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Exhibit 10(52)

SURETY CANADA QUOTA SHARE TREATY
(hereinafter referred to as “Reinsurance Agreement”)

Effective: January 1, 2011

entered into by and between

CONTINENTAL CASUALTY COMPANY (Canadian Branch)
(hereinafter referred to as “Company”)

and

WESTERN SURETY COMPANY
(hereinafter referred to as “Reinsurer”)

In consideration of the mutual covenants contained herein, and upon the terms and conditions hereinafter set forth the Company and the Reinsurer hereby agree as follows:

ARTICLE 1 — BUSINESS COVERED

This Reinsurance Agreement shall cover the Company’s Net Liability on Surety Business written or renewed in Canada, by or on behalf of the Company, during the term of this Reinsurance Agreement, and ceded hereunder. However, if mutually agreed between the Company and the Reinsurer, the Company may retain a Policy, or portion of a Policy, and not be required to cede such Policy, or portion of such Policy, associated with its Surety Business to the Reinsurer under this Reinsurance Agreement. In the event a Policy is not ceded hereunder, the Policy shall be identified and the exception documented, in writing, in the underwriting file.

The liability of the Reinsurer shall commence simultaneously with that of the Company. In the event that a loss covered hereunder involves more than one of the Company’s policies, this Reinsurance Agreement shall provide coverage for each and every Policy in such loss.

ARTICLE 2 — TERM AND CANCELLATION

This Reinsurance Agreement is effective January 1, 2011 and shall continue in full force and effect through December 31, 2011, both days inclusive. Upon expiration of this Reinsurance Agreement, the Reinsurer shall continue to cover all Policies coming within the terms and conditions of this Reinsurance Agreement, until the natural expiration or anniversary of such Policies.

Notwithstanding the expiration of this Reinsurance Agreement as hereinabove provided, the provisions of this Reinsurance Agreement shall continue to apply to all unfinished business hereunder and that all obligations and liabilities incurred by each party hereafter, prior to such expiration, shall be fully performed and discharged.

Surety Canada Quota Share Treaty
Effective: January 1, 2011
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ARTICLE 3 — TERRITORY

This Reinsurance Agreement applies to the territory as in the Company’s original Policies reinsured hereunder.

ARTICLE 4 — ORIGINAL CONDITIONS

All amounts ceded hereunder shall be subject to the same gross rating and to the same clauses, conditions, exclusions and modifications of the Company’s Policies, subject to the limits, terms and conditions of this Reinsurance Agreement.

Except as specifically and expressly provided for in the Insolvency Article, the provisions of this Reinsurance Agreement are intended solely for the benefit of the parties to and executing this Reinsurance Agreement, and nothing in this Reinsurance Agreement shall in any manner create, or be construed to create, any obligations to or establish any rights against any party to this Reinsurance Agreement in favor of any third parties or other persons not parties to and executing this Reinsurance Agreement.

ARTICLE 5 — DEFINITIONS

A.

 

The term “Extra Contractual Obligations” as used in this Reinsurance Agreement shall mean those liabilities not covered under any other provision of this Reinsurance Agreement and which arise from the handling of any claim on business covered hereunder, such liabilities arising because of, but not limited to, the following: failure by the Company to settle within the Policy limit, or by reason of alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in preparation of the defense or in the trial of any action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such action.

B.

 

The term(s) “Loss” and “Losses” as used in this Reinsurance Agreement shall mean that amount incurred by the Company in respect of any settlements, awards, or judgments (including interest where classified as loss) incurred in connection with any Policy reinsured hereunder after deduction for all recoveries, salvages, subrogations and other reinsurances. The Reinsurer and Company agree that the convention to be followed when determining when a loss is incurred is that the date of notice of the actual event of loss or default shall be the date the loss is incurred, except that when the date of notice of the actual event of loss or default occurs after the expiration of a Policy then the date immediately preceding the date the Policy expires shall be deemed to be the date the loss is incurred.

 

C.

 

The term “Loss Expenses” as used in this Reinsurance Agreement shall mean all expenses incurred by the Company in the investigation, appraisal, adjustment, litigation and/or defense of claims under the business reinsured hereunder, including court costs, interest accrued prior to final judgment if included as expense on reinsured Policies, interest accrued after final judgment, but excluding internal office expenses, salaries, per diem, and other remuneration of regular Company employees unless diverted from their normal duties to handle such Loss.

Surety Canada Quota Share Treaty
Effective: January 1, 2011
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D.

 

The term “Net Premiums Written” as used in this Reinsurance Agreement shall mean the gross written premiums on Policies written, renewed or assumed during the term of this Reinsurance Agreement on business the subject of this Reinsurance Agreement, less cancellation and return premiums and less premiums ceded on all other reinsurance which inures to the benefit of this Reinsurance Agreement on business the subject of this Reinsurance Agreement.

