Exhibit 10.1

REINSURANCE POOLING AGREEMENT

AMENDED AND RESTATED

As of January 1, 2010

This Reinsurance Pooling Agreement Amended and Restated effective as of 12:01
a.m., Eastern Standard Time, January 1, 2010 (the “2010 Pooling Agreement”) is
entered into as of February 10, 2010 by and among State Automobile Mutual
Insurance Company, 518 East Broad Street, Columbus, Ohio (hereinafter referred
to as “State Auto Mutual”), State Auto Property & Casualty Insurance Company,
1300 Woodland Drive, West Des Moines, Iowa (hereinafter referred to as “State
Auto P&C”), Milbank Insurance Company, East Highway 12, Milbank, South Dakota
(hereinafter referred to as “Milbank”), State Auto Insurance Company of
Wisconsin (formerly known as Midwest Security Insurance Company), 1062 Oak
Forest Drive, Onalaska, Wisconsin (hereinafter referred to as “SA WI”), Farmers
Casualty Insurance Company, 1300 Woodland Drive, West Des Moines, Iowa
(hereinafter referred to as “Farmers Casualty”), State Auto Insurance Company of
Ohio, 518 East Broad Street, Columbus, Ohio (hereinafter referred to as “SA
OH”), State Auto National Insurance Company, 518 East Broad Street, Columbus,
Ohio (hereinafter referred to as “SAN”), State Auto Florida Insurance Company,
2955 North Meridian Street, Indianapolis, Indiana (hereinafter referred to as
“SA FL”), Meridian Security Insurance Company, 2955 North Meridian Street,
Indianapolis, Indiana (hereinafter referred to as “Meridian Security”), Meridian
Citizens Mutual Insurance Company, 2955 North Meridian Street, Indianapolis,
Indiana (hereinafter referred to as “Meridian Citizens Mutual”), Patrons Mutual
Insurance Company of Connecticut, 769 Hebron Avenue, Glastonbury, Connecticut
(hereinafter referred to as “Patrons”), Litchfield Mutual Fire Insurance
Company, 21 South Street, Litchfield, Connecticut (hereinafter referred to as
“Litchfield”) and Beacon National Insurance Company, 2915 Central Fwy East
Drive, Wichita Falls, Texas (“Beacon”). (State Auto Mutual, State Auto P&C,
Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA FL, Meridian Security, Meridian
Citizens Mutual, Patrons, Litchfield and Beacon are herein collectively referred
to as the “Pooled Companies” or “State Auto” and individually as a “Pooled
Company”).

Background Information

The Pooled Companies have determined that their business operations should be
conducted by employees of State Auto P&C on behalf of each of the Pooled
Companies and that State Auto Mutual should remain as the agent for each of the
Pooled Companies with respect to collecting and disbursing funds as required by
the Pooled Companies’ business operations. These arrangements have been effected
through the Management and Operations Agreement Amended and Restated as of
January 1, 2005 (the “2005 Management Agreement”), as amended from time to time,
as to SA WI through the Amended and Restated Management Agreement dated
effective January 1, 2000 (the “2000 Management Agreement”), and by means of
mutual reinsurance on a percentage basis as herein provided.

State Auto Mutual and State Auto P&C originally entered into an intercompany
Reinsurance Agreement effective as of 12:01 a.m., January 1, 1987 (the
“Reinsurance Agreement”).

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

The Reinsurance Agreement has since been amended by an Addendum effective
January 1, 1987, adding insolvency and arbitration provisions; by Amendment
Number 1 effective as of January 1, 1992 amending the pooling percentages from
20% State Auto P&C - 80% State Auto Mutual to 30% and 70% respectively; by
Amendment Number 2 effective as of January 1, 1991 excluding post retirement
health care benefits liability as a pooled expense and as of January 1, 1994
excluding post employment benefits liability as a pooled expense; and by
Amendment Number 3 effective as of January 1, 1995 adding Milbank as a party and
adjusting the pooling percentages as follows: State Auto P&C 35%, State Auto
Mutual 55% and Milbank 10% and by an Amended and Restated Reinsurance Pooling
Agreement dated July 1, 1996 (the “7/1/96 Reinsurance Agreement”), which
excluded from the Reinsurance Agreement catastrophic loss claims and loss
adjustment expenses incurred by State Auto Mutual, State Auto P&C and Milbank in
the amount of $100,000,000 in excess of $120,000,000 of such losses and loss
adjustment expense and the premiums for such exposure; and by an Amended and
Restated Reinsurance Pooling Agreement effective January 1, 1998 (the “‘98
Pooling Agreement”) which added SA WI as a party and adjusted the Respective
Percentages (as defined below) to State Auto P&C 37%, State Auto Mutual 52%,
Milbank 10%, and SA WI 1%; and by a Reinsurance Pooling Agreement Amended and
Restated as of January 1, 1999 (hereafter referred to as the “‘99 Pooling
Agreement”) which added Farmers Casualty as a party and adjusted the Respective
Percentages to State Auto P&C-37%, State Auto Mutual-49%, Milbank-10%, Farmers
Casualty-3%, and SA WI-1%. In adopting the Reinsurance Pooling Agreement,
amended and restated as of January 1, 2000, (the “2000 SA Pooling Agreement”)
the parties - amended and restated the ‘99 Pooling Agreement as the 2000 Pooling
Agreement, to provide for the continuation of the pooling arrangement it
effects, including the above-described previous amendments and additional
amendments including the following: removing from the scope of the 2000 Pooling
Agreement the premiums, losses, underwriting and administrative expenses
attributable to State Auto Mutual’s voluntary assumption of reinsurance from
third parties which are unaffiliated with State Auto Mutual, which voluntary
assumed reinsurance contracts/treaties initially commenced on or after
January 1, 1999 (this January 1, 1999 and after voluntary third party assumption
reinsurance is hereafter referred to as the “State Auto Mutual Reinsurance
Book”); adding SA OH as a new party; removing an exclusion for post retirement
health care benefits liabilities; and post employment benefits liabilities and
adjusting the Respective Percentages to SA OH 1%, Farmers Casualty 3%, SA WI 1%,
Milbank 10%, State Auto P&C 39% and State Auto Mutual 46%. The 2000 Pooling
Agreement was itself subject to five different amendments: the First Amendment
effective November 17, 2000, clarified that the State Auto P&C Catastrophe
Assumption Agreement, as defined in the 2000 SA Pooling Agreement provided such
amount of catastrophe reinsurance as was available in the then current Property
Catastrophe Overlying Excess of Loss Reinsurance Contract originally effective
July 1, 1999 and annually renewed thereafter; the Second Amendment to the 2000
SA Pooling Agreement clarified that the business that became the legal
obligation of State Auto Mutual as a result of its merger with Meridian Mutual
Insurance Company effective June 1, 2001, was excluded from the 2000 SA Pooling
Agreement until July 1, 2001; the Third Amendment to the 2000 SA Pooling
Agreement amended the Respective Percentages of the parties to result in the
following: SA OH 1%, Farmers Casualty 3%, SA WI 1%, Milbank 17%, State Auto P&C
59% and State Auto Mutual 19% and it also excluded the premiums or losses
attributable to the Stop Loss Agreement as defined in the Third Amendment, each
effective as of October 1, 2004; The Fourth Amendment, effective January 1, 2003
added SA FL to the 2000 SA Pooling

 

2

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

Agreement with 0.7% as a Respective Percentage, while lowering State Auto
Mutual’s Respective Percentage to 18.3%; The Fifth Amendment, effective July 1,
2004, excluded State Auto Middle Market Insurance, (as defined below) from the
2000 SA Pooling Agreement; the Reinsurance Pooling Agreement Amended and
Restated as of January 1, 2005 (the “2005 Pooling Agreement”) added Meridian
Security and Meridian Citizens Mutual as new parties and amended the Respective
Percentages of the parties to result in the following: SA OH 1%, Farmers
Casualty 3%, SA WI 0.0%, Milbank 17%, State Auto P&C 59%, State Auto Mutual
19.5%, SA FL 0.0%, Meridian Security 0.0% and Meridian Citizens Mutual 0.5%; the
First Amendment to the 2005 Pooling Agreement (i) excluded from the 2005 Pooling
Agreement all voluntary assumed reinsurance written or placed with State Auto
Mutual from and after the effective date of that First Amendment, regardless of
whether the ceding company was affiliated with State Auto Mutual; (ii) clarified
the attachment point of the State Auto P&C Catastrophe Assumption Agreement (as
defined hereinafter) and its interplay with the 2005 Pooling Agreement; and
(iii) clarified that all amounts due under the 2005 Pooling Agreement shall be
due and payable by the respective Pooled Company within sixty (60) days after
the end of each calendar quarter; the Reinsurance Pooling Agreement Amended and
Restated as of January 1, 2008 (the “2008 Pooling Agreement”) (i) added Beacon,
Patrons and Litchfield as parties, having Respective Percentages of 0.0%, 0.4%
and 0.1%, respectively, (ii) reduced the Respective Percentage of State Auto
Mutual from 19.5% to 19.0%, (iii) included all State Auto Middle Market
Insurance (which is defined as (a) property casualty insurance for commercial
risks that are larger than those included in the standard segment of the Pooled
Companies’ business; (b) underwritten by the State Auto Middle Market Insurance
underwriting unit; and (c) coded by State Auto as State Auto Middle Market
Insurance) and, (iv) made certain other technical changes; the First Amendment
to the 2008 Pooling Agreement deleted all references related to the Property
Catastrophe Overlying Excess of Loss Reinsurance Contract between State Auto P&C
and the other Pooled Companies. In addition to the foregoing amendments to the
pooling arrangement as set forth in the various agreements, each of these
agreements and this 2010 Pooling Agreement is subject to the Guaranty Agreement
dated as of May 16, 1991 between State Auto Mutual and State Auto P&C (the
“Reserve Guaranty Agreement”).

The parties desire to amend and restate the 2008 Pooling Agreement, as amended,
as the 2010 Pooling Agreement to (i) add SAN as a Pooled Company, having a
Respective Percentage of 0.0%; (ii) include all premiums, losses, underwriting
and administrative expenses attributable to any Pooled Company’s voluntary
assumption of reinsurance from third parties unaffiliated with the Pooled
Companies, which reinsurance is assumed effective on or after January 1, 2009;
and (iii) make certain technical changes. All of these amendments are effective
as of 12:01 a.m. EST, January 1, 2010. It is understood and agreed that any
Pooled Company’s existing or future voluntary assumption of reinsurance from an
affiliate is included in the 2010 Pooling Agreement, unless excluded by an
amendment thereto.

