COMMUTATION AGREEMENT

Exhibit 10.11

 

EXECUTION COPY

 

This Agreement is made effective as of January 1,  2005 (the “Commutation Date”) by and between PXRE Reinsurance Ltd. (“Reinsured”) and Select Reinsurance Ltd. (hereinafter referred to as the “Reinsurer”) and such entities collectively hereinafter, (the “parties”).

 

          WHEREAS, the parties hereto desire to effect a full and final commutation and release of that certain Excess of Loss Reinsurance Treaty, made and effective as of April 1, 2004, by and between the Reinsured and the Reinsurer (the “Commuted Contract”) upon the terms and conditions set forth below:

 

          NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows:

 

1.          The Reinsurer shall pay to Reinsured the amount of $17,250,000 for commutation of the Commuted Contract (the “Commutation Amount”), which amount represents the mutually agreed upon amount to completely discharge all liabilities and obligations of the parties in respect of the Commuted Contract. The Commutation Amount shall be paid as follows:

 

             (A)          The Reinsurer and the Reinsured shall jointly instruct the trustee of the Patriot 2004 Trust (the “Trust”) made June 30, 2004 with Harrington Trust Limited (now known as Appleby Trust) to distribute to the Reinsured cash in the amount of $2,750,000 from the Trust (the “Cash Commutation Payment”) ; and

 

             (B)          The Reinsurer hereby irrevocably and unconditionally releases and forever discharges its claim for the funds withheld premium of $14,500,000 due under the Commuted Contract from the Reinsured to the Reinsurer.

 

2.          The Reinsured and Reinsurer do hereby irrevocably and unconditionally release and forever discharge each other, and their affiliates, parents, subsidiaries and other related or associated companies (the “Entities”), and the Entities’ officers, directors, agents and shareholders, and their heirs, executors, administrators, successors, predecessors and assigns from all past, present and future obligations, losses, offsets, actions, causes of action, suits, debts, sums of money, accounts, damages, judgments, claims, demands or other liability whatsoever, known or unknown, at law or in equity, in contract or in tort, arising under, or in connection with the Commuted Contract, including, without limitation, any obligation for loss, loss adjustment expenses, reinsurance premiums due, reinsurer’s margin, commutation amounts, termination amounts, profit sharing, adjustments, offsets, taxes and any other obligation which might be claimed or demanded by reason of any matter whatsoever arising out of, or in connection with, the Commuted Contract; it being the intention of the parties that this release operate as a full and final settlement of each party’s current and future obligations and liabilities to the other parties hereto with respect to the Commuted Contract and discharge of any claim by one party against any other party whatsoever arising out of, or in connection with, the Commuted Contract.  For the avoidance of doubt, this Agreement shall not release, modify or affect any party’s obligations under any contract with the other party other than the Commuted Contract.

 

3.          Representations and Warranties.  Each of the parties hereto expressly severally warrants and represents to the other party hereto that it is a corporation in good standing in its respective place of domicile; that the execution, giving effect to and performance of its obligations under this Agreement is fully authorized by it; that the person executing this Agreement has the necessary and appropriate authority to do so; that this Agreement constitutes a valid and binding obligation of it (except as limited by applicable bankruptcy or other laws for the protection of debtors); that it derives a benefit and will not assert a lack of benefit by reason of its execution of this Agreement; that there are no existing or pending agreements, transactions or negotiations to which it is a party that would render this Agreement or any part thereof void, avoidable or unenforceable; that there is no authorization, consent or approval of any government or regulatory entity which is required to make this Agreement valid and binding upon it; that no claim or account being paid or settled hereunder has previously been assigned or transferred to another person or entity; that no order has been made or petition presented or other step taken for it to be wound up or for the appointment of a liquidator, provisional liquidator, receiver, administrator or other like office holder under the laws of any jurisdiction whatsoever; that the execution, giving effect to and performance of its obligations under, this Agreement does not contravene or fail to comply with a direction given by any governmental authority having regulatory authority over it; and, that it has not dealt with a broker or other intermediary in connection with the Commuted Contract or this commutation in a manner that places any obligation on  the other party.