EXHIBIT 10.4
PHILADELPHIA INSURANCE COMPANY
Bala Cynwyd, Pennsylvania
PHILADELPHIA INDEMNITY INSURANCE COMPANY
Bala Cynwyd, Pennsylvania
PROPERTY FOURTH PER RISK EXCESS OF LOSS
REINSURANCE AGREEMENT

 

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TABLE OF CONTENTS

              ARTICLE       PAGE
I
  BUSINESS COVERED     1  
II
  TERM     1  
III
  SPECIAL TERMINATION     2  
IV
  DEFINITIONS     3  
 
       Building     3  
 
       Declaratory Judgment Expense     4  
 
       Extra Contractual Obligations/Loss in Excess of Policy Limits     4  
 
       Loss Adjustment Expense     5  
 
       Loss Occurrence (NMA 2244/BRMA 27A)     5  
 
       Net Earned Premium     6  
 
       Policy or Policies     6  
 
       Risk     6  
 
       Terrorism     7  
 
       Ultimate Net Loss     7  
V
  TERRITORY (BRMA 51A)     8  
VI
  EXCLUSIONS     8  
VII
  COVERAGE     10  
VIII
  REINSTATEMENT     11  
IX
  REINSURANCE PREMIUM     11  
X
  NOTICE OF LOSS AND LOSS SETTLEMENTS     12  
XI
  AGENCY AGREEMENT     12  
XII
  SALVAGE AND SUBROGATION     12  
XIII
  ERRORS AND OMISSIONS (BRMA 14C)     13  
XIV
  OFFSET     13  
XV
  CURRENCY (BRMA 12A)     13  
XVI
  TAXES (BRMA 50C)     13  
XVII
  FEDERAL EXCISE TAX (BRMA 17A)     14  
XVIII
  UNAUTHORIZED REINSURANCE (BRMA 55C)     14  
XIX
  NET RETAINED LINES (BRMA 32E)     16  
XX
  TRIA INUREMENT     16  
XXI
  SPECIAL ACCEPTANCES     17  
XXII
  MORTGAGEE REINSURANCE ENDORSEMENTS     17  
XXIII
  THIRD PARTY RIGHTS (BRMA 52C MODIFIED)     18  

 

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              ARTICLE       PAGE
XXIV
  SEVERABILITY     18  
XXV
  GOVERNING LAW (BRMA 71A)     18  
XXVI
  ACCESS TO RECORDS (BRMA 1E)     18  
XXVII
  INSOLVENCY     19  
XXVIII
  ARBITRATION     19  
XXIX
  SERVICE OF SUIT     21  
XXX
  MODE OF EXECUTION     22  
XXXI
  INTERMEDIARY     22  
 
  Nuclear Incident Exclusion Clause — Physical Damage — Reinsurance — U.S.A.    
   
 
  War Exclusion        

 

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PROPERTY FOURTH PER RISK EXCESS OF LOSS
REINSURANCE AGREEMENT
(the “Contract”)
between
PHILADELPHIA INSURANCE COMPANY
PHILADELPHIA INDEMNITY INSURANCE COMPANY
Bala Cynwyd, Pennsylvania
And any additional company established or acquired by the Company
(the “Company”)
and
THE SUBSCRIBING REINSURER(S) EXECUTING THE
INTERESTS AND LIABILITIES AGREEMENT(S)
ATTACHED HERETO
(the “Reinsurer”)
ARTICLE I
BUSINESS COVERED
By this Contract the Reinsurer agrees to reinsure the excess liability of the
Company under its Policies in force at the effective time and date hereof or
issued or renewed at or after that time and date, and classified by the Company
as Property business which is defined as insurance which is classified in the
NAIC Annual Statement as fire, allied lines, inland marine, commercial multiple
peril (property coverages), automobile physical damage (comprehensive and
collision) when written on a garage or open lot basis, subject to the terms,
conditions and limitations hereafter set forth.
ARTICLE II
TERM

A.   This Contract shall become effective at 12:01 a.m., Eastern Standard Time,
January 1, 2008 as respects losses occurring at or after that time and date, and
shall continue in effect until 12:01 a.m., Eastern Standard Time, January 1,
2009.

B.   Upon termination of this Contract, the entire liability of the Reinsurer
for losses occurring subsequent to the date of termination shall cease
concurrently with the date of termination of this Contract.

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C.   Notwithstanding the above, the Company shall have the option to elect
run-off coverage for Policies in force at the expiration of this Contract. If
the Company chooses to run off liability, the Company will notify the Reinsurer
prior to January 31, 2009. If run-off of liability is chosen, the Reinsurer
shall continue to be liable for Ultimate Net Loss incurred by the Company under
all Policies in force at the time and date of expiration until each Policy’s
next anniversary, renewal or expiration, but in no event shall the Reinsurer’s
liability continue for more than 12 months after the expiration date plus odd
time, not to exceed a total of 18 months. The premium for the run-off coverage
shall be the premium rate stated in paragraph A of the REINSURANCE PREMIUM
ARTICLE times its Net Earned Premium for the run-off period for the Policies in
force as of December 31, 2008.

D.   If this Contract expires while a Loss Occurrence covered hereunder is in
progress, the Reinsurer’s liability hereunder shall, subject to the other terms
and conditions of this Contract, be determined as if the entire Loss Occurrence
had occurred prior to the expiration of this Contract, provided that no part of
such Loss Occurrence is claimed against any renewal or replacement of this
Contract.

ARTICLE III
SPECIAL TERMINATION

A.   The Company may terminate this Contract at any time by the giving of
10-days’ notice in writing to the Reinsurer upon the happening of any one of the
following circumstances:

  1.   A State Insurance Department or other legal authority orders the
Reinsurer to cease writing business; or

  2.   The Reinsurer has become insolvent or has been placed into liquidation or
receivership (whether voluntary or involuntary), or there has been instituted
against it proceedings for the appointment of a receiver, liquidator,
rehabilitator, conservator, trustee in bankruptcy or other agent known by
whatever name, to take possession of its assets or control of its operations; or
    3.   The Reinsurer’s policyholders’ surplus has been reduced by whichever is
greater, either 25% of the amount of surplus at the inception of this Contract
or 25% of the amount at the latest anniversary, or has lost any part of, or has
reduced its paid in capital; or     4.   The Reinsurer has become merged with,
acquired or controlled by any company, corporation or individual(s) not
controlling the party’s operations at the inception of this Contract; or     5.
  The Reinsurer has reinsured its entire liability under this Contract without
the terminating party’s prior written consent; or     6.   The Reinsurer ceases
writing new or renewal business.

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  7.   The Reinsurer has been assigned an A.M. Best’s rating of less than “A-”
or a Standard & Poor’s Insurer Financial Strength Rating of less than “A-”.

B.   Notwithstanding any other termination provision of this Contract, if this
Contract is terminated under the provisions of this Article, the Company shall
have the right to terminate liability for losses occurring subsequent to
termination of this Contract. In such event, the Reinsurer shall return the
unearned portion, if any, less any commission allowed thereon, of premiums paid
hereunder and the minimum premium provisions, if any, shall be waived.

