Exhibit 10(h)

INSURANCE POOLING AGREEMENT BETWEEN

ALFA MUTUAL INSURANCE COMPANY

AND

ALFA MUTUAL FIRE INSURANCE COMPANY

ALFA MUTUAL GENERAL INSURANCE COMPANY

ALFA INSURANCE CORPORATION

ALFA GENERAL INSURANCE CORPORATION

ALFA SPECIALTY INSURANCE CORPORATION

ALFA VISION INSURANCE CORPORATION

AMENDED AND RESTATED

EFFECTIVE JANUARY 1, 2006

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AMENDED AND RESTATED

INSURANCE POOLING AGREEMENT

This Agreement is made by and between Alfa Mutual Insurance Company and certain
of its associated companies signatory hereto by means of exhibits setting forth
the interests and liabilities of the parties, attached hereto and made a part of
this Agreement. Alfa Mutual Insurance Company is hereinafter referred to as
“AMI”, and the remaining parties hereto are hereinafter referred to as the
“Associate Companies” or as the “Associate Company,” as the context requires.

The purposes of the Pooling Agreement dated as of September 26, 1994, and as
previously amended and restated through that certain Ninth Amendment to
Insurance Pooling Agreement Effective as of January 1, 2004, and as further
hereby amended and restated, shall be to effectuate a more efficient and
economical method of operation for all participants hereto; to increase the
solvency protection for policyholders and shareholders by increasing available
surplus to draw on in the event of a large catastrophe; to increase geographic
diversification, geographic expansion and risk selection; to increase access to
external capital through the public equity, private equity and debt markets; to
assist in the attraction, motivation and retention of employees; to increase
accountability of directors, officers and employees; to spread and stabilize the
writings of each participating company by providing for common risk sharing for
underwriting operations and to accomplish other operational and financial goals
that are deemed reasonable and desirable or are required by law.

AMI and each Associate Company signatory to the Pooling Agreement agree to honor
the terms set forth herein as if this Agreement were solely between AMI and each
such Associate Company. Balances payable to or recoverable from AMI and any such
Associate Company shall not serve to offset any balances payable to or
recoverable from any other Associate Company signatory to this Agreement.
Reports and remittances between AMI and each Associate Company shall be in
sufficient detail to identify the individual premium and loss obligation of each
party to the other. The Associate Companies each hereby ratify, confirm and
agree to all the terms and provisions of the Pooling Agreement, except as may be
modified by this Agreement.

In consideration of their mutual agreements hereinafter set forth, the parties
hereto agree as follows:

PART I

1. Definitions

 

  1.1 The “opening of business” as used herein means 12:01 a.m., January 1,
2005, or the time stated as the opening of business set forth on Exhibit I.

 

  1.2 The “book of business then in force” as used herein means the net unearned
premium liability of the ceding company, namely, the direct liability of the
ceding company as evidenced by all outstanding policies of

 

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insurance naming the ceding company as insurer, (and including the reinsurance
obligations of: (i) Alfa Mutual Fire Insurance Company resulting from the Quota
Share Reinsurance Treaty with Virginia Mutual Insurance Company, (ii) Alfa
Mutual Fire Insurance Company resulting from the Intercompany Fire Reinsurance
Arrangement with AMI, and (iii) Alfa Vision Insurance Corporation resulting from
arrangement with the Texas State and County Mutual Fire Company, and including
any and all participation in pools and associations relative to such business as
required by the insurance regulatory authorities, but excluding any other
policies of reinsurance assumed.

 

  1.3 The word “net” as used herein shall mean net after giving effect to ceded
reinsurance transactions, now in effect and those hereinafter identified in an
Exhibit attached to this Agreement, with other insurers or reinsurers who are
not a party to this Agreement (and including the intercompany reinsurance
between AMI and Alfa Mutual Fire Insurance Company, the Quota Share Reinsurance
Treaty with VMI, and the Texas State and County Mutual Fire Company, each as
described in Section 1.3(i), (ii) and (iii), directly above), and including any
and all participation in pools and association relative to such business as
required by insurance regulatory authorities.

 

  1.4 “Premiums” as used herein shall include direct premiums written by each
insurer including any premium finance fees applicable to such premiums,
including reinsurance premiums assumed from State and County Mutual Fire
Insurance Company in the State of Texas by Alfa Vision Insurance Corporation but
excluding any reinsurance premiums assumed from other unassociated third party
insurance companies.

