fnhc93018ex104






                                                                                                                   Reinstatement Premium Protection                                   Reinsurance Contract                                  Effective:  July 1, 2018                                  FedNat Insurance Company                                      Sunrise, Florida                                           and                            Monarch National Insurance Company                                      Sunrise, Florida                                                                          _______________________    *****Portions of this document omitted pursuant to an application for an order for confidential  treatment pursuant to Rule 24b-2 under the Exchange Act. Confidential portions of this  document have been filed separately with the Securities and Exchange Commission.      18\F7V1055        





 






                                                                                                                          Table of Contents        Article                                                                         Page        1       Coverage                                                               1       2       Commencement and Termination                                           1       3       Concurrency of Conditions                                              2   4 Premium                                                                          3       5       Sanctions                                                              3       6       Loss Notices and Settlements                                           4       7       Late Payments                                                          4       8       Offset                                                                 5       9       Severability of Interests and Obligations                              5      10       Access to Records                                                      6      11       Errors and Omissions (BRMA 14F)                                        6      12       Currency (BRMA 12A)                                                    6      13       Taxes (BRMA 50B)                                                       7      14       Federal Excise Tax (BRMA 17D)                                          7      15       Foreign Account Tax Compliance Act                                     7      16       Reserves                                                               7      17       Insolvency                                                             9      18       Arbitration                                                            9      19       Service of Suit (BRMA 49C)                                            10      20       Severability (BRMA 72E)                                               11      21       Governing Law (BRMA 71B)                                              11      22       Confidentiality                                                       11      23       Non-Waiver                                                            12      24       Agency Agreement (BRMA 73A)                                           12      25       Notices and Contract Execution                                        12      26       Intermediary                                                          13               Schedule A                Schedule B     18\F7V1055        





 






                                                                                                                   Reinstatement Premium Protection                                   Reinsurance Contract                                  Effective:  July 1, 2018                                  entered into by and between                                  FedNat Insurance Company                                      Sunrise, Florida                                           and                            Monarch National Insurance Company                                      Sunrise, Florida                           (hereinafter referred to as the "Company")                                             and                           The Subscribing Reinsurer(s) Executing the                            Interests and Liabilities Agreement(s)                                      Attached Hereto                          (hereinafter referred to as the "Reinsurer")        Article 1 - Coverage   By this Contract the Reinsurer agrees to indemnify the Company for 100% of any reinstatement  premium which the Company pays or becomes liable to pay as a result of loss occurrences  covered under the provisions of the Company's Excess Catastrophe Reinsurance Contract,  effective July 1, 2018 (hereinafter referred to as the "Original Contract"), subject to the terms  and conditions hereinafter set forth herein and in Schedules A and B attached to and forming  part of this Contract.      Article 2 - Commencement and Termination   A.  This Contract shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2018,      with respect to reinstatement premium payable by the Company under the Original Contract      as a result of losses arising out of loss occurrences commencing at or after that time and      date, and shall remain in force until 12:01 a.m., Eastern Standard Time, July 1, 2019.    B.  Notwithstanding the provisions of paragraph A above, the Company may terminate a      Subscribing Reinsurer's percentage share in this Contract at any time by giving written      notice to the Subscribing Reinsurer in the event any of the following circumstances occur:         1.  The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the           Subscribing Reinsurer's accounting system) at the inception of this Contract has been           reduced by 20.0% or more of the amount of surplus (or the applicable equivalent)           12 months prior to that date; or         2.  The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the           Subscribing Reinsurer's accounting system) at any time during the term of this    18\F7V1055  Page 1      





 






