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Exhibit 10.14
UNDERWRITING MANAGEMENT AGREEMENT
This
Agreement is entered into effective as of June 1, 2003, by and
between
Capitol Specialty Insurance Corporation (hereinafter called the
"Company"), and
Darwin Professional Underwriters Inc. (hereinafter called the
"Manager").
WHEREAS, the Manager intends to develop, produce and market the
insurance
business specified in Appendix I, Insurance Business (hereinafter
called the
"Business") and desires to underwrite, administer and market the
Business on
behalf of the Company; and
WHEREAS, the Company wishes that the Manager underwrite, administer
and
market the Business;
NOW,
THEREFORE, in consideration of the promises herein contained and
other
good and valuable consideration, the receipt and sufficiency of
which are hereby
acknowledged, it is agreed that:
SECTION 1 - APPOINTMENT AND AUTHORITY
1.0 The Company hereby
appoints the Manager as its exclusive agent for writing
the
Business, except the Company may write the Business with an agent
other
than
Darwin, without violating the exclusivity provision of this
Section
1.0,
in the event Company requests that the Manager act as agent for
a
given account or program and the Manager declines Company's
request.
Notwithstanding the foregoing, (i) in the event that Alleghany
Corporation
or
any of its subsidiaries acquires an insurer which is engaged in one
or
more
lines of Business but is not licensed in one or more jurisdictions
in
which the Company is licensed, the Company may as an accommodation
issue
policies with respect to such lines of Business at the request of
that
insurer for a period of no more than six months following such
acquisition
without violating the exclusivity provisions of this Section 1.0,
(ii) the
Company may issue surety products, policies to and in connection
with the
Company's property and casualty accounts and programs in place at
June 1,
2003
and coverages incidental to or in conjunction with commercial
package
policies, without violating the exclusivity provisions of this
Section 1.0
and
(iii) the Company may issue policies for and provide services
to
Resurgens Specialty Underwriting, Inc. and RSUI Indemnity
Company.
1.1 In conducting the
Business, the Manager is responsible for and is
authorized to:
a.
Solicit and
evaluate applications;
b.
Subject to
Appendix II, Underwriting Guidelines (the "Underwriting
Guidelines"), determine the underwriting acceptability of risks
and
rate, quote, negotiate, bind, manuscript, issue, adjust, renew
and
deliver policies, assumed facultative and treaty reinsurance
agreements, endorsements, certificates and binders with respect to
the
Business (hereinafter called the "Contracts");
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c.
Bill, collect
and remit to the Company all premiums for the Contracts
and keep the necessary records to support each transaction in
accordance with the guidelines specified in Appendix III,
Accounting
and Records (the "Accounting and Records Guidelines");
d.
Retain, out of
premiums collected, expense reimbursement subject to
the terms specified in Appendix IV, Payments;
e.
In accordance
with the laws of the applicable jurisdiction, effect
cancellation, nonrenewal or rescission of Contracts on any risk
bound
by the Manager for nonpayment of premium or other causes as the
Manager may deem to be in the interests of the Company or as
directed
by the Company. No provision of this Agreement shall be deemed
to
restrict the Company's rights to cancel or not renew any policy
of
insurance subject to the applicable laws and regulations
concerning
the cancellation and nonrenewal of insurance policies;
f.
Report claims to
the Company and administer, settle and maintain
records of
claims in accordance with the claims guidelines provided in
Appendix V, Claims (the "Claims Guidelines"); and
g.
Accept proposals
of insurance and assumed reinsurance from agents,
brokers or solicitors (hereinafter called "Subproducers") and
determine the amount of compensation payable to such Subproducers.
The
Manager agrees that any compensation payable to a Subproducer will
be
its sole responsibility and the Company shall have no liability
for
any such compensation unless otherwise agreed to in writing by
the
Company and the Manager and, further, that no Subproducer shall
be
appointed or considered as agent of the Company without the
Company's
prior written consent thereto. The Manager shall be solely
responsible
for confirming that all Subproducers approved by the Company
possess
all licenses and appointments required under applicable law.
