exv10w49






EXHIBIT 10.49









WORKERS’ COMPENSATION QUOTA SHARE REINSURANCE CONTRACT



issued to




GUARANTEE INSURANCE COMPANY

Fort Lauderdale, Florida




			
	Effective: July 1, 2008
	 	DOC: August 21, 2008






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WORKERS’ COMPENSATION QUOTA SHARE REINSURANCE CONTRACT




TABLE OF CONTENTS




	 	 	 	 	 	 	 
	Article	 	 	 	Page
	 

	 	Preamble	 	 	4	 
	1

	 	Business Covered	 	 	4	 
	2

	 	Retention and Limit	 	 	5	 
	3

	 	Term	 	 	5	 
	4

	 	Special Termination	 	 	6	 
	5

	 	Territory	 	 	7	 
	6

	 	Exclusions	 	 	7	 
	7

	 	Special Acceptance	 	 	10	 
	8

	 	Premium	 	 	10	 
	9

	 	Other Reinsurance	 	 	10	 
	10

	 	Reports and Remittances	 	 	10	 
	11

	 	Ceding Commission	 	 	11	 
	12

	 	Definitions	 	 	11	 
	13

	 	Extra Contractual Obligations/Excess of Policy Limits	 	 	13	 
	14

	 	Net Retained Liability	 	 	14	 
	15

	 	Original Conditions	 	 	14	 
	16

	 	Salvage and Subrogation	 	 	15	 
	17

	 	No Third Party Rights	 	 	15	 
	18

	 	Loss Settlements	 	 	15	 
	19

	 	Commutation	 	 	16	 
	20

	 	Sunset	 	 	17	 
	21

	 	Late Payments	 	 	17	 
	22

	 	Offset	 	 	18	 
	23

	 	Currency	 	 	19	 
	24

	 	Unauthorized Reinsurance	 	 	19	 
	25

	 	Taxes	 	 	21	 
	26

	 	Access to Records	 	 	21	 
	27

	 	Confidentiality	 	 	22	 
	28

	 	Indemnification and Errors and Omissions	 	 	23	 
	29

	 	Insolvency	 	 	23	 
	30

	 	Arbitration	 	 	24	 
	31

	 	Service of Suit	 	 	26	 
	32

	 	Agency	 	 	27	 
	33

	 	Governing Law	 	 	27	 
	34

	 	Entire Agreement	 	 	28	 
	35

	 	Non-Waiver	 	 	28	 
	36

	 	Change in Administrative Practices	 	 	28	 






			
	 
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WORKERS’ COMPENSATION QUOTA SHARE REINSURANCE CONTRACT




TABLE OF CONTENTS




	 	 	 	 	 	 	 
	Articles	 	 	 	Page
	(Cont’d)	 	 	 	 
	37

	 	Intermediary	 	 	28	 
	38

	 	Mode of Execution	 	 	29	 
	 

	 	Company Signing Block	 	 	29	 
	 
	 	 	 	 	 	 
	Attachments
	 	 	 	 	 	 
	 

	 	Nuclear Risk Exclusion	 	 	30	 
	 
	 	 	 	 	 	 





			
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WORKERS’ COMPENSATION QUOTA SHARE REINSURANCE CONTRACT

(the “Contract”)




issued to




GUARANTEE INSURANCE COMPANY 

Fort
Lauderdale, Florida

(the “Company”)

by




THE SUBSCRIBING REINSURER(S) IDENTIFIED

IN THE INTERESTS AND LIABILITIES AGREEMENT(S)

ATTACHED TO AND FORMING PART OF THIS CONTRACT

(the “Reinsurer”)




PREAMBLE





	A.	 	In the event any affiliated companies are to be reinsured hereunder,
whenever the word
“Company” is used in this Contract, such term shall be held to include any
or all of the
affiliated companies which are or may hereafter be under common control,
provided that
notice be given to the Reinsurer of any such newly affiliated companies
which may
hereafter come under common control as soon as practicable with full
particulars as to how
such affiliation is likely to affect this Contract. In the event of either
party maintaining that
such affiliation calls for alteration in existing terms, and an agreement
for alteration not
being arrived at, then the business of such newly affiliated company is
covered at existing
terms only for a period of 45 days after notice by either party that it does
not wish to cover
such business.
	 
	B.	 	The retention of the Company and the liability of the Reinsurer and
all other benefits
accruing to the Company as provided in this Contract or any amendments
hereto, shall
apply to the affiliated companies comprising the Company as a group and not
separately to
each of the affiliated companies.





ARTICLE 1




BUSINESS COVERED



This Contract is to indemnify the Company in respect of the liability that may
accrue to the Company as a result of loss or losses under Policies classified by
the Company as Traditional Workers’ Compensation and/or Employers Liability
(including losses arising from the United States Longshore and Harbor Workers’
Compensation Act, Jones Act, Federal Employers Liability Act, and any other
Federal Act), in force at the inception of this Contract, or written or




			
	 
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renewed during the term of this Contract by or on behalf of the Company, subject to the terms and
conditions herein contained.




ARTICLE 2




RETENTION AND LIMIT





	A.	 	The Company shall cede, and the Reinsurer shall accept as reinsurance, a 50.0% share of
all business reinsured hereunder. The Reinsurer shall pay to the Company the Reinsurer’s
quota share of losses under the Policies, Loss Adjustment Expense, Extra Contractual
Obligations and Loss in Excess of Policy Limits covered under this Contract, subject to a
maximum limit of $250,000 (being 50.0% of $500,000), inclusive of original deductibles,
each and every Loss Occurrence.
	 
	B.	 	The Company shall retain its 50.0% share net and unreinsured elsewhere.





ARTICLE 3




TERM





	A.	 	This Contract shall take effect at 12:01 a.m., Local Standard Time at the place of the loss,
July 1, 2008, applying to Loss Occurrences commencing at or after that time and date, and
shall remain in effect until 12:01 a.m., Local Standard Time at the place of the loss,
July 1, 2009.
	 
	B.	 	At the sole option of the Company, this Contract may be terminated at any time by the
Company giving the Reinsurer 15 days’ prior written notice.
	 
	C.	 	The Reinsurer shall have no liability for Loss Occurrences commencing at or after
expiration or termination of this Contract.
	 
	D.	 	However, upon mutual agreement between the Company and the Reinsurer, the Reinsurer
shall remain liable hereunder in respect of Policies in force prior to expiration or
termination, until the termination, natural expiration or renewal of such Policies, whichever
occurs first, but in no event to exceed 12 months plus odd time.
	 
	E.	 	In the event this Contract expires or terminates on a run-off basis, the Reinsurer’s
liability
hereunder shall continue if the Company is required by statute or regulation to continue
coverage, until the earliest date on which the Company may cancel the Policy, but not to
exceed 12 months plus odd time.





			
	 
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ARTICLE 4




SPECIAL TERMINATION





	A.	 	The Company may terminate a Subscribing Reinsurer’s percentage share in this Contract at
any time by giving written notice to the Subscribing Reinsurer in the event of any of the
following circumstances:






	 	1.	 	The Subscribing Reinsurer ceases underwriting operations.
	 
	 	2.	 	A state insurance department or other legal authority orders the Subscribing
Reinsurer
to cease writing business, or the Subscribing Reinsurer is placed under regulatory
supervision.
	 
	 	3.	 	The Subscribing Reinsurer has become insolvent or has been placed into liquidation
or receivership (whether voluntary or involuntary), or there have been instituted
against it proceedings for the appointment of a receiver, liquidator, rehabilitator,
conservator, trustee in bankruptcy, or other agent known by whatever name, to take
possession of its assets or control of its operations.
	 
	 	4.	 	The Subscribing Reinsurer’s policyholders’ surplus (or the equivalent under the
Subscribing Reinsurer’s accounting system) as reported in such financial statements
of the Subscribing Reinsurer as designated by the Company, has been reduced by
20% of the amount thereof at any date during the prior 12-month period (including
the period prior to the inception of this Contract). This paragraph shall not apply
should the Subscribing Reinsurer continue to have an A.M. Best’s rating of “A+.”
	 
	 	5.	 	The Subscribing Reinsurer has merged with or has become acquired or controlled by
any company, corporation, or individual(s) not controlling the
Subscribing
Reinsurer’s operations at the inception of this Contract.
	 
