CERTAIN UNDERWRITERS AT LLOYD'S LONDON v. CENTURY INDEMNITY COMPANY Plaintiff Exhibits

8/7/2019 CERTAIN UNDERWRITERS AT LLOYD'S LONDON v. CENTURY INDEMNITY COMPANY Plaintiff Exhibits

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Case 2:11-cv-01055-LDD Document 1 Filed 02/11/11 Page 9 of 22

EXHIBITA




O.l'l". ' ~ 6 @ Q ~ l C H I N G TO AND FORMING' PART OF POLICY No.u. 61268

, .

l'itY·

;Crl / ' 7 e . ~ REINSURANCE AGREEMENT between ·the DlSURANcE COMPANY OF NORTH AMERICA

PHILADELpHIA (hereinafber referred to a's the I I c o m ~ " ) thGtUND'ERWRITINI~ E R . S Oli' LLOYD'S q o m P l ' 1 a ~ tM Synd,lcatall bear the . . , ~ : f 1 n 1 ,iva n U J l l ~ r a l';Iet in tM 3 ® ~ d : P H attsol;,e.d. hereto, ca¢h in "pro,POt't1on aa aat,{lHW1:ffliaftHID F a f ~ f l ~ d V ' e o w l l ~ r ; e " uReinsurers") in respeot >$1; -6:2..05 'f,ot: the following. ,:

, ',' ..1BEING A REINSURANCE Of the ne t exoess l iabi l i ty as ~ e r e i n p r o v 1 ~ e d

and speoified·whioh may acorUe to the Company on business written bythe Automobile D e p a r t m e n t ~ Oompensation and L i a b i l i t ~ Department,Speoial Aooounts D e p a r t m e n ~ and paokage Multiple t ine Department underpublic Liability (inoluding P e r ~ o n a l I n j u r y ) . ' ~ o p e r t y · D a m a g e J W o r ~ n s C Q m p e ~ s a t i o n and Employers L i ~ b 1 l 1 t y inoluding oontraotual L 1 a b i ~ i t y i n s ~ a n o e s issued or renewed by the C o m p ~ y in ~ e s p e c t of risks tallingwithin"the Explosives 01' Chemical or l'hal;'ltlaceut1oal categot';tea w b e r ~

, the so-called "Expl.osive h ~ z a . l : ' d u or uChemioal hazard ll 0);' t1Pharmaoeutioalhazard" i s a. substantial oonsideration at th e time of the. 91'1ginalunderwriting of such risks by the Company and where suoh r ~ s k 8 involvein l1hole or in pa.rt the handling, loaliing, storing and manufacture ofExplosives and Ohem1oals aM l'harmaoeutica:ls.. '.

N O ~ ' IT IS HE!REBY AGREED AS FOLLOWS : -

ARTICLE l '

C ~ V E R ; '.lJh1s Agreement sha.ll apply to a ll pol;f.Oies, oontraots and binders

of insuranoe and/or, in o a ~ e s where legal restrictions do not p e ~ m i t the Company to write direot insuranoe and another oarrier issues a: p o l 1 ~ y . . c'ontra,ct or, binder whioh the company reinsut 'es ]'00%, rein?Ufance (hereinafter oalled the original p o l ~ o i e s ) in force and issued

or ~ e n e w e d by the Oompany in r ~ s p e o t of ~ i a k s as above defined, writtenin the United States of A m e r i o a ~ i ta T e ~ i t o r i e s , a n ~ l 'ossessionsDependenoies, Canada Mexioo,

,ART:wrn 2EXOLUSIONS :

!t 1 s ' u n d e ~ s t o o d and ~ g r e e d t h ~ t this A g r ~ e m e n t : -A. Pqes no t oover R ~ i n s u r a n q e s , other than as provided fo rin 'Artiole 1 above.

B. Does not cOVer Atomic Energy risks.

O. Is s ~ b j e o t to the following Exolusion Clause :"

As regards interests whioh a t time of loss or damage are onshore; no l iabi l i ty shall attaoh hereto respeot of anyloss or damage whioh is oooasioned by war, invasion, hostili t ies,aots of foreign enemies, oivil war, rebellion, insurreotion,military ' 0);' usurped .pOI'ler, OX' martia;L la w or Qonfisoation by

order of any government or publio authority. .This War Exolusion Olause shal.l not, hOi-lever, apply to : l . n t e r e ~ t s which at time of' loss or damage ar e within the terr i tor ial limitsof the United states of Amerioa ( c o m p r i s ~ th e f i f ty States ofthe Union and the District of Columbia and inoluding Bridgesbetween the U.S.A. and Mexioo provided they are under Unitedstates ownership), Oanada, St.Pierre and Miquelon. prOVided suohinterests ar e insured under pOlioies,' endorsements or bindersoontaining a standa:rd war or hos t i l i t i e s Ot ' warlilte operationsexolusions olause. .