 

  1.5 The word “net expenses” means Loss Expenses incurred and all Other
Underwriting Expenses incurred including all expense items that reflect
Underwriting, as opposed to Investment Income and Expense, and excluding
(i) Dividends to Policyholders, (ii) Federal and foreign income taxes,
(iii) charitable contributions and all other strictly corporate expenses, and
(iv) expenses applicable to the companies’ reinsurance assumed operations
(except for certain expenses associated with reinsurance assumed from State and
County Mutual Fire Insurance Company in the State of Texas by Alfa Vision
Insurance Corporation and certain expenses associated with reinsurance assumed
from Virginia Mutual Insurance Company by Alfa Mutual Fire Insurance Company).
All Investment Income and Expenses, including premium tax credits earned from
direct investments in marketable securities, partnerships, and/or limited
liability entities, allocable to investment operations of the participating
companies under generally recognized insurance accounting principles are not
included and are not subject to this Agreement.

 

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  1.6 As to each party the declaration of dividends to policyholders of such
party shall be the decision of such party’s board of directors and that decision
shall be the sole decision of that party’s board of directors and shall be
binding on that party’s underwriting results only.

 

  1.7 A catastrophe event shall mean the sum of all individual losses directly
occasioned by any one disaster, accident or loss or series of disasters,
accidents or losses arising out of one event which occurs within the coverage
area of any pool participant to the extent that said individual losses occurred
during any period of 168 consecutive hours arising out of and directly
occasioned by the same event, except that in regard to windstorm, hail, tornado,
hurricane, cyclone, and including ensuing collapse and water damage, the term
catastrophe shall include only those losses sustained by the company occurring
during any period 72 consecutive hours arising out of and directly occasioned by
the same event. However, the event need not be limited to one state, but must
exceed $1 million in aggregate. If the disaster, accident or loss event is of
greater duration than 72 hours, then the catastrophe may be divided into two or
more “loss occurrences” provided that the two periods do not overlap. It is
further understood that losses arising from a combination of two or more perils
which result from the same event shall be considered as having arisen from one
catastrophe.

2. General Provisions

 

  2.1 This Agreement shall become effective as of the opening of business as
herein defined.

 

  2.2 In the event of the insolvency of any of the ceding companies, any claims
for reinsurance hereunder shall be payable by the accepting companies on the
basis of the liability of the ceding company under the contracts reinsured
without diminution because of the insolvency of the ceding company.

 

  2.3 It is the intent of the parties that each originating insurer shall
maintain its separate responsibility for marketing its products, selecting its
risks and settling its losses and the fortunes of each party as a reinsurer
shall follow the fortunes of the originating insurer for its participation
therein.

 

  2.4 Nothing in this Agreement will or is intended to prevent any pool
participant from purchasing one or more separate policies of reinsurance
protecting its respective share of pool results. The costs and recoveries under
such separate policies of reinsurance will not be pooled or otherwise covered by
this Agreement.

 

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  2.5 Each of the parties acknowledges that the transactions contemplated by
this Agreement are fair and reasonable and that each is able to perform its
financial obligations hereunder.

PART II

 

  1. Ceding and Accepting the Book of Business Then in Force.

 

  1.1 At the opening of business, the Associate Companies will cede and AMI will
accept 100% of the Associate Companies’ book of business then in force as of the
close of business. Each Associate Company shall pay to AMI its proportionate
share of net unearned premium less commissions at the provisional rate of 20%.
However, any payment due from each Associate Company under this Paragraph may be
offset by any payment due to each applicable Associate Company under Paragraph
1.2 of this Part II below.

 

  1.2 At the opening of business, AMI shall cede and each Associate Company will
accept its proportionate share of unearned premiums on AMI’s book of business
then in force as of the close of business including the book of business then in
force accepted by AMI under Paragraph 1 of Part II above as set forth in Exhibit
I attached hereto and made a part of this Agreement. In consideration for this
assumption, AMI agrees to pay to the Associate Companies, as soon as practicable
thereafter, their proportionate share of the combined net unearned premium
reserves, less commissions at the provisional rate of 20% thereon, as shown on
the books and records of AMI after its acceptance under Paragraph 1.1 of Part II
above.

