fnhc93018ex106






                                                                                                                                                                                                                                                                                                                                                                               NET QUOTA SHARE REINSURANCE AGREEMENT                                   NO. POR1238172                                                                                                                     EFFECTIVE: JULY 1, 2018                                                                                                                             between                                                                          FEDNAT INSURANCE COMPANY                                    Sunrise, Florida                                                                                    and                                                                                                           SWISS REINSURANCE AMERICA CORPORATION                                   Armonk, New York                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               _______________________   *****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.      EFFECTIVE: JULY 1, 2018  P18-0057  7/6/2018 11:54 AM.v3  





 






                                                                  NET QUOTA SHARE REINSURANCE AGREEMENT                                    NO. POR1238172  ARTICLE  CONTENTS       PAGE        PREAMBLE         1  I                   BUSINESS COVERED           1  II                  EFFECTIVE DATE AND TERMINATION                   3  III   TERRITORY         4  IV   RETENTION         4  V   DEFINITIONS         4  VI   EXCLUSIONS         8  VII                 SPECIAL ACCEPTANCE             11  VIII                INTERNATIONAL TRADE CONTROLS                          AND ECONOMIC SANCTIONS                     11  IX   REINSURANCE PREMIUM     11  X                   SLIDING SCALE COMMISSION             12  XI                  LOSSES, LOSS ADJUSTMENT EXPENSES                           AND SALVAGES         13    XII                 REPORTS AND REMITTANCES                        14  XIII                ACCESS TO RECORDS              17  XIV                 TAXES        17  XV   OFFSET       18  XVI   DISPUTE RESOLUTION     18  XVII   INSOLVENCY       19  XVIII   AMENDMENTS                           20     SIGNATURES       21    ATTACHMENTS: INSOLVENCY FUNDS EXCLUSION CLAUSE                 POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE                 POLLUTION AND SEEPAGE EXCLUSION CLAUSE                 NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE -                    REINSURANCE - U.S.A.                 NUCLEAR INCIDENT EXCLUSION CLAUSE - REINSURANCE - NO. 4                 POLLUTION LIABILITY EXCLUSION CLAUSE - REINSURANCE                 NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY -                    REINSURANCE - U.S.A.                 TERRORISM EXCLUSION CLAUSE (USA) – REINSURANCE (PROPERTY)                 TERRORISM EXCLUSION CLAUSE (USA) – REINSURANCE (CASUALTY)                                                                             EFFECTIVE: JULY 1, 2018  P18-0057  7/6/2018 11:54 AM.v3  





 






