exv10w6



 






EXHIBIT 10.6


Swiss Re







CASUALTY EXCESS OF LOSS

REINSURANCE AGREEMENT

NO. TC1573A,B,C-R05




EFFECTIVE: January 1, 2005




between

PHILADELPHIA CONSOLIDATED HOLDING CORPORATION’S

following member Companies:

PHILADELPHIA INDEMNITY INSURANCE COMPANY

PHILADELPHIA INSURANCE COMPANY

both of Bala Cynwyd, Pennsylvania




and




SWISS REINSURANCE AMERICA CORPORATION

Armonk, New York




 









 








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CASUALTY EXCESS OF LOSS REINSURANCE AGREEMENT NO. TC1573A,B,C-R05




	 	 	 	 	 	 	 
	ARTICLE	 	CONTENTS
	 	PAGE	 
	 	 	PREAMBLE
	 	 	1	 
	 
	 	 	 	 	 	 
	I	 	BUSINESS COVERED
	 	 	1	 
	 
	 	 	 	 	 	 
	II	 	EFFECTIVE DATE AND TERMINATION
	 	 	2	 
	 
	 	 	 	 	 	 
	III	 	TERRITORY
	 	 	2	 
	 
	 	 	 	 	 	 
	IV	 	LIMIT AND RETENTION
	 	 	3	 
	 
	 	 	 	 	 	 
	V	 	WARRANTY
	 	 	4	 
	 
	 	 	 	 	 	 
	VI	 	REINSTATEMENT
	 	 	4	 
	 
	 	 	 	 	 	 
	VII	 	ULTIMATE NET LOSS
	 	 	5	 
	 
	 	 	 	 	 	 
	VIII	 	LOSS IN EXCESS OF POLICY LIMITS
	 	 	6	 
	 
	 	 	 	 	 	 
	IX	 	EXTRA CONTRACTUAL OBLIGATIONS
	 	 	6	 
	 
	 	 	 	 	 	 
	X	 	EXCLUSIONS
	 	 	7	 
	 
	 	 	 	 	 	 
	XI	 	SPECIAL ACCEPTANCE
	 	 	12	 
	 
	 	 	 	 	 	 
	XII	 	LOSS OCCURRENCE
	 	 	12	 
	 
	 	 	 	 	 	 
	XIII	 	REINSURANCE PREMIUM
	 	 	13	 
	 
	 	 	 	 	 	 
	XIV	 	REPORTS AND REMITTANCES
	 	 	14	 
	 
	 	 	 	 	 	 
	XV	 	CLAIMS
	 	 	15	 
	 
	 	 	 	 	 	 
	XVI	 	SALVAGE AND SUBROGATION
	 	 	16	 
	 
	 	 	 	 	 	 
	XVII	 	TERRORISM EXCESS RECOVERY
	 	 	16	 
	 
	 	 	 	 	 	 
	XVIII	 	ACCESS TO RECORDS
	 	 	18	 
	 
	 	 	 	 	 	 
	XIX	 	TAXES
	 	 	18	 
	 
	 	 	 	 	 	 
	XX	 	CURRENCY
	 	 	18	 
	 
	 	 	 	 	 	 
	XXI	 	OFFSET
	 	 	18	 
	 
	 	 	 	 	 	 
	XXII	 	ERRORS OR OMISSIONS
	 	 	19	 
	 
	 	 	 	 	 	 
	XXIII	 	DISPUTE RESOLUTION
	 	 	19	 
	 
	 	 	 	 	 	 
	XXIV	 	INSOLVENCY
	 	 	20	 
	 
	 	 	 	 	 	 
	XXV	 	SPECIAL TERMINATION
	 	 	21	 
	 
	 	 	 	 	 	 
	XXVI	 	AMENDMENTS
	 	 	22	 
	 
	 	 	 	 	 	 
	 	 	SIGNATURES
	 	 	23	 
	 
	 	 	 	 	 	 
	ATTACHMENTS:	 	POLLUTION LIABILITY EXCLUSION CLAUSE — REINSURANCE
	 	 	 	 
	 	 	INSOLVENCY FUNDS EXCLUSION CLAUSE
	 	 	 	 
	 	 	NUCLEAR INCIDENT EXCLUSION CLAUSE — LIABILITY - REINSURANCE  — U.S.A.
	 	 	 	 
	 	 	NUCLEAR
INCIDENT EXCLUSION CLAUSE — LIABILITY - REINSURANCE — CANADA
	 	 	 	 
	 	 	NUCLEAR
INCIDENT EXCLUSION CLAUSE - REINSURANCE — NO. 4
	 	 	 	 
	 	 	PHARMACEUTICAL / MEDICAL COMPANY EXCLUSION LISTING
	 	 	 	 







 









 








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CASUALTY EXCESS OF LOSS

REINSURANCE AGREEMENT

NO. TC1573A,B,C-R05

(hereinafter referred to as the “Agreement”)




between

PHILADELPHIA CONSOLIDATED HOLDING CORPORATION’S

following member Companies:

PHILADELPHIA INDEMNITY INSURANCE COMPANY

PHILADELPHIA INSURANCE COMPANY

both of Bala Cynwyd, Pennsylvania

(hereinafter referred to as the “Company”)




and




SWISS REINSURANCE AMERICA CORPORATION

Armonk, New York

(hereinafter referred to as the “Reinsurer”)




ARTICLE I — BUSINESS COVERED





	A.  	The Reinsurer shall indemnify the Company on an excess of loss basis in respect of the
Company’s Ultimate Net Loss paid by the Company as a result of losses occurring during the
term of this Agreement, for Policies in force as of January 1, 2005, 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 only to the following Classes
of Insurance, except as excluded under Article X- Exclusions of this Agreement.





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CLASSES OF INSURANCE





	 	1.  	Automobile Liability:
	 
	 	   	Bodily Injury Liability, Property Damage Liability, Medical Payments, Uninsured
Motorists, Underinsured Motorists and No-Fault Coverage.
	 
