Exhibit 10.11


	
 

	
 


	


	
Accenture LLP 


	
 


	
300 Campus Drive  


	
Florham Park, NJ 07932 


	
 


	
www.accenture.com 





March 5, 2009


John
H. Sullivan 

Senior Vice President 

XL
Global Services 

100
Constitution Plaza 

Hartford, CT 06103


          RE:
Early Termination of XL-Accenture OT Programme


Dear
John,


          This
Letter Agreement is to confirm the understanding between Accenture LLP
(“Accenture”) and XL Global Services, Inc.
(“XL”) relating to XL’s intent to terminate for convenience in full the parties’ Operational Transformation
Agreement (“OT
Agreement”), dated May 6, 2008. Accenture provided XL with certain services
(the “OT Programme”) under the OT Agreement. In consideration of the
covenants and respective release of claims set forth in this letter, the parties
agree as follows:


	
 

	
 


	
(1)

	
The
 OT Agreement will terminate effective May 6, 2009 (the “Effective Date of Termination”).
 However, the Parties further agree that they intend to negotiate a new agreement to cover
 future claims work (“Claims Project Agreement”). Notwithstanding the Effective Date of
 Termination, Section 35.4 of the OT Agreement or any reference to Capacity Services,
 Risk/Reward or any other Accenture revenue enhancement provisions, the OT Agreement will continue in full
 force and effect to cover the Claims Workstream as set out in the existing OT Agreement, as may be amended from time to
 time by agreement of the parties, until the Claims Project Agreement is
 completed between the Parties. The termination date of the OT Agreement as it
 relates to the Claims Workstream will be the date on which the Claims Project Agreement is executed between the
 Parties or the Effective Date of
 Termination, whichever is earlier. Until the Claims Project Agreement is
 executed, XL shall continue to pay
 for Claims Workstream services in accordance with the terms of the OT Agreement. In the event both Parties are
 unable to successfully negotiate a Claims Project Agreement prior to
 the effective date of termination of the OT Agreement, XL may, in its sole discretion, with respect to the
 Claims Workstream, elect not to continue to purchase products and services from Accenture without further
 obligation and penalty, however,
 this shall not alter XL’s obligations as set forth in paragraph (5) of this
 Letter Agreement. In the event XL
 elects not to procure future products and services from Accenture, XL agrees to pay for all outstanding
 charges owed to Accenture for services rendered, received and accepted by XL.





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Accenture LLP 


	
 


	
300 Campus Drive  


	
Florham Park, NJ 07932 


	
 


	
www.accenture.com 








	
 

	
 

	
 


	
(2)

	
In
 accordance with Section 35.2 of the OT Agreement and Section 6 of Schedule 3
 of the OT Agreement, XL will pay to Accenture Termination Compensation in the
 amount of Two Million, Five Hundred Thousand Dollars ($2,500,000.00).


	
 

	
 

	
 


	
(3)

	
In
 accordance with Section 35.1 of the OT Agreement, XL agrees to pay to
 Accenture upon receipt of its invoice all outstanding fees and
 expenses due for Services rendered up to and including the Effective Date of Termination. For
 work performed by Accenture for the non-Claims Workstreams in the first quarter of 2009
 that has not been previously invoiced by Accenture and paid by XL, XL will
 pay an amount not greater than Two Million, Nine Hundred Thousand
 Dollars ($2,900,000.00). If the invoice reconciliation process as described
 in Schedule 3, Section 10 of the OT Agreement, results in an actual fee
 greater than this amount, XL will only be required to pay $2.9 million. If
 the reconciliation process results in a lower figure, XL will pay the lower
 figure that results from the reconciliation. The fees and expenses for the non-Claims
 Workstreams as described in this paragraph will be invoiced according to the
 usual invoicing and reconciliation process described in Schedule 3 of the OT
 Agreement.


	
 

	
 

	
 


	
(4)

	
In
 accordance with Section 35.1.1 of the OT Agreement, XL will pay to Accenture
 an amount equal to One Hundred Twenty Thousand Dollars ($120,000.00) for the
 mutually agreed unrecovered costs incurred by Accenture under the OT Programme.


	
 

	
 

	
 


	
(5)

	
In
 accordance with the terms of the OT Agreement (Section 34.4), XL may not
 terminate the OT Agreement in part at any time, nor may XL terminate the OT
 Agreement prior to May 6, 2009. XL no longer has the same business need for the
 services provided by the workstreams noted in paragraph (10), and has
 therefore requested that Accenture stop work on these workstreams on short notice. In
 consideration for Accenture granting XL’s request to terminate these
 workstreams prior to the Effective Date of Termination, XL will further pay to Accenture in
 addition to the other fees listed in this Letter Agreement, an amount equal to Two Million
 Dollars ($2,000,000.00) in compensation for work on the OT Programme that XL has
 requested to stop prematurely (“In-Flight WPDRs”). The Parties agree to this fee for
 In-Flight WPDRs.


	
 

	
 

	
 


	
(6)

	
The
 Parties further agree to the following:


	
 

	
 


	
 

	
a.

	
The
 terms and conditions for the Claims Project Agreement shall be negotiated
 using the OT Agreement as a starting point. XL is under no obligation to
 accept the terms and conditions within the OT Agreement as both Parties agree
 there has been a significant change in project scope. The sole intent of using the OT
 Agreement as a starting point is to facilitate discussions between the Parties in an
 effort to reach agreement in the most expedient and cost effective manner possible to
 address the
 contract needs for the Claims Workstream;


	
 

	
 

	
 


	
 

	
b.

	
Any
 consulting work within the Accenture practice area required by XL Insurance (“XLI”) in the next
 twelve (12) months from the date this Letter Agreement is signed shall be sole sourced
 to Accenture. This may include, but is not limited to business





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Accenture LLP 


	
 


	
300 Campus Drive  


	
Florham Park, NJ 07932 


	
 


	
www.accenture.com 








	
 

	
 

	
 


	
 

	
 

	
strategy,
 organization, business change, operating model, capability assessment,
 sourcing strategy, IT strategy, IT transformation, and/or other CxO level
 advice. Tax advice, legal advice, and actuarial advice is specifically
 excluded. Systems build work
 is also excluded from this agreement; although Accenture would be pleased to work with XL in that space should the opportunity
 arise. Accenture and XL may mutually
 agree that Accenture does not have the capabilities for a specific
 requirement from XL; in those instances the Parties may mutually agree that
 such consulting work will not be sourced to Accenture;


	
 

	
 

	
 


	
 

	
c.

	
Any
 work provided under this paragraph will utilize the appropriate rates
 contained in the OT Agreement (adjusted for indexation and exchange rates) for
 the
 appropriate geography. These documented rates will survive the effective date
 of
 termination of the OT Agreement for twelve (12) months following the date of
 this Letter Agreement; and


	
 

	
 

	
 


	
 

	
d.

	
XL agrees to give
 Accenture the opportunity to bid on all outsourcing work required by XLI, and
 will make commercially reasonable efforts for the same with regard to XL
 Capital, Ltd for the next twenty-four (24) months from the date this Letter Agreement is signed.


	
 

	
 

	
 


	
(7)

	
In
 accordance with Section 5.2 and Schedule 4 of the OT Agreement, XL contracted
 with Accenture for the provision of a minimum volume of certain Capacity
 Services. XL wishes to honor its obligation to use a minimum volume of
 Capacity Services, and both parties recognize that XL currently does not have a business need for the
 type of services originally planned.
 Therefore, XL agrees to pay Accenture Eight Hundred Thousand Dollars ($800,000.00) in consideration for Accenture
 waiving XL’s Capacity Services obligations (the “Capacity Services Payment”). In consideration
 for this Capacity Services Payment, Accenture will provide to XL a credit
 note in the amount of the Capacity Services Payment (“Consulting Credit
 Note”) for offset against future consulting services to be performed by Accenture. For the avoidance of doubt, no
 application maintenance, support services, or outsourcing services may be procured under this Consulting Credit
 Note. The following conditions shall
 apply to the issuance and use of this Consulting Credit Note:


	
 

	
 

	
 


	
 

	
a.

	
The
 Consulting Credit Note is a total credit amount in U.S. dollars to be used
 for Accenture consulting services in the next twelve (12) months from the
 date this Letter
 Agreement is signed as detailed above, and is not tied to a certain number of mandays;


	
 

	
 

	
 


	
 

	
b.

	
Expenses
 are in addition to and are not included in the Consulting Credit Note and will be invoiced
 separately when incurred;


	
 

	
 

	
 


	
 

	
c.

	
The Consulting Credit Note
 may not be used for work covered by the Claims Project Agreement or the existing OT Agreement;


	
 

	
 

	
 


	
 

	
d.

	
The
 Consulting Credit Note will only be applied to work actually performed by Accenture, i.e. it
 will be a credit to XL from Accenture, to offset amounts that would have been payable for
 services rendered. Under no circumstances shall any money be paid by
 Accenture to XL as a result of the Consulting Credit Note.





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Accenture LLP 


	
 


	
300 Campus Drive  


	
Florham Park, NJ 07932 


	
 


	
www.accenture.com 








	
 

	
 

	
 


	
 

	
e.

	
Services
 provided under the Consulting Credit Note will be utilized based on the Business Change Rate contained in the OT
 Agreement (adjusted for indexation and
 exchange rates) for the appropriate geography and these documented rates will survive the effective date of termination of
 the OT Agreement; and


	
 

	
 

	
 


	
 

	
f.

	
Accenture
 will invoice for the full amount of the Capacity Services Payment in conjunction with and
 in addition to the Termination Compensation.


	
 

	
 

	
 


	
 

	
The areas from which XL
 may choose to retain Accenture’s services in its use of the Consulting Credit Note may be drawn from
 Accenture’s consulting practice area, which subject to the other terms of this Letter Agreement may include, but
 is not limited to business strategy, organization, business change, operating
 model, capability assessment, sourcing
 strategy, IT strategy, IT transformation, and/or other CxO level advice. Tax advice, legal advice, and actuarial advice is
 specifically excluded. Systems build work is also excluded from this agreement; although Accenture
 would be pleased to work with XL in that
 space should the opportunity arise.


	
 

	
 


	
(8)

	
The
 Termination Compensation and all other termination-related fees referenced in paragraphs two, four,
 five, and six herein (the “Termination Fees”), not including fees associated
 with the Claims Workstream or the non-Claims Workstreams as described in paragraph (3), will
 be invoiced in total in a single invoice, which will be issued by March 4, 2009. The total invoice amount for the
 Termination Fees shall be Five Million, Four
 Hundred Twenty Thousand Dollars ($5,420,000.00), and will be payable in
 accordance with the terms of the OT Agreement, forty-five (45) days
 from the invoice date.


	
 

	
 

	
 


	
(9)

	
Schedule 3, Annex 6 of the
 OT Agreement describes the Risk/Reward Mechanism agreed by the Parties, and provides that if the OT
 Programme is terminated for any reason, the final Measurement Period for
 Risk/Reward will end on the expiration of the relevant notice period, and any outstanding payments for prior
 Measurement Periods will be honored (Schedule 3, Annex 6, Section 12).
 XL and Accenture agree Risk/Reward will be measured for the 2008 Measurement
 Period as described in Schedule 3, Annex 6, and if a payment is due to Accenture, such payment will be honored
 by XL notwithstanding the termination of the OT Agreement.


	
 

	
 

	
 


	
(10)

	
The Parties hereby agree
 that the following workstreams are closed down effective January 31, 2009, and Accenture has no further
 obligations with respect to them: US Underwriting and Policy Administration, Accounting Services,
 Core IT, Programme Management.
 Further, the Enterprise Performance Management and Management Information
 workstream will not commence as planned.