Contd••••




"

D. Is subjeot to th e following Nuolear InQident EXclusion Olause

Liability M Reinauranoe ;-




I\RTICL'l!: :2LIMIT 8: RETENTION:

The Reinsurers agree for. th e considar,at1on hereinafter appearingto pay to the Company up to bub not exoeed1ng:-

(a) $1,000.000 ultimate net loss on aooount of e a ~ and everyaooident for which th e Company shall beoome l iable in 'excess of $100,000 Ultimate net loss on aooount of'ea6h

, ,,!Uld evel'Y aooident, as l'§!.§peots a l l ()lasl39s of: b U 6 ~ e s s ...qovered hereunder except Produots Bodily I n j u ~ - "Phro.'maceu t ioal s.. .' :;

(b ) $85Q,OOoultimate net loss on aooount of eaoh ~ n d e ~ e r y aooident fo r whioh the Oompany shali beoome l iable ' inexcess of $250.000 ultimate net loss on aooount of eaoh

'and every aooident, as ~ e s p a o t s ~ O d u o t s Bodily Injury -Pharmaceutioals only.

arising under the, origina.l p01:l.0ies hereby peinaured.,

ARTICIE 4

' ~ R M : This A ~ e e m e n t shall apply to all aOoidents oaourring on and

atter th e f i r s t d a ~ of J a n ~ a r y 1964 and on or before the Thirty-firstday ot Deoember 19641 1 ~ e $ p a o t i v e qf ~ h e Inoapt1on dates of th e -

o r i g i ~ l polioies.

ARTICLE 2.NE,T RETAJ:NI?D LINES s

':Chis Agreern,ent sha,.ll apply ~ l l l y 't o "that porti'on--of any,insuranoeor r e i n s u r ~ o e whioh the Oompany retains net for i t s own aooount, andin oalculating th e amount of' any loas hereunder and also in oompu,ting .the amount in exoess of whioh this Agreement attaches, only loss or105se9 in respeot to that pqrt10n of any insurance or reinsuranoewhioh the Company r ~ t a 1 n s net for i t s own acoount shal l be inoluded

i t being understood and agreed that th e amount of: l iabi l i ty hereunderin respeot to any loss or losses ~ h a l l no t be increased by reason ofthe inability of th e Company to oolleot from any other reinsurers,whether speoifio or generaiJ any amounts which may bave become due~ r o m them, whether suoh inabil i ty arises from th e insolvenoy of suohother reinsurers or otherwise ..

ARTICIE 6

DEli'INI';PIONSt

A. The word "Explosives" );'e1'e;r;os to munitions, dynamite. blaok:powder and. similax- 'substanoes intended 1'01' use a.s eXlllosivasand does no t refer to l iquefied petroleum or other sUbstanoeswhioh might explode an4 which are not statutorily olassifiedas E x p ~ o s i v e s .

B. By th e woro.s "Explosive or Chem.ioal or Pha.rmiMeut:Loal. oateg-:>'t'ies tl

i s understood any O};'Iglnal PolIoies issued or to be Issued by th e

Company which t h ~ time of tb e happening of any loss ar eo 1 ~ s s i f i e d by th e Company in their own books under that-headingand the Company shall be t h ~ sole judge of suoh o l a s s i f l o a t ~ o n .

