Exhibit
10.1


 


AMENDMENT NO. 9


 


The
Workers’ Compensation and Employers’ Liability Excess of Loss Reinsurance
Agreement of July 1, 2002, between EMPLOYERS REINSURANCE CORPORATION of
Overland Park, Kansas and ZENITH INSURANCE COMPANY and ZNAT INSURANCE COMPANY,
both of Woodland Hills, California, is hereby amended as follows:


 


It
is understood and agreed that, as respects occurrences taking place on or after
May 1, 2008, only:


 


(A)          Swiss
Reinsurance America Corporation shall be substituted in the place of Employers
Reinsurance Corporation (now known as Westport Insurance Corporation) as the
Reinsurer hereunder, but only as respects occurrences taking place on or after May 1,
2008.  Swiss Reinsurance America
Corporation shall have no liability hereunder as respects occurrences taking
place prior to May 1, 2008. 
Employers Reinsurance Corporation (now known as Westport Insurance
Corporation) shall remain the Reinsurer hereunder as respects occurrences
taking place prior to May 1, 2008.


 


(B)           As
respects occurrence taking place on or after May 1, 2008, Articles I
through XVI of this agreement, the Insolvency Clause and the Nuclear Incident
Exclusion Clauses and Amendment Nos. 1 through 8 of this agreement are deleted
in their entirety and replaced with the provisions attached to this Amendment No. 9.


 


IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
in duplicate by their duly authorized representatives.


 


	
  ZENITH INSURANCE COMPANY

  	
   

  	
  SWISS
  REINSURANCE AMERICA

  
	
   

  	
   

  	
  CORPORATION

  
	
   

  	
   

  	
   

  
	
  /s/
  Jack D. Miller

  	
   

  	
  /s/
  Lawrence D. Hunter-Blank

  
	
  Printed
  name: Jack D. Miller

  	
   

  	
  Printed
  name: Lawrence D. Hunter-Blank

  
	
  Title:
  President

  	
   

  	
  Title:
  Vice President

  
	
   

  	
   

  	
   

  
	
  /s/
  Kari L. Van Gundy

  	
   

  	
  /s/
  Damian C. Hornick

  
	
  Printed
  name: Kari L. Van Gundy

  	
   

  	
  Printed
  name: Damian C. Hornick

  
	
  Title:

  	
  Executive
  Vice President and

  	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
  Chief
  Financial Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
                    July 24,
  2008

  	
   

  	
  Date:

  	
                  July 23,
  2008

  
	
   

  	
   

  	
   

  
	
  ZNAT
  INSURANCE COMPANY

  	
   

  	
  WESTPORT INSURANCE CORPORATION

  
	
   

  	
   

  	
  (formerly named Employers Reinsurance

  
	
   

  	
   

  	
  Corporation)

  
	
   

  	
   

  	
   

  
	
  /s/
  Jack D. Miller

  	
   

  	
  /s/
  Holly Lowe

  
	
  Printed
  name: Jack D. Miller

  	
   

  	
  Printed
  name: Holly Lowe

  
	
  Title:
  President

  	
   

  	
  Title:
  Vice President

  
	
   

  	
   

  	
   

  
	
  /s/
  Kari L. Van Gundy

  	
   

  	
  /s/
  Joel Kim Prather

  
	
  Printed
  name: Kari L. Van Gundy

  	
   

  	
  Printed
  name: Joel Kim Prather

  
	
  Title:

  	
  Executive
  Vice President and

  	
   

  	
  Title:
  Vice President

  
	
   

  	
  Chief
  Financial Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
                   July 24,
  2008

  	
   

  	
  Date:

  	
                  July 22,
  2008

  



 


Page 1 of 17 Pages


 













 


WORKERS’
COMPENSATION AND EMPLOYERS’ LIABILITY


EXCESS OF LOSS
REINSURANCE AGREEMENT


May 1, 2008


TABLE OF
CONTENTS


 


	
  Article

  	
   

  	
   

  	
   

  	
  Page

  
	
  I

  	
   

  	
  Application of Agreement

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  Territory

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  Reinsurance

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  IV

  	
   

  	
  Terrorism Sublimit

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  V

  	
   

  	
  Exclusions

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  VI

  	
   

  	
  Excluded Risks Inadvertently
  Bound

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  VII

  	
   

  	
  Definition of Occurrence

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  VIII

  	
   

  	
  Definitions of Loss and Claim
  Expenses

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  IX

  	
   

  	
  Loss in Excess of Policy Limits

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  X

  	
   

  	
  Extra Contractual Obligations

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  XI

  	
   

  	
  Reinsurance Premium

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  XII

  	
   

  	
  Net Premium Income

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  XIII

  	
   

  	
  Reporting and Accounting

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  XIV

  	
   

  	
  Claims

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  XV

  	
   

  	
  Liability of Reinsurer

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  XVI

  	
   

  	
  Offset

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  XVII

  	
   

  	
  Inspection of Records

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  XVIII

  	
   

  	
  Assignments and Changes of
  Interest

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  XIX

  	
   

  	
  Dispute Resolution

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  XX

  	
   

  	
  Termination

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  Attachments:

  	
   

  	
  Insolvency Clause

  	
  16

  
	
   

  	
   

  	
  Nuclear Incident Exclusion Clauses

  	
  17

  



 


Page 2 of 17 Pages













 


In consideration of the
mutual covenants hereinafter contained, the parties hereto agree as follows:


 


ARTICLE I


 


APPLICATION OF AGREEMENT.  This agreement applies to the Workers’
Compensation and Employers’ Liability line of business, as respects occurrences
taking place on or after the effective date and prior to the termination date
of this agreement.


 


This agreement does not
apply to:


 


(a)           reinsurance
assumed by the Company, except for reinsurance assumed by the Company from
Westport Insurance Corporation relating to incidental exposures from the state
of New Hampshire underwritten by Zenith Insurance Company and issued by
Westport Insurance Corporation;


 


(b)           policies
written specifically as excess insurance over an underlying policy on the same
insured;


 


(c)           policies
written excess of a deductible or retention greater than $250,000 each
occurrence, unless prior written approval is obtained from the Reinsurer by the
Company, in which case this agreement shall apply to any such policy subject to
such notice of approval;


 


(d)           business
written by the Company as a pro rata participant with one or more other
insurers;


 


(e)           business
to the extent that it is reinsured outside of this agreement, except:


 


(i)            reinsurance
afforded the Company under a reinsurance pooling arrangement among the Company
and its affiliates, recoveries under which shall be ignored for purposes of
this agreement;


 


(ii)           quota
share reinsurance provided by Odyssey America Reinsurance Corporation;


 


(f)            the
Company’s liability as a participant, member, subscriber or reinsurer of any
pool, syndicate, association, insolvency fund, guaranty fund or other
combination of insurers or reinsurers formed for the purpose of covering
specific coverages, specific lines of business or for the purpose of insuring
or reinsuring risks located in specific geographical areas.


 


The Insolvency Clause and
the Nuclear Incident Exclusion Clauses are attached hereto and made a part of
this agreement.


 


Page 3 of 17 Pages













 


ARTICLE II


 


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.


 


ARTICLE III


 


REINSURANCE.  As respects loss sustained by the Company under this
agreement, for each occurrence regardless of the number of policies involved in
such occurrence, the Company shall retain as its own net
retention the first $5,000,000 of loss and the Reinsurer hereby agrees
to indemnify the Company against loss in excess of
such retention subject to a limit of $5,000,000 each occurrence and an annual
aggregate limit of $25,000,000, the first such annual period commencing on May 1,
2008 and ending the following April 30, and each successive 12 calendar month
period thereafter.


 


Occupational disease
sustained by each employee shall be deemed to be a separate occurrence.


 


Notwithstanding any
provision of this agreement to the contrary, the Company has the right to carry
facultative reinsurance up to $2,500,000 each occurrence  with
respect to its net retained liability pertaining to its Florida horse related
business.  The Company may make changes
in such facultative reinsurance without notice to the Reinsurer, and such
facultative reinsurance shall not be taken into account in calculating the net
retention of the Company for the purpose of this agreement; neither shall any
portion of the recoveries under such facultative reinsurance be deducted in
arriving at the gross and net loss of the Company hereunder, nor shall the
Company’s right of recovery hereunder be impaired thereby.  Recoveries under such facultative reinsurance
shall inure solely to the benefit of the Company.


 


ARTICLE IV


 


TERRORISM SUBLIMIT.  The following perils, risks and kinds of
insurance are subject to an annual aggregate sublimit under this agreement:


 


Loss, destruction or
damage occasioned by an act or multiple or related acts of Terrorism; whether
such loss, destruction or damage is caused directly, indirectly, happening
through, or in consequence of such Terrorism. 
The term “Terrorism” as used herein shall mean:


 


(a)           A
violent act or an act dangerous to human life, tangible or intangible property
or infrastructure, that is a violation of the criminal laws of the United
States or of any State or Country, or that would be a criminal violation if
committed within the jurisdiction of the United States or of any State or
Country; and


 


(b)           Appears
to be intended to:


 


1.             Intimidate,
coerce or incite a civilian population; or


 


Page 4 of 17 Pages













 


2.             Inflict
economic loss or disrupt any segment of a local, national or global economy; or


 


3.             Influence
or protest against the policy or conduct of a government by any means including
mass destruction, murder, kidnapping, hijacking, hostage-taking, intimidation
or coercion.


