Exhibit 10.1
EXECUTION VERSION
 
ADMINISTRATIVE SERVICES AGREEMENT
BY AND AMONG
CONTINENTAL CASUALTY COMPANY
THE CONTINENTAL INSURANCE COMPANY
CONTINENTAL REINSURANCE CORPORATION INTERNATIONAL, LTD.
CNA INSURANCE COMPANY LIMITED
AND
NATIONAL INDEMNITY COMPANY
DATED AUGUST 31, 2010
 

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ADMINISTRATIVE SERVICES AGREEMENT
TABLE OF CONTENTS

                      Page   ARTICLE I

 
            DEFINITIONS

 
            1.1  
Definitions
    2      
 
        ARTICLE II

 
            AUTHORITY; SERVICE STANDARDS

 
            2.1  
Appointment
    5   2.2  
Services Standards
    5   2.3  
Compliance; Licensure
    6   2.4  
Independent Contractor
    6   2.5  
Subcontracting
    7   2.6  
Monitoring
    7      
 
        ARTICLE III

 
            COMPENSATION

 
            3.1  
Compensation
    8      
 
        ARTICLE IV

 
            ADMINISTRATIVE SERVICES

 
            4.1  
Administrative Services
    8   4.2  
Mixed Accounts
    10   4.3  
GRM Book of Business
    12   4.4  
Extracontractual Damages
    13   4.5  
Conflict of Interest
    13  
 
            ARTICLE V

 
            CLAIMS HANDLING SERVICES

 
            5.1  
Claims Handling Services
    14  

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                      Page   ARTICLE VI

 
            ADMINISTRATION OF THIRD PARTY REINSURANCE AGREEMENTS

 
            6.1  
Third Party Reinsurance Administration
    15   6.2  
Collateral
    16   6.3  
Commutations
    16   6.4  
Collection of Third Party Reinsurance Recoverables
    16   6.5  
Third Party Reinsurance Allocation Agreement
    16  
 
            ARTICLE VII

 
            REGULATORY COMPLIANCE AND REPORTING

 
            7.1  
Regulatory Filings and Examinations
    17  
 
            ARTICLE VIII

 
            OTHER REPORTING OBLIGATIONS

 
            8.1  
Financial Reporting Obligations
    17   8.2  
Change in Status
    19   8.3  
Administrator Controls
    19  
 
            ARTICLE IX

 
            BOOKS AND RECORDS
 
            9.1  
Transfer and Ownership of Books and Records
    20   9.2  
Maintenance of Books and Records
    20   9.3  
Access to Books Records
    20  
 
            ARTICLE X

 
            INABILITY TO PERFORM SERVICES; ERRORS

 
            10.1  
Capacity
    22   10.2  
Inability to Perform Services
    22   10.3  
Errors
    22  
 
            ARTICLE XI

 
            LEGAL ACTIONS

 
            11.1  
Regulatory Proceedings
    23   11.2  
Notification Requirements
    23   11.3  
Right to Associate
    24  

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                      Page   ARTICLE XII

 
            BANK ACCOUNTS

 
            12.1  
Bank Accounts
    24  
 
            ARTICLE XIII
 
            COOPERATION
 
            13.1  
Cooperation
    25   13.2  
Relationship Management
    25  
 
            ARTICLE XIV

 
            DURATION; TERMINATION

 
            14.1  
Duration
    26   14.2  
Termination
    26   14.3  
Certain Actions Related to Termination
    27   14.4  
Survival
    28      
 
        ARTICLE XV

 
            CONFIDENTIALITY; PRIVACY REQUIREMENTS

 
            15.1  
Definitions
    28   15.2  
Obligations
    29   15.3  
Exceptions to Confidential Treatment
    30   15.4  
Privacy
    31   15.5  
Regulatory and Legal Communication
    33  
 
            ARTICLE XVI

 
            FORCE MAJEURE

 
            16.1  
Force Majeure Event
    34  
 
            ARTICLE XVII
 
            INDEMNIFICATION
 
            17.1  
Indemnification Obligation of Administrator
    34   17.2  
Indemnification Obligation of Reinsureds
    35   17.3  
Notice of Indemnification Request
    35   17.4  
Notice of an Asserted Liability
    35   17.5  
Procedures
    36   17.6  
Survival
    37  

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                      Page   ARTICLE XVIII

 
            DISPUTE RESOLUTION; ARBITRATION

 
            18.1  
Dispute Resolution; Arbitration
    37  
 
            ARTICLE XIX

 
            MISCELLANEOUS

 
            19.1  
Notices
    37   19.2  
Entire Agreement
    38   19.3  
Waiver and Amendment
    38   19.4  
Successors and Assigns
    39   19.5  
Headings
    39   19.6  
Construction; Interpretation
    39   19.7  
Governing Law and Jurisdiction
    39   19.8  
No Third Party Beneficiaries
    40   19.9  
Counterparts
    40   19.10  
Severability
    40   19.11  
Specific Performance
    41   19.12  
Waiver of Jury Trial
    41   19.13  
Incontestability
    42   19.14  
Set-Off
    42   19.15  
Currency
    42  

      LIST OF EXHIBITS

 
   
Exhibit A
  Business Associate Agreement
 
    LIST OF SCHEDULES

 
   
Schedule A-1
  Claims Administration System
Schedule A-2
  Items and services associated in supplying Administrator with access to CAS
Schedule B
  GRM Book of Business
Schedule C
  Designations of Primary Handlers to administer existing Mixed Accounts
Schedule D
  Form of Quarterly Data File

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ADMINISTRATIVE SERVICES AGREEMENT
          THIS ADMINISTRATIVE SERVICES AGREEMENT (hereinafter referred to as
this “Administrative Services Agreement”), dated as of August 31, 2010 (the
“Effective Date”), is made and entered into by and among Continental Casualty
Company, an Illinois property and casualty insurance company (“CCC”), The
Continental Insurance Company, a Pennsylvania property and casualty insurance
company (“CIC”), Continental Reinsurance Corporation International, Ltd., a
Bermuda long-term insurance company (“CRCI”), and CNA Insurance Company Limited,
a United Kingdom property and casualty insurance company (“CICL” and together
with CCC, CIC and CRCI, “Reinsureds”), and National Indemnity Company, a
Nebraska property and casualty company (“Administrator” and the Administrator
taken together with the Reinsureds, each a “Party” and, collectively, the
“Parties”).
WITNESSETH:
          WHEREAS, pursuant to a Master Transaction Agreement (the “Master
Transaction Agreement”), dated as of July 14, 2010, among the Parties and
Berkshire Hathaway Inc., a Delaware corporation and the ultimate parent company
of the Reinsurer (“Berkshire”), Reinsureds and Administrator have agreed to
enter into a loss portfolio reinsurance transaction, pursuant to which
Reinsureds will cede all liabilities related to Asbestos Claims and Pollution
Claims under the Business Covered to Administrator, and pursuant to which
Administrator will indemnify Reinsureds for such liabilities up to an aggregate
limit of four billion dollars ($4,000,000,000), net of any Third Party
Reinsurance Recoverables and Other Recoveries;
          WHEREAS, pursuant to a Loss Portfolio Transfer Reinsurance Agreement
among Reinsureds and Administrator dated as of the date hereof, and referenced
in the Master Transaction Agreement as the “LPT Reinsurance Agreement,”
Administrator shall indemnify Reinsureds for 100% of the Ultimate Net Loss,
subject to the LPT Limit; and
          WHEREAS, Reinsureds desire that Administrator perform certain
administrative functions on behalf of Reinsureds from and after the date hereof
with respect to the Reinsured Contracts and Third Party Reinsurance Agreements
as they relate to the Business Covered, and the Parties hereto have agreed to
enter into this Administrative Services Agreement as a condition of
Administrator entering into the LPT Reinsurance Agreement.
          NOW, THEREFORE, for and in consideration of these premises and the
promises and the mutual agreements hereinafter set forth and set forth in the
Master Transaction Agreement and LPT Reinsurance Agreement, the Parties agree as
follows:

 

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ARTICLE I
DEFINITIONS
     1.1 Definitions.
          In this Administrative Services Agreement, unless the context requires
otherwise, words and expressions used in the Master Transaction Agreement and
the LPT Reinsurance Agreement shall bear the same meaning when used in this
Administrative Services Agreement. All capitalized terms not otherwise defined
in this Administrative Services Agreement shall have the meaning given them
under the Master Transaction Agreement or LPT Reinsurance Agreement, as
applicable.
          The following terms shall have the respective meanings set forth below
throughout this Administrative Services Agreement:
“Administrator’s Actuarial Report” shall have the meaning set forth in Section
8.1(a) hereof.
“Administrative Accounts” shall have the meaning set forth in Section 12.1(a)
hereof.
“Administrative Services” shall have the meaning set forth in Section 2.1(a)
hereof.
“Administrative Services Agreement” shall have the meaning set forth in the
preamble.
“Administrator” shall have the meaning set forth in the preamble.
“Administrator Losses” shall have the meaning set forth in Section 17.2 hereof.
“Allocated Bill” shall have the meaning set forth in Section 4.3(a) hereof.
“Asserted Liability” shall have the meaning set forth in Section 17.4 hereof.
“Berkshire” shall have the meaning set forth in the preamble hereof.
“Berkshire Controlled Entity” shall have the meaning set forth in Section 4.5(a)
hereof.
“Berkshire Owned Entity” shall have the meaning set forth in Section 4.5(a)
hereof.

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“Business Associate Agreement” means the business associate agreement attached
hereto as Exhibit A.
“Claims Administration System” or “CAS” shall have the meaning set forth in
Section 3.1(b)hereof.
“CCC” shall have the meaning set forth in the preamble hereof.
“CIC” shall have the meaning set forth in the preamble hereof.
“CICL” shall have the meaning set forth in the preamble hereof.
“Collection Expenses” means the reasonable out-of-pocket expenses incurred by
any Party in connection with the negotiation and collection of Third Party
Reinsurance Recoverables or Commutation Payments.
“Confidential Information” shall have the meaning set forth in Section 15.1(a)
hereof.
“CRCI” shall have the meaning set forth in the preamble hereof.
“Direct Costs” shall have the meaning set forth in Section 4.2(c) hereof.
“Effective Date” shall have the meaning set forth in the preamble hereof.
“Force Majeure Event” shall have the meaning set forth in Section 16.1 hereof.
“GRM Book of Business” shall have the meaning set forth in Section 4.1(a)(xiii)
hereof.
“Gross Third Party Reinsurance Recoverables” means any amounts actually
collected by the Reinsureds or the Reinsurer (acting on behalf of the
Reinsureds) in connection with Third Party Reinsurance Agreements.
“Indemnified Party” shall have the meaning set forth in Section 17.3 hereof.
“Indemnifying Party” shall have the meaning set forth in Section 17.3 hereof.

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“Legal Proceeding” means any litigation, arbitration, mediation or other legal
action.
“LPT Reinsurance Agreement” shall have the meaning set forth in the recitals.
“Master Transaction Agreement” shall have the meaning set forth in the recitals.
“Mixed Account” shall have the meaning set forth in Section 4.2(a) hereof.
“Nonpublic Personal Information” shall have the meaning set forth in Section
15.1(b) hereof.
“Party” or “Parties” shall have the meaning set forth in the recitals.
“Personal Information” shall have the meaning set forth in Section 15.1(c)
hereof.
“Primary Handler” shall have the meaning set forth is Section 4.2(a)(i) hereof.
“Quarterly Data File” shall have the meaning set forth in Section 8.1(d).
“Reinsureds” shall have the meaning set forth in the preamble.
“Reinsureds’ Actuarial Report” shall have the meaning set forth in
Section 8.1(c).
“Reinsureds Losses” shall have the meaning set forth in Section 17.1 hereof.
“Reverse Transition Services Agreement” shall have the meaning set forth in
Section 14.3(a)(i) hereof.
“Security Incident” shall have the meaning set forth in Section 15.5(c) hereof.
“Subcontractor” shall have the meaning set forth in Section 2.5 hereof.
“Third Party Claimant” shall have the meaning set forth in Section 17.4 hereof.
“Third Party Reinsurance Recoverables” means Gross Third Party Reinsurance
Recoverables, less Collection Expenses.