	 	2.  	Liability Other Than Automobile:
	 
	 	   	Bodily Injury Liability, Property Damage Liability, Personal and Advertising Injury
Liability, and Medical Payments Coverage when written as part of a Commercial or
Personal Package Policy or on a monoline basis. However, Advertising Injury
Liability shall only apply to this Agreement when written as part of a Commercial
Package Policy or a Commercial General Liability Coverage Form.
	 
	 	3.  	Commercial Umbrella Liability.
	 
	 	4.  	Professional Liability:
	 
	 	   	Director’s and Officers Liability for For Profit and Not for Profit risks, Miscellaneous
Errors and Omissions Liability, Lawyers Professional Liability, Accountants Professional
Liability, Dentists Professional Liability, Insurance Agents Professional Liability,
Miscellaneous Professional Liability, Employment Practices Liability.





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 1, 2005, and ending 12:01 a.m., Eastern Standard Time, January 1, 2006.
	 
	B.  	During the running of such notice as stipulated in Paragraph A. above, the Reinsurer shall
participate in business coming within the terms of this Agreement until the date of
termination of this Agreement.
	 
	C.  	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.





ARTICLE III — TERRITORY




This Agreement applies to Policies issued by the Company within the United States of America, its
territories and possessions, and Canada and shall apply to losses covered hereunder wherever
occurring.




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ARTICLE IV — LIMIT AND RETENTION





	A.  	The limits and retentions provided under this Agreement are set forth in the following Parts
I, II and III:
	 
	   	Part I — First Excess of Loss (Accounting Code No. TC1573A)
	 
	   	The Company shall retain the first $2,000,000 of Ultimate Net Loss as respects any one Loss
Occurrence. The Reinsurer shall then be liable for the amount by which the Company’s Ultimate
Net Loss exceeds the Company’s retention of $2,000,000, but the liability of the Reinsurer
shall never exceed $3,000,000 with respect to any one Loss Occurrence. However, in no event
shall the liability of the Reinsurer arising out of Act(s) of Terrorism exceed $3,000,000
during the term of this Agreement.
	 
	   	Part II — Second Excess of Loss (Accounting Code No TC1573B)
	 
	   	The Company shall retain the first $5,000,000 of Ultimate Net Loss as respects any one Loss
Occurrence. The Reinsurer shall then be liable for the amount by which the Company’s Ultimate
Net Loss exceeds the Company’s retention of $5,000,000, but the liability of the Reinsurer
shall never exceed $5,000,000 with respect to any one Loss Occurrence. However, in no event
shall the liability of the Reinsurer arising out of Act(s) of Terrorism exceed $5,000,000
during the term of this Agreement.
	 
	   	Part III — Third Excess of Loss (Accounting Code No. TC1573C)
	 
	   	The Company shall retain the first $10,000,000 of Ultimate Net Loss as respects any one Loss
Occurrence. The Reinsurer shall then be liable for the amount by which the Company’s Ultimate
Net Loss exceeds the Company’s retention of $10,000,000, but the liability of the Reinsurer
shall never exceed $10,000,000 with respect to any one Loss Occurrence. However, in no event
shall the liability of the Reinsurer arising out of Act(s) of Terrorism exceed $10,000,000
during the term of this Agreement.
	 
	B.  	The Company’s retention and the Reinsurer’s limit of liability for each Loss Occurrence, set
forth in Parts I, II and III above, shall apply irrespective of the number of Policies
affected or number of hazards in one Policy and regardless of the number of Classes of
Insurance involved.
	 
	C.  	Reinsurance of the Company’s retention, set forth above, shall not be deducted in arriving at
the Company’s Ultimate Net Loss herein.
	 
	D.  	An “Act of Terrorism” for purposes of this Agreement shall mean:





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	 	1.  	Any actual or threatened violent act or act harmful to human life, tangible or
intangible property or infrastructure directed towards or having the effect of (a)
influencing or protesting against any de jure or de facto government or policy thereof,
(b) 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 (c) retaliating
against any country for direct or vicarious support by that country of any other
government or political system.
	 
	 	2.  	Any act declared pursuant to the Terrorism Risk Insurance Act of 2002 shall also be
considered an “Act of Terrorism” for purposes of this Agreement.





ARTICLE V — WARRANTY 





	A.  	It is deemed that inuring Casualty Excess of Loss Reinsurance for limits greater than
$1,000,000 per occurrence/per claim and inuring Corporate Errors and Omission Insurance
coverages that are in effect at the inception of this agreement shall be maintained without
change during the term of this agreement.
	 
	B.  	It is further warranted that Policies subject to this Agreement with inuring coverage as
deemed above, shall not exceed a combined limit for both the Primary Policy and Umbrella
Policy of $11,000,000 per occurrence, or so deemed.
	 
	C.  	The maximum policy period on business covered by this Agreement is one year plus odd time,
not to exceed 120 days.





ARTICLE VI – 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 amount so reinstated the Company agrees to pay an additional premium calculated at
pro rata of the annual premium hereon, being pro rata only as to the fraction of the limit of
liability of this Agreement (i.e., the fraction of $3,000,000 as respects Part I and $5,000,000 as respects Part II and $10,000,000 as respects
Part III) so reinstated and 100% as to the term.





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	C.  	Nevertheless, the Reinsurer’s liability hereunder shall never exceed $3,000,000 as respects
Part I and $5,000,000 as respects Part II and $10,000,000 as respects Part III in respect of
any one Loss Occurrence and shall be further limited in all during the term of this Agreement
to $6,000,000 as respects Part I and $10,000,000 as respects Part II and $20,000,000 as
respects Part III.





ARTICLE VII — ULTIMATE NET LOSS





	A.  	The term “Ultimate Net Loss” shall mean the actual sum paid by the Company in settlement of
losses or liability including interest accrued prior to judgment after making deductions for
all recoveries, including subrogation, salvages, and claims upon other reinsurances, whether
collectible or not, which inure to the benefit of the Reinsurer under this Agreement, and
shall 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
XXIV- Insolvency of this Agreement.
	 
