EXHIBIT
10.14


 


SPECIALTY
PROGRAM BUSINESS AND INSURANCE RISK SHARING BUSINESS


 


QUOTA
SHARE REINSURANCE AGREEMENT


 


between


 


TOWER
INSURANCE COMPANY OF NEW YORK

TOWER NATIONAL INSURANCE COMPANY

(each a “Company”)


 


and


 


CASTLEPOINT
REINSURANCE COMPANY, LTD.

(“Reinsurer”)


 


Entered
into as of April 10, 2006 (April 28, 2006 with 

respect to Tower National Insurance Company)


 


and


 


Effective
April 5, 2006


 


 


ARTICLE
I          BUSINESS COVERED


 


A.           
This
Agreement applies to all in-force, new and renewal Policies, except as
hereinafter excluded, written and classified by the Company as Fire and Allied
Perils, Commercial Multiple Peril, Homeowners Multiple Peril and Liability,
Workers’ Compensation, Inland Marine and Automobile Liability and Physical
Damage and Umbrella, with an inception date effective during the term of this
Agreement and which are classified by the Company as Specialty Program Business
and Insurance Risk Sharing Business.


 


ARTICLE
II        DEFINITIONS


 


“Business
Covered” shall mean the business described in Article I.


 


“Extra-Contractual
Obligations” shall mean those liabilities not covered under any other provision
of this Agreement, other than Loss Excess of Policy Limits, including but not
limited to compensatory, consequential, punitive, or exemplary damages together
with any legal costs and expenses incurred in connection therewith, paid as
damages or in settlement by the Company arising from an allegation or claim of
its insured, its insured’s assignee, or other third party, which alleges
negligence, gross negligence, or other tortious conduct on the part of the
Company in the handling, adjustment, rejection, defense or settlement of a
claim under a Policy.


 


 

















 


“Insurance Risk Sharing
Business” shall mean various risk sharing arrangements such as (i) pooling or
sharing of premiums and losses between the Company and other insurance
companies based upon their respective percentage allocations or (ii) appointing
other third party insurance companies as Program Underwriting Agents with such
third party insurance companies assuming through reinsurance a portion of the
business they produce as Program Underwriting Agents.


 


“Letter(s)
of Credit” shall have the meaning set forth in Article XVI.


 


“Loss”
or “Losses” shall mean, with respect to a Policy, the amount paid or payable by
the Company to an insured with regards a Loss Occurrence, including
(i) any Ex Gratia Payments (i.e., a claim payment not necessarily
required by a Policy as a commercial accommodation by the Company to the
insured or reinsured) and (ii) any payments for Extra-Contractual
Obligations or Losses in Excess of Policy Limits.


 


“Loss
Adjustment Expenses” as used in this Agreement shall mean all loss adjustment
expenses incurred by the Company in settling claims including costs and
expenses allocable to a specific claim that are incurred by the Company in the
investigation, appraisal, adjustment, settlement, litigation, defense or appeal
of a specific claim, including court costs and costs of supersedes and appeal
bonds and including (i) pre-judgment interest, unless included as part of the
award or judgment; (ii) post-judgment interest and (iii) legal expenses and
costs incurred in connection with coverage questions and legal actions
connected thereto, including pro rata declaratory judgment expenses.


 


Loss Adjustment Expenses shall include in-house
adjusters, defense attorneys, and other claims and legal personnel of Tower
Insurance Company of New York/Tower Risk Management and other costs allocated
to the defense and adjustment of a specific claim.


 


“Loss in Excess of Policy
Limits” means any amount of loss, together with any legal costs and expenses
incurred in connection therewith, paid as damages or in settlement by the
Company in excess of its Policy Limits, but otherwise within the coverage terms
of the Policy, arising from an allegation or claim of its insured, its
insured’s assignee, or other third party, which alleges negligence, gross
negligence, or other tortious conduct on the part of the Company in the
handling of a claim under a Policy or bond, in rejecting a settlement within
the Policy Limits, in discharging a duty to defend or prepare the defense in
the trial of an action against its insured, or in discharging its duty to
prepare or prosecute an appeal consequent upon such an action.  For the
avoidance of doubt, the decision by the Company to settle a claim for an amount
within the coverage of the Policy but not within the Policy limit when the
Company has reasonable basis to believe that it may have liability to its
insured or assignee or other third party on the claim will be deemed a Loss in
Excess of Policy Limits.


 


“Losses
Incurred” shall mean Losses ceded and Loss Adjustment Expense ceded as of the
effective date of calculation, plus the ceded reserves for Losses and Loss
Adjustment Expense outstanding as of the same date (including losses incurred
but not reported), it being understood and agreed that all Losses and related
Loss Adjustment Expense under Policies with effective or


 


 


2

















 


renewal dates during an adjustment
period shall be charged to the adjustment period, regardless of the date said
Losses actually occur.


 


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


 


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


 


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


 


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


 


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


 


Except for those “Loss Occurrences” referred to in (i)
and (ii) above, the Company may choose the date and time when any such period
of consecutive hours commences provided that it is not earlier than the date
and time of the occurrence of the first recorded individual loss sustained by
the Company arising out of that disaster, accident or loss and provided that
only one such period of 168 consecutive hours shall apply with respect to one
event.


 


However, as respects those “Loss Occurrences” referred
to in (i) and (ii) above, if the disaster, accident or loss occasioned by the
event is of greater duration than 72 consecutive hours, then the Company may
divide that disaster, accident or loss into two or more “Loss Occurrences”
provided no two periods overlap and no individual loss is included in more than
one such period and provided that no period commences earlier than the date and
time of the occurrence of the


 


 


3

















 


first recorded individual loss sustained by the
Company arising out of that disaster, accident or loss.


 


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


 


“Net
Liability” shall mean the liability for Losses and Loss Adjustment Expenses
which the Company retains net for its own account and unreinsured in any way,
except for excess of loss reinsurance, after recoveries from inuring
reinsurance.


 


“Net
Loss Ratio” shall mean, for any period of time, the ratio of Losses Incurred
during such period to net Premiums Earned for such period.


 


“Net
Written Premium” shall mean direct premium written on the Policies covered by
this Agreement plus additions, less refunds and return premium for
cancellations and reductions (but not dividends) and less premium paid or
payable for reinsurance that inures to the benefit of this Agreement.