" ,

C. The term !leaoh and 'every- aco:ldent" as used in th is Agl'eement shallbe understood to mean ':each and every aocident oX' se-ries ofaooidents arising out of one event 01' ooourrence"; provided that;

Contd •••••

/




(a )

(b )

(0 )

(d )

(e )

t ~ ; r ~ "

As respeot Froduous B o d ~ 1 y Injury L i a b i ~ i t y and' ProduotsPrqperty Damage Liability. i t is ~ l s o understood t b a t ~ (1) rnjuries to a ll ~ e r s o n s and a ll damage to property

of others occurr1ng during a policy period andprooe'ed1,ng £rom or tX'M'eable to the same oausativeagenoy., shall be deemed to arise out of one aOOident,and the date of suoh accident shall be deemed t o . ~ e the oommencing date of the policy period. For the

' . ~ purpose of this provfs1on, eaoh annual period of a, ....policy Whioh oontinues in force for maranhan one~ e a r shall be deemed to be a separate polio¥ P ~ i O d j

(2) However. whel;'6 it i s possible to detel'mine the :extentto whioh injuries to persons and damage to property ofof.' others prooeeds £rom th e use or oonsumption of oneprepared or aoquired lo t of 'merohand:l,se produoti tl1ensnoh injtlt'ies and damage shall, be deemed',. to bave ream te d

from one aooident and sba2l be ~ x o 1 u d e d from the s o ~ ~ ~ ofaub ...paragraph (1 ) above. _" IIword 1 f 1 n j u r i e ~ 1 f as u:;;ed inthis,pat'agraph, (a) inoludes

bu t is nQt limited to, infection, oontagion, poisoning or 'oontaminatlon.

As respeots Property Damage ~ i a b i 1 1 t y (other than AutomobIleand llroduots), said term shall a ~ s o be understood to mean"loss '01' losses oaused by a series ot operations, events orooourrenoes ariSing ou t Of' operationa at one speoifio siteand w h 1 o ~ oannot be attributed to any s ~ S l e one ot suoh9 P ~ r a t 1 o n s ; events ot' OCQ1J:l'.l;'en1]es, bu t ,l:'athel'.' to the cumulativeeffeots of tl\e same". In a s s ~ s s i n g each and every Moldentwithin th e ~ o r e g 6 i n g definition i t i s understood apd agreedthat : .

(1) th e series o ~ o p e ~ a t i o n s , events or ooourrencesshall no t extend over a perio'd longet' than

12 cons,:outive months; andthe d ~ t e ' on whioh th e per104 of not exoeeding conseou-t ive monthB shall be deemed to have commenced sball bea t the election of the Reassured an d shall fal l withinthe period of this Agreement

As respects elas'ses 01" business l'einsured under this Agreementother than t h o s ~ e ~ ~ ~ l ' a t e d in paragraphs (a), (b ) and Cd) ofthis Articl.e, a,a.id term ,shaJ.l alao be unde1.'stooo. to mean, asregard.s each original Assured, Il:rnjuries to one or mora thanone person X'esult1ng from infection" oontagion, poisoning orqontaminatlon prooeeding from or traoeable to th e sameoausative agenoyJl.

An oooupational or other disease suffered by an employee,,whioh disease arises out of the employment and fo r Whioh th eemployer is l iable shall be deemed an aooident Within the'meaning hereof. In case tp e COmpany shall within a policyy e a ~ sustain several losses arising but Qf suoh an oocupational

or o t h ~ r disease of one apecifio kind or claasl suffered bySeveral employees of one A s s u ~ e d , suoh losses shall be deemedto arise ou t of one a c o i d e n t ~ A loss as r e s p ~ o t s each employeeaffected by the disease $hall be deemed to have been sustainedby the company at th e date when compensable disability Qf th eemployee commenced and at no other date.

As respeots businesa where th e causa of loss is the "neglectll,"erX'o);' or' omisaion tl of the Assured, it is undel."stood tha'\i suohnegleot, e.l;'t'o;t' or Ql1l'ission sl}all be deemed to be an "aooident"within the meaning hereof.

\ ... 4 Contd, •• ,




'" ~ . "

D. The tet'm "net J.08S'" shall mean th e SUlU actually pa:J.d bY' th eCompany in settlement of losses 0,1.' liabil-:l.ty after making ,deduotions tor a l l reooveries, a ll salvages and a l l ola+ms upon·other Reinsurances whether oollected or .not and shall inoludea l l adjustment expenses arising trom ~ h e settlement of olaimsinoluding a pro rata share of salaries and expenses of the

. company's employees in i t s New York Law Department conneoted, with ahy rasistanoe to,· invest1gat:ton of . or negotiations

oonoerning settlem.ent of: suoh olaims, bu t otherwise e ~ o l u d i n g the salal;"ies of employees and th e offige expenses ,of : ~ h e Comp'any.

. , . ..

