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Exhibit 10.2
 
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 (  STATE BOARD OF ADMINISTRATION OF FLORIDA  1801 HERMITAGE
BOULEVARDTALLAHASSEE, FLORIDA 32308  (850) 488-4406  POST OFFICE BOX 13300
32317-3300  REIMBURSEMENT CONTRACT  Effective: June 1,2017
(Contract)  between  RICK SCOTT  GOVERNOR  CHAIR  JEFF ATWATER  CHIEF FINANCIAL
OFFICER  PAM BONDI  ATTORNEY GENERAL  ASH WILLIAMSEXECUTIVE DIRECTOR &
CIO  MONARCH NATIONAL INSURANCE COMPANY  (Company)  NAIC # 15715  and  THE STATE
BOARD OF ADMINISTRATION OF THE STATE OF FLORIDA (SBA)WHICH ADMINISTERS THE
FLORIDA HURRICANE CATASTROPHE FUND (FHCF)  (  PREAMBLE  The Legislature of the
State of Florida has enacted Section 215.555, Florida Statutes (Statute),
whichdirects the SBA to administer the FHCF. This Contract, consisting of the
principal document entitledReimbursement Contract, addressing the mandatory FHCF
coverage, and Addenda, is subject to theStatute and to any administrative rule
adopted pursuant thereto, and is not intended to be in conflicttherewith. All
provisions in the principal document are equally applicable to each Addendum
unlessspecifically superseded by one of the Addenda.  In consideration of the
promises set forth in this Contract, the parties agree as follows:  ARTICLE I -
SCOPE OF AGREEMENT  As a condition precedent to the SBA’s obligations under this
Contract, the Company, an AuthorizedInsurer or an entity writing Covered
Policies under Section 627.351, Florida Statutes, in the State ofFlorida, shall
report to the SBA in a specified format the business it writes which is
described in thisContract as Covered Policies.  The terms of this Contract shall
determine the rights and obligations of the parties. This Contract
providesreimbursement to the Company under certain circumstances, as described
herein, and does not provide orextend insurance or reinsurance coverage to any
person, firm, corporation or other entity. The SBA shallreimburse the Company
for its Ultimate Net Loss on Covered Policies, which were in force and in
effectat the time of the Covered Event(s) causing the Loss, in excess of the
Company’s Retention as a result ofeach Covered Event commencing during the
Contract Year, to the extent funds are available, all as  (  hereinafter
defined.  1 FHCF-2017K  Rule 19-8.010 F.A.C. 
 

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 ARTICLE II - PARTIES TO THE CONTRACT  This Contract is solely between tire
Company and the SBA which administers the FHCF. In no instanceshall any insured
of the Company or any claimant against an insured of the Company, or any other
thirdparty, have any rights under this Contract, except as provided in Article
XV. The SBA will only disbursefunds to the Company, except as provided for in
Article XV. The Company shall not, without the priorapproval of the Office of
Insurance Regulation, sell, assign, or transfer to any third party, in return
for afee or other consideration any sums the FHCF pays under this Contract or
the right to receive such sums.  ARTICLE III - TERM  (1) Tire term of this
Contract shall apply to Losses from Covered Events which commence during tire
period horn 12:00:01 a.m., Eastern Time, June 1, 2017, to12:00 midnight, Eastern
Time, May 31, 2018 (Contract Year). Pursuant to the terms of this Contract, the
SBA shall not be liable for Losses from Covered Events which commence after the
effective time and date of expiration or termination. Should this Contract
expire or terminate while a Covered Event is in progress, the SBA shall be
responsible for such Covered Event in progress in the same manner and to the
same extent it would have been responsible had the Contract expired the day
following the conclusion of the Covered Event in progress.  (2) The Company is
required to designate a coverage level, make the required selections, and return
this fully executed Contract to the FHCF Administrator so that the Contract is
received by the FHCF Administrator no later than 5 p.m., Central Time, March 1,
2017. Failure to do so shall result in tire Company’s coverage level under tills
Contract being deemed as follows:  (a) For Companies that are a member of a
National Association of Insurance Commissioners (NAIC) group, the same coverage
level selected by the other Companies of the same NAIC group shall be deemed. If
executed Contracts for none of the members of an NAIC group have been received
by tire FHCF Administrator, the coverage level from the prior Contract Year
shall be deemed.  (b) For Companies that are not a member of an NAIC group under
which other Companies are active participants in the FHCF, the coverage level
from the prior Contract Year shall be deemed.  (c) For New Participants, as that
term is defined in Article V(21), that are a member of an NAIC group, the same
coverage level selected by the other Companies of the same NAIC group shall be
deemed.  (d) For New Participants that are not a member of an NAIC group under
which other Companies are active participants in the FHCF, the 45%, 75% or 90%
coverage levels may be selected providing that the FHCF Administrator receives
executed Contracts within 30 calendar days of the effective date of the first
Covered Policy, otherwise, the 45% coverage level shall be deemed.  (3) Failure
by the Company to meet the requirements of this Article may result in referral
to the Office of Insurance Regulation.  ARTICLE IV - LIABILITY OF THE FHCF  (1)
The SBA shall reimburse the Company, with respect to each Covered Event
commencing during the Contract Year for the “Reimbursement Percentage” elected,
this percentage times the amount of Ultimate Net Loss paid by the Company in
excess of the Company’s Retention, as adjusted pursuant to Article V(28), plus
5% of the reimbursed Losses for Loss Adjustment Expense Reimbursement.  (2) The
Reimbursement Percentage will be 45% or 75% or 90%, at the Company’s option as
elected under Article XIX.  FHCF-2017K  2  Rule 19-8.010 F.A.C. 
 

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 (3) The aggregate liability of the FHCF with respect to all Reimbursement
Contracts covering this  Contract Year shall not exceed the limit set forth
under Section 215.555(4)(c)l., Florida Statutes. Forspecifics regarding
reimbursement calculations, see section (3)(c) of Article X.  (4) Upon the
occurrence of a Covered Event, the SB A shall evaluate the potential Losses to
the FFTCF  and the FHCF’s capacity at the time of the event. The initial
Projected Payout Multiple used toreimburse the Company for its Losses shall not
exceed the Projected Payout Multiple as calculatedbased on the capacity needed
to provide the FHCF’s coverage. If it appears that the EstimatedClaims-Paying
Capacity may be exceeded, the SBA shall reduce the projected payout factors
ormultiples for determining each participating insurer’s projected payout
uniformly among all insurersto reflect the Estimated Claims-Paying
Capacity.  (5) Reimbursement amounts shall not be reduced by reinsurance paid or
payable to the Company from  other sources. Once the Company’s limit of coverage
has been exhausted, the Company will not beentitled to further
reimbursements.  (6) After the end of the calendar year, the SBA shall notify’
insurers of the estimated Borrowing  Capacity and the Balance of the Fund as of
December 31. In May and October of each year, the SBAshall publish in the
Florida Administrative Register a statement of the FFICF’s estimated
BorrowingCapacity, Estimated Claims-Paying Capacity, and the projected Balance
of the Fund as ofDecember 31.  (7) The obligation of the SBA with respect to all
Contracts covering a particular Contract Year shall not  exceed tire Balance of
the Fund as of December 31 of that Contract Year, together with themaximum
amount tire SBA is able to raise through the issuance of revenue bonds or
through othermeans available to the SBA under Section 23 5.555, Florida
Statutes, up to the limit in accordancewith Section 2I5.555(4)(c)l. and (6),
Florida Statutes. The obligations and the liability of the SBAare more fully
described in Rule 19-8.013, Florida Administrative Code (F.A.C.).  ARTICLE V -
DEFINITIONS  (1) Actual Claims-Paying Capacity of the FHCF  This term means the
sum of the Balance of the Fund as of December 31 of a Contract Year-, plus
anyreinsurance purchased by the FHCF, plus the amount the SBA is able to raise
through the issuance ofrevenue bonds, or through other means available by law to
the SBA, up to the limit in accordancewith Section 215.555(4)(c)l, and (6),
Florida Statutes.  (2) Actuarially Indicated  This term means, with respect to
Premiums paid by Companies for reimbursement provided by theFHCF, an amount
determined in accordance with the definition provided in Section
215.555(2)(a),Florida Statutes.  (3) Additional Living Expense (ALE)  ALE Losses
covered by the FHCF are not to exceed 40 percent of the insured value of a
ResidentialStructure or its contents based on the coverage provided in the
policy. Fair rental value, loss of rents,or business interruption losses are not
covered by the FHCF.  (4) Administrator  This term means the entity with which
the SBA contracts to perform administrative tasks associatedwith the operations
of the FHCF. The Administrator is Paragon Strategic Solutions Inc.,8200Tower,
5600 West 83rd Street, Suite 1100, Minneapolis, Minnesota 55437. The telephone
number is(800) 689-3863, and the facsimile number is (800)
264-0492,  FHCF-2017K  3  Rule 19-8.010 F.A.C. 
 

