Exhibit 10.31





CASUALTY EXCESS OF LOSS

REINSURANCE AGREEMENT

NO. POR327454


EFFECTIVE January l, 2006


between


SAFETY INSURANCE COMPANY

SAFETY INDEMNITY INSURANCE COMPANY

Boston, Massachusetts


and


SWISS REINSURANCE AMERICA CORPORATION

Armonk, New York















CASUALTY EXCESS OF LOSS
REINSURANCE AGREEMENT NO POR327454


	
  ARTICLE

  	
   

  	
  CONTENTS

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PREAMBLE

  	
   

  	
  1

  
	
  I

  	
   

  	
  BUSINESS COVERED

  	
   

  	
  1

  
	
  II

  	
   

  	
  EFFECTIVE DATE AND TERMINATION

  	
   

  	
  2

  
	
  III

  	
   

  	
  TERRITORY

  	
   

  	
  2

  
	
  IV

  	
   

  	
  LIMIT AND RETENTION

  	
   

  	
  2

  
	
  V

  	
   

  	
  ULTIMATE NET LOSS

  	
   

  	
  3

  
	
  VI

  	
   

  	
  LOSS IN EXCESS OF POLICY LIMITS

  	
   

  	
  4

  
	
  VII

  	
   

  	
  EXTRA CONTRACTUAL OBLIGATIONS

  	
   

  	
  5

  
	
  VIII

  	
   

  	
  EXCLUSIONS

  	
   

  	
  6

  
	
  IX

  	
   

  	
  SPECIAL ACCEPTANCE

  	
   

  	
  7

  
	
  X

  	
   

  	
  LOSS OCCURRENCE

  	
   

  	
  8

  
	
  XI

  	
   

  	
  REINSURANCE PREMIUM

  	
   

  	
  9

  
	
  XII

  	
   

  	
  CONTINGENT COMMISSION

  	
   

  	
  10

  
	
  XIII

  	
   

  	
  REPORTS AND REMITTANCES

  	
   

  	
  10

  
	
  XIV

  	
   

  	
  CLAIMS

  	
   

  	
  11

  
	
  XV

  	
   

  	
  SALVAGE AND SUBROGATION

  	
   

  	
  12

  
	
  XVI

  	
   

  	
  ACCESS TO RECORDS

  	
   

  	
  13

  
	
  XVII

  	
   

  	
  TAXES

  	
   

  	
  13

  
	
  XVIII

  	
   

  	
  CURRENCY

  	
   

  	
  13

  
	
  XIX

  	
   

  	
  OFFSET

  	
   

  	
  13

  
	
  XX

  	
   

  	
  ERRORS OR OMISSIONS

  	
   

  	
  14

  
	
  XXI

  	
   

  	
  DISPUTE RESOLUTION

  	
   

  	
  14

  
	
  XXII

  	
   

  	
  INSOLVENCY

  	
   

  	
  16

  
	
  XXIII

  	
   

  	
  SPECIAL TERMINATION

  	
   

  	
  16

  
	
  XXIV

  	
   

  	
  AMENDMENTS

  	
   

  	
  18

  
	
   

  	
   

  	
  SIGNATURES

  	
   

  	
  19

  



 


	
  ATTACHMENTS:

  	
   

  	
  POLLUTION
  LIABILITY EXCLUSION CLAUSE - REINSURANCE INSOLVENCY FUNDS EXCLUSION CLAUSE

  
	
   

  	
   

  	
  NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY -
  REINSURANCE - U.S.A.

