Exhibit 10.28


 


	
   

  	
  ACEBDA INS. LTD

  
	
   

  	
  XOL “Piere Cover”

  
	
   

  	
   

  
	
   

  	
  ACE Berumuda

  
	
   

  	
  Insurance Ltd.

  



 





ace bermuda


 


PER CONTRACT EXCESS OF LOSS REINSURANCE
AGREEMENT


(the “Agreement”)


 


	
  COMPANY:

  	
   

  	
  ACE Capital Re International Ltd.

  
	
   

  	
   

  	
   

  
	
  REINSURER:

  	
   

  	
  ACE Bermuda Insurance Ltd.

  
	
   

  	
   

  	
   

  
	
  TYPE:

  	
   

  	
  Per Contract Excess of Loss

  
	
   

  	
   

  	
   

  
	
  TERM:

  	
   

  	
  The Term of this Agreement shall commence as of 12:01 a.m.  Atlantic Standard Time on December 31,
  2001 (the “Effective Date”) and
  shall terminate on the earlier of (i) the Cancellation Date and (ii) 12:01
  a.m.  Atlantic Standard Time on
  December 31, 2026 (the earlier to occur of such dates is the “Termination Date”).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Except as provided herein, after the Termination Date the parties
  will have no rights or obligations under this Agreement other than those
  rights or obligations that have accrued during the Term and remain
  unsatisfied as of the Termination Date.

  
	
   

  	
   

  	
   

  
	
  CANCELLATION:

  	
   

  	
  Subject to ten (10) days prior written notice from the Company to the
  Reinsurer, the Company may cancel this Agreement at any time (the effective
  date of such cancellation is the “Cancellation
  Date”); provided that effective upon the Cancellation Date, no
  return premium shall be due from the Reinsurer to the Company.

  
	
   

  	
   

  	
   

  
	
  PREMIUM:

  	
   

  	
  For the Term, the Company shall pay the Reinsurer a single premium of
  one hundred twenty-five million United States dollars ($125,000,000) on
  December 31, 2001.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Premium payable by the Company as set forth herein shall not be
  reduced by any applicable taxes which may be payable by the Company.

  
	
   

  	
   

  	
   

  
	
  TERRITORY:

  	
   

  	
  This Agreement shall be worldwide in geographical scope.

  
	
   

  	
   

  	
   

  
	
  COVERAGE:

  	
   

  	
  Subject to the Aggregate Limit of liability and all other terms,
  conditions and limitations of this Agreement, the Reinsurer agrees to
  indemnify the Company

  



 

















 


	
   

  	
   

  	
  for all Net Loss paid during the Term by the Company under each
  Covered Contract in excess of the Per Contract Retention up to the Per
  Contract Limit.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For the avoidance of doubt, there may be more than one Net Loss
  payment under a Covered Contract and all such Net Loss payments shall be the
  subject of coverage hereunder.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Company retains the right, in its sole discretion not to cede all
  or any portion of a Net Loss to the Reinsurer hereunder.

  
	
   

  	
   

  	
   

  
	
  PER CONTRACT 

  	
   

  	
   

  
	
  LIMIT:

  	
   

  	
  Subject to the Aggregate Limit, the Reinsurer’s maximum limit of
  liability for all Net Loss under each Covered Contract shall not exceed fifty
  million United States dollars ($50,000,000) (“Per Contract Limit”).

  
	
   

  	
   

  	
   

  
	
  TERM

  	
   

  	
   

  
	
  AGGREGATE

  	
   

  	
   

  
	
  LIMIT:

  	
   

  	
  Notwithstanding the Per Contract Limit, the Reinsurer’s maximum limit
  of liability for all Net Losses during the Term under this Agreement shall
  not exceed four hundred million United States dollars ($400,000,000) (“Aggregate Limit”).

  
	
   

  	
   

  	
   

  
	
  PER CONTACT

  	
   

  	
   

  
	
  RETENTION:

  	
   

  	
  The Reinsurer shall not be liable for any Net Losses in respect of a
  Covered Contract until the total Net Losses paid by the Company under such
  Covered Contract exceed five million United States dollars ($5,000,000) (“Per Contract Retention”).