	 	6.	 	The Subscribing Reinsurer has retroceded its entire liability under this Contract
without the Company’s prior written consent.
	 
	 	7.	 	The Subscribing Reinsurer has been assigned an A.M. Best’s rating of less than “A-”
and/or an S&P rating of less than “BBB+.” However, as respects Underwriting
Members of Lloyd’s, London, a Lloyd’s Market Rating of less than “A-” by A.M.
Best and/or less than “BBB+” by S&P shall apply.






	B.	 	Termination shall be effected on a run-off or cut-off basis as set forth in the Term Article,
at the sole discretion of the Company. The reinsurance premium due the Subscribing
Reinsurer hereunder shall be pro rated based on the period of the Subscribing Reinsurer’s
participation hereon, and the Subscribing Reinsurer shall immediately return any excess
reinsurance premium received.





			
	 
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ARTICLE 5




TERRITORY



The territorial limits of this Contract shall be identical with those of the Company’s Policies but
excluding losses arising out of Policies written and issued in the States of Georgia, South
Carolina or Indiana.




ARTICLE 6




EXCLUSIONS



This Contract shall not apply to and specifically excludes:





	 	1.	 	Assumed reinsurance, except 100% of business ceded by fronting insurance
companies.
	 
	 	2.	 	Liability of the Company arising by contract, operation of law, or otherwise, from
its
participation or membership, whether voluntary or involuntary, in any Insolvency
Fund. “Insolvency Fund” includes any guaranty fund, insolvency fund, plan, pool,
association, fund or other arrangement, howsoever denominated, established or
governed, that provides for any assessment of or payment or assumption by the
Company of part or all of any claim, debt, charge, fee, or other obligation of an
insurer, or its successors or assigns, that has been declared by any competent
authority to be insolvent, or that is otherwise deemed unable to meet any claim, debt,
charge, fee or other obligation in whole or in part.
	 
	 	3.	 	Loss or liability accruing to the Company directly or indirectly from any insurance
written by or through any pool, association, or syndicate, including
pools,
associations, or syndicates in which membership by the Company is required under
any statutes or regulations.
	 
	 	4.	 	Loss or damage which is occasioned by war, invasion, hostilities, acts of foreign
enemies, civil war, rebellion, insurrection, military or usurped power, or martial law
or confiscation by order of any government or public authority. Nevertheless, this
Exclusion shall not apply to loss or damage occasioned by riots, strikes, civil
commotion, vandalism, malicious damage, and Acts of Terrorism.
	 
	 	5.	 	All loss or liability of the Company excluded by the “Nuclear Risk Exclusion”
attached hereto.
	 
	 	6.	 	Manufacturing, packaging, handling, shipping or storage of explosives, explosive
substances intended for use as an explosive, ammunitions, fuses, arms, or fireworks;
however, this exclusion shall not apply to the incidental packaging, handling or





			
	 
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	 	 	 	storage of same in connection with the sale or transportation by owner operators of
such substances.
	 
	 	7.	 	Loss arising from Professional Sports Teams. For the purpose of this Exclusion,
“Professional Sports Team” shall mean an organization of greater than 15 people
(including athletes, coaches, and staff) that exists for the purpose of competing in
regularly scheduled sporting events and whose members are receiving compensation
from the organization at the time of the Occurrence.
	 
	 	8.	 	Loss sustained by Commercial Airline Personnel on board the aircraft and arising
while the aircraft is In Flight. The following definitions shall apply to this
Exclusion:






	 	a.	 	“Commercial Airline” shall mean an organization in the business of
transporting
passengers and/or goods by aircraft;
	 
	 	b.	 	“Personnel” shall mean employees of the Commercial Airline acting
within the
scope of their employment; and
	 
	 	c.	 	“In Flight” shall mean from the time the door(s) close for departure to
the time
the door(s) open for arrival.






	 	9.	 	Liability arising out of, or resulting as a consequence of, insureds principally
involved
in the manufacture, distribution, installation, testing, remediation, removal, storage,
disposal, sale, use of or exposure to asbestos.
	 
	 	10.	 	Railroads, except scenic railways, and access lines and industrial aid
owner
operations when written as an incidental part of an insured’s overall operations.
	 
	 	11.	 	Chemical or petrochemical manufacturing.
	 
	 	12.	 	Underground mining.
	 
	 	13.	 	Loss arising from the intentional wrecking or demolition of buildings or
structures in
excess of three stories.
	 
	 	14.	 	Losses arising from the United States Longshore and Harbor Workers’ Compensation
Act, Jones Act, Federal Employers Liability Act, Maritime Employers Liability Act,
and any other federal act if the payroll for such business is greater than 10% of the
total payroll for the original insured’s total operations including such business.
	 
	 	15.	 	Actual or alleged loss, liability, damage, injury, defense cost, cost or expense
directly
or indirectly caused by, contributed to by, resulting from, arising out of or in
connection with any “acts of terrorism” as defined in the Terrorism Risk Insurance
Act of 2002 (the “Act”), including acts of war, invasion, acts of foreign enemies,
hostilities or warlike operation (whether war be declared or not), civil war, rebellion,
revolution, insurrection, or civil commotion assuming the proportions of
or





			
	 
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	 	 	 	amounting to an uprising, military or usurped power, regardless of any other cause or
event contributing concurrently or in any sequence to the loss and regardless of the
location of the loss, liability, damage, injury, defense, cost or expense.
	 
	 	 	 	Also excluding actual or alleged loss, liability, damage, injury, defense cost or
expense directly or indirectly caused by, contributed to by, resulting from, arising out
of or in connection with any action taken in controlling, preventing, suppressing,
retaliating against, or responding to an act of terrorism as defined in the Act,
regardless of the location of the loss, liability, damage, injury, defense, cost or
expense.
	 
	 	 	 	Notwithstanding the above and subject otherwise to the terms, conditions and
limitations of this Contract, this Contract will pay actual loss or damage caused by an
act of terrorism which does not meet the definition of “act of terrorism” as defined in
the Act, but in no event will this Contract provide coverage for loss, damage, cost or
expense directly or indirectly caused by, contributed to by, resulting from, arising
out of or in connection with biological, chemical or nuclear explosion, pollution,
contamination and/or fire following therefrom.
	 
	 	 	 	In the event any portion of this exclusion is found to be invalid or unenforceable, the
remainder shall remain in full force and effect.
	 
	 	16.	 	Financial Guarantee and Insolvency.
	 
	 	17.	 	Risks with known occupational disease exposures per NCCI D&E codes.
	 
	 	18.	 	Construction of bridges, tunnels or dams.
	 
	 	19.	 	Firefighters and police officers.
	 
	 	20.	 	Trucks hauling explosives or ammunition (local or long distance hauling) — all
employees.
	 
	 	21.	 	Manufacturing, packing, handling, shipping or storage of natural or artificial fuel
gases, butane, propane, gasoline, or liquefied petroleum gas; however, this exclusion
shall not apply to the incidental packing, handling or storage of same in connection
with the sale of such substances.
	 
	 	22.	 	Gas or oil burner installation NOC.
	 
	 	23.	 	Gasoline Service Stations tank installations.
	 
	 	24.	 	Blasting of rock.
	 
	 	25.	 	Sewer construction — all operations.
	 
	 	26.	 	Gas main, steam main, or water main construction or connection construction.





			
	 
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	 	27.	 	Boat manufacturing — F classes.
	 
	 	28.	 	Banks and trust company employees of contracting agencies in bank service:
guards,
patrols, messengers or armored car crews.
	 
	 	29.	 	Detective agencies.
	 
	 	30.	 	Patrol agencies only in regard to armed guard services.
	 
	 	31.	 	Alternative Market business including PEO’s.
	 
	 	32.	 	Risks principally domiciled in the States of Georgia, South Carolina or Indiana.





ARTICLE 7




SPECIAL ACCEPTANCE



Business that is not within the scope of this Contract may be submitted to the Reinsurer for
special acceptance hereunder, and such business, if accepted by the Reinsurer shall be covered
hereunder, subject to the terms and conditions of this Contract, except as modified by the special
acceptance.




