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EXHIBIT 10.14
UNDERWRITING AGENCY AGREEMENT
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THIS AGREEMENT is made effective December 1,2001 between ALLIED
WORLD ASSURANCE
COMPANY, Ltd, (hereinafter referred to as the "Company") and IPCRe
UNDERWRITING
SERVICES LIMITED (hereinafter referred to as the "Underwriting
Agent").
WHEREAS,
A.
The
Company has been incorporated in Bermuda and is licensed under
The Insurance Act 1978 as a Class 4 Insurer; and
B.
The
Underwriting Agent has been incorporated in Bermuda and is
licensed under The Insurance Act 1978 as an Insurance Agent;
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1.
APPOINTMENT
Subject to the terms and conditions of this Agreement, the
Underwriting Agent is
hereby appointed by the Company to solicit, bind, write and
administer the
business described in Section 2. hereof. The Underwriting Agent
hereby accepts
such appointment and agrees to perform faithfully the duties
thereof to the best
of its professional ability, in accordance with the standard of
care of a
professional insurance underwriter, and with that degree of
knowledge, skill and
judgment which is exercised by it with respect to its own business
and the
business of its parent and insurance and reinsurance affiliates.
The word
"Agreement" herein shall be understood to include any and all
Addenda attached
in accordance with the terms and conditions herein specified.
2.
AUTHORITY OF THE UNDERWRITING AGENT
Subject to compliance with the Underwriting Guidelines (as defined
in Section
2.2) and the IPCRe Co-Insurance Limitations (as defined in Section
2.3), the
Underwriting Agent shall have the power to bind the Company on the
Subject
Business described in Section 2.1 and, except as expressly limited
elsewhere
herein, the Underwriting Agent shall have the authority to do,
outside of the
United States of America (which, for purposes of this Agreement,
shall mean the
50 states and the District of Columbia), all things reasonably
necessary in the
conduct of such business in order to fulfill its obligations under
this
Agreement.
2.1
The business to
be underwritten on behalf of the Company shall be
limited to property catastrophe treaty reinsurance pertaining
to
losses wheresoever arising (the "Subject Business").
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2.2
The Underwriting
Agent may not bind the Company to any Subject
Business unless such Subject Business complies with each of the
following guidelines (the "Underwriting Guidelines"):
A. The annual original premium written (excluding reinstatement
premium) for Subject Business ceded to the Company pursuant to
reinsurance treaties entered into by the Underwriting Agent on
behalf of the Company shall not exceed $60 million, in the
aggregate, without the prior consent of an executive officer of
the
Company;
B. The types of risks that may be included in the Subject
Business
assumed by the Company pursuant to reinsurance treaties entered
into
by the Underwriting Agent on behalf of the Company are limited
to
property catastrophe treaty reinsurance, and specifically
excludes
inward retrocessions and per-risk business;
C. The maximum limit of liability under reinsurance treaties
entered
into by the Underwriting Agent on behalf of the Company will be
$12.5 million per program, it being understood that where
multiple
programs are written for a single client group of companies,
the
limit shall be applied separately to each separate segment of
risk,
based on geographic zone or line of business,provided that
applying
such separate limits will not result in any significant
correlation
leading to additional accumulation of risks related to any such
client group, and provided further that in no event shall the
aggregate risk limit associated with any individual geographic
zone
(which zones are described in Addendum A to this agreement) in
which
Subject Business risks are located exceed $200 million per zone
(the
"Zonal Limit");
D. The reinsurance treaties entered into by the Underwriting
Agent
on behalf of the Company must contain customary exclusions no
less
favorable to the Company than the exclusions contained in
similar
treaties underwritten on behalf of IPCRe Limited;
E. The risks assumed by the Company pursuant to reinsurance
treaties
entered into by
the Underwriting Agent on behalf of the Company may
be located wheresoever arising, subject to no territorial
limits
(other than the Zonal Limits); and
F. The maximum treaty period for any reinsurance treaty entered
into
by the Underwriting Agent on behalf of the Company is 3 years,
and
any treaty that is proposed to be entered into for a longer
period
must be approved by an executive officer of the Company.
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2.3
The Underwriting
Agent shall authorize treaty participations to
brokers and other producers of Subject Business only:
A. On the condition that IPCRe Limited will assume at least an
equal
amount of the identical risk on any treaty as will the Company,
and
subject to contractual terms (including rates, limits, net
retention
provisions, and other contractual terms) that are no more
favorable
to IPCRe Limited than those applicable to the Company, it being
understood that (i) if the broker or producer refuses, despite
the
Underwriting Agent's reasonable best efforts, to accept such
authorization, the Underwriting Agent shall nevertheless be free
to
accept the Subject Business on behalf of the Company so long as
the
terms on which it is accepted otherwise comply with the terms
of
this Agreement and (ii) where IPCRe Limited, for itself, is
precluded from entering into a given treaty because of geographic
or
other limitations that would not preclude the Company from
entering
into such treaty, the Underwriting Agent may bind the Company
to
such treaty; and
B. To the extent that any such treaty would reflect the best
efforts
of the Underwriting Agent to achieve consistent proportionality,
on
a per treaty basis, between the overall composition of the
property
catastrophe treaty reinsurance businesses of the Company and of
IPCRe Limited.