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ARTICLE II
AUTHORITY; SERVICE STANDARDS
     2.1 Appointment.
     (a) Reinsureds hereby appoint Administrator, for the period specified in
Article XIV hereof, and Administrator hereby accepts appointment, to provide as
an independent contractor of Reinsureds all such administrative and other
services with respect to the LPT Reinsurance Agreement and with respect to the
Reinsured Contracts and the Third Party Reinsurance Agreements with respect to
the Business Covered, including those services set forth in this Administrative
Services Agreement (the “Administrative Services”), all on the terms, and
subject to the limitations, as set forth in this Administrative Services
Agreement.
     (b) The Parties shall cooperate fully in the transfer of responsibility for
the performance of the Administrative Services from Reinsureds to Administrator
in accordance with the terms of this Administrative Services Agreement and the
Transition Services Agreement.
     (c) In order to assist Administrator in the performance of the
Administrative Services hereunder, Reinsureds shall deliver to Administrator
and, if requested by Administrator, to Resolute Management Inc., an appropriate
power of attorney which shall nominate, constitute and appoint Administrator as
their attorney-in-fact with respect to the rights, duties, and privileges and
obligations of Administrator in and to the Reinsured Contracts and Third Party
Reinsurance Agreements as respects the Business Covered, with full power and
authority to act in the name, place and stead of Reinsureds with respect
thereto, including the power, without reservation, to service the Reinsured
Contracts and Third Party Reinsurance Agreements as respects the Business
Covered, to adjust, to defend, to settle and to pay A&P Claims, and to take such
other and further action as may be necessary or desirable to effect the
transactions contemplated by the Master Transaction Agreement and this
Administrative Services Agreement, but in all cases only to the extent of the
rights and authority granted to Administrator pursuant to this Administrative
Services Agreement and in accordance with the terms of this Administrative
Services Agreement.
     2.2 Services Standards.
          Administrator agrees to perform all Administrative Services and is
hereby authorized to do so on behalf of Reinsureds. Administrator shall perform
the Administrative Services in a professional and competent manner and in
accordance with (i) the terms of the Reinsured Contracts and the Third Party
Reinsurance Agreements, (ii) to the extent not in conflict with any other
provision of this Section 2.2, standards of service that conform with
Administrator’s service standards for administering similar insurance contracts
issued by

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Administrator in its own name, and (iii) Applicable Law, including maintenance
by Administrator of all licenses, authorizations, permits and qualifications
from Governmental Authorities necessary to perform the Administrative Services
required by this Administrative Services Agreement. Administrator shall use its
reasonable best efforts to avoid doing anything which might reasonably be
expected to prejudice or bring into disrepute the reputation of Reinsureds or
their respective directors and officers as professional claims managers.
Administrator acknowledges that the performance of all Administrative Services
required by this Administrative Services Agreement in a professional and
competent manner is of critical importance to Reinsureds.
     2.3 Compliance; Licensure.
     (a) Administrator shall comply with all Applicable Laws in connection with
the performance of its duties hereunder and shall act consistently in all
material respects with, and not cause Reinsureds to be out of compliance with,
the terms of the Reinsured Contracts and Third Party Reinsurance Agreements.
Should Administrator, or any Subcontractor permitted under Section 2.5 of this
Administrative Services Agreement, violate any Applicable Law relating to its
performance under this Administrative Services Agreement that results in a
regulatory fine, penalty, monetary payment or settlement (including expense
reimbursement) imposed on Reinsureds or its Affiliates, Administrator shall
reimburse the Reinsureds or its Affiliates for such regulatory fine, penalty,
monetary payment or settlement. Administrator shall communicate promptly to
Reinsureds upon knowledge of the non-renewal, lapse, suspension or termination
of any licenses required by Applicable Law in connection with the administration
of the Reinsured Contracts and Third Party Reinsurance Agreements. If, in the
ordinary course of operations, Administrator determines that there exists any
material operational concerns or failures with respect to any of the Reinsured
Contracts or Third Party Reinsurance Agreements, Administrator shall notify
Reinsureds and, in consultation with Reinsureds, take all reasonable actions
necessary to bring such Reinsured Contracts and/or Third Party Reinsurance
Agreements into operational compliance.
     (b) Administrator shall use commercially reasonable efforts to ensure that
it or any of its Affiliates that is subcontracted to provide any Administrative
Service continue to be, and their respective employees, agents and
representatives are, or shall become and remain, licensed, in whatever capacity
is required, including without limitation third-party administrator licenses, by
the Governmental Authorities of all jurisdictions in which Reinsureds are
licensed as of the Effective Date. Administrator shall bear all costs and
expenses relating to its own licensing and the licensing of its employees,
agents and representatives.
     2.4 Independent Contractor.
          For all purposes hereof, Administrator shall at all times act as an
independent contractor and Administrator and its Affiliates, on the one hand,
and Reinsureds and their Affiliates, on the other hand, shall not be deemed an
employee, representative, joint venture or

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fiduciary of one another, nor shall this Administrative Services Agreement or
the Administrative Services or any activity or any transaction contemplated
hereby be deemed to create any partnership or joint venture between the Parties
or among their Affiliates. Administrator and its Representatives are not
eligible for, nor may they participate in, any employee benefit plans of
Reinsureds or any of their Affiliates. Reinsureds and their Representatives are
not eligible for, nor may they participate in, any employee benefit plans of
Administrator or any of its Affiliates.
     2.5 Subcontracting.
          Administrator shall not subcontract the performance of any services
that Administrator is to provide hereunder to another Person (the
“Subcontractor”) without the prior written consent of Reinsureds (which consent
shall not be unreasonably withheld); provided, however, that such consent will
not be required if the applicable Subcontractor is Resolute Management Inc. for
such time as it is an Affiliate of Administrator and; provided further, however,
that in the case of Administrative Services relating to other than claims
handling, Reinsureds’ consent will not be required if (i) the applicable
Subcontractor is an Affiliate of Administrator or (ii) the applicable
Subcontractor is to provide those services that it provides to any Reinsureds as
of the date hereof with respect to the Business Covered. Notwithstanding the
foregoing, Administrator shall not permit a Subcontractor (other than Resolute
Management Inc. for such time as it is an Affiliate of Administrator) to access
or use the CAS without Reinsureds’ prior written consent. In the event of such
subcontracting, Administrator shall not be relieved from any of its obligations
or liabilities hereunder, including compliance with Applicable Law and
maintenance of proper licensure, and Administrator shall remain responsible for
all obligations or liabilities of such Subcontractor with respect to the
providing of such service or services as if provided by Administrator; provided
that if employees of the Subcontractor providing a service meet applicable
licensing requirements, Administrator shall be deemed to be in compliance with
said licensure requirements.
     2.6 Monitoring.
          At any time during the term of this Administrative Services Agreement,
Reinsureds shall have the right to appoint a representative to monitor the A&P
Business at the facilities maintained for such A&P Business by the Administrator
or its permitted Subcontractors; provided, however, that any representative
appointed by the Reinsureds pursuant to this Section 2.6 who is not an officer,
director or employee of the Reinsureds shall not have any conflict of interest
with Administrator; provided, however, that any such monitoring shall be
conducted at the sole expense of the Reinsureds.

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ARTICLE III
COMPENSATION
     3.1 Compensation.
     (a) Except as otherwise provided in Section 4.2, Administrator agrees to
perform the Administrative Services with respect to the Business Covered at its
own expense and without any rights of reimbursement from Reinsureds, in
consideration of Reinsureds having entered into the Master Transaction
Agreement, the LPT Reinsurance Agreement and for other good and valuable
consideration, the receipt of which is hereby acknowledged.
     (b) At the reasonable request of Administrator, Reinsureds agree to provide
the technology and required databases listed on Schedule A-1 (the “Claims
Administration System” or “CAS”) to Administrator for a period of one year from
the Effective Date pursuant to the Transition Services Agreement. Administrator
agrees to reimburse the Reinsureds for their actual costs for items or services
associated in supplying Administrator with access to the CAS as provided in
Schedule A-2.
     (c) At the reasonable request of Administrator, Reinsureds shall perform
searches for policy, reinsurance and underwriting files of Reinsureds and shall
provide copies and if necessary testimony with respect to, such policy,
reinsurance and underwriting files, to Administrator. Administrator shall pay
(i) Reinsureds’ reasonable hourly rates for the performance of such searches for
policy, reinsurance and underwriting files, (ii) for all of the copies made
pursuant to this Section 3.1(c) and (iii) Reinsureds’ reasonable hourly rates
for time spent in connection with providing testimony as to these matters.
     (d) Reinsureds shall store and maintain closed claim files at their own
expense and in accordance with the Reinsureds’ then current policy for storing
and maintaining such closed claim files.
ARTICLE IV
ADMINISTRATIVE SERVICES
     4.1 Administrative Services.
     (a) In accordance with the terms of this Administrative Services Agreement,
Administrator shall provide and perform all Administrative Services with respect
to the Business Covered, including:
          (i) to adjust, handle, agree, settle, pay, compromise or repudiate any
claims or any other liability, outgoing or expense;

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          (ii) to commence, conduct, pursue, settle, appeal or compromise any
legal arbitration or other proceedings whatsoever;
          (iii) to collect claim refunds, salvages and reinsurance recoveries;
          (iv) to agree to, or exercise any right to, set-off any claims against
reinsurance recoveries or vice versa or to settle any balance of account owing
to or from Reinsureds solely in relation to the Business Covered;
          (v) to agree, on behalf of Reinsureds, to fund the obligations of any
third party in connection with any A&P Claim;
          (vi) to agree to any without prejudice payment or any other
extra-contractual obligation of or on behalf of Reinsureds;
          (vii) to enter into any arrangements which Administrator considers
will or may avoid or reduce any liability;
          (viii) to use the name of any Reinsureds in connection with the
exercise of any or all of the powers conferred by this Administrative Services
Agreement;
          (ix) to exercise any rights of subrogation or other rights of
recovery, excluding any such rights to recover billed Retrospective Premiums;
          (x) to enter into discussions or negotiations with any insured or
reinsured Person or their Representatives in connection with the Business
Covered;
          (xi) to enter into, amend or cancel any arrangements or agreements
with third parties, including in relation to the handling or collection of
claims, debts or reinsurance recoveries;
          (xii) to retain and instruct lawyers, claims adjusters or other
consultants or experts;
          (xiii) to administer the Business Covered that arises from those pool,
syndicate, association or other sources set forth on Schedule B hereto (the “GRM
Book of Business”) in accordance with the protocol set forth in Section 4.3;

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          (xiv) to coordinate with Reinsureds on the handling of escheat claims;
and
          (xv) to share information received from Reinsureds, including any
information in their files and records, with other insurers, reinsurers,
claimants and other Persons as may be necessary in the judgment of Administrator
to carry out the Administrative Services.
     (b) The Administrative Services which will be undertaken by Administrator
will include all matters relating to the administration, settlement and payment
of claims arising under the Business Covered, together with all other matters
required to give full effect to the terms of the LPT Reinsurance Agreement.
Reinsureds shall have no authority to settle, commute or compromise any direct
A&P Claim or any reinsurance claim arising from an A&P Claim, except with the
consent of Administrator (which consent shall not be unreasonably withheld) and
except with respect to claims brought by or against a Berkshire Owned Entity.
     4.2 Mixed Accounts.
     (a) The Parties acknowledge that an account with Reinsured Contracts may
involve a claim or related claims that are in part or in whole not an Asbestos
Claim or a Pollution Claim. An account with Reinsured Contracts which includes
both A&P Claims and Non-A&P Claims is referred to in this Administrative
Services Agreement as a “Mixed Account.” As used in this Section 4.2(a),
“account” shall mean an insured or cedent under a Reinsured Contract.
          (i) For Mixed Accounts, the Parties shall meet as promptly as
practicable and determine whether the administration of a Mixed Account shall be
done by a single claim handler (the “Primary Handler”). In the event that the
Parties fail to mutually agree to an account being administered by a Primary
Handler, then such Mixed Account shall be administered pursuant to
Section 4.2(a)(ii). The Parties agree that the accounts set forth on Schedule C
hereto shall be handled by the designated Primary Handler.
          (ii) Subject to Section 4.2(a)(i), in the administration of Mixed
Accounts, (A) Reinsureds shall administer such portions of the Mixed Account
that relate to Non-A&P Claims, and (B) Administrator shall administer such
portions of the Mixed Account that relate to A&P Claims. Administrator and
Reinsureds shall establish and maintain an open channel of communication with
each other with respect to the claims contained within each Mixed Account.

