Automatic, Facultative, Facultative Obligatory Introduction

The basis of reinsurance, the Reinsurer’s Percentage, the Ceding Company’s retention,
and the Commencement Date on facultative cases will be determined by the Parties for
each facultative case at the time of acceptance by the Reinsurer.
Once a risk is bound under this facultative reinsurance provision, it shall be deemed a
“Policy”. The terms of the facultative offer shall supersede the terms of this Agreement to
the extent of any conflict between the terms of the offer and the terms of this Agreement.
Except as otherwise provided in the offer, all other terms and conditions of this
Agreement shall apply.
If any risk is to be submitted to more than one reinsurer for consideration, the Allocation
Rules for Placement of Facultative Cases hall apply. [Insert (if desired): Nothing herein
shall prevent the Ceding Company from retaining the risk on a policy that was submitted
facultatively to the Reinsurer.]
Facultative Obligatory Reinsurance:
If a risk exceeds the Automatic Binding Limits, but is within the Total Amount To Be
Placed and the risk otherwise qualifies as automatic reinsurance, the Ceding Company
shall submit the risk to the Reinsurer. If the Reinsurer has capacity, the Reinsurer shall
notify the Ceding Company within [insert timing] of its acceptance of such risk and the
amount of capacity the Reinsurer is able to accept, up to the Facultative-Obligatory
Acceptance Limits, if all of the following conditions are met:
a. the Ceding Company, once it has completed its full underwriting of the risk, shall
promptly communicate to the Reinsurer, in a mutually agreeable format, the
following information:
i. the proposed insured(s)’ name, date of birth, residence, rating and any special
avocation or occupational status;
ii. Ultimate Amount of insurance applied for with the Ceding Company;
iii. the total of the Ultimate Amount of insurance inforce and currently applied for
in all companies; and
iv. the Ultimate Amount of reinsurance requested by the Ceding Company to be
reinsured with the Reinsurer;
b the Reinsurer, upon receipt of such notification, shall check whether the
reinsurance coverage being requested is within its retention limit taking into
account all inforce liabilities and outstanding commitments; and
c. within [insert timing] of receipt of the Reinsurer’s notification of its acceptance of
such risk, the Ceding Company shall advise the Reinsurer, in a mutually agreeable
format, of the Ultimate Amount for which it shall bind the Reinsurer.