C.   Additionally, the Company, at its sole discretion, may elect to commute the
Reinsurer’s liabilities for loss and Loss Adjustment Expenses, whether known and
unknown, on Policies covered under this Contract. In the event the Company and
the Reinsurer cannot agree on the capitalized value of the Reinsurer’s
liabilities on the Policies covered under this Contract, the two parties shall
mutually appoint an actuary to resolve the matter of valuation. If the two
parties cannot agree on the appointment of an actuary, a selection process based
on the ARBITRATION ARTICLE will be employed. Payment by the Reinsurer of the
amount ascertained will constitute full and final release of the Reinsurer’s
liabilities hereunder.

D.   The Company may request special funding for any Reinsurer’s participation
if this Contract is terminated for reasons set forth in subparagraph A.1-7
above. If the Company elects to exercise its special funding option, said
Reinsurer will, within 30 calendar days of the date of the Company’s request to
do so, provide the Company with a cash advance, trust agreement, escrow account
for the benefit of the Company, letter of credit, or a combination thereof
acceptable to the Company to fund the Reinsurer’s share of the reserves
hereunder for losses (including loss and loss expense paid by the Company but
not recovered from the Reinsurer, loss and loss expense reported and
outstanding, loss and loss expenses incurred but not reported) and unearned
premium, as if it were an unauthorized Reinsurer and subject to the UNAUTHORIZED
REINSURANCE ARTICLE. This paragraph D shall not apply to Reinsurers who, at the
inception of this Contract, have been assigned an A.M. Best’s Financial Strength
Rating of A+ or higher or a Standard & Poor’s rating of A+ or higher or to
Underwriting Members of Lloyd’s, London.

ARTICLE IV
DEFINITIONS

A.   Building

“Building” as used herein shall mean such structure enclosed within exterior
walls. Exterior walls are defined as walls constructed on the perimeter
foundation, regardless of the number of additional structures or roofs placed
upon this perimeter foundation.

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B.   Declaratory Judgment Expense

“Declaratory Judgment Expense” as used herein shall mean all expenses incurred
by the Company in connection with a declaratory judgment action brought to
determine the Company’s defense and/or indemnification obligations that are
allocable to a specific claim subject to this Contract. Declaratory Judgment
Expense shall be deemed to have been incurred on the date of the original loss
(if any) giving rise to the declaratory judgment action.

C.   Extra Contractual Obligations/Loss in Excess of Policy Limits

  1.   Extra Contractual Obligations         This Contract shall protect the
Company for any “Extra Contractual Obligations” which as used herein shall mean
any punitive, exemplary, compensatory or consequential damages, other than Loss
in Excess of Policy Limits, paid or payable by the Company as a result of an
action against it by its insured, its insured’s assignee or a third party
claimant, by reason of alleged or actual negligence, fraud or bad faith on the
part of the Company in handling a claim under a Policy subject to this Contract.
        An Extra Contractual Obligation shall be deemed to have occurred on the
same date as the loss covered or alleged to be covered under the Policy.     2.
  Loss in Excess of Policy Limits         This Contract shall protect the
Company for any “Loss in Excess of Policy Limits” which as used herein shall
mean an amount that the Company would have been contractually liable to pay had
it not been for the limit of the original Policy as a result of an action
against it by its insured or its insured’s assignee or a third party claimant.
Such loss in excess of the limit shall have been incurred because of failure by
the Company to settle within the Policy limit, or by reason of alleged or actual
negligence, fraud, or bad faith in rejecting an offer of settlement or in the
preparation of the defense or in the trial of any action against its insured or
in the preparation or prosecution of an appeal consequent upon such action.    
3.   This paragraph C shall not apply where an Extra Contractual Obligation
and/or Loss in Excess of Policy Limits has been incurred due to the fraud
committed by a member of the Board of Directors or a corporate officer of the
Company acting individually or collectively or in collusion with a member of the
Board of Directors or a corporate officer or a partner of any other corporation
or partnership.     4.   Recoveries from any form of insurance or reinsurance
which protects the Company against claims which are the subject matter of this
paragraph C shall inure to the benefit of this Contract.

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D.   Loss Adjustment Expense

“Loss Adjustment Expense” as used herein shall mean all costs and expenses
allocable to a specific claim that are incurred by the Company in the
investigation, appraisal, adjustment, settlement, litigation, defense or appeal
of a specific claim, including court costs and costs of supersedeas and appeal
bonds, and including 1) pre-judgment interest, unless included as part of the
award or judgment; 2) post-judgment interest; 3) legal expenses and costs
incurred in connection with coverage questions and legal actions connected
thereto, including Declaratory Judgment Expense; and 4) a pro rata share of
salaries and expenses of Company field employees, and expenses of other Company
employees who have been temporarily diverted from their normal and customary
duties and assigned to the field adjustment of losses covered by this Contract.
Loss Adjustment Expense does not include unallocated loss adjustment expense.
Unallocated loss adjustment expense includes, but is not limited to, salaries
and expenses of employees, other than (4) above, and office and other overhead
expenses.

E.   Loss Occurrence (NMA 2244/BRMA 27A)

  1.   The term “Loss Occurrence” 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
area of one state of the United States or province of Canada and states or
provinces contiguous thereto and to one another. However, the duration and
extent of any one “Loss Occurrence” shall be limited to all individual losses
sustained by the Company occurring during any period of 168 consecutive hours
arising out of and directly occasioned by the same event except that the term
“Loss Occurrence” shall be further defined as follows:

  a.   As regards windstorm, hail, tornado, hurricane, cyclone, including
ensuing collapse and water damage, all individual losses sustained by the
Company occurring during any period of 72 consecutive hours arising out of and
directly occasioned by the same event. However, the event need not be limited to
one state or province or states or provinces contiguous thereto.     b.   As
regards riot, riot attending a strike, civil commotion, vandalism and malicious
mischief, all individual losses sustained by the Company occurring during any
period of 72 consecutive hours within the area of one municipality or county and
the municipalities or counties contiguous thereto arising out of and directly
occasioned by the same event. The maximum duration of 72 consecutive hours may
be extended in respect of individual losses which occur beyond such 72
consecutive hours during the continued occupation of an assured’s premises by
strikers, provided such occupation commenced during the aforesaid period.     c.
  As regards earthquake (the epicenter of which need not necessarily be within
the territorial confines referred to in the introductory portion of subparagraph
1) and fire following directly occasioned by the earthquake, only those
individual fire

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      losses which commence during the period of 168 consecutive hours may be
included in the Company’s “Loss Occurrence.”     d.   As regards “freeze,” only
individual losses directly occasioned by collapse, breakage of glass and water
damage (caused by bursting of frozen pipes and tanks) may be included in the
Company’s “Loss Occurrence.”

  2.   Except for those “Loss Occurrences” referred to in subparagraphs a and b
above, the Company may choose the date and time when any such period of
consecutive hours commences provided that it is not earlier than the date and
time of the occurrence of the first recorded individual loss sustained by the
Company arising out of that disaster, accident or loss and provided that only
one such period of 168 consecutive hours shall apply with respect to one event.
    3.   However, as respects those “Loss Occurrences” referred to in
subparagraphs a and b above, if the disaster, accident or loss occasioned by the
event is of greater duration than 72 consecutive hours, then the Company may
divide that disaster, accident or loss into two or more “Loss Occurrences”
provided no two periods overlap and no individual loss is included in more than
one such period and provided that no period commences earlier than the date and
time of the occurrence of the first recorded individual loss sustained by the
Company arising out of that disaster, accident or loss.     4.   No individual
losses occasioned by an event that would be covered by 72 hours clauses may be
included in any “Loss Occurrence” claimed under the 168 hours provision.

