**Exhibit 4.49****THIS FRONTING AND ADMINISTRATION AGREEMENT**is made on the 22nd day of December 2006between:(1) **CONVERIUM AG,**a company incorporated in Switzerland whose registered office is at GeneralGuisan-Quai 26, 8022 Zürich, Switzerland**(*Converium*);** (2) **MÜNCHENER RÜCKVERSICHERUNGS-GESELLSCHAFTAKTIENGESELLSCHAFT IN MÜNCHEN,**whose registered office is atKöniginstrabe, 107, 80802München, Germany **(*Munich Re*);** (3) **NATIONAL INDEMNITY COMPANY,**a company incorporated in Nebraska, United States ofAmerica, whose registered office is at 3024 Harney Street, Omaha, Nebraska, USA 68131**(*National Indemnity*);** (4) **GLOBAL AEROSPACE UNDERWRITING MANAGERS LIMITED**(registered number 2512067) whose registered office is at Fitzwilliam House, 10 St. MaryAxe, London EC3A 8EQ **(*Global*);** and**Whereas:**(A) Anaviation and aerospace underwriting pool (the ***Pool***) has been established betweencertain insurance and reinsurance companies including Converium, Munich Re, NationalIndemnity and Global in respect of risks written after the date of the Pool Members’ Agreement (ashereinafter defined) and attaching on or after 1 January 2003, and in respect of which *inter alia*Converium appoints Global as its agent for writing insurance and reinsurance in respect of certainrisks and to provide administration and management services inrespect of the Pool.(B) Converium intends to appoint National Indemnity and Munich Re (or members of theirGroups) to provide fronting insurance for Converium in respect of Relevant Risks which incept inthe Period (all terms as hereinafter defined). The intention is that, unless otherwise stated, inrespect of each risk which would be written in the name of Converium under the terms of the PoolMembers’ Agreement, National Indemnity or a member of its Groupwill front 50 per cent. of suchrisk and Munich Re or a member of its Group will front 50 per cent. of such risk. In certainjurisdictions where there is currently fronting in place in respect of National Indemnity’s orMunich Re’s participation in the Pool, the fronter (being those persons listed in column 4 of ofSchedule 2 and Schedule 3) has agreed to extend the fronting that is currently in place so that itcovers (in each case) 50 per cent of each risk in such jurisdiction which would be written in thename of Converium under the Pool Members’ Agreement.(C) Accordingly, this Agreement constitutes a Fronting Arrangement for the purposes of the PoolMembers’ Agreement and sets out the basis on which (1) National Indemnity and Munich Re ormembers of their Groups set out in Part I of Schedule 2 or Part I of Schedule 3 will appoint Globalto underwrite, administer and
 

 
manage such Relevant Risks and (2) all business written in the name of NationalIndemnity and Munich Re or members of their Groups set out in Part I of Schedule 2or Part I of Schedule 3 under this Agreement will be fully reinsured by Converium.**Now it is hereby agreed** as follows:**1.****Definitions**1.1 Unless otherwise defined in this Agreement and unless the context otherwise requires, allwords and phrases shall have the meaning ascribed to them in the Pool Members’ Agreement.***Agent***means Global as the context requires;***Agreement***means this Agreement as amended from time to time;***Business***means the business of writing Fronting Insurance Contracts as agent for NationalIndemnity, Munich Re or members of their Groups set out in Part I of Schedule 2 or Part I ofSchedule 3 in their capacity as fronting insurers for Converium and managing such business onbehalf of National Indemnity, Munich Re or members of their Groups set out in Part I of Schedule 2or Part I of Schedule 3 and doing such other things ancillary or incidental thereto in any suchcase as may from time to time be permitted or required by or pursuant to this Agreement and for theavoidance of doubt, Business excludes that portion of any risk reflecting the participation ofNational Indemnity, Munich Re or members of their Groups set out in Part I of Schedule 2 or Part Iof Schedule 3 under the Pool Members’ Agreement and that portion of any risk which is written onbehalf of Munich Re or National Indemnity by the persons set out in column 4 of Schedule 2 orSchedule 3 respectively;***Business Day***means any day (not being a Saturday or Sunday) on which banks are open for thetransaction of general banking business in London;***Confidential Information***means:(a) all information obtained by a party as a result of negotiating and entering into thisAgreement; (b) all financial or other information received by a party pursuant to this Agreement in respectof Global; (c) all financial or other information received by a party pursuant to this Agreement in respectof Converium; (d) all financial or other information received by a party pursuant to this Agreement inrespect of National Indemnity or Munich Re; and (e) information as to the terms of this Agreement or of any agreement referred to in it andinformation relating to the performance by any party of its obligations under this Agreementor any agreement referred to in it;