 


Provided, however, that
this sublimit only applies if one or more of the following are attributable to
an incident of Terrorism:


 


(a)           The
total of insured damage to all types of property exceeds $25,000,000.  In determining whether the $25,000,000
threshold is exceeded, we will include all insured damage sustained by property
of all persons and entities affected by the Terrorism and business interruption
losses sustained by owners or occupants of the damaged property.  For the purpose of this provision, “insured
damage” means damage that is covered by any insurance plus damage that would be
covered by any insurance but for the application of any terrorism exclusions;
or


 


(b)          Ten
or more persons sustain death or serious physical injury.  For the purposes of this provision, serious
physical injury means:


 


1.             Physical
injury that involves a substantial risk of death; or


 


2.             Protracted
and obvious physical disfigurement; or


 


3.             Protracted
loss of or impairment of the function of a bodily member or organ; or


 


(c)           The
Terrorism involves the use, release or escape of nuclear materials, or directly
or indirectly results in nuclear reaction or radiation or radioactive
contamination; or


 


(d)           The
Terrorism is carried out by means of the dispersal or application of pathogenic
or poisonous biological or chemical materials; or


 


(e)           Pathogenic
or poisonous biological or chemical materials are released, and it appears that
one purpose of the Terrorism was to release such materials.


 


Other than paragraphs
(c), (d) and (e), immediately preceding, paragraphs (a) and (b) immediately
preceding, describe the thresholds used to measure the magnitude of an incident
of Terrorism and the circumstances in which the threshold will apply for the
purpose of determining whether the Terrorism Sublimit will apply to that
incident.  In the event of any incident
of Terrorism that is not subject to the Terrorism Sublimit, coverage does not apply
to any loss or damage that is otherwise excluded under this agreement.


 


Multiple incidents of
Terrorism which occur within a seventy-two hour period and appear to be carried
out in concert or to have a related purpose or common leadership shall be
considered to be one incident.


 


Page 5 of 17 Pages













 


As respects the subject
business to which this agreement applies, all Terrorism loss amounts paid by
the Company for which this Terrorism Sublimit applies shall be combined and the
total amount for which the Reinsurer shall be obligated shall not exceed
$5,000,000 any one 12 month period.


 


For the purposes of the
application of this provision:


 


	
  (a)

  	
   

  	
  “12 month
  period” means 12 calendar months beginning on the effective or anniversary
  date and ending on the date 12 calendar months thereafter.

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Any amount
  indemnified by the Reinsurer with respect to the subject business hereunder
  shall be a part of and not in addition to any other statement of the
  reinsurance limit(s) set out in this agreement.

  



 


ARTICLE V


 


EXCLUSIONS.      Reinsurance does not apply
to loss:


 


(a)           arising
out of any of the following coverages or operations carried on by the insured
as a principal operation:


 


	
  (1)

  	
  Working or navigation
  of any vessel, other than light craft on inland waterways and dredging;

  
	
   

  	
   

  
	
  (2)

  	
  Manufacture, storage,
  filling, breaking down, or transport of fireworks, ammunition, fuse,
  cartridges, powder, nitroglycerine or any explosive;

  
	
   

  	
   

  
	
  (3)

  	
  Underground mining and
  all coal mining whether above or below ground;

  
	
   

  	
   

  
	
  (4)

  	
  Oil and natural gas
  exploration, drilling and refining, except maintenance work. This exclusion
  does not apply to oil or gas geologists or scouts;

  
	
   

  	
   

  
	
  (5)

  	
  Manufacture of
  celluloid and pyroxylin;

  
	
   

  	
   

  
	
  (6)

  	
  Erection of structural
  iron and/or steel works, unless in conjunction with ordinary construction of
  buildings, except that this exclusion shall not apply to insureds engaged in
  steel work where such steel work erection is not beyond twelve stories in
  height;

  
	
   

  	
   

  
	
  (7)

  	
  Contractors doing
  building wrecking exclusively;

  
	
   

  	
   

  
	
  (8)

  	
  Shoring, underpinning,
  or moving of buildings or structures;

  



 


Page 6 of 17 Pages













 


(9)           Tunneling
and subway construction;


 


(10)         Blasting;


 


(11)         Tower,
steeple and chimney shaft work;


 


(12)         Operation of
dry docks, quays and wharves;


 


(13)         Construction
or maintenance of coffer dams;


 


(14)         Subaqueous
constructions and/or other subaqueous work;


 


(15)         Oil tanks
and/or refining works;


 


(16)         Aviation
risks involving flying risks;


 


(17)         Operations
involving atomic energy and nuclear fission;


 


(18)         Nuclear
power plants;


 


(19)         Use,
handling and transportation of radioactive material, however this exclusion
does not apply for medical use;


 


(20)         Asbestos
removal and encapsulation exposures;


 


(21)         Operations of
a carrier by rail;


 


(22)         Professional
sports teams except racing teams;


 


(23)         All
exposures covered under the Jones Act; or


 


(24)         Employee
leasing and Professional Employment Organizations (PEO’s);


 


(b)           arising, directly or
indirectly, out of:


 


(1)           War,
including undeclared or civil war;


 


(2)           Warlike
action by a military force, including action in hindering or defending against
an actual or expected attack, by any government, sovereign or other authority
in using military personnel or other agents; or


 


(3)           Insurrection,
rebellion, revolution, usurped power, or action taken by governmental authority
in hindering or defending against any of these.


 


The Company may
submit to the Reinsurer for special acceptance any risk excluded hereunder.


 


Page 7 of 17 Pages













 


ARTICLE VI


 


EXCLUDED RISKS
INADVERTENTLY BOUND. 
If, without the knowledge of a member of the Company’s underwriting
department, the Company becomes bound on a risk specifically excluded in this
agreement, such reinsurance as would have been afforded for the risk by this
agreement if the risk had not been excluded shall nevertheless apply to such
risk with respect to occurrences taking place prior to the 31st day
after discovery by a member of such underwriting department of the existence of
the hazard which makes the exclusion applicable.


 


In case, within such 30
day period, the Company shall have forwarded to the Reinsurer complete
underwriting notice of its approval of the risk, the reinsurance shall apply
with respect to such risk for the policy period reported in the same manner as
if such risk were not so excluded, subject, however, to the terms of such
notice of approval.


 


ARTICLE VII


 


DEFINITION OF OCCURRENCE.  The term “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 “occurrence” shall be held to include:


 


As respects Occupational
Disease under Workers Compensation and Employers Liability, each case of an
employee contracting any disease for which the Company may be liable
shall be considered a separate and distinct occurrence and the date of each
occurrence shall be deemed to be as follows:


 


	
  (a)

  	
   

  	
  If the case is
  compensable under the Workers Compensation Law or any Occupational Disease
  Compensation Act, 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 or any Occupational Disease
  Compensation Act, the date of the disability due to said disease actually
  began;

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Where claim is made
  after employment has ceased, then the date of the cessation of employment
  shall be deemed to be the date of disability.

  



 


ARTICLE VIII


 


DEFINITIONS OF
LOSS AND CLAIM EXPENSES.


 


The word “loss” shall
mean only such amounts:


 


(a)           within
applicable policy limits as are actually paid by the Company in settlement of
claims or in satisfaction of awards or judgments (including prejudgment
interest and plaintiff’s costs included in the judgment and subject with the
judgment to the applicable policy limit);


 


Page 8 of 17 Pages


 












 


(b)           equal to 90% of the amount paid by the
Company for loss in excess of policy limits;


 


(c)           equal to 90% of the amount paid by the
Company for extra contractual obligations;


 


(d)           paid by the Company as claim expenses;


 


provided, however, that
in the event of insolvency of the Company, “loss” shall mean the amount of loss
which the insolvent insurer has incurred or is liable for, and payment by the
Reinsurer shall be made to the liquidator, receiver or other statutory
successor of the Company in accordance with the provisions of the insolvency
clause of this agreement.


 


Net salvage, subrogation
or any other recovery (after expenses) shall be used to reduce the loss and so
much of such recovery shall be paid to the Reinsurer as will reduce the loss
ultimately borne by the Reinsurer to what it would have been had the recovery
preceded any payment of such loss by the Reinsurer.


 


The term “claim expenses”
shall mean all costs incurred by the Company in the settlement, defense,
investigation or adjustment of claims under the Company’s policies subject to
this agreement, including claims for loss in excess of policy limits and extra
contractual obligations, court costs, interest upon judgments, and
investigation, adjustment and legal expenses, incurred by the Company related
to the services of persons who are not employees of the Company or of any
subsidiary or affiliated companies of the Company, except in the case of field
claim adjusters or staff attorneys and then only when the time spent by any
adjuster or staff attorney is definitively allocated to a specific claim.  Claim expenses shall also include declaratory
judgment expenses.


 


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.


 


Neither the word “loss”
nor the term “claim expenses” shall include:


 


(a)           salaries paid to employees of the
Company, except as indicated above in the third paragraph of this article;


 


(b)           any statutory penalty imposed upon the
Company on account of any unfair trade practice or any unfair claim practice.


 


ARTICLE IX


 


LOSS IN EXCESS OF POLICY
LIMITS.  “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 handling of a claim, 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.


 


Page 9 of 17 Pages













 


However, this article shall not apply to
the extent 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.


 


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.


 


With
respect to coverage provided under this article, recoveries from any insurance
or reinsurance other than this agreement, whether collectible or not, shall be
deducted to arrive at the amount of the Company’s loss.


 


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


 


ARTICLE X


 


EXTRA CONTRACTUAL
OBLIGATIONS.  “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 handling of a claim, 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.


 


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.


 


However, coverage hereunder as respects
extra contractual obligations shall not apply to the extent 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.


 


With
respect to coverage provided under this article, recoveries from any insurance
or reinsurance other than this agreement, whether collectible or not, shall be
deducted to arrive at the amount of the Company’s loss.


 


Page 10 of 17 Pages













 


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


 


ARTICLE XI


 


REINSURANCE PREMIUM. 
As respects net premium income derived from policies reinsured under
this agreement, the Company shall pay to the Reinsurer a reinsurance premium
equal to .941% of the net premium income derived by the Company from those
lines of business to which this agreement applies.