F.   Net Earned Premium       “Net Earned Premium” as used herein is defined as
gross earned premium of the Company during the term of the Contract for the
classes of business reinsured hereunder, less the earned portion of premiums
ceded by the Company for reinsurance which inures to the benefit of this
Contract.   G.   Policy or Policies       “Policy” or “Policies” as used herein
shall mean the Company’s binders, policies and contracts providing insurance and
reinsurance on the classes of business covered under this Contract.   H.   Risk
      “Risk” as used herein shall mean what constitutes one Risk as established
by the Company at the time of acceptance, provided:

  1.   A building and its contents, regardless of the number of insureds or
Policies involved, including time element coverages, shall never be considered
more than one Risk.

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  2.   When two or more Buildings and their contents are situated at the same
general location, the Company shall identify on its records at the time of
acceptance by the Company those individual Buildings and their contents that are
considered to constitute each Risk; if such identification is not made, all of
the Buildings and their contents situated at the same general location shall be
considered one Risk.     3.   When there are known and named extensions of
coverage involving other risk locations (including but not limited to suppliers
extensions, customer extensions and interdependencies and whether triggered by
physical loss at the risk location or another location) that are included and
formally recorded on the Company’s records at the time of acceptance of the
Risk, all such known and named extensions of coverage shall be included in
calculation of the one Risk.

I.   Terrorism       “Terrorism” as used herein shall mean:

  1.   An activity, including the threat of an activity or any preparation for
an activity, that (a) causes either (i) damage to property or (ii) injury to
persons and (b) appears to be intended to: (i) intimidate or coerce a civilian
population or (ii) disrupt any segment of an economy or (iii) influence the
policy of a government by intimidation or coercion or (iv) affect the conduct of
a government by destruction, assassination, kidnapping or hostage-taking or
(v) advance a political, religious or ideological cause; provided, however, that
an act of Terrorism for purposes of this definition shall not include any act or
threat as described above perpetrated by an official, employee or agent of a
foreign state acting for or on behalf of such state.     2.   Any act authorized
by a governmental authority for the purpose of preventing, terminating,
countering or responding to any act or threat of terrorism or for the purpose of
preventing or minimizing the consequences of any act or threat of Terrorism.    
3.   An activity that involves the use, release or escape of nuclear materials,
or directly or indirectly results in nuclear reaction or radiation or
radioactive contamination, and it appears that one purpose of the terrorism was
to release such materials.     4.   An activity that is carried out by means of
the dispersal or application of pathogenic or poisonous biological or chemical
materials or an activity where pathogenic or poisonous biological or chemical
materials are released, and it appears that one purpose of the terrorism was to
release such materials.

J.   Ultimate Net Loss       The term “Ultimate Net Loss” shall mean the actual
loss, including any pre-judgment interest which is included as part of the award
or judgment, Loss Adjustment Expense, 100% of Loss in Excess of Policy Limits,
and 100% of Extra Contractual Obligations, paid or to be paid by the Company on
its net retained liability after making deductions for all recoveries, salvages,
subrogations and all claims on inuring reinsurance, whether

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    collectible or not; provided, however, that in the event of the insolvency
of the Company, payment by the Reinsurer shall be made in accordance with the
provisions of the INSOLVENCY ARTICLE. Nothing herein shall be construed to mean
that losses under this Contract are not recoverable until the Company’s Ultimate
Net Loss has been ascertained.

ARTICLE V
TERRITORY (BRMA 51A)
The territorial limits of this Contract shall be identical with those of the
Company’s Policies.
ARTICLE VI
EXCLUSIONS
This Contract shall not apply to and specifically excludes the following:

A.   Reinsurance assumed by the Company other than reinsurance of primary
business assumed from affiliated companies;

B.   Nuclear incident per the Nuclear Incident Exclusion Clause — Physical
Damage — Reinsurance attached hereto;

C.   Self-insurance or self-insured obligations, howsoever styled, of the
Company, its affiliates or subsidiaries, or any insurance wherein the Company,
its affiliates or subsidiaries are named as the insured party, either alone or
jointly with some other party, notwithstanding that no legal liability may arise
in respect thereof by reason of the fact that the Company, its affiliates or
subsidiaries, may not be obligated by law to pay a claim to itself, its
affiliates or subsidiaries;

D.   Any loss or liability accruing to the Company directly or indirectly from
any insurance written by or through any pool or association including pools or
associations in which membership by the Company is required under any statutes
or regulations;

E.   Any liability of the Company arising from its participation or membership
in any insolvency fund;

F. War per the attached “War Exclusion” attached hereto;

G.   Risks written on a layered basis, whether primary or excess of loss, or
policies written with a deductible or franchise of more than $500,000; however,
this exclusion shall not apply to policies which provide a percentage deductible
or franchise in connection with windstorm, earthquake or flood;

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H.   Pollution to the extent excluded in the Company’s policies. Nevertheless,
if the insured elects to purchase any “buy back” or additional coverage options,
such options shall not be covered hereunder; however, this exclusion shall not
apply:

  1.   When a judicial entity having legal jurisdiction invalidates the
Company’s Pollution exclusion, thereby obligating the Company for liability when
such liability for Pollution was intended to be excluded by the Company’s
exclusion.     2.   In respect of any Policy written in a state whose insurance
regulatory authorities have prohibited the Company from including a Pollution
liability exclusion in its Policies.

I.   Insurance against earthquake, except when written in conjunction with fire
and otherwise eligible perils;

J.   Insurance on growing crops;

K.   Insurance against flood, waves, tidal waves, overflow of any body of water,
or their spray, all whether driven by wind or not, except when written in
conjunction with fire and otherwise eligible perils;

L.   Business classified by the Company as crime and fidelity when written as
part of a package policy;

M.   Credit insurance;

N.   Business classified as boiler and machinery;

O.   Mortgage impairment insurance and similar kinds of insurance, howsoever
styled, providing coverage to an insured with respect to its mortgagee interest
in property or its owner interest in foreclosed property;

P.   Difference in conditions insurance and similar kinds of insurance,
howsoever styled;

Q.   Any incident that involves the use, release or escape of pathogenic or
poisonous biological or chemical materials or of nuclear materials, or to any
incident that directly or indirectly results in nuclear reaction or radiation or
radioactive contamination. However, this exclusion does not apply to the
Terrorism Annual Aggregate Limit as stated in paragraph B of the COVERAGE
ARTICLE.

R.   Losses with respect to overhead transmission and distribution lines and
their supporting structures, other than those on or within 1,000 feet of the
insured premises. However, public utilities extension and/or suppliers’
extension and/or contingent business interruption coverage are not subject to
this exclusion, provided these are not part of a transmitters’ or distributors’
policy.

S.   Offshore property Risks;

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T.   Inland marine business with respect to the following:

  1.   Cargo insurance when written as such with respect to ocean vessels;    
2.   Faulty Film, tape, processing and editing insurance and cast insurance;    
3.   Drilling rigs for natural fuels;     4.   Furriers’ customers policies;    
5.   Insurance on livestock under so-called “mortality policies”;     6.  
Mining equipment while underground;     7.   Registered mail and armored car
insurance;

U.   Loss of, damage to, or failure of, or consequential loss resulting
therewith (including but not limited to earnings and extra expense) of
satellites, spacecraft, and launch vehicles, including cargo and freight carried
therein, in all phases of operation (including but not limited to pre-launch,
launch, and in-orbit).