                                                                                                 Contract has been reduced by 20.0% or more of the amount of surplus (or the          applicable equivalent) at the date of the Subscribing Reinsurer's most recent financial          statement filed with regulatory authorities and available to the public as of the          inception of this Contract; or         3.  The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded          below A- and/or Standard & Poor's rating has been assigned or downgraded below          BBB+; or         4.  The Subscribing Reinsurer has become, or has announced its intention to become,          merged with, acquired by or controlled by any other entity or individual(s) not          controlling the Subscribing Reinsurer's operations previously; or         5.  A State Insurance Department or other legal authority has ordered the Subscribing          Reinsurer to cease writing business; or         6.  The Subscribing Reinsurer has become insolvent or has been placed into liquidation,          receivership, supervision, administration, winding-up or under a scheme of          arrangement, or similar proceedings (whether voluntary or involuntary) or proceedings          have been instituted against the Subscribing Reinsurer for the appointment of a          receiver, liquidator, rehabilitator, supervisor, administrator, conservator or trustee in          bankruptcy, or other agent known by whatever name, to take possession of its assets          or control of its operations; or         7.  The Subscribing Reinsurer has reinsured its entire liability under this Contract without          the Company's prior written consent; or         8.  The Subscribing Reinsurer has ceased assuming new or renewal property or casualty          treaty reinsurance business; or         9.  The Subscribing Reinsurer has hired an unaffiliated runoff claims manager that is          compensated on a contingent basis or is otherwise provided with financial incentives          based on the quantum of claims paid; or        10.  The Subscribing Reinsurer has failed to comply with the funding requirements set forth          in the Reserves Article.    C.  If this Contract is terminated or expires while a loss occurrence covered hereunder is in      progress, the Reinsurer's liability hereunder shall, subject to the other terms and conditions      of this Contract, be determined as if the entire loss occurrence had occurred prior to the      termination or expiration of this Contract, provided that no part of such loss occurrence is      claimed against any renewal or replacement of this Contract.      Article 3 - Concurrency of Conditions   A.  It is agreed that this Contract will follow the terms, conditions, exclusions, definitions,      warranties and settlements of the Company under the Original Contract, which are not      inconsistent with the provisions of this Contract.      18\F7V1055  Page 2      





 






                                                                                         B.  The Company shall advise the Reinsurer of any material changes in the Original Contract      which may affect the liability of the Reinsurer under this Contract.      Article 4 - Premium   A.  As premium for the reinsurance coverage provided hereunder for each excess layer for the      term of this Contract, the Company shall pay the Reinsurer the product of the following (or a      pro rata portion thereof in the event the term of this Contract is less than 12 months and for      purposes of calculating subparagraph 3 below, the term of the Original Contract is a full      12 months):          1.  The amount, shown as "Reinstatement Factor" for that excess layer in Schedule B           attached hereto; times         2.  The Final Adjusted Rate on Line for the corresponding excess layer of the Original           Contract; times         3.  An amount equal to 100% reinsurance placement percentage under each excess           layer of the Original Contract of the final adjusted premium paid by the Company for           the corresponding excess layer of the Original Contract.        "Final Adjusted Rate on Line" as used herein shall mean an amount equal to a 100%      reinsurance placement percentage under each excess layer of the Original Contract of the      final adjusted premium paid by the Company for the corresponding excess layer of the      Original Contract divided by the amount, shown as the "Reinsurer's Per Occurrence Limit"      for that excess layer under the Original Contract in Schedule A attached hereto.    B.  The Company shall pay the Reinsurer a deposit premium for each excess layer of the      amount, shown as "Annual Deposit Premium" for that excess layer in Schedule B attached      hereto, in four equal installments of the amount, shown as "Deposit Premium Installment"      for that excess layer in Schedule B attached hereto, on July 1 and October 1 of 2018, and      January 1 and April 1 of 2019.  However, in the event this Contract is terminated, there      shall be no deposit premium installments due after the effective date of termination.    C.  As soon as possible after the termination or expiration of this Contract, the Company shall      provide a report to the Reinsurer setting forth the premium due hereunder for each excess      layer for the term of this Contract, computed in accordance with paragraph A above, and      any additional premium due the Reinsurer or return premium due the Company for each      such excess layer shall be remitted promptly.      Article 5 - Sanctions   Neither the Company nor any Subscribing Reinsurer shall be liable for premium or loss under  this Contract if it would result in a violation of any mandatory sanction, prohibition or restriction  under United Nations resolutions or the trade or economic sanctions, laws or regulations of the  European Union, United Kingdom or United States of America that are applicable to either party.        18\F7V1055  Page 3      