	B.  	The term “Ultimate Net Loss” shall include 90% of Loss In Excess of Policy Limits and 90% 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 with the investigation, settlement, defense or litigation, including court costs
and post-judgment interest, of any claim or loss covered by the Policies reinsured under this
Agreement, and shall include Declaratory Judgment Expenses. However, the term “Loss
Adjustment Expenses” shall not include the salaries and expenses of Company employees, office
expenses and other overhead expenses.
	 
	D.  	The term “Declaratory Judgment Expenses” shall mean all legal expenses, incurred in the
representation of the Company in litigation brought to determine the Company’s defense and/or
indemnification obligations, that are allocable to any specific claim or loss applicable to
Policies subject to this Agreement. In addition, the Company shall promptly notify the
Reinsurer of any Declaratory Judgment Expenses subject to this Agreement.
	 
	E.  	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.





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	F.  	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 VIII — 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 IX — EXTRA CONTRACTUAL OBLIGATIONS





	A.  	“Extra Contractual Obligations” are defined as those liabilities not covered under any other
provision of this Agreement and which arise from the handling of any claim on business covered
hereunder, such liabilities arising because of, but not limited to, the following: failure by
the Company to settle within the Policy limit, or by reason of alleged or actual negligence,
fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or
in the trial of any action against its insured or in the preparation or prosecution of an
appeal consequent upon such action.
	 
	B.  	The date on which an Extra Contractual Obligation is incurred by the Company shall be deemed,
in all circumstances, to be the date of the original accident, casualty, disaster or loss
occurrence.





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	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 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.





ARTICLE X- EXCLUSIONS




THIS AGREEMENT DOES NOT COVER:




	A.  	THE FOLLOWING GENERAL CATEGORIES






	 	1.  	Ex-gratia payments.
	 
	 	2.  	Risks subject to a deductible or a self-insured retention excess of $250,000.
	 
	 	3.  	Loss or damage caused directly or indirectly by: (a) enemy attack by armed forces
including action taken by military, naval or air forces in resisting an actual or an
immediately impending enemy attack; (b) invasion; (c) insurrection; (d) rebellion; (e)
revolution; (f) intervention; (g) civil war; and (h) usurped power.
	 
	 	4.  	Reinsurance assumed by the Company.
	 
	 	5.  	Business derived from any Pool, Association, including Joint Underwriting
Association, Syndicate, Exchange, Plan, Fund or other facility directly as a member,
subscriber or participant, or indirectly by way of reinsurance or assessments; provided
this exclusion shall not apply to Automobile or Workers Compensation assigned risks which
may be currently or subsequently covered hereunder.
	 
	 	6.  	Pollution Liability as per the attached Pollution Liability Exclusion Clause -
Reinsurance.
	 
	 	7.  	Insolvency Funds as per the attached Insolvency Funds Exclusion Clause.





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






	 	a.  	Nuclear Incident Exclusion Clause — Liability — Reinsurance  — U.S.A.
	 
	 	b.  	Nuclear Incident Exclusion Clause — Liability — Reinsurance — Canada.
	 
	 	c.  	Nuclear Incident Exclusion Clause — Reinsurance — No. 4.






	 	9.  	Any actual or alleged liability whatsoever for any claim or claims in respect of
loss or losses, directly or indirectly arising out of, resulting from, or in consequence
of asbestos, in whatever form or quantity.
	 
	 	10.  	Any liability, loss, cost or expense of whatsoever nature directly or indirectly
caused by, contributed to by, resulting from, arising out of or in connection with the
use or release, or threat thereof, of any nuclear weapon or device or chemical or
biological agent, regardless of any other cause or event contributing concurrently or in
any other sequence to the loss.
	 
	 	11.  	Policies covering the liability of any original insured whose annual gross revenue,
sales or receipts exceed $5,000,000,000.






	B.  	THE FOLLOWING INSURANCE COVERAGES






	 	1.  	Fiduciary Liability.
	 
	 	2.  	Fidelity and Surety.
	 
	 	3.  	Credit and Financial Guarantee.
	 
	 	4.  	Securities and Exchange Liability.
	 
	 	5.  	Retroactive coverage.
	 
	 	6.  	Personal Excess or Umbrella Liability.
	 
	 	7.  	Medical Malpractice for Doctors, Physicians, Surgeons, Nurses, Hospitals and
Clinics.
	 
	 	8.  	Advertisers,’ Broadcasters’ and Telecasters’ Liability as respects Personal Injury
Liability except as provided under Commercial Package Policies or Commercial General
Liability Coverage Forms.
	 
	 	9.  	Liquor Law Liability except Host Liquor Law Liability.
	 
	 	10.  	Kidnap, Extortion and Ransom Liability.
	 
	 	11.  	Boiler and Machinery Insurance.





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	 	12.  	Protection and Indemnity (Ocean Marine).
	 
	 	13.  	Workers Compensation and Employers Liability Insurance.
	 
	 	14.  	Business classified by the Company as Primary Rental Liability, Supplemental
Liability, Residual Value or GAAP Liability.
	 
	 	15.  	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 by the applicable regulatory authority(ies) to renew any
insured(s) policy.
	 
	 	16.  	Products recall, Products integrity or Products impairment.






	C.  	THE FOLLOWING RISKS AS RESPECTS AUTOMOBILE LIABILITY AND AUTOMOBILE COLLISION






	 	1.  	Vehicles used in or while in practice or preparation for, a prearranged racing,
speed, exhibition or demolition contest.
	 
	 	2.  	All vehicles classified as “Public Automobiles” except church buses, social service
agency automobiles, van pools and vehicles used for the transportation of employees.
	 
	 	3.  	Fire, police, emergency or municipal vehicles.
	 
	 	4.  	Motorcycles.
	 
	 	5.  	The rental or leasing of vehicles to others.
	 
	 	6.  	Logging trucks.
	 
	 	7.  	Vehicles regularly used to haul property of others and operating beyond a 200 mile
radius.
	 
	 	8.  	Newspaper delivery trucks.
	 
	 	9.  	Vehicles engaged in the transportation or distribution of fireworks, fuses,
explosives, ammunitions, natural or artificial fuel, gas, or liquefied petroleum gases or
gasoline.






