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Exhibit 10.6
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 Swiss Reinsurance America
Corporation,
Armonk, New York (hereinafter referred to as "Swiss Re"). The
Company and Swiss
Re are sometimes referred to individually as a "Party" and
collectively as the
"Parties."
WHEREAS, the Company and Swiss 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 Swiss Re assumed a 55.0% share in
the terms and
conditions under the Treaty for the period January 1, 2004 to
December 31, 2004
(the "2004 Contract Year);
WHEREAS, the Company and Swiss 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 $21,403,025.96 which shall be
deemed to equal
55.0% of the balance of the Funds Withheld Account associated with
the 2004
Contract Year. Swiss Re shall retain 55.0% of the Reinsurer's
Expense Allowance
paid under the Treaty (being 55.0% of 3.80% of the 2004 Contract
Year Ceded Net
Written Premium). Such amounts shall be deemed to be fully earned
premium by
Swiss Re. Further, the Company acknowledges that receipt of such
commutation
profit commission constitutes a full and final settlement of all
obligations of
Swiss Re to the Company under the 2004 Contract Year, and that no
further
amounts are or will be owed to the Company by Swiss 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
forever
discharges the other Party, its predecessors, successors, assigns,
affiliates
and subsidiaries, and their past, present and future officers,
directors,
shareholders, employees,
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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, 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 WARRANTIES
Both Parties to this Agreement hereby represent and warrant
that:
1. All judicial,
statutory, regulatory, administrative, and/or ministerial
actions necessary for the e