 






                                                                                         Article 6 - Loss Notices and Settlements   A.  Whenever reinstatement premium settlements made by the Company under the Original      Contract appear likely to result in a claim hereunder, the Company shall notify the      Reinsurer.  The Company will advise the Reinsurer of all subsequent developments relating      to such claims that, in the opinion of the Company, may materially affect the position of the      Reinsurer.    B.  All reinstatement premium settlements made by the Company under the Original Contract,      provided they are within the terms of the Original Contract and within the terms of this      Contract, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts      for which it may be liable within 10 days of receipt of reasonable evidence of the amount      paid (or scheduled to be paid) by the Company.      Article 7 - Late Payments   A.  The provisions of this Article shall not be implemented unless specifically invoked, in      writing, by one of the parties to this Contract.    B.  In the event any premium, loss or other payment due either party is not received by the      intermediary named in the Intermediary Article (hereinafter referred to as the      "Intermediary") by the payment due date, the party to whom payment is due may, by      notifying the Intermediary in writing, require the debtor party to pay, and the debtor party      agrees to pay, an interest charge on the amount past due calculated for each such payment      on the last business day of each month as follows:         1.  The number of full days which have expired since the due date or the last monthly           calculation, whichever the lesser; times         2.  1/365ths of the six-month United States Treasury Bill rate as quoted in The Wall Street           Journal on the first business day of the month for which the calculation is made; times         3.  The amount past due, including accrued interest.        It is agreed that interest shall accumulate until payment of the original amount due plus      interest charges have been received by the Intermediary.    C.  The establishment of the due date shall, for purposes of this Article, be determined as      follows:         1.  As respects the payment of routine deposits and premiums due the Reinsurer, the due           date shall be as provided for in the applicable section of this Contract.  In the event a           due date is not specifically stated for a given payment, it shall be deemed due 30 days           after the date of transmittal by the Intermediary of the initial billing for each such           payment.         2.  Any claim or loss payment due the Company hereunder shall be deemed due 10 days           after the proof of loss or demand for payment is transmitted to the Reinsurer.  If such           loss or claim payment is not received within the 10 days, interest will accrue on the    18\F7V1055  Page 4      





 






                                                                                                 payment or amount overdue in accordance with paragraph B above, from the date the          proof of loss or demand for payment was transmitted to the Reinsurer.         3.  As respects any payment, adjustment or return due either party not otherwise          provided for in subparagraphs 1 and 2 of this paragraph C, the due date shall be as          provided for in the applicable section of this Contract.  In the event a due date is not          specifically stated for a given payment, it shall be deemed due 10 days following          transmittal of written notification that the provisions of this Article have been invoked.        For purposes of interest calculations only, amounts due hereunder shall be deemed paid      upon receipt by the Intermediary.    D.  Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from      contesting the validity of any claim, or from participating in the defense of any claim or suit,      or prohibiting either party from contesting the validity of any payment or from initiating any      arbitration or other proceeding in accordance with the provisions of this Contract.  If the      debtor party prevails in an arbitration or other proceeding, then any interest charges due      hereunder on the amount in dispute shall be null and void.  If the debtor party loses in such      proceeding, then the interest charge on the amount determined to be due hereunder shall      be calculated in accordance with the provisions set forth above unless otherwise      determined by such proceedings.  If a debtor party advances payment of any amount it is      contesting, and proves to be correct in its contestation, either in whole or in part, the other      party shall reimburse the debtor party for any such excess payment made plus interest on      the excess amount calculated in accordance with this Article.    E.  Interest charges arising out of the application of this Article that are $1,000 or less from any      party shall be waived unless there is a pattern of late payments consisting of three or more      items over the course of any 12-month period.      Article 8 - Offset   The Company and the Reinsurer may offset any balance or amount due from one party to the  other under this Contract or any other contract heretofore or hereafter entered into between the  Company and the Reinsurer, whether acting as assuming reinsurer or ceding company.  The  provisions of this Article shall not be affected by the insolvency of either party.      Article 9 - Severability of Interests and Obligations   The rights, duties and obligations set forth below shall apply as if this Contract were a separate  contract between the Subscribing Reinsurers and each named reinsured company:     A.  Balances payable by any Subscribing Reinsurer to or from any reinsured party under the      Contract shall not serve to offset any balances recoverable to, or from, any other reinsured      party to the Contract and balances payable shall be separated by named reinsured      company and paid directly to the appropriate named reinsured company’s bank account.      18\F7V1055  Page 5      