  
	
   

  	
   

  	
  NUCLEAR INCIDENT
  EXCLUSION CLAUSE - LIABILITY - REINSURANCE - CANADA

  
	
   

  	
   

  	
  NUCLEAR INCIDENT EXCLUSION CLAUSE - REINSURANCE -
  NO. 4

  
	
   

  	
   

  	
  PHARMACEUTICAL / MEDICAL COMPANY EXCLUSION LISTING

  



 
















CASUALTY EXCESS OF
LOSS

REINSURANCE AGREEMENT

NO. POR327454

(hereinafter referred to as the “Agreement”)


between


SAFETY INSURANCE
COMPANY

SAFETY INDEMNITY INSURANCE COMPANY

Boston, Massachusetts


(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                         The
Reinsurer shall indemnify the Company on an excess of loss basis in respect of
the Company’s Ultimate Net Loss paid by the Company as a result of losses
occurring during the term of this Agreement, for Policies in force as of
January 1, 2006, and new and renewal Policies becoming effective on or after
said date, subject to the terms and conditions contained herein.


B.                        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.


C                         The
performance of obligations by both parties under this Agreement shall be in
accordance with a fiduciary standard of good faith and fair dealing.


D.                       The
term “Policies” shall mean each of the Company’s binders, policies and
contracts of insurance on the business covered hereunder.


E.                         Under
this Agreement, the indemnity for reinsured loss applies solely to the
following Classes of Insurance as respects voluntary automobile business
written by the Company, except as excluded under Article VIII - Exclusions of
this Agreement. However, as respects Automobile Liability and Automobile
Collision coverage added to the Commonwealth Automobile Facility, the Reinsurer
shall provide 80% recovery as respects Extra Contractual Obligations resulting
from losses arising and covered under said facility.



 1
 









CLASSES OF INSURANCE


1.                         Automobile
Liability


Bodily Injury Liability, Property Damage Liability,
Medical Payments, Uninsured Motorists, Underinsured Motorists and No-Fault
Coverage.


2                            Automobile
Collision


3                            Homeowners
(Section II only)


4                            Commercial
and Personal Umbrella Liability


5                            Businessowners
(Section II only)


ARTICLE II - EFFECTIVE DATE AND
TERMINATION


A                         This
Agreement shall become effective with respect to losses occurring on and after
12:01 a.m., Eastern Standard Time, January 1, 2006, and shall remain in full
force until terminated. This Agreement may be terminated at the close of any
calendar quarter by either party giving to the other 90 days prior written
notice by certified mail of its intention to do so.


B.                        During
the running of such notice as stipulated in Paragraph A. above, the Reinsurer
shall participate in business coming within the terms of this Agreement until
the date of termination of this Agreement.


C.                        In
the event of termination of this Agreement, the Reinsurer shall be liable for
losses occurring prior to the date of termination; however, the Reinsurer shall
have no liability for losses occurring subsequent to the termination of this
Agreement.


ARTICLE III - TERRITORY


This Agreement applies to Policies issued by the
Company within the Commonwealth of Massachusetts and shall apply to losses
covered hereunder wherever occurring.


ARTICLE IV - LIMIT AND RETENTION


A.                      The
Company shall retain the first $1,000,000 of Ultimate Net Loss as respects any
one Loss Occurrence. The Reinsurer shall then be liable for the amount by which
the Company’s Ultimate Net Loss exceeds the Company’s retention of $1,000,000,
but the liability of



 2
 









the Reinsurer shall never exceed $5,000,000 with
respect to any one Loss Occurrence.


B                           The
addition to the Company’s retention set forth in Paragraph A. above, the
Company shall be subject to an annual aggregate deductible of $500,000. Each
loss paid by the Company in excess of $1,000,000 retention shall be accumulated
and retained by the Company until the total accumulated excess amount totals
$500,000. Thereafter, losses in excess of the $1,000,000 retention shall be
recovered from the Reinsurer for the balance of the calendar year.


C                           The
Company’s retention and the Reinsurer’s limit of liability for each Loss
Occurrence, set forth in Paragraph A. above, shall apply irrespective of the
number of Policies affected or number of hazards in one Policy and regardless
of the number of Classes of Insurance involved.


D                          Reinsurance
of the Company’s retention, set forth above, shall not be deducted in arriving
at the Company’s Ultimate Net Loss herein.


E                            It
is understood that as respects Commercial and Personal Umbrella Liability
business, this Agreement shall apply to the Company’s retention under the
Umbrella Liability Quota Share Reinsurance Agreement No. POR327548.


