1021-00003 · Verimark Hospitality Group · Pre-Litigation Correspondence

demand-letter-pinnacle.docx DOCUMENT Antitrust

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CALDERWOOD & HARKNESS LLP Attorneys at Law

333 SE 2nd Avenue, Suite 4400 Miami, Florida 33131 Telephone: (305) 982-7100 Facsimile: (305) 982-7101 www.calderwoodharkness.com

November 20, 2022

VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED AND VIA EMAIL

Pinnacle Surplus Lines Inc. 200 Congress Avenue, Suite 1400 Austin, Texas 78701

Attention: Claims Department / Authorized Representative

Re: Demand for Payment of First Excess Layer Business-Interruption Coverage

Insured: Verimark Hospitality Group Inc. Policy Number: PSL-XS1-2022-3390 Policy Period: July 1, 2022 – July 1, 2023 Date of Loss: September 18, 2022 Loss Event: Hurricane Callista

Dear Sir or Madam:

This firm represents Verimark Hospitality Group Inc. ("VHG"), a Delaware corporation publicly traded on the Nasdaq Stock Market under the ticker symbol "VMRK," with its principal executive offices located at 1900 Brickell Avenue, Suite 3200, Miami, Florida 33129. This letter constitutes VHG's formal demand for payment of the full Fifteen Million Dollars ($15,000,000) in available limits under that certain first excess layer policy issued by Pinnacle Surplus Lines Inc. ("Pinnacle") to VHG, bearing Policy Number PSL-XS1-2022-3390, for business-interruption losses sustained by VHG as a direct result of Hurricane Callista, which made landfall in southern Florida on September 18, 2022. This matter is being handled by our office under Engagement Number 1021-00003.

Please be advised that a concurrent demand of even date has been made upon Ironclad Indemnity Corporation ("Ironclad"), VHG's primary property and business-interruption carrier, under Policy Number IIC-PRP-2022-07541, for payment of the full Twenty-Five Million Dollar ($25,000,000) primary layer limit. Separate demands of even date are also being transmitted to Montclair Assurance Company and Sovereign Re Ltd. as second and third excess carriers in VHG's insurance tower, respectively. VHG's total business-interruption losses arising from Hurricane Callista equal or exceed the aggregate limits of the entire tower.

The factual and legal bases for VHG's demand are set forth in detail below.

1. The Insured and the Insurance Program

VHG is a leading hospitality and real-estate company that owns and operates luxury resort hotels and conference centers in the State of Florida. The company's portfolio includes three premier resort properties situated along Florida's Gulf Coast and the Florida Keys, each of which caters to leisure travelers, corporate groups, and conference clientele. For fiscal year 2021, VHG reported total consolidated revenue of approximately $412 million, with earnings before interest, taxes, depreciation, and amortization ("EBITDA") of approximately $78 million. VHG is a significant employer in the communities in which it operates and a material contributor to the tourism economy of the State of Florida.

In recognition of the substantial property values at risk and the critical importance of continuous business operations to VHG's financial well-being and its obligations to shareholders, employees, and guests, VHG maintains a comprehensive property and business-interruption insurance program. That program was placed by VHG's broker of record, Tidewater Risk Advisors LLC ("Tidewater"), through its account executive, Franklin Orde. The program was structured as a four-layer insurance tower with an aggregate limit of Sixty Million Dollars ($60,000,000) above a Five Hundred Thousand Dollar ($500,000) per-occurrence deductible. The tower is structured as follows:

All four policies in the tower share a common policy period of July 1, 2022 through July 1, 2023, and provide coverage on an "all risks" basis for direct physical loss of or damage to VHG's insured properties, including coverage for business interruption and extra expense arising from such physical loss or damage. The aggregate annual premium for the entire insurance program is approximately $1,840,000, of which Pinnacle's share was $410,000.

Of particular significance to this demand, Pinnacle's first excess layer policy, PSL-XS1-2022-3390, is a follow-form excess policy. As such, it follows the terms, conditions, definitions, coverage grants, and exclusions of the underlying Ironclad primary policy, IIC-PRP-2022-07541, except where the Pinnacle policy specifically provides otherwise. The follow-form nature of Pinnacle's policy means that, subject to its stated layer and limits, Pinnacle's coverage obligations are coextensive with those of the underlying primary carrier. VHG paid the full premium for all layers of this program, including the $410,000 premium for the Pinnacle excess layer, and has complied with all conditions precedent to coverage.

2. Hurricane Callista and the Loss Event

Hurricane Callista was first identified as a tropical disturbance in the western Caribbean Sea in early September 2022. The storm was named by the National Hurricane Center on September 12, 2022, at which point it had intensified to tropical-storm strength. Over the ensuing days, Hurricane Callista underwent rapid intensification as it tracked northward through the warm waters of the Gulf of Mexico and the Straits of Florida.

In response to the escalating threat, Monroe County, Florida, issued a mandatory evacuation order for all residents and visitors in the Florida Keys on September 16, 2022. The following day, September 17, 2022, Lee County, Florida, issued its own mandatory evacuation order for coastal areas, including the barrier islands of Fort Myers Beach and Sanibel Island. VHG immediately commenced emergency shutdown and evacuation procedures at all three of its resort properties in compliance with these governmental orders.

Hurricane Callista made landfall on September 18, 2022, at approximately 1:30 PM Eastern Daylight Time in the Lower Florida Keys, near Big Pine Key, as a Category 4 hurricane on the Saffir-Veltason Hurricane Wind Scale. At landfall, the storm carried maximum sustained winds of approximately 145 miles per hour. The storm produced catastrophic wind damage across Monroe County, Lee County, and portions of Pinellas and Hillsborough Counties as it tracked northward through southwestern Florida. In addition to the extreme wind forces, Hurricane Callista generated devastating storm surge, with storm-surge heights of approximately eight to fourteen (8–14) feet recorded in Monroe County and approximately six to ten (6–10) feet recorded in Lee County.

The combined effect of the extreme sustained winds, hurricane-force gusts, wind-driven rain, and accompanying storm surge caused catastrophic physical damage to all three of VHG's insured resort properties, as described in detail below. All three properties were forced to cease operations and close to guests and the public as a direct and proximate result of the hurricane and the physical damage it caused.

