Exhibit 10.33

[g57982ko01i001.jpg]

PROPERTY CATASTROPHE EXCESS OF LOSS
REINSURANCE AGREEMENT
NO. POR327524

EFFECTIVE: JANUARY 01, 2006

between

SAFETY INSURANCE COMPANY
SAFETY INDEMNITY INSURANCE COMPANY
both of Boston, Massachusetts

and

SWISS REINSURANCE AMERICA CORPORATION
Armonk, New York

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

PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT NO POR327524

ARTICLE

 

CONTENTS

 

PAGE

PREAMBLE

 

 

 

1

ARTICLE I. - BUSINESS COVERED

 

 

 

1

ARTICLE II. - EFFECTIVE DATE AND TERMINATION

 

 

 

2

ARTICLE III. - TERRITORY

 

 

 

2

ARTICLE IV. - LIMIT AND RETENTION

 

 

 

2

ARTICLE V. - REINSTATEMENT

 

 

 

3

ARTICLE VI. - ULTIMATE NET LOSS

 

 

 

4

ARTICLE VII. - LOSS IN EXCESS OF POLICY LIMITS

 

 

 

4

ARTICLE VIII. - EXTRA CONTRACTUAL OBLIGATIONS

 

 

 

5

ARTICLE IX. - EXCLUSIONS

 

 

 

6

ARTICLE X. - SPECIAL ACCEPTANCE

 

 

 

8

ARTICLE XI. - LOSS OCCURRENCE

 

 

 

8

ARTICLE XII. - TERRORISM EXCESS RECOVERY

 

 

 

10

ARTICLE XIII. - REINSURANCE PREMIUM

 

 

 

11

ARTICLE XIV. - CLAIMS

 

 

 

13

ARTICLE XV. - SALVAGE AND SUBROGATION

 

 

 

13

ARTICLE XVI. - ACCESS TO RECORDS

 

 

 

13

ARTICLE XVII. - TAXES

 

 

 

14

ARTICLE XVIII. - CURRENCY

 

 

 

14

ARTICLE XIX. - OFFSET

 

 

 

14

ARTICLE XX. - ERRORS OR OMISSIONS

 

 

 

14

ARTICLE XXI. - DISPUTE RESOLUTION

 

 

 

14

ARTICLE XXII. - INSOLVENCY

 

 

 

16

ARTICLE XXIII. - AMENDMENTS

 

 

 

17

 

 

 

 

 

SIGNATURES

 

 

 

18

 

ATTACHMENTS

 

INSOLVENCY FUNDS EXCLUSION CLAUSE

 

 

POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE

 

 

TOTAL INSURED VALUE EXCLUSION CLAUSE

 

 

POLLUTION AND SEEPAGE EXCLUSION CLAUSE

 

 

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

 

 

NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE - CANADA

 

 

NUCLEAR INCIDENT EXCLUSION CLAUSE - REINSURANCE - NO. 4

 

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

PROPERTY CATASTROPHE EXCESS OF LOSS
REINSURANCE AGREEMENT
NO. POR327524
(hereinafter referred to as the “Agreement”)

between

SAFETY INSURANCE COMPANY
SAFETY INDEMNITY INSURANCE COMPANY
both of Boston, Massachusetts
(hereinafter referred to as the “Company”)

and

SWISS REINSURANCE AMERICA CORPORATION
Armonk, New York
(hereinafter referred to as the “Reinsurer”)

ARTICLE I. - BUSINESS COVERED

A                         The Reinsurer shall indemnify the Company on an excess
of loss basis in respect of the Company’s Ultimate Net Loss paid by the Company
as a result of losses occurring during the term of this Agreement, for Policies
in force as of January 01, 2006, and new and renewal Policies becoming effective
on or after said date, subject to the terms and conditions contained herein.

B.                        This Agreement is solely between the Company and the
Reinsurer, and nothing contained in this Agreement shall create any obligations
or establish any rights against the Reinsurer in favor of any person or entity
not a party hereto.

C                           The performance of obligations by both parties under
this Agreement shall be in accordance with a fiduciary standard of good faith
and fair dealing.

D                          The term “Policies” shall mean each of the Company’s
binders, policies and contracts of insurance on the business covered hereunder.

E                            Under this Agreement, the indemnity for reinsured
loss applies to those Policies issued by the Company with respect to the
following Lines of Business as classified in the Company’s Annual Statement,
subject to the exclusions set forth in Article IX. - Exclusions

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

 

NAIC

 

 

CODE

 

LINE OF BUSINESS

5.1

 

Commercial Multiple Peril - Property

03

 

Allied Lines

04

 

Homeowners -Multiple Peril - Property

21.1

 

Automobile Physical Damage - Private Passenger

21.02

 

Automobile Fire And Theft - Commercial

01

 

Fire

 

ARTICLE II - EFFECTIVE DATE AND TERMINATION

A                       This Agreement shall apply to losses occurring within
the period commencing 12:01 a.m., Eastern Standard Time, January 01, 2006, and
ending 12:01 a.m., Eastern Standard Time, January 1, 2007.

B                         Upon termination of this Agreement, the Reinsurer
shall be liable for losses occurring prior to the date of termination; however,
the Reinsurer shall have no liability for losses occurring subsequent to the
termination of this Agreement.

C                         If this Agreement shall terminate while a Loss
Occurrence covered hereunder is in progress, it is agreed that, subject to the
other conditions of this Agreement, the Reinsurer shall indemnify the Company as
if the entire Loss Occurrence had occurred during the time this Agreement is in
force provided such Loss Occurrence covered hereunder started before the date of
termination.

ARTICLE III. - TERRITORY

This Agreement applies to risks located solely in the Commonwealth of
Massachusetts except that with respect to Multiple Peril Policies covered
hereunder, the territorial limits of this Agreement shall be those of the
original Policies when such Policies are written to cover risks primarily
located in the Commonwealth of Massachusetts.