 


“Obligations”
shall have the meaning set forth in Article XVI.


 


“Policy”
or Policies” shall mean all policies, binders, contracts, certificates, or
agreements of insurance, whether written or oral, covering Specialty Program
Business and Insurance Risk Sharing Business in-force, issued or renewed on or
after the Effective Date by the Company.


 


“Premiums
Earned” shall mean, with regards to any adjustment period, ceded net written
premiums for Policies with effective or renewal dates during the adjustment
period, less the unearned portion thereof as of the effective date of
calculation, it being understood and agreed that all premiums for Policies with
effective or renewal dates during an adjustment period shall be credited to
that adjustment period.


 


“Program
Business” shall mean narrowly defined classes of business that are underwritten
on an individual policy basis by a Program Underwriting Agent on behalf of
insurance companies.


 


“Specialty
Program Business” shall mean (i) Program Business other than Traditional
Program Business and (ii) Traditional Program Business that Company elects not
to manage but that CastlePoint Management Corp. elects to manages.


 


“Terrorism”
shall mean an act, including but not limited to the use of force or violence
and/or the threat thereof, any person or group(s) of persons, whether acting
alone or on behalf of or in connection with any organization(s) or
government(s), committed for political, religious, ideological or similar
purposes including the intention to influence any government and/or to put the
public, or any section of the public, in fear that has been determined by the
appropriate federal authority to have been an act of terrorism.


 


 


4

















 


Terrorism will include loss, damage, cost of expense
of whatsoever nature directly or indirectly caused by, resulting from or in
connection with any action taken in controlling, preventing, supervising or in
any way relating to any act of terrorism.


 


“Traditional
Program Business” shall mean blocks of Program Business in excess of $5 million
in annual gross written premium Tower historically has underwritten, consisting
of non-auto related personal lines and the following commercial lines of
business: retail stores and wholesale trades, commercial and residential real
estate, restaurants, grocery stores, office and service industries, and artisan
contractors.


 


“Trust
Account” shall have the meaning specified in Article XVI.


 


“Trust
Agreement” shall have the meaning specified in Article XVI.


 


“Trustee” shall have the
meaning specified in Article XVI.


 


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


 


ARTICLE
III      COMMENCEMENT AND TERMINATION


 


A.           
This
Agreement is effective at 12:01 a.m., Eastern Standard Time, April 5, 2006 (the
“Effective Date”).  Either party may terminate the Agreement as of the
date thirty six (36) months after the Effective Date and annually thereafter by
giving at least six (6) months prior written notice to the other party by
certified or registered mail.


 


B.           
The
Reinsurer shall have the right to terminate this Agreement as of the date
twenty four (24) months after the Effective Date and annually thereafter by
giving sixty (60) days prior written notice by certified or registered mail to
the Company if the sum of the Net Loss Ratio plus (weighted) ceding commission
percentage hereunder for the Business Covered hereunder since the Effective
Date equals or exceeds 99 % at the end of the calendar quarter immediately
preceding the date of such notice. If the parties cannot agree as to the
calculation of the Net Loss Ratio or ceding commission, within 30 days of
receiving the appropriate report, the calculation shall be arbitrated. The
actuarial firm of Towers Perrin shall furnish an arbiter for Company and
Reinsurer will choose another actuarial firm to furnish its arbiter. Those two arbiters
will select a third independent actuarial firm to furnish the third
arbiter.  However, it is agreed that in the event of termination by
Reinsurer pursuant to this provision, the parties will act reasonably to
negotiate a new reinsurance agreement on terms similar to those then being
offered by other reinsurers.


 


C.           
In
the event either party terminates this Agreement in accordance with Paragraph
A. or B. above, the Reinsurer shall participate in all Policies ceded within
the terms of this Agreement written or renewed by the Company after receipt of
notice of termination but prior to termination, and shall remain liable for all
cessions in force at termination of this Agreement; however, the liability of
the Reinsurer shall cease with respect to Loss Occurrences subsequent to the
first anniversary, natural expiration or cancellation of each Policy ceded, but
not to extend


 


 


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beyond twelve (12) months after
such termination. The Company and the Reinsurer may agree to terminate this
Agreement or some portion of the Business Covered on a cut-off basis. 
Upon such termination, the Reinsurer shall incur no liability for Loss
Occurrences subsequent to the effective date of termination and the Reinsurer
shall return to the Company the Reinsurer’s portion of the unearned premium
reserve for all in force Policies less previously paid Ceding Commission on
such unearned premium reserve.


 


D.           
Either
the Company or the Reinsurer may terminate this Agreement at any time by the
giving of thirty (30) days prior written notice to the other party upon the
happening of any one of the following circumstances:


 


(a)          
A
State Insurance Department or other legal authority orders the other party to
cease writing business, or;


 


(b)          
The
other party has become insolvent or has been placed into liquidation or
receivership (whether voluntary or involuntary), or there has been instituted
against it proceedings for the appointment of a receiver, liquidator,
rehabilitator, conservator, or trustee in bankruptcy, or other agent known by
whatever name, to take possession of its assets or control of its operations,
or


 


(c)          
The
other party’s statutory policyholders’ surplus has been reduced by either 50%
of the amount of surplus at the inception of this Agreement or 50% of the
amount at the latest anniversary, whichever is greater, or has lost any part
of, or has reduced its paid-up capital, or


 


(d)          
The
other party has become merged with, acquired or controlled by any company,
corporation, or individual(s) not controlling the party’s operations
previously, or


 


(e)          
The
other party has reinsured its entire liability under this Agreement without the
terminating party’s prior written consent, or


 


(f)           
The
Company ceases to retain any of the Business Covered.


 


E.           
The Company may
terminate this Agreement upon thirty (30) days notice if the A.M. Best Rating
of the Reinsurer falls below “A-”.


 


F.            
Notwithstanding
the foregoing, this Agreement will terminate upon the effective date of a
Specialty Program Business Pooling Agreement between the Company and
CastlePoint Insurance Company or such other entity designated by the Reinsurer.


