Exhibit 10.1

Execution Version

 

 

 

RESERVE DEVELOPMENT AGREEMENT

between

TOKIO MILLENNIUM RE AG

TOKIO MILLENNIUM RE (UK) LIMITED

and

TOKIO MARINE & NICHIDO FIRE INSURANCE CO., LTD.

 

 

 

 

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TABLE OF CONTENTS

 

     Page  

ARTICLE I DEFINITIONS

     3  

ARTICLE II COVERAGE

     9  

ARTICLE III PREMIUM

     9  

ARTICLE IV TRANSFER OR SALE OF REINSURED BUSINESS

     9  

ARTICLE V GENERAL PROVISIONS; REPRESENTATIONS

     10  

ARTICLE VI REPORTS; RESERVES

     12  

ARTICLE VII DURATION: TERMINATION

     14  

ARTICLE VIII COMMUTATION

     14  

ARTICLE IX COLLATERAL

     16  

ARTICLE X INSOLVENCY

     17  

ARTICLE XI EXCLUSIONS

     18  

ARTICLE XII INDEPENDENT ACCOUNTING FIRM

     18  

ARTICLE XIII ARBITRATION

     19  

ARTICLE XIV MISCELLANEOUS PROVISIONS

     21  

SCHEDULES

  

SCHEDULE 1 – AGREED PROCEDURES

  

SCHEDULE 2 – PREMIUM

  

 

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RESERVE DEVELOPMENT AGREEMENT

This RESERVE DEVELOPMENT AGREEMENT (this “Agreement”), effective as of 12:01
a.m. on the Closing Date (the “Effective Date”), is made and entered into by and
among Tokio Millennium Re AG (“Tokio AG”), Tokio Millennium Re (UK) Limited
(“Tokio UK” and, collectively with Tokio AG, the “Cedent”) and Tokio Marine &
Nichido Fire Insurance Co., Ltd. (the “Reinsurer”). Capitalized terms used
herein are defined below.

WHEREAS, the Reinsurer and the Purchaser have entered into the Stock Purchase
Agreement regarding, among other things, the sale by the Reinsurer and purchase
by the Purchaser of all of the issued and outstanding shares of capital stock of
Tokio AG and Tokio UK;

WHEREAS, the Purchaser and the Reinsurer have agreed that the Reinsurer will
reinsure upon the terms and subject to the conditions stated herein a 95% share
of the Cedent’s Ultimate Net Loss in excess of the Retention; and

WHEREAS, this Agreement is entered into as a condition to the Closing of the
Stock Purchase Agreement.

ARTICLE I

DEFINITIONS

1.1. Definitions. As used in this Agreement, the following terms shall have the
following meanings (definitions are applicable to both the singular and the
plural forms of each term defined in this Article):

“Affiliate” means any other Person that directly or indirectly controls, is
controlled by, or is under common control with, the first Person. “Control”
(including the terms, “controlled by” and “under common control with”) means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a Person, whether through the ownership
of voting securities, by contract or credit arrangement, as trustee or executor,
or otherwise.

“Agreed Procedures” means those accounting and actuarial procedures set forth on
Schedule 1 attached hereto.

“Agreement” shall have the meaning specified in the preamble of this Agreement.

“Allocated Loss Adjustment Expenses” shall mean (i) all obligations for loss
adjustment expenses payable as a result of the terms and conditions of the
insurance and reinsurance contracts constituting the Reinsured Business and any
court, arbitration, mediation or other dispute resolution costs, attorneys’
fees, expenses, pre- and post-judgment interest, and any external costs incurred
in connection with the defense, investigation or audit of or negotiations of a
dispute, including coverage disputes costs and expenses, involving the Reinsured
Business; and

 

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(ii) a pro-rata share of salaries and expenses of in-house counsel, and
personnel of the Cedent or any of its Affiliates who, under the circumstances,
have been either permanently assigned or temporarily diverted from their normal
and customary duties and assigned to the adjustment of a loss covered by this
Agreement according to the time occupied in adjusting such loss, excluding,
however, office expenses and salaries of all other officials and employees of
the Cedent or its Affiliates who are not classified, or temporarily working, as
loss adjusters.

“Business Day” means any day that is not a Saturday, a Sunday or other day on
which commercial banks in the City of New York, New York, Tokyo, Japan, Zurich,
Switzerland or London, United Kingdom are required or authorized by Law to
remain closed.

“Ceded Reinsurance” means all reinsurance ceded by the Cedent pursuant to
contracts, binders, certificates, policies, treaties or other evidence of
reinsurance relating to the Reinsured Business in effect on or prior to the
Effective Date, except the reinsurance provided pursuant to this Agreement.

“Ceded Reinsurance Commutation” means, with respect to any portion of the Ceded
Reinsurance covering the Reinsured Business, a commutation or other similar
transaction that results in the termination of the Ceded Reinsurance with
respect to the Reinsured Business.

“Cedent” shall have the meaning specified in the preamble of this Agreement.

“Cedent Extra Contractual Obligations” means those obligations or losses arising
from the grossly negligent, intentional or bad faith acts or omissions of the
Cedent’s employees, officers or directors, or fraud of an employee, officer or
director of the Cedent acting individually or collectively or in collusion with
any individual or corporation or any other organization or party involved in the
presentation, defense or settlement of any claim, in each case as so determined
by final adjudication by any order, judgment or decree of a court of competent
jurisdiction; provided, that any coverage for bad faith or fraud under this
Agreement shall only be permitted to the extent such coverage is not contrary to
applicable Law (including, with respect to any coverage for risks reinsured by
the United States branch of Tokio AG (“Tokio AG U.S. Branch”), to the extent
such coverage is not contrary to the Laws of the State of New York).

“Closing” means the closing of the transactions contemplated by the Stock
Purchase Agreement.

“Closing Date” means the date on which the Closing occurs.

“Collateral Requirement” shall have the meaning specified in Section 9.1(e).

“Commutation Effective Date” shall have the meaning specified in Section 8.2(a).

“Dispute Notice” shall have the meaning specified in Section 6.4(b) and
Section 8.2(d), as applicable.

“Effective Date” shall have the meaning specified in the preamble of this
Agreement.

 

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“Eligible Assets” means and includes U.S. legal tender (“cash”) and U.S.
Treasury Bills having a remaining maturity at the time of delivery of not more
than one year.

“Estimated Loss Amount” means, as of any date of determination, the sum of
(i) Loss Reserves as of such date of determination, plus (ii) Estimated Loss
from Unearned Premiums as of such date of determination, plus (iii) the actual
paid Losses from the Effective Date to such date of determination, minus
(iv) any Recoveries and Reinsurance Recoveries from the Effective Date to such
date of determination.

“Estimated Loss from Unearned Premium” means the aggregate estimated loss of the
Cedent related to unearned premium in respect of the Reinsured Business, net of
Reinsurance Recoverables and calculated in accordance with the Agreed
Procedures.