 


ARTICLE XII


 


NET PREMIUM INCOME. 
The reinsurance rate shall apply to “net premium income” which shall
mean premiums earned on or after the effective date and prior to the
termination date of this agreement on policies to which this agreement applies
before deduction of:


 


(a)           any policyholder dividends;


 


(b)           credits given for any insured policy with a deductible
in excess of $2,500; and


 


(c)           premium for other reinsurance.


 


ARTICLE XIII


 


REPORTING AND ACCOUNTING. 
Within 25 days after the close of each calendar month the Company shall
furnish to the Reinsurer a report (in a form and medium satisfactory to the
Reinsurer) of reinsurance premiums due the Reinsurer for such month.  Such report shall show and properly segregate
(by state and line) the Company’s premiums to which the reinsurance premium
rates apply, and such report shall contain such other statistical information
as may be required by the Reinsurer.  The
amount due the Reinsurer shall be remitted to the Reinsurer within 45 days
after the close of such month.


 


ARTICLE XIV


 


CLAIMS. 
The Company shall report promptly to the Reinsurer each occurrence which,
in the Company’s reasonable estimate of value of injuries or damages sought,
might involve the reinsurance afforded by this agreement and shall forward
promptly to the Reinsurer copies of such pleadings and reports of investigation
as may be requested by the Reinsurer. 
Notwithstanding the Company’s reasonable estimate of value, any claim
involving one or more of the following injuries shall be reported to the
Reinsurer:


 


(a)           paraplegia or more extensive paralysis;


(b)           severe brain injury or brain damage prognosis;


(c)           severe burns;


 


Page 11 of 17 Pages













 


(d)           multiple fatalities.


 


The Company shall also
notify the Reinsurer of any occurrence for which the Company has created a loss
reserve equal to or greater than one half of the Company’s retention hereunder,
or any occurrence giving rise to a bad faith claim covered by Article VIII
(c) above.  The Company shall advise
the Reinsurer of the estimated amount of loss and claim expenses in connection
with each such occurrence and of any subsequent changes.


 


The Company agrees that
it will investigate and will settle or defend all claims arising under policies
with respect to which reinsurance is afforded by this agreement, and that it
will give prompt notice to the Reinsurer of any claim in excess of the Company’s
application retention and prompt notice of any other event or development which
would involve the Reinsurer hereunder, and will forward promptly to the
Reinsurer copies of such pleadings and reports of investigation as may be
requested by the Reinsurer.


 


The Reinsurer may, at its
own expense, participate with the Company in the investigation, adjustment or
defense of claims to which, in the judgment of the Reinsurer, it is or might
become exposed.


 


Should the right of
subrogation or reimbursement arise out of a loss, a part of which was sustained
by the Reinsurer hereunder, the Company agrees to enforce such right and to
prosecute the claim arising therefrom.


 


The Reinsurer shall
reimburse the Company or its legal representative promptly for loss against
which indemnity is herein provided, upon receipt in the home office of the
Reinsurer of satisfactory evidence of payment of such loss.


 


The Company shall furnish
to the Reinsurer prior to the 20th day of December of each year
a report and statement showing the estimated value of each outstanding claim
subject to excess reinsurance hereunder.


 


ARTICLE XV


 


LIABILITY OF THE
REINSURER.  The liability of the Reinsurer shall follow
that of the Company in every case and shall be subject in all respects to all
the general and special stipulations, clauses, waivers and modifications of the
Company’s policy or policies and any endorsements thereon; provided however,
that nothing herein shall be construed to extend any rights or obligations to
any person not a party to this agreement.


 


Subject to the terms of
the policies, the Company shall be the sole judge as to what shall constitute a
claim or loss covered under the Company’s original policy and as to the Company’s
liability thereunder and as to the amount or amounts which it shall be proper
for the Company to pay thereunder, and the Reinsurer shall be bound by the
judgment of the Company as to the liability and obligation of the Company.


 


No error or omission in
reporting any risk or loss reinsured hereunder shall invalidate the liability
of the Reinsurer, provided such error or omission is corrected promptly by the
Company after discovery thereof, but the reporting of reinsurance not
authorized by this agreement or by special acceptance hereunder shall not bind
the Reinsurer, except for the return of premium paid therefor.


 


Page 12 of 17 Pages













 


ARTICLE XVI


 


OFFSET. 
The Company or the Reinsurer may offset any balance, whether on account
of premiums, commissions, loss or claim expenses due from one party to the
other under this agreement or under any other reinsurance agreement heretofore
or hereafter entered into between the Company and the Reinsurer, whether acting
as assuming reinsurer or ceding company.


 


ARTICLE XVII


 


INSPECTION OF RECORDS. 
The Reinsurer may inspect the records of the Company pertaining to the
risks reinsured hereunder.


 


ARTICLE XVIII


 


ASSIGNMENTS AND CHANGES
OF INTEREST.  No assignment or change of the Company’s
interest hereunder, whether voluntary or involuntary and whether by merger or
reinsurance of its entire business with another company or otherwise, shall be
binding upon the Reinsurer.


 


ARTICLE XIX


 


DISPUTE RESOLUTION.


 


Part I - Choice Of
Law And Forum


 


Any
dispute arising under this agreement shall be resolved in the State of
California, and the laws of the State of California 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.


 


Page 13 of 17 Pages













 


Part III -
Arbitration


 


(a)           Resolution
of Disputes - As a condition precedent to any right of action arising
hereunder, any dispute not resolved by mediation between the Company and the Reinsurer arising out
of the provisions of this agreement or concerning its interpretation or
validity, whether arising before or after termination of this agreement, shall
be submitted to arbitration in the manner hereinafter set forth.


 


(b)           Composition
of Panel - Unless the parties agree upon a single arbitrator within 15 days
after the receipt of a notice of intention to arbitrate, all disputes shall be
submitted to an arbitration panel composed of two arbitrators and an umpire
chosen in accordance with Paragraph C. hereof.


 


(c)           Appointment
of Arbitrators - The members of the arbitration panel shall be chosen from
disinterested persons with at least 10 years experience in the insurance and
reinsurance business.  Unless a single
arbitrator is agreed upon, the party requesting arbitration (hereinafter
referred to as the “claimant”) shall appoint an arbitrator and give written
notice thereof by certified mail to the other party (hereinafter referred to as
the “respondent”) together with its notice of intention to arbitrate.  Within 30 days after receiving such notice,
the respondent shall also appoint an arbitrator and notify the claimant thereof
by certified mail.  Before instituting a
hearing, the two arbitrators so appointed shall choose an umpire.  If, within 20 days after the appointment of
the arbitrator chosen by the respondent, the two arbitrators fail to agree upon
the appointment of an umpire, each of them shall nominate three individuals to
serve as umpire, of whom the other shall decline two and the umpire shall be
chosen from the remaining two by drawing lots. 
The name of the individual first drawn shall be the umpire.


 


(d)           Failure of
Party to Appoint an Arbitrator - If the respondent fails to appoint an
arbitrator within 30 days after receiving a notice of intention to arbitrate,
the claimant’s arbitrator shall appoint an arbitrator on behalf of the
respondent, such arbitrator shall then, together with the claimant’s
arbitrator, choose an umpire as provided in Paragraph C. of Part III of
this article.


 


(e)           If the Company is involved
in a dispute under the terms of this agreement and in one or more separate
disputes with one or more other reinsurers in which common questions of law or
fact are in issue, the Company or the Reinsurer, at its
option, may join with such other reinsurers in a common arbitration proceeding
under the terms of this article.  If the Company and such
other reinsurers have commenced arbitration, the Reinsurer may at its option
join such proceeding for the determination of the dispute between the Company and the Reinsurer.


 


(f)            Submission
of Dispute to Panel – Within 30 days after the notice of appointment of all
arbitrators, the panel shall meet, and determine a timely period for discovery,
discovery procedures and schedules for hearings.


 


(g)           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.


 


Page 14 of 17 Pages













 


(h)           Arbitration
Award - The arbitration panel shall render its decision within 60 days after
termination of the proceeding, which decision shall be in writing, stating the
reasons therefor.  The decision of the majority
of the panel shall be final and binding on the parties to the proceeding.  In no event, however, will the panel be
authorized to award punitive, exemplary or consequential damages of whatsoever
nature in connection with any arbitration proceeding concerning this agreement.


 


(i)            Cost of
Arbitration - Unless otherwise allocated by the panel, each party shall bear
the expense of its own arbitrator and legal expenses of its own counsel and
shall jointly and equally bear with the other parties the expense of the umpire
and the arbitration.


 


ARTICLE XX


 


TERMINATION. 
This agreement shall continue in effect until terminated by mutual
consent, or by either party’s giving to the other party not less than 180 days’
notice by registered mail or express delivery service, stating the termination
date.


