Exhibit 10.27.5

Execution Copy

QUOTA SHARE RETROCESSION AGREEMENT

between

AXA RE

(including its Hong Kong, Madeira and United Kingdom branches)

and

PARIS RE

Dated December 21, 2006 and effective as of January 1, 2006

--------------------------------------------------------------------------------

TABLE OF CONTENTS

QUOTA SHARE RETROCESSION AGREEMENT

 

   ARTICLE 1       DEFINITIONS       ARTICLE 2       SUBJECT BUSINESS   

2.01

   Subject Business    8

2.02

   Changes to Schedule 2.01A    9

2.03

   Rationale    9    ARTICLE 3      

CESSION OF THE SUBJECT BUSINESS, SCOPE OF LIABILITY AND

TERM OF AGREEMENT

  

3.01

   Cover    9

3.02

   Extended Expiration    10

3.03

   Original Terms and Conditions and Follow the Settlements    10

3.04

   Net Basis    10

3.05

   Commencement and Period    11    ARTICLE 4       INURING AXA RE RETROCESSION
AGREEMENTS   

4.01

   Obligations of the Parties    11

4.02

   Receipt of Recoverables    11

4.03

   Default Amounts    11

4.04

   Commutations    11    ARTICLE 5       CONSIDERATION AND PREMIUM   

5.01

   Initial Premium    12

5.02

   Funds Withheld; Future Premiums    12

 

-i-

--------------------------------------------------------------------------------

   ARTICLE 6       FW SUBACCOUNT BALANCES, EXPERIENCE ADJUSTMENTS, INTEREST,
DEPOSITS AND CREDITS   

6.01

   Establishment of Funds Withheld Account    13

6.02

   Netting of FW Subaccount Balances    13

6.03

   Periodic Calculation of FW Subaccount Balances    13

6.04

   Calculation of the Amount of the FW Subaccount Balances    14

6.05

   No Segregation    16

6.06

   Investment Income    16

6.07

   Funds Received by Retrocedant    16    ARTICLE 7       PAYMENT OF FW
SUBACCOUNT BALANCE AND CASH ADVANCES       ARTICLE 8       SETTLEMENTS      
ARTICLE 9       TERMINATION   

9.01

   Termination Notice by Either Party    18

9.02

   Termination Notice by the Retrocedant    18

9.03

   Termination Date    18

9.04

   Effect of Termination Notice/Termination    18    ARTICLE 10       INSOLVENCY
  

10.01

   Insolvency of the Retrocedant    19    ARTICLE 11       CURRENCIES   

11.01

   Currency Conversions    19

11.02

   Rate of Exchange Used in the Retrocedant’s Books    20

11.03

   Modifications to Rate of Exchange used in the Retrocedant’s Books    20

 

-ii-

--------------------------------------------------------------------------------

   ARTICLE 12       OFFSET   

12.01

   Offset    20    ARTICLE 13       THIRD PARTY RIGHTS   

13.01

   No Third Parties    20    ARTICLE 14       ERRORS AND OMISSIONS   

14.01

   Errors and Omissions    21    ARTICLE 15       DUTY OF COOPERATION   

15.01

   Duty of Cooperation    21    ARTICLE 16       GOVERNING LAW AND JURISDICTION
  

16.01

   Governing Law    22

16.02

   Dispute Resolution    22

16.30

   Jurisdiction    22    ARTICLE 17       GENERAL PROVISIONS   

17.01

   Notices    22

17.02

   Invalidity    22

17.03

   Binding Agreement; Assignment    22

17.04

   Modification; Waiver    22

17.05

   Headings    23

17.06

   Schedules    23

17.07

   Entire Agreement    23

 

-iii-

--------------------------------------------------------------------------------

SCHEDULE 1.01A –

  EXCHANGE RATES

SCHEDULE 1.01B –

  INURING AXA RE RETROCESSION AGREEMENTS

SCHEDULE 2.01A –

  SUBJECT BUSINESS

SCHEDULE 5.01 –

  EXPLANATORY MEMORANDUM REGARDING CALCULATION OF INITIAL PREMIUM AND INITIAL
PRINCIPAL AMOUNTS

SCHEDULE 6.04(f) –

  FEES PAYABLE PURSUANT TO THE ISSUANCE AGREEMENT

 

-iv-

--------------------------------------------------------------------------------

QUOTA SHARE RETROCESSION AGREEMENT

THIS QUOTA SHARE RETROCESSION AGREEMENT (this “Agreement”), dated December 21,
2006 and effective as of January 1, 2006, is made by and between AXA RE (the
“Retrocedant”), a reinsurance company organized under the laws of France
(including its Hong Kong, Madeira and United Kingdom branches), and PARIS RE
(the “Retrocessionaire”), a reinsurance company organized under the laws of
France.

WHEREAS, Retrocedant, and PARIS RE Holdings Limited, an exempted limited
liability company incorporated under the laws of Bermuda (“Purchaser”), have
entered into the Stock Purchase Agreement, dated as of June 5, 2006 (as such
agreement may have been, or may from time to time be, amended, supplemented or
otherwise modified, the “Purchase Agreement”);

WHEREAS, Retrocedant, AXA Liabilities Managers, a French société par actions
simplifiée (“ALM”), Purchaser and Retrocessionaire have entered into the Master
Agreement, dated as of December 21, 2006, (as such agreement may have been, or
may from time to time be, amended, supplemented or otherwise modified, the
“Master Agreement”); and

WHEREAS, the Master Agreement and the Purchase Agreement contemplate that the
Parties execute and deliver this Agreement as a common account quota share as of
the date hereof.

NOW, THEREFORE, in consideration of the promises and covenants set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties hereby agree as follows:

ARTICLE 1

DEFINITIONS

The following terms shall have the respective meanings set forth below
throughout the Agreement:

“Agreement” has the meaning set forth in the Preamble hereto.

“Allocated Loss Adjustment Expenses” means any and all amounts paid or payable
by the Retrocedant as allocated loss adjustment expenses under or in relation to
a Policy that is part of the Subject Business or the relevant portion thereof,
including without limitation, legal expenses and court costs, cost of bonds,
appeal bonds expense, and interest accrued after award or judgment and
pre-judgment interest awarded, plus legal expenses and all other expense
incurred in connection with Extra Contractual Obligations, Loss in Excess of
Contract Limits and Declaratory Judgment Expenses.

--------------------------------------------------------------------------------

Allocated Loss Adjustment Expenses shall not include office expenses and
salaries of employees of the Retrocedant or ALM.

“ALM” has the meaning set forth in the Recitals hereto.

“Ancillary Agreement” has the meaning set forth in the Master Agreement.

“AXA” has the meaning set forth in the Recitals hereto.

“Business Day” means any day other than a Saturday, Sunday or any other day on
which commercial banks in Paris, France are required by applicable law to close.

“CAD” or “Canadian Dollars” means the lawful currency of Canada.

“Canadian Branch” has the meaning set forth in the Purchase Agreement.

“Canadian Quota Share Retrocession Agreement” has the meaning set forth in the
Purchase Agreement.

“Cedant” means a ceding insurer under a Policy that is part of the Subject
Business.

“Claims Management and Services Agreement” means the Claims Management and
Services Agreement, dated the First Closing Date, as the same may have been, or
may from time to time be, amended, supplemented or otherwise modified, by and
between Retrocedant and Retrocessionaire.

“Closing Date” has the meaning set forth in the Purchase Agreement.

“Declaratory Judgment Expenses” means all expenses, fees, costs and interest
which the Retrocedant has paid or which are payable by the Retrocedant in
connection with or in relation to the analysis, prosecution, defense, or
resolution of an action or proceeding whether for declaratory judgment or other
action or proceeding brought to determine the obligations under a Policy that is
part of the Subject Business. Declaratory Judgment Expenses are deemed to have
been incurred by the Retrocedant on the date of the actual or alleged claim
giving rise to the declaratory judgment or other action or proceeding and shall
be payable under this Agreement irrespective of whether an actual loss has been
paid or payable by the Retrocedant.

