exv10w5



 



Exhibit 10.5 Casualty Excess of Loss Reinsurance Contract with American Re-Insurance
Company, Converium Reinsurance (North America) Inc., Endurance
Specialty Insurance
Limited, Liberty Mutual Insurance Company effective January 1, 2003


 






 


PHILADELPHIA INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

PHILADELPHIA INDEMNITY INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

MOBILE USA INSURANCE COMPANY, INC.

Pinellas Park, Florida

LIBERTY AMERICAN INSURANCE COMPANY

Pinellas Park, Florida

And any additional company established or acquired by the Company



CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT



PREPARED BY



WILLIS RE INC.



 






 





PHILADELPHIA INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

PHILADELPHIA INDEMNITY INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

MOBILE USA INSURANCE COMPANY, INC.

Pinellas Park, Florida

LIBERTY AMERICAN INSURANCE COMPANY

Pinellas Park, Florida

And any additional company established or acquired by the Company



CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT




	 	 	 	 	 
	 	 	Contract
	Reinsurers	 	Participation
	
	 	

	American Re-Insurance Company
	 	 	25.00	%
	Converium Reinsurance (North America) Inc.
	 	 	35.00	%
	Endurance Specialty Insurance Limited
	 	 	20.00	%
	Liberty Mutual Insurance Company
	 	 	20.00	%
	Total
	 	 	100.00	%



 






 



TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 	 
	ARTICLE	 	 	 	 	PAGE
	
	 	 	 	 	

	 	I	 	 	BUSINESS COVERED
	 	 	1	 
	II	 	AMOUNT OF COVERAGE AND RETENTION
	 	 	2	 
	III	 	ADDITIONAL CONDITIONS
	 	 	2	 
	IV	 	TERM
	 	 	3	 
	 	V	 	 	TERRITORY
	 	 	3	 
	VI	 	EXCLUSIONS
	 	 	4	 
	VII	 	PREMIUM
	 	 	5	 
	VIII	 	REINSTATEMENT
	 	 	6	 
	IX	 	DEFINITIONS
	 	 	6	 
	 	 	 	 	 	“Ultimate Net Loss”
	 	 	6	 
	 	 	 	 	 	“Policy” or “Policies”
	 	 	7	 
	 	 	 	 	 	“Gross Net Earned Premium Income”
	 	 	7	 
	 	X	 	 	NET RETAINED LINES
	 	 	7	 
	XI	 	CURRENCY
	 	 	8	 
	XII	 	UNAUTHORIZED REINSURANCE
	 	 	8	 
	XIII	 	TAXES
	 	 	10	 
	XIV	 	FEDERAL EXCISE TAX
	 	 	10	 
	XV	 	NOTICE OF LOSS AND LOSS SETTLEMENTS
	 	 	10	 
	XVI	 	LOSS IN EXCESS OF POLICY LIMITS
	 	 	11	 
	XVII	 	EXTRA CONTRACTUAL OBLIGATIONS
	 	 	11	 
	XVIII	 	ERRORS
AND OMISSIONS
	 	 	11	 
	XIX	 	ACCESS TO RECORDS
	 	 	12	 
	XX	 	OFFSET
	 	 	12	 
	XXI	 	ARBITRATION
	 	 	12	 
	XXII	 	SERVICE OF SUIT
	 	 	13	 
	XXIII	 	INSOLVENCY
	 	 	14	 
	XXIV	 	CONFIDENTIALITY
	 	 	15	 
	XXV	 	GOVERNING LAW
	 	 	15	 
	XXVI	 	SEVERABILITY
	 	 	15	 
	XXVII	 	THIRD PARTY RIGHTS
	 	 	15	 
	XXVIII	 	AGENCY AGREEMENT
	 	 	15	 
	XXIX	 	INTERMEDIARY
	 	 	16	 
	 	 	 	 	Nuclear
Incident Exclusion Clause - Liability - Reinsurance - U.S.A.
	 	 	 	 
	 	 	 	 	Nuclear
Incident Exclusion Clause - Liability - Reinsurance - Canada
	 	 	 	 
	 	 	 	 	Terrorism Exclusion Endorsement (Reinsurance) N.M.A. 2921 (Amended)
	 	 	 	 
	 	 	 	 	Terrorism Risk Insurance Act Of 2002
	 	 	 	 



 






 



CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)



between



PHILADELPHIA INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

PHILADELPHIA INDEMNITY INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

MOBILE USA INSURANCE COMPANY, INC.

Pinellas Park, Florida

LIBERTY AMERICAN INSURANCE COMPANY

Pinellas Park, Florida

And any additional company established or acquired by the Company

(the “Company”)



and



THE SUBSCRIBING REINSURER EXECUTING THE

INTERESTS AND LIABILITIES AGREEMENT

ATTACHED TO THIS CONTRACT

(the “Reinsurer”)



ARTICLE I



BUSINESS COVERED



This Contract is to indemnify the Company in respect of the net excess
liability as a result of any loss or losses, which may occur during the term of
this Contract under any Policies in force at the effective time and date hereof
or issued or renewed after that time and date by or on behalf of the Company
and classified by the Company as Casualty, Fidelity, Professional Liability
and/or Fiduciary Liability. It is understood and agreed, as respects Policies
on a claims-made or losses-discovered basis, any extended reporting period
coverages provided thereunder shall be reinsured hereunder, provided the date
of loss is during the term of this Contract.


With respect to business classified by the Company as Professional Liability
and written out of the Company’s Specialty Lines Division, the following
product lines of business, as defined by the Company, shall be covered under
the scope of this Contract:



	 	Directors and Officers Liability for For-Profit and Not-For-Profit risks

Miscellaneous Errors and Omissions Liability

Lawyers Professional Liability

Accountants Professional Liability



Page 1






 



	 	Dentists Professional Liability

Insurance Agents Professional Liability

Miscellaneous Medical Professional Liability

Employment Practices Liability



Furthermore, it is agreed that the Company may add other Professional Liability
product lines of business to the scope of this Contract with prior approval of
the Reinsurer.


