$
|
20,017
|
$
|
20,107
|
||||||||||||||||
Obligations of states and political subdivisions
|
1,275
|
2,465
|
2,930
|
2,275
|
2,390
|
9,870
|
21,205
|
23,677
|
||||||||||||||||||||||||
Corporate securities
|
2,992
|
8,225
|
13,992
|
11,197
|
9,773
|
20,315
|
66,494
|
71,652
|
||||||||||||||||||||||||
International securities
|
-
|
335
|
1,414
|
280
|
302
|
1,030
|
3,361
|
3,500
|
||||||||||||||||||||||||
Collateralized mortgage obligations
|
234
|
2,144
|
3,252
|
1,095
|
4,433
|
2,341
|
13,499
|
14,372
|
||||||||||||||||||||||||
Equity securities, at market
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
34,734
|
||||||||||||||||||||||||
All investments
|
$
|
4,996
|
$
|
16,662
|
$
|
22,003
|
$
|
16,426
|
$
|
23,915
|
$
|
40,574
|
$
|
124,576
|
$
|
168,042
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Weighted average interest rate by expected maturity:
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
United States government obligations and authorities
|
1.75
|
%
|
0.27
|
%
|
2.18
|
%
|
0.52
|
%
|
1.01
|
%
|
1.57
|
%
|
1.08
|
%
|
||||||||||||||||||
Obligations of states and political subdivisions
|
5.00
|
%
|
4.11
|
%
|
4.43
|
%
|
4.61
|
%
|
4.82
|
%
|
4.68
|
%
|
4.61
|
%
|
||||||||||||||||||
Corporate securities
|
4.89
|
%
|
3.70
|
%
|
3.84
|
%
|
4.51
|
%
|
4.48
|
%
|
5.16
|
%
|
4.48
|
%
|
||||||||||||||||||
International securities
|
0.00
|
%
|
0.73
|
%
|
1.72
|
%
|
1.50
|
%
|
2.05
|
%
|
5.22
|
%
|
2.71
|
%
|
||||||||||||||||||
Collateralized mortgage obligations
|
5.56
|
%
|
4.67
|
%
|
5.49
|
%
|
4.56
|
%
|
4.08
|
%
|
4.43
|
%
|
4.64
|
%
|
||||||||||||||||||
Equity securities, at market
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
||||||||||||||||||
All investments
|
4.64
|
%
|
3.11
|
%
|
3.99
|
%
|
4.09
|
%
|
3.39
|
%
|
4.38
|
%
|
3.92
|
%
|
|
101.INS-XBRL
|
Instance Document.
|
|
101.SCH-XBRL
|
Taxonomy Extension Schema Document.
|
|
101.CAL-XBRL
|
Taxonomy Extension Calculation Linkbase Document.
|
|
101.LAB-XBRL |
Taxonomy Extension Label Linkbase Document.
|
|
101.PRE-XBRL
|
Taxonomy Extension Presentation Linkbase Document.
|
|
FEDERATED NATIONAL HOLDING COMPANY
|
|
|
|
|
|
|
|
By:
|
/s/ Michael H. Braun
|
|
|
|
Michael H. Braun, Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Peter J. Prygelski, III
|
|
Peter J. Prygelski, III, Chief Financial Officer
|
|||
|
|
(Principal Financial and Accounting Officer)
|
|
Fourth Excess Catastrophe Reinsurance Contract, effective July 1, 2013, between Federated National Insurance Company and subscribing reinsurers. *
|
||
|
|
|
Fourth Excess Catastrophe Reinsurance Contract, effective July 1, 2013, between Federated National Insurance Company and subscribing reinsurers. *
|
||
|
|
|
Fourth Reinstatement Premium Protection Reinsurance Contract, effective July 1, 2013, between Federated National Insurance Company and subscribing reinsurers. *
|
||
|
|
|
Underlying Catastrophe Excess of Loss Reinsurance Contract, effective July 1, 2013, between Federated National Insurance Company and subscribing reinsurers. *
|
||
|
|
|
Insurance Agency Master Agreement dated February 4, 2013 between Ivantage Select Agency, Inc. and Federated National Underwriters, Inc. **
|
||
|
|
|
First Amendment to Insurance Agency Master Agreement dated February 12, 2013 between Ivantage Select Agency, Inc. and Federated National Underwriters, Inc. **
|
||
|
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
*
|
||
|
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
*
|
||
|
|
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act.
*
|
||
|
|
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.
*
|
101.INS-XBRL
|
Instance Document.
|
|
|
|
|
101.SCH-XBRL
|
Taxonomy Extension Schema Document.
|
|
|
|
|
101.CAL-XBRL
|
Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
101.LAB-XBRL
|
Taxonomy Extension Label Linkbase Document.
|
|
|
|
|
101.PRE-XBRL
|
Taxonomy Extension Presentation Linkbase Document.
|
|
|
Article
|
Page
|
|
1
|
Classes of Business Reinsured
|
1
|
2
|
Commencement and Termination
|
1
|
3
|
Territory
|
2
|
4
|
Exclusions
|
3
|
5
|
Retention and Limit
|
4
|
6
|
Florida Hurricane Catastrophe Fund
|
4
|
7
|
Other Reinsurance
|
5
|
8
|
Reinstatement
|
5
|
9
|
Definitions
|
5
|
10
|
Loss Occurrence
|
7
|
11
|
Loss Notices and Settlements
|
8
|
12
|
Salvage and Subrogation
|
8
|
13
|
Reinsurance Premium
|
8
|
14
|
Late Payments
|
9
|
15
|
Offset
|
10
|
16
|
Access to Records
|
10
|
17
|
Liability of the Reinsurer
|
11
|
18
|
Net Retained Lines (BRMA 32E)
|
11
|
19
|
Errors and Omissions (BRMA 14F)
|
11
|
20
|
Currency (BRMA 12A)
|
11
|
21
|
Taxes (BRMA 50B)
|
12
|
22
|
Federal Excise Tax (BRMA 17D)
|
12
|
23
|
Reserves
|
12
|
24
|
Insolvency
|
13
|
25
|
Arbitration
|
14
|
26
|
Service of Suit (BRMA 49C)
|
15
|
27
|
Severability (BRMA 72E)
|
15
|
28
|
Governing Law (BRMA 71B)
|
15
|
29
|
Non-Waiver
|
15
|
30
|
Notices and Contract Execution
|
16
|
31
|
Intermediary
|
16
|
A. | By this Contract the Reinsurer agrees to reinsure the excess liability which may accrue to the Company under its policies in force at the effective date hereof or issued or renewed on or after that date, and classified by the Company as Property business, including but not limited to, Dwelling Fire, Inland Marine, Mobile Home, Commercial and Homeowners business (including any business assumed from Citizens Property Insurance Corporation), subject to the terms, conditions and limitations hereinafter set forth. |
B. | Neither the Company nor the Reinsurer shall be liable for premium or loss under this Contract if it would result in a violation of any mandatory sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, United Kingdom or United States of America that are applicable to either party. |
B. | Notwithstanding the provisions of paragraph A above, the Company may terminate a Subscribing Reinsurer's percentage share in this Contract at any time by giving written notice to the Subscribing Reinsurer in the event any of the following circumstances occur: |
1. | The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at the inception of this Contract has been reduced by more than 20.0% of the amount of surplus (or the applicable equivalent) 12 months prior to that date; or |
|
|
2. | The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at any time during the term of this Contract has been reduced by more than 20.0% of the amount of surplus (or the applicable equivalent) at the date of the Subscribing Reinsurer's most recent financial statement filed with regulatory authorities and available to the public as of the inception of this Contract; or |
3. | The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded below A- and/or Standard & Poor's rating has been assigned or downgraded below BBB+; or |
4. | The Subscribing Reinsurer has become merged with, acquired by or controlled by any other entity or individual(s) not controlling the Subscribing Reinsurer's operations previously; or |
5. | A State Insurance Department or other legal authority has ordered the Subscribing Reinsurer to cease writing business; or |
6. | The Subscribing Reinsurer has become insolvent or has been placed into liquidation, receivership, supervision, administration, winding-up or under a scheme of arrangement, or similar proceedings (whether voluntary or involuntary) or proceedings have been instituted against the Subscribing Reinsurer for the appointment of a receiver, liquidator, rehabilitator, supervisor, administrator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations; or |
7. | The Subscribing Reinsurer has ceased assuming new or renewal property or casualty treaty reinsurance business; or |
8. | The Subscribing Reinsurer has hired an unaffiliated runoff claims manager that is compensated on a contingent basis or is otherwise provided with financial incentives based on the quantum of claims paid. |
C. | The "term of this Contract" as used herein shall mean the period from 12:01 a.m., Eastern Standard Time, July 1, 2013 to 12:01 a.m., Eastern Standard Time, July 1, 2014. However, if this Contract is terminated, the "term of this Contract" as used herein shall mean the period from 12:01 a.m., Eastern Standard Time, July 1, 2013 to the effective time and date of termination. |
D. | If this Contract is terminated or expires while a loss occurrence covered hereunder is in progress, the Reinsurer's liability hereunder shall, subject to the other terms and conditions of this Contract, be determined as if the entire loss occurrence had occurred prior to the termination or expiration of this Contract, provided that no part of such loss occurrence is claimed against any renewal or replacement of this Contract. |
|
|
A. | This Contract does not apply to and specifically excludes the following: |
1. | Reinsurance assumed by the Company under obligatory reinsurance agreements, except business assumed by the Company from Citizens Property Insurance Corporation. |
2. | Hail damage to growing or standing crops. |
3. | Business rated, coded or classified as Flood insurance or which should have been rated, coded or classified as such. |
4. | Business rated, coded or classified as Mortgage Impairment and Difference in Conditions insurance or which should have been rated, coded or classified as such. |
5. | Title insurance and all forms of Financial Guarantee, Credit and Insolvency. |
6. | Aviation, Ocean Marine, Boiler and Machinery, Fidelity and Surety, Accident and Health, Animal Mortality and Workers Compensation and Employers Liability. |
7. | Errors and Omissions, Malpractice and any other type of Professional Liability insurance. |
8. | Loss and/or damage and/or costs and/or expenses arising from seepage and/or pollution and/or contamination, other than contamination from smoke. Nevertheless, this exclusion does not preclude payment of the cost of removing debris of property damaged by a loss otherwise covered hereunder, subject always to a limit of 25.0% of the Company's property loss under the applicable original policy. |
9. | Loss or liability as excluded under the provisions of the "War Exclusion Clause" attached to and forming part of this Contract. |
10. | Nuclear risks as defined in the "Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance (U.S.A.)" attached to and forming part of this Contract. |
11. | Loss or liability from any Pool, Association or Syndicate and any assessment or similar demand for payment related to the FHCF or Citizens Property Insurance Corporation. |
12. | Loss or liability of the Company arising by contract, operation of law, or otherwise, from its participation or membership, whether voluntary or involuntary, in any insolvency fund. "Insolvency fund" includes any guaranty fund, insolvency fund, plan, pool, association, fund or other arrangement, however denominated, established or governed, which provides for any assessment of or payment or assumption by the Company of part or all of any claim, debt, charge, fee or other obligation of an insurer, or its successors or assigns, which has been declared by any competent authority to be insolvent, or which is otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in whole or in part. |
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13. | Losses in the respect of overhead transmission and distribution lines other than those on or within 150 meters (or 500 feet) of the insured premises. |
14. | Mold, unless resulting from a peril otherwise covered under the policy involved. |
15. | Loss or liability as excluded under the provisions of the "Terrorism Exclusion" attached to and forming part of this Contract. |
16. | All property loss, damage, destruction, erasure, corruption or alteration of Electronic Data from any cause whatsoever (including, but not limited to, Computer Virus) or loss of use, reduction in functionality, cost, expense or whatsoever nature resulting therefrom, unless resulting from a peril otherwise covered under the policy involved. |
B. | Notwithstanding the provisions above, no claim shall be made hereunder as respects losses arising out of loss occurrences commencing during the term of this Contract unless at least two risks insured or reinsured by the Company are involved in such loss occurrence. For purposes hereof, the Company shall be the sole judge of what constitutes "one risk." |
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A. | In the event all or any portion of the reinsurance hereunder is exhausted by loss, the amount so exhausted shall be reinstated immediately from the time the loss occurrence commences hereon. For each amount so reinstated the Company agrees to pay additional premium equal to the product of the following: |
1. | The percentage of the occurrence limit reinstated (based on the loss paid by the Reinsurer); times |
2. | The earned reinsurance premium for the term of this Contract (exclusive of reinstatement premium). |
B. | Whenever the Company requests payment by the Reinsurer of any loss hereunder, the Company shall submit a statement to the Reinsurer of reinstatement premium due the Reinsurer. If the earned reinsurance premium for the term of this Contract has not been finally determined as of the date of any such statement, the calculation of reinstatement premium due shall be based on the annual deposit premium and shall be readjusted when the earned reinsurance premium for the term of this Contract has been finally determined. Any reinstatement premium shown to be due the Reinsurer as reflected by any such statement (less prior payments, if any) shall be payable by the Company concurrently with payment by the Reinsurer of the requested loss. Any return reinstatement premium shown to be due the Company shall be remitted by the Reinsurer as promptly as possible after receipt and verification of the Company's statement. |
C. | Notwithstanding anything stated herein, the liability of the Reinsurer hereunder shall not exceed $25,000,000 as respects loss or losses arising out of any one loss occurrence, nor shall it exceed $50,000,000 in all during the term of this Contract. |
A. | "Loss adjustment expense," regardless of how such expenses are classified for statutory reporting purposes, as used in this Contract shall mean all costs and expenses allocable to a specific claim that are incurred by the Company in the investigation, appraisal, adjustment, settlement, litigation, defense or appeal of a specific claim, including court costs and costs of supersedeas and appeal bonds, and including a) pre-judgment interest, unless included as part of the award or judgment; b) post-judgment interest; c) legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto, including Declaratory Judgment Expense; and d) expenses and a pro rata share of salaries of the Company field employees, and expenses of other Company employees who have been temporarily diverted from their normal and customary duties and assigned to the field adjustment of losses covered by this Contract. |
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B. | "Loss in excess of policy limits" and "extra contractual obligations" as used in this Contract shall mean: |
1. | "Loss in excess of policy limits" shall mean 80.0% of any amount paid or payable by the Company in excess of its policy limits, but otherwise within the terms of its policy, such loss in excess of the Company's policy limits having been incurred because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action. Any loss in excess of policy limits that is made in connection with this Contract shall not exceed 25.0% of the actual catastrophe loss. |
2. | "Extra contractual obligations" shall mean 80.0% of any punitive, exemplary, compensatory or consequential damages paid or payable by the Company, not covered by any other provision of this Contract and which arise from the handling of any claim on business subject to this Contract, such liabilities arising because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action. An extra contractual obligation shall be deemed, in all circumstances, to have occurred on the same date as the loss covered or alleged to be covered under the policy. Any extra contractual obligations that are made in connection with this Contract shall not exceed 25.0% of the actual catastrophe loss. |
C. | "Policies" as used in this Contract shall mean all policies, contracts and binders of insurance or reinsurance. |
D. | "Ultimate net loss" as used in this Contract shall mean the sum or sums (including loss in excess of policy limits, extra contractual obligations and loss adjustment expense, as defined herein) paid or payable by the Company in settlement of claims and in satisfaction of judgments rendered on account of such claims, after deduction of all salvage, all recoveries and all claims on inuring insurance or reinsurance, whether collectible or not. Nothing herein shall be construed to mean that losses under this Contract are not recoverable until the Company's ultimate net loss has been ascertained. |
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A. | The term "loss occurrence" shall mean the sum of all individual losses directly occasioned by any one disaster, accident or loss or series of disasters, accidents or losses arising out of one event which occurs within the area of one state of the United States or province of Canada and states or provinces contiguous thereto and to one another. However, the duration and extent of any one "loss occurrence" shall be limited to all individual losses sustained by the Company occurring during any period of 168 consecutive hours arising out of and directly occasioned by the same event, except that the term "loss occurrence" shall be further defined as follows: |
1. | As regards windstorm, hail, tornado, hurricane, cyclone, including ensuing collapse and water damage, all individual losses sustained by the Company occurring during any period of 96 consecutive hours arising out of and directly occasioned by the same event. However, the event need not be limited to one state or province or states or provinces contiguous thereto. |
