EXHIBIT 10.2
EXCESS OF LOSS RETROCESSION
AGREEMENT
BY AND BETWEEN
PLATINUM UNDERWRITERS REINSURANCE,
INC.
(RETROCEDANT)
and
PLATINUM UNDERWRITERS BERMUDA,
LTD.
(RETROCESSIONAIRE)
DATED AS OF AUGUST 5,
2008
ARTICLE 1
-
BUSINESS COVERED
This Agreement
is to indemnify the Retrocedant in respect of the net excess
liability as a result of any catastrophe loss or losses which may
occur during the term of this Agreement under any original
reinsurance contracts written by the Retrocedant (“Original
Reinsurance Contracts”).
ARTICLE 2
-
COMMENCEMENT AND
TERMINATION
This Agreement
shall take effect and shall apply to all losses occurring during
the period 5 th August 2008 to 4 th August 2009 both days inclusive, Local Standard
Time, at the place where the loss occurs.
If this
Agreement terminates while an occurrence covered hereunder is in
progress, it is agreed that subject to the other conditions of this
Agreement, the Retrocessionaire shall indemnify the Retrocedant as
if the entire loss had occurred during the term of this
Agreement.
The following
Exclusion Clauses are attached to and form part of this
Agreement:
1. Nuclear Energy Risks Exclusion Clause
(Reinsurance) (Worldwide Excluding U.S.A. & Canada) (Japanese
Amendment)
2. Pools, Associations, and Syndicates.
3. War Risk Exlusion Clause.
4. Insolvency Funds Exclusion Clause.
5. Terrorism Clause
6. Any loss or losses resulting from any named
storm (which are Tropical Prediction Center designated named
storms) in existence as of August 5, 2008, including without
limitation Tropical Storm Edouard.
Coverage
applies within the territorial limits of the United States, its
territories and possessions and the Gulf of Mexico.
ARTICLE
5 - LIMIT AND RETENTION
The
Retrocessionaire shall be liable in respect of each and every Loss
Occurrence over and above an initial Ultimate Net Loss of
$30,000,000 each and every loss each and every Loss Occurrence,
subject to a limit of liability to the Retrocessionaire of
$50,000,000 Ultimate Net Loss each and every loss or series of
losses arising out of one Loss Occurrence. Nevertheless,
the limit of liability to Retrocessionaire for all occurrences
arising under this Agreement shall be limited to
$100,000,000.
ARTICLE
6 - REINSTATEMENT
Each loss
hereon reduces the amount of indemnity provided under this
Agreement by the amount paid. Any amount so exhausted
shall be automatically reinstated from the time of the occurrence
of loss and for each amount so reinstated, the Retrocedant agrees
to pay an additional premium calculated at pro rata of the annual
premium as respects the fraction of indemnity exhausted and 100% of
the annual premium regardless of the unexpired term of this
Agreement. Nevertheless, the Retrocessionaire’s
liability shall not exceed $100,000,000 with respect to all Loss
Occurrences during the term of the Agreement.
ARTICLE 7 -
PREMIUM
The premium for
this Agreement shall be a flat premium of $11,000,000 payable in
two equal installments on September 1, 2008 and March 1,
2009.
ARTICLE 8 -
ULTIMATE NET LOSS
Ultimate Net
Loss shall mean the actual loss paid by the Retrocedant, or for
which the Retrocedant becomes liable to pay, such loss to include
100% of any Extra Contractual Obligations and 100% of any Excess of
Policy Limits loss, and expenses of litigation and interest, if
any, and all other loss expenses covered under Original Reinsurance
Contracts, and such expenses of the Retrocedant incurred in the
handling of loss arising out of Original Reinsurance Contracts
including subrogation, salvage and recovery expenses (office
expenses and salaries of officials and employees not classified as
loss adjusters are not chargeable as expenses for purpose of this
paragraph), but salvages and all recoveries, including recoveries
under all reinsurances which inure to the benefit of this agreement
(whether recovered or not), shall be first deducted from such loss
to arrive at the amount of liability attaching
hereunder.
All salvages,
recoveries or payments recovered or received subsequent to loss
settlement hereunder shall be applied as if recovered or received
prior to the aforesaid settlement and all necessary adjustments
shall be made by the parties hereto.
For purposes of
this article, the phrase “becomes liable to pay” shall
mean the existence of a judgment or award, which the Retrocedant
does not intend to appeal or a release has been obtained by the
Retrocedant, or the Retrocedant has accepted a proof of
loss.
Nothing in this
clause shall be construed to mean that losses are not recoverable
hereunder until the Retrocedant’s net loss has been
ascertained.
ARTICLE 9
– LOSS OCCURRENCE
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. However, the duration and extent of any one
“Loss Occurrence” shall be limited to all individual
losses sustained by the Retrocedant 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:
(i) As regards
windstorm, hail, tornado, hurricane, cyclone, including ensuing
collapse and water damage, all individual losses sustained by the
Retrocedant 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.
(ii) As regards riot,
riot attending a strike, civil commotion, vandalism and malicious
mischief, all individual losses sustained by the Retrocedant
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.
(iii) 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 which commence during the period
of 168 consecutive hours may be included in the Retrocedant’s
Loss Occurrence.
(iv) 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.
Except for
those Loss Occurrences referred to in (i) and (ii) above, the
Retrocedant 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 Retrocedant 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.