ARTICLE II



AMOUNT OF COVERAGE AND RETENTION



The Reinsurer will be liable for $10,000,000 of Ultimate Net Loss in respect of
each Loss Occurrence, each Insured in excess of the Company’s retention of
$1,000,000 Ultimate Net Loss each Loss Occurrence, each Insured. With respect
to the Company’s Directors and Officers Liability Policies that contain more
than one coverage part, the amount of coverage and retention hereunder shall
apply separately to each coverage part.


The term “Loss Occurrence” and the term “Insured” as used herein shall have the
same meaning as in the Company’s Policies. However, in the event of any
ambiguity or dispute relating to these terms, the Company shall be the sole
judge of what constitutes one Loss Occurrence and one Insured.


ARTICLE III



ADDITIONAL CONDITIONS




	A.	 	The Company will include as part of their original Policies a Mold
exclusion for business classified as Architects and Engineers, Property
Managers and Real Estate, as determined by the Company. However, this
provision will not apply wherever the Company’s exclusion has not been
filed and approved.
	 
	B.	 	The Company may issue up to $120,000,000 of aggregate limit in respect of
any new and renewal Policies classified by the Company as Public Directors
and Officers Liability insurance for insured companies with a market
capitalization at the time of binding that is more than $200,000,000 but
no greater than $500,000,000. Any such Policy that, if written, would
make the total aggregate limit greater than $120,000,000 shall be
submitted to the lead Reinsurer for acceptance into the Contract.
Furthermore, any such Policies with market capitalization’s that are
greater than $500,000,000 at the time of binding shall be submitted to the
lead Reinsurer for acceptance into the Contract. Upon expiration of the
Contract, the Company shall submit to the Reinsurer a bordereaux detailing
all the Public Directors and Officers Liability Policies that were written
during the term of the Contract.
	 
	C.	 	Business classified by the Company as Specialty Lines Excess shall be
limited to a maximum of 3.5% of the total Gross Net Earned Premium Income
subject to this Contract. In the event the Company’s premium attributable
to Specialty Lines Excess business



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	 	 	exceeds 3.5% of the total Gross Net Earned Premium Income, that business in
excess of 3.5% shall be ceded to the Contract at pro rata premium less a
ceding commission of 27.5%. Any Policies that are Specially Accepted in
accordance with paragraph B, above, shall not be subject to this condition.
	 
	D.	 	Business classified by the Company as First Party Cyber-Liability, when
written as such in conjunction with Miscellaneous Professional Liability
Policies, shall be sub-limited in the Company’s original Policies to
$1,000,000 or so deemed.
	 
	E.	 	New and renewal Policies classified by the Company as Miscellaneous
Professional Liability shall contain a sub-limit of $250,000 for
Copyright, Patent and Trademark coverages, when written as such, or so
deemed. However, this provision will not apply wherever the Company is
not permitted to do so by the applicable regulatory authority(ies).



ARTICLE IV



TERM



The term of this Contract shall be from 12:01 a.m., Eastern Standard Time,
January 1, 2003, to 12:01 a.m., Eastern Standard Time, January 1, 2004.


The Reinsurer shall cease to be liable for Loss Occurrences after the time and
date of expiration of this Contract but shall remain liable for Ultimate Net
Loss incurred by the Company with respect to Loss Occurrences under the
Company’s Policies with the date of loss prior to the termination date of this
Contract.


The Company shall have the option to elect run-off coverage for Policies in
force at the expiration of this Contract. If the Company chooses to run off
liability, the Reinsurer shall continue to be liable for Ultimate Net Loss
incurred by the Company under all Policies in force at the time and date of
expiration until each Policy’s next anniversary, renewal or expiration, but in
no event shall the Reinsurer’s liability continue for more than 12 months after
the expiration date plus odd time, not to exceed a total of 18 months. The
premium for said run-off coverage shall be the Contract rate applied to the
Gross Net Earned Premium Income for subject Policies for such run-off period.
The premium, based on the run-off period, shall be payable quarterly in
advance. The maximum recoverable limit under this Contract for the run-off
period will be 200% of the ceded earned premium for the run-off coverage and
shall be in addition to the Reinsurer’s liability in respect to all Loss
Occurrences during the term of this Contract.


ARTICLE V



TERRITORY



This Contract shall cover wherever the Company’s original Policies cover.


Page 3






 


ARTICLE VI



EXCLUSIONS



This Contract does not cover and specifically excludes:



	A.	 	Policies with per claim or per occurrence limits of $1,000,000 and less.
	 
	 	 	When the Company writes a primary Policy and an umbrella Policy for the
same Insured, and the sum of the per claim or per occurrence limits of the
two Policies is greater than $1,000,000, this exclusion shall not apply to
either Policy.
	 
	B.	 	Pools, Associations or Syndicates, except losses from Assigned Risk Plans
or similar plans are not excluded.
	 
	C.	 	Nuclear Incident pursuant to the “Nuclear Incident Exclusion Clause -
Liability - Reinsurance - U.S.A.” attached hereto.
	 
	D.	 	Nuclear Incident pursuant to the “Nuclear Incident Exclusion Clause -
Liability - Reinsurance - Canada” attached hereto.
	 
	E.	 	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. “Insolvency fund” includes any
guarantee 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 the Company 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.
	 
	F.	 	Financial Guarantee or Insolvency, when written as such.
	 
	 	 	However, the liability of the Company under any bond covering losses due to
negligence of any person or failure of any person to faithfully perform his
duty or failure to account for and pay over money or other property in his
custody shall not be considered Financial Guarantee or Insolvency.
	 
