Exhibit 10.20
TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
QUOTA SHARE REINSURANCE CONTRACT
issued to
THE DIRECT GENERAL GROUP
NASHVILLE, TENNESSEE, INCLUDING
DIRECT INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
and
DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
THE DIRECT GENERAL GROUP
TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
QUOTA SHARE REINSURANCE CONTRACT
TABLE OF CONTENTS
ARTICLE PAGE
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Preamble......................................................3
1 Business Reinsured............................................3
2 Cover.........................................................4
3 Loss Limit....................................................4
4 Loss Corridor.................................................5
5 Commencement and Termination..................................5
6 Territory.....................................................6
7 Exclusions....................................................6
8 Reinsurance Premium...........................................8
9 Premium Cap...................................................8
10 Provisional Ceding Commission.................................9
11 Adjustment of Ceding Commission..............................10
12 Accounts and Remittances.....................................10
13 Interlock....................................................11
14 Definitions..................................................12
15 Extra Contractual Obligations................................14
16 Excess of Policy Limits......................................15
17 Original Conditions..........................................15
18 Special Provisions...........................................15
19 Loss and Loss Adjustment Expense.............................16
20 Offset.......................................................16
21 Currency.....................................................16
22 Loss Reserve Funding.........................................17
23 Taxes........................................................19
24 Federal Excise Tax...........................................19
25 Inspection...................................................19
26 Delay, Omission or Error.....................................20
27 Insolvency...................................................20
28 Arbitration..................................................21
29 Service of Suit..............................................21
30 Entire Contract..............................................22
31 Severability.................................................23
32 Intermediary.................................................23
33 Mode of Execution............................................23
Company Signature............................................24
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TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
QUOTA SHARE REINSURANCE CONTRACT
TABLE OF CONTENTS
ATTACHMENTS PAGE
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Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance
- U.S.A...........................................................25
Nuclear Incident Exclusion Clause - Liability - Reinsurance
- U.S.A...........................................................27
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TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
QUOTA SHARE REINSURANCE CONTRACT
(the "Contract")
issued to
THE DIRECT GENERAL GROUP
NASHVILLE, TENNESSEE, INCLUDING
DIRECT INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
and
DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
THE DIRECT GENERAL GROUP
(individually and collectively the "Company")
by
THE SUBSCRIBING REINSURER(S) IDENTIFIED IN THE
INTERESTS AND LIABILITIES AGREEMENT(S)
ATTACHED TO AND FORMING PART OF THIS CONTRACT
(the "Reinsurer")
ARTICLE 1
BUSINESS REINSURED
This Contract is to share with the Reinsurer the interests and liabilities of
the Company's Loss on its Net Retained Liability under all Policies,
endorsements, and/or other evidences of liability for Private Passenger
Automobile Physical Damage and Liability business written or renewed by or on
behalf of the Company in the States of Arkansas, Florida, Georgia, Kentucky,
Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee during the
Contract Year (hereinafter referred to as "Policy(ies)"), subject to the terms
and conditions herein contained.
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ARTICLE 2
COVER
A. Subject to the limits hereof, the Company will cede, and the Reinsurer
will accept as reinsurance, a 25% share of the Company's Loss arising
from its Net Retained Liability for all business reinsured hereunder as
respects Policies with new or renewal Policy periods effective during
the Contract Year.
B. In addition, an amount not to exceed a combined total of $900,000
(being 90% of $1,000,000) any one Loss for Extra Contractual
Obligations and Losses in Excess of Policy Limits, as specified in the
Extra Contractual Obligations and Excess of Policy Limits Articles,
will be subject to this Contract.
C. Notwithstanding the above, the Reinsurer's liability under this
Contract and the Companion Contract for Loss classified by the Company
as "Property Loss" will be limited to $1,000,000 per Loss Occurrence
(i.e., the maximum property reinsurance recovery from this Contract is
$1,000,000 per Loss Occurrence). Any reduction in coverage under this
Contract under the terms of this paragraph will be in the same
proportion that the Loss under this Contract for the Loss Occurrence
bears to the total Loss under this Contract and the Companion Contract
for the Loss Occurrence.
D. The Company is permitted to carry an Excess Cessions reinsurance
contract that inures to the benefit of this Contract, as well as other
Quota Share and Excess Catastrophe reinsurance, recoveries under which
shall inure solely to the benefit of the Company.
ARTICLE 3
LOSS LIMIT
For purposes of determining the liability of the Reinsurer, the limits of
liability of the Company for Loss with respect to any one Policy shall be deemed
not to exceed the greater of the minimum statutory limits in the applicable
state in which the Company is licensed, or the following:
Automobile Bodily Injury Liability $10,000 per person/$20,000 per occurrence
Property Damage Liability $5,000 per occurrence
Uninsured/Underinsured Motorists
Bodily Injury Liability $10,000 per person/$20,000 per occurrence
Uninsured/Underinsured Motorists
Property Damage Liability $5,000 per occurrence
Personal Injury Protection Statutory Coverages
Medical Payments $10,000 per person
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These limits of liability are further subject to the following maximum limits:
Automobile Physical Damage $75,000 each vehicle, or so deemed.
ARTICLE 4
LOSS CORRIDOR
As respects Policies with effective or renewal dates during the Contract Year,
the Company shall retain, under this Contract and the Companion Contract, 100%
of Losses Incurred above a Loss Ratio of 73.0%. The Company will remain liable
for such Losses Incurred unless the Losses Incurred exceeds a Loss Ratio of
84.0%, at which point the Reinsurer's liability will resume (based on its pro
rata share) for any Losses Incurred in excess of an 84.0% Loss Ratio. Said
additional retention is called the "Loss Corridor." The Loss Corridor is not
subject to any effect from a deficit carryforward from prior Contract Years.
ARTICLE 5
COMMENCEMENT AND TERMINATION
A. This Contract shall become effective at 12:01 a.m., Central Standard
Time, January 1, 2002, and shall remain in full force and effect until
terminated as provided in the following paragraph.
B. This Contract may be terminated by either party at 12:01 a.m., Central
Standard Time, on January 1, 2003, or any January 1 thereafter by
giving to the other party not less than 90 days' notice by certified or
registered mail, return receipt requested.
C. Either party to this Contract shall also have the right to cancel this
Contract immediately by giving written notice to the other party by
certified or registered mail in the event that one party:
1. has its financial condition impaired by a reduction of surplus
as regards policyholders of 25% or more in any 12-month period
from the inception date of this Contract.
2. is declared insolvent or put in liquidation by any competent
regulatory authority or court of competent jurisdiction.
D. It is understood and agreed that should the Company enter any
arrangement either by way of shareholding or management or otherwise,
under which effective legal or presumptive control of 50% or more is
assumed by any other individual or organization than that which
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pertained at the time this Contract became effective, the Company shall
forthwith notify the Reinsurer.
Acting upon such actual notice, or upon constructive notice thereof by
any other means, the Company shall have the right to terminate this
Contract by giving not less than 90 days' notice from the closing date
of the arrangement, by registered letter stating therein the date of
termination.
E. The Reinsurer will remain liable for 12 months run-off, plus six months
of odd time, for all Policies in force on the date of termination,
unless the Company elects to terminate coverage on a cut-off basis,
such election to be made by the Company in writing within 30 days of
the date of termination.