	D.  	THE FOLLOWING AS RESPECTS LIABILITY OTHER THAN AUTOMOBILE






	 	1.  	Risks involving known exposure to the following substances:






	 	a.  	dioxin.
	 
	 	b.  	polychlorinated biphenols.
	 
	 	c.  	lead.
	 
	 	d.  	silica.






	 	2.  	Liability as respects Products and Completed Operations:





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	 	a.  	The manufacture, labeling or re-labeling, importation or wholesale
distribution of:






	 	(i)  	Drugs or pharmaceuticals.
	 
	 	(ii)  	Cosmetics.
	 
	 	(iii)  	Herbicides, insecticides or pesticides.
	 
	 	(iv)  	Petrochemical or electrical equipment used for
heating, lighting or cooking.
	 
	 	(v)  	Industrial or toxic chemicals.
	 
	 	(vi)  	Valves, gaskets or seals of a hydraulic, petrochemical or
high pressure nature.
	 
	 	(vii)  	Medical supplies.
	 
	 	(viii)  	Heavy machinery and equipment.
	 
	 	(ix)  	Power tools.
	 
	 	(x)  	Medical equipment used for diagnostic or life
sustaining purposes.






	 	b.  	The manufacture or importing of motorized or self-propelled vehicles
and equipment.
	 
	 	c.  	The manufacturing, importing, packing, canning, bottling or processing
of foodstuffs.
	 
	 	d.  	The blending, mixing, processing or importing of animal feed.
	 
	 	e.  	The manufacture, sale, distribution, handling, servicing or maintenance
of aircraft, aerospacecraft, missiles, satellites or any component or components
thereof.
	 
	 	f.  	Exterior installation finishing systems (EIFS) or synthetic stucco
manufacturing, importation, or installation.
	 
	 	g.  	Any insured contractors’ or developers’ operations which are involved
in the new construction of apartments, condominiums, cooperatives, town houses or
single family dwellings in Arizona, California, Colorado, Hawaii, Nevada, South
Carolina, Utah or Washington.






	 	3.  	Ownership, operation or use of vessels exceeding 50 feet in length.
	 
	 	4.  	All railway operations except sidetrack agreements.
	 
	 	5.  	Amusement parks, carnivals or circuses.
	 
	 	6.  	Public assembly exposure in excess of 5,000.
	 
	 	7.  	Gas, electric and water utility companies.
	 
	 	8.  	Subaqueous operations.
	 
	 	9.  	Mining.
	 
	 	10.  	Blasting operations.
	 
	 	11.  	Demolition of buildings or structures in excess of two stories.





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	 	12.  	Shoring, underpinning or moving of buildings or structures.
	 
	 	13.  	Manufacture, sale, rental, lease, erection or repair of scaffolds.
	 
	 	14.  	Construction of bridges, tunnels or dams.
	 
	 	15.  	a. Manufacturers or importers of fireworks, fuses, or any substance, as defined and
noted below, intended for use as an explosive.






	 	b.  	Loading of fireworks, fuses, or any explosive substance defined below
into containers for use as explosive objects, propellant charges or detonation
devices and the storage thereof.
	 
	 	c.  	Manufacturers or importers of any product in which fireworks, fuses, or
any explosive substance defined below is an ingredient.
	 
	 	d.  	Handling, storage, transportation or use of fireworks, fuses, or any
explosive substance defined below.






	 	   	NOTE: An explosive substance is defined as any substance manufactured for
the express purpose of exploding as differentiated from commodities used
industrially and which are only incidentally explosive.
	 
	 	16.  	Manufacture, production, refining, storage, wholesale distribution or
transportation of natural or artificial fuel, gas, butane, propane or liquefied petroleum
gases or gasoline.
	 
	 	17.  	Onshore and offshore gas and oil drilling operations.
	 
	 	18.  	Ownership, maintenance or use of any airport or aircraft, including fueling, or any
device or machine intended for and/or aiding in the achievement of atmospheric flight,
projection or orbit.
	 
	 	19.  	Municipalities.
	 
	 	20.  	Liability as respects companies identified in the attached Pharmaceutical / Medical
Company Exclusion Listing, including all affiliates and subsidiaries thereof.






	E.  	Those exclusions set forth under Items 5. and 16. of Section D. shall not apply if the
exposure is incidental to the regular operations of the insured covered hereunder. An
exposure shall be considered incidental if it comprises 15% or less of the insured’s exposure
base.





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






	 	1.  	As respects Automobile Liability And Collision:
	 
	 	   	Items 2. through 9. of Section C.
	 
	 	2.  	As respects Liability Other Than Automobile:
	 
	 	   	Items 2. through 19. of Section D.





ARTICLE XI — SPECIAL ACCEPTANCE




Policies which are beyond the terms, conditions or limitations of this Agreement may be submitted
to the Reinsurer for special acceptance hereunder; and such Policies, if accepted in writing by the
Reinsurer, shall be subject to all of the terms, conditions and limitations of this Agreement,
except as modified by the special acceptance. Premiums and losses derived from any special
acceptance shall be included with other data for rating purposes under this Agreement.




ARTICLE XII — LOSS OCCURRENCE




The term “Loss Occurrence” shall mean any accident or occurrence or series of accidents or
occurrences arising out of any one event and happening within the term and scope of this Agreement.
Without limiting the generality of the foregoing, the term “Loss Occurrence” shall be held to
include:





	A.  	As respects Products Bodily Injury and Products Property Damage Liability, injuries to all
persons and all damage to property of others occurring during a Policy Period and proceeding
from or traceable to the same causative agency shall be deemed to arise out of one Loss
Occurrence, and the date of such Loss Occurrence shall be deemed to be the commencing date of
the Policy Period. For the purpose of this provision, each annual period of a Policy which
continues in force for more than one year shall be deemed to be a separate Policy Period.
	 