V.   Mobile homes unless written as part of a commercial multiple peril policy.

W.   Watercraft, other than watercraft insured under a standard homeowners
policy or when written as part of contents coverage under a commercial multiple
peril policy.

If the Company is bound without knowledge of or contrary to the instructions of
the Company’s supervisory underwriting personnel, or any business falling within
the scope of one or more of the exclusions set forth in this section, these
exclusions, except A, B, C, D, E, F, H, J, L, M, O, shall suspend with respect
to such business until 60 days after an underwriting supervisor of the Company
acquires knowledge of such business.
Should any judicial or regulatory entity having jurisdiction invalidate any
exclusion in the Company’s Policy that is also the subject of one or more of the
exclusions herein, then a loss for which the Company is liable because of such
invalidation shall not be excluded hereunder.
ARTICLE VII
COVERAGE

A.   The Reinsurer shall be liable for the amount of Ultimate Net Loss in excess
of the Company’s retention, being $15,000,000 each risk, each loss, subject to a
limit of liability to the Reinsurer of $35,000,000 each risk, each loss, and
further subject to a limit of liability to the Reinsurer of $35,000,000 each
Loss Occurrence. The Reinsurer’s limit of liability in respect to all risks, all
losses shall not exceed $70,000,000.

B.   The Reinsurer’s liability in respect to Terrorism losses shall not exceed
$35,000,000.

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C.   The Company shall maintain in force other reinsurance, recoveries under
which shall inure to the benefit of this Contract.   D.   The Company shall be
permitted to carry underlying reinsurance, recoveries under which shall inure
solely to the benefit of the Company and be entirely disregarded in applying all
of the provisions of this Contract.

ARTICLE VIII
REINSTATEMENT

A.   Should all or any part of the Reinsurer’s limit of liability be exhausted
as a result of a loss, the sum so exhausted shall be reinstated from the date
the loss commenced.

B.   For each amount so reinstated, the Company agrees to pay an additional
premium at the time of the Reinsurer’s payment of the loss calculated in
accordance with the following formula:

  1.   The amount of limit exhausted for each risk, each loss divided by
$35,000,000.     2.   The reinsurance premium paid or payable for the term of
this Contract.

The dollar amount resulting from the multiplication of subparagraphs 1 and 2
above shall equal the reinstatement premium. If at the time of the Reinsurer’s
payment of a loss hereon, the reinsurance premium as calculated under this
Contract is unknown, the calculation of the reinstatement premium shall be based
upon the deposit premium subject to adjustment when the reinsurance premium is
finally established.

C.   Nevertheless, the Reinsurer’s liability hereunder shall not exceed
$35,000,000 in respect of each risk, each loss in respect of any one loss, and
shall be further limited to $35,000,000 each Loss Occurrence, and shall be
further limited to $70,000,000 in respect of all risks, all losses occurring
during the term of this Contract.

ARTICLE IX
REINSURANCE PREMIUM

A.   As premium for the reinsurance provided hereunder, the Company shall pay
the Reinsurer 0.635% of its Net Earned Premium during the term of this Contract,
subject to a minimum premium of $2,994,000.

B.   The Company shall pay the Reinsurer a deposit premium of $3,327,000 in four
equal installments of $831,750 on April 1; July 1; October 1, 2008; and
January 1, 2009.

C.   Within 90 days after the expiration of this Contract, the Company shall
provide a report to the Reinsurer setting forth the premium due hereunder,
computed in accordance with

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    paragraph A, and any additional premium due the Reinsurer or return premium
due the Company shall be remitted promptly.

ARTICLE X
NOTICE OF LOSS AND LOSS SETTLEMENTS

A.   The Company shall advise the Reinsurer promptly of all losses which, in the
opinion of the Company, may result in a claim hereunder and of all subsequent
developments thereto which, in the opinion of the Company, may materially affect
the position of the Reinsurer.

B.   When so requested in writing, the Company shall afford the Reinsurer or its
representatives an opportunity to be associated with the Company, at the expense
of the Reinsurer, in the defense of any claim, suit or proceeding involving this
reinsurance, and the Company and the Reinsurer shall cooperate in every respect
in the defense of such claim, suit or proceeding.

C.   All loss settlements made by the Company that are within the terms and
conditions of the Policy or by way of compromise, and except as otherwise
provided in this Contract, shall be binding upon the Reinsurer. Upon receipt of
satisfactory proof of loss and within no more than 25 days of receipt of the
proof of loss, the Reinsurer agrees to pay or allow, as the case may be, its
share of each such settlement in accordance with this Contract.

D.   Ex-gratia payments shall be recoverable hereunder only where the Company,
through written communication prior to settlement, counsels with the Reinsurer
and the Reinsurer concurs, in writing, with the settlement proposed by the
Company.

ARTICLE XI
AGENCY AGREEMENT
If more than one reinsured company is named as a party to this Contract, the
first named company will be deemed the agent of the other reinsured companies
for purposes of sending or receiving notices required by the terms and
conditions of this Contract and for purposes of remitting or receiving any
monies due any party.
ARTICLE XII
SALVAGE AND SUBROGATION
The Reinsurer shall be credited with salvage or subrogation recoveries (i.e.,
reimbursement obtained or recovery made by the Company, less Loss Adjustment
Expense incurred in obtaining such reimbursement or making such recovery) on
account of claims and settlements involving reinsurance hereunder. Salvage and
subrogation recoveries thereon shall always be used to reimburse the excess
carriers in the reverse order of their priority according to their participation

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before being used in any way to reimburse the Company for its primary loss. The
Company hereby agrees to enforce its rights to salvage or subrogation relating
to any loss, a part of which loss was sustained by the Reinsurer, and to
prosecute all claims arising out of such rights.
ARTICLE XIII
ERRORS AND OMISSIONS (BRMA 14C)
Any inadvertent delay, omission or error shall not be held to relieve either
party hereto from any liability which would attach to it hereunder if such
delay, omission or error had not been made, provided such omission or error is
rectified upon discovery.
ARTICLE XIV
OFFSET
The Company and the Reinsurer may offset any balance, whether on account of
premium, commission, claims or losses, Loss Adjustment Expense, salvage, or
otherwise, due from one party to the other under the terms of this Contract or
under any other agreement heretofore or hereafter entered into between the
Company and the Reinsurer.
ARTICLE XV
CURRENCY (BRMA 12A)

A.   Whenever the word “Dollars” or the “$” sign appears in this Contract, they
shall be construed to mean United States Dollars and all transactions under this
Contract shall be in United States Dollars.

B.   Amounts paid or received by the Company in any other currency shall be
converted to United States Dollars at the rate of exchange at the date such
transaction is entered on the books of the Company.

ARTICLE XVI
TAXES (BRMA 50C)
In consideration of the terms under which this Contract is issued, the Company
will not claim a deduction in respect of the premium hereon when making tax
returns, other than income or profits tax returns, to any state or territory of
the United States of America, the District of Columbia or Canada.

