SETTLEMENT AND RELEASE AGREEMENT 

This Settlement and Release Agreement ("Agreement") is entered into by and between 

the Federal Deposit Insurance Corporation as Receiver for Eurobank, San Juan, Puerto Rico 

("FDIC-R") and Chubb Insurance Company of Puerto Rico, fonnerly named Ace Insurance 

Company ("Ace"). The FDIC-R and Ace may be referred to herein individually as "Party" and 

collectively as the "Parties." 

RECITALS 

WHEREAS: 

Prior to April 30, 2010, Eurobank. San Juan, Puerto Rico ("Eurobank" or the "Bank") 

was a depository institution organized and existing under the laws of the Commonwealth of 

Puerto Rico. 

Ace issued Management Protection Insurance Policy No.I f which included a (b )( 4) 

Financial Institution Bond Coverage Pai1 effective for the bond period May 26, 2009 through 

May 26, 2010 (the "Bond"). The Bond provides coverage up to $7,500,000 for loss resulting 

from employee fraud or dishonesty. 

On or about December 29, 2009, Eurobank provided notice (the "Notice") to Ace under 

the Bond seeking coverage for losses incurred by Eurobank that were caused by fraud or 

dishonesty by certain employees. 

On April 30, 2010, the Office of the Commissioner of Financial Institutions of the 

Commonwealth of Puerto Rico closed Eurobank, and pursuant to 12 U.S.C. § 182l(c), the 

Federal Deposit Insurance Corporation ,vas appointed receiver. In accordance with 12 U.S.C. § 

1821(d), the FDIC-R succeeded to all rights, titles, powers and privileges of Eurobank, including 

those with respect to Eurobank's assets. 

SETTI.,E:tv!ENT Ai"\JD RELEASE AGREEtvfENT Page 1 of 10 
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(b )(4) 

Among the assets to which the FDIC-R succeeded were any and all claims, demands and 

causes of action against Eurobank's financial institution bond insurer(s), including against Ace 

under the Bond. 

On or about June 25, 2010, pursuant to the Notice, the FDIC-R submitted a sworn Proof 

of Loss (the "Proof of Loss") to Ace seeking coverage under Insuring Clauses A, H, and O of the 

Bond. Ace reserved all rights. 

On April 29, 2016, the FDIC-R filed a complaint for money damages against Ace. Those 

claims for damages are now pending in the United States District Court for the District of Puerto 

Rico in Federal Deposit Insurance Corporation as Receiver for Eurobank v. Ace Insurance 

Company, No. 16-CV-1843(PAD) (the "Action"). 

The Parties deem it in their best interests to enter into this Agreement to avoid the 

uncertainty and expense of further litigation. 

NOW, THEREFORE, in consideration of the promises, undertakings, payments and 

releases stated herein, the sufficiency of which consideration is hereby acknowledged, the 

undersigned Parties agree, each with the other, as follows: 

SECTION I: Payment to the FDIC-R 

A. As an essential covenant and condition to this Agreement, on or before September 

22, 2017, Ace agrees to pay to the FDIC-R the sum of Two Million One Hundred Thousand and 

00/100 dollars ($2,100,000.00) (the "Settlement Payment"). 

B. Ace shall deliver the Settlement Payment to the FDIC-R by direct wire transfer 

into the following account: 

BANK: Federal Home Loan Bank of New York 

ROUTING#:~----~ 

FOR CREDIT TO: FDIC National Liquidation Account 

ACCOUNT#: I I 

SETTLEME:'.JT AND RELEASE AGREEMEJ\T Page 2 of 10 
New York Main Office 

IO I Park A venue 

New York, NY IO I 78-0599 

212-681-6000 

212-441-6890 Fax 

OTHER BENEFICIARY INFORMA TIO'! (OBI): 

1. Fund code: I 0230 - Asset No. 10229020822 

2. Notify: Sandra M. Hagen - DRR Investigations (972) 761-4243 

3. Eurobank of Pue1to Rico -Ace Bond Settlement 

C. If the FDIC-R does not receive the Settlement Payment m full on or before 

September 22, 2017, then the FDIC-R, in its sole discretion, shall have the right at any time prior 

to receipt of the Settlement Payment in full, to: 

