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EXHIBIT 10.73

**** indicates material that has been omitted pursuant to a request for
confidential treatment. The omitted material has been filed separately with the
U.S. Securities and Exchange Commission.

 

 

 

ARP-HCI-02-CAT-2EA-15    DOC: June 11, 2015   

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INTERESTS AND LIABILITIES AGREEMENT

attaching to, and forming part of, the

CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT

(hereinafter called the “Contract”)

EFFECTIVE: JUNE 1, 2015

issued to

HOMEOWNERS CHOICE PROPERTY & CASUALTY INSURANCE COMPANY, INC.

TAMPA, FLORIDA

(hereinafter called the “Reinsured”)

by

BLUE WATER RE LTD.

(hereinafter called the “Subscribing Reinsurer”)

Under the terms of this Contract the above Subscribing Reinsurer agrees to
assume severally and not jointly with other participants

 

Limit and Retention

   Participation  

$58,000,000 xs $46,000,000

     10.000 % 

of the liability in the layer(s) described in the attached Contract including
the same corresponding proportional participation of the Reinsurers’ additional
obligations set forth within the layer(s) upon which the Subscribing Reinsurer
participates described above.

Brokerage

10.00% of Ceded Reinsurance Premium

It is Also Agreed that as respects the above Subscribing Reinsurer in the
attached Contract, the following shall be deleted from the Contract:

Subparagraphs (a), (b), (c), (e), (g) and (h) of Paragraph (3) of ARTICLE 2 –
TERM

ARTICLE 17 – FUNDING OF RESERVES

It is Also Agreed that as respects the above Subscribing Reinsurer in the
attached Contract, the following shall be added to the Contract:

ARTICLE 35 – COLLATERAL, to read as follows:

 

1.

As promptly as possible following execution of this Contract, the Reinsurer (as
Grantor) shall enter into a Trust Agreement (the “Trust Agreement”) with the
Reinsured (as Beneficiary) and the trustee, pursuant to which the Reinsurer
shall provide collateral in the form of eligible Assets deposited and held in a
Trust Account, with such Assets having a market value greater than or equal to
$3,000,000 (the “Collateral,” which is not subject

 

 

ARP-HCI-02-CAT-2EA-15    I&L – BLWTR DOC: June 11, 2015   

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  to the percentage share expressed in this Interests and Liabilities
Agreement), less unpaid premium (net of brokerage and applicable Federal Excise
Tax, if any). It is understood that deposit premium paid in accordance with the
Rate and Premium Article shall be deposited into the Trust Account.

 

2. The Reinsured agrees that if the Reinsurer makes indemnity payment(s) to the
Reinsured under this Contract, the Reinsurer may withdraw Assets from the Trust
Account, reducing the market value of Assets in the Trust Account to an amount
at least equal to the unused Reinsurance Limit, in accordance with the
provisions of the Trust Agreement.

 

3. The Trust Fund may be drawn upon by the Reinsured at any time and the Assets
may be used at the Reinsured’s option in accordance with the provisions of the
Trust Agreement.

 

4. Except as provided in the Collateral Release Article, the Reinsured agrees to
release the Assets in the Trust Account required under this Article as promptly
as provided in the Trust Agreement.

ARTICLE 36 – COLLATERAL RELEASE, to read as follows:

 

1. At the expiration or termination of this Contract, if the Trust has not yet
been terminated, the Reinsured shall calculate for each Coverage Section, on a
monthly basis, how much, if any, of the collateral shall be released from the
Trust, as follows:

 

  a. For each potentially covered Loss Occurrence, subject to the provisions of
the Retention and Limit Article, the Reinsured shall multiply the Loss Amount
(being equal to the sum of losses and Loss Adjustment Expenses paid plus
reserves for losses and Loss Adjustment Expense outstanding plus reserves for
losses incurred but not yet reported) by the appropriate Buffer Loss Factor from
the table below, based upon the type of Loss Occurrence and the number of months
which have elapsed since the event. The product of this calculation shall be
defined as the Buffered Loss Amount (“BLA”).

Buffer Loss Factor Table

 

Number of Calendar Months Since Date of Loss Occurrence

   Windstorm*/Brushfire     Earthquake and
Fire Following     Other  

0 to 3

     200 %      300 %      250 % 

> 3 to 6

     150 %      200 %      175 % 

> 6 to 9

     125 %      175 %      150 % 

> 9 to 12

     110 %      150 %      130 % 

> 12 to 15

     105 %      125 %      115 % 

> 15 to 18

     100 %      120 %      110 % 

Thereafter

     100 %      100 %      100 % 

 

* For the purpose of this Article, the term “Windstorm” shall include Hurricane,
Rainstorm, Storm, Tempest, Tornado, Cyclone, Typhoon and Hail.