2. | As regards riot, riot attending a strike, civil commotion, vandalism and malicious mischief, all individual losses sustained by the Company occurring during any period of 72 consecutive hours within the area of one municipality or county and the municipalities or counties contiguous thereto arising out of and directly occasioned by the same event. The maximum duration of 72 consecutive hours may be extended in respect of individual losses which occur beyond such 72 consecutive hours during the continued occupation of an assured's premises by strikers, provided such occupation commenced during the aforesaid period. |
3. | As regards earthquake (the epicenter of which need not necessarily be within the territorial confines referred to in the introductory portion of this paragraph A) and fire following directly occasioned by the earthquake, only those individual fire losses which commence during the period of 168 consecutive hours may be included in the Company's "loss occurrence." |
4. | As regards "freeze," only individual losses directly occasioned by collapse, breakage of glass and water damage (caused by bursting frozen pipes and tanks) may be included in the Company's "loss occurrence." |
5. | As regards conflagration, brush fires and any other fires, irrespective of origin (except as provided in subparagraphs 2 and 3 above), all individual losses sustained by the Company which occur during any period of 168 consecutive hours within a 150-mile radius of any fixed point selected by the Company may be included in the Company's "loss occurrence." |
B. | Except for those "loss occurrences" referred to in subparagraph 2 of paragraph A above, the Company may choose the date and time when any such period of consecutive hours commences, provided that it is not earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss, and provided that only one such period of 168 consecutive hours shall apply with respect to one event, except for any "loss occurrence" referred to in subparagraph 1 of paragraph A above where only one such period of 96 consecutive hours shall apply with respect to one event, regardless of the duration of the event. |
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C. | However, as respects those "loss occurrences" referred to in subparagraph 2 of paragraph A above, if the disaster, accident or loss occasioned by the event is of greater duration than 72 consecutive hours, then the Company may divide that disaster, accident or loss into two or more "loss occurrences," provided that no two periods overlap and no individual loss is included in more than one such period, and provided that no period commences earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss. |
D. | No individual losses occasioned by an event that would be covered by a 96 or 72 hours clause may be included in any "loss occurrence" claimed under a 168 hours provision. |
A. | Whenever losses sustained by the Company are reserved by the Company for an amount greater than 50.0% of the Company's retention hereunder and/or appear likely to result in a claim hereunder, the Company shall notify the Subscribing Reinsurers and shall provide updates related to development of such losses. The Reinsurer shall have the right to participate in the adjustment of such losses at its own expense. |
B. | All loss settlements made by the Company, provided they are within the terms of this Contract and the terms of the original policy (with the exception of loss in excess of policy limits or extra contractual obligations coverage, if any, under this Contract), shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be liable upon receipt of reasonable evidence of the amount paid by the Company. |
1. | $1,875,000; times |
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2. | The percentage calculated by dividing (a) the actual Average Annual Loss ("AAL") determined by the Company's wind insurance in force on September 30, 2013, by (b) $198,314. |
B. | The Company shall pay the Reinsurer an annual deposit premium of $1,875,000 in four equal installments of $468,750 on July 1 and October 1 of 2013, and on January 1 and April 1 of 2014. However, in the event this Contract is terminated, there shall be no deposit premium installments due after the effective date of termination. |
C. | On or before June 30, 2014, the Company shall provide a report to the Reinsurer setting forth the premium due hereunder for the term of this Contract, computed in accordance with paragraph A above, and any additional premium due the Reinsurer or return premium due the Company shall be remitted promptly. |
A. | The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Contract. |
B. | In the event any premium, loss or other payment due either party is not received by the intermediary named in the Intermediary Article (hereinafter referred to as the "Intermediary") by the payment due date, the party to whom payment is due may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest charge on the amount past due calculated for each such payment on the last business day of each month as follows: |
1. | The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times |
2. | 1/365ths of the six-month United States Treasury Bill rate as quoted in The Wall Street Journal on the first business day of the month for which the calculation is made; times |
3. | The amount past due, including accrued interest. |
C. | The establishment of the due date shall, for purposes of this Article, be determined as follows: |
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1. | As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Contract. In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal by the Intermediary of the initial billing for each such payment. |
2. | Any claim or loss payment due the Company hereunder shall be deemed due 10 days after the proof of loss or demand for payment is transmitted to the Reinsurer. If such loss or claim payment is not received within the 10 days, interest will accrue on the payment or amount overdue in accordance with paragraph B above, from the date the proof of loss or demand for payment was transmitted to the Reinsurer. |
3. | As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1 and 2 of this paragraph C, the due date shall be as provided for in the applicable section of this Contract. In the event a due date is not specifically stated for a given payment, it shall be deemed due 10 days following transmittal of written notification that the provisions of this Article have been invoked. |
D. | Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Contract. If the debtor party prevails in an arbitration or other proceeding, then any interest charges due hereunder on the amount in dispute shall be null and void. If the debtor party loses in such proceeding, then the interest charge on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings. If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article. |
E. | Interest charges arising out of the application of this Article that are $1,000 or less from any party shall be waived unless there is a pattern of late payments consisting of three or more items over the course of any 12-month period. |
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A. | The liability of the Reinsurer shall follow that of the Company in every case and be subject in all respects to all the general and specific stipulations, clauses, waivers and modifications of the Company's policies and any endorsements thereon. However, in no event shall this be construed in any way to provide coverage outside the terms and conditions set forth in this Contract. |
B. | Nothing herein shall in any manner create any obligations or establish any rights against the Reinsurer in favor of any third party or any persons not parties to this Contract. |
A. | This Contract applies only to that portion of any policy which the Company retains net for its own account (prior to deduction of any underlying reinsurance specifically permitted in this Contract), and in calculating the amount of any loss hereunder and also in computing the amount or amounts in excess of which this Contract attaches, only loss or losses in respect of that portion of any policy which the Company retains net for its own account shall be included. |
B. | The amount of the Reinsurer's liability hereunder in respect of any loss or losses shall not be increased by reason of the inability of the Company to collect from any other reinsurer(s), whether specific or general, any amounts which may have become due from such reinsurer(s), whether such inability arises from the insolvency of such other reinsurer(s) or otherwise. |
A. | Whenever the word "Dollars" or the "$" sign appears in this Contract, they shall be construed to mean United States Dollars and all transactions under this Contract 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. |
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A. | The Reinsurer has 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 of premium becoming due hereunder the Reinsurer 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. |
A. | The Reinsurer agrees to fund its share of amounts, including but not limited to, the Company's ceded unearned premium and outstanding loss and loss adjustment expense reserves (including all case reserves plus any reasonable amount estimated to be unreported from known loss occurrences) (hereinafter referred to as "Reinsurer's Obligations") 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 |
2. | Escrow accounts for the benefit of the Company; and/or |
3. | Cash advances; |
1. | Is unauthorized in any state of the United States of America or the District of Columbia having jurisdiction over the Company and 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; or |
2. | Has an A.M. Best Company's rating equal to or below B++ at the inception of this Contract. |
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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 Reinsurer 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 Reinsurer, but only for one or more of the following purposes: |
1. | To reimburse itself for the Reinsurer's share of unearned premiums returned to insureds on account of policy cancellations, unless paid in cash by the Reinsurer; |
2. | To reimburse itself for the Reinsurer's share of losses and/or loss adjustment expense paid under the terms of policies reinsured hereunder, unless paid in cash by the Reinsurer; |
3. | To reimburse itself for the Reinsurer's share of any other amounts claimed to be due hereunder, unless paid in cash by the Reinsurer; |
4. | To fund a cash account in an amount equal to the Reinsurer's share of amounts, including but not limited to, the Reinsurer's Obligations as set forth above, 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 Reinsurer 10 days prior to its expiration date; |
5. | To refund to the Reinsurer any sum in excess of the actual amount required to fund the Reinsurer's share of amounts, including but not limited to, the Reinsurer's Obligations as set forth above, if so requested by the Reinsurer. |
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B. | Where two or more reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this Contract as though such expense had been incurred by the Company. |
C. | It is further understood and agreed that, in the event of the insolvency of the Company, the reinsurance under this Contract shall be payable directly by the Reinsurer to the Company or to its liquidator, receiver or statutory successor, except as provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract specifically provides another payee of such reinsurance in the event of the insolvency of the Company or (2) where the Reinsurer with the consent of the direct insured or insureds has assumed such policy obligations of the Company as direct obligations of the Reinsurer to the payees under such policies and in substitution for the obligations of the Company to such payees. |
A. | As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Contract, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration. One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters. In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration. If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots. |
B. | Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire. The Arbiters shall consider this Contract as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law. The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties. Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction. |
C. | If more than one reinsurer is involved in the same dispute, all such reinsurers shall, at the option of the Company, constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the reinsurers participating under the terms of this Contract from several to joint. |
D. | Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration. In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties. |
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E. | Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Contract, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office. |
A. | It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due hereunder, the Reinsurer, 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 Reinsurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. |
B. | Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates 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 Contract. |
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A. | Whenever a notice, statement, report or any other written communication is required by this Contract, unless otherwise specified, such notice, statement, report or other written communication may be transmitted by certified or registered mail, nationally or internationally recognized express delivery service, personal delivery, electronic mail, or facsimile. With the exception of notices of termination, first class mail is also acceptable. |
B. | The use of any of the following shall constitute a valid execution of this Contract or any amendments thereto: |
1. | Paper documents with an original ink signature; |
2. | Facsimile or electronic copies of paper documents showing an original ink signature; and/or |
3. | Electronic records with an electronic signature made via an electronic agent. For the purposes of this Contract, the terms "electronic record," "electronic signature" and "electronic agent" shall have the meanings set forth in the Electronic Signatures in Global and National Commerce Act of 2000 or any amendments thereto. |
C. | This Contract may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original. |
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1. | This Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or Nuclear Energy risks. |
2. | Without in any way restricting the operation of paragraph (1) of this Clause, this Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any insurance against Physical Damage (including business interruption or consequential loss arising out of such Physical Damage) to: |
I. | Nuclear reactor power plants including all auxiliary property on the site, or |
II. | Any other nuclear reactor installation, including laboratories handling radioactive materials in connection with reactor installations, and "critical facilities" as such, or |
III. | Installations for fabricating complete fuel elements or for processing substantial quantities of "special nuclear material," and for reprocessing, salvaging, chemically separating, storing or disposing of "spent" nuclear fuel or waste materials, or |
IV. | Installations other than those listed in paragraph (2) III above using substantial quantities of radioactive isotopes or other products of nuclear fission. |
3. | Without in any way restricting the operations of paragraphs (1) and (2) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear installation and which normally would be insured therewith except that this paragraph (3) shall not operate |
(a) | where Reassured does not have knowledge of such nuclear reactor power plant or nuclear installation, or |
(b) | where said insurance contains a provision excluding coverage for damage to property caused by or resulting from radioactive contamination, however caused. However on and after 1st January 1960 this sub-paragraph (b) shall only apply provided the said radioactive contamination exclusion provision has been approved by the Governmental Authority having jurisdiction thereof. |
4. | Without in any way restricting the operations of paragraphs (1), (2) and (3) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive contamination is a named hazard specifically insured against. |
5. | It is understood and agreed that this Clause shall not extend to risks using radioactive isotopes in any form where the nuclear exposure is not considered by the Reassured to be the primary hazard. |
6. | The term "special nuclear material" shall have the meaning given it in the Atomic Energy Act of 1954 or by any law amendatory thereof. |
7. | Reassured to be sole judge of what constitutes: |
(a) | substantial quantities, and |
(b) | the extent of installation, plant or site. |
(a) | all policies issued by the Reassured on or before 31st December 1957 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply. |
(b) | with respect to any risk located in Canada policies issued by the Reassured on or before 31st December 1958 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply. |
1. | Involves violence against one or more persons, or |
2. | Involves damage to property; or |
3. | Endangers life other than the person committing the action; or |
4. | Creates a risk to health or safety of the public or a section of the public; or |
5. | Is designed to interfere with or disrupt an electronic system. |