 


G.           
In
the event of any such termination under D., E., or F., the liability of the
Reinsurer shall be terminated in accordance with the termination provisions set
forth in Paragraph C. above.  However, in the case of a termination under
D or E, if the terminating party is the Company, the Company shall have the
right, by the giving of prior written notice, to terminate this Agreement on a
cut-off basis as provided in Paragraph C. above.


 


 


6

















 


ARTICLE
IV       TERRITORIAL SCOPE


 


The territorial limits of
this Agreement shall be identical with those of the Company’s Policies.


 


ARTICLE
V        EXCLUSIONS


 


This Agreement shall not
apply to and specifically excludes:


 


A.           
Nuclear
Incident, in accordance with the following clauses attached hereto:


 


1.            
Nuclear Incident Exclusion
Clause – Physical Damage –Reinsurance – U.S.A. – NMA 1119;


 


2.            
Nuclear Incident Exclusion
Clause – Liability – Reinsurance – U.S.A. – NMA 1590;


 


B.           
War
Risks, in accordance with BRMA Clause 56B;


 


C.           
Insolvency,
in accordance with BRMA Clause 20A;


 


D.           
Liability
assumed by the Company as a member of any pool, association or syndicate, in
accordance with BRMA Clause 40A;


 


E.           
Earthquake
when written as such;


 


F.            
Liability
arising out of ownership, maintenance or use of any aircraft or flight
operations;


 


G.           
Professional
Liability, when written as such, however not to exclude when written as part of
a package Policy or when written in conjunction with other Policies issued by
the Company;


 


H.           
Insolvency
and Financial Guarantee;


 


I.            
Any
acquisitions of companies or books of business outside of the normal course of business
(“agent rollovers”) without the prior written consent of the Reinsurer hereon;


 


J.            
Asbestos
liabilities of any nature;


 


K.           
Pollution
liabilities of any nature;


 


L.           
Assumed
reinsurance with the exception of inter-affiliate reinsurance.


 


ARTICLE
VI       REINSURANCE COVERAGE


 


A.           
Upon
the contribution of capital to the Reinsurer by its parent in the amount of at
least $156 million, the Company shall automatically and obligatorily cede to
the Reinsurer, and the Reinsurer shall be obligated to accept as assumed
reinsurance, an 85% quota share portion of


 


 


7

















 


the Net Liabilities with respect to
such Policies, subject to adjustment as set forth below.  The Company may,
in its sole discretion, change the quota share participation of the Reinsurer
from time to time effective as of any 6 month anniversary date of the effective
date of this Agreement upon not less than ninety (90) days prior written notice
to the Reinsurer; provided, however that the quota share
participation of the Company shall at all times during the term of this
Agreement be a minimum of 15% and a maximum of 25%, and provided further that
the quota share participation of the Company does not exceed $25 million during
the first 12 month period ended March 31, 2007, with such maximum amount
subject to a 25% growth factor per twelve (12) month period thereafter. 
If the Company’s quota share participation maximum of $25 million (subject to
the growth factor) is attained in any twelve month period ended March 31, then
the quota share participation percentage, which shall apply to all premiums and
losses on a pro-rated basis for such period, shall be decreased for that 12
month period even if such participation is below 15%. Each such change shall
apply to Policies issued or renewed after the effective date of such change.


 


B.           
The
Reinsurer’s liability as respect Losses shall be subject to the following
limits:


 


	
  Property:

  	
   

  	
  $1,000,000 Per Risk

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $10,000,000 Per
  Occurrence

  
	
   

  	
   

  	
   

  
	
  Liability:

  	
   

  	
  $1,000,000 Per Claim

  
	
   

  	
   

  	
   

  
	
  Terrorism Sub-Limit:

  	
   

  	
  $10,000,000 Per
  Occurrence property and liability combined

  



 


ARTICLE
VII     REINSURANCE PREMIUM


 


As premium for the
reinsurance provided by this Agreement, the Company shall cede to the Reinsurer
an amount equal to the Reinsurer’s quota share cession of the Net Written
Premium of the Company for the Business Covered by this Agreement.


 


ARTICLE
VIII   CEDING COMMISSION


 


The Reinsurer shall allow
the Company a 30% commission on all premiums ceded hereunder.   The
ceding commission may be adjusted every six (6) months on each six (6) month
anniversary of the Effective Date based on the Net Loss Ratio of the Specialty
Program Business and Insurance Risk Sharing Business ceded hereunder from the
Effective Date. It shall increase by nine-tenths of a percentage point for
every 1.0 percentage point decline in the Net Loss Ratio below 63% up to a
maximum ceding commission of 36%, as follows:


 


	
  Net
  Loss Ratio

  	
   

  	
  Ceding
  Commission

  	
   

  
	
  63.0% or higher

  	
   

  	
  30.0

  	
  %

  
	
  62

  	
   

  	
  30.9

  	
   

  
	
  61

  	
   

  	
  31.8

  	
   

  
	
  60

  	
   

  	
  32.7

  	
   

  
	
  59

  	
   

  	
  33.6

  	
   

  
	
  58

  	
   

  	
  34.5

  	
   

  
	
  57

  	
   

  	
  35.4

  	
   

  
	
  56.33 or lower

  	
   

  	
  36.0

  	
   

  



 


 


8

















 


The Company shall allow
the Reinsurer return commission on return premiums at the same rate. It is
expressly agreed that the ceding commission allowed the Company includes
provision for all dividends, commissions, taxes, assessments, and all other
expenses of whatever nature, except loss adjustment expense. However, in the
event that regulatory authorities do not approve an intercompany transaction
containing these ceding commissions, the pariticipating companies shall use
their best good faith effort to structure the transaction for the Participating
Companies in order that the sum of the Net Loss Ratio plus ceding commission
percentage equals 93% for the Specialty Program Business and Insurance Risk
Sharing Business.


 


ARTICLE
IX      REPORTS AND REMITTANCES


 


A.           
Within forty five
(45) days following the end of each calendar month during the term of this
Agreement, the Company shall provide the Reinsurer with a report summarizing
the following with regards to such month and on a cumulative basis:


 


1.            
Net Written Premium
and ceded Net Written Premiums received by line of business;


2.            
Net Premiums Earned
and ceded net Premiums Earned by line of business;


3.            
Ceding commission due
on ceded Net Written Premium received;


4.            
Net ceded Loss and
Loss Adjustment Expenses paid by line of business; and


5.            
Salvage recovered
plus net salvage recovered by line of business.


 


In addition, the Company
shall furnish the Reinsurer such other information as may be required by the
Reinsurer for completion of its financial statements.