E.

 

The term “Net Liability” as used in this Reinsurance Agreement shall mean the remaining portion of the Company’s gross liability on each Policy reinsured under this Reinsurance Agreement after deduction of all reinsurance which inures to the benefit of this Reinsurance Agreement.

 

F.

 

The term(s) “Policy” and “Policies” as used in this Reinsurance Agreement shall mean the Company’s binders, riders, policies, endorsements, bonds and contracts providing insurance and reinsurance on the Surety Business covered under this Reinsurance Agreement.

G.

 

The term “Surety Business” as used in this Reinsurance Agreement means the issuance, writing or underwriting of policies or licenses with respect to the following: (i) bonds required by statutes or ordinances guaranteeing the payment of certain taxes and fees and providing consumer protection as a condition to granting licenses to engage in various trades or professions, (ii) bonds required by statutes, courts or legal documents for the protection of those on whose behalf a fiduciary acts, (iii) bonds required by statutes or ordinances to guarantee the lawful and faithful performance of the duties of office by public officials, (iv) bonds required by statutes to protect against improper actions by notaries public, and (v) bonds which secure the payment and/or performance of an obligation under a written contract; but it shall not include, without limitation, financial guaranty bonds and the issuance, writing or underwriting of bonds and licenses which cover Losses arising from employee dishonesty.

ARTICLE 6 — PREMIUM

As outlined in the Reports and Remittances Article, the Company shall pay to the Reinsurer 100% of the Company’s Net Premiums Written on its Net Liability on the business covered hereunder, less the ceding commission.

The Company and the Reinsurer agree that in respect of the business covered hereunder, the Company shall not be responsible or liable to the Reinsurer for any such amounts to the extent such amounts constitute premiums that: (i) have not been actually collected or received by an insurance agent, broker, intermediary or other insurance representative of the Company, or (ii) have been collected or received by an insurance agent, broker, intermediary or other insurance representative of the Company but not remitted to the Company by such agent, broker, intermediary or other insurance representative.

It is mutually understood and agreed by and between the Reinsurer and the Company that the Reinsurer shall have no recourse whatsoever against the Company for any such uncollected or unremitted premiums.

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Effective: January 1, 2011
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ARTICLE 7 — CEDING COMMISSION

The Reinsurer agrees to allow the Company a commission allowance per calendar quarter of (a) the actual direct expenses incurred in the underwriting of Canadian business, plus (b) 33.5% of Net Premiums Written ceded under this Reinsurance Agreement. Return commission shall be allowed on return premiums at the same rate.

Such commission allowance shall be the sole provision for all commissions, brokerages, taxes, board, exchange or bureau assessments, and for all other expenses of whatever nature, including but not limited to rent and applicable salaries for the use and employment of the Company’s office space and employees, excepting loss expenses.

ARTICLE 8 — LOSS SETTLEMENTS & NOTICES

Claims shall be adjusted and salvage and subrogation shall be handled pursuant to the terms of the Services and Indemnity Agreement effective January 1, 2011, between the Company and the Reinsurer.

The Reinsurer shall be liable for its proportionate share of all Losses and Loss Expenses covered under this Reinsurance Agreement. However, in the event a verdict or judgment is reduced by an appeal or a settlement, subsequent to the entry of the judgment, resulting in an ultimate saving on such verdict or judgment, or a judgment is reversed outright, the expense incurred in securing such final reduction or reversal shall be prorated between the Reinsurer and the Company in the proportion that each benefits from such reduction or reversal, and the expenses incurred up to the time of the original verdict or judgment shall be pro rated in proportion to each party’s interest in such verdict.

In addition, the Reinsurer shall also be liable for its proportionate share of all legal expenses and other costs incurred in connection with coverage questions and legal actions connected thereto arising under the business covered by this Reinsurance Agreement. The Reinsurer’s proportionate share of these costs and expenses shall be the same as the Reinsurer’s percentage of participation in this Reinsurance Agreement.

Nothing in this Reinsurance Agreement shall be construed as meaning that Losses are not recoverable hereunder until the actual Loss of the Company has been ascertained.

ARTICLE 9 — EXCESS OF ORIGINAL POLICY LIMITS

This Reinsurance Agreement shall protect the Company as provided in Article 1 — Business Covered in connection with Loss in excess of the limit of the original Policy, such Loss in excess of the limit having been incurred because of failure by the Company to settle within the Policy limit or by reason of alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of any action against its insured or reinsured or in the preparation of prosecution of an appeal consequent upon such action.

However, this Article shall not apply where the Loss has been incurred due to fraud by a member of the Board of Directors or a corporate officer of the Company acting individually or

Surety Canada Quota Share Treaty
Effective: January 1, 2011
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