Exhibit 10.31

MANAGEMENT SERVICE AGREEMENT

THIS MANAGEMENT SERVICE AGREEMENT (hereinafter called “Agreement”) is made
effective as of the 30th day of August, 1996, between Patrons Mutual Insurance
Company of Connecticut, a Connecticut corporation (“Patrons Connecticut”), and
Patrons Fire Insurance Company of Rhode Island, a Rhode Island corporation
(“Patrons Rhode Island”).

RECITALS

WHEREAS, Patrons Connecticut has extensive experience in the operation of its
insurance business and has trained personnel, equipment and facilities for
conducting its present and future insurance operations (which term as
hereinafter used shall include reinsurance and investment operations and
activities incidental, ancillary or complementary to an insurance business); and
in time it is expected that Patrons Rhode Island may develop such experience,
personnel, equipment and facilities; and

WHEREAS, Patrons Connecticut and Patrons Rhode Island desire to arrange that
such party having the appropriate experience, personnel, equipment and
facilities shall provide services and facilities upon request, to the party in
need of such services and facilities, and desire to provide generally for such
events; and

WHEREAS, the parties desire to provide for the performance of certain
administrative and other services (hereinafter called “services”) for their
insurance operations and desire further to arrange to make use in their
day-to-day operations of certain property, equipment and facilities (hereinafter
called “facilities”) of the parties as each may from time to time request, and
the parties contemplate that this arrangement will result in certain operating
economies and will improve services to the mutual benefit of them; and

WHEREAS, the parties desire to assure that all charges for services and the use
of facilities incurred hereunder are reasonable and are arrived at in a fair and
equitable manner; and

WHEREAS, the parties desire to identify generally the services to be rendered
and the facilities to be used; and

WHEREAS, to the extent a party provides services or facilities to the other
pursuant to the terms of this Agreement it may be denominated a “provider” and
to the extent that it receives services or the use of facilities of the other it
may be denominated a “recipient”.

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Now, therefore, in consideration of the premises and of the promises set forth
herein, the parties agree as follows:

1. PERFORMANCE OF SERVICES AND JOINT USE OF FACILITIES.

(a) Services. Each party agrees, to the extent requested by the other, to
perform services of a type similar to that which provider customarily performs
in the course of its own insurance operations for the recipient as such
recipient may determine to be reasonably necessary in the conduct of its
insurance operations. The services which a provider shall perform in whole or in
part for the recipient may include, but need not be limited to: accounting, tax
and auditing services; legal services; actuarial services; employee benefit
plans and personnel administration; sales services; software development
services; electronic data processing operations; communications operations and
investment services.

(b) Facilities. Each party agrees to the extent requested by a recipient to make
available its facilities to the recipient as the recipient may determine to be
reasonably necessary in the conduct of its insurance operations. The facilities
of a provider which the recipient may use in whole or in part shall include, but
need not be limited to: electronic data processing equipment; business property,
whether owned or leased; communications equipment; and a security vault.

(c) Best Efforts. Each party agrees at all times to use its best efforts to
maintain sufficient personnel and facilities of the kind necessary to perform
this Agreement, in accordance with the reasonable requests of a recipient and
upon reasonable notice to the provider. If, however, a provider determines that
for any reason, including its own needs, it is or will be unable to perform any
service or provide any facility under this Agreement, it shall immediately
notify the recipient so that the recipient can make other arrangements for such
service or facility.

(d) Designation of Capacity of Personnel. Even though a provider utilizes its
personnel to perform services for a recipient pursuant to this Agreement, such
personnel shall at all times remain employees of the provider. The provider
shall alone retain full liability to such personnel for their welfare, salaries,
fringe benefits, legally required employee contributions and tax obligations.

(e) Status of Facilities. No facility of a provider used in performing services
for or subject to use by a recipient shall be deemed to be transferred,
assigned, conveyed or leased by performance or use pursuant to this Agreement,
except as the provider and recipient may otherwise agree in writing. The amount
charged as rent for any facilities leased pursuant to any such writing shall be
computed in accordance with the provisions of Section 2 of this Agreement.

 

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(f) Exercise of Judgment in Rendering Services. In providing any service
hereunder which requires the exercise of judgment by the provider, the provider
will endeavor to perform such service in accordance with any reasonable and
appropriate standards and guidelines the recipient develops and communicates to
the provider.

(g) Control. The performance or receipt of services or the making available or
use of facilities pursuant to this Agreement shall in no way impair the absolute
control of the business and operations of each of the parties by its own Board
of Directors.