 


B.           
Amounts
due by either party shall be (1) ceded Net Written Premiums received less (2)
ceding commission on ceded Net Written Premiums received less (3) ceded Loss
and Loss Adjustment Expenses paid plus (4) net salvage recovered, and shall be
remitted within 15 days of the report on a collected basis. Should payment due
from the Reinsurer exceed $100,000 as respects any one Loss Occurrence, the
Company may give the Reinsurer notice of payment made or its intention to make
payment on a certain date.  If the Company has paid the loss, payment
shall be made by the Reinsurer immediately after receipt of notice from the
Company.  If the Company intends to pay the loss by a certain date and has
submitted a satisfactory proof of loss or similar document, payment shall be
due from the Reinsurer 24 hours prior to that date, provided the Reinsurer has
a period of five working days after receipt of said notice to make the
payment.  Cash amounts specifically remitted by the Reinsurer as set forth
herein shall be credited to the next monthly account.


 


 


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ARTICLE
X        EXTRA-CONTRACTUAL
OBLIGATIONS/LOSS EXCESS OF POLICY LIMITS


 


A.           
The
Reinsurer shall protect the Company for the Reinsurer’s quota share portion of
Extra-Contractual Obligations and Loss Excess of Policy Limits, subject to the
limitations set forth in Article VI.


 


B.           
An
Extra-Contractual Obligation or a Loss Excess of Policy Limits shall be deemed
to have occurred on the same date as the loss covered under the Company’s
original Policy and shall be considered part of the original loss (subject to
other terms of this Agreement.)


 


C.           
Neither
an Extra-Contractual Obligation nor a Loss Excess of Policy Limits shall
include a loss incurred by the Company as the result of any bad faith,
fraudulent or criminal act by the Company.


 


D.           
Recoveries,
whether collectible or not, including any retentions and/or deductibles, from
any other form of insurance or reinsurance which protect the Company against
any loss or liability covered under this Article shall inure to the benefit of
the Reinsurer and shall be deducted from the total amount of any
Extra-Contractual Obligation and/or Loss Excess of Policy Limits in determining
the amount of Extra-Contractual Obligation and/or Loss Excess of Policy Limits
that shall be indemnified under this Article.


 


E.           
The
Company shall be indemnified in accordance with this Article to the extent
permitted by applicable law.


 


ARTICLE
XI      ORIGINAL CONDITIONS


 


The Reinsurer’s liability
to the Company shall attach simultaneously with that of the Company and the
reinsurance of all Business Covered hereunder shall be subject in all respects
to the same risks, terms, clauses, conditions, interpretations, alterations,
modifications cancellations and waivers as the respective insurances (or
reinsurances) of the Company’s Policies and the Reinsurer shall pay losses as
may be paid thereon, the true intent of this Agreement being that in each and
every case to which this Agreement applies, the Reinsurer shall follow the
settlements and fortunes of the Company, subject always to the limits, terms
and conditions of this Agreement.


 


ARTICLE
XII     ERRORS AND OMISSIONS


 


Inadvertent delays,
errors or omissions made by the Company in connection with this Agreement
(including the reporting of claims) shall not relieve the Reinsurer from any
liability which would have attached had such delay, error or omission not
occurred, provided always that such delay, error or omission shall be rectified
as soon as possible after discovery.


 


ARTICLE
XIII   CURRENCY


 


Whenever the word
“Dollars” or the “$” sign appears in this Agreement, they shall be construed to
mean United States Dollars and all transactions under this Agreement shall be
in United States Dollars.  Amounts paid or received by the Company in any
other currency shall be


 


 


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converted to United States Dollars at the rate of
exchange at the date such transaction is entered on the books of the Company.


 


ARTICLE
XIV   FEDERAL EXCISE TAX AND OTHER TAXES


 


A.           
To
the extent that any portion of the reinsurance premium for this Agreement is
subject to the Federal Excise Tax (as imposed under Section 4371 of the
Internal Revenue Code) and the Reinsurer is not exempt therefrom, the Reinsurer
shall allow for the purpose of paying the Federal Excise Tax, a deduction by
the Company of the applicable percentage of the premium payable hereon. In the
event of any return of premium becoming due hereunder, the Reinsurer shall
deduct the applicable same percentage from the return premium payable hereon
and the Company or its agent shall take steps to recover the tax from the
United States Government.  In the event of any uncertainty, upon the
written request of the Company, the Reinsurer will immediately file a
certificate of a senior corporate officer of the Reinsurer certifying to its
entitlement to the exemption from the Federal Excise Tax with respect to one or
more transactions.


 


B.           
In
consideration of the terms under which this Agreement is issued, the Company
undertakes not to claim any deduction of the premium hereon when making tax
returns, other than income or profits tax returns, to any State or Territory of
the United States of America or to the District of Columbia.


 


ARTICLE
XV     ACCESS TO RECORDS


 


The Company shall place
at the disposal of the Reinsurer at all reasonable times, and the Reinsurer
shall have the right to inspect (and make reasonable copies) through its
designated representatives, during the term of this Agreement and thereafter,
all books, records and papers of the Company directly related to any reinsurance
hereunder, or the subject matter hereof, provided that if the Reinsurer has
ceased active market operations, this right of access shall be subject to that
Reinsurer being current in all payments owed the Company.


 


ARTICLE
XVI   RESERVES


 


A.           
If
any Reinsurer is unauthorized or otherwise unqualified in any state or other
United States jurisdiction, and if, without such security, a financial penalty
to the Company would result on any statutory statement or report it is required
to make or file with insurance regulatory authorities or a court of law in the
event of insolvency, the Reinsurer will timely secure the Reinsurer’s share of
obligations under this Agreement in a manner, form, and amount acceptable to
the Company and to all applicable insurance regulatory authorities in
accordance with this Article.