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     (b) For Mixed Accounts administered by a Primary Handler, the Primary
Handler shall review, analyze, process and collect all associated inward and
outward reinsurance as well as perform all other Administrative Services
necessary to adjust the claim and/or receive Third Party Reinsurance
Recoverables or Other Recoveries, including distributions from any insolvent
estate and any reinsurer for all agreed A&P Claims and Non-A&P Claims on the
Mixed Account. Administrator and Reinsureds shall establish and maintain an open
channel of communication with each other with respect to the claims contained
within each Mixed Account, and shall cooperate with each other to resolve all
such claims in a timely and efficient manner. The Primary Handler shall not have
the authority to enter into any agreement to pay, in the aggregate, more than
$1,000,000 in any Ultimate Net Loss allocable to the other Party without the
prior consent of the other Party, which consent shall not be unreasonably
delayed or withheld.
     (c) With respect to costs associated with administering a Mixed Account,
the Primary Handler shall be reimbursed by the other Party for Direct Costs. All
such Direct Costs shall be billed by the Primary Handler, to the other Party, on
a quarterly basis. Upon receipt of a billing statement from the Primary Handler,
which sets forth the Direct Costs, the other Party shall reimburse the Primary
Handler within thirty (30) calendar days. “Direct Costs” as referenced herein
refers to the salary and benefits of the claims handler (which benefits will be
calculated at thirty percent (30%) of salary) for the actual hours devoted by
that claims handler to the Mixed Account.
     (d) To the extent practicable, all payments, in a Mixed Account claim, for
indemnity for bodily injury or property damage for an individual plaintiff shall
be allocated among the Parties based upon the actual cause of the injury or
damage for such plaintiff, identified at the time of settlement or judgment. If
information as to the actual cause of injury or damage is unclear or
unavailable, then indemnity payments shall be allocated among the Parties based
upon the best available information within one year after the settlement or
judgment as to any claims in such account. Such indemnity payments will be
billed as they are incurred. Upon receipt of a billing statement from the
Primary Handler for such indemnity payments, the other Party shall reimburse the
Primary Handler within thirty (30) calendar days without prejudice to either
Party’s right to adjust any allocation within one year of the settlement or
judgment.
     (e) In the event that Allocated Loss Adjustment Expenses or Declaratory
Judgment Expenses are incurred for Mixed Accounts, and allocation to specific
claims is not practicable, then such expense payments shall be provisionally
allocated among the Parties, on an equitable basis, in accordance with each
Party’s respective financial exposure to the claims in question. Such expense
payments will be billed as they are incurred and shall be without prejudice to
either Party’s right to adjust any allocation in accordance with the manner
indemnity payments have been allocated up to one year after settlement or
judgment as to any claims in the account. Upon receipt of a billing

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statement from the Primary Handler for such expense payments, the other Party
shall reimburse the Primary Handler within thirty (30) calendar days.
     (f) In the event that a claim arises subject to Section 4.2(d) and Section
4.2(e), above, the Parties shall use reasonable best efforts to obtain the data
and information required to establish accurate allocations among the Parties.
Notwithstanding the foregoing, prior the Closing Date, the Parties may establish
mutually agreed upon protocols for certain accounts and such protocols may set
forth alternative allocations arrangements with respect to each such account.
     4.3 GRM Book of Business.
          In the administration of the GRM Book of Business, the Parties shall
allocate indemnity payments, Allocated Loss Adjustment Expenses and Declaratory
Judgment Expenses as follows:
     (a) In the event that the manager of a GRM Book of Business delivers a bill
that allocates as between A&P Claims and Non-A&P Claims (an “Allocated Bill”),
the Parties shall defer to the allocations set forth in the Allocated Bill.
     (b) In the event that no Allocated Bill pursuant to Section 4.3(a), above,
is received, the Administrator shall use reasonable best efforts to obtain, from
the manager of a GRM Book of Business, data and information required to
establish an equitable allocation between A&P Claims and Non-A&P Claims among
the Parties.
     (c) In the event that (i) no Allocated Bill pursuant to Section 4.3(a),
above, is received, and (ii) reasonably satisfactory data cannot be obtained
pursuant to Section 4.3(b), above, the allocation between A&P Claims and Non-A&P
Claims shall be in proportion to the manner in which the GRM Book of Business
actuarial report has estimated its ultimate liability for A&P Claims and Non-A&P
Claims.
     (d) In the event that information required to make an allocation pursuant
to this Section 4.3 is not forthcoming within ninety (90) calendar days of
receipt of a bill, such allocation shall be made on an interim and without
prejudice basis in proportion to the prior allocation for such GRM Book of
Business exposure.

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     4.4 Extracontractual Damages.
     (a) Extracontractual Damages covered under the LPT Reinsurance Agreement
shall be paid by Administrator and any such payments shall be applied against
the LPT Limit.
     (b) For the avoidance of doubt, notwithstanding anything to the contrary in
this Administrative Services Agreement, any liability of Reinsureds or a CNA
Insurer for the intentional and malicious acts or omissions of its employees,
officers or directors (as so determined by final adjudication by any Order,
writ, injunction, directive, judgment or decree of a court of competent
jurisdiction applicable to the Parties) shall be paid by such Reinsureds or CNA
Insurer and any such payment shall not affect the LPT Limit.
     (c) For the avoidance of doubt, notwithstanding anything to the contrary in
this Administrative Services Agreement, any liability of Administrator as a
result of its intentional and malicious acts or omissions of its employees,
officers or directors (as so determined by final adjudication by any Order,
writ, injunction, directive, judgment or decree of a court of competent
jurisdiction applicable to the Parties) shall be paid by Administrator;
provided, however, any such payment shall not affect the LPT Limit.
     4.5 Conflict of Interest.
     (a) Subject to Section 4.5(b) below, whenever a claim arises: (i) by, or
from, Reinsureds against (A) Berkshire or any insurer, reinsurer or other
company that is a direct or indirect Subsidiary of Berkshire (each, a “Berkshire
Owned Entity”), or (B) a Berkshire Owned Entity or any insurer, reinsurer or
other company that is one hundred percent reinsured by a direct or indirect
Subsidiary of Berkshire (each, a “Berkshire Controlled Entity”), or (C) that
involve Administrator or another Berkshire Controlled Entity as an administrator
for a third party, or (ii) against Reinsureds by, or from, (A) a Berkshire Owned
Entity, or (B) a Berkshire Controlled Entity, or (C) that involve Administrator
or another Berkshire Controlled Entity as an administrator for a third party,
Administrator agrees that it will handle such claims under this Administrative
Services Agreement in good faith and with due regard for the singular interests
of Reinsureds. At Reinsureds’ discretion, Reinsureds may direct Administrator in
the administration of any claim (i) by, or from, a Berkshire Owned Entity
against Reinsureds or (ii) against a Berkshire Owned Entity by, or from,
Reinsureds.
     (b) In the event of the occurrence of a conflict of interest, pursuant to
this Section 4.5, involving (i) a Berkshire Controlled Entity, (ii) any claim
by, or from, a Berkshire Owned Entity against Reinsureds, or (iii) any claim
against a Berkshire Owned Entity by, or from, Reinsureds, Administrator shall
obtain the Reinsureds’ prior approval before committing to a resolution of such
conflicted matter, which such approval shall not be unreasonably delayed or
withheld. For the avoidance of doubt, all liabilities, fees, costs and expenses
associated with the administration of such Third Party Reinsurance Agreements
and any payments and recovery under such Third Party Reinsurance Agreements
shall be covered by the LPT Reinsurance Agreement.

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ARTICLE V
CLAIMS HANDLING SERVICES
     5.1 Claims Handling Services.
          The Administrative Services shall include, as necessary and
appropriate, all functions relating to the handling of A&P Claims, including
those functions set forth in this Section 5.1.
          (a) Administrator shall acknowledge, consider, review, investigate,
deny, settle, pay or otherwise dispose of each A&P Claim. Administrator shall
pay, using its own funds, A&P Claims and associated expenses as Ultimate Net
Loss under the LPT Reinsurance Agreement and subject to the terms of the LPT
Reinsurance Agreement.
          (b) Without limiting paragraph (a) of this Section 5.1, Administrator
shall:
          (i) establish, maintain and organize A&P Claim files and maintain and
organize other A&P Claims-related records;
          (ii) review all A&P Claims and determine whether the claimant is
eligible for payment and if so, the nature and extent of such payment;
          (iii) maintain trained claims personnel;
          (iv) maintain a complaint log with respect to the Reinsured Contracts
in accordance with applicable requirements of Governmental Authorities and
provide a copy of such log upon Reinsureds’ request;
          (v) gather all information necessary for Reinsureds to comply with
regulatory reporting requirements related to A&P Claims detail, including
Medicare Set Aside reporting;
          (vi) respond promptly to all written or oral A&P Claims-related
communications that Administrator reasonably believes to require a response; and

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          (vii) in accordance with Articles VII and XI hereof, respond to, or
assist Reinsureds’ in responding to, regulatory and legal matters to the extent
such matters relate to A&P Claims.
ARTICLE VI
ADMINISTRATION OF THIRD PARTY REINSURANCE AGREEMENTS
     6.1 Third Party Reinsurance Administration.
          The Administrative Services provided by Administrator with respect to
the Third Party Reinsurance Agreements with respect to the Business Covered
shall include the following:
     (a) administer and collect, on behalf of and in the name of the applicable
Reinsureds, Third Party Reinsurance Recoverables and Other Recoveries due in
respect of the Reinsured Liabilities in accordance with the contractual terms of
the applicable Third Party Reinsurance Agreements and Reinsured Contracts in a
commercially reasonable manner consistent;
     (b) cede all A&P Claims in the first instance to the applicable Third Party
Reinsurance Agreements before ceding such claims to the LPT Reinsurance
Agreement; provided, however, that Administrator may not cede any such claims to
Third Party Reinsurance Agreements whose aggregate limits have been exhausted;
     (c) provide all necessary litigation functions with respect to the Third
Party Reinsurance Agreements;
     (d) initiate Legal Proceedings in the name of the applicable Reinsureds in
those instances where such action is necessary in order for the applicable
Reinsureds to enforce or protect its rights under the Third Party Reinsurance
Agreements in respect of the Business Covered;
     (e) consult with Reinsureds in the filing of proofs of claim in any
insolvent estate or scheme of arrangement;
     (f) comply with any applicable notice requirements under the Third Party
Reinsurance Agreements; and

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     (g) perform other certain administrative functions relating to the Third
Party Reinsurance Agreements with respect to the Business Covered as agreed to
the Parties from time to time.
          In determining the amount of the Third Party Reinsurance Recoverables,
there shall first be deducted from any amount recovered the out-of-pocket
expenses incurred in effectuating the recovery (including, without limitation,
all court, arbitration, mediation or other dispute resolution costs, attorneys’
fees and expenses, but excluding overhead, salaries and expenses of officers and
employees of Reinsureds and similar internal costs), except to the extent
otherwise paid or reimbursed by Reinsurers hereunder.
     6.2 Collateral.
     With prior notice to the applicable Reinsureds, Administrator shall have
the authority to secure any letter of credit or other funds held as appropriate
under third party contracts and draw upon any letter of credit, trust, funds
withheld, offset or take any action in the name of Reinsureds in relation to any
collateral security maintained in the name, or on behalf, of such Reinsureds
under the Third Party Reinsurance Agreements.
     6.3 Commutations.
     Notwithstanding any other provision of this Administrative Services
Agreement to the contrary, no Party shall have authority to commute any Third
Party Reinsurance Agreements which relates to the Business Covered without the
written consent of the other Party.
     6.4 Collection of Third Party Reinsurance Recoverables.
     Administrator shall have the authority to decide not to collect Third Party
Reinsurance Recoverables solely related to the Business Covered that
Administrator deems uncollectible; provided, however, that Administrator shall
not decide to forego the collection of any Third Party Reinsurance Recoverable
that involves a Mixed Account claim that it is administering without the prior
written consent of Reinsureds. Reinsureds shall not decide to forgo the
collection of any Third Party Reinsurance Recoverable that involves a Mixed
Account claim that it is administering without the prior written consent of the
Administrator.
     6.5 Third Party Reinsurance Allocation Agreement.
     The Parties acknowledge that amounts recoverable under the Third Party
Reinsurance Agreements will be allocable to Administrator for the Business
Covered and to the Reinsureds for all other claims in accordance with the terms
of the Third Party Reinsurance Allocation Agreement.

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ARTICLE VII
REGULATORY COMPLIANCE AND REPORTING
     7.1 Regulatory Filings and Examinations.
     (a) Commencing on the Effective Date, Administrator shall take all
necessary action within its control so that Reinsureds, solely with respect to
the Business Covered, satisfy all current and future informational reporting and
any other requirements imposed by any Governmental Authority. Without limiting
the foregoing, Administrator shall timely prepare such reports and summaries,
including statistical summaries, as are necessary to satisfy any requirements
imposed by a Governmental Authority upon Reinsureds with respect to the Business
Covered. In addition, Administrator, upon Reinsureds’ reasonable request, shall
promptly provide to such Reinsureds copies of all existing records relating to
the Reinsured Contracts and Third Party Reinsurance Agreements (including, with
respect to records maintained in machine readable form, hard copies) that are
necessary to satisfy such requirements.
     (b) Administrator shall reasonably assist Reinsureds and cooperate with
Reinsureds in doing all things necessary, proper or advisable in connection with
any and all market conduct or other examinations by Governmental Authorities
relating to the Business Covered.
     (c) Any reports or other materials required to be prepared by Administrator
under this Section 7.1 shall be prepared on a timely basis in order for
Reinsureds to comply with any filing deadlines required by contract or by
Reinsureds’ internal procedures and policies, in each case to the extent
previously provided to Administrator with sufficient advance notice thereof and
reasonably consistent with Administrator’s own internal systems and procedures,
or by Applicable Law. All such reports shall include such information as may
reasonably be required by Reinsureds, as applicable, and shall be provided in a
form, electronic or otherwise, as is reasonably requested by Reinsureds, as
applicable.
ARTICLE VIII
OTHER REPORTING OBLIGATIONS
     8.1 Financial Reporting Obligations.
          Administrator shall assume the reporting and accounting obligations
set forth in this Section 8.1.