  
	
   

  	
   

  	
   

  
	
  REPORTS:

  	
   

  	
  The Company shall provide the Reinsurer with a Bordereau on the
  Business Day following January 14th of each year during the Term listing each
  Covered Contract in force as at December 31st of the immediately
  preceding year.  Failure by the
  Company to list a Covered Contract shall not constitute grounds for denial of
  a claim under this Agreement, but shall be remedied as soon as discovered.

  
	
   

  	
   

  	
   

  
	
  CLAIMS NOTICES

  	
   

  	
   

  
	
  & SETTLEMENTS:

  	
   

  	
  Notice. 
  The Company shall promptly advise the Reinsurer, giving all relevant
  details, of a Net Loss or potential Net Loss under a Covered Contract that
  could reasonably be expected to become a ceded Net Loss under this Agreement
  (the “Notice”).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Net Loss Payments.  The Reinsurer shall pay each Net Loss due hereunder to the
  Company within ten (10) Business Days following receipt of a Notice from the
  Company; provided that if no later than three (3) Business Days prior to the
  due

  



 


2

















 


	
   

  	
   

  	
  date of the Company’s payment of a Net Loss under the Covered
  Contract (“Due Date”) the Reinsurer is furnished with particulars of the Net
  Loss and the Company’s certification that the Company’s claim must be paid on
  the Due Date, at the request of the Company, the Reinsurer shall place the
  Company in funds for the Reinsurer’s share of such claim payment on or before
  such due date, in satisfaction of its obligations to the Company in respect
  of such Net Loss.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Loss Settlements & Claims Cooperation.  All loss settlements made by the Company,
  provided they are within the terms of this Agreement and the applicable
  Covered Contract, shall be unconditionally binding upon the Reinsurer.  Notwithstanding the foregoing, when
  requested by the Reinsurer, the Company shall permit the Reinsurer to
  associate (at the Reinsurer’s expense) in the defense and control of any
  investigation, claim or other action pertaining to a Net Loss under this
  Agreement.

  
	
   

  	
   

  	
   

  
	
  DEFINITIONS:

  	
   

  	
  (1)              “Actual
  Loss” means, in respect of:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)                                                              a
  Covered Contract which is a Loss Portfolio Transfer:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)          any True-Up payments actually paid by the
  Company to a Portfolio Fund in accordance with the terms of such Covered
  Contract, and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)         any actual claims paid by the Company to a
  cedent of such Covered Contract after the Portfolio Fund balance is reduced
  to zero.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)                                                         all
  Covered Contracts other than those set out in (i) above, any loss, claim,
  profit commission, and/or any other payment by the Company to a cedent under
  and pursuant to the terms of a Covered Contract.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2)              “Business Day” means a day that banks and
  foreign exchange offices are open for business in Bermuda.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (3)              “Covered Contracts” means all binders,
  contracts, policies, and other obligations in respect of insurance,
  reinsurance, financial guaranty, other financial obligations underwritten by
  the Company in accordance with its guidelines, or derivatives (including but
  not limited to swaps) in-force at the Effective Date, or written or renewed
  during the Term, in each if such contracts are issued or entered into by the
  Company; provided that Covered Contracts shall not include:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)                                                        unless
  otherwise agreed by the parties, any contracts or treaties ceded by the
  Company to the Reinsurer under a separate reinsurance

  



 


3

















 


	
   

  	
   

  	
  agreement.  For purposes of
  clarification and not limitation, such separate reinsurance agreements
  include, as of the Effective Date, the Per Policy Excess of Loss Second
  Retrocession Agreement between the parties dated January 1, 2000 in respect
  of title risks ceded by ACE Capital Title Reinsurance Company to the Company;
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)                                  collateral
  (howsoever called) required to be posted as security for a Covered Contract;
  provided that True-Up payments shall not be considered collateral for
  purposes of this provision.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For the avoidance of doubt and unless otherwise agreed by the
  parties, any contracts or treaties ceded by the Reinsurer to the Company
  shall be included in the definition of Covered Contract.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (4)              “Extra Contractual Obligations” means
  those liabilities which are not covered under any other provision of this
  Agreement and which arise from the Company’s handling of any claim on
  business covered hereunder, such liabilities arising because of, but not
  limited to, the following: failure of the Company to settle within the policy
  limit, or by reason of the Company’s 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 or prosecution of an appeal consequent upon such action.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (5)              “Inuring Reinsurance” means reinsurance,
  offsetting swaps, and other hedging arrangements that by their terms apply
  first in payment of Net Loss on a Covered Contract to the Company and thereby
  reduce the Net Loss payable by the Reinsurer hereunder.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (6)              “Loss
  Portfolio Transfer” means a type of Covered Contract under which a block
  of business, which was insured or reinsured by a cedent, is reinsured to the
  Company in exchange for payment of premium by the cedent to the Company which
  premium is held in a Portfolio Fund and used to pay claims under the Covered
  Contract.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (7)              “Losses
  in Excess of Policy Limits” means any amount of loss together with any
  legal costs and expenses incurred in connection therewith, paid or payable by
  the Company in excess of its policy limits, but otherwise within the coverage
  terms of the policy, as a result of an action against it by its insured or
  its insured’s assignee to recover damages the insured is legally obligated to
  pay to a third party claimant because of the Company’s alleged or actual
  negligence or bad faith in rejecting a settlement within the policy limits,
  or in discharging its duty to defend or prepare the defense in the trial