F                            The
Company warrants that the maximum limit of liability, per occurrence set forth
under each Policy subject to this Agreement shall not exceed $1,000,000.


ARTICLE V - ULTIMATE NET LOSS


A                         The
term “Ultimate Net Loss” shall mean the actual sum paid by the Company in
settlement of losses or liability including interest accrued prior to judgment
after making deductions for all recoveries, including subrogation, salvages,
and claims upon other reinsurances, whether collectible or not, which inure to
the benefit of the Reinsurer under this Agreement, and shall exclude all
expenses incurred by the Company; provided, however, that in the event of the
insolvency of the Company, Ultimate Net Loss shall mean the amount of loss for
which the Company is liable, and payment by the Reinsurer shall be made to the
liquidator, receiver, conservator or statutory successor of the Company in
accordance with the provisions of Article 13 - Insolvency of this Agreement.


B                           The
term “Ultimate Net Loss” shall include 80% of Loss In Excess of Policy Limits
and 80% of Extra Contractual Obligations, as defined herein, but only as
respects business covered under this Agreement.


All Loss Adjustment Expenses defined below shall be
apportioned in the same proportion that each party’s interest bears to the



 3
 









Company’s Ultimate Net Loss. The Reinsurer shall not
be liable for any portion of the Company’s Loss Adjustment Expenses, unless the
Company’s Ultimate Net Loss exceeds its retention.


D                          In
the event a verdict, award or judgment is ultimately compromised, reduced or
reversed on appeal, the Reinsurer shall indemnify the Company for the Loss
Adjustment Expenses incurred in obtaining such reduction or reversal in the
ratio that the benefit each party derives from such reduction, reversal or
compromise bears to the total benefit derived therefrom. However, all Loss
Adjustment Expenses incurred up to the time of the original verdict or judgment
shall be considered separate and apart from appeal expenses and shall be prorated
in proportion to each party’s interests in such original verdict or judgment.


E.                         The
term “Loss Adjustment Expenses” shall mean all expenses incurred by the Company
in connection with the investigation, settlement, defense or litigation,
including court costs and post-judgment interest, of any claim or loss covered
by the Policies reinsured under this Agreement, but shall exclude the salaries
and expenses of Company employees, office expenses, Declaratory Judgment
Expenses and other overhead expenses.


F                            The
term “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.


G.                        All
recoveries, salvages or payments recovered or received subsequent to a loss
settlement under this Agreement shall be applied as if recovered or received
prior to the aforesaid settlement and all necessary adjustments to the loss
settlement shall be made by the parties hereto.


H.                       Nothing
in this Article shall be construed to mean that losses are not recoverable
hereunder until the Ultimate Net Loss of the Company has been ascertained.


ARTICLE VI - LOSS IN EXCESS OF POLICY
LIMITS


A                         “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.



 4
 









B                           However,
this Article 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.


C                           For
the purposes of this Article, 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.


D                          With
respect to coverage provided under this Article, 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 Loss.


ARTICLE VII - EXTRA CONTRACTUAL OBLIGATIONS


A                         “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.


B                           The
date on which an Extra Contractual Obligation is incurred by the Company shall
be deemed, in all circumstances, to be the data of the original accident,
casualty, disaster or loss occurrence.


C                           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.


D                          Recoveries,
collectible 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 obligation for purposes of determining the loss hereunder.



 5
 









E                            If
any provision of this Article shall be rendered illegal or unenforceable by the
laws, regulations or public policy of any state, such provision shall be
considered void in such state, but this shall not affect the validity or
enforceability of any other provision of this Article or the enforceability of
such provision in any other jurisdiction.


ARTICLE VIII - EXCLUSIONS


THIS AGREEMENT DOES NOT COVER


A.                      THE FOLLOWING GENERAL CATEGORIES


1                            Ex-gratia
payments


2                            Risks
subject to a deductible or a self-insured retention excess of $25,000.


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 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;
provided this exclusion shall not apply to Automobile or Workers Compensation
assigned risks which may be currently or subsequently covered hereunder.