F. Notwithstanding the foregoing, in the event the Company is required by
statute, regulation or by order of any court or regulatory authority to
(i) continue a Policy or Policies subject hereto in force, (ii) renew
the coverage under a Policy or Policies through the issuance of a
renewal Policy or Policies, or (iii) accept new insurance business,
after termination the Reinsurer agrees to extend reinsurance coverage
hereunder with respect to such Policy or Policies until the Company may
legally cancel, nonrenew or otherwise eliminate its liability under
such Policy or Policies, such extended coverage will not exceed 24
months after the termination of the Contract.
ARTICLE 6
TERRITORY
This Contract shall cover wherever the Company's original Policies cover but is
limited to Losses occurring on Policies issued to insureds located in the United
States of America and its territories and possessions.
ARTICLE 7
EXCLUSIONS
This Contract shall not apply to and specifically excludes the following perils,
risks and classes of business:
1. As regards interests which at time of Loss or damage are on
shore, no liability shall attach hereto in respect of any Loss
or damage which is occasioned by war, invasion, hostilities,
acts of foreign enemies, civil war, rebellion, insurrection,
military or usurped power, or marital law or confiscation by
order of any government or public authority. This War
Exclusion Clause shall not, however, apply to interests which
at time of loss or damage are within the territorial limits of
the United States of America (comprising the fifty States of
the Union, the District of Columbia, and including
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bridges between the U.S.A. and Mexico provided they are under
United States ownership), Canada, St. Pierre and Miquelon,
provided such interests are insured under Policies,
endorsements or binders containing a standard war or
hostilities or warlike operations exclusion clause.
2. Business excluded by the following attached Nuclear Incident
Exclusion Clauses:
(a) Nuclear Incident Exclusion Claus - Physical Damage -
Reinsurance - U.S.A.
(b) Nuclear Incident Exclusion Clause - Liability -
Reinsurance - U.S.A.
3. Pools, Associations and Syndicates, except Losses from
Assigned Risk Plans or similar plans are not excluded. It is
further agreed that business ceded to the North Carolina
Reinsurance Facility is excluded hereunder.
4. Reinsurance except for Agency and Intra Group Company
Reinsurance.
5. Mortgage Impairment Insurance or other similar covers, however
styled.
6. All 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 (other than
recoupment fees), 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.
7. Products Liability, Professional Malpractice Liability,
Directors' & Officers' Liability, Securities and Exchange
Commission Liability, Workers' Compensation and Employers'
Liability.
8. Loss arising out of the ownership, maintenance or use of any
vehicle, the principal use of which is:
(a) As a public or livery conveyance;
(b) Emergency vehicles;
(c) Drive yourself motor vehicles available for leasing
periods of less than six months;
(d) Automobiles used in speed contests and races;
(e) Motorcycles.
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9. Commercial Automobile Physical Damage and Liability business.
10. Accidental Death, Towing and Rental Reimbursement, and Life
Insurance when written as such.
11. Coverages written in conjunction with Motor Club memberships,
Accident Hospital Indemnity, Vehicle Protection Plans or
Travel Protection Plans.
12. Losses arising from seepage and pollution, provided, however,
that this exclusion will not apply, if and when a court
invalidates the Company's pollution liability exclusion
notwithstanding that such liability was intended to be
excluded from coverage.
In the event the Company becomes bound on an excluded risk without its
knowledge, either as a result of an existing insured extending its operations or
through an inadvertent error by an agent, the exclusions hereunder, other than
exclusions 1, 2, 4, 6 and 12, shall be suspended with respect to such insured
risk until 30 days after an underwriting supervisor of the Company acquires
knowledge thereof and until the Company can legally cancel or terminate its
coverage of such risk.
Business which is beyond the terms, conditions or limitations of this Contract
may be submitted to the Reinsurer for special acceptance hereunder and such
business, if accepted by the Reinsurer, shall be subject to all of the terms,
conditions and limitations of this Contract except as modified by the special
acceptance.
ARTICLE 8
REINSURANCE PREMIUM
Company shall pay the Reinsurer its quota share percentage of the Gross Net
Written Premium.
ARTICLE 9
PREMIUM CAP
A. As respects the Contract Year beginning January 1, 2002, the Company's
Gross Net Written Premium for Policies subject to this Contract and for
Policies subject to the
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Companion Contract shall not exceed the following Premium Caps:
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LOCATION GROSS NET WRITTEN PREMIUM
-------------------------------------------------------------------------------
Florida $150,000,000
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Louisiana $ 15,000,000
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Arkansas, Georgia, Kentucky, Mississippi, North
Carolina, South Carolina and Tennessee combined $135,000,000
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TOTAL FOR ALL STATES $300,000,000
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B. If any Premium Cap is exceeded, or is projected by the Company to be
exceeded, during the Contract Year, the Reinsurer shall have the right
to waive the Premium Cap, or to invoke either of the following options
within 30 days of the date the Premium Cap is exceeded or projected to
be exceeded:
1. Reduce the quota share percentage under this Contract and the
Companion Contract, as respects the business for which the
Premium Cap is exceeded, to the proportion that 25% of the
Premium Cap bears to the total Gross Net Written Premium under
this Contract and the Companion Contract in the state(s) to
which the Premium Cap applies; or
2. As respects Policies issued in the state(s) in which the
Premium Cap is exceeded, exclude from cession under this
Contract and the Companion Contract all such Policies issued
after the Premium Cap is reached (as estimated after returns
and cancellations).
Failure to invoke an option within 30 days will constitute waiver of
the Premium Cap.
ARTICLE 10
PROVISIONAL CEDING COMMISSION
A. The Reinsurer shall allow the Company a provisional ceding commission
of 21.0% of the ceded Gross Net Written Premium remitted to the
Reinsurer as per subparagraph A.2. of the Accounts and Remittances
Article. Return commission shall be allowed on return premiums at the
same rate.
B. It is expressly agreed that the ceding commission includes provision
for all acquisition costs, administrative fees, and for all other
expenses (other than the flat 6.0% charge and up to an additional 2.5%
charge for outside legal expense relating to Loss Adjustment Expense)
of whatever nature.
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ARTICLE 11
ADJUSTMENT OF CEDING COMMISSION
A. As respects Policies written or renewed during the Contract year, the
provisional ceding commission will be adjusted upwards in the event the
Adjusted Loss Ratio for the Contract Year is below 74.0%. For each 1%
point decrease in the Adjusted Loss Ratio, from a starting Adjusted
Loss Ratio of 74.0%, the ceding commission will be increased by 1%
point. The maximum ceding commission for the Contract Year is 31.0%
(corresponding to an Adjusted Loss Ratio of 64.0% or better).
B. The first adjustment of the provisional ceding commission will take
place 12 months after the close of the Contract Year. The Company will
provide the Reinsurer with a detailed report showing its adjustment
calculation and indicating any amounts due. In the event funds are due
the Reinsurer, the Company will remit said funds with the report. In
the event funds are due the Company, the Reinsurer will remit said
funds to the Company within 30 days of receipt of the report.
C. Adjustments will continue to be made each January 1st thereafter until
all Losses and Loss Adjustment Expense for the Contract Year have been
closed, at which time a final adjustment will be made.
ARTICLE 12
ACCOUNTS AND REMITTANCES
A. Within 30 days following the end of each month, the Company shall
render a net account to the Reinsurer, segregated by Contract Year.
Such account shall contain the following information, summarized by
line of business:
1. Ceded Gross Net Earned Premium during the month; less,
2. The provisional ceding commission rate (applied to ceded Gross
Net Earned Premium remitted), and the allowance for Loss
Adjustment Expense, as provided for in this Contract; less,
3. Loss and outside legal expense paid on Losses under Policies
written or renewed during the Contract Year (net of the
Company's Cumulative Retention under the Loss Corridor for the
Contract Year, if any); plus,
4. Subrogation, salvage, or other recoveries on Losses under
Policies written or renewed during Contract Year.