“Default Amount” means any amount due or claimed to be due to the Retrocedant
under an Inuring AXA RE Retrocession Agreement that has not been paid for any
reason whatsoever, including by reason of the alleged or actual invalidity of
the applicable Inuring AXA RE Retrocession Agreement and including paid amounts

 

-2-

--------------------------------------------------------------------------------

subsequently recovered by an Inuring AXA RE Reinsurer through litigation or
otherwise and amounts not paid which are in dispute, (1) in the event the
non-payment is the result of a General Insolvency Event with respect to the
Inuring AXA RE Reinsurer, within 120 days of the date on which a claim for
payment of such amount has been made (or should have been made with reasonable
diligence on the part of the Retrocedant or the Retrocessionaire acting on
behalf of the Retrocedant, as the case may be) and (2) in all other
circumstances, within 360 days of the date on which a claim for payment of such
amount has been made (or should have been made with reasonable diligence on the
part of the Retrocedant or the Retrocessionaire acting on behalf of the
Retrocedant, as the case may be); provided that such 120-day or 360-day period
shall be deemed to have commenced no earlier than the First Closing Date; and
provided, further, that to the extent it is determined that any such claimed
amount was not due under the relevant Inuring AXA RE Retrocession Agreement or a
settlement is reached with the relevant Inuring AXA RE Reinsurer for a lower
amount than initially claimed, any amount so claimed but not payable by the
Inuring AXA RE Reinsurer shall no longer be deemed to be a Default Amount.

“Deposits” means any and all of the funds withheld, whether by way of cash,
letter of credit, trust or otherwise, (i) by any Cedant in relation to any
Policy(ies) that is (are) part of the Subject Business or (ii) by any Inuring
AXA RE Reinsurer in relation to any Inuring AXA RE Retrocession Agreement.

“Dispute” has the meaning set forth in Section 16.02.

“EUR” or “Euro” means the lawful currency of certain member states of the
European Union as defined in EC Regulation 1103/97.

“EUR Subaccount” means the funds withheld subaccount for Subject Business
denominated in EUR.

“Excluded Investments” has the meaning set forth in Section 6.01.

“Extra Contractual Obligations” means any and all liabilities, compensatory,
punitive, exemplary or consequential damages, losses, legal costs, expenses,
interest, settlement amounts or other amounts assessed, incurred, awarded, paid
or payable against or by the Retrocedant relating to any of the Policies that
are part of the Subject Business but which are not covered by any Policy and
which directly or indirectly arise out of or relate to: (1) any actual or
alleged negligence, fraud, bad faith or other tortious act or omission of or by
any Cedant or the Retrocedant, and (2) either the handling, adjustment,
rejection, settlement or defense of, or offer or failure to settle within any
policy limit, any claim, demand or action, or any failure to undertake the
defense of any claim, demand or action, or participation in any proceeding,
trial or hearing relating to any claim, demand or action against an insured, a
Gedant or the Retrocedant, or the preparation or prosecution of any appeal
relating to any such claim, demand or action. For the avoidance of doubt, any
amount included in Extra Contractual Obligations shall not be duplicative of or
include such amount to the extent already included in Loss in Excess of Contract
Limits. An Extra Contractual Obligation shall be deemed to have occurred on the
same date as the loss covered or alleged to be covered by a Policy that is part
of the Subject Business.

 

-3-

--------------------------------------------------------------------------------

“First Closing Date” has the meaning set forth in the Purchase Agreement.

“First Quarter after Closing” has the meaning set forth in Section 6.03.

“FW Canadian Account Balance” has the meaning set forth in the Canadian Quota
Share Retrocession Agreement.

“FW Cash Call” has the meaning set forth in Section 7.01.

“FW Subaccount” has the meaning set forth in Section 6.01.

“FW Subaccount Balance(s)” means the balance(s) described in Article 6.

“Funds Withheld Balance” means the total of the FW Subaccount Balances and
Deposits.

“Future Premiums” means all original gross premiums relating to Policies that
are part of the Subject Business earned on or after January 1, 2006, including
all renewal, additional, adjustment, amendment, reinstatement and other such
premiums, less all brokerage, fees, commissions or other deductions and less
cancellations, returned premiums and premiums on the Inuring AXA RE Retrocession
Agreements.

“GBP” or “British Pounds Sterling” means the lawful currency of the United
Kingdom.

“General Insolvency Event” shall occur, with respect to any person or entity, if
such person or entity makes any formal declaration of bankruptcy, declaration of
cessation of payments or any formal statement to the effect that it is insolvent
or likely to become insolvent; or a judgment, case, proceeding or other action
shall be commenced under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization,
conservatorship, liquidation, rehabilitation, or relief of debtors, seeking to
have an order for relief entered with respect to it or its debts.

“Initial Premium” means €2,309 million (based on the exchange rates set forth in
Schedule 1.01A), as determined in accordance with the principles set forth in
Section 5.01.

 

-4-

--------------------------------------------------------------------------------

“Initial Principal Amount” means €2,292 million (based on the exchange rates set
forth in Schedule 1.01A) and is equal to the Initial Premium, plus reinsurance
and retrocession payables, plus bad debt, minus reinsurance and retrocession
receivables.

“Insolvency Event” shall occur if the Retrocedant has commenced proceedings for
mandat ad hoc or procédure de conciliation in accordance with articles L.611-3
to L 611-15 of the French Code de Commerce, or made any formal declaration of
bankruptcy, declaration of cessation of payments (déclaration de cessation des
paiements) or any formal statement to the effect that it is insolvent or likely
to become insolvent; or a procedure de sauvegarde, a judgment for redressement
judiciaire, cession totale ou partielle de l’entreprise or liquidation
judiciaire is entered in relation to the Retrocedant under articles L.620-1 to
L.644-6 of the French Code de Commerce (or any analogous procedure) or a case,
proceeding or other action shall be commenced under any existing or future law
of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship or relief of debtors, seeking to have an order
for relief entered with respect to it or its debts.

“Inuring AXA RE Retrocession Agreements” means those contracts of reinsurance
and retrocession in effect to which Retrocedant is a party and that reinsure the
obligations of Retrocedant, including without limitation the retrocession
agreements listed on Schedule 1.01B, as in effect on the date hereof, and any
other new or modified reinsurance and retrocession agreements, that shall have
been approved in writing by the Retrocessionaire, between the Retrocedant (as
cedant) and third party reinsurers (as reinsurers or retrocessionaires of the
Retrocedant) but only to the extent inuring to the benefit of the Subject
Business or the Policies that are part of the Subject Business. For the
avoidance of doubt, the Inuring AXA RE Retrocession Agreements shall include any
renewal, extension, modification or amendment to any of the retrocession
agreements listed on Schedule 1.01B only to the extent previously approved in
writing by the Retrocessionaire, except for any such renewal, extension,
modification or amendment which is required by law or regulation.

“Inuring AXA RE Reinsurers” means all reinsurers or retrocessionaires that are
parties to one or more Inuring AXA RE Retrocession Agreements.

“Investment Income” means (i) any gain or loss realized from the sale, exchange,
lapse, transfer or other disposition of securities or other assets contained in
any FW Subaccount Balance or Deposit (to the extent released therefrom to the
Retrocedant (or one of its Affiliates)), (ii) any gain or loss recognized or
realizable on securities or assets in any FW Subaccount Balance or any Deposits
because of the occurrence of a General Insolvency Event in respect of (A) the
issuer of such security or other asset or (B) the Cedant who is in possession of
the Deposit, and (iii) any interest, dividends or other income or loss realized
in respect of securities or other assets contained in any FW Subaccount Balance
or in respect of any Deposit (to the extent released therefrom to the
Retrocedant or one of its Affiliates), in each case (x) gross of taxes, (y) net
of interest paid by the Retrocedant (or one of its Affiliates) in respect of
Deposits and commissions

 

-5-

--------------------------------------------------------------------------------

or fees paid or incurred by the Retrocedant (or one of its Affiliates) in
respect of any letter of credit facility or other security arrangement and
(z) net of custodian fees and other investment expenses incurred by the
Retrocedant (or one of its Affiliates) in connection with the management of such
securities or other assets. Investment Income may be positive or negative.