	 	 	Notwithstanding the foregoing, no claim to attach hereto in respect of any
loss or losses arising as a result of:




	 	1.	 	The insolvency of any financial institution at which trust moneys
are deposited or insolvency of any person, firm or company, or
	 
	 	2.	 	The fall in the market value of investments unless such loss is
the direct result of a) a dishonest, fraudulent, criminal or negligent
act on the part of the bonded person or b) a dishonest, fraudulent or
criminal act on the part of any other person or persons or c) unless
such loss is solely created by a physical damage loss to property
other than



Page 4






 





	 	 	 	where such physical damage loss could have been recovered from a third
party but for the insolvency of such third party.




	 	 	The above shall not apply as respects claims made under Specialty Lines
Division Policies issued by the Company.
	 
	G.	 	Pollution liability to the extent excluded in the Company’s original
Policies. However, this exclusion shall not apply:




	 	1.	 	When a judicial entity having legal jurisdiction invalidates the
Company’s Pollution exclusion, thereby obligating the Company for
liability when such liability for Pollution was intended to be
excluded by the Company’s exclusion.
	 
	 	2.	 	In respect of any Policy written in a state whose insurance
regulatory authorities have prohibited the Company from including a
Pollution liability exclusion in its Policies.




	H.	 	Fidelity business, except when written in conjunction with a Director’s
and Officers’ Liability Policy.
	 
	I.	 	Business classified by the Company as Primary Rental Liability and
Supplemental Liability.
	 
	J.	 	Liability assumed by the Company under any form of treaty reinsurance;
however, group intra-company reinsurance (if applicable), local agency
reinsurance accepted in the normal course of business and/or Policies
written by another carrier at the Company’s request and reinsured 100% by
the Company, as well as Policies written for the captive of the Company’s
insured, will not be excluded hereunder.
	 
	K.	 	Terrorism pursuant to the “Terrorism Exclusion Endorsement (Reinsurance)
N.M.A. 2921 (Amended)” attached hereto.
	 
	L.	 	Any losses arising out of tobacco or tobacco products, when written as
such.
	 
	M.	 	Any losses arising out of latex or latex products, when written as such.
	 
	N.	 	New and renewal business classified by the Company as Nursing Home or
Assisted Living General Liability or Professional Liability. However,
this exclusion shall not apply if the Company is required to offer renewal
to any insured(s) by the applicable regulatory authority(ies).



ARTICLE VII



PREMIUM



The premium to be paid by the Company to the Reinsurer for reinsurance provided
by this Contract shall be calculated by applying a rate of 6.60% to the Gross
Net Earned Premium


Page 5






 


Income accounted for by the Company during the term of this Contract on all
business the subject matter hereof, subject to a minimum premium of
$20,000,000.


The Company shall pay to the Reinsurer an annual deposit premium of $25,053,600
payable in quarterly installments of $6,263,400 due April 1; July 1; and
October 1, 2003; and January 1, 2004.


Within 90 days following the expiration of this Contract, the Company shall
render to the Reinsurer a statement of premium due in accordance with the first
paragraph of this Article. An adjustment of premium shall thereupon be made in
accordance with the statement submitted by the Company.


ARTICLE VIII



REINSTATEMENT



Each loss hereon reduces the amount of indemnity hereunder, but the amount so
exhausted shall be reinstated from the date the Loss Occurrence commenced.



	A.	 	The first three full reinstatements shall be without payment of
additional premium.
	 
	B.	 	Subsequently, three reinstatements have been agreed at an additional
premium, each calculated pro rata by applying, to 20% of the premium
earned hereon, the percentage the amount reinstated bears to $10,000,000.
	 
	C.	 	Thereafter, three successive full reinstatements shall be allowed without
payment of additional premium.



Nevertheless, the Reinsurer’s liability hereunder shall never be more than
$100,000,000 in respect of all Loss Occurrences during the term of this
Contract.


ARTICLE IX



DEFINITIONS




	A.	 	“Ultimate Net Loss"
	 
	 	 	Shall mean the actual loss paid by the Company or for which the Company
becomes liable to pay, such loss shall include 100% of any Loss in Excess
of Policy Limits as defined in the LOSS IN EXCESS OF POLICY LIMITS ARTICLE,
100% of any Extra Contractual Obligations as defined in the EXTRA
CONTRACTUAL OBLIGATIONS ARTICLE, ex-gratia payments subject to prior
approval, expenses of litigation and interest, claim-specific declaratory
judgment expenses, and all other loss expense of the Company including
subrogation, salvage, and recovery expenses (office expenses and salaries
of officials and employees not classified as loss adjusters are not
chargeable as expenses for purposes of this paragraph), but salvages and
all recoveries, including recoveries under all reinsurances,



Page 6






 







	 	 	which inure to the benefit of this Contract (whether recovered or not),
shall be first deducted from such loss to arrive at the amount of liability
attaching hereunder.
	 
	 	 	The phrase “ex-gratia payments” shall mean payments made as an
accommodation by the Company in settlement of a claim for which no coverage
exists under the Policy reinsured hereunder, subject to the prior approval
of the Reinsurer.
	 
	 	 	The phrase “claim-specific declaratory judgment expenses,” as used in this
Contract will mean all expenses incurred by the Company in connection with
declaratory judgment actions brought to determine the Company’s defense
and/or indemnification obligations that are allocable to specific Policies
and claims subject to this Contract. Declaratory judgment expenses will be
deemed to have been incurred by the Company on the date of the original
loss (if any) giving rise to the declaratory judgment action.
	 
	 	 	All salvages, recoveries or payments recovered or received subsequent to
loss settlements hereunder shall be applied as if recovered or received
prior to the aforesaid settlement, and all necessary adjustments shall be
made by the parties hereto.
	 
	 	 	For purposes of this definition, the phrase “becomes liable to pay” shall
mean the existence of a judgment, which the Company does not intend to
appeal, or a release has been obtained by the Company, or the Company has
accepted a proof of loss.
	 