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ARTICLE XVII
FEDERAL EXCISE TAX (BRMA 17A)
(Applicable to those subscribing reinsurers, excepting Underwriters at Lloyd’s
London and other subscribing reinsurers exempt from Federal Excise Tax, who are
domiciled outside the United States of America.)

A.   The subscribing reinsurer has agreed to allow, for the purpose of paying
the Federal Excise Tax, the applicable percentage of the premium payable hereon
(as imposed under Section 4371 of the Internal Revenue Code) to the extent such
premium is subject to the Federal Excise Tax.

B.   In the event of any return of premium becoming due hereunder, the
subscribing reinsurer will deduct the applicable percentage from the return
premium payable hereon, and the Company or its agent should take steps to
recover the tax from the United States Government.

ARTICLE XVIII
UNAUTHORIZED REINSURANCE (BRMA 55C)
(Applies only to a subscribing reinsurer who does not qualify for full credit
with any insurance regulatory authority having jurisdiction over the Company’s
reserves.)

A.   As regards Policies or bonds issued by the Company coming within the scope
of this Contract, the Company agrees that when it shall file with the insurance
regulatory authority or set up on its books reserves for losses covered
hereunder which it shall be required by law to set up, it will forward to the
subscribing reinsurer a statement showing the proportion of such reserves which
is applicable to the subscribing reinsurer. The subscribing reinsurer hereby
agrees to fund such reserves in respect of known outstanding losses that have
been reported to the subscribing reinsurer and allocated Loss Adjustment Expense
relating thereto, losses and allocated Loss Adjustment Expense paid by the
Company but not recovered from the subscribing reinsurer, plus reserves for
losses incurred but not reported, as shown in the statement prepared by the
Company (hereinafter referred to as “subscribing reinsurer’s obligations”) by
funds withheld, cash advances or a Letter of Credit. The subscribing reinsurer
shall have the option of determining the method of funding provided it is
acceptable to the insurance regulatory authorities having jurisdiction over the
Company’s reserves.

B.   When funding by a Letter of Credit, the subscribing reinsurer agrees to
apply for and secure timely delivery to the Company of a clean, irrevocable and
unconditional Letter of Credit issued by a bank and containing provisions
acceptable to the insurance regulatory authorities having jurisdiction over the
Company’s reserves in an amount equal to the subscribing reinsurer’s proportion
of said reserves. Such Letter of Credit shall be issued for a period of not less
than one year, and shall be automatically extended for one year from its date of
expiration or any future expiration date unless 30 days (60 days where required
by

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    insurance regulatory authorities) prior to any expiration date the issuing
bank shall notify the Company by certified or registered mail that the issuing
bank elects not to consider the Letter of Credit extended for any additional
period.

C.   The subscribing reinsurer and Company agree that the Letters of Credit
provided by the subscribing reinsurer pursuant to the provisions of this
Contract may be drawn upon at any time, notwithstanding any other provision of
this Contract, and be utilized by the Company or any successor, by operation of
law, of the Company including, without limitation, any liquidator,
rehabilitator, receiver or conservator of the Company for the following
purposes, unless otherwise provided for in a separate Trust Agreement:

  1.   To reimburse the Company for the subscribing reinsurer’s obligations, the
payment of which is due under the terms of this Contract and which has not been
otherwise paid;     2.   To make refund of any sum which is in excess of the
actual amount required to pay the subscribing reinsurer’s obligations under this
Contract;     3.   To fund an account with the Company for the subscribing
reinsurer’s obligations. Such cash deposit shall be held in an interest bearing
account separate from the Company’s other assets, and interest thereon not in
excess of the prime rate shall accrue to the benefit of the subscribing
reinsurer;     4.   To pay the subscribing reinsurer’s share of any other
amounts the Company claims are due under this Contract.

In the event the amount drawn by the Company on any Letter of Credit is in
excess of the actual amount required for subparagraph 1 or 3, or in the case of
subparagraph 4, the actual amount determined to be due, the Company shall
promptly return to the subscribing reinsurer the excess amount so drawn. All of
the foregoing shall be applied without diminution because of insolvency on the
part of the Company or the subscribing reinsurer.

D.   The issuing bank shall have no responsibility whatsoever in connection with
the propriety of withdrawals made by the Company or the disposition of funds
withdrawn, except to ensure that withdrawals are made only upon the order of
properly authorized representatives of the Company.

E.   At annual intervals, or more frequently as agreed but never more frequently
than quarterly, the Company shall prepare a specific statement of the
subscribing reinsurer’s obligations, for the sole purpose of amending the Letter
of Credit, in the following manner:

  1.   If the statement shows that the subscribing reinsurer’s obligations
exceed the balance of credit as of the statement date, the subscribing reinsurer
shall, within 30 days after receipt of notice of such excess, secure delivery to
the Company of an amendment to the Letter of Credit increasing the amount of
credit by the amount of such difference.     2.   If, however, the statement
shows that the subscribing reinsurer’s obligations are less than the balance of
credit as of the statement date, the Company shall, within 30 days after receipt
of written request from the subscribing reinsurer, release such excess

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      credit by agreeing to secure an amendment to the Letter of Credit reducing
the amount of credit available by the amount of such excess credit.

ARTICLE XIX
NET RETAINED LINES (BRMA 32E)

A.   This Contract applies only to that portion of any Policy which the Company
retains net for its own account (prior to deduction of any underlying
reinsurance specifically permitted in this Contract), and in calculating the
amount of any loss hereunder and also in computing the amount or amounts in
excess of which this Contract attaches, only loss or losses in respect of that
portion of any Policy which the Company retains net for its own account shall be
included.

B.   The amount of the Reinsurer’s liability hereunder in respect of any loss or
losses shall not be increased by reason of the inability of the Company to
collect from any other reinsurer(s), whether specific or general, any amounts
which may have become due from such reinsurer(s), whether such inability arises
from the insolvency of such other reinsurer(s) or otherwise.

ARTICLE XX
TRIA INUREMENT

A.   As respects any “insured loss,” as defined in the Terrorism Risk Insurance
Act of 2002, including the Terrorism Risk Insurance Extension Act of 2005, and
any other extensions or amendments thereto (“TRIA”), for which the Reinsurer
makes a payment to the Company under this Contract, the following provisions
shall apply.

B.   If the sum of

  1.   Financial assistance provided under TRIA to the Company and its
affiliates, if any, (as “affiliate” is defined in TRIA) with respect to all
“insured loss” that applies to each “program year,” as defined in TRIA and    
2.   Amounts due from all reinsurance which the Company and its affiliates, if
any, purchase, including but not limited to this reinsurance, all other treaty
reinsurance and all facultative reinsurance, and whether collectible or not,
under which there is a recoverable for any such “insured loss”

exceeds the amount of the Company’s and its affiliates’, if any, gross “insured
loss,” the excess amount shall be allocated to the Reinsurer in the ratio that
the Reinsurer’s liability for the “insured loss” under this Contract bears to
the total collectible reinsurance recoverables for the “insured loss” under 2
above.

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C.   Upon receipt of payment under TRIA by the Company and its affiliates, if
any, the Company shall pay to or credit the Reinsurer under this Contract with
the Reinsurer’s share of such excess amount determined in accordance with the
preceding paragraph.

ARTICLE XXI
SPECIAL ACCEPTANCES

A.   Business not within the terms of this Contract may be submitted to the
Reinsurer for special acceptance and, if accepted by the Reinsurer, shall be
subject to all of the terms of this Contract, except as modified by the Special
Acceptance.