 






                                                                                          B.  Balances recoverable by any Subscribing Reinsurer to or from any reinsured party under      the Contract shall not serve to offset any balances payable to, or from, any other reinsured      party to the Contract.    C.  Reports and remittances made to the Reinsurer in accordance with the applicable articles      of the Contract are to be in sufficient detail to identify both the Reinsurer's loss obligations      due to each named reinsured company and each named reinsured company's premium      remittance under the report.     D.  In the event of the insolvency of any of the parties to the Contract, offset shall be only      allowed in accordance with the laws of the insolvent party's state of domicile.    E.  Nothing in this Article shall be construed to provide a separate retention, Reinsurer's limit of      liability any one loss occurrence or Reinsurer's annual limit of liability for each named      reinsured company.      Article 10 - Access to Records   The Reinsurer or its designated representatives shall have access at any reasonable time to all  records of the Company which pertain in any way to this reinsurance, provided the Reinsurer  gives the Company at least 15 days prior notice of request for such access.  However, a  Subscribing Reinsurer or its designated representatives shall not have any right of access to the  records of the Company if it is not current in all undisputed payments due the Company.   "Undisputed" as used herein shall mean any amount that the Subscribing Reinsurer has not  contested in writing to the Company specifying the reason(s) why the payments are disputed.      Article 11 - Errors and Omissions (BRMA 14F)   Inadvertent delays, errors or omissions made in connection with this Contract or any transaction  hereunder shall not relieve either party from any liability which would have attached had such  delay, error or omission not occurred, provided always that such error or omission is rectified as  soon as possible after discovery.      Article 12 - Currency (BRMA 12A)   A.  Whenever the word "Dollars" or the "$" sign appears in this Contract, they shall be      construed to mean United States Dollars and all transactions under this Contract shall be in      United States Dollars.    B.  Amounts paid or received by the Company in any other currency shall be converted to      United States Dollars at the rate of exchange at the date such transaction is entered on the      books of the Company.        18\F7V1055  Page 6      





 






                                                                                         Article 13 - Taxes (BRMA 50B)   In consideration of the terms under which this Contract is issued, the Company will not claim a  deduction in respect of the premium hereon when making tax returns, other than income or  profits tax returns, to any state or territory of the United States of America or the District of  Columbia.      Article 14 - Federal Excise Tax (BRMA 17D)   A.  The Reinsurer has agreed to allow for the purpose of paying the Federal Excise Tax the      applicable percentage of the premium payable hereon (as imposed under Section 4371 of      the Internal Revenue Code) to the extent such premium is subject to the Federal Excise      Tax.    B.  In the event of any return of premium becoming due hereunder the Reinsurer will deduct      the applicable percentage from the return premium payable hereon and the Company or its      agent should take steps to recover the tax from the United States Government.      Article 15 - Foreign Account Tax Compliance Act   A.  To the extent the Reinsurer is subject to the deduction and withholding of premium payable      hereon as set forth in the Foreign Account Tax Compliance Act (Sections 1471-1474 of the      Internal Revenue Code), the Reinsurer shall allow such deduction and withholding from the      premium payable under this Contract.     B.  In the event of any return of premium becoming due hereunder, the return premium shall      be determined and paid in full without regard to any amounts deducted or withheld under      paragraph A of this Article.  In the event the Company or its agent recovers such premium      deductions and withholdings on the return premium from the United States Government,      the Company or its agent shall reimburse the Reinsurer for such amounts.      Article 16 - Reserves   A.  The Reinsurer agrees to fund its share of amounts, including but not limited to, the      Company's ceded unearned premium and outstanding loss reserves (being the sum of all      reinstatement premiums paid by the Company under the Original Contract but not yet      recovered from the Reinsurer, plus the Company's reserves for reinstatement premium due      under the Original Contract, if any) (hereinafter referred to as "Reinsurer's Obligations") by:         1.  Clean, irrevocable and unconditional letters of credit issued and confirmed, if           confirmation is required by the insurance regulatory authorities involved, by a bank or           banks meeting the NAIC Securities Valuation Office credit standards for issuers of           letters of credit and acceptable to said insurance regulatory authorities; and/or         2.  Escrow accounts for the benefit of the Company; and/or         3.  Cash advances;    18\F7V1055  Page 7      