However, as
respects those Loss Occurrences referred to in (i) and (ii) above,
if the disaster, accident or loss occasioned by the event is of
greater duration than 72 consecutive hours, then the Retrocedant
may divide that disaster, accident or loss into two or more Loss
Occurrences provided 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 Retrocedant
arising out of that disaster, accident or loss.
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
10 - EXTRA CONTRACTUAL
OBLIGATIONS
This Agreement
shall protect the Retrocedant and any original reinsured, within
the limits hereof, where the loss includes any Extra Contractual
Obligations. The term “Extra Contractual
Obligations” is defined as those liabilities not covered
under any other provision of this Agreement and which arise from
the handling of any claim on business covered hereunder, such
liabilities arising because of, but not limited to, the following:
failure by any original reinsured 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
reinsured or in the preparation or prosecution of an appeal
consequent upon such action.
The date on which any Extra
Contractual Obligation is incurred by any original reinsured shall
be deemed, in all circumstances, to be the date of the original
disaster and/or casualty.
However, this Article shall not
apply where the loss has been incurred due (i) solely to the acts,
or failure to act, of the Retrocedant in handling its claims or
(ii) to fraud by a member of the Board of Directors or a corporate
officer of any original reinsured acting individually or
collectively or in collusion with any individual or corporation or
any other organization or party involved in the presentation,
defense or settlement of any claim covered hereunder.
ARTICLE 11 - EXCESS OF ORIGINAL
POLICY LIMITS
This Agreement shall protect the
Retrocedant and any original reinsured, within the limits hereof,
in connection with loss in excess of the limit of its original
policy, such loss in excess of the limit having been incurred
because of failure of the original reinsured 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 reinsured or in the preparation or prosecution of an
appeal consequent upon such action.
However, this Article shall not
apply where the loss has been incurred due (i) solely to the acts,
or failure to act, of the Retrocedant in handling its claims or
(ii) to fraud by a member of the Board of Directors or a corporate
officer of the original reinsured acting individually or
collectively or in collusion with any individual or corporation or
any other organization or party involved in the presentation,
defense or settlement of any claim covered hereunder.
For the purpose of this Article, the
word “loss” shall mean any amounts for which the
original reinsured or Retrocedant would have been contractually
liable to pay had it not been for the limit of the original
policy.
ARTICLE 12 -
NET RETAINED LINES
This Agreement
applies only to that portion of any reinsurance or any Extra
Contractual Obligations or Excess of Original Policy Limits which
the Retrocedant retains net for its own account, and in calculating
the amount of any loss hereunder and also in computing the amount
or amounts in excess of which this Agreement attaches, only loss or
losses in respect of that portion of any reinsurance or any Extra
Contractual Obligations or Excess of Original Policy Limits which
the Retrocedant retains nets for its own account shall be
included.
The amount of
the Retrocessionaire liability hereunder in respect of any loss or
losses shall not be increased by reason of the inability of the
Retrocedant to collect from any other Retrocessionaire, whether
specific or general, any amounts which may have become due from
them, whether such inability arises from the insolvency of such
other Retrocessionaire or otherwise.
ARTICLE 13-
NOTICE OF LOSS AND LOSS SETTLEMENTS
The Retrocedant
shall advise the Retrocessionaire promptly of any Loss Occurrence
which, in the opinion of the Retrocedant may result in a claim
hereunder and of all subsequent developments thereto which, in the
opinion of the Retrocedant may materially affect the position of
the Retrocessionaire.
All loss
settlements made by the Retrocedant, provided they are within the
terms of this Agreement, shall be unconditionally binding upon the
Retrocessionaire who agrees to pay all amounts for which it may be
liable immediately upon being furnished by the Retrocedant with
reasonable evidence of the amount due or to be due. In
addition, the Retrocessionaire agrees to abide by court and/or
arbitration decisions affecting the Retrocedant’s Original
Reinsurance Contracts.
ARTICLE 14 -
ARBITRATION
SECTION 14.01
As a condition precedent to any right of action under this
Agreement, any dispute or difference between the parties hereto
relating to the formation, interpretation, or performance of this
Agreement, or any transaction under this Agreement, whether arising
before or after termination, shall be submitted for decision to a
panel of three arbitrators (the “ Panel” ) at
the offices of Judicial Arbitration and Mediation Services, Inc. in
accordance with the Streamlined Arbitration Rules and Procedures of
Judicial Arbitration and Mediation Services, Inc.
SECTION 14.02
The party demanding arbitration shall do so by written notice
to the responding party. Retrocessionaire hereby
appoints its General Counsel as its agent to receive any
arbitration demand hereunder and Retrocedant hereby appoints its
Chief Financial Officer as its agent to receive any arbitration
demand hereunder. The arbitration demand shall state the
issues to be resolved and shall name the arbitrator appointed by
the demanding party.
SECTION 14.03
Within thirty (30) days of receipt of the demand for
arbitration, the responding party shall notify the demanding party
of any additional issues to be resolved in the arbitration and the
name of the responding party’s appointed
arbitrator. If the responding party refuses or neglects
to appoint an arbitrator within thirty (30) days following receipt
of the written arbitration demand, then the demanding party may
appoint the second arbitrator but only after providing ten (10)
days' written notice of its intention to do so, and only if such
other party has failed to appoint the second arbitrator within such
ten (10) day period.
SECTION 14.04
The two arbitrators shall, before instituting the hearing,
select an impartial arbit