3. The Insured Properties and Business-Interruption Losses

VHG engaged Meridian Forensic Accountants LLP to prepare a comprehensive analysis of the business-interruption losses sustained at each of the three insured properties. That analysis, which incorporates historical revenue data, seasonal occupancy trends, average daily rate ("ADR") history, and contractual event-revenue projections, supports the aggregate loss figures set forth below. A detailed forensic-accounting report will be made available to Pinnacle and its adjusters upon reasonable request.

3.1 Verimark Grand Key Resort — Marathon, Florida

The Verimark Grand Key Resort is VHG's flagship property, located at Mile Marker 48, Marathon, Florida 33050. The resort is a 312-room luxury oceanfront property featuring a full-service marina, multiple restaurants and bars, a spa, and extensive meeting and event facilities. Prior to Hurricane Callista, the Grand Key Resort maintained a pre-loss average daily rate ("ADR") of $389 per room night, with a stabilized occupancy rate of approximately 82%. The resort is one of the premier luxury destinations in the Florida Keys, and its revenue performance has historically been among the strongest in VHG's portfolio, particularly during the high-season months of October through April.

Hurricane Callista inflicted severe structural damage to the Grand Key Resort, including destruction of the marina, the collapse of two beachfront restaurant structures, extensive roof damage across multiple guest-room buildings, and widespread flooding of ground-floor common areas and guest rooms from both wind-driven rain and storm surge. The resort was forced to close on September 18, 2022, and remained fully closed for a total of 178 days, reopening to guests on March 15, 2023. The prolonged closure period reflects the severity of the physical damage, the remote and access-constrained location of the property in the Florida Keys, and the extreme difficulty of securing qualified contractors and building materials in the post-hurricane environment.

Based on the forensic-accounting analysis, the estimated business-interruption loss for the Verimark Grand Key Resort, inclusive of lost revenue, continuing expenses, and extra expense, totals approximately $31,400,000.

3.2 Verimark Harborview Hotel & Conference Center — Fort Myers Beach, Florida

The Verimark Harborview Hotel & Conference Center is located at 1400 Estero Boulevard, Fort Myers Beach, Florida 33931. The property consists of a 224-room full-service hotel and a 40,000-square-foot state-of-the-art conference and events facility. The Harborview serves both leisure travelers and a substantial corporate and association meeting clientele. Prior to Hurricane Callista, the hotel maintained a pre-loss ADR of $295 per room night, with a stabilized occupancy rate of approximately 74%. The conference facility was booked for numerous corporate meetings, industry conferences, and social events throughout the fourth quarter of 2022 and the first quarter of 2023, all of which were canceled or relocated as a direct result of the hurricane damage.

The Harborview sustained catastrophic damage from Hurricane Callista, including significant storm-surge inundation (the property is located directly on the barrier island of Fort Myers Beach, which experienced storm surge of approximately six to ten feet), extensive wind damage to the building envelope, destruction of the hotel's mechanical and electrical systems on the lower floors, and severe interior water damage throughout the conference center and guest-room wings. The hotel was forced to close on September 18, 2022, and remained fully closed for a total of 135 days, reopening on January 31, 2023.

Based on the forensic-accounting analysis, the estimated business-interruption loss for the Verimark Harborview Hotel & Conference Center, inclusive of lost room revenue, lost conference and event revenue, continuing expenses, and extra expense, totals approximately $18,700,000.

3.3 Verimark Sunset Shores — St. Pete Beach, Florida

The Verimark Sunset Shores is a 186-room boutique luxury resort located at 7200 Gulf Boulevard, St. Pete Beach, Florida 33706. The property is situated on the Gulf of Mexico and caters primarily to upscale leisure travelers. Prior to Hurricane Callista, the Sunset Shores maintained a pre-loss ADR of $342 per room night, with a stabilized occupancy rate of approximately 79%.

Although the Sunset Shores is located further north than VHG's other two properties and thus experienced somewhat lower wind speeds and storm-surge heights, the resort nonetheless sustained significant wind damage to its roof systems, exterior facades, and landscaping, as well as water intrusion damage to guest rooms and public areas. The property was fully closed for 73 days, from September 18, 2022 through November 30, 2022. Following its partial reopening on December 1, 2022, the resort operated at materially reduced capacity—initially offering only approximately 40% of its room inventory—as phased repairs continued over the ensuing months. The property did not return to full operational capacity until February 28, 2023.

Based on the forensic-accounting analysis, the estimated business-interruption loss for the Verimark Sunset Shores, inclusive of lost revenue during both the full-closure and reduced-capacity periods, continuing expenses, and extra expense, totals approximately $9,900,000.

3.4 Total Claimed Business-Interruption Loss

The aggregate business-interruption losses across all three insured VHG properties are summarized as follows:

The total claimed business-interruption loss of $60,000,000 equals the full available aggregate limits of VHG's four-layer insurance tower above the $500,000 per-occurrence deductible. This loss fully penetrates through every layer of the tower, including the entirety of Pinnacle's $15,000,000 first excess layer.

4. Notice of Loss, Proof of Loss, and Claim Status

VHG has fully and timely complied with all notice and proof-of-loss obligations under the insurance program. The timeline of relevant claim activity is as follows:

VHG submitted its initial notice of loss to Ironclad Indemnity Corporation, as lead carrier in the insurance tower, on September 22, 2022—within four (4) calendar days of the September 18, 2022 date of loss. The notice identified all three insured properties, described the nature and cause of the loss (Hurricane Callista), and provided preliminary estimates of the damage and business-interruption exposure. Copies of the initial notice of loss were simultaneously transmitted to Tidewater Risk Advisors as VHG's broker of record.

Ironclad retained Arbor Claims Services LLC ("Arbor") as the independent adjusting firm for the claim. Arbor's lead adjuster on the matter, Denise Whitford, conducted initial site inspections of all three VHG properties on October 5, 2022. Ms. Whitford and her team were granted full access to the properties and were provided with all requested documentation, including pre-loss financial records, occupancy reports, booking data, and vendor contracts. VHG has cooperated fully and in good faith with the adjustment process at every stage.

On October 12, 2022, Ironclad issued a reservation of rights letter to VHG. VHG, through this firm, has responded to that reservation of rights letter and has preserved its objections to certain of the coverage positions articulated therein. The specific contents of Ironclad's reservation of rights letter are discussed in Section 6 below, to the extent relevant to Pinnacle's coverage obligations.

On November 15, 2022, VHG submitted a sworn statement in proof of loss in the aggregate amount of $60,000,000, representing the total business-interruption losses sustained across all three insured properties. A copy of the sworn statement in proof of loss is enclosed with this letter.