“Extra Contractual Obligations” means those liabilities arising from claims
which arise from the handling of any claim relating to the Reinsured Business
because of, but not limited to, failure to settle within the policy limit, or by
reason of alleged or actual negligence, fraud or bad faith rejecting an offer of
settlement or in the preparation of the defense in the trial of any action
against its insured or reinsured or in the preparations or prosecution of an
appeal consequent upon such action, including losses in excess of policy limits,
in each case excluding Cedent Extra Contractual Obligations; provided, that any
coverage for bad faith or fraud under this Agreement shall only be permitted to
the extent such coverage is not contrary to applicable Law (including, with
respect to any coverage for risks reinsured by Tokio AG U.S. Branch, to the
extent such coverage is not contrary to the Laws of the State of New York).

“Governmental Action” means any consent, approval, authorization, waiver,
Permit, grant, franchise, concession, agreement, license, certificate,
exemption, order, decree, judgment, injunction, registration, declaration,
filing, report or notice of, with or to any Governmental Authority.

“Governmental Authority” means any foreign or national government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

“Impairment Event” means any of the following occurrences:

(a) the Reinsurer becomes insolvent or has been placed into liquidation,
rehabilitation, conservation, supervision, receivership or similar proceedings
(whether voluntary or involuntary), or there has been 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 assume control of its operations;

(b) the Reinsurer’s AM Best Rating or Standard & Poor’s Financial Strength
Rating has been assigned or downgraded below “A-”; or

 

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(c) the Reinsurer fails to pay any undisputed amounts due hereunder in excess of
$10,000,000 and such breach has not been cured within twenty (20) Business Days
after written notice thereof from the Cedent.

“Independent Accounting Firm” means KPMG, or if such firm is not available or is
unwilling to serve, then an independent and nationally recognized accounting
firm upon which the Cedent and the Reinsurer mutually agree in writing, or
failing such mutual agreement; within twenty (20) Business Days after the Cedent
and the Reinsurer are notified that KPMG is not available or is unwilling to
serve, an independent and nationally recognized accounting firm selected by the
New York City office of the American Arbitration Association upon the request of
the Cedent and the Reinsurer; provided, however that, unless otherwise agreed
between the Cedent and the Reinsurer, if the Parent and the Acquiror submit any
disputes to an Independent Accounting Firm (as defined in the Stock Purchase
Agreement) pursuant to Section 2.05(d) of the Stock Purchase Agreement, such
Independent Accounting Firm shall be the Independent Accounting Firm for
purposes of Article XII hereof.

“Insurance Department” means in any jurisdiction, the Governmental Authority
primarily charged with the regulation of the business of insurance in such
jurisdiction.

“Law” means all (i) constitutions, treaties, statutes, laws (including common
law), codes, rules, regulations, ordinances or orders of any Governmental
Authority, (ii) Governmental Actions, (iii) orders, decisions, injunctions,
judgments, awards and decrees of or agreements with any Governmental Authority,
and (iv) rules and policies of any self-regulatory body.

“Layer” means the Cedent’s losses in excess of the Retention up to the
Reinsurer’s Aggregate Limit.

“Lien” means any mortgage, pledge, deed of trust, hypothecation, claim, security
interest, title defect, encumbrance, burden, charge or other similar
restriction, lease, sublease, claim, title retention agreement, option,
easement, covenant, encroachment or other adverse claim.

“LOC” shall have the meaning specified in Section 9.1(a).

“Loss” or “Losses” means the amount of liability paid or to be paid by the
Cedent from and after the Effective Date with respect to claims, including any
settlements or compromises or disputed claims, arising out of or relating to the
Reinsured Business. Loss shall include all Allocated Loss Adjustment Expenses,
Extra Contractual Obligations, and commutations of any Reinsured Business in
accordance with the terms and conditions of this Agreement. Loss shall also
include profit commissions and No Claims Bonuses paid by the Cedent on the
Reinsured Business where profit commissions and No Claims Bonuses were accounted
for in the calculation of the Loss Reserves or Estimated Loss from Unearned
Premium.

“Loss Reserves” means the aggregate reserves of the Cedent for Losses (including
(i) Allocated Loss Adjustment Expenses and (ii) losses incurred but not
reported), net of collectible Reinsurance Recoverables.

“Net Retained Liability” shall have the meaning specified in Section 2.2.

 

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“Non-Specific Reinsurance” shall have the meaning specified in Section 2.2.

“Permits” means all federal, state, local and foreign governmental approvals,
authorizations, certificates, filings, franchises, licenses, notices, permits
and rights.

“Person” means any natural person, firm, limited liability company, general
partnership, limited partnership, joint venture, association, corporation,
trust, Governmental Authority or other entity.

“Premium Adjustments” means any increase or decrease of premium under the
Reinsured Business after the Effective Date as a result of retrospective premium
adjustment provisions with respect to the Reinsured Business.

“Purchaser” means RenaissanceRe Holdings Ltd.

“Purchaser Group” shall have the meaning specified in Section 2.1(b).

“Quarterly Loss Payment” with respect to each calendar quarter during the term
of this Agreement, means (i) if the Ultimate Net Loss has never exceeded the
Retention, zero; and (ii) if the Ultimate Net Loss has exceeded the Retention,
the result of [0.95 x [(a) – (b)]] – (c), where:

 

  (a)

is the Ultimate Net Loss as of the end of such calendar quarter;

 

  (b)

is the Retention; and

 

  (c)

is the sum of all Quarterly Loss Payments paid by the Reinsurer to the Cedent
prior to the end of such calendar quarter.

“Quarterly Report” shall have the meaning specified in Section 6.1.

“Recoveries” means salvage and subrogation amounts actually recovered by the
Cedent in respect of Losses. “Recoveries” do not include Reinsurance Recoveries.

“Reinsurance Recoverables” means the amount of reinsurance recoverables that are
payable under Ceded Reinsurance with respect to Losses incurred by the Cedent.

“Reinsurance Recoveries” means the amount of Reinsurance Recoverables that are
(i) actually collected by the Cedent under Ceded Reinsurance with respect to
Losses incurred by the Cedent, or (ii) in the event of a Ceded Reinsurance
Commutation, actually collected by the Cedent as the commutation payment.

“Reinsured Business” means (i) all insurance and reinsurance contracts of the
Cedent (including the entire term of any multi-year policies) that are bound
prior to the Effective Date and (ii) all renewals and replacements thereof or
amendments or supplements thereto required under contractual terms in effect
prior to the Effective Date or under applicable Law, in each case excluding any
liabilities ceded by Tokio Millennium Re AG to Tokio Marine and Nichido Fire
Insurance Co., Ltd. pursuant to that certain Retrocession Agreement, dated as of
the date

 

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hereof, relating to third-party capital business. With respect to renewal and/or
replacement contracts that are required pursuant to the contractual terms in
effect prior to the Effective Date and/or applicable Law, such contracts may be
renewed onto any balance sheet within the Purchaser Group and still qualify as
Reinsured Business hereunder.