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     (a) On an annual basis, Administrator shall prepare, or have prepared, an
actuarial analysis of the Reserves related to the Business Covered on a gross,
ceded and net basis prior to the application of the LPT Reinsurance Agreement
(“Administrator’s Actuarial Report”). The Administrator’s Actuarial Report shall
include both (i) an analysis of gross, ceded and net Reserves prior to the
application of the LPT Reinsurance Agreement, prepared by a qualified actuary
with a Fellow of the Casualty Actuarial Society designation in accordance with
all applicable actuarial standards, and (ii) the Administrator’s documentation
and rationale supporting how the actuary’s analysis was used in making decisions
pertaining to estimates of Ultimate Net Losses for Business Covered.
Administrator shall provide to Reinsureds a copy of the Administrator’s
Actuarial Report no later than November 1st of each year.
     (b) On an annual basis, Administrator shall provide to Reinsureds a current
estimate of the ultimate exposure for Loss and expenses (which estimate shall
include paid loss, paid Allocated Loss Adjustment Expenses, paid Declaratory
Judgment Expense, loss reserves, Allocated Loss Adjustment Expenses reserves and
Declaratory Judgment Expense reserves) related to the Business Covered, by
account, on a gross, ceded and net basis prior to the application of the LPT
Reinsurance Agreement.
     (c) Administrator shall allow Reinsureds and their Representatives access
to Administrator’s actuarial and claims personnel, documentation, systems and
records to the extent required by Reinsureds in order to complete their review
of the Administrator’s Actuarial Report and complete the Reinsureds’ actuarial
report (the “Reinsureds’ Actuarial Report”) and statutory actuarial opinion.
     (d) Subject to an early processing systems cut-off date that is mutually
agreed upon by the Parties, within two (2) Business Days after the end of each
quarter, Administrator shall deliver to Reinsureds a quarterly data file (each a
“Quarterly Data File”), substantially in the form set forth in Schedule D
hereto, as required for financial reporting and other purposes, including
requisite coding necessary for all statutory reporting obligations; it being
understood that the initial Quarterly Data File shall be for the period from the
Effective Date to the last day of the quarter in which this Administrative
Services Agreement is executed.
     (e) In addition to the reports described in paragraphs (a) through (d) of
this Section 8.1, the Parties agree that Administrator shall provide Reinsureds
information related to the Business Covered under the Reinsured Contracts and/or
Third Party Reinsurance Agreements and copies of any other reports that are
produced by Administrator.
     (f) Solely for the purposes of determining (i) the Required Amount in a
Reinsurance Credit Event, (ii) the Security Amount in a Collateral Triggering
Event or (iii) if the Administrator may exercise its withdrawal rights pursuant
to Section 6.2(c) of

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the Collateral Trust Agreement, Administrator may request, from time to time
during the term of this Administrative Services Agreement, a copy of the
Reinsureds’ Actuarial Report for the purpose of reviewing the Reinsureds’
calculation of Reserves. Upon receipt of such request, Reinsureds shall provide
a copy of the most recent available Reinsureds’ Actuarial Report as promptly as
possible to Administrator. If Administrator objects to the Reinsured’s
calculation of Reserves for the purposes set forth in this Section
8.1(f)(i)-(iii), above, the Parties shall retain either Milliman Inc. or Towers
Watson or, if both firms refuse to act in such capacity, such other nationally
recognized independent actuarial firm as may be agreed by the Parties, to
conduct a review of the calculation of the Reserves set forth in such
Reinsureds’ Actuarial report, and to prepare a report setting forth its findings
and conclusions on such matter. The fees, costs and expenses of retaining such
an actuarial firm shall be allocated by the actuarial firm between the Parties
in accordance with the actuarial firm’s judgment as to the relative merits of
the Parties’ proposals in respect of the disputed items.
     8.2 Change in Status.
     (a) Administrator shall (a) notify Reinsureds in writing promptly following
(i) the public announcement of entry into any agreement that would result in a
majority of the capital stock of Administrator no longer being owned or
controlled, directly or indirectly, by Berkshire (or its successor) or (ii) the
adoption of any plan to liquidate, merge or dissolve Administrator and
(b) obtain the prior written consent of Reinsureds prior to the sale or transfer
of assets of Administrator or any of its Affiliates that would render
Administrator unable to perform its obligations under this Administrative
Services Agreement. Twenty (20) calendar days prior to the closing of any
transaction contemplated by sub-clause (a) in the preceding sentence, the
successor or survivor of the transaction shall reaffirm in writing its
obligations under this Administrative Services Agreement in writing to
Reinsureds.
     (b) Administrator shall notify Reinsureds in writing prior to any material
change to its claims handling personnel or operations.
     8.3 Administrator Controls.
          Administrator represents that during the term of this Administrative
Services Agreement it will continue to maintain its accounting and oversight
controls with respect to its operations consistent with the requirements under
the Sarbanes-Oxley Act of 2002 (as that statute may be amended from time to
time) and with past practice, to the extent consistent with Applicable Law and
taking into consideration the wind-down of the Business Covered. Administrator
shall provide Reinsureds with documentation supporting such compliance upon the
request of Reinsureds.

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ARTICLE IX
BOOKS AND RECORDS
     9.1 Transfer and Ownership of Books and Records.
     In accordance with Section 5.7 of the Master Transaction Agreement, prior
to Closing, the Parties shall in good faith agree upon a protocol to
(a) transfer to Administrator the Books and Records following the Closing and/or
(b) provide Administrator with reasonable access to the Books and Records during
normal business hours following the Closing. Notwithstanding the foregoing,
Reinsureds shall retain legal ownership of such Books and Records and shall be
entitled to retain one or more copies and/or originals of such Books and
Records. With respect to any Books and Records which are archived, the Parties
agree that Reinsureds shall not be required to transfer such archived Books and
Records to Administrator at the Closing, but instead shall provide Administrator
with reasonable access to such archived Books and Records. At any time following
the Closing, Reinsureds shall transfer all or a portion of the archived Books
and Records to Administrator upon Administrator’s reasonable request.
     9.2 Maintenance of Books and Records.
     Administrator shall maintain (including, backing up its computer files, and
maintaining facilities and procedures for safekeeping and retaining documents)
Books and Records (which term, for purposes of this Administrative Services
Agreement if the context requires, shall include (i) any such material developed
after the date hereof by a Party or its Affiliates and (ii) any archived Books
and Records) of all transactions pertaining to the Business Covered in
accordance with the record retention requirements in effect from time to time
for Administrator’s business not covered by this Administrative Services
Agreement.
     9.3 Access to Books Records.
     (a) Administrator and Reinsureds shall each make the Books and Records
(which term, for purposes of this Administrative Services Agreement if the
context requires, shall include (i) any such material developed after the date
hereof by a Party or its Affiliates and (ii) any archived Books and Records) in
its possession or under its control reasonably available to Reinsureds or
Administrator, as applicable, or their Representatives during normal office
hours for such auditing or any other purposes related to the LPT Reinsurance
Agreement or this Administrative Services Agreement as Reinsureds or
Administrator, as applicable, may require. Reinsureds or Administrator, as
applicable, shall, at their own expense, be entitled to make copies of the Books
and Records for these purposes. Administrator will provide all needed
information, including access to claim files and personnel, for the purpose of
periodically updating actuarial studies of gross liabilities of the Business
Covered. This obligation shall survive the

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expiration of this Administrative Services Agreement and shall continue for so
long as Administrator may have any liability arising under this Administrative
Services Agreement or the LPT Reinsurance Agreement.
     (b) Administrator shall make the Books and Records and its personnel
reasonably available at any such location and manner as may be required by the
terms of any Third Party Reinsurance Agreement.
     (c) The Books and Records shall at all reasonable times be open for
inspection by Administrator (where such Books and Records are being kept by
Reinsureds) and by Reinsureds (where such Books and Records are being kept by
Administrator) and (in each case) their respective Representatives during normal
business hours and on reasonable notice, for such auditing or other purposes as
Administrator or Reinsureds may require. Administrator shall permit Reinsureds
and their Representatives, and Reinsureds shall permit Administrator and its
Representatives, to make copies of such Books and Records. This obligation shall
survive the expiration of this Administrative Services Agreement and continue
for so long as Administrator may have any liability arising under this
Administrative Services Agreement or the LPT Reinsurance Agreement.
     (d) Upon Administrator’s reasonable request, Reinsureds shall transfer to
Administrator any archived Books and Records that Administrator requests
pertaining to the Business Covered.
     (e) Administrator shall not, and shall cause its Affiliates to not, dispose
of, alter or destroy any Books and Records related to A&P Claims or other
relevant materials other than in accordance with Administrator’s books and
records retention policies as may be in effect from time to time, but in no
event will Administrator dispose of, alter or destroy, or cause or permit any of
its Affiliates to dispose of, alter or destroy, any such Books and Records or
other relevant materials (i) prior to the seventh anniversary of the Closing and
(ii) without providing Reinsureds with advance written notice and the
opportunity to take possession of such Books and Records.
     (f) Notwithstanding any other provision of this Section 9.3, a Party shall
not be obligated to provide such access to any Books and Records, employees or
information if such Party determines, in its reasonable judgment, that doing so
would violate Applicable Law or a contract, agreement or obligation of
confidentiality owing to a third party; provided, however, that the Parties
requesting access shall have the right to require such other Party to use its
commercially reasonable efforts to take steps in order to provide such access
without causing such violations.

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ARTICLE X
INABILITY TO PERFORM SERVICES; ERRORS
     10.1 Capacity.
     (a) Administrator shall at all times maintain all necessary licenses,
authorizations, permits and qualifications from Governmental Authorities under
Applicable Laws that Administrator is required to maintain in order to perform
the Administrative Services in the manner required by this Administrative
Services Agreement.
     (b) Subject to Section 2.5 of this Administrative Services Agreement and to
the terms of the Transition Services Agreement, Administrator shall at all times
maintain sufficient facilities and trained personnel of the kind necessary to
perform its obligations under this Administrative Services Agreement in
accordance with the performance standards set forth herein.
     (c) Administrator may carry out its obligations under this Article X
through Resolute Management Inc.
     10.2 Inability to Perform Services.
     In the event that Administrator shall be unable to perform normal and
routine services as required by this Administrative Services Agreement for any
reason for a period that can reasonably be expected to exceed thirty
(30) calendar days, Administrator shall provide notice to Reinsureds of its
inability to perform the services and shall cooperate with Reinsureds in
obtaining an alternative means of providing such services. Administrator will be
responsible for all costs incurred in restoring services except in cases where
such inability to provide services results solely from Reinsureds failure to
provide the Claims Administration System in accordance with the terms of the
Transition Services Agreement, in which case Reinsureds shall be responsible for
all costs reasonably incurred by Administrator in restoring services.
     10.3 Errors.
     Administrator shall, at its own expense, use commercially reasonable
efforts to correct any errors in Administrative Services caused by it as soon as
practicable after discovering such error or receiving notice thereof from
Reinsureds or other Person.

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ARTICLE XI
LEGAL ACTIONS
     11.1 Regulatory Proceedings.
     (a) If Reinsureds or Administrator receives notice of, or otherwise becomes
aware of, any regulatory investigation, examination or proceeding or other
significant inquiry relating to the Reinsured Contracts and Third Party
Reinsurance Agreements, Reinsureds (to the extent pertaining to the Business
Covered) or Administrator, as applicable, shall promptly notify the other Party.
Unless Reinsureds choose to delegate responsibility to Administrator with
respect to a specific matter, Reinsureds shall respond to and resolve all
regulatory matters and regulatory investigations, examinations, inquiries and
proceedings relating to the Business Covered with the full assistance and
cooperation of Administrator.
     (b) Notwithstanding anything to the contrary contained in this
Administrative Services Agreement, neither Reinsureds nor Administrator shall
have the authority to institute, prosecute or maintain any regulatory
proceedings on behalf of the other Party without the prior written consent of
such other Party.
     11.2 Notification Requirements.
     (a) If Reinsureds or Administrator receives notice of any litigation,
arbitration, declaratory judgment or other legal proceeding against a Party to
this Administrative Services Agreement that has been instituted either under,
arising out of, or relating to any Reinsured Contract or Third Party Reinsurance
Agreement in respect to the Business Covered, Reinsureds or Administrator, as
applicable, shall promptly notify the other Party.
     (b) Administrator shall promptly notify Reinsureds in writing of any
potential loss from an A&P Claim, set of interrelated A&P Claims, or a single
account, which is reasonably likely to involve a loss, on a gross of third party
ceded reinsurance basis, in the amount of $10,000,000 or greater. Administrator
shall provide Reinsureds with quarterly progress reports regarding such A&P
Claims or accounts.
     (c) At least ten (10) calendar days prior to making any third-party
reinsurance cession of over $10,000,000, Administrator shall provide a draft
copy of the billing to Reinsureds.
     (d) Administrator shall promptly notify Reinsureds in writing whenever a
Berkshire Controlled Entity is an opposing party in any litigation, arbitration,
declaratory

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judgment or other legal proceeding against Reinsureds that has been instituted
either under, arising out of, or relating to any Reinsured Contract or Third
Party Reinsurance Agreement in respect to the Business Covered.
     (e) Administrator shall promptly notify Reinsureds in writing of any events
that constitute a Reinsurance Credit Event.
     11.3 Right to Associate.
          Administrator shall prosecute or defend, at its own expense pursuant
to the terms of this Administrative Services Agreement and the LPT Reinsurance
Agreement and in the name of the applicable Reinsureds when necessary, any
litigation, arbitration or other legal proceeding brought on any Reinsured
Contract or Third Party Reinsurance Agreement with respect to the Business
Covered. Administrator, when so requested, shall afford Reinsureds an
opportunity to be associated with Administrator, at the expense of Reinsureds,
in the defense of any claim, suit or proceeding involving the Business Covered
and the Parties shall cooperate in every respect in the prosecution or defense
of such claim, suit or proceeding. Any recovery for the benefit of Reinsureds
shall be first used to reimburse Administrator for its expenses in connection
with the proceedings and the remainder used as a recovery under the terms of the
LPT Reinsurance Agreement.
ARTICLE XII
BANK ACCOUNTS
     12.1 Bank Accounts.
     (a) As soon as reasonably practicable after the Effective Date,
Administrator shall open and maintain accounts into and out of which all
payments due from Administrator under the LPT Reinsurance Agreement shall be
paid and all recoverables due Administrator under the LPT Reinsurance Agreement
shall be received (the “Administrative Accounts”).
     (b) Administrator may open and maintain such bank accounts in its own name
as it may require in relation to the provision of the Administrative Services,
and Reinsureds hereby authorize all payments to be made from and all recoveries
paid to such accounts in connection with the provision of the Administrative
Services.
     (c) Reinsureds and Administrator shall cooperate in procuring that, as soon
as reasonably practicable, following the Effective Date, changes to the
instruction and finance systems are made so as to enable payments and recoveries
to be paid into and from the Administrative Accounts. All costs of changes will
be paid by Administrator.