Concurrently with the transmittal of this demand letter to Pinnacle, Calderwood & Harkness is issuing a separate demand letter of even date to Ironclad Indemnity Corporation, demanding payment of the full $25,000,000 primary layer limit (less the $500,000 per-occurrence deductible). Separate demands of even date are also being transmitted to Montclair Assurance Company and Sovereign Re Ltd. for payment of their respective excess layer limits. VHG is pursuing payment from all carriers in its insurance tower simultaneously in order to ensure the prompt and complete indemnification to which it is entitled.

5. Pinnacle's Coverage Obligations

Pinnacle's first excess layer policy, PSL-XS1-2022-3390, provides $15,000,000 in coverage in excess of the $25,000,000 underlying Ironclad primary layer. Pinnacle's attachment point is therefore $25,000,000 (or, stated differently, $25,500,000 inclusive of the per-occurrence deductible). As set forth above, VHG's total business-interruption losses of $60,000,000 far exceed Pinnacle's attachment point, fully penetrating into and entirely through Pinnacle's $15,000,000 first excess layer.

As a follow-form excess policy, Pinnacle's policy incorporates the terms, conditions, coverage grants, definitions, and exclusions of the underlying Ironclad primary policy, except to the extent that the Pinnacle policy specifically provides otherwise. VHG is not aware of any provision in the Pinnacle excess policy that narrows, restricts, or modifies the coverage otherwise available under the follow-form terms of the Ironclad primary policy in any manner material to this claim.

The loss at issue constitutes a covered "all risks" occurrence under the policies. Hurricane Callista caused direct physical loss of and damage to all three of VHG's insured resort properties, which in turn caused the prolonged cessation and material impairment of VHG's business operations at those properties. Business-interruption coverage is expressly provided under the terms of the Ironclad primary policy, and by incorporation, under the Pinnacle follow-form excess policy. There is no applicable exclusion that eliminates or reduces coverage for this loss.

Pinnacle's attachment point of $25,000,000 is unambiguously reached by VHG's total losses. Even if the Ironclad primary layer were paid in full (as VHG has demanded), the remaining $35,000,000 in losses above the primary layer would exhaust Pinnacle's $15,000,000 first excess layer in its entirety, with an additional $20,000,000 in losses flowing into the second and third excess layers. Accordingly, Pinnacle owes the full $15,000,000 limit of its first excess layer to VHG.

6. Rebuttal of Anticipated Coverage Defenses

VHG is aware that Ironclad's reservation of rights letter of October 12, 2022, raised certain potential coverage defenses. To the extent that Pinnacle, as a follow-form excess carrier, may seek to rely upon or assert similar defenses, VHG addresses each of the anticipated defenses below and explains why none of them provides a valid basis for reducing or denying Pinnacle's coverage obligations.

6.1 Named-Windstorm Sub-Limit

VHG understands that Ironclad may assert the existence of a $15,000,000 named-windstorm sub-limit applicable to business-interruption losses under the primary policy. VHG's position is that this sub-limit was expressly deleted from the Ironclad primary policy during the July 2022 renewal negotiations. This deletion was specifically negotiated by VHG's broker of record, Tidewater Risk Advisors, through its account executive Franklin Orde, and is confirmed by contemporaneous correspondence between Mr. Orde and Ironclad's underwriting department. VHG has retained copies of that correspondence and will produce it at the appropriate time if this issue is raised as a basis for any coverage limitation.

Moreover, even if a named-windstorm sub-limit were determined to apply to the Ironclad primary policy—which VHG expressly denies—any such sub-limit would not independently reduce Pinnacle's follow-form excess coverage obligations below Pinnacle's own stated policy limits unless the sub-limit were expressly and specifically incorporated into the Pinnacle excess policy. VHG contends that no such express incorporation exists in the Pinnacle policy. A sub-limit in the primary policy operates to cap the primary carrier's exposure; it does not, absent express language to the contrary, reduce the stated limits of an excess carrier whose policy sits above the primary layer. VHG reserves all rights to brief this issue in full if any party raises it as a basis for denial or reduction of coverage.

6.2 Concurrent Causation / Flood Exclusion

VHG anticipates that one or more carriers may attempt to invoke a flood exclusion in connection with storm-surge damage at the insured properties and may further argue that the concurrent-causation doctrine bars coverage for all losses, including wind-damage-related business interruption, where storm-surge flooding was a concurrent cause of the loss.

Any such argument is inconsistent with well-established Florida law. Florida applies an efficient proximate cause analysis in first-party property insurance disputes involving multiple concurrent causes of loss. Under this analysis, where a covered peril (hurricane wind) and an excluded peril (flood) concurrently cause a loss, coverage is available if the covered peril is the efficient proximate cause—i.e., the predominant or most significant cause—of the loss. See Ostrander Partners LLC, 208 So. 3d 694 (Fla. 2016); Fla. Stat. § 627.702.

Here, the predominant and efficient proximate cause of the business-interruption losses at all three VHG properties was wind damage from a Category 4 hurricane with sustained winds of 145 miles per hour. The wind damage alone was sufficient to cause the prolonged closures of all three properties. While storm surge contributed to property damage at certain locations—particularly the Grand Key Resort and the Harborview Hotel—the wind damage was independently catastrophic and was the predominant cause of the inability to operate. Accordingly, any attempt to invoke a flood exclusion to bar or reduce business-interruption coverage would be legally and factually unavailing.

6.3 Period of Restoration

VHG further anticipates that one or more carriers may seek to challenge the length of the business-interruption period of restoration at one or more of the insured properties, contending that VHG's claimed closure periods exceed a reasonable period of restoration.

VHG acted reasonably and diligently at all times in restoring its properties to operational condition following Hurricane Callista. The closure periods experienced by VHG's properties were dictated by the extraordinary severity of the physical damage caused by a Category 4 hurricane, the geographic isolation of the Florida Keys (in the case of the Grand Key Resort), the widespread devastation across southwestern Florida that created extreme demand for contractors and building materials, and the regulatory and permitting requirements applicable to major reconstruction work on barrier islands and in coastal flood zones. VHG engaged contractors on an expedited basis, pursued emergency permitting where available, and reopened each property as promptly as conditions permitted. In the case of the Sunset Shores, VHG undertook a phased reopening strategy to bring available rooms back online while repairs continued in other portions of the property, thereby affirmatively mitigating its business-interruption losses.