	 	 	Nothing in this clause shall be construed to mean that losses are not
recoverable hereunder until the Company’s Ultimate Net Loss has been
ascertained.
	 
	B.	 	“Policy” or “Policies"
	 
	 	 	Shall mean any binder, policy, or contract of insurance or reinsurance
issued, accepted or held covered provisionally or otherwise, including any
extended reporting periods, by or on behalf of the Company.
	 
	C.	 	“Gross Net Earned Premium Income"
	 
	 	 	Shall mean gross earned premium income during the term of this Contract on
business the subject of this Contract less earned premium income paid for
reinsurances, recoveries under which would inure to the benefit of this
Contract.



ARTICLE X



NET RETAINED LINES



This Contract applies only to that portion of any insurances or reinsurances
covered by this Contract, which the Company retains net for its own account
and, in calculating the amount of any loss hereunder and also in computing the
amount in excess of which this Contract attaches, only loss or losses in
respect of that portion of any insurances or reinsurances which the Company
retains net for its own account shall be included.


Page 7






 


The Company reserves the right to maintain reinsurance agreement(s) in respect
of its net retention under this Contract, and recoveries under said
reinsurance(s) shall be entirely disregarded in determining the Ultimate Net
Loss hereunder.


The amount of the Reinsurer’s liability hereunder in respect of any loss or
losses shall not be increased by reason of the inability of the Company to
collect from any other reinsurers, whether specific or general, any amounts
which may have become due from them whether such inability arises from the
insolvency of such other reinsurers or otherwise.


ARTICLE XI



CURRENCY



Whenever the word “Dollars” or the “$” sign appears in this Contract, they
shall be construed to mean United States Dollars and all transactions under
this Contract shall be in United States Dollars. Amounts paid or received by
the Company in any other currency shall be converted to United States Dollars
at the rate of exchange at the date such transaction is entered on the books of
the Company.


ARTICLE XII



UNAUTHORIZED REINSURANCE



(Applies only to a Reinsurer who does not qualify for full credit with any
insurance regulatory authority having jurisdiction over the Company’s
reserves.)


As regards Policies or bonds issued by the Company coming within the scope of
this Contract, the Company agrees that when it shall file with the insurance
regulatory authority or set up on its books reserves for losses covered
hereunder which it shall be required by law to set up, it will forward to the
Reinsurer a statement showing the proportion of such reserves which is
applicable to the Reinsurer. The Reinsurer hereby agrees to fund such reserves
in respect of known outstanding losses that have been reported to the Reinsurer
and allocated loss adjustment expense relating thereto, losses and allocated
loss adjustment expense paid by the Company but not recovered from the
Reinsurer, plus reserves for losses incurred but not reported, as shown in the
statement prepared by the Company (hereinafter referred to as “Reinsurer’s
Obligations”) by funds withheld, cash advances or a Letter of Credit. The
Reinsurer shall have the option of determining the method of funding provided
it is acceptable to the insurance regulatory authorities having jurisdiction
over the Company’s reserves.


When funding by a Letter of Credit, the Reinsurer agrees to apply for and
secure timely delivery to the Company of a clean, irrevocable and unconditional
Letter of Credit issued by a bank and containing provisions acceptable to the
insurance regulatory authorities having jurisdiction over the Company’s
reserves in an amount equal to the Reinsurer’s proportion of said reserves.
Such Letter of Credit shall be issued for a period of not less than one year
and shall be automatically extended for one year from its date of expiration or
any future expiration date unless 30 days (60 days where required by insurance
regulatory authorities) prior to any expiration date the issuing


Page 8






 


bank shall notify the Company by certified or registered mail that the issuing
bank elects not to consider the Letter of Credit extended for any additional
period.


The Reinsurer and Company agree that the Letters of Credit provided by the
Reinsurer pursuant to the provisions of this Contract may be drawn upon at any
time, notwithstanding any other provision of this Contract, and be utilized by
the Company or any successor, by operation of law, of the Company including,
without limitation, any liquidator, rehabilitator, receiver or conservator of
the Company for the following purposes, unless otherwise provided for in a
separate Trust Agreement:



	(a)	 	to reimburse the Company for the Reinsurer’s Obligations, the payment of
which is due under the terms of this Contract and which has not been
otherwise paid;
	 
	(b)	 	to make refund of any sum which is in excess of the actual amount
required to pay the Reinsurer’s Obligations under this Contract;
	 
	(c)	 	to fund an account with the Company for the Reinsurer’s Obligations.
Such cash deposit shall be held in an interest bearing account separate
from the Company’s other assets, and interest thereon not in excess of the
prime rate shall accrue to the benefit of the Reinsurer;
	 
	(d)	 	to pay the Reinsurer’s share of any other amounts the Company claims are
due under this Contract.



In the event the amount drawn by the Company on any Letter of Credit is in
excess of the actual amount required for (a) or (c) or, in the case of (d), the
actual amount determined to be due, the Company shall promptly return to the
Reinsurer the excess amount so drawn. All of the foregoing shall be applied
without diminution because of insolvency on the part of the Company or the
Reinsurer.


The issuing bank shall have no responsibility whatsoever in connection with the
propriety of withdrawals made by the Company or the disposition of funds
withdrawn, except to ensure that withdrawals are made only upon the order of
properly authorized representatives of the Company.


At annual intervals or more frequently as agreed, but never more frequently
than quarterly, the Company shall prepare a specific statement of the
Reinsurer’s Obligations, for the sole purpose of amending the Letter of Credit,
in the following manner:



	(a)	 	If the statement shows that the Reinsurer’s Obligations exceed the
balance of credit as of the statement date, the Reinsurer shall, within 30
days after receipt of notice of such excess, secure delivery to the
Company of an amendment to the Letter of Credit increasing the amount of
credit by the amount of such difference.
	 