The Company's "Cumulative Retention under the Loss Corridor" for the
Contract Year shall mean the lesser of (a) 11% of the inception-to-date
accumulated ceded Gross Net
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Earned Premium from Policies with effective or renewal dates during the
Contract Year and b) the amount, if any, by which the inception-to-date
accumulated paid Losses Incurred exceed 73% of inception-to-date ceded
Gross Net Earned Premium from Policies with effective or renewal dates
during the Contract Year.
Any balances (as calculated in subparagraphs A.1. through A.4. above)
due to the Reinsurer shall be paid by the Company within 30 days
following the end of the month. Any balances due to the Company shall
be paid by the Reinsurer as soon as is reasonably practicable after
receiving the monthly report, but not to exceed 30 days following
receipt of the monthly report.
B. This account will also bear a notation advising of the Gross Net
Written Premium, outstanding Loss, Extra Contractual Obligations,
Losses in Excess of Policy Limits and Loss Adjustment Expense reserve,
summarized by line of business, and the unearned premium reserve at the
end of the period, summarized by line of business, segregated by
Contract Year. Should Loss, Extra Contractual Obligations, Losses in
Excess of Policy Limits and Loss Adjustment Expense attributable to an
ISO catastrophe(s) be involved, the account should bear a notation
showing the ISO number(s) and the paid and outstanding amounts
applicable.
C. Within 60 days following the end of each annual accounting period, the
Company shall furnish to the Reinsurer any other information which the
Reinsurer may require for its Annual Convention Statement which may be
reasonably available to the Company.
ARTICLE 13
INTERLOCK
For purposes of calculations under the following Articles and provisions:
1. Premium Cap Article;
2. "Property Per Loss Occurrence Limit" provisions of paragraph C
of the Cover Article;
3. Loss and Loss Adjustment Expense Article;
4. Loss Corridor Article;
5. Adjustment of Ceding Commission Article; and
6. Accounts and Remittances Article;
experience (including but not limited to Loss, Loss Adjustment Expense, Extra
Contractual Obligations, Loss in Excess of Policy Limits and Gross Net Written
Premium, as applicable)
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under this Contract and under the Companion Contract shall be combined. Any
reduction in coverage will be applied to each reinsurance contract on a pro rata
basis, based on the proportion of combined Loss, Loss Adjustment Expense, Extra
Contractual Obligations, Loss in Excess of Policy Limits or Gross Net Written
Premium experience, as applicable.
ARTICLE 14
DEFINITIONS
A. "Loss" shall mean amounts paid or payable by Company for indemnity
under the Policies reinsured under this Contract.
B. "Net Retained Liability" shall mean the Company's gross liability for
Loss, Extra Contractual Obligations, Loss in Excess of Policy Limits
and Loss Adjustment Expense under the Policies, after application of
any reinsurance which inures to the benefit of this Contract.
C. "Private Passenger Automobile Physical Damage and Liability Business"
shall mean that business classified as private passenger automobile
insurance, including liability, physical damage, uninsured/underinsured
motorists and personal injury protection.
D. "Companion Contract" shall mean the Traditional Private Passenger
Automobile Quota Share Reinsurance Contract, effective at 12:01 a.m.,
Central Standard Time, January 1, 2002, issued to Mutual Service
Casualty Insurance Company (Intermediary Reference Number
0481-10-0008-00).
E. "Gross Net Written Premium" shall mean the gross written premium income
on subject business, less returns and cancellations and less written
premium income paid for reinsurances, recoveries under which would
inure to the benefit of this Contract. Gross Net Written Premium income
shall not include premium finance income, billing fees and Policy fees,
collected by the Company in connection with business covered hereunder,
regardless of whether these fees are taxed as premium by the
jurisdiction in question.
F. "Gross Net Earned Premium" shall mean the earned portion of the Gross
Net Written Premium.
G. "Loss Ratio" shall mean: (a) the Losses Incurred arising from Policies
with effective or renewal dates during the Contract Year; divided by,
(b) the Gross Net Earned Premium from Policies with effective or
renewal dates during the Contract Year. The "Loss Ratio" will be
calculated for the Contract Year using the combined experience of this
Contract and the Companion Contract.
H. "Adjusted Loss Ratio" shall mean the Loss Ratio after application of
the Loss Corridor and IBNR.
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I. "Losses Incurred" shall mean paid Loss, Extra Contractual Obligations,
Loss in Excess of Policy Limits, Loss Adjustment Expense, plus
outstanding reserves under this Contract and the Companion Contract
combined.
J. "IBNR" shall mean the amount added to Losses Incurred for purposes of
determining the Adjusted Loss Ratio for the adjustment of the ceding
commission for each Contract Year. As respects each Contract Year, the
IBNR factor for the first computation of adjusted commission for said
Contract Year will be 6% of ceded Automobile Liability Gross Net
Earned Premium (excluding property damage) under this Contract and the
Companion Contract. For the second computation, the IBNR factor will be
reduced to 3% of said premium. IBNR will be eliminated for subsequent
computations of adjusted commission for said Contract Year.
K. "Contract Year" shall mean the 12-month period beginning 12:01 a.m.,
Central Standard Time, January 1, 2002, and each subsequent 12-month
period that this Contract remains in force shall be a separate Contract
Year.
L. 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 windstorms, hail, tornado, hurricane, cyclone,
including ensuing collapse and water damage, all individual
losses sustained by the Company occurring during any period of
72 consecutive hours arising out of and directly occasioned by
the same event. However, the event need not be limited to one
state or province or states or provinces contiguous thereto.
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
insured's premises by strikers, provided such occupation
commenced during the aforementioned period.
3. As regards earthquake (the epicenter of which need not
necessarily be within the territorial confines referred to in
the opening paragraph of this Article) and fire following
directly occasioned by the earthquake, only those individual
fire losses
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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 of frozen pipes and tanks) may be included
in the Company's "Loss Occurrence."
For all "Loss Occurrences" 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 1
68 consecutive hours shall apply with respect to one event, except for
those "Loss Occurrences" referred to in subparagraphs 1 and 2 above
where only one such period of 72 consecutive hours shall apply with
respect to one event, regardless of the duration of the event.
No individual losses occasioned by an event that would be covered by 72
hours clauses may be included in any "Loss Occurrence" claimed under
the 168 hours provision.
ARTICLE 15
EXTRA CONTRACTUAL OBLIGATIONS
This Contract shall protect the Company, subject to the Reinsurer's limit of
liability appearing in the Cover Article of this Contract, where the Loss
includes any extra contractual obligations for 100% of such extra contractual
obligations. "Extra Contractual Obligations" are defined as those liabilities
not covered under any other provision of this Contract and which arise from
handling of any claim on business covered hereunder, such liabilities arising
because of but not limited to, the following: failure by the Company to settle
within the Policy limit, or by reason of 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 any action against its insured or in the preparation
or prosecution of an appeal consequent upon such action.
The date on which any Extra Contractual Obligation is incurred by the Company
shall be deemed, in all circumstances, to be the date of the original loss.
Notwithstanding anything stated herein, the Contract shall not apply to any
Extra Contractual Obligation incurred by the Company as a result of any final
legal adjudication of fraudulent and/or criminal act by any officer or director
of the Company acting individually, or collectively, or in collusion with any
individual or corporation, or any other organization, or party involved in the
presentation, or defense of settlement of any claim covered hereunder.
