Document:

LIMITED ASSIGNMENT DISTRIBUTION AGREEMENT

 

Exhibit 10.12

NEW JERSEY PERSONAL AUTOMOBILE INSURANCE PLAN

LIMITED ASSIGNMENT DISTRIBUTION (LAD) AGREEMENT

BETWEEN

THE CLARENDON NATIONAL INSURANCE COMPANY (LAD CARRIER)

AND

PROFORMANCE INSURANCE COMPANY (BUY-OUT COMPANY)

Subject to approval by the Personal Automobile Insurance Plan (PAIP or Plan)
Governing Committee, and subject to payments specified below, the Clarendon
National Insurance Company (LAD Carrier) agrees to assume the assignment
obligation of the Proformance Insurance Company (Buy-Out Company) as follows:
assignment obligations of the Proformance Insurance business and the acquired
Ohio Casualty Company business but excludes the assignment obligations of the
recently acquired Sentry, a Mutual Company and Metropolitan Property and
Casualty Insurance Company (formerly US Fidelity & Guaranty Co.) books of
business (“Defined Assignment Obligations”). The LAD Carrier and Buy-Out
Company agree further that:

	1.	 	The Buy-Out Company will be assigned no further Plan business during the
term of this Agreement, and the Plan will increase the Clarendon National
Insurance Company quota to include the Buyout Company’s aforementioned
Defined Assignment Obligations.
	 
	 	 	Any in-force Plan policies of the Buy-Out Company in existence at the
time of the effective date of the buy-out contract shall not be
transferred to the LAD Carrier until their respective renewal/expiration
date. At least forty-five (45) days, but not more than sixty (60) days,
prior to the renewal/expiration date of each affected policy, the Buy-Out
Company shall notify the insured and the producer involved, in writing,
that the policy will be non-renewed by the Buy-Out Company. If the
insured no longer meets the definition of a “qualified applicant” in
accordance with Plan Manual rules, the Buy-Out Company’s notice of
non-renewal will advise the insured and producer to seek coverage in the
voluntary market. If the insured continues to be qualified for coverage
through the Plan, the notice of non-renewal will advise the insured and
the producer that the Plan policy, with all its rights and obligations,
will be transferred to the LAD Carrier effective on the date of the
non-renewal. Such notice shall also include the name and address of the
LAD Carrier.
	 
	 	 	The Buy-Out Company shall maintain proof of mailing that such non-renewal
notice was forwarded to the insured.
	 
	2.	 	The Buy-Out Company agrees to pay a fee in accordance with the following:

	 	a)	 	The fee will be a percentage of the Buy-Out Company’s private
passenger non-fleet premium quota for the years ending December 31,
2004 and December 31, 2005. For the calendar year ending December
31, 2004, that percentage will be 8.0 percent, For the calendar year
ending December 31, 2005, the percentage will be 5.0 percent. For
each

 

 

	 	 	 	subsequent year, the Clarendon National Insurance Company will
specify the percentage by November 1, preceding the year that the
buy-out fee is to be in effect.
	 
	 	b)	 	The Buy-Out Company will pay to the LAD Carrier an estimated
buy-out fee, using the percentage above, applied to the estimation
of the Buy-Out Company’s private passenger non-fleet premium quota
for the calendar years ending December 31, 2004 and December 31,
2005. For contracts starting after January 1, the Buy-Out Company
will be responsible for assignment obligations for which it is
responsible prior to the initiation of this contract. The estimated
fee will be due in installments at the beginning of each month.
	 
	 	c)	 	By September of 2005 the buy-out fee will be adjusted to
reflect the actual premium quota fear the Buy-Out Company for the
previous calendar year ending December 31, 2004 including, over or
under adjustments as reported in the Plan annual reports. By
September of 2006 the buy-out fee will be adjusted to reflect the
actual premium quota for the Buy-Out Company for the previous
calendar year ending December 31, 2005 including, over or under
adjustments as reported in the Plan annual reports. A true-up will
be made each year that this Agreement is in effect using the
procedures set forth in the LAD manual.
	 
	 	d)	 	The Buy Out Company and the LAD Carrier acknowledge that the
Governing Committee has the discretion to set parameters for the
buy-out fee in accordance with the Plan of Operation when Plan
experience data becomes available and further acknowledge that this
Agreement and future amendments and renewals thereto shall be deemed
to incorporate these parameters.