 


ATTACHMENTS:


 


1. Insolvency
Clause


 


2. Nuclear
Exclusion Clauses


 


ATTACHMENTS NOT
INCLUDED


 


Page 15 of 17 Pages


 













 


THE UNDERLYING
AGREEMENT EFFECTIVE JULY 1, 2002


AND AMENDMENTS NO.
1 THROUGH 8 FOLLOW


 












 


WORKERS’ COMPENSATION AND EMPLOYERS’
LIABILITY


EXCESS OF LOSS REINSURANCE AGREEMENT


(Contract No. 00984-060702)


July 1,
2002


ZENITH INSURANCE COMPANY


ZNAT INSURANCE COMPANY


ZENITH STAR INSURANCE COMPANY


 













 


WORKERS’
COMPENSATION AND EMPLOYERS’ LIABILITY


EXCESS
OF LOSS REINSURANCE AGREEMENT


(Contract
No. 00984-060702)


July 1,
2002


 


TABLE
OF CONTENTS


 


	
  Article

  	
   

  	
   

  	
   

  	
  Page

  
	
  I

  	
   

  	
  Application of
  Agreement

  	
   

  	
  1

  
	
  II

  	
   

  	
  Reinsurance

  	
   

  	
  2

  
	
  III

  	
   

  	
  Terrorism Sublimit

  	
   

  	
  2

  
	
  IV

  	
   

  	
  Exclusions

  	
   

  	
  3

  
	
  V

  	
   

  	
  Excluded Risks
  Inadvertently Bound

  	
   

  	
  4

  
	
  VI

  	
   

  	
  Definitions of Loss and
  Claim Expenses

  	
   

  	
  5

  
	
  VII

  	
   

  	
  Indemnity for Claim
  Expenses

  	
   

  	
  5

  
	
  VIII

  	
   

  	
  Reinsurance Premium

  	
   

  	
  6

  
	
  IX

  	
   

  	
  Net Premium Income

  	
   

  	
  6

  
	
  X

  	
   

  	
  Reporting and
  Accounting

  	
   

  	
  6

  
	
  XI

  	
   

  	
  Claims

  	
   

  	
  6

  
	
  XII

  	
   

  	
  Liability of
  Corporation

  	
   

  	
  7

  
	
  XIII

  	
   

  	
  Offset

  	
   

  	
  8

  
	
  XIV

  	
   

  	
  Inspection of Records

  	
   

  	
  8

  
	
  XV

  	
   

  	
  Assignments and Changes
  of Interest

  	
   

  	
  8

  
	
  XVI

  	
   

  	
  Termination

  	
   

  	
  8

  
	
  Attachments:

  	
   

  	
   

  
	
   

  	
   

  	
  Insolvency Clause

  	
   

  	
  10

  
	
   

  	
   

  	
  Nuclear Incident
  Exclusion Clauses

  	
   

  	
  10

  



 













 


WORKERS’
COMPENSATION AND EMPLOYERS’ LIABILITY


EXCESS
OF LOSS REINSURANCE AGREEMENT


(Contract
No. 00984-060702)


 


entered
into between


 


EMPLOYERS
REINSURANCE CORPORATION


of


Overland
Park, Kansas


(hereinafter
called the CORPORATION)


 


and


 


ZENITH
INSURANCE COMPANY


ZNAT
INSURANCE COMPANY


both
of


Woodland
Hills, California


ZENITH
STAR INSURANCE COMPANY


of


Austin,
Texas


(all
hereinafter collectively called the REINSURED)


 


EFFECTIVE
DATE: July 1, 2002


 


In consideration of the
mutual covenants hereinafter contained, the parties hereto agree as follows:


 


ARTICLE
I


 


APPLICATION
OF AGREEMENT.  This
agreement applies to the Workers’ Compensation and Employers’ Liability line of
business, as respects occurrences taking place on or after the effective date
and prior to the termination date of this agreement.


 


This agreement does not
apply to:


 


(a)                                 reinsurance
assumed by the REINSURED;


 


(b)                                policies
written specifically as excess insurance over an underlying policy on the same
insured;


 


(c)                                 policies
written excess of a deductible or retention greater than $250,000 each
occurrence, unless prior written approval is obtained from the CORPORATION by
the REINSURED, in which case this agreement shall apply to any such policy
subject to such notice of approval;


 


(d)                                business
written by the REINSURED as a pro rata participant with one or more other
insurers;


 


(e)                                 business
to the extent that it is reinsured outside of this agreement, except:


 


(i)                                    reinsurance
afforded the REINSURED under a reinsurance pooling arrangement among the
REINSURED and its affiliates, recoveries under which shall be ignored for
purposes of this agreement;


 


(ii)                                 quota
share reinsurance provided by Odyssey America Reinsurance Corporation;


 


(f)                                   the
REINSURED’S liability as a participant, member, subscriber or reinsurer of any
pool, syndicate, association, insolvency fund, guaranty fund or other combination
of insurers of reinsurers formed for the purpose of covering specific
coverages, specific lines of business or for the purpose of insuring or
reinsuring risks located in specific geographical areas.


 













 


The Insolvency Clause and
the Nuclear Incident Exclusion Clauses are attached hereto and made a part of
this agreement.


 


ARTICLE
II


 


REINSURANCE.  As respects loss sustained by the REINSURED
under Layer One of this agreement, for each occurrence regardless of the number
of policies involved in such occurrence, the REINSURED shall retain as its own
net retention the first $1,000,000 of loss and the CORPORATION hereby agrees to
indemnify the REINSURED against loss in excess of such retention subject to a
limit of $1,000,000.


 


As respects loss
sustained by the REINSURED under Layer Two of this agreement, for each
occurrence regardless of the number of policies involved in such occurrence,
the CORPORATION hereby agrees to indemnify the REINSURED against loss in excess
of the underlying amount of $2,000,000, subject to a limit of $1,000,000.


 


As respects loss
sustained by the REINSURED under Layer Three of this agreement, for each
occurrence regardless of the number of policies involved in such occurrence,
the CORPORATION hereby agrees to indemnify the REINSURED against loss in excess
of the underlying amount of $3,000,000, subject to a limit of $2,000,000.


 


As respects loss
sustained by the REINSURED under Layer Four of this agreement, for each
occurrence regardless of the number of policies involved in such occurrence,
the CORPORATION hereby agrees to indemnify the REINSURED against loss in excess
of the underlying amount of $5,000,000, subject to a limit of $5,000,000.


 


Occupational disease
sustained by each employee shall be deemed to be a separate occurrence.


 


ARTICLE
III


 


TERRORISM
SUBLIMIT.  The
following perils, risks and kinds of insurance are subject to an annual
aggregate sublimit under this agreement:


 


Loss, destruction or
damage occasioned by an act or multiple or related acts of Terrorism; whether
such loss, destruction or damage is caused directly, indirectly, happening
through, or in consequence of such Terrorism. The term “Terrorism” as used
herein shall mean:


 


(a)                                 A
violent act or an act dangerous to human life, tangible or intangible property
or infrastructure, that is a violation of the criminal laws of the United
States or of any State or Country, or that would be a criminal violation if
committed within the jurisdiction of the United States or of any State or
Country; and


 


(b)                                Appears
to be intended to:


 


1.                                      Intimidate,
coerce or incite a civilian population; or


 


2.                                      Inflict
economic loss or disrupt any segment of a local, national or global economy; or


 


3.                                      Influence
or protest against the policy or conduct of a government by any means including
mass destruction, murder, kidnapping, hijacking, hostage-taking, intimidation
or coercion.


 


Provided, however, that
this sublimit only applies if one or more of the followings are attributable to
an incident of Terrorism:


 


(a)                                 The
total of insured damage to all types of property exceeds $25,000,000. In
determining whether the $25,000,000 threshold is exceeded, we will include all
insured damage sustained by property of all persons and entities affected by
the Terrorism and business interruption losses sustained by owners or occupants
of the damaged property. For the purpose of this provision, insured damage
means damage that is covered by any insurance plus damage that would be covered
by any insurance but for the application of any terrorism exclusions; or


 


(b)                                Ten
or more persons sustain death or serious physical injury. For the purposes of
this provision, serious physical injury means:


 













 


1.                                      Physical
injury that involves a substantial risk of death; or


 


2.                                      Protracted
and obvious physical disfigurement; or


 


3.                                      Protracted
loss of or impairment of the function of a bodily member or organ; or


 


(c)                                 The
Terrorism involves the use, release or escape of nuclear materials, or directly
or indirectly results in nuclear reaction or radiation or radioactive
contamination; or


 


(d)                                The
Terrorism is carried out by means of the dispersal or application of pathogenic
or poisonous biological or chemical materials; or


 


(e)                                 Pathogenic
or poisonous biological or chemical materials are released, and it appears that
one purpose of the Terrorism was to release such materials.


 


Other than paragraphs
(c), (d) and (e), immediately preceding, paragraphs (a) and (b) immediately
preceding, describe the thresholds used to measure the magnitude of an incident
of Terrorism and the circumstances in which the threshold will apply for the
purpose of determining whether the Terrorism Sublimit will apply to that
incident. In the event of any incident of Terrorism that is not subject to the
Terrorism Sublimit, coverage does not apply to any loss or damage that is
otherwise excluded under this agreement.


 


Multiple incidents of
Terrorism which occur within a seventy-two hour period and appear to be carried
out in concert or to have a related purpose or common leadership shall be
considered to be one incident.


 


As respects the subject
business to which this agreement applies, all Terrorism loss amounts paid by
the REINSURED for which this Terrorism Sublimit applies shall be combined and
the total amount for which the CORPORATION shall be obligated shall not exceed
$9,000,000 any one 12 month period.


 


For the purposes of the
application of this provision:


 


(a)                                 “12 month
period” means 12 calendar months beginning on the effective or anniversary date
and ending on the date 12 calendar months thereafter.


 


(b)                                Any
amount indemnified by the CORPORATION with respect to the subject business
hereunder shall be a part of and not in addition to any other statement of the
reinsurance limit(s) set out in this agreement.


 


ARTICLE
IV


 


EXCLUSIONS.  Reinsurance does not apply to loss:


 


(a)                                  arising
out of any of the following coverages or operations carried on by the insured
as a principal operation:


 


(1)                                 Working
or navigation of any vessel, other than light craft on inland waterways and
dredging;


 


(2)                                 Manufacture,
storage, filling, breaking down, or transport of:


 


(i)                                    Fireworks,
ammunition, fuse, cartridges, powder, nitroglycerine or any explosive;


 


(ii)                                 Gasses
and/or air under pressure in containers (but this exclusion shall not apply to
the storage of distribution of liquid petroleum gas by wholesale or retail
dealers);


 


(3)                                 Underground
coal mines;


 


(4)                                 Manufacture
of celluloid and pyroxylin;


 













 


(5)                                 Erection
of structural iron and/or steel works, unless in conjunction with ordinary
construction of buildings, except that this exclusion shall not apply to
insureds engaged in steel work where such steel work erection is not beyond
twelve stories in height;


 


(6)                                 Contractors
doing building wrecking exclusively;


 


(7)                                 Tunneling;


 


(8)                                 Tower,
steeple and chimney shaft work;


 


(9)                                 Operation
of dry docks, docks, quays and wharves;


 


(10)                           Construction
or maintenance of coffer dams;


 


(11)                           Subaqueous
constructions and/or other subaqueous work;


 


(12)                           Oil
tanks and/or refining works;


 


(13)                           Aviation
risks involving flying risks;


 


(14)                           Operations
involving atomic energy and nuclear fission;


 


(15)                           Operations
of a carrier by rail;


 


(16)                           All
exposures covered under the Jones Act.