B.   Renewal of Policies, which have previously received a Special Acceptance
under prior Contracts, are deemed to be covered hereunder.

C.   Further, should a reinsurer become party to this Contract subsequent to the
acceptance of any business not normally covered hereunder, that reinsurer will
automatically accept the special acceptances as being part of this Contract.

ARTICLE XXII
MORTGAGEE REINSURANCE ENDORSEMENTS

A.   To induce a mortgagee named in a policy of the Company to accept such
policy, the Company and the Reinsurer may agree to name such mortgagee as a
third party beneficiary in a Mortgagee Reinsurance Endorsement made a part of
this Contract. For each such mortgagee Reinsurance Endorsement so issued, the
Company shall indemnify the Reinsurer for any and all liability, loss, cost, or
expense the Reinsurer may sustain or incur in excess of its obligations under
this Contract by reason of the issuance of such Mortgagee Reinsurance
Endorsement.

B.   If the Reinsurer becomes liable to a mortgagee under any Mortgagee
Reinsurance Endorsement, the Reinsurer shall, to the extent of its liability:

  1.   Benefit pro-rata in reductions of the Company’s loss by salvage,
subrogation, compromise, or otherwise.     2.   Be automatically subrogated to
all of the mortgagee’s rights against the Company under the policy.     3.   Be
completely discharged from its obligation to make any payment to the Company
under this Contract and be entitled to set off against any amount due from the
Reinsurer to the Company under this or any other agreement for any amounts for
which the Reinsurer would not be liable except for the existence of such
Mortgagee Reinsurance Endorsement.

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C.   The Reinsurer shall have the right to cancel any Mortgagee Reinsurance
Endorsement by notice to the mortgagee.

D.   Prior to the termination date, the Company shall advise the Reinsurer as to
which of the above options shall apply.

ARTICLE XXIII
THIRD PARTY RIGHTS (BRMA 52C MODIFIED)
Except for the provisions of the MORTGAGEE REINSURANCE ENDORSEMENTS ARTICLE,
this Contract is solely between the Company and the Reinsurer, and in no
instance shall any other party have any rights under this Contract except as
expressly provided otherwise in the INSOLVENCY ARTICLE.
ARTICLE XXIV
SEVERABILITY
If any provision of this Contract shall be rendered illegal or unenforceable by
the laws or regulations of any state, such provision shall be considered void in
such state, but this shall not affect the validity or enforceability of any
other provision of this Contract or the enforceability of such provision in any
other jurisdiction.
ARTICLE XXV
GOVERNING LAW (BRMA 71A)
This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Pennsylvania, exclusive of that
state’s rules with respect to conflicts of law, except as to rules with respect
to credit for reinsurance, in which case the applicable rules of all states
shall apply.
ARTICLE XXVI
ACCESS TO RECORDS (BRMA 1E)
The Reinsurer or its designated representatives shall have access to the books
and records of the Company on matters relating to this reinsurance at all
reasonable times for the purpose of obtaining information concerning this
Contract or the subject matter hereof.

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ARTICLE XXVII
INSOLVENCY

A.   In the event of the insolvency of the Company, this reinsurance shall be
payable directly to the Company or to its liquidator, receiver, conservator or
statutory successor, with reasonable provision for verification, on the basis of
the liability of the Company without diminution because of the insolvency of the
Company or because the liquidator, receiver, conservator or statutory successor
of the Company has failed to pay all or a portion of any claim. It is agreed,
however, that the liquidator, receiver, conservator or statutory successor of
the Company shall give written notice to the Reinsurer of the pendency of a
claim against the Company indicating the Policy or bond reinsured, which claim
would involve a possible liability on the part of the Reinsurer, within a
reasonable time after such claim is filed in the conservation or liquidation
proceeding or in the receivership, and that during the pendency of such claim,
the Reinsurer may investigate such claim and interpose, at its own expense, in
the proceeding where such claim is to be adjudicated, any defense or defenses
that it may deem available to the Company or its liquidator, receiver,
conservator or statutory successor. The expense thus incurred by the Reinsurer
shall be chargeable, subject to the approval of the Court, against the Company
as part of the expense of conservation or liquidation to the extent of a
proportionate share of the benefit which may accrue to the Company solely as a
result of the defense undertaken by the Reinsurer.

B.   Where two or more subscribing reinsurers are involved in the same claim and
a majority in interest elect to interpose defense to such claim, the expense
shall be apportioned in accordance with the terms of this Contract as though
such expense had been incurred by the Company.

C.   It is further agreed that, in the event of the insolvency of the Company,
the reinsurance under this Contract shall be payable directly by the Reinsurer
to the Company or its liquidator, receiver, conservator, or statutory successor,
except as provided by Section 4118(a) of the New York Insurance Law or except
(1) where this Contract specifically provides another payee of such reinsurance
in the event of the insolvency of the Company or (2) where the Reinsurer with
the consent of the direct insured or insureds has assumed such Policy
obligations of the Company as direct obligations of the Reinsurer to the payees
under such Policies and in substitution for the obligations of the Company to
such payees.

D.   In the event of the insolvency of any company or companies listed in the
designation of “Company” under this Contract, this Article shall apply only to
the insolvent company or companies.

ARTICLE XXVIII
ARBITRATION

A.   As a condition precedent to any right of action hereunder, any
irreconcilable dispute arising out of the interpretation, performance or breach
of this Contract, including the formation or

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    validity thereof, whether arising before or after the expiry or termination
of the Contract, shall be submitted for decision to a panel of 3 arbitrators.
Notice requesting arbitration will be in writing and sent by certified mail,
return receipt requested, or such reputable courier service as is capable of
returning proof of receipt of such notice by the recipient to the party
demanding arbitration.

B.   One arbitrator shall be appointed by each party. If either party fails to
appoint its arbitrator within 30 days after being requested to do so by the
other party, the latter, after 10 days notice by certified mail or reputable
courier as provided above of its intention to do so, may appoint the second
arbitrator.

C.   The two arbitrators shall, before instituting the hearing, appoint an
impartial third arbitrator who shall preside at the hearing. If the 2
arbitrators are unable to agree upon the third arbitrator within 30 days of
their appointment, the Company shall petition the American Arbitration
Association to appoint the third arbitrator. If the American Arbitration
Association fails to appoint the third arbitrator within 30 days of being
requested to do so, either party may request a district court judge of the
federal district court having jurisdiction over the geographical area in which
the arbitration is to take place, or if the federal court declines to act, the
state court having general jurisdiction in such area to select the third
arbitrator from a list of 6 individuals (3 named by each arbitrator previously
appointed). All arbitrators shall be disinterested active or former senior
executives of insurance or reinsurance companies or Underwriters at Lloyd’s,
London.

D.   Within 30 days after notice of appointment of all arbitrators, the panel
shall meet and determine timely periods for briefs, discovery procedures and
schedules for hearings. The panel shall be relieved of all judicial formality
and shall not be bound by the strict rules of procedure and evidence. Unless the
panel agrees otherwise, arbitration shall take place in Bala Cynwyd,
Pennsylvania, but the venue may be changed when deemed by the panel to be in the
best interest of the arbitration proceeding. Insofar as the arbitration panel
looks to substantive law, it shall consider the law of the State of
Pennsylvania. The decision of any 2 arbitrators when rendered in writing shall
be final and binding. The panel is empowered to grant interim relief as it may
deem appropriate.