ARTICLE 8




PREMIUM



The Company shall cede and pay to the Reinsurer its proportionate share of the Gross Net Earned
Premium Income of the Company.




ARTICLE 9




OTHER REINSURANCE



The Company is permitted to have excess of loss treaty reinsurance, recoveries under which shall
inure to the benefit of this Contract. The Company shall be permitted to deduct 100% of the cost
of excess reinsurance in determining the Gross Net Earned Premium Income ceded hereunder. The cost
of such reinsurance is deemed to be 10% for the duration of this Contract.




ARTICLE 10




REPORTS AND REMITTANCES





	A.	 	Within 30 days after the end of each month, the Company shall provide the following
information to the Reinsurer with reports being provided at the insurance Policy level:





			
	 
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	 	1.	 	ceded Gross Net Earned Premium Income for the month;
	 
	 	2.	 	the ceding commission as provided for in this Contract;
	 
	 	3.	 	ceded paid loss and Loss Adjustment Expense during the month;
	 
	 	4.	 	ceded subrogation or other recoveries during the month;
	 
	 	5.	 	ceded outstanding losses and Loss Adjustment Expense.
	 
	 	The Company shall remit the positive balance of (1) less (2) less (3), plus (4), 45 days after
the end of each month. Negative balances shall be remitted by the Reinsurer as promptly as
possible after receipt of the Company’s report but in no event later than 15 days after
receipt of the Company’s report.






	B.	 	Should the amount recoverable under this Contract equal $250,000 (being 50.0% of
$500,000) as respects any one loss, the Company may give the Reinsurer notice of payment
made or its intention to make payment on a certain date. If the Company has paid the loss,
payment shall be made by the Reinsurer immediately. If the Company intends to pay the
loss by a certain date and has submitted a proof of loss or similar document, payment shall
be due from the Reinsurer 24 hours prior to that date, provided the Reinsurer has a period
of five working days after receipt of said notice to dispatch the payment. Cash loss
amounts specifically remitted by the Reinsurer as set forth herein shall be credited to the
next monthly account.
	 
	C.	 	The Company shall also provide the Reinsurer with such other information as may be
required by the Reinsurer for completion of its NAIC annual statements.





ARTICLE 11




CEDING COMMISSION



The Reinsurer shall allow the Company a 25% commission on all premiums ceded to the Reinsurer
hereunder prior to any deductions for premiums ceded by the Company for reinsurance that inures to
the benefit of this Contract. The Company shall allow the Reinsurer return commission on return
premiums at the same rate.




ARTICLE 12




DEFINITIONS





	A.	 	“Loss Occurrence” means each and every disaster, casualty, accident, or loss or series of
disasters, casualties, accidents or losses arising out of one event. As respects a Loss
Occurrence involving Occupational Disease or Other Disease or Cumulative Trauma, the
following shall apply:





			
	 
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	 	1.	 	Per Event Coverage. As respects losses arising from Occupational Disease
or Other
Disease, regardless of the specific kind or class, suffered by employees of one or
more employers, all such losses sustained by the Company from one event shall,
together with losses not classified as Occupational Disease or Other Disease, be
deemed to be a single “Loss Occurrence.”
	 
	 	2.	 	Per Employee Coverage. As respects losses arising from Occupational
Disease or
Other Disease or Cumulative Trauma suffered by a single employee, and not covered
under subparagraph (1) above, the date that the Loss Occurrence commences shall be
determined as follows:






	 	a.	 	If the case is compensable under the Workers’ Compensation Law, the
date of
the beginning of the disability for which compensation is payable.
	 
	 	b.	 	If the case is not compensable under the Workers’ Compensation Law, the
date
that disability due to said disease actually began.
	 
	 	c.	 	If the claim is made after employment has ceased, the date of cessation
of such
employment.






	 	3.	 	Per Employer Coverage. As respects losses arising from Occupational
Disease or
Other Disease or Cumulative Trauma of the same specific kind or class, suffered by
multiple employees of the same employer, and not covered under subparagraphs (1)
or (2) above, all such losses sustained by the Company within a Policy year shall be
aggregated and considered as constituting one “Loss Occurrence” hereunder and the
inception date of the Policy year in which losses occur shall be deemed to be the date
of the Loss Occurrence.






	B.	 	“Gross Net Earned Premium Income” means gross earned manual premium adjusted for
experience and schedule credit/debit modifications, State/NCCI safety credit and other
allowable credits, premium discount, deductible credits, expense constants and Policy fees,
less the earned portion of premiums ceded by the Company for reinsurance that inures to
the benefit of this Contract according to the provisions of the Other Reinsurance Article.
	 
	C.	 	“Loss Adjustment Expense” means costs and expenses incurred by the Company in
connection with the investigation, appraisal, adjustment, settlement, litigation, defense or
appeal of a specific claim or loss, or alleged loss, including but not limited to:






	 	1.	 	court costs;
	 
	 	2.	 	costs of supersedeas and appeal bonds;
	 
	 	3.	 	monitoring counsel expenses;
	 
	 	4.	 	legal expenses and costs incurred in connection with coverage questions and legal
actions connected thereto, including but not limited to declaratory judgment actions;





			
	 
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	 	5.	 	post-judgment interest;
	 
	 	6.	 	pre-judgment interest, unless included as part of an award or judgment;
	 
	 	7.	 	a pro rata share of salaries and expenses of Company field employees, calculated
in
accordance with the time occupied in adjusting such loss, and expenses of other
Company employees who have been temporarily diverted from their normal and
customary duties and assigned to the field adjustment of losses covered by this
Contract; and
	 
	 	8.	 	subrogation, salvage and recovery expenses.
	 
	 	“Loss Adjustment Expense” does not include salaries and expenses of the Company’s employees,
except as provided in subparagraph (7) above, and office and other overhead expenses.






	D.	 	“Policy(ies)” means any binder, policy, or contract of insurance or reinsurance issued,
accepted or held covered provisionally or otherwise, by or on behalf of the Company.
	 
	E.	 	“Occupational Disease,” “Other Disease” and “Cumulative Trauma” shall be defined by the
applicable state or federal statutes, regulations, or case law having jurisdiction over such
losses.





ARTICLE 13




EXTRA CONTRACTUAL OBLIGATIONS/EXCESS OF POLICY LIMITS





	A.	 	This Contract shall cover 90% of any Extra Contractual Obligations, as provided in the
Retention and Limit Article. “Extra Contractual Obligations” shall be defined as those
liabilities not covered under any other provision of this Contract and that 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 reinsured or in the preparation or prosecution of an appeal consequent upon such action.
	 
	B.	 	This Contract shall cover 90% of any Loss in Excess of Policy Limits, as provided in the
Retention and Limit Article. “Loss in Excess of Policy Limits” shall be defined as Loss in
excess of the Policy limit, having been incurred because of, but not limited to, 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 reinsured or in the preparation or
prosecution
of an appeal consequent upon such action.





			
	 
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	C.	 	An Extra Contractual Obligation and/or Loss in Excess of Policy Limits shall be deemed to
have occurred on the same date as the loss covered under the Company’s Policy, and shall
constitute part of the original loss.
	 
	D.	 	For the purposes of the Loss in Excess of Policy Limits coverage hereunder, the word
“Loss” means any amounts for which the Company would have been contractually liable to
pay had it not been for the limit of the original Policy.
	 
	E.	 	Loss Adjustment Expense in respect of Extra Contractual Obligations and/or Loss in
Excess of Policy Limits shall be covered hereunder in the same manner as other Loss
Adjustment Expense.
	 
	F.	 	However, this Article shall not apply where the loss has been incurred due to 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.
	 
	G.	 	Recoveries from any form of insurance or reinsurance, that protects the Company against
claims which are the subject matter of this Article, shall inure to the benefit of the
Reinsurer, to the extent collected, and shall be deducted from the total amount of Extra
Contractual Obligations and Loss in Excess of Policy Limits for purposes of determining
the loss hereunder.
	 
	H.	 	In no event shall coverage be provided to the extent not permitted under law.





ARTICLE 14




NET RETAINED LIABILITY





	A.	 	This Contract applies only to that portion of any Policy that the Company retains net for its
own account (prior to deduction of any reinsurance that inures solely to the benefit of the
Company).
	 