ARTICLE IV. - LIMIT AND RETENTION

A                       As respects one or more than one Line of Business
covered under this Agreement, the Company shall retain the first $15,000,000 of
Ultimate Net Loss as respects each risk. The Reinsurer shall then be liable for
the amount by which the Company’s Ultimate Net Loss exceeds the Company’s
retention of $15,000,000, but the liability of the Reinsurer shall never exceed
$13,500,000 (i.e., 90% of $15,000,000) each risk, nor shall the Reinsurer’s
liability exceed $27,000,000 (i.e., 90% of $30,000,000) in all during the term
of this Agreement. Notwithstanding the foregoing, as respects the event of
terrorism, Reinsurer’s liability shall be further limited to $13,500,000 in all,
during the term of this Agreement.

2

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

B                         Reinsurance of the Company’s retention, set forth
above, shall not be deducted in arriving at the Company’s Ultimate Net Loss
herein.

C                         It is warranted by the Company that the reinsurance
provided under this Agreement shall attach only when two or more risks are
involved in the same Loss Occurrence. The Company shall be the sole judge of
what constitutes one risk provided, however, that:

1                          A risk shall never be less than all insurable values
within exterior walls and under one roof regardless of fire divisions, the
number of Policies involved, and whether there is a single, multiple or
unrelated named insureds involved in such risk.

2.                         When two or more buildings 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 all insurable values
contained therein that are considered to constitute each risk. If such
identification is not made, each building and all insurable values contained
therein shall be considered to be a separate risk.

3                          A risk shall be determined from the standpoint of the
predominant peril and such peril shall be noted in the Company’s records.

D                        It is warranted by the Company that it shall retain at
its own risk and not reinsured in any way, 10% of Ultimate Net Loss, each Loss
Occurrence as set forth above.

ARTICLE V. - REINSTATEMENT

A                       Each claim hereunder reduces the amount of indemnity
from the time of occurrence of the loss by the sum paid, but any amount so
exhausted is hereby reinstated from the time the Loss Occurrence commences
hereon.

B                         For each subsequent reinstatement, the Company agrees
to pay an additional premium calculated at pro rata of the annual premium
hereon, being pro rata both as to the fraction of the limit of liability of this
Agreement (i.e., the fraction of $15,000,000) so reinstated and as to the
fraction of unexpired annual term at the time of the Loss Occurrence.

C                         Nevertheless, the Reinsurer’s liability hereunder
shall never exceed $13,500,000 (i.e., 90% of $15,000,000) in respect of any one
Loss Occurrence and shall be further limited in all during the term of the
Agreement to $27,000,000 (i.e., 90% of $30,000,000).

3

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

ARTICLE VI. - ULTIMATE NET LOSS

A                         The term “Ultimate Net Loss” shall mean the actual sum
paid by the Company in settlement of losses or liability after making deductions
for all recoveries, including subrogation, salvages, and claims upon other
reinsurances, whether collectible or not, which inure to the benefit of the
Reinsurer under this Agreement, and shall include Loss Adjustment Expenses
incurred by the Company; provided, however, that in the event of the insolvency
of the Company, Ultimate Net Loss shall mean the amount of loss and Loss
Adjustment Expenses for which the Company is liable, and payment by the
Reinsurer shall be made to the liquidator, receiver, conservator or statutory
successor of the Company in accordance with the provisions of Article XXII.
-Insolvency of this Agreement.

B                           The term “Ultimate Net Loss” shall include 100% of
Loss In Excess of Policy Limits and 100% of Extra Contractual Obligations, as
defined herein, but only as respects business covered under this Agreement.

C                           The term “Loss Adjustment Expenses” shall mean all
expenses incurred by the Company in connection with the investigation,
settlement, defense or litigation of any claim or loss covered by the Policies
reinsured under this Agreement, but shall exclude the salaries and expenses of
Company employees, office expenses and other overhead expenses.

D                          All recoveries, salvages or payments recovered or
received subsequent to a loss settlement under this Agreement shall be applied
as if recovered or received prior to the aforesaid settlement and all necessary
adjustments to the loss settlement shall be made by the parties hereto.

E                            Nothing in this Article shall be construed to mean
that losses are not recoverable hereunder until the Ultimate Net Loss of the
Company has been ascertained.

ARTICLE VII. - LOSS IN EXCESS OF POLICY LIMITS

                               “Loss in Excess of Policy Limits” is defined as
loss in excess of the limit of the original Policy, such loss in excess of the
limit having 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.

B                           However, this Article shall not apply where the loss
has been incurred due to fraud by a member of the Board of Directors or a

4

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

corporate officer of the Company 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 covered
hereunder.

C.                        For the purposes of this Article, the word “loss”
shall mean any amounts which the Company would have been contractually liable to
pay had it not been for the limit of the original Policy.

D.                       With respect to coverage provided under this Article,
recoveries from any insurance or reinsurance other than this Agreement shall be
deducted to arrive at the amount of the Company’s Ultimate Net Loss.

ARTICLE VIII. - EXTRA CONTRACTUAL OBLIGATIONS

A.                      “Extra Contractual Obligations” are defined as those
liabilities not covered under any other provision of this Agreement and which
arise from the handling of any claim on business covered hereunder, such
liabilities arising because of, but not limited to, the following: 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.

B                         The date on which an Extra Contractual Obligation is
incurred by the Company shall be deemed, in all circumstances, to be the date of
the original accident, casualty, disaster or loss occurrence.

C                         However, coverage hereunder as respects Extra
Contractual Obligations shall not apply where the loss has been incurred due to
the fraud of a member of the Board of Directors or a corporate officer of the
Company 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 covered hereunder.