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To the extent that payments and recoveries are made after the Effective Date
from accounts held by Reinsureds, Reinsureds and Administrator shall cooperate
in setting up reimbursement procedures for payment of amounts due between the
Administrator and Reinsureds.
ARTICLE XIII
     COOPERATION
     13.1 Cooperation.
     The Parties shall cooperate in a commercially reasonable manner in order
that the duties assumed by Administrator will be effectively, efficiently and
promptly discharged, and will not take any actions which would frustrate the
intent of the transactions contemplated by this Administrative Services
Agreement, the Master Transition Agreement, the LPT Reinsurance Agreement or any
other Ancillary Agreements. Each Party shall, at all reasonable times under the
circumstances, make available to the other Party properly authorized personnel
for the purpose of consultation and decision.
     13.2 Relationship Management.
     In the interest of effective effectuation of this Administrative Services
Agreement, the Parties will seek in good faith to have primary communications
regarding documents, records, and request for information under this
Administrative Services Agreement be made through the following authorized
Representatives:

For Administrator:

Brian G. Snover
Vice President and General Counsel
Berkshire Hathaway Reinsurance Division
100 First Stamford Place
Stamford, CT 06902
Fax: (203) 363-5221

For Reinsureds:

Michael P. Warnick
Senior Vice President and Deputy General Counsel
CNA Financial Corporation
333 S. Wabash Avenue
Chicago, IL 60604
Fax: (312) 755-2479

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          Any Party may change its Representative pursuant to this Section 13.2
on fifteen (15) calendar days’ advance notice in writing to the other Parties.
ARTICLE XIV
DURATION; TERMINATION
     14.1 Duration.
          This Administrative Services Agreement shall commence on the date of
its execution and shall continue until it is terminated under Section 14.2.
     14.2 Termination.
     (a) Subject to the provisions regarding survivability set forth in
Section 14.4 hereof, this Administrative Services Agreement shall terminate:
          (i) at any time upon the mutual written consent of the Parties, which
writing shall state the effective date of termination, and consistent with
Section 14.3 hereof, shall set forth in reasonable detail the procedure for
transferring the Administrative Services to Reinsureds or their designee;
          (ii) automatically upon termination of Administrator’s liability under
the LPT Reinsurance Agreement. Under all circumstances Administrator’s liability
under this Administrative Services Agreement shall cease at the close of the
Business Day on which Administrator has paid an Ultimate Net Loss equal to the
LPT Limit;
          (iii) at the option of Reinsureds, upon written notice to
Administrator, if Administrator becomes subject to dissolution, liquidation,
conservation, rehabilitation, bankruptcy, statutory reorganization,
receivership, compulsory composition, or similar proceedings in any
jurisdiction, or if creditors of Administrator take over its management, or if
Administrator otherwise enters into any arrangement with creditors, or makes an
assignment for the benefit of creditors, or if any significant part of
Administrator’s undertakings or property is impounded or confiscated by action
of any Governmental Authority.
     (b) In the event that this Administrative Services Agreement is terminated
pursuant to Section 14.2(a)(iii), Reinsureds shall promptly select a third-party

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administrator reasonably acceptable to Administrator to perform the
Administrative Services.
     (c) Following any termination of this Administrative Services Agreement by
Reinsureds pursuant to Section 14.2(a)(iii), Administrator shall reimburse
Reinsureds for any reasonable out-of-pocket costs arising as a result of such
termination, including, without limitation, (i) the cost of transitioning the
Administrative Services to a substitute provider of Reinsureds, (ii) any fees
paid to any such substitute provider and (iii) any reasonable costs incurred by
Reinsureds with respect to the Administrative Services after termination of this
Administrative Services Agreement subject to the LPT Reinsurance Agreement
continuing to be unexhausted.
     14.3 Certain Actions Related to Termination.
     (a) In the event that (x) either of the Parties reasonably determines that
the aggregate Ultimate Net Loss incurred by Administrator under the LPT
Reinsurance Agreement on a paid basis is reduced to one billion dollars
($1,000,000,000) or (y) any notice of termination is given under either the LPT
Reinsurance Agreement or this Administrative Services Agreement, then, upon the
request of Reinsureds:
          (i) Reinsureds and Administrator shall negotiate in good faith a
services agreement (the “Reverse Transition Services Agreement”) containing
terms and conditions mutually acceptable to the Parties, whereby Administrator
and its Affiliates will provide, at actual cost (exclusive of any overhead
allocation), all transition or administrative services reasonably necessary or
appropriate in order to transition the administration of the A&P Business to
Reinsureds, which services will be provided for a period of not less than one
(1) year following the termination or expiration of this Administrative Services
Agreement.
          (ii) Administrator shall provide to Reinsureds a true and complete
list of each employee of Administrator or its Affiliates who is primarily
dedicated to the administration of the A&P Business, including each such
employee’s classification, hire date, department function, office location,
current annual salary and most recent annual bonus target. Administrator shall
provide updates to such list from time to time upon the reasonable request of
Reinsureds, and shall reasonably cooperate with and assist Reinsureds in
connection with making offers of employment to any such employees for employment
commencing on or after the termination or expiration of this Administrative
Services Agreement.
          (iii) To ensure an effective transition and transfer of the
administration of the A&P Business, Administrator shall, and shall cause its
Affiliates and their respective Representatives to, fully cooperate and work
with Reinsureds in transition planning and implementation. Reinsureds shall
reimburse Administrator for any out of

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pocket expenses incurred by Administrator or its Affiliates in connection with
any actions undertaken by Administrator at the request of Reinsureds in
transitioning the administration of the A&P Business to Reinsureds.
     (b) Unless otherwise agreed to by the Parties, upon the termination or
expiration of this Administrative Services Agreement, Administrator shall, and
shall cause each of its Affiliates, to, promptly transfer to Reinsureds, or
their designee, originals or copies of all Books and Records in the possession
or control of such Persons.
     (c) Unless otherwise agreed to in writing by the Parties, from and after
the termination or expiration of this Administrative Services Agreement,
Administrator shall, and shall cause its Affiliates and their respective
Representatives to, fully cooperate with Reinsureds in connection with
transitioning the administration of the A&P Business to Reinsureds or their
designee, including in connection with any regulatory or tax audits or
proceedings relating to any period during which Administrator was providing
services pursuant to this Administrative Services Agreement.
     (d) If requested by Reinsureds pursuant to Section 14.3(b), upon the
termination or expiration of this Administrative Services Agreement,
Administrator and Reinsureds shall execute and deliver the Reverse Transition
Services Agreement.
     14.4 Survival.
     The provisions of Section 9.3, paragraphs (b) and (c) of Section 14.2,
Section 14.3, Section 14.4, Article XV, Article XVII, and Sections 19.1, 19.7,
19.10 and 19.12 shall survive the termination of this Administrative Services
Agreement.
ARTICLE XV
CONFIDENTIALITY; PRIVACY REQUIREMENTS
     15.1 Definitions.
          The following terms, when used in this Administrative Services
Agreement, shall have the meanings set forth in this Section:
     (a) As used herein, “Confidential Information” means any information of
Administrator or Reinsureds that is not generally known to the public and at the
time of disclosure is identified, or would reasonably be understood by the
receiving Party to be proprietary or confidential, whether or not so marked and
whether disclosed in oral, written, visual, electronic or other form, and to
which the receiving Party (or its contractors or agents) has access to in
connection with this Administrative Services

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Agreement. For purposes of clarification, Confidential Information includes: (i)
business plans, strategies, forecasts, projects and analyses; (ii) financial
information and fee structures; (iii) business processes, methods and models;
(iv) employee and supplier information; (v) product and service specifications;
(vi) manufacturing, purchasing, logistics, sales and marketing information;
(vii) methods and training materials; and (viii) the terms and conditions of
this Administrative Services Agreement, and in the case of Reinsureds, also
includes (A) information about or owned by Reinsureds’ customers, insureds, or
claimants; (B) information treated or defined as confidential under the
Reinsureds’ standards; (C) Reinsureds’ data and Personal Information; and
(D) the CAS.
     (b) “Nonpublic Personal Information” is as defined in Title V of the
Financial Modernization Act (the Gramm-Leach-Bliley Act) (15 U.S.C.6801 et seq.)
and related Applicable Law. Nonpublic Personal Information is individually
identifiable financial and medical or health-related information, including
application, policy, or claim information; social security numbers, personal
financial information, health information; medical records; and names or lists
of individuals derived from nonpublic personally identifiable information
becoming known by Administrator through the performance of its obligations under
this Administrative Services Agreement.
     (c) “Personal Information” shall mean any information about an individual,
in whatever form received or created, whether prepared by Administrator,
Reinsureds or otherwise, that contains or otherwise reflects information that
identifies or about which there is a reasonable basis to believe can be used to
identify the individual. Personal Information includes Nonpublic Personal
Information.
     15.2 Obligations.
          The receiving Party will use the same care and discretion to avoid
disclosure, publication or dissemination of any Confidential Information
received from the disclosing Party as the receiving Party uses with its own
similar information that it does not wish to disclose, publish or disseminate
(but in no event less than a reasonable degree of care). The receiving Party
will: (a) use the disclosing Party’s Confidential Information only for the
purpose for which it is disclosed in connection with the performance of its
obligations under this Administrative Services Agreement or the full enjoyment
of its rights hereunder; and (b) not disclose the disclosing Party’s
Confidential Information except to: (i) its employees, agents and contractors,
who have a need to know such Confidential Information in connection with the
performance of its obligations under this Administrative Services Agreement or
the full enjoyment of its rights hereunder who have executed agreements
obligating them to keep the Confidential Information confidential, (ii) its
legal, financial or other professional advisors as reasonably necessary to
provide or benefit from the Administrative Services, (iii) an Affiliate of
Reinsureds in connection with the use or receipt of Administrative Services by
such Affiliate pursuant to this Administrative Services Agreement, or (iv) an
Administrator Affiliate, Subcontractor and/or employees of approved
Subcontractor, in each case, solely in connection with and as required by their
performance of Administrative Services. The receiving Party shall ensure that
any Affiliates, Subcontractors, advisors and any other third parties to whom
Confidential Information

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is disclosed hereunder have signed an agreement with the same or similar
confidentiality obligations as set forth herein. The receiving Party is liable
for any unauthorized disclosure or misappropriation of Confidential Information
by any of its personnel, agents, Subcontractors or advisors. The receiving Party
will promptly report to the disclosing Party any breaches in confidentiality of
which it is aware that may materially affect the disclosing Party and specify
the corrective action taken. Administrator will not commingle the Confidential
Information or Personal Information of Reinsureds with any other personal or
confidential information.

  15.3   Exceptions to Confidential Treatment.

     (a) General. Except with respect to Personal Information of Reinsureds,
this Administrative Services Agreement imposes no obligation upon either Party
with respect to information that: (i) the receiving Party possessed prior to
disclosure by the disclosing Party, without an obligation of confidentiality;
(ii) is or becomes publicly available without breach of this Administrative
Services Agreement by the receiving Party; (iii) is or was independently
developed by the receiving Party without the use of any Confidential Information
of the disclosing Party other than in connection with the Administrative
Services; (iv) is or was disclosed by the disclosing Party without imposing any
obligation of confidentiality on the receiving Party; or (v) is or was received
by the receiving party from a third party that does not have an obligation of
confidentiality to the disclosing party or its Affiliates.
     (b) Required Disclosure. If either party is requested or required to
disclose Confidential Information of the other pursuant to any judicial or
administrative process, then such receiving party shall, to the extent it may
legally do so, promptly notify the other party in writing of such request or
requirement. The party whose Confidential Information is requested or required
to be disclosed shall either: (i) promptly seek protective relief from such
disclosure obligation, or (ii) direct the receiving party to comply with such
request or requirement. The receiving party shall cooperate with efforts of the
disclosing party to maintain the confidentiality of such information or to
resist compulsory disclosure thereof, to the extent it may legally do so, but
any costs incurred by the receiving party shall be reimbursed by the disclosing
party. If, after a reasonable opportunity to seek protective relief, such relief
is not obtained by disclosing party, or if such party fails to obtain such
relief, the receiving party may disclose such portion of such Confidential
Information that the receiving party reasonably believes, on the basis of advice
of such party’s counsel, such party is legally obligated to disclose. Either
Party may disclose Confidential Information to a state insurance regulator or to
a tax authority as required under Applicable Law or as required to support that
Party’s position on any tax return.
     (c) Return or Destruction. At Reinsureds’ request and upon the termination
of this Administrative Services Agreement, Administrator will return or certify
or cause the return or certification of destruction by its Subcontractors of all
of Reinsureds’ Confidential Information in Administrator’s possession or
control. Reinsureds will have

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the same obligations with respect to Administrator’s Confidential Information as
Administrator has with respect to Reinsureds’ Confidential Information under
this section. The Parties shall be entitled to retain an archival copy of any
Confidential Information (excluding Personal Information) to the extent required
to enforce the terms of this Administrative Services Agreement or to comply with
Applicable Law or to support its position on any tax return; provided, that such
Confidential Information will be returned or destroyed in accordance with this
provision upon the expiration of the period specified in the Applicable Law, the
expiration of the applicable statute of limitations and the final resolution of
any pending dispute.