 

  1.3 The 20% provisional commission rate to AMI ceded shall be applied to the
cession of the book of business then in force and return commission on return
premiums shall be allowed at the same rate.

 

  1.4 The provisional commissions allowed in Part II shall be adjusted to the
actual underwriting expense related to all premiums, losses and expenses covered
by this Agreement earned and incurred through midnight, December 31, 2005.

 

  1.5 At the opening of business, each party shall retain and be liable for
outstanding net losses (including incurred but not reported losses) and
liability for outstanding net expenses, and retain its interest in salvage and
subrogation related to losses incurred, all as of the close of business.

 

  1.6 The parties hereto may establish a committee of their respective boards of
directors which shall be charged with the responsibility of determining
questions which may arise under this Agreement.

 

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PART III

1. Ceding and Accepting Net Liability For Net Premiums Written On Or After The
Opening of Business.

 

  1.1 Commencing on the opening of business, the Associate Companies will cede
and AMI will accept 100% of the net liabilities on all insurance thereafter
written by the Associate Companies.

 

  1.2 Commencing on the opening of business, AMI will cede and the Associate
Companies will accept their proportionate share (as shown on Exhibit I) of the
net liability on all insurance thereafter written by AMI, including the net
liability on the business assumed by AMI under Paragraph 1.1 of this Part III,
shown on Exhibit I hereof.

 

  1.3 The parties hereto agree that all net premiums, losses and expenses on all
insurance written by AMI and assumed by it under Paragraph 1.1 of this Part III
shall be prorated between the parties in their proportionate share shown on
Exhibit 1.

 

  1.4 Catastrophe losses, as defined in Part I, 1.8 above, shall be allocated
between the participating companies in accordance with Exhibit II attached
hereto. The allocation percentages for catastrophes will be annually reviewed by
the participating companies. Updates to the catastrophe allocations will be
reviewed taking into account the latest catastrophe return time estimates, for
actual catastrophe frequency, updated relative surpluses of the member companies
of the pool and such other information as may be relevant. Changes to the
catastrophe allocations must be approved by the Boards of Directors of the
respective pool participant companies and must be formalized into an Exhibit II
which will be substituted for the then existing Exhibit II to the Pooling
Agreement as changes are required.

PART IV

1. Accounting and Reporting

 

  1.1 To the extent that transfers of non-cash assets may be required to
effectuate the settlements herein provided, such transfers shall be made at fair
market values as of the date such transfers are made.

 

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  1.2 Each participating Associate Company agrees to render to AMI and AMI
agrees to render to the Associate Company a monthly accounting within thirty
(30) days after the close of each month and the receiving companies shall have
the opportunity for examination and audit, and any balance due shall be paid not
later than thirty (30) days after the close of business of said month.

 

  1.3 AMI agrees to pay to the Associate Company its respective participation of
all premiums written by the companies after first deducting premiums on all
Working Cover reinsurance ceded to reinsurers (other than the parties hereto).
Similarly, it is further agreed that all losses, loss expense and other
underwriting and administrative expenses (with the exceptions noted in Part II
hereof) of the companies, less all losses and expenses recovered and recoverable
under Working Cover reinsurance ceded to reinsurers (other than the parties
hereto), shall be pro-rated between the parties on the basis of their respective
participations as reflected in the aforesaid exhibit.

 

  1.4 As promptly as possible after the effective date of this Agreement, AMI
shall remit on a monthly basis any positive cash flow resulting from the
combined book of business to each participating Associate Company its
proportionate share of such positive cash flow.

 

  1.5 It is the intent of this Agreement that its administration shall be
accomplished by personnel on the payroll of AMI, and that each such employee is
subject to the direction and control of the Board of Directors, Committees or
authorized appointees of each party to this Agreement so far as the duties or
activities of the personnel relate to the business or affairs of such party.

 

  1.6 The parties hereto also agree each shall be credited with its
proportionate share of salvage and subrogation (i.e. reimbursement obtained or
recovery made by originating company, less actual cost of obtaining such
reimbursements or making such recovery) on account of claims and settlements
involving reinsurance hereunder.

