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Exhibit 10.5    
    


Swiss Re  


PROPERTY CATASTROPHE EXCESS OF LOSS

REINSURANCE AGREEMENT

NO POR327524 


EFFECTIVE
JANUARY 01 2007 


between



SAFETY
INSURANCE COMPANY

SAFETY INDEMNITY INSURANCE COMPANY

both of Boston Massachusetts 


and 


SWISS
REINSURANCE AMERICA CORPORATION

Armonk New York 








        PROPERTY
CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT NO POR327524 



	ARTICLE
 
	 	CONTENTS
	 	PAGE

	 	 	PREAMBLE	 	1
	ARTICLE I	 	BUSINESS COVERED	 	1
	ARTICLE II	 	EFFECTIVE DATE AND TERMINATION	 	1
	ARTICLE III	 	TERRITORY	 	2
	ARTICLE IV	 	LIMIT AND RETENTION	 	2
	ARTICLE V	 	REINSTATEMENT	 	2
	ARTICLE VI	 	ULTIMATE NET LOSS	 	3
	ARTICLE VII	 	LOSS IN EXCESS OF POLICY LIMITS	 	3
	ARTICLE VIII	 	EXTRA CONTRACTUAL OBLIGATIONS	 	3
	ARTICLE IX	 	EXCLUSIONS	 	4
	ARTICLE X	 	SPECIAL ACCEPTANCE	 	5
	ARTICLE XI	 	LOSS OCCURRENCE	 	6
	ARTICLE XII	 	TERRORISM EXCESS RECOVERY	 	7
	ARTICLE XIII	 	REINSURANCE PREMIUM	 	8
	ARTICLE XIV	 	CLAIMS	 	9
	ARTICLE XV	 	SALVAGE AND SUBROGATION	 	10
	ARTICLE XVI	 	ACCESS TO RECORDS	 	10
	ARTICLE XVII	 	TAXES	 	10
	ARTICLE XVIII	 	CURRENCY	 	10
	ARTICLE XIX	 	OFFSET	 	10
	ARTICLE XX	 	ERRORS OR OMISSIONS	 	10
	ARTICLE XXI	 	DISPUTE RESOLUTION	 	11
	ARTICLE XXII	 	INSOLVENCY	 	12
	ARTICLE XXIII	 	AMENDMENTS	 	12
	 	 	SIGNATURES	 	13
	ATTACHMENTS	 	INSOLVENCY FUNDS EXCLUSION CLAUSE

POOLS ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE

TOTAL INSURED VALUE EXCLUSION CLAUSE

POLLUTION AND SEEPAGE EXCLUSION CLAUSE

NUCLEAR INCIDENT EXCLUSION CLAUSE PHYSICAL DAMAGE

REINSURANCE USA

NUCLEAR INCIDENT EXCLUSION CLAUSE PHYSICAL DAMAGE

REINSURANCE CANADA

NUCLEAR INCIDENT EXCLUSION CLAUSE REINSURANCE NO 4	 	 











PROPERTY CATASTROPHE EXCESS OF LOSS

REINSURANCE AGREEMENT

NO POR327524

(hereinafter referred to as the Agreement) 


between



SAFETY
INSURANCE COMPANY

SAFETY INDEMNITY INSURANCE COMPANY

both of 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 01, 2007, 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 to those Policies issued by the Company with respect to the following Lines of Business as classified in the Company's
Annual Statement, subject to the exclusions set forth in Article IX—Exclusions 






	NAIC

CODE
	 	LINE OF BUSINESS

	5.1	 	Commercial Multiple Peril (Section I only)
	03	 	Allied Lines
	04	 	Homeowners (Section I only) Property
	21.1	 	Automobile Physical Damage—Private Passenger
	21.02	 	Automobile Physical Damage—Commercial
	01	 	Fire





ARTICLE II.—EFFECTIVE DATE AND TERMINATION  


	A.
	This
Agreement shall apply to losses occurring within the period commencing 12:01 a.m., Eastern Standard Time, January 01, 2007, and ending 12:01 a.m., Eastern Standard
Time, December 31, 2007.



	B.
	Upon
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.



	C.
	If
this Agreement shall terminate while a Loss Occurrence covered hereunder is in progress, it is agreed that, subject to the other conditions of this Agreement, the Reinsurer shall
indemnify the 







 

Company
as if the entire Loss Occurrence had occurred during the time this Agreement is in force provided such Loss Occurrence covered hereunder started before the date of termination. 




ARTICLE III.—TERRITORY  


        This Agreement applies to risks located solely in the Commonwealth of Massachusetts except that with respect to Multiple Peril Policies covered hereunder, the
territorial limits of this Agreement shall be those of the original Policies when such Policies are written to cover risks primarily located in the Commonwealth of Massachusetts. 