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ARTICLE 16
EXCESS OF POLICY LIMITS
In the event the Loss includes an amount in excess of the Company's Policy
limit, 100% of such amount in excess of the Company's Policy limit shall be
added to the amount of the Company's Policy limit, and the sum thereof shall be
covered hereunder, subject to the Reinsurer's limit of liability appearing in
the Cover Article of this Contract.
However, this Article shall not apply where the Loss has been incurred by the
Company as a result of any final legal adjudication of fraudulent and/or
criminal act by any officer or director of the Company acting individually, or
collectively, or in collusion with any individual or corporation, or any other
organization, or party involved in the presentation, or defense of settlement of
any claim covered hereunder.
For the purpose of this Article, the word "Loss" shall mean any amounts for
which the Company would have been contractually liable to pay had it not been
for the limit of the original Policy.
ARTICLE 17
ORIGINAL CONDITIONS
All insurances falling under this Contract shall be subject to the same terms,
rates, conditions and waivers, and to the same modifications, alterations and
cancellations as the respective Policies of the Company (except that in the
event of the insolvency of the Company the provisions of the Insolvency Article
of this Contract shall apply).
ARTICLE 18
SPECIAL PROVISIONS
A. The Company may not lower its rates or revise its underwriting
guidelines without obtaining prior approval of the majority of the
Subscribing Reinsurers, which shall not be unreasonably withheld.
B. The Company shall file for rate changes per the Rate Change Summary
dated October 19, 2001, unless otherwise mutually agreed to in
quarterly meetings between the Company's management and the Reinsurer.
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ARTICLE 19
LOSS AND LOSS ADJUSTMENT EXPENSE
Subject to the terms and conditions of this Contract, any Loss settlement made
by the Company within the terms and conditions of the Policy shall be
unconditionally binding upon the Reinsurer in proportion to its participation,
and the Reinsurer shall benefit proportionally in all salvages and recoveries.
As an allowance for Loss Adjustment Expense (including Declaratory Judgment
Expenses), the Reinsurer shall be liable for an amount equal to 6% of the ceded
Gross Net Earned Premium hereunder. The Reinsurer shall also reimburse the
Company for a pro rata share of any outside legal expenses incurred, but the
Reinsurer's liability for such expenses under this Contract and the Companion
Contract combined shall not exceed 2.5% of ceded Gross Net Earned Premium under
both contracts.
"Declaratory Judgment Expenses" shall mean all expenses incurred by the Company
in connection with declaratory judgment actions brought to determine the
Company's defense and/or indemnification obligations that arc allocable to
specific Policies and claims subject to this Contract. Declaratory Judgment
Expenses shall be deemed to have been incurred by the Company on the date of the
original loss (if any) giving rise to the declaratory judgment action.
ARTICLE 20
OFFSET
The Company and the Reinsurer shall have the right to offset any balance or
balances (whether on account of premiums or Losses) due from one party to the
other under the terms of this Contract or any other contract heretofore or
hereafter entered into between the Company and the Reinsurer which is classified
by the Company as part of the Company's Private Passenger Automobile program.
However in the event of the insolvency of any party hereto, offsets shall be
allowed in accordance with the statutes and/or regulations of the state having
jurisdiction over the Solvency.
ARTICLE 21
CURRENCY
The currency to be used for all purposes of this Contract shall be United States
of America currency.
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ARTICLE 22
LOSS RESERVE FUNDING
A. This Article applies only to a reinsurer who does not qualify for full
credit with any insurance regulatory authority having jurisdiction over
the Company's reserves.
B. The Company agrees, in respect of its Policies or bonds falling within
the scope of this Contract, that when it files with its insurance
regulatory authority, or sets up on its books liabilities as required
by law, it will forward to the Reinsurer a statement showing the
proportion of such liabilities applicable to the Reinsurer. The
"Reinsurer's Obligations" shall be defined as follows:
1. unearned premium (if applicable);
2. known outstanding losses that have been reported to the
Reinsurer and Loss Adjustment Expense relating thereto;
3. losses and Loss Adjustment Expense paid by the Company but not
recovered from the Reinsurer;
4. losses incurred but not reported and Loss Adjustment Expense
relating thereto, where the Company has submitted the
calculation for said amount to the Reinsurer and the
Reinsurer's agreement is not unreasonably withheld.
C. The Reinsurer's Obligations shall be funded by funds withheld, cash
advances, trust agreement or a Letter of Credit (LOC). The Reinsurer
shall have the option of determining the method of funding provided it
is acceptable to the insurance regulatory authorities having
jurisdiction over the Company's reserves.
D. When funding by an LOC, the Reinsurer agrees to apply for and secure
timely delivery to the Company of a clean, irrevocable and
unconditional LOC issued by a bank and containing provisions acceptable
to the insurance regulatory authorities having jurisdiction over the
Company's reserves in an amount equal to the Reinsurer's Obligations.
Such LOC shall be issued for a period of not less than one year, and
shall be automatically extended for one year from its date of
expiration or any future expiration date unless 30 days (or such other
time period as may be required by insurance regulatory authorities),
prior to any expiration date the issuing bank shall notify the Company
by certified or registered mail that the issuing bank elects not to
consider the LOC extended for any additional period.
E. The Reinsurer and Company agree that any funding provided by the
Reinsurer pursuant to the provisions of this Contract may be drawn upon
at any time, notwithstanding any other provision of this Contract, and
be utilized by the Company or any successor, by operation of law, of
the Company including, without limitation, any liquidator,
rehabilitator, receiver
17 of 31
or conservator of the Company, for the following purposes, unless
otherwise provided for in a separate trust agreement:
1. to reimburse the Company for the Reinsurer's Obligations, the
payment of which is due under the terms of this Contract and
that has not been otherwise paid;
2. to make refund of any sum that is in excess of the actual
amount required to pay the Reinsurer's Obligations under this
Contract (or in excess of 102% of Reinsurer's Obligations, if
funding is provided by a trust agreement);
3. to fund an account with the Company for the Reinsurer's
Obligations. Such cash deposit shall be held in an interest
bearing account separate from the Company's other assets, and
interest thereon not in excess of the prime rate shall accrue
to the benefit of the Reinsurer. Any taxes payable on accrued
interest shall be paid out of the assets in the account that
are in excess of the Reinsurer's Obligations (or in excess of
102% of Reinsurer's Obligations, if funding is provided by a
trust agreement). If the assets are inadequate to pay taxes,
any taxes due shall be paid by the Reinsurer;
4. to pay the Reinsurer's share of any other amounts the Company
claims are due under this Contract.
F. If the amount drawn by the Company is in excess of the actual amount
required for 1. or 3., or in the case of 4., the actual amount
determined to be due, the Company shall promptly return to the
Reinsurer the excess amount so drawn. All of the foregoing shall be
applied without diminution because of insolvency on the part of the
Company or the Reinsurer.
G. The issuing bank shall have no responsibility whatsoever in connection
with the propriety of withdrawals made by the Company or the
disposition of funds withdrawn, except to ensure that withdrawals are
made only upon the order of properly authorized representatives of the
Company.
H. Fifty days prior to the end of each calendar quarter, the Company shall
prepare a specific statement of the Reinsurer's Obligations for the
sole purpose of amending the LOC or other method of funding, in the
following manner:
1. If the statement shows that the Reinsurer's Obligations exceed
the balance of the LOC as of the statement date, the Reinsurer
shall, within 30 days after receipt of the statement, secure
delivery to the Company of an amendment to the LOC increasing
the amount of credit by the amount of such difference. Should
another method of funding be used, the Reinsurer shall, within
the time period outlined above, increase such funding by the
amount of such difference.