  



 


4

















 


	
   

  	
   

  	
  of an action against its insured, or in discharging its duty to
  prepare or prosecute an appeal consequent upon such action.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (8)              “Net
  Loss” means the losses for which the Company is liable under Covered
  Contracts, such losses to include (a) the Actual Loss, if any paid by the
  Company in satisfaction of its contractual obligations under a Covered
  Contract, (b) loss expenses of the Company whether incurred on its own
  account or as reimbursement under a Covered Contract, including but not
  limited to expenses incurred in connection with settlements, litigation,
  arbitration, research of coverage questions, workouts of a potential loss,
  protection and perfection of any interest under a Covered Contract, but loss
  expenses shall not include the salaries or overhead of the Company, and (c)
  Losses in Excess of Policy Limits and Extra Contractual Obligations covered
  under the terms of a Covered Contract or arising by reason of the liability
  of the Company in settling a covered loss under a Covered Contract.  Nothing in this clause shall be construed
  to mean that losses under this Agreement are not recoverable until the Company’s
  net loss has been ascertained.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All salvages, recoveries, payments and reversals or reductions of
  verdicts or judgments, Portfolio Disbursements, and Profit Commissions,
  including amounts recoverable under Inuring Reinsurance (hereinafter “Recoveries”) (net of the cost of obtaining
  such Recoveries) provided that such Recoveries are received during the Term
  shall be applied as if recovered, received or obtained prior to the aforesaid
  settlement and shall be deducted from the actual losses sustained under a
  Covered Contract to arrive at the amount of the Net Loss under a Covered
  Contract.  To the extent Recoveries
  are received by the Company after a Net Loss has been paid by the Reinsurer,
  the Company shall account to the Reinsurer for the Reinsurer’s share of such
  Recoveries.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (9)              “Profit
  Commissions” means, profit commissions (howsoever called) which are paid
  by the cedent to the Company pursuant to the terms of a Covered Contract and
  which are a function of the profit position of the underlying risk to the
  Covered Contract.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (10)       “Portfolio
  Disbursements” means, in respect of a Covered Contract which is a Loss
  Portfolio Transfer, the amount received by the Company from a Portfolio Fund
  pursuant to a provision in such Covered Contract allowing the Company to
  withdraw monies held in the Portfolio Fund which are in excess of the minimum
  required balance of the Portfolio Fund.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (11)       “Portfolio
  Fund” means, in respect of a Covered Contract which is a Loss Portfolio
  Transfer, the trust or other segregated assets, if applicable,

  



 


5

















 


	
   

  	
   

  	
  or, if the premium due the Company under a Covered Contract is
  retained by the cedent on a ‘funds withheld’ basis, then the premium so
  withheld by the cedent (together with interest which accrues thereon).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (12)       “True-Up”
  means the liability, if any, of the Company pursuant to the terms of a
  Covered Contract to make payments to a Portfolio Fund to maintain the same at
  a required minimum level.  True-Up
  payments do not include the original or any subsequent premium or related
  payments by a cedent to the Company (whether or not on a funds withheld
  basis) which are deposited or held in the Portfolio Fund.