I . Extend the period of time for the Settlement Payment; or 

2. Enforce this Agreement, in which event Ace agrees to jurisdiction in the 

United States District Comt for the District of Puerto Rico and to pay all of the FDIC-R's 

reasonable attorneys' fees and costs expended in enforcing the terms of this Agreement; or 

3. Terminate the Agreement, move to vacate any dismissal order, to which 

Ace agrees to consent, and re-institute an action on the FDIC-R's claims. Ace further agrees to 

waive any defense based on any statute of limitations that would bar any of the FDIC-R's claims 

and waive all objections, defenses, claims or counterclaims, and covenant and agree not to assert 

any objections, defenses, claims or counterclaims that did not exist or were otherwise 

unavailable as of the date this Agreement was fully executed; and/or 

4. Seek any other relief available to it in law or equity. 

Any extension of time under Section I.C. l for delivery of the Settlement Payment or 

acceptance ofa portion of the Settlement Payment shall not prejudice the FDIC-R's rights to take 

any of the actions set forth in Section I.C.2 through l.C.4 at any time prior to receipt of the 

Settlement Payment in full. 

SETTLEMENT AND RELEASE AGREEJl..fENT Page 3 of IO 
SECTION II: Stipulation of Dismissal 

Within ten (I 0) business days after the later of ( 1) execution of this Agreement by the 

FDIC-Rand Ace, and (2) receipt of the Settlement Payment by the FDIC-R, the FDIC-R shall 

file a stipulation of dismissal of the Action with prejudice, executed by the attorneys for all 

Paities hereto, in the form attached hereto as Exhibit A. 

SECTION III: Releases 

A. The FDIC-R's Release of Ace. 

Upon receipt of the Settlement Payment in full as provided in Section I, and the dismissal 

described in Section II above, and except as provided in Section III.D., the FDIC-R, for itself and 

its successors and assigns, hereby releases and discharges Ace, its parents, subsidiaries, affiliates 

and reinsurers, and their respective employees, officers, directors, agents, representatives, 

successors, and assigns, from any and all claims, demands, obligations, damages, actions and 

causes of action, direct or indirect, in law or in equity, that arise from or relate to the Notice, the 

Proof of Loss, the Bond, the Action, and/or Ace's handling, investigation, and adjustment of 

same. The FDIC-R agrees that any interest it has or may have under the Bond is extinguished. 

B. Ace's Release of the FDIC-R. 

Effective simultaneously with the release granted in Section III.A. above, Ace, for itself 

and its successors and assigns, and on behalf of its parents, subsidiaries, affiliates and reinsurers, 

and their respective agents, representatives, successors and assigns, hereby releases and 

discharges the FDIC-R, and its employees, officers, directors, agents, attorneys, representatives, 

successors and assigns, from any and all claims, demands, obligations, damages, actions and 

causes of action, direct or indirect, in law or in equity, that arise from or relate to the Notice, the 

Proof of Loss, the Bond, and/or the Action. 

SETTLEMENT A.J"ID RELEASE AGREEillNT Page 4 of 10 
C. Ace's Waiver of Subrogation. 

Ace agrees to and hereby does irrevocably waive any rights of subrogation it may have 

relating to the Notice, the Proof of Loss, the Bond, and/or the Action ("Rights of Recovery"). 

Ace agrees that the FDIC-R may retain, sell, transfer, or otherwise dispose of such Rights of 

Recovery as it sees fit, in its sole discretion, and retain the proceeds (if any) thereof. Any such 

present or future retention or disposition of such Rights of Recovery shall not modify, alter, or 

otherwise affect the consideration due under this Agreement or the amount of the Settlement 

Payment to be paid by Ace. 