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Reinsurer(s)
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Participation(s)
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Through Aon UK Limited trading as Aon Benfield
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Companies Per Signing Page(s)
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50.0
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%
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Total
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50.0
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%
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Article
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Page
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1
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Classes of Business Reinsured
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1
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2
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Commencement and Termination
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1
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3
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Territory
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2
|
4
|
Exclusions
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3
|
5
|
Retention and Limit
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4
|
6
|
Florida Hurricane Catastrophe Fund
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4
|
7
|
Other Reinsurance
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5
|
8
|
Reinstatement
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5
|
9
|
Definitions
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5
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10
|
Loss Occurrence
|
7
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11
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Loss Notices and Settlements
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8
|
12
|
Salvage and Subrogation
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8
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13
|
Reinsurance Premium
|
8
|
14
|
Late Payments
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9
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15
|
Offset
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10
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16
|
Access to Records
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10
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17
|
Liability of the Reinsurer
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11
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18
|
Net Retained Lines (BRMA 32E)
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11
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19
|
Errors and Omissions (BRMA 14F)
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11
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20
|
Currency (BRMA 12A)
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11
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21
|
Taxes (BRMA 50B)
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12
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22
|
Federal Excise Tax (BRMA 17D)
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12
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23
|
Reserves
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12
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24
|
Insolvency
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13
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25
|
Arbitration
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14
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26
|
Service of Suit (BRMA 49C)
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15
|
27
|
Severability (BRMA 72E)
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15
|
28
|
Governing Law (BRMA 71B)
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15
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29
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Non-Waiver
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15
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30
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Notices and Contract Execution
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16
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31
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Intermediary
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16
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A. | By this Contract the Reinsurer agrees to reinsure the excess liability which may accrue to the Company under its policies in force at the effective date hereof or issued or renewed on or after that date, and classified by the Company as Property business, including but not limited to, Dwelling Fire, Inland Marine, Mobile Home, Commercial and Homeowners business (including any business assumed from Citizens Property Insurance Corporation), subject to the terms, conditions and limitations hereinafter set forth. |
B. | Neither the Company nor the Reinsurer shall be liable for premium or loss under this Contract if it would result in a violation of any mandatory sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, United Kingdom or United States of America that are applicable to either party. |
B. | Notwithstanding the provisions of paragraph A above, the Company may terminate a Subscribing Reinsurer's percentage share in this Contract at any time by giving written notice to the Subscribing Reinsurer in the event any of the following circumstances occur: |
1. | The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at the inception of this Contract has been reduced by more than 20.0% of the amount of surplus (or the applicable equivalent) 12 months prior to that date; or |
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2. | The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at any time during the term of this Contract has been reduced by more than 20.0% of the amount of surplus (or the applicable equivalent) at the date of the Subscribing Reinsurer's most recent financial statement filed with regulatory authorities and available to the public as of the inception of this Contract; or |
3. | The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded below A- and/or Standard & Poor's rating has been assigned or downgraded below BBB+; or |
4. | The Subscribing Reinsurer has become merged with, acquired by or controlled by any other entity or individual(s) not controlling the Subscribing Reinsurer's operations previously; or |
5. | A State Insurance Department or other legal authority has ordered the Subscribing Reinsurer to cease writing business; or |
6. | The Subscribing Reinsurer has become insolvent or has been placed into liquidation, receivership, supervision, administration, winding-up or under a scheme of arrangement, or similar proceedings (whether voluntary or involuntary) or proceedings have been instituted against the Subscribing Reinsurer for the appointment of a receiver, liquidator, rehabilitator, supervisor, administrator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations; or |
7. | The Subscribing Reinsurer has ceased assuming new or renewal property or casualty treaty reinsurance business; or |
8. | The Subscribing Reinsurer has hired an unaffiliated runoff claims manager that is compensated on a contingent basis or is otherwise provided with financial incentives based on the quantum of claims paid. |
C. | The "term of this Contract" as used herein shall mean the period from 12:01 a.m., Eastern Standard Time, July 1, 2013 to 12:01 a.m., Eastern Standard Time, July 1, 2014. However, if this Contract is terminated, the "term of this Contract" as used herein shall mean the period from 12:01 a.m., Eastern Standard Time, July 1, 2013 to the effective time and date of termination. |
D. | If this Contract is terminated or expires while a loss occurrence covered hereunder is in progress, the Reinsurer's liability hereunder shall, subject to the other terms and conditions of this Contract, be determined as if the entire loss occurrence had occurred prior to the termination or expiration of this Contract, provided that no part of such loss occurrence is claimed against any renewal or replacement of this Contract. |
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A. | This Contract does not apply to and specifically excludes the following: |
1. | Reinsurance assumed by the Company under obligatory reinsurance agreements, except business assumed by the Company from Citizens Property Insurance Corporation. |
2. | Hail damage to growing or standing crops. |
3. | Business rated, coded or classified as Flood insurance or which should have been rated, coded or classified as such. |
4. | Business rated, coded or classified as Mortgage Impairment and Difference in Conditions insurance or which should have been rated, coded or classified as such. |
5. | Title insurance and all forms of Financial Guarantee, Credit and Insolvency. |
6. | Aviation, Ocean Marine, Boiler and Machinery, Fidelity and Surety, Accident and Health, Animal Mortality and Workers Compensation and Employers Liability. |
7. | Errors and Omissions, Malpractice and any other type of Professional Liability insurance. |
8. | Loss and/or damage and/or costs and/or expenses arising from seepage and/or pollution and/or contamination, other than contamination from smoke. Nevertheless, this exclusion does not preclude payment of the cost of removing debris of property damaged by a loss otherwise covered hereunder, subject always to a limit of 25.0% of the Company's property loss under the applicable original policy. |
9. | Loss or liability as excluded under the provisions of the "War Exclusion Clause" attached to and forming part of this Contract. |
10. | Nuclear risks as defined in the "Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance (U.S.A.)" attached to and forming part of this Contract. |
11. | Loss or liability from any Pool, Association or Syndicate and any assessment or similar demand for payment related to the FHCF or Citizens Property Insurance Corporation. |
12. | Loss or liability of the Company arising by contract, operation of law, or otherwise, from its participation or membership, whether voluntary or involuntary, in any insolvency fund. "Insolvency fund" includes any guaranty fund, insolvency fund, plan, pool, association, fund or other arrangement, however denominated, established or governed, which provides for any assessment of or payment or assumption by the Company of part or all of any claim, debt, charge, fee or other obligation of an insurer, or its successors or assigns, which has been declared by any competent authority to be insolvent, or which is otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in whole or in part. |
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13. | Losses in the respect of overhead transmission and distribution lines other than those on or within 150 meters (or 500 feet) of the insured premises. |
14. | Mold, unless resulting from a peril otherwise covered under the policy involved. |
15. | Loss or liability as excluded under the provisions of the "Terrorism Exclusion" attached to and forming part of this Contract. |
16. | All property loss, damage, destruction, erasure, corruption or alteration of Electronic Data from any cause whatsoever (including, but not limited to, Computer Virus) or loss of use, reduction in functionality, cost, expense or whatsoever nature resulting therefrom, unless resulting from a peril otherwise covered under the policy involved. |
B. | Notwithstanding the provisions above, no claim shall be made hereunder as respects losses arising out of loss occurrences commencing during the term of this Contract unless at least two risks insured or reinsured by the Company are involved in such loss occurrence. For purposes hereof, the Company shall be the sole judge of what constitutes "one risk." |
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A. | In the event all or any portion of the reinsurance hereunder is exhausted by loss, the amount so exhausted shall be reinstated immediately from the time the loss occurrence commences hereon. For each amount so reinstated the Company agrees to pay additional premium equal to the product of the following: |
1. | The percentage of the occurrence limit reinstated (based on the loss paid by the Reinsurer); times |
2. | The earned reinsurance premium for the term of this Contract (exclusive of reinstatement premium). |
B. | Whenever the Company requests payment by the Reinsurer of any loss hereunder, the Company shall submit a statement to the Reinsurer of reinstatement premium due the Reinsurer. If the earned reinsurance premium for the term of this Contract has not been finally determined as of the date of any such statement, the calculation of reinstatement premium due shall be based on the annual deposit premium and shall be readjusted when the earned reinsurance premium for the term of this Contract has been finally determined. Any reinstatement premium shown to be due the Reinsurer as reflected by any such statement (less prior payments, if any) shall be payable by the Company concurrently with payment by the Reinsurer of the requested loss. Any return reinstatement premium shown to be due the Company shall be remitted by the Reinsurer as promptly as possible after receipt and verification of the Company's statement. |
C. | Notwithstanding anything stated herein, the liability of the Reinsurer hereunder shall not exceed $25,000,000 as respects loss or losses arising out of any one loss occurrence, nor shall it exceed $50,000,000 in all during the term of this Contract. |
A. | "Loss adjustment expense," regardless of how such expenses are classified for statutory reporting purposes, as used in this Contract shall mean all costs and expenses allocable to a specific claim that are incurred by the Company in the investigation, appraisal, adjustment, settlement, litigation, defense or appeal of a specific claim, including court costs and costs of supersedeas and appeal bonds, and including a) pre-judgment interest, unless included as part of the award or judgment; b) post-judgment interest; c) legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto, including Declaratory Judgment Expense; and d) expenses and a pro rata share of salaries of the Company field employees, and expenses of other Company employees who have been temporarily diverted from their normal and customary duties and assigned to the field adjustment of losses covered by this Contract. |
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B. | "Loss in excess of policy limits" and "extra contractual obligations" as used in this Contract shall mean: |
1. | "Loss in excess of policy limits" shall mean 80.0% of any amount paid or payable by the Company in excess of its policy limits, but otherwise within the terms of its policy, such loss in excess of the Company's policy limits having been incurred because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action. Any loss in excess of policy limits that is made in connection with this Contract shall not exceed 25.0% of the actual catastrophe loss. |
2. | "Extra contractual obligations" shall mean 80.0% of any punitive, exemplary, compensatory or consequential damages paid or payable by the Company, not covered by any other provision of this Contract and which arise from the handling of any claim on business subject to this Contract, such liabilities arising because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action. An extra contractual obligation shall be deemed, in all circumstances, to have occurred on the same date as the loss covered or alleged to be covered under the policy. Any extra contractual obligations that are made in connection with this Contract shall not exceed 25.0% of the actual catastrophe loss. |
C. | "Policies" as used in this Contract shall mean all policies, contracts and binders of insurance or reinsurance. |
D. | "Ultimate net loss" as used in this Contract shall mean the sum or sums (including loss in excess of policy limits, extra contractual obligations and loss adjustment expense, as defined herein) paid or payable by the Company in settlement of claims and in satisfaction of judgments rendered on account of such claims, after deduction of all salvage, all recoveries and all claims on inuring insurance or reinsurance, whether collectible or not. Nothing herein shall be construed to mean that losses under this Contract are not recoverable until the Company's ultimate net loss has been ascertained. |
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A. | The term "loss occurrence" shall mean the sum of all individual losses directly occasioned by any one disaster, accident or loss or series of disasters, accidents or losses arising out of one event which occurs within the area of one state of the United States or province of Canada and states or provinces contiguous thereto and to one another. However, the duration and extent of any one "loss occurrence" shall be limited to all individual losses sustained by the Company occurring during any period of 168 consecutive hours arising out of and directly occasioned by the same event, except that the term "loss occurrence" shall be further defined as follows: |
1. | As regards windstorm, hail, tornado, hurricane, cyclone, including ensuing collapse and water damage, all individual losses sustained by the Company occurring during any period of 96 consecutive hours arising out of and directly occasioned by the same event. However, the event need not be limited to one state or province or states or provinces contiguous thereto. |