ARTICLE IV.—LIMIT AND RETENTION  


	A.
	As
respects one or more than one Line of Business covered under this Agreement, the Company shall retain the first $15,000,000 of Ultimate Net Loss as respects each risk. The Reinsurer
shall then be liable for the amount by which the Company IS Ultimate Net Loss exceeds the Company's retention of $15,000,000, but the liability of the Reinsurer shall never exceed $13,500,000(i.e.,
90% of $15,000,000) each risk, nor shall the Reinsurer's liability exceed $27,000,000 (i.e., 90% of $30,000,000) in all during the term of this Agreement. Notwithstanding the foregoing, as respects
the event of terrorism, Reinsurer's liability shall be further limited to $13,500,000 in all, during the term of this Agreement.



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



	C.
	It
is warranted by the Company that the reinsurance provided under this Agreement shall attach only when two or more risks are involved in the same Loss Occurrence. The Company shall
be the sole judge of what constitutes one risk provided, however, that:



	1.
	A
risk shall never be less than all insurable values within exterior walls and under one roof regardless of fire divisions, the number of Policies involved, and whether there is a
single, multiple or unrelated named insureds involved in such risk.



	2.
	When
two or more buildings are situated at the same general location, the Company shall identify on its records at the time of acceptance by the Company, those individual buildings and
all insurable values contained therein that are considered to constitute each risk. If such identification is not made, each building and all insurable values contained therein shall be considered to
be a separate risk.



	3.
	A
risk shall be determined from the standpoint of the predominant peril and such peril shall be noted in the Company's records.






	D.
	It
is warranted by the Company that it shall retain at its own risk and not reinsured in any way, 10% of Ultimate Net Loss, each Loss Occurrence as set forth above. 





ARTICLE V.—REINSTATEMENT  


	A.
	Each
claim hereunder reduces the amount of indemnity from the time of occurrence of the loss by the sum paid, but any amount so exhausted is hereby reinstated from the time the Loss
Occurrence commences hereon.



	B.
	For
each subsequent reinstatement, the Company agrees to pay an additional premium calculated at pro rata of the annual premium hereon, being pro rata both as to the fraction of the
limit of liability of this Agreement (i.e., the fraction of $15,000,000) so reinstated and as to the fraction of unexpired annual term at the time of the Loss Occurrence. 


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	C.
	Nevertheless,
the Reinsurer's liability hereunder shall never exceed $13,500,000 (i.e., 90% of $15,000,000) in respect of anyone Loss Occurrence and shall be further limited in all
during the term of the Agreement to $27,000 1000 (i. e. I 90% of $30 1000,000). 




ARTICLE VI.—ULTIMATE NET LOSS  


	A.
	The
term "Ultimate Net Loss" shall mean the actual sum paid by the Company in settlement of losses or liability 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 include Loss Adjustment 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 and Loss Adjustment Expenses 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 XXII Insolvency of this
Agreement.



	B.
	The
term "Ultimate Net Loss" shall include 100% of Loss In Excess of Policy Limits and 100% of Extra Contractual Obligations, as defined herein, but only as respects business covered
under this Agreement.



	C.
	The
term "Loss Adjustment Expenses" shall mean all expenses incurred by the Company in connection wi th the investigation, settlement, defense or litigation 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 and other overhead expenses.



	D.
	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.



	E.
	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 VII.—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.



	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 shall be deducted to arrive at the amount of the Company's
Ultimate Net Loss. 



ARTICLE VIII.—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 


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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 date 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,
collectibles or retention from any other form of insurance or reinsurance including deductibles or self-insured retention which protect the Company against
Extra Contractual Obligations, whether collectible or not, shall inure to the benefit of the Reinsurer and shall be deducted from the total amount of Extra Contractual Obligations for purposes of
determining the loss hereunder.



	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 contract or the enforceability of such provision in any other jurisdiction. 



ARTICLE IX.—EXCLUSIONS  


        THIS AGREEMENT DOES NOT COVER: 


	A.
	THE
FOLLOWING GENERAL CATEGORIES



	1.
	All
Lines of Business not specifically listed in Article I Business Covered.



	2.
	Policies
issued with a deductible of $100,000 or more; provided this exclusion shall not apply to Policies which customarily provide a percentage deductible on the perils of earthquake
or windstorm.



	3.
	Reinsurance
assumed, except pro rata local agency reinsurance on specific risks.



	4.
	Ex-gratia
Payments.



	5.
	Loss
or damage occasioned by war, invasion, revolution, bombardment, hostilities, acts of foreign enemies, civil war, rebellion, insurrection, military or usurped power, martial law,
or confiscation by order of any government or public authority, but not excluding loss or damage which would be covered under a standard form of Policy containing a standard war exclusion clause.



	6.
	Insolvency
Funds as per the attached Insolvency Funds Exclusion Clause, which is made part of this Agreement.



	7.
	Pool,
Syndicate and Association business as per the attached Pools, Associations and Syndicates Exclusion Clause, which is made part of this Agreement.



