Opinion ID: 808087
Heading Depth: 2
Heading Rank: 3

Heading: The Terms and Conditions of the Certificate

Text: The Certificate is four pages long and does not contain an express choice-of-law provision. On the first page, Items 3 and 4 set out the amount of risk retained by PEIC (referred to as the Company) and the amount of reinsurance accepted 8 by Constitution (referred to as the Reinsurer). Specifically, they state: ITEM 3 - COMPANY RETENTION THE FIRST $1,000,000 SUBJECT TO FACULTATIVE REINSURANCE. ITEM 4 - REINSURANCE ACCEPTED $1,000,000 ANY ONE OCCURRENCE AND IN THE AGGREGATE WHERE APPLICABLE PART OF $4,000,000 WHICH IS EXCESS OF $1,000,000 WHICH IN TURN IS EXCESS OF UNDERLYING INSURANCE. Item 5 indicates that Constitution‘s ―Basis of Acceptance‖ is ―Excess of Loss,‖ which is later defined to mean that ―[t]he limit(s) of liability of the Reinsurer, as stated in Item 4 of the Declarations (Reinsurance Accepted) applies(y) only to that portion of loss settlement(s) in excess of the applicable retention of the Company as stated in Item 3 of the Declarations.‖ The second page is titled ―Reinsuring Agreements and Conditions.‖ Significantly, the preamble on this page states the fundamental nature of the agreement: In consideration of the payment of the premium, and subject to the terms, conditions and limits of 9 liability set forth herein and in the Declarations made a part thereof, the Reinsurer does hereby reinsure the ceding company named in the Declarations (herein called the Company) in respect of the Company‘s policy(ies) as follows:[.] Following this first sentence, the second page outlines certain terms and conditions. Paragraph A contains a ―follow-the-fortunes‖ clause, linking PEIC‘s liability under the Excess Policy to Constitution‘s liability under the Certificate, and a ―follow form‖ clause, importing into the Certificate the terms and conditions of the Excess Policy ―except when otherwise specifically provided.‖ It reads in relevant part: A. . . . The liability of the Reinsurer, as specified in Item 4 of the Declarations, shall follow that of the Company and shall be subject in all respects to all the terms and conditions of the Company‘s policy except when otherwise specifically provided herein or designated as nonconcurrent reinsurance in the Declarations . . . . Paragraph D describes circumstances in which PEIC must provide Constitution with certain information about claims or occurrences reported to it under the Excess Policy. It also details Constitution‘s ―right to associate.‖ The paragraph states: 10