  15.4   Privacy.

          To the extent of any conflict between the requirements of Section 15.2
and this Section 15.4, this Section 15.4 shall govern and control with respect
to Personal Information.
     (a) Acknowledgement. Administrator acknowledges that it may have access to
Personal Information in order to perform its duties under this Administrative
Services Agreement and that Personal Information is protected under Applicable
Law.
     (b) Use and Disclosure. Administrator agrees to use and disclose the
Personal Information only: (i) as required for it to perform its duties and
obligations under this Administrative Services Agreement; (ii) for any lawful
purpose related to this Administrative Services Agreement; and (iii) as
permitted by Applicable Law.
     (c) Privacy Protection Protocol. Administrator shall at all times maintain
a privacy protection protocol, which is sufficient to assure compliance with
nondisclosure, privacy, security and other provisions of this Administrative
Services Agreement that relate to Personal Information and Confidential
Information and with all Applicable Law to the extent of Administrator’s
obligations under Section 2.4.
     (d) Security Precautions. Administrator shall take all reasonable security
precautions to maintain the confidentiality and security of all Personal
Information, take all steps necessary to protect against unauthorized access to
Personal Information, and to protect against any anticipated threats or hazards
to the security of such information. Among other things, Administrator shall:
(i) limit access to Personal Information to those actually performing
Administrative Services for Reinsureds; (ii) limit access of personnel
performing Administrative Services for Reinsureds to that Personal Information
actually required for the performance of Administrative Services for Reinsureds;
(iii) take all reasonable and necessary steps to ensure that Personal
Information is transmitted only in a secure manner including by encryption or
equivalent means; and (iv) take all reasonable and necessary steps to ensure
that Personal Information is minimally disclosed, combined, amended, deleted, or
otherwise altered by Administrator personnel so as to maintain its integrity and
accuracy.

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     (e) Protected Health Information. If Administrator or Administrator
personnel will have access to “protected health information” (as such term is
defined by the HIPAA Privacy Rule), Administrator shall execute the Business
Associate Agreement substantially in the form attached hereto as Exhibit A.
Administrator and Administrator personnel shall comply with the terms of the
Business Associate Agreement in performing the applicable Administrative
Services. Administrator shall be responsible under this Administrative Services
Agreement for any failure of Administrator or Administrator personnel to comply
with the terms of the Business Associate Agreement or the Applicable Laws
referenced in the Business Associate Agreement applicable to Administrator in
the same manner and to the same extent it would be responsible for any failure
to comply with its other obligations under this Administrative Services
Agreement.
     (f) Privacy Breach. If Administrator breaches the provisions of this
Section 15.4, Administrator agrees to immediately notify Reinsureds and
cooperate with Reinsureds in mitigating any potential damages by, at
Administrator’s expense:
          (i) immediately endeavoring to recover all Personal Information from
the unauthorized recipient, if known, and instructing the unauthorized recipient
to cease and desist from any use of the improperly disclosed Personal
Information;
          (ii) at the request of Reinsureds, returning within ten (10) Business
Days all Personal Information provided by Reinsureds to Administrator pursuant
to this Section 15.4;
          (iii) at the request of Reinsureds, deleting from Administrator
electronic systems and physical records within ten (10) Business Days all
Personal Information provided by Reinsureds and providing certification that
such deletion has occurred;
          (iv) assisting and cooperating with any demand forwarded by Reinsureds
to Administrator as a result of a court order imposed on Reinsureds or from a
Governmental Authority having jurisdiction over Reinsureds; and
          (v) assisting with taking any other remedial steps reasonably required
by Reinsureds.
     (g) No Limitation. The inclusion of this Section 15.4 relating primarily to
Personal Information shall not, in any way, limit the obligations of
Administrator under other sections of this Administrative Services Agreement
that relate to the protection of Confidential Information generally.

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  15.5   Regulatory and Legal Communication.

     To the extent Administrator may legally do so:
     (a) Government Requests. Administrator agrees that, should any Governmental
Authority request Administrator to submit any information or provide any
communication related to the Administrative Services provided pursuant to this
Administrative Services Agreement, Administrator will notify Reinsureds
immediately upon receipt of such request. In no case shall said notice be
received by Reinsureds later than five (5) calendar days after receipt by
Administrator. Administrator must contact Reinsureds prior to any response
Administrator would make to any Governmental Authority that involves Reinsureds,
Reinsureds’ clients, or any Reinsureds relationship with such Governmental
Authority. This provision does not apply to reviews by tax authorities or to
state insurance departments in connection with financial examinations.
     (b) Notice. Without limiting anything in subsection (a) above,
Administrator shall provide Reinsureds with prompt notice of any Governmental
Authority review, audit or inspection of Administrator’s facilities, processes,
or products under the FCPA or any anti-bribery Applicable Law that relates to
the Administrative Services furnished to Reinsureds under this Administrative
Services Agreement. Even if Reinsureds are not otherwise identified as involved
in the review, audit, or inspection, Administrator shall provide Reinsureds with
the summary results of any such review, audit or inspection. If not legally
prohibited, Administrator shall provide Reinsureds a reasonable opportunity to
provide assistance to Administrator in responding to any such review, audit or
inspection.
     (c) Security Incident. In the event of an incident that does, or is
reasonably likely to, result in an unauthorized disclosure of, or access to,
Personal Information (a “Security Incident”), Administrator shall immediately
notify Reinsureds of the Security Incident, and Administrator shall promptly
(and in any event as soon as reasonably practical) (i) perform a root cause
analysis and prepare a corrective action plan, (ii) provide Reinsureds with
written reports and detailed information regarding any such Security Incident,
including how and when such Security Incident occurred and what actions
Administrator is taking to remedy such Security Incident, (iii) cooperate in the
investigation of the Security Incident at Reinsureds’ request, (iv) reimburse
Reinsureds for their costs of notifying any individuals and/or authorities of
the Security Incident if Reinsureds, in their good faith judgment, consider
notification necessary, (v) remediate such Security Incident or potential
Security Incident and take commercially reasonable actions to prevent its
recurrence; provided, however, to the extent such Security Incident or potential
Security Incident is not caused by Administrator’s or its Subcontractors’
failure to comply with this Administrative Services Agreement, Reinsureds shall
reimburse Administrator for Administrator’s reasonable expenses incurred in such
remediation, and (vi) promptly restore any lost Reinsureds data to the last
available back-up.

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     (d) Material Breach. A breach of this Article XV may be a material breach
of this Administrative Services Agreement. Each Party acknowledges that monetary
damages may not be a sufficient remedy for unauthorized disclosure of
Confidential Information or Personal Information and that each Party shall be
entitled, in addition to any other rights or remedies available at law or in
equity, to seek such injunctive or equitable relief as may be deemed proper by a
court of competent jurisdiction.
ARTICLE XVI
FORCE MAJEURE

  16.1   Force Majeure Event.

          Except for any failure of either Party to comply with the provisions
of the Disaster Recovery Plans, neither Party shall have any liability or
responsibility, and shall be excused from performance for, any interruption,
delay, impairment or other failure to fulfill any obligation under this
Administrative Services Agreement to the extent and so long as the fulfillment
of such obligation is interrupted, delayed, impaired, prevented or frustrated as
a result of or by natural disaster, hurricane, earthquake, floods, fire,
catastrophic weather conditions, diseases or other elements of nature or acts of
God, acts of war (declared or undeclared), insurrection, riot, civil disturbance
or disorders, rebellion, sabotage, government regulations or directives,
embargoes, terrorist acts, or explosions, strikes, failure of or damage to
public utility (“Force Majeure Event”); provided that such Party uses best
efforts promptly to overcome or mitigate the cause of such delay or failure to
perform, including the implementation of the Disaster Recovery Plans. Any Party
so delayed in its performance shall immediately notify the other thereof by
telephone and confirm promptly thereafter in writing, describing in reasonable
detail the circumstances causing such delay, and shall resume the performance of
its obligations as promptly as reasonably practicable after the Force Majeure
Event has ceased to exist.
ARTICLE XVII
INDEMNIFICATION

  17.1   Indemnification Obligation of Administrator.

          Administrator agrees to indemnify and hold harmless Reinsureds and
each of their directors, officers, employees, agents or Affiliates (and the
directors, officers, employees and agents of such Affiliates) from any and all
losses, liabilities, costs, claims, demands, compensatory, extra contractual
and/or punitive damages, fines, penalties and expenses (including reasonable
attorneys’ fees and expenses) (collectively, “Reinsureds Losses”) resulting in
damages not included within the definition of Ultimate Net Loss arising out of
or caused by: (i) any actual or alleged fraud, theft or embezzlement by
officers, employees or agents of Administrator or its Subcontractors during the
term of this Administrative Services Agreement; (ii) the failure, either
intentional or unintentional, of Administrator or its

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Subcontractors to properly perform the services or take the actions required by
this Administrative Services Agreement, including, without limitation, the
failure to properly process, evaluate and pay disbursement requests in
accordance with the terms of this Administrative Services Agreement; (iii) any
other act of negligence or willful misconduct committed by officers, agents or
employees of Administrator or its Subcontractors during the term of this
Administrative Services Agreement; or (iv) any failure of Administrator or its
Subcontractors to comply with Applicable Laws during the term of this
Administrative Services Agreement. Nothing herein shall be construed to require
Administrator to indemnify Reinsureds with respect to any act or omission where
the decision to take or omit such action was with the agreement of Reinsureds.

  17.2   Indemnification Obligation of Reinsureds.

          Reinsureds agree to indemnify and hold harmless Administrator and any
of its directors, officers, employees, agents or Affiliates (and the directors,
officers, employees and agents of such Affiliates) from any and all losses,
liabilities, costs, claims, demands, compensatory, extra contractual and/or
punitive damages, fines, penalties and expenses (including reasonable attorneys’
fees and expenses) (collectively, “Administrator Losses”) arising out of or
caused by: (i) fraud, theft or embezzlement by officers, employees or agents of
Reinsureds during the term of this Administrative Services Agreement; (ii) any
other act of negligence or willful misconduct committed by officers, agents or
employees of Reinsureds during the term of this Administrative Services
Agreement; or (iii) any failure of Reinsureds to comply with Applicable Laws
during the term of this Administrative Services Agreement other than any failure
on the part of Reinsureds or Administrator caused by the action or inaction of
Administrator, including when acting in the name or on behalf of Reinsureds,
whether or not in compliance with the terms of this Administrative Services
Agreement. Nothing herein shall be construed to require Reinsureds to indemnify
Administrator with respect to any act or omission where the decision to take or
omit such action was with the agreement of Administrator.

  17.3   Notice of Indemnification Request.

          In the event that either Party asserts a claim for indemnification
hereunder, such Party seeking indemnification (the “Indemnified Party”) shall
give written notice to the other Party (the “Indemnifying Party”) specifying the
facts constituting the basis for, and the amount (if known) of, the claim
asserted within one year of the date the claim is asserted against or should be
known by the Indemnified Party.

  17.4   Notice of an Asserted Liability.

          If an Indemnified Party asserts, or may in the future seek to assert,
a claim for indemnification hereunder because of a claim or demand made, or an
action, proceeding or investigation instituted, by any person not a party to
this Administrative Services Agreement (a “Third Party Claimant”) that may
result in an Administrator Loss with respect to which Administrator is entitled
to indemnification pursuant to Section 17.2 hereof or Reinsureds Loss with
respect to which Reinsureds are entitled to indemnification pursuant to Section
17.1 hereof

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(an “Asserted Liability”), the Indemnified Party shall so notify the
Indemnifying Party as promptly as practicable, but in no event later than ten
(10) Business Days after such Asserted Liability is actually known to the
Indemnified Party. Failure to deliver notice with respect to an Asserted
Liability in a timely manner shall not be deemed a waiver of the Indemnified
Party’s right to indemnification for Losses in connection with such Asserted
Liability but the amount of reimbursement to which the Indemnified Party is
entitled shall be reduced by the amount, if any, by which the Indemnified
Party’s Losses would have been less had such notice been timely delivered.