E.   The panel shall make its decision considering the custom and practice of
the applicable insurance and reinsurance business as promptly as possible
following the termination of the hearings. Judgment upon the award may be
entered in any court having jurisdiction thereof.

F.   If more than one subscribing reinsurer is involved in arbitration where
there are common questions of law or fact and a possibility of conflicting
awards or inconsistent results, all such subscribing reinsurers shall constitute
and act as one party for purposes of this Article and communications shall be
made by the Company to each of the subscribing reinsurers constituting the one
party; provided, however, that nothing therein shall impair the rights of such
subscribing reinsurers to assert several, rather than joint defenses or claims,
nor be construed as changing the liability of the subscribing reinsurers under
the terms of this Contract from several to joint.

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G.   Each party shall bear the expense of its own arbitrator and shall jointly
and equally bear with the other party the cost of the third arbitrator. The
remaining costs of the arbitration shall be allocated by the panel. The panel
may, at its discretion, award such further costs and expenses as it considers
appropriate, including but not limited to attorneys fees, to the extent
permitted by law. However, the panel may not award any exemplary or punitive
damages.

ARTICLE XXIX
SERVICE OF SUIT
(This Article is applicable if the subscribing reinsurer is not domiciled in the
United States of America and/or is not authorized in any State, Territory or
District of the United States where authorization is required by insurance
regulatory authorities. This Article is not intended to conflict with or
override the obligation of the parties to arbitrate their disputes in accordance
with the ARBITRATION ARTICLE.)

A.   In the event of the failure of the subscribing reinsurer to pay any amount
claimed to be due hereunder, the subscribing reinsurer, at the request of the
Company, shall submit to the jurisdiction of a court of competent jurisdiction
within the United States. Nothing in this Article constitutes or should be
understood to constitute a waiver of the subscribing reinsurer’s rights to
commence an action in any court of competent jurisdiction in the United States,
to remove an action to a United States District Court, or to seek a transfer of
a case to another court as permitted by the laws of the United States or of any
state in the United States. The subscribing reinsurer, once the appropriate
court is selected, whether such court is the one originally chosen by the
Company and accepted by subscribing reinsurer or is determined by removal,
transfer, or otherwise, as provided for above, shall comply with all
requirements necessary to give said court jurisdiction and, in any suit
instituted against it upon this Contract, shall abide by the final decision of
such court or of any appellate court in the event of an appeal.

B.   Service of process in such suit may be made upon the agent for the service
of process (“agent”) named below, depending on the jurisdiction where the
Company chooses to bring suit:

  1.   If the suit is brought in the State of California, the law firm of Mendes
and Mount, 445 South Figueroa, 38th Floor, Los Angeles, California 90071 shall
be authorized and directed to accept service of process on behalf of the
subscribing reinsurer in any such suit;     2.   If the suit is brought in the
State of New York, the law firm of Mendes and Mount, 750 Seventh Avenue, New
York, New York 10019 shall be authorized and directed to accept service of
process on behalf of the subscribing reinsurer in any such suit;     3.   If the
suit is brought in any state other than California or New York, either of the
agents described in subparagraphs 1 or 2 above shall be authorized and directed
to accept service of process on behalf of the subscribing reinsurer in any such
suit; or

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  4.   If the subscribing reinsurer has designated an agent in the subscribing
reinsurer’s Interests and Liabilities Agreement attached hereto, then that agent
shall be authorized and directed to accept service of process on behalf of the
subscribing reinsurer in any suit. However, if an agent is designated in the
subscribing reinsurer’s Interests and Liabilities Agreement and the agent is not
located in California as respects a suit brought in California or New York as
respects a suit brought in New York, in keeping with the laws of the states of
California and New York which require that service be made on an agent located
in the respective state if a suit is brought in that state, the applicable
office of Mendes and Mount stipulated in subparagraphs 1 and 2 above must be
used for service of suit unless the provisions of paragraph C of this Article
apply.

C.   Further, pursuant to any statute of any state, territory or district of the
United States that makes provision therefor, the subscribing reinsurer hereby
designates the Superintendent, Commissioner or Director of Insurance, or other
officer specified for that purpose in the statute, or his successor or
successors in office, as its true and lawful attorney upon whom may be served
any lawful process in any action, suit or proceedings instituted by or on behalf
of the Company or any beneficiary hereunder arising out of this Contract, and
hereby designates the above-named as the person to whom the said officer is
authorized to mail such process or a true copy thereof.

ARTICLE XXX
MODE OF EXECUTION
This Contract may be executed either by an original written ink signature of
paper documents, by an exchange of facsimile copies showing the original written
ink signature of paper documents, or by electronic signature by either party
employing appropriate software technology as to satisfy the parties at the time
of execution that the version of the document agreed to by each party shall
always be capable of authentication and satisfy the same rules of evidence as
written signatures. The use of any one or a combination of these methods of
execution shall constitute a legally binding and valid signing of this Contract.
This Contract may be executed in one or more counterparts, each of which, when
duly executed, shall be deemed an original.
ARTICLE XXXI
INTERMEDIARY
Willis Re Inc., Two Liberty Place, 50 South 16th Street, Suite 2500,
Philadelphia, Pennsylvania 19102 is hereby recognized as the intermediary
negotiating this Contract and through whom all communications relating thereto
shall be transmitted to the Company or the Reinsurer. However, all
communications concerning accounts, claim information, funds and inquiries
related thereto shall be transmitted to the Company or the Reinsurer through
Willis Re Inc., 5420 Millstream Road, P.O. Box 3000, McLeansville, North
Carolina 27301-3000. Payments by the Company to Willis Re Inc. shall be deemed
to constitute payment to the Reinsurer and payments by the

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Reinsurer to Willis Re Inc. shall be deemed to constitute payment to the Company
only to the extent that such payments are actually received by the Company.
IN WITNESS WHEREOF, the Company by its duly authorized representative has
executed this Contract as of the date specified below:
Signed this                                          day of                 
                                                                                    ,
200                    .
PHILADELPHIA INSURANCE COMPANY
PHILADELPHIA INDEMNITY INSURANCE COMPANY

         
By
 
   
 
       
Printed Name
 
 
           
 
       
Title
 
   

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NUCLEAR INCIDENT EXCLUSION CLAUSE — PHYSICAL DAMAGE —
REINSURANCE — U.S.A.

1)   This Agreement does not cover any loss or liability accruing to the
Reinsured, directly or indirectly, and whether as Insurer or Reinsurer, from any
Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or
Nuclear Energy risks.

2)   Without in any way restricting the operation of paragraph (1) of this
Clause, this Agreement does not cover any loss or liability accruing to the
Reinsured, directly or indirectly and whether as Insurer or Reinsurer, from any
Insurance against Physical Damage (including business interruption or
consequential loss arising out of such Physical Damage) to:

  I.   Nuclear reactor power plants including all auxiliary property on the
site, or     II.   Any other nuclear reactor installation, including
laboratories handling radioactive materials in connection with reactor
installations, and “critical facilities” as such, or     III.   Installations
for fabricating complete fuel elements or for processing substantial quantities
of “special nuclear material,” and for reprocessing, salvaging, chemically
separating, storing or disposing of “spent” nuclear fuel or waste materials, or
    IV.   Installations other than those listed in paragraph 2) III above using
substantial quantities of radioactive isotopes or other products of nuclear
fission.