D                        Recoveries, collectibles or retention from any other
form of insurance or reinsurance including deductibles or self-insured retention
which protect the Company against Extra Contractual Obligations, whether
collectible or not, shall inure to the benefit of the Reinsurer and shall be
deducted from the total amount of Extra Contractual Obligations for purposes of
determining the loss hereunder.

5

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

E                          If any provision of this Article shall be rendered
illegal or unenforceable by the laws, regulations or public policy 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 IX. - EXCLUSIONS

THIS AGREEMENT DOES NOT COVER

A        THE FOLLOWING GENERAL CATEGORIES

1.                         All Lines of Business not specifically listed in
Article I Business Covered.

2.                         Policies issued with a deductible of $100,000 or
more; provided this exclusion shall not apply to Policies which customarily
provide a percentage deductible on the perils of earthquake or windstorm.

3.                         Reinsurance assumed, except pro rata local agency
reinsurance on specific risks.

4.                         Ex-gratia Payments

5.                         Loss or damage occasioned by war, invasion,
revolution, bombardment, hostilities, acts of foreign enemies, civil war,
rebellion, insurrection, military or usurped power, martial law, or confiscation
by order of any government or public authority, but not excluding loss or damage
which would be covered under a standard form of Policy containing a standard war
exclusion clause.

6.                         Insolvency Funds as per the attached Insolvency Funds
Exclusion Clause, which is made part of this Agreement.

7.                         Pool, Syndicate and Association business as per the
attached Pools, Associations and Syndicates Exclusion Clause, which is made part
of this Agreement.

8.                         Risks where the Total Insured Value, per risk,
exceeds the figure specified as per the attached Total Insured Value Exclusion
Clause, which is made part of this Agreement.

6

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

9.                         Loss resulting from damage to overhead transmission
and distribution lines, including supporting structures and anything attached
thereto, of any public or private utility company, cable television or
telecommunication company of any kind. This exclusion shall not apply to such
overhead transmission and distribution lines, including supporting structures
and anything attached thereto located on the premises of any policyholder or
within 1,000 feet thereof. Nor shall this exclusion apply to utility service
interruption or contingent business interruption losses for any policyholder,
unless such policyholder is a public or private utility company, cable
television or telecommunication company of any kind.

B.        THE FOLLOWING CLASSES OF BUSINESS AND TYPES OF RISKS

1.                         Theft Insurance

2.                         Insurance of wrongful conversion, embezzlement, and
secretion

3.                         Cargo Liability

4.                         Mobile Homes

Manufacturer’s stock

Dealers Open Lot

C.        THE FOLLOWING PERILS

Flood and/or Earthquake when written as such

Difference in Conditions, however styled

Pollution and Seepage as per the attached Pollution and Seepage Exclusion
Clause, which is made part of this Agreement.

4                            Nuclear Incident Exclusion Clauses which are
attached and made part of this Agreement:

a                             Nuclear Incident Exclusion Clause - Physical
Damage Reinsurance - U.S.A.

b                            Nuclear Incident Exclusion Clause - Physical Damage
Reinsurance - Canada.

c                             Nuclear Incident Exclusion Clause - Reinsurance -
No. 4

5                            a          Loss, damage or expense of whatsoever
nature caused directly or indirectly by any of the following, regardless of any
other cause or event contributing concurrently or in any other sequence to the
loss: nuclear reaction or radiation, or radioactive contamination, however
caused.

7

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

b.                         However, if nuclear reaction or radiation, or
radioactive contamination results in fire it is specifically agreed herewith
that this Agreement will pay for such fire loss or damage subject to all of the
terms, conditions and limitations of this Agreement.

c.                          This exclusion shall not apply to loss, damage or
expense originating from and occurring at risks using radioactive isotopes in
any form where the nuclear exposure is not considered by the Company to be the
primary hazard.

ARTICLE X. - SPECIAL ACCEPTANCE

Risks which are beyond the terms, conditions or limitations of this Agreement
may be submitted to the Reinsurer for special acceptance hereunder; and such
risks, if accepted in writing by the Reinsurer, shall be subject to all of the
terms, conditions and limitations of this Agreement, except as modified by the
special acceptance. Premiums and losses derived from any special acceptance
shall be included with other data for rating purposes under this Agreement.

ARTICLE XI. - LOSS OCCURRENCE

A.                      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:

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.

2                            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

8

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

during the continued occupation of an assured’s premises by strikers, provided
such occupation commenced during the aforesaid period.

3                            As regards earthquake (the epicentre of which need
not necessarily be within the territorial confines referred to in the opening
paragraph of this Article) and fire following directly occasioned by the
earthquake, only those individual fire losses which commence during the period
of 168 consecutive hours may be included in the Company’s Loss Occurrence.

4                            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.

As regards Terrorism, 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. Should such an event of Terrorism give rise to other perils
which, in an unbroken chain of causation, have occasioned the losses, the cause
of the losses is understood to be that event of Terrorism.

a                             “Terrorism,” for purposes of this Agreement, shall
mean any actual or threatened violent act or act harmful to human life, tangible
or intangible property or infrastructure directed towards or having the effect
of (i) influencing or protesting against any de jure or de facto government or
policy thereof, (ii) intimidating, coercing or putting in fear a civilian
population or section thereof for the purpose of establishing or advancing a
specific ideological, religious or political system of thought, perpetrated by a
specific individual or group directly or indirectly through agents acting on
behalf of said individual or group or (iii) retaliating against any country for
direct or vicarious support by that country of any other government or political
system.

b                            Any act declared pursuant to the Terrorism Risk
Insurance Act of 2002, as amended, shall also be considered “Terrorism” for
purposes of this Agreement.