2. If, however, the statement shows that the Reinsurer's
Obligations are less than the balance of the LOC (or less than
102% of Reinsurer's Obligations if funding is provided by a
trust agreement), as of the statement date, the Company shall,
within 30 days after receipt of written request from the
Reinsurer, release such excess credit by
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agreeing to secure an amendment to the LOC reducing the amount
of credit available by the amount of such excess credit.
Should another method of funding be used, the Company shall,
within the time period outlined above, decrease such funding
by the amount of such excess.
ARTICLE 23
TAXES
In consideration of the terms under which this Contract is issued, the Company
undertakes not to claim any deduction of the premium hereon when making tax
returns, other than income or profits tax returns, to any state or territory of
the United States of America or to the District of Columbia.
ARTICLE 24
FEDERAL EXCISE TAX
(This Article applies only to those reinsurers, domiciled outside the United
States of America, who are not exempt from the Federal Excise Tax.)
The Reinsurer has agreed to allow for the purpose of paying the Federal Excise
Tax the percentage specified by United States law of the premium payable hereon
to the extent such premium is subject to Federal Excise Tax.
In the event of any return of premium becoming due hereunder, the Reinsurer
shall deduct the percentage specified by United States law from the amount of
the return and the Company or its agent should take steps to recover the Tax
from the United States Government.
ARTICLE 25
INSPECTION
The Company shall place at the disposal of the Reinsurer at all reasonable
times, and the Reinsurer shall have the right to inspect, through its authorized
representatives, all books, records and papers of the Company in connection with
any reinsurance hereunder or claims in connection herewith.
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ARTICLE 26
DELAY, OMISSION OR ERROR
Any inadvertent delay, omission or error shall not be held to relieve either
party hereto from any liability which would attach to it hereunder if such
delay, omission or error had not been made, providing such delay, omission or
error is rectified upon discovery.
ARTICLE 27
INSOLVENCY
In the event of the insolvency of the Company, reinsurance under this Contract
shall be payable by the Reinsurer on the basis of the liability of the Company
under Policy or Policies reinsured without diminution because of the insolvency
of the Company, 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 when the Contract specifically provides another payee of such
reinsurance in the event of the insolvency of the Company or when 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.
It is agreed, however, that the liquidator or receiver or statutory successor of
the insolvent Company shall give written notice to the Reinsurer of the pendency
of a claim against the insolvent Company on the Policy or Policies reinsured
within a reasonable time after such claim is filed in the insolvency proceeding
and that during the pendency of such claim, the Reinsurer may investigate such
claim and interpose, at its own expense, in the proceeding when such claim is to
be adjudicated, any defense or defenses which it may deem available to the
Company or its liquidator or receiver or statutory successor. The expense thus
incurred by the Reinsurer shall be chargeable, subject to court approval,
against the insolvent Company as part of the expense of liquidation to the
extent of a proportionate share of the benefit which may accrue to the Company
solely as a result of the defense undertaken by the Reinsurer.
When 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 insolvent Company.
In the event of the insolvency of any company or companies included in the
designation of "Company," this clause will apply only to the insolvent company
or companies.
20 of 31
ARTICLE 28
ARBITRATION
As a condition precedent to any right of action hereunder, any irreconcilable
dispute between the parties to this Contract will be submitted for decision to a
board of arbitration composed of two arbitrators and an umpire meeting at a site
in Nashville, Tennessee.
Arbitration shall be initiated by the delivery of a written notice of demand for
arbitration by one party to the other within a reasonable time after the dispute
has arisen.
The members of the board of arbitration shall be active or retired disinterested
officials of insurance or reinsurance companies, or Underwriters at Lloyd's,
London, not under the control or management of either party to this Contract.
Each party shall appoint its arbitrator and the two arbitrators shall choose an
umpire before instituting the hearing. If the respondent fails to appoint its
arbitrator within four weeks after being requested to do so by the claimant, the
latter shall also appoint the second arbitrator. If the two arbitrators fail to
agree upon the appointment of an umpire within four weeks after their
nominations, each of them shall name three, of wham the other shall decline two,
and the decision shall be made by drawing lots.
The claimant shall submit its initial brief within 45 days from appointment of
the umpire. The respondent shall submit its brief within 45 days thereafter and
the claimant may submit a reply brief within 30 days after filing of the
respondent's brief.
The board shall make its decision with regard to the custom and usage of the
insurance and reinsurance business. The board shall issue its decision in
writing based upon a hearing in which evidence may be introduced without
following strict rules of evidence but in which cross-examination and rebuttal
shall be allowed. The board shall make its decision within 60 days following the
termination of the hearings unless the parties consent to an extension. The
majority decision of the board shall be final and binding upon all parties to
the proceeding. Judgment may be entered upon the award of the board in any court
having jurisdiction.
Each party shall bear the expense of its own arbitrator and shall jointly and
equally bear with the other party the expense of the umpire and of the
arbitration.
ARTICLE 29
SERVICE OF SUIT
A. This Article applies only to those reinsurers not domiciled in the
United States of America, and/or not authorized in any state, territory
and/or district of the United States of America where authorization is
required by insurance regulatory authorities.
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B. In the event of the failure of a Reinsurer to pay any amount claimed to
be due under this Contract, the Reinsurer, at the request of the
Company, shall submit to the jurisdiction of any court of competent
jurisdiction within the United States of America and shall comply with
all requirements necessary to give such court jurisdiction; and all
matters arising hereunder shall be determined in accordance with the
law and practice of such court. Nothing in this clause 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 of America, 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 of America or of any state
in the United States of America.
C. Service of process in such suit may be made upon Messrs. Mendes and
Mount, βββ βββββββ ββββββ, βββ ββββ, βββ ββββ βββββ-ββββ
(hereinafter, "agent for service of process"), and in any suit
instituted against the Reinsurer upon this Contract, the Reinsurer
shall abide by the final decision of such court or of any appellate
court in the event of an appeal.
The above named are authorized and directed to accept service of
process on behalf of the Reinsurer in any such suit and/or upon the
request of the Company to give a written undertaking to the Company
that the agent for service of process shall enter a general appearance
on behalf of the Reinsurer in the event such a suit shall be
instituted.
Further, pursuant to any statute of any state, territory or district of
the United States of America that makes provision therefor, the
Reinsurer hereby designates 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 and hereby
designates the agent for service of process as the firm to whom the
said officer is authorized to mail such process or a true copy thereof.
ARTICLE 30
ENTIRE CONTRACT
This Contract embodies the entire agreement and understanding between the
Company and the Reinsurer relating to the subject matter hereof during the term
of this Contract. Unless otherwise specifically provided herein, this Contract
may be amended, modified or waived only by an instrument in writing signed by
the Company and each subscribing reinsurer that is affected by such amendment,
modification or waiver.
22 of 31
ARTICLE 31
SEVERABILITY
If any law or regulation of the Federal, state or local government of the United
States of America or the rulings of officials having supervision over insurance
companies should render the undertaking of this Contract illegal within the
jurisdiction of such authority, the Company may upon written notice to the
Reinsurer suspend, abrogate or amend this Contract insofar as it relates to such
jurisdiction, to the extent necessary to comply with such law, regulation or
ruling. Such suspension, abrogation or amendment of a portion of this Contract
will in no way affect any other portion thereof.