                                                                                                                                                     NET QUOTA SHARE REINSURANCE AGREEMENT                                   NO. POR1238172                       (hereinafter referred to as the "Agreement")                                                                                 between                                                                      FEDNAT INSURANCE COMPANY                                   Sunrise, Florida                        (hereinafter referred to as the "Company")                                                                                   and                                                             SWISS REINSURANCE AMERICA CORPORATION                                  Armonk, New York                       (hereinafter referred to as the "Reinsurer")                                                                                      ARTICLE I - BUSINESS COVERED    A.     By this Agreement the Company obligates itself to cede to the Reinsurer and the         Reinsurer  obligates  itself  to  accept  from  the  Company  a  2%  Quota  Share         participation of the Company's Ultimate Net Liability for Policies in force as of July         1, 2018, and new and renewal Policies becoming effective on or after said date as         respects losses occurring on or after July 1, 2018, subject to Paragraph B.  This         Quota Share is subject to the maximum cession limits set forth below:                1.    Property Business                          ***** each risk (2% share of the Company's Ultimate Net Liability of ***** ),               but in no event shall the Reinsurer's liability from all risks in any one Loss               Occurrence exceed ***** (2% of ***** ) during the term of this Agreement.                              Notwithstanding the limits stated above, the Reinsurer's liability shall not               exceed ***** (2% of ***** ) as respects all Loss Occurrences taking place               during the term of this Agreement.                       2.    Casualty Business                          *****  each  Policy  each  Loss  Occurrence  (2%  share  of  the  Company's               Ultimate Net Liability of ***** .)                                       B.     The cession percentage set forth in Paragraph A. of this Article may  be adjusted         up to three times during the Agreement Year, subject to the following:        EFFECTIVE: JULY 1, 2018                                     1.           POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                      1.    The  Company  has  provided  the  Reinsurer  no  less  than  45  day's  written                notice prior to the end of any calendar quarter during the Agreement Year,                of its desire to adjust the cession percentage prospectively.             2.     The adjusted cession percentage shall not be less than 2% nor greater than                20%.                   3.     The  cession  adjustment  is  to  take  effect  as  respects  in  force,  new  and                renewal business on a prospective basis on the last day of the calendar                quarter in which such notice was given as respects Loss Occurrences taking                place on or after such date;                   4.     Such cession adjustment shall be at the election of the Company only if the                Loss Ratio from Agreement inception through the end of the quarter in which                such notice was given is less than or equal to 30%.                  5.     If such Loss Ratio is greater than 30%, any such cession adjustment must                be mutually agreed by both parties.                   6.     Mutual agreement of the parties to any cession adjustment is evidenced by                addendum to this Agreement signed by both parties.                  For  purposes  of  this  Paragraph  B.,  "Loss  Ratio"  shall  mean  the actual  ratio  of         Incurred Losses to Earned Premiums from Agreement inception to the end of the         calendar quarter for which calculation is being made.  The terms "Incurred Losses"         and "Earned Premiums" shall be defined as they are under Article X  - Sliding Scale         Commission,  provided  however,  as  respects  Incurred  Losses,  there  will  be  no         Incurred But Not Reported ("IBNR") losses included.      C.     Loss Adjustment Expenses and any loss arising under this Agreement with respect         to Loss In Excess of Policy Limits and Extra Contractual Obligations, as defined         herein,  shall  be  recovered  in  the  same  proportion  as  the  contractual  loss         recoverable  hereunder;  provided  such  contractual  loss  plus  Loss  Adjustment         Expenses, Loss In Excess of Policy Limits and Extra Contractual Obligations shall         never exceed the maximum cession limit set forth under Paragraph A. above.   D.     This Agreement is solely between the Company and the Reinsurer, and nothing         contained  in  this  Agreement  shall  create  any  obligations  or  establish  any  rights         against the Reinsurer in favor of any person or entity not a party hereto.    E.     The performance of obligations by both parties under this Agreement shall be in         accordance with a fiduciary standard of good faith and fair dealing.    F.     Under this Agreement, the indemnity for reinsured loss applies only to the following         Property and Casualty Business except as excluded under Article VI - Exclusions         of this Agreement.           PROPERTY LINES OF BUSINESS                  Homeowners (Section I only)   EFFECTIVE: JULY 1, 2018                                     2.           POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                      Dwelling Fire (Section I only)                  CASUALTY LINES OF BUSINESS                  Homeowners (Section II only)          Dwelling Fire (Section II only)      ARTICLE II - EFFECTIVE DATE AND TERMINATION    A.     This Agreement shall become effective at 12:01 a.m., Eastern Standard  Time, July         1, 2018, and shall terminate at 12:01 a.m., Eastern Standard  Time on July 1, 2019.    B.     Upon termination of this Agreement:            1.     All reinsurance hereunder shall be automatically cancelled as of the date                of termination and the Reinsurer shall be released of all liability as                respects losses occurring on or after the date of termination.  The                Reinsurer shall return to the Company the unearned premiums on the                business in force hereunder at the date of termination, less the                commission allowed thereon.            2.  Alternatively, at the Company's option, and provided written notice of the               Company's election of such option is given to the Reinsurer by certified mail,               electronic mail or by a courier service each producing evidence of receipt               by  the  Reinsurer  prior  to  the  date  of  termination,  this  Agreement  will               terminate on a "Run-off" basis and the Reinsurer shall be liable for losses               occurring  on  or  after  to  the  date  of  termination  for  all  Policies  covered               hereunder and in force at the date of termination of this Agreement until               their  natural  expiry,  cancellation  or  next  anniversary  of  such business,               whichever first occurs; but in no case shall the Reinsurer be liable for losses               occurring  more  than  12  months  after  the  termination  date  unless the               Company  is  required  by  statute  or  regulation  to  continue  coverage  on  a               Policy.  In such case, the Reinsurer shall continue to be liable for losses               occurring subsequent to the date of termination until the earliest date on               which the Company may cancel such Policy.  The Reinsurer shall return to               the Company the unearned premiums, if any, less commissions applicable,               for the unexpired periods.                                  ARTICLE III – TERRITORY     As respects Property Business, this Agreement applies to risks located in Florida.    As respects Casualty Business, the Agreement applies to Policies issued by the  Company within Florida and shall apply to losses covered hereunder wherever occurring.    EFFECTIVE: JULY 1, 2018                                     3.           POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                   ARTICLE IV - RETENTION    A.     The Company warrants that it shall retain net for its own account and not reinsure         in any way, 98% of its Ultimate Net Liability.     B.     In the event there is a cession adjustment pursuant to Paragraph B. of Article I –         Business  Covered,  the  Company's  net  retention  shall  be  revised to reflect the         difference between the revised cession percentage and 100% as of the effective         date of the change.      ARTICLE V – DEFINITIONS    A.     AGREEMENT YEAR           "Agreement Year" shall mean the 12 month period commencing July 1, 2018  and         continuing through  June 30, 2019.    B.     DECLARATORY JUDGMENT EXPENSES                            "Declaratory Judgment Expenses" shall mean all legal expenses incurred in the         representation of the Company in litigation brought to determine the Company's         defense and/or indemnification obligations that are allocable to any specific claim         or loss applicable to Policies subject to this Agreement.  In addition, the Company         shall promptly notify the Reinsurer of any Declaratory Judgment Expenses subject         to this Agreement.    C.     EXTRA CONTRACTUAL OBLIGATIONS           1.     "Extra Contractual Obligations" are defined as those liabilities not covered                under  any  other  provision  of  this  Agreement  and  which  arise  from  the                handling of any claim on business covered hereunder, such liabilities arising                because of, but not limited to, the following: failure by the Company to settle                within the Policy limit, or by reason of alleged or actual negligence, fraud or                bad  faith  in  rejecting  an  offer  of  settlement  or  in  the  preparation  of  the                defense or in the trial of any action against its insured or in the preparation                or prosecution of an appeal consequent upon such action.           2.     The  date  on  which  an  Extra  Contractual  Obligation  is  incurred  by  the                Company  shall  be  deemed,  in  all  circumstances,  to  be  the  date  of  the                original accident, casualty, disaster or loss occurrence.           3.     However,  coverage  hereunder  as  respects  Extra  Contractual  Obligations                shall  not  apply  where  the  loss  has  been  incurred  due  to  the  fraud  of  a                member of the Board of Directors or a corporate officer of the Company                acting  individually  or  collectively  or  in  collusion  with  any  individual  or                corporation or any other organization or party involved in the presentation,                defense or settlement of any claim covered hereunder.  EFFECTIVE: JULY 1, 2018                                     4.           POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                               4.    Recoveries,  collectibles  or  retention  from  any  other  form  of  insurance  or                reinsurance including deductibles or self-insured retention which protect the                Company against Extra Contractual Obligations, whether collectible or not,                shall inure to the benefit of the Reinsurer and shall be deducted from the                total amount of Extra Contractual Obligations for purposes of determining                the loss hereunder.                  5.     If any provision of this paragraph shall be rendered illegal or unenforceable                by the laws, regulations or public policy of any jurisdiction, such provision                shall  be  considered  void  in  such  jurisdiction,  but  this  shall  not affect the                validity  or  enforceability  of  any  other  provision  of  this  Article  or  the                enforceability of such provision in any other jurisdiction.           D.     GROSS PREMIUMS WRITTEN           "Gross Premiums Written" shall mean the Company's written premiums for         subject business less return premiums.    E.     LOSS ADJUSTMENT EXPENSES           "Loss  Adjustment  Expenses"  shall  mean  all  expenses  paid  by  the Company  in         connection with the investigation, settlement, defense or litigation, including court         costs and postjudgment interest, of any claim or loss which is the subject matter of         Policies  covered  under  this  Agreement  and  shall  include  Declaratory  Judgment         Expenses.  However, "Loss Adjustment Expenses" shall not include the salaries         and  expenses  of  Company  employees,  office  expenses,  and  other  overhead         expenses.           F.     LOSS IN EXCESS OF POLICY LIMITS           1.     "Loss in Excess of Policy Limits" is defined as loss in excess of the limit of                the  original Policy,  such  loss  in  excess  of  the  limit  having  been  incurred                because  of  failure  by  the  Company  to  settle  within  the  Policy  limit  or  by                reason of alleged or actual negligence, fraud or bad faith in rejecting an offer                of settlement or in the preparation of the defense or in the trial of any action                against  its  insured  or  in  the  preparation  or  prosecution  of  an appeal                consequent upon such action.                  2.     However, this paragraph shall not apply where the loss has been incurred                due to fraud by a member of the Board of Directors or a corporate officer of                the  Company  acting  individually  or  collectively  or  in  collusion  with  any                individual or corporation or any other organization or party involved in the                presentation, defense or settlement of any claim covered hereunder.                  3.     For the purposes of this paragraph, the word "loss" shall mean any amounts                which the Company would have been contractually liable to pay had it not                been for the limit of the original Policy.            EFFECTIVE: JULY 1, 2018                                     5.           POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                      4.     With respect to coverage provided under this paragraph, recoveries from                any insurance or reinsurance other than this Agreement, whether collectible                or not, shall be deducted to arrive at the amount of the Company's Ultimate                Net Liability.           G.     LOSS OCCURRENCE          As respects Property Business covered under this Agreement:          1.    