 


B.           
The
Reinsurer shall secure such Obligations by either:


 


1.            
Clean, irrevocable, and
unconditional evergreen letter(s) of credit (“Letter(s) of Credit”) meeting the
requirements of New York Regulation 133; and/or


 


2.            
A trust account meeting the
requirements of New York Regulation 114.


 


 


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C.           
The
“Obligations” referred to herein means the then current (as of the end of each
calendar quarter) sum of:


 


1.            
The amount of the ceded unearned
premium reserve for which the Reinsurer is responsible to the Company;


 


2.            
The amount of Losses and Loss
Adjustment Expenses and other amounts paid by the Company for which the
Reinsurer is responsible to the Company but has not yet paid;


 


3.            
The amount of ceded reserves for
Losses and Loss Adjustment Expenses (including, ceded reserves for losses
incurred but not reported) for which the Reinsurer is responsible to the
Company; and


 


4.            
The amount of return and refund
premiums paid by the Company for which the Reinsurer is responsible to the
Company but has not yet paid.


 


D.           
To
the extent that the Reinsurer elects to provide Letter(s) of Credit, the
following shall apply.


 


1.            
Each
Letter of Credit will be issued for a term of at least one year and will
include an “evergreen clause”, which automatically extends the term for at
least one additional year at each expiration date unless written notice of
non-renewal is given to the Company not less than 30 days prior to said
expiration date.


 


2.            
The
Letter of Credit must be issued or confirmed by a bank which is authorized to
issue letters of credit, which is either a member of the Federal Reserve System
or is a New York State chartered bank, and which in all other respects
satisfies the definition of a “Qualified Bank” under Section 79.1(e) of New
York Insurance Regulation 133.  If the Letter of Credit is issued by a
bank authorized to issue letters of credit but which is not such a “Qualified
Bank”, then the Letter of Credit must be confirmed by such a bank and the
Letter of Credit must meet all of the conditions set forth in Section 79.4 of
New York Insurance Regulation 133.


 


3.            
The
Reinsurer and the Company agree that the Company may draw upon the Letter(s) of
Credit at any time, notwithstanding any other provisions in the Agreement,
provided such assets are applied and utilized by the Company or any successor
of the Company by operation of law, including, without limitation, any
liquidator, rehabilitator, receiver or conservator of the Company, without
diminution because of the insolvency of the Company or the Reinsurer, only for
the following purposes:


 


(i)           
to
reimburse the Company for the Reinsurer’s share of premiums returned to the
owners of policies reinsured under this Agreement on account of cancellations
of such policies;


 


(ii)          
to
reimburse the Company for the Reinsurer’s share of surrenders and benefits or
losses paid by the Company under the terms and provisions of the policies
reinsured under this Agreement;


 


 


12

















 


(iii)         
to
fund an account with the Company in an amount at least equal to the deduction,
for reinsurance ceded, from the Company’s liabilities for policies ceded under
this Agreement.  Such amount shall include, but not be limited to, amounts
for policy reserves for claims and losses incurred (including losses incurred
but not reported), loss adjustment expenses, and unearned premiums; and


 


(iv)         
to
pay any other amounts the Company claims are due under this Agreement.


 


4.            
The
Company shall immediately return to the Reinsurer any amounts drawn down on the
Letter of Credit that are subsequently determined not to be due.


 


5.            
The
issuing bank shall have no responsibility whatsoever in connection with the
propriety of withdrawals made by the Company of the disposition of funds
withdrawn, except to ensure that withdrawals are made only upon the order of
properly authorized representatives of the Company.


 


E.           
To
the extent that the Reinsurer elects to establish a trust account, the following
shall apply.


 


1.            
It
is agreed that the Reinsurer shall enter into a trust agreement (the “Trust
Agreement”) in a form acceptable to the Company and establish a trust account
(the “Trust Account”) for the sole benefit of the Company with a trustee (the
“Trustee”), which shall be at the time the Trust is established, and shall
continue to be, either a member of the Federal Reserve System or a New York
state chartered bank and which shall not be a parent, subsidiary or affiliate
of the Reinsurer or the Company.


 


2.            
The
Reinsurer agrees to deposit and maintain in said Trust Account assets to be
held in trust by the Trustee for the benefit of the Company as security for the
payment of the Reinsurer’s Obligations to the Company under the
Agreement.  Such assets shall be maintained in the Trust Account by the
Reinsurer as long as the Reinsurer continues to remain liable for such
Obligations.


 


3.            
The
Reinsurer agrees that the assets deposited into the Trust Account shall be valued
according to their current fair market value and shall consist only of currency
of the United States of America, certificates of deposit issued by a United
States bank and payable in United States legal tender, and investments of the
types specified in paragraphs (1), (2), (3), (8) and (10) of Section 1404(a) of
the New York Insurance Law, provided such investments are issued by an
institution that is not the parent, subsidiary or affiliate of either the
Grantor or the Beneficiary (“Authorized Investments”).


 


4.            
The
Reinsurer, prior to depositing assets with the Trustee, shall execute all
assignments and endorsements in blank, and shall transfer legal title to the
Trustee of all shares, obligations or any other assets requiring assignments,
in order that the Company, or the Trustee upon direction of the Company, may
whenever necessary negotiate any such assets without consent or signature from
the Reinsurer or any other entity.


 


 


13

















 


5.            
All
settlements of account under the Trust Agreement between the Company and
Reinsurer shall be made in cash or its equivalent.


 


6.            
The
Reinsurer and the Company agree that the assets in the Trust Account may be
withdrawn by the Company at any time, notwithstanding any other provisions in
the Agreement, provided such assets are applied and utilized by the Company or
any successor of the Company by operation of law, including, without
limitation, any liquidator, rehabilitator, receiver or conservator of the
Company, without diminution because of the insolvency of the Company or the
Reinsurer, only for the following purposes:


 


(i)           
to
reimburse the Company for the Reinsurer’s share of any Losses and Loss
Adjustment Expenses paid by the Company but not received from the Reinsurer or
for unearned premiums due to the Company but not otherwise paid by the
Reinsurer under the Agreement; or


 


(ii)          
to
make payment to the Reinsurer of any amounts held in the Trust Account that
exceed 102% of the Reinsurer’s Obligations (less the balance of credit
available under any Letter(s) of Credit) hereunder; or


 


(iii)         
where
the Company has received notification of termination of the Trust Account, and
where the Reinsurer’s entire Obligations under the Agreement remain
unliquidated and undischarged ten (10) days prior to such termination, to
withdraw amounts equal to such Obligations (less the balance of credit
available under any Letter(s) of Credit) and deposit such amounts in a separate
account, in the name of the Company, in any United States bank or trust
company, apart from its general assets, in trust for such uses and purposes
specified in sub-paragraphs (i) and (ii) above as may remain executory after
such withdrawal and for any period after such termination.