  17.5   Procedures.

     (a) The Indemnifying Party shall have the right, upon written notice to the
Indemnified Party, to investigate, contest, defend or settle the Asserted
Liability; provided that the Indemnified Party may, at its option and at its own
expense, participate in the investigation, contesting, defense or settlement of
any such Asserted Liability through representatives and counsel of its own
choosing. The failure of the Indemnifying Party to respond in writing to proper
notice of an Asserted Liability within ten (10) calendar days after receipt
thereof shall be deemed an election not to defend the same. Unless and until the
Indemnifying Party elects to defend the Asserted Liability, the Indemnified
Party shall have the right, at its option and at the Indemnifying Party’s
expense, to do so in such manner as it deems appropriate, including, but not
limited to, settling such Asserted Liability (after giving notice of the
settlement to the Indemnifying Party) on such terms as the Indemnified Party
deems appropriate.
     (b) Except as provided in the immediately preceding sentence, the
Indemnified Party shall not settle or compromise any Asserted Liability for
which it seeks indemnification hereunder without the prior written consent of
the Indemnifying Party (which shall not be unreasonably withheld) during the ten
(10) calendar day period specified above.
     (c) The Indemnifying Party shall be entitled to participate in (but not to
control) the defense of any Asserted Liability which it has elected, or is
deemed to have elected, not to defend, with its own counsel and at its own
expense.
     (d) Except as provided in the first sentence of paragraph (a) of this
Section 17.5, the Indemnifying Party shall bear all reasonable costs of
defending any Asserted Liability and shall indemnify and hold the Indemnified
Party harmless against and from all costs, fees and expenses incurred in
connection with defending such Asserted Liability.
     (e) Administrator and Reinsureds shall make mutually available to each
other all relevant information in their possession relating to any Asserted
Liability (except to the extent that such action would result in a loss of
attorney-client privilege) and shall cooperate with each other in the defense
thereof.

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  17.6   Survival.

          The provisions of this Article XVII shall survive the termination of
this Administrative Services Agreement for a period of one year.
ARTICLE XVIII
DISPUTE RESOLUTION; ARBITRATION

  18.1   Dispute Resolution; Arbitration.

          If Reinsureds and Administrator are unable to resolve any dispute
arising from this Administrative Services Agreement, the matter will be handled
in accordance with the dispute resolution and arbitration procedures set forth
in Article X and Article XI of the Master Transaction Agreement.
ARTICLE XIX
MISCELLANEOUS

  19.1   Notices.

          Any notice, request, demand, waiver, consent, approval or other
communication required or permitted to be given by any Party hereunder shall be
in writing and shall be delivered personally, sent by facsimile transmission,
sent by registered or certified mail, postage prepaid, or sent by a standard
overnight courier of national reputation with written confirmation of delivery.
Any such notice shall be deemed given when so delivered personally, or if sent
by facsimile transmission, on the date received (provided that any notice
received after 5:00 p.m. (addressee’s local time) shall be deemed given at 9:00
a.m. (addressee’s local time) on the next Business Day), or if mailed, on the
date shown on the receipt therefor, or if sent by overnight courier, on the date
shown on the written confirmation of delivery. Such notices shall be given to
the following address:
To CNA Parties:
CNA Financial Corporation
333 S. Wabash Avenue
Chicago, IL 60604
Attention: Jonathan D. Kantor
Executive Vice President,
General Counsel and Secretary
Fax: (312) 817-0511

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With a copy to:
CNA Financial Corporation
333 S. Wabash Avenue
Chicago, IL 60604
Attention: Michael P. Warnick
Senior Vice President and Deputy General Counsel
Fax: (312) 755-2479
To Administrator:
National Indemnity Company
100 First Stamford Place
Stamford, CT 06902
Attention: General Counsel
Fax: (203) 363-5221
With a copy to:
National Indemnity Company
3024 Harney Street
Omaha, NE 68131
Attention: Treasurer
Fax: (402) 916-3030
Any Party may change its notice provisions on fifteen (15) calendar days’
advance notice in writing to the other Parties.

  19.2   Entire Agreement.

          This Administrative Services Agreement (including the exhibits and
schedules hereto), the Master Transaction Agreement and the other Ancillary
Agreements and any other documents delivered pursuant hereto and thereto,
constitute the entire agreement among the Parties and their respective
Affiliates with respect to the subject matter hereof and supersede all prior
negotiations, discussions, writings, agreements and understandings, oral and
written, among the Parties with respect to the subject matter hereof and
thereof.

  19.3   Waiver and Amendment.

          This Administrative Services Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only by an
instrument in writing signed by the Parties, or, in the case of a waiver, by the
Party waiving compliance. No delay on the part of any Party in exercising any
right, power or privilege hereunder shall operate as a

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waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other such right, power
or privilege. No waiver of any breach of this Administrative Services Agreement
shall be held to constitute a waiver of any other or subsequent breach.

  19.4   Successors and Assigns.

          The rights and obligations of the Parties under this Administrative
Services Agreement shall not be subject to assignment without the prior written
consent of the other Parties, and any attempted assignment without the prior
written consent of the other Parties shall be invalid ab initio. The terms of
this Administrative Services Agreement shall be binding upon and inure to the
benefit of and be enforceable by and against the successors and permitted
assigns of the Parties.

  19.5   Headings.

          The headings of this Administrative Services Agreement are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.

  19.6   Construction; Interpretation.

          Reinsureds and Administrator have participated jointly in the
negotiation and drafting of this Administrative Services Agreement. In the event
of an ambiguity or question of intent or interpretation arises, this
Administrative Services Agreement shall be construed as if drafted jointly by
the Parties and no presumption or burden of proof shall arise favoring or
disfavoring either Party by virtue of the authorship of any of the provisions of
this Administrative Services Agreement. When a reference is made to an Article,
Section, Schedule or Exhibit such reference shall be to an Article, Section,
Schedule or Exhibit of or to this Administrative Services Agreement unless
otherwise indicated. Whenever the words “include,” “includes” or “including” are
used in this Administrative Services Agreement, they shall be deemed to be
followed by the words “without limitation.” The word “Agreement,” means this
Administrative Services Agreement as amended or supplemented, together with all
Exhibits and Schedules attached hereto or incorporated by reference, and the
words “hereof,” “herein,” “hereto,” “hereunder” and other words of similar
import shall refer to this Administrative Services Agreement in its entirety and
not to any particular Article, Section or provision of this Administrative
Services Agreement. The references to “$” shall be to United States dollars.
Reference to any Applicable Law means such Applicable Law as amended, modified,
codified, replaced or reenacted, and all rules and regulations promulgated
thereunder. References to a Person are also to its successors and permitted
assigns.

  19.7   Governing Law and Jurisdiction.

          This Administrative Services Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
such state’s principles of

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conflict of laws that could compel the application of the laws of another
jurisdiction. SUBJECT TO ARTICLE XVIII, ANY SUIT, ACTION OR PROCEEDING TO COMPEL
ARBITRATION OR FOR TEMPORARY INJUNCTIVE RELIEF IN AID OF ARBITRATION OR TO
PRESERVE THE STATUS QUO PENDING THE APPOINTMENT OF THE ARBITRATOR(S) SHALL BE
BROUGHT BY THE PARTIES SOLELY IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, PROVIDED THAT IF SAID COURT DETERMINES THAT IT
DOES NOT HAVE SUBJECT MATTER JURISDICTION THEN SAID ACTIONS MAY BE BROUGHT IN
THE SUPREME COURT OF THE STATE OF NEW YORK FOR NEW YORK COUNTY; AND EACH
REINSUREDS AND ADMINISTRATOR EACH HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF SUCH COURTS FOR SUCH PURPOSE AND ANY APPELLATE COURTS THEREOF,
EXCEPT THAT ANY FINAL ARBITRAL AWARD RENDERED IN ACCORDANCE WITH ARTICLE XVIII
MAY BE ENTERED AND ENFORCED IN ANY COURT HAVING JURISDICTION OVER ANY PARTY OR
ANY OF ITS ASSETS.

  19.8   No Third Party Beneficiaries.

          Except as otherwise expressly set forth in any provision of this
Administrative Services Agreement, nothing in this Administrative Services
Agreement is intended or shall be construed to give any Person, other than the
Parties, any legal or equitable right, remedy or claim under or in respect of
this Administrative Services Agreement or any provision contained herein.

  19.9   Counterparts.

          This Administrative Services Agreement may be executed by the Parties
in separate counterparts; each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument binding upon all of the Parties notwithstanding the fact that
all Parties are not signatory to the original or the same counterpart. Each
counterpart may consist of a number of copies hereof each signed by less than
all, but together signed by all of the Parties. Each counterpart may be
delivered by facsimile transmission, which transmission shall be deemed delivery
of an originally executed document.

  19.10   Severability.

          Any term or provision of this Administrative Services Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Administrative Services Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Administrative Services Agreement in any
other jurisdiction, so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any Party. If any provision of this

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Administrative Services Agreement is so broad as to be unenforceable, that
provision shall be interpreted to be only so broad as is enforceable. In the
event of such invalidity or unenforceability of any term or provision of this
Administrative Services Agreement, such term or provision shall be reformed and
the Parties shall use their commercially reasonable efforts to reform such terms
or provisions to carry out the commercial intent of the Parties as reflected
herein, while curing the circumstance giving rise to the invalidity or
unenforceability of such term or provision.

  19.11   Specific Performance.

          Each of the Parties acknowledges and agrees that the other Party would
be irreparably damaged in the event that any of the provisions of this
Administrative Services Agreement were not performed or complied with in
accordance with their specific terms or were otherwise breached, violated or
unfulfilled. Accordingly, each of the Parties agrees that the other Party shall
be entitled to an injunction or injunctions to prevent noncompliance with, or
breaches or violations of, the provisions of this Administrative Services
Agreement by the other Party and to enforce specifically this Administrative
Services Agreement and the terms and provisions hereof in any action instituted
in accordance with Section 19.7, in addition to any other remedy to which such
Party may be entitled, at law or in equity. In the event that any action is
brought in equity to enforce the provisions of this Administrative Services
Agreement, no Party will allege, and each Party hereby waives the defense or
counterclaim, that there is an adequate remedy at law. The Parties further agree
that (i) by seeking the remedies provided for in this Section 19.11, a Party
shall not in any respect waive its right to seek any other form of relief that
may be available to a Party under this Administrative Services Agreement,
including monetary damages in the event that this Administrative Services
Agreement has been terminated or in the event that the remedies provided for in
this Section 19.11 are not available or otherwise are not granted and
(ii) nothing contained in this Section 19.11 shall require any Party to
institute any action (or limit any Party’s right to institute any action for)
specific performance under this Section 19.11 before exercising any termination
right under Article XIV nor shall the commencement of any action pursuant to
this Section 19.11 or anything contained in this Section 19.11 restrict or limit
any Party’s right to terminate this Administrative Services Agreement in
accordance with the terms of Article XIV or pursue any other remedies under this
Administrative Services Agreement that may be available then or thereafter.

  19.12   Waiver of Jury Trial.

          EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS ADMINISTRATIVE SERVICES AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
ADMINISTRATIVE SERVICES AGREEMENT. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTIES HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTIES WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER,

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AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS ADMINISTRATIVE
SERVICES AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS ADMINISTRATIVE
SERVICES AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 19.12.

  19.13   Incontestability.

          In consideration of the mutual covenants and agreements contained
herein, each Party does hereby agree that this Administrative Services
Agreement, and each and every provision hereof, is and shall be enforceable by
and between them according to its terms, and each Party does hereby agree that
it shall not contest in any respect the validity or enforceability hereof.

  19.14   Set-Off.

          Any debts or credits, matured or unmatured, liquidated or
unliquidated, regardless of when they arose or were incurred, in favor of or
against either of the Reinsureds or Administrator with respect to this
Administrative Services Agreement are deemed mutual debts or credits, as the
case may be, and shall be set off, and only the net balance shall be allowed or
paid.

  19.15   Currency.

          All financial data required to be provided pursuant to the terms of
this Administrative Services Agreement shall be expressed in United States
dollars. All payments and all settlements of account between the Parties shall
be in United States currency unless otherwise agreed by the Parties.
(The remainder of this page has been intentionally left blank.)

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          IN WITNESS WHEREOF, this Administrative Services Agreement has been
duly executed by a duly authorized officer of each Party hereto as of the date
first above written.

            CONTINENTAL CASUALTY COMPANY
      By:   /s/ Lawrence J. Boysen         Name:   Lawrence J. Boysen       
Title:   Senior Vice President and Corporate Controller        THE CONTINENTAL
INSURANCE COMPANY
      By:   /s/ Lawrence J. Boysen         Name:   Lawrence J. Boysen       
Title:   Senior Vice President and Corporate Controller        CONTINENTAL
REINSURANCE
CORPORATION INTERNATIONAL, LTD.
      By:   /s/ Lawrence J. Boysen         Name:   Lawrence J. Boysen       
Title:   Chairman of the Board and President        CNA INSURANCE COMPANY
LIMITED
      By:   /s/ Lawrence J. Boysen         Name:   Lawrence J. Boysen       
Title:   Authorized Representative        NATIONAL INDEMNITY COMPANY
      By:   /s/ Brian Snover         Name:   Brian Snover        Title:   Vice
President   

 

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EXHIBIT A
[Form of Business Associate Agreement]
BUSINESS ASSOCIATE AGREEMENT
           This Business Associate Agreement (the “Business Associate
Agreement”), dated as of ___, 2010 (the “Effective Date”), is made and entered
into by and among Continental Casualty Company, an Illinois property and
casualty insurance company (“CCC”), The Continental Insurance Company, a
Pennsylvania property and casualty insurance company (“CIC”), Continental
Reinsurance Corporation International, Ltd., a Bermuda long-term insurance
company (“CRCI”), and CNA Insurance Company Limited, a United Kingdom property
and casualty insurance company (“CICL” and together with CCC, CIC and CRCI,
“Reinsureds”), and National Indemnity Company, a Nebraska property and casualty
company (“Administrator”).
           WHEREAS, pursuant to a Master Transaction Agreement (the “Master
Transaction Agreement”), dated as of July 14, 2010, among Reinsureds and
Administrator, Reinsureds and Administrator have agreed to enter into a loss
portfolio reinsurance transaction, pursuant to which Reinsureds will cede all
liabilities related to asbestos and pollution claims under the Business Covered
to Administrator, and pursuant to which Administrator will indemnify Reinsureds
for such liabilities up to an aggregate limit of four billion dollars
($4,000,000,000), net of any Third Party Reinsurance Recoverables and Other
Recoveries;
           WHEREAS, pursuant to a Loss Portfolio Transfer Reinsurance Agreement
among Reinsureds and Administrator dated as of August 31, 2010, and referenced
in the Master Transaction Agreement as the “LPT Reinsurance Agreement,”
Administrator shall indemnify Reinsureds for 100% of the Ultimate Net Loss,
subject to the LPT Limit;
           WHEREAS, pursuant to an Administrative Services Agreement (the
“Administrative Services Agreement,” dated as of August 31, 2010, Administrator
shall perform certain administrative functions on behalf of Reinsureds with
respect to the Reinsured Contracts and Third Party Reinsurance Agreements as
they relate to the Business Covered; and
          WHEREAS, Reinsureds and Administrator are entering into this Business
Associate Agreement to comply with the Health Insurance Portability and
Accountability Act of 1996 (“HIPAA”) Privacy Rule and Security Standards as
those terms are defined in this Business Associate Agreement.