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***Claim***means, in relation to any Reinsured Risk, the notification, by the insured(or as applicable reinsured) of an actual or potential claim under such Reinsured Risk and, forthe avoidance of doubt, a ***Claim***shall be deemed to have been made where there is a settlement,compromise, commutation and/or policy buy back entered into by or on behalf of National Indemnity,Munich Re or members of their Groups set out in Part I of Schedule 2 or Part I of Schedule 3 inrelation to the Reinsured Risks (or any of them);***Claims-Related Extra Contractual Obligation***means any liability on the part of National Indemnity,Munich Re or members of their Groups set out in Part I of Schedule 2 or Part I of Schedule 3 (oramount agreed to be paid by or on behalf of National Indemnity, Munich Re or members of theirGroups set out in Part I of Schedule 2 or Part I of Schedule 3 in respect of potential or allegedliability on the part of National Indemnity, Munich Re or members of their Groups set out in PartI of Schedule 2 or Part I of Schedule 3) which has arisen in connection with or which relates inany way to the conduct of a claim and/or the conduct of the Business where such liability (orpotential or alleged liability) has arisen because of or relates in any way to any Reinsured Riskin respect of which a Fronting Insurance Contract has been written in such person’s name save tothe extent that any Claims-Related Extra Contractual Obligation results from fraud of NationalIndemnity or a member of its Group, or Munich Re or a member of its Group;***duly authorised***means:(a) in the United Kingdom, duly authorised to carry on general insurance business under theFinancial Services and Markets Act 2000; and (b) in any other jurisdiction, duly authorised, licensed or otherwise approved or permitted,under the laws of the applicable jurisdiction, to underwrite or carry on general insurancebusiness covering Specified Risks in accordance with the relevant laws or regulations of suchjurisdiction;***Due***means with respect to any sum or amount of money that such sum or amount has been demanded byor from the Agent and ***Due Premium***means that amount of written premium that has been demanded bythe Agent from an ***Original Insured,***being the insured party to any relevant Fronting InsuranceContract, for and on behalf of Munich Re and /or National Indemnity, as appropriate, by way ofbill, invoice or other enforceable demand, and in respect of which the Agent has assigned a date bywhen such Original Insured must actually pay the amount of premiumdemanded **(*Due Date*)** andcalculated in all cases as at the relevant Due Date(s).***Fronting Insurance Contract***means a contract of insurance and/or reinsurance which is written byGlobal pursuant to this Agreement on behalf of National Indemnity or Munich Re or the relevantmember of such person’s Group (solely in its capacity as fronting insurer for Converium) inrespect of the proportion of the Relevant Risks set out in Clause 2.3(b) attaching during thePeriod provided that Fronting Insurance
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Contracts shall not relate to the percentage of each policy issued under the Pool Members’Agreement representing Munich Re’s or National Indemnity’s interest under the Pool Members’Agreement;**GAI means GLOBAL AEROSPACE, INC.**(formerly known as ASSOCIATED AVIATION UNDERWRITERS, INC.) aDelaware corporation.***Group***means in relation to a company, that company and any company which is a holding company ofthat company or a subsidiary of that company or of such holding company;***holding company***has the meaning ascribed thereto by Section 736 of the Companies Act 1985;***Incurred Position***means, in relation to Converium, such amount as may be determined in accordancewith Clause 15 as being the greater of:(a) ***Due Premium***(in relation to the relevant Reinsured Risks less any (i) due reinsurancepremiums ceded in respect of reinsurance taken out in accordance with the Pool Business Plan(as defined in the Pool Members’ Agreement) as amended from time to time or otherwise takenout by the Agents on behalf of the Members of the Pool as a whole; (ii) original commissionsin relation to such Reinsured Risks; and (iii) taxes on the premiums relating to suchReinsured Risks, ((a) less each of (i), (ii) and(iii) being the ***Net Premiums*)** multiplied by150 per cent; (b) 120 per cent. of outstanding claims amounts attributable to relevant Reinsured Risks(including reserves for claims incurred but not reported maintained by National Indemnity orMunich Re or the relevant member of such person’s Group (as the case may be) in respect ofrelevant Reinsured Risks) written in the name of National Indemnity or Munich Re or therelevant member of such person’s Group less amounts recoverable in respect of reinsurancetaken out in accordance with the Pool Business Plan (as defined in the Pool Members’Agreement) as amended from time to time or otherwise taken out by the Agents on behalf of theMembers of the Pool as a whole ; or (c) $8,600,000.00 million plus the Net Premiums in relation to the relevant Reinsured Risks;**provided that:** (i) if in relation to Converium, it has its financial strength rating upgradedto A- or above by S&P or if such rating is not available, above such comparablerating as may be reasonably agreed between the parties the references to “150” and“120” above shall be read as “100” save that nothing in this proviso shall beconstrued to reduce the Incurred Position below the minimum percentage which isrequired to allow Munich Re, National Indemnity or the relevant member of itsGroup to