2. | As regards riot, riot attending a strike, civil commotion, vandalism and malicious mischief, all individual losses sustained by the Company occurring during any period of 72 consecutive hours within the area of one municipality or county and the municipalities or counties contiguous thereto arising out of and directly occasioned by the same event. The maximum duration of 72 consecutive hours may be extended in respect of individual losses which occur beyond such 72 consecutive hours during the continued occupation of an assured's premises by strikers, provided such occupation commenced during the aforesaid period. |
3. | As regards earthquake (the epicenter of which need not necessarily be within the territorial confines referred to in the introductory portion of this paragraph A) and fire following directly occasioned by the earthquake, only those individual fire losses which commence during the period of 168 consecutive hours may be included in the Company's "loss occurrence." |
4. | As regards "freeze," only individual losses directly occasioned by collapse, breakage of glass and water damage (caused by bursting frozen pipes and tanks) may be included in the Company's "loss occurrence." |
5. | As regards conflagration, brush fires and any other fires, irrespective of origin (except as provided in subparagraphs 2 and 3 above), all individual losses sustained by the Company which occur during any period of 168 consecutive hours within a 150-mile radius of any fixed point selected by the Company may be included in the Company's "loss occurrence." |
B. | Except for those "loss occurrences" referred to in subparagraph 2 of paragraph A above, the Company may choose the date and time when any such period of consecutive hours commences, provided that it is not earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss, and provided that only one such period of 168 consecutive hours shall apply with respect to one event, except for any "loss occurrence" referred to in subparagraph 1 of paragraph A above where only one such period of 96 consecutive hours shall apply with respect to one event, regardless of the duration of the event. |
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C. | However, as respects those "loss occurrences" referred to in subparagraph 2 of paragraph A above, if the disaster, accident or loss occasioned by the event is of greater duration than 72 consecutive hours, then the Company may divide that disaster, accident or loss into two or more "loss occurrences," provided that no two periods overlap and no individual loss is included in more than one such period, and provided that no period commences earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss. |
D. | No individual losses occasioned by an event that would be covered by a 96 or 72 hours clause may be included in any "loss occurrence" claimed under a 168 hours provision. |
A. | Whenever losses sustained by the Company are reserved by the Company for an amount greater than 50.0% of the Company's retention hereunder and/or appear likely to result in a claim hereunder, the Company shall notify the Subscribing Reinsurers and shall provide updates related to development of such losses. The Reinsurer shall have the right to participate in the adjustment of such losses at its own expense. |
B. | All loss settlements made by the Company, provided they are within the terms of this Contract and the terms of the original policy (with the exception of loss in excess of policy limits or extra contractual obligations coverage, if any, under this Contract), shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be liable upon receipt of reasonable evidence of the amount paid by the Company. |
1. | $2,062,500; times |
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2. | The percentage calculated by dividing (a) the actual Average Annual Loss ("AAL") determined by the Company's wind insurance in force on September 30, 2013, by (b) $198,314. |
B. | The Company shall pay the Reinsurer an annual deposit premium of $2,062,500 in four equal installments of $515,625 on July 1 and October 1 of 2013, and on January 1 and April 1 of 2014. However, in the event this Contract is terminated, there shall be no deposit premium installments due after the effective date of termination. |
C. | On or before June 30, 2014, the Company shall provide a report to the Reinsurer setting forth the premium due hereunder for the term of this Contract, computed in accordance with paragraph A above, and any additional premium due the Reinsurer or return premium due the Company shall be remitted promptly. |
A. | The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Contract. |
B. | In the event any premium, loss or other payment due either party is not received by the intermediary named in the Intermediary Article (hereinafter referred to as the "Intermediary") by the payment due date, the party to whom payment is due may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest charge on the amount past due calculated for each such payment on the last business day of each month as follows: |
1. | The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times |
2. | 1/365ths of the six-month United States Treasury Bill rate as quoted in The Wall Street Journal on the first business day of the month for which the calculation is made; times |
3. | The amount past due, including accrued interest. |
C. | The establishment of the due date shall, for purposes of this Article, be determined as follows: |
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1. | As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Contract. In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal by the Intermediary of the initial billing for each such payment. |
2. | Any claim or loss payment due the Company hereunder shall be deemed due 10 days after the proof of loss or demand for payment is transmitted to the Reinsurer. If such loss or claim payment is not received within the 10 days, interest will accrue on the payment or amount overdue in accordance with paragraph B above, from the date the proof of loss or demand for payment was transmitted to the Reinsurer. |
3. | As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1 and 2 of this paragraph C, the due date shall be as provided for in the applicable section of this Contract. In the event a due date is not specifically stated for a given payment, it shall be deemed due 10 days following transmittal of written notification that the provisions of this Article have been invoked. |
D. | Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Contract. If the debtor party prevails in an arbitration or other proceeding, then any interest charges due hereunder on the amount in dispute shall be null and void. If the debtor party loses in such proceeding, then the interest charge on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings. If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article. |
E. | Interest charges arising out of the application of this Article that are $1,000 or less from any party shall be waived unless there is a pattern of late payments consisting of three or more items over the course of any 12-month period. |
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A. | The liability of the Reinsurer shall follow that of the Company in every case and be subject in all respects to all the general and specific stipulations, clauses, waivers and modifications of the Company's policies and any endorsements thereon. However, in no event shall this be construed in any way to provide coverage outside the terms and conditions set forth in this Contract. |
B. | Nothing herein shall in any manner create any obligations or establish any rights against the Reinsurer in favor of any third party or any persons not parties to this Contract. |
A. | This Contract applies only to that portion of any policy which the Company retains net for its own account (prior to deduction of any underlying reinsurance specifically permitted in this Contract), and in calculating the amount of any loss hereunder and also in computing the amount or amounts in excess of which this Contract attaches, only loss or losses in respect of that portion of any policy which the Company retains net for its own account shall be included. |
B. | The amount of the Reinsurer's liability hereunder in respect of any loss or losses shall not be increased by reason of the inability of the Company to collect from any other reinsurer(s), whether specific or general, any amounts which may have become due from such reinsurer(s), whether such inability arises from the insolvency of such other reinsurer(s) or otherwise. |
A. | Whenever the word "Dollars" or the "$" sign appears in this Contract, they shall be construed to mean United States Dollars and all transactions under this Contract 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. |
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A. | The Reinsurer has 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 of premium becoming due hereunder the Reinsurer 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. |
A. | The Reinsurer agrees to fund its share of amounts, including but not limited to, the Company's ceded unearned premium and outstanding loss and loss adjustment expense reserves (including all case reserves plus any reasonable amount estimated to be unreported from known loss occurrences) (hereinafter referred to as "Reinsurer's Obligations") 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 |
2. | Escrow accounts for the benefit of the Company; and/or |
3. | Cash advances; |
1. | Is unauthorized in any state of the United States of America or the District of Columbia having jurisdiction over the Company and 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; or |
2. | Has an A.M. Best Company's rating equal to or below B++ at the inception of this Contract. |
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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 Reinsurer 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 Reinsurer, but only for one or more of the following purposes: |
1. | To reimburse itself for the Reinsurer's share of unearned premiums returned to insureds on account of policy cancellations, unless paid in cash by the Reinsurer; |
2. | To reimburse itself for the Reinsurer's share of losses and/or loss adjustment expense paid under the terms of policies reinsured hereunder, unless paid in cash by the Reinsurer; |
3. | To reimburse itself for the Reinsurer's share of any other amounts claimed to be due hereunder, unless paid in cash by the Reinsurer; |
4. | To fund a cash account in an amount equal to the Reinsurer's share of amounts, including but not limited to, the Reinsurer's Obligations as set forth above, 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 Reinsurer 10 days prior to its expiration date; |
5. | To refund to the Reinsurer any sum in excess of the actual amount required to fund the Reinsurer's share of amounts, including but not limited to, the Reinsurer's Obligations as set forth above, if so requested by the Reinsurer. |
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B. | Where two or more reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this Contract as though such expense had been incurred by the Company. |
C. | It is further understood and agreed that, in the event of the insolvency of the Company, the reinsurance under this Contract shall be payable directly by the Reinsurer to the Company or to its liquidator, receiver or statutory successor, except as provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract specifically provides another payee of such reinsurance in the event of the insolvency of the Company or (2) where the Reinsurer with the consent of the direct insured or insureds has assumed such policy obligations of the Company as direct obligations of the Reinsurer to the payees under such policies and in substitution for the obligations of the Company to such payees. |
A. | As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Contract, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration. One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters. In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration. If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots. |
B. | Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire. The Arbiters shall consider this Contract as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law. The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties. Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction. |
C. | If more than one reinsurer is involved in the same dispute, all such reinsurers shall, at the option of the Company, constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the reinsurers participating under the terms of this Contract from several to joint. |
D. | Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration. In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties. |
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E. | Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Contract, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office. |
A. | It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due hereunder, the Reinsurer, 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 Reinsurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. |
B. | Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates 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 Contract. |
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A. | Whenever a notice, statement, report or any other written communication is required by this Contract, unless otherwise specified, such notice, statement, report or other written communication may be transmitted by certified or registered mail, nationally or internationally recognized express delivery service, personal delivery, electronic mail, or facsimile. With the exception of notices of termination, first class mail is also acceptable. |
B. | The use of any of the following shall constitute a valid execution of this Contract or any amendments thereto: |
1. | Paper documents with an original ink signature; |
2. | Facsimile or electronic copies of paper documents showing an original ink signature; and/or |
3. | Electronic records with an electronic signature made via an electronic agent. For the purposes of this Contract, the terms "electronic record," "electronic signature" and "electronic agent" shall have the meanings set forth in the Electronic Signatures in Global and National Commerce Act of 2000 or any amendments thereto. |
C. | This Contract may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original. |
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1. | This Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or Nuclear Energy risks. |
2. | Without in any way restricting the operation of paragraph (1) of this Clause, this Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any insurance against Physical Damage (including business interruption or consequential loss arising out of such Physical Damage) to: |
I. | Nuclear reactor power plants including all auxiliary property on the site, or |
II. | Any other nuclear reactor installation, including laboratories handling radioactive materials in connection with reactor installations, and "critical facilities" as such, or |
III. | Installations for fabricating complete fuel elements or for processing substantial quantities of "special nuclear material," and for reprocessing, salvaging, chemically separating, storing or disposing of "spent" nuclear fuel or waste materials, or |
IV. | Installations other than those listed in paragraph (2) III above using substantial quantities of radioactive isotopes or other products of nuclear fission. |
3. | Without in any way restricting the operations of paragraphs (1) and (2) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear installation and which normally would be insured therewith except that this paragraph (3) shall not operate |
(a) | where Reassured does not have knowledge of such nuclear reactor power plant or nuclear installation, or |
(b) | where said insurance contains a provision excluding coverage for damage to property caused by or resulting from radioactive contamination, however caused. However on and after 1st January 1960 this sub-paragraph (b) shall only apply provided the said radioactive contamination exclusion provision has been approved by the Governmental Authority having jurisdiction thereof. |
4. | Without in any way restricting the operations of paragraphs (1), (2) and (3) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive contamination is a named hazard specifically insured against. |
5. | It is understood and agreed that this Clause shall not extend to risks using radioactive isotopes in any form where the nuclear exposure is not considered by the Reassured to be the primary hazard. |
6. | The term "special nuclear material" shall have the meaning given it in the Atomic Energy Act of 1954 or by any law amendatory thereof. |
7. | Reassured to be sole judge of what constitutes: |
(a) | substantial quantities, and |
(b) | the extent of installation, plant or site. |
(a) | all policies issued by the Reassured on or before 31st December 1957 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply. |
(b) | with respect to any risk located in Canada policies issued by the Reassured on or before 31st December 1958 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply. |
1. | Involves violence against one or more persons, or |
2. | Involves damage to property; or |
3. | Endangers life other than the person committing the action; or |
4. | Creates a risk to health or safety of the public or a section of the public; or |
5. | Is designed to interfere with or disrupt an electronic system. |
Reinsurer(s)
|
Participation (s)
|
|||
|
||||
Allied World Assurance Company, Ltd
|
4.0
|
%
|
||
Ariel Re Bda Limited on behalf of Ariel Syndicate 1910
|
6.0
|
%
|
||
DaVinci Reinsurance Ltd.