 

 

ARP-HCI-02-CAT-2EA-15    I&L – BLWTR DOC: June 11, 2015   

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  b. The BLA will be reduced by any inuring reinsurance recoveries to compute
the Presumed Ultimate Net Loss. The Presumed Ceded Loss will be defined as the
lesser of the Presumed Ultimate Net Loss and the limit of $30,000,000.

 

  c. The Presumed Total Ceded Loss will equal the lesser of the limit of
$30,000,000 and the Presumed Ceded Loss. An amount equal to the Presumed Total
Ceded Loss less losses paid by the Reinsurer under this Contract shall be
retained in the Trust and any excess in the Trust shall be released to the
Reinsurer.

 

  d. Notwithstanding the aforementioned, at December 31, 2015, the parties agree
to consider the release of collateral. The intention is to release collateral
for all limits for which there is essentially no possibility of loss from past
or future events before the expiration of this Contract. All collateral securing
what the parties agree are unreachable limits will be released within three
business days.

 

  e. Thirty-six months following the expiration of this Contract, the Reinsurer
shall have the option to commute this Contract by sending the Reinsured written
notice thereof. In such event, the Reinsurer shall pay to the Reinsured an
amount equal to the loss and loss adjustment expense reserves hereunder,
including reserves for incurred but not reported losses, as estimated by the
Reinsured, which would be recoverable hereunder. Upon the Reinsurer’s payment of
such amount, both parties shall be completely released from all liability under
this Contract, whether known or unknown.

 

2. So long as there is any security on deposit in the Trust, the Reinsured shall
perform the calculation set forth above within 10 business days after the end of
each month and deliver a report substantially in the form of the Collateral
Calculation Table attached to this Contract to the Reinsurer and the Trustee
named in the Trust Agreement. Collateral will be adjusted monthly based on this
calculation. To the extent the calculation indicates that collateral may be
reduced, the delivery of the report to the Trustee will constitute a directive
to return excess collateral to the Reinsurer. In the event the calculation
indicates additional collateral is required, the Reinsurer will have 10 business
days from receipt of the report to deposit the required collateral into the
Trust.

ARTICLE 37 – LIMITED RECOURSE AND BERMUDA REGULATIONS, to read as follows:

 

1. The liability of the Reinsurer for the performance and discharge of all of
its obligations, however they may arise, in relation to this Contract (together
“Obligations” for purposes of this Article), shall be limited to and payable
solely from the proceeds of realization of the assets of the Trust Fund
established in accordance with this Contract, and accordingly there shall be no
recourse to any other assets of the Blue Water Re Master Fund Ltd., whether or
not allocated to any other separate account or the general account of the Blue
Water Re Master Fund Ltd. In the event that the proceeds of realization of the
assets of the Trust Fund are insufficient to meet all Obligations, any
Obligations remaining after the application of such proceeds shall be
extinguished, and the Reinsured undertakes in such circumstances to take no
further action against the Reinsurer in respect of any such Obligations. In
particular, neither the Reinsured nor any party acting on its behalf shall
petition or take any steps for the winding up or receivership of the Reinsurer
or the Blue Water Re Master Fund Ltd.

 

2.

Notwithstanding any matter referred to herein, the Reinsured understands and
accepts that the Reinsurer acts on behalf of one or more separate accounts of
the Blue Water Re Master Fund Ltd. and that all corporate matters relating to
the creation of the Reinsurer,

 

 

ARP-HCI-02-CAT-2EA-15    I&L – BLWTR DOC: June 11, 2015   

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  capacity of the Reinsurer, operation and liquidation of the Reinsurer and any
matters relating to the Reinsurer thereof shall be governed by, and construed in
accordance with, the laws of Bermuda. The Reinsured has had the opportunity to
take advice and to obtain all such additional information that it considers
necessary to evaluate the terms, conditions and risks of entering into this
Contract with the Reinsurer.

It is Also Agreed that as respects the above Subscribing Reinsurer in the
attached Contract, the following shall be amended to the Contract:

Schedule A shall now read as attached

All other Terms and Conditions remain unchanged.

Signed in                                 , on this                      day of
                    , 20    

BLUE WATER RE LTD.

BY:                                                             

TITLE:                                                             

Signed in                                 , on this                      day of
                    , 20    

HOMEOWNERS CHOICE PROPERTY & CASUALTY INSURANCE COMPANY, INC.