No basis exists for reducing the period of restoration below the actual closure and reduced-capacity periods experienced by VHG's properties, and any attempt to do so would be arbitrary, unsupported by the facts, and contrary to the reasonable expectations of the insured.

6.4 Duty to Mitigate / Failure to Mitigate

Finally, to the extent any carrier may assert that VHG failed to take reasonable steps to mitigate its business-interruption losses, VHG categorically rejects any such contention. As described above, VHG took all reasonable steps available to mitigate its losses following Hurricane Callista. These mitigation efforts included, without limitation:

(a) the immediate engagement of emergency restoration contractors within days of the storm;

(b) the pursuit of expedited building permits and regulatory approvals for reconstruction work;

(c) the negotiation of temporary facility arrangements with neighboring hotels and conference venues to accommodate displaced group bookings and events where feasible;

(d) the phased reopening of the Verimark Sunset Shores property at reduced capacity while repairs continued; and

(e) ongoing communication with guests, corporate clients, and event planners to preserve future booking relationships and minimize long-term revenue losses.

VHG's mitigation efforts were reasonable, prudent, and consistent with the standard of care expected of a sophisticated hospitality company operating under extraordinary post-disaster conditions.

7. Formal Demand for Payment

Based on the foregoing, Verimark Hospitality Group Inc. hereby formally demands that Pinnacle Surplus Lines Inc. pay the full Fifteen Million Dollars ($15,000,000) in available limits under its first excess layer policy, Policy Number PSL-XS1-2022-3390, to VHG within thirty (30) days of the date of this letter—i.e., on or before December 20, 2022.

Payment of Pinnacle's $15,000,000 first excess layer should be made in conjunction with, and following or concurrent with, Ironclad Indemnity Corporation's payment of the full $25,000,000 primary layer limit (less the $500,000 per-occurrence deductible) under Policy Number IIC-PRP-2022-07541. However, Pinnacle's obligation to pay its layer is independent and shall not be excused or delayed by any failure, refusal, or delay by Ironclad or any other carrier in the tower to pay its respective limits. If the primary layer is exhausted by payment, judgment, or settlement, Pinnacle's $15,000,000 obligation is immediately due.

Payment should be made payable to Verimark Hospitality Group Inc. and delivered to the offices of Calderwood & Harkness LLP at the following address:

Calderwood & Harkness LLP 333 SE 2nd Avenue, Suite 4400 Miami, Florida 33131

Attention: Elaine Forsythe, Partner

Reference: Verimark Hospitality Group Inc. / Engagement No. 1021-00003

8. Reservation of Rights and Warning Regarding Bad Faith

VHG expressly reserves all rights and remedies available to it under the Pinnacle policy, under the laws of the State of Florida, and in equity, including but not limited to claims for:

(a) breach of contract for failure to pay policy benefits;

(b) declaratory judgment establishing Pinnacle's coverage obligations;

(c) bad faith, both statutory (pursuant to Fla. Stat. § 624.155) and at common law, for the unreasonable delay or wrongful denial of a covered claim;

(d) consequential damages proximately caused by Pinnacle's failure to timely pay benefits owed; and

(e) attorneys' fees, costs, and pre-judgment and post-judgment interest as provided by applicable law.

Pinnacle is hereby placed on express notice that any unreasonable delay in responding to or paying this claim, or any wrongful denial or underpayment of VHG's covered business-interruption losses, may expose Pinnacle to statutory bad-faith liability under Florida law. Florida Statute § 624.155 authorizes a first-party insured to bring a civil action against an insurer that has not attempted in good faith to settle a claim when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for the insured's interests. Statutory bad-faith damages under Florida law are not limited to the policy limits and may include damages in excess of the policy limits, as well as attorneys' fees, costs, and other consequential damages.

VHG's willingness to engage in good-faith discussion and negotiation regarding this claim, or any component thereof, shall not be construed as a waiver of any rights, claims, or remedies available to VHG, all of which are expressly preserved.

9. Request for Response and Contact Information

VHG respectfully requests that Pinnacle respond to this demand in writing within thirty (30) days of the date of this letter. VHG's preference is to resolve this matter promptly, cooperatively, and without the need for litigation. However, VHG is prepared to take all necessary legal action to protect its rights if Pinnacle fails to respond or refuses to honor its coverage obligations in a timely manner.

All correspondence, communications, and inquiries regarding this matter should be directed to the undersigned counsel at the following address:

Elaine Forsythe, Partner Calderwood & Harkness LLP 333 SE 2nd Avenue, Suite 4400 Miami, Florida 33131 Telephone: (305) 982-7118

Email: eforsythe@calderwoodharkness.com

Reference: Verimark Hospitality Group Inc. / Engagement No. 1021-00003

We trust that Pinnacle will give this demand the serious and prompt attention it warrants and that this matter can be resolved expeditiously and in good faith. We look forward to your timely response.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Elaine Forsythe Partner

cc (via email and first-class mail):

Nathaniel Driscoll, General Counsel, Verimark Hospitality Group Inc.

Sandra Pellegrini, Vice President, Risk Management, Verimark Hospitality Group Inc.

Franklin Orde, Account Executive, Tidewater Risk Advisors LLC

Victor Haddon, Senior Vice President, Claims, Ironclad Indemnity Corporation (as lead carrier)

Enclosures:

1. Copy of VHG's Sworn Statement in Proof of Loss, dated November 15, 2022

2. Copy of Pinnacle Surplus Lines Inc. Policy PSL-XS1-2022-3390 (Declarations Page)

Layer	Carrier	Limit	Attachment Point	Policy Number
Primary	Ironclad Indemnity Corporation	$25,000,000	$500,000 deductible	IIC-PRP-2022-07541
First Excess	Pinnacle Surplus Lines Inc.	$15,000,000	$25,000,000 xs deductible	PSL-XS1-2022-3390
Second Excess	Montclair Assurance Company	$10,000,000	$40,000,000 xs deductible	MAC-XS2-2022-09817
Third Excess	Sovereign Re Ltd.	$10,000,000	$50,000,000 xs deductible	SRL-XS3-2022-5102
Property	Closure Period	Estimated BI Loss
Verimark Grand Key Resort	178 days (Sept. 18, 2022 – Mar. 15, 2023)	$31,400,000
Verimark Harborview Hotel & Conference Center	135 days (Sept. 18, 2022 – Jan. 31, 2023)	$18,700,000
Verimark Sunset Shores	73 days full closure + reduced capacity to Feb. 28, 2023	$9,900,000
Total	$60,000,000