	8.
	Risks
where the Total Insured Value, per risk, exceeds the figure specified as per the attached Total Insured Value Exclusion Clause, which is made part of this Agreement. 





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	9.
	Loss
resulting from damage to overhead transmission and distribution lines, including supporting structures and anything attached thereto, of any public or private utility company,
cable television or telecommunication company of any kind. This exclusion shall not apply to such overhead transmission and distribution lines, including supporting structures and anything attached
thereto located on the premises of any policyholder or within 1,000 feet thereof. Nor shall this exclusion apply to utility service interruption or contingent business interruption losses for any
policyholder, unless such policyholder is a public or private utility company, cable television or telecommunication company of any kind.






	B.
	THE
FOLLOWING CLASSES OF BUSINESS AND TYPES OF RISKS



	1.
	Theft
Insurance



	2.
	Insurance
of wrongful conversion, embezzlement, and secretion.



	3.
	Cargo
Liability.



	4.
	Mobile
Homes.



	5.
	Manufacturer's
stock.



	6.
	Dealers
Open Lot.






	C.
	THE
FOLLOWING PERILS



	1.
	Flood
and/or Earthquake when written as such.



	2.
	Difference
in Conditions, however styled.



	3.
	Pollution
and Seepage as per the attached Pollution and Seepage Exclusion Clause, which is made part of this Agreement.



	4.
	Nuclear
Incident Exclusion Clauses which are attached and made part of this Agreement:



	a.
	Nuclear
Incident Exclusion Clause physical Damage Reinsurance—U.S.A.



	b.
	Nuclear
Incident Exclusion Clause physical Damage Reinsurance—Canada.



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






	5.
	a.
Loss, damage or expense of whatsoever nature caused directly or indirectly by any of the following, regardless of any other cause or event contributing concurrently or in any other
sequence to the loss: nuclear reaction or radiation, or radioactive contamination, however caused.



	b.
	However,
if nuclear reaction or radiation, or radioactive contamination results in fire it is specifically agreed herewith that this Agreement will pay for such fire loss or damage
subject to all of the terms, conditions and limitations of this Agreement.



	c.
	This
exclusion shall not apply to loss, damage or expense originating from and occurring at risks using radioactive isotopes in any form where the nuclear exposure is not considered by
the Company to be the primary hazard. 









ARTICLE X.—SPECIAL ACCEPTANCE  


        Risks which are beyond the terms, conditions or limitations of this Agreement may be submitted to the Reinsurer for special acceptance Hereunder; and such risks,
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. 


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ARTICLE XI.—LOSS OCCURRENCE  


	A.
	The
term "Loss Occurrence" shall mean the sum of all individual losses directly occasioned by anyone disaster, accident or loss or series of disasters, accidents or losses arising out
of one event which occurs within the area of one state of the United States or province of Canada and states or provinces contiguous thereto and to one another. However, the duration and extent of
anyone Loss Occurrence shall be limited to all individual losses sustained by the Company occurring during any period of 168 consecutive hours arising out of and directly occasioned by the same event
except that the term "Loss Occurrence" shall be further defined as follows:



	1.
	As
regards windstorm, hail, tornado, hurricane, cyclone, including ensuing collapse and water damage, all individual losses sustained by the Company occurring during any period of 72
consecutive hours arising out of and. directly occasioned by the same event. However, the event need not be limited to one state or province or states or provinces contiguous thereto.



	2.
	As
regards riot, riot attending a strike, civil commotion, vandalism and malicious mischief, all individual losses sustained by the Company, occurring during any period of 72
consecutive hours within the area of one municipality or county and the municipalities or counties contiguous thereto arising out of and directly occasioned by the same event. The maximum duration of
72 consecutive hours may be extended in respect of individual losses which occur beyond such 72 consecutive hours during the continued occupation of an assured's premises by strikers, provided such
occupation commenced during the aforesaid period.



	3.
	As
regards earthquake (the epicentre of which need not necessarily be within the territorial confines referred to in the opening paragraph of this Article) and fire following directly
occasioned by the earthquake, only those individual fire losses which commence during the period of 168 consecutive hours may be included in the Company's Loss Occurrence. 





6













  



	4.
	As
regards Freeze, only individual losses directly occasioned by collapse, breakage of glass and water damage (caused by bursting of frozen pipes and tanks) may be included in the
Company's Loss Occurrence.



	5.
	As
regards Terrorism, all individual losses sustained by the Company occurring during any period of 72 consecutive hours arising out of and directly occasioned by the same event.
Should such an event of Terrorism give rise to other perils which, in an unbroken chain of causation, have occasioned the losses, the cause of the losses is understood to be that event of Terrorism.



	a.
	"Terrorism,"
for purposes of this Agreement, shall mean any actual or threatened violent act or act harmful to human life, tangible or intangible property or infrastructure directed
towards or having the effect of (i) influencing or protesting against any de jure or de facto government or policy thereof, (ii) intimidating, coercing or putting in fear a civilian
population or section thereof for the purpose of establishing or advancing a specific ideological, religious or political system of thought, perpetrated by a specific individual or group directly or
indirectly through agents acting on behalf of said individual or group or (iii) retaliating against any country for direct or vicarious support by that country of any other government or
political system.



	b.
	Any
act declared pursuant to the Terrorism Risk Insurance Act of 2002, as amended, shall also be considered "Terrorism" for purposes of this Agreement.