	3.	 	This Agreement shall be automatically renewed for a period of twelve
months commencing January 1, 2006 and shall be successively renewed on
January 1 of each year thereafter, subject to the following conditions:

	 	a)	 	The LAD Carrier may terminate this Agreement by giving
written notice of such termination to the designee specified by the
Buy-Out Company and PAIP by September 1, 2005 or by September 1 of
each year thereafter that this Agreement is in effect, for the
upcoming year.
	 
	 	b)	 	The Buy-Out Company may terminate this Agreement by giving
written notice of such termination to the designee specified by the
LAD Carrier and PAIP by December 1, 2005 or by September 1 of each
year thereafter that this Agreement is in effect, for the upcoming
year.

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          If this Agreement is not renewed:

	 	c)	 	The Clarendon National Insurance Company shall continue to
service and renew in accordance with Plan rules all policies it has
contracted to write pursuant to this Agreement.
	 
	 	d)	 	The Buy-Out Company shall contract with another LAD Carrier
or shall start accepting assignments on January 1 of the new year.

	4.	 	This Agreement will terminate if Clarendon becomes ineligible to act as a
LAD Carrier or fails to comply with applicable performance standards, but
Clarendon will continue to service and renew in accordance with Plan rules
all policies it has contracted to write pursuant to this Agreement, unless
directed otherwise by PAIP or order of the Insurance Commissioner.
	 
	5.	 	This Agreement induces the transfer of the over/under assignment of the
Buy-Out Company.
	 
	6.	 	This Agreement may be amended or modified at any time upon mutual written
consent of the parties hereto and upon written notice, a copy of which
will be mailed to the Plan office. Any amendments or modifications to the
basic contract are subject to the approval by the Plan Governing Committee
and the Insurance Commissioner.
	 
	7.	 	Subject to the appropriate approvals, this Agreement is effective January
1, 2004 and expires December 31, 2005 subject to the renewal provisions
contained in section 3 of this Agreement,
	 
	8.	 	The LAD Carrier agrees to comply with performance standards set forth in
article 40 of the Plan of Operation-Performance Standards for Insurers
Writing New Jersey Personal Automobile Insurance Plan Risks.

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For LAD Carrier

Clarendon National Insurance Company

	 	 	 
	By:

	 	/s/ Gary Ketles

	 
	 	 
	Title: Secretary
	 
	 	 
	Date: 5/12/04
	 
	 	 

For Buy-Out Company

Proformance Insurance Company

	 	 	 
	 
	 	 
	By:

	 	/s/ Peter A. Cappello Jr.

Peter A. Cappello Jr.
	 
	 	 
	Title:

	 	Executive Vice President

Proformance Insurance Company
	 
	 	 
	Date: 4/12/04

4LIMITED ASSIGNMENT DISTRIBUTION AGREEMENT

 

Exhibit 10.13

NEW JERSEY PERSONAL AUTOMOBILE INSURANCE PLAN

LIMITED ASSIGNMENT DISTRIBUTION (LAD) AGREEMENT

BETWEEN

AUTOONE INSURANCE COMPANY (LAD CARRIER)

AND

PROFORMANCE INSURANCE COMPANY (BUY-OUT COMPANY)

Subject to approval by the Personal Automobile Insurance Plan (PAIP or Plan)
Governing Committee, and subject to payments specified below, AutoOne Insurance
Company (formerly known as General Assurance Company (LAD Carrier) agrees to
assume the assignment obligation of the Proformance Insurance Company (Buy-Out
Company) only with respect to the recently acquired Sentry Insurance A Mutual
Company and Metropolitan Property and Casualty Insurance Company (formerly US
Fidelity & Guaranty Co.) books of business (Defined Assignment Obligations).
The LAD Carrier and Buy-Out Company agree further that:

	1.	 	The Buy-Out Company will be assigned no further Plan business during the
term of this Agreement, and the Plan will increase the AutoOne Insurance
Company quota to include the aforementioned Defined Assignment
Obligations.
	 
	 	 	Any in-force Plan policies of the Buy-Out Company in existence at the
time of the effective date of the buy-out contract shall not be
transferred to the LAD carrier until their respective renewal /
expiration date. At least forty-five (45) days, but not more than sixty
(60) days, prior to the renewal / expiration date of each affected
policy, the Buy-Out Company shall notify the insured and the producer
involved, in writing, that the policy will be non-renewed by the Buy-Out
Company. If the insured no longer meets the definition of a “qualified
applicant” in accordance with Plan Manual rules, the Buy-Out Company’s
notice of non-renewal will advise the insured and producer to seek
coverage in the voluntary market. If the insured continues to be
qualified for coverage through the Plan, the notice of non-renewal will
advise the insured and the producer that the Plan policy, with all its
rights and obligations, will be transferred to the LAD carrier effective
on the date of the non-renewal. Such notice shall also include the name
and address of the LAD carrier.
	 
