EXHIBIT
10.12


 


TRADITIONAL
PROGRAM 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, with
an inception date effective during the term of this Agreement and which are
classified by the Company as Traditional Program 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.


 


“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 all 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 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:


 


 


 


2

















 


(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 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.


 


 


3

















 


“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 Traditional Program
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.


 


“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.


 


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 gross written premium that Tower has historically 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.


 


 


4

















 


ARTICLE
III      COMMENCEMENT AND TERMINATION


 


A.           
This
Agreement is effective at 12:01 a.m., Eastern Standard Time, April 4, 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 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


 


 


5

















 


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 risks 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.            
In the event of any
such termination under D or E, the liability of the Reinsurer shall be
terminated in accordance with the termination provisions set forth in Paragraph
C. above.  However, 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.


 


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;


 


 


6

















 


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, a 30% quota share portion of 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 as of any six 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 Reinsurer shall at all times during the term of this Agreement be a
minimum of 25% and a maximum of 45%; and provided further that the Reinsurer’s
quota share participation does not exceed $50 million of gross written premium
for the 12 month period ended March 31, 2007, with such maximum amount subject
to a 25% growth factor per 12 month period thereafter.  If the Reinsurer’s
quota share participation maximum of $50 million (subject to 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 25%. Each such change shall apply to
Policies issued or renewed after the effective date of such change.
Notwithstanding the foregoing, if the Company writes business of the type that
it has historically not written or writes more than 25% of its gross written
premiums outside the state of New York in any 12 month period ending on the
anniversary date of this Agreement, then the Reinsurer has the right to refuse
to reinsure such business that the Company has not historically written and
such excess business written outside the State of New York.


 


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

  



 


 


7

















 


	
  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 months on each six month anniversary of
the Effective Date based on the Net Loss Ratio of the Traditional Program
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% 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

  	
   

  



 


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 Company and Reinsurer shall use their best good faith efforts
to structure the transaction in order that the sum of the Net Loss Ratio plus
ceding commission percentage equals 93% for the Traditional Program Business.


 


ARTICLE
IX      REPORTS AND REMITTANCES


 


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;


 


 


8

















 


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.


 


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.


 


 


9

















 


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 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.


 


 


10

















 


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.


 


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


 


 


11

















 


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;


 


(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


 


 


12

















 


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.


 


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


 


 


13

















 


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).


 


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


 


8.            
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.


 


9.            
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


 


 


14

















 


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 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


 


 


15

















 


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.


 


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


 


 


16

















 


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 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


 


 


17

















 


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 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


 


 


18

















 


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.


 


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


 


 


19

















 


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.


 


 


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OF THIS PAGE INTENTIONALLY LEFT BLANK]


 


 


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