	B.
	For
all Loss Occurrences the Company may choose the date and time when any such period of consecutive hours commences provided that it is not earlier than the date and time of the
occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss and provided that only one such period of 168 consecutive hours shall apply
with respect to one event except for those Loss Occurrences referred to in I., 2., and 5. above, where only one such period of 72 consecutive hours shall apply with respect to one event, regardless of
the duration of the event.



	C.
	No
individual losses occasioned by an event that would be covered by 72 hours clauses may be included in any Loss Occurrence claimed under the 168 hours provision. 



ARTICLE XII.—TERRORISM EXCESS RECOVERY  


	A.
	For
purposes of this Article:



	1.
	"Act"
shall mean the Terrorism Risk Insurance Act of 2002, any amendments thereto and any regulations promulgated thereunder.



	2.
	"Affiliate,"
"Insured Losses," and "Program Year" shall have the meanings provided in the Act.



	3.
	"Company"
shall include the Company and all affiliates.






	B.
	This
reinsurance shall not apply to any fines, civil penalties or surcharges assessed pursuant to the Act.



	C.
	To
the extent that the Company allocates Insured Losses and/or federal assistance under the Act among affiliates, claims, contracts or otherwise in any manner which impacts the
reinsurance provided hereunder, the Company shall apply a reasonable allocation method acceptable to the Reinsurer.



	D.
	To
the extent that an Insured Loss is otherwise payable hereunder, the reinsurance provided by this Agreement shall apply only to the portion of liability, loss, cost and/ or expense
retained by the Company net of any federal assistance pursuant to the Act. For each Program Year, the 


7







 

liability
of the Reinsurer for Insured Losses under this Agreement shall be reduced by the ratio that the financial assistance under the Act allocated to Policies subject to this Agreement bears to
the Company's total Insured Losses subject to this Agreement. If the Company does not make such allocation, the liability of the Reinsurer for Insured Losses in any Program Year under this Agreement
shall be reduced by the ratio that the financial assistance available to the Company under the Act for that Program Year bears to the Company's total Insured Losses for the same Program Year. 



	E.
	The
parties recognize that, for any Program Year, the Reinsurer may without waiver of the foregoing Paragraphs make payments for Insured Losses which, together with available financial
assistance under the Act and the Company retentions and/or deductibles hereunder, exceed the Company's Insured Losses. In such event, the Reinsurer's proportional share of all such excess recovery
(hereafter "Reinsurer's Excess Share") shall inure to the benefit of the Reinsurer. All excess recovery described in this Paragraph shall be allocated to the Reinsurer and the Company in proportion to
the respective liability of each for Insured Losses, net of federal assistance under the Act, salvage, subrogation and other similar recoveries, as applicable.



	F.
	In
the event of a Reinsurer's Excess Share, the Company shall:



	1.
	Promptly
pay the Reinsurer's Excess Share to the Reinsurer; or



	2.
	Upon
request of the Reinsurer at any time and at the Reinsurer's sole discretion, instead assign to the Reinsurer its rights to recover directly from the federal government any portion
of Reinsurer's Excess Share not already paid to the Reinsurer. The Company shall cooperate wi th and assist the Reinsurer, at its own expense, to the extent reasonably necessary for the Reinsurer to
exercise those rights. If the Reinsurer is unable, for any reason, to exercise any right assigned to it by the Company pursuant to this Article, the Company shall pay the Reinsurer's Excess Share to
the Reinsurer as if no assignment had taken place to the extent that the Company has not been deemed to have forfeited the right to financial assistance under the Act by virtue of the attempted
assignment.






	G.
	In
the event of an Insured Loss, the Company shall provide the Reinsurer with a monthly report detailing claim settlement activities and financial assistance under the Act.
Calculations for each Program Year shall continue to be made until the settlement of all Insured Losses covered hereunder. 




ARTICLE XIII.—REINSURANCE PREMIUM  


	A.
	The
Company shall pay to the Reinsurer a premium for the reinsurance provided under this Agreement at a rate of 1.53%. Such rate shall be applied to the Company's Subject Earned
Premium for the Agreement Year being reported subject to an annual deposit premium of $1,684,377 payable in four equal installments of $421,094 at the beginning of each calendar quarter. Swiss
Reinsurance Corporation shall have a 90% share in the minimum and deposit premiums set forth above.