The  term  "Loss  Occurrence"  shall  mean  the  sum  of  all  individual  losses                directly  occasioned  by  any  one  disaster,  accident  or  loss  or  series  of                disasters, accidents or losses arising out of one event which occurs within                the  state  of  Florida.   However,  the  duration  and  extent  of  any one  Loss                Occurrence  shall  be  limited  to  all  individual  losses  sustained by  the                Company occurring during any period of 168 consecutive hours arising out                of and directly occasioned by the same event except that the term "Loss                Occurrence" shall be further defined as follows:                 a.    As regards windstorm, other than Named Windstorms, hail, tornado,                      hurricane, cyclone, including ensuing collapse and water damage,                      all individual losses sustained by the Company occurring during any                      period  of  120  consecutive  hours  arising  out  of  and  directly                      occasioned by the same event.                  b.    As regards riot, riot attending a strike, civil commotion, vandalism                      and  malicious  mischief,  all  individual  losses  sustained  by  the                      Company,  occurring  during  any  period  of  72  consecutive  hours                      within the area of one municipality or county and the municipalities                      or counties contiguous thereto arising out of and directly occasioned                      by the same event.  The maximum duration of 72 consecutive hours                      may be extended in respect of individual losses which occur beyond                      such 72 consecutive hours during the continued occupation of an                      assured's  premises  by  strikers,  provided  such  occupation                      commenced during the aforesaid period.                 c.    As regards earthquake (the epicentre of which need not necessarily                      be within the territorial confines referred to in the opening paragraph                      of  this  Article)  and  fire  following  directly  occasioned  by  the                      earthquake,  only  those  individual  fire  losses  which  commence                      during the period of 168 consecutive hours may be included in the                      Company's Loss Occurrence.                 d.    As  regards  Freeze,  only  individual  losses  directly  occasioned  by                      collapse,  breakage  of  glass  and  water  damage  (including  but  not                      limited to those caused by freezing and/or melting of ice, snow and                      sleet, or ice damming on a structure or bursting of frozen pipes and                      tanks) may be included in the Company's Loss Occurrence.          2.     For all Loss Occurrences the Company may choose the date and time when               any such period of consecutive hours commences provided that it is not   EFFECTIVE: JULY 1, 2018                                     6.           POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                            earlier  than  the  date  and  time  of  the  occurrence  of  the  first  recorded               individual  loss  sustained  by  the  Company  arising  out  of  that  disaster,               accident or loss and provided that only one such period of 168 consecutive               hours  shall  apply  with  respect  to  one  event  except  for  those  Loss               Occurrences referred to in a. and b. above, where only one such period of               72 consecutive hours shall apply with respect to one event, regardless of               the duration of the event.          3.     No individual losses occasioned by an event that would be covered by 72               hours clauses may be included in any Loss Occurrence claimed under the               168 hours provision.          As respects Casualty Business covered under this Agreement:          "Loss Occurrence" shall mean any accident or occurrence or series of accidents or         occurrences arising out of any one event and happening within the term and scope         of this Agreement.     H.     NAMED WINDSTORMS           "Named Windstorms" shall mean a storm and all other atmospheric perils arising         out of such storm that are identified and named as a Tropical Storm or Hurricane         by the National Hurricane Center of the National Weather Service, operated by         the National Oceanographic Administration of the U.S. Government ("NHC").  The         duration of such Named Windstorm shall be  deemed to be as follows:           1.    Beginning at the time a Named Windstorm warning is issued  by the NHC                for any part of each state in which the Company writes the business                reinsured hereunder;           2.    Continuing  for the time period which the Named Windstorm conditions                exist anywhere in such state; and           3.     Ending 72 hours following termination of the last Named Windstorm                warning by NHC for any part of such state.    I.     POLICIES           "Policies"  shall  mean  each  of  the  Company's  binders,  policies  and  contracts  of         insurance on the business covered hereunder.    J.     RISK              The  Company  shall  be  the  sole  judge  of  what  constitutes  one  risk  provided,         however, that:              1.     A risk shall never be less than all insurable values within exterior walls and               under one roof regardless of fire divisions, the number of Policies involved,               and whether there is a single, multiple or unrelated named insureds involved               in such risk.   EFFECTIVE: JULY 1, 2018                                     7.           POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                        2.     When two or more buildings are situated at the same general location, the                Company  shall  identify  on  its  records  at  the  time  of  acceptance  by  the                Company,  those  individual  buildings  and  all  insurable  values  contained                therein that are considered to constitute each risk.  If such identification is                not made, each building and all insurable values contained therein shall be                considered to be a separate risk.                3.     A risk shall be determined from the standpoint of the predominant peril and                such peril shall be noted in the Company's records.    K.     ULTIMATE NET LIABILITY           "Ultimate Net Liability" shall mean the remaining portion of the Company's gross         liability on each Policy reinsured under this Agreement after deducting recoveries         from all other reinsurance, whether specific or general and whether collectible or         not.             ARTICLE VI - EXCLUSIONS    I.   AS RESPECTS PROPERTY BUSINESS COVERED UNDER THIS AGREEMENT         THIS AGREEMENT DOES NOT COVER:                    A.     THE FOLLOWING GENERAL CATEGORIES                       1.    All  Lines  of  Business  not  specifically  listed  in  Article  I  -  Business                      Covered.                                2.    Reinsurance assumed.                                3.    Ex-gratia Payments.                                4.    Loss  or  damage  occasioned  by  war,  invasion,  revolution,                      bombardment,  hostilities,  acts  of  foreign  enemies,  civil  war,                      rebellion,  insurrection,  military  or  usurped  power,  martial  law,  or                      confiscation by order of any government or public authority, but not                      excluding loss or damage which would be covered under a standard                      form of Policy containing a standard war exclusion clause.                                5.    Insolvency Funds as per the attached Insolvency Funds Exclusion                      Clause, which is made part of this Agreement.                                6.    Pool,  Syndicate  and  Association  business  as  per  the  attached                      Pools,  Associations  and  Syndicates  Exclusion  Clause,  which  is                      made part of this Agreement.                   EFFECTIVE: JULY 1, 2018                                     8.           POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                            7.     Any  statutory  or  regulatory  fine  or  penalty  imposed  upon  the                      Company on account of any unfair trade or claim practice.                         B.    THE FOLLOWING PERILS                        1.     Flood and/or Earthquake when written on a stand-alone basis.                              2.     Pollution and Seepage as per the attached Pollution and Seepage                      Exclusion Clause which is made part of this Agreement.                              3.     Nuclear Incident Exclusion Clauses which are attached and made                      part of this Agreement:                                     a.     Nuclear  Incident  Exclusion  Clause  -  Physical  Damage  -                             Reinsurance - U.S.A.                      b.     Nuclear Incident Exclusion Clause - Reinsurance - No. 4.                                     4.     a.     Loss,  damage  or  expense  of  whatsoever  nature  caused                             directly or indirectly by any of the following, regardless of any                             other cause or event contributing concurrently or in any other                             sequence  to  the  loss:  nuclear  reaction  or  radiation,  or                             radioactive contamination, however caused.                               b.     However,  if  nuclear  reaction  or  radiation,  or  radioactive                             contamination results in fire it is specifically agreed herewith                             that  this  Agreement  will  pay  for  such  fire  loss  or  damage                             subject to all of the terms, conditions and limitations of this                             Agreement.                                            c.     This exclusion shall not apply to loss, damage or expense                             originating  from  and  occurring  at  risks  using  radioactive                             isotopes  in  any  form  where  the  nuclear  exposure  is  not                             considered by the Company to be the primary hazard.                5.     Terrorism as per the attached Terrorism Exclusion Clause (USA) –                      Reinsurance (Property), which is made part of this Agreement.                6.     Loss, damage or expense of whatsoever nature arising from Named                      Windstorms.                        II.    AS RESPECTS CASUALTY BUSINESS COVERED UNDER THIS AGREEMENT                  THIS AGREEMENT DOES NOT COVER:                  1.     All Lines of Business not specifically listed in Article I - Business Covered.                  2.    Ex-gratia payments.                  3.    Loss or damage caused directly or indirectly by: (a) enemy attack by armed               forces including action taken by military, naval or air forces in resisting an   EFFECTIVE: JULY 1, 2018                                     9.           POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                            actual  or  an  immediately  impending  enemy  attack;  (b)  invasion; (c)               insurrection; (d) rebellion; (e) revolution; (f) intervention; (g) civil war; and               (h) usurped power.                  4.    Reinsurance assumed by the Company.                  5.     Business derived from any Pool, Association, including Joint Underwriting               Association, Syndicate, Exchange, Plan, Fund or other facility directly as a               member,  subscriber  or participant, or  indirectly  by  way  of  reinsurance  or               assessments.                         6.     Pollution Liability as per the attached Pollution Liability Exclusion Clause -               Reinsurance.                  7.     Insolvency Funds as per the attached Insolvency Funds Exclusion Clause.                  8.     Nuclear Incident Exclusion Clauses which are attached and made part of               this Agreement:                        a.     Nuclear Incident Exclusion Clause - Liability - Reinsurance - U.S.A.               b.     Nuclear Incident Exclusion Clause - Reinsurance - No. 4.                  9.    Any statutory or regulatory fine or penalty imposed upon the Company on               account of any unfair trade or claim practice.          10.    Terrorism  as  per  the  attached  Terrorism  Exclusion  Clause  (USA)  –               Reinsurance (Casualty), which is made part of this Agreement.                  11.   Any actual or alleged liability whatsoever for any claim or claims in respect               of loss or losses, directly or indirectly arising out of, resulting from, or  in               consequence of asbestos, in whatever form or quantity.              ARTICLE VII - SPECIAL ACCEPTANCE    Risks  and/or  Policies  which  are  beyond  the  terms,  conditions  or  limitations  of  this  Agreement may be submitted to the Reinsurer for special acceptance hereunder; and such  risks and/or Policies, if accepted in writing by the Reinsurer, shall be subject to all of the  terms,  conditions  and  limitations  of  this  Agreement,  except  as modified  by  the  special  acceptance.  Premiums and losses derived from any special acceptance shall be included  with other data for purposes of this Agreement.      ARTICLE VIII - INTERNATIONAL TRADE CONTROLS AND ECONOMIC SANCTIONS    No Reinsurer shall be deemed to provide cover and no Reinsurer shall be liable to pay any  claim or pay any benefit hereunder to the extent that the provision of such cover, payment  of such claim or provision of such benefit would expose that Reinsurer to any sanction,  prohibition  or  restriction  under  United  Nations  resolutions  or the  trade  or  economic  sanctions, laws or regulations of any jurisdiction applicable to that Reinsurer.   EFFECTIVE: JULY 1, 2018                                     10.          POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                   ARTICLE IX - REINSURANCE PREMIUM     A.     The  Company  shall  cede  to  the  Reinsurer  2%  of  the  Company's unearned         premiums on its Ultimate Net Liability in force as of July 1, 2018 on the business         covered hereunder.    B.     The Company shall cede to the Reinsurer 2% of the Company's Gross  Premiums          Written applicable to new and renewal Policies becoming effective on or after July         1,  2018,  with  respect  to  its   Ultimate  Net  Liability  on  the  business  covered         hereunder.      C.     The Reinsurer will allow the Company an allowance for other reinsurance equal to         ***** of the premiums ceded under Paragraphs A. and B. above.  