 


(b)                                arising,
directly or indirectly, out of:


 


(1)                                 War,
including undeclared or civil war; or


 


(2)                                 Warlike
action by a military force, including action in hindering or defending against
an actual or expected attack, by any government, sovereign or other authority
using military personnel or other agents; or


 


(3)                                 Insurrection,
rebellion, revolution, usurped power, or action taken by governmental authority
in hindering or defending against any of these.


 


The REINSURED may submit
to the CORPORATION for special acceptance any risk excluded hereunder.


 


ARTICLE
V


 


EXCLUDED
RISKS INADVERTENTLY BOUND. 
If, without the knowledge of a member of the REINSURED’S underwriting
department, the REINSURED becomes bound on a risk specifically excluded in this
agreement, such reinsurance as would have been afforded for the risk by this
agreement if the risk had not been excluded shall nevertheless apply to such
risk with respect to occurrences taking place prior to the 31st day
after discovery by a member of such underwriting department of the existence of
the hazard which makes the exclusion applicable.


 


In case, within such
30 day period, the REINSURED shall have forwarded to the CORPORATION
complete underwriting notice of its approval of the risk, the reinsurance shall
apply with respect to such risk for the policy period reported in the same
manner as if such risk were not so excluded, subject, however, to the terms of
such notice of approval.


 


ARTICLE
VI


 


DEFINITIONS OF LOSS AND CLAIM EXPENSES.


 


The word “loss” shall
mean only such amounts:


 













 


(a)                                 within
applicable policy limits as are actually paid by the REINSURED in settlement of
claims or in satisfaction of awards or judgments (including prejudgment
interest and plaintiff’s costs included in the judgment and subject with the
judgment to the applicable policy limit);


 


(b)                                equal
to 90% of the amount paid by the REINSURED in excess of applicable third party
liability coverage policy limits occasioned by liability imposed upon the
REINSURED on account of the failure of the REINSURED to settle a claim for an
amount within such policy limits;


 


(c)                                 equal
to 90% of the amount paid by the REINSURED for punitive, exemplary, or
compensatory damages awarded to the insured and arising out of the conduct of
the REINSURED in the investigation, trial or settlement of any claim or failure
to pay or delay in payment of any benefits under any policy.


 


Provided, however, that
in the event of insolvency the REINSURED, “loss” shall mean the amount of loss
which the insolvent insurer has incurred or is liable for, and payment by the
CORPORATION shall be made to the liquidator, receiver or other statutory
successor of the REINSURED in accordance with the provisions of the insolvency
clause of this agreement; but the word “loss” shall not include claim expenses.


 


Net salvage, subrogation
or any other recovery (after expenses) shall be used to reduce the loss and so
much of such recovery shall be paid to the CORPORATION as will reduce the loss
ultimately borne by the CORPORATION to what it would have been had the recovery
preceded any payment of such loss by the CORPORATION.


 


The term “claim expenses”
shall mean all payments under the supplementary payments provisions of the
REINSURED’S policy, including court costs, interest upon judgments, and
investigation, adjustment and legal expenses, incurred by persons who are not
employees of the REINSURED or of any subsidiary or affiliated companies of the
REINSURED, except in the case of field claim adjusters or staff attorneys and
then only when the time spent by any adjuster or staff attorney is definitively
allocated to a specific claim.


 


Recoveries from any form
of insurance or reinsurance which protects the REINSURED against loss as
described in subparagraphs (b) and (c) above of this Article shall
inure to the benefit of this agreement.


 


Neither the word “loss”
nor the term “claim expenses” shall include:


 


(a)                                 salaries
paid to employees of the REINSURED, except as indicated above in the paragraph
four of this article;


 


(b)                                any
statutory penalty imposed upon the REINSURED on account of any unfair trade
practice or any unfair claim practice.


 


ARTICLE
VII


 


INDEMNITY
FOR CLAIM EXPENSES. 
The CORPORATION hereby agrees that, as respects reinsurance afforded by
the other terms of this agreement, the CORPORATION will, with respect to each
occurrence, indemnify the REINSURED against that proportion of claim expenses
paid by the REINSURED that the amount of loss ultimately borne by the
CORPORATION bears to the total amount of loss: Provided, however, that in the
event a verdict, award or judgment is reduced or reversed by appeal taken by
the REINSURED from an award or judgment, the CORPORATION shall indemnify the
REINSURED against claim expenses paid by the REINSURED connected with such
settlement or appeal in the same ratio that the benefit derived by the
CORPORATION from such reduction or reversal bears to the total benefit
resulting from such reduction or reversal.


 


ARTICLE
VIII


 


REINSURANCE
PREMIUM.  As respects
net premium income derived from Layer One of this agreement, the REINSURED
shall pay to the CORPORATION a reinsurance premium equal to 1.140% of the net
premium income derived by the REINSURED from the line of business to which this
agreement applies.


 


As respects net premium
income derived from Layer Two of this agreement, the REINSURED shall pay to the
CORPORATION a reinsurance premium equal to .525% of the net premium income derived
by the REINSURED from the line of business to which this agreement applies.


 













 


As respects net premium
income derived from Layer Three of this agreement, the REINSURED shall pay to
the CORPORATION a reinsurance premium equal to .575% of the net premium income
derived by the REINSURED from the line of business to which this agreement
applies.


 


As respects net premium
income derived from Layer Four of this agreement, the REINSURED shall pay to
the CORPORATION a reinsurance premium equal to .31% of the net premium income
derived by the REINSURED from the line of business to which this agreement
applies.


 


The REINSURED shall also
pay to the CORPORATION an additional reinsurance premium of $400,000 annually
for the Terrorism coverage provided pursuant to Article III of this
agreement.


 


ARTICLE
IX


 


NET
PREMIUM INCOME.  The
reinsurance rate shall apply to “net premium income” which shall mean premiums
earned on or after the effective date and prior to the termination date of this
agreement on policies to which this agreement applies before deduction of:


 


(a)                                 any
policyholder dividends;


 


(b)                                credits
given for any insured policy with a deductible in excess of $2,500; and


 


(c)                                 premium
for other reinsurance.


 


ARTICLE
X


 


REPORTING
AND ACCOUNTING.  Within
25 days after the close of each calendar month the REINSURED shall furnish
to the CORPORATION a report (in a form and medium satisfactory to the
CORPORATION) of reinsurance premiums due the CORPORAITON for such month. Such
report shall show and properly segregate (by state and line) the REINSURED’S
premiums to which the reinsurance premium rates apply, and such report shall
contain such other statistical information as may be required by the
CORPORATION. The amount due the CORPORATION shall be remitted to the CORPORATION
within 45 days after the close of such month.


 


ARTICLE
XI


 


CLAIMS.  The REINSURED shall report promptly to the
CORPORATION each occurrence which, in the REINSURED’S reasonable estimate of
value of injuries or damages sought, might involve the reinsurance afforded by
this agreement and shall forward promptly to the CORPORATION copies of such
pleadings and reports of investigation as may be requested by the CORPORATION.
Notwithstanding the REINSURED’S reasonable estimate of value, any claim
involving one or more of the following injuries shall be reported to the
CORPORATION:


 


(a)                                 fatality;


 


(b)                                paraplegia
or more extensive paralysis;


 


(c)                                 severe
brain injury or brain damage prognosis;


 


(d)                                severe
burns;


 


(e)                                 amputations
of one or more limbs;


 


(f)                                   loss
of sight or hearing to a substantial degree;


 


(g)                                back
injury where surgery has been performed or is recommended by the treating
doctor;


 


(h)                                severe
laceration cases involving the face, arms or legs and leaving serious cosmetic
deformity;


 


(i)                                    a
claim for psychological injury for which there appears to be a reasonable
basis;


 













 


(j)                                    multiple
fractures or severe internal injuries with high residual permanent impairment;


 


(k)                                 any
injury where there is, or appears probable, an alleged loss of earnings for one
year or more.


 


The REINSURED shall also
notify the CORPORATION of any occurrence for which the REINSURED has created a
loss reserve equal to or greater than one half of the REINSURED’S retention
hereunder, or any occurrence giving rise to a bad faith claim covered by Article VI
(c) above. The REINSURED shall advise the CORPORATION of the estimated
amount of loss and claim expenses in connection with each such occurrence and
of any subsequent changes.


 


The REINSURED agrees that
it will investigate and will settle or defend all claims arising under policies
with respect to which reinsurance is afforded by this agreement, and that it
will give prompt notice to the CORPORATION of any claim in excess of the
REINSURED’S application retention and prompt notice of any other event or
development which would involve the CORPORATION hereunder, and will forward
promptly to the CORPORATION copies of such pleadings and reports of
investigation as may be requested by the CORPORATION.


 


The CORPORATION may, at
its own expense, participate with the REINSURED in the investigation,
adjustment or defense of claims to which, in the judgment of the CORPORATION,
it is or might become exposed.


 


Should the right of
subrogation or reimbursement arise out of a loss, a part of which was sustained
by the CORPORATION hereunder, the REINSURED agrees to enforce such right and to
prosecute the claim arising therefrom.


 


The CORPORATION shall
reimburse the REINSURED or its legal representative promptly for loss against
which indemnity is herein provided, upon receipt in the home office of the
CORPORATION of satisfactory evidence of payment of such loss.