	B.
	As
promptly as possible after the expiration of this Agreement, the Company shall render a statement to the Reinsurer showing the actual reinsurance premium due hereunder. If such
premium calculations differ from the deposit previously paid, the debtor party shall pay the outstanding balance as soon as practicable, However, in no event shall the annual adjusted premium be less
than a minimum of $1,347,502.



	C.
	The
term "Subject Earned Premium" as used herein is equal to the sum of the Net Premiums 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 


8







 

premium
is to be calculated on an actual daily basis or in accordance with the Company's methodology I as agreed. 



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



	E.
	The
following percentages of the Company's premium shall be allocated to the business covered under this Agreement: 90% Homeowners



	F.
	In
respect of Paragraph B. above:



	1.
	All
account statements shall be sent to:



	a.
	E-Mail/XML
or EDI Formats: reaccount armonk@swissre.com, or



	b.
	Standard
Mail: 











Swiss
Reinsurance America Corporation

Accounting Department

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: 8900489197

ABA Number: 021000018 (SWIFT: IRVTUS3N)



	(ii)
	All
supporting documentation should be sent to:

Swiss Reinsurance America Corporation

Accounting Department

175 King Street

Armonk, NY 10504 










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.



	B.
	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, suitor 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. 


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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. 



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. 


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 ceding insurer, under the various agreements involved,
provided however, that in the event of insolvency of a party hereto, offsets shall only be allowed in accordance with the provisions of 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. 


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 endorsements 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. 


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ARTICLE XXI.—DISPUTE RESOLUTION  


Part I—Choice
Of Law And Forum 


        Any
dispute arising under this Agreement shall be resolved in the State of Massachusetts, and the laws of the State 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 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—Within 30 days after the notice of appointment of all arbitrators, the panel shall meet, and determine a timely period of discovery,
discovery procedures and schedules for hearings.



	F.
	Procedure
Governing Arbitration—All proceedings before the panel shall be informal and the panel shall not be bound by the formal rules of evidence. The panel shall have
the power to fix all procedural rules relating to the arbitration proceeding. In reaching any decision, the panel shall give due consideration to the customs and usages of the insurance and
reinsurance business.



	G.
	Arbitration
Award—The arbitration panel shall render its decision within 60 days after termination of the proceeding, which decision shall be in writing, stating the
reasons therefor. The decision of the majority of the panel shall be final and binding on the parties to the proceeding. In no event 


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however,
will the panel be authorized to award punitive, exemplary or consequential damages of whatsoever nature in connection with any arbitration proceeding concerning this Agreement. 



	H.
	Cost
of Arbitration—Unless otherwise allocated by the panel, each party shall bear the expense of its own arbitrator and shall jointly and equally bear with the other
parties the expense of the umpire and the arbitration. 



ARTICLE 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 XIX Offset, any debts or credits, liquidated or unliquidated, in favor of or against either party on the date of the
receivership or liquidation order (except where the obligation was purchased by or transferred to be used as an offset) are deemed mutual debts or credits and shall be set off with the balance only to
be allowed or paid. Although such claim on the part of either party against the other may be unliquidated or undetermined in amount on the date of the entry of the receivership or liquidation order,
such claim will be regarded as being in existence as of such date and any claims then in existence and held by the other party may be offset against it.



	D.
	Nothing
contained in this Article is intended to change the relationship or status of the parties to this Agreement or to enlarge upon the rights or obligations of either party
hereunder except as provided herein. 



ARTICLE XXIII.—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. 


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        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, Massachusetts, this 15 day of June, 2007. 



	ATTEST:	 	Safety Insurance Company

Safety Indemnity Insurance Company
	

/s/  GLENN R. HILTPOLD      
	
 	

/s/  EDWARD N. PATRICK, JR.      

	

Glenn R. Hiltpold
 Name	
 	

Edward N. Patrick, Jr.
 Name
	

Director of Actuarial Services
 Title	
 	

VP
 Title





        And
in Armonk, New York, this 6th day of April, 2007 



	ATTEST:	 	SWISS REINSURANCE AMERICA CORPORATION
	

/s/  NICHOLAS M. SIGNONETTE      
	
 	

/s/  E.H. VIEUX      

	

Nicholas M. Signonette
 Name	
 	

E.H. Vieux
 Name
	

Vice President

Member of Management
 Title	
 	

Senior Vice President Member of Senior Management
 Title




13









SUPPLEMENT TO THE ATTACHMENTS 


DEFINITION OF IDENTIFICATION TERMS USED WITHIN THE ATTACHMENTS


	A.
	Wherever
the term "Company" or "Reinsured" or "Reassured" or whatever other term is used to designate the reinsured company or companies within the various attachments to the
reinsurance agreement, the term shall be understood to mean Company or Reinsured or Reassured or whatever other term is used in the attached reinsurance agreement to designate the reinsured company or
companies.



	B.
	Wherever
the term "Agreement" or "Contract" or "Policy" or whatever other term is used to designate the attached reinsurance agreement within the various attachments to the reinsurance
agreement, the term shall be understood to mean Agreement or Contract or Policy or whatever other term is used to designate the attached reinsurance' agreement.