CALDERWOOD & HARKNESS LLP Attorneys at Law
333 SE 2nd Avenue, Suite 4400 Miami, Florida 33131 Telephone: (305) 982-7100 Facsimile: (305) 982-7101 www.calderwoodharkness.com
November 20, 2022
VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED AND VIA EMAIL
Pinnacle Surplus Lines Inc. 200 Congress Avenue, Suite 1400 Austin, Texas 78701
Attention: Claims Department / Authorized Representative
Re: Demand for Payment of First Excess Layer Business-Interruption Coverage
Insured: Verimark Hospitality Group Inc. Policy Number: PSL-XS1-2022-3390 Policy Period: July 1, 2022 – July 1, 2023 Date of Loss: September 18, 2022 Loss Event: Hurricane Callista
Dear Sir or Madam:
This firm represents Verimark Hospitality Group Inc. ("VHG"), a Delaware corporation publicly traded on the Nasdaq Stock Market under the ticker symbol "VMRK," with its principal executive offices located at 1900 Brickell Avenue, Suite 3200, Miami, Florida 33129. This letter constitutes VHG's formal demand for payment of the full Fifteen Million Dollars ($15,000,000) in available limits under that certain first excess layer policy issued by Pinnacle Surplus Lines Inc. ("Pinnacle") to VHG, bearing Policy Number PSL-XS1-2022-3390, for business-interruption losses sustained by VHG as a direct result of Hurricane Callista, which made landfall in southern Florida on September 18, 2022. This matter is being handled by our office under Engagement Number 1021-00003.
Please be advised that a concurrent demand of even date has been made upon Ironclad Indemnity Corporation ("Ironclad"), VHG's primary property and business-interruption carrier, under Policy Number IIC-PRP-2022-07541, for payment of the full Twenty-Five Million Dollar ($25,000,000) primary layer limit. Separate demands of even date are also being transmitted to Montclair Assurance Company and Sovereign Re Ltd. as second and third excess carriers in VHG's insurance tower, respectively. VHG's total business-interruption losses arising from Hurricane Callista equal or exceed the aggregate limits of the entire tower.
The factual and legal bases for VHG's demand are set forth in detail below.
1. The Insured and the Insurance Program
VHG is a leading hospitality and real-estate company that owns and operates luxury resort hotels and conference centers in the State of Florida. The company's portfolio includes three premier resort properties situated along Florida's Gulf Coast and the Florida Keys, each of which caters to leisure travelers, corporate groups, and conference clientele. For fiscal year 2021, VHG reported total consolidated revenue of approximately $412 million, with earnings before interest, taxes, depreciation, and amortization ("EBITDA") of approximately $78 million. VHG is a significant employer in the communities in which it operates and a material contributor to the tourism economy of the State of Florida.
In recognition of the substantial property values at risk and the critical importance of continuous business operations to VHG's financial well-being and its obligations to shareholders, employees, and guests, VHG maintains a comprehensive property and business-interruption insurance program. That program was placed by VHG's broker of record, Tidewater Risk Advisors LLC ("Tidewater"), through its account executive, Franklin Orde. The program was structured as a four-layer insurance tower with an aggregate limit of Sixty Million Dollars ($60,000,000) above a Five Hundred Thousand Dollar ($500,000) per-occurrence deductible. The tower is structured as follows:
All four policies in the tower share a common policy period of July 1, 2022 through July 1, 2023, and provide coverage on an "all risks" basis for direct physical loss of or damage to VHG's insured properties, including coverage for business interruption and extra expense arising from such physical loss or damage. The aggregate annual premium for the entire insurance program is approximately $1,840,000, of which Pinnacle's share was $410,000.
Of particular significance to this demand, Pinnacle's first excess layer policy, PSL-XS1-2022-3390, is a follow-form excess policy. As such, it follows the terms, conditions, definitions, coverage grants, and exclusions of the underlying Ironclad primary policy, IIC-PRP-2022-07541, except where the Pinnacle policy specifically provides otherwise. The follow-form nature of Pinnacle's policy means that, subject to its stated layer and limits, Pinnacle's coverage obligations are coextensive with those of the underlying primary carrier. VHG paid the full premium for all layers of this program, including the $410,000 premium for the Pinnacle excess layer, and has complied with all conditions precedent to coverage.
2. Hurricane Callista and the Loss Event
Hurricane Callista was first identified as a tropical disturbance in the western Caribbean Sea in early September 2022. The storm was named by the National Hurricane Center on September 12, 2022, at which point it had intensified to tropical-storm strength. Over the ensuing days, Hurricane Callista underwent rapid intensification as it tracked northward through the warm waters of the Gulf of Mexico and the Straits of Florida.
In response to the escalating threat, Monroe County, Florida, issued a mandatory evacuation order for all residents and visitors in the Florida Keys on September 16, 2022. The following day, September 17, 2022, Lee County, Florida, issued its own mandatory evacuation order for coastal areas, including the barrier islands of Fort Myers Beach and Sanibel Island. VHG immediately commenced emergency shutdown and evacuation procedures at all three of its resort properties in compliance with these governmental orders.
Hurricane Callista made landfall on September 18, 2022, at approximately 1:30 PM Eastern Daylight Time in the Lower Florida Keys, near Big Pine Key, as a Category 4 hurricane on the Saffir-Veltason Hurricane Wind Scale. At landfall, the storm carried maximum sustained winds of approximately 145 miles per hour. The storm produced catastrophic wind damage across Monroe County, Lee County, and portions of Pinellas and Hillsborough Counties as it tracked northward through southwestern Florida. In addition to the extreme wind forces, Hurricane Callista generated devastating storm surge, with storm-surge heights of approximately eight to fourteen (8–14) feet recorded in Monroe County and approximately six to ten (6–10) feet recorded in Lee County.
The combined effect of the extreme sustained winds, hurricane-force gusts, wind-driven rain, and accompanying storm surge caused catastrophic physical damage to all three of VHG's insured resort properties, as described in detail below. All three properties were forced to cease operations and close to guests and the public as a direct and proximate result of the hurricane and the physical damage it caused.
3. The Insured Properties and Business-Interruption Losses
VHG engaged Meridian Forensic Accountants LLP to prepare a comprehensive analysis of the business-interruption losses sustained at each of the three insured properties. That analysis, which incorporates historical revenue data, seasonal occupancy trends, average daily rate ("ADR") history, and contractual event-revenue projections, supports the aggregate loss figures set forth below. A detailed forensic-accounting report will be made available to Pinnacle and its adjusters upon reasonable request.