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   receive credit for the Reinsurance to which the security relates under thelaws of the jurisdiction in which such person is domiciled; and  (ii) proviso (i) above shall only apply during such periods as Standard &Poor’s financial strength rating of Converium is A- or above (or if such rating isnot available, such comparable rating as may be reasonably agreed betweenConverium, Munich Re and National Indemnity). Converium shall make such additionaldeposits to and or increase any relevant LOC(s) in the MR Fund, as appropriate,and the NICO Fund in the event that Standard & Poor’s financial strength rating ofConverium falls below A- subsequent to termination of this Agreement under Clause10.1 so as to comply with the requirements of Clause 13 or Clause 14 (asappropriate) without regard to proviso (i) above;The Incurred Position shall be calculated by the Agent within 20 business days of the end of eachquarter, one quarter in arrears or upon written request by any of the parties hereto, within 25business days of the receipt of such written request.***Letter of Credit (“LOC”)***means a clean, unconditional and irrevocable Letter of Credit issued onbehalf of Converium by a bank with a credit rating by Standard and Poors of AA or above (or if suchrating is not available, such other comparable rating as may be reasonably agreed between theperson in whose favour such Letter of Credit is written and Converium) for the benefit of NationalIndemnity or Munich Re (or the applicable member of such person’s Group) (as the case may be) in anamount to be determined from time to time in accordance with Clause 13 or Clause 14 (asappropriate) provided that the bank issuing any Letter of Credit must be one that would permit (a)National Indemnity or the relevant member of its Group to receive credit for the Reinsurance towhich that Letter of Credit relates under the laws of the jurisdiction in which such person isdomiciled; or (b) Munich Re or the relevant member of its Group to receive credit for theReinsurance to which that Letter of Credit relates under the laws of Germany;***Letter of Credit Notice***means a notice issued by National Indemnity or Munich Re (as the case maybe) from time to time requiring Converium to either: (a) arrange or cause to be arranged the issueand/or delivery of a Letter of Credit and/or to increase the amount of any such Letter of Credit;or (b) deposit additional funds in the MR Fund or the NICO Fund;***Net Premiums***has the meaning given to it in the definition of Incurred Position;***Overriding Commission***means the overriding commission payable in accordance with Clause 6, theamount of which shall be calculated in accordance with Schedule 1;***Period***means the period beginning at 12:01 am BST on 1 January 2007 and ending at 12.01 a.m. BSTon 30 June 2007;
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***Pool Members’ Agreement***means the Agreement between GAI, Global and various insurancecompanies and reinsurance companies including National Indemnity, Munich Re and Converium dated 27November 2002 for the formation of an aviation and aerospace underwriting pool under themanagement of Global and GAI;***Premium***shall have the meaning given to it in Clause 5.1;***profit***shall mean, subject to the provisions of Schedule 4 or Schedule 5, for the purposes ofClauses 13.5, 13.12 to 13.14, 14.5 and 14.12 to 14.14:(a) the Due Premiums in respect of the relevant Reinsured Risks;   LESS (b) paid claims in respect of the relevant Reinsured Risks as at 31 December 2010;   LESS (c) outstanding claims which have been notified to Global or any of its subsidiaries inrelation to relevant Reinsured Risks as at 31 December 2010;   LESS (d) the reserves held for incurred but not reported claims in respect of relevant Reinsured Risksas at 31 December 2010 by Munich Re or National Indemnity or a relevant number of suchperson’s group, calculated by Munich Re or National Indemnity (or such person’s respectiveappointee) (as appropriate) in accordance with actuarial best practice and guidance producedby relevant actuarial bodies in the relevant country (and subject to the dispute resolutionmechanism in Clause 6),in the case of (a) to (c) as produced by Global’s computer systems;***Regulatory Action***means:(a) any order of a court of competent jurisdiction; (b) any order made, decision given or final view expressed by a competent national,supranational, governmental or regulatory authority or agency; or (c) any enactment of a legislative body; (i) which prohibits or restricts to a material extent the carrying on of the Business orthe arrangements contemplated by this Agreement; or (ii) in consequence of which any of the parties would incur fines or a liability in damageswere this Agreement to be performed in accordance with its terms;***Reinsurance***has the meaning given to it in Clause 3;