“Reinsurer” shall have the meaning specified in the preamble of this Agreement.

“Reinsurer’s Aggregate Limit” means $ 500,000,000.

“Representative” of a Person means the directors, officers, employees, advisers,
agents, consultants, accountants, investment bankers or other representatives of
such Person and of such Person’s Affiliates.

“Retention” means the sum of (i) Loss Reserves, plus (ii) Estimated Loss from
Unearned Premiums, in each case as of the Effective Date and reflected on the
Retention Statement, as finally determined in accordance with Section 6.4 and
the Agreed Procedures.

“Retention Statement” shall have the meaning specified in Section 6.4(a).

“Stock Purchase Agreement” means the Stock Purchase Agreement, dated as of
October 30, 2018, as amended, among the Reinsurer, Tokio Marine Holdings and the
Purchaser.

“Terminal Settlement Payment” shall have the meaning specified in Section 8.2.

“Terminal Settlement Statement” shall have the meaning specified in Section 8.2.

“Tokio AG U.S. Branch” shall have the meaning set forth in the definition of
“Cedent Extra Contractual Obligations”.

“Treasury Rate” means the interest rate on U.S. Treasury bills having a time to
maturity of 90 days.

“Trust Account” shall have the meaning specified in Section 9.1(a).

“Trust Agreement” shall have the meaning specified in Section 9.1(a).

“Trustee” shall have the meaning specified in Section 9.1(a).

“Ultimate Net Loss” means, as of any date of determination, the sum of (i) the
actual paid Losses from the Effective Date to such date of determination, less
(ii) Recoveries and Reinsurance Recoveries from the Effective Date to such date
of determination.

 

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ARTICLE II

COVERAGE

2.1. Coverage.

(a) As of the Effective Date, the Cedent hereby cedes to the Reinsurer, and the
Reinsurer hereby agrees to indemnify and reimburse the Cedent for, an aggregate
amount equal to ninety-five percent (95%) of the Cedent’s Ultimate Net Loss in
excess of the Retention, in an amount not to exceed the Reinsurer’s Aggregate
Limit.

(b) Notwithstanding Section 2.1(a), there shall not be any duplicative payments
or indemnities by the Reinsurer under the Stock Purchase Agreement and by the
Reinsurer under this Agreement (i.e., no “double recovery” for the same loss).
Subject to the immediately preceding sentence, notwithstanding anything to the
contrary in this Agreement or any other agreement previously or concurrently
entered into between the Reinsurer or any of its Affiliates and the Purchaser or
any of its Affiliates in connection with the Stock Purchase Agreement and the
transactions contemplated thereby, if the Cedent and/or the Purchaser, its
Affiliates, officers, directors, employees, agents and representatives
(collectively the “Purchaser Group”) has the right to indemnification or
recovery under more than one provision of this Agreement or any such other
agreement, the Purchaser Group shall have the right to seek and obtain
indemnification or other recovery for all recoveries allowed under each such
provision.

2.2. Net Retained Liability. The Cedent shall retain, net and unreinsured, five
percent (5%) of the Layer (“Net Retained Liability”); provided, however, that
the Reinsurer may purchase Non-Specific Reinsurance that may cover its Net
Retained Liability and any recoveries under such Non-Specific Reinsurance shall
be disregarded for purposes of determining Ultimate Net Loss. For purposes of
this Agreement, “Non-Specific Reinsurance” shall mean either: (i) reinsurance
purchased by the Cedent and/or its Affiliates that is designed to protect the
Purchaser Group’s combined exposures with respect to certain types of risks
which may include Reinsured Business hereunder; and (ii) only with the prior
written consent of the Reinsurer (which shall not be unreasonably withheld),
reinsurance purchased by the Purchaser Group with respect to the Reinsured
Business in order to maintain the Cedent’s corporate risk tolerances, including
reinsurance in order to maintain the Cedent’s corporate retention limits or to
reduce the Cedent’s exposure to certain exposures outside of its corporate risk
tolerances.

ARTICLE III

PREMIUM

3.1. Premium. The Cedent shall pay a premium to the Reinsurer in the amount and
in accordance with the terms set forth in Schedule 2 to be annexed hereto.

ARTICLE IV

TRANSFER OR SALE OF REINSURED BUSINESS

4.1. Transfer or Sale within Purchaser Group. The Cedent shall be entitled to
transfer or sell, by any means, all or a portion of the Reinsured Business to
any balance sheet within the Purchaser Group and such transferred or sold
business shall still qualify as Reinsured Business hereunder.

4.2. Transfer or Sale outside of Purchaser Group. With the prior written consent
of the Reinsurer (which shall not be unreasonably withheld), the Cedent shall be
entitled to transfer or sell, by any means, all or a portion of the Reinsured
Business to an entity not within the Purchaser Group and the transfer or sale
price shall be treated under this Agreement in a manner agreed to by each of the
Reinsurer and the Cedent at the time of such transfer or sale.

 

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ARTICLE V

GENERAL PROVISIONS; REPRESENTATIONS

5.1. Inspection; Cooperation. (a) Upon reasonable prior written notice, the
parties to this Agreement or their designated representatives may inspect, at
the offices of the Reinsurer or the Cedent where such records are located, any
and all books and records of the Cedent or the Reinsurer, respectively, to the
extent directly relating to the Reinsured Business, during normal business hours
for such period as this Agreement is in effect or for as long thereafter as any
rights or obligations of any party survives. The information obtained shall be
used only for purposes relating to reinsurance under this Agreement.

(b) The Reinsurer shall have the right, but not the obligation, to associate at
its own expense with the Cedent in the adjustment, litigation or negotiation of
claims arising from the Reinsured Business; however, the Cedent shall retain
ultimate authority on handling of claims.

(c) Each party hereto shall cooperate fully with the other in all reasonable
respects in order to accomplish the objectives of this Agreement including
making available to each their respective officers and employees for interviews
and meetings with Governmental Authorities and furnishing any additional
assistance, information and documents as may be reasonably requested by a party
from time to time. Without limiting the foregoing, the Cedent shall cooperate
and otherwise take all reasonable steps to permit the Reinsurer to exercise its
rights of association in respect of the Reinsured Business.

5.2. Misunderstandings and Oversights. If any delay, omission, error or failure
to pay amounts due or to perform any other act required by this Agreement is
unintentional and caused by misunderstanding or oversight, the Cedent and the
Reinsurer will adjust the situation to what it would have been had the
misunderstanding or oversight not occurred. The party first discovering such
misunderstanding or oversight, or an act resulting from such misunderstanding or
oversight, will notify the other party in writing promptly upon discovery
thereof, and, subject to mutual agreement, the parties shall act to correct any
agreed misunderstandings or oversights within ten (10) Business Days of such
other party’s receipt of such notice. However, this Section shall not be
construed as a waiver by either party of its right to enforce strictly the terms
of this Agreement. All payments due with respect to such corrective action shall
bear interest at the Treasury Rate then in effect from the date when such
amounts would have been paid absent such misunderstanding or oversight to the
date of actual payment, unless otherwise mutually agreed by the parties to this
Agreement.