  
	
   

  	
   

  	
   

  
	
  GENERAL CONDITIONS:

  	
   

  	
   

  
	
   

  	
   

  	
  1.                   Inspection
  and Audit.   The Reinsurer or its authorized representative
  shall have access to the books and records of the Company at all reasonable
  times for the purpose of obtaining information concerning this Agreement or
  its subject matter.  This access shall
  include, without limitation, access to all papers in the possession of the
  Company in connection with claims and the adjustment of claims.  The Reinsurer’s right of access shall
  continue during the Term and thereafter as long as either party has a claim
  against the other arising out of this Agreement.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.                   Headings.   The
  headings to the text of this Agreement are intended and inserted solely for
  convenience of reference and shall not effect the meaning, interpretation,
  construction or effect of this Agreement.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.                   Assignment
  and Amendment.   This Agreement may not be
  assigned or amended by either party without the prior written consent of the
  other party.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.                   Third
  Party Beneficiaries.   This Agreement is solely
  between the Company and the Reinsurer. 
  The acceptance of reinsurance hereunder shall not create any right or
  legal relation whatever between the Reinsurer and any original insured or any
  beneficiary under any business reinsured hereunder, and the Company shall
  remain solely liable to such original insured or any such beneficiary.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.                   Enforceability.   In
  the event that any provision contained in this Agreement shall for any reason
  be held by a court of competent jurisdiction to be invalid or unenforceable,
  such invalidity or unenforceability shall not affect any other provision of
  this Agreement, and this Agreement shall be construed as if such
  unenforceable provision had never been contained herein.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.                   Severability.   To
  the extent that this Agreement may be in conflict with any applicable law or
  regulation, this Agreement shall be amended, at the mutual

  



 


6

















 


	
   

  	
   

  	
  agreement of both the Company and the Reinsurer, to the extent
  possible, to comply with such law and regulation.  If any term or provision of this Agreement shall be found by a
  court of competent jurisdiction to be illegal or otherwise unenforceable, the
  same shall not invalidate the whole of this Agreement, but such term or
  provision shall be deemed modified to the extent necessary in the court’s
  opinion to render such term or provision enforceable, and the rights and
  obligations of the parties shall be construed and enforced accordingly
  preserving to the fullest permissible extent the intent and agreements of the
  parties set forth herein.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.                   Errors and Omissions.  If either party hereto shall fail to
  perform an obligation under this Agreement, and such failure is shown to be
  unintentional and the result of an oversight, misunderstanding or clerical
  error on the party of either party, then the party shall not be deemed in
  breach thereby, but such error shall be corrected promptly by restoring both
  parties to the positions they would have occupied had no such error occurred.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.                   Entire Agreement.  This Agreement contains the entire
  agreement between the parties hereto relating to the subject matter hereof
  and supersedes and replaces all oral statements and prior writings with
  respect thereto.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.                   Waivers.  There shall be no waiver of any breach of
  the terms of this Agreement, nor waiver of any right, remedy, power or
  privilege conferred by this Agreement, except as notified in writing by the
  party waiving to the other party, or as otherwise expressly provided for in
  this Agreement.  Notwithstanding this,
  and for the avoidance of doubt:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)  any waiver of a breach of
  any term of this Agreement or of any default hereunder shall not be deemed a
  waiver of any subsequent breach or default and shall in no way affect the
  other terms of this Agreement;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)  no failure to exercise
  and no delay on the part of any party in exercising any right, remedy, power
  or privilege of that party under this Agreement and no course of dealing
  between the parties shall be construed or operate as a waiver thereof, nor
  shall any single or partial exercise of any right, remedy, power or privilege
  preclude any other or further exercise thereof or the exercise of any right,
  remedy, power or privilege.  The
  rights and remedies provided by this Agreement are cumulative and are not exclusive
  of any rights or remedies provided by law.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.            Currency.  All the retentions, limits and premiums are stated in United
  States Dollars.  All claims under this
  Agreement are payable in United States Dollars.  Losses arising out of Covered Contracts written by the Company
  in currencies

  



 


7

















 


	
   