“Issuance Agreement” means the Issuance Agreement, dated the First Closing Date,
as the same may have been, or may from time to time be, amended, supplemented or
otherwise modified, by and between Retrocedant and Retrocessionaire, and
relating to Policies to be bound, issued, written, agreed or renewed after the
First Closing Date.

“JPY” or “Japanese Yen” means the lawful currency of Japan.

“Loss in Excess of Contract Limits” means any and all amounts, legal costs,
expenses, interest, settlement amounts or other amounts assessed, incurred,
awarded, paid or payable against or by the Retrocedant relating to any of the
Policies that are part of the Subject Business which are in excess of the limits
of a policy or reinsurance agreement, but otherwise within the coverage terms of
such policy or reinsurance agreement, for which there would have been
contractual liability to pay had it not been for the limit of such policy
agreement, which directly or indirectly arise out of or relate to: (1) any
actual or alleged negligence, fraud, bad faith or other tortious act or omission
of or by any Cedant or the Retrocedant; (2) either the handling, adjustment,
rejection, settlement or defense of, or offer or failure to settle within any
policy limit, any claim, demand or action, or any failure to undertake the
defense of any claim, demand or action, or participation in any proceeding,
trial or hearing relating to any claim, demand or action against an insured, a
Cedant or the Retrocedant, or the preparation or prosecution of any appeal
relating to any such claim, demand or action, and (3) all ex gratia payments and
compromise settlements made by the Retrocedant in respect of the Policies
included in the Subject Business. Without limiting the foregoing and
notwithstanding any other provisions to the contrary in this Agreement, the
decision by a Cedant (or Retrocedant) to settle a claim for an amount in excess
of the limit when the Cedant (or Retrocedant) has a reasonable basis to believe
that it is liable for the claim, will be deemed a Loss in Excess of Contract
Limits. For the avoidance of doubt, any amount included in Loss in Excess of
Contract Limits shall not be duplicative of or include such amount to the extent
already included in Extra Contractual Obligations.

“Master Agreement” has the meaning set forth in the Recitals hereto.

“Net Liability” means any and all amounts paid or payable by the Retrocedant
under or in relation to any and all Policies that are part of the Subject
Business, in respect of any loss, damage, occurrence, claim, settlement,
interest, bond, fine, penalty, or other such amount and including Allocated Loss
Adjustment Expenses, Extra Contractual Obligations, Loss in Excess of Contract
Limits and Declaratory Judgment Expenses. “Net Liability” shall, in addition,
include: (1) any and all liability

 

-6-

--------------------------------------------------------------------------------

for insurance premium taxes, excise taxes and any other taxes paid or payable on
account of Future Premiums, to the extent not already settled, deducted from or
allowed against such premiums; (2) any and all liability of the Retrocedant for
brokerage, fees, commissions or other deductions paid or payable on or after
January 1, 2006 with respect to the Subject Business, to the extent not already
settled, deducted from or allowed; (3) except to the extent otherwise provided
herein, any and all liability for returns or refunds of premiums, experience
adjustments related to retrospective premiums and contingent commissions, less
any brokerage, fees, commissions or other deductions with respect to Subject
Business minus any adjustment premium earned prior to January 1, 2006 but which
is received by the Retrocedant on or after January 1, 2006; (4) any commutations
entered into by the Retrocedant in respect of the Subject Business; (5) any
participation and/or assessments incurred by the Retrocedant in respect of
mandatory pool, association, syndicate, scheme, fund or residual market
mechanism and the like howsoever named arising from or in connection with the
Subject Business and (6) any and all liability of the Retrocedant under weather
derivative contracts. “Net liability” is net in accordance with the terms of
Section 3.04.

“Parties” has the meaning set forth in the Preamble hereto.

“Policy” means a cover note, treaty, slip, facultative certificate, binder,
policy or contract of insurance or reinsurance, written, issued, bound, renewed
or agreed by or on behalf of the Retrocedant pursuant to which the Retrocedant
assumes, insures or reinsures the risks of others, and creates, pursuant
thereto, a legally binding obligation on the part of the Retrocedant, and all
legally binding addenda, endorsements, alterations, amendments and ancillary
agreements in connection therewith of whatsoever nature.

“Principal Amount” means, with respect to any FW Subaccount, that portion of the
Initial Principal Amount allocated to each FW Subaccount, as adjusted to give
effect to the changes that would have occurred to such FW Subaccount, assuming
this Agreement had been in effect from January 1, 2006 through the First Closing
Date, including, without limitation, changes that would have resulted pursuant
to Section 6.04 and the fourth sentence of Section 5.02.

“Purchase Agreement” has the meaning set forth in the Recitals hereto.

“Purchaser” has the meaning set forth in the Recitals hereto.

“Records” means all documents relating to the Subject Business, including
underwriting files, claims files and accounting, actuarial, reserving or
reporting information or other records, including in electronic form.

“Reserve Agreement” means the Reserve Agreement, dated the First Closing Date,
as the same may have been, or may from time to time be, amended, supplemented or
otherwise modified, by and between AXA and the Retrocessionaire.

“Retrocedant” has the meaning set forth in the Preamble hereto.

 

-7-

--------------------------------------------------------------------------------

“Retrocessionaire” has the meaning set forth in the Preamble hereto.

“Run Off Services and Management Agreement” means the Run-Off Services and
Management Agreement, dated the date of the Purchase Agreement, as the same may
have been, or may from time to time be, amended, supplemented or otherwise
modified, by and between the Retrocedant and ALM.

“SGD” or “Singapore Dollar” means the lawful currency of the Republic of
Singapore.

“Subject Business” means the business as defined in Article 2.

“Termination Amount” shall be the amount described in Section 9.04.

“Termination Date” has the meaning set forth in Section 9.03.

“Termination Notice” means a written notice of termination given by one Party to
the other Party pursuant to Article 9.

“Termination Premium” means any termination premium payable pursuant to
paragraph D of Article XVI of the Novation Agreement, dated as of December 31,
2003, between the Retrocedant and National Indemnity Company.

“Unallocated Loss Adjustment Expenses” shall mean the overhead and other
non-specific costs associated with the handling and settlement of claims with
respect to the Subject Business.

“USD” or “United States Dollar” means the lawful currency of the United States
of America.

ARTICLE 2

SUBJECT BUSINESS

2.01 Subject Business. “Subject Business” means:

(a) all Policies and weather derivative contracts referred to in Schedule 2.01A
(all to the extent not issued or booted by Retrocedant’s Canadian Branch); and

(b) all Policies and weather derivative contracts bound, issued, written, agreed
on, booked or renewed by the Retrocedant or its affiliates (other than (i) the
Retained Entities and (ii) to the extent issued or booked by Retrocedant’s
Canadian Branch) pursuant to the Issuance Agreement.

The Retrocedant represents that the disc referenced in Schedule 2.01A and
delivered by Retrocedant to Retrocessionaire on the date hereof includes only
the Policies that, to the knowledge of Retrocedant, were issued up to and
including December 7,

 

-8-

--------------------------------------------------------------------------------

2006. As soon as reasonably practicable after termination of the Issuance
Agreement pursuant to Article 6 thereof, Retrocessionaire shall, after
consultation with Retrocedant, deliver to Retrocedant an updated disc containing
all Policies that constitute the Subject Business. For the avoidance of doubt,
the agreed procedures hereunder shall apply to such, and any other, update of
such disc.