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 (5)  Authorized Insurer  {  This term is defined in Section 624.09(1), Florida
Statutes.  (6)  Borrowing Capacity  This term means the amount of funds which
are able to be raised by the issuance of revenue bonds orthrough other financing
mechanisms, less bond issuance expenses and reserves.  (7) Citizens Property
Insurance Corporation (Citizens)  This term means Citizens Property Insurance
Corporation as created under Section 627.351(6),Florida Statutes. For the
purposes of the FHCF, Citizens Property Insurance Corporationincorporates two
accounts, (a) the coastal account and (b) the personal lines and commercial
linesaccounts. Each account is h eated by the FHCF as if it were a separate
participating insurer with itsown reportable exposures, Reimbursement Premium,
Retention, and Ultimate Net Loss,  (8)  Contract  This term means this
Reimbursement Contract for the current Contract Year.  (9)  Covered Event  This
term means any one storm declared to be a hurricane by Hie National FTurricane
Center whichcauses insured losses in Florida. A Covered Event begins when a
hurricane causes damage in Floridawhile it is a hurricane and continues
throughout any subsequent downgrades in storm status by tireNational Hurricane
Center regardless of whether the hurricane makes landfall. Any storm, includinga
tropical storm, which does not become a hurricane is not a Covered
Event.  (10)  Covered Policy or Covered Policies  (a)  Covered Policy, as
defined in Section 215.555(2)(c), Florida Statutes, is further clarified
to  mean only that portion of a binder, policy or contract of insurance that
insures real or personal  property located in the State of Florida to the extent
such policy insures a Residential Structure  f  or the contents of a Residential
Structure, located in the State of Florida.  ^  (b)  Due to tire specialized
nature of the definition of Covered Policies, Covered Policies are not  limited
to only one line of business in tire Company’s annual statement required to be
filed bySection624.424, Florida Statutes. Instead, Covered Policies are found in
several lines ofbusiness on the Company’s annual statement Covered Policies will
at a minimum be reportedin the Company’s statutory annual statement as;  1.
Fire  2. Allied Lines  3. Farraowners Multiple Peril  4. Homeowners Multiple
Peril  5. Commercial Multiple Peril (non liability portion, covering
condominiums and  apartments)  6. Inland Marine  Note that where particular
insurance exposures, e.g., mobile homes, are reported on an annualstatement is
not dispositive of whether or not the exposure is a Covered Policy.  (c) This
definition applies only to the first-party property section of a policy
pertaining strictly to  the structure, its contents, appurtenant structures, or
ALE coverage.  (d) Covered Policy also includes any collateral protection
insurance policy covering personal  residences which protects both the
borrower’s and the lender’s financial interest, in an amountat least equal to
the coverage for the dwelling in place under the lapsed homeowner’s policy,
ifsuch policy can be accurately reported as required in Section 215.555(5),
Florida Statutes. A  Company will be deemed to be able to accurately report data
if the required data, as specified inthe Premium Formula adopted in Section
215.555(5), Florida Statutes, is available.  (e) See Article VI for specific
exclusions.  FHCF-2017K  4  Rule 19-8.010 F.A.C. 
 

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 (11) Deductible Buy-Back Policy  This term means a specific policy that
provides coverage to a policyholder for some portion of thepolicyholder’s
deductible under a policy issued by another insurer,  (12) Estimated
Claims-Paying Capacity of the FHCF  This term means the sum of the projected
Balance of the Fund as of December 31 of a ContractYear, plus any reinsurance
purchased by tire FHCF, plus the most recent estimate of the BorrowingCapacity
of the FHCF, determined pursuant to Section 2I5.555(4)(c), Florida
Statutes.  (13)  Excess Policy  This term, for the purposes of this Contract,
means a policy that provides insurance protection forlarge commercial property
risks and that provides a layer of coverage above a primary layer (whichis
insured by a different insurer) that acts much the same as a very large
deductible.  (14) Florida Department of Financial Services  This term means the
Florida regulatory agency, created pursuant to Section 20.121, FloridaStatutes,
which is charged with regulating the Florida insurance market and administering
theFlorida Insurance Code,  (15) Florida Insurance Code  This term means those
chapters identified in Section 624.01, Florida Statutes, which are designatedas
the Florida Insurance Code.  (16) Formula or the Premium Formula  This term
means the Formula approved by the SB A for the purpose of determining tile
ActuariallyIndicated Premium to be paid to the FHCF. The Premium Formula is
defined as an approach ormethodology which leads to the creation of premium
rates. The Formula shall, pursuant to Section215.555(5)(b), Florida Statutes,
include a cash build-up factor in the amount specified therein.  (17) Fund
Balance or Balance of the Fund as of December 31  These terms mean the amount of
assets available to pay claims, not including any bondingproceeds, resulting
from Covered Events which occurred during the Contract Year.  (18)  Insurer
Group  For purposes of the coverage option election In Section 215.555(4)(b),
Florida Statutes, InsurerGroup means the group designation assigned by the
National Association of InsuranceCommissioners (NAIC) for purposes of filing
consolidated financial statements. A Company is amember of a group as designated
by the NAIC until such Company is assigned another groupdesignation or is no
longer a member of a group recognized by the NAIC.  (19)  Loss  “Loss” or
“Losses” means incurred losses under a Covered Policy from a Covered Event,
includingAdditional Living Expenses not to exceed 40 percent of the insured
value of a Residential Structureor its contents and amounts paid as fees on
behalf of or inuring to the benefit of a policyholder.“Loss” excludes allocated
or unallocated loss adjustment expenses and also excludes any Item forwhich this
Contract does not provide reimbursement pursuant to the exclusions in Article
VI.  (20) Loss Adjustment Expense Reimbursement  (a) Loss Adjustment Expense
Reimbursement shall be 5% of the reimbursed Losses under this Contract as
provided in Article IV, pursuant to Section 215.555(4)(b)L, Florida
Statutes.  (b) The 5% Loss Adjustment Expense Reimbursement is included in the
total Payout Multiple applied to each Company.  (21) New Partidpant(s)  This
term means all Companies which begin writing Covered Policies on or after the
beginning ofthe Contract Year. A Company that removes exposure from Citizens
pursuant to an assumptionagreement effective on or after June 1 and had written
no other Covered Policies before June 1 isalso considered a New
Participant.  FHCF-2017K  5  Rule 19-8.010 F.A.C. 
 

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 (22) Office of Insurance Regulation  This term means that office within the
Department of Financial Services and which was created inSection 20.121(3),
Florida Statutes.  (23) Payout Multiple  This term means the multiple as
calculated in accordance with Section 215.555(4) (c), FloridaStatutes, which is
derived by dividing the single season Claims-Paying Capacity of the FF1CF bythe
total aggregate industry Reimbursement Premium for the FHCF for the Contract
Year billed asof December 31 of the Contract Year, The final Payout Multiple is
determined onceReimbursement Premiums have been billed as of December 33 and the
amount of bond proceedshas been determined.  (24)  Premium  This term means the
same as Reimbursement Premium.  (25) Projected Payout Multiple  The Projected
Payout Multiple is used to calculate a Company’s projected payout pursuant
toSection 215.555(4)(d)2,, Florida Statutes. The Projected Payout Multiple is
derived by dividing theestimated single season Claims-Paying Capacity of the
FHCF by the estimated total aggregateindustry Reimbursement Premium for tire
FHCF for tire Contract Year, Tire Company’sReimbursement Premium as paid to the
SBA for the Contract Year is multiplied by the ProjectedPayout Multiple to
estimate the Company’s coverage from tire FHCF for the Contract Year,  (26)
Reimbursement Premium  This term means the Premium determined by multiplying
each $3,000 of insured value reported bythe Company in accordance with Section
215.555(5)(b), Florida Statutes, by the rate as derivedfrom the Premium Formula,
as described in Rule 19-8.028, F.A.C.  (27) Residential Structures  This term
means units or buildings used exclusively or predominantly for dwelling or
habitationaloccupancies, including the primary structure and appurtenant
structures insured under the samepolicy and any other structures covered under
endorsements associated with a policy covering aresidential structure. For the
purpose of this Contract, a single structure which includes a mix ofcommercial
habitational and commercial non-habitational occupancies, and which is insured
undera commercial policy, is considered a Residential Structure if 50% or more
of the total insured valueof the structure is used for habitational occupancies.
Covered Residential Structures do not includeany structures listed under Article
VI.  (28)  Retention  This term means the amount of Losses finm a Covered Event
which must be incurred by theCompany before it is eligible for reimbursement
from the FHCF,  (a) When the Company incurs Losses from one or two Covered
Events during the Contract Year, the Company’s full Retention shall be applied
to each of the Covered Events.  (b) When the Company incurs Losses from more
than two Covered Events during the Contract Year, the Company’s full Retention
shall be applied to each of the two Covered Events causing the largest Losses
for the Company. For each other Covered Event resulting in Losses, the Company’s
Retention shall he reduced to one-third of its full Retention.  1. All
reimbursement of Losses for each Covered Event shall be based on the Company’s
full Retention until December 31 of the Contract Year. Adjustments to reflect a
reduction to one-third of the full Retention shall be made on or after January1
of the Contract Year provided the Company reports its Losses as specified in
this Contract.  2. Adjustments to the Company’s Retention shall be based upon
its paid and outstanding Losses as reported on the Company’s Proof of Loss
Reports, but shall not include incurred but not reported Losses. The Company’s
Proof of Loss Reports shall be used to determine  FHCF-2017K  6  Rule 19-8.010
F.A.C. 
 