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 - Liability - Reinsurance - Canada.


c                     Nuclear
Incident Exclusion Clause - Reinsurance - No. 4.



 6
 









9                            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.


B                           THE
FOLLOWING RISKS AS RESPECTS AUTOMOBILE LIABILITY AND AUTOMOBILE COLLISION


1                            Vehicles
used in or while in practice or preparation for, a prearranged racing, speed,
exhibition or demolition contest.


2                            All
vehicles classified as “Public Automobiles” except church buses, social service
agency automobiles, van pools and vehicles used for the transportation of
employees.


3                            Fire,
police emergency or municipal vehicles


The rental or leasing of vehicles to others


5                            Logging
trucks


6                            Vehicles
engaged in the transportation or distribution of fireworks, fuses, explosives,
ammunitions, natural or artificial fuel, gas, or liquefied petroleum gases or
gasoline.


C                           In
the event the Company is inadvertently bound on any risk which is excluded
under this Agreement and identified below, the reinsurance provided under this
Agreement shall apply to such risk until discovery by the Company within its
Home Office of the existence of such risk and for 30 days thereafter, and shall
then cease unless within the 30 day period, the Company has received from the
Reinsurer written notice of its approval of such risk:


As respects Automobile Liability And Collision.


Items 2. through 6. of Section B. of this Article


ARTICLE IX - SPECIAL ACCEPTANCE


Policies which are beyond the terms, conditions or limitations
of this Agreement may be submitted to the Reinsurer for special acceptance
hereunder; and such 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 rating purposes
under this Agreement.



 7
 









ARTICLE X - LOSS OCCURRENCE


The term “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. Without limiting the generality of
the foregoing, the term “Loss Occurrence” shall be held to include:


A                         As
respects Products Bodily Injury and Products Property Damage Liability,
injuries to all persons and all damage to property of others occurring during a
Policy Period and proceeding from or traceable to the same causative agency
shall be deemed to arise out of one Loss Occurrence, and the date of such Loss
Occurrence shall be deemed to be the commencing date of the Policy Period. For
the purpose of this provision, each annual period of a Policy which continues
in force for more than one year shall be deemed to be a separate Policy Period.


B.                        As
respects Bodily Injury Liability (other than Automobile and Products), said
term shall also be understood to mean, as regards each original assured,
injuries to one or more than one person resulting from infection, contagion,
poisoning, or contamination proceeding from or traceable to the same causative
agency.


C.                        As
respects Property Damage Liability (other than Automobile and Products), said
term shall also, subject to Provisions 1. and 2. below, be understood to mean
loss or losses caused by a series of operations, events, or occurrences arising
out of operations at one specific site and which cannot be attributed to any
single one of such operations, events or occurrences, but rather to the
cumulative effect of the same. In assessing each and every Loss Occurrence
within the foregoing definition, it is understood and agreed that:


the series of operations, events or occurrences shall
not extend over a period longer than 12 consecutive months; and


2                            the
Company may elect the date on which the period of not exceeding 12 consecutive
months shall be deemed to have commenced.


In the event that the series of operations, events or occurrences
extend over a period longer than 12 consecutive months, then each consecutive
period of 12 months, the first of which commences on the date elected under 2.
above, shall form the basis of claim under this Agreement.



 8
 









ARTICLE XI - REINSURANCE PREMIUM


A                         The
Company shall pay to the Reinsurer a premium for the reinsurance provided
hereunder a rate of .12%. Such rate shall be applied to the Company’s Subject
Earned Premium for the quarterly period being reported.


B                           The
term “Subject Earned Premium” as used herein is equal to the sum of the Net
Premium Written on the business covered hereunder during the period under
consideration, plus the unearned premium reserve as respects premiums in force
at the beginning of such period, less the unearned premium reserve as respects
premiums in force at the end of the period, said unearned premium is to be
calculated on an actual daily basis or in accordance with the Company’s
methodology, as agreed.