2.02 Changes to Schedule 2.01A. Schedule 2.01A is intended to be definitive,
subject only to the agreed procedures hereunder for altering Schedule 2.01A. If
any Policy not included in Schedule 2.01A is determined after the date of
execution of this Agreement by agreement of the Parties to be part of the
Subject Business, the Schedule shall be amended accordingly to include that
Policy and the Parties shall make adjustments to the Funds Withheld Balance, as
necessary, to reflect the inclusion of such Policy on the Schedule as if it had
been included on the First Closing Date. If any Policy included in Schedule
2.01A is determined after the date of execution and delivery of this Agreement
by agreement of the Parties not to be part of the Subject Business, the Schedule
shall be amended accordingly to exclude that Policy and the Parties shall make
adjustments to the Funds Withheld Balance, as necessary, to reflect the
exclusion of such Policy from the Schedule as if it had been excluded on the
First Closing Date. In determining whether a Policy has been properly included
in or erroneously omitted from Schedule 2.01A, regard shall be given to (1) the
rationale set forth in Section 2.03 and (2) the accounting and claims systems
maintained by the Retrocedant prior to the First Closing Date, provided, that
the accounting and claims systems treatment of a particular Policy shall not be
given any weight in making such determination if it can be shown that such
treatment was in error at the time of entry of such data onto such systems.

2.03 Rationale. The Subject Business as defined in Section 2.01 comprises that
part of the assumed reinsurance business of the Retrocedant, which consists of
(a) all Policies and weather derivatives contracts which were written prior to
23:59 Paris time on the First Closing Date howsoever underwritten by the
Retrocedant, under the brand name “AXA”, “AXA RE” or otherwise, but excluding
any Policies issued or booked through the Retrocedant’s reinsurance branch
offices in Canada and (b) Policies issued by the Retrocedant (excluding any
Policies issued or booked through the Retrocedant’s reinsurance branch offices
in Canada) after 23:59 Paris time on the First Closing Date pursuant to the
Issuance Agreement.

ARTICLE 3

CESSION OF THE SUBJECT BUSINESS, SCOPE OF LIABILITY AND

TERM OF AGREEMENT

3.01 Cover. The Retrocedant shall cede to the Retrocessionaire, and the
Retrocessionaire shall accept and reinsure, on a 100% quota share basis the
Subject Business in accordance with the terms and conditions of this Agreement.
For the avoidance of doubt, the cession, assumption and reinsurance of the
Subject Business means the transfer of all benefits and risks of the Subject
Business to the Retrocessionaire

 

-9-

--------------------------------------------------------------------------------

and such transfer and assumption shall only have effect among the Parties and,
save as expressly provided for in this Agreement, shall not affect or alter the
position of the Retrocedant as the sole contractual partner, creditor and debtor
vis-à-vis the other parties to the Subject Business, and no such other party to
the Subject Business shall have any direct claim whatsoever against the
Retrocessionaire.

3.02 Extended Expiration. If this Agreement should be terminated while a loss
occurrence covered by a Policy that is part of the Subject Business is in
progress, subject to the other terms and conditions of this Agreement, the
Retrocessionaire is responsible as if the entire loss or damage had occurred
prior to the termination of this Agreement.

3.03 Original Terms and Conditions and Follow the Settlements. Subject to the
terms and conditions of this Agreement, the Retrocessionaire’s liability to the
Retrocedant under this Agreement shall be subject to the same terms, limits,
conditions, cancellations, exclusions and endorsements contained in or relating
to the Policies included in the Subject Business, and to all interpretations,
modifications, waivers and alterations thereto. All loss settlements or payments
of whatsoever nature made by the Retrocedant in connection with the Policies
covered by this Agreement shall be binding upon the Retrocessionaire and shall
be deemed to be within the terms and conditions of this Agreement whether or not
the Retrocedant was liable in law under the terms and conditions of the Policy,
or on the facts relating to the claim made under the Policy. For the avoidance
of doubt, the Retrocessionaire shall be bound by:

(a) any commutations entered into by the Retrocedant in respect of the Subject
Business; and

(b) any participation and/or assessments incurred by the Retrocedant in respect
of mandatory pool, association, syndicate, scheme, fund or residual market
mechanism and the like howsoever named arising from or in connection with the
Subject Business.

3.04 Net Basis. The liability of the Retrocessionaire towards the Retrocedant
shall arise at the same time as and to the same extent as the Net Liability of
the Retrocedant, such Net Liability being after all appropriate deductions for
(1) claims upon the Inuring AXA RE Retrocession Agreements, subject to Article 4
below, and (2) salvage, subrogation and other recoveries received other than
recoveries pursuant to the Inuring AXA RE Retrocession Agreements. Subject to
Article 4 below, any and all amounts received as salvage or subrogation or other
recovery, which are recovered subsequently to any payment or settlement under
this Agreement by the Retrocessionaire shall be for the account of the
Retrocessionaire and credited to the relevant FW Subaccount Balance(s) or,
following a FW Cash Call of all FW Subaccount Balances, paid in cash, to the
extent of the Retrocessionaire’s quota share participation in the Net Liability
receiving the benefit of the salvage, subrogation or recovery, even if recovered
after termination or expiry of this Agreement.

 

-10-

--------------------------------------------------------------------------------

3.05 Commencement and Period. This Agreement is a continuous contract and shall
commence at 00.01 A.M. Paris time as of January 1, 2006 and remain in full force
and effect until such time as any of the Policies included in the Subject
Business remain in force and as any and all Net Liability has been fully and
finally discharged, or unless or until this Agreement is terminated as provided
herein.

ARTICLE 4

INURING AXA RE RETROCESSION AGREEMENTS

4.01 Obligations of the Parties. The Retrocedant agrees and undertakes to
maintain in force the Inuring AXA RE Retrocession Agreements and to pay all
relevant premiums and otherwise to take all necessary and reasonable steps to
maintain in force all Inuring AXA RE Retrocession Agreements. Except for the
payment of any Termination Premium, any premiums or other amounts due to the
Inuring AXA RE Reinsurers for periods on or after January 1, 2006 in respect of
Inuring AXA RE Retrocession Agreements shall be calculated in, and debited to,
the relevant FW Subaccount Balance(s) in accordance with the provisions of
Section 6.04 hereof.

4.02 Receipt of Recoverables. Except as otherwise provided for in this
Agreement, the amounts recovered on or after January 1, 2006 by the Retrocedant
under the Inuring AXA RE Retrocession Agreements shall continue to be received
directly by the Retrocedant.

4.03 Default Amounts. The Retrocessionaire shall bear the risk of any Default
Amount under any and all Inuring AXA RE Retrocession Agreements, provided that
upon the receipt by Retrocessionaire of a payment pursuant to the Reserve
Agreement reflecting all or part of any Default Amount, the Retrocessionaire
shall immediately relinquish, and the Retrocedant shall immediately succeed to,
any and all rights with regard to any such Default Amount, whether by novation
or assignment, subrogation or otherwise. Any future steps to enforce or
otherwise act with regard to such rights shall be at the cost of the
Retrocedant, provided, that the Retrocessionaire shall at its own cost take all
necessary and reasonable steps to give full effect to the subrogation,
assignment, novation or other arrangement.