	(b)	 	If, however, the statement shows that the Reinsurer’s Obligations are
less than the balance of credit as of the statement date, the Company
shall, within 30 days after receipt of written request from the Reinsurer,
release such excess credit by agreeing to secure an amendment to the
Letter of Credit reducing the amount of credit available by the amount of
such excess credit.



Page 9






 






ARTICLE XIII



TAXES



In consideration of the terms under which this Contract is issued, the Company
will not claim a deduction in respect of the premium hereon when making tax
returns, other than income or profits tax returns, to any state or territory of
the United States of America, the District of Columbia or Canada.


ARTICLE XIV



FEDERAL EXCISE TAX



(Applicable to those Reinsurers, excepting Underwriters at Lloyd’s London and
other Reinsurers exempt from Federal Excise Tax, who are domiciled outside the
United States of America.)


The Reinsurer has agreed to allow, for the purpose of paying the Federal Excise
Tax, the applicable percentage of the premium payable hereon (as imposed under
Section 4371 of the Internal Revenue Code) to the extent such premium is
subject to the Federal Excise Tax.


In the event of any return of premium becoming due hereunder, the Reinsurer
will deduct the applicable percentage from the return premium payable hereon,
and the Company or its agent should take steps to recover the tax from the
United States Government.


ARTICLE XV



NOTICE OF LOSS AND LOSS SETTLEMENTS



The Company will advise the Reinsurer promptly of all claims which in the
opinion of the Company may involve the Reinsurer and of all subsequent
developments on these claims which may materially affect the position of the
Reinsurer, such advices to include any claim for which the reserve is 50% or
more of the Company’s retention.


The Reinsurer agrees to abide by the loss settlements of the Company provided
that retroactive extension of Policy terms or coverages made voluntarily by the
Company and not in response to court decisions (whether such court decision is
against the Company or other companies affording the same or similar coverages)
will not be covered under this Contract.


When so requested, the Company will afford the Reinsurer an opportunity to be
associated with the Company, at the expense of the Reinsurer, in the defense of
any claim or suit or proceeding involving this reinsurance, and the Company
will cooperate in every respect in the defense of such claim, suit or
proceeding.


The Reinsurer will pay its share of loss settlements within 15 days upon
receipt and verification of proof of loss from the Company.


Page 10






 


ARTICLE XVI



LOSS IN EXCESS OF POLICY LIMITS



This Contract shall protect the Company, within the limits hereof, in
connection with the Ultimate Net Loss in excess of the limit of its original
Policy, such loss in excess of the limit having been incurred because of
failure by it to settle within the Policy limit or by reason of alleged or
actual negligence, criminal act or 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 reinsured or in the preparation or prosecution of an
appeal consequent upon such action.


For the purpose of this Article, the word “loss” shall mean any amounts for
which the Company would have been contractually liable to pay had it not been
for the limit of the original Policy. 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.


ARTICLE XVII



EXTRA CONTRACTUAL OBLIGATIONS



This Contract shall protect the Company within the limits hereof, where the
Ultimate Net Loss includes any Extra Contractual Obligations. The term “Extra
Contractual Obligations” is defined as those liabilities not covered under any
other provision of this Contract 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, criminal act or 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 reinsured or in
the preparation or prosecution of an appeal consequent upon such action.


The date on which any Extra Contractual Obligation is incurred by the Company
shall be deemed, in all circumstances, to be the date of the original disaster
and/or casualty.


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.


ARTICLE XVIII



ERRORS AND OMISSIONS



Any inadvertent delay, omission or error shall not be held to relieve either
party hereto from any liability, which would attach to it hereunder, if such
delay, omission or error had not been made, providing such delay, omission or
error is rectified upon discovery.


Page 11






 


ARTICLE XIX



ACCESS TO RECORDS



The Company shall place at the disposal of the Reinsurer at all reasonable
times, and the Reinsurer shall have the right to inspect through its designated
representatives, all books, records and papers of the Company in connection
with any reinsurance hereunder or claims in connection herewith. Rights of
access to records shall survive the termination or expiration of this Contract.


ARTICLE XX



OFFSET



The Company and the Reinsurer, each at its option, may offset any balance or
balances, whether on account of premiums, claims and losses, loss expenses or
salvages due from one party to the other under this Contract; provided,
however, that in the event of the insolvency of a party hereto, offsets shall
only be allowed in accordance with applicable statutes and regulations.


ARTICLE XXI



ARBITRATION



As a condition precedent to any right of action hereunder, any irreconcilable
dispute between the parties to this Contract will be submitted for decision to
a board of arbitration composed of two arbitrators and an umpire meeting in
Bala Cynwyd, Pennsylvania.


Arbitration shall be initiated by the delivery of a written notice of demand
for arbitration by one party to the other within a reasonable time after the
dispute has arisen.


The members of the board of arbitration shall be active or former,
disinterested officials of insurance or reinsurance companies or Underwriters
at Lloyd’s, London, not under the control or management of either party to this
Contract. Each party shall appoint its arbitrator, and the two arbitrators
shall choose an umpire before instituting the hearing. If the respondent fails
to appoint its arbitrator within 4 weeks after being requested to do so by the
claimant, the latter shall also appoint the second arbitrator.


If the two arbitrators are unable to agree upon the umpire within 30 days of
their appointment, the umpire shall be selected by a judge of any court of
competent jurisdiction.


The claimant shall submit its initial brief within 45 days from appointment of
the umpire. The respondent shall submit its brief within 45 days thereafter,
and the claimant may submit a reply brief within 30 days after filing of the
respondent’s brief.


The board shall make its decision with regard to the custom and usage of the
insurance and reinsurance business. The board shall issue its decision in
writing based upon a hearing in which


Page 12






 


evidence may be introduced without following strict rules of evidence but in
which cross-examination and rebuttal shall be allowed. The board shall make
its decision within 60 days following the termination of the hearings unless
the parties consent to an extension. The majority decision of the board shall
be final and binding upon all parties to the proceeding. Judgment may be
entered upon the award of the board in any court having jurisdiction.