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 which Covered Events constitute the Company’s two largest Covered Events. After
thisinitial determination, any subsequent adjustments shall be made quarterly by
the SBA onlyif the Proof of Loss Reports reveal that loss development patterns
have resulted in a change  in the order of Covered Events entitled to the
reduction to one-third of the full Retention.  (c)The Company’s full Retention
is established in accordance with the provisions of Section 215.555(2)(e),
Florida Statutes, and shall be determined by multiplying the Retention Multiple
by the Company’s Reimbursement Premium for the Contract Year.  (29) Retention
Multiple  (a) The Retention Multiple is applied to the Company’s Reimbursement
Premium to determine the Company’s Retention. The Retention Multiple for the
2017/2018 Contract Year shall be equal to $4.5 billion, adjusted based upon the
reported exposure for the 2015/2016 Contract Year to reflect the percentage
growth in exposure to the FHCF since 2004, divided by the estimated total
industry Reimbursement Premium at the 90% reimbursement percentage level for the
Contract Year as determined by the SBA.  (b) The Retention Multiple shall be
adjusted to reflect the reimbursement percentage elected by the Company under
this Contract as follows:  1. If the Company elects a 90% reimbursement
percentage, the adjusted Retention Multiple is 100% of the amount determined
under (29)(a) above;  2. If the Company elects a 75% reimbursement percentage,
the adjusted Retention Multiple is 120% of the amount determined under (29) (a)
above; or  3. If the Company elects a 45% reimbursement percentage, the adjusted
Retention Multiple is 200% of the amount determined under (29)(a) above.  (30)
Ultimate Net Loss  (a) This term means all Losses under Covered Policies in
force at the time of a Covered Event prior to the application of the Company’s
Retention and reimbursement percentage, and excluding loss adjustment expense
and any exclusions under Article VI.  (b) The Company’s Ultimate Net Loss shall
be determined in accordance with the deductible level as specified under the
policy sustaining the Loss without taking into consideration any deductible
discounts or deductible waivers.  (c) Salvages and all other recoveries,
excluding reinsurance recoveries, shall be first deducted from such Loss to
arrive at the amount of liability attaching hereunder.  (d) All salvages,
recoveries or payments recovered or received subsequent to a Loss settlement
under this Contract shall be applied as if recovered or received prior to the
aforesaid settlement and all necessary adjustments shall be made by the parties
hereto.  (e) Nothing in this clause shall be construed to mean that Losses under
this Contract are not recoverable until the Company’s Ultimate Net Loss has been
ascertained.  (f) The SBA shall be subrogated to the rights of the Company to
the extent of its reimbursement of the Company. The Company agrees to assist and
cooperate with the SBA in all respects as regards such subrogation. The Company
further agrees to undertake such actions as may be necessary to enforce its
rights of salvage and subrogation, and its rights, if any, against other
insurers as respects any claim, loss, or payment arising out of a Covered
Event.  ARTICLE VI - EXCLUSIONS  This Contract does not provide reimbursement
for:  (1) Any losses not defined as being within the scope of a Covered
Policy.  (2) Any policy which excludes wind or hurricane
coverage.  FHCF-2017K  t  7  Rule 19-8.010 F.A.C. 
 

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 (3) Any Excess Policy or Deductible Buy-Back Policy that requires individual
ratemaking, as  determined by the FHCF,  (4) (a) Any policy for Residential
Structures that provides a layer of coverage underneath an Excess  Policy issued
by a different insurer;  (b) Any policy providing a layer of windstorm or
hurricane coverage for a particular structure above or below a layer of
windstorm or hurricane coverage under a separate policy issued by a different
insurer, or any other circumstance in which two or more insurers provide primary
windstorm or hurricane coverage for a single structure using separate policy
forms;  (c) Any other policy providing a layer of windstorm or hurricane
coverage for a particular structure below a layer of self-insured windstorm or
hurricane coverage for the same structure; or  (d) The exclusions in this
subsection do not apply to primary quota share policies written by Citizens
Property Insurance Corporation under Section 627.351 (6)(c)2., Florida
Statutes.  (5) Any liability of the Company attributable to losses for fair
rental value, loss of rent or rental income,  or business interruption.  (6) Any
collateral protection policy that does not meet the definition of Covered Policy
as defined in  Article V(10)(d).  (7) Any reinsurance assumed by the
Company.  (8) Any exposure for hotels, motels, timeshares, shelters, camps,
retreats, and any other rental property  used solely for commercial
purposes.  (9) Any exposure for homeowner associations if no habitational
structures are insured under the policy.  (10) Any exposure for homes and
condominium structures or units that are non-owner occupied and  rented for 6 or
more rental periods by different parties during the course of a 12-month
period.  (11) Commercial healthcare facilities and nursing homes; however, a
nursing home which is an integral  part of a retirement community consisting
primarily of habitational structures that are not nursinghomes will not be
subject to this exclusion.  (12) Any exposure under commercial policies covering
only appurtenant structures or structures that do  not function as a
habitational structure (e.g,, a policy covering only the pool of an
apartmentcomplex).  (13) Policies covering only Additional Living Expense.  (14)
Any exposure for barns or barns with apartments or living quarters.  (15) Any
exposure for builders risk coverage or new Residential Structures still under
construction.  (16) Any exposure for recreational vehicles, golf carts, or boats
(including boat related equipment)  requiring licensing and written on a
separate policy or endorsement.  (17) Any liability of the Company for extra
contractual obligations or liabilities in excess of original policy limits. This
exclusion includes, but is not limited to, amounts paid as bad faith awards,
punitive damages awards, or other court-imposed fines, sanctions, or penalties;
or other amounts in excess of the coverage limits under the Covered
Policy.  (18) Any losses paid in excess of a policy’s hurricane limit in force
at the time of each Covered Event, including individual coverage limits (i.e.,
building, appurtenant structures, contents, and additional living expense), or
other amounts paid as tire result of a voluntary expansion of coverage by the
insurer, including, but not limited to, a discount on or waiver of an applicable
deductible. This exclusion includes overpayments of a specific individual
coverage limit even if total payments under the policy are within the aggregate
policy limit.  (19) Any losses paid under a policy for Additional Living
Expense, written as a time element coverage, in excess of the Additional Living
Expense exposure reported for that policy under the Data Call for die applicable
Contract Year (unless policy limits have changed effective after June30 of the
Contract Year),  FHCF-2017K  8  Rule 19-8.010 F.A.C. 
 

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 (20) Any losses which the Company’s claims files do not adequately support.
Claim file support shall be deemed adequate if in compliance with the Records
Retention Requirements outlined on the Form FHCF-L1B (Proof of Loss Report)
applicable to the Contract Year.  (21) Any exposure for, or amounts paid to
reimburse a policyholder for, condominium association loss assessments or under
similar coverages for contractual liabilities.  (22) Losses in excess of the sum
of the Balance of the Fund as of December 31 of the Contract Year and  the
amount the SBA is able to raise through the issuance of revenue bonds or by the
use of otherfinancing mechanisms, up to the limit pursuant to Section
215.555(4)(c), Florida Statutes.  (23) Any liability assumed by tire Company
from Pools, Associations, and Syndicates. Exception:  Covered Policies assumed
from Citizens under the terms and conditions of an executed assumptionagreement
between the Authorized Insurer and Citizens are covered by this Contract.  (24)
All liability of the Company arising by contract, operation of law, or
otherwise, from its participation  or membership, whether voluntary or
involuntary, in any insolvency fund. “Insolvency fund”includes any guaranty
fund, insolvency fund, plan, pool, association, fund or other
arrangement,howsoever denominated, established or governed, which provides for
any assessment of or paymentor assumption by the Company of part or all of any
claim, debt, charge, fee, or other obligation of aninsurer, or its successors or
assigns, which has been declared by any competent authority to beinsolvent, or
which is otherwise deemed unable to meet any claim, debt, charge, fee or
otherobligation in whole or in part.  (25) Property losses that are proximately
caused by any peril other than a Covered Event, including, but  not limited to,
fire, theft, flood or rising water, or windstorm that does not constitute a
CoveredEvent, or any liability of the Company for loss or damage caused by or
resulting from nuclearreaction, nuclear radiation, or radioactive contamination
from any cause, whether direct or indirect,proximate or remote, and regardless
of any other cause or event contributing concurrently or in anyother sequence to
the loss.  (26) The FEICF does not provide coverage for water damage which is
generally excluded under property  insurance contracts and has been defined to
mean flood, surface water, waves, tidal water, overflowof a body of water, storm
surge, or spray from any of these, whether or not driven by wind,  (27) Policies
and endorsements predominantly covering Specialized Fine Arts Risks or
collectible types  of property meeting the following requirements:  (a) A policy
or endorsement predominantly covering Specialized Fine Arts Risks and not
covering any Residential Structure if it meets the description in subparagraph1
and if the conditions in subparagraph 2 are met.  1. For purposes of this
exemption, a Specialized Fine Arts Risk policy or endorsement is a policy or
endorsement that;  a.Insures works of art, of rarity, or of historic value, such
as paintings, works on paper, etchings, art glass windows, pictures, statuary,
sculptures, tapestries, antique furniture, antique silver, antique rugs, rare
books or manuscripts, jewelry, or other similar items;fa. Charges a minimum
premium of $500; and  c. Insures scheduled items valued, in the aggregate, at no
less than $100,000.  2. The insurer offers specialized loss prevention services
or other collector services designed to prevent or minimize loss, or to value or
inventory the Specialized Fine Arts for insurance purposes, such as:  a.
Collection risk assessments;  b. Fire and security loss prevention;  c.
Warehouse inspections to protect items stored off-site;  d. Assistance with
collection inventory management; or  FHCF-2017K  9  Rule 19-8.010 F.A.C, 
 