|
1.2
|
%
|
||
Renaissance Reinsurance, Ltd.
|
1.8
|
%
|
||
|
||||
Through Aon UK Limited trading as Aon Benfield
|
||||
Lloyd's Underwriters and Companies Per Signing Page(s)
|
37.0
|
%
|
||
Total
|
50.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Article
|
|
Page
|
1
|
Coverage
|
1
|
2
|
Commencement and Termination
|
1
|
3
|
Concurrency of Conditions
|
2
|
4
|
Premium
|
3
|
5
|
Loss Notices and Settlements
|
3
|
6
|
Late Payments
|
4
|
7
|
Offset
|
5
|
8
|
Access to Records
|
5
|
9
|
Errors and Omissions (BRMA 14F)
|
5
|
10
|
Currency (BRMA 12A)
|
5
|
11
|
Taxes (BRMA 50B)
|
6
|
12
|
Federal Excise Tax (BRMA 17D)
|
6
|
13
|
Reserves
|
6
|
14
|
Insolvency
|
7
|
15
|
Arbitration
|
8
|
16
|
Service of Suit (BRMA 49C)
|
9
|
17
|
Severability (BRMA 72E)
|
9
|
18
|
Governing Law (BRMA 71B)
|
10
|
19
|
Non-Waiver
|
10
|
20
|
Notices and Contract Execution
|
10
|
21
|
Intermediary
|
10
|
|
|
A. | By this Contract the Reinsurer agrees to indemnify the Company for 100% of any reinstatement premium which the Company pays or becomes liable to pay as a result of loss occurrences covered under the Company's Fourth Excess Catastrophe Reinsurance Contract, effective July 1, 2013 (hereinafter referred to as the "Original Contract"), subject to the terms, conditions and limitations hereinafter set forth. |
B. | Neither the Company nor the Reinsurer shall be liable for premium or loss under this Contract if it would result in a violation of any mandatory sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, United Kingdom or United States of America that are applicable to either party. |
B. | Notwithstanding the provisions of paragraph A above, the Company may terminate a Subscribing Reinsurer's percentage share in this Contract at any time by giving written notice to the Subscribing Reinsurer in the event any of the following circumstances occur: |
1. | The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at the inception of this Contract has been reduced by more than 20.0% of the amount of surplus (or the applicable equivalent) 12 months prior to that date; or |
|
|
2. | The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at any time during the term of this Contract has been reduced by more than 20.0% of the amount of surplus (or the applicable equivalent) at the date of the Subscribing Reinsurer's most recent financial statement filed with regulatory authorities and available to the public as of the inception of this Contract; or |
3. | The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded below A- and/or Standard & Poor's rating has been assigned or downgraded below BBB+; or |
4. | The Subscribing Reinsurer has become merged with, acquired by or controlled by any other entity or individual(s) not controlling the Subscribing Reinsurer's operations previously; or |
5. | A State Insurance Department or other legal authority has ordered the Subscribing Reinsurer to cease writing business; or |
6. | The Subscribing Reinsurer has become insolvent or has been placed into liquidation, receivership, supervision, administration, winding-up or under a scheme of arrangement, or similar proceedings (whether voluntary or involuntary) or proceedings have been instituted against the Subscribing Reinsurer for the appointment of a receiver, liquidator, rehabilitator, supervisor, administrator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations; or |
7. | The Subscribing Reinsurer has ceased assuming new or renewal property or casualty treaty reinsurance business; or |
8. | The Subscribing Reinsurer has hired an unaffiliated runoff claims manager that is compensated on a contingent basis or is otherwise provided with financial incentives based on the quantum of claims paid. |
C. | If this Contract is terminated or expires while a loss occurrence covered hereunder is in progress, the Reinsurer's liability hereunder shall, subject to the other terms and conditions of this Contract, be determined as if the entire loss occurrence had occurred prior to the termination or expiration of this Contract, provided that no part of such loss occurrence is claimed against any renewal or replacement of this Contract. |
A. | It is agreed that this Contract will follow the terms, conditions, exclusions, definitions, warranties and settlements of the Company under the Original Contract, which are not inconsistent with the provisions of this Contract. |
|
|
B. | The Company shall advise the Reinsurer of any material changes in the Original Contract which may affect the liability of the Reinsurer under this Contract. |
A. | As premium for the reinsurance coverage provided hereunder for the term of this Contract, the Company shall pay the Reinsurer the product of the following (or a pro rata portion thereof in the event the term of this Contract is less than 12 months and for purposes of calculating subparagraph 3 below, the term of the Original Contract is a full 12 months): |
1. | 1.111; times |
2. | The Final Adjusted Rate on Line for the Original Contract; times |
3. | An amount equal to 100% reinsurance placement percentage under the Original Contract of the final adjusted premium paid by the Company for the Original Contract. |
B. | The Company shall pay the Reinsurer a deposit premium of $172,266 in four equal installments of $43,066.50 on July 1 and October 1 of 2013, and January 1 and April 1 of 2014. However, in the event this Contract is terminated, there shall be no deposit premium installments due after the effective date of termination. |
C. | As soon as possible after the termination or expiration of this Contract, the Company shall provide a report to the Reinsurer setting forth the premium due hereunder for the term of this Contract, computed in accordance with paragraph A, and any additional premium due the Reinsurer or return premium due the Company shall be remitted promptly. |
A. | Whenever reinstatement premium settlements made by the Company under the Original Contract appear likely to result in a claim hereunder, the Company shall notify the Reinsurer. The Company will advise the Reinsurer of all subsequent developments relating to such claims that, in the opinion of the Company, may materially affect the position of the Reinsurer. |
B. | All reinstatement premium settlements made by the Company under the Original Contract, provided they are within the terms of the Original Contract and within the terms of this Contract, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be liable within 10 days of receipt of reasonable evidence of the amount paid (or scheduled to be paid) by the Company. |
|
|
A. | The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Contract. |
B. | In the event any premium, loss or other payment due either party is not received by the intermediary named in the Intermediary Article (hereinafter referred to as the "Intermediary") by the payment due date, the party to whom payment is due may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest charge on the amount past due calculated for each such payment on the last business day of each month as follows: |
1. | The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times |
2. | 1/365ths of the six-month United States Treasury Bill rate as quoted in The Wall Street Journal on the first business day of the month for which the calculation is made; times |
3. | The amount past due, including accrued interest. |
C. | The establishment of the due date shall, for purposes of this Article, be determined as follows: |
1. | As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Contract. In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal by the Intermediary of the initial billing for each such payment. |
2. | Any claim or loss payment due the Company hereunder shall be deemed due 10 days after the proof of loss or demand for payment is transmitted to the Reinsurer. If such loss or claim payment is not received within the 10 days, interest will accrue on the payment or amount overdue in accordance with paragraph B above, from the date the proof of loss or demand for payment was transmitted to the Reinsurer. |
3. | As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1 and 2 of this paragraph C, the due date shall be as provided for in the applicable section of this Contract. In the event a due date is not specifically stated for a given payment, it shall be deemed due 10 days following transmittal of written notification that the provisions of this Article have been invoked. |
|
|
D. | Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Contract. If the debtor party prevails in an arbitration or other proceeding, then any interest charges due hereunder on the amount in dispute shall be null and void. If the debtor party loses in such proceeding, then the interest charge on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings. If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article. |
E. | Interest charges arising out of the application of this Article that are $1,000 or less from any party shall be waived unless there is a pattern of late payments consisting of three or more items over the course of any 12-month period. |
A. | Whenever the word "Dollars" or the "$" sign appears in this Contract, they shall be construed to mean United States Dollars and all transactions under this Contract 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. |
A. | The Reinsurer has 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 of premium becoming due hereunder the Reinsurer 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. |
A. | The Reinsurer agrees to fund its share of amounts, including but not limited to, the Company's ceded unearned premium and outstanding loss reserves (being the sum of all reinstatement premiums paid by the Company under the Original Contract but not yet recovered from the Reinsurer, plus the Company's reserves for reinstatement premium due under the Original Contract, if any) (hereinafter referred to as "Reinsurer's Obligations") 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 |
2. | Escrow accounts for the benefit of the Company; and/or |
3. | Cash advances; |
1. | Is unauthorized in any state of the United States of America or the District of Columbia having jurisdiction over the Company and 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; or |
|
|
2. | Has an A.M. Best Company's rating equal to or below B++ at the inception of this Contract. |
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 Reinsurer 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 Reinsurer, but only for one or more of the following purposes: |
1. | To reimburse itself for the Reinsurer's share of unearned premiums returned to insureds on account of policy cancellations, unless paid in cash by the Reinsurer; |
2. | To reimburse itself for the Reinsurer's share of reinstatement premiums paid by the Company under the terms of the Original Contract, unless paid in cash by the Reinsurer; |
3. | To reimburse itself for the Reinsurer's share of any other amounts claimed to be due hereunder, unless paid in cash by the Reinsurer; |
4. | To fund a cash account in an amount equal to the Reinsurer's share of amounts, including, but not limited to, the Reinsurer's Obligations as set forth above, 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 Reinsurer 10 days prior to its expiration date; |
5. | To refund to the Reinsurer any sum in excess of the actual amount required to fund the Reinsurer's share of amounts, including but not limited to, the Reinsurer's Obligations as set forth above, if so requested by the Reinsurer. |
|
|
B. | Where two or more reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this Contract as though such expense had been incurred by the Company. |
C. | It is further understood and agreed that, in the event of the insolvency of the Company, the reinsurance under this Contract shall be payable directly by the Reinsurer to the Company or to its liquidator, receiver or statutory successor, except as provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract specifically provides another payee of such reinsurance in the event of the insolvency of the Company or (2) where the Reinsurer with the consent of the direct insured or insureds has assumed such policy obligations of the Company as direct obligations of the Reinsurer to the payees under such policies and in substitution for the obligations of the Company to such payees. |
A. | As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Contract, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration. One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters. In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration. If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots. |
B. | Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire. The Arbiters shall consider this Contract as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law. The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties. Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction. |
|
|
C. | If more than one reinsurer is involved in the same dispute, all such reinsurers shall, at the option of the Company, constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the reinsurers participating under the terms of this Contract from several to joint. |
D. | Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration. In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties. |
E. | Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Contract, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office. |
A. | It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due hereunder, the Reinsurer, 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 Reinsurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. |
B. | Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates 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 Contract. |
|
|
A. | Whenever a notice, statement, report or any other written communication is required by this Contract, unless otherwise specified, such notice, statement, report or other written communication may be transmitted by certified or registered mail, nationally or internationally recognized express delivery service, personal delivery, electronic mail, or facsimile. With the exception of notices of termination, first class mail is also acceptable. |
B. | The use of any of the following shall constitute a valid execution of this Contract or any amendments thereto: |
1. | Paper documents with an original ink signature; |
2. | Facsimile or electronic copies of paper documents showing an original ink signature; and/or |
3. | Electronic records with an electronic signature made via an electronic agent. For the purposes of this Contract, the terms "electronic record," "electronic signature" and "electronic agent" shall have the meanings set forth in the Electronic Signatures in Global and National Commerce Act of 2000 or any amendments thereto. |
C. | This Contract may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original. |
|
|
|
|
Reinsurer(s)
|
Participation(s)
|
|||
|
||||
DaVinci Reinsurance Ltd.
|
40.0
|
%
|
||
Renaissance Reinsurance, Ltd.