 






                                                                                               if the Reinsurer:         1.  Is unauthorized in any state of the United States of America or the District of Columbia           having jurisdiction over the Company and if, without such funding, a penalty would           accrue to the Company on any financial statement it is required to file with the           insurance regulatory authorities involved; or         2.  Has an A.M. Best Company's rating equal to or below B++ at the inception of this           Contract.        The Reinsurer, at its sole option, may fund in other than cash if its method and form of      funding are acceptable to the insurance regulatory authorities involved.    B.  With regard to funding in whole or in part by letters of credit, it is agreed that each letter of      credit will be in a form acceptable to insurance regulatory authorities involved, will be issued      for a term of at least one year and will include an "evergreen clause," which automatically      extends the term for at least one additional year at each expiration date unless written      notice of non-renewal is given to the Company not less than 30 days prior to said expiration      date.  The Company and the Reinsurer further agree, notwithstanding anything to the      contrary in this Contract, that said letters of credit may be drawn upon by the Company or      its successors in interest at any time, without diminution because of the insolvency of the      Company or the Reinsurer, but only for one or more of the following purposes:         1.  To reimburse itself for the Reinsurer's share of unearned premiums returned to           insureds on account of policy cancellations, unless paid in cash by the Reinsurer;         2.  To reimburse itself for the Reinsurer's share of reinstatement premiums paid by the          Company under the terms of the Original Contract, unless paid in cash by the          Reinsurer;         3.  To reimburse itself for the Reinsurer's share of any other amounts claimed to be due          hereunder, unless paid in cash by the Reinsurer;         4.  To fund a cash account in an amount equal to the Reinsurer's share of amounts,          including, but not limited to, the Reinsurer's Obligations as set forth above, funded by          means of a letter of credit which is under non-renewal notice, if said letter of credit has          not been renewed or replaced by the Reinsurer 10 days prior to its expiration date;         5.  To refund to the Reinsurer any sum in excess of the actual amount required to fund          the Reinsurer's share of amounts, including but not limited to, the Reinsurer's          Obligations as set forth above, if so requested by the Reinsurer.        In the event the amount drawn by the Company on any letter of credit is in excess of the      actual amount required for B(1), B(2) or B(4), or in the case of B(3), the actual amount      determined to be due, the Company shall promptly return to the Reinsurer the excess      amount so drawn.        18\F7V1055  Page 8      





 