Other reinsurance         includes  but  is  not  limited  to  Property  Per  Risk  Reinsurance,  Florida  Hurricane         Catastrophe Mandatory Coverage Layer and Property Catastrophe Excess of Loss         Reinsurance.    D.     In the event there is a cession adjustment pursuant to Paragraph B. of Article I –         Business Covered, the percentage of the Company's Gross Premiums Written to         be  ceded  to  the  Reinsurer  commencing  on  the   effective  date  of   such  cession         change shall be the newly revised cession percentage and any resulting difference         in unearned premiums shall be debited or credited to the appropriate party.     ARTICLE X – SLIDING SCALE COMMISSION     A.     The Reinsurer shall make to the Company a provisional commission allowance of         *****  of  the  Gross  Premiums  Written  ceded  hereunder.   Such  provisional         commission  allowance  shall  also  apply  to   the  Company's  unearned  premiums         ceded hereunder as respects business in force as of July 1, 2018. The Company         shall  debit  the  Reinsurer  with  the  provisional  commission  allowance;  such         provisional  commission  shall  be  adjusted  as  provided  hereafter.  On all return         premiums the Company shall return to the Reinsurer the provisional commission         allowance of ***** . Such commission allowance includes provision for all brokerage         and  commission,  premium  taxes  of  all  kinds,  all  board,  bureau  and  exchange         assessments  and  any  other  expenses  whatsoever  except  Loss  Adjustment         Expenses.      B.    The  adjusted  commission  allowance  which  the  Reinsurer  shall  make  to  the         Company shall be in accordance with the following formula and computed and paid         on Earned Premiums.  All intermediate and final calculations shall be rounded to         two decimal places.    EFFECTIVE: JULY 1, 2018                                     11.          POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                        If the actual ratio of Incurred               The adjusted commission           Losses to Earned Premiums is:                 shall be:             ***** or less                                 ***** Maximum            Higher than ***** but                         ***** less *****  of            not exceeding *****                           the difference between                                                          the actual loss ratio                                                          and  *****             ***** or higher                               ***** Minimum   C.  The term "Incurred Losses" means all losses and Loss Adjustment Expenses paid       less recoveries, including salvage and subrogation, during the current Period for which       computation is being made plus all losses and Loss Adjustment Expenses outstanding       at the end of the current Period plus a reserve for IBNR losses at the end of the current       Period,  as  determined  by  the  Company,  less  all  losses  and  Loss Adjustment       Expenses outstanding and IBNR, determined by the Company, at the close of the       preceding period.   D.  The term "Earned Premiums" means the total of the Gross Premiums Written, ceded       during the current Period plus the unearned premiums as respects premiums in force       at  the  beginning  of  such  Period,  less  the  unearned  premiums  at the  close  of  the       current  Period,  provided  that  in  the  event  of  a  Run-off  termination,  only  those       unearned premiums applicable to any  unexpired periods shall be deducted.        Said unearned premiums to be calculated on an actual daily basis or in accordance       with the Company's methodology, as agreed.   E.   The term "Period" means the actual time covered by each adjustment of commission.   F.   Within  90  days  after  the  close  of  each  Period,  the  Reinsurer  shall  calculate  the       commission  adjustment  on  the  Earned  Premiums  during  the  Period.  The  first       adjustment of commission shall be made as of September 30, 2019, for the Period       from July 1, 2018, through June 30, 2019 and annually thereafter.  If the adjusted       commission  on  the  Earned  Premiums  during  the  Period  exceeds  the  provisional       commission already allowed on the Earned Premiums, the Reinsurer shall pay the       difference  to  the  Company.   If  the  provisional  commission  already  allowed  on  the        Earned Premiums exceeds the adjusted commission on the Earned Premiums, the       difference  shall  be  refunded  by  the  Company  to  the  Reinsurer.  In  addition,  the       difference in commission adjustment shall be paid by the debtor party within 30 days       after the Company's verification of the Reinsurer's calculations.   G.  In the event reserves for losses and Loss Adjustment Expenses used in any previous       calculation of adjusted commission shall have been underestimated or overestimated,       as proven by subsequent developments, such previous calculations shall be revised       at the request of either party.  The Company  shall refund to the Reinsurer, or the       Reinsurer shall pay to the Company, such amount as will give effect to the revision(s).    EFFECTIVE: JULY 1, 2018                                     12.          POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                               H.  After  the  first  commission  adjustment,  as  noted  in  Paragraph  F.  above,  all      subsequent adjustments of commission shall be made every September 30th  until      the  expiration  of  all  liability  and  the  settlement  of  all  losses  covered  under  this      Agreement.     ARTICLE XI - LOSSES, LOSS ADJUSTMENT EXPENSES AND SALVAGES    A.     The Reinsurer shall pay its pro rata share of losses including prejudgment interest         paid by the Company arising under Policies covered under this Agreement, subject         to Article I – Business Covered, and the Reinsurer shall benefit proportionately in         all recoveries, including salvage and subrogation.    B.     The Reinsurer shall pay its pro rata share of Loss Adjustment Expenses paid by         the Company, subject to Article I – Business Covered.      C.     The  Company  shall  have  the  responsibility  to  investigate,  defend  or  negotiate         settlements of all claims and lawsuits related to Policies written by the Company         and  reinsured  under  this  Agreement.   The  Reinsurer,  at  its  own expense,  may         associate with the Company in the defense of any claim, suit or other proceeding         which involves or is likely to involve the reinsurance provided under this Agreement,         and the Company shall cooperate in every respect in the defense of any such claim,         suit or proceeding.       ARTICLE XII - REPORTS AND REMITTANCES    A.     The Company shall provide the Reinsurer with a quarterly account and bordereaux,         as well as quarterly and annual reports, in accordance with the provisions set forth         in Paragraphs C., E., F. and G. below.    B.     Portfolio Assumption - Within 45 days after July 1, 2018, the Company shall pay to         the Reinsurer the Reinsurer's pro rata share of the Company's unearned premium         reserve segregated by Line of Business on the business in force as of said date.    C.     Quarterly Account - Within 30 days after the close of each calendar quarter, the         Company shall forward a quarterly account summarizing the following transactions         under this Agreement during such quarter:           1.     Gross Premiums Written ceded segregated by Line of Business specifically                identifying the current cession rate in the event there has been a cession                change pursuant to Paragraph B. of Article I – Business Covered;                   2.    ***** allowance for reinsurance;                  3.     Provisional Commissions;                   4.     Loss  and  Loss  Adjustment  Expenses  paid  less  recoveries,  including                salvage and subrogation, segregated by Line of Business, by year of loss.    EFFECTIVE: JULY 1, 2018                                     13.          POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                               The balance due either party shall be paid within 45 days after the close of each for         the transactions during such quarter.    D.     In respect of Paragraph C. above:           1.     All quarterly Account Statements shall be sent to the Reinsurer at:                          a.     E-Mail/Word,  Excel,  PDF,  or  TIF  Formats,  or  other  scanned                      documents:                                     *****, or               b.     Standard Mail:                                      Swiss Reinsurance America Corporation                      P.O. Box 74008504                      Chicago, IL  60674-8504                    2.     All  checks  and  supporting  documentation  shall  be  sent  to  the  Reinsurer               through one of the options set forth below and shall identify the applicable               Reinsurer Agreement Number(s):                          a.     WIRE TRANSFER                                     (i)    All wires shall be sent to:                                                          Bank of America                             655 Grant Street                             Concord, CA  94520                             Account Name:  Swiss Reinsurance America Corporation                             Account Address:  175 King Street Armonk, NY  10504                             Account Number:  *****                              Wire ABA Number:  *****                             ACH ABA Number:  *****                             SWIFT:  *****                                                   (ii)   All supporting documentation shall be sent to:                                               (a)    E-Mail/Word,  Excel,  PDF,  or  TIF  Formats,  or  other                                    scanned documents:                                                   *****, or                                                          (b)    Standard Mail:                                                                Swiss Reinsurance America Corporation                                   P.O. Box 74008504                                   Chicago, IL  60674-8504                  b.    COURIER OR OVERNIGHT CARRIER  EFFECTIVE: JULY 1, 2018                                     14.          POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                                                       Both checks and supporting documentation shall be sent to:                       Bank of America Lockbox Services                       Swiss Reinsurance America Corporation                      540 West Madison Street, 4th Floor                      Chicago, IL  60661                      Re:  Lockbox 74008504                                c.    STANDARD MAIL                                                   Both checks and supporting documentation shall be sent to:                                            Swiss Reinsurance America Corporation                      P.O. Box 74008504                      Chicago, IL  60674-8504    E.     Premium Bordereau as respects each Policy covered under this Agreement - Within         30  days  after  the  close  of  each  quarter,  the  Company  shall  submit a premium         bordereau  to  the  Reinsurer  segregated  by  underwriting  year,  the  following         information as respects each Policy covered under this Agreement:                1.    Name of Insured,                  2.     Policy Number,                  3.    Effective and Expiration Dates,                  4.     Line of Business.         F.     Loss Bordereau as respects each Policy covered under this Agreement - Within 30         days after the close of each quarter, the Company shall submit a loss bordereau to         the Reinsurer segregating by underwriting year of loss the following information as         respects each loss covered under this Agreement:                 1.   Name of Insured,                    2.    Policy Number,                    3.    Policy Limits,                    4.   Effective and Expiration Dates,                    5.   Claim Number,                          6.    Date of Loss,                    7.    Line of Business.              EFFECTIVE: JULY 1, 2018                                     15.          POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                               G.     Quarterly Report - The Company shall furnish the Reinsurer within 30 days after         the close of each quarter the following information as respects the business ceded         hereunder:                1.    Unearned premium reserves segregated by Line of Business at the end of                the quarter and calculated on the actual daily basis or in accordance with                the Company's methodology, as agreed.                  2.     Estimated loss and Loss Adjustment Expense reserves outstanding at the                end of the quarter segregated by Line of Business, by year of loss.    H.  Annual Report - The Company shall furnish the Reinsurer, within 45 days after the       termination  date  of  this  Agreement,  and  annually  thereafter,  a summary  of  the       business ceded hereunder:        1.  Gross Premiums Written ceded from inception to date, segregated by Line of           Business;  provided  that  in  the  event  there  was  a  cession  change  under  the           Agreement, pursuant to Paragraph B. of Article I- Business Covered, such report           shall provide separately the Gross Premiums Written ceded during the year as           respects the initial 2% cession and the Gross Premiums Written ceded during           the year as respects the revised cession percentage, specifically identifying the           new percentage.        2.  Unearned premium reserves segregated by Line of Business;        3.  Losses and Loss Adjustment Expenses paid, less recoveries, including salvage           and subrogation, from inception to date;        4.  Losses  and  Loss  Adjustment  Expenses  outstanding,  segregated by  Line  of           Business;        5.  IBNR, as determined by the Company, as of each June 30th.          ARTICLE XIII - ACCESS TO RECORDS    The Reinsurer or its duly authorized representatives shall have the right to examine, at the  offices of the Company at a reasonable time, during the currency of this Agreement or  anytime thereafter, all books and records of the Company relating to business which is the  subject of this Agreement.      ARTICLE XIV - TAXES    The Company shall be liable for all taxes on premiums paid to the Reinsurer under this  Agreement, except income or profit taxes of the Reinsurer, and shall indemnify and hold  the Reinsurer harmless for any such taxes which the Reinsurer may become obligated to  pay to any local, state or federal taxing authority.       EFFECTIVE: JULY 1, 2018                                     16.          POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                 ARTICLE XV - OFFSET    Each party to this Agreement together with their successors or assigns shall have and may  exercise, at any time, the right to offset any balance or balances due the other (or, if more  than  one,  any  other).   Such  offset  may  include  balances  due  under  this  Agreement  regardless  of  whether  such  balances  arise  from  premiums,  losses  or  otherwise,  and  regardless of capacity of any party, whether as assuming insurer and/or ceding insurer,  under the various agreements involved; provided however, that in the event of insolvency  of a party hereto, offsets shall only be allowed in accordance with the provisions of any  applicable Florida law, statute or regulation governing such offset.       ARTICLE XVI - DISPUTE RESOLUTION    Part I - Choice Of Law And Forum    Any dispute arising under this Agreement shall be resolved in the State of Florida, and the  laws  of  the  State  of  Florida  shall  govern  the  interpretation  and  application  of  this  Agreement.    Part II - Mediation    If a dispute between the Company and the Reinsurer, arising out of the provisions of this  Agreement or concerning its interpretation or validity and whether arising before or after  termination of this Agreement has not been settled through negotiation, both parties agree  to  try  in  good  faith  to  settle  such  dispute  by  nonbinding  mediation,  before  resorting  to  arbitration.    Part III - Arbitration    A.      Resolution of Disputes - As a condition precedent to any right of action arising          hereunder, any dispute not resolved by mediation between the Company and the          Reinsurer  arising  out  of  the  provisions  of  this  Agreement  or  concerning  its          interpretation  or  validity,  whether  arising  before  or  after  termination  of  this          Agreement, shall be submitted to arbitration in the manner hereinafter set forth.    B.      Composition of Panel - Unless the parties agree upon a single arbitrator within 15          days  after  the  receipt  of  a  notice  of  intention  to  arbitrate,  all  disputes  shall  be          submitted  to  an  arbitration  panel  composed  of  two  arbitrators  and  an  umpire          chosen in accordance with Paragraph C. hereof.     C.      Appointment of Arbitrators - The members of the arbitration panel shall be chosen          from disinterested persons with at least 10 years' experience in the insurance and          reinsurance  business.   Unless  a  single  arbitrator  is  agreed  upon,  the  party          requesting arbitration (hereinafter referred to as the "claimant") shall appoint an          arbitrator and give written notice thereof by certified mail or by a courier service          producing evidence of receipt by the receiving party, to the other party (hereinafter          referred to as the "respondent") together with its notice of intention to arbitrate.           Within 30 days after receiving such notice, the respondent shall also appoint an  EFFECTIVE: JULY 1, 2018                                     17.          POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                       arbitrator and notify the claimant thereof by certified mail or by a courier service          producing evidence of receipt by the receiving party.  Before instituting a hearing,          the two arbitrators so appointed shall choose an umpire.  If, within 20 days after          the appointment of the arbitrator chosen by the respondent, the two arbitrators fail          to agree upon the appointment of an umpire, each of them shall nominate three          individuals to serve as umpire, of whom the other shall decline two and the umpire          shall be chosen from the remaining two by drawing lots.  The name of the individual          first drawn shall be the umpire.    D.      Failure  of  Party  to  Appoint  an  Arbitrator  -  If  the  respondent  fails  to  appoint  an          arbitrator  within  30  days  after  receiving  a  notice  of  intention  to  arbitrate,  the          claimant's arbitrator shall appoint an arbitrator on behalf of the respondent, such          arbitrator shall then, together with the claimant's arbitrator, choose an umpire as          provided in Paragraph C. of Part III of this Article.    E.      Submission of Dispute to Panel – Within 30 days after the notice of appointment          of all arbitrators, the panel shall meet, and determine a timely period for discovery,          discovery procedures and schedules for hearings.    F.      Procedure  Governing  Arbitration  -  All  proceedings  before  the  panel  shall  be          informal and the panel shall not be bound by the formal rules of evidence.  The          panel  shall  have  the  power  to  fix  all  procedural  rules  relating  to  the  arbitration          proceeding. In reaching any decision, the panel shall give due consideration to the          customs and usages of the insurance and reinsurance business.    G.      Arbitration Award - The arbitration panel shall render its decision within 60 days          after termination of the proceeding, which decision shall be in writing, stating the          reasons  therefor.   The  decision  of  the  majority  of  the  panel  shall  be  final  and          binding on the parties to the proceeding. In no event, however, will the panel be          authorized to award punitive, exemplary or consequential damages of whatsoever          nature in connection with any arbitration proceeding concerning this Agreement.    H.      Cost of Arbitration - Unless otherwise allocated by the panel, each party shall bear          the expense of its own arbitrator and shall jointly and equally bear with the other          parties the expense of the umpire and the arbitration.      ARTICLE XVII - INSOLVENCY    A.     In  the  event  of  insolvency  of  the  Company,  the  reinsurance  provided  by  this         Agreement  shall  be  payable  by  the  Reinsurer  on  the basis  of  the  liability  of  the         Company as respects Policies covered hereunder, without diminution because of         such insolvency, directly to the Company or its liquidator, receiver, conservator or         statutory successor except as provided in Sections 4118(a)(1)(A) and 1114(c) of         the New York Insurance Law.    B.     The Reinsurer shall be given written notice of the pendency of each claim or loss         which may involve the reinsurance provided by this Agreement within a reasonable         time after such claim or loss is filed in the insolvency proceedings.  The Reinsurer         shall have the right to investigate each such claim or loss and interpose, at its own  EFFECTIVE: JULY 1, 2018                                     18.          POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                      expense,  in  the  proceedings  where  the  claim  or  loss  is  to  be  adjudicated,  any         defense  which  it  may  deem  available  to  the  Company,  its  liquidator,  receiver,         conservator or statutory successor.  The expense thus incurred by the Reinsurer         shall be chargeable, subject to court approval, against the insolvent Company as         part of the expense of liquidation to the extent of a proportionate share of the benefit         which may accrue to the Company solely as a result of the defense undertaken by         the Reinsurer.    C.     In  addition  to  the  offset  provisions  set  forth  in  Article  XV  -  Offset,  any  debts  or         credits, liquidated or unliquidated, in favor of or against either party on the date of         the receivership or liquidation order (except where the obligation was purchased by         or transferred to be used as an offset) are deemed mutual debts or credits and shall         be set off with the balance only to be allowed or paid.  Although such claim on the         part  of  either  party  against  the  other  may  be  unliquidated  or  undetermined  in         amount on the date of the entry of the receivership or liquidation order, such claim         will  be  regarded  as  being  in  existence  as  of  such  date  and  any claims  then  in         existence and held by the other party may be offset against it.    D.     Nothing contained in this Article is intended to change the relationship or status of         the parties to this Agreement or to enlarge upon the rights or obligations of either         party hereunder except as provided herein.      ARTICLE XVIII - AMENDMENTS    This  Agreement  may  be  amended  by  mutual  consent  of  the  parties expressed  in  an  addendum; and such addendum, when executed by both parties, shall be deemed to be  an integral part of this Agreement and binding on the parties hereto.      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed  by their duly authorized representatives as of the following dates:         EFFECTIVE: JULY 1, 2018                                     19.          POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                                        FEDNAT INSURANCE COMPANY                                                                                         /s/ Michael H. Braun                      /s/ Ronald A. Jordan  Signature                                 Signature                                               Michael H. Braun                         Ronald A. Jordan  Print Name                                Print Name                                                CEO & President                           CFO  Title                                     Title    Date:  7/20/2018                          Date:  07/20/2018                                SWISS REINSURANCE AMERICA CORPORATION                                                   /s/ Daryl Polenz     /s/ Thomas Smith                                       Signature          Signature    Daryl Polenz      Thomas Smith      Print Name      Print Name    Vice President      Title    Date:  7/6/2018         Date:  7/6/2018                                           EFFECTIVE: JULY 1, 2018                                     20.          POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                                                                                    SUPPLEMENT TO THE ATTACHMENTS                                                                                            DEFINITION OF IDENTIFICATION TERMS USED WITHIN THE ATTACHMENTS    A.     Wherever the term "Company" or "Reinsured" or "Reassured" or whatever other         term is used to designate the reinsured company or companies within the various         attachments to the reinsurance agreement, the term shall be understood to mean         Company or Reinsured or Reassured or whatever other term is used in the attached         reinsurance agreement to designate the reinsured company or companies.    B.     Wherever the term "Agreement" or "Contract" or "Policy" or whatever other term is         used  to  designate  the  attached  reinsurance  agreement  within  the  various         attachments to the reinsurance agreement, the term shall be understood to mean         Agreement or Contract or Policy or whatever other term is used to designate the         attached reinsurance agreement.    C.     Wherever the term "Reinsurer" or "Reinsurers" or "Underwriters" or whatever other         term is used to designate the reinsurer or reinsurers in the various attachments to         the  reinsurance  agreement,  the  term  shall  be  understood  to  mean  Reinsurer  or         Reinsurers  or  Underwriters  or  whatever  other  term  is  used  to  designate  the         reinsuring company or companies.                                 EFFECTIVE: JULY 1, 2018                                     1.           POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                                     INSOLVENCY FUNDS EXCLUSION CLAUSE                                                                                        This Agreement excludes all liability of the Company arising by contract, operation of law,  or otherwise from its participation or membership, whether voluntary or involuntary, in any  insolvency fund or from reimbursement of any person for any such liability.  "Insolvency  fund" includes any guaranty fund, insolvency fund, plan, pool, association, fund or other  arrangement, howsoever denominated, established or governed, which provides for any  assessment of or payment or assumption by any person of part or all of any claim, debt,  charge, fee, or other obligation of an insurer, or its successors or assigns, which has been  declared by any competent authority to be insolvent or which is otherwise deemed unable  to meet any claim, debt, charge, fee or other obligation in whole or in part.        EFFECTIVE: JULY 1, 2018                                     1.           POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                           POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE   SECTION A   Excluding:   (a)  All  Business  derived  directly  or  indirectly  from  any  Pool, Association  or  Syndicate  which       maintains its own reinsurance facilities.   (b)  Any Pool or Scheme (whether voluntary or mandatory) formed after March 1, 1968, for the       purpose  of  insuring  Property  whether  on  a  country-wide  basis  or  in  respect  of  designated       areas.  This Exclusion shall not apply to so-called Automobile Insurance Plans or other Pools       formed to provide coverage for Automobile Physical Damage.   SECTION B   It is agreed that business, written by the Company for the same perils, which is known at the time  to be insured by or in excess of underlying amounts placed in the following Pools, Associations or  Syndicates, whether by way of insurance or reinsurance is excluded hereunder:        Industrial  Risk  Insurers  (successor  to  Factory  Insurance  Association  and  Oil  Insurance       Association); Associated Factory Mutuals.        Any  Pool,  Association  or  Syndicate  formed  for  the  purpose  of  writing  Oil,  Gas  or  Petro-      Chemical Plants and/or Oil or Gas Drilling Rigs.        United  States  Aircraft  Insurance  Group,  Canadian  Aircraft  Insurance  Group,  Associated       Aviation Underwriters, American Aviation Underwriters.   SECTION B does not apply:   (a)  Where  the  Total  Insured  Value  over  all  interests  of  the  risk  in  question  is  less  than       $350,000,000.   (b)  To interests traditionally underwritten as Inland Marine or Stock and/or Contents written on a       Blanket basis.   (c)  To Contingent Business Interruption, except when the Company is aware that the key location       is known at the time to be insured in any Pool, Association or Syndicate named above.   (d)  To risks as follows: Offices, Hotels, Apartments, Hospitals, Educational Establishments, Public       Utilities (other than Railroad Schedules) and Builders Risks on the classes of risks specified       in this subsection (d) only.                        EFFECTIVE: JULY 1, 2018                                     1.           POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3   