 

3

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

Statement of Agreement

In consideration of the mutual covenants set forth herein and INTENDING TO BE
LEGALLY BOUND HEREBY, the parties hereto hereby agree as follows:

1. Definitions: As used in this Agreement:

(a) “Net Liabilities” shall mean all direct liabilities plus reinsurance assumed
minus reinsurance ceded, except as otherwise expressly excluded below, provided
that the parties hereto expressly understand and agree that Net Liabilities
excludes any and all liabilities arising out of the State Auto Mutual
Reinsurance Book.

(b) “Net Premiums” shall mean all direct premiums plus reinsurance assumed minus
reinsurance ceded, except as otherwise expressly excluded below, provided that
the parties hereto expressly understand and agree that Net Premiums excludes any
and all premiums arising out of the State Auto Mutual Reinsurance Book.

(c) “Respective Percentage” shall be:

 

As to SA OH

   1.0 % 

As to Farmers Casualty

   3.0 % 

As to SA WI

   0.0 % 

As to Milbank

   17.0 % 

As to State Auto P&C

   59.0 % 

As to State Auto Mutual

   19.0 % 

As to SAN

   0.0 % 

As to SA FL

   0.0 % 

As to Meridian Security

   0.0 % 

As to Meridian Citizens Mutual

   0.5 % 

As to Beacon

   0.0 % 

As to Patrons

   0.4 % 

As to Litchfield

   0.1 % 

(d) “State Auto Mutual Reinsurance Book” means premiums, losses, underwriting
and administrative expenses attributable to State Auto Mutual’s voluntary
assumption of reinsurance from third parties unaffiliated with State Auto Mutual
which reinsurance was assumed prior to January 1, 2009.

2. Cession:

(a) State Auto P&C Cession: State Auto Mutual hereby reinsures and assumes and
State Auto P&C hereby cedes and transfers to State Auto Mutual all Net
Liabilities of State Auto P&C as of January 1, 2010, and all Net Liabilities
incurred under or in connection with all contracts and policies of insurance
issued by State Auto P&C outstanding and in force as of and subsequent to 12:01
a.m. Eastern Standard Time, January 1, 2010. Such liabilities shall include
State Auto P&C’s reserves for unearned premiums, outstanding losses and loss
expenses (including unreported losses) and all other outstanding underwriting
and administrative expenses as evidenced by State Auto P&C’s books and records
at the close of business on December 31, 2009, but shall not include
intercompany balances, liabilities incurred in connection with the investment
transactions of State Auto

 

4

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

P&C, liabilities for dividends to stockholders declared and unpaid, and other
liabilities not incurred in connection with underwriting operations. It is
further agreed State Auto Mutual shall receive the Net Premiums for said
contracts and policies.

(b) Milbank Cession: State Auto Mutual hereby reinsures and assumes and Milbank
hereby cedes and transfers to State Auto Mutual all Net Liabilities of Milbank
as of January 1, 2010, and all Net Liabilities incurred under or in connection
with all contracts and policies of insurance issued by Milbank outstanding and
in force as of and subsequent to 12:01 a.m. EST, January 1, 2010. Such
liabilities shall include Milbank’s reserves for unearned premiums, outstanding
losses and loss expenses (including unreported losses) and all other outstanding
underwriting and administrative expenses as evidenced by Milbank’s books and
records at the close of business on December 31, 2009, but shall not include
intercompany balances, liabilities incurred in connection with the investment
transactions of Milbank, liabilities for dividends to stockholders declared and
unpaid, and other liabilities not incurred in connection with underwriting
operations. It is further agreed that State Auto Mutual shall receive the Net
Premiums for said contracts and policies.

(c) SA WI Cession: State Auto Mutual hereby reinsures and assumes and SA WI
hereby cedes and transfers to State Auto Mutual all Net Liabilities of SA WI as
of January 1, 2010, and all Net Liabilities incurred under or in connection with
all contracts and policies of insurance issued by SA WI outstanding and in force
as of and subsequent to 12:01 a.m. EST, January 1, 2010. Such liabilities shall
include SA WI’s reserves for unearned premiums, outstanding losses and loss
expenses (including unreported losses) and all other outstanding underwriting
and administrative expenses as evidenced by SA WI’s books and records at the
close of business on December 31, 2009, but shall not include intercompany
balances, liabilities incurred in connection with the investment transactions of
SA WI, liabilities for dividends to stockholders declared and unpaid, and other
liabilities not incurred in connection with underwriting operations. It is
further agreed that State Auto Mutual shall receive the Net Premiums for said
contracts and policies.

(d) Farmers Casualty Cession: State Auto Mutual hereby reinsures and assumes and
Farmers Casualty hereby cedes and transfers to State Auto Mutual all Net
Liabilities of Farmers Casualty as of January 1, 2010, and all Net Liabilities
incurred under or in connection with all contracts and policies of insurance
issued by Farmers Casualty outstanding and in force as of and subsequent to
12:01 a.m. EST, January 1, 2010. Such liabilities shall include Farmers
Casualty’s reserves for unearned premiums, outstanding losses and loss expenses
(including unreported losses) and all other outstanding underwriting and
administrative expenses as evidenced by Farmers Casualty’s books and records at
the close of business on December 31, 2009, but shall not include intercompany
balances, liabilities incurred in connection with the investment transactions of
Farmers Casualty, liabilities for dividends to stockholders declared and unpaid,
and other liabilities not incurred in connection with underwriting operations.
It is further agreed that State Auto Mutual shall receive the Net Premiums for
said contracts and policies.

 

5

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

(e) SA OH Cession: State Auto Mutual hereby reinsures and assumes and SA OH
hereby cedes and transfers to State Auto Mutual all Net Liabilities of SA OH as
of January 1, 2010, and all Net Liabilities incurred under or in connection with
all contracts and policies of insurance issued by SA OH outstanding and in force
as of and subsequent to 12:01 a.m. EST, January 1, 2010. Such liabilities shall
include SA OH’s reserves for unearned premiums, outstanding losses and loss
expenses (including unreported losses) and all other outstanding underwriting
and administrative expenses as evidenced by SA OH’s books and records at the
close of business on December 31, 2009, but shall not include intercompany
balances, liabilities incurred in connection with the investment transactions of
SA OH, liabilities for dividends to stockholders declared and unpaid, and other
liabilities not incurred in connection with underwriting operations. It is
further agreed that State Auto Mutual shall receive the Net Premiums for said
contracts and policies.

(f) SAN Cession: State Auto Mutual hereby reinsures and assumes and SAN hereby
cedes and transfers to State Auto Mutual all Net Liabilities of SAN as of
January 1, 2010, and all Net Liabilities incurred under or in connection with
all contracts and policies of insurance issued by SAN outstanding and in force
as of and subsequent to 12:01 a.m. EST, January 1, 2010. Such liabilities shall
include SAN’s reserves for unearned premiums, outstanding losses and loss
expenses (including unreported losses) and all other outstanding underwriting
and administrative expenses as evidenced by SAN’s books and records at the close
of business on December 31, 2009, but shall not include intercompany balances,
liabilities incurred in connection with the investment transactions of SAN,
liabilities for dividends to stockholders declared and unpaid, and other
liabilities not incurred in connection with underwriting operations. It is
further agreed that State Auto Mutual shall receive the Net Premiums for said
contracts and policies.

(g) SA FL Cession: State Auto Mutual hereby reinsures and assumes and SA FL
hereby cedes and transfers to State Auto Mutual all Net Liabilities of SA FL as
of January 1, 2010, and all Net Liabilities incurred under or in connection with
all contracts and policies of insurance issued by SA FL outstanding and in force
as of and subsequent to 12:01 a.m. EST, January 1, 2010. Such liabilities shall
include SA FL’s reserves for unearned premiums, outstanding losses and loss
expenses (including unreported losses) and all other outstanding underwriting
and administrative expenses as evidenced by SA FL’s books and records at the
close of business on December 31, 2009, but shall not include intercompany
balances, liabilities incurred in connection with the investment transactions of
SA FL, liabilities for dividends to stockholders declared and unpaid, and other
liabilities not incurred in connection with underwriting operations. It is
further agreed that State Auto Mutual shall receive the Net Premiums for said
contracts and policies.

 

6

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

(h) Meridian Security Cession: State Auto Mutual hereby reinsures and assumes
and Meridian Security hereby cedes and transfers to State Auto Mutual all Net
Liabilities of Meridian Security as of January 1, 2010, and all Net Liabilities
incurred under or in connection with all contracts and policies of insurance
issued by Meridian Security outstanding and in force as of and subsequent to
12:01 a.m. EST, January 1, 2010. Such liabilities shall include Meridian
Security’s reserves for unearned premiums, outstanding losses and loss expenses
(including unreported losses) and all other outstanding underwriting and
administrative expenses as evidenced by Meridian Security’s books and records at
the close of business on December 31, 2009, but shall not include intercompany
balances, liabilities incurred in connection with the investment transactions of
Meridian Security, liabilities for dividends to stockholders declared and
unpaid, and other liabilities not incurred in connection with underwriting
operations. It is further agreed that State Auto Mutual shall receive the Net
Premiums for said contracts and policies.

(i) Meridian Citizens Mutual Cession: State Auto Mutual hereby reinsures and
assumes and Meridian Citizens Mutual hereby cedes and transfers to State Auto
Mutual all Net Liabilities of Meridian Citizens Mutual as of January 1, 2010,
and all Net Liabilities incurred under or in connection with all contracts and
policies of insurance issued by Meridian Citizens Mutual outstanding and in
force as of and subsequent to 12:01 a.m. EST, January 1, 2010. Such liabilities
shall include Meridian Citizens Mutual’s reserves for unearned premiums,
outstanding losses and loss expenses (including unreported losses) and all other
outstanding underwriting and administrative expenses as evidenced by Meridian
Citizen Mutual’s books and records at the close of business on December 31,
2009, but shall not include intercompany balances, liabilities incurred in
connection with the investment transactions of Meridian Citizens Mutual, and
other liabilities not incurred in connection with underwriting operations. It is
further agreed that State Auto Mutual shall receive the Net Premiums for said
contracts and policies.