3)   Without in any way restricting the operations of paragraphs 1) and 2)
hereof, this Agreement does not cover any loss or liability by radioactive
contamination accruing to the Reinsured, directly or indirectly, and whether as
Insurer or Reinsurer, from any insurance on property which is on the same site
as a nuclear reactor power plant or other nuclear installation and which
normally would be insured therewith except that this paragraph 3) shall not
operate

  a)   where the Reinsured does not have knowledge of such nuclear reactor power
plant or nuclear installation, or

     b) where said insurance contains a provision excluding coverage for damage
to property caused by or resulting from radioactive contamination, however
caused. However, on and after 1st, January 1960, this sub-paragraph b) shall
only apply provided the said radioactive contamination exclusion provision has
been approved by the Government Authority having jurisdiction thereof.

4)   Without in any way restricting the operations of paragraphs 1), 2) and 3)
hereof, this Agreement does not cover any loss or liability by radioactive
contamination accruing to the Reinsured, directly or indirectly, and whether as
Insurer or Reinsurer, when such radioactive contamination is a named hazard
specifically insured against.

5)   It is understood and agreed that this Clause shall not extend to risks
using radioactive isotopes in any form where the nuclear exposure is not
considered by the Reinsured to be the primary hazard.

6)   The term “special nuclear material” shall have the meaning given it in the
Atomic Energy Act of 1954, or by any law amendatory thereof.

7)   Reinsured to be sole judge of what constitutes:

  a)   substantial quantities, and     b)   the extent of installation, plant or
site.

NOTE: Without in any way restricting the operations of paragraph 1) hereof, it
is understood and agreed that:

  a)   all policies issued by the Reinsured on or before 31st, December 1957,
shall be free from the application of the other provisions of this Clause until
expiry date or 31st, December 1960, whichever first occurs whereupon all the
provisions of this Clause shall apply,

     b)      with respect to any risk located in Canada policies issued by the
Reinsured on or before 31st, December 1958, shall be free from the application
of the other provisions of this Clause until expiry date or 31st, December 1960,
whichever first occurs whereupon all the provisions of this Clause shall apply.
12/12/57
N.M.A. 1119
BRMA 35B

 

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WAR EXCLUSION
As regards interests which at time of loss or damage are on shore, no liability
shall attach hereto in respect of any loss or damage which is occasioned by war,
invasion, hostilities, acts of foreign enemies, civil war, rebellion,
insurrection, military or usurped power, or martial law or confiscation by order
of any government or public authority.
This War Exclusion Clause shall not, however, apply to interests which at time
of loss or damage are within the territorial limits of the United States of
America (comprising the fifty States of the Union and the District of Columbia,
its territories and possessions, including the Commonwealth of Puerto Rico and
including Bridges between the United States of America and Mexico provided they
are under United States ownership), Canada, St. Pierre and Miquelon, provided
such interests are insured under original policies, endorsements or binders
containing a standard war or hostilities or warlike operations exclusion clause.
Nevertheless, this clause shall not be construed to apply to loss or damage
occasioned by riots, strikes, civil commotion, vandalism, malicious damage.

 

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INTERESTS AND LIABILITIES AGREEMENT
(the “Agreement”)
of
HANNOVER RUCKVERSICHERUNG AG
(the “Subscribing Reinsurer”)
 
with respect to the
 
PROPERTY FOURTH PER RISK EXCESS OF LOSS
REINSURANCE AGREEMENT
(the “Contract”)
issued to
PHILADELPHIA INSURANCE COMPANY
PHILADELPHIA INDEMNITY INSURANCE COMPANY
Bala Cynwyd, Pennsylvania
And any additional company established or acquired by the Company
(the “Company”)
The Subscribing Reinsurer shall have a 5.00% share in the interests and
liabilities of the “Reinsurer” as set forth in the Contract attached hereto and
executed by the Company.
This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1,
2008, and shall continue in force until 12:01 a.m., Eastern Standard Time,
January 1, 2009, unless earlier terminated in accordance with the attached
Contract.
The share of the Subscribing Reinsurer in the interests and liabilities of the
“Reinsurer” shall be several and not joint with the share of any other
subscribing reinsurer. In no event shall the Subscribing Reinsurer participate
in the interests and liabilities of the other subscribing reinsurers.
IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date specified below:
Signed this 28th day of February, 2008.
HANNOVER RUCKVERSICHERUNG AG
By Dirk Heuer Senior Underwriter & Assistant Vice President

 

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INTERESTS AND LIABILITIES AGREEMENT
(the “Agreement”)
of
QBE REINSURANCE CORPORATION
(the “Subscribing Reinsurer”)
 
with respect to the
 
PROPERTY FOURTH PER RISK EXCESS OF LOSS
REINSURANCE AGREEMENT
(the “Contract”)
issued to
PHILADELPHIA INSURANCE COMPANY
PHILADELPHIA INDEMNITY INSURANCE COMPANY
Bala Cynwyd, Pennsylvania
And any additional company established or acquired by the Company
(the “Company”)
The Subscribing Reinsurer shall have a 4.75% share in the interests and
liabilities of the “Reinsurer” as set forth in the Contract attached hereto and
executed by the Company.
This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1,
2008, and shall continue in force until 12:01 a.m., Eastern Standard Time,
January 1, 2009, unless earlier terminated in accordance with the attached
Contract.
The share of the Subscribing Reinsurer in the interests and liabilities of the
“Reinsurer” shall be several and not joint with the share of any other
subscribing reinsurer. In no event shall the Subscribing Reinsurer participate
in the interests and liabilities of the other subscribing reinsurers.
IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date specified below:
Signed this 15th day of February, 2008.
QBE REINSURANCE CORPORATION
By Gregory R. Cuilwik Vice President

 

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INTERESTS AND LIABILITIES AGREEMENT
(the “Agreement”)
of
UNDERWRITERS AT LLOYD’S, LONDON
AS SET FORTH IN THE SIGNING PAGE(S) ATTACHED HERETO
(the “Subscribing Reinsurer”)
with respect to the
PROPERTY FOURTH PER RISK EXCESS OF LOSS
REINSURANCE AGREEMENT
(the “Contract”)
issued to
PHILADELPHIA INSURANCE COMPANY
PHILADELPHIA INDEMNITY INSURANCE COMPANY
Bala Cynwyd, Pennsylvania
And any additional company established or acquired by the Company
(the “Company”)
The Subscribing Reinsurer shall have a share in the interests and liabilities of
the “Reinsurer” as set forth in the Contract attached hereto and executed by the
Company. The Subscribing Reinsurer’s percentage share shall equal the sum of the
final signed lines percentage share(s) as executed on the attached signing
page(s) for Lloyd’s Underwriters.
This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1,
2008 and shall continue in force until 12:01 a.m., Eastern Standard Time,
January 1, 2009, unless earlier terminated in accordance with the attached
Contract.
The share of the Subscribing Reinsurer in the interests and liabilities of the
“Reinsurer” shall be several and not joint with the share of any other
subscribing reinsurer. In no event shall the Subscribing Reinsurer participate
in the interests and liabilities of the other subscribing reinsurers.
IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement per the attached signing page(s).
Lloyd’s, London