 


7.            
The Reinsurer shall have the
right to seek the Company’s approval to withdraw all or any part of the assets
from the Trust Account and transfer such assets to the Reinsurer, provided that
the withdrawal conforms to the following requirements:


 


(i)           
the
Reinsurer shall, at the time of withdrawal, replace the withdrawn assets with
other Authorized Investments having a market value equal to the market value of
the assets withdrawn,


 


(ii)          
after
such withdrawal and transfer, the market value of the Trust Account is no less
than 102% of the Reinsurer’s Obligations (less the balance of credit available
under any Letter(s) of Credit).


 


8.            
In the event that the Reinsurer
seeks the Company’s approval hereunder, the Company shall not unreasonably or
arbitrarily withhold its approval.


 


9.            
In the event that the Company
withdraws assets from the Trust Account for the purposes set forth in Paragraph
(6)(i) above in excess of actual amounts required to meet the Reinsurer’s
Obligations to the Company (less the balance of credit available under any
Letter(s) of Credit), or in excess of amounts determined to be due and under
Paragraph (6)(iii) above, the Company will return such excess to the Reinsurer.


 


 


14

















 


10.         
The Company will prepare and
forward at annual intervals or more frequently as determined by the Company,
but not more frequently than quarterly to the Reinsurer a statement for the
purposes of this Article, showing the Reinsurer’s share of Obligations as set
forth above.  If the Reinsurer’s share thereof exceeds the then existing
balance of the security provided, the Reinsurer will, within fifteen (15) days
of receipt of the Company’s statement, but never later than December 31 of any
year, increase the amount of the letter of credit, or Trust Account to the
required amount of the Reinsurer’s share of Obligations set forth in the
Company’s statement, but never later than December 31 of any year.  If the
then existing balance of the security provided exceeds an amount equal to 100%
of the Reinsurer’s share thereof, the Company will release the excess thereof
to the Reinsurer upon the Reinsurer’s written request.


 


F.            
The
Reinsurer will take any other reasonable steps that may be required for the
Company to take full credit on its statutory financial statements for the
reinsurance provided by this Agreement.


 


ARTICLE
XVII  SERVICE OF SUIT


 


A.           
This
Article only applies to a Reinsurer domiciled outside of the United States
and/or unauthorized in any state, territory or district of the United States
having jurisdiction over the Company.  Furthermore, this Article will not
be read to conflict with or override the obligations of the parties to
arbitrate their disputes as provided for in the Article entitled
Arbitration.  This Article is intended as an aid to compelling arbitration
or enforcing such arbitration or arbitral award, not as an alternative to the
Arbitration Article for resolving disputes arising out of this Agreement.


 


B.           
In
the event of any dispute, the Reinsurer, at the request of the Company, shall
submit to the jurisdiction of a court of competent jurisdiction within the United
States.  Nothing in this Article constitutes or should be understood to
constitute a waiver of any obligation to arbitrate disputes arising from this
Agreement or the Reinsurer’s rights to commence an action in any court of
competent jurisdiction in the United States, to remove an action to a United
States District Court, or to seek a transfer of a case to another court as
permitted by the laws of the United States or of any state in the United
States.


 


C.           
Service
of process in any such suit against the Reinsurer may be made upon Mendes and
Mount, 750 Seventh Avenue, New York, New York 10019-6829 (“Firm”), or the party
identified on behalf of the Reinsurer on the Reinsurer’s signature page to this
Agreement, and in any suit instituted, the Reinsurer shall abide by the final
decision of such court or of any Appellate Court in the event of an appeal.


 


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


 


E.           
Further,
as required by and pursuant to any statute of any state, territory or district
of the United States which makes provision therefore, the Reinsurer hereby
designates the Superintendent, Commissioner or Director of Insurance or other
officer specified for that


 


 


15

















 


purpose in the statute, or his
successor or successors in office, as their true and lawful attorney upon whom
may be served any lawful process in any action, suit or proceeding instituted
by or on behalf of the Company or any beneficiary hereunder arising out of this
Agreement, and hereby designates the above-named as the person to whom the said
officer is authorized to mail such process or a true copy thereof.


 


ARTICLE
XVIII               
ARBITRATION


 


A.           
Any
dispute or other matter in question between the Company and the Reinsurer
arising out of, or relating to, the formation, interpretation, performance, or
breach of this Agreement, whether such dispute arises before or after
termination of this Agreement, shall be settled by arbitration. 
Arbitration shall be initiated by the delivery of a written notice of demand
for arbitration by one party to the other within a reasonable time after the
dispute has arisen.


 


B.           
If
more than one reinsurer is involved in the same dispute, all such reinsurers
shall constitute and act as one party for the purposes of this Article,
provided, however, that nothing herein shall impair the rights of such
reinsurers to assert several, rather than joint, defenses or claims, nor be
construed as changing the liability of the Reinsurer under the terms of this
Agreement from several to joint.


 


C.           
Except
as set forth in Article III, each party shall appoint an individual as
arbitrator and the two so appointed shall then appoint a third arbitrator. 
If either party refuses or neglects to appoint an arbitrator within 60 days,
the other party may appoint the second arbitrator.  If the two arbitrators
do not agree on a third arbitrator within 60 days of the appointment of the
second arbitrator, each of the arbitrators shall nominate three individuals. If
the two arbitrators are unable to agree upon the third arbitrator within thirty
(30) days of their appointment, the third arbitrator shall be selected from a
list of six individuals (three named by each arbitrator) by a judge of the
United States District Court having jurisdiction over the geographical area in
which the arbitration is to take place, or if that court declines to act, the
state court having general jurisdiction in such area. The arbitrators shall be
active or retired officers of insurance or reinsurance companies or Lloyd’s of
London Underwriters; the arbitrators shall not have a personal or financial
interest in the result of the arbitration.