3.1 Verimark Grand Key Resort — Marathon, Florida
The Verimark Grand Key Resort is VHG's flagship property, located at Mile Marker 48, Marathon, Florida 33050. The resort is a 312-room luxury oceanfront property featuring a full-service marina, multiple restaurants and bars, a spa, and extensive meeting and event facilities. Prior to Hurricane Callista, the Grand Key Resort maintained a pre-loss average daily rate ("ADR") of $389 per room night, with a stabilized occupancy rate of approximately 82%. The resort is one of the premier luxury destinations in the Florida Keys, and its revenue performance has historically been among the strongest in VHG's portfolio, particularly during the high-season months of October through April.
Hurricane Callista inflicted severe structural damage to the Grand Key Resort, including destruction of the marina, the collapse of two beachfront restaurant structures, extensive roof damage across multiple guest-room buildings, and widespread flooding of ground-floor common areas and guest rooms from both wind-driven rain and storm surge. The resort was forced to close on September 18, 2022, and remained fully closed for a total of 178 days, reopening to guests on March 15, 2023. The prolonged closure period reflects the severity of the physical damage, the remote and access-constrained location of the property in the Florida Keys, and the extreme difficulty of securing qualified contractors and building materials in the post-hurricane environment.
Based on the forensic-accounting analysis, the estimated business-interruption loss for the Verimark Grand Key Resort, inclusive of lost revenue, continuing expenses, and extra expense, totals approximately $31,400,000.
3.2 Verimark Harborview Hotel & Conference Center — Fort Myers Beach, Florida
The Verimark Harborview Hotel & Conference Center is located at 1400 Estero Boulevard, Fort Myers Beach, Florida 33931. The property consists of a 224-room full-service hotel and a 40,000-square-foot state-of-the-art conference and events facility. The Harborview serves both leisure travelers and a substantial corporate and association meeting clientele. Prior to Hurricane Callista, the hotel maintained a pre-loss ADR of $295 per room night, with a stabilized occupancy rate of approximately 74%. The conference facility was booked for numerous corporate meetings, industry conferences, and social events throughout the fourth quarter of 2022 and the first quarter of 2023, all of which were canceled or relocated as a direct result of the hurricane damage.
The Harborview sustained catastrophic damage from Hurricane Callista, including significant storm-surge inundation (the property is located directly on the barrier island of Fort Myers Beach, which experienced storm surge of approximately six to ten feet), extensive wind damage to the building envelope, destruction of the hotel's mechanical and electrical systems on the lower floors, and severe interior water damage throughout the conference center and guest-room wings. The hotel was forced to close on September 18, 2022, and remained fully closed for a total of 135 days, reopening on January 31, 2023.
Based on the forensic-accounting analysis, the estimated business-interruption loss for the Verimark Harborview Hotel & Conference Center, inclusive of lost room revenue, lost conference and event revenue, continuing expenses, and extra expense, totals approximately $18,700,000.
3.3 Verimark Sunset Shores — St. Pete Beach, Florida
The Verimark Sunset Shores is a 186-room boutique luxury resort located at 7200 Gulf Boulevard, St. Pete Beach, Florida 33706. The property is situated on the Gulf of Mexico and caters primarily to upscale leisure travelers. Prior to Hurricane Callista, the Sunset Shores maintained a pre-loss ADR of $342 per room night, with a stabilized occupancy rate of approximately 79%.
Although the Sunset Shores is located further north than VHG's other two properties and thus experienced somewhat lower wind speeds and storm-surge heights, the resort nonetheless sustained significant wind damage to its roof systems, exterior facades, and landscaping, as well as water intrusion damage to guest rooms and public areas. The property was fully closed for 73 days, from September 18, 2022 through November 30, 2022. Following its partial reopening on December 1, 2022, the resort operated at materially reduced capacity—initially offering only approximately 40% of its room inventory—as phased repairs continued over the ensuing months. The property did not return to full operational capacity until February 28, 2023.
Based on the forensic-accounting analysis, the estimated business-interruption loss for the Verimark Sunset Shores, inclusive of lost revenue during both the full-closure and reduced-capacity periods, continuing expenses, and extra expense, totals approximately $9,900,000.
3.4 Total Claimed Business-Interruption Loss
The aggregate business-interruption losses across all three insured VHG properties are summarized as follows:
The total claimed business-interruption loss of $60,000,000 equals the full available aggregate limits of VHG's four-layer insurance tower above the $500,000 per-occurrence deductible. This loss fully penetrates through every layer of the tower, including the entirety of Pinnacle's $15,000,000 first excess layer.
4. Notice of Loss, Proof of Loss, and Claim Status
VHG has fully and timely complied with all notice and proof-of-loss obligations under the insurance program. The timeline of relevant claim activity is as follows:
VHG submitted its initial notice of loss to Ironclad Indemnity Corporation, as lead carrier in the insurance tower, on September 22, 2022—within four (4) calendar days of the September 18, 2022 date of loss. The notice identified all three insured properties, described the nature and cause of the loss (Hurricane Callista), and provided preliminary estimates of the damage and business-interruption exposure. Copies of the initial notice of loss were simultaneously transmitted to Tidewater Risk Advisors as VHG's broker of record.
Ironclad retained Arbor Claims Services LLC ("Arbor") as the independent adjusting firm for the claim. Arbor's lead adjuster on the matter, Denise Whitford, conducted initial site inspections of all three VHG properties on October 5, 2022. Ms. Whitford and her team were granted full access to the properties and were provided with all requested documentation, including pre-loss financial records, occupancy reports, booking data, and vendor contracts. VHG has cooperated fully and in good faith with the adjustment process at every stage.
On October 12, 2022, Ironclad issued a reservation of rights letter to VHG. VHG, through this firm, has responded to that reservation of rights letter and has preserved its objections to certain of the coverage positions articulated therein. The specific contents of Ironclad's reservation of rights letter are discussed in Section 6 below, to the extent relevant to Pinnacle's coverage obligations.
On November 15, 2022, VHG submitted a sworn statement in proof of loss in the aggregate amount of $60,000,000, representing the total business-interruption losses sustained across all three insured properties. A copy of the sworn statement in proof of loss is enclosed with this letter.
