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Exhibit 10.5
REINSURANCE COMMUTATION AND RELEASE AGREEMENT
This Reinsurance Commutation and Release Agreement (hereinafter
referred to as
the "Agreement"), is entered into by and between Philadelphia
Insurance Company,
Philadelphia Indemnity Insurance Company, both of Bala Cynwyd,
Pennsylvania, and
any and all other companies which are now or may hereafter become
member
companies of Philadelphia Consolidated Holding Corporation
(hereinafter referred
to collectively as the "Company") and Federal Insurance Company,
Warren, New
Jersey, through Chubb Re, Inc., Bernardsville, New Jersey, and
Harbor Point
Services, Inc. on behalf of Federal Insurance Company (hereinafter
referred to
as "Chubb Re"). The Company and Chubb Re are sometimes referred to
individually
as a "Party" and collectively as the "Parties."
WHEREAS, the Company and Chubb Re entered into the Whole Account
Net Quota Share
Reinsurance Contract, effective April 1, 2003 and Addendum No. 1
thereto,
effective January 1, 2004 (hereinafter referred to collectively as
the
"Treaty");
WHEREAS, the Company ceded and Chubb Re assumed a 45.0% share in
the terms and
conditions under the Treaty for the period January 1, 2004 through
December 31,
2004 (the "2004 Contract Year");
WHEREAS, the Company and Chubb Re have agreed to cancel and commute
the 2004
Contract Year as of January 1, 2006, fully and finally settle,
commute and
discharge any and all of their respective obligations and
liabilities under the
2004 Contract Year, and enter into mutual releases relating
thereto;
NOW THEREFORE, in consideration of the covenants, assumptions,
promises,
payments, agreements and other good and valuable consideration
recited as set
forth herein, the sufficiency of which is acknowledged, the Parties
agree to the
following:
ARTICLE I - CONSIDERATION
In consideration for commuting the 2004 Contract Year, the Company
shall receive
a commutation profit commission of $17,511,566.70 which shall be
deemed to equal
45.0% of the balance of the Funds Withheld Account associated with
the 2004
Contract Year under the provisions of the Treaty. Chubb Re shall
retain 45.0% of
the Reinsurer's Expense Allowance paid under the 2004 Contract Year
(being 45.0%
of 3.80% of the 2004 Contract Year Ceded Net Written Premium). Such
amounts
shall be deemed to be fully earned by Chubb Re. Further, the
Company
acknowledges that receipt of such commutation profit commission
constitutes a
full and final settlement of all obligations of Chubb Re to the
Company under
the 2004 Contract Year, and that no further amounts are or will be
owed to the
Company by Chubb Re for the 2004 Contract Year.
ARTICLE II - MUTUAL RELEASE
Each Party hereto, on behalf of itself and its predecessors,
successors,
assigns, affiliates and subsidiaries, and their past, present and
future
officers, directors, shareholders, employees, agents, receivers,
trustees,
attorneys, and legal representatives hereby releases, acquits,
and
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forever discharges the other Party, its predecessors, successors,
assigns,
affiliates and subsidiaries, and their past, present and future
officers,
directors, shareholders, employees, agents, receivers, trustees,
attorneys, and
legal representatives from any and all claims, loss debts, demands,
causes of
action, liabilities, obligations, costs, disbursements, fees,
attorneys' fees,
expenses, damages, and injuries of every kind, nature and
description based on,
relating to, or arising out of the 2004 Contract Year, whether
grounded in law
or in equity, in contract or in tort, including, but not limited
to, any
common-law or statutory claims for fraud and misrepresentation, or
statutory
RICO claims, whether or not now known, suspected, reported, or
claimed whether
fixed or contingent, currently existing or arising in the
future.
ARTICLE III - REPRESENTATIONS AND WAR