All salvages, reooveries or payments reoovered or r e c i ~ i v e d subsequent to a loss settlement u n d e ~ this A ~ e e m e n t ' s h a l l be

a p p l ~ e d as i t ~ e o o v e r e d ov reoeived,prior to the aforesaidsettlement and a l l neoeasary adjustments shall be made by th eparties h e r ~ t o . Provided always that nothing in t h ~ s Clauseshali be'oonstrued to mean t ~ a t losses under this Agreement

ar e not recoverable unti l th e Company's ultimate net losshas been a s o e r t a i n e d ~

A,RTICrE 7.

DECLARATIONS:

1. In"force b u a 1 n e s ~ a t inoeption hereof - Original POlioiesdecla.red, under tihe' expirj,ng Agreement ar e oovered hereunder

, as of th e inception elate qf, tqia A.gl'eement. '

2. New ,and" r e n ! 9 \ ~ a l b u ~ 1 n e s a ' - The Company will advise Messrs.Pi'itohat'd 8: Baird, 11:10.', 12 3 Wll,iialD street# New York :38,New York, U.S.A. o,r eaoh (It'iginal 1'01:1.0'1 falling wi thin th\'lscope Pi' this Agreement.

ARTICLE 8

The premium to be paid to the Reinsurers hereon shall be

oaloulated at th e ~ a t e o ~ 25% of th e Gross Nett E a ~ n e d Premium !noomeaooounted f o ~ by th e Company in 'respeot of business th e subjeot matterof this Agreement.

The term uGross Nett Earned Premium Income fl shall mean th egross premiums e a ~ n e d during th e o u r ~ e n o y of this Agreement lesse a ~ n e d p ~ e m t u m s on reinsuranoes, recoveries under whioh inure toth e b e n e r ~ t of Reinsurers.

, '

A minimum and d e p o ~ i ~ premium of $400,000.00 (payable in tour

1 n s t a l ~ e n t s ) shall be, paid to t h ~ ~ e 1 n s u r e r s h e ~ e u n d e r ViZt

1st JanuarY 1964 •••••••••• $ I O O ~ O O O J O O 1s t April 1964 ••••••••••••• $ 1 0 0 ~ O O O . O O 1st July 1964 •••••••••••••,$100;000.001st Ootober 1964 ••••• . . . . . .$100,000.00

As s o o ~ as praotioable af ter the expiration of this A g r e e ~ e n t , th e company shall prepare a statement of the premium due to Rein-surers oaloulated in aooordanoe with the oonditions of this Artioleand should the premium so oaloUlated exoeed the minimum and depositpremium of $400,000.00 t h ~ O o m p a n ~ will pay th e amount in eXoessthereof to Reinsurers, but if th e p ~ e m l u m so oaloulated be less than$400,000.00 t h e ~ e shall be no refUnd to the Company as the minimumpremium payable hereunder i s $400,000.00.

- 5 " Contd •••••




. '- - , -'. t;)r - : l ~ ........

ARTICIJi)

IJ:AXES:,

In oonsideration the t e ~ m s under whioh this Agreement is

1ssued t the C o m p ~ y undertakes no t to olaim any d e d u c t ~ o n in respeotof the premium hereon When making tax· returns, other t ~ a n Inoome OrPit.ot'its· Tax return,s- to any...~ ~ a t e ot' Terr1torw or th e D 1 s ~ ~ ~ ~ o t ofOolumpia. ".'

Notioe is hereby given that the Reinsurers h a V e ' a g ~ e e d to allowa deduotion from the premium p a y ~ b l e on this Agreement the arnqunt

required for the p u r ~ o s e of p ~ o h a s i n g United states GovernmentStamps fo r attaohment to tb e Agreement respeot of th e Federalstamp Tax due t h e r ~ o n .

I t is understood and agreed that in th e event of any return of

premium beooming due under this Agreement. the Reinsurers willdeduot trom the amount of the ~ e t u r n the same peroentage as the

a ~ l o w a n o e towards th e rederal Stamp T.ax made by the R e i n $ u ~ e r s onth e total premium. .