 

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          NOW, THEREFORE, for and in consideration of these premises and the
promises and the mutual agreements hereinafter set forth and set forth in the
Master Transaction Agreement, the LPT Reinsurance Agreement and the
Administrative Services Agreement, Reinsureds and Administrator (individually, a
“Party” and collectively, the “Parties”) agree as follows:
I. DEFINITIONS
          All capitalized terms not otherwise defined in this Business Associate
Agreement shall have the meaning given them under the Master Transaction
Agreement, LPT Reinsurance Agreement, or Administrative Services Agreement, as
applicable. The following terms used in this Business Associate Agreement shall
have the same meaning as those terms in the HIPAA Privacy Rule and Security
Standards, currently defined, in relevant part:
“Protected Health Information” shall mean Individually Identifiable Health
Information transmitted or maintained in any form or medium that Administrator
creates or receives from or on behalf of Reinsureds in the course of fulfilling
its obligations under this Business Associate Agreement. “Protected Health
Information” shall not include (i) education records covered by the Family
Educational Rights and Privacy Act, as amended, 20 U.S.C. §1232g, (ii) records
described in 20 U.S.C. §1232g(a)(4)(B)(iv), and (iii) employment records held by
Reinsureds in their role as employers.
“Designated Record Set” shall mean a group of records maintained by or for
Reinsureds that is (i) the medical records and billing records about individuals
maintained by or for Reinsureds, (ii) the enrollment, payment, claims
adjudication, and case or medical management record systems maintained by or for
a health plan; or (iii) used, in whole or in part, by or for Reinsureds to make
decisions about individuals. As used herein, the term “Record” means any item,
collection, or grouping of information that includes Protected Health
Information and is maintained, collected, used, or disseminated by or for
Reinsureds.
“Electronic Media” shall mean (i) electronic storage media including memory
devices in computers (hard drives) and any removable/transportable digital
memory medium, such as magnetic tape or disk, optical disk, or digital memory
card; or (ii) transmission media used to exchange information already in
electronic storage media. Transmission media include, for example, the internet
(wide-open), extranet (using internet technology to link a business with
information accessible only to collaborating parties), leased lines, dial-up
lines, private networks, and the physical movement of removable/transportable
electronic storage media. Certain transmissions, including paper, via facsimile,
and of voice, via telephone, are not considered to be transmissions via
electronic media, because the information being exchanged did not exist in
electronic form before transmission.
“Electronic Protected Health Information” shall mean Protected Health
Information that is transmitted by or maintained in Electronic Media.

 

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“Individually Identifiable Health Information” shall mean information that is a
subset of health information, including demographic information collected from
an individual, and

  (i)   is created or received by a health care provider, health plan, employer,
or health care clearinghouse; and     (ii)   relates to the past, present, or
future physical or mental health or condition of an individual; the provision of
health care to an individual; or the past, present or future payment for the
provision of health care to an individual; and (a) identifies the individual, or
(b) with respect to which there is a reasonable basis to believe the information
can be used to identify the individual; and     (iii)   relates to identifiable
non-health information including but not limited to an individual’s address,
phone number and/or Social Security number.

“Privacy Rule” shall mean the Standards for Privacy of Individually Identifiable
Health Information at 45 CFR Part 160 and Part 164, Subparts A and E.
“Secretary” shall mean the Secretary of the Department of Health and Human
Services.
“Security Incident” means the attempted or successful unauthorized access, use,
disclosure, modification, or destruction of information or interference with
system operations in an information system.
“Security Standards” shall mean the HIPAA Security Standards, 45 C.F.R. Parts
160 and 164
II. OBLIGATIONS OF ADMINISTRATOR
Section 1. Use and Disclosure of Protected Health Information.
Administrator may use and disclose Protected Health Information only to carry
out the obligations of Administrator set forth in this Business Associate
Agreement, the Administrative Services Agreement or as required by law, subject
to the provisions set forth in this Business Associate Agreement. Administrator
shall neither use nor disclose Protected Health Information for the purpose of
creating de-identified information that will be used for any purpose other than
as directed by Reinsureds to carry out the obligations of Administrator set
forth in this Business Associate Agreement or the Administrative Services
Agreement, or as required by law.

 

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Section 2. Safeguards Against Misuse of Information.
Administrator agrees that it will implement appropriate safeguards to prevent
the use or disclosure of Protected Health Information in any manner other than
pursuant to the terms and conditions of this Business Associate Agreement.
Administrator shall implement administrative, physical and technical safeguards
that reasonably and appropriately protect the confidentiality, integrity, and
availability of the Electronic Protected Health Information that it creates,
receives, maintains, or transmits on behalf of Reinsureds, as required by the
Security Standards.
Section 3. Reporting of Uses and Disclosures of Protected Health Information and
Security Incidents.
Upon becoming aware of a use or disclosure of Protected Health Information in
violation of this Business Associate Agreement, Administrator shall promptly
report such use or disclosure to Reinsureds. Administrator shall promptly report
to Reinsureds any Security Incident of which it becomes aware.
Section 4. Agreements with Third Parties.
Administrator shall ensure that any agent or subcontractor of Administrator to
whom Administrator provides Protected Health Information that is received from
Reinsureds, or created or received by Administrator on behalf of Reinsureds,
agrees to be bound by the same restrictions and conditions that apply to
Administrator pursuant to this Business Associate Agreement with respect to such
Protected Health Information. Administrator warrants and represents that in the
event of a disclosure of Protected Health Information to any third party, the
information disclosed shall be no more than the minimum necessary for the
intended purpose. Administrator shall ensure that any agent or subcontractor of
Administrator to whom Administrator provides Electronic Protected Health
Information agrees to implement reasonable and appropriate safeguards to protect
such information.
Section 5. Access to Information.
In the event Administrator maintains Protected Health Information in a
Designated Record Set, Administrator shall, within thirty (30) days of receipt
of a request from Reinsureds, provide to Reinsureds Protected Health Information
in Administrator’s possession that is required for Reinsureds to respond to an
individual’s request for access to Protected Health Information made pursuant to
45 C.F.R. § 164.524 or other applicable law. In the event any individual
requests access to Protected Health Information directly from Administrator,
whether or not Administrator is in possession of Protected Health Information,
Administrator may not approve or deny access to the Protected Health Information
requested. Rather, Administrator shall, within five (5) Business Days, forward
such request to Reinsureds.

 

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Section 6. Availability of Protected Health Information for Amendment.
In the event Administrator maintains Protected Health Information in a
Designated Record Set, Administrator shall, within thirty (30) days of receipt
of a request from Reinsureds, provide to Reinsureds Protected Health Information
in Administrator’s possession that is required for Reinsureds to respond to an
individual’s request to amend Protected Health Information made pursuant to 45
C.F.R. § 164.526 or other applicable law. If the request is approved,
Administrator shall incorporate any such amendments to the Protected Health
Information as required by 45 C.F.R. §164.526 or other applicable law. In the
event that the request for the amendment of Protected Health Information is made
directly to the Administrator, whether or not Administrator is in possession of
Protected Health Information, Administrator may not approve or deny the
requested amendment. Rather, Administrator shall, within five (5) Business Days
forward such request to Reinsureds.
Section 7. Accounting of Disclosures.
Administrator agrees to document such disclosures of Protected Health
Information and information related to such disclosures as would be required for
Reinsureds to respond to a request by an individual for an accounting of
disclosures of Protected Health Information in accordance with 45 CFR § 164.528
or other applicable law. Administrator shall, within sixty (60) Business Days of
receipt of a request from Reinsureds, provide to Reinsureds such information as
is in Administrator’s possession and is required for Reinsureds to respond to a
request for an accounting made in accordance with 45 C.F.R. 164.528 or other
applicable law. In the event the request for an accounting is delivered directly
to Administrator, Administrator shall, within five (5) Business Days, forward
such request to Reinsureds. It shall be Reinsureds’ responsibility to prepare
and deliver any such accounting requested.
Section 8. Availability of Books and Records.
Administrator hereby agrees to make its applicable internal practices, books and
records, including policies and procedure, available to the Secretary for
purposes of determining Reinsureds’ and Administrator’s compliance with the
Privacy Rule and Security Standards. The practices, books and records subject to
this Section are those practices, books and records that relate to the use and
disclosure of Protected Health Information that is created by Administrator on
behalf of Reinsureds, received by Administrator from Reinsureds, or received by
Administrator from a third party on behalf of Reinsureds.
III. Term and Termination
Section 1. Term.
The Term of this Business Associate Agreement shall be effective as of the
Effective Date, and shall terminate when all of the Protected Health Information
provided by Reinsureds to Administrator, or created or received by Administrator
on behalf of Reinsureds, is destroyed or returned to Reinsureds, or, if it is
infeasible to return or destroy Protected Health Information,

 

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protections are extended to such information, in accordance with the termination
provisions in this Article III.
Section 2. Effect of Termination.
(a) Except as provided in paragraph (b) of this Section, upon termination of
this Business Associate Agreement, for any reason, Administrator shall return or
destroy all Protected Health Information received from Reinsureds, or created or
received by Administrator on behalf of Reinsureds. This provision shall apply to
Protected Health Information that is in the possession of subcontractors or
agents of Administrator. Administrator shall retain no copies of the Protected
Health Information.
(b) In the event that Administrator determines that returning or destroying the
Protected Health Information is infeasible, Administrator shall provide to
Reinsureds notification of the conditions that make return or destruction
infeasible. Upon Reinsureds’ determination that return or destruction of
Protected Health Information is infeasible, Administrator shall extend the
protections of this Business Associate Agreement to such Protected Health
Information and limit further uses and disclosures of such Protected Health
Information to those purposes that make the return or destruction infeasible,
for so long as Administrator maintains such Protected Health Information.
IV. MISCELLANEOUS
Section 1. Limitation of Liability. No exculpation or limitation on
Administrator’s liability set forth in the Administrative Services Agreement
shall apply to damages suffered by Reinsureds as a result of Administrator’s
breach of this Business Associate Agreement.
Section 2. Indemnification. Each Party acknowledges and agrees that the
provisions of Article IX of the Master Transaction Agreement apply to the
indemnification rights and obligations of each Party pursuant to this Agreement.
Section 3. Regulatory References. A reference in this Business Associate
Agreement to a section in the HIPAA Privacy Rule or Security Standards means the
section as in effect or as amended.
Section 4. Amendment. In the event that state or federal law or regulation, or
an arbitration or judicial interpretation of same, or any regulatory or
enforcement action should explicitly or otherwise require that this Business
Associate Agreement be changed, altered or modified, then the Reinsureds shall
notify Administrator and provide such required amendment, and the Reinsureds and
Administrator shall continue to perform services under this Business Associate
Agreement as modified.

 

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Section 5. Survival. The respective rights and obligations of Administrator
under Section III(2)(b) (Effect of Termination), Section IV(1) (Limitation of
Liability), Section IV(2) (Indemnification), Section IV(3) (Regulatory
References) and Section IV(5) (Survival) of this Business Associate Agreement
shall survive the termination of this Business Associate Agreement.
V. EFFECT OF BUSINESS ASSOCIATE AGREEMENT
To the extent that this Business Associate Agreement conflicts with the terms of
the Administrative Services Agreement or any other agreement between Reinsureds
and Administrator relating to Protected Health Information, the terms of this
Business Associate Agreement shall take precedence.
[Remainder of page left intentionally blank]

 

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          IN WITNESS WHEREOF, this Business Associate Agreement has been duly
executed by a duly authorized officer of each Party hereto as of the date first
above written.

            CONTINENTAL CASUALTY COMPANY
      By:           Name:           Title:        

            THE CONTINENTAL INSURANCE COMPANY
      By:           Name:           Title:        

            CONTINENTAL REINSURANCE
CORPORATION INTERNATIONAL, LTD.
      By:           Name:           Title:        

            CNA INSURANCE COMPANY LIMITED
      By:           Name:           Title:        

            NATIONAL INDEMNITY COMPANY
      By:           Name:           Title: