Exhibit 10.32
COMMUTATION AND MUTUAL RELEASE AGREEMENT
This COMMUTATION AND MUTUAL RELEASE AGREEMENT (the "AGREEMENT")
made as of and
dated the 21st day of November, 2005 by and among HOUSTON CASUALTY
COMPANY, U.S.
SPECIALTY INSURANCE COMPANY, HCC SPECIALTY INSURANCE COMPANY, HCC
REINSURANCE
COMPANY LIMITED AND HOUSTON CASUALTY COMPANY EUROPE SEGUROS Y
REASEGUROS S.A.
(individually, a "REASSURED" and collectively, the "REASSUREDS")
and QUANTA
REINSURANCE LIMITED (the "REINSURER") (The Reassureds and the
Reinsurer are
collectively herein referred to as "PARTIES").
WHEREAS, the Parties have entered into certain reinsurance
agreements as listed
below whereby the Reinsurer agreed to reinsure the Reassureds
pursuant to the
terms and subject to the conditions of the reinsurance agreements:
Obligatory Quota Share Reinsurance Agreement Reference No:
044073-Section
A, effective for the treaty period January 1, 2004 to January 1,
2005
attached hereto as Exhibit A;
USA D&O Liability Obligatory Quota Share Reinsurance Agreement
Reference
No: 044073-Section B, effective for the treaty period January 1,
2004 to
January 1, 2005 attached hereto as Exhibit B;
Obligatory Quota Share Reinsurance Agreement Reference No: 044093
effective
for the treaty period October 1, 2004 to January 1, 2005 attached
hereto as
Exhibit C; and
Obligatory Quota Share Reinsurance Agreement Reference No: 054073
effective
for the treaty period January 1, 2005 to January 1, 2006 attached
hereto as
Exhibit D
The above listed reinsurance agreements are jointly referred to as
the
"Reinsurance Agreements"; and
WHEREAS, the Parties desire to terminate the Reinsurance Agreements
and fully
and finally settle and commute, by means of the payment referred to
in Article 1
hereof (the "Commutation Payments"), any and all past, present
and/or future
rights, privileges, duties, obligations and liabilities under the
Reinsurance
Agreements, to fully and forever release and discharge one another
with respect
to the Reinsurance Agreements, and to enter into mutual releases
thereto on the
terms set forth in this Agreement; and
WHEREAS, this Agreement is the result of a compromise freely
entered into by the
Parties (following advice from their professional advisors) for
their mutual
benefit, releasing them from their respective obligations under the
Reinsurance
Agreements as set forth in this Agreement; and
WHEREAS, this Agreement shall apply only to the Reassureds and the
Reinsurer
executing this Agreement and as their interests in the Reinsurance
Agreements
are specified thereon.
NOW, THEREFORE, intending to be legally bound, in consideration of
the
covenants, promises, agreements, assumptions, releases,
representations and
warranties set forth herein and the payments to be made hereunder
and other good
and valuable consideration recited as set forth herein, the Parties
agree as
follows:
ARTICLE 1. PAYMENT & TERMINATION OF COLLATERAL
A.
The Reinsurer shall pay to the Reassureds commutation payments as
calculated on Schedule 1 hereto in the amounts and in the
currencies listed
below (the "Commutation Payments") for 100% of the liabilities of
Reinsurer
under the Reinsurance Agreements by wire transfer to the accounts
detailed
below in Article 1B in full without set off or counterclaim and
clear of
any deductions not later than Monday, November 28, 2005:
1
CONTRACT
USD
GBP
EUR
CAD
--------
----------------
---------------
---------------
------------
US 044073-Section B
USD11,946,758.26
-0-
-0-
-0-
US 054073-Section A
USD 3,363,879.02
-0-
-0-
-0-
Int'l 044073-Section A
USD 2,309,738.23
GBP
680,764.43
EUR1,259,140.91
CAD37,840.69
Int'l 054073-Section B
USD
469,102.23
GBP1,543,486.89
EUR
522,150.46
-0-
Int'l 044073
USD 2,454,295.02
GBP
794,008.28
EUR1,120,629.03
CAD56,761.03
----------------
---------------
---------------
------------
Total
USD20,543,772.76
GBP3,018,259.60
EUR2,901,920.40
CAD94,601.72
----------------
---------------
---------------
------------
B.