|
60.0
|
%
|
||
Total
|
100.0
|
%
|
|
|
|
|
|
|
|
|
Article
|
|
Page
|
|
|
|
|
|
1
|
|
Classes of Business Reinsured
|
1
|
2
|
|
Commencement and Termination
|
1
|
3
|
|
Territory
|
3
|
4
|
|
Exclusions
|
3
|
5
|
|
Retention and Limit
|
4
|
6
|
|
Florida Hurricane Catastrophe Fund
|
5
|
7
|
|
Other Reinsurance
|
5
|
8
|
|
Definitions
|
5
|
9
|
|
Loss Occurrence
|
6
|
10
|
|
Loss Notices and Settlements
|
7
|
11
|
|
Salvage and Subrogation
|
8
|
12
|
|
Reinsurance Premium
|
8
|
13
|
|
Late Payments
|
9
|
14
|
|
Offset
|
10
|
15
|
|
Access to Records
|
10
|
16
|
|
Liability of the Reinsurer
|
10
|
17
|
|
Net Retained Lines (BRMA 32E)
|
11
|
18
|
|
Errors and Omissions (BRMA 14F)
|
11
|
19
|
|
Currency (BRMA 12A)
|
11
|
20
|
|
Taxes (BRMA 50B)
|
11
|
21
|
|
Federal Excise Tax (BRMA 17D)
|
11
|
22
|
|
Reserves
|
12
|
23
|
|
Insolvency
|
13
|
24
|
|
Arbitration
|
14
|
25
|
|
Service of Suit (BRMA 49C)
|
15
|
26
|
|
Severability (BRMA 72E)
|
15
|
27
|
|
Governing Law (BRMA 71B)
|
15
|
28
|
|
Non-Waiver
|
15
|
29
|
|
Notices and Contract Execution
|
15
|
30
|
|
Intermediary
|
16
|
|
|
A. | By this Contract the Reinsurer agrees to reinsure the excess liability which may accrue to the Company under its policies in force at the effective date hereof or issued or renewed on or after that date, and classified by the Company as Property business, including but not limited to, Dwelling Fire, Inland Marine, Mobile Home, Commercial and Homeowners business (including any business assumed from Citizens Property Insurance Corporation), subject to the terms, conditions and limitations hereinafter set forth. |
B. | Neither the Company nor the Reinsurer shall be liable for premium or loss under this Contract if it would result in a violation of any mandatory sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, United Kingdom or United States of America that are applicable to either party. |
A.
|
This Contract shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2013, with respect to losses arising out of loss occurrences commencing at or after that time and date, and shall remain in force until 12:01 a.m., Eastern Standard Time, July 1, 2014.
|
B.
|
Notwithstanding the provisions of paragraph A above, the Company may terminate a Subscribing Reinsurer's percentage share in this Contract at any time by giving written notice to the Subscribing Reinsurer in the event any of the following circumstances occur:
|
1.
|
The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at the inception of this Contract has been reduced by more than 20.0% of the amount of surplus (or the applicable equivalent) 12 months prior to that date; or
|
|
|
2.
|
The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at any time during the term of this Contract has been reduced by more than 20.0% of the amount of surplus (or the applicable equivalent) at the date of the Subscribing Reinsurer's most recent financial statement filed with regulatory authorities and available to the public as of the inception of this Contract; or
|
3.
|
The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded below A- and/or Standard & Poor's rating has been assigned or downgraded below BBB+; or
|
4.
|
The Subscribing Reinsurer has become merged with, acquired by or controlled by any other entity or individual(s) not controlling the Subscribing Reinsurer's operations previously; or
|
5.
|
A State Insurance Department or other legal authority has ordered the Subscribing Reinsurer to cease writing business; or
|
6.
|
The Subscribing Reinsurer has become insolvent or has been placed into liquidation, receivership, supervision, administration, winding-up or under a scheme of arrangement, or similar proceedings (whether voluntary or involuntary) or proceedings have been instituted against the Subscribing Reinsurer for the appointment of a receiver, liquidator, rehabilitator, supervisor, administrator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations; or
|
7.
|
The Subscribing Reinsurer has reinsured its entire liability under this Contract without the Company's prior written consent; or
|
8.
|
The Subscribing Reinsurer has ceased assuming new or renewal property or casualty treaty reinsurance business; or
|
9.
|
The Subscribing Reinsurer has hired an unaffiliated runoff claims manager that is compensated on a contingent basis or is otherwise provided with financial incentives based on the quantum of claims paid.
|
C.
|
The "term of this Contract" as used herein shall mean the period from 12:01 a.m., Eastern Standard Time, July 1, 2013 to 12:01 a.m., Eastern Standard Time, July 1, 2014. However, if this Contract is terminated, the "term of this Contract" as used herein shall mean the period from 12:01 a.m., Eastern Standard Time, July 1, 2013 to the effective time and date of termination.
|
D.
|
If this Contract is terminated or expires while a loss occurrence covered hereunder is in progress, the Reinsurer's liability hereunder shall, subject to the other terms and conditions of this Contract, be determined as if the entire loss occurrence had occurred prior to the termination or expiration of this Contract, provided that no part of such loss occurrence is claimed against any renewal or replacement of this Contract.
|
|
|
A.
|
This Contract does not apply to and specifically excludes the following:
|
1.
|
Reinsurance assumed by the Company under obligatory reinsurance agreements, except business assumed by the Company from Citizens Property Insurance Corporation.
|
2.
|
Hail damage to growing or standing crops.
|
3.
|
Business rated, coded or classified as Flood insurance or which should have been rated, coded or classified as such.
|
4.
|
Business rated, coded or classified as Mortgage Impairment and Difference in Conditions insurance or which should have been rated, coded or classified as such.
|
5.
|
Title insurance and all forms of Financial Guarantee, Credit and Insolvency.
|
6.
|
Aviation, Ocean Marine, Boiler and Machinery, Fidelity and Surety, Accident and Health, Animal Mortality and Workers Compensation and Employers Liability.
|
7.
|
Errors and Omissions, Malpractice and any other type of Professional Liability insurance.
|
8.
|
Loss and/or damage and/or costs and/or expenses arising from seepage and/or pollution and/or contamination, other than contamination from smoke. Nevertheless, this exclusion does not preclude payment of the cost of removing debris of property damaged by a loss otherwise covered hereunder, subject always to a limit of 25.0% of the Company's property loss under the applicable original policy.
|
9.
|
Loss or liability as excluded under the provisions of the "War Exclusion Clause" attached to and forming part of this Contract.
|
10.
|
Nuclear risks as defined in the "Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance (U.S.A.)" attached to and forming part of this Contract.
|
11.
|
Loss or liability from any Pool, Association or Syndicate and any assessment or similar demand for payment related to the FHCF or Citizens Property Insurance Corporation.
|
12.
|
Loss or liability of the Company arising by contract, operation of law, or otherwise, from its participation or membership, whether voluntary or involuntary, in any insolvency fund. "Insolvency fund" includes any guaranty fund, insolvency fund, plan, pool, association, fund or other arrangement, however denominated, established or governed, which provides for any assessment of or payment or assumption by the Company of part or all of any claim, debt, charge, fee or other obligation of an insurer, or its successors or assigns, which has been declared by any competent authority to be insolvent, or which is otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in whole or in part.
|
|
|
13.
|
Losses in the respect of overhead transmission and distribution lines other than those on or within 150 meters (or 500 feet) of the insured premises.
|
14.
|
Mold, unless resulting from a peril otherwise covered under the policy involved.
|
15.
|
Loss or liability as excluded under the provisions of the "Terrorism Exclusion" attached to and forming part of this Contract.
|
16.
|
All property loss, damage, destruction, erasure, corruption or alteration of Electronic Data from any cause whatsoever (including, but not limited to, Computer Virus) or loss of use, reduction in functionality, cost, expense or whatsoever nature resulting therefrom, unless resulting from a peril otherwise covered under the policy involved.
|
A.
|
The Company shall retain and be liable for the first $7,000,000 of ultimate net loss arising out of each loss occurrence. The Reinsurer shall then be liable for the amount by which such ultimate net loss exceeds the Company's retention, but the liability of the Reinsurer shall not exceed $4,000,000 as respects any one loss occurrence, nor shall it exceed $8,000,000 in all during the term of this Contract.
|
B.
|
Notwithstanding the provisions above, no claim shall be made hereunder as respects losses arising out of loss occurrences commencing during the term of this Contract unless at least two risks insured or reinsured by the Company are involved in such loss occurrence. For purposes hereof, the Company shall be the sole judge of what constitutes "one risk."
|
|
|
A.
|
"Loss adjustment expense," regardless of how such expenses are classified for statutory reporting purposes, as used in this Contract shall mean all costs and expenses allocable to a specific claim that are incurred by the Company in the investigation, appraisal, adjustment, settlement, litigation, defense or appeal of a specific claim, including court costs and costs of supersedeas and appeal bonds, and including a) pre-judgment interest, unless included as part of the award or judgment; b) post-judgment interest; c) legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto, including Declaratory Judgment Expense; and d) expenses and a pro rata share of salaries of the Company field employees, and expenses of other Company employees who have been temporarily diverted from their normal and customary duties and assigned to the field adjustment of losses covered by this Contract.
|
B.
|
"Loss in excess of policy limits" and "extra contractual obligations" as used in this Contract shall mean:
|
1.
|
"Loss in excess of policy limits" shall mean 80.0% of any amount paid or payable by the Company in excess of its policy limits, but otherwise within the terms of its policy, such loss in excess of the Company's policy limits having been incurred because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action. Any loss in excess of policy limits that is made in connection with this Contract shall not exceed 25.0% of the actual catastrophe loss.
|
|
|
2.
|
"Extra contractual obligations" shall mean 80.0% of any punitive, exemplary, compensatory or consequential damages paid or payable by the Company, not covered by any other provision of this Contract and which arise from the handling of any claim on business subject to this Contract, such liabilities arising because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action. An extra contractual obligation shall be deemed, in all circumstances, to have occurred on the same date as the loss covered or alleged to be covered under the policy. Any extra contractual obligations that are made in connection with this Contract shall not exceed 25.0% of the actual catastrophe loss.
|
C.
|
"Policies" as used in this Contract shall mean all policies, contracts and binders of insurance or reinsurance.
|
D.
|
"Ultimate net loss" as used in this Contract shall mean the sum or sums (including loss in excess of policy limits, extra contractual obligations and loss adjustment expense, as defined herein) paid or payable by the Company in settlement of claims and in satisfaction of judgments rendered on account of such claims, after deduction of all salvage, all recoveries and all claims on inuring insurance or reinsurance, whether collectible or not. Nothing herein shall be construed to mean that losses under this Contract are not recoverable until the Company's ultimate net loss has been ascertained.
|
A.
|
The term "loss occurrence" shall mean the sum of all individual losses directly occasioned by any one disaster, accident or loss or series of disasters, accidents or losses arising out of one event which occurs within the area of one state of the United States or province of Canada and states or provinces contiguous thereto and to one another. However, the duration and extent of any one "loss occurrence" shall be limited to all individual losses sustained by the Company occurring during any period of 168 consecutive hours arising out of and directly occasioned by the same event, except that the term "loss occurrence" shall be further defined as follows:
|
1.
|
As regards windstorm, hail, tornado, hurricane, cyclone, including ensuing collapse and water damage, all individual losses sustained by the Company occurring during any period of 96 consecutive hours arising out of and directly occasioned by the same event. However, the event need not be limited to one state or province or states or provinces contiguous thereto.
|
2.
|
As regards riot, riot attending a strike, civil commotion, vandalism and malicious mischief, all individual losses sustained by the Company occurring during any period of 72 consecutive hours within the area of one municipality or county and the municipalities or counties contiguous thereto arising out of and directly occasioned by the same event. The maximum duration of 72 consecutive hours may be extended in respect of individual losses which occur beyond such 72 consecutive hours during the continued occupation of an assured's premises by strikers, provided such occupation commenced during the aforesaid period.
|
|
|
3.
|
As regards earthquake (the epicenter of which need not necessarily be within the territorial confines referred to in the introductory portion of this paragraph A) and fire following directly occasioned by the earthquake, only those individual fire losses which commence during the period of 168 consecutive hours may be included in the Company's "loss occurrence."
|
4.
|
As regards "freeze," only individual losses directly occasioned by collapse, breakage of glass and water damage (caused by bursting frozen pipes and tanks) may be included in the Company's "loss occurrence."
|
5.
|
As regards conflagration, brush fires and any other fires, irrespective of origin (except as provided in subparagraphs 2 and 3 above), all individual losses sustained by the Company which occur during any period of 168 consecutive hours within a 150-mile radius of any fixed point selected by the Company may be included in the Company's "loss occurrence."
|
B.
|
Except for those "loss occurrences" referred to in subparagraph 2 of paragraph A above, the Company may choose the date and time when any such period of consecutive hours commences, provided that it is not earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss, and provided that only one such period of 168 consecutive hours shall apply with respect to one event, except for any "loss occurrence" referred to in subparagraph 1 of paragraph A above where only one such period of 96 consecutive hours shall apply with respect to one event, regardless of the duration of the event.
|
C.
|
However, as respects those "loss occurrences" referred to in subparagraph 2 of paragraph A above, if the disaster, accident or loss occasioned by the event is of greater duration than 72 consecutive hours, then the Company may divide that disaster, accident or loss into two or more "loss occurrences," provided that no two periods overlap and no individual loss is included in more than one such period, and provided that no period commences earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss.
|
D.
|
No individual losses occasioned by an event that would be covered by a 96 or 72 hours clause may be included in any "loss occurrence" claimed under a 168 hours provision.
|
A.
