Exhibit 10.32

REINSURANCE TRUST AGREEMENT

THIS REINSURANCE TRUST AGREEMENT (this “Agreement”) is entered into on
October 31, 2007 (the “Effective Date”), by and among MGA Insurance Company,
Inc., a stock property and casualty insurance company domiciled in the State of
Texas, as grantor (the “Grantor”), General Agents Insurance Company of America,
Inc., a stock property and casualty insurance company domiciled in the State of
Oklahoma, as the beneficiary (together with any successor thereof by operation
of law, including, without limitation, any liquidator, rehabilitator, receiver
or conservator, the “Beneficiary”) and Bank of Oklahoma, N.A., as trustee (the
“Trustee”). The Grantor, the Beneficiary and the Trustee are each sometimes
referred to herein individually as a “Party” and collectively as the “Parties”.
Capitalized terms used herein shall have the meanings assigned to such terms in
Section 12 or elsewhere in this Agreement.

WHEREAS, the Grantor and the Beneficiary have entered into the Reinsurance
Agreement identified in Exhibit A hereto (as it may be amended from time to
time, the “Reinsurance Agreement”);

WHEREAS, the Beneficiary desires the Grantor to secure payments of all amounts
at any time and from time to time owing by the Grantor to the Beneficiary under
or in connection with the Reinsurance Agreement and desires to create a trust
arrangement that complies with the Oklahoma Insurance Code;

WHEREAS, the Grantor desires to transfer to the Trustee for deposit to a trust
account (the “Trust Account”) certain assets in order to secure payments under
or in connection with the Reinsurance Agreement;

WHEREAS, the Trustee has agreed to act as Trustee hereunder, and to hold such
assets in trust in the Trust Account at the Trustee’s office in the United
States for the sole use and benefit of the Beneficiary as described herein; and

WHEREAS, this Agreement is made for the sole use and benefit of the Beneficiary
and for the purpose of setting forth the duties and powers of the Trustee with
respect to the Trust Account.

 

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NOW, THEREFORE, for and consideration of the premises and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the Parties
hereby agree as follows:

1. DEPOSIT OF ASSETS TO THE TRUST ACCOUNT.

(a) The Grantor shall establish the Trust Account for the sole use and benefit
of the Beneficiary, and the Trustee shall administer the Trust Account in its
name as trustee for the Beneficiary. The Trust Account shall be subject to
withdrawal by the Beneficiary solely as provided herein.

(b) Upon the establishment of the Trust Account, the Grantor shall transfer to
the Trustee, for deposit to the Trust Account, the assets listed in Exhibit B
hereto with a Fair Market Value of $11,506,072, which is equal to the sum of
(i) one hundred five percent (105%) of the sum of case reserves for losses and
loss adjustment expenses and case IBNR reserves for losses and loss adjustment
expenses and the actuarially determined IBNR reserves as of June 30, 2007, all
of which are calculated net of any and all amounts ceded by the Beneficiary
under any Inuring Reinsurance, less the lesser of (A) the aggregate amount of
losses and loss adjustment expenses paid, or (B) the aggregate amount of case
reserves for losses and loss adjustment expenses, plus the aggregate amount of
case IBNR reserves for losses and loss adjustment expenses, with respect to
claims closed after June 30, 2007 and before the Effective Date, with respect to
the liabilities ceded to the Grantor under the Reinsurance Agreement; (ii) for
claims made after June 30, 2007 and before the Effective Date in excess of
$499,999 in any individual case or in the aggregate, one hundred five percent
(105%) of the sum of case reserves for losses and loss adjustment expenses and
case IBNR reserves for losses and loss adjustment expenses for such claims, as
determined as of the month end for the most recent month for which the financial
statements have been completed prior to the Effective Date, all of which are
calculated net of amounts ceded by the Beneficiary under any Inuring
Reinsurance; (iii) the total amount of the formally disputed portions of
reinsurance claims by or on behalf of the Beneficiary which were outstanding on
the Effective Date under any Inuring Reinsurance; and (iv) for each Inuring
Reinsurance agreement pursuant to which the Beneficiary ceded liabilities to a
third party reinsurer that has an A.M. Best Company rating on the Effective Date
that is lower than “A-”, the liability ceded to such reinsurer by the
Beneficiary as determined as of the month end for the most recent month for
which the financial statements have been completed prior to the Effective Date.
Thereafter the Grantor shall transfer to the Trustee, for deposit to the Trust
Account, such other assets as it may from time to time be required to transfer
hereunder (all such assets actually received in the Trust Account are herein
referred to individually as an “Asset” and collectively as the “Assets”). The
Assets shall consist only of cash (United States legal tender) and Eligible
Securities, or any combination thereof. Reserves shall be calculated for the
purposes of this Agreement in accordance with the same reserving practices
utilized by the Grantor prior to the Effective Date. The monthly financial
statements referenced in clause (ii) above shall be as of a month end that is no
more than thirty (30) days prior to the Effective Date, and the monthly
financial statements referenced in clause (iv) above shall be as of a month end
that is no more than forty-five (45) days prior to the Effective Date.