	B.  	As respects Bodily Injury Liability (other than Automobile and Products), said term shall
also be understood to mean, as regards each original assured, injuries to one or more than one
person resulting from infection, contagion, poisoning, or contamination proceeding from or
traceable to the same causative agency.





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






	 	1.  	the series of operations, events or occurrences shall not extend over a period
longer than 12 consecutive months; and
	 
	 	2.  	the Company may elect the date on which the period of not exceeding 12 consecutive
months shall be deemed to have commenced.






	   	In the event that the series of operations, events or occurrences extend over a period longer
than 12 consecutive months, then each consecutive period of 12 months, the first of which
commences on the date elected under 2. above, shall form the basis of claim under this
Agreement.
	 
	D.  	As respects those Policies of the Company which provide aggregate limits of liability, the
total of all individual losses occurring during any one Policy year which proceed from or are
traceable to the same causative agency.





ARTICLE XIII — REINSURANCE PREMIUM





	A.  	The Company shall pay to the Reinsurer a premium for the reinsurance provided under the
First, Second and Third Excess of Loss Layers at the rates set forth in Paragraph B. below.
Such rates shall be applied to the Company’s Subject Earned Premium for the term of this
Agreement.
	 
	B.  	A deposit premium for each layer set forth below, shall be payable by the Company to the
Reinsurer in four equal installments each due
January 1, April 1, July 1 and October 1. Within 60 days after the
termination of this Agreement, the Company shall render a statement to
the Reinsurer showing the actual reinsurance premiums due hereunder.
If such premium calculations differ from the deposit previously paid,
the debtor party shall pay the outstanding balance within 60 days
after the termination of this Agreement. However, in no event shall
the adjusted premium be less than the minimum premium for each layer,
set forth below.





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Deposit	 	 	Minimum	 	 	Quarterly	 
	 	 	Rate	 	 	Premium	 	 	Premium	 	 	Deposit	 
	First Excess Layer
	 	 	.061	%	 	$	385,000	 	 	$	310,000	 	 	$	96,250	 
	Second Excess Layer
	 	 	.068	%	 	$	425,000	 	 	$	340,000	 	 	$	106,250	 
	Third Excess Layer
	 	 	.131	%	 	$	825,000	 	 	$	660,000	 	 	$	206,250	 






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	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 premium is to be calculated on an actual daily basis or in accordance with the
Company’s methodology, 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.





ARTICLE XIV — REPORTS AND REMITTANCES





	A.  	The Company shall furnish the Reinsurer with all necessary data respecting premiums and
losses for as long as one of the parties hereto has a claim against the other arising from
this Agreement.
	 
	B.  	All checks and supporting documentation shall be sent via wire transfer 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






	 	b.  	LOCK BOX
	 
	 	   	Both checks and supporting documentation shall be sent to:
	 
	 	   	Swiss Reinsurance America Corporation


P.O. Box 7247-7281

Philadelphia, PA 19170-7281





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





ARTICLE XV — 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 advise the Reinsurer of all claims which:






	 	1.  	Are reserved by the Company for an amount in excess of 50% of its retention;
	 
	 	2.  	Originate from fatal injuries;
	 
	 	3.  	Originate from the following kinds of bodily injury:






	 	a.  	Brain injuries resulting in impairment of physical function;
	 
	 	b.  	Spinal injuries resulting in a partial or total paralysis of upper or
lower extremities;
	 
	 	c.  	Amputation or permanent loss of use of upper or lower extremities;
	 
	 	d.  	Severe burn injuries;
	 
	 	e.  	Loss of sight in one or both eyes;
	 
	 	f.  	All other injuries likely to result in a permanent disability rate of
50% or more.






	 	4.  	Any action alleging Extra Contractual Obligations against the Company.
	 
	 	5.  	Any Declaratory Judgment action brought by or against the Company.
	 
	 	6.  	Any judgment against an insured for an amount in excess of the Company’s policy
limit.






	C.  	The Company shall have the responsibility to investigate, defend or negotiate settlements of
all claims and lawsuits related to Policies written by the Company and reinsured under this
Agreement. The Reinsurer, at its own expense, may associate with the Company in the defense
or control of any claim, suit or other proceeding which involves or is likely to involve the
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	   	Agreement, and the Company shall cooperate in every respect in the defense of any such claim,
suit or proceeding.





ARTICLE XVI — 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 XVII — 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 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
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	   	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 with 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.





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ARTICLE XVIII — 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 XIX — 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 XX — CURRENCY




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




ARTICLE XXI — 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.




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ARTICLE XXII — 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.




ARTICLE XXIII — DISPUTE RESOLUTION




Part I — Choice Of Law And Forum




Any dispute arising under this Agreement shall be resolved in the State of Pennsylvania, and the
laws of the State of Pennsylvania 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
persons knowledgeable 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
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	  	arbitrate. Within 30 days after receiving such notice, the respondent shall also appoint an
arbitrator and notify the claimant thereof by certified mail. Before instituting a hearing,
the two arbitrators so appointed shall choose an umpire. If, within 20 days after the
appointment of the arbitrator chosen by the respondent, the two arbitrators fail to agree upon
the appointment of an umpire, each of them shall nominate three individuals to serve as
umpire, of whom the other shall decline two and the umpire shall be chosen from the remaining
two by drawing lots. The name of the individual first drawn shall be the umpire.
	 
	D.  	Failure of Party to Appoint an Arbitrator — If the respondent fails to appoint an arbitrator
within 30 days after receiving a notice of intention to arbitrate, the claimant’s arbitrator
shall appoint an arbitrator on behalf of the respondent, such arbitrator shall then, together
with the claimant’s arbitrator, choose an umpire as provided in Paragraph C. of Part III of
this Article.
	 
	E.  	Submission of Dispute to Panel — Unless otherwise extended by the arbitration panel or agreed
to by the parties, each party shall submit its case to the panel within 30 days after the
selection of the umpire.
	 
	F.  	Procedure Governing Arbitration — All proceedings before the panel shall be informal and the
panel shall not be bound by the formal rules of evidence. The panel shall have the power to
fix all procedural rules relating to the arbitration 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.
	 