|
Whenever losses sustained by the Company are reserved by the Company for an amount greater than 50.0% of the Company's retention hereunder and/or appear likely to result in a claim under this Contract, the Company shall notify the Subscribing Reinsurers and shall provide updates related to development of such losses. The Reinsurer shall have the right to participate in the adjustment of such losses at its own expense.
|
|
|
B.
|
All loss settlements made by the Company, provided they are within the terms of this Contract and the terms of the original policy (with the exception of loss in excess of policy limits or extra contractual obligations coverage, if any, under this Contract), shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be liable upon receipt of reasonable evidence of the amount paid by the Company.
|
A.
|
As premium for the reinsurance coverage provided by this Contract, the Company shall pay the Reinsurer a premium equal to the product of the following (or a pro rata portion thereof in the event the term of this Contract is less than 12 months), subject to a minimum premium of $2,160,000 (or a pro rata portion thereof in the event the term of this Contract is less than 12 months):
|
1.
|
$2,700,000; times
|
2.
|
The percentage calculated by dividing (a) the actual Average Annual Loss ("AAL") determined by the Company's wind insurance in force on September 30, 2013, by (b) $1,114,274.
|
B.
|
The Company shall pay the Reinsurer an annual deposit premium of $2,700,000 in four equal installments of $675,000 on July 1 and October 1 of 2013, and on January 1 and April 1 of 2014. However, in the event this Contract is terminated, there shall be no deposit premium installments due after the effective date of termination.
|
C.
|
On or before June 30, 2014, the Company shall provide a report to the Reinsurer setting forth the premium due hereunder for the term of this Contract, computed in accordance with paragraph A above, and any additional premium due the Reinsurer or return premium due the Company shall be remitted promptly.
|
|
|
A.
|
The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Contract.
|
B.
|
In the event any premium, loss or other payment due either party is not received by the intermediary named in the Intermediary Article (hereinafter referred to as the "Intermediary") by the payment due date, the party to whom payment is due may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest charge on the amount past due calculated for each such payment on the last business day of each month as follows:
|
1.
|
The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times
|
2.
|
1/365ths of the six-month United States Treasury Bill rate
as quoted in
The Wall Street Journal
on the first business day of the month for which the calculation is made; times
|
3.
|
The amount past due, including accrued interest.
|
C.
|
The establishment of the due date shall, for purposes of this Article, be determined as follows:
|
1.
|
As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Contract. In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal by the Intermediary of the initial billing for each such payment.
|
2.
|
Any claim or loss payment due the Company hereunder shall be deemed due 10 days after the proof of loss or demand for payment is transmitted to the Reinsurer. If such loss or claim payment is not received within the 10 days, interest will accrue on the payment or amount overdue in accordance with paragraph B above, from the date the proof of loss or demand for payment was transmitted to the Reinsurer.
|
3.
|
As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1 and 2 of this paragraph C, the due date shall be as provided for in the applicable section of this Contract. In the event a due date is not specifically stated for a given payment, it shall be deemed due 10 days following transmittal of written notification that the provisions of this Article have been invoked.
|
|
|
D.
|
Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Contract. If the debtor party prevails in an arbitration or other proceeding, then any interest charges due hereunder on the amount in dispute shall be null and void. If the debtor party loses in such proceeding, then the interest charge on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings. If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article.
|
E.
|
Interest charges arising out of the application of this Article that are $1,000 or less from any party shall be waived unless there is a pattern of late payments consisting of three or more items over the course of any 12-month period.
|
A.
|
The liability of the Reinsurer shall follow that of the Company in every case and be subject in all respects to all the general and specific stipulations, clauses, waivers and modifications of the Company's policies and any endorsements thereon. However, in no event shall this be construed in any way to provide coverage outside the terms and conditions set forth in this Contract.
|
B.
|
Nothing herein shall in any manner create any obligations or establish any rights against the Reinsurer in favor of any third party or any persons not parties to this Contract.
|
|
|
A.
|
This Contract applies only to that portion of any policy which the Company retains net for its own account (prior to deduction of any underlying reinsurance specifically permitted in this Contract), and in calculating the amount of any loss hereunder and also in computing the amount or amounts in excess of which this Contract attaches, only loss or losses in respect of that portion of any policy which the Company retains net for its own account shall be included.
|
B.
|
The amount of the Reinsurer's liability hereunder in respect of any loss or losses shall not be increased by reason of the inability of the Company to collect from any other reinsurer(s), whether specific or general, any amounts which may have become due from such reinsurer(s), whether such inability arises from the insolvency of such other reinsurer(s) or otherwise.
|
A.
|
Whenever the word "Dollars" or the "$" sign appears in this Contract, they shall be construed to mean United States Dollars and all transactions under this Contract 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.
|
A.
|
The Reinsurer has 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 of premium becoming due hereunder the Reinsurer 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.
|
A.
|
The Reinsurer agrees to fund its share of amounts, including but not limited to, the Company's ceded unearned premium and outstanding loss and loss adjustment expense reserves (including all case reserves plus any reasonable amount estimated to be unreported from known loss occurrences) (hereinafter referred to as "Reinsurer's Obligations") 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
|
2.
|
Escrow accounts for the benefit of the Company; and/or
|
3.
|
Cash advances;
|
1.
|
Is unauthorized in any state of the United States of America or the District of Columbia having jurisdiction over the Company and 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; or
|
2.
|
Has an A.M. Best Company's rating equal to or below B++ at the inception of this Contract.
|
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 Reinsurer 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 Reinsurer, but only for one or more of the following purposes:
|
1.
|
To reimburse itself for the Reinsurer's share of unearned premiums returned to insureds on account of policy cancellations, unless paid in cash by the Reinsurer;
|
|
|
2.
|
To reimburse itself for the Reinsurer's share of losses and/or loss adjustment expense paid under the terms of policies reinsured hereunder, unless paid in cash by the Reinsurer;
|
3.
|
To reimburse itself for the Reinsurer's share of any other amounts claimed to be due hereunder, unless paid in cash by the Reinsurer;
|
4.
|
To fund a cash account in an amount equal to the Reinsurer's share of amounts, including but not limited to, the Reinsurer's Obligations as set forth above, 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 Reinsurer 10 days prior to its expiration date;
|
5.
|
To refund to the Reinsurer any sum in excess of the actual amount required to fund the Reinsurer's share of amounts, including but not limited to, the Reinsurer's Obligations as set forth above, if so requested by the Reinsurer.
|
A.
|
In the event of the insolvency of the Company, this reinsurance shall be payable directly to the Company or to its liquidator, receiver, conservator or statutory successor on the basis of the liability of the Company without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim. It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company indicating the policy or bond reinsured which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that it may deem available to the Company or its liquidator, receiver, conservator or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the Court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit which may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.
|
B.
|
Where two or more reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this Contract as though such expense had been incurred by the Company.
|
C.
|
It is further understood and agreed that, in the event of the insolvency of the Company, the reinsurance under this Contract shall be payable directly by the Reinsurer to the Company or to its liquidator, receiver or statutory successor, except as provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract specifically provides another payee of such reinsurance in the event of the insolvency of the Company or (2) where the Reinsurer with the consent of the direct insured or insureds has assumed such policy obligations of the Company as direct obligations of the Reinsurer to the payees under such policies and in substitution for the obligations of the Company to such payees.
|
|
|
A.
|
As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Contract, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration. One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters. In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration. If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots.
|
B.
|
Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire. The Arbiters shall consider this Contract as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law. The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties. Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction.
|
C.
|
If more than one reinsurer is involved in the same dispute, all such reinsurers shall, at the option of the Company, constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the reinsurers participating under the terms of this Contract from several to joint.
|
D.
|
Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration. In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties.
|
E.
|
Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Contract, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office.
|
|
|
A.
|
It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due hereunder, the Reinsurer, 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 Reinsurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States.
|
B.
|
Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates 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 Contract.
|
A.
|
Whenever a notice, statement, report or any other written communication is required by this Contract, unless otherwise specified, such notice, statement, report or other written communication may be transmitted by certified or registered mail, nationally or internationally recognized express delivery service, personal delivery, electronic mail, or facsimile. With the exception of notices of termination, first class mail is also acceptable.
|
|
|
B.
|
The use of any of the following shall constitute a valid execution of this Contract or any amendments thereto:
|
1.
|
Paper documents with an original ink signature;
|
2.
|
Facsimile or electronic copies of paper documents showing an original ink signature; and/or
|
3.
|
Electronic records with an electronic signature made via an electronic agent. For the purposes of this Contract, the terms "electronic record," "electronic signature" and "electronic agent" shall have the meanings set forth in the Electronic Signatures in Global and National Commerce Act of 2000 or any amendments thereto.
|
C.
|
This Contract may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original.
|
|
|
1.
|
This Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or Nuclear Energy risks.
|
2.
|
Without in any way restricting the operation of paragraph (1) of this Clause, this Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any insurance against Physical Damage (including business interruption or consequential loss arising out of such Physical Damage) to:
|
I.
|
Nuclear reactor power plants including all auxiliary property on the site, or
|
II.
|
Any other nuclear reactor installation, including laboratories handling radioactive materials in connection with reactor installations, and "critical facilities" as such, or
|
III.
|
Installations for fabricating complete fuel elements or for processing substantial quantities of "special nuclear material," and for reprocessing, salvaging, chemically separating, storing or disposing of "spent" nuclear fuel or waste materials, or
|
IV.
|
Installations other than those listed in paragraph (2) III above using substantial quantities of radioactive isotopes or other products of nuclear fission.
|
3.
|
Without in any way restricting the operations of paragraphs (1) and (2) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear installation and which normally would be insured therewith except that this paragraph (3) shall not operate
|
(a)
|
where Reassured does not have knowledge of such nuclear reactor power plant or nuclear installation, or
|
(b)
|
where said insurance contains a provision excluding coverage for damage to property caused by or resulting from radioactive contamination, however caused. However on and after 1st January 1960 this sub-paragraph (b) shall only apply provided the said radioactive contamination exclusion provision has been approved by the Governmental Authority having jurisdiction thereof.
|
4.
|
Without in any way restricting the operations of paragraphs (1), (2) and (3) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive contamination is a named hazard specifically insured against.
|
5.
|
It is understood and agreed that this Clause shall not extend to risks using radioactive isotopes in any form where the nuclear exposure is not considered by the Reassured to be the primary hazard.
|
6.
|
The term "special nuclear material" shall have the meaning given it in the Atomic Energy Act of 1954 or by any law amendatory thereof.
|
7.
|
Reassured to be sole judge of what constitutes:
|
(a)
|
substantial quantities, and
|
(b)
|
the extent of installation, plant or site.
|
(a)
|
all policies issued by the Reassured on or before 31st December 1957 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.
|
(b)
|
with respect to any risk located in Canada policies issued by the Reassured on or before 31st December 1958 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.
|
1.
|
Involves violence against one or more persons, or
|
2.
|
Involves damage to property; or
|
3.
|
Endangers life other than the person committing the action; or
|
4.
|
Creates a risk to health or safety of the public or a section of the public; or
|
5.
|
Is designed to interfere with or disrupt an electronic system.
|
|
|
|
|
|
|
|
|
(a)
|
*
|
(b)
|
*
|
If to ISA:
|
Ivantage Select Agency, Inc.
|
3100 Sanders Road
|
|
Northbrook, IL 60062
|
|
|
Attn: Mark Green, President
|
|
|
With a copy to:
|
Allstate Insurance Company
|
|
Corporate Law Department
|
|
2775 Sanders Road
|
|
Suite A2W
|
|
Northbrook, IL 60062
|
|
Attn: Steve Ihm, Vice President and Assistant General Counsel
|
|
|
If to COMPANY:
|
Federated National Underwriters, Inc.
|
|
14050 NW 14
th
Street, Suite 180
|
|
Sunrise, FL 33323
|
|
Attn: Gordon Jennings, President
|
FEDERATED NATIONAL
|
|
IVANTAGE SELECT AGENCY, INC.
|
|||
UNDERWRITERS, INC.