5.3. Payments. All payments made pursuant to this Agreement shall be made in
immediately available funds.

 

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5.4. Follow the Fortunes. The Reinsurer’s liability for each insurance or
reinsurance arrangement constituting the Reinsured Business shall be subject in
all respects to the same risks, terms, conditions, definitions, coverages,
interpretations, waivers, modifications, alterations, and cancellations as the
respective insurances (or reinsurances) of the Cedent (including, without
limitation, coverage for any extra-contractual obligations or losses in excess
of policy limits as may be covered under any of the insurance or reinsurance
arrangements constituting the Reinsured Business). The true intent of this
Agreement is that the Reinsurer shall, subject to the terms, conditions and
limits of this Agreement, including the Reinsurer’s Aggregate Limit, follow the
fortunes of the Cedent.

5.5. Administration. (a) The Cedent shall administer the Reinsured Business and
Ceded Reinsurance at the Cedent’s sole expense. The Reinsurer shall not be
liable for any costs and expenses for the administration of the Reinsured
Business, or Ceded Reinsurance, except as set forth in the definition of
“Allocated Loss Adjustment Expenses”.

(b) The Cedent shall administer the Reinsured Business and Ceded Reinsurance in
a professional and competent manner consistent with the Cedent’s past practice
and subject to 5.5(c)-(e) below.

(c) Without the prior written consent of the Reinsurer (such consent not to be
unreasonably withheld), the Cedent shall not:

(i) Commute or terminate any Ceded Reinsurance (including any associated
reinsurance collateral arrangement);

(ii) Commute or terminate any assumed insurance or reinsurance arrangement
constituting the Reinsured Business in excess of $10,000,000;

(iii) Settle a claim on any one Property Other assumed insurance or reinsurance
contract in excess of $10,000,000; or

(iv) Settle a claim on any one Property Catastrophe assumed insurance or
reinsurance contract in excess of $25,000,000.

(d) The Reinsurer will be deemed to have consented if it fails to respond
within:

(i) Ten (10) Business Days of receiving a request pursuant to 5.5(c)(i) or (ii);
or

(ii) Two (2) Business Days of receiving a request pursuant to 5.5(c)(iii) or
(iv).

(e) If the Reinsurer refuses to consent to a request under 5.5(c) or if
circumstances prevented the Cedent from seeking such consent, the Reinsurer
shall provide the Cedent with the basis for any objection to a commutation,
termination or settlement in writing, following which the parties shall seek to
mutually resolve any areas of dispute. If the parties are unable to resolve
their dispute, it shall be referred to arbitration pursuant to Article XIII in
order to determine the extent to which the Ultimate Net Loss may have increased
due to the Cedent acting without prior written consent.

 

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5.6. Representations and Warranties. The Reinsurer hereby represents and
warrants to the Purchaser and the Cedent as of the Effective Date as follows:

(a) The Cedent and the Reinsurer are duly organized, validly existing and in
good standing under the laws of their respective states of incorporation, and
have the corporate and legal power and authority to own, lease and operate their
assets, to carry on their business as now conducted and to enter into and
consummate the transactions contemplated hereby.

(b) The Cedent and the Reinsurer have duly authorized, executed and delivered
this Agreement, which constitutes the legal, valid and binding obligation of the
Cedent and the Reinsurer enforceable against the Cedent and the Reinsurer in
accordance with its terms, except as limited by laws affecting the enforcement
of creditors’ rights generally or by general equitable principles.

(c) The execution, delivery and performance by the Cedent and the Reinsurer of
this Agreement, and the performance by the Cedent and the Reinsurer of their
respective obligations hereunder will not (i) conflict with any of the
provisions of the articles or certificate of incorporation and bylaws of the
Cedent or the Reinsurer, as applicable, (ii) conflict with or result in a breach
of or default (with or without notice or lapse of time, or both) under, give
rise to a right of termination, cancellation, modification or acceleration of
any obligation or to the loss of any benefit under, or result in the creation of
any Lien on the shares of issued and outstanding capital stock of the Cedent or
any property or asset owned by the Cedent under, any Permit, instrument,
contract or other legally binding commitment or agreement to which the Cedent or
the Reinsurer is a party or by which any of their respective properties or
assets is bound, or (iii) violate any Law applicable to the Cedent or the
Reinsurer or their respective properties or assets.

ARTICLE VI

REPORTS; RESERVES

6.1. Quarterly Reports. Within forty-five (45) days after the close of each
calendar quarter ending after the Effective Date, the Cedent shall deliver to
the Reinsurer a report (the “Quarterly Report”) in a form mutually acceptable to
the Cedent and the Reinsurer, containing the following information regarding the
Reinsured Business:

(a) Loss Reserves and Estimated Loss from Unearned Premiums as of the beginning
of the calendar quarter;

(b) Loss Reserves and Estimated Loss from Unearned Premiums as of the close of
the calendar quarter;

(c) Loss actually paid by the Cedent, during the calendar quarter;

 

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(d) Recoveries actually received by the Cedent during the calendar quarter;

(e) Reinsurance Recoveries actually received by the Cedent during the calendar
quarter;

(f) Premium Adjustments during the calendar quarter;

(g) A calculation of Ultimate Net Loss as of the close of the calendar quarter;

(h) A calculation of the Quarterly Loss Payment for the calendar quarter;

(i) If security is required pursuant to Article IX, a calculation of the
Collateral Requirement as of the end of the calendar quarter; and

(j) All additional information as may be reasonably required by the Reinsurer to
prepare its statutory statements filed with insurance regulators or as may be
otherwise reasonably requested by the Reinsurer for similar business purposes.

6.2. Payment. If the aggregate amount of Loss actually paid by the Cedent, net
of Recoveries and Reinsurance Recoveries, is greater than the Retention, the
Reinsurer shall pay to the Cedent any amounts due the Cedent pursuant to
Section 2.1 (less any amounts previously paid by the Reinsurer to the Cedent
under this Section) within thirty (30) days after the receipt of the Quarterly
Report.

6.3. Commercially Reasonable Efforts to Supply Actual Data. In preparing all
reports required in this Agreement, the Cedent shall use its commercially
reasonable efforts to supply the actual data. If the actual data cannot be
supplied with the appropriate report, the Cedent shall so indicate in the
report, shall produce estimates thereof and shall provide amended reports based
on actual data no more than thirty (30) Business Days after the actual data
becomes available and the parties will settle any additional amounts due within
ten (10) Business Days thereafter.