4.04 Commutations. Any portion of the proceeds of a commutation of any Inuring
AXA RE Retrocession Agreements as relates to the Retrocessionaire’s
participation in the Net Liability shall be added to the applicable FW
Subaccount Balance, except to the extent the Retrocessionnaire shall have
received a payment or participated in a credit or benefit under the Reserve
Agreement in respect of such participation in the Net Liability; provided
however that the proceeds in respect of a commutation of a multi-year Inuring
AXA RE Retrocession Agreement which was in effect or otherwise covers any period
prior to January 1, 2006 shall be allocated between the Retrocedant and the
Retrocessionaire, in a mutually acceptable manner, such allocation to be based
on the pro rata amount of aggregate loss reserves (and to the extent

 

-11-

--------------------------------------------------------------------------------

appropriate, paid Losses (as defined in the Reserve Agreement)) in respect of
Policies in the Guaranteed Portfolio and such other Policies, respectively, that
are the subject of such commutation. The Retrocessionaire agrees that, following
such a commutation, the Net Liability reinsured under this Agreement shall cease
to be subject to reduction from retrocessional protection previously afforded by
such commuted Inuring AXA RE Retrocession Agreement

ARTICLE 5

CONSIDERATION AND PREMIUM

5.01 Initial Premium. The Retrocedant undertakes to pay (on a funds withheld
basis) the amounts in each separate currency, as set out below (collectively,
the “Initial Premium”):

 

Currency

   Amount United States Dollars (“USD”)    USD 1,889m Euros (“EUR”)    EUR 595m
Canadian Dollars (“CAD”)    CAD 11m British Pounds (“GBP”)    GBP 66m Japanese
Yen (“JPY”)    JPY 628m Singapore Dollars (“SGD”)    SGD 1m

The Parties hereby acknowledge that the Initial Premium numbers set forth above
was calculated in accordance with the principles set forth in Schedule 5.01
hereto.

5.02 Funds Withheld; Future Premiums. It is agreed that the funds withheld basis
does not require actual payment of the Initial Premium. Any such payment will be
made, subject to Article 7, on September 30, 2037, provided that any amount so
paid shall in no event exceed the amount of any FW Subaccount Balance which may
be released pursuant to Section 7.01 and provided further that no such amount
shall be paid or payable prior to the time any such FW Subaccount Balance is
paid pursuant to Section 7.01. Further, it is agreed that the Initial Premium
does not include any Future Premiums. Each such Future Premium received by the
Retrocedant shall be credited to the applicable FW Subaccount Balance(s) upon
the receipt of such premium, along with all interest, dividends or other income
or loss on such Future Premium from the date of receipt by Retrocedant through
the date of crediting to the applicable FW Subaccount Balance(s) hereunder, and
for so long as the FW Subaccount Balances are maintained pursuant to this
Agreement. Following a FW Cash Call of all FW Subaccount Balances, the
Retrocessionaire shall be entitled to cash payment in the amount of Future
Premiums actually received by the Retrocedant after such FW Cash Call. The
Retrocessionaire shall bear the risk of uncollected Future Premiums.

 

-12-

--------------------------------------------------------------------------------

ARTICLE 6

FW SUBACCOUNT BALANCES, EXPERIENCE ADJUSTMENTS,

INTEREST, DEPOSITS AND CREDITS

6.01 Establishment of Funds Withheld Account. As of the First Closing Date, the
Retrocedant shall establish on its books and records for its own account a
“funds withheld account” as a separate, segregated, account in the amount equal
to the sum of the Principal Amount for each of the FW Subaccounts and shall make
adjustments from time to time to reflect the current Funds Withheld Balance as
provided herein. The Retrocedant shall, within the “funds withheld account”
establish separate subaccounts (each a “FW Subaccount”) for Subject Business
denominated in USD, EUR, CAD, GBP, JPY and SGD, and shall credit, as of the
First Closing Date, to each such subaccount the Principal Amount that
corresponds to each such currency subaccount. Each such separate subaccount
balance represents the initial FW Subaccount Balance for each of the currencies
of the Subject Business of this Agreement as of the First Closing Date. The
Retrocedant shall undertake that (x) as of the First Closing Date, the assets in
the FW Subaccounts shall not include any collateralized debt obligations (CDOs)
or private equity investments (“Excluded Investments”), and (y) it shall
contribute or cause to be contributed the cash in the amount of (i) such
Excluded Investments plus interest thereon at a rate of 3% from January 1, 2006
until such time as the relevant assets are substituted with assets other than
Excluded Investments, minus (ii) any coupon or dividends received in respect of
such Excluded Investments between January 1, 2006 and the date of such
substitution, in each case to the relevant FW Subaccount. For purposes of the
preceding sentence, the value of such Excluded Investments as of January 1, 2006
shall be calculated as follows: (x) in the case of securities which are listed
on a securities exchange or for which a quotation from a securities quotation
system is available, such listed or quoted value at January 1, 2006, and (y) in
the case of other securities, a valuation mutually agreed between the parties
consistent with the basis reflected for investment valuations in the Pro Forma
Statements (as defined in the Purchase Agreement).

6.02 Netting of FW Subaccount Balances. The Retrocedant shall deduct from each
separate FW Subaccount Balance all amounts due from the Retrocessionaire in each
respective subaccount currency. For the purposes of making deductions in
relation to any amount due in a currency Other than the six currencies
specifically identified in Section 5.01, the amount shall be converted into EUR.
The Retrocessionaire shall not be required to settle any such amounts on a cash
basis, as long as the applicable separate FW Subaccount Balance is positive.

6.03 Periodic Calculation of FW Subaccount Balances. (a) Commencing with the
first quarter ending following the First Closing (the “First Quarter after
Closing”) and continuing until there has been a complete settlement of the FW
Subaccount Balances following a FW Cash Call or termination of this Agreement,
the Retrocedant shall recalculate, or cause to be recalculated, the FW
Subaccount Balances as of the end

 

-13-

--------------------------------------------------------------------------------

of each quarter in accordance with Section 6.04, reflecting all amounts actually
paid or received in relation to the Subject Business (including as paid by the
Retrocedant on behalf of the Retrocessionaire by way of deduction from each
separate FW Subaccount Balance). The periodic calculation contemplated hereby
shall also be adjusted to reflect reallocations among the FW Subaccount Balances
during each quarter that result from investment decisions made by the
Retrocessionaire in accordance with the terms of the investment guidelines
contained in the Claims Management and Services Agreement.

(b) The Retrocedant will provide the Retrocessionaire quarterly reports
reflecting the details of such calculations in form and content to be mutually
agreed by the parties. In addition, such reports will include information as to
premium accounts, commission allowances, losses paid, loss adjustment expenses,
salvage recovered, loss reserves, allocated loss adjustment expense reserves,
and such other matters to be agreed by the parties in sufficient reasonable
detail, so as to enable the parties to monitor results of the Guaranteed
Portfolio (as defined in the Reserve Agreement) separately from the other
business subject to this Agreement on an accident year basis and by currency,
and to make all allocations between the Guaranteed Portfolio and such other
business. The Retrocessionaire shall have reasonable audit rights with respect
to such reports and information.

6.04 Calculation of the Amount of the FW Subaccount Balances. The quarterly
recalculation of the FW Subaccount Balances shall be carried out in accordance
with the formula set forth below with respect to all amounts actually paid or
received either in the six specifically identified currencies or in other
currencies, as converted to EUR:

(a) starting initially with each separate initial FW Subaccount Balance and
subsequently with each separate FW Subaccount Balance at the end of the previous
quarter; plus

(b) Future Premiums, Deposits (less any brokerage, fees, commissions or other
deductions) and any amounts pursuant to weather derivative contracts actually
paid to the Retrocedant in the respective quarter; plus

(e) salvage, subrogation or other recoveries (including any reduction in a
Default Amount for which Retrocessionaire has provided reimbursement pursuant to
Section 2.5(b) of the Reserve Agreement) which relate to and are recovered in
anticipation of or subsequent to, any payment or settlement under this
Agreement; plus

(d) amounts received under Inuring AXA RE Retrocession Agreements (including
pursuant to the commutation thereof); plus

(e) profit commissions actually received by the Retrocedant in the respective
quarter to the extent relating to the Subject Business; plus

 