	B.	 	The amount of the Reinsurer’s liability hereunder in respect of any loss or losses shall not
be increased by reason of the inability of the Company to collect from any other
reinsurer(s), whether specific or general, any amounts that may have become due from such
reinsurer(s), whether such inability arises from the insolvency of such other reinsurer(s) or
otherwise.





ARTICLE 15




ORIGINAL CONDITIONS



All reinsurance under this Contract shall be subject to the same rates, terms, conditions, waivers
and interpretations, and to the same modifications and alterations as the respective Policies of
the




			
	 
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Company. However, in no event shall this be construed in any way to provide coverage outside the
terms and conditions set forth in this Contract.




ARTICLE 16




SALVAGE AND SUBROGATION





	A.	 	Salvages and all recoveries (including amounts due from all reinsurances that inure to the
benefit of this Contract, whether recovered or not), shall be first deducted from such loss
to
arrive at the amount of liability attaching hereunder.
	 
	B.	 	All salvages, recoveries or payments recovered or received subsequent to loss settlement
hereunder shall be applied as if recovered or received prior to the aforesaid settlement, and
all necessary adjustments shall be made by the parties hereto.





ARTICLE 17




NO THIRD PARTY RIGHTS



This Contract is solely between the Company and the Reinsurer, and in no instance shall any
insured, claimant or other third party have any rights under this Contract except as may be
expressly provided otherwise herein.




ARTICLE 18




LOSS SETTLEMENTS





	A.	 	The Company alone and at its full discretion shall adjust,
settle or compromise all claims and losses.
	 
	B.	 	As respects losses subject to this Contract, all loss
settlements made by the Company, whether under strict Policy terms or by way of compromise other than Ex-Gratia
Settlements which are covered hereunder only as provided in paragraph C below, and any
Extra Contractual Obligations and/or Loss in Excess of Policy Limits, shall be binding
upon the Reinsurer, and the Reinsurer agrees to pay or allow, as the case may be, its share
of each such settlement as provided in accordance with the Reports and Remittances
Article.
	 
	 	 	“Ex-Gratia Settlements,” as used in this Contract, will mean all settlements of losses not
covered under the express terms of the Policies, which are primarily motivated by a customer
business relationship. “Ex-Gratia Settlements” will not include settlements of losses which
arise from court decisions or other judicial acts or orders.





			
	 
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	C.	 	Any Ex-Gratia Settlement made by the Company on a loss subject to this Contract shall be
binding on the Reinsurer, provided the Company has submitted the settlement to the Reinsurer
and received the Reinsurer’s agreement to the settlement. If the Ex-Gratia Settlement is
accepted by the Reinsurer, it shall be subject to the terms of this Contract.





ARTICLE 19




COMMUTATION





	A.	 	This Article will only take effect should the parties hereto mutually agree to commute one or
any number of the Workers’ Compensation losses under this Contract. There will be no
obligation on the part of either party to so commute.
	 
	B.	 	Should the Company become liable for any loss hereunder, and be required to make periodic
payments to or otherwise set up on its books reserves for such loss, at any time after seven
years following the date of such loss and upon mutual agreement of the Company and the
Reinsurer, said loss (including Loss Adjustment Expenses) may be commuted. If the value of
said loss, including amounts falling to the share of the Reinsurer, cannot be agreed upon by
the parties to this Contract, said value may be determined by employing one of the following:






	 	1.	 	A present value calculation based on the following criteria:






	 	a.	 	In respect of all unindexed benefits, the present value calculation
shall be determined based upon an annual discount equal to the five-year U.S.
Treasury note rate at the time of commutation.
	 
	 	b.	 	In respect of all future medical costs, the present value calculation
shall be based upon the Company’s evaluation of long term medical care and
rehabilitation requirements, using an annual discount equal to the five-year U.S.
Treasury note rate at the time of commutation, and an annual escalation equal to
the Medical Care Consumer Price Index (CPI-MC) at the time of commutation.
	 
	 	c.	 	Where applicable, impaired life expectancy, survivors’ life expectancy,
as well as remarriage probability shall be reflected in the calculation by
employing tables required by statute.






	 	2.	 	The Company may determine the present value by purchasing (or obtaining a quotation
for) an annuity from any A. M. Best’s Class VIII IIA+II rated or better annuity writer,
with an AAA rating by Standard & Poor’s.






	C.	 	The Reinsurer’s proportion of the amount determined will be considered its total liability
for such loss and the lump sum payment thereof shall constitute a complete release of both
parties from liability hereunder for the commuted losses.






	D.	 	This Article shall survive the expiration or termination of this Contract.





			
	 	 	 
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ARTICLE 20




SUNSET



Notwithstanding the provisions of paragraph C of the Indemnification and Errors and Omissions
Article of this Contract, coverage hereunder shall apply only to Loss Occurrences notified by
Company to the Reinsurer, with full particulars, within 84 months from the effective date of this
Contract. Notice of an event shall include:





	 	1.	 	The approximate time and location of the Loss Occurrence.
	 
	 	2.	 	The date of loss as established under this Contract.
	 
	 	3.	 	The names of any original insureds that have been identified by the Company, at
the time of notice, as being involved in the Loss Occurrence.
	 
	 	4.	 	The current indemnity, medical and expense reserves delineated by the original
insured.
	 
	 	5.	 	The total payments made by the Company, delineated by original insured.





ARTICLE 21




LATE PAYMENTS





	A.	 	In the event any payment due either party is not received by the payment due date, the party
to whom payment is due may, by notifying the other party in writing, require the debtor party
to pay, and the debtor party agrees to pay, an interest penalty on the amount past due
calculated for each such payment on the last business day of each month as follows:






	 	1.	 	The number of full days that have expired since the overdue date or the last
monthly calculation, whichever the lesser; times
	 
	 	2.	 	l/365th of the sum of the six-month United States Treasury Bill rate as quoted in
The Wall Street Journal on the first business day of the month for which the calculation
is made, plus 1%; times
	 
	 	3.	 	The amount past due, including accrued interest.






	 	 	Interest shall accumulate until payment of the original amount due plus interest penalties
has been received by the party to whom payment is due.






	B.	 	The due date shall, for purposes of this Article, be determined as follows:





			
	 	 	 
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	 	1.	 	Payments from the Reinsurer to the Company shall be due on the date on which the
demand for payment (including delivery of bordereaux or quarterly or monthly reports)
is received by the Reinsurer, and shall be overdue 30 days thereafter.
	 
	 	2.	 	Payments from the Company to the Reinsurer shall be due on the dates specified
within this Contract. Payments shall be overdue 30 days thereafter except for the first
installment of premium, if applicable, which shall be overdue 60 days from inception or
30 days from final line-signing, whichever the later. Reinstatement premium, if
applicable, shall have as a due date the date when the Company receives payment for the
claim giving rise to such reinstatement premium, and payment shall be overdue 30 days
thereafter. In the event a due date is not specifically stated for a given payment,
the overdue date shall be 30 days following the date of billing.






	C.	 	If the information contained in the Company’s demand for payment is insufficient or not in
accordance with the conditions of this Contract, then within 30 days the Reinsurer shall
request from the Company all additional information necessary to validate its claim and the
payment due date as defined in paragraph B shall be deemed to be the date upon which the
Reinsurer received the requested additional information. This paragraph is only for the
purpose of establishing when a payment is overdue, and shall not alter the provisions of the
Loss Settlements Article, the Reports and Remittances Article, or other pertinent
contractual stipulations.
	 
	D.	 	Should the Reinsurer dispute a claim presented by the Company and the timeframes set out in
paragraph B be exceeded, interest as stipulated in paragraph A shall be payable for the entire
overdue period, but only for the amount of the final settlement with the Reinsurer.
	 
	E.	 	In the event arbitration is necessary to settle a dispute, the panel shall have the authority
to make a determination awarding interest to the prevailing party. Interest, if any, awarded
by the panel shall supersede the interest amounts outlined herein.
	 
	F.	 	Any interest owed pursuant to this Article may be waived by the party to which it is owed.
Waiver of such interest, however, shall not affect the waiving party’s rights to other
interest amounts due as a result of this Article.
	 
