EX-10.11 10 file009.txt SLIP AGREEMENT EXHIBIT 10.11 WILLIS Reference : SGT5667. Reinsured : National Indemnity Company. Type : Quota Share. REINSURED: NATIONAL INDEMNITY COMPANY, Omaha, USA. PERIOD: Covering business incepting between 1 January 2002 and 31 May 2002, both days inclusive, in respect of the 2002 year of account excluding the reinsurance to close from earlier years of account. In addition US Surplus Lines Business written between 1 June 2002 and 30 June 2002, both days inclusive, is covered hereunder. TYPE: Quota Share. INTEREST: To cover the Reinsured's liabilities assumed under Quota Share Agreement, Willis Ltd Reference SGT5648, in the name of Syndicate 2020, Wellington Underwriting, and in respect of their Whole Account from 1 January 2002 to 31 May 2002, plus US Surplus Lines Business written from 1 June 2002 to 30 June 2002. TERRITORIAL SCOPE: Worldwide TREATY DETAIL: The Reinsurer agrees to accept a 34% share of the Reinsured's 35.70% Quota Share allocation of Syndicate 2020, Wellington Underwriting's Whole Account for the specified period. Syndicate 2020, Wellington Underwriting's Stamp Capacity for 2002: GBP 625,000,000 All of the above is subject to a maximum ceded premium of 34% of 30% of Stamp Capacity or GBP 63,750,000. The above capacity and limit are calculated at the following rates of exchange: GBP 1 = USD 1.55 = CAD 2.27 = EUR 1.52 = AUD 2.51 = JPY 170.91 = ZAR 10.29 = CHF 2.39. The Reinsurer shall share in the benefits (to the extent WILLIS Reference : SGT5667. Reinsured : National Indemnity Company. Type : Quota Share. recoveries are collected) and costs of all reinsurances protecting Syndicate 2020, Wellington Underwriting's Whole Account, other than the Whole Account Stop Loss coverage bought by the Syndicate. PREMIUM: Reinsurer's quota share of 100% Whole Account premium written less Reinsured's commissions and expenses. (Premiums are original premiums less all overseas levies, taxes and original brokerage and commissions, with no further deduction for any other fees, costs, or levies). CASH LOSS: GBP 170,000 any one loss to this reinsurance (net of claims collectable under other reinsurances). OVERRIDING COMMISSION: 9.0 % on gross net premiums ceded. Gross net premiums are original premiums less all overseas levies, taxes and original brokerage and commissions. Net premiums are Gross net premiums less reinsurance costs. PROFIT COMMISSION: 10% (after 7.5% Reinsurer's expenses) on profit amount up to 20% of Net Premiums. 25% thereafter. Provisional Profit Commission payable by Reinsurer at 31 December, 2004 and adjustable quarterly thereafter until execution of Reinsurer's Commutation and Hold Harmless Agreement. Plus an additional 2% with calculation based on profit prior to the application of any Profit Commission calculation on the original Quota Share Agreement (Willis Ltd Reference SGT5648) Payment of any provisional Profit Commission is to be made by 31 March 2005. Subsequent quarterly adjustments to the Profit Commission are to be paid within 90 days of the end of each quarter. REINSURANCE PREMIUM ALLOCATION: 34% of Reinsurance Premium costs allocated to the Qualifying Quota Share underwritten by the Reinsured, Willis Limited Reference SGT5648. 2 WILLIS Reference : SGT5667. Reinsured : National Indemnity Company. Type : Quota Share. ACCOUNTS: Quarterly. Accounts to be rendered within 45 days of due date. Account to be paid in settlement currencies. Undisputed items to be paid within 15 working days of rendering, other items upon agreement. First Quarterly Account as at 30 September, 2002. Funds Withheld Basis. Interest payable to be calculated at either the rates on USD Funds and GBP Funds as reported in the Syndicate's accounts, or the applicable 90 days London Interbank Offer Rates (LIBOR), whichever is the lesser, as applied to each currency individually. No interest on funds withheld which are due from Reinsurer from date of Reinsured's payment of Account. TAXES: Federal Excise Tax as applicable to be deducted from Premium due Reinsurer. LETTERS OF CREDIT: Reinsurer to provide appropriate Letter of Credit to the amount of 40% of Expected Gross Written Premium ceded hereunder, plus Letters of Credit required in excess of this amount in order to comply with NAIC requirements, as applicable. Letters of credit must be in form required for NICO to receive credit for reinsurance under NAIC model credit for reinsurance act. GENERAL CONDITIONS: Subject to Lloyd's and FSA approval. Arbitration Clause as attached. Proper Law and Jurisdiction governing this Reinsurance (including Arbitration Tribunal) shall be the law of Nebraska. All reinsurances (excess of loss or otherwise) purchased by Syndicate 2020, Wellington Underwriting, to be for common account, other than Whole Account Stop Loss. Costs and recoveries to be shown separately in each account to the extent that such information is provided by 3 WILLIS Reference : SGT5667. Reinsured : National Indemnity Company. Type : Quota Share. Syndicate 2020. The Reinsurer shall hereon follow the fortunes of Syndicate 2020, Wellington Underwriting and the Reinsured in respect of all original business and all common account reinsurances which are the subject matter of this reinsurance. This Reinsurance may be commuted at the request of either party after five years from inception and at any subsequent anniversary date, at conditions to be agreed. Nevertheless this Reinsurance may not be commuted any earlier than the original Qualifying Quota Share (Willis Limited Reference SGT5648) except by Agreement. Access to Records, as attached. Willis Limited Intermediary Clause, amended for direct settlements, as attached. Offset, as attached. No Third Party Rights, as attached. Non-waiver, as attached. Insolvency, as attached. Noted and agreed that the Reinsurer has made their own underwriting investigations of the business to be ceded hereunder. WORDING: To be agreed. OFFSET ------ The Reinsured or the Reinsurer may offset any balance(s) due from the other under this Agreement or any other reinsurance agreement between them. Each party may exercise such right at any time whether the balance(s) due are on account of premiums or losses or otherwise. 