C                           The
term “Net Premiums Written” shall mean gross premiums written less returns,
allowances and reinsurances which inure to the benefit of the Reinsurer.


ARTICLE XII - CONTINGENT COMMISSION


A                         The
Reinsurer shall allow the Company a contingent commission of 15% of the profit,
if any, accruing to the Reinsurer hereunder, such profit to be computed on the
following formula:


CONTINGENT COMMISSION COMPUTATION FOR THE PERIOD


INCOME


1                            Premiums
received by the Reinsurer, as determined under Article XI - Reinsurance Premium
of this Agreement, for the Period.


OUTGO


2                            Incurred
Losses of the Reinsurer during the Period


3                            Deficit,
if any, brought forward from the preceding Period.


The amount by which Income exceeds Outgo is profit


The amount by which Outgo exceeds Income is deficit.


C                           The
term “Incurred Losses” means all losses and Loss Adjustment Expenses paid less
recoveries, including salvage and subrogation, during the current Period as
respects losses which occurred during the period for which computation is being
made plus the reserve for all unpaid losses and Loss Adjustment Expenses
outstanding at the end of the current Period.



 9
 









D                          The
term “Period” means the actual time covered by each adjustment of commission.


E                            The
Company shall calculate the commission adjustment for each Period, 36 months
after the close of such Period. The first calculation of commission adjustment
shall cover the Period January 1, 2006  through
December 31, 2006, and thereafter adjustments shall be made for each subsequent
Period commencing January 1 and ending the following December 31.


F                            If,
for any Period, the Income of the plan exceeds the total of the Items shown
under Outgo of the plan, the Reinsurer shall pay to the Company, within 30 days
after verification of the Company’s calculations, 15% of the difference. If,
for any Period, the total of the Items shown under Outgo of the plan exceeds
the Income of the plan, the difference shall be carried forward to the next Period’s
calculation of commission adjustment as a deficit.


G                           In
case notice of termination has been given


1                            By
the Company, no further adjustments of commission shall be made.


2                            By
the Reinsurer, no further adjustments of commission shall be made until the
expiration of all liability and the settlement of all losses covered under this
Agreement.


ARTICLE XIII - REPORTS AND
REMITTANCES


A                         The
Company shall furnish the Reinsurer with all necessary data respecting premiums
and losses for as long as one of the parties hereto has a claim against the
other arising from this Agreement.


B                           Within
30 days after the close of each calendar quarter, the Company shall submit an
account to the Reinsurer summarizing Subject Earned Premium by Line of
Business, and the reinsurance premium due. Such reinsurance premium shall be
remitted within 45 days after the close of each calendar quarter.


C                           In
respect of Paragraph B above


All quarterly account statements shall be sent to the
Reinsure at:


a                             E-Mail/XML
or EDI Formats reaccount_[Illegible].com, or


b                            Standard
Mail


Swiss Reinsurance America Corporation Accounting
Department



 10
 









175 King Street


Armonk, NY 10504


Telephone: 914-828-8000


Facsimile: 914-828-5919


2.                          All
checks and supporting documentation shall be sent to the Reinsurer through one
of the options set forth below:


a.                         WIRE
TRANSFER


i)                            All
wires should be sent to


The Bank of New York

1 Wall Street

New York, NY 10286

Account Name: Swiss Reinsurance America Corporation

Account Number: 

ABA Number:


(ii                                                          All
supporting documentation should be sent to


Swiss Reinsurance America Corporation

Accounting Department

175 King Street

Armonk, NY 10504


b                           LOCK
BOX


Both checks and supporting documentation shall be sent
to


Swiss Reinsurance America Corporation

P.O. Box 7247-[Illegible]

Philadelphia, PA 19170-[Illegible]


D.                       Payment
by the Reinsurer of its portion of loss and Loss Adjustment Expenses paid by
the Company shall be made by the Reinsurer to the Company within 15 days after
proof of payment is received by the Reinsurer.