 

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(c) The Grantor agrees to deposit with the Trustee additional Assets necessary
to maintain an amount in the Trust Account (based on the Fair Market Value of
the Assets as of the end of each calendar quarter and including accrued interest
as of the end of each calendar quarter) equal to the amount of the Obligations
as of the end of such calendar quarter plus five percent (5%) of the amount
determined pursuant to clause (i) of the definition of Obligations in Section 12
(the amount so determined, the “Quarterly Obligations Amount”); provided,
however, if the Grantor defaults in its obligations to make any deposit
hereunder and such default continues for thirty (30) days after written notice
thereof, thereafter for the remaining term of this Agreement, the Quarterly
Obligations Amount shall be equal to the Obligations as of the end of the
applicable calendar quarter plus twenty-five percent (25%) of the amount
determined pursuant to clause (i) of the definition of Obligations in
Section 12. The Quarterly Obligations Amount shall be determined in accordance
with Sections 1(d) and (e). The deposit of any such necessary additional Assets
by the Grantor will be made within ten (10) Business Days after the Quarterly
Obligations Amount becomes operative for purposes of this Agreement in
accordance with Section 1(d). Upon delivery of such Assets, the Grantor shall
advise the Beneficiary in writing that such delivery has been effected.

(d) Within forty-five (45) days after the end of each calendar quarter, the
Grantor shall deliver to the Beneficiary its calculation of the Quarterly
Obligations Amount, and all actuarial and other data reasonably necessary for
the Beneficiary to calculate the Quarterly Obligations Amount for such quarter
(including updated case reserves and, at Grantor’s sole option and expense,
either its own or an independent third party’s analysis or calculation of the
IBNR reserves). Within ten (10) Business Days after the Beneficiary’s receipt of
the Grantor’s calculation of the Quarterly Obligations Amount and the related
data, the Beneficiary may object to the Grantor’s calculation thereof by
delivering written notice of such objection to the Grantor and providing a
reasonably detailed explanation specifying a reasonable basis for the
Beneficiary’s objection and a revised Quarterly Obligations Amount acceptable to
the Beneficiary. If the Beneficiary does not object within such ten
(10) Business Day period, the Quarterly Obligations Amount calculated by the
Grantor shall be operative for purposes of this Agreement. If the Beneficiary
objects within such ten (10) Business Day period, the Grantor and the
Beneficiary shall use commercially reasonable efforts to resolve such objection
within ten (10) Business Days after receipt by the Grantor of the Beneficiary’s
notice of objection. If the Grantor and the Beneficiary are unable to agree on
the Quarterly Obligations Amount within such ten (10) Business Day period, then
each of them shall submit its final Quarterly Obligations Amount (as modified by
any partial agreement reached between the Grantor and the Beneficiary during
such ten (10) Business Day period) before the end of such ten (10) Business Day
period, and the operative Quarterly Obligations Amount shall be equal to the
average of their final Quarterly Obligations Amounts. All calculations of the
Quarterly Obligations Amount, whether made by the Grantor or the Beneficiary,
shall be made (i) in accordance with the Standards of Practice issued by the
Actuarial Standards Board (including the Casualty Actuarial Society’s Statement
of Principles Regarding Property and Casualty Loss and Loss Adjustment Expense
Reserves) as those standards may exist from time to time and (ii) after analysis
of the claims insured under the Reinsurance Agreement only on their own merits,
without a view to any extraneous factors.

 

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(e) Prior to February 15 of each year during the term of this Agreement, the
Grantor shall submit to the Tillinghast division of Towers, Perrin, Forster &
Crosby, Inc. or another independent actuarial firm selected by the Beneficiary
and reasonably acceptable to the Grantor (such firm or such other independent
actuarial firm, the “Independent Actuary”), such information as the Independent
Actuary shall reasonably require to prepare its annual actuarial report (but not
an actuarial opinion) and to make a calculation of the Quarterly Obligations
Amount for the fourth quarter of the prior calendar year. The Independent
Actuary’s calculation of the Quarterly Obligations Amount for the fourth
calendar quarter shall be operative for purposes of this Agreement. All fees,
costs, charges and expenses of the Independent Actuary for the preparation of
the annual actuarial report for the business reinsured under the Reinsurance
Agreement (including the determination of gross and net reserves, but not the
actuarial certification of such reserves) and the Quarterly Obligations Amount
for the fourth quarter shall be borne equally by the Grantor and the
Beneficiary. The Grantor and the Beneficiary may at any time by mutual written
consent, waive the provisions of this Section 1(e) and instead choose to
calculate the Quarterly Obligations Amount pursuant to Section 1(d).