2. CHARGES. Recipient agrees to pay to the provider a charge equal to all
expenses, direct and indirect, reasonably and equitably determined by the
provider to be attributable to the recipient for services and facilities
provided by the former to the latter pursuant hereto, except to the extent
application of laws or regulations would otherwise require.

The bases for determining such charges to the recipient shall be similar to
those used by the provider for internal cost distribution including, where
applicable, time records prepared for this purpose. Such bases shall be modified
and adjusted where necessary or appropriate to reflect fairly and equitably the
actual incidence of cost incurred by the provider on behalf of the recipient.

The provider’s determination of charges hereunder shall be conclusive as between
such parties, except that if the recipient objects to any such determination, it
shall so advise the provider within thirty (30) days of receipt of notice of
said determination. Unless such parties can reconcile any such objection, or
otherwise agree, they shall select a firm of independent certified public
accountants which shall determine the charges properly allocable to the
recipient and shall, within a reasonable time, submit such determination,
together with the basis therefor, in writing to both parties whereupon such
determination shall be binding. The expenses of any such determination by a firm
of independent certified public accountants shall be borne as determined to be
equitable by such accountants.

3. PAYMENT. The provider shall submit to the recipient within thirty (30) days
of the end of each calendar month (or such other interval not greater than
quarterly as such parties may agree), a written statement of the amount
estimated to be owed by the recipient to the provider for services and the use
of facilities pursuant to this Agreement in that calendar month (or interval)
and the recipient shall pay to the provider within thirty (30) days following
receipt of such written statement the amount set forth in the statement.

 

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4. ACCOUNTING RECORDS AND DOCUMENTS. The provider shall be responsible for
maintaining full and accurate accounting records of all services rendered and
facilities used pursuant to this Agreement and such additional information as
the recipient may reasonably request for purposes of its internal bookkeeping
and accounting operations. The provider shall keep such accounting records
insofar as they pertain to the computation of charges hereunder available at its
principal offices for audit, inspection and copying by the recipient or any
governmental agency having jurisdiction during all reasonable business hours.

5. OTHER RECORDS AND DOCUMENTS. Each party shall maintain appropriate records
identifying the nature and type of each service requested and provided pursuant
to this Agreement, and the person requesting any substantial or ongoing service.
All books, records, and files established and maintained by the provider by
reason of its performance under this Agreement which, absent this Agreement,
would have been held by the recipient shall be deemed the property of such
recipient, and, together with records called for pursuant to the first sentence
of this paragraph, shall be subject to examination by it and persons authorized
by it at all times, and shall be delivered to it on demand.

6. LIABILITY; USE OF SERVICES OR FACILITIES. As services are being performed and
facilities made available by a provider, such provider shall have no liability
for any action taken or omitted by it in furnishing services and facilities
under this Agreement, in good faith and without gross negligence.

7. TERMINATION. This Agreement shall terminate upon the termination of that
certain Agreement of Association dated March 25, 1989 between the parties
hereto, as amended from time to time, or upon order issued by the Director of
the Department of Business Regulation.

8. SETTLEMENT ON TERMINATION. No later than ninety (90) days after the effective
date of termination, each party which has provided services shall deliver to the
other a detailed written statement for all charges incurred and not included in
any previous statement to the effective date of termination. The amounts owed
hereunder shall be due and payable within thirty (30) days of receipt of such
statement.

9. ASSIGNMENT AND ADDITIONAL PARTIES. This Agreement and any rights pursuant
hereto shall not be assignable by any party hereto, except by operation of law.
Except as and to the extent specifically provided in this Agreement, nothing in
this

 

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Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto, or their respective legal successors, any rights, remedies,
obligations or liabilities, or to relieve any person other than the parties
hereto, or their respective legal successors, from any obligations or
liabilities that would otherwise be applicable.

10. GOVERNING LAW. This Agreement is made pursuant to and shall be governed by,
interpreted under, and the rights of the parties determined in accordance with,
the laws of the State of Rhode Island.

11. NOTICE. All notices, statements or requests provided for hereunder shall be
deemed to have been duly given by one party to another when delivered by hand to
an officer of the other party, or when deposited with the U.S. Postal Service,
as certified or registered mail, postage prepaid, addressed to a party at its
principal executive offices as such address appears on its most recent annual
statement, attention: Chief Executive Officer, or to such other person or place
as that party may from time to time designate by written notice sent as
aforesaid.

12. ENTIRE AGREEMENT. This Agreement, together with such Amendments as may from
time to time be executed in writing by the parties, constitutes the entire
Agreement between the parties with respect to the subject matter hereof.