	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 XXIV- 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.





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	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 XXI- 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 XXV — SPECIAL TERMINATION





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






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






	 	a.  	Entry of an order of liquidation, rehabilitation, receivership or
conservatorship with respect to the Company or the Reinsurer by any court or
regulatory authority;
	 
	 	b.  	Assignment of this Agreement by either party;
	 
	 	c.  	General reinsurance of any portion of the Company’s business it retains
net for its own account, as determined under the provisions of this Agreement
without prior consent of the Reinsurer.





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






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






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






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






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






	 	   	A reduction of 50% or more of the Company’s policyholders surplus during any
calendar year. Such reduction shall be determined by calculating the difference
between the Company’s prior year annual statement and each subsequent quarterly
statutory statement within such current calendar year.
	 
	 	   	As respects the event set forth in this Paragraph A.4., the Company shall
be obligated to notify the Reinsurer in writing within 30 days after the filing of
its quarterly statement. Upon receipt of such notification the Reinsurer shall
have the right to terminate this Agreement, by giving not less than 30 days notice
of its intention to do so.






	B.  	Any notice of termination pursuant to the provisions set forth in Paragraphs A.2., A.3. and
A.4. above shall be sent by certified mail, return receipt requested. Such notice period
shall commence upon the other party’s receipt of the notice of termination.
	 
	C.  	In the event of termination, as provided under the provisions of this Article, the Reinsurer
shall not be liable for losses occurring subsequent to the date of termination.





ARTICLE XXVI — 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 Bala Cynwyd, Pennsylvania, this 21st day of March, 2005




	 	 	 
	Attest:

	 	PHILADELPHIA CONSOLIDATED HOLDING CORPORATION’S
	 
	 	 
	

	 	Following member Companies:
	 
	 	 
	

	 	PHILADELPHIA INDEMNITY INSURANCE COMPANY
	 
	 	 
	

	 	PHILADELPHIA INSURANCE COMPANY






	 	 	 
	Thomas R. Herendeen

	 	Christopher J. Maguire
	 
	 	 
	Vice President

	 	Exec. VP & Chief U/W Officer






And in Armonk, New York, this 4th day of February, 2005.




	 	 	 	 	 
	Attest:	 	SWISS REINSURANCE AMERICA CORPORATION
	 
	 	 	 	 
	Pete Thompson

	 	 	 	M. Taxter
	 
	 	 	 	 
	Vice President

	 	 	 	Senior Vice President






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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.




 









 










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POLLUTION LIABILITY EXCLUSION CLAUSE — REINSURANCE





	   	This Reinsurance excludes:






	 	(1)  	Any loss occurrence arising out of the actual, alleged or threatened discharge,
dispersal, release or escape of pollutants:






	 	a)  	At or from premises owned, rented or occupied by an original assured;
or
	 
	 	b)  	At or from any site or location used for the handling, storage,
disposal, processing or treatment of waste; or
	 
	 	c)  	Which are at any time transported, handled, stored, treated, disposed
of, or processed as waste; or
	 
	 	d)  	At or from any site or location on which any original assured is
performing operations:






	 	(i)  	If the pollutants are brought on or to the site or location
in connection with such operations; or
	 
	 	(ii)  	If the operations are to test for, monitor, clean up, remove,
contain, treat, detoxify or neutralize the pollutants.






	 	(2)  	Any liability, loss, cost or expense arising out of any governmental direction or
request to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize
pollutants.





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




Subparagraphs a) and d)(i) of paragraph (1) of this exclusion do not apply to loss occurrences
caused by heat, smoke or fumes from a hostile fire. As used herein, “hostile fire” means one which
becomes uncontrollable or breaks out from where it was intended to be.




“Original assured” as used herein means all insureds as defined in the policy issued by the
Company.





 









 







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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.





 









 





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	   	NUCLEAR INCIDENT EXCLUSION CLAUSE — LIABILITY — REINSURANCE — U.S.A.
	 
	   	N.M.A. 1590
	 
	1.  	This reinsurance does not cover any loss or liability accruing to the Reassured as a member
of, or subscriber to, any association of insurers or reinsurers formed for the purpose of
covering nuclear energy risks or as a direct or indirect reinsurer of any such member,
subscriber or association.
	 
	2.  	Without in any way restricting the operation of paragraph 1. of this Clause it is understood
and agreed that for all purposes of this reinsurance all the original policies of the
Reassured (new, renewal and replacement) of the classes specified in Clause II. in this
paragraph 2. from the time specified in Clause III. in this paragraph 2. shall be deemed to
include the following provision (specified as the Limited Exclusion Provision):
	 
	   	LIMITED EXCLUSION PROVISION*






	 	I.  	It is agreed that the policy does not apply under any liability coverage,
to injury, sickness, disease, death or destruction, bodily injury or property damage
with respect to which an insured under the policy is also an insured under a nuclear
energy liability policy issued by Nuclear Energy Liability Insurance Association,
Mutual Atomic Energy Liability Underwriters or Nuclear Insurance Association of
Canada, or would be an insured under any such policy but for its termination upon
exhaustion of its limit of liability.
	 
	 	II.  	Family Automobile Policies (liability only), Special Automobile Policies
(private passenger automobiles, liability only), Farmers Comprehensive Personal
Liabilities Policies (liability only), Comprehensive Personal Liability Policies
(liability only) or policies of a similar nature; and the liability portion of
combination forms related to the four classes of policies stated above, such as the
Comprehensive Dwelling Policy and the applicable types of Homeowners Policies.
	 
	 	III.  	The inception dates and thereafter of all original policies as described in II.
above, whether new, renewal or replacement, being policies which either












 









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	 	(a)  	become effective on or after 1st May, 1960, or
	 
	 	(b)  	become effective before that date and contain the Limited Exclusion
Provision set out above; provided this paragraph 2. shall not be applicable to
Family Automobile Policies, Special Automobile Policies, or policies or
combination policies of a similar nature, issued by the Reassured on New York
risks, until 90 days following approval of the Limited Exclusion Provision by the
Governmental Authority having jurisdiction thereof.