(f) The Grantor hereby represents and warrants that all Assets transferred by
the Grantor to the Trustee for deposit to the Trust Account shall (i) be in such
form that the Trustee, upon receipt of a written direction from the Beneficiary,
will be able to immediately negotiate any such Assets without consent or
signature from the Grantor or any person other than the Trustee in accordance
with the terms of this Agreement and (ii) consist only of cash (United States
legal tender) and Eligible Securities, or any combination of the foregoing,
which are free and clear of all liens, claims and other encumbrances.

(g) The Trustee shall have no responsibility to determine whether the Assets in
the Trust Account are sufficient to secure the Grantor’s liabilities under the
Reinsurance Agreement.

2. WITHDRAWAL OF ASSETS FROM THE TRUST ACCOUNT.

(a) The Beneficiary shall have the right, at any time and from time to time, to
withdraw from the Trust Account, upon written notice to the Trustee with a copy
to the Grantor (the “Withdrawal Notice”), such Assets as are specified in such
Withdrawal Notice. The Withdrawal Notice shall designate a Party or third party
(the “Designee”) to whom the Assets specified therein shall be delivered. The
Beneficiary need present no statement or other document in addition to a
Withdrawal Notice in order to withdraw any Assets, nor is said right of
withdrawal or any other provision of this Agreement subject to any conditions or
qualifications not contained in this Agreement; provided, however, that
subsequent to any withdrawal, upon the Grantor’s written request, the
Beneficiary shall furnish the Grantor with an explanation and reasonably
specific supporting documentation for such withdrawal.

(b) Upon receipt of a Withdrawal Notice, the Trustee shall immediately take any
and all steps necessary to transfer absolutely and unequivocally all right,
title and interest in and to the Assets specified in such Withdrawal Notice and
shall deliver physical custody of such assets to or for the account of the
Designee specified in such Withdrawal Notice.

 

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(c) Subject to paragraph (a) of this Section 2 and to Section 4 of this
Agreement, in the absence of a Withdrawal Notice, the Trustee shall allow no
substitution or withdrawal of any Asset from the Trust Account.

(d) The Trustee shall have no responsibility whatsoever to determine that any
Assets withdrawn from the Trust Account pursuant to this Section 2 will be used
and applied in the manner contemplated by Section 3 of this Agreement.

(e) Within ten (10) Business Days after the end of each calendar month, the
Grantor, at its option, may deliver to the Beneficiary a notice substantially in
the form of Exhibit C hereto (the “Claims Closed Notice”) setting forth (i) the
following information with respect to each individual claimant claim covered by
the Reinsurance Agreement and closed during such calendar month: (a) the amount
of losses paid; (b) the amount of allocated loss adjustment expenses paid;
(c) the amount received or recoverable by the Beneficiary under any Inuring
Reinsurance; (d) the case reserve for losses and loss adjustment expenses, net
of Inuring Reinsurance recoverable (as updated by the Grantor as of the end of
such month); and (e) the case IBNR reserve for losses and loss adjustment
expenses, net of Inuring Reinsurance recoverable (as updated by the Grantor as
of the end of such month); and (ii) the Grantor’s calculation of the amount that
the Beneficiary would be obligated to direct the Trustee to withdraw under
Section 2(g) if the Claims Closed Notice became operative (the “Withdrawal
Amount”). The Grantor’s Claims Closed Notice shall also include, with respect to
each individual claimant claim referenced therein, a copy of the signed
settlement agreement, proof of payment of the claim and such other evidence that
such claim is closed as the Beneficiary may reasonably request.

(f) Within ten (10) Business Days after its receipt of the Claims Closed Notice,
the Beneficiary may object to some or all of the information contained in the
Claims Closed Notice by delivering to the Grantor a notice (the “Claims
Objection Notice”) providing (i) a reasonably detailed explanation specifying a
reasonable basis for the Beneficiary’s objections and (ii) a revised Claims
Closed Notice, including a Withdrawal Amount acceptable to the Beneficiary. If
the Beneficiary does not deliver a Claims Objection Notice to the Grantor within
such ten (10) Business Day period, the Withdrawal Amount shown in the Grantor’s
Claims Closed Notice shall be operative for purposes of this Agreement. If the
Beneficiary delivers a Claims Objection Notice within such ten (10) Business Day
period, the Grantor and the Beneficiary shall use commercially reasonable
efforts to resolve their disagreements within ten (10) Business Days after
receipt by the Grantor of the Claims Objection Notice. If the Grantor and the
Beneficiary cannot mutually agree within such ten (10) Business Day period, then
each of them shall submit its final Claims Closed Notice (as modified by any
partial agreement reached between the Grantor and the Beneficiary during such
ten (10) Business Day period) before the end of such ten (10) Business Day
period, and the operative Withdrawal Amount shall be equal to the average of the
Withdrawal Amounts shown on their final Claims Closed Notices.