Clauses A.
and B. above are referred to as the "IPCRe Co-Insurance
Limitations".
2.4
Except as
provided in Section 2.3A., the net retention of IPCRe in
respect of any Subject Business to which the Company is bound
pursuant to a treaty entered into by the Underwriting Agent in
accordance with this Agreement shall at all times equal or
exceed
the net retention of the Company.
3.
LIMITATIONS OF AUTHORITY
The Underwriting Agent shall have no power or authority other than
as granted
and set forth herein and no other or greater power shall be implied
from the
grant or denial of powers specifically mentioned herein.
3.1
In addition to
the other limitations expressly contained in this
Agreement, the Underwriting Agent has no authority to:
A. make, accept or endorse notes or otherwise incur any
liability
which is not incurred in the ordinary course of business of the
Underwriting Agent on behalf of the Company pursuant to the
terms
and conditions of this Agreement;
B. issue a guaranty, other than as permitted expressly in writing
by
the Company; or
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C. hold itself out as an agent of the Company in any other
manner,
or for any other purposes, than as specifically prescribed in
this
Agreement.
3.2
The Underwriting
Agent shall use no advertising material,
prospectus, proposal, or representation, either in general or
in
relation to a particular product of the Company, unless
furnished
by the Company for that purpose.
3.3
The Underwriting
Agent shall have no authority to appoint sub-agents
for the Company without prior written approval of the Company,
except that the Underwriting Agent may employ American
International
Company Limited at its own expense to assist it in the
performance
of any ancillary duties under this Agreement.
3.4
The Underwriting
Agent shall have no authority to produce and bind
Subject Business for the Company to the extent that doing so
would
result in the Company's having any "related person insurance
income"
or "RPII" (as defined in Section 953(c)(2) of the United States
Internal Revenue Code of 1986, as amended (the "Code")). In order
to
effectuate the foregoing, the Underwriting Agent, in its capacity
as
agent for the Company, will: (A) not write reinsurance for
insurers
that are "United States shareholders" (as defined in Section
953(c)
of the Code; (B) in a case where the person or persons insured
under
insurance policies that are to be reinsured cannot be
identified,
reinsure risks affecting large populations in order to minimize
the
portion of the Company's reinsurance premiums that are
attributable
(directly or indirectly) to the risks of any particular person
that
may be a United States shareholder or persons related to such
shareholder (within the meaning of Section 953(c) of the Code);
and
(C), except with the express written consent of the Company
(which
consent shall be granted or withheld in the Company's sole and
absolute discretion), not write any reinsurance policy if the
Underwriting Agent knows, or has reason to know, that such
policy
may (directly or indirectly) reinsure risks of a United States
shareholder or persons related to such shareholder (within the
meaning of Section 953(c) of the Code). If, and to the extent
that,
any reinsurance treaty to which the Underwriting Agent has bound
the
Company would otherwise result in the Company's having any RPII,
the
Underwriting Agent, on behalf of IPCRe Limited, hereby accepts
retrocession of the reinsured risk to the extent that the risk
is
(directly or indirectly) the risk of a United States shareholder
or
a
person related to such a shareholder (within the meaning of
Section 953(c) of the Code).
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4.
UNDERWRITING AGENT'S RECOMMENDATIONS
The Underwriting Agent will recommend to the Company the
institution,
prosecution, defense or maintenance of any legal proceedings in
connection with
any matter pertaining to the Subject Business produced by the
Underwriting Agent
on behalf of the Company.
5.
TERRITORY
The territory within which the Underwriting Agent shall operate is
intended to
be principally Bermuda. This Agreement shall be performed and
services provided
hereunder shall be rendered in all material respects in Bermuda, it
being
understood that the Underwriting Agent may also perform certain
functions under
this agreement through affiliates located in other jurisdictions
outside of the
United States of America. The Underwriting Agent shall be the
exclusive agent of
the Company for the Subject Business. The Underwriting Agent shall
not, however,
have any right to represent the Company or act on its behalf within
the United
States of America and shall not discharge any of its rights, duties
and
obligations set forth in this Agreement from within the United
States of
America. Furthermore, nothing contained in this Agreement shall
prevent the
Company from soliciting, binding, writing and administering Subject
Business by
and on its own behalf.
6.
UNDERWRITING SERVICES
The Underwriting Agent shall perform, from outside the United
States of America,
the following underwriting services on behalf of the Company:
6.1
Process
submissions for property catastrophe treaty reinsurance.
6.2.
Rate, quote and
execute property catastrophe reinsurance treaties in
accordance with the authority granted herein and in conformity
with
Section 2, and, if appropriate, terminate or cancel policies
and
issue notices of cancellation.
6.3
Develop and
maintain underwriting files, in customary form, on
b