 






                                                                  POLLUTION AND SEEPAGE EXCLUSION CLAUSE      This Reinsurance does not apply to:        1.  Pollution, seepage, contamination or environmental impairment (hereinafter collectively           referred to as "pollution") insurances, however styled;        2.  Loss or damage caused directly or indirectly by pollution, unless said loss or damage           follows as a result of a loss caused directly by a peril covered hereunder;        3.  Expenses resulting from any governmental direction or request that material present in           or part of or utilized on an insured's property be removed or modified, except as provided           in 5. below;        4.  Expenses incurred in testing for and/or monitoring pollutants;        5.  Expenses incurred in removing debris, unless (A) the debris results from a loss caused           directly by a peril covered hereunder, and (B) the debris to be removed is itself covered           hereunder, and (C) the debris is on the insured's premises, subject, however, to a limit           of $5,000 plus 25% of (i) the property damage loss, any risk, any one location, any one           original insured, and (ii) any deductible applicable to the loss;        6.  Expenses  incurred  to  extract  pollutants  from  land  or  water  at  the  insured's  premises           unless (A) the release, discharge, or dispersal of pollutants results from a loss caused           directly by a peril covered hereunder, and (B) such expenses shall not exceed $10,000;        7.  Loss  of  income  due  to  any  increased  period  of  time  required to  resume  operations           resulting from enforcement of any law regulating the prevention, control, repair, clean-up           or restoration of environmental damage;        8.  Claims under 5. and/or 6. above, unless notice thereof is given to the Company by the           insured within 180 days after the date of the loss occurrence to which such claims relate.   "Pollutants" means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke,  vapor, soot, fumes, acids, alkalis, chemicals and waste.  Waste includes materials to be recycled,  reconditioned or reclaimed.   Where no pollution exclusion has been accepted or approved by an insurance regulatory authority  for use in a policy that is subject to this Agreement or where a pollution exclusion that has been  used in a policy is overturned, either in whole or in part, by a court having jurisdiction, there shall be  no recovery for pollution under this Agreement unless said pollution loss or damage follows as a  result of a loss caused directly by a peril covered hereunder.   Nothing herein shall be deemed to extend the coverage afforded by this reinsurance to property or  perils  specifically  excluded  or  not  covered  under  the  terms  and  conditions  of  the  original  policy  involved.    EFFECTIVE: JULY 1, 2018  1                                               POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                               NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE - U.S.A.      N.M.A. 1119   1.   This Reinsurance does not cover any loss or liability accruing to the Reassured, directly or       indirectly, and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed       for the purpose of covering Atomic or Nuclear Energy risks.   2.   Without in any way restricting the operation of paragraph 1. of this Clause, this Reinsurance       does not cover any loss or liability accruing to the Reassured, directly or indirectly, and whether       as  Insurer  or  Reinsurer,  from  any  insurance  against  Physical  Damage  (including  business       interruption or consequential loss arising out of such Physical Damage) to:        I.   Nuclear reactor power plants including all auxiliary property on the site, or        II.  Any  other  nuclear  reactor  installation,  including  laboratories  handling  radioactive            materials in connection with reactor installations, and critical facilities as such, or        III.  Installations  for  fabricating  complete  fuel  elements  or  for  processing  substantial            quantities  of  "special  nuclear  material,"  and  for  reprocessing,  salvaging,  chemically            separating, storing or disposing of spent nuclear fuel or waste materials, or        IV.  Installations  other  than  those  listed  in  paragraph  2.  III. above  using  substantial            quantities of radioactive isotopes or other products of nuclear fission.   3.   Without  in  any  way  restricting  the  operation  of  paragraphs  1.  and  2.  of  this  Clause,  this       Reinsurance does not cover any loss or liability by radioactive contamination accruing to the       Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on       property which is on the same site as a nuclear reactor power plant or other nuclear installation       and which normally would be insured therewith, except that this paragraph 3. shall not operate:            (a)  where the Reassured does not have knowledge of such nuclear reactor power plant               or nuclear installation, or            (b)  where the said insurance contains a provision excluding coverage for damage to               property caused by or resulting from radioactive contamination, however caused.                However, on and after 1st January, 1960, this sub-paragraph (b) shall only apply               provided the said radioactive contamination exclusion provision has been approved               by the Governmental Authority having jurisdiction thereof.   4.   Without in any way restricting the operation of paragraphs 1., 2. and 3. of this Clause, this       Reinsurance does not cover any loss or liability by radioactive contamination accruing to the       Reassured, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive       contamination is a named hazard specifically insured against.   5.   It is understood and agreed this Clause shall not extend to risks using radioactive isotopes in       any form where the nuclear exposure is not considered by the Reassured to be the primary       hazard.   N.M.A. 1119    EFFECTIVE: JULY 1, 2018                 1                                   POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3   