N e v e r t h e ~ e a s where such r e t u r ~ of premium beoo.mes due owing tothe cancellation of this Agreement by the Reinsurers the abovededuotion of the Tax allowanoe shall 'not be made exoept in SQ faras th e company has a right to' recover .the '])ax from th e United StatesGovernment. -

ARTIOIE 10

CLAIMS,:

, The Company will a d v ~ s e the Reinsurers prQmptly of a l ~ olaimsand any subsequent developments pertaining thereto;'whlch may in i t s

opinion develop into losses l n v o l y ~ g reinsurance hereunder and all

papal's oonnected With th e adjustment of the same shall be ata l ~ times at the oommand of Reinsurers Dr parties deSignated by themfo r inspeotion., ,

I t is understood t h ~ t , when 60 ~ q u e s t e d , the Company will-affordthe ReinSUrers an opportunity. to be a s s o c i a t ~ d with th e Company at 'the expense of the R ~ 1 n s u r e r s # in th e defense or control of any olaimor suit or proceeding l ~ v o l v i n g this ~ e l n s u r a n o e , and the Company andthe R e 1 n ~ e r s s h a l ~ c o ~ o p e r a t e in every respeot in the defense oroontrol of such olaim or suit or proaeeding.

The Reinsurers agree to pay to th e Company any amounts that maybe recoverable-under this, Agreement promptly upon reoeipt of proofof: payment by the Company.

- The Oompany will turpish to the Reinsurevs annually a l i s t ofoutstanding olaims in \'lh1ch the Reinsurers ar e interested, showingthe.amount of loss r e s e ~ e s set up by the Company in respect of: boththe gross amount and th e amount recoverable hereunder 1n respeot ofeach and every suoh claim.

ARTICIE 11

COMMUTATI.ON:

. Twenty-four month$ after the expiry date of this Agreement theCompany shall advise th e Reinsurers of any olaims involving Workmen'sCompensation Polioies which may not: h ~ v e been finally settled andwhioh llIay cause a olaim unde:t' this Agreement. The ReinSUl"ers maythen, at any time thereafter demand that the Company make-a f ~ n a l claim against the R&insurers in respeot of suoh unsettled claims.

Contd•••••

/ "-,-, .




In 'that: event t:le". Oompany' a n d · · t h e " R € J i n S U J ; ' e J ; ' s m : i a ~ J . mut.lially ..

appoint' an Aotuaz>y or Appraise):, who Elhall i n ~ e s t i g a . t e d e t e r m i r . ~ andoapitalise any suoh u n s ~ t ~ l e d olaims. ~ n d the p a y m e n ~ of the

R e ~ s u r e r s ' proportion of this sum shal l oonstitute a oomplete releaseof th e R e ~ u r e r a for such loss so valued. '

ARTICLE 12

PRovtS10N FOR RUN-OFF:,.,../

I t is underst90d that 'i n th e event of termination 0f \ this Agree-ment Reinsurers will agree to oontinue t h ~ reinsuranoe in respeot toin-foroe business for a. period of one yea.r from the ,date':of terminationor to the f ~ r s t anniversary of any, i n ~ f o r o e business w h ~ g h e v e r period:1.15 the 1easer, a t th e trea.ty rate of 2 ~ . •

ARTICLE ,12,ERRORS AND OMISSIONS I

Any deiays, omissions, or e'rrors made in conneotion with thebusiness dealv with under this A g r e e m ~ n t shall no t be held to relievee:l:thet' party hereto f'l.'oin any 1.1abllity ~ l h 1 c h 'would have a.,ttached toi t hereunder i f suoh delays. omissions ot' et'I'Ol'S had n o ~ been made,provided suoh omissions or errors are reotif ied immediately upondisoovery. '

AR'UCIE 14

I

ARBITRATION ---... "

If aby dispute shall a.:t'ise ' ~ ~ ~ t w e e n the Company and the ReinsUl"al.'swith referenoe to th e interp,l;'etation of this AgX'eement, or the rightswith respect of any transaction involved; the dispute sPall bereferred to two A r b i ~ r a t o r s . one be ohosen by each party. ,and s u o ~ A:t'bitrators shall ohoOSe a,t\ Umpire, and in th e event of sa1.d A t ' b : i ~ tra-tors no t a s r e e i n g ~ the d a o 1 s i o ~ of said Umpire ~ h a l l be final andbinding upon a ll parties. The At'b1trators and th e Umpire shallinterpret this A ~ e e m e n t as an honourable engagement. and they shall,

make t h e i ~ award with a view to effeoting the general purpose of this.Agreement in a reasonable m a n n e r ~ rather than in a o o 6 ~ d a n o e with al i teral 1:nte!'pretat1on of th e language. Said At'bltration to takeplaoe in Philadelphia.

