Cover note for First - Thrid Excess of Loss Reinsurance



 Exhibit 10.83 
  
 Guy Carpenter & Company, Inc. 
 44 Whippany Road 
 P.O. Box 1926 
 Morristown, NJ 07962-1926 
 973 285 7900  Fax 917 934 9700 
  
 Cover Note 
  
 File #:                  8493-00-0009-00

 Effective Date:  January 1, 2005 
  
 COMPANY: 
  
 SCPIE HOLDINGS, INC., 
 AND/OR SCPIE INDEMNITY
COMPANY, 
 AND/OR AMERICAN HEALTHCARE INDEMNITY COMPANY, 
 AND/OR AMERICAN HEALTHCARE SPECIALTY COMPANY, 
 AND/OR SCPIE INSURANCE SERVICES, INC., 
 AND/OR SCPIE MANAGEMENT SERVICES, INC., 
 LOS
ANGELES, CALIFORNIA 
  
 TYPE 
  
 FIRST – THIRD EXCESS OF LOSS REINSURANCE AGREEMENT 
  
 BUSINESS COVERED: 
  

	 	1.	Physicians & Surgeons Comprehensive Professional and Business Liability, including Clinics and Clinical Laboratories. 

  

	 	2.	Professional and Business Liability Policies for Hospitals and Healthcare Facilities, including: 

  

	 	a.	Modified Claims Made Coverage Hospitals and Medical Centers (Primary & Excess); 

  

	 	b.	Claims Made Coverage Hospitals and Medical Centers (Primary & Excess); 

  

	 	c.	Excess Automobile Liability and Excess Employers Liability associated with the policy forms outlined above. 

  

	 	3.	Errors and Omissions Liability Policies for Managed Care Organizations, and Directors and Officers Liability Policies. 

  

	 	4.	Physicians and Surgeons Comprehensive Professional Liability and Personal Umbrella Business underwritten by Brown & Brown, Inc., Tampa, Florida. 








 Page:                     2 of 9 
 File #:                    8493-00-0009-00 
 Effective Date:    January 1, 2005 
  
 TERM: 
  
 January 1, 2005 to December 31, 2005 as respects claims made during the calendar year 2005. 
  
 The term “claims made” as used herein shall mean (A) In respect of Claims Made Policies, claims first notified to
the Company during the term of this Agreement on any inforce policy or reporting endorsement arising out of incidents subsequent to the retroactive date of said policy as the result of the rendering of or failure to render a professional service or
the reporting of losses which arise from the insured premises and operations incidental to the practice of a physician, hospital or managed care organization and/or (B) In respect of Occurrence, or Modified Claims Made Policies, claims or losses
first notified to the Company during the term of this Agreement. 
  
 Retroactive date January 1, 1976, except for Extra Contractual Obligations which is January 1, 1979. 
  
 In the event of cancellation or non-renewal, and at the option of the Reinsured, Reinsurers agree to run-off policies in force until natural expiration
not to exceed 12 months from the expiration date hereon, at terms to be mutually agreed. 
  
 TERRITORY: 
  
 As
per the Company’s original policies, contracts, or binders. 
  
 EXCLUSIONS: 
  

	 	1.	Insolvency Funds. 

  

	 	2.	Nuclear Incident - Liability - Reinsurance. 

  

	 	3.	Assumed Reinsurance other than for Licensing, Financial Rating Purposes or Acquisition Purposes. 

  

	 	4.	Terrorism per NMA 2929. 








 Page:                     3 of 9 
 File #:                    8493-00-0009-00 
 Effective Date:    January 1, 2005 
  
 RETENTION AND LIMIT: 
  
 First Layer: 
  

	 	A.)	$3,000,000 each and every loss in excess of $2,000,000 each and every loss. 

  

Reinsurers maximum aggregate liability, during the term of this Agreement shall be $18,000,000. 
  
 Not withstanding the foregoing it is a condition hereto that an Annual
Aggregate Deductible of $3,000,000, otherwise recoverable, shall first be deducted before any liability attaches hereon. 
  
 Second Layer: 
  

					
		
	 A.)
	 	$5,000,000 each and every loss in excess of $5,000,000 each and every loss.
			
	 B.)
	 	Reinstatements -	  	First - Computed Pro-Rata as to amount, 60% as to Premium.
			
	 	 	 	  	Second - Computed Pro-Rata as to amount, 100% as to Premium.