 


D.           
The
arbitration hearings shall be held in New York, New York, or such other place
as may be mutually agreed.  Each party shall submit its case to the
arbitrators within 60 days of the selection of the third arbitrator or within
such longer period as may be agreed by the arbitrators.  The arbitrators
shall not be obliged to follow judicial formalities or the rules of evidence
except to the extent required by governing law, that is, the state law of the
situs of the arbitration as herein agreed; they shall make their decisions
according to the practice of the reinsurance business.  The decision
rendered by a majority of the arbitrators shall be final and binding on both
parties.  Such decision shall be a condition precedent to any right of
legal action arising out of the arbitrated dispute which either party may have
against the other.  Judgment upon the award rendered may be entered in any
court having jurisdiction thereof.


 


E.           
Each
party shall pay the fee and expenses of its own arbitrator and one-half of the
fee and expenses of the third arbitrator.  All other expenses of the
arbitration shall be equally divided between the parties.


 


 


16

















 


F.            
Except
as provided above, arbitration shall be based, insofar as applicable, upon the
procedures of the American Arbitration Association.


 


ARTICLE
XIX   INSOLVENCY


 


A.           
In
the event of insolvency and the appointment of a conservator, liquidator, or
statutory successor of the Company, the portion of any risk or obligation
assumed by the Reinsurer shall be payable to the conservator, liquidator, or
statutory successor on the basis of claims allowed against the insolvent
Company by any court of competent jurisdiction or by any conservator,
liquidator, or statutory successor of the Company having authority to allow
such claims, without diminution because of that insolvency, or because the
conservator, liquidator, or statutory successor has failed to pay all or a
portion of any claims.


 


B.           
Payments
by the Reinsurer as above set forth shall be made directly to the Company or to
its conservator, liquidator, or statutory successor, except where the Agreement
of insurance or reinsurance specifically provides another payee of such
reinsurance or except as provided by applicable law and regulation (such as
subsection (a) of section 4118 of the New York Insurance laws) in the event of
the insolvency of the Company.


 


C.           
In
the event of the insolvency of the Company, the liquidator, receiver,
conservator or statutory successor of the Company shall give written notice to
the Reinsurer of the pendency of a claim against the insolvent Company on the
Policy or Policies reinsured within a reasonable time after such claim is filed
in the insolvency proceeding and during the pendency of such claim the
Reinsurer may investigate such claim and interpose, at its own expense, in the
proceeding where such claim is to be adjudicated any defense or defenses which
it may deem available to the Company or its liquidator, receiver, conservator
or statutory successor.  The expense thus incurred by the Reinsurer shall
be chargeable subject to court approval against the insolvent Company as part
of the expense of liquidation to the extent of a proportionate share of the benefit
which may accrue to the Company solely as a result of the defense undertaken by
the Reinsurer.


 


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


 


ARTICLE
XX     CLAIMS COOPERATION 


 


When
so requested in writing, the Company shall afford the Reinsurer or its
representatives an opportunity to be associated with the Company, at the
expense of the Reinsurer, in the defense of any claim, suit or proceeding
involving this reinsurance, and the Company and the Reinsurer shall cooperate
in every respect in the defense of such claim, suit or proceeding, provided the
Company shall have the right to make any decision in the event of disagreement
over any matter of defense or settlement.


 


ARTICLE
XXI   CONFIDENTIALITY


 


A.           
The
information, data, statements, representations and other materials provided by
the Company or the Reinsurer to the other arising from consideration and
participation in this


 


 


17

















 


Agreement whether contained in the
reinsurance submission, this Agreement, or in materials or discussions arising
from or related to this Agreement, may contain confidential or proprietary
information as expressly indicated by the disclosing party in writing from time
to time to the other party of the respective parties (“Confidential
Information”). This Confidential Information is intended for the sole use of
the parties to this Agreement (and their retrocessionaires, respective auditors
and legal counsel) as may be necessary in analyzing and/or accepting a
participation in and/or executing their respective responsibilities under or
related to this Agreement.  Disclosing or using Confidential Information
disclosed under this Agreement for any purpose beyond (i) the scope of this
Agreement, (ii) the reasonable extent necessary to perform rights and
responsibilities expressly provided for under this Agreement, (iii) the
reasonable extent necessary to administer, report to and effect recoveries from
retrocessional reinsurers, (iv) the extent necessary to comply with legal or
regulatory requirements or (v) persons with a need to know the information and
who are obligated to maintain the confidentiality of the Confidential
Information or who have agreed in writing to maintain the confidentiality of
the Confidential Information is expressly forbidden without the prior written
consent of the disclosing party. Copying, duplicating, disclosing, or using
Confidential Information for any purpose beyond this expressed purpose is
forbidden without the prior written consent of the disclosing party.


 


B.           
Should
a party (“Receiving Party”) receive a third party demand pursuant to subpoena,
summons, or court or governmental order, to disclose Confidential Information
that has been provided by another party to this Agreement (“Disclosing Party”),
the Receiving Party shall, to the extent permitted by law, make commercially
reasonable efforts to notify the Disclosing Party promptly upon receipt of the
demand and prior to disclosure of the Confidential Information and provide the
Disclosing Party a reasonable opportunity to object to the disclosure.  If
such notice is provided, the Receiving Party may after the passage of five (5)
business days after providing notice, proceed to disclose the Confidential
Information as necessary to satisfy such a demand without violating this
Agreement.  If the Disclosing Party timely objects to the release of the
Confidential Information, the Receiving Party will comply with the reasonable
requests of the Disclosing Party in connection with the Disclosing Party’s efforts
to resist release of the Confidential Information. The Disclosing Party shall
bear the cost of resisting the release of the Confidential Information.


 


ARTICLE
XXII               
OFFSET


 


The Company and the
Reinsurer shall have the right to offset any balance or amounts due from one
party to the other under the terms of this Agreement.  The party asserting
the right of offset may exercise such right any time whether the balances due
are on account of premiums or losses or otherwise. However, in the event of the
insolvency of any party hereto, offset shall only be allowed in accordance with
applicable law.


