noted that “[t]he proposed agreement is straightforward and uncomplicated,” but that he had two
comments concerning it. He pointed out that, first, “the agreement refers to ‘various reinsurance
contracts’ between Central National and Old Republic,” without any attempt to “list, identify or
describe those contracts.” Secondly, he noted that the agreement constituted “a complete mutual
release between the parties with respect to all of their ‘various reinsurance contracts.’” However,
LeRoy indicated that the principal reinsurance liabilities arose out of the “Baccala and Shoop
business,” an insurance agency hired by Old Republic in 1981 to procure facultative reinsurance for
policies issued by Old Republic.
The next day, on July 27, 1990, LeRoy sent Davlin a revised draft of the commutation
agreement, along with a cover letter stating that the changes “consist of a slight broadening in the
referred to reinsurance agreements between the parties which are the subject of the commutation and
mutual releases.” LeRoy’s proposed changes were underlined in the text of the revised version:
“THIS AGREEMENT is made effective ________ by and
between OLD REPUBLIC INSURANCE COMPANY (‘Old
Republic’) and THE CENTRAL NATIONAL INSURANCE
COMPANY OF OMAHA (‘Central National’).
WHEREAS, Old Republic and Central National have
heretofore entered into various reinsurance contracts with one
another, under which reinsurance agreements there are or may be
certain liabilities and obligations outstanding (the ‘Reinsurance
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