(j) Beacon Cession: State Auto Mutual hereby reinsures and assumes and Beacon
hereby cedes and transfers to State Auto Mutual all Net Liabilities of Beacon as
of January 1, 2010, and all Net Liabilities incurred under or in connection with
all contracts and policies of insurance issued by Beacon outstanding and in
force as of and subsequent to 12:01 a.m. EST, January 1, 2010. Such liabilities
shall include Beacon’s reserves for unearned premiums, outstanding losses and
loss expenses (including unreported losses) and all other outstanding
underwriting and administrative expenses as evidenced by Beacon’s books and
records at the close of business on December 31, 2009, but shall not include
intercompany balances, liabilities incurred in connection with the investment
transactions of Beacon, liabilities for dividends to stockholders declared and
unpaid, and other liabilities not incurred in connection with underwriting
operations. It is further agreed that State Auto Mutual shall receive the Net
Premiums for said contracts and policies.

 

7

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

(k) Patrons Cession: State Auto Mutual hereby reinsures and assumes and Patrons
hereby cedes and transfers to State Auto Mutual all Net Liabilities of Patrons
as of January 1, 2010, and all Net Liabilities incurred under or in connection
with all contracts and policies of insurance issued by Patrons outstanding and
in force as of and subsequent to 12:01 a.m. EST, January 1, 2010. Such
liabilities shall include Patrons reserves for unearned premiums, outstanding
losses and loss expenses (including unreported losses) and all other outstanding
underwriting and administrative expenses as evidenced by Patrons books and
records at the close of business on December 31, 2009, but shall not include
intercompany balances, liabilities incurred in connection with the investment
transactions of Patrons, and other liabilities not incurred in connection with
underwriting operations. It is further agreed that State Auto Mutual shall
receive the Net Premiums for said contracts and policies.

(l) Litchfield Cession: State Auto Mutual hereby reinsures and assumes and
Litchfield hereby cedes and transfers to State Auto Mutual all Net Liabilities
of Litchfield as of January 1, 2010, and all Net Liabilities incurred under or
in connection with all contracts and policies of insurance issued by Litchfield
outstanding and in force as of and subsequent to 12:01 a.m. EST, January 1,
2010. Such liabilities shall include Litchfield’s reserves for unearned
premiums, outstanding losses and loss expenses (including unreported losses) and
all other outstanding underwriting and administrative expenses as evidenced by
Litchfield’s books and records at the close of business on December 31, 2009,
but shall not include intercompany balances, liabilities incurred in connection
with the investment transactions of Litchfield, and other liabilities not
incurred in connection with underwriting operations. It is further agreed that
State Auto Mutual shall receive the Net Premiums for said contracts and
policies.

3. Assets Transfer to State Auto Mutual:

(a) State Auto P&C: In consideration of the agreements herein contained, State
Auto P&C hereby agrees that there has been or will be assigned and transferred
to State Auto Mutual an amount, in cash or other assets, equal to the aggregate
of all liabilities of State Auto P&C assumed by State Auto Mutual under
paragraph 2(a) hereof, less a ceding commission equal to the sum of the
acquisition expenses associated with the unearned premium reserves which are
transferred as provided herein. There have been included among the assets
assigned and transferred to State Auto Mutual by State Auto P&C all of the
right, title and interest of State Auto P&C in and to all assets relative to the
underwriting operations of State Auto P&C, due or that became due, as evidenced
by its books and records at the close of business on December 31, 2009, not
including investments, accrued investment income, intercompany balances and bank
deposits.

 

8

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

(b) Milbank: In consideration of the agreements herein contained, Milbank hereby
agrees that there has been or will be assigned and transferred to State Auto
Mutual an amount, in cash or other assets, equal to the aggregate of all
liabilities of Milbank assumed by State Auto Mutual under paragraph 2(b) hereof,
less a ceding commission equal to the sum of the acquisition expenses associated
with the unearned premium reserves which are transferred as provided herein.
There shall be included among the assets assigned and transferred to State Auto
Mutual by Milbank all of the right, title and interest of Milbank in and to all
assets relative to the underwriting operations of Milbank due or that may become
due as evidenced by its books and records at the close of business on
December 31, 2009 not including investments, accrued investment income,
intercompany balances and bank deposits.

(c) SA WI: In consideration of the agreements herein contained, SA WI hereby
agrees that there has been or will be assigned and transferred to State Auto
Mutual an amount, in cash or other assets, equal to the aggregate of all
liabilities of SA WI assumed by State Auto Mutual under paragraph 2(c) hereof,
less a ceding commission equal to the sum of the acquisition expenses associated
with the unearned premium reserves which are transferred as provided herein.
There shall be included among the assets assigned and transferred to State Auto
Mutual by SA WI all of the right, title and interest of SA WI in and to all
assets relative to the underwriting operations of SA WI due or that may become
due as evidenced by its books and records at the close of business on
December 31, 2009, not including investments, accrued investment income,
intercompany balances and bank deposits.

(d) Farmers Casualty: In consideration of the agreements herein contained,
Farmers Casualty hereby agrees that there has been or will be assigned and
transferred to State Auto Mutual an amount, in cash or other assets, equal to
the aggregate of all liabilities of Farmers Casualty assumed by State Auto
Mutual under paragraph 2(d) hereof, less a ceding commission equal to the sum of
the acquisition expenses associated with the unearned premium reserves which are
transferred as provided herein. There shall be included among the assets
assigned and transferred to State Auto Mutual by Farmers Casualty all of the
right, title and interest of Farmers Casualty in and to all assets relative to
the underwriting operations of Farmers Casualty due or that may become due as
evidenced by its books and records at the close of business on December 31,
2009, not including investments, accrued investment income, intercompany
balances and bank deposits.

(e) SA OH: In consideration of the agreements herein contained, SA OH hereby
agrees that there has been or will be assigned and transferred to State Auto
Mutual an amount, in cash or other assets, equal to the aggregate of all
liabilities of SA OH assumed by State Auto Mutual under paragraph 2(e) hereof,
less a ceding commission equal to the sum of the acquisition expenses associated
with the unearned premium reserves which are transferred as provided herein.
There shall be included

 

9

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

among the assets assigned and transferred to State Auto Mutual by SA OH all of
the right, title and interest of SA OH in and to all assets relative to the
underwriting operations of SA OH due or that may become due as evidenced by its
books and records at the close of business on December 31, 2009, not including
investments, accrued investment income, intercompany balances and bank deposits.

(f) SAN: In consideration of the agreements herein contained, SAN hereby agrees
that there has been or will be assigned and transferred to State Auto Mutual an
amount, in cash or other assets, equal to the aggregate of all liabilities of
SAN assumed by State Auto Mutual under paragraph 2(f) hereof, less a ceding
commission equal to the sum of the acquisition expenses associated with the
unearned premium reserves which are transferred as provided herein. There shall
be included among the assets assigned and transferred to State Auto Mutual by
SAN all of the right, title and interest of SAN in and to all assets relative to
the underwriting operations of SAN due or that may become due as evidenced by
its books and records at the close of business on December 31, 2009, not
including investments, accrued investment income, intercompany balances and bank
deposits.

(g) SA FL: In consideration of the agreements herein contained, SA FL hereby
agrees that there has been or will be assigned and transferred to State Auto
Mutual an amount, in cash or other assets, equal to the aggregate of all
liabilities of SA FL assumed by State Auto Mutual under paragraph 2(g) hereof,
less a ceding commission equal to the sum of the acquisition expenses associated
with the unearned premium reserves which are transferred as provided herein.
There shall be included among the assets assigned and transferred to State Auto
Mutual by SA FL: all of the right, title and interest of SA FL in and to all
assets relative to the underwriting operations of SA FL due or that may become
due as evidenced by its books and records at the close of business on
December 31, 2009, not including investments, accrued investment income,
intercompany balances and bank deposits.

(h) Meridian Security: In consideration of the agreements herein contained,
Meridian Security hereby agrees that there has been or will be assigned and
transferred to State Auto Mutual an amount, in cash or other assets, equal to
the aggregate of all liabilities of Meridian Security assumed by State Auto
Mutual under paragraph 2(h) hereof, less a ceding commission equal to the sum of
the acquisition expenses associated with the unearned premium reserves which are
transferred as provided herein. There shall be included among the assets
assigned and transferred to State Auto Mutual by Meridian Security all of the
right, title and interest of Meridian Security in and to all assets relative to
the underwriting operations of Meridian Security due or that may become due as
evidenced by its books and records at the close of business on December 31,
2009, not including investments, accrued investment income, intercompany
balances and bank deposits.

 

10

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

(i) Meridian Citizens Mutual: In consideration of the agreements herein
contained, Meridian Citizens Mutual hereby agrees that there has been or will be
assigned and transferred to State Auto Mutual an amount, in cash or other
assets, equal to the aggregate of all liabilities of Meridian Citizens Mutual
assumed by State Auto Mutual under paragraph 2(i) hereof, less a ceding
commission equal to the sum of the acquisition expenses associated with the
unearned premium reserves which are transferred as provided herein. There shall
be included among the assets assigned and transferred to State Auto Mutual by
Meridian Citizens Mutual all of the right, title and interest of Meridian
Citizens Mutual in and to all assets relative to the underwriting operations of
Meridian Citizens Mutual due or that may become due as evidenced by its books
and records at the close of business on December 31, 2009, not including
investments, accrued investment income, intercompany balances and bank deposits.

(j) Beacon: In consideration of the agreements herein contained, Beacon hereby
agrees that there has been or will be assigned and transferred to State Auto
Mutual an amount, in cash or other assets, equal to the aggregate of all
liabilities of Beacon assumed by State Auto Mutual under paragraph 2(j) hereof,
less a ceding commission equal to the sum of the acquisition expenses associated
with the unearned premium reserves which are transferred as provided herein.
There shall be included among the assets assigned and transferred to State Auto
Mutual by Beacon all of the right, title and interest of Beacon in and to all
assets relative to the underwriting operations of Beacon due or that may become
due as evidenced by its books and records at the close of business on
December 31, 2009, not including investments, accrued investment income,
intercompany balances and bank deposits.

(k) Patrons: In consideration of the agreements herein contained, Patrons hereby
agrees that there has been or will be assigned and transferred to State Auto
Mutual an amount, in cash or other assets, equal to the aggregate of all
liabilities of Patrons assumed by State Auto Mutual under paragraph 2(k) hereof,
less a ceding commission equal to the sum of the acquisition expenses associated
with the unearned premium reserves which are transferred as provided herein.
There shall be included among the assets assigned and transferred to State Auto
Mutual by Patrons all of the right, title and interest of Patrons in and to all
assets relative to the underwriting operations of Patrons due or that may become
due as evidenced by its books and records at the close of business on
December 31, 2009, not including investments, accrued investment income,
intercompany balances and bank deposits.