-14-

--------------------------------------------------------------------------------

(f) any fees paid by the Retrocessionaire to the Retrocedant in respect of
Section 4.1 of the Issuance Agreement in accordance with Schedule 6.04(f) hereof
or to ALM pursuant to Section 8.3(b) of the Run Off Services and Management
Agreement in respect of the Subject Business; plus

(g) any other amounts received by the Retrocedant, if any, in connection with
the Policies that are part of the Subject Business and/or with the Inuring AXA
RE Retrocession Agreements; less

(g-1) any fees paid by the Retrocedant to the Retrocessionaire in respect of
Section 4.2 of the Issuance Agreement to the extent relating to the Subject
Business; less

(h) the total Net Liability actually paid by the Retrocedant in the respective
quarter before netting pursuant to Section 3.04 (but not including amounts paid
by the Retrocedant by reduction of a Deposit); less

(i) premium refunds (with relevant credit for brokerage, fees, commissions or
other deductions) actually made by the Retrocedant in the respective quarter,
but only to the extent not already covered by clause (g) above; less

(j) profit commissions actually paid by the Retrocedant in the respective
quarter to the extent relating to the Subject Business; less

(k) other than with respect to the Termination Premium, amounts actually paid to
purchase, maintain or renew the Inuring AXA RE Retrocession Agreements,
including reinstatement premiums; less

(l) any fees paid by the Retrocedant to the Retrocessionaire in respect of the
Claims Management and Services Agreement to the extent relating to the Subject
Business; less

(m) amounts paid by the Retrocedant in respect of Deposits or other amounts in
respect of Policies written, issued, bound, agreed or renewed on behalf of
Retrocessionaire pursuant to the Issuance Agreement; less

(n) any other amounts paid by the Retrocedant to ALM pursuant to the Run-Off
Services and Management Agreement in respect of the Subject Business, if any, in
connection with (i) Policies that are part of the Subject Business and/or
(ii) Inuring AXA RE Retrocession Agreements (for the avoidance of doubt,
excluding Unallocated Loss Adjustment Expenses in respect of Net Liabilities
incurred on or prior to December 31, 2005 but including Unallocated Loss
Adjustment Expenses to the extent related to services provided by ALM in respect
of Net Liabilities incurred after December 31, 2005); less

(o) any fees paid by the Retrocedant to AXA IARD in respect of the Rating
Guarantee (as defined in the Purchase Agreement to the extent not in excess of
the amounts set forth in Schedule 6.04(f) for the relevant quarter); less

 

-15-

--------------------------------------------------------------------------------

(p) any other amounts paid by the Retrocedant for costs incurred at the
direction of Retrocessionaire and costs incurred in respect of asset management,
if any, in connection with (i) Policies that are part of the Subject Business
and/or (ii) Inuring AXA RE Retrocession Agreements (in each case not
inconsistent with other Transaction Agreements but excluding Unallocated Loss
Adjustment Expenses in respect of Net Liabilities incurred prior to December 31,
2005;

provided that, for the avoidance of doubt, all additions and subtractions under
this Section 6.04 shall be made without duplication; provided, further, that the
recalculation of the FW Subaccount Balances for the First Quarter after Closing
shall reflect all activity covered by this Section 6.04 from the First Closing
Date through the end of such quarter.

6.05 No Segregation. It is agreed that the balance represented by each separate
FW Subaccount Balance shall be a notional balance and that there shall be no
segregation of any of the assets of the Retrocedant or any requirement to set
aside funds with respect to such balances.

6.06 Investment Income. The Retrocedant shall, within five Business Days of the
receipt of the report delivered pursuant to the Claims Management and Services
Agreement detailing changes made to each separate FW Subaccount Balance and
advising of the resulting new balance, release any positive Investment Income
relating to, or received in, the applicable quarter in cash in the applicable
currency to the Retrocessionaire. If a quarterly report provided pursuant to the
Claims Management and Services Agreement shows negative Investment Income
relating to, or received in, the applicable quarter, then the Retrocessionaire
shall pay the Retrocedant an amount in cash equal to such negative Investment
Income through the relevant FW Subaccount. Such payment shall be made by the
Retrocessionaire in the applicable currency at the time of the delivery of the
quarterly report. For the avoidance of doubt, but without duplication of any of
the other provisions contained herein, the investment results of the Funds
Withheld Balance from January 1, 2006 through the First Quarter after Closing
shall be included in calculating the Investment Income for the First Quarter
after Closing.

6.07 Funds Received by Retrocedant. The Retrocedant shall notify, or cause to be
notified, the Retrocessionaire of all amounts received by the Retrocedant in
relation to the Subject Business as soon as practicable following receipt. All
such amounts shall be deemed to have been added to the FW Subaccount Balance on
the date of receipt.

ARTICLE 7

PAYMENT OF FW SUBACCOUNT BALANCE AND CASH ADVANCES

The Retrocessionaire shall have the right, upon ten Business Days prior written
notice to the Retrocedant, to call for payment in cash of each separate FW
Subaccount Balance at any time after the total remaining amount represented by
the sum of all such separate FW Subaccount Balances and the FW Canadian Account
Balance (as converted in relation to all balances denominated in currencies
other than

 

-16-

--------------------------------------------------------------------------------

EUR) falls below EUR 5 million, or, alternatively, at any time after
September 30, 2037, whichever first occurs. The delivery of such notice shall
constitute an agreement by the Parties as contemplated in clause (ii) of the
first sentence of Section 7.01 of the Canadian Quota Share Retrocession
Agreement. If the Retrocessionaire shall have made a call for payment in
accordance with this Section (a “FW Cash Call”), the Retrocedant shall, after
providing the next quarterly statement following such FW Cash Call, be
thereafter relieved from the obligation to maintain the FW Subaccount Balances
and, except as otherwise provided herein, all amounts required under this
Agreement to be debited or credited to a FW Subaccount Balance shall be settled
in cash.

ARTICLE 8

SETTLEMENTS

8.01 (a) If a quarterly report provided pursuant to the Claims Management and
Services Agreement shows a negative balance in any FW Subaccount Balance or the
FW Canadian Account Balance other than the EUR Subaccount, then the negative
balance shall be netted against the available positive balance of the EUR
Subaccount (and the opening balances of the respective FW Subaccount Balances
and the FW Canadian Account Balance for the ensuing calendar quarter shall
reflect such netting). If said quarterly report shows a negative balance in the
FW Subaccount Balance for the EUR Subaccount, after giving effect to any
payments made pursuant to Section 6.06, then the Retrocessionaire shall pay the
Retrocedant the amount of the negative balance at the time of delivery of the
report. Following a FW Cash Call of all FW Subaccount Balances or the exhaustion
of all FW Subaccount Balances, the Retrocessionaire and the Retrocedant shall
settle all balances due between them by payment not later than five Business
Days after receipt of such report if a net amount is due from the Retrocedant to
the Retrocessionaire.

(b) In addition to any payments pursuant to Section 8.01(a), 90 days after the
end of each calendar year the Retrocedant shall pay the Retrocessionaire an
additional amount (which shall be made by way of deduction from the FW
Subaccount Balances) to the extent (i) the Retrocedant determines based on a
review of the reserves and related losses paid in respect of Future Premiums
earned that Retrocessionnaire has earned an underwriting profit after January 1,
2006 in respect of the business represented by such Future Premiums which is not
offset by the aggregate underwriting losses so calculated incurred since
January 1, 2006 and (ii) such payment does not result in a negative aggregate
balance in the FW Canadian Account (as defined in the Canadian Quota Share
Retrocession Agreement) and the FW Subaccounts.