 

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(g) Within fifteen (15) Business Days after the Withdrawal Amount becomes
operative, the Beneficiary shall deliver a Withdrawal Notice to the Trustee
naming the Grantor as the Designee thereunder and instructing the Trustee to pay
to the Grantor an amount from the Trust Account equal to the lesser of (i) the
aggregate amount of losses paid, plus the aggregate amount of allocated loss
adjustment expenses paid, less the aggregate amount received or recoverable by
the Beneficiary under any Inuring Reinsurance, with respect to claims closed
during the calendar month, or (ii) the aggregate amount of case reserves for
losses and loss adjustment expenses, net of any Inuring Reinsurance recoverable,
plus the aggregate amount of case IBNR reserves for losses and loss adjustment
expenses, net of any Inuring Reinsurance recoverable, with respect to claims
closed during the calendar month, all as set forth in the operative Claims
Closed Notice. Notwithstanding the foregoing, to the extent that the calculation
of a Quarterly Obligations Amount is not operative for purposes of this
Agreement within forty-five (45) days after the end of a given calendar quarter
as a result of an objection made pursuant to Section 1(d), the Beneficiary’s
obligation to cause the Trustee to make the payment to the Grantor pursuant to
the immediately preceding sentence shall be suspended until such time as the
calculation of a Quarterly Obligations Amount in accordance with Section 1(d)
becomes operative for purposes of this Agreement.

(h) Within ten (10) Business Days after the Quarterly Obligations Amount becomes
operative for purposes of this Agreement in accordance with Section 1(d) or (e),
to the extent that the amount of Assets in the Trust Account exceeds the
Quarterly Obligations Amount, the Beneficiary shall deliver a Withdrawal Notice
to the Trustee naming the Grantor as the Designee thereunder and instructing the
Trustee to pay the Grantor an amount from the Trust Account equal to such
excess.

3. APPLICATION OF ASSETS.

(a) The Beneficiary hereby covenants to the Grantor that it shall use and apply
any withdrawn Assets, without diminution because of the insolvency of the
Beneficiary or the Grantor, for the following purposes only:

(i) to pay or reimburse the Beneficiary for the Grantor’s share under the
Reinsurance Agreement regarding any losses and allocated loss adjustment
expenses paid by the Beneficiary but not recovered from the Grantor (or any
third party reinsurer), if not otherwise paid by the Grantor in accordance with
the terms of the Reinsurance Agreement;

(ii) to pay Grantor pursuant to Section 2(g) or (h); or

(iii) where the Beneficiary has received a Termination Notice (as hereinafter
defined) pursuant to Section 11 of this Agreement and where the Grantor’s entire
Obligations remain unliquidated and undischarged ten (10) days

 

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prior to the Termination Date (as hereinafter defined), to withdraw amounts
equal to such Obligations and deposit such amounts in a separate account, in the
name of the Beneficiary, in any Qualified Fiduciary United States Financial
Institution, apart from its other assets, in trust for the uses and purposes
specified in clauses (i) and (ii) of this Section as may remain executory after
such withdrawal and for any period after such Termination Date.

(b) The existence of the Trust Account, as security for the Obligations, shall
not affect the Grantor’s liabilities under the Reinsurance Agreement, nor shall
the Assets of the Trust Account be used as an offset by the Grantor against any
Obligations.

4. REDEMPTION, INVESTMENT AND SUBSTITUTION OF ASSETS.

(a) The Trustee shall, upon call or at maturity of any Asset, surrender such
Asset for redemption or payment and shall deposit the principal amount of the
proceeds of any such redemption or payment in the Trust Account.

(b) From time to time, at the written order and direction of the Grantor or its
designated representative, the Trustee shall invest Assets in the Trust Account
only in Eligible Securities.

(c) From time to time the Grantor or its designated representative may direct
the Trustee to substitute Eligible Securities for other Eligible Securities held
in the Trust Account at such time and shall give notice thereof to the
Beneficiary.

(d) All investments and substitutions of securities referred to in Sections 4(b)
and (c) shall be Eligible Securities. The Trustee shall have no responsibility
whatsoever to determine that any Assets in the Trust Account are or continue to
be Eligible Securities. Any instruction or order concerning such investments or
substitutions of securities shall be referred to herein as an “Investment
Order.” The Trustee shall execute Investment Orders and settle securities
transactions by itself or by means of an agent or broker. The Trustee shall not
be responsible for any act or omission, or for the solvency, of any such agent
or broker unless said act or omission is the result, in whole or in part, of the
Trustee’s negligence, willful misconduct or lack of good faith. Unless otherwise
instructed by Grantor, the Trustee shall invest and reinvest the Assets in the
American Performance U.S. Treasury Fund (the “Money Market Fund”).