ARTICLE XIV - CLAIMS


A.                      The
Company shall promptly notify the Reinsurer of each claim which may involve the
reinsurance provided hereunder and of all subsequent developments relating
thereto, stating the amount claimed and estimate of the Company’s Ultimate Net
Loss and Loss Adjustment Expenses. Notwithstanding the provisions set forth in
any other Article herein, prompt notification of loss shall be considered a
condition precedent to liability under this Agreement.



 11
 









B                           The
Company shall advise the Reinsurer of all Claims which:


1                            Are
reserved by the Company for an amount in excess of 50% of its retention;


2                            Originate
from fatal injuries;


3                            Originate
from the following kinds of bodily injury:


a.                          Brain
injuries resulting in impairment of physical function;


b.                         Spinal
injuries resulting in a partial or total paralysis of upper or lower
extremities;


c.                          Amputation
or permanent loss of use of upper or lower extremities;


d.                         Severe
burn injuries;


e.                          Loss
of sight in one or both eyes;


f.                            All
other injuries likely to result in a permanent disability rate of 50% or more.


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 or control 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 XV - SALVAGE AND SUBROGATION


A                         In
the event of the payment of any indemnity by the Reinsurer under this
Agreement, the Reinsurer shall be subrogated, to the extent of such payment, to
all of the rights of the Company against any person or entity legally
responsible for damages of the loss. The Company agrees to enforce such rights;
but, in case the Company refuses or neglects to do so, the Reinsurer is hereby
authorized and empowered to bring any appropriate action in the name of the
Company or their policyholders or otherwise to enforce such rights.


B                           From
any amount recovered by subrogation, salvage or other means, there shall first
be deducted the expenses incurred in effecting the recovery. The balance shall
then be used to reimburse the excess carriers in the inverse order to that in
which their respective liabilities attached, before being used to reimburse the
Company for its primary loss.



 12
 









ARTICLE XVI - 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 XVII - 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.


ARTICLE XVIII - CURRENCY


Wherever the word “dollars” or the “$” symbol is used
in this Agreement, it shall mean dollars of the United States of America,
excepting in those cases where the Policy is issued by the Company in Canadian
dollars, in which case it shall mean dollars of Canada. In the event the
Company is involved in a loss requiring payment in United States and Canadian
currency, the Company’s retention and the limit of liability of the Reinsurer
shall be apportioned between the two currencies in the same proportion as the
amount of net loss in each currency bears to the total amount of net loss paid
by the Company. For the purposes of this Agreement, where the Company receives
premiums or pays losses in currencies other than United States or Canadian
currency, such premiums and losses shall be converted into United States
dollars at the actual rates of exchange at which the premiums and losses are
entered in the Company’s books.


ARTICLE XIX - 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 and any other
agreements heretofore or hereafter entered into between the parties regardless
of whether such balances arise from premiums, losses or otherwise, and
regardless of capacity of any party, whether as assuming insurer and/or coding
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 Section 7427 of the Insurance Law of the
State of New York to the extent such statute or any other applicable law,
statute or regulation governing such offset shall apply.



 13
 









ARTICLE XX - ERRORS OR OMISSIONS


Errors or omissions of an administrative nature on the
part of the Company shall not invalidate the reinsurance under this Agreement,
provided such errors or omissions are corrected promptly after discovery
thereof; but the liability of the Reinsurer under this Agreement or any
exhibits, addenda, or endorsement attached hereto shall in no event exceed the
limits specified herein nor be extended to cover any risks, perils, lines of
business or classes of insurance generally or specifically excluded herein.


ARTICLE XXI - DISPUTE RESOLUTION


Part I - Choice Of Law And Forum


Any dispute arising under this Agreement shall be
resolved in the Commonwealth of Massachusetts, and the laws of the State of
Commonwealth of Massachusetts 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, to the



 14
 









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 arbitrator and
notify the claimant thereof by certified mail. 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 - Unless otherwise extended by the arbitration panel or
agreed to by the parties, each party shall submit its case to the panel within
30 days after the selection of the umpire.