 

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EXTENSION OF EFFECTIVE DATE OF

CONFIRMATION OF SUCCESSOR AGREEMENT

This Extension of Effective Date of Confirmation of Successor Agreement (the
“Successor Agreement”) is entered into by and between Linda L. Ruthardt, as
Trustee (the “Trustee”) of Abington Mutual Liquidating Trust, Patrons Fire
Insurance Company of Rhode Island, (“Patrons Rhode Island”), and Patrons Mutual
Insurance Company of Connecticut (“Patrons Connecticut”).

For good and valuable consideration, the receipt and sufficiency whereof is
hereby acknowledged, the parties hereto agree that the second sentence of
Paragraph 4 of the Successor Agreement is amended to read as follows:

If the Effective Date does not occur prior to August 30, 1996, this Successor
Agreement shall become null and void, without recourse to the parties hereto.

The Successor Agreement shall in all other respects remain unchanged.

The undersigned have executed this Extension as a sealed instrument as of the
15th day of August, 1996.

 

ABINGTON MUTUAL LIQUIDATING TRUST

By:

 

/s/ J. David Leslie

 

Linda L. Ruthardt, as Trustee

of Abington Mutual Liquidating Trust,

by her attorney,

J. David Leslie

PATRONS FIRE INSURANCE COMPANY OF

RHODE ISLAND

By:

 

/s/ J. David Leslie

 

Ralph A. Spunzo, President,

by his attorney,

 

J. David Leslie

PATRONS MUTUAL INSURANCE COMPANY OF CONNECTICUT

By:

 

/s/ Terence M. Fracassa

 

William Siclari, President,

by his attorney,

Terence M. Fracassa

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
multiple counterparts by their respect officers duly authorized so to do as of
the day and year first above written.

 

Patrons Mutual Insurance Company of

    Connecticut

By:

 

 

Patrons Fire Insurance

Company of Rhode Island

By :

 

 

 

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FIRST AMENDMENT

to

MANAGEMENT SERVICES AGREEMENT

among

PATRONS FIRE INSURANCE COMPANY OF RHODE ISLAND

PATRONS MUTUAL INSURANCE COMPANY OF CONNECTICUT

STATE AUTOMOBILE MUTUAL INSURANCE COMPANY

and

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY

This First Amendment to Management Services Agreement (“First Amendment”), dated
as of December 14, 2007, amends the Management Services Agreement (the
“Management Agreement”), dated as of August 30, 1996, by and between Patrons
Fire Insurance Company of Rhode Island (“Patrons Rhode Island”) and Patrons
Mutual Insurance Company of Connecticut (“Patrons Connecticut”) as follows:

RECITALS

WHEREAS, Patrons Rhode Island and Patrons Connecticut have previously entered
into the Management Agreement; and

WHEREAS, Patrons Connecticut and Patrons Rhode Island will affiliate their
business operations with State Automobile Mutual Insurance Company (“SAM”) upon
the closing of the transactions contemplated by the Amended and Restated
Affiliation Agreement (the “Restated Affiliation Agreement”), by and among SAM,
Patrons Connecticut and Litchfield Mutual Fire Insurance Company; and

WHEREAS, the parties intend to add SAM and State Auto Property & Casualty
Insurance Company (“SAP&C”) as parties to the Management Agreement in order for
SAM and SAP&C to provide supplemental management services to Patrons Connecticut
and Patrons Rhode Island.

STATEMENT OF AGREEMENT

In consideration of the mutual covenants set forth herein and INTENDING TO BE
LEGALLY BOUND HEREBY, the parties to this First Amendment agree to amend the
Management Agreement as follows:

 

1.

Capitalized terms used in this First Amendment (including the Recitals) which
are not otherwise defined herein shall have the meanings ascribed to such terms
in the Management Agreement.

 

2.

Upon the Effective Date (as defined below) of this First Amendment, SAM and
SAP&C shall become parties to and shall be bound by all the terms and conditions
of the Management Agreement, with employees of SAP&C providing such executive,
administrative, technical, and professional support as agreed upon by the
parties and SAM providing such data processing equipment, office supplies and
equipment, furniture and fixtures, automobiles and other items of tangible
personal property or facilities as agreed upon by the parties.

 

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3.