|
|
|
|
||
|
|
|
|
|
|
By:
|
/s/ J. Gordon Jennings, III
|
|
By:
|
/s/ Mark Green
|
|
Title:
|
President
|
|
Title:
|
Ivantage President
|
|
Date:
|
2/5/13
|
|
Date:
|
2/4/13
|
(a) | Workers' Compensation. |
(b) | Employers' Liability. |
(c) | Automobile Liability. |
(d) | General Liability. |
(e) | Bond. |
(f) | Errors & Omissions. |
(g) | Umbrella Liability. |
1. | Commission File (Monthly) COMPANY will provide to ISA a monthly commission file for the prior month's business. The Excel file will include the following information by Producer: |
COLUMN HEADER
|
FIELD DESCRIPTION
|
Example
|
Reporting Month
|
Include on each line
|
00/00/0000
|
Allstate Agent Number
|
“A” plus 6 numeric or alpha numeric digits
|
A000000
A0A1234
|
Underwriting Carrier
|
List name
|
Agent Name
|
Line of Business
|
Refer to “Line of Business Codes” under Production Report requirement
|
|
Transaction Type
|
New, Renewal, Endorsement, abbreviations acceptable
|
New, Ren, End
|
Insured First Name
|
First
|
First
|
Insured Last Name
|
Last
|
Last
|
Policy Number
|
|
|
Effective Date
|
00/00/0000
|
00/00/0000
|
Risk State
|
2 letter state abbreviation
|
IL
|
Total Premium Recorded For Month
|
Dollar amount, two decimals, no dollar symbol, comma acceptable
|
20000.00
|
Commission Rate
|
*
|
10%
|
Commission Amount
|
Dollar amount, two decimals, no dollar symbol, comma acceptable
|
20000.00
|
2. | Agent Enrollment File (Monthly) COMPANY will provide to ISA a monthly agent enrollment file in Excel to include all actively enrolled Producers. COMPANY should use the monthly active agent list provided by ISA to identify terminated Producers that should no longer be part of the program and identify those Producers to ISA. |
COLUMN HEADER
|
FIELD DESCRIPTION
|
Example
|
Allstate Agent Number
|
Allstate agent number, alpha character plus 6 numeric or alpha numeric digits
|
A000000
A0A1234
|
Date Agent Enrolled
|
Date Allstate agent enrolled
|
00/00/0000
|
3. | Production Reporting (Monthly, by the 10 th business day of the following month) |
· | There are two files that need to be sent: |
§ | Control File – used for quick data file validation |
Ø | Naming convention for this file should be: |
Ø | Consists of one record containing two fields in comma delimited format. |
Ø | The first field contains the total number of records sent in the data file. No commas in the number. |
Ø | The second field contains the total amount of written premium in the data file. No $ or commas in the number. |
§ | Data File – the actual policy records |
Ø | Naming convention for this file should be: |
Ø | Submit one record for all policies active for the previous month in comma delimited format . Do not send column headers as the first row. The entire file should be data. |
Ø | Every policy number must be unique. No duplicates . |
Ø | The policy number must be the base number related to the policy. Any prefix or suffix that modifies the base policy number should be broken down into the policy prefix and policy suffix fields. |
Ø | Please note the required fields and the format we have requested for each field as defined on Chart 1 |
Ø | The Vendor GA – ID will be derived from a code assigned by ISA. Your GA ID will be _ 0XX _. The Vendor Carrier – ID is the NAIC code assigned to each carrier. |
Field Number
|
Field Name
|
Type(Text, Currency, Numeric, Date)
|
Format Expected to Receive Data (example: phone number could be (999)999-9999 or 999999999: Amount could be 1234.56 or $1,234.56
|
Required
* Check Field Definitions
|
Length of Field
|
1
|
Accounting Year/Month
|
Date
|
YYYYMM
|
X
|
6
|
2
|
Line of Business
|
Text
|
XXX (use leading zeros if necessary)
|
X
|
3
|
3
|
Policy Effective Date
|
Date
|
YYYYMMDD
|
X
|
8
|
4
|
Policy Expiration Date
|
Date
|
YYYYMMDD
|
X
|
8
|
5
|
Policy Inception Date
|
Date
|
YYYYMMDD
|
X
|
8
|
6
|
Policy Number
|
Text
|
|
X
|
30
|
7
|
Policy Prefix
|
Text
|
|
|
|
8
|
Policy Suffix
|
Text
|
|
|
|
9
|
Policy Term
|
Numeric
|
99
|
X
|
2
|
10
|
Business Name
|
Text
|
|
*
|
50
|
11
|
Insured First Name
|
Text
|
|
*
|
30
|
12
|
Insured Last Name
|
Text
|
|
*
|
30
|
13
|
Written Premium
|
Numeric
|
9999999.00
|
X
|
|
14
|
Allstate Agent Number
|
Text
|
a999999
|
X
|
7
|
15
|
Allstate Agent First Name
|
Text
|
|
*
|
30
|
Field
|
Field Name
|
Description
|
Rules
|
1
|
Accounting Date
|
The year and month of the current inforce policies passed from the GA/Carrier to Allstate
|
Accounting date should always be equal to or greater than the inception date.
|
|
|
|
Examples
Accounting date = 201103
Correct: Inception date = 20110301 or 20110101. Effective date = 20110301 or 20110501.
Incorrect: Inception date = 20110401. (Inception date is greater than Accounting date - show on April submission)
|
2
|
Line of Business
|
The line of business on the policy.
|
Must be a valid business code. See tab LOB. Must be an approved LOB for state and GA/Carrier per contract. It should never change for the same policy number in the monthly submissions.
|
3
|
Policy Effective Date
|
The date coverage begins on the policy.
|
Changes upon renewal. Should not change prior to renewal. Can be equal to or greater than inception date, but should never be prior.
|
|
|
|
Examples
Effective date = 20110101
Correct: Inception date = 20110101 or 20110315
Incorrect: Inception date = 20110501 (Effective date should be equal to or greater than Inception date.)
|
4
|
Policy Expiration Date
|
The date policy expected to retire. End date of current policy.
|
The expiration date is typically one policy term in the future from the effective date.
|
5
|
Policy Inception Date
|
The date the policy was created (written, processed, bound).
|
Should never change. Can be equal to or prior to effective date, but can never come after. No policies with an inception date greater than the accounting date should appear on monthly submission.
|
|
|
|
Examples
Inception date = 20110301
Correct: Effective date = 20110301, 20110315 or 20110501
Incorrect: Effective date = 20110215 (Inception date must be prior to or equal to Effective date.)
Incorrect: Accounting date = 201102 (Policy should appear on 201103 submission.)
|
6
|
Policy Number
|
The unique number assigned to the policy.
|
Should never change. Do not truncate. No duplicates. Strip off policy prefix and/or suffix
only
if they are expected to change. Policy number must be unique; any changes will result in error.
If the policy number contains leading or trailing zeros, do not truncate.
|
7
|
Policy Prefix
|
User defined policy prefix.
|
Optional
|
8
|
Policy Suffix
|
User defined policy suffix.
|
Optional
|
9
|
Policy Term
|
Length of policy coverage measured in months.
|
|
10
|
Business Name
|
Business name of insured.
|
Do not combine names - field should contain a single insured (first and last name). Cannot be blank if insured first name or insured last name is blank.
|
|
|
|
Example
Correct: John Smith
Incorrect: John Smith a single man and Amy Brown a single woman
|
11
|
Insured First Name
|
First name of insured.
|
Cannot be blank if last name is filled in. Cannot be blank if business name is blank.
|
12
|
Insured Last Name
|
Last name of insured.
|
Cannot be blank if first name is filled in. Cannot be blank if business name is blank.
|
13
|
Written Premium
|
Written premium should not include fees.
|
Written premium cannot be 0 or negative.
|
14
|
Allstate Agent Number
|
The Allstate agent number consisting of seven characters.
|
Exclusive agents (IDs beginning with A0, A1), Employee agents (IDs beginning with A6 in NY and WV only)
|
15
|
Allstate Agent Last Name
|
Allstate agent last name.
|
Cannot be blank if agent first name is filled in. Cannot be blank if agency name is blank.
|
16
|
Allstate Agent First Name
|
Allstate agent first name
|
Cannot be blank if agent last name is filled in. Cannot be blank if agency name is blank.
|
17
|
Allstate Agency Name
|
Agency name of agent.
|
Cannot be blank if agent last and first name is blank.
|
18
|
Allstate Agent State
|
Agent resident license state.
|
Must be US state. Cannot be blank.
|
19
|
Insured Risk Address
|
Address of insured property.
|
Must be US address.
|
20
|
Insured Risk City
|
City of insured property.
|
Must be US city.
|
21
|
Insured Risk State
|
State of insured property.
|
Must be US State.
|
22
|
Insured Risk Zip
|
Zip code of insured property.
|
Must be US zip code. Do not truncate.
|
23
|
Insured Mail Address
|
Mail address for insured property.
|
Cannot be blank if foreign or US.
|
24
|
Insured Mail City
|
Mail city for insured property.
|
Cannot be blank if foreign or US.
|
25
|
Insured Mail State
|
Mail state for insured property.
|
Cannot be blank if US.
|
26
|
Insured Mail Zip
|
Mail zip for insured property.
|
Cannot be blank if US.
|
27
|
Insured Mail Phone
|
Area code + exchange + number of mail phone for insured.
|
Optional
|
28
|
Vendor GA ID
|
GA code - provided by Ivantage.
|
Mandatory - Please refer to Ivantage for your GA Code
|
29
|
Vendor Carrier ID
|
NAIC code of carrier.
|
Must be valid NAIC code. Must be an approved carrier. Should never change.
|
30
|
Cancellation Field
|
Date policy ceases to exist. (Cancelled, non-renewed).
|
Must contain a date or 0. Cannot be blank. No leading or trailing spaces.
When a policy cancels, expires or if it is a nonrenewal, please indicate the date here.
|
CODE
|
LINE OF BUSINESS
|
DEFINITION
|
001
|
Homeowners
|
HO3, HO5
|
002
|
Residential Fire
|
All DP forms
|
003
|
High Value
|
|
004
|
Earthquake
|
|
005
|
Wind
|
Wind Only Policies
|
006
|
Mexican Travel
|
|
007
|
Manufactured Home
Mobile Home
|
Factory built housing transported to site for permanent installation
|
008
|
Boats
|
Includes personal watercraft, boat and yacht
|
009
|
Excess Flood
|
|
010
|
CPL
|
Comprehensive Personal Liability
|
011
|
Motorhomes
|
Self Propelled vehicle equiped with living quarters (RV)
|
012
|
Condo
|
|
013
|
Renters
|
Tenant coverage, personal property only
|
014
|
Motorcycles
|
|
015
|
LPP
|
Landlord Policy
|
016
|
SPP
|
Scheduled Property Policy - Valuable Articles Floater
|
017
|
Auto/ Classic Car
|
|
018
|
Personal Umbrella
|
Personal Umbrella Policy
|
019
|
Worker's Comp
|
|
020
|
Jewelry
|
|
021
|
Exc. CPL
|
Excess Comprehensive Personal Liability
|
022
|
Farm and Ranch
|
|
023
|
Excess Auto Liability
|
|
024
|
Workers Compensation
|
|
025
|
Commercial Auto
|
|
026
|
Commercial Property
|
|
027
|
Bonds
|
|
028
|
Commercial Umbrella
|
|
029
|
General Liability
|
Commercial General Liability
|
FEDERATED NATIONAL
|
|
IVANTAGE SELECT AGENCY, INC.
|
|||
UNDERWRITERS, INC.
|
|
|
|
||
|
|
|
|
|
|
By:
|
/s/ J. Gordon Jennings, III
|
|
By:
|
/s/ Mark Green
|
|
|
|
|
|
|
|
Title:
|
President
|
|
Title:
|
Ivantage President
|
|
|
|
|
|
|
|
Date:
|
2/5/13
|
|
Date:
|
2/4/13
|
1. | The Parties agree that First Revised Schedule A of the Agreement hereby replaces and supersedes Schedule A, and is made a part of the Agreement effective as of February 4 th , 2013. |
2. | Except for the amendments to the Agreement expressly provided for herein, the Agreement shall remain unchanged and in full force and effect. |
3. | This First Amendment shall be binding on the parties hereto, including their affiliates, successors and assigns. |
4. | Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to them in the Agreement. |
5. | This First Amendment may be signed in multiple counterparts which together shall constitute a single instrument. |
FEDERATED NATIONAL
|
|
IVANTAGE SELECT AGENCY, INC.
|
|||
UNDERWRITERS, INC.
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ J. Gordon Jennings, III
|
|
By:
|
/s/ Mark Green
|
|
Typed Name:
|
J.G. Jennings, III
|
|
Typed Name:
|
Mark Green
|
|
Title:
|
President
|
|
Title:
|
President
|
|
Date:
|
2/13/13
|
|
Date:
|
2/26/13
|
FEDERATED NATIONAL
|
|
IVANTAGE SELECT AGENCY, INC.
|
|||
UNDERWRITERS, INC.
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ J. Gordon Jennings, III
|
|
By:
|
/s/ Mark Green
|
|
Typed Name:
|
J.G. Jennings, III
|
|
Typed Name:
|
Mark Green
|
|
Title:
|
President
|
|
Title:
|
President
|
|
Date:
|
2/13/13
|
|
Date:
|
2/26/13
|
/s/ Michael H. Braun
|
Michael H. Braun
|
Chief Executive Officer
|
/s/ Peter J. Prygelski, III
|
Peter J. Prygelski, III
|
Chief Financial Officer
|
(Principal Financial and Accounting Officer)
|
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Federated National Holding Company. |
By:
/s/ Michael H. Braun
|
|
Michael H. Braun, Chief Executive Officer (Principal Executive Officer)
|
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Federated National Holding Company. |
By: /
s/ Peter J. Prygelski, III
|
|
Peter J. Prygelski, III, Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
November 6, 2013
|
|