	C.
	Wherever
the term "Reinsurer" or "Reinsurers" or "Underwriters" or whatever other term is used to designate the reinsurer or reinsurers in the various attachments to the reinsurance
agreement, the term shall be understood to mean Reinsurer or Reinsurers or Underwriters or whatever other term is used to designate the reinsuring company or companies. 








INSOLVENCY FUNDS EXCLUSION CLAUSE




        This
Agreement excludes all liability of the Company arising by contract, operation of law, or otherwise from its participation or membership, whether voluntary or involuntary, in any
insolvency fund or from reimbursement of any person for any such liability. "Insolvency fund" includes any guaranty fund, insolvency fund, plan, pool, association, fund or other arrangement, howsoever
denominated, established or governed, which provides for any assessment of or payment or assumption by any person of part or all of any claim, debt, charge, fee, or other obligation of an insurer, or
its successors or assigns, which has been declared by any competent authority to be insolvent or which is otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in whole or
in part. 








   POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE  


SECTION A 


        Excluding:




	(a)
	All Business
derived directly or indirectly from any Pool, Association or Syndicate which maintains its own reinsurance facilities.



	(b)
	Any Pool
or Scheme (whether voluntary or mandatory) formed after March 1, 1968, for the purpose of insuring Property whether on a country-wide basis or in respect of
designated areas. This Exclusion shall not apply to so-called Automobile Insurance Plans or other Pools formed to provide coverage for Automobile Physical Damage. 




SECTION
B 


        It
is agreed that business, written by the Company for the same perils, which is known at the time to be insured by or in excess of underlying amounts placed in the following Pools,
Associations or Syndicates, whether by way of insurance or reinsurance is excluded hereunder: 



        Industrial
Risk Insurers (successor to Factory Insurance Association and oil Insurance Association) i Associated Factory Mutuals Improved
Risk Mutuals. 


        Any
Pool, Association or Syndicate formed for the purpose of writing Oil, Gas or Petro-Chemical Plants and/or Oil or Gas Drilling Rigs. United States Aircraft Insurance Group, Canadian
Aircraft Insurance Group, Associated Aviation Underwriters, American Aviation Underwriters. 


SECTION
B does not apply: 



	(a)
	Where the
Total Insured Value over all interests of the risk in question is less than $350,000,000.



	(b)
	To interests
traditionally underwritten as Inland Marine or Stock and/or Contents written on a Blanket basis.



	(c)
	To Contingent
Business Interruption, except when the Company is aware that the key location is known at the time to be insured in any Pool, Association or Syndicate named above.



	(d)
	To risks
as follows: Offices, Hotels, Apartments, Hospitals, Educational Establishments, Public Utilities (other than Railroad Schedules) and Builders Risks on the classes of risks
specified in this subsection (d) only. 




SECTION
C 


        NEVERTHELESS
the Reinsurer specifically agrees that Liability accruing to the Company from its participation in: 



	(a)
	The following
so-called "Coastal Pools": 





ALABAMA
INSURANCE UNDERWRITING ASSOCIATION

FLORIDA WINDSTORM UNDERWRITING ASSOCIATION

LOUISIANA INSURANCE UNDERWRITING ASSOCIATION

MISSISSIPPI WINDSTORM INSURANCE UNDERWRITING ASSOCIATION

NORTH CAROLINA INSURANCE UNDERWRITING ASSOCIATION

SOUTH CAROLINA WINDSTORM AND HAIL UNDERWRITING ASSOCIATION

TEXAS CATASTROPHE PROPERTY INSURANCE ASSOCIATION 




        and 


	(b)
	All "Fair
Plan" and "Rural Risk Plan" Business 



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for
all perils otherwise protected hereunder will not be excluded, except however, that this reinsurance does not include any increase in such liability resulting from: 



	(1)
	The inability
for any other participant in such "Coastal Pool" and/or "Fair Plan" and/or "Rural Risk Plan" to meet its liability.



	(2)
	Any Claim
against such "Coastal Pool" and/or "Fair Plan" and/or "Rural Risk Plan" or any participant therein, including the Company, whether by way of subrogation or otherwise, brought
by or on behalf of any insolvency fund (as defined in the Insolvency Funds Exclusion Clause incorporated in this agreement). 



2












TOTAL INSURED VALUE EXCLUSION CLAUSE  


        It is the mutual intention of the parties to exclude risks, other than Offices, Hotels, Apartments, Hospitals, Educational Establishments, Public Utilities
(except Railroad schedules) and Builders Risk on the above classes where, at the time of the cession, the Total Insured Value over all interests exceeds $350,000,000. However, the Company shall be
protected hereunder, subject to the other terms and conditions of this Agreement, if subsequently to cession being made the Company becomes acquainted with the true facts of the case and discovers
that the mutual intention has been inadvertently breached, the Company shall at the first opportunity, and certainly by next anniversary of the original policy, exclude the risk in question. 