	G.	 	For purposes of this Article, reinsuring Underwriting Members of Lloyd’s, London, shall be
considered to be one entity.





ARTICLE 22




OFFSET



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




			
	 	 	 
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ARTICLE 23




CURRENCY





	A.	 	Where the word “Dollars” and/or the sign “$” appear in this Contract, they shall mean United
States Dollars.
	 
	B.	 	For purposes of this Contract, where the Company receives premiums or pays losses in
currencies other than United States Dollars, such premiums or losses shall be converted into
United States Dollars at the actual rates of exchange at the time of receipt or payment by the
Company.





ARTICLE 24




UNAUTHORIZED REINSURANCE





	A.	 	This Article applies only to a Subscribing Reinsurer who does not qualify for full credit
with any insurance regulatory authority having jurisdiction over the Company’s reserves.
	 
	B.	 	The Company agrees, in respect of its Policies or bonds falling within the scope of this
Contract, that when it files with its insurance regulatory authority, or sets up on its books
liabilities as required by law, it shall forward to the Reinsurer a statement showing the
proportion of such liabilities applicable to the Reinsurer. The “Reinsurer’s Obligations”
shall be defined as follows:






	 	1.	 	unearned premium (if applicable);
	 
	 	2.	 	known outstanding losses that have been reported to the Reinsurer and Loss
Adjustment Expense relating thereto;
	 
	 	3.	 	losses and Loss Adjustment Expense paid by the Company but not recovered from the
Reinsurer;
	 
	 	4.	 	losses incurred but not reported and Loss Adjustment Expense relating thereto.






	C.	 	The Reinsurer’s Obligations shall be funded by funds withheld, cash advances, Trust Agreement
or a Letter of Credit (LOC). The Reinsurer shall have the option of determining the method of
funding provided it is acceptable to the insurance regulatory authorities having jurisdiction
over the Company’s reserves.
	 
	D.	 	When funding by an LOC, the Reinsurer agrees to apply for and secure timely delivery to the
Company of a clean, irrevocable and unconditional LOC issued by a bank and containing
provisions acceptable to the insurance regulatory authorities having jurisdiction over the
Company’s reserves in an amount equal to the Reinsurer’s Obligations. Such LOC shall be
issued for a period of not less than one year, and shall be automatically extended for one
year from its date of expiration or any future expiration date unless





			
	 	 	 
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30 days (or such other time period as may be required by insurance regulatory authorities),
prior to any expiration date the issuing bank shall notify the Company by certified or
registered mail that the issuing bank elects not to consider the LOC extended for any
additional period.




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






	 	1.	 	to reimburse the Company for the Reinsurer’s Obligations, the payment of which is
due under the terms of this Contract and that has not been otherwise paid;
	 
	 	2.	 	to make refund of any sum that is in excess of the actual amount required to pay
the Reinsurer’s Obligations under this Contract (or in excess of 102% of the Reinsurer’s
Obligations, if funding is provided by a Trust Agreement);
	 
	 	3.	 	to fund an account with the Company for the Reinsurer’s Obligations. Such cash
deposit shall be held in an interest bearing account separate from the Company’s other
assets, and interest thereon not in excess of the prime rate shall accrue to the benefit
of the Reinsurer. Any taxes payable on accrued interest shall be paid out of the assets
in the account that are in excess of the Reinsurer’s Obligations (or in excess of 102%
of the Reinsurer’s Obligations, if funding is provided by a Trust Agreement). If the
assets are inadequate to pay taxes, any taxes due shall be paid by the Reinsurer;
	 
	 	4.	 	to pay the Reinsurer’s share of any other amounts the Company claims are due
under this Contract.






	F.	 	If the amount drawn by the Company is in excess of the actual amount required for E(l) or
E(3), or in the case of E(4), the actual amount determined to be due, the Company shall
promptly return to the Reinsurer the excess amount so drawn. All of the foregoing shall be
applied without diminution because of insolvency on the part of the Company or the Reinsurer.
	 
	G.	 	The issuing bank shall have no responsibility whatsoever in connection with the propriety of
withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that
withdrawals are made only upon the order of properly authorized
representatives of the Company.
	 
	H.	 	At annual intervals, or more frequently at the discretion of the Company, but never more
frequently than quarterly, the Company shall prepare a specific statement of the Reinsurer’s
Obligations for the sole purpose of amending the LOC or other method of funding, in the
following manner:





			
	 	 	 
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	 	1.	 	If the statement shows that the Reinsurer’s Obligations exceed the balance of the
LOC as of the statement date, the Reinsurer shall, within 30 days after receipt of the
statement, secure delivery to the Company of an amendment to the LOC increasing the
amount of credit by the amount of such difference. Should another method of funding
be used, the Reinsurer shall, within the time period outlined above, increase such
funding by the amount of such difference.
	 
	 	2.	 	If, however, the statement shows that the Reinsurer’s Obligations are less than
the balance of the LOC (or that 102% of the Reinsurer’s Obligations are less than the
trust account balance if funding is provided by a Trust Agreement), as of the statement
date, the Company shall, within 30 days after receipt of written request from the
Reinsurer, release such excess credit by agreeing to secure an amendment to the LOC
reducing the amount of credit available by the amount of such excess credit. Should
another method of funding be used, the Company shall, within the time period outlined
above, decrease such funding by the amount of such excess.





ARTICLE 25




TAXES





	A.	 	In consideration of the terms under which this Contract is issued, the Company undertakes not
to claim any deduction of the premium hereon when making Canadian tax returns or when making
tax returns, other than Income or Profits Tax returns, to any state or territory of the United
States of America or to the District of Columbia.






	B. 	1.	 	 Each Subscribing Reinsurer has agreed to allow, for the purpose of paying the Federal
Excise Tax, the applicable percentage of the premium payable hereon (as imposed under
the Internal Revenue Code) to the extent such premium is subject to Federal Excise
Tax.






	 	2.	 	In the event of any return of premium becoming due hereunder, the Subscribing
Reinsurer shall deduct the applicable percentage of the premium from the amount of the
return, and the Company or its agent should take steps to recover the Tax from the U.S.
Government.





ARTICLE 26




ACCESS TO RECORDS



The Reinsurer or its duly authorized representatives shall have the right to visit the offices of
the Company to inspect, examine, audit, copy, and verify any of the Policy, accounting or claim
files or other relevant records (“Records”) relating to business reinsured under this Contract
during regular business hours after giving five working days’ prior notice. This right shall be
exercisable during the term of this Contract or after the expiration of this Contract.




			
	 	 	 
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Notwithstanding the above, the Reinsurer shall not have any right of access to the Records of the
Company if it is not current in all undisputed payments due the Company.




ARTICLE 27




CONFIDENTIALITY





	A.	 	The Reinsurer hereby acknowledges that the documents, information and data provided to it by
the Company, whether directly or through an authorized agent, in connection with the placement
and execution of this Contract (“Confidential Information”) are proprietary and confidential
to the Company. Confidential Information shall not include documents, information or data
that the Reinsurer can show:






	 	1.	 	are publicly known or have become publicly known through no unauthorized act of
the Reinsurer;
	 
	 	2.	 	have been rightfully received from a third person without
obligation of confidentiality; or
	 
	 	3.	 	were known by the Reinsurer prior to the placement of this Contract without an
obligation of confidentiality.






	B.	 	Absent the written consent of the Company, the Reinsurer shall not disclose any Confidential
Information to any third parties, including any affiliated companies (except to the extent
necessary to enable affiliated companies or third parties engaged by the Reinsurer to perform
services related to this Contract on behalf of the Reinsurer), except:






	 	1.	 	when required by retrocessionaires subject to the business ceded to this Contract;
	 
	 	2.	 	when required by regulators performing an audit of the Reinsurer’s records and/or
financial condition; or
	 
	 	3.	 	when required by external auditors performing an audit of the Reinsurer’s records
in the normal course of business; or
	 
	 	4.	 	when required by attorneys or arbitrators in connection with an actual or
potential dispute hereunder; or
	 
	 	5.	 	when required by the Reinsurer’s internal reinsurance operations.






	 	 	Further, the Reinsurer agrees not to use any Confidential Information for any purpose not
related to the performance of its obligations or enforcement of its rights under this
Contract or for the Reinsurer’s internal reinsurance operations.
	 