ARTICLE 32
INTERMEDIARY
βββ βββββββββ & Company, Inc., is hereby recognized as the Intermediary
negotiating this Contract for all business hereunder. All communications
(including notices, statements, premiums, return premiums, commissions, taxes,
Losses, Loss Adjustment Expense, salvages, and loss settlements) relating
thereto shall be transmitted to the Company or the Reinsurer through βββ
βββββββββ & Company, Inc., ββββ βββββββββ βββββ, βββββ βββ, βββββββββββ,
βββββββββ βββββ. Payments by the Company to the Intermediary shall be deemed
payment to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be
deemed payment to the Company only to the extent that such payments are actually
received by the Company.
ARTICLE 33
MODE OF EXECUTION
A. This Contract may be executed by:
1. An original written ink signature of paper documents.
2. An exchange of facsimile copies showing the original written
ink signature of paper documents.
3. Electronic signature technology employing computer software
and a digital signature or digitizer pen pad to capture a
person's handwritten signature in such a manner that the
signature is unique to the person signing, is under the sole
control of the person signing, is capable of verification to
authenticate the signature and is linked to the document
signed in such a manner that if the data is changed, such
signature is invalidated.
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B. The use of any one or a combination of these methods of execution shall
constitute a legally binding and valid signing of this Contract. This
Contract may be executed in one or more counterparts, each of which,
when duly executed, shall be deemed an original.
IN WITNESS WHEREOF, THE COMPANY HAS CAUSED THIS CONTRACT TO BE EXECUTED BY ITS
DULY AUTHORIZED REPRESENTATIVE(S) THIS 27TH DAY OF SEPTEMBER, 2002.
THE DIRECT GENERAL GROUP
NASHVILLE, TENNESSEE, INCLUDING
DIRECT INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
AND
DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
THE DIRECT GENERAL GROUP
/s/ J. ββββ ββββββ
--------------------------------------------------------------------------------
J. ββββ ββββββ
Vice President - Finance & Treasurer
Direct Insurance Company
Direct General Insurance Company
Direct General Insurance Company of Louisiana
Direct General Insurance Company of Mississippi
24 of 31
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE -
REINSURANCE - U.S.A.
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.
25 of 31
5. It is understood and agreed that this clause shall not extend to risks
using radioactive isotopes in any form where the nuclear exposure is
not considered by the Reassured to be the primary hazard.
6. The term "special nuclear material" shall have the meaning given it in
the Atomic Energy Act of 1954 or by any law amendatory thereof.
7. Reassured to be sole judge of what constitutes:
(a) substantial quantities, and
(b) the extent of installation, plant or site.
Note: Without in any way restricting the operation of paragraph (1) hereof, it
is understood and agreed that:
(a) all policies issued by the Reassured on or before 31st
December 1957 shall be free from the application of the other
provisions of this Clause until expiry date or 31st December
1960 whichever first occurs whereupon all the 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.
12/12/57
NMA 1119
--------------------------------------------------------------------------------
NOTES: Wherever used herein the terms:
"Reassured" shall be understood to mean "Company", "Reinsured",
"Reassured" or whatever other term is used in the attached
reinsurance document to designate the reinsured company or
companies.
"Agreement" shall be understood to mean "Agreement", "Contract",
"Policy" or whatever other term is used to designate the
attached reinsurance document.
"Reinsurers" shall be understood to mean "Reinsurers", "Underwriters"
or whatever other term is used in the attached reinsurance
document to designate the reinsurer or reinsurers.
26 of 31
NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - U.S.A.
(1) This reinsurance does not cover any loss or liability accruing to the
Reassured as a member of; or subscriber to, any association of insurers
or reinsurers formed for the purpose of covering nuclear energy risks
or as a direct or indirect reinsurer of any such member, subscriber or
association.
(2) Without in any way restricting the operation of paragraph (1) of this
Clause it is understood and agreed that for all purposes of this
reinsurance all the original policies of the Reassured (new, renewal
and replacement) of the classes specified in Clause II of this
paragraph (2) from the time specified in Clause III in this paragraph
(2) shall be deemed to include the following provision (specified as
the Limited Exclusion Provision):
LIMITED EXCLUSION PROVISION.*
I. It is agreed that the policy does not apply under any
liability coverage, to
injury, sickness, disease, death or destruction
bodily injury or property damage
with respect to which an insured under the policy is also an
insured under a nuclear energy liability policy issued by
Nuclear Energy Liability Insurance Association, Mutual Atomic
Energy Liability Underwriters or Nuclear Insurance Association
of Canada, or would be an insured under any such policy but
for its termination upon exhaustion of its limit of liability.
II. Family Automobile Policies (liability only), Special
Automobile Policies (private passenger automobiles, liability
only), Farmers Comprehensive Personal Liability Policies
(liability only), Comprehensive Personal Liability Policies
(liability only) or policies of a similar nature; and the
liability portion of combination forms related to the four
classes of policies stated above, such as the Comprehensive
Dwelling Policy and the applicable types of Homeowners
Policies.
III. The inception dates and thereafter of all original policies as
described in II above, whether new, renewal or replacement,
being policies which either:
(a) become effective on or after 1st May, 1960, or
(b) become effective before that date and contain the
Limited Exclusion Provision set out above;
provided this paragraph (2) shall not be applicable to Family
Automobile Policies, Special Automobile Policies, or policies
or combination policies of a similar nature, issued by the
Reassured on New York risks, until 90 days following approval
of the
27 of 31
Limited Exclusion Provision by the Governmental Authority
having jurisdiction thereof.
(3) Except for those classes of policies specified in Clause II of
paragraph (2) and without in any way restricting the operation of
paragraph (1) of this Clause, it is understood and agreed that for all
purposes of this reinsurance the original liability policies of the
Reassured (new, renewal and replacement) affording the following
coverages:
Owners, Landlords and Tenants Liability, Contractual
Liability, Elevator Liability, Owners or Contractors
(including railroad) Protective Liability, Manufacturers and
Contractors Liability, Product Liability, Professional and
Malpractice Liability, Storekeepers Liability, Garage
Liability, Automobile Liability (including Massachusetts Motor
Vehicle or Garage Liability)
shall be deemed to include, with respect to such coverages, from the
time specified in Clause V of this paragraph (3), the following
provision (specified as the Broad Exclusion Provision):
BROAD EXCLUSION PROVISION.*
It is agreed that the policy does not apply:
I. Under any Liability Coverage, to
injury, sickness, disease, death or destruction
bodily injury or property damage
(a) with respect to which an insured under the policy is
also an insured under a nuclear energy liability
policy issued by Nuclear Energy Liability Insurance
Association, Mutual Atomic Energy Liability
Underwriters or Nuclear Insurance Association of
Canada, or would be an insured under any such policy
but for its termination upon exhaustion of its limit
of liability; or
(b) resulting from the hazardous properties of nuclear
material and with respect to which (1) any person or
organization is required to maintain financial
protection pursuant to the Atomic Energy Act of 1
954, or any law amendatory thereof, or (2) the
insured is, or had this policy not been issued would
be, entitled to indemnity from the United States of
America, or any agency thereof, under any agreement
entered into by the United States of America, or any
agency thereof, with any person or organization.
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II. Under any Medical Payments Coverage, or under any
Supplementary Payments Provision relating to
immediate medical or surgical relief
first aid,
to expenses incurred with respect to
bodily injury, sickness, disease or death
bodily injury
resulting from the hazardous properties of nuclear material
and arising out of the operation of a nuclear facility by any
person or organization.