 






                                               6.   The term "special nuclear material" shall have the meaning given to it by the Atomic Energy       Act of 1954 or by any law amendatory thereof.   7.   Reassured to be sole judge of what constitutes:        (a)  substantial quantities, and        (b)  the extent of installation, plant or site.   NOTE: - Without in any way restricting the operation of paragraph 1. hereof, it is understood and  agreed that        (a)  all policies issued by the Reassured on or before 31st December, 1957 shall be free from           the application of the other provisions of this Clause until expiry date or 31st December,           1960 whichever first occurs whereupon all the provisions of this Clause shall apply,        (b)  with respect to any risk located in Canada policies issued by the Reassured on or before           31st December, 1958 shall be free from the application of the other provisions of this           Clause until expiry date or 31st December, 1960 whichever first occurs whereupon all           the provisions of this Clause shall apply.        EFFECTIVE: JULY 1, 2018                 2                                   POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3   





 






                                                          NUCLEAR INCIDENT EXCLUSION CLAUSE - REINSURANCE - NO. 4   1.   This Reinsurance does not cover any loss or liability accruing to the Reassured as a member       of, or subscriber to, any association of insurers or reinsurers formed for the purpose of covering       nuclear energy risks or as a direct or indirect reinsurer of any such member, subscriber or       association.   2.   Without in any way restricting the operations of Nuclear Incident Exclusion Clauses, - Liability,       - Physical Damage, - Boiler and Machinery and paragraph 1. of this Clause, it is understood       and  agreed  that  for  all  purposes  of  the  reinsurance  assumed  by the  Reinsurer  from  the       Reinsured,  all  original  insurance  policies  or  contracts  of  the Reinsured  (new,  renewal  and       replacement)  shall  be  deemed  to  include  the  applicable  existing  Nuclear  Clause  and/or       Nuclear Exclusion Clause(s) in effect at the time and any subsequent revisions thereto as       agreed upon and approved by the Insurance Industry and/or a qualified Advisory or Rating       Bureau.    EFFECTIVE: JULY 1, 2018 1                                                POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






                                                             POLLUTION LIABILITY EXCLUSION CLAUSE - REINSURANCE        This Reinsurance excludes:        (1)  Any loss occurrence arising out of the actual, alleged or threatened discharge, dispersal,           release or escape of pollutants:            a)   At or from premises owned, rented or occupied by an original assured; or            b)   At or from any site or location used for the handling, storage, disposal, processing                or treatment of waste; or            c)   Which  are  at  any  time  transported,  handled,  stored,  treated,  disposed  of,  or               processed as waste; or            d)   At  or  from  any  site  or  location  on  which  any  original  assured  is  performing               operations:                (i)   If the pollutants are brought on or to the site or location in connection  with                     such operations; or                 (ii)  If the operations are to test for, monitor, clean up, remove, contain, treat,                     detoxify or neutralize the pollutants.        (2)  Any liability, loss, cost or expense arising out of any governmental direction or request to           test for, monitor, clean up, remove, contain, treat, detoxify or neutralize pollutants.   "Pollutants" means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke,  vapor, soot, fumes, acids, alkalis, chemicals and waste.  Waste includes materials to be recycled,  reconditioned or reclaimed.   Subparagraphs  a)  and  d)(i)  of  paragraph  (1)  of  this  exclusion  do  not  apply  to  loss  occurrences  caused by heat, smoke or fumes from a hostile fire. As used herein, "hostile fire" means one which  becomes uncontrollable or breaks out from where it was intended to be.   "Original  assured"  as  used  herein  means  all  insureds  as  defined  in  the  policy  issued  by  the  Company.    EFFECTIVE: JULY 1, 2018 1                                                POR1238172  P18-0057                                                                          7/6/2018 11:54 AM.v3  





 






         NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - U.S.A.        N.M.A. 1590                                                                                       1.   This reinsurance does not cover any loss or liability accruing to the Reassured as a member       of, or subscriber to, any association of insurers or reinsurers formed for the purpose of covering       nuclear energy risks or as a direct or indirect reinsurer of any such member, subscriber or       association.   2.   Without in any way restricting the operation of paragraph 1. of this Clause it is understood and       agreed that for all purposes of this reinsurance all the original policies of the Reassured (new,       renewal and replacement) of the classes specified in Clause II. in this paragraph 2. from the       time  specified  in  Clause  III.  in  this  paragraph  2.  shall  be  deemed  to  include  the  following       provision (specified as the Limited Exclusion Provision):          LIMITED EXCLUSION PROVISION*           I.    It is agreed that the policy does not apply under any liability  coverage, to injury,               sickness, disease, death or destruction, bodily injury or property damage with               respect to which an insured under the policy is also an insured under a nuclear               energy  liability  policy  issued  by  Nuclear  Energy  Liability  Insurance  Association,               Mutual Atomic Energy Liability Underwriters or Nuclear Insurance Association of               Canada, or would be an insured under any such policy but for its termination upon               exhaustion of its limit of liability.          II.    Family  Automobile  Policies  (liability  only),  Special  Automobile  Policies  (private               passenger automobiles, liability only), Farmers Comprehensive Personal Liabilities               Policies (liability only), Comprehensive Personal Liability Policies (liability only) or               policies of a similar nature; and the liability portion of combination forms related to               the four  classes of policies stated above, such as the Comprehensive Dwelling               Policy and the applicable types of Homeowners Policies.          III.   The inception dates and thereafter of all original policies as described in II. above,               whether new, renewal or replacement, being policies which either              (a)    become effective on or after 1st May, 1960, or              (b)    become  effective  before  that  date  and  contain  the  Limited  Exclusion                    Provision set out above; provided this paragraph 2. shall not be applicable to                    Family  Automobile  Policies,  Special  Automobile  Policies,  or  policies  or                    combination policies of a similar nature, issued by the Reassured on New                    York risks, until 90 days following approval of the Limited Exclusion Provision                    by the Governmental Authority having jurisdiction thereof.   3.   Except for those classes of policies specified in Clause II. of paragraph 2. and without in any       way restricting the operation of paragraph 1. of this Clause, it is understood and agreed that       for all purposes of this reinsurance the original liability policies of the Reassured (new, renewal       and replacement) affording the following coverages:   2012 JULY 1   EFFECTIVE: JULY 1, 2018    P18-0057                                                                 POR1238172  7/6/2018 11:54 AM.v3   





 