TAMPA, FLORIDA

BY:                                                             

TITLE:                                                             

 

 

 

ARP-HCI-02-CAT-2EA-15    I&L – BLWTR DOC: June 11, 2015   

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SCHEDULE A

CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT

EFFECTIVE: JUNE 1, 2015

issued to

HOMEOWNERS CHOICE PROPERTY & CASUALTY INSURANCE COMPANY, INC.

TAMPA, FLORIDA

 

Reinsured’s Retention

   $ 46,000,000   

Reinsurer’s Per Occurrence Limit

   $ 58,000,000   

Otherwise Recoverable

   $ 58,000,000   

Reinsurer’s Contract Limit

   $ 30,000,000   

Exposure Rate

     **** % 

Minimum Premium

   $ ****   

Deposit Premium

   $ ****   

Deposit Payment Schedule:

  

Installment Due June 1, 2015

   $ ****   

Installment Due January 1, 2016

   $ ****  * 

 

* plus applicable adjustment per Rate and Premium Article

All figures listed above are based on a projected TIV of $47,625,882,720 and
shown at 100% and shall apply to each Reinsurer in the percentage share
expressed in its Interests and Liabilities Agreement attached hereto.

 

 

ARP-HCI-02-CAT-2EA-15    I&L – BLWTR DOC: June 11, 2015    Schedule A

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COLLATERAL CALCULATION TABLE

Collateral Release Calculation as of [INSERT REPORTING PERIOD]

 

Line No.

  

Col 1

   Col. 2    Col. 3    Col. 4    Col. 5    Col. 6   

Col. 7

  

Col. 8

   Col. 9     

Date

of Loss
Event

   Description    Loss
Amount    Buffer
Loss
Factor    Buffer
Loss
Amount
(Col. 3 x
Col. 4)    Inuring
Reinsurance
Coverage   

Buffered Loss
Amount, net of
Inuring Reinsurance,
Capped at
$XXX,XXX,XXX

(Col. 5 - Col. 6

  

Less:

Flat Deductible of
$XX,XXX,XXX

   Balance
(Col. 7 - Col. 8) 1A                         ($xx,xxx,xxx)    1B               
         ($xx,xxx,xxx)    1C                         ($xx,xxx,xxx)    1D      
                  ($xx,xxx,xxx)    1E                         ($xx,xxx,xxx)   
1F                         ($xx,xxx,xxx)    2    Presumed Ultimate Net Loss (sum
of Col. 9)    3    Less: Aggregate Retention    ($xxx,xxx,xxx) 4   

Presumed Ceded Loss - 100% of Line 2

NOTE: If the amount equals $xxx,xxx,xxx or more, insert policy limit of
$xxx,xxx,xxx. If amount is less than Zero, insert Zero.

   5    Losses paid under this contract    6    Reinsurer’s Obligations – Line 4
minus Line 5    7    Collateral in the trust    8    Collateral Adjustment –
Line 5 minus Line 6 (a negative number indicates the amount by which the
collateral must be reduced)   

 

 

ARP-HCI-02-CAT-2EA-15    I&L – BLWTR DOC: June 11, 2015    Collateral
Calculation Table

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INTERESTS AND LIABILITIES AGREEMENT

attaching to, and forming part of, the

CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT

(hereinafter called the “Contract”)

EFFECTIVE: JUNE 1, 2015

issued to

HOMEOWNERS CHOICE PROPERTY & CASUALTY INSURANCE COMPANY, INC.

TAMPA, FLORIDA

(hereinafter called the “Reinsured”)

by

ENDURANCE SPECIALTY INSURANCE LTD.

(hereinafter called the “Subscribing Reinsurer”)

Under the terms of this Contract the above Subscribing Reinsurer agrees to
assume severally and not jointly with other participants

 

Limit and Retention

   Participation  

$58,000,000 xs $46,000,000

     10.000 % 

of the liability in the layer(s) described in the attached Contract including
the same corresponding proportional participation of the Reinsurers’ additional
obligations set forth within the layer(s) upon which the Subscribing Reinsurer
participates described above.

Brokerage

****% of Ceded Reinsurance Premium

Signed in                                 , on this                      day of
                    , 20    

ENDURANCE SPECIALTY INSURANCE LTD.

BY:                                                             

TITLE:                                                             

 

 

ARP-HCI-02-CAT-2EA-15    I&L – ENDURB DOC: June 11, 2015   

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Signed in                                 , on this                      day of
                    , 20    

HOMEOWNERS CHOICE PROPERTY & CASUALTY INSURANCE COMPANY, INC.

TAMPA, FLORIDA

BY:                                                             

TITLE:                                                             

 

 

 

ARP-HCI-02-CAT-2EA-15    I&L – ENDURB DOC: June 11, 2015