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
proceedings. 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.



 15















ARTICLE XXII - 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 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 XVIII 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 of the date of 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 XXIII - SPECIAL TERMINATION


Notwithstanding the
termination provisions set forth in Article II - Effective Date and
Termination, this Agreement shall be:


1                            Terminated
automatically and simultaneously upon the happening of any of the following
events:



 16
 









a                             Entry
of an order of liquidation, rehabilitation, receivership or conservatorship
with respect to the Company or the Reinsurer by any court or regulatory
authority;


b                            Assignment
of this Agreement by either party;


c                             General
reinsurance of any portion of the Company’s business it retains net for its own
account, as determined under the provisions of this Agreement without prior
consent of the Reinsurer.


2                            Terminated
by either party giving not less than 30 days prior written notice to the other
party upon the happening of the following event:


Any transfer of control of either party by change in
ownership or otherwise.


3                            Terminated
by the Reinsurer by giving not less than 30 days prior written notice to the
Company upon the happening of the following event:


Failure of the Company to remit premiums in accordance
with the provisions set forth in this Agreement.


4                            Terminated
in accordance with the provisions set forth in this Paragraph, upon the
discovery of the following event:


A reduction of 50% or more of the Company’s
policyholders surplus during any calendar year. Such reduction shall be
determined by calculating the difference between the Company’s prior year
annual statement and each subsequent quarterly statutory statement within such
current calendar year.


As respects the event set forth in this Paragraph
A.4., the Company shall be obligated to notify the Reinsurer in writing within
30 days after the filing of its quarterly statement. Upon receipt of such
notification the Reinsurer shall have the right to terminate this Agreement, by
giving not less than 30 days notice of its intention to do so.


B                           Any
notice of termination pursuant to the provisions set forth in Paragraphs A.2.,
A.3. and A.4. above shall be sent by certified mail, return receipt requested.
Such notice period shall commence upon the other party’s receipt of the notice
of termination.


C                           In
the event of termination, as provided under the provisions of this Article, the
Reinsurer shall not be liable for losses occurring subsequent to the date of
termination.



 17
 









ARTICLE XXIV - 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.



 18
 









IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed in duplicate, by their
duly authorized representatives as of the following dates:


In Boston, MA, this 5th day of September,
2006


	
  ATTEST:

  	
   

  	
   

  	
   

  	
  SAFETY INSURANCE COMPANY

  SAFETY INDEMNITY INSURANCE COMPANY

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Illegible

  	
   

  	
   

  	
   

  	
  /s/ Illegible

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Illegible

  	
   

  	
   

  	
   

  	
  Illegible

  
	
  Name

  	
   

  	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Illegible

  	
   

  	
   

  	
   

  	
  Illegible

  
	
  Title

  	
   

  	
   

  	
   

  	
  Title

  



 


And in Armonk, New York,
this 3rd day of March, 2006


	
  ATTEST:

  	
   

  	
   

  	
   

  	
  SWISS REINSURANCE AMERICA CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Illegible

  	
   

  	
   

  	
   

  	
  /s/ Illegible

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Illegible

  	
   

  	
   

  	
   

  	
  Illegible

  
	
  Name

  	
   

  	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Vice President

  Member of Senior Management

  	
   

  	
   

  	
   

  	
  Vice President

  Member of Senior Management

  
	
  Title

  	
   

  	
   

  	
   

  	
  Title

  



 



 19
 









SUPPLEMENT TO THE ATTACHMENTS


DEFINITION OF
IDENTIFICATION TERMS USED WITHIN THE ATTACHMENTS


A.                      Wherever
the term “Company” or “Reinsured” to “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.



 20
 









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
operation:


(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 neutralise 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 the 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.



 21
 









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,
however 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.



 22















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 of 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



 1
 









(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:


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



 2
 









(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


(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.



 3
 









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.



 4
 









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


(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.



 5















NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY -
REINSURANCE - CANADA


M.M.A 1979a


2                             This
Agreement does not cover any loss or liability accruing to the Company 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.