If more than one reinsurer is involved in the same dispute, all such reinsurers
shall constitute and act as one party for purposes of this clause, and
communications shall be made by the Company to each of the reinsurers
constituting the one party provided, however, that nothing therein shall impair
the rights of such reinsurers to assert several rather than joint defenses or
claims, nor be construed as changing the liability of the reinsurers under the
terms of this Contract from several to joint.


Each party shall bear the expense of its own arbitrator and shall jointly and
equally bear with the other party the expense of the umpire. The remaining
costs of the arbitration proceedings shall be allocated by the board.


ARTICLE XXII



SERVICE OF SUIT



(This Article only applies to reinsurers domiciled outside of the United States
and/or unauthorized in any state, territory, or district of the United States
having jurisdiction over the Company).


It is agreed that in the event of the failure of the Reinsurer hereon to pay
any amount claimed to be due hereunder, the Reinsurer hereon, at the request of
the Company, will submit to the jurisdiction of a court of competent
jurisdiction within the United States. Nothing in this Article constitutes or
should be understood to constitute a waiver of the Reinsurer’s rights to
commence an action in any court of competent jurisdiction in the United States,
to remove an action to a United States District Court or to seek a transfer of
a case to another court as permitted by the laws of the United States or of any
state in the United States.


It is further agreed that service of process in such suit may be made upon
Mendes and Mount, 750 Seventh Avenue, New York, New York 10019, and that in any
suit instituted the Reinsurer will abide by the final decision of such court or
of any appellate court in the event of an appeal.


The above-named are authorized and directed to accept service of process on
behalf of the Reinsurer in any such suit and/or upon the request of the Company
to give a written undertaking to the Company that they will enter a general
appearance upon the Reinsurer’s behalf in the event such a suit shall be
instituted.


Further, pursuant to any statute of any state, territory or district of the
United States which makes provision therefor, the Reinsurer hereon hereby
designates the Superintendent, Commissioner or Director of Insurance or other
officer specified for that purpose in the statute, or his successor or
successors in office, as its true and lawful attorney upon whom may be served
any lawful process in any action, suit or proceeding instituted by or on behalf
of the Company or any beneficiary


Page 13






 


hereunder arising out of this Contract of reinsurance and hereby designates the
above-named as the person to whom the said officer is authorized to mail such
process or a true copy thereof.


ARTICLE XXIII



INSOLVENCY



In the event of the insolvency of the Company, this reinsurance shall be
payable directly to the Company or to its liquidator, receiver, conservator or
statutory successor on the basis of the liability of the Company without
diminution because of the insolvency of the Company or because the liquidator,
receiver, conservator or statutory successor of the Company has failed to pay
all or a portion of any claim. It is agreed, however, that the liquidator,
receiver, conservator or statutory successor of the Company shall give written
notice to the Reinsurer of the pendency of a claim against the Company
indicating the Policy or bond reinsured, which claim would involve a possible
liability on the part of the Reinsurer, within a reasonable time after such
claim is filed in the conservation or liquidation proceeding or in the
receivership and that, during the pendency of such claim, the Reinsurer may
investigate such claim and interpose, at its own expense, in the proceeding
where such claim is to be adjudicated, any defense or defenses that it may deem
available to the Company or its liquidator, receiver, conservator or statutory
successor. The expense thus incurred by the Reinsurer shall be chargeable,
subject to the approval of the court, against the Company as part of the
expense of conservation or liquidation to the extent of a pro rata share of the
benefit, which may accrue to the Company solely as a result of the defense
undertaken by the Reinsurer.


Where two or more reinsurers are involved in the same claim and a majority in
interest elect to interpose defense to such claim, the expense shall be
apportioned in accordance with the terms of this Contract as though such
expense had been incurred by the insolvent Company.


In the event of the insolvency of the Company, the reinsurance under this
Contract shall be payable directly by the Reinsurer to the Company or to its
liquidator, receiver, conservator or statutory successor, except as provided by
Section 4118(a) of the New York Insurance Law or except (a) where this Contract
specifically provides another payee of such reinsurance in the event of the
insolvency of the Company or (b) where the Reinsurer with the consent of the
direct insured or insureds has assumed such Policy obligations of the Company
as direct obligations of the Reinsurer to the payees under such Policies and in
substitution for the obligations of the Company to such payees.


Should the Company go into liquidation or should a receiver be appointed, all
amounts due either Company or Reinsurer under this or any other agreement,
whether by reason of premium, losses or otherwise under this Contract, shall be
subject to the right of offset at any time and from time to time and, upon the
exercise of the same, only the net balance shall be due.


In the event of the insolvency of any company or companies included in the
designation of “Company,” this clause will apply only to the insolvent company
or companies.


Page 14






 


ARTICLE XXIV



CONFIDENTIALITY



The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly communicate, disclose or divulge to any third
party, any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company’s books, records and
papers. The restrictions, as outlined in this Article, shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, parent company, retrocessionaires, potential
retrocessionaires, legal counsel, arbitrators involved in any arbitration
procedures under this Contract or disclosures required upon subpoena or other
duly-issued order of a court or other governmental agency or regulatory
authority.


ARTICLE XXV



GOVERNING LAW



This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Pennsylvania, exclusive of the rules
with respect to conflicts of law, except as to rules with respect to credit for
reinsurance, in which case the applicable rules of all states shall apply.


ARTICLE XXVI



SEVERABILITY



If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.


ARTICLE XXVII



THIRD PARTY RIGHTS



This Contract is solely between the Company and the Reinsurer, and in no
instance shall any other party have any rights under this Contract except as
expressly provided otherwise in the INSOLVENCY ARTICLE.