 


ARTICLE
XXIII               
RECOVERIES


 


A.           
All
recoveries, including but not limited to salvage, subrogation, payments and
reversals or reductions of verdicts or judgments (net of the cost of obtaining
such recovery, payment or reversal or reduction of a verdict or judgment)
whether recovered, received or obtained prior or subsequent to a loss
settlement under this Agreement, including amounts


 


 


18

















 


recoverable under other reinsurance
whether collected or not, shall be applied as if recovered, received or
obtained prior to the aforesaid settlement and shall be deducted from the
actual losses sustained to arrive at the amount of the Net Liability. 
Nothing in this Article shall be construed to mean amounts are not recoverable
from the Reinsurer until the final Net Liability to the Company has been
ascertained. Amounts recovered from salvage and/or subrogation will always be
used to reimburse any excess reinsurers (and the Company should it carry a
portion of excess coverage net) before being used in any way to reimburse the
Company and the Reinsurer hereon, who will share pro-rata in any remainder.


 


B.           
The
Reinsurer shall be subrogated, as respects any Loss Occurrence for which the
Reinsurer shall actually pay or become liable, but only to the extent of the
amount of payment by or the amount of liability to the Reinsurer, to all the
rights of the Company against any person or other entity who may be legally
responsible for damages as a result of said Loss Occurrence.  Should the
Company elect not to enforce such rights, the Reinsurer is hereby authorized
and empowered to bring any appropriate action in the name of the Company or its
policyholders, or otherwise to enforce such rights.  The Reinsurer shall
promptly remit to the Company the amount of any judgment awarded in such an
action in excess of the amount of payment by, or the amount of liability to,
the Reinsurer hereunder.


 


C.           
In
the event that this Agreement shall provide reinsurance for the Net Liability
from a Loss Occurrence or event incurred by two or more Companies, each Company
contributing to the Net Liability shall be entitled to its proportionate share
of the recovery in the proportion that its contribution to the total Net
Liability bears to the total Net Liability. Payment of any recovery amount to
one Company by the Reinsurer shall make that Company the agent for payment of
all other Companies contributing to the Net Liability.


 


ARTICLE
XXIV               
MISCELLANEOUS


 


A.           
This
Agreement shall be binding upon and inure to the benefit of the Company and
Reinsurer and their respective successors and assigns provided, however, that
this Agreement may not be assigned by either party without the prior written
consent of the other which consent may be withheld by either party in its sole
unfettered discretion. This provision shall not be construed to preclude the
assignment by the Company of reinsurance recoverables to another party for
collection.


 


B.           
This
Agreement shall constitute the entire agreement between the parties with
respect to the Business Covered hereunder. There are no understandings between
the parties other than as expressed in this Agreement or any amendment
thereto.  Any change or modification of this Agreement shall be null and
void unless made by amendment to the Agreement and signed by the parties or
otherwise clearly and unequivocally amended by exchange of letters or
electronic mail.  Nothing in this Article shall act to preclude the
introduction of submission-related documents in any dispute between the
parties.


 


C.           
This
Agreement shall be governed by and construed according to the laws of the state
of the New York, exclusive of the rules with respect to conflicts of law.


 


 


19

















 


D.           
The
headings preceding the text of the Articles and paragraphs of this Agreement
are intended and inserted solely for the convenience of reference and shall not
affect the meaning, interpretation, construction or effect of this Agreement.


 


E.           
This
Agreement is solely between the Company and the Reinsurer, and in no instance
shall any insured, claimant or other third party have any rights under this
Agreement.


 


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


 


G.           
The
failure of the Company or Reinsurer to insist on strict compliance with this
Agreement or to exercise any right or remedy shall not constitute a waiver of
any rights contained in this Agreement nor estop the parties from thereafter
demanding full and complete compliance nor prevent the parties from exercising
any remedy.


 


H.           
Each
party shall be excused for any reasonable failure or delay in performing any of
its respective obligations under this Agreement, if such failure or delay is
caused by Force Majeure.  “Force Majeure” shall mean any act of God,
strike, lockout, act of public enemy, any accident, explosion, fire, storm,
earthquake, flood, drought, peril of sea, riot, embargo, war or foreign,
federal, state or municipal order or directive issued by a court or other
authorized official, seizure, requisition or allocation, any failure or delay
of transportation, shortage of or inability to obtain supplies, equipment, fuel
or labor or any other circumstance or event beyond the reasonable control of
the party relying upon such circumstance or event; provided, however, that no
such Force Majeure circumstance or event shall excuse any failure or delay
beyond a period exceeding ten (10) days from the date such performance would
have been due but for such circumstance or event.


 


I.            
All
Articles of this Agreement shall survive the termination of this Agreement
until all obligations between the parties have been finally settled, provided
however that this Agreement shall not be construed to provide reinsurance for
Business Covered, other than as specifically described in the Articles of this
Agreement entitled Reinsurance Coverage nor to Loss occurring after the
termination date of this Agreement other than as expressed in the Article
entitled Commencement and Termination.


 


J.            
This
Agreement may be executed by the parties hereto in any number of counterparts,
and by each of the parties hereto in separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.


 


K.           
This
Agreement is entered into as of the date hereof by the parties hereto, except
that with respect to Tower National Insurance Company it shall be deemed to be
entered into as of April 28, 2006, subject in any case to the satisfaction of
applicable insurance regulatory requirements of New York and Massachusetts,
including any conditions such regulators may impose on the terms of this
Agreement subsequent to the date hereof.  Subject to the foregoing, this
Agreement shall be effective as of April 5, 2006.


 


 


20

















 


IN
WITNESS WHEREOF,
the Company and the Reinsurer have caused this Agreement to be executed as of
the day and year first above written.


 


 


	
   

  	
  Tower Insurance Company
  of New York

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/
  Francis Colalucci

  	
   

  
	
   

  	
  Name: Francis M.
  Colalucci

  
	
   

  	
  Title: Chief Financial
  Officer and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Tower National
  Insurance Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/
  Francis Colalucci

  	
   

  
	
   

  	
  Name: Francis M.
  Colalucci

  
	
   

  	
  Title: Chief Financial
  Officer and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CastlePoint Reinsurance
  Company, Ltd.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/
  Joel S. Weiner

  	
   

  
	
   

  	
  Name: Joel S. Weiner

  
	
   

  	
  Title: Senior Vice
  President and Chief Financial Officer

  



 


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