	3.  	Except for those classes of policies specified in Clause II. of paragraph 2. and without in
any way restricting the operation of paragraph 1. of this Clause, it is understood and agreed
that for all purposes of this reinsurance the original liability policies of the Reassured
(new, renewal and replacement) affording the following coverages:
	 
	   	Owners, Landlords and Tenants Liability, Contractual Liability, Elevator Liability, Owners or
Contractors (including railroad) Protective Liability, Manufacturers and Contractors
Liability, Product Liability, Professional and Malpractice Liability, Storekeepers Liability,
Garage Liability, Automobile Liability (including Massachusetts Motor Vehicle or Garage
Liability)
	 
	   	shall be deemed to include with respect to such coverages, from the time specified in Clause
V. of this paragraph 3., the following provision (specified as the Broad Exclusion Provision):
	 
	   	BROAD EXCLUSION PROVISION*
	 
	   	It is agreed that the policy does not apply:






	 	I.  	Under any Liability Coverage to injury, sickness, disease, death or
destruction, bodily injury or property damage






	 	(a)  	with respect to which an insured under the policy is also an
insured under nuclear energy liability policy issued by Nuclear Energy
Liability Insurance Association, Mutual Atomic Energy Liability Underwriters
or Nuclear Insurance Association of Canada, or would be an insured under any
such policy but for its termination upon exhaustion of its limit of liability;
or












 









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	 	(b)  	resulting from the hazardous properties of nuclear material
and with respect to which (1) any person or organization is required to
maintain financial protection pursuant to the Atomic Energy Act of 1954, or
any law amendatory thereof, or (2) the insured is, or had this policy not been
issued would be, entitled to indemnity from the United States of America, or
any agency thereof, under any agreement entered into by the United States of
America, or any agency thereof, with any person or organization.






	 	II.  	Under any Medical Payments Coverage, or under any Supplementary Payments
Provision relating to immediate medical or surgical relief, first aid, to expenses
incurred with respect to bodily injury, sickness, disease or death, bodily injury
resulting from the hazardous properties of nuclear material and arising out of the
operation of a nuclear facility by any person or organization.
	 
	 	III.  	Under any Liability Coverage, to injury, sickness, disease, death or destruction,
bodily injury or property damage resulting from the hazardous properties of nuclear
material, if






	 	(a)  	the nuclear material (1) is at any nuclear facility owned by,
or operated by or on behalf of, an insured or (2) has been discharged or
dispersed therefrom;
	 
	 	(b)  	the nuclear material is contained in spent fuel or waste at
any time possessed, handled, used, processed, stored, transported or disposed
of by or on behalf of an insured; or
	 
	 	(c)  	the injury, sickness, disease, death or destruction, bodily
injury or property damage arises out of the furnishing by an insured of
services, materials, parts or equipment in connection with the planning,
construction, maintenance, operation or use of any nuclear facility, but if
such facility is located within the United States of America, its territories,
or possessions or Canada, this exclusion (c) applies only to injury to or
destruction of property at such nuclear facility, property damage to such
nuclear facility and any property thereat.













 










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	 	IV.  	As used in this endorsement:
	 
	 	   	“hazardous properties” include radioactive, toxic or explosive properties; “nuclear
material” means source material, special nuclear material or byproduct material;
“source material,” “special nuclear material,” and “byproduct material” have the
meanings given them in the Atomic Energy Act of 1954 or in any law amendatory
thereof; “spent fuel” means any fuel element or fuel component, solid or liquid,
which has been used or exposed to radiation in a nuclear reactor; “waste” means any
waste material (1) containing byproduct material other than the tailings or wastes
produced by the extraction or concentration of uranium or thorium from any ore
processed for its source material content and (2) resulting from the operation by
any person or organization of any nuclear facility included within the definition
of nuclear facility under paragraph (a) or (b) thereof; “nuclear facility” means






	 	(a)  	any nuclear reactor,
	 
	 	(b)  	any equipment or device designed or used for (1) separating
the isotopes of uranium or plutonium, (2) processing or utilizing spent fuel,
or (3) handling, processing or packaging waste,
	 
	 	(c)  	any equipment or device used for the processing, fabricating
or alloying of special nuclear material if at any time the total amount of
such material in the custody of the insured at the premises where such
equipment or device is located consists of or contains more than 25 grams of
plutonium or uranium 233 or any combination thereof, or more than 250 grams of
uranium 235,
	 
	 	(d)  	any structure, basin, excavation, premises or place prepared
or used for the storage or disposal of waste






	 	   	and includes the site on which any of the foregoing is located, all operations
conducted on such site and all premises used for such operations; “nuclear reactor”
means any apparatus designed or used to sustain nuclear fission in a
self-supporting chain reaction or to contain a critical mass of fissionable
material; with respect to injury to or destruction of property, the word “injury”
or “destruction” includes all forms of radioactive contamination of property;
“property damage” includes all forms of radioactive contamination of property.













 









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	 	V.  	The inception dates and thereafter of all original policies affording
coverages specified in this paragraph 3., whether new, renewal or replacement, being
policies which become effective on or after 1st May, 1960, provided this paragraph 3.
shall not be applicable to






	 	(i)  	Garage and Automobile Policies issued by the Reassured on New
York risks, or
	 
	 	(ii)  	Statutory liability insurance required under Chapter 90,
General Laws of Massachusetts,






	 	   	until 90 days following approval of the Broad Exclusion Provision by the
Governmental Authority having jurisdiction thereof.






	4.  	Without in any way restricting the operations of paragraph 1. of this Clause, it is
understood and agreed that paragraphs 2. and 3. above are not applicable to original liability
policies of the Reassured in Canada, and that with respect to such policies, this Clause shall
be deemed to include the Nuclear Energy Liability Exclusion Provisions adopted by the Canadian
Underwriters’ Association or the Independent Insurance Conference of Canada.