	C.	 	Notwithstanding the above, in the event that the Reinsurer is required by court order, other
legal process or any regulatory authority to release or disclose any or all of the
Confidential





			
	 	 	 
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	 	 	Information, the Reinsurer agrees to provide the Company with written notice of same at least
10 days prior to such release or disclosure and to use its best efforts to assist the Company
in maintaining the confidentiality provided for in this Article.
	 
	D.	 	The provisions of this Article shall extend to the officers, directors and employees of
the Reinsurer and its affiliates, and shall be binding upon their successors and assigns.





ARTICLE 28




INDEMNIFICATION AND ERRORS AND OMISSIONS





	A.	 	The Reinsurer is reinsuring, to the amount herein provided, the obligations of the Company
under any original insurance or reinsurance. The Company shall be the sole judge as to:






	 	1.	 	what shall constitute a claim or loss covered under any original insurance or
reinsurance written by the Company;
	 
	 	2.	 	the Company’s liability thereunder;
	 
	 	3.	 	the amount or amounts that it shall be proper for the Company to pay thereunder.






	B.	 	The Reinsurer shall be bound by the judgment of the Company as to the obligation(s) and
liability(ies) of the Company under any original insurance or reinsurance.
	 
	C.	 	Except for the conditions as provided for in the Sunset Article, any inadvertent error,
omission or delay in complying with the terms and conditions of this Contract shall not be
held to relieve either party hereto from any liability that would attach to it hereunder if
such error, omission or delay had not been made, provided such error, omission or delay is
rectified immediately upon discovery.





ARTICLE 29




INSOLVENCY





	A.	 	If more than one reinsured company is referenced within the definition of “Company” in the
Preamble to this Contract, this Article will apply severally to each such company. Further,
this Article and the laws of the domiciliary state will apply in the event of the insolvency
of any company covered hereunder. In the event of a conflict between any provision of this
Article and the laws of the domiciliary state of any company covered hereunder, that
domiciliary state’s laws will prevail.
	 
	B.	 	In the event of the insolvency of the Company, this reinsurance (or the portion of any risk
or obligation assumed by the Reinsurer, if required by applicable law) shall be payable
directly to the Company, or to its liquidator, receiver, conservator or statutory successor,
either: (1) on the basis of the liability of the Company, or (2) on the basis of claims filed





			
	 	 	 
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	 	 	and allowed in the liquidation proceeding, whichever may be required by applicable statute,
without diminution because of the insolvency of the Company or because the liquidator,
receiver, conservator or statutory successor of the Company has failed to pay all or a
portion of any claim. It is agreed, however, that the liquidator, receiver, conservator or
statutory successor of the Company shall give written notice to the Reinsurer of the pendency
of a claim against the Company indicating the Policy or bond reinsured, which claim would
involve a possible liability on the part of the Reinsurer within a reasonable time after such
claim is filed in the conservation or liquidation proceeding or in the receivership, and that
during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at
its own expense, in the proceeding where such claim is to be adjudicated any defense or
defenses that it may deem available to the Company or its liquidator, receiver, conservator
or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable,
subject to the approval of the court, against the Company as part of the expense of
conservation or liquidation to the extent of a pro rata share of the benefit that may accrue
to the Company solely as a result of the defense undertaken by the Reinsurer.
	 
	C.	 	Where two or more reinsurers are involved in the same claim and a majority in interest elect
to interpose defense to such claim, the expense shall be apportioned in accordance with the
terms of this reinsurance Contract as though such expense had been incurred by the Company.
	 
	D.	 	As to all reinsurance made, ceded, renewed or otherwise becoming effective under this
Contract, the reinsurance shall be payable as set forth above by the Reinsurer to the Company
or to its liquidator, receiver, conservator or statutory successor, (except as provided by
Section 4118(a)(l)(A) of the New York Insurance Law, provided the conditions of 1114(c) of
such law have been met, if New York law applies) or except (1) where the Contract specifically
provides another payee in the event of the insolvency of the Company, or (2) where the
Reinsurer, with the consent of the direct insured or insureds, has assumed such Policy
obligations of the Company as direct obligations of the Reinsurer to the payees under such
Policies and in substitution for the obligations of the Company to such payees. Then, and in
that event only, the Company, with the prior approval of the certificate of assumption on New
York risks by the Superintendent of Insurance of the State of New York, or with the prior
approval of such other regulatory authority as may be applicable, is entirely released from
its obligation and the Reinsurer shall pay any loss directly to payees under such Policy.





ARTICLE 30




ARBITRATION





	A.	 	Any dispute arising out of the interpretation, performance or breach of this Contract,
including the formation or validity thereof, shall be submitted for decision to a panel of





			
	 	 	 
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	 	 	three arbitrators. Notice requesting arbitration will be in writing and sent certified
registered mail, return receipt requested.
	 
	B.	 	If the amount in dispute is less than $100,000, unless the arbitration notice includes a
demand for rescission of this Contract, the dispute shall be resolved by a sole arbitrator and
the following procedures shall apply:






	 	a.	 	The sole arbitrator shall be chosen by mutual agreement of the parties within 15
business days after the demand for arbitration. If the parties have not chosen an
arbitrator within the 15 business days after the receipt of the arbitration notice, the
arbitrator shall be chosen in accordance with the Neutral Arbitrator Selection Procedure
modified for a single arbitrator, established by the AIDA Reinsurance and Insurance
Arbitration Society — U.S. (ARIAS) and in force on the date the arbitration is demanded.
The nominated arbitrator must be available to read any written submissions and hear
testimony within 60 calendar days of being chosen.
	 
	 	b.	 	Within 10 business days after the arbitrator has been appointed, the parties
shall be notified of deadlines for the submission of briefs and documentary evidence, as
determined by the arbitrator. There shall be no discovery or hearing unless the parties
agree to engage in limited discovery and/or a hearing. Also, the arbitrator can
determine, without the consent of the parties, that a limited hearing is necessary.
	 
	 	c.	 	The arbitrator shall render a decision no later than 10 business days from the
later of the date on which the briefs are submitted or the close of the hearing, if any.
The decision of the arbitrator shall be in writing and shall be final and binding.






	C.	 	If the amount in dispute is equal to or greater than $100,000, or if the arbitration notice
includes a demand for rescission of this Contract, the following procedures shall apply:






	 	1.	 	One arbitrator shall be chosen by each party and the two arbitrators shall,
before instituting the hearing, choose an impartial third arbitrator who shall preside
at the hearing. If either party fails to appoint its arbitrator within 30 days after
being requested to do so by the other party, the latter, after 10 days’ notice by
certified or registered mail of its intention to do so, may appoint the second
arbitrator.
	 
	 	2.	 	If the two arbitrators are unable to agree upon the third arbitrator within 30
days of their appointment, the third arbitrator shall be selected by the American
Arbitration Association.
	 
	 	3.	 	Within 45 days after notice of appointment of all arbitrators, the panel shall
meet and determine timely periods for briefs, discovery procedures and schedules for
hearings. Unless the panel agrees otherwise, arbitration shall take place in Fort
Lauderdale, Florida, but the venue may be changed when deemed by the panel to be in the
best interest of the arbitration proceeding.





			
	 	 	 
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	 	4.	 	The panel shall make its decision within 60 days following the termination of the
hearings. The decision of any two arbitrators when rendered in writing shall be final
and binding.
	 
	 	5.	 	Each party shall bear the expense of its own arbitrator and shall jointly and
equally bear with the other party the cost of the third arbitrator.






	D.	 	All arbitrators shall be disinterested active or former executives of insurance or
reinsurance companies or Underwriters at Lloyd’s, London, with expertise or experience in the
area being arbitrated. If a member of the panel dies, becomes disabled or is otherwise
unwilling or unable to serve, a substitute shall be selected in the same manner as the
departing member was chosen and the arbitration shall continue.
	 
	E.	 	The panel shall be relieved of all judicial formality and shall not be bound by the strict
rules of procedure and evidence. Notwithstanding anything to the contrary in this Contract,
the arbitrators may at their discretion, consider underwriting and placement information
provided by the Company to the Reinsurer, as well as any correspondence exchanged by the
parties that is related to this Contract. The panel is empowered to grant interim relief, as
it may deem appropriate.
	 