	 	 	The Buy-Out it Company shall maintain proof of mailing that such
non-renewal notice was forwarded to the insured.
	 
	2.	 	The Buy-Out Company agrees to pay a fee in accordance with the following:

	 	a)	 	The fee will be a percentage of the Buy-Out Company’s private
passenger non-fleet premium quota for the year ending December 31,
2004. For that year that percentage will be 8.0 percent. For each
subsequent year, AutoOne Insurance Company will specify the
percentage by October 1, preceding the year that the buy-out fee is
to be in effect.

 

 

	 	b)	 	The Buy-Out Company will pay to the LAD carrier an estimated
buy-out fee, using the percentage above, applied to the estimation
of the Buy-Out Company’s private passenger non-fleet premium quota
for the calendar year ending December 31, 2004. For contracts
starting after January 1, the Buy-Out Company will be responsible
for assignment obligations for which it is responsible prior to the
initiation of this contract. The estimated fee will be due in
installments at the beginning of each month.
	 
	 	c)	 	By September of 2005 the buy-out fee will be adjusted to
reflect the actual premium quota for the Buy-Out Company for the
previous calendar year ending December 31, 2004 including, over or
under adjustments as reported in the Plan annual reports. A true-up
will be made each year that this Agreement is in effect using the
procedures set forth in the LAD manual.
	 
	 	d)	 	The Buy-Out Company and the LAD carrier acknowledge that the
Governing Committee has the discretion to set parameters for the
buy-out fee in accordance with the Plan of Operation when Plan
experience data becomes available and further acknowledge that this
Agreement and future amendments and renewals thereto shall be deemed
to incorporate these parameters.

	3.	 	This Agreement shall be automatically renewed for a period of twelve
months commencing January 1, 2005 and shall be successively renewed on
January 1 of each year thereafter, subject to the following conditions:

	 	a)	 	The LAD carrier may terminate this Agreement by giving
written notice of such termination to the designee specified by the
Buy-Out Company and PAIP by December 1 for the upcoming year.
	 
	 	b)	 	The Buy-Out Company may terminate this Agreement by giving
written notice of such termination to the designee specified by the
LAD carrier and PAIP by December 1 for the upcoming year.

          If this Agreement is not renewed:

	 	c)	 	AutoOne Insurance Company shall continue to service and renew
in accordance with Plan rules all policies it has contracted to
write pursuant to this Agreement.
	 
	 	d)	 	The Buy-Out Company shall contract with another LAD carrier
or shall start accepting assignments on January 1 of the new year.

2

 

	4.	 	This Agreement will terminate if AutoOne Insurance Company becomes
ineligible to act as a LAD carrier or fails to comply with applicable
performance standards, but AutoOne Insurance Company will continue to
service and renew in accordance with Plan rules all policies it has
contracted to write pursuant to this Agreement, unless directed otherwise
by PAIP or order of the Insurance Commissioner.
	 
	5.	 	This Agreement includes the transfer of the over/under assignment of the
Buy-Out Company.
	 
	6.	 	This Agreement may be amended or modified at any time upon mutual written
consent of the parties hereto and upon written notice, a copy of which
will be mailed to the Plan office. Any amendments or modifications to the
basic contract are subject to the approval by the Plan Governing Committee
and the Insurance Commissioner.
	 
	7.	 	Subject to the appropriate approvals, this Agreement is effective January
1, 2004 and expires December 31, 2004 subject to the renewal provisions
contained in section 3 of this Agreement.
	 
	8.	 	The LAD carrier agrees to comply with performance standards set forth in
article 40 of the Plan of Operation-Performance Standards for Insurers
Writing New Jersey Personal Automobile Insurance Plan Risks.

For LAD Carrier

AutoOne Insurance Company

(formerly known as General Assurance Company)

	 	 	 
	By:

	 	/s/ Carey D. Benson

	 
	 	 
	Title: President & CEO
	 
	 	 
	Date: 4/15/04
	 
	 	 

For Buy-Out Company

Proformance Insurance Company

	 	 	 
	 
	 	 
	By:

	 	/s/ Peter A. Cappello Jr.

	 
	 	 
	Title: CFO
	 
	 	 
	Date: 4/12/04

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