  	
   

  	
  other than United States Dollars shall be converted into United
  States Dollars at the rates of exchange as used in the books of the Company.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  11.            Offset.  The parties have the right to offset any
  balance(s) from one to the other under this Agreement or under any other
  agreement between the parties hereto.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  12.            Governing Law.  This Agreement, and any dispute,
  controversy or claim arising out of or relating to this Agreement, shall be
  governed by and construed in accordance with the laws of Bermuda.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  13.            Arbitration.  If any irreconcilable dispute shall arise between the Company
  and the Reinsurer with reference to the interpretation of this Agreement or
  any Covered Contract (including, but not limited to, disputes concerning the
  formation or validity of this Agreement), whether such dispute arises before
  or after termination of this Agreement, such dispute, upon the written
  request of either party, shall be submitted to three arbitrators, one to be
  chosen by each party, and the third by the two arbitrators so chosen.  Where a party fails to appoint an
  arbitrator within fourteen (14) calendar days of being called upon to do so
  or where the two party-appointed arbitrators fail to appoint a third within
  twenty-eight (28) calendar days of their appointment, then upon application
  ARIAS (UK) will appoint an arbitrator to fill the vacancy.  At any time prior to the appointment by
  ARIAS (UK) the party or arbitrators in default may make such appointment.  All arbitrators shall be active or retired
  disinterested officers of insurance or reinsurance companies or underwriters
  at Lloyd’s of London not under the control of or otherwise affiliated with
  either party to this Agreement.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Except as may be otherwise provided herein, the arbitrators shall
  promulgate roles to interpret this Agreement under ARIAS Arbitration
  Rules.  The arbitrators shall
  interpret this Agreement as an honorable engagement rather than as a legal
  obligation and will make their award with the view to effecting the general
  purpose and intent of this Agreement, rather than in accordance with the
  literal interpretation of this Agreement.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The party requesting the arbitration shall submit its case to the
  arbitrators within forty-five (45) calendar days of the appointment of the
  third arbitrator.  The party
  responding to the request for arbitration shall submit its case to the
  arbitrators within forty-five (45) calendar days of the receipt of the
  petitioner’s case.  A hearing shall be
  held within thirty (30) calendar days after receipt of the parties’ cases in
  writing.  The arbiters shall render
  their decision within thirty (30) calendar days after completion of the
  hearing.  The decision in writing of
  any two arbiters, when filed with the parties hereto, shall be final and
  binding on both parties.  Judgment may
  be entered upon the final decision of the arbitrators in any

  



 


8

















 


	
   

  	
   

  	
  court having jurisdiction. 
  Each party shall bear the expense of its own arbitrator and shall
  jointly and equally bear with the other party the expense of the third
  arbitrator and arbitration.  Said
  arbitration shall take place in Hamilton, Bermuda, unless some other
  place is mutually agreed upon by the parties.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The procedures specified in this Article shall be the sole and
  exclusive procedures for the resolution of irreconcilable disputes between
  the parties arising out of or relating to this Agreement.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  14.            Counterparts.  This Agreement may be executed in any
  number of counterparts, and by the parties on separate counterparts, but will
  not be effective until each party has executed at least one counterpart.  Each counterpart will constitute an
  original of this Agreement, but all the counterparts will together constitute
  but one and the same instrument.  All
  signatures of the parties to this Agreement may be transmitted by facsimile,
  and such facsimile will, for all purposes, be deemed to be the original signature
  of such party whose signature it reproduces and will be binding upon such
  party.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  15.            Form and Address for Notices.  Any notice required or authorized to be
  given or served upon a party pursuant to this Agreement shall be given by
  facsimile (with confirming copy sent promptly by mail), prepaid post or
  overnight delivery service or by hand to that party at its address or
  facsimile number appearing below or such other address or facsimile number as
  the party may have notified in writing to the other party or parties:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In the case of the Company:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ACE Capital Re International, Ltd.

  
	
   

  	
   

  	
  The ACE Building

  
	
   

  	
   

  	
  30 Woodbourne Avenue

  
	
   

  	
   

  	
  Hamilton, HM 08, Bermuda

  
	
   

  	
   

  	
  Attn: President

  
	
   

  	
   

  	
  Tel: 441-298-9572

  
	
   

  	
   

  	
  Fax: 441-296-3379

  



 


9

















 


	
   

  	
   

  	
  In the case of the Reinsurer:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ACE Bermuda Insurance Ltd.

  
	
   

  	
   

  	
  ACE Global Headquarters

  
	
   

  	
   

  	
  17 Woodbourne Ave.

  
	
   

  	
   

  	
  Hamilton HM 08 Bermuda

  
	
   

  	
   

  	
  Attn: President and CEO, ACE Financial
  Solutions International

  
	
   

  	
   

  	
  Tel: 441-299-9269

  
	
   

  	
   

  	
  Fax: 441-292-8677.