        It
is agreed that this mutual intention does not apply to Contingent Business Interruption or to interest traditionally underwritten as Inland Marine or to Stock and/or Contents written
on a blanket basis except where the Company is aware that the Total Insured Value of $350,000,000 is already exceeded for buildings, machinery, equipment and direct use and occupancy at the key
location. 


        It
is understood and agreed that this Clause shall not apply hereunder where the Company writes 100% of the risk. 


        Notwithstanding
anything contained herein to the contrary, it is the mutual intention of the parties in respect of bridges and tunnels to exclude such risks where the Total Insured Value
over all interests exceeds $350,000,000. 








   POLLUTION AND SEEPAGE EXCLUSION CLAUSE  


        This Reinsurance does not apply to: 


	1.
	Pollution,
seepage, contamination or environmental impairment hereinafter collectively referred to as "pollution") insurances, however styled;



	2.
	Loss
or damage caused directly or indirectly by pollution, unless said loss or damage follows as a result of a loss caused directly by a peril covered hereunder;



	3.
	Expenses
resulting from any governmental direction or request that material present in or part of or utilized on an insured's property be removed or modified, except as provided in 5.
below;



	4.
	Expenses
incurred in testing for and/or monitoring pollutants;



	5.
	Expenses
incurred in removing debris, unless (A) the debris results from a loss caused directly by a peril covered hereunder, and (B) the debris to be removed is itself
covered hereunder, and (C) the debris is on the insured's premises, subject, however, to a limit of $5,000 plus 25% of (i) the property damage loss, any risk, any one location, any one
original insured, and (ii) any deductible applicable to the loss;



	6.
	Expenses
incurred to extract pollutants from land or water at the insured's premises unless (A) the release, discharge, or dispersal of pollutants results from a loss caused
directly by a peril covered hereunder, and (B) such expenses shall not exceed $10,000;



	7.
	Loss
of income due to any increased period of time required to resume operations resulting from enforcement of any law regulating the prevention, control, repair, clean-up
or restoration of environmental damage;



	8.
	Claims
under 5. and/or 6. above, unless notice thereof is given to the Company by the insured within 180 days after the date of the loss occurrence to which such claims relate. 



        "Pollutants"
means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be
recycled, reconditioned or reclaimed. 


        Where
no pollution exclusion has been accepted or approved by an insurance regulatory authority for use in a policy that is subject to this Agreement or where a pollution exclusion that
has been used in a policy is overturned, either in whole or in part, by a court having jurisdiction, there shall be no recovery for pollution under this Agreement unless said pollution loss or damage
follows as a result of a loss caused directly by a peril covered hereunder. 


        Nothing
herein shall be deemed to extend the coverage afforded by this reinsurance to property or perils specifically excluded or not covered under the terms and conditions of the
original policy involved. 


1









   NUCLEAR INCIDENT EXCLUSION CLAUSE—PHYSICAL DAMAGE—REINSURANCE U.S.A.  


        N.M.A. 1119 


	1.
	This
Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers
formed for the purpose of covering Atomic or Nuclear Energy risks.



	2.
	Without
in any way restricting the operation of paragraph 1. of this Clause, this Reinsurance does not cover any loss or liability accruing to the Reassured, directly or
indirectly, and whether as Insurer or Reinsurer, from any insurance against Physical Damage (including business interruption or consequential loss arising out of such Physical Damage) to:



	I.
	Nuclear
reactor power plants including all auxiliary property on the site, or



	II.
	Any
other nuclear reactor installation, including laboratories handling radioactive materials in connection with reactor installations, and critical facilities as such,
or



	III.
	Installations
for fabricating complete fuel elements or for processing substantial quantities of "special nuclear material," and for reprocessing, salvaging, chemically
separating, storing or disposing of spent nuclear fuel or waste materials, or



	IV.
	Installations
other than those listed in paragraph 2. III. above using substantial quantities of radioactive isotopes or other products of nuclear fission.






	3.
	Without
in any way restricting the operation of paragraphs 1. and 2. of this Clause, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the
Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear installation and
which normally would be insured therewith, except that this paragraph 3. shall not operate:



	(a)
	where the
Reassured does not have knowledge of such nuclear reactor power plant or nuclear installation, or



	(b)
	where the
said insurance contains a provision excluding coverage for damage to property caused by or resulting from radioactive contamination, however caused. However, on and after 1st
January, 1960, this sub-paragraph (b) shall only apply provided the said radioactive contamination exclusion provision has been approved by the Governmental Authority having
jurisdiction thereof.






	4.
	Without
in any way restricting the operation of paragraphs 1., 2. and 3. of this Clause, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to
the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive contamination is a named hazard specifically insured against.



	5.
	It
is understood and agreed this Clause shall not extend to risks using radioactive isotopes in any form where the nuclear exposure is not considered by the Reassured to be the primary
hazard.