III. Under any Liability Coverage, to
injury, sickness, disease, death or destruction
bodily injury or property damage
resulting from the hazardous properties of nuclear material,
if
(a) the nuclear material (1) is at any nuclear facility
owned by, or operated by or on behalf of, an insured
or (2) has been discharged or dispersed therefrom;
(b) the nuclear material is contained in spent fuel or
waste at any time possessed, handled, used,
processed, stored, transported or disposed of by or
on behalf of an insured; or
(c) the
injury, sickness, disease, death or destruction
bodily injury or property damage
arises out of the furnishing by an insured of services,
materials, parts or equipment in connection with the planning,
construction, maintenance, operation or use of any nuclear
facility, but if such facility is located within the United
States of America, its territories or possessions or Canada,
this exclusion (c) applies only to
injury to or destruction of property at such nuclear
facility.
property damage to such nuclear facility and any property
thereat.
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IV. As used in this endorsement:
"HAZARDOUS PROPERTIES" include radioactive, toxic or explosive
properties; "NUCLEAR MATERIAL" means source material, special
nuclear material or byproduct material; "SOURCE MATERIAL",
"SPECIAL NUCLEAR MATERIAL", and "BYPRODUCT MATERIAL" have the
meanings given them in the Atomic Energy Act of 1 954 or in
any law amendatory thereof; "SPENT FUEL" means any fuel
element or fuel component, solid or liquid, which has been
used or exposed to radiation in a nuclear reactor; "WASTE"
means any waste material (1) containing byproduct material
other than the tailings or wastes produced by the extraction
or concentration of uranium or thorium from any ore processed
primarily for its source material content and (2) resulting
from the operation by any person or organization of any
nuclear facility included under the first two paragraphs of
the definition of nuclear facility; "NUCLEAR FACILITY" means
(a) any nuclear reactor,
(b) any equipment or device designed or used for (1)
separating the isotopes of uranium or plutonium, (2)
processing or utilizing spent fuel, or (3) handling,
processing or packaging waste,
(c) any equipment or device used for the processing,
fabricating or alloying of special nuclear material
if at any time the total amount of such material in
the custody of the insured at the premises where such
equipment or device is located consists of or
contains more than 25 grams of plutonium or uranium
233 or any combination thereof, or more than 250
grams of uranium 235,
(d) any structure, basin, excavation, premises or place
prepared or used for the storage or disposal of
waste,
and includes the site on which any of the foregoing is
located, all operations conducted on such site and all
premises used for such operations; "nuclear reactor" means any
apparatus designed or used to sustain nuclear fission in a
self-supporting chain reaction or to contain a ββββββββ ββββ
of fissionable material;
With respect to injury to or destruction of property, the word
"injury" or "destruction" includes all forms of radioactive
contamination of property, "property damage" includes all
forms of radioactive contamination of property.
V. The inception dates and thereafter of all original policies
affording coverages specified in this paragraph (3), whether
new, renewal or replacement, being policies which become
effective on or after 1st May, 1960, provided this paragraph
(3) shall not be applicable to:
(i) Garage and Automobile Policies issued by the
Reassured on New York risks, or
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(ii) statutory liability insurance required under Chapter
90, General Laws of Massachusetts,
until 90 days following approval of the Broad Exclusion
Provision by the Governmental Authority having jurisdiction
thereof.
(4) Without in any way restricting the operation of paragraph (1) of this
Clause, it is understood and agreed that paragraphs (2) and (3) above
are not applicable to original liability policies of the Reassured in
Canada and that with respect to such policies this Clause shall be
deemed to include the Nuclear Energy Liability Exclusion Provisions
adopted by the Canadian Underwriters' Association or the Independent
Insurance Conference of Canada.
--------------------------------------------------------------------------------
*NOTE THE WORDS PRINTED IN ITALICS IN THE LIMITED EXCLUSION PROVISION AND IN THE
BROAD EXCLUSION PROVISION SHALL APPLY ONLY IN RELATION TO ORIGINAL LIABILITY
POLICIES WHICH INCLUDE A LIMITED EXCLUSION PROVISION OR A BROAD EXCLUSION
PROVISION CONTAINING THOSE WORDS.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NOTES: Wherever used herein the terms:
"Reassured" shall be understood to mean "Company",
"Reinsured", "Reassured" or whatever other term
is used in the attached reinsurance document to
designate the reinsured company or companies.
"Agreement" shall be understood to mean "Agreement",
"Contract", "Policy" or whatever other term is
used to designate the attached reinsurance
document.
"Reinsurers" shall be understood to mean "Reinsurers",
"Underwriters" or whatever other term is used in
the attached reinsurance document to designate
the reinsurer or reinsurers.
21/9/67
NMA 1590 (amended).
31 of 31
INTERESTS AND LIABILITIES AGREEMENT
(the "Agreement")
of the
AXA CORPORATE SOLUTIONS REASSURANCE PARIS
(the "Subscribing Reinsurer")
as respects the
TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
QUOTA SHARE REINSURANCE CONTRACT
(the "Contract")
issued to and executed by
THE DIRECT GENERAL GROUP
NASHVILLE, TENNESSEE, INCLUDING
DIRECT INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
and
DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
THE DIRECT GENERAL GROUP
(individually and collectively the "Company")
The Subscribing Reinsurer agrees that its share in the interests and liabilities
of the "Reinsurers" as set forth in the Contract attached hereto shall be for
12.50%.
The share of the Subscribing Reinsurer in the interests and liabilities of the
Reinsurers in respect of said Contract shall be separate and apart from the
shares of such other subscribing reinsurers, if any, in respect of said
Contract. The interests and liabilities of the Subscribing Reinsurer shall not
be joint with those of such other subscribing reinsurers, and in no event shall
the Subscribing Reinsurer participate in the interests and liabilities of such
other subscribing reinsurers.
This Agreement shall be effective at 12:01 a.m., Central Standard Time, January
1, 2002, subject to the termination provisions of the Commencement and
Termination Article of the Contract.
1 of 2
IN WITNESS WHEREOF, the Subscribing Reinsurer has caused this Agreement to be
executed by its duly authorized representative as follows:
on this 27th day of September, in the year of 2002.
AXA CORPORATE SOLUTIONS REASSURANCE PARIS
/s/ βββββββ βββββββββββ
--------------------------------------------------------------------------------
AXA CS Reassurance Paris will not waive the Premium Cap, notwithstanding the
provisions of Article 9.
Market Reference Number: dref: 210723
THE DIRECT GENERAL GROUP
NASHVILLE, TENNESSEE, INCLUDING
DIRECT INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
AND
DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
THE DIRECT GENERAL GROUP
TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
QUOTA SHARE REINSURANCE CONTRACT
2 of 2
INTERESTS AND LIABILITIES AGREEMENT
(the "Agreement")
of the
DORINCO REINSURANCE COMPANY
(the "Subscribing Reinsurer")
as respects the
TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
QUOTA SHARE REINSURANCE CONTRACT
(the "Contract")
issued to and executed by
THE DIRECT GENERAL GROUP
NASHVILLE, TENNESSEE, INCLUDING
DIRECT INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
AND
DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
THE DIRECT GENERAL GROUP
(the "Company")
The Subscribing Reinsurer agrees that its share in the interests and liabilities
of the "Reinsurers" as set forth in the Contract attached hereto shall be for
10.00%.
The share of the Subscribing Reinsurer in the interests and liabilities of the
Reinsurers in respect of said Contract shall be separate and apart from the
shares of such other subscribing reinsurers, if any, in respect of said
Contract. The interests and liabilities of the Subscribing Reinsurer shall not
be joint with those of such other subscribing reinsurers, and in no event shall
the Subscribing Reinsurer participate in the interests and liabilities of such
other subscribing reinsurers.