  



 


 


[Remainder of Page Intentionally Left Blank]


 


10

















 


IN WITNESS WHEREOF,
this Agreement has been executed in Hamilton, Bermuda by the following
individuals duly authorized to act on behalf of the parties:


 


 


	
  On Behalf of:

  	
   

  	
  On behalf of:

  
	
   

  	
   

  	
   

  
	
  ACE Capital Re International Ltd.

  	
   

  	
  ACE Bermuda Insurance Ltd.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ [ILLEGIBLE]

  	
   

  	
   

  	
  By:

  	
  /s/ Dienne Samson

  	
   

  
	
   

  	
   

  	
   

  
	
  Name/Title:

  	
  [ILLEGIBLE]

  	
   

  	
   

  	
  Name/Title:

  	
  Dienne Samson

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  President/FSI

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  SUP/Ace Bermuda

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  12/21/01

  	
   

  	
   

  	
  Date:

  	
  12/20/01

  	
   

  
								



 


11

















 


COMMUTATION AND SETTLEMENT AGREEMENT


(hereinafter referred to as this “Agreement”)


 


This Agreement is entered into by and between ACE Capital Re International, Ltd.
(hereinafter referred to as the “Company”)
and ACE Bermuda Insurance Ltd.
(hereinafter referred to as the “Reinsurer”)
and made effective 11:59:59 p.m. Local Standard Time, December 31, 2003 (the “Commutation Date”).


 


WHEREAS, the Company and Reinsurer are parties to the Per Contract
Excess of Loss Reinsurance Agreement for the term incepting December 31, 2001
and originally terminating December 31, 2026 (hereinafter referred to as the “Contract”), which is attached hereto and
made part of this Agreement; and


 


WHEREAS, the Company and Reinsurer desire to fully and finally settle
and commute all obligations and liabilities, known and unknown, of the Company
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
COMPANY THAT:


 


1.                                       As consideration
for the following release, the Reinsurer shall pay the Company the Commutation
Amount no later than January 31, 2004, subject to the Reinsurer’s receipt of an
original copy of this Agreement, having been fully executed by the parties
hereto.


 


The “Commutation Amount” shall equal the sum of the Principal and
Return, as defined below:


 


“Principal” shall equal One hundred thirty one million, nine hundred
thirty seven thousand, two hundred eighty five United States dollars
($131,937,285);


 


“Return” shall equal: [Principal] x [Lehman Intermediate Rate]; and


 


“Lehman Intermediate Rate” shall mean the year-to-date total return of
the Lehman Brothers U.S. Intermediate Aggregate Bond Index, determined for the
period January 1, 2004 through the date of transfer by the Reinsurer of the
payment of the Commutation Amount.


 


2.                                       Subject to the
execution of this Agreement by the parties hereto and payment by the Reinsurer
of the Commutation amount as required pursuant to paragraph 1 above, as of the
Commutation Date, the Company releases and discharges the Reinsurer and its
predecessors, successors, parent, subsidiaries, affiliates, assigns, agents,
employees, officers, directors and shareholders (collectively, the “Reinsurer’s
Related Parties”) 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 (including but not limited to
those claims for which notices have been submitted to the Reinsurer),
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,


 


1

















 


Agreement may not be modified or amended, or any of its provisions
waived, except by an instrument in writing, signed by the parties hereunder.


 


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 section 13, Arbitration,
of the General Conditions of the Contract.


 


8.                                       This Agreement
shall be governed and construed in accordance with the laws of Bermuda,
notwithstanding the venue of any arbitration proceeding.


 


9.                                       This Agreement
is solely between the Company and the Reinsurer, and nothing herein shall in
any manner create any obligations or establish any rights against the Reinsurer
in favor of any third parties or any persons not parties to this Agreement.


 


10.                                 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 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 CAPITAL RE INTERNATIONAL,

  LTD.

  
	
  in Hamilton, Bermuda

  	
   

  	
  in Hamilton, Bermuda

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Dienne Samson

  	
   

  	
   

  	
  /s/ Carla Ranum

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:  Dienne Samson

  	
   

  	
  Name:  Carla Ranum

  
	
  Title: 
  President Ace Financial Solutions International

  	
   

  	
  Title:  Vice President

  
	
  Date:  1/7/04

  	
   

  	
  Date: January 6, 2004

  
					



 


3