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 r  e. Collection valuation reviews.  1  (b) A policy fonn or endorsement
generally used by the Company to cover personal property which  could include
property of a collectible nature, including fine aits, as further described in
thisparagraph, either on a scheduled basis or written under a blanket limit, and
not coveringanything other than personal property. All such policy forms or
endorsements are subject to theexclusion provided in this paragraph when the
policy or endorsement limit equals or exceeds$500,000. Generally such
collectible property has unusually high values due to its investible,artistic,
or unique intrinsic nature. The class of property covered under such a policy
orendorsement represents an unusually high exposure value and such policy is
intended to providecoverage for a class or classes of property that is not
typical for the contents coverage underresidential property insurance policies.
In many cases propeify may be located at variouslocations either in or outside
the state of Florida or the location of the property may change fromtime to
time. The investment nature of such property distinguishes this type of exposur
e from thetypical contents associated with a Covered Policy.  (28) Any losses
under liability coverages.  (29) Any exposure for a condominium structure
insured on a commercial policy in which more than 50% of the individual units
are non-owner occupied and rented for 6 or more rental periods by different
parties during the course of a 12-month period.  (30) Any structure used
exclusively or predominantly for non-dwelling or non-habitational
occupancies.  ARTICLE VII - MANAGEMENT OF CLAIMS AND LOSSES  The Company shall
investigate and settle or defend all claims and Losses. All payments of claims
orLosses by the Company within tire terms and limits of the appropriate coverage
parts of Covered Policies  / shall be binding on the SB A, subject to the terms
of this Contract, including the provisions in Article XIII  relating to
inspection of records and examinations.  ARTICLE YIII -REIMBURSEMENT
ADJUSTMENTS  Section 215.555(4)(d) and (e), Florida Statutes, provides the SBA
with the right to seek the return ofexcess reimbursements which have been paid
to tire Company along with interest thereon. Excessreimbursements are those
payments made to the Company by the SBA that are in excess of the  Company’s
coverage under the Contract Year, Excess reimbursements may result from
adjustments to theProjected Payout Multiple or tire Payout Multiple, incorrect
exposure(Data Call) submissions orresubmissions, incorrect calculations of
Reimbursement Premiums or Retentions, incorrect Proof of LossReports, incorrect
calculation of reinsurance recoveries, or subsequent readjustment of
policyholderclaims, including subrogation and salvage, or any combination of the
foregoing. The Company will besent an invoice showing the due date for
adjustments along with the interest due thereon through the duedate. The
applicable interest rate for interest credits, and for interest charges for
adjustments beyond theCompany’s control, will be the average rate earned by the
SBA for the FHCF for the first four months ofthe Contract Year, The applicable
interest rate for interest charges on excess reimbursements due toadjustments
resulting from incorrect exposure submissions or Proof of Loss Reports will
accrue at thisrate plus 5%. Ail interest will continue to accrue if not paid by
the due date.  ARTICLE IX - REIMBURSEMENT PREMIUM  (I) The Company shall, in a
timely manner, pay the SBA its Reimbursement Premium for the Contract Year, Tire
Reimbursement Premium for the Contract Year shall be calculated in accordance
with Section 215.555, Florida Statutes, with any rules promulgated thereunder,
and with Article X(2).  (2) The Company’s Reimbursement Premium is based on its
June 30 exposure in accordance with Article X, except as provided for New
Participants under Article X, and is not adjusted to reflect
an  FHCF-2017K  10  Rule 19-8.010 F.A.C. 
 

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 increase or decrease in exposure for Covered Policies effective after June 30
nor is dieReimbursement Premium adjusted when the Company cancels policies or is
liquidated or otherwisechanges its business status(merger, acquisition, or
termination) or stops writing new business  (continues in business with its
policies in a runoff mode). Similarly, new business written after June  30 will
not increase or decrease the Company’s FHCF Reimbursement Premium or impact its
FHCFcoverage. FHCF Reimbursement Premiums are required of all Companies based on
their writingCovered Policies in Florida as of June 30, and each Company’s FHCF
coverage as based on die  definition in Section 2I5.555(2)(m), Florida Statutes,
shall exist for die entirety of the Contract Yearregardless of exposure changes,
except as provided for New Participants under Article X.  (3) Since the
calculation of the Actuarially Indicated Premium assumes that the Companies will
pay  their Reimbursement Premiums timely, interest charges will accrue under the
followingcircumstances, A Company may choose to estimate its own Premium
installments. However, if theCompany’s estimation is less than the provisional
Premium billed, an interest charge will accrue onthe difference between the
estimated Premium and the final Premium, If a Company estimates itsfirst
installment, the Administrator shall bill that estimated Premium as the second
installment aswell, which will be considered as an estimate by the Company. No
interest will accrue regarding anyprovisional Premium if paid as billed by the
FHCF’s Administrator, except in the case of anestimated second installment as
set forth in this Article. Also, if a Company makes an estimation thatis higher
than the provisional Premium billed but is less than the final Premium, interest
will notaccrue. If the Premium payment is not received from a Company when it is
due, an interest chargewill accrue on a daily basis until the payment is
received. Interest will also accrue on Premiumsresulting from submissions or
resubmissions finalized after December 1 of the Contract Year. Aninterest credit
will be applied for any Premium which is overpaid as either an estimate or as
aprovisional Premium. Interest shall not be credited past December1 of the
Contract Year. Theapplicable interest rate for interest credits will be the
average rate earned by the SB A for the FHCFfor the first four months of the
Contract Year, The applicable interest rate for interest charges willaccrue at
this rate plus 5%.  ARTICLE X - REPORTS AND REMITTANCES  (1) Exposures  (a) If
the Company writes Covered Policies before June 1 of the Contract Year, the
Company shall report to the SBA, unless otherwise provided in Rule19-8.029,
F.A.C., no later than the statutorily required date of September1 of the
Contract Year, by ZIP Code or other limited geographical area as specified by
the SBA, its insured values under Covered Policies as of June 30 of the Contract
Year as outlined in tire annual reporting of insured values form, FHCF- D1A
(Data Call) adopted for the Contract Year under Rule 19-8.029, F.A.C., and other
data or information in the format specified by the SBA.  (b) If the Company
first begins writing Covered Policies on or after June 1 but prior to December 1
of the Contract Year, the Company shall report to the SBA, no later than
February 1 of the Contract Year, by ZIP Code or other limited geographical area
as specified by the SBA, its insured values under Covered Policies as of
November 30 of the Contract Year as outlined in the Supplemental Instructions
for New Participants section of the Data Call adopted for the Contract Year
under Rule19-8.029, F.A.C., and other data or information in the format
specified by the SBA.  (c) If the Company first begins writing Covered Policies
on December 1 through and including May 31 of the Contract Year, the Company
shall not report its exposure data for the Contract Year to the SBA.  (d) The
requirement that a report is due on a certain date means that the report shall
be received by the SBA no later than 4 p.m. Eastern Time on the due date. If the
applicable due date is a  FHCF-2017K  11  Rule 19-8.010 F.A.C. 
 

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 Saturday, Sunday or legal holiday, then the actual due date will be the day
immediately  I  following the applicable due date which is not a Saturday,
Sunday or legal holiday. For  purposes of the timeliness of the submission,
neither the United States Postal Service postmarknor a postage meter date is in
any way determinative. Reports sent to the FHCF Administratorin Minneapolis,
Minnesota, will be returned to the sender. Reports not in the physicalpossession
of the SBA by 4 p.m., Eastern Time, on the applicable due date are late.  (2)
Reimbursement Premium  (a) If the Company writes Covered Policies before June I
of the Contract Year, the Company shall  pay the FHCF its Reimbursement Premium
in installments due on or before August 1,October 1, and December 1 of tire
Contract Year in amounts to be determined by the FHCF.However, if the Company’s
Reimbursement Premium for the prior Contract Year was less than  $5,000, the
Company’s full provisional Reimbursement Premium, in an amount equal to
theReimbursement Premium paid in the prior year, shall be due in full on or
before August i of theContract Year. Tire Company will be invoiced for amounts
due, if any, beyond the provisional  Reimbursement Premium payment, on or before
December 1 of the Contract Year.  (b) If the Company is under administrative
supervision, or if any control or oversight of the  Company has been transferred
through any legal or regulatory action to a state regulator orcourt appointed
receiver or rehabilitator (referred to in die aggregate as “state action”):  1.
The full annual provisional Reimbursement Premium as billed and any outstanding
balances will be due and payable on August1, or the date that such State action
occurs after August 1 of the Contract Year.  2. Failure by such Company to pay
the full annual provisional Reimbursement Premium as specified in I, above by
the applicable due date(s) shall result in the 45% coverage level being deemed
for the complete Contract Year regardless of the level selected for
the  l  Company through the execution of this Contract and regardless of whether
a hurricane  event occurred or triggered coverage,  3. The provisions required
in 1. and 2. above will not apply when tire state regulator, receiver, or
rehabilitator provides a letter of assurance to the FHCF that the Company will
have the resources and will pay the full Reimbursement Premium for the coverage
level selected through the execution of this Contract.  4. When control or
oversight has been transferred, in whole or in part, through a legal or
regulatory action, the controlling management of the Company shall specify by
August 1 or as soon thereafter as possible (but not to exceed two weeks after
any regulatory or legal action) in a letter to tire FHCF as to the Company’s
intentions to either pay die full FHCF Reimbursement Premium as specified in 1.
above, to default to the 45% coverage being deemed as specified in 2. above, or
to provide the assurances as specified in 3. above.  (c) A New Participant that
first begins writing Covered Policies on or after June 1 but prior to  December
1 of the Contract Year shall pay tine FHCF a provisional Reimbursement Premium
of$1,000 upon execution of this Contract. The Administrator shall calculate the
Company's actualReimbursement Premium for die period based on its actual
exposure as of November 30 of theContract Year, as reported on or before
February 1 of the Contract Year. To recognize that NewParticipants have limited
exposure during this period, the actual Premium as determined byprocessing the
Company's exposure data shall then be divided in half, the provisional
Premiumshall be credited, and the resulting amount shall be the total Premium
due for the Company forthe remainder of the Contract Year. However, if that
amount is less than $1,000, then theCompany shall pay $1,000. The Premium
payment is due no later than April 1 of the ContractYear. The Company’s
Retention and coverage will be determined based on the total Premiumdue as
calculated above.  FHCF-2017K  12  Rule 19-8.010 F.A.C. 
 

