# CASUALTY FACULTATIVE GENERAL CONDITIONS

Except as otherwise provided in this Reinsurance Agreement, the liability of the Reinsurer named in the Declarations attached hereto shall follow that of the Reinsured, herein called the Company, and shall be subject to the terms and conditions of the policies reinsured.

1. The Company warrants to retain for its own account, as a minimum, the amount specified in the Declaration attached hereto, which amount may be subject to Treaty Reinsurance, unless otherwise declared to the Reinsurer. As respects Pro-Rata Reinsurance, the Reinsurer's liability shall be proportionate to the amount retained by the Company. As respects Excess of Loss Reinsurance, any other reinsurance purchased by the Company that might reduce this retention warranty will insure to the benefit of the Reinsurer in this Reinsurance Agreement.
2. Except as provided by the insolvency clause and any amendments thereto referred to in Condition 11, the obligations under this Reinsurance Agreement shall run to the Company and the Reinsurer shall have no obligation to the original insured or to any other party seeking coverage under the policy(ies) reinsured.
3. The Company shall, unless otherwise advised, furnish the Reinsurer with a copy of its policy(ies) and all endorsements thereto which in any manner affect this Reinsurance Agreement, and make them available for inspection and place at the disposal of the Reinsurer at reasonable cost, of any of its records relating to this reinsurance or claims in connection therewith.
4. The Company shall notify the Reinsurer promptly of any change in the policy(ies) reinsured hereunder, which affects this Reinsurance Agreement and any such change is subject to Reinsurer acceptance.
5. The Company shall comply with the standard Nuclear Incident Exclusion Clause(s) and standard War Exclusion Clause(s) for the coverage provided.
6. Prompt notice shall be given by the Company to the Reinsurer of any occurrence or accident and any subsequent developments which without regard to liability would appear likely to involve this reinsurance.
7. All claims for loss and allocated loss expenses covered by this Reinsurance Agreement shall be binding upon the Reinsurer who shall be bound to pay its proportion as set forth herein.
8. "Loss" as used herein shall mean those amounts settled by the Company which are included within the limit of liability of the Company's policy. Loss and any allocated loss expenses included in the Company's policy limit shall be included in and subject to the limit of this Reinsurance Agreement.
9. "Allocated loss expenses" as used herein shall mean all expenses incurred in the investigation and settlement of claims, including court costs and interest on any judgement or award. It shall not include Company salaries, office expenses and expenses incurred by the Company in regard to any actual or alleged liability that is not within the provisions of the policy reinsured. Allocated loss expenses which are not included in the company's policy limit shall be subject to the terms of this Reinsurance Agreement and the Reinsurer shall pay its proportion of such expenses as follows: (a) in respect to Excess of Loss reinsurance in the ratio that the Reinsurer's loss payment bears to the Company's gross loss payment; and (b) in respect to Pro-Rata reinsurance in the ratio that the Reinsurer's limit of liability bears to the Company's limit of liability.
10. Payment of the Reinsurer's proportion of loss and allocated loss expense which the Company is legally obligated to pay will be made to the Company or as provided for in Condition 11, promptly upon receipt and approval of a satisfactory proof of loss.
11. The Reinsurer will be paid or credited by the Company with its proportion of salvages, i.e., reimbursement obtained or recovery made by the Company, less the actual cost (excluding Company salaries and office expenses) of obtaining such reimbursement or making such recovery. If the reinsurance afforded by this Reinsurance Agreement is an Excess of Loss basis, salvage shall be applied in the inverse order in which liability for losses attach.
12. In lieu of any right of action hereunder, if any dispute shall arise between the Company and the Reinsurer with reference to the interpretation of this Reinsurance Agreement or their rights with respect to any transaction involved, whether such dispute arises before or after termination of this Reinsurance Agreement, such dispute shall be submitted to arbitration. There shall be three arbitrators, one to be chosen by each party, and the third by the two so chosen. If either party refuses or neglects to appoint an arbitrator within thirty days after the receipt of written notice from the other party requesting it to do so, the requesting party may appoint an arbitrator. If the two arbitrators fail to agree on the selection of an arbitrator within thirty days of their appointment, one of them shall name two, of whom the other shall decline one and the decision shall be made by drawing lots. All arbitrators shall be active or retired disinterested officers of insurance or reinsurance companies not under the control of either party to this agreement. The arbitrators shall interpret this Agreement as an honorable engagement and not as a contract of obligation. They shall not be bound by the rules of evidence or procedural. They shall make their award with a view to effecting the general purpose of this Agreement in a reasonable manner rather than in accordance with a literal interpretation of the language. Each party shall submit its case to the arbitrators within sixty days of the appointment of the first arbitrator. A decision in writing by any two arbitrators filed with parties shall be final and binding on both parties. Judgement may be entered upon the final decision of the arbitrators in any 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 arbitrator whose award is the final and binding arbitration shall take place in the city in which the Company's Head Office is located unless some other place is mutually agreed upon by the Company and the Reinsurer.
13. (A) This reinsurance may be cancelled at any time on a pro rata basis by either the Company or the Reinsurer giving written notice to the other party, by mailing such notice to the intermediary at the address appearing on the Declarations attached hereto. The effective date of the cancellation shall be determined by the number of days allowed in the original policy plus 30 additional days not to exceed 90 days in all. Cancellation of the policy(ies) reinsured hereunder shall be deemed an automatic cancellation of the reinsurance as of the same date and on the same premium basis as that of the policy(ies) reinsured. The Company shall be entitled to return premiums payable on the cancelled reinsurance less the amount of the ceding commission thereon, if any.
(B) In the event of non-payment of premium this Reinsurance Agreement may be cancelled by the Reinsurer at any time within 15 days prior written notice stating when the reinsurance afforded hereby shall terminate. Proof of mailing shall be deemed proof of notice.
14. The intermediary named on the Declarations attached hereto is hereby recognized as the intermediary negotiating this Reinsurance for all business hereunder. All communications (including but not limited to notices, statements, payments, return premium commissions, salvage, losses, loss adjustment expenses, salvages, and loss settlement(s) relating thereto) shall be transmitted to the Company or the Reinsurer through the intermediary. Payments by the Company to the intermediary shall be deemed to constitute payment to the Reinsurer. Payments by the Reinsurer to the intermediary shall be deemed to constitute payment by the Company only to the extent that such payments are not in respect of the Company's liability for loss.
15. The terms of this Reinsurance Agreement shall not be waived or changed except by endorsement issued to form a part hereof, executed by a duly authorized representative of the Reinsurer.