D. Express Exceptions to Releases by FDIC-R. 

I. Notwithstanding any other provision of this Agreement, the FDIC-R does not 

release, and expressly preserves fully and to the same extent as if this Agreement had not been 

executed, any rights, claims, or causes of action: 

a. against Ace or any other person or entity for liability, if any, incurred as 

the maker, endorser or guarantor of any promissory note or indebtedness payable or owed by 

them to the FDIC-R, Eurobank, other financial institutions, or any other person or entity, 

including without limitation any such claims acquired by the FDIC-Ras successor in interest to 

the Bank or any person or entity other than the Bank; 

b. against the directors and/or officers, their respective spouses, and the 

conjugal partnerships fanned between them that are named as defendants in Federal Deposit 

Insurance Corporation, as Receiver for Eurobank v. Rafael Arrillaga-Torrlins, Jr., et al., No. 13-

cv-01328 (PAD), including without limitation the claims presently asserted or to be asserted 

therein; 

SEITLEJ\1E};"T AND RELEASE AGREE.ME.NT Page 5 of 10 
c. against ACE, Liberty Mutual Insurance Company, and XL Insurance Company, 

including without limitation any claims asserted or to be asserted in Federal Deposit Insurance 

Corporation, as Receiver for Eurobank v. Rafael Arrillaga-Torrins, Jr., et al., No. 13-cv-0 1328 

(PAD), and any claims or counterclaims asserted or to be asserted in Liberty Mutual Insurance 

Company v. Federal Deposit Insurance Corporation, as Receiver for Eurobank, et al, No. 17-cv01328 (WGY); 

d. under or relating to any policy of insurance issued by Ace (or any other insurer) 

other than the Bond; and 

e. against any person or entity not expressly released by the FDIC-R m this 

Agreement. 

2. Notwithstanding any other prov1s10n of this Agreement, nothing in this 

Agreement shall be construed or interpreted as limiting, waiving, releasing, or compromising the 

jurisdiction and authority of the Federal Deposit Insurance Corporation in the exercise of its 

supervisory or regulatory authority or diminishing its ability to institute administrative 

enforcement or other proceedings seeking removal, prohibition, or any other relief it is 

authorized to seek pursuant to its supervisory or regulatory authority against any person or entity. 

3. Notv.1ithstanding any other provision of this Agreement, this Agreement does not 

purpott to waive, or intend to waive, any claims that could be brought by the United States 

through the Department of Justice, the United States Attorney's Office for any federal judicial 

district, or any other depattment, agency or instrumentality of the United States as defined by 18 

U.S.C. § 6. In addition, the FDIC-R specifically reserves the right to seek court ordered 

restitution pursuant to the relevant provisions of the Mandatory Victims Restitution Act, 18 

U.S.C. §§ 3322 and 3663 et seq., if appropriate. 

SEITLEME:'-!T AND RELEASE AGREEMEKT Page 6 of 10 
SECTION IV: Representations and Acknowledgements 

A. Authorized Signatories. Each of the undersigned persons represents and warrants 

that he or she is authorized to sign this Agreement on behalf of the respective Party on behalf of 

whom he or she is signing, and that he or she has the full power and authority to bind such Party 

to each and every provision of this Agreement. This Agreement shall be binding upon and inure 

to the benefit of the undersigned Parties and their respective heirs, executors, administrators, 

representatives, successors, and assigns. 

B. Advice of Counsel. Each Party hereby acknowledges that it has consulted with 

and obtained the advice of counsel prior to executing this Agreement, and that this Agreement 

has been explained to the Party by its counsel. 

C. Reasonable Cooperation. The Parties agree to cooperate in good faith to 

effectuate all the terms and conditions of this Agreement, including doing, or causing their 

agents and attorneys to do, whatever is reasonably necessary to effectuate the signing, delivery, 

execution, filing, recording, and entry, of any documents necessary to conclude the Action and to 

otherv.rise perform the terms of this Agreement. 

D. No Admission ofLiabilit;y. The undersigned Parties each acknowledge and agree 

that the matters set fotih in this Agreement constitute the settlement and compromise of disputed 

claims and defenses, and that this Agreement is not an admission or evidence of liability or 

infirmity by any of them regarding any claim or defense, and that this Agreement shall not be 

offered or received in evidence by or against any Party except to enforce its tenns. 