6.4. Calculation of Retention. (a) Within sixty (60) days following the Closing
Date, the Cedent shall prepare and deliver to the Reinsurer a detailed
calculation of the (i) Loss Reserves and (ii) Estimated Loss from Unearned
Premiums, each determined in accordance with the Agreed Procedures (the
“Retention Statement”).

(b) The Reinsurer shall have thirty (30) days following receipt of the Retention
Statement to review the calculation of the Retention, and to notify the Cedent
in writing if it disputes any aspect of the calculation of the Retention set
forth in the Retention Statement (the “Dispute Notice”), specifying the reasons
therefor in reasonable detail. The Reinsurer shall be conclusively deemed to
have accepted all items and amounts contained in the Retention Statement other
than the items identified in the Dispute Notice. In connection with the
Reinsurer’s review of the Retention Statement, the Cedent shall permit, and
shall cause its Representatives to permit, the Reinsurer and its Representatives
to have reasonable access, during normal business hours and upon reasonable
notice, to (i) the relevant books, records and employees of the Cedent and
(ii) all relevant work papers, schedules, memoranda and other documents prepared
by the Cedent or its Representatives in connection with its preparation of its
calculation of the Retention.

 

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(c) In the event that the Reinsurer shall deliver a Dispute Notice to the
Cedent, the Cedent and the Reinsurer shall attempt to resolve such dispute as
promptly as practicable and, upon such resolution, if any adjustments to the
Retention shall be made in accordance with the resolution of the Cedent and the
Reinsurer, then the Cedent and the Reinsurer shall set forth any such resolution
in writing. If the Cedent and the Reinsurer are unable to resolve any such
dispute within thirty (30) Business Days (or such longer period as the Cedent
and the Reinsurer shall mutually agree in writing) of the Reinsurer’s delivery
of such Dispute Notice, the Cedent and the Reinsurer shall promptly submit to
the Independent Accounting Firm any remaining items in dispute for resolution
pursuant to the procedures set forth in Article XII, and any determination of
the Independent Accounting Firm shall be final and binding on the parties.

(d) To the extent that there are any Premium Adjustments that occur after the
Effective Date, the Retention will be updated in accordance with the Agreed
Procedures.

ARTICLE VII

DURATION: TERMINATION

7.1. Reinsurer’s Liability. This Agreement shall commence as of the Effective
Date and continue in force until the earlier of (i) the date that the Reinsurer
has actually paid an aggregate net amount in respect of Ultimate Net Loss equal
to the Reinsurer’s Aggregate Limit, (ii) such time as the Cedent has no further
liability with respect to the Reinsured Business and all amounts due to the
Cedent under this Agreement have been paid by the Reinsurer and (iii) this
Agreement is commuted in full and all amounts due to the Cedent under this
Agreement have been paid by the Reinsurer.

ARTICLE VIII

COMMUTATION

8.1. Commutation by Agreement. Except as set forth in Section 8.2, this
Agreement may only be commuted in accordance with the prior written agreement of
the parties to this Agreement. The parties agree to negotiate in good faith a
full commutation of this Agreement as of the fifth (5th) anniversary of the
Effective Date and until commuted as of every anniversary thereafter, and the
parties agree that the terms of any commutation of this Agreement shall be fair
and equitable to the parties hereto.

8.2. Commutation Following Impairment Event.

(a) Upon the occurrence of an Impairment Event, the Cedent shall have the right
(but not the obligation) to commute all, and not less than all, of the
reinsurance ceded under this Agreement, by providing the Reinsurer with written
notice of its intent to effect commutation. The commutation shall be effective
on the date specified in such notice (the “Commutation Effective Date”);
provided, that the Commutation Effective Date shall be at least ten
(10) calendar days but no more than six (6) months following the date of such
notice.

 

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(b) In the event of a commutation pursuant to Section 8.2(a), the Reinsurer
shall make a final payment (a “Terminal Settlement Payment”) to the Cedent in an
amount equal to the result of [0.95 x [(i) – (ii)]] – (iii) – (iv), where:

(i) is the Estimated Loss Amount as of the Commutation Effective Date;

(ii) is the Retention;

(iii) is the sum of all Quarterly Loss Payments paid by the Reinsurer to the
Cedent prior to the Commutation Effective Date; and

(iv) is the discount for the present value of the result of the foregoing
clauses (i)-(iii), based on the average remaining duration for the Reinsured
Business and a discount interest mechanism to be mutually agreed by the parties
to this Agreement at the time of such calculation.

(c) Within sixty (60) days following the Cedent’s delivery of a notice of its
election to commute this Agreement pursuant to Section 8.2(a), the Cedent shall
prepare and deliver to the Reinsurer a detailed calculation of the Terminal
Settlement Payment (the “Terminal Settlement Statement”).

(d) The Reinsurer shall have thirty (30) days following receipt of the Terminal
Settlement Statement to review the calculation of the Terminal Settlement
Payment, and to notify the Cedent in writing if it disputes any aspect of the
calculation of the Terminal Settlement Payment set forth in the Terminal
Settlement Statement (the “Dispute Notice”), specifying the reasons therefor in
reasonable detail. The Reinsurer shall be conclusively deemed to have accepted
all items and amounts contained in the Terminal Settlement Statement other than
the items identified in the Dispute Notice. In connection with the Reinsurer’s
review of the Terminal Settlement Statement, the Cedent shall permit, and shall
cause its Representatives to permit, the Reinsurer and its Representatives to
have reasonable access, during normal business hours and upon reasonable notice,
to (i) the books, records and relevant employees of the Cedent and (ii) all
relevant work papers, schedules, memoranda and other documents prepared by the
Cedent or its Representatives in connection with its preparation of its
calculation of the Terminal Settlement Payment.

(e) In the event that the Reinsurer shall deliver a Dispute Notice to the
Cedent, the Cedent and the Reinsurer shall attempt to resolve such dispute as
promptly as practicable and, upon such resolution, if any adjustments to the
Terminal Settlement Payment shall be made in accordance with the resolution of
the Cedent and the Reinsurer, then the Cedent and the Reinsurer shall set forth
any such resolution in writing. If the Cedent and the Reinsurer are unable to
resolve any such dispute within thirty (30) Business Days (or such longer period
as the Cedent and the Reinsurer shall mutually agree in writing) of the

 

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Reinsurer’s delivery of such Dispute Notice, the Cedent and the Reinsurer shall
promptly submit to the Independent Accounting Firm any remaining items in
dispute for resolution pursuant to the procedures set forth in Article XII, and
any determination of the Independent Accounting Firm shall be final and binding
on the parties.

(f) Any payment required to be made by the Reinsurer under Section 8.2 shall be
made by wire transfer within five (5) Business Days of the determination of such
amount, including the final determination of any payment amount pursuant to
Article XII.