ARTICLE XXVIII



AGENCY AGREEMENT



If more than one reinsured company is named as a party to this Contract, the
first named company will be deemed the agent of the other reinsured companies
for purposes of sending or receiving notices required by the terms and
conditions of this Contract and for purposes of remitting or receiving any
monies due any party.


Page 15






 


ARTICLE XXIX



INTERMEDIARY



Willis Re Inc., 11 Penn Center, Suite 2700, 1835 Market Street, Philadelphia,
Pennsylvania 19103, is hereby recognized as the intermediary negotiating this
Contract and through whom all communications relating thereto shall be
transmitted to the Company or the Reinsurer. However, all communications
concerning accounts, claim information, funds and inquiries related thereto
shall be transmitted to the Company or the Reinsurer through Willis Re Inc.,
5420 Millstream Road, Suite 200, P.O. Box 3000, McLeansville, North Carolina,
27301-3000. Payments by the Company to Willis Re Inc. shall be deemed to
constitute payment to the Reinsurer and payments by the Reinsurer to Willis Re
Inc. shall be deemed to constitute payment to the Company only to the extent
that such payments are actually received by the Company.


IN WITNESS WHEREOF, the Reinsured by its duly authorized representative has
executed this Agreement as of the date specified below:


Signed this 17th day of July, 2003.



PHILADELPHIA INSURANCE COMPANY

PHILADELPHIA INDEMNITY INSURANCE COMPANY

MOBILE USA INSURANCE COMPANY, INC.

LIBERTY AMERICAN INSURANCE COMPANY


By Christopher J. Maguire



Page 16










 




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



(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 of 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 Liability 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:



	 	 	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 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; 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.



Page 1 of 2






 



	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 damages
	 
	 	 	 	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 threat.




	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 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”
	 	 	(“property damage” includes all forms of radioactive contamination of
property
	 	 	(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
	 
	 	(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 operation 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 of the Independent Insurance Conference of Canada.



	 	 	 	*NOTE: The words printed in italics 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.



21/9/67

N.M.A. 1590



Page 2 of 2






 



NUCLEAR INCIDENT EXCLUSION CLAUSE
- LIABILITY - REINSURANCE - CANADA




	1.	 	This Agreement does not cover any loss or liability accruing to the
Reinsured 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 his clause
it is agreed that for all purposes of this Agreement all the original
liability contracts of the Reinsured, whether new, renewal or replacement,
of the following classes, namely,



         Personal Liability.

         Farmers’ Liability.

         Storekeepers’ Liability.




	 	 	which become effective on or after 31st December 1984, 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 1984, shall
be deemed to include, from their inception dates and thereafter, the
following provision:
	 
	 	 	Broad Exclusion Provision.
	 
	 	 	It is agreed that this Policy does not apply:




	 	(a)	 	to liability imposed by or arising under The Nuclear Liability Act;
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:





	 	(i)	 	the ownership, maintenance, operation or use of a nuclear
facility by or on behalf of an Insured;
	 
	 	(ii)	 	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.




Page 1 of 2






 




As used in this Policy:



	1.	 	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 that the Atomic Energy
Control Board may, by regulation, designate as being prescribed substances
capable of releasing atomic energy, or as being requisite for the
production, use or application of atomic energy;
	 
	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 or 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 substance” 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.



N.M.A. 1979a

01/04/96



Page 2 of 2






 



TERRORISM EXCLUSION ENDORSEMENT (REINSURANCE) N.M.A. 2921 (AMENDED)



Notwithstanding any provision to the contrary within this reinsurance or any
endorsement thereto it is agreed that this reinsurance excludes loss, damage,
cost or expense of whatsoever nature directly or indirectly caused by,
resulting from or in connection with any act of terrorism regardless of any
other cause or event contributing concurrently or in any other sequence to the
loss.


For the purpose of this endorsement an act of terrorism means an act, including
but not limited to the use of force or violence and/or the threat thereof, of
any person or group(s) of persons, whether acting alone or on behalf of or in
connection with any organization(s) or government(s), committed for political,
religious, ideological or similar purposes including the intention to influence
any government and/or to put the public, or any section of the public, in fear.


This endorsement also excludes loss, damage, cost or expense of whatsoever
nature directly or indirectly caused by, resulting from or in connection with
any action taken in controlling, preventing, suppressing or in any way relating
to any act of terrorism.


If the Reinsurers allege that by reason of this exclusion, any loss, damage,
cost or expense is not covered by this reinsurance the burden of proving the
contrary shall be upon the Reassured.


In the event any portion of this endorsement is found to be invalid or
unenforceable, the remainder shall remain in full force and effect.


Notwithstanding the above, this terrorism exclusion shall only apply to
liability losses arising directly from the following classes of business, when
written as such.



	 	 	 
	Class of Business	 	Coverage
	
	 	

	Airports (Including Any Related Services Or Operations)	 	
CGL/UMB
	Amusement Parks	 	
CGL/UMB
	Animal Feed Mills	 	
CGL/UMB
	Bridges and Tunnels	 	
CGL/UMB
	Buildings in which U.S. Government is Owner or Largest Tenant	 	
CGL/UMB
	Chemical Manufacturing, Wholesale Or Storage	 	
CGL/UMB
	Convention Centers	 	
CGL/UMB
	Concert Halls
3 1,000 person capacity	 	
CGL/UMB
	Dams	 	
CGL/UMB
	Drug Manufacturing	 	
CGL/UMB
	Electrical Generating Facilities	 	
CGL/UMB
	Explosives - Manufacture, Distribution Or Storage	 	
CGL/UMB
	Mass Transit Systems - Subways, Railways Etc.	 	
CGL/UMB
	Oil & Gas Pipelines	 	
CGL/UMB
	Oil Refineries & Storage Tank Farms	 	
CGL/UMB
	Pesticides, Herbicides, Insecticides - Manufacture	 	
CGL/UMB
	Ports (Including Any Related Services Or Operations)	 	
CGL/UMB
	Security Services	 	
CGL/UMB
	Stadiums and Sports Arenas	 	
CGL/UMB
	Telecommunications Services - Telephone, Radio, TV, Internet	 	
CGL/UMB
	Water & Sewage Treatment Plants	 	
CGL/UMB



However, the maximum liability to the Reinsurer for all Terrorism losses during
the term of this Contract shall be limited to $10,000,000.