  
 Third Layer:

  

					
		
	 A.)
	 	$10,000,000 each and every loss in excess of $10,000,000 each and every loss.
			
	 B.)
	 	Reinstatement -	  	One in all computed Pro-Rata as to amount, 100% as to Premium.

  
 WARRANTY: 
  

	 	1.)	In respect of Physicians and Surgeons Comprehensive Professional and Business Liability Policies, including Clinics and Clinical Laboratories, the Maximum Policy Limit is
$10,000,000 subject to inuring protection of $8,000,000 in excess of $2,000,000 with a maximum aggregate of $8,000,000 during each 12 month period, or so deemed. 

  

	 	2.)	Coverage for Professional and Business Liability Policies for Hospitals is restricted to policies incepting prior to January 1, 2002, the Maximum Policy Limit is $50,000,000, or so
deemed. 








 Page:                     4 of 9 
 File #:                    8493-00-0009-00 
 Effective Date:    January 1, 2005 
  
 WARRANTY (Continued): 
  

	 	3.)	In respect of Professional and Business Liability Policies for Healthcare Facilities, the Maximum Policy Limit is $10,000,000 for policies incepting prior to January 1, 2002, and
$5,000,000 for policies incepting on or after January 1, 2002, or so deemed. 

  

	 	4.)	In respect of Errors and Omissions Liability Policies for Managed Care Organizations, Directors and Officers Liability Policies, and Employment Practices Liability Insurance, the
Maximum Policy Limit is $5,000,000 for policies incepting prior to January 1, 2002, and $1,000,000 for policies incepting on or after January 1, 2002, or so deemed. 

  

	 	5.)	In respect of Professional and Business Liability Policies for Dentists, excluding coverages for Oral and Maxillofacial Surgeons, the Maximum Policy Limit is $10,000,000, for
policies incepting prior to January 1, 2002, and $2,000,000 for policies incepting on or after January 1, 2002, or so deemed. 

  
 PREMIUM: 
  
 First Layer: 
  
 4.43% of G.N.E.P.I. 
 Deposit - $6,158,000 payable $3,079,000 semi-annually. 
 Minimum - $4,926,400 
  
 Second Layer: 
  
 2.47% of G.N.E.P.I. 
 Deposit - $3,433,000 payable $1,716,500 semi-annually. 
 Minimum - $2,746,000 
  
 Third Layer: 
  
 1.45% of G.N.E.P.I. 
 Deposit - $2,016,000 payable $1,008,000 semi-annually. 
 Minimum - $1,612,800 
  
 ATTACHMENT OF LIABILITY: 
  

	 	(A)	For purposes of determining the attachment of the Reinsurers liability hereunder as respects any one loss, all losses (including Discovery Period Losses) involving one or more
Original Insureds, arising from the same incident, and in which First Notice of Claim or Circumstance is notified to the Company during the term of this Agreement shall be covered hereunder. 








 Page:                     5 of 9 
 File #:                    8493-00-0009-00 
 Effective Date:    January 1, 2005 
  
 ATTACHMENT OF LIABILITY (Continued): 
  


	 	(B)	The date of a loss hereunder shall be the earliest date, within the term of this Agreement, that the Company has received First Notice of Claim or Circumstance.


  
 CONTINGENT COMMISSION (FIRST LAYER ONLY):

  

	 	A.	Within 45 days following December 31, 2008, and annually thereafter until all losses on Claims Made during the term of this Contract are settled, a contingent commission calculation
shall be prepared by the Company in accordance with the following: 

  

	 	1.	“Income” means the reinsurance premium for the First Layer for the term of this Contract. 

  

	 	2.	“Outgo” means the sum of: 

  

	 	a.	Losses and Loss Adjustment Expense paid by the Reinsurer on Claims Made under the First Layer during the term of this Contract, plus 

  

	 	b.	The outstanding case reserves of the Reinsurer on Claims Made under the First Layer during the term of this Contract, plus 

  

	 	c.	The Reinsurer’s expense allowance of 30% of Income, plus 

  

	 	d.	As respects any Subscribing Reinsurer who participated on all Predecessor Contracts, the cumulative deficit from the Predecessor Contracts, if any (i.e., the amount by which
Reinsurer’s share of losses incurred under those contracts exceeds the Reinsurer’s earned premium under those contracts). 