ARTIOIE 1:2INSPEOTIONI

The, Company shal.l place at th e c;U,sposal of the ReinsurerS at a ll

reasonable times, and the ~ e i n s u r e r s shaLl have th e right to inspeot,through their a'Uthol'ized representa.tives', a ll !:looks. i>ecoJ.'da andpapers of the Company in connection ~ r . L t h any r e i n s ~ a n c e hereunder,or olaims in conneotion herewith.

f.RTIOLE 1 6 '

CURRENCY':

Premiums and losses hereunder spall be payabla in United Statesof America pollara.

ARTIClE 17

,TIlTERME:DIAR!:

Messrs. Pritchard &Baird, I n o . ~ 12 ) William street . New York,New York 10038, U.S.A. are hereby reoognised as t h ~ intermedialWnegotiating this Agveement through whom all oommunioations ~ e l a t i n g thereto Shall be t r a n s ~ t t e d to both p a r t i e s ~

GMB




~ j : ~ : I' lllEMORANDUM of intent abtaohing to and fcrm1ns pat't or Polio:! No. U. 61268

' / '

The deOision as to whetber a ~ r i s k qual i f ies for deolarationunder this Reinsul:'anoe Agreement, whe -he).' i t is an Explosive,Chemiaal or Pharmaceutioal r:J,sjc that· ,s involved, i s a t the s.oledisQl'etion of the Compa.ny. ." HoweV8r

tWhere the' aat;iV'it;J.. of an

O ~ i g i n a l Assured are auah tha t the Co p ~ y feels i t canQot olearlydefine fol' olass i f icat ion purposes be ween Explos'ive and/orChemioa:l. and/or Pharrne.oeutiaal o a t ~ g o t i e s then th e Ul'.lde'l1sl{anding'is tbat a Pharmaoeutioal Produots Bod+ly Injury losS shall be

d ~ e m s d to be one whe.ra ~ h e o l a ~ m ,for :Bodily Injury a t ' iS8S fV9m:

i.

i i .

Artioles intended for use in theldiagnosis, oure, mitigation,

t r e a £ m ~ n t or p r e v e ~ t i o n of diseare in man; anct

Artioles (other than food) i n t e n ~ e d to affeot th e s t ~ u o t u r e or any other funotion o f . t ~ e bodt of man; and

i i i . Artic1.es intended fo r use· as a o6mponent of any ar t ic lesspeoif ied in clause 1, or 11, bUt does n.ot include devicesor thei:t' compone';lts. parts oX' ac essories .. . '"

Note A: . . '

"

The w o ~ d "devioes 1t :I.n iii i n ~ a n a ~ n s t l ' U l l l e x + t s J apparatus. an d

o o ~ t I ' i v a n o e s . including tbe i r o o ~ o n e n t a , parts , and aocessories,intende'd (eo) for us e in th e dia@o!'l1s; cure, mitigation, Vreat- .mant, or p r e v e n t 1 o ~ of.diseaae in man; or (b ) to affeot thestruoture 0)." any tunotion ot th e body or man. '

Note B:

The term uarbio-les", as used in itel!lS' 11 :l.i, an d iii i s no t1ntal,1ded to inolude llcosmet1oslt. The term "cosmetio ll means:

(1) articles inbended to be l'Ubbed. poured, sprinll;led or .sprayed on. introduoed,into 'Jor otherwise'applied totb e human body an y part tpereof for cleanSing,

b e a ~ t 1 f y 1 n g . p ~ o m o t i n g attraotiveness. or al ter ingth e appearanoe, an d

(2 ) ar t ioles 1 n t e . n d ~ d for u ~ e as a ~ o m p o n e n t of any suohal. ' tioles; e'xgept tb.a.t sUoh term shall not :l,nolude .soap.

I.J

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Addengum No. 1.

a r ~ IT IS HEj1EBY understood and agreed that th e :folloViing clauses

deemed to be i n o o r p o r a ~ e d in thia Agreement:- ,(A) ~ ' . : ~ . INSOLVENCY CUUSl!l (lUllINSURANCES) "l