(l) Litchfield: In consideration of the agreements herein contained, Litchfield
hereby agrees that there has been or will be assigned and transferred to State
Auto Mutual an amount, in cash or other assets, equal to the aggregate of all
liabilities of Litchfield assumed by State Auto Mutual under paragraph 2(l)
hereof, less a ceding commission equal to the sum of the acquisition expenses
associated with the unearned premium reserves which are transferred as provided
herein. There shall be

 

11

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

included among the assets assigned and transferred to State Auto Mutual by
Litchfield all of the right, title and interest of Litchfield in and to all
assets relative to the underwriting operations of Litchfield due or that may
become due as evidenced by its books and records at the close of business on
December 31, 2009, not including investments, accrued investment income,
intercompany balances and bank deposits.

4. Assumption of Reinsurance:

(a) State Auto P&C: State Auto P&C hereby reinsures and assumes and State Auto
Mutual hereby cedes and transfers to State Auto P&C its Respective Percentage of
all Net Liabilities as of January 1, 2010 and all Net Liabilities under all
contracts and policies of insurance, (including those ceded by State Auto P&C
and reinsured by State Auto Mutual as provided in paragraph 2(a)), on which
State Auto Mutual is subject to liability and which are outstanding and in force
on or after the effective date hereof.

Such liabilities shall include reserves for unearned premiums, outstanding
losses (including unreported losses) and loss expenses and all other
underwriting and administrative expenses, but shall not include intercompany
balances, liabilities for federal income taxes, liabilities incurred in
connection with investment transactions, liabilities for dividends to
stockholders declared and unpaid, and other liabilities not incurred in
connection with underwriting operations.

(b) Milbank: Milbank hereby reinsures and assumes and State Auto Mutual hereby
cedes and transfers to Milbank its Respective Percentage of all Net Liabilities
as of January 1, 2010 and all Net Liabilities under all contracts and policies
of insurance, (including those ceded by Milbank and reinsured by State Auto
Mutual as provided in paragraph 2(b)), on which State Auto Mutual is subject to
liability and which are outstanding and in force on or after the effective date
hereof.

Such liabilities shall include reserves for unearned premiums, outstanding
losses (including unreported losses) and loss expenses and all other
underwriting and administrative expenses, but shall not include intercompany
balances, liabilities for federal income taxes, liabilities incurred in
connection with investment transactions, liabilities for dividends to
stockholders declared and unpaid, and other liabilities not incurred in
connection with underwriting operations.

(c) SA WI: SA WI hereby reinsures and assumes and State Auto Mutual hereby cedes
and transfers to SA WI its Respective Percentage of all Net Liabilities as of
January 1, 2010 and all Net Liabilities under all contracts and policies of
insurance, (including those ceded by SA WI and reinsured by State Auto Mutual as
provided in paragraph 2(c)), on which State Auto Mutual is subject to liability
and which are outstanding and in force on or after the effective date hereof.

 

12

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

Such liabilities shall include reserves for unearned premiums, outstanding
losses (including unreported losses) and loss expenses and all other
underwriting and administrative expenses, but shall not include intercompany
balances, liabilities for federal income taxes, liabilities incurred in
connection with investment transactions, liabilities for dividends to
stockholders declared and unpaid, and other liabilities not incurred in
connection with underwriting operations.

(d) Farmers Casualty: Farmers Casualty hereby reinsures and assumes and State
Auto Mutual hereby cedes and transfers to Farmers Casualty its Respective
Percentage of all Net Liabilities as of January 1, 2010 and all Net Liabilities
under all contracts and policies of insurance, (including those ceded by Farmers
Casualty and reinsured by State Auto Mutual as provided in paragraph 2(d)), on
which State Auto Mutual is subject to liability and which are outstanding and in
force on or after the effective date hereof.

Such liabilities shall include reserves for unearned premiums, outstanding
losses (including unreported losses) and loss expenses and all other
underwriting and administrative expenses, but shall not include intercompany
balances, liabilities for federal income taxes, liabilities incurred in
connection with investment transactions, liabilities for dividends to
stockholders declared and unpaid, and other liabilities not incurred in
connection with underwriting operations.

(e) SA OH: SA OH hereby reinsures and assumes and State Auto Mutual hereby cedes
and transfers to SA OH its Respective Percentage of all Net Liabilities as of
January 1, 2010 and all Net Liabilities under all contracts and policies of
insurance, (including those ceded by SA OH and reinsured by State Auto Mutual as
provided in paragraph 2(e)), on which State Auto Mutual is subject to liability
and which are outstanding and in force on or after the effective date hereof.

Such liabilities shall include reserves for unearned premiums, outstanding
losses (including unreported losses) and loss expenses and all other
underwriting and administrative expenses, but shall not include intercompany
balances, liabilities for federal income taxes, liabilities incurred in
connection with investment transactions, liabilities for dividends to
stockholders declared and unpaid, and other liabilities not incurred in
connection with underwriting operations.

(f) SAN: SAN hereby reinsures and assumes and State Auto Mutual hereby cedes and
transfers to SAN its Respective Percentage of all Net Liabilities as of
January 1, 2010 and all Net Liabilities under all contracts and policies of
insurance, (including those ceded by SAN and reinsured by State Auto Mutual as
provided in paragraph 2(f)), on which State Auto Mutual is subject to liability
and which are outstanding and in force on or after the effective date hereof.

 

13

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

Such liabilities shall include reserves for unearned premiums, outstanding
losses (including unreported losses) and loss expenses and all other
underwriting and administrative expenses, but shall not include intercompany
balances, liabilities for federal income taxes, liabilities incurred in
connection with investment transactions, liabilities for dividends to
stockholders declared and unpaid, and other liabilities not incurred in
connection with underwriting operations.

(g) SA FL: SA FL hereby reinsures and assumes and State Auto Mutual hereby cedes
and transfers to SA FL its Respective Percentage of all Net Liabilities as of
January 1, 2010 and all Net Liabilities under all contracts and policies of
insurance, (including those ceded by SA FL and reinsured by State Auto Mutual as
provided in paragraph 2(g)), on which State Auto Mutual is subject to liability
and which are outstanding and in force on or after the effective date hereof.

Such liabilities shall include reserves for unearned premiums, outstanding
losses (including unreported losses) and loss expenses and all other
underwriting and administrative expenses, but shall not include intercompany
balances, liabilities for federal income taxes, liabilities incurred in
connection with investment transactions, liabilities for dividends to
stockholders declared and unpaid, and other liabilities not incurred in
connection with underwriting operations.

(h) Meridian Security: Meridian Security hereby reinsures and assumes and State
Auto Mutual hereby cedes and transfers to Meridian Security its Respective
Percentage of all Net Liabilities as of January 1, 2010 and all Net Liabilities
under all contracts and policies of insurance, (including those ceded by
Meridian Security and reinsured by State Auto Mutual as provided in paragraph
2(h)), on which State Auto Mutual is subject to liability and which are
outstanding and in force on or after the effective date hereof.

Such liabilities shall include reserves for unearned premiums, outstanding
losses (including unreported losses) and loss expenses and all other
underwriting and administrative expenses, but shall not include intercompany
balances, liabilities for federal income taxes, liabilities incurred in
connection with investment transactions, liabilities for dividends to
stockholders declared and unpaid, and other liabilities not incurred in
connection with underwriting operations.

(i) Meridian Citizens Mutual: Meridian Citizens Mutual hereby reinsures and
assumes and State Auto Mutual hereby cedes and transfers to Meridian Citizens
Mutual its Respective Percentage of all Net Liabilities as of January 1, 2010
and all Net Liabilities under all contracts and policies of insurance,
(including those ceded by Meridian Citizens Mutual and reinsured by State Auto
Mutual as provided in paragraph 2(i)), on which State Auto Mutual is subject to
liability and which are outstanding and in force on or after the effective date
hereof.

 

14

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

Such liabilities shall include reserves for unearned premiums, outstanding
losses (including unreported losses) and loss expenses and all other
underwriting and administrative expenses, but shall not include intercompany
balances, liabilities for federal income taxes, liabilities incurred in
connection with investment transactions, and other liabilities not incurred in
connection with underwriting operations.

(j) Beacon: Beacon hereby reinsures and assumes and State Auto Mutual hereby
cedes and transfers to Beacon its Respective Percentage of all Net Liabilities
as of January 1, 2010 and all Net Liabilities under all contracts and policies
of insurance, (including those ceded by Beacon and reinsured by State Auto
Mutual as provided in paragraph 2(j)), on which State Auto Mutual is subject to
liability and which are outstanding and in force on or after the effective date
hereof.

Such liabilities shall include reserves for unearned premiums, outstanding
losses (including unreported losses) and loss expenses and all other
underwriting and administrative expenses, but shall not include intercompany
balances, liabilities for federal income taxes, liabilities incurred in
connection with investment transactions, liabilities for dividends to
stockholders declared and unpaid, and other liabilities not incurred in
connection with underwriting operations.

(k) Patrons: Patrons hereby reinsures and assumes and State Auto Mutual hereby
cedes and transfers to Patrons its Respective Percentage of all Net Liabilities
as of January 1, 2010 and all Net Liabilities under all contracts and policies
of insurance, (including those ceded by Patrons and reinsured by State Auto
Mutual as provided in paragraph 2(k)), on which State Auto Mutual is subject to
liability and which are outstanding and in force on or after the effective date
hereof.

Such liabilities shall include reserves for unearned premiums, outstanding
losses (including unreported losses) and loss expenses and all other
underwriting and administrative expenses, but shall not include intercompany
balances, liabilities for federal income taxes, liabilities incurred in
connection with investment transactions, and other liabilities not incurred in
connection with underwriting operations.

(l) Litchfield: Litchfield hereby reinsures and assumes and State Auto Mutual
hereby cedes and transfers to Litchfield its Respective Percentage of all Net
Liabilities as of January 1, 2010 and all Net Liabilities under all contracts
and policies of insurance, (including those ceded by Litchfield and reinsured by
State Auto Mutual as provided in paragraph 2(l)), on which State Auto Mutual is
subject to liability and which are outstanding and in force on or after the
effective date hereof.

 

15

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

Such liabilities shall include reserves for unearned premiums, outstanding
losses (including unreported losses) and loss expenses and all other
underwriting and administrative expenses, but shall not include intercompany
balances, liabilities for federal income taxes, liabilities incurred in
connection with investment transactions, and other liabilities not incurred in
connection with underwriting operations.

5. Asset Transfer by State Auto Mutual:

(a) State Auto P&C: In consideration of the agreements herein contained, State
Auto Mutual hereby agrees that there has been or will be assigned and
transferred to State Auto P&C an amount, in cash or other assets, equal to the
aggregate of all liabilities of State Auto Mutual assumed by State Auto P&C
under paragraph 4(a) hereof, less a ceding commission equal to the sum of the
acquisition expenses associated with the unearned premium reserves which are
transferred as provided herein. There shall be included among the assets
assigned and transferred to State Auto P&C by State Auto Mutual all of the
right, title and interest of State Auto Mutual in and to all assets relative to
the underwriting operations of State Auto Mutual, due or that may become due, as
evidenced by its books and records at the close of business on December 31,
2009, not including investments, accrued investment income, intercompany
balances and bank deposits.

(b) Milbank: In consideration of the agreements herein contained, State Auto
Mutual hereby agrees that there has been or will be assigned and transferred to
Milbank an amount, in cash or other assets, equal to the aggregate of all
liabilities of State Auto Mutual assumed by Milbank under paragraph 4(b) hereof,
less a ceding commission equal to the sum of the acquisition expenses associated
with the unearned premium reserves which are transferred as provided herein.
There shall be included among the assets assigned and transferred to Milbank by
State Auto Mutual all of the right, title and interest of State Auto Mutual in
and to all assets relative to the underwriting operations of State Auto Mutual,
due or that may become due, as evidenced by its books and records at the close
of business on December 31, 2009, not including investments, accrued investment
income, intercompany balances and bank deposits.

(c) SA WI: In consideration of the agreements herein contained, State Auto
Mutual hereby agrees that there has been or will be assigned and transferred to
SA WI an amount, in cash or other assets, equal to the aggregate of all
liabilities of State Auto Mutual assumed by SA WI under paragraph 4(c) hereof,
less a ceding commission equal to the sum of the acquisition expenses associated
with the unearned premium reserves which are transferred as provided herein.
There shall be included among the assets assigned and transferred to SA WI by
State Auto Mutual all of the right, title and interest of State Auto Mutual in
and to all assets relative to the underwriting operations of State Auto Mutual,
due or that may become due, as evidenced by its books and records at the close
of business on December 31, 2009, not including investments, accrued investment
income, intercompany balances and bank deposits.

 

16

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

(d) Farmers Casualty: In consideration of the agreements herein contained, State
Auto Mutual hereby agrees that there has been or will be assigned and
transferred to Farmers Casualty an amount, in cash or other assets, equal to the
aggregate of all liabilities of State Auto Mutual assumed by Farmers Casualty
under paragraph 4(d) hereof, less a ceding commission equal to the sum of the
acquisition expenses associated with the unearned premium reserves which are
transferred as provided herein. There shall be included among the assets
assigned and transferred to Farmers Casualty by State Auto Mutual all of the
right, title and interest of State Auto Mutual in and to all assets relative to
the underwriting operations of State Auto Mutual, due or that may become due, as
evidenced by its books and records at the close of business on December 31,
2009, not including investments, accrued investment income, intercompany
balances and bank deposits.

(e) SA OH: In consideration of the agreements herein contained, State Auto
Mutual hereby agrees that there has been or will be assigned and transferred to
SA OH an amount, in cash or other assets, equal to the aggregate of all
liabilities of State Auto Mutual assumed by SA OH under paragraph 4(e) hereof,
less a ceding commission equal to the sum of the acquisition expenses associated
with the unearned premium reserves which are transferred as provided herein.
There shall be included among the assets assigned and transferred to SA OH by
State Auto Mutual all of the right, title and interest of State Auto Mutual in
and to all assets relative to the underwriting operations of State Auto Mutual,
due or that may become due, as evidenced by its books and records at the close
of business on December 31, 2009, not including investments, accrued investment
income, intercompany balances and bank deposits.

(f) SAN: In consideration of the agreements herein contained, State Auto Mutual
hereby agrees that there has been or will be assigned and transferred to SAN an
amount, in cash or other assets, equal to the aggregate of all liabilities of
State Auto Mutual assumed by SAN under paragraph 4(f) hereof, less a ceding
commission equal to the sum of the acquisition expenses associated with the
unearned premium reserves which are transferred as provided herein. There shall
be included among the assets assigned and transferred to SAN by State Auto
Mutual all of the right, title and interest of State Auto Mutual in and to all
assets relative to the underwriting operations of State Auto Mutual, due or that
may become due, as evidenced by its books and records at the close of business
on December 31, 2009, not including investments, accrued investment income,
intercompany balances and bank deposits.

 

17

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

(g) SA FL: In consideration of the agreements herein contained, State Auto
Mutual hereby agrees that there has been or will be assigned and transferred to
SA FL an amount, in cash or other assets, equal to the aggregate of all
liabilities of State Auto Mutual assumed by SA FL under paragraph 4(g) hereof,
less a ceding commission equal to the sum of the acquisition expenses associated
with the unearned premium reserves which are transferred as provided herein.
There shall be included among the assets assigned and transferred to SA FL by
State Auto Mutual all of the right, title and interest of State Auto Mutual in
and to all assets relative to the underwriting operations of State Auto Mutual,
due or that may become due, as evidenced by its books and records at the close
of business on December 31, 2009, not including investments, accrued investment
income, intercompany balances and bank deposits.

(h) Meridian Security: In consideration of the agreements herein contained,
State Auto Mutual hereby agrees that there has been or will be assigned and
transferred to Meridian Security an amount, in cash or other assets, equal to
the aggregate of all liabilities of State Auto Mutual assumed by Meridian
Security under paragraph 4(h) hereof, less a ceding commission equal to the sum
of the acquisition expenses associated with the unearned premium reserves which
are transferred as provided herein. There shall be included among the assets
assigned and transferred to Meridian Security by State Auto Mutual all of the
right, title and interest of State Auto Mutual in and to all assets relative to
the underwriting operations of State Auto Mutual, due or that may become due, as
evidenced by its books and records at the close of business on December 31,
2009, not including investments, accrued investment income, intercompany
balances and bank deposits.

(i) Meridian Citizens Mutual: In consideration of the agreements herein
contained, State Auto Mutual hereby agrees that there has been or will be
assigned and transferred to Meridian Citizens Mutual an amount, in cash or other
assets, equal to the aggregate of all liabilities of State Auto Mutual assumed
by Meridian Citizens Mutual under paragraph 4(i) hereof, less a ceding
commission equal to the sum of the acquisition expenses associated with the
unearned premium reserves which are transferred as provided herein. There shall
be included among the assets assigned and transferred to Meridian Citizens
Mutual by State Auto Mutual all of the right, title and interest of State Auto
Mutual in and to all assets relative to the underwriting operations of State
Auto Mutual, due or that may become due, as evidenced by its books and records
at the close of business on December 31, 2009, not including investments,
accrued investment income, intercompany balances and bank deposits.

(j) Beacon: In consideration of the agreements herein contained, State Auto
Mutual hereby agrees that there has been or will be assigned and transferred to
Beacon an amount, in cash or other assets, equal to the aggregate of all
liabilities of State Auto Mutual assumed by Beacon under paragraph 4(j) hereof,
less a ceding commission equal to the sum of the acquisition expenses associated
with the unearned premium reserves which are transferred as provided herein.
There shall be included among the assets assigned and transferred to Beacon by
State Auto Mutual all of the right, title and interest of State Auto Mutual in
and to all assets relative to the underwriting operations of State Auto Mutual,
due or that may become due, as evidenced by its books and records at the close
of business on December 31, 2009, not including investments, accrued investment
income, intercompany balances and bank deposits.

 

18

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

(k) Patrons: In consideration of the agreements herein contained, State Auto
Mutual hereby agrees that there has been or will be assigned and transferred to
Patrons an amount, in cash or other assets, equal to the aggregate of all
liabilities of State Auto Mutual assumed by Patrons under paragraph 4(k) hereof,
less a ceding commission equal to the sum of the acquisition expenses associated
with the unearned premium reserves which are transferred as provided herein.
There shall be included among the assets assigned and transferred to Patrons by
State Auto Mutual all of the right, title and interest of State Auto Mutual in
and to all assets relative to the underwriting operations of State Auto Mutual,
due or that may become due, as evidenced by its books and records at the close
of business on December 31, 2009, not including investments, accrued investment
income, intercompany balances and bank deposits.

(l) Litchfield: In consideration of the agreements herein contained, State Auto
Mutual hereby agrees that there has been or will be assigned and transferred to
Litchfield an amount, in cash or other assets, equal to the aggregate of all
liabilities of State Auto Mutual assumed by Litchfield under paragraph 4(l)
hereof, less a ceding commission equal to the sum of the acquisition expenses
associated with the unearned premium reserves which are transferred as provided
herein. There shall be included among the assets assigned and transferred to
Litchfield by State Auto Mutual all of the right, title and interest of State
Auto Mutual in and to all assets relative to the underwriting operations of
State Auto Mutual, due or that may become due, as evidenced by its books and
records at the close of business on December 31, 2009, not including
investments, accrued investment income, intercompany balances and bank deposits.

6. Premium Collection and Payment of Losses: As of the effective date of this
Agreement and pursuant to the terms of the 2005 Management Agreement and the
2000 Midwest Management Agreement, all as amended from time to time, State Auto
P&C, Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA FL, Meridian Security,
Meridian Citizens Mutual, Beacon, Patrons and Litchfield hereby authorize and
empower State Auto Mutual to collect and receive all premiums and to take charge
of, adjust and administer the payment of all losses with respect to any and all
contracts and policies of insurance previously or thereafter issued by State
Auto P&C, Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA FL, Meridian
Security, Meridian Citizens Mutual, Beacon, Patrons and Litchfield and to
reinsure or terminate all such contracts and policies, and in all respects to
act as though said contracts and policies were issued by State Auto Mutual.
State Auto Mutual agrees to administer the payment of all losses and loss
adjustment expenses in connection with such contracts and policies. None of the
foregoing is intended to affect or impair the direct obligation of State Auto
P&C, Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA FL, Meridian Security,
Meridian Citizens Mutual, Beacon, Patrons and Litchfield, to their insureds
under policies issued by State Auto P&C, Milbank, SA WI, Farmers Casualty, SA
OH, SAN, SA FL, Meridian Security, Meridian Citizens Mutual, Beacon, Patrons and
Litchfield respectively.

 

19

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

7. Premium Payable by State Auto Mutual:

(a) State Auto P&C: Commencing with the effective date of this Agreement, State
Auto Mutual hereby agrees to pay to State Auto P&C its Respective Percentage of
the Net Premiums written by the parties hereto. Similarly, commencing with the
effective date of this Agreement, all losses, loss expenses, underwriting
expenses, and administrative expenses chargeable to underwriting of the parties
hereto (except for losses, loss expenses, underwriting expenses and
administrative expenses chargeable to the State Auto Mutual Reinsurance Book),
including the policyholder dividends, less all losses and expenses recovered and
recoverable under reinsurance ceded to reinsurers other than the parties hereto,
shall be prorated among the parties on the basis of the Respective Percentage of
each. Subject to the offset provision in Section 8 hereof, all amounts due under
this Agreement shall be due and payable by the respective Pooled Company within
sixty (60) days after the end of each calendar quarter.

(b) Milbank: Commencing with the effective date of this Agreement, State Auto
Mutual hereby agrees to pay Milbank its Respective Percentage of the Net
Premiums written by the parties hereto. Similarly, commencing with the effective
date of this Agreement, all losses, loss expenses, underwriting expenses, and
administrative expenses chargeable to underwriting of the parties hereto,(except
for losses, loss expenses, underwriting expenses and administrative expenses
chargeable to the State Auto Mutual Reinsurance Book), including policyholder
dividends, less all losses and expenses recovered and recoverable under
reinsurance ceded to reinsurers other than the parties hereto, shall be prorated
among the parties on the basis of the Respective Percentage of each. Subject to
the offset provision in Section 8 hereof, all amounts due under this Agreement
shall be due and payable by the respective Pooled Company within sixty (60) days
after the end of each calendar quarter.

(c) SA WI: Commencing with the effective date of this Agreement, State Auto
Mutual hereby agrees to pay SA WI its Respective Percentage of the Net Premiums
written by the parties hereto. Similarly, commencing with the effective date of
this Agreement, all losses, loss expenses, underwriting expenses, and
administrative expenses chargeable to underwriting of the parties hereto (except
for losses, loss expenses, underwriting expenses and administrative expenses
chargeable to the State Auto Mutual Reinsurance Book), including policyholder
dividends, less all losses and expenses recovered and recoverable under
reinsurance ceded to reinsurers other than the parties hereto, shall be prorated
among the parties on the basis of the Respective Percentage of each. Subject to
the offset provision in Section 8 hereof, all amounts due under this Agreement
shall be due and payable by the respective Pooled Company within sixty (60) days
after the end of each calendar quarter.

 

20

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

(d) Farmers Casualty: Commencing with the effective date of this Agreement,
State Auto Mutual hereby agrees to pay Farmers Casualty its Respective
Percentage of the Net Premiums written by the parties hereto. Similarly,
commencing with the effective date of this Agreement, all losses, loss expenses,
underwriting expenses, and administrative expenses chargeable to underwriting of
the parties hereto,(except for losses, loss expenses, underwriting expenses and
administrative expenses chargeable to the State Auto Mutual Reinsurance Book),
including policyholder dividends, less all losses and expenses recovered and
recoverable under reinsurance ceded to reinsurers other than the parties hereto,
shall be prorated among the parties on the basis of the Respective Percentage of
each. Subject to the offset provision in Section 8 hereof, all amounts due under
this Agreement shall be due and payable by the respective Pooled Company within
sixty (60) days after the end of each calendar quarter.

(e) SA OH: Commencing with the effective date of this Agreement, State Auto
Mutual hereby agrees to pay SA OH its Respective Percentage of the Net Premiums
written by the parties hereto. Similarly, commencing with the effective date of
this Agreement, all losses, loss expenses, underwriting expenses, and
administrative expenses chargeable to underwriting of the parties hereto
,(except for losses, loss expenses, underwriting expenses and administrative
expenses chargeable to the State Auto Mutual Reinsurance Book), including
policyholder dividends, less all losses and expenses recovered and recoverable
under reinsurance ceded to reinsurers other than the parties hereto, shall be
prorated among the parties on the basis of the Respective Percentage of each.
Subject to the offset provision in Section 8 hereof, all amounts due under this
Agreement shall be due and payable by the respective Pooled Company within sixty
(60) days after the end of each calendar quarter.

(f) SAN: Commencing with the effective date of this Agreement, State Auto Mutual
hereby agrees to pay SAN its Respective Percentage of the Net Premiums written
by the parties hereto. Similarly, commencing with the effective date of this
Agreement, all losses, loss expenses, underwriting expenses, and administrative
expenses chargeable to underwriting of the parties hereto ,(except for losses,
loss expenses, underwriting expenses and administrative expenses chargeable to
the State Auto Mutual Reinsurance Book), including policyholder dividends, less
all losses and expenses recovered and recoverable under reinsurance ceded to
reinsurers other than the parties hereto, shall be prorated among the parties on
the basis of the Respective Percentage of each. Subject to the offset provision
in Section 8 hereof, all amounts due under this Agreement shall be due and
payable by the respective Pooled Company within sixty (60) days after the end of
each calendar quarter.

 

21

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

(g) SA FL: Commencing with the effective date of this Agreement, State Auto
Mutual hereby agrees to pay SA FL its Respective Percentage of the Net Premiums
written by the parties hereto. Similarly, commencing with the effective date of
this Agreement, all losses, loss expenses, underwriting expenses, and
administrative expenses chargeable to underwriting of the parties hereto
,(except for losses, loss expenses, underwriting expenses and administrative
expenses chargeable to the State Auto Mutual Reinsurance Book), including
policyholder dividends, less all losses and expenses recovered and recoverable
under reinsurance ceded to reinsurers other than the parties hereto, shall be
prorated among the parties on the basis of the Respective Percentage of each.
Subject to the offset provision in Section 8 hereof, all amounts due under this
Agreement shall be due and payable by the respective Pooled Company within sixty
(60) days after the end of each calendar quarter.

(h) Meridian Security: Commencing with the effective date of this Agreement,
State Auto Mutual hereby agrees to pay Meridian Security its Respective
Percentage of the Net Premiums written by the parties hereto. Similarly,
commencing with the effective date of this Agreement, all losses, loss expenses,
underwriting expenses, and administrative expenses chargeable to underwriting of
the parties hereto ,(except for losses, loss expenses, underwriting expenses and
administrative expenses chargeable to the State Auto Mutual Reinsurance Book),
including policyholder dividends, less all losses and expenses recovered and
recoverable under reinsurance ceded to reinsurers other than the parties hereto,
shall be prorated among the parties on the basis of the Respective Percentage of
each. Subject to the offset provision in Section 8 hereof, all amounts due under
this Agreement shall be due and payable by the respective Pooled Company within
sixty (60) days after the end of each calendar quarter.

(i) Meridian Citizens Mutual: Commencing with the effective date of this
Agreement, State Auto Mutual hereby agrees to pay Meridian Citizens Mutual its
Respective Percentage of the Net Premiums written by the parties hereto.
Similarly, commencing with the effective date of this Agreement, all losses,
loss expenses, underwriting expenses, and administrative expenses chargeable to
underwriting of the parties hereto ,(except for losses, loss expenses,
underwriting expenses and administrative expenses chargeable to the State Auto
Mutual Reinsurance Book), including policyholder dividends, less all losses and
expenses recovered and recoverable under reinsurance ceded to reinsurers other
than the parties hereto, shall be prorated among the parties on the basis of the
Respective Percentage of each. Subject to the offset provision in Section 8
hereof, all amounts due under this Agreement shall be due and payable by the
respective Pooled Company within sixty (60) days after the end of each calendar
quarter.

(j) Beacon: Commencing with the effective date of this Agreement, State Auto
Mutual hereby agrees to pay Beacon its Respective Percentage of the Net Premiums
written by the parties hereto. Similarly, commencing with the effective date of
this Agreement, all losses, loss expenses, underwriting expenses, and
administrative expenses chargeable to underwriting of the

 

22

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

parties hereto ,(except for losses, loss expenses, underwriting expenses and
administrative expenses chargeable to the State Auto Mutual Reinsurance Book),
including policyholder dividends, less all losses and expenses recovered and
recoverable under reinsurance ceded to reinsurers other than the parties hereto,
shall be prorated among the parties on the basis of the Respective Percentage of
each. Subject to the offset provision in Section 8 hereof, all amounts due under
this Agreement shall be due and payable by the respective Pooled Company within
sixty (60) days after the end of each calendar quarter.

(k) Patrons: Commencing with the effective date of this Agreement, State Auto
Mutual hereby agrees to pay Patrons its Respective Percentage of the Net
Premiums written by the parties hereto. Similarly, commencing with the effective
date of this Agreement, all losses, loss expenses, underwriting expenses, and
administrative expenses chargeable to underwriting of the parties hereto
,(except for losses, loss expenses, underwriting expenses and administrative
expenses chargeable to the State Auto Mutual Reinsurance Book), including
policyholder dividends, less all losses and expenses recovered and recoverable
under reinsurance ceded to reinsurers other than the parties hereto, shall be
prorated among the parties on the basis of the Respective Percentage of each.
Subject to the offset provision in Section 8 hereof, all amounts due under this
Agreement shall be due and payable by the respective Pooled Company within sixty
(60) days after the end of each calendar quarter.

(l) Litchfield: Commencing with the effective date of this Agreement, State Auto
Mutual hereby agrees to pay Litchfield its Respective Percentage of the Net
Premiums written by the parties hereto. Similarly, commencing with the effective
date of this Agreement, all losses, loss expenses, underwriting expenses, and
administrative expenses chargeable to underwriting of the parties hereto,(except
for losses, loss expenses, underwriting expenses and administrative expenses
chargeable to the State Auto Mutual Reinsurance Book), including policyholder
dividends, less all losses and expenses recovered and recoverable under
reinsurance ceded to reinsurers other than the parties hereto, shall be prorated
among the parties on the basis of the Respective Percentage of each. Subject to
the offset provision in Section 8 hereof, all amounts due under this Agreement
shall be due and payable by the respective Pooled Company within sixty (60) days
after the end of each calendar quarter.

8. Offset: It is understood and agreed that, insofar as is practicable and
consistent with the purposes and intentions of this Agreement, the obligations
of each company under this Agreement to transfer assets to the other company
may, in whole or in part, be offset against the reciprocal reinsurance
obligations of each company to the other company so that each company shall
deliver hereunder only a net amount of assets required under such offset.

 

23

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

9. General Statement of Intent: It is the purpose and intent of this Agreement
that:

(a) State Auto Mutual shall be liable as a reinsurer to State Auto P&C, Milbank,
SA WI, Farmers Casualty, SA OH, SAN, SA FL, Meridian Security, Meridian Citizens
Mutual, Beacon, Patrons and Litchfield on the policies and contracts of
insurance of State Auto P&C, Milbank, SA WI, Farmers Casualty. SA OH, SAN, SA
FL, Meridian Security, Meridian Citizens Security, Beacon, Patrons and
Litchfield respectively, issued and in force at 12:01 a.m., EST, January 1,
2010, or on which there were, at that time, unsettled claims or losses
(including unreported losses), and on policies and contracts thereafter issued
by State Auto P&C, Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA FL, Meridian
Security, Meridian Citizens Mutual, Beacon, Patrons and Litchfield to the extent
of State Auto Mutual’s Respective Percentage.

(b) State Auto P&C shall be liable as a reinsurer to State Auto Mutual, Milbank,
SA WI, Farmers Casualty, SA OH, SAN, SA FL, Meridian Security, Meridian Citizens
Mutual, Beacon, Patrons and Litchfield on the policies and contracts of
insurance of State Auto Mutual, Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA
FL, Meridian Security, Meridian Citizens Mutual, Beacon, Patrons and Litchfield
respectively, issued and in force at 12:01 a.m., EST, January 1, 2010, or on
which there were, at that time, unsettled claims or losses (including unreported
losses), and on policies and contracts thereafter issued by State Auto Mutual,
Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA FL, Meridian Security, Meridian
Citizens Mutual, Beacon, Patrons and Litchfield to the extent of State Auto
P&C’s Respective Percentage.

(c) Milbank shall be liable as a reinsurer to State Auto Mutual, State Auto P&C,
SA WI, Farmers Casualty SA OH, SAN, SA FL, Meridian Security, Meridian Citizens
Mutual, Beacon, Patrons and Litchfield on the policies and contracts of State
Auto Mutual, State Auto P&C, SA WI, Farmers Casualty, SA OH, SAN, SA FL,
Meridian Security, Meridian Citizens Mutual, Beacon, Patrons and Litchfield
respectively, issued and in force at 12:01 a.m., EST, on January 1, 2010 or on
which there were, at that time, unsettled claims or losses (including unreported
losses), and on policies thereafter issued by State Auto Mutual, State Auto P&C,
SA WI, Farmers Casualty, SA OH, SAN, SA FL, Meridian Security, Meridian Citizens
Mutual, Beacon, Patrons and Litchfield to the extent of Milbank’s Respective
Percentage.

(d) SA WI shall be liable as a reinsurer to State Auto Mutual, State Auto P&C,
Milbank, Farmers Casualty, SA OH, SAN, SA FL, Meridian Security, Meridian
Citizens Mutual, Beacon, Patrons and Litchfield on the policies and contracts of
State Auto Mutual, State Auto P&C, Milbank, Farmers Casualty SA OH, SAN, SA FL,
Meridian Security, Meridian Citizens Mutual, Beacon, Patrons and Litchfield
respectively, issued and in force at 12:01 a.m., EST, on January 1, 2010 or on
which there were, at that time, unsettled claims or losses (including unreported
losses), and on policies thereafter issued by State Auto Mutual, State Auto P&C,
Milbank, Farmers Casualty, SA OH, SAN, SA FL, Meridian Security, Meridian
Citizens Mutual, Beacon, Patrons and Litchfield to the extent of SA WI’s
Respective Percentage.

 

24

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

(e) Farmers Casualty shall be liable as a reinsurer to State Auto Mutual, State
Auto P&C, Milbank, SA WI, SA OH, SAN, SA FL, Meridian Security, Meridian
Citizens Mutual, Beacon, Patrons and Litchfield on the policies and contracts of
State Auto Mutual, State Auto P&C, Milbank, SA WI, SA OH, SAN, SA FL, Meridian
Security, Meridian Citizens Mutual, Beacon, Patrons and Litchfield respectively,
issued and in force at 12:01 a.m., EST, January 1, 2010 or on which there were,
at that time, unsettled claims or losses (including unreported losses), and on
policies and contracts thereafter issued by State Auto Mutual, State Auto P&C,
Milbank, SA WI, SA OH, SAN, SA FL, Meridian Security, Meridian Citizens Mutual,
Beacon, Patrons and Litchfield to the extent of Farmers Casualty’s Respective
Percentage.

(f) SA OH shall be liable as a reinsurer to State Auto Mutual, State Auto P&C,
Milbank, SA WI, Farmers Casualty, SAN, SA FL, Meridian Security, Meridian
Citizens Mutual, Beacon, Patrons and Litchfield on the policies and contracts of
State Auto Mutual, State Auto P&C, Milbank, SA WI, Farmers Casualty, SAN, SA FL,
Meridian Security, Meridian Citizens Mutual, Beacon, Patrons and Litchfield
respectively, issued and in force at 12:01 a.m., EST, January 1, 2010 or on
which there were, at that time, unsettled claims or losses (including unreported
losses) , and on policies and contracts thereafter issued by State Auto Mutual,
State Auto P&C, Milbank, SA WI, Farmers Casualty, SAN, SA FL, Meridian Security,
Meridian Citizens Mutual, Beacon, Patrons and Litchfield to the extent of SA
OH’s Respective Percentage.

(g) SAN shall be liable as a reinsurer to State Auto Mutual, State Auto P&C,
Milbank, SA WI, Farmers Casualty, SA OH, SA FL, Meridian Security, Meridian
Citizens Mutual, Beacon, Patrons and Litchfield on the policies and contracts of
State Auto Mutual, State Auto P&C, Milbank, SA WI, Farmers Casualty, SA OH, SA
FL, Meridian Security, Meridian Citizens Mutual, Beacon, Patrons and Litchfield
respectively, issued and in force at 12:01 a.m., EST, January 1, 2010 or on
which there were, at that time, unsettled claims or losses (including unreported
losses) , and on policies and contracts thereafter issued by State Auto Mutual,
State Auto P&C, Milbank, SA WI, Farmers Casualty, SA OH, SA FL, Meridian
Security, Meridian Citizens Mutual, Beacon, Patrons and Litchfield to the extent
of SAN’s Respective Percentage.

(h) SA FL shall be liable as a reinsurer to State Auto Mutual, State Auto P&C,
Milbank, SA WI, Farmers Casualty, SA OH, SAN, Meridian Security, Meridian
Citizens Mutual, Beacon, Patrons and Litchfield on the policies and contracts of
State Auto Mutual, State Auto P&C, Milbank, SA WI, Farmers Casualty, SA OH, SAN,
Meridian Security, Meridian Citizens Mutual, Beacon, Patrons and Litchfield
respectively, issued and in force at 12:01 a.m., EST, January 1, 2010 or on
which there were, at that time, unsettled claims or losses (including unreported
losses), and on policies and contracts thereafter issued by State Auto Mutual,
State Auto P&C, Milbank, SA WI, Farmers Casualty, SA OH, SAN, Meridian Security,
Meridian Citizens Mutual, Beacon, Patrons and Litchfield to the extent of SA
FL’s Respective Percentage.

 

25

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

(i) Meridian Security shall be liable as a reinsurer to State Auto Mutual, State
Auto P&C, Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA FL, Meridian Citizens
Mutual, Beacon, Patrons and Litchfield on the policies and contracts of State
Auto Mutual, State Auto P&C, Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA
FL, Meridian Citizens Mutual, Beacon, Patrons and Litchfield respectively,
issued and in force at 12:01 a.m., EST, January 1, 2010 or on which there were,
at that time, unsettled claims or losses (including unreported losses) , and on
policies and contracts thereafter issued by State Auto Mutual, State Auto P&C,
Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA FL, Meridian Citizens Mutual,
Beacon, Patrons and Litchfield to the extent of Meridian Security’s Respective
Percentage.

(j) Meridian Citizens Mutual shall be liable as a reinsurer to State Auto
Mutual, State Auto P&C, Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA FL,
Meridian Security, Beacon, Patrons and Litchfield on the policies and contracts
of State Auto Mutual, State Auto P&C, Milbank, SA WI, Farmers Casualty, SA OH,
SAN, SA FL, Meridian Security, Beacon, Patrons and Litchfield respectively,
issued and in force at 12:01 a.m., EST, January 1, 2010 or on which there were,
at that time, unsettled claims or losses (including unreported losses), and on
policies and contracts thereafter issued by State Auto Mutual, State Auto P&C,
Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA FL, Meridian Security, Beacon,
Patrons and Litchfield to the extent of Meridian Citizens Mutual’s Respective
Percentage.

(k) Beacon shall be liable as a reinsurer to State Auto Mutual, State Auto P&C,
Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA FL, Meridian Security, Meridian
Citizens Mutual, Patrons and Litchfield on the policies and contracts of State
Auto Mutual, State Auto P&C, Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA
FL, Meridian Security, Meridian Citizens Mutual, Patrons and Litchfield
respectively, issued and in force at 12:01 a.m., EST, January 1, 2010 or on
which there were, at that time, unsettled claims or losses (including unreported
losses), and on policies and contracts thereafter issued by State Auto Mutual,
State Auto P&C, Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA FL, Meridian
Security, Meridian Citizens Mutual, Patrons and Litchfield to the extent of
Beacon’s Respective Percentage.

(l) Patrons shall be liable as a reinsurer to State Auto Mutual, State Auto P&C,
Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA FL, Meridian Security, Meridian
Citizens Mutual, Beacon and Litchfield on the policies and contracts of State
Auto Mutual, State Auto P&C, Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA
FL, Meridian Security, Meridian Citizens Mutual, Beacon and Litchfield
respectively, issued and in force at 12:01 a.m., EST, January 1, 2010 or on
which there were, at

 

26

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

that time, unsettled claims or losses (including unreported losses), and on
policies and contracts thereafter issued by State Auto Mutual, State Auto P&C,
Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA FL, Meridian Security, Meridian
Citizens Mutual, Beacon and Litchfield to the extent of Patron’s Respective
Percentage.