	F.	 	The arbitrator(s) shall interpret this Contract as an honorable engagement rather than as
merely a legal obligation considering the custom and practice of the applicable insurance and
reinsurance business.
	 
	G.	 	Judgment upon the award may be entered in any court having jurisdiction thereof.
	 
	H.	 	Except as provided in subparagraph C(5) above, the costs of the arbitration shall be
allocated by the panel. The panel may, at its discretion, award such further costs and
expenses as it considers appropriate, including but not limited to attorneys’ fees, to the
extent permitted by law.
	 
	I.	 	Punitive damages assessed, if any, shall not exceed $250,000 (being 50.0% of $500,000).





ARTICLE 31




SERVICE OF SUIT





	A.	 	This Article applies only to those Subscribing Reinsurers not domiciled in the United States
of America, and/or not authorized in any state, territory and/or district of the United States
of America where authorization is required by insurance regulatory authorities.
	 
	B.	 	This Article shall not be read to conflict with or override the obligations of the parties to
arbitrate their disputes as provided for in the Arbitration Article. This Article is intended
as an aid to compelling arbitration or enforcing such arbitration or arbitral award, not as an
alternative to the Arbitration Article for resolving disputes arising out of this Contract.





			
	 	 	 
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	C.	 	In the event of the failure of the Reinsurer to pay any amount claimed to be due
hereunder, the Reinsurer, at the request of the Company, shall submit to the jurisdiction of
a court of competent jurisdiction within the United States. Nothing in this Article
constitutes or should be understood to constitute a waiver of the Reinsurer’s rights to
commence an action in any court of competent jurisdiction in the United States, to remove an
action to a United States District Court, or to seek a transfer of a case to another court as
permitted by the laws of the United States or of any state in the United States. The
Reinsurer, once the appropriate court is selected, whether such court is the one originally
chosen by the Company and accepted by Reinsurer or is determined by removal, transfer, or
otherwise, as provided for above, shall comply with all requirements necessary to give said
court jurisdiction and, in any suit instituted against the Reinsurer upon this Contract,
shall abide by the final decision of such court or of any appellate court in the event of an
appeal.
	 
	D.	 	Service of process in such suit may be made upon Messrs. Mendes and Mount, 750 Seventh
Avenue, New York, New York 10019-6829, or another party specifically designated in the
applicable Interests and Liabilities Agreement attached hereto. The above-named are
authorized and directed to accept service of process on behalf of the Reinsurer in any such
suit.
	 
	E.	 	Further, pursuant to any statute of any state, territory or district of the United States
that makes provision therefor, the Reinsurer hereby designates the
Superintendent, Commissioner or Director of Insurance, or other officer specified for that
purpose in the statute, or his successor or successors in office, as its true and lawful
attorney upon whom may be served any lawful process in any action, suit or proceeding
instituted by or on behalf of the Company or any beneficiary hereunder arising out of this
Contract, and hereby designates the above-named as the person to whom the said officer is
authorized to mail such process or a true copy thereof.





ARTICLE 32




AGENCY



For purposes of sending and receiving notices and payments required by this Contract, Guarantee
Insurance Company shall be deemed the agent of all other reinsured Companies referenced in this
Contract. In no event, however, shall any reinsured Company be deemed the agent of another with
respect to the terms of the Insolvency Article.




ARTICLE 33




GOVERNING LAW



This Contract shall be governed as to performance, administration and interpretation by the laws
of the State of Florida, exclusive of conflict of law rules. However, with respect to credit for
reinsurance, the rules of all applicable states shall apply.




			
	 	 	 
	Effective: July 1, 2008
	 	DOC: August 21, 2008






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ARTICLE 34




ENTIRE AGREEMENT



This Contract sets forth all of the duties and obligations between the Company and the Reinsurer
and supersedes any and all prior or contemporaneous written agreements with respect to matters
referred to in this Contract. The Contract may not be modified or changed except by an amendment to
this Contract in writing signed by both parties.




ARTICLE 35




NON-WAIVER



The failure of the Company or the Reinsurer to insist on compliance with this Contract or to
exercise any right or remedy hereunder shall not constitute a waiver of any rights or remedy
contained herein nor stop either party from thereafter demanding full and complete compliance nor
prevent either party from exercising such rights or remedy in the future.




ARTICLE 36




CHANGE IN ADMINISTRATIVE PRACTICES



The Company undertakes not to introduce any change in its established acceptance and underwriting
policy in respect of the business covered hereunder without prior approval of the Reinsurer.




ARTICLE 37




INTERMEDIARY



Guy Carpenter & Company, LLC, is hereby recognized as the Intermediary negotiating this Contract
for all business hereunder. All communications (including notices, statements, premiums, return
premiums, commissions, taxes, losses, Loss Adjustment Expense, salvages, and loss settlements)
relating thereto shall be transmitted to the Company or the Reinsurer through Guy Carpenter &
Company, LLC, 3600 Minnesota Drive, Suite 400, Edina, Minnesota 55435. Payments by the Company to
the Intermediary shall be deemed payment to the Reinsurer. Payments by the Reinsurer to the
Intermediary shall be deemed payment to the Company only to the extent that such payments are
actually received by the Company.




			
	 	 	 
	Effective: July 1, 2008
	 	DOC: August 21, 2008







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ARTICLE 38




MODE OF EXECUTION





	A.	 	This Contract may be executed by:






	 	1.	 	an original written ink signature of paper documents;
	 
	 	2.	 	an exchange of facsimile copies showing the original written ink signature of
paper documents;
	 
	 	3.	 	electronic signature technology employing computer software and a digital
signature or digitizer pen pad to capture a person’s handwritten signature in such a
manner that the signature is unique to the person signing, is under the sole control of
the person signing, is capable of verification to authenticate the signature and is
linked to the document signed in such a manner that if the data is changed, such
signature is invalidated.






	B.	 	The use of any one or a combination of these methods of execution shall constitute a legally
binding and valid signing of this Contract. This Contract may be executed in one or more
counterparts, each of which, when duly executed, shall be deemed an original.




IN WITNESS WHEREOF, the Company has caused this Contract to be executed by its duly authorized
representative(s) this 28th day of August, in the year of 2008.




Signed in Fort Lauderdale, Florida




	 	 	 	 	 	 	 
	ATTEST:	 	GUARANTEE INSURANCE COMPANY	 	 
	 
	 	 	 	 	 	 
	

	 	By:
	 	
 

	 	 
	 
	 	 	 	 	 	 
	

	 	Title:
	 	Chief Underwriting Officer	 	 
	 
	 	 	 	 	 	 
	 

	 	Reference:	 	 	 	 
	 

	 	 	 	 

	 	 






WORKERS’ COMPENSATION QUOTA SHARE REINSURANCE CONTRACT




			
	 	 	 
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	 	DOC: August 21, 2008







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NUCLEAR RISK EXCLUSION



This Agreement does not apply to “Ultimate Net Loss” arising from, whether directly or indirectly,
whether proximate or remote:





	 	a)	 	Any Nuclear Facility, Nuclear Hazard or Nuclear Reactor;
	 
	 	b)	 	Any Nuclear Material, Radioactive Material, Nuclear Reaction, Nuclear Radiation
or radioactive contamination, all whether controlled or uncontrolled; or
	 
	 	c)	 	Any Nuclear Material, Radioactive Material, Nuclear Reaction, Nuclear Radiation
or radioactive contamination, all whether controlled or uncontrolled, caused directly or
indirectly by, contributed to or aggravated by an Event;
	 
	 	d)	 	Any Spent Fuel or Waste;

	 
	 	e)	 	Any Fissionable Substance; or
	 
	 	f)	 	Any nuclear device or bomb.




As used in this Exclusion:



“Fissionable Substance” means;





	 	 	 	any prescribe substance that is, or from which can be obtained, a substance capable of
releasing atomic energy by nuclear fission.