Payments in USD and CAD to be wired to:
Wells Fargo Bank
Account Number: 4159-734433
ABA Number: 121000248
For Benefit of: HCC Insurance Holdings, Inc.
Payments in GBP to be wired to:
Natwest Bank
Account Number: 36298131
Swift code: NWBKGB2L
Sort code: 60-00-01
For Benefit of: HCC Insurance Holdings, Inc
Payments in EUR to be wired to:
Natwest Bank
Account Number: 42023106
Swift code: NWBKGB2L
Sort code: 60-00-01
For Benefit of: HCC insurance Holdings, Inc.
C.
The Reassureds shall accept the Commutation Payments set forth in
Article
1A herein, which each party agrees shall serve as full and final
settlement
of any and all amounts claimed heretofore or hereinafter to be due
by
either party to the other party, arising under, in respect of or in
any way
related to the Reinsurance Agreements.
D.
Upon receipt of the Commutation Payments, the Reassureds will
release the
amount equal under each of the Letters of Credit as Scheduled
below:
LOC BALANCE
AMOUNT TO
AMOUNT TO
BENEFICIARY
BANK
LOC NUMBER
@ 11/18/05
BE RETAINED
BE RELEASED
-----------
---------
-----------
-----------
-----------
-----------
HC
JP Morgan
U-612395
6,592,609
4,030,697
2,561,912
HC
JP Morgan
U-612397
1,171,253
-0-
1,171,253
HC
JP Morgan
U-619969
7,057,077
-0-
7,057,077
HC
JP Morgan
U-249982
1,111,895
-0-
1,111,895
HC
JP Morgan
TUTS-644937
2,009,003
-0-
2,009,003
HC
JP Morgan
TUTS-644934
331,800
-0-
331,800
USSIC
JP Morgan
U-612396
706,610
-0-
706,610
USSIC
JP Morgan
U-619970
3,159,612
-0-
3,159,612
USSIC
JP Morgan
U-250140
2,884,181
1,000,000
1,884,181
The Reinsurer and Reassureds agree that the amounts to be retained
reflected in the Schedule above shall remain outstanding under
letters of
credit as security for agreements of reinsurance between the
Parties other
than the Reinsurance Agreements that are the subject of this
Commutation
and Mutual Release Agreement.
2
ARTICLE 2. MUTUAL RELEASE
A.
Simultaneous with payment of the Commutation Payments by the
Reinsurer to
the Reassureds and the release of amounts under the Letters of
Credit by
the Reassureds to the Reinsurer, the Reinsurer on behalf of itself
and its
predecessors, successors, assigns, and their past, present and
future
officers, directors, shareholders, employees, agents, receivers,
trustees,
attorneys, and legal representatives hereby releases, acquits, and
forever
discharges the Reassureds, its predecessors, successors, assigns,
and their
past, present, and future officers, directors, shareholders,
employees,
agents, receivers, trustees, attorneys, and legal representatives
from any
and all claims, 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 Reinsurance Agreements and any applicable
letters of
credit, trust, or other collateral, 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, and whether currently
existing or
arising in the future.
B.
Simultaneous with payment of the Commutation Payments by the
Reinsurer to
the Reassureds and the release of amounts under the Letters of
Credit by
the Reassureds to the Reinsurer, the Reassureds on behalf of
themselves and
their predecessors, successors, assigns, and their past, present,
and
future officers, directors, shareholders, employees, agents,
receivers,
trustees, attorneys, and legal representatives, hereby releases,
acquits,
and forever discharges the Reinsurer, its predecessors, successors,
assigns, and their past, present, and future officers, directors,
shareholders, employees, agents, receivers, trustees, attorneys,
and legal
representatives, from any and all claims, debts, demands, causes of
action,
liabilities, obligations, costs, disbursements, fees, attorneys'
fees,
expenses