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 (d) A New Participant that first begins writing Covered Policies on or after
December 1 through and including May 31 of the Contract Year shall pay the FHCF
a Reimbursement Premium of $1,000 upon execution of this Contract  (e) The
requirement that the Reimbursement Premium is due on a certain date means that
the Premium shall be remitted by wire transfer or ACH and shall have been
credited to the FHCF’s account at its bank in Tampa, Florida, as set out on the
invoice sent to the Company, on the due date applicable to the particular
installment If the applicable due date is a Saturday, Sunday or legal holiday,
then the actual due date will be the day immediately following the applicable
due date which is not a Saturday, Sunday or legal holiday. Reimbursement
Premiums not credited to the FHCF’s account on the applicable due date are
late.  (f) Except as required by Section 215,555(7)(c), Florida Statutes, or as
described in the following sentence, Reimbursement Premiums, together with
earnings thereon, received in a given Contract Year will be used only to pay for
Losses attributable to Covered Events occurring in that Contract Year or for
Losses attributable to Covered Events in subsequent Contract Years and will not
be used to pay for past Losses or for debt service on post-event revenue
bonds  ' issued pursuant to Section 215.555(6) (a)L, Florida Statutes.
Reimbursement Premiums andearnings thereon may be used for payments relating to
such revenue bonds in the eventemergency assessments are insufficient. If
Reimbursement Premiums or earnings thereon are  used for debt service on
post-event revenue bonds, then the amount of the ReimbursementPremiums or
earnings thereon so used shall be returned, without interest, to the Fund
whenemergency assessments or other legally available funds remain available
after making paymentrelating to the post-event revenue bonds and any other
purposes for which emergencyassessments were levied.  (3) Losses  (a) In
General  Losses resulting from a Covered Event commencing during the Contract
Year shall be reportedby the Company and reimbursed by the FHCF as provided
herein and in accordance with dieStatute, this Contract, and any rules adopted
pursuant to the Statute. For a Companyparticipating in a quota share primary
insurance agreements) with Citizens Property InsuranceCorporation Coastal
Account, Citizens and the Company shall report only their respectiveportion of
Losses under the quota share primary insurance agreements). Pursuant to
Section215.555(4)(c), Florida Statutes, the SB A is obligated to pay for Losses
not to exceed the ActualClaims-Paying Capacity of the FHCF, up to the limit in
accordance with Section215.555(4)(c)L, Florida Statutes, for any one Contract
Year.  (b) Loss Reports  1. At the direction of the SBA, the Company shall
report its projected Ultimate Net Loss from each Covered Event to provide
information to the SBA in determining any potential liability for possible
reimbursable Losses under the Contract on the Interim Loss Report, Form FHCF-L1
A, adopted for the Contract Year under Rule 19-8.029, F.A.C. Interim Loss
Reports (including subsequent Interim Loss Reports if required by the SBA) will
be due in no less than fourteen days from the date of the notice from the SBA
that such a report is required.  2. FHCF reimbursements will be issued based on
Ultimate Net Loss information reported by the Company on the Proof of Loss
Report, Form FHCF-L1B, adopted for the Contract Year under Rule 19-8,029,
F.A.C.  a. To qualify for reimbursement, the Proof of Loss Report must have the
electronic signatures of two executive officers authorized by the Company to
sign or submit the report.  FHCF-2017K  13  Rule 19-8.010 F.A.C. 
 

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 b. The Company must also submit a Detailed Claims Listing, Form FHCF-DCL,
adopted for the Contract Year under Rule 19-8.029, F.A.C., at the same time it
submits its first Proof of Loss Report for a specific Covered Event that
qualifies the Company for reimbursement under that Covered Event, and should be
prepared to supply a Detailed Claims Listing for any subsequent Proof of Loss
Report upon request.  c. While the Company may submit a Proof of Loss Report
requesting reimbursement at any time following a Covered Event, the Company
shall submit a mandatory Proof of Loss Report for each Covered Event no earlier
than December1 and no later than December 31 of the Contract Year during which
the Covered Event occurs using the most current data available, regardless of
the amount of Ultimate Net Loss or the amount of reimbursements or advances
already received.  d. For the Proof of Loss Reports due by December 31 of the
Contract Year, and the required subsequent quarterly and annual reports required
under subparagraphs 3. and  4. below, the Company shall submit its Proof of Loss
Reports by each quarter-end oryear-end using the most current data available.
However, the date of such data shall notbe more than sixty days prior to the
applicable quarter-end or year-end date,  3. Updated Proof of Loss Reports for
each Covered Event are due quarterly thereafter until all Losses resulting from
a Covered Event are fully discharged including any adjustments to such Losses
due to salvage or other recoveries, or the Company has received its full
coverage under the Contract Year in which the Covered Event occurred. Guidelines
follow:  a. Quarterly Proof of Loss Reports are due by March 31 from a Company
whose Losses exceed, or are expected to exceed, 50% of its FHCF Retention for a
specific Covered Event.  b. Quarterly Proof of Loss Reports are due by June 30
from a Company whose Losses exceed, or are expected to exceed, 75% of its FHCF
Retention for a specific Covered Event.  c. Quarterly Proof of Loss Reports are
due by September 30 and quarterly thereafter from a Company whose Losses exceed,
or are expected to exceed, its FHCF Retention for a specific Covered Event.  If
the Company’s Retention must be recalculated as the result of an exposure
resubmission,and if the recalculated Retention changes the FHCF’s reimbursement
obligations, then theCompany shall submit additional Proof of Loss Reports for
recalculation of the FHCF’sobligations.  4. Annually after December 31 of the
Contract Year, all Companies shall submit a mandatory year-end Proof of Loss
Report for each Covered Event, as applicable, using the most current data
available, accompanied by a Detailed Claims Listing. This Proof of Loss Report
shall be filed no ear lier than December 1 and no later than December 31 of each
year1 and shall continue until the earlier of the commutation process described
in (3)(d) below or until all Losses resulting from the Covered Event are fully
discharged including any adjustments to such Losses due to salvage or other
recoveries.  5. The SB A, except as noted below, will determine and pay, within
30 days or as soon as practicable after receiving Proof of Loss Reports, the
reimbursement amount due based on Losses paid by the Company to date and
adjustments to this amount based on subsequent quarterly information. The
adjustments to reimbursement amounts shall require the SBA to pay, or the
Company to return, amounts reflecting the most recent determination of
Losses,  a. The SBA shall have the right to consult with all relevant regulatory
agencies to seek all relevant information, and shall consider any other factors
deemed relevant, prior to the issuance of reimbursements.  FHCF-2017K  14  Rule
19-8.010 F.A.C. 
 

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 b. The SBA shall require commercial self-insurance funds established under
Section 624.462, Florida Statutes, to submit contractor receipts to support paid
Losses reported on a Proof of Loss Report, and the SBA may hire an independent
consultant to confirm Losses, prior to the issuance of reimbursements.  c. The
SBA shall have the right to conduct a loss examination prior to the issuance of
any advances or reimbursements requested by Companies that have been placed
under regulatory supervision by a State or where control has been transferred
through any legal or regulatory proceeding to a state regulator or court
appointed receiver or rehabilitator.  6. All Proof of Loss Reports received will
be compared with the FHCF’s exposure data to establish the facial reasonableness
of the reports. The SBA may also review the results of current and prior
Contract Year exposure and loss examinations to determine the reasonableness of
the reported Losses. Except as noted in paragraph 4, above. Companies meeting
these tests for reasonableness will be scheduled for reimbursement. Companies
not meeting these tests for reasonableness will be handled on a case-by-case
basis and will be contacted to provide specific information regarding their
individual book of business. The discovery of errors in a Company’s reported
exposure under the Data Call may require a resubmission of the current Contract
Year Data Call which, as the Data Call impacts the Company’s Premium, Retention,
and coverage for the Contract Year, will be required before the Company’s
request for reimbursement or an advance will be fully processed by the
Administrator.  (c) Loss Reimbursement Calculations  1. In general, the
Company’s paid Ultimate Net Losses must exceed its full FHCF Retention for a
specific Covered Event before any reimbursement is payable from the FHCF for
that Covered Event. As described in Article V(28)(b), Retention adjustments will
be made on or after January 1 of the Contract Year. No interest is payable on
additional payments to the Company due to this type of Retention adjustment,
Each Company, including entities created pursuant to Section 627.351(6), Florida
Statutes, incurring reimbursable Losses will receive the amount of reimbursement
due under the individual Company’s Contract up to the amount of tire Company’s
payout. If more than one Covered Event occurs in any one Contract Year, any
reimbursements due from the FHCF shall take into account the Company’s Retention
for each Covered Event. However, the Company’s reimbursements from tire FHCF for
all Covered Events occurring during the Contract Year shall not exceed, in
aggregate, the Projected Payout Multiple or Payout Multiple, as applicable,
tunes the individual Company’s Reimbursement Premium for the Contract Year,  2.
Reserve established. When a Covered Event occurs in a subsequent Contract Year
when reimbursable Losses are still being paid for a Covered Event in a previous
Contract Year, the SBA will establish a reserve for the outstanding reimbursable
Losses for the previous Contract Year, based on the length of time the Losses
have been outstanding, the amount of Losses already paid, the percentage of
incurred Losses still unpaid, and any other factors specific to the loss
development of the Covered Events involved.  (d) Commutation  1. Not less than
36 months or more than 60 months after the end of the Contract Year, the Company
shall file a final Proof of Loss Report(s), with the exception of Companies
having no reportable Losses as described in paragraph (3)(d)l.a. below.
Otherwise, the final Proof of Loss Report(s) is required as specified in
paragraph (3)(d)l.b. below. The Company and SBA may mutually agree to initiate
commutation after 36 months and prior to 60 months after the end of the Contract
Year, The commutation negotiations shall begin at the later of  60 months after
the end of the Contract Year or upon completion of the FHCF lossexamination for
the Company and the resolution of all outstanding examination
issues.  FHCF-2017K  15  Rule 19-8.01 OF.A.C. 
 