SECTION 2 - LIMITATIONS OF AUTHORITY
2.0 The Manager shall
not accept proposals or bind the Company for insurance
(i)
on risks not included in the types of insurance specified in
Appendix
I,
Insurance Business, (ii) on risks deemed unacceptable, as specified
in
the
Underwriting Guidelines, and (iii) as the Company may direct in
writing
from
time to time. The Manager shall have no authority to bind the
Company
to
any ceding reinsurance agreements.
2.1 Except for use of
either party's name in correspondence in the ordinary
course of business, neither party shall use the other party's name,
logo or
marks in any advertisement, sales or promotional materials
without
providing notice thereof to the other party before or within 10
days of
such
use. Neither party shall continue
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such
use upon receipt of an objection thereto by the other party,
such
objection not to be unreasonably made.
2.2 The Manager shall
not institute legal proceedings on behalf of the Company
except (i) for collection of premium, (ii) as may be specified in
the
Claims Guidelines or (iii) as otherwise agreed by the Company and
the
Manager.
2.3 With respect to
the insurance functions performed for the Company by the
Manager, it is specifically recognized that the relationship
between the
Manager and the Company shall be that of an authorized agent acting
on
behalf of a principal. In all other respects, however, the Manager
shall
conduct its business as an independent contractor.
2.4 The Manager shall
not authorize any other person or entity to exercise any
of
the Manager's underwriting authority specified herein without the
prior
written consent of the Company.
SECTION 3 - OWNERSHIP AND CONTROL OF PROPRIETARY INFORMATION
3.0 As used herein,
"Proprietary Information" means all intellectual property
rights, copyrights, trademarks, trade names, trade secrets and
all
underwriting and marketing materials originated or substantially
developed
by
the Manager or the Company relating to the Business including, but
not
limited to, underwriting manuals, applications, Contract forms,
advertisements, brochures, newsletters, loss prevention materials
and
marketing logos. The Company and the Manager both acknowledge
that
Proprietary Information developed or acquired by the other party
prior to
or
subsequent to the inception date of this Agreement is owned by the
other
party and shall continue to be owned by the other party in the
event of the
termination of this Agreement, regardless of the reason for the
termination.
SECTION 4 - OTHER DUTIES AND RESPONSIBILITIES
4.0 It is the
responsibility of the Manager and the Company to comply with
all
laws
and regulations applicable to the Business, including but not
limited
to:
a.
Obtaining and
maintaining appropriate licenses;
b.
Maintaining
accurate records of all transactions affecting the
Business;
c.
Complying with
any and all cancellation, nonrenewal and
countersignature requirements imposed by law; and
d.
Complying with
the requirements of any other applicable insurance
laws.
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The Manager and the Company shall comply with the specific
requirements applicable to each, and shall assist each other
whenever
possible in complying with this Section 4.0.
4.1 The Company shall
pay all premium related taxes, with the exception of
surplus lines taxes which shall be the responsibility of the
Manager or
another licensed surplus lines broker or agent producing Business
to the
Manager, unless otherwise agreed upon in writing by the Company and
the
Manager.
4.2 The Manager shall
observe all regulatory restrictions upon the licensing
and
soliciting of insurance in each jurisdiction.
4.3 The Manager shall
become a licensed agent of the Company and the Company
shall assist the Manager in obtaining licenses when required by
applicable
law.
The Manager shall secure a proper countersignature for each
Contract
when
required by law.
4.4 Except as
otherwise provided herein, the Manager shall be responsible for
its
own expenses which shall include, but not be limited to, all
employee
compensation, all business license fees, overhead expenses,
in-house claim
services expenses, commissions to Subproducers and compensation
to
associates or entities sponsoring or end