 


The REINSURED shall
furnish to the CORPORATION prior to the 20th day of December of
each year a report and statement showing the estimated value of each
outstanding claim subject to excess reinsurance hereunder.


 


ARTICLE
XII


 


LIABILITY
OF THE CORPORATION. 
The liability of the CORPORATION shall follow that of the REINSURED in
every case and shall be subject in all respects to all the general and special stipulations,
clauses, waivers and modifications of the REINSURED’S policy or policies and
any endorsements thereon; provided however, that nothing herein shall be
construed to extend any rights or obligations to any person not a party to this
agreement.


 


Subject to the terms of
the policies, the REINSURED shall be the sole judge as to what shall constitute
a claim or loss covered under the REINSURED’S original policy and as to the
REINSURED’S liability thereunder and as to the amount or amounts which it shall
be proper for the REINSURED to pay thereunder, and the CORPORATION shall be
bound by the judgment of the REINSURED as to the liability and obligation of
the REINSURED.


 


No error or omission in
reporting any risk or loss reinsured hereunder shall invalidate the liability
of the CORPORATION, provided such error or omission is corrected promptly by
the REINSURED after discovery thereof, but the reporting of reinsurance not
authorized by this agreement or by special acceptance hereunder shall not bind
the CORPORATION, except for the return of premium paid therefor.


 


ARTICLE
XIII


 


OFFSET.  The REINSURED or the CORPORATION may offset
any balance, whether on account of premiums, commissions, loss or claim
expenses due from one party to the other under this agreement or under any
other reinsurance agreement heretofore or hereafter entered into between the
REINSURED and the CORPORATION, whether acting as assuming reinsurer or ceding
company.


 


ARTICLE
XIV


 


INSPECTION
OF RECORDS.  The
CORPORATION may inspect the records of the REINSURED pertaining to the risks
reinsured hereunder.


 













 


ARTICLE
XV


 


ASSIGNMENTS
AND CHANGES OF INTEREST. 
No assignment or change of the REINSURED’S interest hereunder, whether
voluntary or involuntary and whether by merger or reinsurance of its entire
business with another company or otherwise, shall be binding upon the
CORPORATION.


 


ARTICLE
XVI


 


TERMINATION.  This agreement shall continue in effect until
terminated by mutual consent, or by either party’s giving to the other party
not less than 180 days’ notice in advance of any calendar quarter by
registered mail or express delivery service, stating the termination date.


 













 


IN WITNESS WHEREOF, the
parties hereto have caused this agreement to be signed in duplicate.


 


	
  ZENITH INSURANCE COMPANY

  	
   

  	
  EMPLOYERS
  REINSURANCE CORPORATION

  
	
  /s/ JOHN J. TICKNER

  	
   

  	
  /s/ GARRY L. SCHULTZ

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
  Second Vice President

  	
   

  
	
   

  	
   

  	
   

  	
  [Illegible]

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
  Second Vice President

  	
   

  
	
  Date:

  	
  July 10, 2002

  	
   

  	
  Date:

  	
  July 3, 2002

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ZNAT
  INSURANCE COMPANY

  	
   

  	
  ZENITH
  STAR INSURANCE COMPANY

  
	
  /s/ JOHN J. TICKNER

  	
   

  	
  /s/ JOHN J. TICKNER

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Title:

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Title:

  	
   

  	
   

  
	
  Date:

  	
  July 10, 2002

  	
   

  	
  Date:

  	
  July 10, 2002

  	
   

  



 













 


ATTACHMENTS:


 


1.                                      Insolvency
Clause


 


2.                                      Nuclear
Incident Exclusion Clauses


 


ATTACHMENTS NOT
INCLUDED


 













 


AMENDMENT NO. 1


 


The
Workers’ Compensation and Employers’ Liability Excess of Loss Reinsurance
Agreement of July 1, 2002, between EMPLOYERS REINSURANCE CORPORATION of
Overland Park, Kansas and ZENITH INSURANCE COMPANY and ZNAT INSURANCE COMPANY,
both of Woodland Hills, California and ZENITH STAR INSURANCE COMPANY of Austin,
Texas is hereby amended as follows:


 


As
respects occurrences taking place on or after September 1, 2002:


 


Article I
(a) is hereby deleted and the following is submitted therefore:


 


(a) reinsurance
assumed by the REINSURED, except for reinsurance assumed by the REINSURED from
the CORPORATION relating to incidental exposures from the state of New
Hampshire underwritten by Zenith Insurance Company and issued by Westport
Insurance Corporation.


 


In
all other respects not inconsistent herewith, said agreement shall remain
unchanged.


 


IN
WITNESS WHEREOF, the parties hereto have caused this amendment to be executed
in duplicate.


 


 


	
  ZENITH INSURANCE COMPANY

  	
   

  	
  EMPLOYERS REINSURANCE

  	
   

  
	
   

  	
   

  	
  CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  John J. Tickner

  	
   

  	
  /s/
  signature illegible

  
	
  Title:
  Senior Vice President

  	
   

  	
  Title:
  Second Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Jack Hasbrouck

  	
   

  	
  /s/
  signature illegible

  
	
  Title:
  Senior Vice President

  	
   

  	
  Title:
  Second Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  August 3, 2003

  	
   

  	
  Date:

  	
  August 6, 2003

  
						



 


Page 1 of 1 Page













 


AMENDMENT
NO. 2


 


The Workers’ Compensation
and Employers’ Liability Excess of Loss Reinsurance Agreement of July 1,
2002, between EMPLOYERS REINSURANCE CORPORATION of Overland Park, Kansas and
ZENITH INSURANCE COMPANY and ZNAT INSURANCE COMPANY, both of Woodland Hills,
California and ZENITH STAR INSURANCE COMPANY of Austin, Texas is hereby amended
as follows:


 


I.                                         As
respects net premium income entered on the books and records of the REINSURED
on and after July 1, 2003, Article VIII, REINSURANCE PREMIUM, is
hereby deleted in its entirety and the following is substituted therefor:


 


ARTICLE VIII


 


REINSURANCE
PREMIUM.  As respects net
premium income derived from Layer One of this agreement, the REINSURED shall
pay to the CORPORATION a reinsurance premium equal to 1.430% of the net premium
income derived by the REINSURED from the line of business to which this
agreement applies.


 


As respects
net premium income derived from Layer Two of this agreement, the REINSURED
shall pay to the CORPORATION a reinsurance premium equal to .525% of the net
premium income derived by the REINSURED from the line of business to which this
agreement applies.


 


As
respects net premium income derived from Layer Three of this agreement, the
REINSURED shall pay to the CORPORATION a reinsurance premium equal to .575% of
the net premium income derived by the REINSURED from the line of business to
which this agreement applies.


 


As
respects net premium income derived from Layer Four of this agreement, the
REINSURED shall pay to the CORPORATION a reinsurance premium equal to .290% of
the net premium income derived by the REINSURED from the line of business to
which this agreement applies.


 


As
respects net premium income derived from all Layers of this agreement, the
REINSURED shall pay to the CORPORATION a reinsurance premium equal to .100% of
the net premium income derived from the line of business to which this agreement
applies for the Terrorism coverage provided pursuant to Article III of
this agreement.  In the event that the
REINSURED has paid no Terrorism loss or claims expenses, for which it has or
will seek indemnification from the CORPORATION attributable to an agreement
year for 6 months after the expiration of such agreement year, the CORPORATION
shall pay to the REINSURED a no claims bonus equal to .025% of the net premium
income for such agreement year.  Should
the REINSURED seek indemnification for a Terrorism loss or claims expenses for
any agreement year for which it has previously received a no claims bonus, such
bonus shall be deducted from any amount due to the REINSURED.


 


Page 1 of 2 Pages













 


II.                                     As
respects occurrences taking place on or after July 1, 2003, subsection
(a)(2)(ii) is hereby deleted from ARTICLE IV, EXCLUSIONS.


 


In all other respects not
inconsistent herewith, said agreement shall remain unchanged.


 


IN WITNESS WHEREOF, the
parties hereto have caused this amendment to be executed in duplicate.


 


 


	
  ZENITH
  INSURANCE COMPANY

  	
   

  	
  EMPLOYERS
  REINSURANCE

  	
   

  
	
   

  	
   

  	
  CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ John J. Tickner

  	
   

  	
  /s/ signature illegible

  
	
  Title:

  	
   

  	
  Title: Second Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ signature illegible

  
	
  Title:

  	
   

  	
  Title: Second Vice
  President

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  July 28,
  2003

  	
   

  	
  Date:

  	
  July 21,
  2003

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ZNAT
  INSURANCE COMPANY

  	
   

  	
  ZENITH STAR INSURANCE
  COMPANY

  
	
   

  	
   

  	
   

  
	
  /s/ John J. Tickner

  	
   

  	
  /s/ John J. Tickner

  
	
  Title:

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  
						



 


Page 2 of 2 Pages













 


AMENDMENT
NO. 3


 


The Workers’ Compensation
and Employers’ Liability Excess of Loss Reinsurance Agreement (Contract No. 00984-060702)
of July 1, 2002, between EMPLOYERS REINSURANCE CORPORATION of Overland
Park, Kansas and ZENITH INSURANCE COMPANY and ZNAT INSURANCE COMPANY, both of
Woodland Hills, California and ZENITH STAR INSURANCE COMPANY of Austin, Texas
is hereby amended as follows:


 


I.                                         As
respects occurrences taking place on or after July 1, 2004, Article IV,
EXCLUSIONS, as amended, is hereby deleted in its entirety and the following is
substituted therefor:


 


ARTICLE IV


 


EXCLUSIONS.  Reinsurance does not apply to loss:


 


(a)                                  arising
out of any of the following coverages or operations carried on by the insured
as a principal operation:


 


