Exhibit 10.47


 


COMMUTATION AND SETTLEMENT AGREEMENT


(hereinafter referred to as the “Agreement”)


 


This Agreement
is entered into by and between ACE Guaranty
Corp. (formerly known as ACE Guaranty Re Inc., hereinafter referred
to as the “Reinsured”) and ACE Bermuda Insurance Ltd. (hereinafter
referred to as the “Reinsurer”)
and made effective 11:59:59 p.m., Eastern Daylight Savings Time, June 30, 2003
(the “Commutation Date”).


 


WHEREAS, the
Reinsured and Reinsurer are parties to a Whole-Account Excess of Loss
Reinsurance Agreement for the Term originally incepting January 1, 2001 and
terminating January 1, 2011, or such earlier date as may be provided under the
terms of such agreement (referred to hereinafter as the “Contract”), which is
attached hereto and made part of this Agreement; and


 


WHEREAS, the
Reinsured, Reinsurer and State Street Bank and Trust Company (the “Trustee”)
have entered into a trust agreement dated 28th September 2001 (the
“Trust Agreement”) pursuant to the requirements of Article XIII of the
Contract, for the purpose of securing the obligations of the Reinsurer under
the Contract; and


 


WHEREAS,
notwithstanding the termination provisions set forth in the Contract, the
Reinsured and the Reinsurer mutually agree to a commutation of the Contract as
at the Commutation Date; and


 


WHEREAS, the
Reinsured and Reinsurer desire to fully and finally settle and commute all
obligations and liabilities, known and unknown, of the Reinsured and the
Reinsurer under the Contract.


 


NOW,
THEREFORE, for good and valuable consideration the receipt of which is hereby
acknowledged, IT IS AGREED BY AND BETWEEN THE REINSURER AND THE REINSURED THAT:


 


1.                                       As
consideration for the following releases: (a) the Reinsurer shall pay the
Reinsured the commutation amount of fifty three million three hundred eighty
three thousand five hundred United States dollars (US$53,383,500), such amount
being equivalent to the sum of: (i) $51,508,500 (the balance of the Profit
Commission Account as defined in the Contract, as of the Commutation Date), and
(ii) $1,875,000 (the unearned portion of the Reinsurer’s Margin), within ten
(10) days after the Reinsurer’s receipt of this Agreement having been fully
executed by the Reinsured; and (b) the Reinsured shall provide written
instructions to the Trustee requesting that all funds held pursuant to the
Trust Agreement be immediately released to the Reinsurer, and that the Trust
Agreement be terminated as of the Commutation Date.


 


2.                                       Subject
to the execution of this Agreement by the parties hereto, as of the Commutation
Date, the Reinsured releases and discharges the Reinsurer from any and all
present and future obligations, claims, demands, liabilities and/or losses
whatsoever, all whether known or unknown, reported or unreported, and whether
currently existing or arising in the future, including, but not limited to, all
claims, obligations, offsets, debts, demands, actions, causes of action, suits,
duties, sums of money, covenants, contracts, controversies, agreements,
reckonings, bonds, bills, promises, doings, omissions, damages, liability for
payment of interest, judgments, costs, expenses, losses,


 


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adjustments,
accounts, representations and warranties whatsoever, which the Reinsured ever
had, now have, or hereinafter may have, whether grounded in law or equity, in
contract or in tort, against the Reinsurer or any other party by reason of any
matter whatsoever arising out of or related to the Contract, it being the
intention of the parties that this release operate as a full and final
settlement of the Reinsurer’s current future obligations and liabilities to the
Reinsured arising out of or related to the Contract.


