Article 3.2

(Remedies for breach of pre-contractual duty of disclosure)

(1)  If the prospective reinsured breaches its duty of disclosure as set forth in Article 2.2.1 and if the reinsurer, had it known the undisclosed information, would have entered into the contract on different terms and conditions other than the premium, the reinsurer is entitled to retroactively adjust the contract to these different terms and conditions.

(2)  Subject to paragraph (1), if the prospective reinsured breaches its duty of disclosure as set forth in Article 2.2.1 and if the reinsurer, had it known the undisclosed information, would have entered into the contract on a higher premium, the reinsurer is entitled to

(a)  proportionally reduce the amount to be paid on any claim arising from a loss that occurred before the reinsurer became aware of the breach and

(b)  claim the higher premium for the remaining contract period while providing full coverage according to the adjusted contract for all claims arising from a loss that occurred after the reinsurer became aware of the breach.

If the reinsured notifies the reinsurer, within reasonable time after the adjustment, it is entitled to pay the higher premium retroactively to the formation of the contract and to full coverage for losses of which it was not aware prior to notification.

(3)  A breach of the duty of disclosure as set forth in Article 2.2.1 by the prospective reinsured entitles the reinsurer to avoid the contract retroactively if

(a)  the duty was breached fraudulently, or

(b)  the reinsurer would not have entered into the contract at all had it known the undisclosed information.

(4)  If the reinsurer exercises a remedy pursuant to paragraphs (1) to (3), it may claim additional damages.