	6.
	The
term "special nuclear material" shall have the meaning given to it by the Atomic Energy Act of 1954 or by any law amendatory thereof.



	7.
	Reassured
to be sole judge of what constitutes:



	(a)
	substantial
quantities, and



	(b)
	the
extent of installation, plant or site. 






NOTE:
Without in any way restricting the operation of paragraph 1. hereof, it is understood and agreed that 


1







 



	(a)
	all
policies issued by the Reassured on or before 31st December, 1957 shall be free from the application of the other provisions of this Clause until expiry date or 31st December,
1960 whichever first occurs whereupon all the provisions of this Clause shall apply,



	(b)
	with
respect to any risk located in Canada policies issued by the Reassured on or before 31st December, 1958 shall be free from the application of the other provisions of this Clause
until expiry date or 31st December, 1960 whichever first occurs whereupon all the provisions of this Clause shall apply. 



2













   NUCLEAR INCIDENT EXCLUSION CLAUSE—PHYSICAL DAMAGE—REINSURANCE CANADA  


        N.M.A. 1980a 


	1.
	This
Agreement does not cover any loss or liability accruing to the Company directly or indirectly, and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed
for the purpose of covering Atomic or Nuclear Energy risks.



	2.
	Without
in any way restricting the operation of paragraph 1. of this clause, this Agreement does not cover any loss or liability accruing to the Company, directly or indirectly,
and whether as Insurer or Reinsurer, from any insurance against Physical Damage (including business interruption or consequential loss arising out of such Physical Damage) to:



	a.
	Nuclear
reactor power plants including all auxiliary property on the site, or



	b.
	Any
other nuclear reactor installation, including laboratories handling radioactive materials in connection with reactor installations, and critical facilities as such, or



	c.
	Installations
for fabricating complete fuel elements or for processing substantial quantities of radioactive materials, and for reprocessing, salvaging, chemically separating, storing
or disposing of spent nuclear fuel or waste materials, or



	d.
	Installations
other than those listed in c. above using substantial quantities of radioactive isotopes or other products of nuclear fission.






	3.
	Without
in any way restricting the operation of paragraphs 1. and 2. of this clause, this Agreement does not cover any loss or liability by radioactive contamination accruing to the
Company, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear installation and which
normally would be insured therewith, except that this paragraph 3. shall not operate:



	a.
	where
the Company does not have knowledge of such nuclear reactor power plant or nuclear installation, or



	b.
	where
the said insurance contains a provision excluding coverage for damage to property caused by or resulting from radioactive contamination, however caused.






	4.
	without
in any way restricting the operation of paragraphs 1., 2. and 3. of this clause, this Agreement does not cover any loss or liability by radioactive contamination accruing to
the Company, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive contamination is a named hazard specifically insured against.



	5.
	This
clause shall not extend to risks using radioactive isotopes in any form where the nuclear exposure is not considered by the Company to be the primary hazard.



	6.
	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 any 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.



	7.
	Company
to be sole judge of what constitutes:



	a.
	substantial
quantities, and



	b.
	the
extent of installation, plant or site. 





1







 




	8.
	without
in any way restricting the operation of paragraphs I., 2., 3. and 4. of this clause, this Agreement does not cover any loss or liability accruing to the Company, directly or
indirectly, and whether as Insurer or Reinsurer, caused:



	a.
	by
any nuclear incident as defined in or pursuant to the Nuclear Liability Act or any other nuclear liability act, law or statute, or any law amendatory thereof, or nuclear explosion,
except for ensuing loss or damage which results directly from fire, lightning or explosion of natural, coal or manufactured gas;



	(b)
	by
contamination by radioactive material. 






NOTE:
Without in any way restricting the operation of paragraphs 1., 2., 3. and 4. of this clause, paragraph 8. of this clause shall only apply to all original contracts of the Company whether
new, renewal or replacement which become effective on or after December 31, 1992. 


April
I, 1996 


2








   NUCLEAR INCIDENT EXCLUSION CLAUSE—REINSURANCE—NO. 4


	1.
	This
Reinsurance does not cover any loss or liability accruing to the Reassured as a member of, or subscriber to, any association of insurers or reinsurers formed for the purpose of
covering nuclear energy risks or as a direct or indirect reinsurer of any such member, subscriber or association.



	2.
	Without
in any way restricting the operations of Nuclear Incident Exclusion Clauses, Liability, Physical Damage, Boiler and Machinery and paragraph 1. of this Clause, it is
understood and agreed that for all purposes of the reinsurance assumed by the Reinsurer from the Reinsured, all original insurance policies or contracts of the Reinsured (new, renewal and replacement)
shall be deemed to include the applicable existing Nuclear Clause and/or Nuclear Exclusion Clause(s) in effect at the time and any subsequent revisions thereto as agreed upon and approved by the
Insurance Industry and/or a qualified Advisory or Rating Bureau. 


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Exhibit 10.5