(1)                                Working
or navigation of any vessel, other than light craft on inland waterways and
dredging;


 


(2)                              Manufacture,
storage, filling, breaking down, or transport of fireworks, ammunition, fuse,
cartridges, powder, nitroglycerine or any explosive;


 


(3)                                Underground
mining and all coal mining whether above or below ground;


 


(4)                                Oil
and natural gas exploration, drilling and refining, except maintenance
work.  This exclusion does not apply to
oil or gas geologists or scouts;


 


(5)                                Manufacture
of celluloid and pyroxylin;


 


(6)                                Erection
of structural iron and/or steel works, unless in conjunction with ordinary
construction of buildings, except that this exclusion shall not apply to
insureds engaged in steel work where such steel work erection is not beyond
twelve stories in height;


 


(7)                                Contractors
doing building wrecking exclusively;


 


(8)                                Shoring,
underpinning, or moving of buildings or structures;


 


(9)                                Tunneling
and subway construction;


 


Page 1 of 3 Pages













 


(10)                            Blasting;


 


(11)                            Tower,
steeple and chimney shaft work;


 


(12)                            Operation
of dry docks, quays and wharves;


 


(13)                            Construction
or maintenance of coffer dams;


 


(14)                            Subaqueous
constructions and/or other subaqueous work;


 


(15)                            Oil
tanks and/or refining works;


 


(16)                            Aviation
risks involving flying risks;


 


(17)                            Operations
involving atomic energy and nuclear fission;


 


(18)                            Nuclear
power plants;


 


(19)                            Use,
handling and transportation of radioactive material, however this exclusion
does not apply for medical use;


 


(20)                            Asbestos
removal and encapsulation exposures;


 


(21)                            Operations
of a carrier by rail;


 


(22)                            Professional
sports teams except racing teams;


 


(23)                            All
exposures covered under the Jones Act; or


 


(24)                            Employee
leasing and Professional Employment Organizations (PEO’s);


 


(b)                                 arising,
directly or indirectly, out of:


 


(1)                               War,
including undeclared or civil war;


 


(2)                               Warlike
action by a military force, including action in hindering or defending against
an actual or expected attack, by any government, sovereign or other authority
in using military personnel or other agents; or


 


(3)                              Insurrection,
rebellion, revolution usurped power, or action taken by governmental authority
in hindering or defending against any of these.


 


The REINSURED may submit
to the CORPORATION for special acceptance any risk excluded hereunder.


 


Page 2 of 3 Pages













 


In all other respects not
inconsistent herewith, said agreement shall remain unchanged.


 


IN WITNESS WHEREOF, the
parties hereto have caused this amendment to be executed in duplicate.


 


 


	
  ZENITH
  INSURANCE COMPANY

  	
   

  	
  EMPLOYERS
  REINSURANCE

  	
   

  
	
   

  	
   

  	
  CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ John J. Tickner

  	
   

  	
  /s/ signature illegible

  
	
  Title:

  	
   

  	
  Title: Second Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ signature illegible

  
	
  Title:

  	
   

  	
  Title: Second Vice
  President

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  May 10,
  2004

  	
   

  	
  Date:

  	
  May 5,
  2004

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ZNAT
  INSURANCE COMPANY

  	
   

  	
  ZENITH
  STAR INSURANCE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ John J. Tickner

  	
   

  	
  /s/ John J. Tickner

  
	
  Title:

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  
						



 


Page 3 of 3 Pages













 


AMENDMENT
NO. 4


 


The Workers’ Compensation
and Employers’ Liability Excess of Loss Reinsurance Agreement of July 1,
2002, between EMPLOYERS REINSURANCE CORPORATION of Overland Park, Kansas and
ZENITH INSURANCE COMPANY and ZNAT INSURANCE COMPANY, both of Woodland Hills,
California and ZENITH STAR INSURANCE COMPANY of Austin, Texas is hereby amended
as follows:


 


As respects net premium
income entered on the books and records of the REINSURED on and after January 1,
2005, the reinsurance premium rates set forth in Article VIII, REINSURANCE
PREMIUM, as respects Layer One and Layer Three are hereby amended and,
accordingly, the first and third paragraphs of that article are hereby deleted
in their entirety and the following are substituted therefor:


 


REINSURANCE
PREMIUM.  As respects
net premium income derived from Layer One of this agreement, the REINSURED
shall pay to the CORPORATION a reinsurance premium equal to 1.258% of the net
premium income derived by the REINSURED from the line of business to which this
agreement applies.


 


As
respects net premium income derived from Layer Three of this agreement, the
REINSURED shall pay to the CORPORATION a reinsurance premium equal to .532% of
the net premium income derived by the REINSURED from the line of business to
which this agreement applies.


 


In all other respects not
inconsistent herewith, said agreement shall remain unchanged.


 


Page 1 of 2 Pages













 


IN WITNESS WHEREOF, the
parties hereto have caused this amendment to be executed in duplicate.


 


 


	
  ZENITH
  INSURANCE COMPANY

  	
   

  	
  EMPLOYERS REINSURANCE

  
	
   

  	
   

  	
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/John J. Tickner

  	
   

  	
  /s/ signature illegible

  
	
  Title: Senior Vice
  President

  	
   

  	
  Title:
  Second Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Jack D. Miller

  	
   

  	
  /s/ Janet A. Popek

  
	
  Title: President

  	
   

  	
  Title:
  Second Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  March 8,
  2005

  	
   

  	
  Date:

  	
  March 3,
  2005

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ZNAT
  INSURANCE COMPANY

  	
   

  	
  ZENITH STAR INSURANCE
  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ John J. Tickner

  	
   

  	
  /s/ John J. Tickner

  
	
  Title: Senior Vice
  President

  	
   

  	
  Title: Senior Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Jack D. Miller

  	
   

  	
  /s/ Jack D. Miller

  
	
  Title: President

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  March 8,
  2005

  	
   

  	
  Date:

  	
  March 8,
  2005

  



 


Page 2 of 2 Pages













 


AMENDMENT
NO. 5


 


The Workers’ Compensation
and Employers’ Liability Excess of Loss Reinsurance Agreement of July 1,
2002, between EMPLOYERS REINSURANCE CORPORATION of Overland Park, Kansas and
ZENITH INSURANCE COMPANY and ZNAT INSURANCE COMPANY, both of Woodland Hills,
California and ZENITH STAR INSURANCE COMPANY of Austin, Texas is hereby amended
as follows:


 


As respects net premium
income entered on the books and records of the REINSURED on and after January 1,
2006, the reinsurance premium rate set forth in Article VIII, REINSURANCE
PREMIUM, as amended, as respects Layer One is hereby decreased from 1.258% to
1.143%.


 


In all other respects not
inconsistent herewith, said agreement shall remain unchanged.


 


IN WITNESS WHEREOF, the
parties hereto have caused this amendment to be executed in duplicate.


 


 


	
  ZENITH
  INSURANCE COMPANY

  	
   

  	
  EMPLOYERS
  REINSURANCE

  	
   

  
	
   

  	
   

  	
  CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Jack Hasbrouck

  	
   

  	
  /s/ signature illegible

  
	
  Title: Senior Vice
  President

  	
   

  	
  Title:
  Second Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Diane Heidenreich

  	
   

  	
  /s/ Janet A. Popek

  
	
  Title: Vice President

  	
   

  	
  Title:
  Second Vice President

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  March 7,
  2006

  	
   

  	
  Date:

  	
  March 2,
  2006

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ZNAT
  INSURANCE COMPANY

  	
   

  	
  ZENITH STAR INSURANCE
  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Jack Hasbrouck

  	
   

  	
  /s/ Jack D. Miller

  
	
  Title: Senior Vice
  President

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Diane Heidenreich

  	
   

  	
  /s/ Robert E. Meyer

  
	
  Title: Vice President

  	
   

  	
  Title: Senior Vice
  President & Actuary

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  March 7,
  2006

  	
   

  	
  Date:

  	
  March 7,
  2006

  
						



 


Page 1 of 1 Page












 


AMENDMENT NO. 6


 


The Workers’ Compensation and Employers’ Liability Excess of Loss
Reinsurance Agreement of July 1, 2002, between EMPLOYERS REINSURANCE
CORPORATION of Overland Park, Kansas and ZENITH INSURANCE COMPANY and ZNAT
INSURANCE COMPANY, both of Woodland Hills, California and ZENITH STAR INSURANCE
COMPANY of Austin, Texas is hereby amended as follows:


 


I.              In
recognition of the merger between Zenith Star Insurance Company and Zenith
Insurance Company effective September 30, 2005, in which Zenith Insurance
Company was the surviving corporation, the name Zenith Star Insurance Company
shall no longer appear as a separate reinsured hereunder as of such date.


 


II.            By way of correction,
the effective date for the reinsurance premium rate change set forth in
Amendment No. 5 is hereby changed from January 1, 2006 to March 1,
2006.


 


In all other respects not inconsistent herewith, said agreement shall
remain unchanged.


 


IN WITNESS WHEREOF, the parties hereto have caused this amendment to be
executed in duplicate.


 


 


	
  ZENITH INSURANCE COMPANY

  	
   

  	
  EMPLOYERS REINSURANCE

  	
   

  
	
   

  	
   

  	
  CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Jack D. Miller

  	
   

  	
  /s/ signature illegible

  
	
  Title: 

  	
   

  	
  Title: Second Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Robert E. Meyer

  	
   

  	
  /s/ signature illegible

  
	
  Title:

  	
   

  	
  Title: Second Vice President

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  April 13, 2006

  	
   

  	
  Date:

  	
  April 6, 2006

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ZNAT INSURANCE COMPANY

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Jack D. Miller

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Robert E. Meyer

  	
   

  	
   

  
	
  Title: Vice President

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  April 13, 2006

  	
   

  	
   

  
						



 


Page 1 of 1 Page













 


AMENDMENT NO. 7


 


The Workers’ Compensation and Employers’ Liability Excess of Loss
Reinsurance Agreement of July 1, 2002, between EMPLOYERS REINSURANCE
CORPORATION of Overland Park, Kansas, and ZENITH INSURANCE COMPANY and ZNAT
INSURANCE COMPANY, both of Woodland Hills, California, is hereby amended as
follows:


 


I.              As respects
occurrences taking place on or after May 1, 2007, and net premium income
entered on the books and records of the REINSURED on and after such date:


 


A.            All references
to separate layers under this agreement are hereby deleted, and Article II,
Reinsurance, and Article VIII, Reinsurance Premium, are hereby amended as
described herein.