B                           For all Loss Occurrences 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 except for those Loss Occurrences referred to in
1., 2., and 5. above, where only one such period of 72 consecutive hours shall

9

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

apply with respect to one event regardless of the duration of the event.

C                           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.

ARTICLE XII. - TERRORISM EXCESS RECOVERY

A                         For purposes of this Article:

“Act” shall mean the Terrorism Risk Insurance Act of 2002, any amendments
thereto and any regulations promulgated thereunder.

2                            “Affiliate,” “Insured Losses,” and “Program Year”
shall have the meanings provided in the Act.

3                            “Company” shall include the Company and all
affiliates

B                           This reinsurance shall not apply to any fines civil
penalties or surcharges assessed pursuant to the Act.

C                           To the extent that the Company allocates Insured
Losses and/or federal assistance under the Act among affiliates, claims,
contracts or otherwise in any manner which impacts the reinsurance provided
hereunder, the Company shall apply a reasonable allocation method acceptable to
the Reinsurer.

D                          To the extent that an Insured Loss is otherwise
payable hereunder, the reinsurance provided by this Agreement shall apply only
to the portion of liability, loss, cost and/or expense retained by the Company
net of any federal assistance pursuant to the Act. For each Program Year, the
liability of the Reinsurer for Insured Losses under this Agreement shall be
reduced by the ratio that the financial assistance under the Act allocated to
Policies subject to this Agreement bears to the Company’s total Insured Losses
subject to this Agreement. If the Company does not make such allocation, the
liability of the Reinsurer for Insured Losses in any Program Year under this
Agreement shall be reduced by the ratio that the financial assistance available
to the Company under the Act for that Program Year bears to the Company’s total
Insured Losses for the same Program Year.

E                            The parties recognize that, for any Program Year,
the Reinsurer may without waiver of the foregoing Paragraphs make payments for
Insured Losses which, together with available financial assistance under the Act
and the Company retentions and/or deductibles hereunder, exceed the Company’s
Insured Losses. In such event, the Reinsurer’s proportional share of all such
excess recovery (hereafter “Reinsurer’s Excess Share”) shall inure to the
benefit of the

10

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

Reinsurer. All excess recovery described in this Paragraph shall be allocated to
the Reinsurer and the Company in proportion to the respective liability of each
for Insured Losses, net of federal assistance under the Act, salvage,
subrogation and other similar recoveries, as applicable.

F                            In the event of a Reinsurer’s Excess Share, the
Company shall

1.                         Promptly pay the Reinsurer’s Excess Share to the
Reinsurer; or

2                            Upon request of the Reinsurer at any time and at
the Reinsurer’s sole discretion, instead assign to the Reinsurer its rights to
recover directly from the federal government any portion of Reinsurer’s Excess
Share not already paid to the Reinsurer. The Company shall cooperate with and
assist the Reinsurer, at its own expense, to the extent reasonably necessary for
the Reinsurer to exercise those rights. If the Reinsurer is unable, for any
reason, to exercise any right assigned to it by the Company pursuant to this
Article, the Company shall pay the Reinsurer’s Excess Share to the Reinsurer as
if no assignment had taken place to the extent that the Company has not been
deemed to have forfeited the right to financial assistance under the Act by
virtue of the attempted assignment.

G                           In the event of an Insured Loss, the Company shall
provide the Reinsurer with a monthly report detailing claim settlement
activities and financial assistance under the Act. Calculations for each Program
Year shall continue to be made until the settlement of all Insured Losses
covered hereunder.

ARTICLE XIII. - REINSURANCE PREMIUM

A                         The Company shall pay to the Reinsurer a premium for
the reinsurance provided under this Agreement at a rate of 1.2117%. Such rate
shall be applied to the Company’s Subject Earned Premium for the Agreement Year
being reported subject to an annual deposit premium of $1,347,470 payable in
four equal installments of $336,868 at the beginning of each calendar quarter.

Swiss Reinsurance Corporation shall have a 90% share in the minimum and deposit
premiums set forth above.

B.                        As promptly as possible after the expiration of this
Agreement, the Company shall render a statement to the Reinsurer showing the
actual reinsurance premium due hereunder. If such premium calculations differ
from the deposit previously paid, the debtor party shall pay the outstanding
balance as soon as practicable, However, in no event shall the annual adjusted
premium be less than a minimum of $1,077,976.

11

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

C                           The term “Subject Earned Premium” as used herein is
equal to the sum of the Net Premiums Written on the business covered hereunder
during the period under consideration, plus the unearned premium reserve as
respects premiums in force at the beginning of such period, less the unearned
premium reserve as respects premiums in force at the end of the period, said
unearned premium is to be calculated on an actual daily basis or in accordance
with the Company’s methodology, as agreed.

D                          The term “Net Premiums Written” shall mean gross
premiums written less returns, allowances and reinsurances which inure to the
benefit of the Reinsurer.

E                            The following percentages of the Company’s premium
shall be allocated to the business covered under this Agreement: 90% Homeowners

F                            In respect of Paragraph B. above

1                            All account statements shall be sent to

a                             E-Mail/XML or EDI Formats
      reaccount_armonk@swissre.com, or

b                            Standard Mail

Swiss Reinsurance America Corporation
Accounting Department
175 King Street
Armonk, NY 10504
Telephone:   914-828-8000
Facsimile:    914-828-5919

2.                          All checks and supporting documentation shall be
sent to the Reinsurer through one of the options set forth below:

a                             WIRE TRANSFER

(i                           All wires should be sent to:

The Bank of New York
1 Wall street
New York, NY 10286
Account Name:  Swiss Reinsurance America Corporation
Account Number:
ABA Number:

(ii                        All supporting documentation should be sent to

Swiss Reinsurance America Corporation
Accounting Department
175 King street
Armonk, NY 10504

12

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

ARTICLE XIV. - CLAIMS

A                         The Company shall promptly notify the Reinsurer of
each claim which may involve the reinsurance provided hereunder and of all
subsequent developments relating thereto, stating the amount claimed and
estimate of the Company’s Ultimate Net Loss and Loss Adjustment Expenses.
Notwithstanding the provisions set forth in any other Article herein, prompt
notification of loss shall be considered a condition precedent to liability
under this Agreement.

B                           The Company shall have the responsibility to
investigate, defend or negotiate settlements of all claims and lawsuits related
to Policies written by the Company and reinsured under this Agreement. The
Reinsurer, at its own expense, may associate with the Company in the defense or
control of any claim, suit or other proceeding which involves or is likely to
involve the reinsurance provided under this Agreement, and the Company shall
cooperate in every respect in the defense of any such claim, suit or proceeding.

ARTICLE XV - SALVAGE AND SUBROGATION

A                         In the event of the payment of any indemnity by the
Reinsurer under this Agreement, the Reinsurer shall be subrogated, to the extent
of such payment, to all of the rights of the Company against any person or
entity legally responsible for damages of the loss. The Company agrees to
enforce such rights; but, in case the Company refuses or neglects to do so, the
Reinsurer is hereby authorized and empowered to bring any appropriate action in
the name of the Company or their policyholders or otherwise to enforce such
rights.

B                           From any amount recovered by subrogation, salvage or
other means, there shall first be deducted the expenses incurred in effecting
the recovery. The balance shall then be used to reimburse the excess carriers in
the inverse order to that in which their respective liabilities attached, before
being used to reimburse the Company for its primary loss.

ARTICLE XVI. - ACCESS TO RECORDS

The Reinsurer or its duly authorized representatives shall have the right to
examine, at the offices of the Company at a reasonable time, during the currency
of this Agreement or anytime thereafter, all books and records of the Company
relating to business which is the subject of this Agreement.

13

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

ARTICLE XVII. - TAXES

The Company shall be liable for all taxes on premiums paid to the Reinsurer
under this Agreement, except income or profit taxes of the Reinsurer, and shall
indemnify and hold the Reinsurer harmless for any such taxes which the Reinsurer
may become obligated to pay to any local, state or federal taxing authority.

ARTICLE XVIII - CURRENCY

Wherever the word “dollars” or the “$” symbol is used in this Agreement, it
shall mean dollars of the United States of America.

ARTICLE XIX. - OFFSET

Each party to this Agreement together with their successors or assigns shall
have and may exercise, at any time, the right to offset any balance or balances
due the other (or, if more than one, any other). Such offset may include
balances due under this Agreement and any other agreements heretofore or
hereafter entered into between the parties regardless of whether such balances
arise from premiums, losses or otherwise, and regardless of capacity of any
party, whether as assuming insurer and/or ceding insurer, under the various
agreements involved, provided however, that in the event of insolvency of a
party hereto, offsets shall only be allowed in accordance with the provisions of
Section 7427 of the Insurance Law of the State of New York to the extent such
statute or any other applicable law, statute or regulation governing such offset
shall apply.

ARTICLE XX - ERRORS OR OMISSIONS

Errors or omissions of an administrative nature on the part of the Company shall
not invalidate the reinsurance under this Agreement, provided such errors or
omissions are corrected promptly after discovery thereof; but the liability of
the Reinsurer under this Agreement or any exhibits, addenda, or endorsements
attached hereto shall in no event exceed the limits specified herein nor be
extended to cover any risks, perils, lines of business or classes of insurance
generally or specifically excluded herein.

ARTICLE_XXI. - DISPUTE RESOLUTION

Part I - Choice Of Law And Forum

Any dispute arising under this Agreement shall be resolved in the State of
Massachusetts, and the laws of the state of Massachusetts shall govern the
interpretation and application of this Agreement.

14

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

Part II - Mediation

If a dispute between the Company and the Reinsurer, arising out of the
provisions of this Agreement or concerning its interpretation or validity and
whether arising before or after termination of this Agreement has not been
settled through negotiation, both parties agree to try in good faith to settle
such dispute by nonbinding mediation, before resorting to arbitration.

Part III - Arbitration

A.                      Resolution of Disputes - As a condition precedent to any
right of action arising hereunder, any dispute not resolved by mediation between
the Company 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
hereinafter set forth.

B.                        Composition of Panel - Unless the parties agree upon a
single arbitrator within 15 days after the receipt of a 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 Paragraph C. hereof.

C.                        Appointment of Arbitrators - The members of the
arbitration panel shall be chosen from disinterested persons with at least 10
years experience in the insurance and reinsurance business. Unless a single
arbitrator is agreed upon, the party requesting arbitration (hereinafter
referred to as the “claimant”) shall appoint an arbitrator and give written
notice thereof by certified mail, to the other party (hereinafter referred to as
the “respondent”) together with its notice of intention to arbitrate. Within 30
days after receiving such notice, the respondent shall also appoint an
arbitrator and notify the claimant thereof by certified mail. Before instituting
a hearing, the two arbitrators so appointed shall choose an umpire. If, within
20 days after the appointment of the arbitrator chosen by the respondent, the
two arbitrators fail to agree upon the appointment of an umpire, each of them
shall nominate three individuals to serve as umpire, of whom the other shall
decline two and the umpire shall be chosen from the remaining two by drawing
lots. The name of the individual first drawn shall be the umpire.

D.                       Failure of Party to Appoint an Arbitrator - If the
respondent fails to appoint an arbitrator within 30 days after receiving a
notice of intention to arbitrate, the claimant’s arbitrator shall appoint an
arbitrator on behalf of the respondent, such arbitrator shall then, together
with the claimant’s arbitrator, choose an umpire as provided in Paragraph C. of
Part III of this Article.

15

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

E.                         Submission of Dispute to Panel - Within 30 days after
the notice of appointment of all arbitrators, the panel shall meet, and
determine a timely period of discovery, discovery procedures and schedules for
hearings.

F.                         Procedure Governing Arbitration - All proceedings
before the panel shall be informal and the panel shall not be bound by the
formal rules of evidence. The panel shall have the power to fix all procedural
rules relating to the arbitration proceeding. In reaching any decision, the
panel shall give due consideration to the customs and usages of the insurance
and reinsurance business.

G.                        Arbitration Award - The arbitration panel shall render
its decision within 60 days after termination of the proceeding, which decision
shall be in writing, stating the reasons therefor. The decision of the majority
of the panel shall be final and binding on the parties to the proceeding. In no
event however, will the panel be authorized to award punitive, exemplary or
consequential damages of whatsoever nature in connection with any arbitration
proceeding concerning this Agreement.

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

ARTICLE XXII. - INSOLVENCY

A.                      In the event of insolvency of the Company, the
reinsurance provided by this Agreement shall be payable by the Reinsurer on the
basis of the liability of the Company as respects Policies covered hereunder,
without diminution because of such insolvency, directly to the Company or its
liquidator, receiver, conservator or statutory successor except as provided in
Sections 4118(a)(1)(A) and 1114(c) of the New York Insurance Law.

B.                        The Reinsurer shall be given written notice of the
pendency of each claim or loss which may involve the reinsurance provided by
this Agreement within a reasonable time after such claim or loss is filed in the
insolvency proceedings. The Reinsurer shall have the right to investigate each
such claim or loss and interpose, at its own expense, in the proceedings where
the claim or loss is to be adjudicated, any defense which it may deem available
to the Company, its liquidator, receiver, conservator or statutory successor.
The expense thus incurred by the Reinsurer shall be chargeable, subject to court
approval, against the insolvent Company as part of the expense of 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.

16

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

In addition to the offset provisions set forth in Article XIX. - Offset, any
debts or credits, liquidated or unliquidated, in favor of or against either
party on the date of the receivership or liquidation order (except where the
obligation was purchased by or transferred to be used as an offset) are deemed
mutual debts or credits and shall be set off with the balance only to be allowed
or paid. Although such claim on the part of either party against the other may
be unliquidated or undetermined in amount on the date of the entry of the
receivership or liquidation order, such claim will be regarded as being in
existence as of such date and any claims then in existence and held by the other
party may be offset against it.

D.                       Nothing contained in this Article is intended to change
the relationship or status of the parties to this Agreement or to enlarge upon
the rights or obligations of either party hereunder except as provided herein.

ARTICLE XXIII - AMENDMENTS

This Agreement may be amended by mutual consent of the parties expressed in an
addendum; and such addendum, when executed by both, parties, shall be deemed to
be an integral part of this Agreement and binding on the parties hereto.

17

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

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate, by their duly authorized representatives as of the following
dates:

In Boston, Massachusetts this 21st day of March, 2006

ATTEST:

 

 

 

SAFETY INSURANCE COMPANY
SAFETY INDEMNITY INSURANCE COMPANY

 

 

 

 

 

 

 

 

 

 

/s/ Glenn Hiltpold, F.C.A.S.

 

 

 

/s/ Edward N. Patrick Jr.

 

 

 

 

 

 

 

 

 

 

Glenn Hiltpold

 

 

 

Edward N. Patrick Jr.

Name

 

 

 

Name

 

 

 

 

 

 

 

 

 

 

DIRECTOR-ACTUARIAL SERVICES

 

 

 

VP Underwriting

Title

 

 

 

Title

 

And in Armonk New York, this 10th day of March, 2006.

ATTEST

 

 

 

SWISS REINSURANCE AMERICA CORPORATION

 

 

 

 

 

 

 

 

 

 

/s/ James Bronneck

 

 

 

/s/ Jeffrey Illegible

 

 

 

 

 

 

 

 

 

 

James Bronneck

 

 

 

Jeffrey Illegible

Name

 

 

 

Name

 

 

 

 

 

 

 

 

 

 

Vice President
Member of Management

 

 

 

Senior Vice President
Member of Senior Management

Title

 

 

 

Title

 

18

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

SUPPLEMENT TO THE ATTACHMENTS

DEFINITION OF IDENTIFICATION TERMS USED WITHIN THE ATTACHMENTS

A                         Wherever the term “Company” or “Reinsured” or
“Reassured” or whatever other term is used to designate the reinsured company or
companies within the various attachments to the reinsurance agreement, the term
shall be understood to mean Company or Reinsured or Reassured or whatever other
term is used in the attached reinsurance agreement to designate the reinsured
company or companies.

B                           Wherever the term “Agreement” or “Contract” or
“Policy” or whatever other term is used to designate the attached reinsurance
agreement within the various attachments to the reinsurance agreement, the term
shall be understood to mean Agreement or Contract or Policy or whatever other
term is used to designate the attached reinsurance agreement.

C                           Wherever the term “Reinsurer” or “Reinsurers” or
“Underwriters” or whatever other term is used to designate the reinsurer or
reinsurers in the various attachments to the reinsurance agreement, the term
shall be understood to mean Reinsurer or Reinsurers or Underwriters or whatever
other term is used to designate the reinsuring company or companies.

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

INSOLVENCY FUNDS EXCLUSION CLAUSE

This Agreement excludes all liability of the Company arising by contract,
operation of law, or otherwise from its participation or membership, whether
voluntary or involuntary, in any insolvency fund or from reimbursement of any
person for any such liability. “Insolvency fund” includes any guaranty fund,
insolvency fund, plan, pool, association, fund or other arrangement, howsoever
denominated, established or governed, which provides for any assessment of or
payment or assumption by any person of part or all of any claim, debt, charge,
fee, or other obligation of an insurer, or its successors or assigns, which has
been declared by any competent authority to be insolvent or which is otherwise
deemed unable to meet any claim, debt, charge, fee or other obligation in whole
or in part.

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

POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE

SECTION A

Excluding:

(a)                     All Business derived directly or indirectly from any
Pool, Association or Syndicate which maintains its own reinsurance facilities.

(b)                    Any Pool or Scheme (whether voluntary or mandatory)
formed after March 1, 1968, for the purpose of insuring Property whether on a
country-wide basis or in respect of designated areas. This Exclusion shall not
apply to so-called Automobile Insurance Plans or other Pools formed to provide
coverage for Automobile Physical Damage.

SECTION B

It is agreed that business, written by the Company for the same perils, which is
known at the time to be insured by or in excess of underlying amounts placed in
the following Pools, Associations or Syndicates, whether by way of insurance or
reinsurance is excluded hereunder:

Industrial Risk Insurers (successor to Factory Insurance Association and Oil
Insurance Association); Associated Factory Mutuals; Improved Risk Mutuals.

Any Pool, Association or Syndicate formed for the purpose of writing oil, Gas or
Petro-Chemical Plants and/or Oil or Gas Drilling Rigs.

United States Aircraft Insurance Group, Canadian Aircraft Insurance Group,
Associated Aviation Underwriters, American Aviation Underwriters.

SECTION B does not apply

(a)                     Where the Total Insured Value over all interests of the
risk in question is less than $350,000,000.

(b)                    To interests traditionally underwritten as Inland Marine
or Stock and/or contents written on a Blanket basis.

(c)                     To Contingent Business Interruption, except when the
Company is aware that the key location is known at the time to be insured in any
Pool, Association or Syndicate named above.

(d)                    To risks as follows: Offices, Hotels, Apartments,
Hospitals, Educational Establishments, Public Utilities (other than Railroad
Schedules) and Builders Risks on the classes of risks specified in this
subsection (d) only.

1

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

SECTION C

NEVERTHELESS the Reinsurer specifically agrees that Liability accruing to the
Company from its participation in:

(a)                     The following so-called “Coastal Pools”

ALABAMA INSURANCE UNDERWRITING ASSOCIATION

FLORIDA WINDSTORM UNDERWRITING ASSOCIATION

LOUISIANA INSURANCE UNDERWRITING ASSOCIATION

MISSISSIPPI WINDSTORM INSURANCE UNDERWRITING ASSOCIATION

NORTH CAROLINA INSURANCE UNDERWRITING ASSOCIATION

SOUTH CAROLINA WINDSTORM AND HAIL UNDERWRITING ASSOCIATION

TEXAS CATASTROPHE PROPERTY INSURANCE ASSOCIATION

and

(b)                    All “Fair Plan” and “Rural Risk Plan” Business

for all perils otherwise protected hereunder will not be excluded, except
however, that this reinsurance does not include any increase in such liability
resulting from:

(1)                    The inability for any other participant in such “Coastal
Pool” and/or “Fair Plan” and/or “Rural Risk Plan” to meet its liability.

(2)                    Any Claim against such “Coastal Pool” and/or “Fair Plan”
and/or “Rural Risk Plan” or any participant therein, including the Company,
whether by way of subrogation or otherwise, brought by or on behalf of any
insolvency fund (as defined in the Insolvency Funds Exclusion Clause
incorporated in this agreement) .

2

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

TOTAL INSURED VALUE EXCLUSION CLAUSE

It is the mutual intention of the parties to exclude risks, other than Offices,
Hotels, Apartments, Hospitals, Educational Establishments, Public Utilities
(except Railroad schedules) and Builders Risk on the above classes where, at the
time of the cession, the Total Insured Value over all interests exceeds
$350,000,000. However, the Company shall be protected hereunder, subject to the
other terms and conditions of this Agreement, if subsequently to cession being
made the Company becomes acquainted with the true facts of the case and
discovers that the mutual intention has been inadvertently breached, the Company
shall at the first opportunity, and certainly by next anniversary of the
original policy, exclude the risk in question.

It is agreed that this mutual intention does not apply to Contingent Business
Interruption or to interest traditionally underwritten as Inland Marine or to
Stock and/or Contents written on a blanket basis except where the Company is
aware that the Total Insured Value of $350,000,000 is already exceeded for
buildings, machinery, equipment and direct use and occupancy at the key
location.

It is understood and agreed that this Clause shall not apply hereunder where the
Company writes 100% of the risk.

Notwithstanding anything contained herein to the contrary, it is the mutual
intention of the parties in respect of bridges and tunnels to exclude such risks
where the Total Insured Value over all interests exceeds $350,000,000.

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

POLLUTION AND SEEPAGE EXCLUSION CLAUSE

This Reinsurance does not apply to:

Pollution, seepage, contamination or environmental impairment (hereinafter
collectively referred to as “pollution”) insurances, however styled;

2                            Loss or damage caused directly or indirectly by
pollution, unless said loss or damage follows as a result of a loss caused
directly by a peril covered hereunder;

Expenses resulting from any governmental direction or request that material
present in or part of or utilized on an insured’s property be removed or
modified, except as provided in 5. below;

4                            Expenses incurred in testing for and/or monitoring
pollutants;

Expenses incurred in removing debris, unless (A) the debris results from a loss
caused directly by a peril covered hereunder, and (B) the debris to be removed
is itself covered hereunder, and (C) the debris is on the insured’s premises,
subject, however, to a limit of $5,000 plus 25% of (i) the property damage loss,
any risk, any one location, any one original insured, and (ii) any deductible
applicable to the loss;

6                            Expenses incurred to extract pollutants from land
or water at the insured’s premises unless (A) the release, discharge, or
dispersal of pollutants results from a loss caused directly by a peril covered
hereunder, and (B) such expenses shall not exceed $10,000;

Loss of income due to any increased period of time required to resume operations
resulting from enforcement of any law regulating the prevention, control,
repair, clean-up or restoration of environmental damage;

8.                         Claims under 5. and/or 6. above, unless notice
thereof is given to the Company by the insured within 180 days after the date of
the loss occurrence to which such claims relate.

“Pollutants” means any solid, liquid, gaseous or thermal irritant or
contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and
waste. Waste includes materials to be recycled, reconditioned or reclaimed.

1

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

Where no pollution exclusion has been accepted or approved by an insurance
regulatory authority for use in a policy that is subject to this Agreement or
where a pollution exclusion that has been used in a policy is overturned, either
in whole or in part, by a court having jurisdiction, there shall be no recovery
for pollution under this Agreement unless said pollution loss or damage follows
as a result of a loss caused directly by a peril covered hereunder.

Nothing herein shall be deemed to extend the coverage afforded by this
reinsurance to property or perils specifically excluded or not covered under the
terms and conditions of the original policy involved.

2

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

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

N.M.A    1119

1                             This Reinsurance does not cover any loss or
liability accruing to the Reassured, 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 Reinsurance does not cover any loss or
liability accruing to the Reassured, 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 operation of
paragraphs 1. and 2. of this Clause, this Reinsurance does not cover any loss or
liability by radioactive contamination accruing to the Reassured, 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 Reassured does not have knowledge of such
nuclear reactor power plant or nuclear installation, or

1

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

(b)                    where the 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 Governmental Authority having
jurisdiction thereof.

4                             Without in any way restricting the operation of
paragraphs 1., 2. and 3. of this Clause, this Reinsurance does not cover any
loss or liability by radioactive contamination accruing to the Reassured,
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 this Clause shall not
extend to risks using radioactive isotopes in any form where the nuclear
exposure is not considered by the Reassured to be the primary hazard.

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

7                             Reassured 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 operation of paragraph 1 hereof, it
is understood and agreed that

(a)                    all policies issued by the Reassured 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 Reassured 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.

2

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

NUCLEAR INCIDENT EXCLUSION CLAUSE — PHYSICAL DAMAGE — REINSURANCE CANADA

N.M.A    1980a

1                             This Agreement does net cover any loss or
liability accruing to the Company 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 Company, 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:

a                            Nuclear reactor power plants including all
auxiliary property on the site, or

b                           Any other nuclear reactor installation, including
laboratories handling radioactive materials in connection with reactor
installations, and critical facilities as such, or

c                            Installations for fabricating complete fuel
elements or for processing substantial quantities of radioactive materials, and
for reprocessing, salvaging, chemically separating, storing or disposing of
spent nuclear fuel or waste materials, or

d                           Installations other than those listed in c. above
using substantial quantities of radioactive isotopes or other products of
nuclear fission.

3                             Without in any way restricting the operation of
paragraphs 1. and 2. of this clause, this Agreement does not cover any loss or
liability by radioactive contamination accruing to the Company, 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 Company does not have knowledge of such
nuclear reactor power plant or nuclear installation, or

b                           where the said insurance contains a provision
excluding coverage for damage to property caused by or resulting from
radioactive contamination, however caused.

1

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

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

5                             This clause shall not extend to risks using
radioactive isotopes in any form where the nuclear exposure is not considered by
the Company to be the primary hazard.

6                             The term “radioactive material” means uranium,
thorium, plutonium, neptunium, their respective derivatives and compounds,
radioactive isotopes of other elements and any other substances which may be
designated by or pursuant to any law, act or statute, or any law amendatory
thereof as being prescribed substances capable of releasing atomic energy, or as
being requisite for the production, use or application of atomic energy.

7                             Company to be sole judge of what constitutes

a                            substantial quantities, and

b                           the extent of installation, plant or site

8                             Without in any way restricting the operation of
paragraphs 1., 2., 3. and 4. of this clause, this Agreement does not cover any
loss or liability accruing to the Company, directly or indirectly, and whether
as Insurer or Reinsurer, caused:

by any nuclear incident as defined in or pursuant to the Nuclear Liability Act
or any other nuclear liability act, law or statute, or any law amendatory
thereof, or nuclear explosion, except for ensuing loss or damage which results
directly from fire, lightning or explosion of natural, coal or manufactured gas;

(b)                   by contamination by radioactive material

NOTE                                    Without in any way restricting the
operation of paragraphs 1., 2., 3. and 4. of this clause, paragraph 8. of this
clause shall only apply to all original contracts of the Company whether new,
renewal or replacement which become effective on or after December 31, 1992.

April 1, 1996

2

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

NUCLEAR INCIDENT EXCLUSION CLAUSE - REINSURANCE - NO. 4

1                             This Reinsurance does not cover any loss or
liability accruing to the Reassured as a member of, or subscriber to, any
association of insurers or reinsurers formed for the purpose of covering nuclear
energy risks or as a direct or indirect reinsurer of any such member, subscriber
or association.

2                             Without in any way restricting the operations of
Nuclear Incident Exclusion Clauses, - Liability, - Physical Damage, - Boiler and
Machinery and paragraph 1. of this Clause, it is understood and agreed that for
all purposes of the reinsurance assumed by the Reinsurer from the Reinsured, all
original insurance policies or contracts of the Reinsured (new, renewal and
replacement) shall be deemed to include the applicable existing Nuclear Clause
and/or Nuclear Exclusion Clause(s) in effect at the time and any subsequent
revisions thereto as agreed upon and approved by the Insurance Industry and/or a
qualified Advisory or Rating Bureau.

3

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