“Nuclear Facility” means;





	 	 	 	any Nuclear Reactor,
	 
	 	 	 	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;
	 
	 	 	 	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;
	 
	 	 	 	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;





			
	 	 	 
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	 	DOC: August 21, 2008






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	 	 	 	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 premised 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;
	 
	 	 	 	any structure, basin, excavation, premises or place prepared or used for the storage
or disposal of Waste or Radioactive Material, and includes the site on which any of
the foregoing is located, all operations conducts on such site and all premises used
for such operations;




“Nuclear Hazard” means: the radioactive, toxic, explosive or other hazardous properties of
Radioactive Material or Nuclear Material.



“Nuclear Material” means Source Material, Special Nuclear Material or Byproduct Material.



“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.



“Radioactive Material” means uranium, thorium, plutonium, neptunium, their respective derivatives
and compounds, radioactive isotopes of other elements and any other substances that the Atomic
Energy Control Board may, by regulation designate as being prescribed substances capable of
releasing atomic energy, or as being requisite for the production, use or application of atomic
energy.



“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 sued or
exposed to radiation in the Nuclear Reactor.



“Waste” means any waste material (i) containing Byproduct Material and (ii) resulting from the
operation by any person or organization of any Nuclear Facility.




			
	 	 	 
	Effective: July 1, 2008
	 	DOC: August 21, 2008






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INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)




of




NATIONAL INDEMNITY COMPANY

(the “Subscribing Reinsurer”)




as respects the




WORKERS’ COMPENSATION QUOTA SHARE REINSURANCE CONTRACT

Effective: July 1, 2008

(the “Contract”)




issued to




GUARANTEE INSURANCE COMPANY

Fort Lauderdale, Florida

(the “Company”)



The Subscribing Reinsurer’s share in the interests and liabilities of the Reinsurer as set forth
in the Contract shall be 75.0%.



The share of the Subscribing Reinsurer in the interests and liabilities of the Reinsurer in respect
of the Contract shall be separate and apart from the shares of other subscribing reinsurers, if
any, on the Contract. The interests and liabilities of the Subscribing Reinsurer shall not be joint
with those of such other subscribing reinsurers and in no event shall the Subscribing Reinsurer
participate in the interests and liabilities of such other subscribing reinsurers.



This Agreement shall become effective at 12:01 a.m., Local Standard Time at the place of the loss,
July 1, 2008 and shall be subject to the provisions of the Article and all other terms and
conditions of the Contract.



The following Term Article shall apply to the participation of the Subscribing Reinsurer, in lieu
of Article 3 — Term — in the Contract.




TERM





	A.	 	This Contract shall take effect at 12:01 a.m., Local Standard Time at the place of the loss,
July 1, 2008, applying to Loss Occurrences commencing at or after that time and date, and
shall remain in effect until 12:01 a.m., Local Standard Time at the place of the loss,
January 1, 2009.





			
	 	 	 
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	 	DOC: August 21, 2008






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	B.	 	At the sole option of the Company, this Contract may be terminated at any time by the
Company giving the Reinsurer 15 days’ prior written notice.
	 
	C.	 	The Reinsurer shall have no liability for Loss Occurrences commencing at or after
expiration or termination of this Contract.
	 
	D.	 	However, upon mutual agreement between the Company and the Reinsurer, the Reinsurer shall
remain liable hereunder in respect of Policies in force prior to expiration or termination,
until the termination, natural expiration or renewal of such Policies, whichever occurs
first, but in no event to exceed 12 months plus odd time.
	 
	E.	 	In the event this Contract expires or terminates on a run-off basis, the Reinsurer’s
liability hereunder shall continue if the Company is required by statute or regulation to
continue coverage, until the earliest date on which the Company may cancel the Policy, but
not to exceed 12 months plus odd time.




The following Intermediary Article shall apply to the participation of the Subscribing Reinsurer,
in lieu of Article 37 — Intermediary — in the Contract.




INTERMEDIARY



Guy Carpenter & Company, LLC, 3600 Minnesota Drive, Suite 400, Edina, Minnesota 55435, is hereby
recognized as the Intermediary negotiating this Contract for all business hereunder. All
communications (including notices, statements, premiums, return premiums, commissions, taxes,
losses, Loss Adjustment Expense, salvages, and loss settlements) relating thereto shall be
transmitted directly between the Company and the Reinsurer. All payments in connection with this
Contract shall be made directly between the Company and the Reinsurer. However, in the event that
payments are made through the Intermediary, any such payments by the Company to the Intermediary
shall be deemed payment to the Reinsurer, but any such payments by the Reinsurer to the
Intermediary shall be deemed payment to the Company only to the extent that such payments are
actually received by the Company.



Premium and loss payments made to Guy Carpenter shall be deposited in a Premium and Loss Account
in accordance with Section 32.3(a)(l) of Regulation 98 of the New York Insurance Department. The
Subscribing Reinsurer consents to withdrawals from said account in accordance with Section
32.3(a)(3) of the Regulation, including interest and Federal Excise Tax.



Brokerage hereunder is 1.0% of gross ceded premium.




			
	 	 	 
	Effective: July 1, 2008
	 	DOC: August 21, 2008






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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly
authorized representatives as follows:



Signed in
Fort Lauderdale, Florida




	 	 	 	 	 	 	 
	ATTEST:	 	GUARANTEE INSURANCE COMPANY	 	 
	 
	 	 	 	 	 	 
	

	 	By:
	 	
 

	 	 
	 
	 	 	 	 	 	 
	

	 	Title:
	 	Chief Underwriting Officer	 	 
	 
	 	 	 	 	 	 
	08/28/2008

	 	Reference:	 	 	 	 
	 

	 	 	 	 

	 	 






WORKERS’ COMPENSATION QUOTA SHARE REINSURANCE CONTRACT




			
	 	 	 
	Effective: July 1, 2008
	 	DOC: August 21, 2008






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and on
this 4th day of September, in the year of 2008.




NATIONAL INDEMNITY COMPANY







Market Reference Number:




GUARANTEE INSURANCE COMPANY




WORKERS’ COMPENSATION QUOTA SHARE REINSURANCE CONTRACT




			
	 	 	 
	Effective: July 1, 2008
	 	DOC: August 21, 2008






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INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)




of


SWISS REINSURANCE AMERICA CORPORATION

(the “Subscribing Reinsurer”)




as respects the




WORKERS’ COMPENSATION QUOTA SHARE REINSURANCE CONTRACT




Effective:
July 1, 2008

(the “Contract”)




issued to and executed by




GUARANTEE INSURANCE COMPANY

Fort Lauderdale, Florida

(the “Company”)



The Subscribing Reinsurer’s share in the interests and liabilities of the Reinsurer as set forth
in the Contract shall be        25.00%.



The share of the Subscribing Reinsurer in the interests and liabilities of the Reinsurer in
respect of the Contract shall be separate and apart from the shares of other subscribing
reinsurers, if any, on the Contract. The interests and liabilities of the Subscribing Reinsurer
shall not be joint with those of such other subscribing reinsurers and in no event shall the
Subscribing Reinsurer participate in the interests and liabilities of such other subscribing
reinsurers.



This Agreement shall become effective at 12:01 a.m., Local Standard Time at the place of the loss,
July 1, 2008 and shall be subject to the provisions of the Term Article and the Special Termination
Article and all other terms and conditions of the Contract.



Premium and loss payments made to Guy Carpenter shall be deposited in a Premium and Loss Account
in accordance with Section 32.3(a)(1) of Regulation 98 of the New York Insurance Department. The
Subscribing Reinsurer consents to withdrawals from said account in accordance with Section 32.3
(a)(3) of the Regulation, including interest and Federal Excise Tax.



Brokerage for Guy Carpenter (US) hereunder is 1.0% of gross ceded premium.




			
	 	 	 
	Effective: July 1, 2008
	 	DOC: August 21, 2008






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IN WITNESS WHEREOF, The Subscribing Reinsure has caused this Agreement to be executed by its duly
authorized representative as follows:



on this
22nd  day of August, in the year 2008.




SWISS REINSURANCE AMERICA CORPORATION

BY: SWISS RE UNDERWRITERS AGENCY INC., ITS AUTHORIZED

REPRESENTATIVE




 Vice President




Market
Reference Number: POR 1005211




GUARANTEE
INSURANCE COMPANY




WORKERS’
COMPENSATION
QUOTA SHARE REINSURANCE CONTRACT




			
	 	 	 
	Effective: July 1, 2008
	 	DOC: August 21, 2008







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