Concurrently with the transmittal of this demand letter to Pinnacle, Calderwood & Harkness is issuing a separate demand letter of even date to Ironclad Indemnity Corporation, demanding payment of the full $25,000,000 primary layer limit (less the $500,000 per-occurrence deductible). Separate demands of even date are also being transmitted to Montclair Assurance Company and Sovereign Re Ltd. for payment of their respective excess layer limits. VHG is pursuing payment from all carriers in its insurance tower simultaneously in order to ensure the prompt and complete indemnification to which it is entitled.
5. Pinnacle's Coverage Obligations
Pinnacle's first excess layer policy, PSL-XS1-2022-3390, provides $15,000,000 in coverage in excess of the $25,000,000 underlying Ironclad primary layer. Pinnacle's attachment point is therefore $25,000,000 (or, stated differently, $25,500,000 inclusive of the per-occurrence deductible). As set forth above, VHG's total business-interruption losses of $60,000,000 far exceed Pinnacle's attachment point, fully penetrating into and entirely through Pinnacle's $15,000,000 first excess layer.
As a follow-form excess policy, Pinnacle's policy incorporates the terms, conditions, coverage grants, definitions, and exclusions of the underlying Ironclad primary policy, except to the extent that the Pinnacle policy specifically provides otherwise. VHG is not aware of any provision in the Pinnacle excess policy that narrows, restricts, or modifies the coverage otherwise available under the follow-form terms of the Ironclad primary policy in any manner material to this claim.
The loss at issue constitutes a covered "all risks" occurrence under the policies. Hurricane Callista caused direct physical loss of and damage to all three of VHG's insured resort properties, which in turn caused the prolonged cessation and material impairment of VHG's business operations at those properties. Business-interruption coverage is expressly provided under the terms of the Ironclad primary policy, and by incorporation, under the Pinnacle follow-form excess policy. There is no applicable exclusion that eliminates or reduces coverage for this loss.
Pinnacle's attachment point of $25,000,000 is unambiguously reached by VHG's total losses. Even if the Ironclad primary layer were paid in full (as VHG has demanded), the remaining $35,000,000 in losses above the primary layer would exhaust Pinnacle's $15,000,000 first excess layer in its entirety, with an additional $20,000,000 in losses flowing into the second and third excess layers. Accordingly, Pinnacle owes the full $15,000,000 limit of its first excess layer to VHG.
6. Rebuttal of Anticipated Coverage Defenses
VHG is aware that Ironclad's reservation of rights letter of October 12, 2022, raised certain potential coverage defenses. To the extent that Pinnacle, as a follow-form excess carrier, may seek to rely upon or assert similar defenses, VHG addresses each of the anticipated defenses below and explains why none of them provides a valid basis for reducing or denying Pinnacle's coverage obligations.
6.1 Named-Windstorm Sub-Limit
VHG understands that Ironclad may assert the existence of a $15,000,000 named-windstorm sub-limit applicable to business-interruption losses under the primary policy. VHG's position is that this sub-limit was expressly deleted from the Ironclad primary policy during the July 2022 renewal negotiations. This deletion was specifically negotiated by VHG's broker of record, Tidewater Risk Advisors, through its account executive Franklin Orde, and is confirmed by contemporaneous correspondence between Mr. Orde and Ironclad's underwriting department. VHG has retained copies of that correspondence and will produce it at the appropriate time if this issue is raised as a basis for any coverage limitation.
Moreover, even if a named-windstorm sub-limit were determined to apply to the Ironclad primary policy—which VHG expressly denies—any such sub-limit would not independently reduce Pinnacle's follow-form excess coverage obligations below Pinnacle's own stated policy limits unless the sub-limit were expressly and specifically incorporated into the Pinnacle excess policy. VHG contends that no such express incorporation exists in the Pinnacle policy. A sub-limit in the primary policy operates to cap the primary carrier's exposure; it does not, absent express language to the contrary, reduce the stated limits of an excess carrier whose policy sits above the primary layer. VHG reserves all rights to brief this issue in full if any party raises it as a basis for denial or reduction of coverage.
6.2 Concurrent Causation / Flood Exclusion
VHG anticipates that one or more carriers may attempt to invoke a flood exclusion in connection with storm-surge damage at the insured properties and may further argue that the concurrent-causation doctrine bars coverage for all losses, including wind-damage-related business interruption, where storm-surge flooding was a concurrent cause of the loss.
Any such argument is inconsistent with well-established Florida law. Florida applies an efficient proximate cause analysis in first-party property insurance disputes involving multiple concurrent causes of loss. Under this analysis, where a covered peril (hurricane wind) and an excluded peril (flood) concurrently cause a loss, coverage is available if the covered peril is the efficient proximate cause—i.e., the predominant or most significant cause—of the loss. See Ostrander Partners LLC, 208 So. 3d 694 (Fla. 2016); Fla. Stat. § 627.702.
Here, the predominant and efficient proximate cause of the business-interruption losses at all three VHG properties was wind damage from a Category 4 hurricane with sustained winds of 145 miles per hour. The wind damage alone was sufficient to cause the prolonged closures of all three properties. While storm surge contributed to property damage at certain locations—particularly the Grand Key Resort and the Harborview Hotel—the wind damage was independently catastrophic and was the predominant cause of the inability to operate. Accordingly, any attempt to invoke a flood exclusion to bar or reduce business-interruption coverage would be legally and factually unavailing.
6.3 Period of Restoration
VHG further anticipates that one or more carriers may seek to challenge the length of the business-interruption period of restoration at one or more of the insured properties, contending that VHG's claimed closure periods exceed a reasonable period of restoration.
VHG acted reasonably and diligently at all times in restoring its properties to operational condition following Hurricane Callista. The closure periods experienced by VHG's properties were dictated by the extraordinary severity of the physical damage caused by a Category 4 hurricane, the geographic isolation of the Florida Keys (in the case of the Grand Key Resort), the widespread devastation across southwestern Florida that created extreme demand for contractors and building materials, and the regulatory and permitting requirements applicable to major reconstruction work on barrier islands and in coastal flood zones. VHG engaged contractors on an expedited basis, pursued emergency permitting where available, and reopened each property as promptly as conditions permitted. In the case of the Sunset Shores, VHG undertook a phased reopening strategy to bring available rooms back online while repairs continued in other portions of the property, thereby affirmatively mitigating its business-interruption losses.