  

	 	B.	The contingent commission shall be 25% of the amount by which Income exceeds Outgo. 

  

	 	C.	As respects the first calculation of contingent commission hereunder, the Reinsurer shall remit to the Company, as promptly as possible after receipt and verification of the
Company’s report, one-third of the contingent commission shown to be due to the Company. As respects the second calculation, the Reinsurer shall remit to the Company, as promptly as possible after receipt and verification of the Company’s
report, two-thirds of the contingent commission shown to be due to the Company, less any contingent commission previously paid. As respects the third and each subsequent calculation, the Reinsurer shall remit to the Company, as promptly as possible
after receipt and verification of the Company’s report, the contingent commission shown to be due to the Company, less any contingent commission previously paid. 

  

	 	D.	Should Outgo exceed Income, the difference shall be considered as the Reinsurer’s deficit and shall be carried forward on an unlimited basis into the calculations for the
successors to this Contract, if any. 








 Page:                     6 of 9 
 File #:                    8493-00-0009-00 
 Effective Date:    January 1, 2005 
  

	 	E.	“Predecessor Contracts” means the following reinsurance agreements (or layers of reinsurance agreements) issued to the Company: 

  

	 	1.	Second Excess of Loss Reinsurance, effective January 1, 1997 (01-97-0021); 

  

	 	2.	Second Excess of Loss Reinsurance, effective January 1, 1998 (01-98-0021); 

  

	 	3.	Second Excess of Loss Reinsurance, effective January 1, 1999 (8493-00-0001-99-02); 

  

	 	4.	First Excess of Loss Reinsurance, effective January 1, 2000 Contract 8493-0009-2000-1; 

  

	 	5.	First Layer of First - Fifth Excess of Loss Reinsurance, effective January 1, 2001. Contract 8493-0009-01; 

  

	 	6.	First Layer of First - Fifth Excess of Reinsurance, effective January 1, 2002. Contract 8493-0009-01. 

  

	 	7.	First Layer of First - Fifth Excess of Loss Reinsurance, effective January 1, 2003. Contract 8493-0009-00; 

  

	 	8.	First Layer of First - Fifth Excess of Loss Reinsurance, effective January 1, 2004 contract 8493-0009-00. 

  
 ACCOUNTING: 
  
 Premiums - Payments within 60 days of respective due date. 
 Losses - Payments within 60 days of receipt of proof of loss. 
 Outstanding losses reported individually as
they occur. 
  
 GENERAL CONDITIONS: 
  
 Loss Adjustment Expenses to be included with the Ultimate Net Loss.

 Excess of Original Policy Limits Clause 
 80% Extra Contractual Obligations Clause 
 Ultimate Net Loss Clause including Declaratory Judgement Expenses
incurred in 
     connection with coverage questions and legal actions related to a specific claim. 








 Page:                     7 of 9 
 File #:                    8493-00-0009-00 
 Effective Date:    January 1, 2005 
  
 Net Retained Lines Clause 
 Notice of Loss Clause 
 Loss Funding Clause - Including IBNR (See Attached) 
 Special Funding Clause 
 Confidentiality
Clause 
 Commutation Clause by Mutual Agreement 
 Federal Excise Tax Clause 
 Errors and Omissions Clause 
 Insolvency Clause 
 Offset Clause – BRMA
36A 
 Service of Suit Clause 
 Mode of Execution Clause 
 Arbitration Clause 
 Access to Records Clause 
 Guy Carpenter & Company, Inc. Intermediary Clause 
  
 INFORMATION: 
  

				
	 2004 Premium Estimates by Line:

	  	 
	 Physicians SCPIE
	  	$	100,000,000
	 Physicians (Standard) AHI-CA
	  	$	19,000,000
	 Physicians Other than CA. Std. AHI
	  	$	3,600,000
	 Physicians - Non Standard AHI
	  	$	3,000,000
	 	  	
	

	 Subtotal:
	  	$	125,600,000
		
	 Healthcare Facilities
	  	$	9,000,000
	 Heathcare Providers
	  	$	1,800,000
	 Umbrella
	  	$	600,000
	 Managed Care E&O
	  	$	1,000,000
	 Directors & Officers
	  	$	540,000
	 SCPIE Best Defense
	  	$	460,000
	 	  	
	

	 Subtotal:
	  	$	13,400,000
		
	 Grand Total:
	  	$	139,000,000

  
 REGULATION 98:

  
 Premium and loss payments made to Guy Carpenter shall be
deposited in a Premium and Loss Account in accordance with Section 32.3(a)(1) of Regulation 98 of the New York Insurance Department. The parties hereto consent to withdrawals from said account in accordance with Section 32.3(a)(3) of the Regulation,
including interest and Federal Excise Tax. 
  