Section 1.(a) “Services” of the Management Agreement is hereby deleted in its
entirety and replaced by the following:

“(a) Services. Each party agrees, to the extent requested by the others, to
perform services of a type similar to that which provider customarily performs
in the course of its own insurance operations for the recipient as such
recipient may determine to be reasonably necessary in the conduction of its
insurance operations. The services which a provider shall perform in whole or in
part for the recipient may include, but need not be limited to: accounting, tax
and auditing services, legal services, actuarial services, employee benefit
plans and personnel administration, sales services, software development
services, electronic data processing operations, communications operations and
investment services. The cost and expense of the services Patrons Connecticut
provides to Patrons Rhode Island hereunder shall be allocated to Patrons Rhode
Island in accordance with the terms of the Inter-Company Expense Agreement, as
amended (the “Expense Agreement”), by and between Patrons Connecticut and
Patrons Rhode Island, a copy of which is attached hereto as Exhibit A. The cost
and expense of the services, equipment and facilities provided by SAP&C and SAM
to Patrons Connecticut and Patrons Rhode Island pursuant to the terms hereunder
shall be allocated to Patrons Connecticut and Patrons Rhode Island in accordance
with the terms of the Expense Agreement and in accordance with the terms of the
State Auto Reinsurance Pooling Agreement (the “State Auto Pooling Agreement”), a
copy of which is attached hereto as Exhibit B.”

 

4.

Section 4 of the Management Agreement is hereby deleted in its entirety and
replaced by the following:

“The provider shall be responsible for maintaining full and accurate accounting
records of all services rendered and facilities used pursuant to this Agreement
and such additional information as the recipient may reasonably request for
purposes of its internal bookkeeping and accounting operations. Expenses shall
be apportioned in accordance with statutory accounting principles consistently
applied. The books, accounts, and records shall be so maintained as to clearly
and accurately disclose the nature and details of the transactions including
such accounting information as is necessary to support the expenses apportioned
to the respective parties. The provider shall keep such accounting records
insofar as they pertain to the computation of charges hereunder available at its
principal offices for audit, inspection and copying by the recipient or any
governmental agency having jurisdiction during all reasonable business hours.”

 

5.

Section 7 of the Management Agreement is hereby deleted in its entirety and
replaced with the following:

“TERMINATION. This Agreement may be terminated with respect to any party by
action of such party’s Board of Directors and upon ninety (90) days’ prior
written notice to the other parties hereto.

 

6.

Section 10 of the Management Agreement is hereby deleted in its entirety and
replaced with the following:

“This Agreement is made pursuant to and shall be governed by, interpreted under,
and the rights of the parties determined in accordance with, the laws of the
State of Connecticut.”

 

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7.

The following is hereby added to the Management Agreement as new Section 13:

“AMENDMENT. This Agreement may be amended by mutual consent of the parties.
Except as provided herein, no alteration or variation of the terms of this
Agreement shall be valid unless made in writing and signed by all the parties to
this Agreement. Furthermore, no alteration or variation of the terms of this
Agreement shall be valid unless prior approval for such alteration or variation
has been received from the Commissioners of the Ohio and the Connecticut
Departments of Insurance.”

 

8.

This First Amendment shall be effective (the “Effective Date”) as of the Patrons
Closing Date (as defined in the Restated Affiliation Agreement). Notwithstanding
the foregoing, the effectiveness of this First Amendment is subject to the
receipt of all regulatory consents required to implement the terms of this First
Amendment. Until such time as all such regulatory consents have been obtained,
this First Amendment shall not become operative to amend the Management
Agreement in any manner whatsoever and shall be of no force or effect.

 

9.

This First Amendment constitutes an integral part of the Management Agreement.
In the event of any inconsistencies between the provisions of the Management
Agreement and this First Amendment, the provisions of this First Amendment shall
control. Except as expressly amended hereby, the terms and provisions of the
Management Agreement shall continue in full force and effect without change for
the balance of the term thereof.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be
duly executed as of the day and year first above written.

 

PATRONS MUTUAL INSURANCE COMPANY OF CONNECTICUT

By:

 

/s/ William Siclari

 

William Siclari, President

PATRONS FIRE INSURANCE COMPANY OF RHODE ISLAND

By:

 

/s/ William Siclari

 

William Siclari, President

STATE AUTOMOBILE MUTUAL INSURANCE COMPANY

By:

 

/s/ Robert P. Restrepo, Jr.

 

Robert P. Restrepo, Jr., President

STATE AUTO PROPERTY & CASUALTY

INSURANCE COMPANY

By:

 

/s/ Robert P. Restrepo, Jr.

 

Robert P. Restrepo, Jr., President

 

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EXHIBIT A

Inter-Company Expense Agreement

 

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EXHIBIT B

State Auto Reinsurance Pooling Agreement

 

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