 


B.            Article II,
Reinsurance, is hereby deleted in its entirety and the following is substituted
therefor:


 


ARTICLE II


 


REINSURANCE.  As respects
loss sustained by the REINSURED under this agreement, for each occurrence
regardless of the number of policies involved in such occurrence, the REINSURED
shall retain as its own net retention the first $5,000,000 of loss and the
CORPORATION hereby agrees to indemnify the REINSURED against loss in excess of
such retention subject to a limit of $5,000,000 each occurrence and an annual
aggregate limit of $25,000,000, the first such annual period commencing on May 1,
2007 and ending the following April 30, and each successive 12 calendar
month period thereafter.


 


Occupational disease sustained by each employee shall be deemed to be a
separate occurrence.


 


C.            The Terrorism
Sublimit specified in Article III, Terrorism Sublimit, is hereby decreased
from $9,000,000 to $5,000,000 any one 12 month period.


 


D.            Article VIII,
Reinsurance Premium, as amended, is hereby deleted in its entirety and the
following is substituted therefor:


 


ARTICLE VIII


 


REINSURANCE PREMIUM.  As respects net premium income derived from
policies reinsured under this agreement, the REINSURED shall pay to the
CORPORATION a reinsurance premium equal to .834% of the net premium income
derived by the REINSURED from those lines of business to which this agreement
applies.


 


Page 1 of 5 Pages













 


II.            As respects occurrences taking place on or after May 1,
2007:


 


A.            The following
new article is hereby added to this agreement:


 


ARTICLE V-A


 


DEFINITION OF OCCURRENCE.  The term “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 “occurrence” shall be held to include:


 


As respects Occupational Disease under Workers Compensation and
Employers Liability, each case of an employee contracting any disease for which
the REINSURED may be liable shall be considered a separate and distinct
occurrence and the date of each occurrence shall be deemed to be as follows:


 


(a)           If the case
is compensable under the Workers Compensation Law or any Occupational Disease
Compensation Act, 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 or any Occupational
Disease Compensation Act, the date of the disability due to said disease
actually began;


 


(c)           Where claim
is made after employment has ceased, then the date of the cessation of
employment shall be deemed to be the date of disability.


 


B.            The following
new paragraph is hereby added to Article VI, Definitions of Loss and Claim
Expenses:


 


However, coverage in excess of policy limits and coverage for extra
contractual obligations, as described in subparagraphs (b) and (c) of
this article, respectively, 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 REINSURED acting individually or collectively or in collusion with an
individual or corporation or any other organization or party involved in the
presentation, defense or settlement of any claim covered hereunder.


 


Page 2 of 5 Pages













 


III.           Effective May 1, 2007:


 


A.            The following
new paragraph is hereby added to Article VI, Definitions of Loss and Claim
Expenses:


 


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


 


B.            The following
new article is hereby added to this agreement:


 


ARTICLE XV-A


 


DISPUTE RESOLUTION.


 


Part I - Choice Of Law And Forum


 


Any dispute arising under this agreement
shall be resolved in the State of California, and the laws of the State of
California shall govern the interpretation and application of this agreement.


 


Part II - Mediation


 


If a dispute between the REINSURED and the
CORPORATION, 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 REINSURED and the
CORPORATION 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.


 


Page 3 of 5 Pages













 


C.            Appointment
of Arbitrators - The members of the arbitration panel shall be chosen from
disinterested persons with at least 10 years experience in the insurance and
reinsurance business.  Unless a single
arbitrator is agreed upon, the party requesting arbitration (hereinafter
referred to as the “claimant”) shall appoint an arbitrator and give written
notice thereof by certified mail, to the other party (hereinafter referred to
as the “respondent”) together with its notice of intention to arbitrate.  Within 30 days after receiving such notice,
the respondent shall also appoint an arbitrator and notify the claimant thereof
by certified mail.  Before instituting a
hearing, the two arbitrators so appointed shall choose an umpire.  If, within 20 days after the appointment of
the arbitrator chosen by the respondent, the two arbitrators fail to agree upon
the appointment of an umpire, each of them shall nominate three individuals to
serve as umpire, of whom the other shall decline two and the umpire shall be
chosen from the remaining two by drawing lots. 
The name of the individual first drawn shall be the umpire.


 


D.            Failure of
Party to Appoint an Arbitrator - If the respondent fails to appoint an
arbitrator within 30 days after receiving a notice of intention to arbitrate,
the claimant’s arbitrator shall appoint an arbitrator on behalf of the
respondent, such arbitrator shall then, together with the claimant’s
arbitrator, choose an umpire as provided in Paragraph C. of Part III of
this Article.


 


E.             If the
REINSURED is involved in a dispute under the terms of this agreement and in one
or more separate disputes with one or more other reinsurers in which common
questions of law or fact are in issue, the REINSURED or the CORPORATION, at its
option, may join with such other reinsurers in a common arbitration proceeding
under the terms of this article.  If the
REINSURED and such other reinsurers have commenced arbitration, the CORPORATION
may at its option join such proceeding for the determination of the disupte
between the REINSURED and the CORPORATION.


 


F.             Submission
of Dispute to Panel – Within 30 days after the notice of appointment of all
arbitrators, the panel shall meet, and determine a timely period for discovery,
discovery procedures and schedules for hearings.


 


G.            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.


 


Page 4 of 5 Pages













 


H.            Arbitration
Award - The arbitration panel shall render its decision within 60 days after
termination of the proceeding, which decision shall be in writing, stating the
reasons therefor.  The decision of the
majority of the panel shall be final and binding on the parties to the
proceeding.  In no event, however, will
the panel be authorized to award punitive, exemplary or consequential damages
of whatsoever nature in connection with any arbitration proceeding concerning
this agreement.


 


I.              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.


 


In all other respects not inconsistent herewith, said agreement shall
remain unchanged.


 


IN WITNESS WHEREOF, the parties hereto have caused this amendment to be
executed in duplicate.


 


	
  ZENITH INSURANCE COMPANY

  	
   

  	
  EMPLOYERS REINSURANCE 

  CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Jack D. Miller

  	
   

  	
  /s/ Lawrence D. Hunter-Blank

  
	
  Title: President

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
  /s/ Michael E. Jansen

  	
   

  	
  /s/ Holly W. Lowe

  
	
  Title: Executive Vice President and General

  	
   

  	
  Title: Second Vice President

  
	
  Counsel

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  July 20, 2007

  	
   

  	
  Date:

  	
  July 18, 2007

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ZNAT INSURANCE COMPANY

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Jack D. Miller

  	
   

  	
   

  
	
  Title: President

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Michael E. Jansen

  	
   

  	
   

  
	
  Title: Executive Vice President and General

  	
   

  	
   

  
	
  Counsel

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  July 20, 2007

  	
   

  	
   

  
						



 


Page 5 of 5 Pages













 


AMENDMENT NO. 8


 


The
Workers’ Compensation and Employers’ Liability Excess of Loss Reinsurance
Agreement of July 1, 2002, between EMPLOYERS REINSURANCE CORPORATION of
Overland Park, Kansas and ZENITH INSURANCE COMPANY and ZNAT INSURANCE COMPANY,
both of Woodland Hills, California, is hereby amended as follows:


 


As
respects occurrences taking place on or after April 1, 2008, the following
paragraph is hereby added as the final paragraph of Article II,
Reinsurance:


 


Notwithstanding any provision of this agreement to
the contrary, the Company has the right to carry facultative reinsurance up to
$2,500,000 each occurrence with respect to its net retained liability
pertaining to its Florida horse related business.  The Company may make changes in such
facultative reinsurance without notice to the Reinsurer, and such facultative
reinsurance shall not be taken into account in calculating the net retention of
the Company for the purpose of this agreement; nether shall any portion of the
recoveries under such facultative reinsurance be deducted in arriving at the
gross and net loss of the Company hereunder, nor shall the Company’s right of
recovery hereunder be impaired thereby. 
Recoveries under such facultative reinsurance shall inure solely to the
benefit of the Company.


 


In
all other respects not inconsistent herewith, said agreement shall remain
unchanged.


 


IN
WITNESS WHEREOF, the parties hereto have caused this amendment to be executed
in duplicate.


 


	
  ZENITH INSURANCE COMPANY

  	
   

  	
  WESTPORT INSURANCE CORPORATION

  	
   

  
	
   

  	
   

  	
  (formerly named Employers Reinsurance

  	
   

  
	
   

  	
   

  	
  Corporation)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Jack D. Miller

  	
   

  	
  /s/
  signature illegible

  
	
  Title:
  President

  	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Michael E. Jansen

  	
   

  	
  /s/
  signature illegible

  
	
  Title:

  	
  Executive
  Vice President and

  	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
  General
  Counsel

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  April 29, 2008

  	
   

  	
  Date:

  	
  April 25, 2008

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ZNAT INSURANCE COMPANY

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Jack D. Miller

  	
   

  	
   

  
	
  Title:
  President

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Michael E. Jansen

  	
   

  	
   

  
	
  Title:

  	
  Executive
  Vice President and

  	
   

  	
   

  
	
   

  	
  General
  Counsel

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  April 29, 2008

  	
   

  	
   

  
						



 


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