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Exhibit 10.12
UNDERWRITING MANAGEMENT AGREEMENT
This Agreement is entered into effective as of December 12, 2003,
by
and between PLATTE RIVER INSURANCE COMPANY (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 and (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.
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.
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.
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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, ov