                                                                                         Article 17 - Insolvency   A.  In the event of the insolvency of the Company, this reinsurance shall be payable directly to      the Company or to its liquidator, receiver, conservator or statutory successor on the basis of      the liability of the Company without diminution because of the insolvency of the Company or      because the liquidator, receiver, conservator or statutory successor of the Company has      failed to pay all or a portion of any claim.  It is agreed, however, that the liquidator, receiver,      conservator or statutory successor of the Company shall give written notice to the      Reinsurer of the pendency of a claim against the Company indicating the policy or bond      reinsured which claim would involve a possible liability on the part of the Reinsurer within a      reasonable time after such claim is filed in the conservation or liquidation proceeding or in      the receivership, and that during the pendency of such claim, the Reinsurer may investigate      such claim and interpose, at its own expense, in the proceeding where such claim is to be      adjudicated, any defense or defenses that it may deem available to the Company or its      liquidator, receiver, conservator or statutory successor.  The expense thus incurred by the      Reinsurer shall be chargeable, subject to the approval of the Court, against the Company      as part of the expense of conservation or liquidation to the extent of a pro rata share of the      benefit which may accrue to the Company solely as a result of the defense undertaken by      the Reinsurer.    B.  Where two or more Subscribing Reinsurers are involved in the same claim and a majority in      interest elect to interpose defense to such claim, the expense shall be apportioned in      accordance with the terms of this Contract as though such expense had been incurred by      the Company.    C.  It is further understood and agreed that, in the event of the insolvency of the Company, the      reinsurance under this Contract shall be payable directly by the Reinsurer to the Company      or to its liquidator, receiver or statutory successor, except as provided by Section 4118(a) of      the New York Insurance Law or except (1) where this Contract specifically provides another      payee of such reinsurance in the event of the insolvency of the Company or (2) where the      Reinsurer with the consent of the direct insured or insureds has assumed such policy      obligations of the Company as direct obligations of the Reinsurer to the payees under such      policies and in substitution for the obligations of the Company to such payees.      Article 18 - Arbitration   A.  As a condition precedent to any right of action hereunder, in the event of any dispute or      difference of opinion hereafter arising with respect to this Contract, it is hereby mutually      agreed that such dispute or difference of opinion shall be submitted to arbitration.  One      Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall      be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active      or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's      London Underwriters.  In the event that either party should fail to choose an Arbiter within      30 days following a written request by the other party to do so, the requesting party may      choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration.  If      the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their      appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of      whom the other shall decline, and the decision shall be made by drawing lots.      18\F7V1055  Page 9      





 






                                                                                         B.  Each party shall present its case to the Arbiters within 30 days following the date of      appointment of the Umpire.  The Arbiters shall consider this Contract as an honorable      engagement rather than merely as a legal obligation and they are relieved of all judicial      formalities and may abstain from following the strict rules of law.  The decision of the      Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the      Umpire and the decision of the majority shall be final and binding upon both parties.       Judgment upon the final decision of the Arbiters may be entered in any court of competent      jurisdiction.    C.  If more than one Subscribing Reinsurer is involved in the same dispute, all such      Subscribing Reinsurers shall, at the option of the Company, constitute and act as one party      for purposes of this Article and communications shall be made by the Company to each of      the Subscribing Reinsurers constituting one party, provided, however, that nothing herein      shall impair the rights of such Subscribing Reinsurers to assert several, rather than joint,      defenses or claims, nor be construed as changing the liability of the Subscribing Reinsurers      participating under the terms of this Contract from several to joint.    D.  Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with      the other the expense of the Umpire and of the arbitration.  In the event that the two      Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the      Umpire and the arbitration shall be equally divided between the two parties.    E.  Any arbitration proceedings shall take place at a location mutually agreed upon by the      parties to this Contract, but notwithstanding the location of the arbitration, all proceedings      pursuant hereto shall be governed by the law of the state in which the Company has its      principal office.      Article 19 - Service of Suit (BRMA 49C)   (Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not  authorized in any State, Territory or District of the United States where authorization is required  by insurance regulatory authorities)    A.  It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due      hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of a      court of competent jurisdiction within the United States.  Nothing in this Article constitutes or      should be understood to constitute a waiver of the Reinsurer's rights to commence an      action in any court of competent jurisdiction in the United States, to remove an action to a      United States District Court, or to seek a transfer of a case to another court as permitted by      the laws of the United States or of any state in the United States.    B.  Further, pursuant to any statute of any state, territory or district of the United States which      makes provision therefor, the Reinsurer hereby designates the party named in its Interests      and Liabilities Agreement, or if no party is named therein, the Superintendent,      Commissioner or Director of Insurance or other officer specified for that purpose in the      statute, or his successor or successors in office, as its true and lawful attorney upon whom      may be served any lawful process in any action, suit or proceeding instituted by or on      behalf of the Company or any beneficiary hereunder arising out of this Contract.      18\F7V1055  Page 10      





 