(other than Oal1:forn;t.a),

REINSURERS (nereinafter called th e Assuming I n ~ u r e r s ) here,by agree t h ~ t . in the event of: th e I.naoJ.vency of 'the COl1lIlany(hereinatter called the Oeding Insurer), this contraot of reinsuranoeshall be sq construed that th e reinSlU'ancu 6h9).1 be payable directlYto the Ceding ~ n B u r e r Or to i ta liquidator, reoeiver Or statutorysUoceSSOr by th e Assuming Insurers in·the e v ~ n t of the insolvency of:'!ihe Oeding InsureI' on thl1' basis of the l iabi l i ty of the Ceding Insurerundel' th e contract Or oontI'.acta reinsured wi:thout diminution becauseot: th e illsolvenoy ot: t1i.e Geding InsureI'. : I t is : f . u r t h ~ r agJJeed that . .the' liquidator, th e reoeiver; or the statutory suocessor of th e O e ~ n g ,.Insurer shali sive written notioe to the Assuming lnaurevs of the ,pendenoy of a olaim against the Oeding Insurer on the Polioy r e ~ n s u r e d w ~ t h i n a reasonable time atter.suoh olaim 1s f ; led in th e ipaolvenoyprooeed1ngsj' that during the pendenciy of a ~ o h . o l a i m th e AssumingI n 8 u r ~ r a may Investigate suoh claim and interpoae a t their Own e ~ e n s e in the prooeed.ings.where suoh ~ l a i m i s to be adjudioated any defenoeor d e f e ~ o a a w h i c ~ t h e ~ may 4eem a v a i l a b ~ ~ to .the O e d i n g ' I ~ s u r e ~ 01' i t sliquidator, reoeiv.er or statutory BuOOeaaoI1; that th e 8:lCPense thus:j.nOuI're.d by ~ h e ..Aseuming Insurers Shall be chargeable subjeot to OOUl' t

a p p r o v ~ l against the ' Ceding. Insurer as part of' tha· expense of l iqui-dation to the extent ot $ p r o ~ o r t 1 0 n a t e Share of th e benefit which mayaoorue to suon Oeding ! n e u ~ e r solely as a result t h ~ defenoe u n d e r ~ taken by th e Assuming Insurers.

(B).'

INSOLVENOY OLAUSE) (REINstJRA'NCES)Cl;I.l11'orn::l.a.

IN '.mE EVENT the inaolValiOY Of the oompany , reinsurano eunder th i s Agreement sh a l l 'be payable by the Reinsurer to the l iqui-.dator or oQneervator Of t h ~ Oompany (exoept where either the contractof ' insuranoe OX' th i s oontJ.>!lct 8pe.o11'1oal1y provides another payee ofsuoh reinaurance in th e event of insolvenoy th e c o ~ a n y ) on thebasis of th e olaim olaims'alloWed by such l i q u i d a t o ~ or conservator

w ~ t h o u t diminution beoause of suoh insolvenoy or beoause the liquidatoror conservator 61' th e Oompany has failed to pay Qll or a portion of any·

o l f \ i m ~ :ct i s agreed, hOW8yer, that th e liquidator, conservatol',reoeiver or statutory suooessor of th e Company shall give written

n o t ~ p e to the Reinaurers of the. pendency of a olaim against the'Oompanyindicating. the Policy or bond reinsured whi6h claim wou.ld involve apossible l iabi l i ty Qn th e part of the R e i n B u ~ e r a within a reasonabletime arter such claim is f ' i led in th e c o n a e ~ v a t i o n or liquidation

prooeeding and that dUring th e pendency of Buch claim th e Reinsurersma.y investigate suoh claim and int.erpose,. at their own eXpenaet in th eproceeqing Where SUch claim is to be adjudicated any de:fenoe or defenceSwhioh they may deem available to th e Company Or i ts liquidator,

c o n s e ~ v a t o r J receiver or statutovy aucoessor. The expense thusinou.rredby th e Reinsurers shall be chargeable, subject to th e approvalof' the Oourt, against the Company as pal't of' .·the expense ot conservationor l iquidation to th e extent ot a pro rata share of th e benefit whioh mayaccrUe to th e Oompany solelY as a resUlt of th e defenoe undertaken byth e ReinauX'srs.




Ad.dendum No. 2

ATTACHING TO and forming pal' t Of F O l i c ~ lto.U61268.___ _____ ______ ___ __ _ ______________ ________________ H ~ ~ _____ ~ ~ ~ ____ _

, • • I , , ; . .. '

IT IS HEREBY understood and agreed t ~ t the f o l l ~ w i ~ g ' ~ l a u s e isdeemed to be ' incorporated in this Agreement : -

SEftVIOE OF SUIT OLAUSm (U.S.A)

I t is 'agreed that in the e v ~ n t of th e f a i i u r ~ of Underwr,itera hereon topay any amount claimed to be due hereunder, U n d e r ~ r i t e r a hereon, at therequest o.f tlJ.e Insured (ot' fteil'1sured), will submit to th e jurisdiotion

of al'lY Court of' competent jUl'isdiction w ~ t h i n the United Btatea and willo o m p ~ y with a l l ~ e q u 1 r e m e n t a neces$ary to give euch Court jurisdictionand a ll mattera, aX'!sing hel'eunder I ? ~ l l be det.ermined in acooro.anoe withth e law andpractioe of such OOUl't.