(e) Any loss incurred from any investment pursuant to the terms of this
Section 4 shall be borne exclusively by the Trust Account. The Trustee shall
have no liability for any loss sustained as a result of any investment made
pursuant to the terms of this Agreement or as a result of any liquidation of any
investment prior to its maturity or for the failure of the Grantor and the
Beneficiary to give the Trustee instructions to invest or reinvest the Trust
Account. The Grantor shall make additional deposits pursuant to Section 1(c) in
the event such loss is incurred resulting in a deficiency in the Trust Account.

 

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5. INTEREST AND DIVIDENDS. The Trustee shall collect, receive and hold in the
Trust Account in accordance with this Agreement any dividends, interest or other
income received in respect of the Assets in the Trust Account, but shall have no
responsibility with respect to the collection of such income beyond the exercise
of due care.

6. RIGHT TO VOTE ASSETS. The Trustee shall forward all annual and interim
stockholder reports and all proxies and proxy materials relating to the Assets
in the Trust Account to the Grantor. The Grantor shall have the full and
unqualified right to exercise any voting rights associated with the Assets in
the Trust Account.

7. ADDITIONAL RIGHTS AND DUTIES OF THE TRUSTEE.

(a) The Trustee shall notify the Grantor and the Beneficiary in writing within
five (5) Business Days following each deposit to, or withdrawal from, the Trust
Account.

(b) Before accepting any Asset for deposit to the Trust Account, the Trustee
shall determine that such Asset is in such form that the Trustee, upon receipt
of written direction by the Beneficiary will be able to immediately negotiate
such Asset without consent or signature from the Grantor or any person or entity
other than the Trustee in accordance with the terms of this Agreement.

(c) All Assets in the Trust Account shall be held by the Trustee in a safe place
at the Trustee’s office within the United States; provided, however, that the
Trustee may deposit any Assets in the Trust Account in a book-entry account
maintained at the Federal Reserve Bank of New York or in depositories such as
the Depository Trust Company, and Assets may be held in the name of a nominee
maintained by the Trustee or by any such depository.

(d) The Trustee shall accept and open all mail directed to the Grantor or the
Beneficiary in care of the Trustee.

(e) The Trustee shall furnish to the Grantor and the Beneficiary a statement of
all Assets in the Trust Account upon the inception of the Trust Account and at
least the end of each calendar quarter thereafter.

(f) Upon the request of the Grantor or the Beneficiary, the Trustee shall
promptly permit the Grantor or the Beneficiary, their respective agents,
employees and independent auditors to examine, audit, excerpt, transcribe and
copy, during the Trustee’s normal business hours, any books, documents, papers
and records relating to the Trust Account or the Assets.

(g) The Trustee is authorized to follow and rely upon all instructions furnished
to the Trustee from time to time by the Grantor and the Beneficiary,
respectively, and by attorneys-in-fact acting under written authority furnished
to the Trustee by the Grantor or the Beneficiary, including, without limitation,
instructions

 

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given by letter, facsimile transmission, telegram, teletype, cablegram or
electronic media, if the Trustee believes such instructions to be genuine and to
have been signed, sent or presented by the proper party or parties. The Trustee
shall not incur any liability to anyone resulting from actions taken by the
Trustee in reliance in good faith on such instructions. The Trustee shall not
incur any liability in executing instructions (i) from an attorney-in-fact prior
to receipt by it of notice of the revocation of the written authority of the
attorney-in-fact or (ii) from any officer of the Grantor or the Beneficiary.

(h) The duties and obligations of the Trustee shall only be such as are
specifically set forth in this Agreement, as it may from time to time be
amended, and no implied duties or obligations shall be read into this Agreement
against the Trustee. The Trustee shall only be liable for its own negligence,
willful misconduct or lack of good faith.

(i) No provision of this Agreement shall require the Trustee to take any action
which, in the Trustee’s reasonable judgment, would result in any violation of
this Agreement or any provision of law.

(j) The Trustee may confer with counsel of its own choice in relation to matters
arising under this Agreement and may rely in good faith and in accordance with
opinion of such counsel.

8. THE TRUSTEE’S COMPENSATION, EXPENSES AND INDEMNIFICATION.

(a) The Grantor shall pay the Trustee, as compensation for its services under
this Agreement, a fee computed at rates as may be agreed to from time to time in
writing by the Trustee and the Grantor. The Grantor shall pay or reimburse the
Trustee for all of the Trustee’s reasonable expenses and disbursements in
connection with the exercise of its duties under this Agreement (including
attorney’s fees and expenses), except any such expense or disbursement as may
arise from the Trustee’s negligence, willful misconduct or lack of good faith.
The Grantor also hereby indemnifies the Trustee for, and holds it harmless
against, any loss, liability, costs or expenses (including attorney’s fees and
expenses) incurred or made without negligence, willful misconduct or lack of
good faith on the part of the Trustee, arising out of or in connection with the
performance of its obligations in accordance with the provisions of this
Agreement, including, without limitation, any loss, liability, costs or expenses
arising out of or in connection with the status of the Trustee and its nominee
as the holder of record of the Assets. In no event shall the Trustee be liable
for special, indirect or consequential loss or damage of any kind whatsoever
(including, without limitation, lost profits), even if the Trustee has been
advised of the likelihood of such loss or damage and regardless of the form of
action.