                                                                                           Article 20 - Severability (BRMA 72E)   If any provision of this Contract shall be rendered illegal or unenforceable by the laws,  regulations or public policy of any state, such provision shall be considered void in such state,  but this shall not affect the validity or enforceability of any other provision of this Contract or the  enforceability of such provision in any other jurisdiction.      Article 21 - Governing Law (BRMA 71B)   This Contract shall be governed by and construed in accordance with the laws of the State of  Florida.      Article 22 - Confidentiality   A.  The Reinsurer hereby acknowledges that the documents, information and data provided to      it by the Company, whether directly or through an authorized agent, in connection with the      placement and execution of this Contract, including all information obtained through any      audits and any claims information between the Company and the Reinsurer, and any      submission or other materials relating to any renewal (hereinafter referred to as      "Confidential Information") are proprietary and confidential to the Company.      B.  Except as provided for in paragraph C below, the Reinsurer shall not disclose any      Confidential Information to any third parties, including but not limited to the Reinsurer's      subsidiaries and affiliates, other insurance companies and their subsidiaries and affiliates,      underwriting agencies, research organizations, any unaffiliated entity engaged in modeling      insurance or reinsurance data, and statistical rating organizations.      C.  Confidential Information may be used by the Reinsurer only in connection with the      performance of its obligations or enforcement of its rights under this Contract and will only      be disclosed when required by (1) retrocessionaires subject to the business ceded to this      Contract, (2) regulators performing an audit of the Reinsurer's records and/or financial      condition, (3) external auditors performing an audit of the Reinsurer's records in the normal      course of business, or (4) the Reinsurer's legal counsel; provided that the Reinsurer      advises such parties of the confidential nature of the Confidential Information and their      obligation to maintain its confidentiality.  The Company may require that any third-party      representatives of the Reinsurer agree, in writing, to be bound by this Confidentiality Article      or by a separate written confidentiality agreement, containing terms no less stringent than      those set forth in this Article.  If a third-party representative of the Reinsurer is not bound, in      writing, by this Confidentiality Article or by a separate written confidentiality agreement, the      Reinsurer shall be responsible for any breach of this provision by such third-party      representative of the Reinsurer.    D.  Notwithstanding the above, in the event that the Reinsurer is required by court order, other      legal process or any regulatory authority to release or disclose any or all of the Confidential      Information, the Reinsurer agrees to provide the Company with written notice of same at      least 10 days prior to such release or disclosure, to the extent legally permissible, and to    18\F7V1055  Page 11      





 






                                                                                             use its best efforts to assist the Company in maintaining the confidentiality provided for in      this Article.    E.  Any disclosure of Non-Public Personally Identifiable Information shall comply with all state      and federal statutes and regulations governing the disclosure of Non-Public Personally      Identifiable Information.  "Non-Public Personally Identifiable Information" shall be defined as      this term or a similar term is defined in any applicable state, provincial, territory, or federal      law.  Disclosing or using this information for any purpose not authorized by applicable law is      expressly forbidden without the prior consent of the Company.    F.  The parties agree that any information subject to privilege, including the attorney-client      privilege or attorney work product doctrine (collectively "Privilege") shall not be disclosed to      the Reinsurer until, in the Company's opinion, such Privilege is deemed to be waived or      otherwise compromised by virtue of its disclosure pursuant to this Contract.  Furthermore,      the Reinsurer shall not assert that any Privilege otherwise applicable to the Confidential      Information has been waived or otherwise compromised by virtue of its disclosure pursuant      to this Contract.      G.  The provisions of this Article shall extend to the officers, directors and employees of the      Reinsurer and its affiliates, and shall be binding upon their successors and assigns.      Article 23 - Non-Waiver   The failure of the Company or Reinsurer to insist on compliance with this Contract or to exercise  any right, remedy or option hereunder shall not:  (1) constitute a waiver of any rights contained  in this Contract, (2) prevent the Company or Reinsurer from thereafter demanding full and  complete compliance, (3) prevent the Company or Reinsurer from exercising such remedy in  the future, nor (4) affect the validity of this Contract or any part thereof.      Article 24 - Agency Agreement (BRMA 73A)   If more than one reinsured company is named as a party to this Contract, the first named  company shall be deemed the agent of the other reinsured companies for purposes of sending  or receiving notices required by the terms and conditions of this Contract, and for purposes of  remitting or receiving any monies due any party.      Article 25 - Notices and Contract Execution   A.  Whenever a notice, statement, report or any other written communication is required by this      Contract, unless otherwise specified, such notice, statement, report or other written      communication may be transmitted by certified or registered mail, nationally or      internationally recognized express delivery service, personal delivery, electronic mail, or      facsimile.  With the exception of notices of termination, first class mail is also acceptable.      18\F7V1055  Page 12      