	
 

	
 

	
 


	
(11)

	
XL
 acknowledges and agrees that all Services performed and Deliverables that XL
 has requested or that Accenture has provided under the OT Programme have been
 successfully delivered by Accenture and documented in WPCRs. With regards to the
 Claims Workstream WPDRs that
 were completed under the OT Agreement, XL acknowledges and





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Accenture LLP 


	
 


	
300 Campus Drive  


	
Florham Park, NJ 07932 


	
 


	
www.accenture.com 








	
 

	
 


	
 

	
agrees that all Services
 performed and Deliverables that XL has requested or that Accenture has provided under the OT Programme have been
 successfully delivered by Accenture (in addition to XL acknowledging the foregoing by signing this Letter
 Agreement, the parties shall also document it in WPCRs). With the exception of
 the uncompleted Claims Deliverables, acceptance of which will be
 subject to the agreed upon terms and conditions of the OT Agreement (other
 than to the extent modified by the Claims Project Agreement), XL accepts all
 of the Services and Deliverables, and hereby releases and discharges
 Accenture, its partners, agents, and
 employees of and from all liabilities, obligations, claims, and demands whatsoever, arising from or under all
 work performed as part of the OT Programme.


	
 

	
 


	
(12)

	
The
 Parties agree, subject to paragraph (1) of this Letter Agreement, that the
 terms of the OT Agreement shall govern all work performed by Accenture
 in relation to the OT Programme for XL up to the Effective Date of Termination, which
 shall include any extension of the OT Agreement as it regards the Claims Workstream.
 Any variation from the terms of the OT Agreement as to the Claims Workstream
 must be mutually agreed between the Parties and will be subject to a Change Notice pursuant to
 the Change Control Process outlined in Schedule 7 of the OT Agreement.


	
 

	
 


	
(13)

	
Each Party shall be
 responsible for the payment of taxes in connection with this Letter Agreement in accordance with the OT Agreement.


	
 

	
 


	
(14)

	
Accenture
 and XL agree that the terms of Section 27, Confidentiality and Data
 Protection, of the OT Agreement will continue to apply between the
 parties as this provision will survive the expiration or termination of the
 OT Agreement.


	
 

	
 


	
(15)

	
Accenture and XL agree not
 to disclose the existence or terms of this Letter Agreement and any and all
 agreements, negotiations, or discussions relating to this Letter Agreement or
 the amount of consideration in support
 hereof, directly or indirectly, to any third party, except as such
 disclosures may be required by law, to their respective accountants or
 attorneys, without the express written consent of the other party.


	
 

	
 


	
(16)

	
All
 capitalized terms herein shall have the meaning given to them in the OT
 Agreement unless
 otherwise specified. In the event of a conflict between this Letter Agreement
 and the terms of the OT Agreement, this Letter Agreement shall take
 precedence to the extent of the conflict.
 Other than as expressly stated in this Letter Agreement, the Parties further
 agree that neither party waives any rights it has under the OT Agreement by
 agreeing to this Letter Agreement.


	
 

	
 


	
(17)

	
Each
 of the parties represents and warrants for itself that is authorized to enter
 into this Letter Agreement and bind its respective entities to the terms of
 the same. The Parties acknowledge that this Letter Agreement constitutes the
 full and final agreement of the parties relating to the subject matter
 contained herein. No other statements, promises, or





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Accenture LLP 


	
 


	
300 Campus Drive  


	
Florham Park, NJ 07932 


	
 


	
www.accenture.com 








	
 

	
 


	
 

	
representations
 have been made or relied upon by and among the parties. All prior discussions and
 negotiations have been merged and integrated into, and are superseded by this Letter
 Agreement. This Letter Agreement may only be modified or amended in writing.








	
 

	
 

	
 


	
On
 behalf of XL Global Services, Inc.

	
 


	
 

	
 


	
By:

	
/s/ David Duclos

	
 


	
 

	


	
 


	
Name:

	
David Duclos

	
 


	
Title:

	
Chief
 Executive, XL Insurance

	
 


	
 

	
 

	
 


	
By:

	
/s/ John H. Sullivan

	
 


	
 

	


	
 


	
Name:

	
John H. Sullivan

	
 


	
Title:

	
Senior
 Vice President

	
 


	
 

	
 

	
 


	
On
 behalf of Accenture, LLP 

	
 


	
 

	
 


	
By:

	
/s/ John Cusano

	
 


	
 

	



	
Name:

	
John Cusano

	
 


	
Title:

	
Managing
 Partner North American Insurance





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