(b) The Trustee shall be entitled to deduct its compensation and expenses from
payments of dividends, interest and other income in respect to the Assets held
in the Trust Account, but in no event shall the trust corpus be utilized for
paying compensation, or reimbursing expenses of the Trustee.

 

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9. TAXPAYER IDENTIFICATION NUMBER (TIN). The Grantor and the Beneficiary each
represent that their correct Taxpayer Identification Numbers (TINs) assigned by
the Internal Revenue Service or any other taxing authority are set forth in
Schedule 1. The Grantor and the Beneficiary acknowledge this Trust constitutes a
grantor trust as that term is defined in the Internal Revenue Code. All
interest, dividends, Asset sales or exchanges shall be deemed attributable to
the Grantor and the Grantor shall be liable for all taxes, penalties, interest
or similar governmental charge with respect to any Asset or any transaction
related thereto. Trustee shall prepare and file, or cause to be prepared and
filed, such reports and returns as may, from time to time, be required by
regulations of the Internal Revenue Service or state tax authorities.

10. RESIGNATION OF THE TRUSTEE.

(a) The Trustee may resign at any time by giving not less than ninety (90) days’
written notice thereof to the Beneficiary and to the Grantor, such resignation
to become effective upon the acceptance of appointment by a successor trustee
and the transfer to such successor trustee of all Assets in the Trust Account in
accordance with Section 10(b).

(b) Upon receipt of the Trustee’s notice of resignation, the Grantor and the
Beneficiary shall appoint a successor trustee. Any successor trustee must be a
bank that is a member of the Federal Reserve System and a Qualified Fiduciary
United States Financial Institution and must not be a Parent, a Subsidiary or an
Affiliate of the Grantor or the Beneficiary. Upon the acceptance of the
appointment as trustee hereunder by a successor trustee, payment of all fees due
the Trustee and the transfer to such successor trustee of all Assets in the
Trust Account, the resignation of the Trustee shall become effective. Thereupon,
such successor trustee shall succeed to and become vested with all the rights,
powers, privileges and duties of the Trustee, and the Trustee shall be
discharged from any future duties and obligations under this Agreement, but the
Trustee shall continue after its resignation to be entitled to the benefits of
the indemnities provided herein for the Trustee.

(c) If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation, without any further act, shall be the successor Trustee; provided
that any such successor Trustee must be a bank that is a member of the Federal
Reserve System and a Qualified Fiduciary United States Financial Institution and
must not be a Parent, a Subsidiary or an Affiliate of the Grantor or the
Beneficiary.

11. TERMINATION OF THE TRUST ACCOUNT.

(a) The Trust Account and this Agreement, except for the indemnities provided
herein, may be terminated only after (i) the Grantor or the Beneficiary has
given the Trustee written notice of its intention to terminate the Trust Account
(the “Notice of

 

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Intention”), (ii) the Trustee has given the Grantor and the Beneficiary the
written notice specified in Section 11(b), (iii) the Reinsurance Agreement shall
have terminated, and (iv) the Beneficiary has given the Trustee written notice
that all obligations of the Grantor under the Reinsurance Agreement have been
extinguished. The Notice of Intention shall specify the date on which the
notifying Party intends the Trust Account to terminate (the “Proposed Date”).

(b) Within ten (10) Business Days following receipt by the Trustee of the Notice
of Intention, the Trustee shall give written notification (the “Termination
Notice”) to the Beneficiary and the Grantor of the date (the “Termination Date”)
on which the Trust Account shall terminate. The Termination Date shall be
(i) the Proposed Date (or, if the Proposed Date is not a Business Day, the next
Business Day thereafter), if the Proposed Date is at least thirty (30) days but
no more than forty-five (45) days subsequent to the date the Termination Notice
is given; (ii) thirty (30) days subsequent to the date the Termination Notice is
given (or if not a Business Day, the next Business Day thereafter), if the
Proposed Date is fewer than thirty (30) days subsequent to the date the
Termination Notice is given; or (iii) forty-five (45) days subsequent to the
date the Termination Notice is given (or if not a Business Day, the next
Business Day thereafter), if the Proposed Date is more than forty-five (45) days
subsequent to the date the Termination Notice is given.