No basis exists for reducing the period of restoration below the actual closure and reduced-capacity periods experienced by VHG's properties, and any attempt to do so would be arbitrary, unsupported by the facts, and contrary to the reasonable expectations of the insured.
6.4 Duty to Mitigate / Failure to Mitigate
Finally, to the extent any carrier may assert that VHG failed to take reasonable steps to mitigate its business-interruption losses, VHG categorically rejects any such contention. As described above, VHG took all reasonable steps available to mitigate its losses following Hurricane Callista. These mitigation efforts included, without limitation:
(a) the immediate engagement of emergency restoration contractors within days of the storm;
(b) the pursuit of expedited building permits and regulatory approvals for reconstruction work;
(c) the negotiation of temporary facility arrangements with neighboring hotels and conference venues to accommodate displaced group bookings and events where feasible;
(d) the phased reopening of the Verimark Sunset Shores property at reduced capacity while repairs continued; and
(e) ongoing communication with guests, corporate clients, and event planners to preserve future booking relationships and minimize long-term revenue losses.
VHG's mitigation efforts were reasonable, prudent, and consistent with the standard of care expected of a sophisticated hospitality company operating under extraordinary post-disaster conditions.
7. Formal Demand for Payment
Based on the foregoing, Verimark Hospitality Group Inc. hereby formally demands that Pinnacle Surplus Lines Inc. pay the full Fifteen Million Dollars ($15,000,000) in available limits under its first excess layer policy, Policy Number PSL-XS1-2022-3390, to VHG within thirty (30) days of the date of this letter—i.e., on or before December 20, 2022.
Payment of Pinnacle's $15,000,000 first excess layer should be made in conjunction with, and following or concurrent with, Ironclad Indemnity Corporation's payment of the full $25,000,000 primary layer limit (less the $500,000 per-occurrence deductible) under Policy Number IIC-PRP-2022-07541. However, Pinnacle's obligation to pay its layer is independent and shall not be excused or delayed by any failure, refusal, or delay by Ironclad or any other carrier in the tower to pay its respective limits. If the primary layer is exhausted by payment, judgment, or settlement, Pinnacle's $15,000,000 obligation is immediately due.
Payment should be made payable to Verimark Hospitality Group Inc. and delivered to the offices of Calderwood & Harkness LLP at the following address:
Calderwood & Harkness LLP 333 SE 2nd Avenue, Suite 4400 Miami, Florida 33131
Attention: Elaine Forsythe, Partner
Reference: Verimark Hospitality Group Inc. / Engagement No. 1021-00003
8. Reservation of Rights and Warning Regarding Bad Faith
VHG expressly reserves all rights and remedies available to it under the Pinnacle policy, under the laws of the State of Florida, and in equity, including but not limited to claims for:
(a) breach of contract for failure to pay policy benefits;
(b) declaratory judgment establishing Pinnacle's coverage obligations;
(c) bad faith, both statutory (pursuant to Fla. Stat. § 624.155) and at common law, for the unreasonable delay or wrongful denial of a covered claim;
(d) consequential damages proximately caused by Pinnacle's failure to timely pay benefits owed; and
(e) attorneys' fees, costs, and pre-judgment and post-judgment interest as provided by applicable law.
Pinnacle is hereby placed on express notice that any unreasonable delay in responding to or paying this claim, or any wrongful denial or underpayment of VHG's covered business-interruption losses, may expose Pinnacle to statutory bad-faith liability under Florida law. Florida Statute § 624.155 authorizes a first-party insured to bring a civil action against an insurer that has not attempted in good faith to settle a claim when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for the insured's interests. Statutory bad-faith damages under Florida law are not limited to the policy limits and may include damages in excess of the policy limits, as well as attorneys' fees, costs, and other consequential damages.
VHG's willingness to engage in good-faith discussion and negotiation regarding this claim, or any component thereof, shall not be construed as a waiver of any rights, claims, or remedies available to VHG, all of which are expressly preserved.
9. Request for Response and Contact Information
VHG respectfully requests that Pinnacle respond to this demand in writing within thirty (30) days of the date of this letter. VHG's preference is to resolve this matter promptly, cooperatively, and without the need for litigation. However, VHG is prepared to take all necessary legal action to protect its rights if Pinnacle fails to respond or refuses to honor its coverage obligations in a timely manner.
All correspondence, communications, and inquiries regarding this matter should be directed to the undersigned counsel at the following address:
Elaine Forsythe, Partner Calderwood & Harkness LLP 333 SE 2nd Avenue, Suite 4400 Miami, Florida 33131 Telephone: (305) 982-7118
Email: eforsythe@calderwoodharkness.com
Reference: Verimark Hospitality Group Inc. / Engagement No. 1021-00003
We trust that Pinnacle will give this demand the serious and prompt attention it warrants and that this matter can be resolved expeditiously and in good faith. We look forward to your timely response.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Elaine Forsythe Partner
cc (via email and first-class mail):
Nathaniel Driscoll, General Counsel, Verimark Hospitality Group Inc.
Sandra Pellegrini, Vice President, Risk Management, Verimark Hospitality Group Inc.
Franklin Orde, Account Executive, Tidewater Risk Advisors LLC
Victor Haddon, Senior Vice President, Claims, Ironclad Indemnity Corporation (as lead carrier)
Enclosures:
1. Copy of VHG's Sworn Statement in Proof of Loss, dated November 15, 2022
2. Copy of Pinnacle Surplus Lines Inc. Policy PSL-XS1-2022-3390 (Declarations Page)
Layer | Carrier | Limit | Attachment Point | Policy Number
Primary | Ironclad Indemnity Corporation | $25,000,000 | $500,000 deductible | IIC-PRP-2022-07541
First Excess | Pinnacle Surplus Lines Inc. | $15,000,000 | $25,000,000 xs deductible | PSL-XS1-2022-3390
Second Excess | Montclair Assurance Company | $10,000,000 | $40,000,000 xs deductible | MAC-XS2-2022-09817
Third Excess | Sovereign Re Ltd. | $10,000,000 | $50,000,000 xs deductible | SRL-XS3-2022-5102
Property | Closure Period | Estimated BI Loss
Verimark Grand Key Resort | 178 days (Sept. 18, 2022 – Mar. 15, 2023) | $31,400,000
Verimark Harborview Hotel & Conference Center | 135 days (Sept. 18, 2022 – Jan. 31, 2023) | $18,700,000
Verimark Sunset Shores | 73 days full closure + reduced capacity to Feb. 28, 2023 | $9,900,000
Total | $60,000,000

CALDERWOOD & HARKNESS LLP Attorneys at Law

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