I t ia further agreed that s e ~ i o e of prooess in such sui t may be madeupon ~ e s s r s . 'Mendes and Mount, 27 W1111Ml street , New York, and th.a:t :l.p.any sui t i n a t i t u t e ~ a g ~ i n s t anyone of ~ h e m upon this oontraot, U n d e r ~ writers will abide by the f inal 'decision of such Court of anyAppellate O , ? u ~ t · in th e event of an a p p e a . l ~ . '

The a Q o v e - u a m ~ a ~ ~ e a ~ t h o ~ i a a d and directed to a ~ c e p t service of process,on behalf of Underwriters in any such sui.t and!oX' u;pon the. r e q ~ e s t of theinsured (or reinsured) to g i v ~ a wX'itten undertaking to the insured (orreinsured) that they will e n ~ e r ~ g e n e r ~ a p p e a ~ a n c e upon. U n d e ~ / r i t e r s ' behalf in the, event suoh a suit ' shal l be ins t i tu ted. .

Further, pursuant to any statute of any s t a t ~ , t e r X ' i t o ~ or,dis t r iot ofthe united s tates whioh makes provision therefor Undel'Writera hereonhereby deSignate th e Superintendent, Commissioner or Direotor 6f Insuranceor other officer speoified for that purpose· in th e statute, or hissuccessor successors in offioe, their true and lawfUl attorneyupon whom may be s 6 ~ e a any l a w f U l p r o o e ~ ~ in aotion, sui t Orprooeed:!,n,g inat:!.tuted by or on behalf' of th e :Lmlu:red (o r Reinsured) oX'~ n y benefioiary hereunder arising out of this oontract of inauranoe\or l'einsuJ;'anoe), and hel'eb;r designate the above-named as the :per-sonto whom the said offioer i s authoriseQ. to mail such prooess O r a trueoopy thereOf.

~ h e words lIUndel'Vll'ltera" and., "inSUred (or reinsured) II mentioned. a.boveare understood to refer to. th e Reimlurers and th e Company respectively.

RR/




EXHIBITB




Umpire Selection Methodology

1. The starting point of the selection process is the list of the 175 JAMS membersidentified as IIInsul.'aJlce Neutrals. II

2. The next step is to reduce this list to a more manageable universe in a fail' and randommanner. We would propose two potential methods of doing this:

a) GeogmphicalJy - By choosing those candidates who reside in the NortheastConidor (Boston, New York, Philadelphia and Washington, DC) we would reduce theuniverse to 42. Ifwe eliminated Boston, the universe would be further. reduced to 31.The geographical method has some advantages including the candidates being morelikely/able to s e ~ ' V e , cost and convenience; or

b) randomly select 30-40 names from the JAMS list.

We are quite flexible as to the reduction methodology as long as it is random and fau', soi f you have any ideas we would be happy to consider them.

3. Both sides would then have a celtain number of strikes. We'would suggestsomewhere between 5 and 10 strikes each. Again, we are quite flexible on the number ofstrikes, as long as there remains a pool of at least 10-12 candidates.

4. Umpu'e questionnaires would be emailed to the remaining candidates and those witha conflict or unable/unwilling to serve would be elimi'nated. To further ensure that theumpire is not pre-disposed on the issue, the questiomlaire would also ask the candidates

whether they had previously considered the issue of the accumulation/aggregationof

asbestos claims as an.occurrence or accident under a reinsurance contract. Thoseanswering affirmatively wouLd also be eliminated.

5. The names of the remaining candidates would then be thrown into a hat and theneutral umpire would be selected. We should probably pick an alternate or two, at thesame tune, in case of'any unforeseen conflicts, etc. so that we don't have to go throughthe whole process all over again.

CERTAIN UNDERWRITERS AT LLOYD'S LONDON v. CENTURY INDEMNITY COMPANY Plaintiff Exhibits

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