(c) On the Termination Date, upon receipt of the written approval of the
Beneficiary, the Trustee shall transfer to the Grantor any Assets remaining in
the Trust Account, at which time all liability of the Trustee with respect to
such Assets shall cease.

12. DEFINITIONS. Except as the context shall otherwise require, the following
terms shall have the following meanings for all purposes of this Agreement (the
definitions to be applicable to both the singular and the plural forms of each
term defined if both such forms of such term are used in this Agreement):

“Affiliate” shall mean, with respect to any corporation or other business
organization, another corporation or business organization which, directly or
indirectly through one of more intermediaries, controls or is controlled by, or
is under common control with, such corporation or other business organization.
The term “control” (including the related terms “controlled by” and “under
common control with”) shall mean the ownership, directly or indirectly, of more
than fifty percent (50%) of the voting power of a corporation or the equity
interests of another business organization.

“Business Day” shall mean any day other than a Saturday, Sunday or any other day
on which the Trustee located at the notice address set forth on Schedule 1 is
authorized or required by law or executive order to remain closed.

A claimant’s claim will be considered “closed” when evidence of final settlement
or release in accordance with customary claims handling practices (which may be
comprised of attorney correspondence) has been received by the Grantor, the
Beneficiary or any of their Affiliates.

 

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“Eligible Securities” shall mean and include certificates of deposit issued by a
United States bank and payable in United States legal tender, and readily
marketable securities issued in the United States, listed by the Securities
Valuation Office (SVO) of the National Association of Insurance Commissioners
(NAIC), and of the type permitted by the Oklahoma Insurance Code; provided,
however, that no such securities shall have been issued by a Parent, a
Subsidiary or an Affiliate of either the Grantor or the Beneficiary.

“Fair Market Value” shall mean, (i) with respect to Eligible Securities, the
Fair Market Value of such securities as shown on reports issued by the
Securities Valuation Office (SVO) of the National Association of Insurance
Commissioners (NAIC), and (ii) with respect to any other assets, the Fair Market
Value of such assets as determined by another method mutually acceptable to the
Grantor and the Beneficiary.

“Inuring Reinsurance” means all reinsurance and retrocessional treaties and
agreements pursuant to which the Beneficiary ceded any reinsurance to third
parties on or prior to the Effective Date.

“Obligations” shall mean (i) the Grantor’s share, net of amounts ceded by the
Beneficiary under any Inuring Reinsurance, of the case reserves for losses and
loss adjustment expenses and case IBNR reserves for the losses and loss
adjustment expenses and the actuarially determined IBNR reserves as of the end
of the calendar quarter for liabilities ceded to the Grantor under the
Reinsurance Agreement, (ii) the total amount of the formally disputed portions
of reinsurance claims by or on behalf of the Beneficiary which were outstanding
at the end of the calendar quarter under any Inuring Reinsurance, and (iii) for
each Inuring Reinsurance agreement pursuant to which the Beneficiary has ceded
liabilities to a third party reinsurer that has an A.M. Best Company rating at
the end of the calendar quarter that is lower than “A-”, the liability ceded to
such reinsurer by the Beneficiary.

“Person” shall mean and include an individual, a corporation, a partnership, an
association, a trust, an unincorporated organization or a government or
political subdivision thereof.

“Parent” shall mean a corporation or other business organization that, directly
or indirectly, controls another corporation or other business organization.

“Qualified Fiduciary United States Financial Institution” shall mean an
institution that is (i) organized, or, in the case of a United States branch or
agency office of a foreign banking organization, licensed, under the laws of the
United States or any state thereof and has been granted authority to act with
fiduciary powers; and (ii) regulated, supervised and examined by federal or
state authorities having regulatory authority over banks and trust companies.

 

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“Subsidiary” shall mean a corporation or other business organization that is
controlled, directly or indirectly, by another corporation or other business
organization.

13. GOVERNING LAW AND VENUE. This Agreement shall be subject to and governed by
the laws of the State of Oklahoma. Each party hereto irrevocably waives any
objection on the grounds of venue, forum non-conveniens or any similar grounds
and irrevocably consents to service of process by mail or in any other manner
permitted by applicable law and consents to the jurisdiction of the courts
located in Chicago, Illinois. The Parties further hereby waive any right to a
trial by jury with respect to any lawsuit or judicial proceeding arising out of
or relating to this Agreement.

14. SUCCESSORS AND ASSIGNS. No Party may assign this Agreement or any of its
obligations hereunder, without the prior written consent of the other Parties;
provided, however, that this Agreement shall inure to the benefit of and bind
any Person who, by operation of law, becomes a successor to a Party, including,
without limitation, any liquidator, rehabilitator, receiver or conservator and
any successor merged or consolidated entity; and provided further that, in the
case of the Trustee, the successor trustee is eligible to be a trustee under the
terms hereof. Any corporation or other business organization into which the
Trustee may be merged or converted or with which it may be consolidated, or any
corporation or other business organization to which all or substantially all the
escrow business of the Trustee’s corporate trust line of business may be
transferred, shall be the Trustee under this Agreement without further act.