 






                                                                                         B.  The use of any of the following shall constitute a valid execution of this Contract or any      amendments thereto:         1.  Paper documents with an original ink signature;         2.  Facsimile or electronic copies of paper documents showing an original ink signature;           and/or         3.  Electronic records with an electronic signature made via an electronic agent.  For the           purposes of this Contract, the terms "electronic record," "electronic signature" and           "electronic agent" shall have the meanings set forth in the Electronic Signatures in           Global and National Commerce Act of 2000 or any amendments thereto.    C.  This Contract may be executed in one or more counterparts, each of which, when duly      executed, shall be deemed an original.      Article 26 - Intermediary   Aon Benfield Inc., or one of its affiliated corporations duly licensed as a reinsurance  intermediary, is hereby recognized as the Intermediary negotiating this Contract for all business  hereunder.  All communications (including but not limited to notices, statements, premiums,  return premiums, commissions, taxes, losses, loss adjustment expense, salvages and loss  settlements) relating to this Contract will be transmitted to the Company or the Reinsurer  through the Intermediary.  Payments by the Company to the Intermediary will be deemed  payment to the Reinsurer.  Payments by the Reinsurer to the Intermediary will be deemed  payment to the Company only to the extent that such payments are actually received by the  Company.      In Witness Whereof, the Company by its duly authorized representatives has executed this  Contract as of the dates specified below:    This 9th day of August in the year 2018.    FedNat Insurance Company    /s/ Michael H. Braun          This 9th day of August in the year 2018.    Monarch National Insurance Company    /s/ Michael H. Braun          18\F7V1055  Page 13      





 






                                                                                                                                                                        Schedule A                                           Reinstatement Premium Protection                                                Reinsurance Contract                                                Effective:  July 1, 2018                                                                                                         FedNat Insurance Company                                                    Sunrise, Florida                                                         and                                         Monarch National Insurance Company                                                    Sunrise, Florida                                                       Original         Original         Original       Original                                              Contract          Contract        Contract        Contract                                                First           Second            Third          Fourth                                               Excess            Excess          Excess          Excess           Reinsurer's Per Occurrence Limit     $85,000,000     $180,000,000     $60,000,000    $117,500,000          Reinsurer's Term Limit              $170,000,000     $360,000,000    $120,000,000    $235,000,000          Minimum Premium                             *****             *****          *****           *****          AAL                                         *****             *****          *****           *****          Annual Deposit Premium                      *****             *****          *****           *****          Deposit Premium Installments                *****             *****          *****           *****         18\F7V1055  Schedule A      





 






                                                                                                                                                                        Schedule B                                           Reinstatement Premium Protection                                                Reinsurance Contract                                                Effective:  July 1, 2018                                                                                                         FedNat Insurance Company                                                    Sunrise, Florida                                                         and                                         Monarch National Insurance Company                                                    Sunrise, Florida                                                                                                             First           Second             Third           Fourth                                             RPP Layer        RPP Layer        RPP Layer        RPP Layer           Reinstatement Factor                *****            *****            *****            *****            Annual Deposit Premium              *****            *****            *****            *****            Deposit Premium Installments        *****            *****            *****            *****                                                                     18\F7V1055  Schedule B      





 






                                                                                          The Interests and Liabilities Agreements, constituting 33 pages in total, have been omitted in  accordance with Rule 24b-2 under the Exchange Act.  These pages have been filed separately  with the Securities and Exchange Commission.    18\F7V1055