(m) Litchfield shall be liable as a reinsurer to State Auto Mutual, State Auto
P&C, Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA FL, Meridian Security,
Meridian Citizens Mutual, Beacon and Patrons on the policies and contracts of
State Auto Mutual, State Auto P&C, Milbank, SA WI, Farmers Casualty, SA OH, SAN,
SA FL, Meridian Security, Meridian Citizens Mutual, Beacon and Patrons
respectively, issued and in force at 12:01 a.m., EST, January 1, 2010 or on
which there were, at that time, unsettled claims or losses (including unreported
losses), and on policies and contracts thereafter issued by State Auto Mutual,
State Auto P&C, Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA FL, Meridian
Security, Meridian Citizens Mutual, Beacon and Patrons to the extent of
Litchfield’s Respective Percentage.

(n) The parties hereto shall, on and after 12:01 a.m., EST, January 1, 2010,
participate on the basis of, 19.0% for State Auto Mutual, 59% for State Auto
P&C, 17% for Milbank, 0.0% for SA WI, 3% for Farmers Casualty, 1% for SA OH,
0.0% for SAN, 0.0% for SA FL, 0.0% for Meridian Security, 0.5% for Meridian
Citizens Mutual, 0.0% for Beacon, 0.4% for Patrons and 0.1% for Litchfield, in
all of the underwriting operations of each of the parties hereto, except as
otherwise expressly excluded herein.

10. Losses Excluded: All premiums, losses, loss expenses, underwriting expenses
and administrative expenses attributable to the State Auto Mutual Reinsurance
Book are outside the 2010 Pooling Agreement, as amended from time to time. In
addition, this 2010 Pooling Agreement, as amended from time to time, is subject
to the Reserve Guaranty Agreement.

11. Liabilities Excluded: In addition to the liabilities set forth in paragraphs
2(a), 2(b), 2(c), 2(d), 2(e), 2(f), 2(g), 2(h), 2(i), 2(j), 2(k), 2(l) and 10
above, this Agreement shall not apply to the investment operation or liabilities
for federal income tax or other liabilities excluded by this Agreement.

12. “Follow the Fortunes”: The reinsurance provided by the terms of this
Agreement shall be subject to the same terms and conditions under which the
original insurance was concluded, or which may be or may have been agreed to
during the term of the original insurance contract.

 

27

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

13. Methods and Procedures: The president of State Auto Mutual, State Auto P&C,
Milbank, SA WI, Farmers Casualty, SA OH, SAN, SA FL, Meridian Security, Meridian
Citizens Mutual, Beacon, Patrons and Litchfield or any officer of any of these
companies designated by said president, shall determine the methods and
procedures, including accounting transactions, by which the terms of this
Agreement shall be performed by and on behalf of the parties hereto. The
accounting for the transactions shall be in compliance with appropriate
Statements of Statutory Accounting Principles (SSAPs) including SSAP No. 62 –
Property and Casualty Reinsurance and SSAP No. 63 - Underwriting Pools and
Associations Including Intercompany Pools, as amended or superseded, and also
shall be in compliance with all Ohio laws and regulations.

14. Amendments: This Agreement may be modified from time to time, so as to adapt
its provisions to the varying conditions of the business of the Pooled
Companies, by a mutual agreement in writing of the parties hereto, subject to
ratification by the Board of Directors of each party and with the approval of
the insurance regulatory officials from the States of Ohio, South Dakota,
Wisconsin, Iowa, Indiana, Texas and Connecticut as required by law.

15. Term and Effect of Termination: This Agreement shall remain in full force
and effect until canceled by the giving of twelve months notice by one of the
parties to the other parties and to the respective domiciliary insurance
department of each of the parties. Upon termination, all Net Liabilities of the
terminated Pooled Company incurred under or in connection with all contracts or
policies of insurance issued by the terminated Pooled Company prior to 12:01
a.m. EST on the date of termination shall remain subject to all terms and
provisions of this 2010 Pooling Agreement; provided, however, if the terminated
Pooled Company is not affiliated with State Auto Mutual on the date of
termination, then this 2010 Pooling Agreement shall automatically and
immediately terminate as to the terminated Pooled Company, all unpaid Net
Liabilities of the terminated Pooled Company as of the date of termination shall
be retroceded to the terminated Pooled Company.

16. Interpretation: Wherever required to give the correct meaning throughout
this Agreement, the singular shall be interpreted in the plural. Clerical errors
or errors of involuntary or inadvertent omission or commission shall not be
interpreted as a discharge of liability on behalf of any of the parties to this
contract. Such errors shall be rectified at the time of discovery or as soon as
practicable thereafter. Caption headings are for convenience only and are not
intended to affect the construction of the terms hereof. 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.

17. Insolvency: The reinsurance made under this Agreement shall be payable by
the assuming reinsurer on the basis of the liability of the ceding insurer under
the contract or contracts reinsured without diminution because of the insolvency
of the ceding insurer. The reinsurance made effective under this Agreement shall
be payable by the assuming reinsurer to the ceding insurer or to the liquidator,
receiver or statutory successor of the ceding insurer.

 

28

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

In the event that one of the Pooled Companies becomes insolvent or is otherwise
subject to liquidation or receivership proceedings, State Auto Mutual shall
adjust its net retained portion of the combined Pooled Companies’ Net
Liabilities and the remaining pool members shall adjust their assumed portions
of the combined Pooled Companies’ Net Liabilities, each on a pro rata basis, so
as to collectively absorb or assume in full the net retained portion of the
combined Pooled Companies’ Net Liabilities of State Auto Mutual which would
otherwise be the responsibility of such impaired company. In the event of such
insolvency, liquidation or receivership proceedings of a Pooled Company, the
liquidator or receiver or statutory successor of such Pooled Company shall give
written notice to State Auto Mutual of the pendency of any claim against the
insolvent Pooled Company on the policy or bond reinsured within a reasonable
time after such claim is filed in the insolvency proceeding; that during the
pendency of such claim State Auto Mutual may investigate such claim and
interpose in the proceeding where such claim is to be adjudicated any defense or
defenses which it may deem available to the insolvent Pooled Company or its
liquidator or receiver or statutory successors; any such expense thus incurred
by State Auto Mutual shall be pro-rated among State Auto Mutual and the
remaining Pooled Companies, except for the insolvent Pooled Company.

In the event that State Auto Mutual becomes insolvent or is otherwise subject to
liquidation or receivership proceedings, the remaining pool members shall adjust
their assumed portions, each on a pro rata basis, so as to collectively absorb
or assume in full the net retained portion of the combined Pooled Companies’ Net
Liabilities of State Auto Mutual which they had not previously assumed and which
would otherwise be the responsibility of State Auto Mutual. In the event of such
insolvency, liquidation or receivership proceedings of State Auto Mutual, the
liquidator or receiver or statutory successor of State Auto Mutual shall give
written notice to the Pooled Companies of the pendency of any claim against
State Auto Mutual on the policy or bond reinsured within a reasonable time after
such claim is filed in the insolvency proceeding; that during the pendency of
such claim the Pooled Companies may investigate such claim and interpose in the
proceeding where such claim is to be adjudicated any defense or defenses which
they may deem available to State Auto Mutual or its liquidator or receiver or
statutory successors; any such expense thus incurred shall be pro-rated among
the remaining Pooled Companies except for State Auto Mutual.

18. Arbitration: In the event of any dispute hereafter arising with respect to
this Agreement, State Auto Mutual, State Auto P&C, Milbank, SA WI, Farmers
Casualty, SA OH, SAN, SA FL, Meridian Security, Meridian Citizens Mutual,
Beacon, Patrons and Litchfield hereby agree that such dispute shall, upon the
request of the one of the parties, be submitted to arbitration. One arbitrator
shall be chosen by each party and those arbitrators shall then select an umpire
who shall hear and decide the issues to be arbitrated. If one party fails to
name an arbitrator within thirty (30) days after receipt of a written request to
do so, the party initiating the arbitration may choose the arbitrators. The
decision of the umpire shall be final and binding on the parties. Each party
shall bear the expense of its arbitrator and the cost of the umpire shall be
shared equally. The arbitration shall be governed by Ohio law and shall take
place at Columbus, Ohio or such other location upon which the parties may
mutually agree.

 

29

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

The foregoing notwithstanding, with regard to SA WI and in compliance with Wis.
Stat. Section 645.58(2), the parties hereto agree that this Agreement cannot and
does not require SA WI to arbitrate an action on or related to this Agreement
when SA WI is subject to a delinquency proceeding under Subchapter III of
Chapter 645 of the Wisconsin Statutes.

19. Access to Records: The parties hereto understand and agree that each shall
have such access to the records of the other as is necessary to confirm that the
2010 Pooling Agreement is being properly administered and applied, provided that
such access is achieved in compliance with laws protecting the privacy of
insureds and claimants. It is further understood and agreed that the parties
will permit regulators with jurisdiction to have such access to such records, as
and to the extent required by law.

20. Counterparts: The 2010 Pooling Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument.

21. Governing Law: The 2010 Pooling Agreement will be governed by and construed
in accordance with the laws of the State of Ohio.

22. Complete Agreement: This document contains the entire amended and restated
reinsurance pooling agreement between the parties and supersedes all prior or
contemporaneous discussions, negotiations, representations, or agreements
relating to the subject matter, including without limitation, the 2008 Pooling
Agreement and all previous amendments thereto.

23. Assignment: This Agreement may not be assigned without the written consent
of the other parties hereto and without the prior approval of the Insurance
Department Commissioners for the states where any of the parties hereto are
domiciled.

[SIGNATURE PAGE TO FOLLOW]

 

30

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

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of February 10, 2010.

 

    State Automobile Mutual Insurance Company     State Auto Property & Casualty
Insurance Company     Milbank Insurance Company     State Auto Insurance Company
of Wisconsin     Farmers Casualty Insurance Company     State Auto Insurance
Company of Ohio     State Auto National Insurance Company     State Auto Florida
Insurance Company     Meridian Security Insurance Company     Meridian Citizens
Mutual Insurance Company     Beacon National Insurance Company     Patrons
Mutual Insurance Company of Connecticut     Litchfield Mutual Fire Insurance
Company Attest       /s/ James A. Yano     By   /s/ Robert P. Restrepo, Jr.  
James A. Yano, Secretary       Robert P. Restrepo, Jr., President

 

31