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 a. If the Company’s most recently submitted Proof of Loss Report(s) indicates
that it has no Losses resulting from Covered Events during the Contract Year,
the SB A shall after  36 months request that the Company execute a final
commutation agreement. The finalcommutation agreement shall constitute a
complete and final release of all obligations ofthe SB A with respect to Losses.
If the Company chooses not to execute a finalcommutation agreement, the SBA
shall be released from all obligations60 monthsfollowing the end of the Contract
Year if no Proof of Loss Report indicatingreimbursable Losses had been filed and
tire commutation shall be deemed concluded.However during this time, if the
Company determines that it does have Losses to reportfor FHCF reimbursement, the
Company must submit an updated Proof of Loss Reportprior to the end of 60 months
after the Contract Year and the Company shall be requiredto follow the
commutation provisions and time frames otherwise specified in thissection.  b.
If the Company has submitted a Proof of Loss Report indicating that it does have
Losses  resulting from a Covered Event during the Contract Year1, the SBA may
require theCompany to submit within 30 days an updated, current Proof of Loss
Report for eachCovered Event during the Contract Year. The Proof of Loss Report
must include all paid  Losses as well as all outstanding Losses and incurred but
not reported Losses, which arenot finally settled and which may be reimbursable
Losses under this Contract, and mustbe accompanied by supporting documentation
(at a minimum an adjuster’s summary  report or equivalent details) and a copy of
a written opinion on the present value of theoutstanding Losses and incurred but
not reported Losses by the Company’s certifyingactuary. Failure of the Company
to provide an updated current Proof of Loss Report,  supporting documentation,
and an opinion by the date requested by the SBA may resultin referral to the
Office of Insurance Regulation for a violation of the Contract. Increasesin
reported paid, outstanding, or incurred but not reported Losses on original
or  corrected Proof of Loss Report filings received later than 60 months after
the end of theContract Year shall not be eligible for reimbursement or
commutation.  Determining the present value of outstanding Losses.  a. If the
Company exceeds or expects to exceed its Retention, the Company and tire SBA or
their respective representatives shall attempt, by mutual agreement, to agree
upon the present value of all outstanding Losses, both reported and inclined but
not reported, resulting from Covered Events during the Contract Year. Payment by
the SBA of its portion of any amount or amounts so mutually agreed and certified
by the Company’s certifying actuary shall constitute a complete and final
release of the SBA in respect of all Losses, both reported and unreported, under
this Contract.  b. If agreement on present value cannot be reached within 90
days of the FHCF’s receipt of the final Proof of Loss Report and supporting
documentation, the Company and the SBA may mutually appoint an actuary,
adjuster, or appraiser to investigate and determine such Losses. If both parties
then agree, the SBA shall pay its portion of the amount so determined to be the
present value of such Losses.  c. If the parties fail to agree, then any
difference shall be settled by a panel of three actuaries, as provided in this
paragraph.  i. One actuary shall be chosen by each party, and the third actuary
shall be chosen by those two actuaries. If either party does not appoint an
actuary within 30 days, the other party may appoint two actuaries. If the two
actuaries fail to agree on the selection of an independent third actuary within
30 days of their appointment, each of them shall name two, of whom the other
shall decline one and the decision shall be made by drawing
lots.  FHCF-2017K  16  Rule 19-8.010 F.A.C. 
 

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 ii. All of tiie actuaries shall be regularly engaged in the valuation of
property claims and losses and shall be members of the Casualty Actuarial
Society and of the American Academy of Actuaries.  iii. None of the actuaries
shall be under the control of either party to this Contract,  iv. Each party
shall submit its case to the pane! in writing on the 30th day after
the  appointment of the third actuary. Following the submission of the case to
the panel,the parties are prohibited from providing any further information or
othercommunication except at the request of the panel. Such responses to
requests fromthe panel must be in writing and simultaneously provided to the
other party and allmembers of the panel, except that the parrel may require the
response to be providedin a meeting or teleconference attended by both parties
and all members of thepanel,  v. The decision in writing of any two actuaries,
when fried with the parties hereto, shall be final and binding on both
parties.  d. The reasonable and customary expense of tire actuaries and of the
commutation (as a result of b. and c. above) shall be equally divided between
the two parties. Sard commutation shall take place in Tallahassee, Florida,
unless some other place is mutually agreed upon by the Company and the
SBA.  (4)  Advances  (a) The SBA may make advances for loss reimbursements as
defined herein, at market interest  rates, to the Company in accordance with
Section 215.555(4)(e), Florida Statutes. An advanceis an early reimbursement
which allows the Company to continue to pay claims in a timelymanner. Advances
will be made based on the Company’s paid and reported outstanding Lossesfor
Covered Policies (excluding all incurred but not reported Losses) as reported on
a Proof ofLoss Report, and shall include Loss Adjustment Expense Reimbursement
as calculated by theFHCF. In order to be eligible for an advance, the Company
must submit its exposure data forthe Contract Year as required under
paragraph(1) of this Article. Except as noted below,advances, if approved, will
be made as soon as practicable after the SBA receives a writtenrequest, signed
by two officers of the Company, for an advance of a specific amount and anyother
information required for the specific type of advance under subparagraphs(c)
and(e)below. All reimbursements due to the Company shall be offset against any
amount ofoutstanding advances plus the interest due thereon.  (b) For advances
or excess advances, which are advances that are in excess of the amount to
which  the Company is entitled, the market interest rate shall be the prime rate
as published in tire WallStreet Journal on the first business day of the
Contract Year. This rate will be adjusted annuallyon the first business day of
each subsequent Contract Year, regardless of whether the Companyexecutes
subsequent Contracts. In addition to the prime rate, an additional 5% interest
chargewill apply on excess advances. All interest charged will commence on the
date the SBA issuesa check for an advance and will cease on the date upon which
the FHCF has received theCompany’s Proof of Loss Report for the Covered Event
for which the Company qualifies forreimbursement. If such reimbursement is less
than the amount of outstanding advances issuedto the Company, interest will
continue to accrue on the outstanding balance of the advancesuntil subsequent
Proof of Loss Reports qualify the Company for reimbursement under anyCovered
Event equal to or exceeding the amount of any outstanding advances. Interest
shall bebilled on a periodic basis. If it is determined that the Company
received funds in excess of thoseto which it was entitled, the interest as to
those sums will not cease on the date of the receipt ofthe Proof of Loss Report
but will continue until the Company reimburses the FHCF for
theoverpayment.  FHCF-2017K  17  Rule 19-8.010 F.A.C. 
 

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 (c) If Hie Company has an outstanding advance balance as of December 31 of this
or any other Contract Year, the Company is required to have an actuary certify
outstanding and incurred but not reported Losses as reported on the applicable
December Proof of Loss Report.  (d) The specific type of advances enumerated in
Section 215.555, Florida Statutes, follow. 1.Advances to Companies to prevent
insolvency, as defined under Article XIV.  a. Section 215,555(4) (e)L, Florida
Statutes, provides that the SBA shall advance to the  Company amounts necessary
to maintain the solvency of the Company, up to 50percent of the SBA ‘'s estimate
of the reimbursement due to the Company.  b. In addition to the requirements
outlined in subparagraph (4)(a) above, the requirements for an advance to a
Company to prevent insolvency are that the Company demonstrates it is likely to
qualify for reimbursement and that the immediate receipt of moneys from the SBA
is likely to prevent the Company from becoming insolvent, and the Company
provides the following information:  i. Current assets;  ii. Current liabilities
other than liabilities due to the Covered Event;iii. Current surplus as to
policyholders;  iv. Estimate of other expected liabilities not due to Hie
Covered Event; and  v. Amount of reinsurance available to pay claims for the
Covered Event under other reinsurance treaties.  c. The SBA’s final decision
regarding an application for an advance to prevent insolvency shall be based on
wheflier or not, considering Hie totality of the circumstances, including Hie
SBA’s obligations to provide reimbursement for ail Covered Events occurring
during the Contract Year, granting an advance is essential to allowing the
entity to continue to pay additional claims for a Covered Event in a timely
manner.  2. Advances to entities created pursuant to Section 627.351 (6),
Florida Statutes.  a. Section 215.555(4) (e)2., Florida Statutes, provides that
Hie SBA may advance to an  entity created pursuant to Section 627.351(6),
Florida Statutes, up to 90% of the lesserof the SBA’s estimate of the
reimbursement due or the entity’s share of the actualaggregate Reimbursement
Premium for that Contract Year, multiplied by the currentavailable liquid assets
of the FHCF.  b. In addition to the requirements outlined in subparagraph (4)(a)
above, Hie requirements for an advance to entities created pursuant to Section
627.351(6), Florida Statutes, are that the entity must demonstrate to Hie SBA
that Hie advance is essential to allow the entity to pay claims for a Covered
Event.  3. Advances to limited apportionment companies.  Section
215.555(4)(e)3., Florida Statutes, provides Hiat the SBA may advance the
amountof estimated reimbursement payable to limited apportionment
companies.  (e) In determining whether or not to grant an advance and the amount
of an advance, the SBA:  1. Shall determine whether its assets available for the
payment of obligations are sufficient  and sufficienHy liquid to fulfill its
obligations to other Companies prior to granting anadvance;  2. Shall review and
consider all Hie information submitted by such Companies;  3. Shall review such
Companies’ compliance with all requirements of Section 215.555,  Florida
Statutes;  4. Shall consult with all relevant regulatory agencies to seek all
relevant information;  FHCF-2017K  18  Rule 19-8.010 F.A.C. 
 

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 5. Shall review the damage caused by the Covered Event and when that Covered
Event occurred;  6. Shall consider whether the Company has substantially
exhausted amounts previously advanced;  7. Shall consider any other factors
deemed relevant; and  8. Shall require commercial self-insurance funds
established under section 624.462, Florida Statutes, to submit a copy of written
estimates of expenses in support of the amount of advance requested.  (f) Any
amount advanced by the SBA shall be used by the Company only to pay claims of
its policyholders for the Covered Event which has precipitated the immediate
need to continue to pay additional claims as they become due.  (5) Inadequate
Data Submissions  If exposure data or other information required to be reported
by the Company under the terms of thisContract is not received by the FHCF in
the format specified by the FHCF or is inadequate to theextent that the FHCF
requires resubmission of data, the Company will be required to pay the FHCF
aresubmission fee of $1,000 for resubmissions that are not a result of an
examination by the SBA. If aresubmission is necessary as a result of an
examination report issued by the SBA, the firstresubmission fee will be $2,000.
If the Company’s examination-required resubmission is inadequateand the SBA
requires an additional resubmission(s), the resubmission fee for each
subsequentresubmission shall be $2,000. A resubmission of exposure data may
delay the processing of theCompany’s request for reimbursement or an
advance.  (6) Confidential Information/Trade Secret Information  Pursuant to the
provisions of Section 215.557, Florida Statutes, the reports of insured values
underCovered Policies by ZIP Code submitted to the SBA pursuant to Section
215,555, Florida Statutes,are confidential and exempt from the provisions of
Section 119.07(1), Florida Statutes, and Section24(a), Art. I of the State
Constitution, If other information submitted by the Company to the FHCFcould
reasonably be ruled a “trade secret” as defined in Section812,081, Florida
Statutes, suchinformation must be clearly marked “Trade Secret
Information,”  ARTICLE XI - TAXES  In consideration of the terms under which
this Contract is issued, the Company agrees to make nodeduction in respect of
the Premium herein when making premium tax returns to the
appropriateauthorities. Should any taxes be levied on the Company in respect of
the Premium herein, the Companyagrees to make no claim upon the SBA for
reimbursement in respect of such taxes.  ARTICLE XII - ERRORS AND OMISSIONS  Any
inadvertent delay, omission, or error on the part of the SBA shall not be held
to relieve the Companyfrom any liability which would attach to it hereunder if
such delay, omission, or error had not been made.  ARTICLE XIII - INSPECTION OF
RECORDS  The Company shall allow the SBA to inspect, examine, and verify, at
reasonable times, all records of theCompany relating to the Covered Policies
under this Contract, including Company files concerningclaims. Losses, or legal
proceedings regarding subrogation or claims recoveries which involve
thisContract, including premium, loss records and reports involving exposure
data or Losses under CoveredPolicies. This right by the SBA to inspect, examine,
and verify shall survive the completion and closureof an exposure examination or
loss examination file and the termination of the Contract. The Companyshall have
no right to re-open an exposure or loss examination once closed and the findings
have been  FHCF-20 i 7K  19  Rule 19-8.010 F.A.C, 
 

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 accepted by the Company; any re-opening shall be at the sole discretion of the
SBA. If the State Board of  I  L  c  Administration Finance Corporation has
issued revenue bonds and relied upon the exposure and Lossdata submitted and
certified by the Company as accurate to determine the amount of bonding needed,
theSBA may choose not to require, or accept, a resubmission if the resubmission
will result in additionalreimbursements to tire Company. The SBA may require any
discovered errors, inadvertent omissions,and typographical errors associated
with the data reporting of insured values, discovered prior to dieclosing of the
file and acceptance of the examination findings by die Company, to be corrected
to reflectdie proper values. The Company shall retain its records in accordance
with die requirements for recordsretention regarding exposure reports and claims
reports outlined herein, and in any administrative rulesadopted pursuant to
Section 215.555, Florida Statutes. Companies writing covered collateral
protectionpolicies, as defined in definition(10)(d) of Article V, must be able
to provide documentation diat thepolicy covers personal residences, protects
both the borrower’s and lender’s interest, and that thecoverage is in an amount
at least equal to the coverage for the dwelling in place under tire
lapsedhomeowner’s policy.  (1) Purpose of FHCF Examination  The purpose of the
examinations conducted by the SBA is to evaluate the accuracy of the
FHCFexposure or Loss data reported by the Company. However, due to the limited
nature of theexamination, it cannot be relied upon as an assurance that a
Company’s data is reported accurately orin its entirety. The Company should not
rely on the FHCF to identify every type of reporting error inits data. In
addition, the reporting requirements are subject to change each Contract Year so
it is theCompany’s responsibility to be familiar' with the applicable Contract
Year requirements and toincorporate any changes into its data for drat Contract
Year. It is also the Company’s responsibilityto ensure that its data is reported
accurately and to comply with Florida Statutes and any applicablerules when
reporting exposure data. The examination report is not intended to provide a
legaldetermination of the Company’s compliance.  (2) Examination Requirements
for Exposure Verification  The Company shall retain complete and accurate
records, in policy level detail, of all exposure datasubmitted to the SBA in any
Contract Year until the SBA has completed its examination of theCompany’s
exposure submissions. The Company shall also retain complete and accurate
records ofany completed exposure examination for any Contract Year in which tire
Company incurred Lossesuntil the completion of the loss reimbursement
examination and commutation for that Contract Year.The records to be retained
are outlined in the Data Call adopted for the Contract Year under Rule
19-  8.029, F.A.C. A complete list of records to be retained for the exposure
examination is set forth inForm FHCF-EAP1, adopted for the Contract Year under
Rule 19-8.030, F.A.C.  (3) Examination Requirements for Loss Reports  The
Company shall retain complete and accurate records of all reported Losses and/or
advancessubmitted to the SBA until the SBA has completed its examination of tire
Company’s reimbursableLosses and commutation for the Contr act Year (if
applicable) has been concluded. The records to beretained ar e set forth as par
t of the Proof of Loss Report, Form FHCF-L1B, adopted for the ContractYear under
Rule 19-8,029, F.A.C., and Form FHCF-LAP1, adopted for the Contract Year-
underRule 19-8.030, F.A.C.  (4) Examination Procedures  (a) The FHCF will send
an examination notice to tire Company providing the commencement date of the
examination, the site of the examination, any accommodation requirements of
tire  examiner, and the reports and data which must be assembled by the Company
and forwarded tothe FHCF upon request. The Company shall be prepared to choose
one location in which to beexamined, unless otherwise specified by the
SBA.  FHCF-2017K  20 Rule 19-8.010 F.A.C. 
 