ARTICLE IX

COLLATERAL

9.1. Collateral.

(a) If the Reinsurer has experienced an Impairment Event and the Cedent has not
yet elected to commute this Agreement in full pursuant to Section 8.2, at the
Cedent’s request, the Reinsurer shall provide collateral as security for the
Reinsurer’s obligations to the Cedent hereunder, in accordance with this Article
IX. Within ten (10) Business Days after the Cedent’s delivery of notice to the
Reinsurer requiring that the Reinsurer provide collateral pursuant to this
Section 9.1, the Reinsurer shall deliver to the Cedent security in the form of
(i) clean, irrevocable and unconditional letters of credit issued by a bank or
banks acceptable to the Cedent (“LOCs”) and/or (ii) Eligible Assets valued at
fair market value in a trust account (a “Trust Account”) with a trustee (the
“Trustee”) reasonably acceptable to the Cedent naming the Cedent as sole
beneficiary thereof, in the aggregate amount equal to the Collateral Requirement
as of the end of the calendar quarter immediately preceding the Cedent’s written
notice. The parties agree to negotiate in good faith the form of trust agreement
pursuant to which the Reinsurer will establish and maintain with the Trustee the
Trust Account (the “Trust Agreement”).

(b) Prior to depositing assets in the Trust Account, the Reinsurer will execute
assignments, endorsements, medallion guaranteed stock powers, and medallion
guaranteed bond powers in blank as appropriate in each instance for the type of
asset, to transfer legal title to the trustee of all shares, obligations or any
other assets requiring assignment, conveyance or transfer, in order that the
Cedent, or the trustee upon the direction of the Cedent, may whenever necessary
negotiate the assets, attach the endorsements and record the assignments without
any additional consent or signature from the Reinsurer or any other entity.

(c) The amount of security provided by the Reinsurer shall be adjusted following
the end of each calendar quarter to be equal to the Collateral Requirement as of
the end of such calendar quarter as follows:

(i) If the aggregate face amount of the LOCs and the fair market value of the
Eligible Assets held in the Trust Account at the end of any calendar quarter is
less than the Collateral Requirement as of the end of such calendar quarter,
calculated based on the most recent Quarterly Report, the Reinsurer shall, no
later than ten (10) Business Days following receipt of Quarterly Report,
increase the

 

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face amount of the LOCs and/or transfer additional Eligible Assets to the Trust
Account so that the aggregate face amount of the LOCs and the fair market value
of the Eligible Assets held in the Trust Account is not less than the Collateral
Requirement as of the end of such calendar quarter.

(ii) If the aggregate face amount of the LOCs and the fair market value of the
Eligible Assets held in the Trust Account at the end of any calendar quarter
exceeds the Collateral Requirement as of the end of such calendar quarter,
calculated based on the most recent Quarterly Report, the Reinsurer shall have
the right to decrease the face amount of the LOCs and/or withdraw Eligible
Assets from the Trust Account in accordance with the terms of the Trust
Agreement.

(d) The Cedent and the Reinsurer agree that the LOC may be drawn upon by the
Cedent and the assets maintained in the Trust Account may be withdrawn by the
Cedent, including without limitation by any liquidator, rehabilitator, receiver
or conservator of the Cedent, without diminution because of insolvency on the
part of the Cedent or the Reinsurer at any time without notice to or consent
from the Reinsurer, but only for one or more of the following purposes:

(i) to pay or reimburse the Cedent for amounts due to the Cedent hereunder, to
the extent such amount has not been paid by the Reinsurer within twenty
(20) Business Days following the Reinsurer’s receipt of a written notice
thereof; and

(ii) to make payments to the Reinsurer of amounts held in the Trust Account in
excess of the amount required to be maintained by the Reinsurer in the Trust
Account.

(e) The term “Collateral Requirement”, as of any date of determination, means
100% of the result of [0.95 x [(i) – (ii)]] – (iii), where:

(i) is the Estimated Loss Amount as of such date of determination;

(ii) is the Retention; and

(iii) is the sum of all Quarterly Loss Payments paid by the Reinsurer to the
Cedent prior to such date of determination.

ARTICLE X

INSOLVENCY

10.1. Payments. In the event of the insolvency of the Cedent, payments due the
Cedent on all reinsurance made, ceded, renewed or otherwise becoming effective
under this Agreement shall be paid by the Reinsurer directly to the Cedent or to
its domiciliary liquidator on the basis of the liability of the Cedent under the
policy or policies reinsured, subject to court approval, without diminution
because of the insolvency of the Cedent. It is agreed and understood, however,
that (i) in the event of the insolvency of the Cedent, the Reinsurer shall be
given

 

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written notice of the pendency of a claim against the insolvent Cedent with
respect to the policy or policies reinsured within a reasonable time after such
claim is filed in the insolvency proceeding and (ii) 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 defenses
which it may deem available to the Cedent or its domiciliary liquidator.

10.2. Continuity of Terms. In the event of the insolvency of the Cedent, the
terms of this Agreement shall continue in full force and effect.

ARTICLE XI

EXCLUSIONS

11.1. Exclusions. The following shall be excluded from the definition of
“Ultimate Net Loss” and not covered by this Agreement:

(a) Any liability paid by the Cedent prior to the Effective Date; and

(b) Any liability of any tax, whether the tax is denominated as an income tax,
excise tax, premium tax, surplus lines tax or any other tax assessment.

ARTICLE XII

INDEPENDENT ACCOUNTING FIRM

12.1. Dispute Resolution. In the event that the Cedent and Reinsurer are unable
to mutually resolve a dispute pursuant to Section 6.4, or Section 8.2, the
Cedent and the Reinsurer shall promptly submit to the Independent Accounting
Firm for resolution those items remaining in dispute pursuant to the following
procedures:

(a) The Cedent and the Reinsurer agree to enter into a customary engagement
letter with the Independent Accounting Firm, and any fees, costs or expenses of
the Independent Accounting Firm (and the American Arbitration Association if
engaged pursuant to the definition of Independent Accounting Firm) in respect of
its services as contemplated by this Section 12.1 shall be borne by the parties
in reverse proportion to the relative success of the parties on the disputed
items submitted to the Independent Accounting Firm, with such determination of
relative success made by the Independent Accounting Firm, or if the Independent
Accounting Firm is unwilling to make such determination, then such fees, costs
and expenses shall be borne fifty percent (50%) by the Reinsurer and fifty
percent (50%) by the Cedent.

(b) The Independent Accounting Firm shall be instructed to use reasonable best
efforts to perform its services and reach a final determination with respect to
the matters submitted to it for resolution within thirty (30) days of submission
of the dispute thereto and, in any case, as promptly as practicable after such
submission. In resolving any disputed item, the Independent Accounting Firm
(i) shall be bound by the provisions of this Section 12.1 and any other relevant
provisions of this Agreement and (ii) may not assign a value to any item greater
than the greatest value for such item claimed by either the Cedent or the
Reinsurer or less than the smallest value for such item claimed by either the
Cedent or the Reinsurer.