 BROKERAGE:

  
 10.00% 
  
 The brokerage rate on reinstatement premium shall be 5% for those markets
paying brokerage on such premium. 








 Page:                     8 of 9 
 File #:                    8493-00-0009-00 
 Effective Date:    January 1, 2005 
  
 EFFECTED WITH: 
  

												
	 Reinsurer

	  	FEIN #

	  	1st Layer

	 	 	2nd Layer

	 	 	3rd Layer

	 
	 Hannover Rückversicherung-AG
	  	AA-1340125	  	35.0000	%	 	30.0000	%	 	15.0000	%
					
	Guy Carpenter & Company, Limited	  	 	  	 	 	 	 	 	 	 	 
	Alea London Limited on behalf of Alea London Limited	  	AA-1120146	  	2.0000	%	 	4.0000	%	 	NIL	 
	 Aspen Insurance UK Limited
	  	AA-1120337	  	8.2110	%	 	5.1040	%	 	6.7460	%
	 QBE Reinsurance (Europe) Limited
	  	AA-1780070	  	6.6350	%	 	9.5300	%	 	8.6950	%
	 Lloyd’s Underwriter Syndicate No. 0435 FDY
	  	AA-1126435	  	NIL	 	 	9.1689	%	 	13.4094	%
	 Lloyd’s Underwriter Syndicate No. 0570 ATR
	  	AA-1126570	  	NIL	 	 	1.0000	%	 	2.5000	%
	 Lloyd’s Underwriter Syndicate No. 0623 AFB
	  	AA-1126623	  	NIL	 	 	0.7500	%	 	3.7546	%
	 Lloyd’s Underwriter Syndicate No. 0727 SAM
	  	AA-1126727	  	NIL	 	 	1.7500	%	 	2.0000	%
	 Lloyd’s Underwriter Syndicate No. 0780 ADV
	  	AA-1126780	  	1.1350	%	 	1.4712	%	 	4.3638	%
	 Lloyd’s Underwriter Syndicate No. 1084 CSL
	  	AA-1127084	  	NIL	 	 	0.7356	%	 	3.1289	%
	 Lloyd’s Underwriter Syndicate No. 2001 AML
	  	AA-1128001	  	NIL	 	 	NIL	 	 	1.5000	%
	 Lloyd’s Underwriter Syndicate No. 2003 SJC
	  	AA-1128003	  	3.6345	%	 	NIL	 	 	6.0047	%
	 Lloyd’s Underwriter Syndicate No. 2488 AGM
	  	AA-1128488	  	20.0000	%	 	16.5000	%	 	NIL	 
	 Lloyd’s Underwriter Syndicate No. 2623 AFB
	  	AA-1128623	  	NIL	 	 	1.7500	%	 	8.7608	%
	 Lloyd’s Underwriter Syndicate No. 2791 MAP
	  	AA-1128791	  	14.0095	%	 	6.1779	%	 	6.7047	%
	 Lloyd’s Underwriter Syndicate No. 2987 BRT
	  	AA-1128987	  	NIL	 	 	4.9327	%	 	6.2577	%
	 Lloyd’s Underwriter Syndicate No. 4472 LIB
	  	AA-1126006	  	9.3750	%	 	7.1297	%	 	11.1744	%
	 	  	 	  	
	
	 	
	
	 	
	

	 Total
	  	 	  	100.0000	%	 	100.0000	%	 	100.0000	%
	 	  	 	  	
	
	 	
	
	 	
	









 Page:                     9 of 9 
 File #:                    8493-00-0009-00 
 Effective Date:    January 1, 2005 
  
 This Cover Note confirms the terms and conditions of the reinsurance negotiated with the listed reinsurers on your behalf. In the event that
any of these details do not meet with your approval, or the security of the participating reinsurers does not meet with your requirements, please notify this office immediately. If all is in order, please sign and return one copy of this Cover Note
to confirm your approval and complete our files. 
  

			
	 /s/ Paul Molloy

	 	 /s/ A. Clarke Blanton


	 Officer Title
 Guy Carpenter & Company, Inc.
 March 7, 2005
	 	 Officer Title
 Guy Carpenter & Company, Inc.
 March 7, 2005

	
	 	

	 Date
  
	 	Date
	 /s/ Donald J. Zuk

	 	 
	 SCPIE Indemnity Company
  
	 	 
	 March 9, 2005

	 	 
	Date