This Agreement shall be effective for the period commencing at 12:01 a.m.,
Central Standard Time, January 1, 2002, subject to the termination provisions of
the Commencement and Termination Article of the Contract.
1 of 2
IN WITNESS WHEREOF, the Subscribing Reinsurer has caused this Agreement to be
executed by its duly authorized representative as follows:
on this 27th day of September, in the year of 2002.
DORINCO REINSURANCE COMPANY
/s/ βββββββ β'ββββββ
--------------------------------------------------------------------------------
Market Reference Number: TA 33586
THE DIRECT GENERAL GROUP
NASHVILLE, TENNESSEE, INCLUDING
DIRECT INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
AND
DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
THE DIRECT GENERAL GROUP
TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
QUOTA SHARE REINSURANCE CONTRACT
2 of 2
INTERESTS AND LIABILITIES AGREEMENT
(the "Agreement")
of the
FOLKSAMERICA REINSURANCE COMPANY
(the "Subscribing Reinsurer")
as respects the
TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
QUOTA SHARE REINSURANCE CONTRACT
(the "Contract")
issued to and executed by
THE DIRECT GENERAL GROUP
NASHVILLE, TENNESSEE, INCLUDING
DIRECT INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
and
DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
THE DIRECT GENERAL GROUP
(the "Company")
The Subscribing Reinsurer agrees that its share in the interests and liabilities
of the "Reinsurers" as set forth in the Contract attached hereto shall be for
10.00%.
The share of the Subscribing Reinsurer in the interests and liabilities of the
Reinsurers in respect of said Contract shall be separate and apart from the
shares of such other subscribing reinsurers, if any, in respect of said
Contract. The interests and liabilities of the Subscribing Reinsurer shall not
be joint with those of such other subscribing reinsurers, and in no event shall
the Subscribing Reinsurer participate in the interests and liabilities of such
other subscribing reinsurers.
This Agreement shall be effective for the period commencing at 12:01 a.m.,
Central Standard Time, January 1, 2002, subject to the termination provisions of
the Commencement and Termination Article of the Contract.
1 of 2
IN WITNESS WHEREOF, the Subscribing Reinsurer has caused this Agreement to be
executed by its duly authorized representative as follows:
on this 27th day of September, in the year of 2002.
FOLKSAMERICA REINSURANCE COMPANY
/s/ βββββ β. ββββββ
--------------------------------------------------------------------------------
Market Reference Number: dref: 210723
THE DIRECT GENERAL GROUP
NASHVILLE, TENNESSEE, INCLUDING
DIRECT INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
AND
DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
THE DIRECT GENERAL GROUP
TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
QUOTA SHARE REINSURANCE CONTRACT
2 of 2
INTERESTS AND LIABILITIES AGREEMENT
(the "Agreement")
of the
OVERSEAS PARTNER US REINSURANCE COMPANY
(the "Subscribing Reinsurer")
as respects the
TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
QUOTA SHARE REINSURANCE CONTRACT
(the "Contract")
issued to and executed by
THE DIRECT GENERAL GROUP
NASHVILLE, TENNESSEE, INCLUDING
DIRECT INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
and
DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
THE DIRECT GENERAL GROUP
(individually and collectively the "Company")
The Subscribing Reinsurer agrees that its share in the interests and liabilities
of the "Reinsurers" as set forth in the Contract attached hereto shall be for
40.0%.
The share of the Subscribing Reinsurer in the interests and liabilities of the
Reinsurers in respect of said Contract shall be separate and apart from the
shares of such other subscribing reinsurers, if any, in respect of said
Contract. The interests and liabilities of the Subscribing Reinsurer shall not
be joint with those of such other subscribing reinsurers, and in no event shall
the Subscribing Reinsurer participate in the interests and liabilities of such
other subscribing reinsurers.
1 of 3
The following shall apply to the Subscribing Reinsurer's share in the attached
Contract in lieu of paragraph B of Article 9 - Premium Cap - of the Contract:
B. If any Premium Cap is exceeded, or is projected by the Company to be
exceeded, during the Contract Year, the Reinsurer shall have the right
to waive the Premium Cap, or to invoke either of the following options
within 60 days of the receipt by the Reinsurer of the monthly report
indicating that a Premium Cap has been exceeded:
1. Reduce the quota share percentage under this Contract and the
Companion Contract, as respects the business for which the
Premium Cap is exceeded, to the proportion that 25% of the
Premium Cap bears to the total Gross Net Written Premium under
this Contract and the Companion Contract in the state(s) to
which the Premium Cap applies; or
2. As respects Policies issued in the state(s) in which the
Premium Cap is exceeded, exclude from cession under this
Contract and the Companion Contract all such Policies issued
after the Premium Cap is reached (as estimated after returns
and cancellations).
Failure by the Reinsurer to make an election within 60 days as
indicated above will constitute waiver of the specific Premium Cap upon
which the Reinsurer has received notice.
This Agreement shall be effective at 12:01 a.m., Central Standard Time, January
1, 2002, subject to the termination provisions of the Commencement and
Termination Article of the Contract.
2 of 3
IN WITNESS WHEREOF, the Subscribing Reinsurer has caused this Agreement to be
executed by its duly authorized representative as follows:
on this 27th day of September, in the year of 2002.
OVERSEAS PARTNER US REINSURANCE COMPANY
/s/ βββββββ β. ββββββ
--------------------------------------------------------------------------------
Market Reference Number:
THE DIRECT GENERAL GROUP
NASHVILLE, TENNESSEE, INCLUDING
DIRECT INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
AND
DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
THE DIRECT GENERAL GROUP
TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
QUOTA SHARE REINSURANCE CONTRACT
3 of 3
INTERESTS AND LIABILITIES AGREEMENT
(the "Agreement")
of the
SCOR REINSURANCE COMPANY
(the "Subscribing Reinsurer")
as respects the
TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
QUOTA SHARE REINSURANCE CONTRACT
(the "Contract")
issued to and executed by
THE DIRECT GENERAL GROUP
NASHVILLE, TENNESSEE, INCLUDING
DIRECT INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
and
DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
THE DIRECT GENERAL GROUP
(the "Company")
The Subscribing Reinsurer agrees that its share in the interests and liabilities
of the "Reinsurers" as set forth in the Contract attached hereto shall be for
27.50%.
The share of the Subscribing Reinsurer in the interests and liabilities of the
Reinsurers in respect of said Contract shall be separate and apart from the
shares of such other subscribing reinsurers, if any, in respect of said
Contract. The interests and liabilities of the Subscribing Reinsurer shall not
be joint with those of such other subscribing reinsurers, and in no event shall
the Subscribing Reinsurer participate in the interests and liabilities of such
other subscribing reinsurers.
This Agreement shall be effective for the period commencing at 12:01 a.m.,
Central Standard Time, January 1, 2002, subject to the termination provisions of
the Commencement and Termination Article of the Contract.
1 of 2
IN WITNESS WHEREOF, the Subscribing Reinsurer has caused this Agreement to be
executed by its duly authorized representative as follows:
on this 27th day of September, in the year of 2002.
SCOR REINSURANCE COMPANY
/s/ ββββββββ βββββββββ
--------------------------------------------------------------------------------
Assistant Secretary
Market Reference Number: TOO 7598
THE DIRECT GENERAL GROUP
NASHVILLE, TENNESSEE, INCLUDING
DIRECT INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY
DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
AND
DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
THE DIRECT GENERAL GROUP
TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
QUOTA SHARE REINSURANCE CONTRACT
2 of 2