 

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(c) In connection with the Independent Accounting Firm’s consideration of the
dispute submitted to it, each party shall permit, and cause its Affiliates and
Representatives to permit, the Independent Accounting Firm and its
Representatives to have reasonable access, during normal business hours and upon
reasonable notice, to all relevant work papers, schedules, memoranda and other
documents prepared by such Party or its Representatives in connection with its
preparation of the disputed statement and/or the Dispute Notice, as the case may
be, and to personnel of such Party and its Affiliates and any other information
which the Independent Accounting Firm or any Representative thereof reasonably
requests, and the parties hereto shall, and shall cause their respective
Affiliates and Representatives to, otherwise cooperate with the Independent
Accounting Firm and its Representatives in connection therewith.

(d) Any determination of the Independent Accounting Firm shall be final and
binding on the parties.

ARTICLE XIII

ARBITRATION

13.1. Resolution of Damages. Except as otherwise provided in this Agreement,
including in Section 6.4 and Section 8.2, as a condition precedent to any right
arising under this Agreement, any dispute between the Cedent and the Reinsurer
arising out of the provisions of this Agreement, or concerning its
interpretation or validity, whether arising before or after termination of this
Agreement, shall be submitted to arbitration in the manner set forth in this
Article XIII. In the event of a conflict between this Section 13.1 and any other
provision of this Agreement, this Section 13.1 shall prevail and the right of
either party to commence proceedings before any other court or tribunal shall be
limited to the process of enforcement of any award made pursuant to arbitration
conducted in accordance with this Article XIII. Either party may initiate
arbitration of any such dispute by giving written notice to the other party by
registered mail or a recognized overnight courier of its intention to arbitrate
and of its appointment of an arbitrator in accordance with Section 13.3.

13.2. Composition of Panel. Unless the parties agree upon a single arbitrator
within fifteen (15) days after the receipt of notice of intention to arbitrate,
all disputes shall be submitted to an arbitration panel composed of two
arbitrators and an umpire, chosen in accordance with Sections 13.3 and 13.4.

13.3. Appointment of Arbitrators. The party requesting arbitration (hereinafter
referred to as the “claimant”) shall appoint an arbitrator and give written
notice thereof, by registered mail or a recognized overnight courier to the
other party (hereinafter referred to as the “respondent”) together with its
notice of intention to arbitrate. Unless a single arbitrator is agreed upon
within fifteen (15) days after the receipt of the notice or intention to
arbitrate, the respondent shall, within thirty (30) days after receiving such
notice, also appoint an arbitrator and notify the claimant thereof in a like
manner. Before instituting a hearing, the two arbitrators so appointed shall
choose an impartial umpire. If, within thirty (30) days after they are both
appointed, the arbitrators fail to agree upon the appointment of an umpire, the
umpire shall be appointed by the President of the American Arbitration
Association. The arbitrators shall be present or former executives or officers
of property and casualty insurance or reinsurance companies. The arbitrators and
umpire shall be disinterested individuals and not be under the control of either
party, and shall have no financial interest in the outcome of the arbitration.

 

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13.4. Failure of a Party to Appoint Arbitrator. If the respondent fails to
appoint an arbitrator within thirty (30) days after receiving a notice of
intention to arbitrate, such arbitrator shall be appointed by the President of
the American Arbitration Association, and shall then, together with the
arbitrator appointed by the claimant, choose an umpire as provided in
Section 13.3.

13.5. Choice of Forum. Any arbitration instituted pursuant to this Article XIII
shall be held in New York, New York or such other place as the parties may
mutually agree; provided, that, notwithstanding the location of the arbitration,
any arbitration or other legal proceeding pursuant to this Agreement shall be
governed by the laws of the State of New York in accordance with Section 14.7.

13.6. Submission of Dispute to Panel. Unless otherwise extended by the
arbitration panel, or agreed to by the parties, the claimant shall submit its
brief to the panel within forty-five (45) days after the selection of an umpire.
The respondent shall submit its brief within forty-five (45) days thereafter.
The claimant may submit a reply brief within thirty (30) days after the filing
of the respondent’s brief. Notwithstanding anything herein to the contrary, the
time period for submission of the case to the panel may be extended or modified
by mutual consent of the parties.

13.7. Procedure Governing Arbitration. Each party participating in the
arbitration shall have the obligation to produce those documents and as
witnesses to the arbitration those of its employees as any other participating
party reasonably requests providing always that the same witnesses and documents
be obtainable and relevant to the issues before the arbitration and not be
unduly burdensome or excessive. The parties may mutually agree as to pre-hearing
discovery prior to the arbitration hearing and in the absence of agreement, upon
the request of any party, pre-hearing discovery may be conducted as the panel
shall determine in its sole discretion to be in the interest of fairness, full
disclosure, and a prompt hearing, decision and award by the panel. The panel
shall be the final judge of the procedures of the panel, the conduct of the
arbitration of the rules of evidence, the rules of privilege and production and
of excessiveness and relevancy of any witnesses and documents upon the petition
of any participating party. To the extent permitted by law, the panel shall have
the authority to issue subpoenas and other orders to enforce their decisions.

13.8. Arbitration Award. The arbitration panel shall render its decision within
sixty (60) days after termination of the proceeding unless the parties consent
to an extension, which decision shall be in writing, stating the reason
therefor. The decision of the majority of the panel shall be final and binding
on the parties to the proceeding except to the extent otherwise provided in the
Federal Arbitration Act. Judgment upon the award may be entered in any court
having jurisdiction pursuant to the Federal Arbitration Act.

 

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13.9. Cost of Arbitration. Unless otherwise allocated by the panel, each party
shall bear the expense of its own arbitrator and its own witnesses and shall
equally bear with the other parties the expense of the umpire and the
arbitration.

13.10. Limit of Authority. It is agreed that the arbitrators shall have no
authority to impose any punitive, exemplary or consequential damage awards on
either of the parties hereto.

ARTICLE XIV

MISCELLANEOUS PROVISIONS

14.1. Headings. Headings used herein are not a part of this Agreement and shall
not affect the terms hereof.

14.2. Notices. All notices, requests, demands and other communications hereunder
must be in writing (including facsimile transmission or electronic mail) and
shall be deemed to have been duly given (i) when received if delivered by hand
against written receipt, (ii) when received if sent by facsimile transmission or
electronic mail between 9:00 a.m. and 5:00 p.m. on a Business Day, provided such
transmission is confirmed by the transmitting machine or e-mail system of the
sender, or (iii) if sent by overnight courier, two (2) Business Days after
delivery to a recognized major overnight courier service, fees prepaid. In each
case notices shall be addressed as follows:

If to the Cedent:

RenaissanceRe Holdings Ltd.

12 Crow Lane

Pembroke HM19, Bermuda

Attention: General Counsel

E-mail: shw@renre.com

If to the Reinsurer:

Tokio Marine & Nichido Fire Insurance Co., Ltd.