 






 


TERRORISM RISK INSURANCE ACT OF 2002




	A.	 	Any financial assistance the Company receives under the Terrorism
Risk Insurance Act of 2002 (“TRIA”) shall apply as follows:




	 	1.	 	Except as provided in subparagraph 2 below, any such
financial assistance shall inure solely to the benefit of the
Company and shall be entirely disregarded in applying all of the
provisions of this Contract.
	 
	 	2.	 	If losses occurring hereunder result in recoveries made
by the Company both under this Contract and under TRIA, and such
recoveries, together with any other reinsurance recoveries made
by the Company applicable to said losses, exceed the amount
permitted by TRIA, any amount in excess thereof shall reduce the
Ultimate Net Loss subject to this Contract for the losses to
which the TRIA financial assistance applies.




	B.	 	Nothing herein shall be construed to mean that losses under this
Contract are not recoverable until the Company has received financial
assistance under TRIA.




 









 



INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)



of



AMERICAN RE-INSURANCE COMPANY

(the “Subscribing Reinsurer”)



with respect to the



CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)



issued to



PHILADELPHIA INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

PHILADELPHIA INDEMNITY INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

MOBILE USA INSURANCE COMPANY, INC.

Pinellas Park, Florida

LIBERTY AMERICAN INSURANCE COMPANY

Pinellas Park, Florida

(the “Company”)



The Subscribing Reinsurer shall have a 25.00% share in the interests and
liabilities of the “Reinsurer” as set forth in the Contract attached hereto and
executed by the Company.


This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1,
2003, and shall continue in force until 12:01 a.m., Eastern Standard Time,
January 1, 2004.


The share of the Subscribing Reinsurer in the interests and liabilities of the
“Reinsurer” shall be several and not joint with the share of any other
subscribing reinsurer. In no event shall the Subscribing Reinsurer participate
in the interests and liabilities of the other subscribing reinsurers.


IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date specified below:


Signed this 30th day of September, 2003.


AMERICAN RE-INSURANCE COMPANY

By: American Re Broker Market



By Jennifer G. Atallah


 






 



INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)



of



CONVERIUM REINSURANCE (NORTH AMERICA) INC.

(the “Subscribing Reinsurer”)



with respect to the



CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)



issued to



PHILADELPHIA INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

PHILADELPHIA INDEMNITY INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

MOBILE USA INSURANCE COMPANY, INC.

Pinellas Park, Florida

LIBERTY AMERICAN INSURANCE COMPANY

Pinellas Park, Florida

(the “Company”)



The Subscribing Reinsurer shall have a 35.00% share in the interests and
liabilities of the “Reinsurer” as set forth in the Contract attached hereto and
executed by the Company.


This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1,
2003, and shall continue in force until 12:01 a.m., Eastern Standard Time,
January 1, 2004.


The share of the Subscribing Reinsurer in the interests and liabilities of the
“Reinsurer” shall be several and not joint with the share of any other
subscribing reinsurer. In no event shall the Subscribing Reinsurer participate
in the interests and liabilities of the other subscribing reinsurers.


IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date specified below:


Signed this 17th day of September, 2003.


CONVERIUM REINSURANCE (NORTH AMERICA) INC.



By N. Weston, Vice President


 






 



INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)



of



ENDURANCE SPECIALTY INSURANCE LTD.

(the “Subscribing Reinsurer”)



with respect to the



CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)



issued to



PHILADELPHIA INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

PHILADELPHIA INDEMNITY INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

MOBILE USA INSURANCE COMPANY, INC.

Pinellas Park, Florida

LIBERTY AMERICAN INSURANCE COMPANY

Pinellas Park, Florida

(the “Company”)



The Subscribing Reinsurer shall have a 20.00% share in the interests and
liabilities of the “Reinsurer” as set forth in the Contract attached hereto and
executed by the Company.


This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1,
2003, and shall continue in force until 12:01 a.m., Eastern Standard Time,
January 1, 2004.


The share of the Subscribing Reinsurer in the interests and liabilities of the
“Reinsurer” shall be several and not joint with the share of any other
subscribing reinsurer. In no event shall the Subscribing Reinsurer participate
in the interests and liabilities of the other subscribing reinsurers.


IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date specified below:


Signed this 23rd day of August, 2003.


ENDURANCE SPECIALTY INSURANCE LTD.


By Dennis J. Stokes



 






 



INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)



of



LIBERTY MUTUAL INSURANCE COMPANY

(the “Subscribing Reinsurer”)



with respect to the



CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)



issued to



PHILADELPHIA INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

PHILADELPHIA INDEMNITY INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

MOBILE USA INSURANCE COMPANY, INC.

Pinellas Park, Florida

LIBERTY AMERICAN INSURANCE COMPANY

Pinellas Park, Florida

(the “Company”)



The Subscribing Reinsurer shall have a 20.00% share in the interests and
liabilities of the “Reinsurer” as set forth in the Contract attached hereto and
executed by the Company.


This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1,
2003, and shall continue in force until 12:01 a.m., Eastern Standard Time,
January 1, 2004.


The share of the Subscribing Reinsurer in the interests and liabilities of the
“Reinsurer” shall be several and not joint with the share of any other
subscribing reinsurer. In no event shall the Subscribing Reinsurer participate
in the interests and liabilities of the other subscribing reinsurers.


IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date specified below:


Signed this 13th day of August, 2003.


LIBERTY MUTUAL INSURANCE COMPANY


By Richard Steele, Assistant Secretary