E. Execution in Counterparts. This Agreement may be executed in counterparts by 

one or more of the Paiiies and all such counterparts when so executed shall together constitute 

the final Agreement, as if one document had been signed by all Patties, and each such 

SETTLE:MENT AND RELEASE AGREEMENT Page 7 of 10 
(b )(6) 

counterpart, upon execution and delivery, shall be deemed a complete original, binding the 

Parties subscribed thereto upon the execution by all Parties to this Agreement. Signatures 

delivered via email shall'be treated as original signatures for all purposes. 

F. Choice of Law. This Agreement shall be interpreted, construed, and enforced 

according to applicable federal law, or in its absence, the laws of the Commonwealth of Puerto 

Rico. 

G. Entire Agreement and Amendments. This Agreement constitutes the entire 

agreement and understanding between and among the undersigned Parties concerning the matters 

set forth herein and supersedes any prior agreements or understandings. This Agreement may 

not be amended or modified, nor may any of its provisions be waived, except in writing signed 

by the Parties bound thereby or by their respective authorized attorney(s) or other 

representative( s ). 

H. Titles and Captions. All section titles and captions contained in this Agreement 

are for convenience only and shall not affect the interpretation of this Agreement. 

I. No Confidentiality. The Parties acknowledge and agree that this Agreement shall 

not be confidential, and nothing in this Agreement prohibits the FDIC-R or Ace from disclosing 

its terms. 

J. Notices. Any notices required hereunder shall be sent by registered mail, first 

class, return receipt requested, and by email, to the fol!owing: 

If to FDIC-R: 

John V. Church 

FDIC 

3501 Fairfax Drive, Room VS-B-7056 

Arlington, VA 22226 

I I 

SETTLE!v1ENT AND RELEASE AGREEr,...IENT Page 8 of 10 
(b )(6) 

(b )(6) 

(b )(6) 

ff to Ace: 

Michael R. Goodstein 

Bailey Cavalieri LLC 

10 W. Broad Street, Suite 2100 

Columbus, Ohio 43215-3422 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed 

by each of them by their authorized representatives on the date hereinafter subscribed. 

f • 

Date: "{ /:2 ? / ; l 

I I 

Date: O<l/J-1) Ir 

FEDERAL DEPOSIT INSURANCE 

CORPORATION, AS RECEIVER FOR 

EUROBANK, SAN JUAN, PUERTO 

RICO BYi·---------~ 

TITLQ C,, .J ,~I 

PRJNT NAME·. ~,. d ,._; 1/ C \ C 1· 

'1" ""~', 

CHUBB 

PUERTO 

INS 

INSURANCE COMPANY OF 

RICO, formerly named ACE 

T C/o.,,M:'.> H.ec9er: 

PRINT NAME: 1ec.nneH--e. Barrios 

SETTLEMENT AND RELEASE AGREEMENT Page 9 oflO 
EXIITBIT A 

THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF PUERTO RICO 

FEDERAL DEPOSIT L'!SURANCE ) 

CORPORATION,ASRECEIVERFOR ) 

EUROBANK, ) 

) 

Plaintiff, ) 

) 

v. ) 

) 

ACE INSURANCE COMPANY, ) 

) 

) 

Defendant. ) 

CIVIL ACTION NO. 16-cv-1843 (PAD) 

Breach of Contract, Damages 

STIPULATION OF DISMISSAL WITH PREJUDICE 

Plaintiff Federal Deposit Insurance Corporation, as Receiver for Eurobank, San Juan, Puerto Rico 

("FDIC-R"), and Defendant Ace Insurance Company (collectively with FDIC-R, the "Parties"), by and through 

their respective undersigned attorneys, and pursuant to Fed. R. Civ. P. 4l(a)(l)(A)(ii), hereby stipulate to the 

dismissal of this action with prejudice, with the Parties to each bear their own attorney's fees, costs, and 

expenses incurred in this action. 

Dated this_ day of~-' 2017 

SETTLEMENT AND RELEASE AGREEMENT Page 10 of IO