2-1 Marunouchi 1-Chome

Chiyoda-ku, Tokyo, Japan, 100-8050

Tel: 81-3-6267-5775

Fax: 81-3-6267-5755

Attention: Tomoya Kittaka, General Manager,

Global Division, Commercial Lines Marketing Department

E-mail: TOMOYA.KITSUTAKA3@tmnf.jp

or to such other address or to such other Person as either party may have last
designated by notice to the other party.

 

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14.3. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, permitted
assigns and legal representatives. Neither this Agreement, nor any right or
obligation hereunder, may be assigned by either party without the prior written
consent of the other party; provided, that the Reinsurer may assign this
Agreement to a third party reinsurer with the prior written consent of the
Cedent, which consent shall not be unreasonably withheld. Any assignment in
violation of this Section 14.3 shall be void and shall have no force and effect.

14.4. Execution in Counterpart. This Agreement may be executed by the parties
hereto in any number of counterparts, and by each of the parties hereto in
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.

14.5. Currency. Whenever the word “Dollars” or the “$” sign appear in this
Agreement, they shall be construed to mean United States Dollars, and all
transactions under this Agreement shall be in United States Dollars. Amounts
paid or received by the Cedent in currency that is not United States Dollars
shall be converted to United States Dollars at the rate of exchange at which
such transactions are converted on the books of the Cedent.

14.6. Amendments. This Agreement may not be changed, altered or modified unless
the same shall be in writing executed by the Cedent and the Reinsurer; provided,
that, as and to the extent required by New York Law, this Agreement shall not be
amended without the prior approval or non-objection of the New York Department
of Financial Services.

14.7. Governing Law. This Agreement will be construed, performed and enforced in
accordance with the laws of the State of New York without giving effect to its
principles or rules of conflict of laws thereof to the extent such principles or
rules would require or permit the application of the laws of another
jurisdiction.

14.8. Entire Agreement; Severability. (a) This Agreement contains the entire
agreement of the parties with respect to the subject matter of this Agreement,
and supersedes all other prior agreements, understandings, statements,
representations and warranties, oral or written, express or implied, between the
parties and their respective Affiliates, representatives and agents in respect
of the subject matter hereof and thereof.

(b) If any provision of this Agreement is held to be void or unenforceable, in
whole or in part, (i) such holding shall not affect the validity and
enforceability of the remainder of this Agreement, including any other
provision, paragraph or subparagraph, and (ii) the parties agree to attempt in
good faith to reform such void or unenforceable provision to the extent
necessary to render such provision enforceable and to carry out its original
intent.

(c) If any provision of this Agreement shall be rendered illegal or
unenforceable by the laws, regulations or public policy of any state, such
provision shall be void in such state, but this shall not affect the validity or
enforceability of such provision in any other jurisdiction.

 

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14.9. No Waiver; Preservation of Remedies. No consent or waiver, express or
implied, by any party to or of any breach or default by any other party in the
performance by such other party of its obligations hereunder shall be deemed or
construed to be a consent or waiver to or of any other breach or default in the
performance of obligations hereunder by such other party hereunder. Failure on
the part of any party to complain of any act or failure to act of any other
party or to declare any other party in default, irrespective of how long such
failure continues, shall not constitute a waiver by such first party of any of
its rights hereunder. The rights and remedies provided are cumulative and are
not exclusive of any rights or remedies that any party may otherwise have at law
or equity.

14.10. Third Party Beneficiary. Except as expressly provided for in the
insolvency subsection above or in Section 14.3 of this Agreement, nothing in
this Agreement will confer any rights upon any Person that is not a party or a
successor or permitted assignee of a party to this Agreement; provided, that the
parties expressly agree and acknowledge that the Purchaser is also a third party
beneficiary for purposes of Section 5.5 of this Agreement.

14.11. Negotiated Agreement. This Agreement has been negotiated by the parties
and the fact that the initial and final draft will have been prepared by either
party or an intermediary will not give rise to any presumption for or against
any party to this Agreement or be used in any respect or forum in the
construction or interpretation of this Agreement or any of its provisions.

14.12. Interpretation. Wherever the words “include,” “includes” or “including”
are used in this Agreement, they shall be deemed to be followed by the words
“without limitation.” Nothing affecting the validity or enforceability of any
agreement entered into between the Reinsurer or any of its Affiliates and the
Purchaser or any of its Affiliates in connection with the Stock Purchase
Agreement and the transactions contemplated thereby shall affect the validity or
enforceability of this Agreement.

14.13. Incontestability. In consideration of the mutual covenants and agreements
contained herein, each party hereto does hereby agree that this Agreement, and
each and every provision hereof, is and shall be enforceable by and between them
according to its terms, and each party does hereby agree that it shall not,
directly or indirectly, contest the validity or enforceability hereof.

14.14. Service of Suit. It is agreed that in the event of the failure of the
Reinsurer to pay any amount claimed to be due to Tokio AG U.S. Branch hereunder,
the Reinsurer, at the request of the Cedent, will submit to the jurisdiction of
a court of competent jurisdiction within the State of New York. Nothing in this
Section 14.14 constitutes or should be understood to constitute a waiver of the
Reinsurer’s rights to commence an action in any court of competent jurisdiction
in the State of New York, to remove an action to a federal or state court
located in the State of New York, 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. It is further agreed that service of process in such suit may be
made upon Tokio Marine North America, Inc., 1221 Avenue of the Americas, Suite
1500, New York, NY 10020, and that in any suit instituted, the Reinsurer will
abide by the final decision of such court or of any appellate court in the event
of an appeal. Further, the Reinsurer hereby designates the Superintendent of the
New York State Department of Financial Services or other officer specified for
that purpose in the New York Insurance Law, or his or her successor or
successors in office, as its true and lawful attorney upon whom may be served
any lawful process in any action, suit or proceeding instituted by or on behalf
of Tokio AG U.S. Branch arising out

 

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of this Agreement, 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. This
Section 14.14 will not be read to conflict with or override the obligations of
the parties to arbitrate their disputes as provided for in Article XIII. This
Section 14.14 is intended as an aid to compelling arbitration or enforcing such
arbitration or arbitral award, not as an alternative to Article XIII for
resolving disputes arising out of this Agreement.

14.15. Survival. Article XIII and Article XIV shall survive the termination of
this Agreement.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives.

 

TOKIO MILLENNIUM RE AG By   /s/ Michael J. Schell   Name: Michael J. Schell  
Title:   Non-Executive Director

 

TOKIO MILLENNIUM RE (UK) LIMITED By   /s/ Kiichiro (Ken) Hatakeyama   Name:
Kiichiro (Ken) Hatakeyama   Title:   Non-Executive Director

 

TOKIO MARINE & NICHIDO FIRE INSURANCCE CO., LTD. By   /s/ Satoru Komiya   Name:
Satoru Komiya   Title:   Senior Managing Director

 

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