         Owners, Landlords and Tenants Liability, Contractual Liability, Elevator Liability, Owners or       Contractors (including railroad) Protective Liability, Manufacturers and Contractors Liability,       Product  Liability,  Professional  and  Malpractice  Liability,  Storekeepers  Liability,  Garage       Liability, Automobile Liability (including Massachusetts Motor Vehicle or Garage Liability)        shall be deemed to include with respect to such coverages, from the time specified in Clause       V. of this paragraph 3., the following provision (specified as the Broad Exclusion Provision):          BROAD EXCLUSION PROVISION*        It is agreed that the policy does not apply:         I.      Under any Liability Coverage to injury, sickness, disease, death or destruction,                bodily injury or property damage                 (a)   with respect to which an insured under the policy is also an insured under                      nuclear energy liability policy issued by Nuclear Energy Liability Insurance                      Association,  Mutual  Atomic  Energy  Liability Underwriters  or  Nuclear                      Insurance Association of Canada, or would be an insured under any such                      policy but for its termination upon exhaustion of its limit of liability; or                  (b)  resulting  from  the  hazardous properties  of  nuclear  material  and  with                      respect  to  which  (1)  any  person  or  organization  is  required  to maintain                      financial protection pursuant to the Atomic Energy Act of 1954, or any law                      amendatory thereof, or (2) the insured is, or had this policy not been issued                      would be, entitled to indemnity from the United States of America, or any                      agency thereof, under any agreement entered into by the United States of                      America, or any agency thereof, with any person or organization.         II.     Under any Medical Payments Coverage, or under any Supplementary Payments                Provision relating to immediate medical or surgical relief, first aid, to expenses                incurred with respect to bodily injury, sickness, disease or death, bodily injury                resulting from the hazardous properties of nuclear material and arising out of the                operation of a nuclear facility by any person or organization.        III.     Under any Liability Coverage, to injury, sickness, disease, death or destruction,                bodily injury or property damage resulting from the hazardous properties of nuclear                material, if                 (a)   the nuclear material (1) is at any nuclear facility owned by, or operated by                      or  on  behalf  of,  an  insured  or  (2)  has  been  discharged  or  dispersed                      therefrom;                 (b)   the  nuclear  material  is  contained  in  spent  fuel  or  waste  at any time                      possessed, handled, used, processed, stored, transported or disposed of                      by or on behalf of an insured; or    EFFECTIVE: JULY 1, 2018    P18-0057                                                                 POR1238172  7/6/2018 11:54 AM.v3   





 






                 (c)    the injury,  sickness,  disease,  death  or  destruction,  bodily  injury  or                      property  damage  arises  out  of  the  furnishing  by  an  insured  of  services,                      materials, parts or equipment in connection with the planning, construction,                      maintenance, operation or use of any nuclear facility, but if such facility is                      located within the United States of America, its territories, or possessions                      or Canada, this exclusion (c) applies only to injury to or destruction of                      property at such nuclear facility, property damage to such nuclear facility                      and any property thereat.         IV.     As used in this endorsement:                 "hazardous properties" include radioactive, toxic or explosive properties; "nuclear                material" means source material, special nuclear material or byproduct material;                "source  material,"  "special  nuclear  material,"  and  "byproduct  material"  have  the                meanings given them in the Atomic Energy Act of 1954 or in any law amendatory                thereof;  "spent  fuel"  means  any  fuel  element  or  fuel  component,  solid  or  liquid,                which has been used or exposed to radiation in a nuclear reactor; "waste" means                any  waste  material  (1)  containing  byproduct  material  other  than  the  tailings  or                wastes produced by the extraction or concentration of uranium or thorium from any                ore processed for its source material content and (2) resulting from the operation                by any person or organization of any nuclear facility included within the definition of                nuclear facility under paragraph (a) or (b) thereof; "nuclear facility" means                 (a)   any nuclear reactor,                 (b)   any equipment or device designed or used for (1) separating the isotopes                      of  uranium  or  plutonium,  (2)  processing  or  utilizing  spent  fuel,  or  (3)                      handling, processing or packaging waste,                 (c)   any equipment or device used for the processing, fabricating or alloying of                      special nuclear material if at any time the total amount of such material in                      the custody of the insured at the premises where such equipment or device                      is  located  consists  of  or  contains  more  than  25  grams  of  plutonium  or                      uranium  233  or  any  combination  thereof,  or  more  than  250  grams of                      uranium 235,                 (d)   any structure, basin, excavation, premises or place prepared or used for                      the storage or disposal of waste                 and  includes  the  site  on  which  any  of  the  foregoing  is  located,  all  operations                conducted on such site and all premises used for such operations; "nuclear reactor"                means  any  apparatus  designed  or  used  to  sustain  nuclear  fission  in  a  self-               supporting chain reaction or to contain a critical mass of fissionable material; with                respect  to  injury  to  or  destruction  of  property,  the  word  "injury"  or                "destruction"  includes  all  forms  of  radioactive  contamination  of  property;                "property damage" includes all forms of radioactive contamination of property.          V.     The  inception  dates  and  thereafter  of  all  original  policies  affording  coverages                specified in this paragraph 3., whether new, renewal or replacement, being policies                which become effective on or after 1st May, 1960, provided this paragraph 3. shall                not be applicable to                 (i)  Garage  and   Automobile  Policies  issued  by  the  Reassured                      on New York risks, or    EFFECTIVE: JULY 1, 2018    P18-0057                                                                 POR1238172  7/6/2018 11:54 AM.v3   





 






                 (ii)   Statutory liability insurance required under Chapter 90, General Laws of                      Massachusetts,                 until  90  days  following  approval  of  the  Broad  Exclusion  Provision  by  the               Governmental Authority having jurisdiction thereof.   4.   Without in any way restricting the operations of paragraph 1. of this Clause, it is understood       and agreed that paragraphs 2. and 3. above are not applicable to original liability policies of       the Reassured in Canada, and that with respect to such policies, this Clause shall be deemed       to  include  the  Nuclear  Energy  Liability  Exclusion  Provisions  adopted  by  the  Canadian       Underwriters' Association or the Independent Insurance Conference of Canada.     *NOTE:   The words printed in BOLD TYPE in the Limited Exclusion Provision and in the Broad           Exclusion Provision shall apply only in relation to original liability policies which include a           Limited Exclusion Provision or a Broad Exclusion Provision containing those words.        EFFECTIVE: JULY 1, 2018    P18-0057                                                                 POR1238172  7/6/2018 11:54 AM.v3   





 






         TERRORISM EXCLUSION CLAUSE (USA) – REINSURANCE (PROPERTY)                                               Notwithstanding any provision to the contrary within this Agreement or any endorsement  thereto,  this  reinsurance  Agreement  does  not  cover  any  loss,  damage  or  expense  of  whatsoever  nature  directly  or  indirectly  caused  by,  resulting  from,  arising  out  of  or  in  connection with any act of terrorism in the United States of America, regardless of any  other  cause  contributing  concurrently  or  in  any  other  sequence to  the  loss,  damage  or  expense.   For the purpose of this exclusion, terrorism means any actual or threatened violent act or  act harmful to human life, tangible or intangible property or infrastructure, directed towards  or  having  the  effect  of  (a)  influencing  or  protesting  against  any  de  jure  or  de  facto  government  or  policy  thereof  or  (b)  intimidating,  coercing  or  putting  in  fear  a  civilian  population or section thereof.   In any action, suit or other proceedings where the reinsurer alleges that by reason of this  exclusion a loss, damage or expense is not covered by this reinsurance Agreement, the  burden  of  proving  that  such  loss,  damage  or  expense  is  covered shall  be  upon  the  Company.      TERRUSA-PROP      EFFECTIVE: JULY 1, 2018    P18-0057                                                                 POR1238172  7/6/2018 11:54 AM.v3   





 






                                                       TERRORISM EXCLUSION CLAUSE (USA) – REINSURANCE (CASUALTY)                                                                                        Notwithstanding any provision to the contrary within this Agreement or any endorsement  thereto, this reinsurance Agreement does not cover any liability, loss, cost or expense of  whatsoever  nature  directly  or  indirectly  caused  by,  resulting  from,  arising  out  of  or  in  connection with any act of terrorism in the United States of America, regardless of any  other cause contributing concurrently or in any other sequence to the liability, loss, cost or  expense.   For the purpose of this exclusion, terrorism means any actual or threatened violent act or  act harmful to human life, tangible or intangible property or infrastructure, directed towards  or  having  the  effect  of  (a)  influencing  or  protesting  against  any  de  jure  or  de  facto  government  or  policy  thereof  or  (b)  intimidating,  coercing  or  putting  in  fear  a  civilian  population or section thereof.   In any action, suit or other proceedings where the reinsurer alleges that by reason of this  exclusion a liability, loss, cost or expense is not covered by this reinsurance Agreement,  the burden of proving that such liability, loss, cost or expense is covered shall be upon the  Company.    TERRUSA-CAS        EFFECTIVE: JULY 1, 2018    P18-0057                                                                 POR1238172  7/6/2018 11:54 AM.v3