15. SEVERABILITY. In the event that any provision of the Agreement shall be
declared invalid or unenforceable by any regulatory body or court having
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remaining portions of this Agreement.

16. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among the
Parties, and there are no understandings or agreements, conditions or
qualifications relative to this Agreement which are not fully expressed in this
Agreement.

17. AMENDMENTS. This Agreement may be modified or otherwise amended, and the
observance of any term of this Agreement may be waived, if such modification,
amendment or waiver is in writing and signed by all of the Parties.

18. NOTICES. Unless otherwise provided in this Agreement, all notices,
directions, requests, demands, acknowledgments and other communications required
or permitted to be given or made under the terms hereof shall be in writing and
shall be deemed to have been duly given or made (a) (i) when delivered
personally, (ii) when made or given by prepaid telex, telegraph or facsimile, or
(iii) in the case of mail delivery, upon the expiration of three (3) days after
any such notice, direction, request, demand,

 

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acknowledgment or other communication shall have been deposited in the United
States mail for transmission by first class mail, postage prepaid, or upon
receipt thereof, whichever shall first occur, and (b) when addressed as shown on
Schedule 1 hereto. Notwithstanding the foregoing, communications pursuant to
Section 1(d) or 2(e) may be transmitted via electronic mail. Notwithstanding the
foregoing, in the case of communications delivered to the Trustee pursuant to
clause (a)(ii) or (iii) of this Section 18, such communications shall be deemed
to have been given on the date received by the Trustee. In the event that the
Trustee, in its sole discretion, shall determine that an emergency exists, the
Trustee may use such other means of communication as the Trustee deems
appropriate.

19. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall constitute an original, but
such counterparts together shall constitute one and the same Agreement. All
signatures to this Agreement by the Parties may be transmitted by facsimile, and
such facsimile will, for all purposes, be deemed to be the original signature of
such Party whose signature it reproduces, and will be binding upon such Party.

20. SECURITY PROCEDURES. In the event funds transfer instructions are given
(other than in writing at the time of execution of this Agreement, as indicated
in Schedule 1 attached hereto), whether in writing, by telecopy or otherwise,
the Trustee is authorized to seek confirmation of such instructions by telephone
call-back to the person or persons designated on Schedule 2 hereto (“Schedule
2”), and the Trustee may rely upon the confirmation of anyone purporting to be
the person or persons so designated. The persons and telephone numbers for
call-backs may be changed only in a writing actually received and acknowledged
by the Trustee. If the Trustee is unable to contact any of the authorized
representatives identified in Schedule 2, the Trustee is hereby authorized to
seek confirmation of such instructions by telephone call-back to any one or more
of Beneficiary’s executive officers (“Executive Officers”), which shall include
the titles of chief executive officer, chief financial officer or treasurer, as
the Trustee may select. Such Executive Officer shall deliver to the Trustee a
fully executed Incumbency Certificate, and the Trustee may rely upon the
confirmation of anyone purporting to be any such officer. The Trustee and the
Beneficiary’s bank in any funds transfer may rely solely upon any account
numbers or similar identifying numbers provided by the Beneficiary to identify
(i) the Beneficiary, (ii) the Beneficiary’s bank, or (iii) an intermediary bank.
The Trustee may apply any of the Trust Account for any payment order it executes
using any such identifying number, even when its use may result in a person
other than the Beneficiary being paid, or the transfer of funds to a bank other
than the Beneficiary’s bank or an intermediary bank designated. The Parties
acknowledge that these security procedures are commercially reasonable.

21. FORCE MAJEURE. In the event that any Party to this Agreement is unable to
perform its obligations under the terms of this Agreement because of acts of
God, strikes, equipment or transmission failure or damage reasonably beyond its
control, or other substantial cause reasonably beyond its control, such Party
shall not be liable for damages to the other Parties for any unforeseeable
damages resulting from such failure to perform or otherwise from such causes.
Performance under this Agreement shall resume when the affected Party is able to
substantially perform that Party’s duties.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Reinsurance Trust
Agreement to be executed and delivered by their respective officers thereunto
duly authorized as of the date first above written.

 

GENERAL AGENTS INSURANCE COMPANY OF AMERICA, INC. By:   /s/ Daniel J. Coots  
Daniel J. Coots   Senior Vice President and Treasurer MGA INSURANCE COMPANY,
INC. By:   /s/ Daniel J. Coots   Daniel J. Coots   Senior Vice President and
Treasurer BANK OF OKLAHOMA, N.A., as Trustee By:   /s/ Barbara Bailey Name:  
Barbara Bailey Title:   Vice President and Trust Officer