4 WILLIS Reference : SGT5667. Reinsured : National Indemnity Company. Type : Quota Share. NO THIRD PARTY RIGHTS --------------------- In no event shall anyone other than the Reinsurer or the Reinsured have any rights under this Agreement, whether under the Third Parties' Rights under Contracts Act (1999) or otherwise. NON-WAIVER ---------- The failure of the Reinsured or the Reinsurer to insist on compliance with this Agreement or to exercise any right or remedy hereunder shall not constitute a waiver of any rights or remedy contained herein or otherwise, nor estop either party from thereafter demanding full and complete compliance nor prevent either party from exercising such rights or remedy in the future. INSOLVENCY ---------- In the event of the insolvency or liquidation of the Reinsured, this reinsurance shall be payable solely to the Reinsured or to its liquidator, receiver, conservator or statutory successor in accordance with all the terms and conditions of this Agreement. Under no circumstances shall the Reinsurer's obligations be accelerated in time or enlarged in the event of the insolvency, scheme of arrangement or other impairment of the Reinsured. Insolvency Clause to be amended as required for Reinsured to receive credit for this reinsurance under NAIC model credit for reinsurance act. ARIAS ARBITRATION AGREEMENT --------------------------- All disputes and differences arising under or in connection with this Agreement shall be referred to arbitration under ARIAS Arbitration Rules. The Arbitration Tribunal shall consist of three arbitrators, one to be appointed by the Claimant, one to be appointed by the Respondent and the third to be appointed by the two appointed arbitrators. The third member of the Tribunal shall be appointed as soon as practicable (and no later than 28 days) after the appointment of the two party-appointed arbitrators. The Tribunal shall be constituted upon the appointment of the third arbitrator. The Arbitrators shall be persons (including those who have retired) with not less than ten years' experience of insurance or reinsurance within the industry. Where a party fails to appoint an arbitrator within 14 days of being called upon to do so or where the two party-appointed arbitrators fail to appoint a third within 28 days of their appointment, then upon application ARIAS (US) will appoint an arbitrator to fill the vacancy. At any time prior to the appointment by ARIAS (US) the party or arbitrators in default may make such appointment. 5 WILLIS Reference : SGT5667. Reinsured : National Indemnity Company. Type : Quota Share. The Tribunal may in its sole discretion make such orders and directions as it considers to be necessary for the final determination of the matters in dispute. The Tribunal shall have the widest discretion permitted under the law governing the arbitral procedure when making such orders or directions. The seat of arbitration shall be Omaha, Nebraska. The proper law of this Agreement shall be the law of Nebraska. ACCESS TO RECORDS ----------------- The Reinsurer or their duly authorised representatives shall, at all reasonable times and upon reasonable notice being given, be entitled to inspect all relevant records, correspondence and documents in the possession of the Reinsured relating to the adjustment of a loss or losses under this Agreement. This entitlement shall continue for as long as the Reinsurer remains liable under this Agreement. A copy of the Inspection Report and/or a summary of its findings shall be delivered to the Reinsured within four weeks of the completion of the inspection and any costs and expenses incurred under any such inspection shall be borne by the Reinsurer. Notwithstanding the foregoing, this Article shall not be understood to alter any other terms of this Agreement and the Reinsurer shall not delay payment of amounts due to the Reinsured pending the results of any such inspection. However this shall not prejudice the Reinsurer rights to recover any amounts they have paid to the Reinsured which, following such inspection, are proven to be outside of the terms of this Agreement. INTERMEDIARY ------------ Willis Limited, Ten Trinity Square, London, EC3P 3AX are recognised as the intermediary negotiating this Agreement; through whom all communications relating thereto shall be transmitted to both parties. Notwithstanding the above payments of balances due shall be made directly between the Reinsured and Reinsurer. 6 WILLIS Reference : SGT5667. Reinsured : National Indemnity Company. Type : Quota Share. SIGNING PAGE ------------ | Signed | | Line % | Approved for National Indemnity Company 06 June 2002 by /s/ Forrest N. Katter, Secretary -------------------------------- Forrest N. Katter, Secretary