Exhibit 10(h)
INSURANCE POOLING AGREEMENT
BETWEEN
ALFA MUTUAL INSURANCE
COMPANY
AND
ALFA MUTUAL FIRE INSURANCE
COMPANY
ALFA MUTUAL GENERAL INSURANCE
COMPANY
ALFA INSURANCE
CORPORATION
ALFA GENERAL INSURANCE
CORPORATION
ALFA SPECIALTY INSURANCE
CORPORATION
ALFA VISION INSURANCE
CORPORATION
AMENDED AND
RESTATED
EFFECTIVE JANUARY 1,
2006
AMENDED AND
RESTATED
INSURANCE POOLING
AGREEMENT
This Agreement is made by and
between Alfa Mutual Insurance Company and certain of its associated
companies signatory hereto by means of exhibits setting forth the
interests and liabilities of the parties, attached hereto and made
a part of this Agreement. Alfa Mutual Insurance Company is
hereinafter referred to as “AMI”, and the remaining
parties hereto are hereinafter referred to as the “Associate
Companies” or as the “Associate Company,” as the
context requires.
The purposes of the Pooling
Agreement dated as of September 26, 1994, and as previously
amended and restated through that certain Ninth Amendment to
Insurance Pooling Agreement Effective as of January 1, 2004,
and as further hereby amended and restated, shall be to effectuate
a more efficient and economical method of operation for all
participants hereto; to increase the solvency protection for
policyholders and shareholders by increasing available surplus to
draw on in the event of a large catastrophe; to increase geographic
diversification, geographic expansion and risk selection; to
increase access to external capital through the public equity,
private equity and debt markets; to assist in the attraction,
motivation and retention of employees; to increase accountability
of directors, officers and employees; to spread and stabilize the
writings of each participating company by providing for common risk
sharing for underwriting operations and to accomplish other
operational and financial goals that are deemed reasonable and
desirable or are required by law.
AMI and each Associate Company
signatory to the Pooling Agreement agree to honor the terms set
forth herein as if this Agreement were solely between AMI and each
such Associate Company. Balances payable to or recoverable from AMI
and any such Associate Company shall not serve to offset any
balances payable to or recoverable from any other Associate Company
signatory to this Agreement. Reports and remittances between AMI
and each Associate Company shall be in sufficient detail to
identify the individual premium and loss obligation of each party
to the other. The Associate Companies each hereby ratify, confirm
and agree to all the terms and provisions of the Pooling Agreement,
except as may be modified by this Agreement.
In consideration of their mutual
agreements hereinafter set forth, the parties hereto agree as
follows:
PART I
1. Definitions
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1.1
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The
“opening of business” as used herein means 12:01 a.m.,
January 1, 2005, or the time stated as the opening of business
set forth on Exhibit I.
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1.2
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The “book
of business then in force” as used herein means the net
unearned premium liability of the ceding company, namely, the
direct liability of the ceding company as evidenced by all
outstanding policies of
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insurance naming the ceding company
as insurer, (and including the reinsurance obligations of:
(i) Alfa Mutual Fire Insurance Company resulting from the
Quota Share Reinsurance Treaty with Virginia Mutual Insurance
Company, (ii) Alfa Mutual Fire Insurance Company resulting
from the Intercompany Fire Reinsurance Arrangement with AMI, and
(iii) Alfa Vision Insurance Corporation resulting from
arrangement with the Texas State and County Mutual Fire Company,
and including any and all participation in pools and associations
relative to such business as required by the insurance regulatory
authorities, but excluding any other policies of reinsurance
assumed.
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1.3
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The word
“net” as used herein shall mean net after giving effect
to ceded reinsurance transactions, now in effect and those
hereinafter identified in an Exhibit attached to this Agreement,
with other insurers or reinsurers who are not a party to this
Agreement (and including the intercompany reinsurance between AMI
and Alfa Mutual Fire Insurance Company, the Quota Share Reinsurance
Treaty with VMI, and the Texas State and County Mutual Fire
Company, each as described in Section 1.3(i), (ii) and
(iii), directly above), and including any and all participation in
pools and association relative to such business as required by
insurance regulatory authorities.
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1.4
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“Premiums” as used herein shall
include direct premiums written by each insurer including any
premium finance fees applicable to such premiums, including
reinsurance premiums assumed from State and County Mutual Fire
Insurance Company in the State of Texas by Alfa Vision Insurance
Corporation but excluding any reinsurance premiums assumed from
other unassociated third party insurance companies.
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1.5
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The word
“net expenses” means Loss Expenses incurred and all
Other Underwriting Expenses incurred including all expense items
that reflect Underwriting, as opposed to Investment Income and
Expense, and excluding (i) Dividends to Policyholders,
(ii) Federal and foreign income taxes, (iii) charitable
contributions and all other strictly corporate expenses, and
(iv) expenses applicable to the companies’ reinsurance
assumed operations (except for certain expenses associated with
reinsurance assumed from State and County Mutual Fire Insurance
Company in the State of Texas by Alfa Vision Insurance Corporation
and certain expenses associated with reinsurance assumed from
Virginia Mutual Insurance Company by Alfa Mutual Fire Insurance
Company). All Investment Income and Expenses, including premium tax
credits earned from direct investments in marketable securities,
partnerships, and/or limited liability entities, allocable to
investment operations of the participating companies under
generally recognized insurance accounting principles are not
included and are not subject to this Agreement.
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1.6
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As to each
party the declaration of dividends to policyholders of such party
shall be the decision of such party’s board of directors and
that decision shall be the sole decision of that party’s
board of directors and shall be binding on that party’s
underwriting results only.
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1.7
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A catastrophe
event 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 coverage area of any pool participant to the
extent that said individual losses occurred during any period of
168 consecutive hours arising out of and directly occasioned by the
same event, except that in regard to windstorm, hail, tornado,
hurricane, cyclone, and including ensuing collapse and water
damage, the term catastrophe shall include only those losses
sustained by the company occurring during any period 72 consecutive
hours arising out of and directly occasioned by the same event.
However, the event need not be limited to one state, but must
exceed $1 million in aggregate. If the disaster, accident or loss
event is of greater duration than 72 hours, then the catastrophe
may be divided into two or more “loss occurrences”
provided that the two periods do not overlap. It is further
understood that losses arising from a co
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