2. Commutation of Certain Pools

 

  2.1 For good and valuable consideration, those certain pools identified as
Pools 1, 2 and 3, being the “book of business then in force” from August 1, 1987
through December 31, 2001, as described in Insurance Pooling Agreement dated
August 1, 1987; Insurance Pooling Agreement Restated as of October 1, 1994; and
Second Amendment to Insurance Pooling Agreement dated October 1, 1996
(collectively, “Commutated Pooling Arrangements”), and as more particularly
described on Exhibit III hereto, are hereby terminated as of the opening of
business, January 1, 2005 and AMI shall be free from all further liability to
any of the Associated

 

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Companies with respect to the Commutated Pooling Arrangements, both parties
being commutated of all of their respective rights, obligations and liabilities
thereunder.

PART V

1. Termination and Modifications

 

  1.1 It is the intent of the parties that this Agreement shall continue in
effect for an indeterminate period, it shall be subject to termination only by
either mutual agreement of the parties in writing.

 

  1.2 This Agreement (including the exhibits hereto) constitutes the entire
agreement between the parties and may be amended only by an agreement reduced to
writing and signed by all parties hereto.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers, duly authorized, as of December 30, 2005.

 

ATTEST:      ALFA MUTUAL INSURANCE COMPANY

/s/ H. Al Scott

     By:  

/s/ Jerry A. Newby

     ALFA MUTUAL FIRE INSURANCE COMPANY

/s/ H. Al Scott

     By:  

/s/ Jerry A. Newby

     ALFA MUTUAL GENERAL INSURANCE COMPANY

/s/ H. Al Scott

     By:  

/s/ Jerry A. Newby

 

 

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     ALFA INSURANCE CORPORATION

/s/ H. Al Scott

     By:  

/s/ Jerry A. Newby

    

ALFA GENERAL INSURANCE CORPORATION

/s/ H. Al Scott

     By:  

/s/ Jerry A. Newby

     ALFA SPECIALTY INSURANCE CORPORATION

/s/ H. Al Scott

     By:  

/s/ Jerry A. Newby

     ALFA VISION INSURANCE CORPORATION

/s/ H. Al Scott

     By:  

/s/ Jerry A. Newby

 

 

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EXHIBIT I

ALFA INSURANCE COMPANIES INSURANCE POOLING AGREEMENT

 

Pool Participation

  

Pool Participation

Effective January 1, 2005

Alfa Mutual Insurance Company

   18%

Alfa Mutual Fire Insurance Company

   13%

Alfa Mutual General Insurance Company

   3%

Alfa Insurance Corporation

   30%

Alfa General Insurance Corporation

   30%

Alfa Specialty Insurance Corporation

   1%

Alfa Vision Insurance Corporation

   5%

Opening of Business: January 1, 2005

Date of Exhibit I: January 1, 2005

 

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EXHIBIT II

ALFA INSURANCE GROUP

ALLOCATIONS FOR CATASTROPHE

LOSSES AND RELATED EXPENSES

EFFECTIVE JANUARY 1, 2006

 

      Coinsurance Allocation  

Cumulative Calendar Year

Catastrophe Losses and

Related Expenses

   AIC, AGIC
AVIC    

AMI, AMF

AMG

 

Less than or equal to 21.2 million

   65 %*   35 %*

Between 21.2 million and 525.5 million

   0 %   100 %*

greater than or equal to 525.5 million

   19 %**   81 %**

 

  •   *AMI, AMF, AMG, AIC, AGIC and AVIC % to be allocated according to each
group’s relative pool percentages in effect.

 

  •   Catastrophe losses are to be accumulated during each annual calendar
period.

 

  •   **AMI, AMF, AMG, AIC, AGIC and AVIC % to be allocated according to each
group’s relative surplus as reported in the preceding year-end annual statement.

 

  •   Coinsurance Allocation of AMI to include any coinsurance allocation for
ASIC (AMI’s wholly owned subsidiary).

Date of Exhibit II: January 1, 2006

 

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EXHIBIT III

 

Pool Title

   Starting Date    Ending Date    Commutation Date

Pool l

   08/01/1987    09/30/1994    01/01/2005

Pool 2

   10/01/1994    09/30/1996    01/01/2005

Pool 3

   10/1/1996    12/31/2000    01/01/2005

Date of Exhibit III: January 1, 2005

 

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