		
	*NOTE: 	The words printed in BOLD TYPE in the Limited Exclusion Provision and in the Broad Exclusion
Provision shall apply only in relation to original liability policies which include a Limited
Exclusion Provision or a Broad Exclusion Provision containing those words.














 








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	   	NUCLEAR INCIDENT EXCLUSION CLAUSE — LIABILITY — REINSURANCE — CANADA
	 
	   	N.M.A. 1979a
	 
	1.  	This Agreement does not cover any loss or liability accruing to the Company as a member of,
or subscriber to, any association of insurers or reinsurers formed for the purpose of covering
nuclear energy risks or as a direct or indirect reinsurer of any such member, subscriber or
association.
	 
	2.  	Without in any way restricting the operation of Paragraph 1. of this Clause, it is agreed
that for all purposes of this Agreement all the original liability contracts of the Company,
whether new, renewal or replacement, of the following classes, namely,




Personal Liability

Farmers’ Liability

Storekeepers’ Liability




	   	which become effective on or after 31st December 1992, shall be deemed to include, from their
inception dates and thereafter, the following provision:
	 
	   	Limited Exclusion Provision -
	 
	   	This Policy does not apply to bodily injury or property damage with respect to which the
Insured is also insured under a contract of nuclear energy liability insurance (whether the
Insured is unnamed in such contract and whether or not it is legally enforceable by the
Insured) issued by the Nuclear Insurance Association of Canada or any other group or pool of
insurers or would be an Insured under any such policy but for its termination upon exhaustion
of its limits of liability.
	 
	   	With respect to property, loss of use of such property shall be deemed to be property damage.
	 
	3.  	Without in any way restricting the operation of Paragraph 1. of this Clause, it is agreed
that for all purposes of this Agreement all the original liability contracts of the Company,
whether new, renewal or replacement, of any class whatsoever (other than Personal Liability,
Farmers’ Liability, Storekeepers’ Liability or Automobile Liability contracts), which become
effective on or after 31st December 1992, shall be deemed to include, from their inception
dates and thereafter, the following provision:













 










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Broad Exclusion Provision -




It is agreed that this Policy does not apply:





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






	 	(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.





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 which may be designated by or pursuant to any law, act or statute, or
law amendatory thereof as being prescribed substances capable of releasing atomic energy,
or as being requisite for the production, use or application of atomic energy;




 









 









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	(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.





April 1, 1996




 









 






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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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PHARMACEUTICAL / MEDICAL COMPANY EXCLUSION LISTING




	 	 	 	 	 	 
	 	ABBOTT LABORATORIES

	 	 	NOVARTIS	 
	 	AKZO NOBEL

	 	 	NOVO NORDISK	 
	 	ALLERGAN

	 	 	OTSUKA PHARMACEUTICAL	 
	 	ALPHARMA

	 	 	PFIZER	 
	 	ALTANA AG

	 	 	PIERRE FABRE	 
	 	AMGEN

	 	 	PROCTER & GAMBLE	 
	 	ASTRAZENECA

	 	 	PURDUE FREDERICK / PRA HOLDING	 
	 	AVENTIS

	 	 	ROCHE	 
	 	BARR LABORATORIES

	 	 	SANKYO	 
	 	BAXTER INTERNATIONAL

	 	 	SANOFI-SYNTHELABO	 
	 	BAYER

	 	 	SCHERING AG	 
	 	BEAUFOUR IPSEN

	 	 	SCHERING-PLOUGH	 
	 	BECTON, DICKINSON AND COMPANY

	 	 	SCHWARZ PHARMA	 
	 	BIOGEN

	 	 	SERONO	 
	 	BOEHRINGER INGELHEIM KG

	 	 	SHIONOGI	 
	 	BOSTON SCIENTIFIC CORPORATION

	 	 	SHIRE PHARMACEUTICALS	 
	 	BRISTOL-MYERS SQUIBB

	 	 	SMITH & NEPHEW	 
	 	CELLTECH (former MEDEVA)

	 	 	SOLVAY	 
	 	CHIRON

	 	 	ST. JUDE MEDICAL	 
	 	CHUGAI PHARMACEUTICAL

	 	 	STRYKER	 
	 	CSL (including ZLB Behring [former

	 	 	SUMITOMO PHARMACEUTICALS / SUMITOMO	 
	 	ZLB and Aventis Behring]

	 	 	CHEMICAL	 
	 	DAIICHI PHARMACEUTICAL

	 	 	SYNTHES-STRATEC	 
	 	DAINIPPON PHARMACEUTICAL

	 	 	TAKEDA CHEMICAL INDUSTRIES	 
	 	EDWARDS LIFESCIENCES

	 	 	TANABE	 
	 	EISAI

	 	 	TAP PHARMACEUTICAL PRODUCTS	 
	 	ELAN

	 	 	TEVA PHARMACEUTICAL	 
	 	FOREST LABORATORIES

	 	 	UCB	 
	 	GENENTECH

	 	 	WATSON PHARMACEUTICAL	 
	 	GLAXOSMITHKLINE

	 	 	WYETH	 
	 	GUIDANT

	 	 	YAMANOUCHI PHARMACEUTICAL /FUJISAWA

PHARMACEUTICAL	 
	 	HOSPIRA

	 	 	ZIMMER	 
	 	IVAX
	 	 	 	 
	 	JOHNSON & JOHNSON
	 	 	 	 
	 	KING PHARMACEUTICALS
	 	 	 	 
	 	KYOWA HAKKO KOGYO
	 	 	 	 
	 	LABORATOIRE FOURNIER
	 	 	 	 
	 	LABORATOIRE SERVIER
	 	 	 	 
	 	LILLY (ELI)
	 	 	 	 
	 	MEDTRONIC
	 	 	 	 
	 	MERCK & CO
	 	 	 	 
	 	MERCK KGAA
	 	 	 	 
	 	MINNESOTA MINING & MANUFACTURING
	 	 	 	 
	 	MITSUBISHI PHARMACEUTICAL
	 	 	 	 
	 	MYLAN LABORATORIES
	 	 	 	 
	 





GROUP PM CASUALTY/2004 APRIL 30