(c) In addition to any payments due pursuant to Sections 8.01(a) and 8.01(b),
the Retrocedant shall pay itself an additional amount (which shall be deducted
from the FW Subaccount Balances), to the extent (i) Retrocessionaire is required
to make a payment pursuant to Sections 2.1 through 2.3 and Section 2.4(b)(ii)
and Section 2.5(b) of the Reserve Agreement (except to the extent payment in
respect thereof has been made pursuant to Section 8.0l(c) of the Canadian Quota
Share Retrocession Agreement), and (ii) such payment does not result in a
negative aggregate balance in the FW Subaccounts.

 

-17-

--------------------------------------------------------------------------------

ARTICLE 9

TERMINATION

9.01 Termination Notice by Either Party. Either Party shall have the right to
give a written Termination Notice to the other Party:

(a) if the performance of the whole or any part of this Agreement is prohibited
or rendered impossible de jure or de facto for a period of thirty (30) days or
more (including, but not limited to, in consequence of any law or regulation
which is or shall be in force in any country or territory or if any law or
regulation shall prevent directly or indirectly the remittance of all or any
part of the balance of payments due to or from either party), provided that
where only part of the performance is so affected, it must substantially impair
the ability of the Parties to perform their obligations under this Agreement;
and provided further however, that the Parties shall use reasonable efforts to
amend the Agreement so performance is no longer so affected; or

(b) subject to Article 15 if the other Party has failed to comply with any of
the terms and conditions of this Agreement which is a material breach, provided
that the affected Party has first notified the other Party of the failure to
comply, and such Party has not rectified the failure within ninety (90) days
from such notification.

9.02 Termination Notice by the Retrocedant. In addition to the rights provided
in Section 9.01, the Retrocedant shall have the right to deliver a Termination
Notice in the event that the Retrocessionaire becomes insolvent or is placed
into liquidation or receivership (whether voluntary or involuntary), or there is
instituted against it proceedings for the appointment of a receiver, liquidator,
rehabilitator, conservator, or trustee in bankruptcy, or other agent known by
whatever name, to take possession of its assets or control its operations.

9.03 Termination Date. The effective date of termination (“Termination Date”)
shall be at the discretion of the Party providing written notice of termination
(“Termination Notice”) and shall be stated therein, provided that it shall not
be earlier than 30 days following the date such notice is served upon the other
Party.

9.04 Effect of Termination Notice/Termination. Upon the delivery of a
Termination Notice pursuant to Section 9.01 or 9.02 and in accordance with the
provisions of Section 9.03, unless the Parties agree otherwise, (i) the Issuance
Agreement shall terminate, and any provisions herein with respect to any
Policies written thereunder after the Termination Date shall be of no further
force and effect and (ii) this Agreement shall remain in effect with respect to
the Subject Business.

 

-18-

--------------------------------------------------------------------------------

ARTICLE 10

INSOLVENCY

10.01 Insolvency of the Retrocedant. Where an Insolvency Event occurs in
relation to the Retrocedant the following terms shall apply (and in the event of
any inconsistency between these terms and any other terms of this Agreement,
these terms shall prevail, in each case, subject to applicable law):

(a) Notwithstanding any requirement in this Agreement that the Retrocedant shall
actually make payment in discharge of its liability to its Cedants before
becoming entitled to payment from the Retrocessionaire:

 

  (1) the Retrocessionaire shall be liable to pay (in accordance with
Section 12.01 of this Agreement when applicable) the Retrocedant even though the
Retrocedant is unable to actually pay, or discharge its liability to its
Cedants; but

 

  (2) nothing in this Article shall operate to accelerate the date for payment
by one Party of any sum which may be payable to the other Party, which sum shall
only become payable as and when the relevant Party would have discharged, by
actual payment, its liability for its loss but for its being the subject of any
Insolvency Event.

(b) The existence, quantum, valuation and date for payment of any sum which the
Retrocessionaire is liable to pay the Retrocedant under this Agreement shall be
those and only those for which the Retrocessionaire would be liable to the
Retrocedant if the liability of the Retrocedant to its Cedants had been
determined without reference to any term in any composition or scheme of
arrangement or any similar such arrangement entered into between the Retrocedant
and all or any part of its Cedants, unless and until the Retrocessionaire serves
written notice to the contrary on the Retrocedant in relation to any composition
or scheme of arrangement.

(c) Any payments due from the Retrocessionaire hereunder shall be made (i) first
through deduction from the FW Subaccount Balances and (ii) if there are
insufficient funds in the FW Subaccount Balances, through a payment by
Retrocessionaire to Retrocedant.

ARTICLE 11

CURRENCIES

11.01 Currency Conversions. This Agreement follows the original currency
denominations of the Subject Business in relation to USD, GBP, EUR, CAD, SGD and
JYP as paid or received. Unless otherwise specified under this Agreement,
amounts received on Subject Business denominated in all other currencies shall
be converted to EUR at the rate of exchange used for this purpose in the
Retrocedant’s books.

 

-19-

--------------------------------------------------------------------------------

11.02 Rate of Exchange used in the Retrocedant’s Books. The date of the rate of
exchange used in the Retrocedant’s books shall be the date imposed by the
Retrocedant’s general corporate rules of accounting that states, inter alia,
that:

(a) the rate of exchange used in the fourth calendar quarter account is the rate
of exchange used for balance sheet purposes, that is, the rate of exchange in
force on October 31st (or closest Business Day);

(b) the rate of exchange used in the first, second and third calendar quarter
accounts is the rate of exchange provisionally used for balance sheet purposes,
that is, the rate of exchange in force on the previous year’s technical
accounting closing process; and

(c) The official source of rates of exchange used by the Retrocedant are those
published by the Banque de France in its daily fixing (14.15 Paris time, on a
given Business Day).

11.03 Modifications to Rate of Exchange used in the Retrocedant’s Books. The
Retrocedant shall provide written notice to the Retrocessionaire of any
modifications to the Retrocedant’s general corporate rules of accounting as set
out in Section 11.02. Such modifications shall apply to currency conversions
pursuant to this Agreement 30 days following the date upon which notice is
deemed to have been given.

ARTICLE 12

OFFSET

12.01 Offset. (a) Notwithstanding any provision of this Agreement to the
contrary, any debts or credits, regardless of when they arose, in favor of or
against the Retrocedant or the Retrocessionaire are deemed mutual debts or
credits, as the case may be, and shall be offset, and only the net balance shall
be allowed or paid. However, in the event of the insolvency of either Party,
offset shall only be allowed in accordance with applicable laws.

(b) While this Agreement is in effect, offset pursuant to this Section shall not
override the express requirements of Articles 6 and 7 regarding circumstances
when amounts are to be offset against the FW Subaccount Balance(s).

ARTICLE 13

THIRD PARTY RIGHTS

13.01 No Third Parties. This Agreement is for the sole benefit of the Parties to
this Agreement and does not give rise to or create any legal, equitable or other
right, entitlement, remedy, claim or benefit enforceable by any person not a
party to this Agreement and nor shall it create any legal relation(s) directly
with either the Retrocedant or the Retrocessionaire and any other person not a
party to this Agreement.

 

-20-

--------------------------------------------------------------------------------

ARTICLE 14

ERRORS AND OMISSIONS

14.01 Errors and Omissions. Any inadvertent delays, errors or omissions made in
connection with this Agreement or any transaction hereunder shall not relieve
either Party from any liability which would have attached, had such delay, error
or omission not occurred, provided always that such liability is not accelerated
or increased in any way and provided, further, that any such delay, error or
omission is rectified as soon as possible after discovery. For the avoidance of
doubt, this Article shall not constitute a waiver of any of the Parties’ rights
or remedies under this Agreement, nor shall it prevent the Parties from
exercising such right or remedy in the future.

ARTICLE 15

DUTY OF COOPERATION

15.01 Duty of Cooperation. (a) Each Party hereto shall cooperate fully with the
other Party in all reasonable respects in order to accomplish the objectives of
this Agreement. The Parties further agree that each will provide, at its own
expense, to the other Party to this Agreement such cooperation and assistance as
is reasonably necessary to respond to requests made by any governmental
authority having regulatory jurisdiction over a Party in connection with any
financial examination or other investigation, inquiry or proceeding relating to
a Party hereto, such cooperation and assistance to include, without limitation,
making appropriate personnel and records available to such governmental
authority and making copies, at its own expense, reasonably necessary to respond
to requests or inquiries from such governmental authority.