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 (b) The reports and data are required to be forwarded to the FHCF as set forth
in an examination notice letter. The information is then forwarded to the
examiner. If the FHCF receives accurate and complete records as requested, the
examiner will contact the Company to inform the Company as to what policies or
other documentation will be required once the examiner is on site. Any records
not required to be provided to the examiner in advance shall be made available
at the time the examiner arrives on site. Any records to support reported
exposure or Losses which are provided after the examiner has left die work-site
will, at the SBA’s discretion, result in an additional examination of exposure
and/or Loss records or an extension or expansion of the examination already in
progress. All costs associated with such additional examination or with the
extension or expansion of the original examination shall be borne by the
Company.  (c) At the conclusion of the examiner’s work and the management review
of the examiner’s report, findings, recommendations, and work papers, the FHCF
will forward an examination report to the Company and require a response from
the Company by a date certain as to the examination findings and
recommendations, if any.  (d) If the Company accepts the examination findings
and recommendations, and there is no recommendation for additional information,
the examination report will be finalized and the exam file closed.  (e) If the
Company disputes the examiner’s findings, the areas in dispute will be resolved
by a meeting or a conference call between the Company and FHCF management.  (I)
1. If the recommendation of the examiner is to resubmit the Company’s exposure
data for the  Contract Year in question, then the FHCF will send the Company a
letter outlining theprocess for resubmission and including a deadline to
resubmit. Once the resubmission isreceived, the FHCF’s Administrator calculates
a revised Reimbursement Premium for theContract Year which has been examined.
The SB A shall then review the resubmission withrespect to the examiner’s
findings, and accept tire resubmission or contact the Company withany questions
regarding the resubmission. Once the SBA has accepted the resubmission as
asufficient response to the examiner’s findings, the exam is closed.  2, If the
recommendation of the examiner is to give the Company the option to either
resubmit the exposure data or to pay the estimated Premium difference, then the
FHCF will send the Company a letter outlining the process for resubmission or
for paying the estimated Premium difference and including a deadline for the
resubmission or the payment to be received by the FHCF’s Administrator. If the
Company chooses to resubmit, the same procedures outlined in Article XIII(4)
apply.  (g) If the recommendation of the examiner is to update the Company’s
Proof of Loss Report(s) for the Contract Year under review, the FHCF will send
the Company a letter outlining the process for submitting the Proof of Loss
Report(s) and including a deadline to file. Once the Proof of Loss Report(s) is
received by the FHCF Administrator, the FHCF’s Administrator will calculate a
revised reimbursement. The SBA shall then review the submitted Proof of Loss
Report(s) with respect to the examiner’s findings, and accept the Proof of Loss
Report(s) as filed, or contact the Company with any questions. Once the SBA has
accepted the corrected Proof of Loss Report(s) as a sufficient response to the
examiner’s findings, the exam is closed.  (h) The examiner’s list of errors is
made available in the examination report sent to the Company. Given that the
examination was based on a sample of the Company’s policies or claims rather
than the whole universe of the Company’s Covered Policies or reported claims,
the error list is not intended to provide a complete list of errors but is
intended to indicate what information needs to be reviewed and corrected
throughout the Company’s book of Covered Policy business or claims information
to ensure more complete and accurate reporting to the
FHCF.  FHCF-2017K  21  Rule 19-8.010 F.A.C. 
 

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 (5) Costs of the Examinations  The costs of the examinations shall be borne by
the SBA. However, in order to remove any incentivefor a Company to delay
preparations for an examination, the SBA shall be reimbursed by theCompany for
any examination expenses incurred in addition to the usual and customary costs,
whichadditional expenses were incurred as a result of the Company’s failure,
despite proper notice, to beprepared for the examination or as a result of a
Company’s failure to provide requested information.All requested information
must be complete and accurate.  ARTICLE XIV - OFFSETS  The SBA reserves the
right to offset amounts payable to the SBA from the Company, including
amountspayable under the Reimbursement Contract for any Contract Year and also
including the Company’s fullPremium for the current Contract Year (regardless of
installment due dates), against any (1) premiumrefunds under any Contract Year,
(2) reimbursement or advance amounts, or (3) amounts agreed to in acommutation
agreement, which are due and payable to the Company fi’ora the SBA as a result
of theliability of the SBA.  ARTICLE XV - INSOLVENCY OF THE COMPANY  Company
shall notify the FHCF immediately upon becoming insolvent. Except as otherwise
providedbelow, no reimbursements will be made until the FHCF has completed and
closed its examination of theinsolvent Company’s Losses, unless an agreement is
entered into by the court appointed receiver  specifying that all data and
computer systems required for FHCF exposure and loss examinations will
bemaintained until completion of the Company’s exposure and loss examinations.
Except as otherwiseprovided below, in order to account for potential erroneous
reporting, the SBA shall hold back 25% ofrequested reimbursements until the
exposure and loss examinations for the Company are completed. Onlythose Losses
supported by the examination will be reimbursed. Pursuant to Section
215.555(4)(g), Florida  Statutes, the FHCF is required to pay the “net amount of
all reimbursement moneys” due an insolventinsurer to the Florida Insurance
Guaranty Association (FIGA) for the benefit of Florida policyholders. Forthe
purpose of this Contract, a Company is insolvent when an order of liquidation
with a finding ofinsolvency has been entered by a court of competent
jurisdiction. In light of the need for an immediateinfusion of funds to enable
policyholders of insolvent companies to be paid for their claims, the SBA
mayenter into agreements with FIGA allowing exposure and loss examinations to
take place immediatelywithout the usual notice and response time limitations and
allowing the FHCF to make reimbursements(net of any amounts payable to the SBA
from the Company or FIGA) to FIGA before the examinationsare completed and
before the response time expires for claims filing by reinsurers and
financialinstitutions, which have a priority interest in those funds pursuant to
Section215,555(4)(g), FloridaStatutes. Such agreements must ensure the
availability of the necessary records and adequate securitymust be provided so
that if the FHCF determines that it overpaid FIGA on behalf of the Company, or
ifclaims are filed by reinsurers or financial institutions having a priority
interest in these funds, that thefunds will be repaid to the FHCF by FIGA within
a reasonable time.  ARTICLE XVI - TERMINATION  The FHCF and the obligations of
both parties under this Contract can be terminated only as may beprovided by law
or applicable rules.  FHCF-2017K  22  Rule 19-8.010 F.A.C. 
 

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 ARTICLE XVII - VIOLATIONS  (1) Statutory Provisions  (a) Section 215,555 (10),
Florida Statutes, provides that any violation of Section 215.555,
Florida  Statutes, or of rules adopted under that section, constitutes a
violation of the Florida InsuranceCode, This Contract has been adopted as part
of Rule19-8.010, Florida Administrative Code,under the authority of that section
of Florida Statutes.  (b) Section 215.555(11), Florida Statutes, authorizes the
SBA to take any action necessary to enforce the rules and the provisions and
requirements of this Contract, required by and adopted pursuant to Section
215.555, Florida Statutes.  (2) Noncompliance  (a) As used in this Article, the
term “noncompliance” means the failure of the Company to meet any applicable
requirement of Section215.555, Florida Statutes, or of any rule adopted under
the authority of that section of Florida Statutes, including, but not limited
to, any failure to meet a deadline for an FHCF payment. Data Call submissions or
resubmissions, Loss reporting or commutation documentation, or a deadline
related to SBA examination requirements. The Company remains in a state of
noncompliance as long as the Company fails to meet tire applicable
requirement(s).  (b) If the Company is in a state of noncompliaoce, the SBA
reserves the right to withhold any payments or advances due the Company until
the SBA determines that the Company is no longer in a state of
noncompliance.  ARTICLE XVIII - APPLICABLE LAW  This Contract shall be governed
by and construed according to the laws of the State of Florida in respectof any
matter relating to or arising out of this Contract.  FHCF-2017K  23  Rule
19-8,010 F.A.C, 
 

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 ARTICLE XIX-REIMBURSEMENT CONTRACT ELECTIONS  (I) Reimbursement Percentage  For
purposes of determining reimbursement (if any) due the Company under this
Contract and inaccordance with the Statute, the Company has the option to elect
a45% or75% or90%reimbursement percentage under this Contract. If the Company is
a member of an NAIC group, allmembers must elect the same reimbursement
percentage, and the individual executing this Contracton behalf of the Company,
by placing his or her initials in the box under (a) below, affirms that
theCompany has elected the same reimbursement percentage as all members of its
NAIC group. If theCompany is an entity created pursuant to Section 627,351,
Florida Statutes, the Company must electthe90% reimbursement percentage. The
Company shall not be permitted to change itsreimbursement percentage during the
Contract Year, The Company shall be permitted to change itsreimbursement
percentage at the beginning of a new Contract Year, but may not reduce
itsreimbursement percentage if a Covered Event required the issuance of revenue
bonds, until thebonds are no longer outstanding.  The Reimbursement Percentage
elected by the Company for tire prior Contract Year effectiveJune 1, 2016 was as
follows: Monarch National Insurance Company - 75%  (a) NAIC Group Affirmation:
Initial the following box if the Company is part of an
NAIC  Group;  o-[s^-\  (  (b) Reimbursement Percentage Election; The Company
hereby elects the following Reimbursement Percentage for the Contract Year from
12:00:01 a.m., Eastern Time, June 1,  2017, to 12:00 a.m,, Eastern Time, May 31,
2018, (the individual executing this Contract onbehalf of the Company shall
place his or her initials in the box to the left of the percentageelected for
the Company):  45% 75% OR 90%  (101) Additional Living Expense (ALE) Written as
Time Element Coverage  If your Company writes Covered Policies that provide ALE
coverage on a time element basis (i.e.,coverage is based on a specific period of
time as opposed to a stated dollar limit), you must initialthe‘Yes - Time
Element ALE’ box below. If your Company does not write time element ALE  Element
ALE Element ALE  24 FHCF-2017K  Rule 19-8.010 F. A. C. 
 

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 ARTICLE XX - SIGNATURES  Approved by:  Florida Hurricane Catastrophe Fund  By:
State Board of Administration of the State of Florida  By:  Ashbel C.
Williams  Date  Executive Director & CIO  Approved as to
legality:  By:  Date  Authority to sign on behalf of the Company:  The person
signing this Contract on behalf of the Company hereby represents that he or she
is an officerof the Company, acting within his or her authority to enter into
this Contract on behalf of the Company,with the requisite authority to bind the
Company and make the representations on behalf of the Companyas set forth in
this Contract.  Monarch National Insurance Company  Printed Name and
Title  By:  25 FHCF-20I7K  Rule 19-8.010 F.A.C. 
 
 
 

 

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