 


3.                                       Subject
to the release by the Reinsured of the Reinsurer as provided for in Paragraph 2
herein, the Reinsurer hereby releases and discharges the Reinsured from any and
all present and future obligations, claims, demands, liabilities and/or losses
whatsoever, all whether known or unknown, reported or unreported, and whether
currently existing or arising in the future, including, but not limited to, all
claims, obligations, offsets, debts, demands, actions, causes of action, suits,
duties, sums of money, covenants, contracts, controversies, agreements,
reckonings, bonds, bills, promises, doings, omissions, damages, liability for
payment of interest, judgments, costs expenses, losses, adjustments, accounts,
representations and warranties whatsoever, which the Reinsurer ever had, now
have, or hereinafter may have, whether grounded in law or equity, in contract
or in tort, against the Reinsured or any other party by reason of any matter
whatsoever arising out of or related to the Contract, it being the intention of
the parties that this release operate as a full and final settlement of the
Reinsured’s current and future obligations and liabilities to the Reinsurer
arising out of or related to the Contract.


 


4.                                       Each
party acknowledges that the consideration specified in Paragraph 1 of this
Agreement and the mutual releases set forth in Paragraphs 2 and 3 of this
Agreement constitute adequate and fair consideration and this Agreement shall
operate as a complete accord, satisfaction, settlement and commutation of all
of the obligations of the Reinsurer and the Reinsured under the Contract.


 


5.                                       The
parties hereto expressly warrant and represent that they are corporations in
good standing in their respective places of domicile; that the execution of
this Agreement is fully authorized by each of them; that the person or persons
executing this Agreement have the necessary and appropriate authority to do so;
that there are no pending agreements, transactions, or negotiations to which
any of them are a party that would render this agreement or any party thereof
void, voidable, or unenforceable; and that no authorization, consent or
approval of any government entity is required to make this Agreement valid and
binding upon them and that no claim or loss being paid or settled by this
Agreement has been previously assigned, sold or transferred to any other person
or entity.  The parties hereto further
warrant, each to the other, that they have not transferred, assigned or
contracted to transfer or assign to any person, corporation, company or entity
any of their rights, title, benefit or obligations arising out of or in
connection with the Contract, including without limitation any balances,
accounts, costs, claims, counterclaims or demands which are within the
contemplation of this Agreement.


 


6.                                       This
Agreement contains the entire agreement between the parties as respects its
subject matter.  All discussions and
agreements previously entertained between the parties concerning the subject
matter of this commutation and settlement are merged into this Agreement.  This Agreement may not be modified or
amended, or any of its provisions waived, except by an instrument in writing,
signed by the parties hereunder.


 


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7.                                       Any
dispute, controversy or claim arising out of or relating to this Agreement
shall be subject to Arbitration in accordance with the provisions of Article
XIV of the Contract, Section 14.2, Arbitration.


 


8.                                       This
Agreement shall be governed and construed in accordance with the laws of the
State of New York (without giving effect to the conflicts of laws provisions
thereof).


 


9.                                       This
Agreement may be executed and delivered in counterparts, each of which, when so
executed and delivered shall constitute an original and all of such
counterparts shall together constitute one and the same instrument.


 


 


IN WITNESS
WHEREOF, this Agreement has been executed on the date first written above by
the following individuals authorized to act on behalf of the parties:


 


 


	
  For and on
  Behalf of:

  	
  For and on
  Behalf of: 

  
	
   

  	
   

  
	
  ACE BERMUDA INSURANCE LTD.

  	
  ACE GUARANTY CORP.

  
	
  In Hamilton, Bermuda

  	
  (FORMERLY KNOWN AS ACE

  
	
   

  	
  GUARANTY RE INC.)

  
	
   

  	
   

  
	
   

  	
   

  
	
     /s/ Simon Burton

  	
   

  	
  /s/ Lisa Mumford

  	
   

  
	
   

  	
   

  
	
  Name: SIMON
  BURTON

  	
  Name: Lisa
  Mumford

  
	
  Title:
  EXECUTIVE V.P.

  	
  Title:
  Senior Vice President & Chief Financial Officer

  
	
  Date: JULY
  2, 2003

  	
  Date: June 26,
  2003

  
				



 


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