(b) Each Party hereto shall, to the extent this would not materially adversely
affect such Party, take such commercially reasonable steps upon the request and
at the cost and expense of the other Party as may be necessary to preserve the
statutory accounting treatment of this Agreement at the date hereof, including
through trust or similar arrangements. The Parties acknowledge that they believe
that as of the date of this Agreement (assuming that prior to and immediately
subsequent to such transfer there is no event or circumstance which could be
expected to result in a General Insolvency Event or similar event with respect
to either Party), a transfer of the assets in the FW Subaccount Balances to
Retrocessionaire and a simultaneous pledge, on terms satisfactory to
Retrocedant, of such assets to Retrocedant would not, in and of itself,
materially adversely affect either Party, it being agreed that the foregoing
shall not be binding on either Party for purposes of implementing this paragraph
(b) after the date hereof, nor the basis for any other liability, action or
inaction hereunder.

 

-21-

--------------------------------------------------------------------------------

ARTICLE 16

GOVERNING LAW AND JURISDICTION

16.01 Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of France and without giving effect to conflicts of law
principles.

16.02 Dispute Resolution. Any dispute arising out of or relating to this
Agreement, including the breach, termination or invalidity thereof (each, a
“Dispute”), shall initially be submitted for resolution pursuant to the
applicable provisions of the Master Agreement.

16.03 Jurisdiction. Subject to Section 16.02, all Disputes shall be subject to
the exclusive jurisdiction of the competent courts within the jurisdiction of
the court of appeals of Paris.

ARTICLE 17

GENERAL PROVISIONS

17.01 Notices. Any notice or other communication required or permitted hereunder
shall be made in accordance with the Master Agreement.

17.02 Invalidity. If any provision of this Agreement should be found to be
illegal, invalid or unenforceable, such provision shall be severable and its
illegality, invalidity or unenforceability shall not affect the legality,
validity or enforceability of other provisions, unless the whole Agreement is
rendered illegal, invalid, unenforceable or incapable of performance or the
illegality, invalidity or unenforceability of such provision frustrates the
intent of the Parties or the purpose of this Agreement. In the event of the
foregoing, the Parties shall negotiate in good faith to replace such illegal,
invalid or unenforceable provision with a provision that corresponds as closely
as possible to the intentions of the Parties as expressed in such illegal,
invalid or enforceable provision.

17.03 Binding Agreement; Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective successors and
permitted assigns. Neither this Agreement nor any right hereunder may be
assigned by any Party without the prior written consent of the Retrocessionaire
and the Retrocedant affected thereby, which consent shall not be unreasonably
withheld.

17.04 Modification; Waiver. This Agreement may be modified in any manner and at
any time only by a duly authorized written instrument executed by an executive
officer of each of the Parties hereto. No delay on the part of any Party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof. Any of the terms and conditions of this Agreement may be waived at any
time by Retrocedant or

 

-22-

--------------------------------------------------------------------------------

Retrocessionaire by the duly authorized writing of the Party entitled to the
benefit of such term or condition. A waiver on one occasion will not be deemed
to be a waiver of the same or any other breach or non-fulfillment on a future
occasion. Unless expressly provided otherwise herein, all remedies, whether
under this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.

17.05 Headings. The headings in this Agreement are for convenience of reference
only and will not affect the construction of any provisions hereof.

17.06 Schedules. All Schedules to this Agreement are deemed to be integrated in
and to form part of this Agreement in the form and substance from time to time
agreed upon between the Parties concerned in writing.

17.07 Entire Agreement. This Agreement, together with the Purchase Agreement,
the Master Agreement and the other Ancillary Agreements, constitutes the entire
agreement of the Parties with respect to its subject matter and shall supersede
all previous agreements and understandings, representations and discussions,
written or oral.

 

-23-

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Retrocedant and the Retrocessionaire have caused this
Agreement to be executed by their duly authorized representatives as of the
Effective Date.

 

Date and Place:     AXA RE       LOGO [g55151img001.jpg]     Name:     Title:
Date and Place:     PARIS RE       LOGO [g55151img001.jpg]     Name:     Title:

 

-24-

--------------------------------------------------------------------------------

SCHEDULE 1.01A

EXCHANGE RATES

 

Exchange rates

CAD

   0.731797

EUR

   1.000000

GBP

   1.485443

JPY

   0.007042

SGD

   0.504134

USD

   0.848536

 

-25-

--------------------------------------------------------------------------------

SCHEDULE 1.01B

INURING AXA RE RETROCESSION AGREEMENTS

[See attached disc of Inuring Policies]

 

-26-

--------------------------------------------------------------------------------

SCHEDULE 2.01A

SUBJECT BUSINESS

All Policies entered into by or on behalf of the Retrocedant under the brand
name “AXA”, “AXA RE” or otherwise which were written prior to 23:59 Paris time
on the First Closing Date, other than (i) business that gave rise to discounted
life reserves prior to January 1, 2006 which are excluded from the Companies
Reserves (as defined in the Reserve Agreement) and (ii) any Policies bound,
issued, written, agreed or renewed through the Retrocedant’s reinsurance branch
offices in Canada in force at such time.

[See attached disc of Policies]

 

-27-

--------------------------------------------------------------------------------

SCHEDULE 5.01

EXPLANATORY MEMORANDUM REGARDING CALCULATION OF INITIAL

PREMIUM AND INITIAL PRINCIPAL AMOUNTS

This explanatory memorandum is included for illustrative purposes only and sets
forth the principles which were applied to calculate the Initial Premium as of
January 1, 2006 with respect to all Policies included in the Subject Business.
The following principles were applied:

 

  •  

Unearned premium reserves net of Inuring AXA RE Retrocession Agreements; plus

 

  •  

Claims reserves and other reserves, including losses that have been incurred but
not reported or incurred but not enough reported net of Inuring AXA RE
Retrocession Agreements but excluding unallocated loss adjustment expenses; plus

 

  •  

Future policy benefit and other policy liabilities but excluding unallocated
loss adjustment expenses; minus

 

  •  

Unearned commission net of Inuring AXA RE Retrocession Agreements; minus

 

  •  

Premiums to be written net of Inuring AXA RE Retrocession Agreements; plus

 

  •  

Commissions to be written net of Inuring AXA RE Retrocession Agreements.

The amounts were determined in accordance with French GAAP and in a manner
consistent with the Retrocedant’s regular and customary practices and procedures
consistently applied.

The following schedule details amounts of Initial Premium and Initial Principal
Amounts as of January 1, 2006.

 

INITIAL PREMIUM (in million euros)

   TOTAL      2,309   

Cession of AXA RE claims reserves net of other reinsurance

   2,357   

Cession of AXA RE unearned premiums net of other reinsurance

   360   

Cession of AXA RE unearned commissions net of other reinsurance

   (80 ) 

Cession of AXA RE premiums to be written net of other reinsurance

   (445 ) 

Cession of AXA RE commissions to be written net of other reinsurance

   118   

INITIAL PRINCIPAL AMOUNT

   TOTAL      2,292   

Initial Premium

   2,308.7   

Reinsurance and Retrocession receivables

   382.2   

Bad debts

   22.6   

Reinsurance and Retrocession payable

   (421.4 ) 

 

-28-

--------------------------------------------------------------------------------

SCHEDULE 6.04(f)

FEES PAYABLE PURSUANT TO THE ISSUANCE AGREEMENT

In respect of the Rating Guarantee, €2.5 million per quarter, except that each
of the first four quarterly payments shall be €50.000.

 

-29-