Without in any way restricting the operation of
Paragraph 1. of this Clause, it is agreed that for all purposes of this
Agreement all the original liability contracts of the Company, whether new,
renewal or replacement, of the following classes, namely,


Personal Liability 

Farmers’ Liability

Storekeepers’ Liability


which become effective on or after 31st December 1992,
shall be deemed to include, from their inception dates and thereafter, the
following provision:


Limited Exclusion Provision -


This Policy does not apply to bodily injury or
property damage with respect to which the Insured is also insured under a
contract of nuclear energy liability insurance (whether the Insured is unnamed
in such contract and whether or not it is legally enforceable by the Insured)
issued by the Nuclear Insurance Association of Canada or any other group or
pool of insurers or would be an Insured under any such policy but for its
termination upon exhaustion of its limits of liability.


With respect to property, loss of use of such property
shall be deemed to be property damage.


3                             Without
in any way restricting the operation of Paragraph 1. of this Clause, it is agreed
that for all purposes of this Agreement all the original liability contracts of
the Company, whether new, renewal or replacement, of any class whatsoever
(other than Personal Liability, Farmers’ Liability, Storekeepers’ Liability or
Automobile Liability contracts), which become effective on or after 31st
December 1992, shall be deemed to include, from their inception dates and
thereafter, the following provision:



 1
 









Broad Exclusion Provision


It is agreed that this Policy does not apply


(a)                     to
liability imposed by or arising from any nuclear liability act, law or statute
or any law amendatory thereof; nor


(b)                    to
bodily injury or property damage with respect to which an Insured under this
Policy is also insured under a contract of nuclear energy liability insurance
(whether the Insured is unnamed in such contract and whether or not it is
legally enforceable by the Insured) issued by the Nuclear Insurance Association
of Canada or any other insurer or group or pool of insurers or would be an
Insured under any such policy but for its termination upon exhaustion of its
limit of liability; nor


(c)                     to
bodily injury or property damage resulting directly or indirectly from the
nuclear energy hazard arising from:


the ownership, maintenance, operation or use of a nuclear
facility by or on behalf of an Insured;


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; and


iii                         the
possession, consumption, use, handling, disposal or transportation of
fissionable substances, or of other radioactive material (except radioactive
isotopes, away from a nuclear facility, which have reached the final stage of
fabrication so as to be usable for any scientific, medical, agricultural,
commercial or industrial purpose) used, distributed, handled or sold by an
Insured.


As used in this Policy


The term “nuclear energy hazard” means the radioactive, toxic,
explosive, or other hazardous properties of radioactive material;


(2)                     The
term “radioactive material” means uranium, thorium, plutonium, neptunium, their
respective derivatives and compounds, radioactive isotopes of other elements
and any other substances which may be designated by or pursuant to any law, act
or statute, or law amendatory thereof as being prescribed substances capable of
releasing atomic energy, or as being requisite for the production, use or
application of atomic energy;



 2
 









(3)                     The
term “nuclear facility” means


(a)                    any
apparatus designed or used to sustain nuclear fission in a self-supporting
chain reaction or to contain a critical mass of plutonium, thorium and uranium
or any one or more of them;


(b)                   any
equipment or device designed or used for (i) separating the isotopes of
plutonium, thorium and uranium or any one or more of them, (ii) processing or
utilizing spent fuel, or (iii) handling, processing or packaging waste;


(c)                    any
equipment or device used for the processing, fabricating or alloying of
plutonium, thorium and uranium enriched in the isotope uranium 233 or in the
isotope uranium 235, or any one or more of them 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 radioactive material;


and includes the site on which any of the foregoing is located,
together with all operations conducted thereon and all premises used for such
operations.


(4)                     The
term “fissionable substances” means any prescribed substance that is, or from
which can be obtained, a substance capable of releasing atomic energy by
nuclear fission.


(5)                     With
respect to property, loss of use of such property shall be deemed to be
property damage.



 3
 









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.


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



 4