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***Reinsured Risks***means that percentage of any and all contracts of insurance, reinsurance orretrocession written by either Agent in the name of Munich Re, National Indemnity (or members oftheir Groups set out in Part I of Schedule 2 or Part I of Schedule 3) solely in its capacity asfronting insurer for Converium under, pursuant to or in connection with (or purportedly under,pursuant to or in connection with) this Agreement (as such contracts may be amended from time totime) and irrespective of whether the acceptance of such contract was within the scope of theauthority granted to the Agent by Munich Re or National Indemnity or members of their Groups setout in Part I of Schedule 2 or Part I of Schedule 3 under the terms of this Agreement or withinthe scope of (or in accordance with the terms of) the Pool Members’ Agreement and ***Reinsured Risk***shall be construed accordingly. For the avoidance of doubt, Reinsured Risks shall not include thepercentage of each policy issued under the Pool Members’ Agreement representing Munich Re’s orNational Indemnity’s interest under the Pool Members’ Agreement;***Relevant Risks***means Specified Risks relating to those countries set out in Part I of Schedule 2 in the case of Munich Re and the members of its Group and Part I of Schedule 3 in thecase of National Indemnity and the members of its Group, which are insurance or reinsurance risks;***Respective Proportion***has the meaning given to it in the Pool Members’ Agreement;***Specified Risks***means aerospace, aviation and all related and incidental insurance and reinsurancerisks;***subsidiary***and ***wholly-owned subsidiary***shall have the meanings given thereto in Section 736 of theCompanies Act 1985; and***Taxation***means all forms of taxation and statutory, governmental, state, provincial, localgovernmental or municipal impositions, duties, contribution and levies and all penalties, charges,costs and interest relating thereto.1.2 References to Recitals, Clauses, Schedules and parties are, except where otherwise provided, toRecitals, Clauses, Schedules or parties to this Agreement. The Schedules form part of thisAgreement and have the same force and effect as if set out in the body of this Agreement.1.3 References to a statutory provision include such provision and any regulations made inpursuance thereof as from time to time modified or re-enacted whether before or after the date ofthis Agreement so far as such modification or re-enactment applies or is capable of applying to anytransactions entered into pursuant to this Agreement or to which this Agreement relates and (so faras the same may be relevant) shall include any statutory provisions or regulations which suchprovisions or regulations have directly or indirectly replaced.1.4 The headings and index hereto are inserted for convenience only and shall not affect theconstruction of this Agreement.
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1.5 References to Converium, Munich Re (and any member of its Group), National Indemnity(and any member of its Group) or to the Agents or any of them mean and include their respectivesuccessors in title and permitted assigns.1.6 Where the context so admits, references to the singular shall be deemed to include the pluraland vice versa.1.7 References to Schedule 2 or Schedule 3 shall be to that Schedule as amended in accordance withthe terms of Schedule 2 or Schedule 3 (respectively) at the relevant time.**2.  Appointment of Global and GAI to write Fronting Insurance**2.1 Each of Munich Re and National Indemnity (for itself and as agent for each member of itsGroup set out in Part I of Schedule 2 or Part I of Schedule 3 respectively) hereby severallyappoints Global to act as agent for it or such member of its Group as is set out in Part I ofSchedule 2 or Part I of Schedule 3 in the relevant jurisdiction indicated in those Schedules (whichappointment Global hereby accepts and acknowledges): (a) to underwrite and/or bind and/or effect Fronting InsuranceContracts in the name of each of such persons in accordance with the terms ofthis Agreement; and  (b) to administer the Fronting Insurance Contracts andany reinsurance of them including (without limitation) providing those servicesspecified in paragraphs 1.2 and 2 of Schedule 3 of the Pool Members’ Agreementin relation to the Fronting Insurance Contracts2.2 The Agent in performing its services under this Agreement shall act as agent (and describeitself as acting as agent) for Munich Re or the relevant member of its Group when acting pursuantto its appointment by Munich Re or a member of its Group or National Indemnity or the relevantmember of its Group when acting pursuant to its appointment by National Indemnity or a member ofits Group.2.3 The appointment by each of Munich Re and National Indemnity and the relevant members of theirGroups of Global to act as its agent to underwrite and/or bind and/or effect Fronting InsuranceContracts in the name of Munich Re or National Indemnity or the relevant member of its Group islimited to the negotiation and/or underwriting and/or binding and/or effecting of FrontingInsurance Contracts: (a) in those countries set out against such person’s name in Part Iof Schedule 2 or Part I of Schedule 3;  (b) in respect of the percentage set out against such person’s namein Part I of Schedule 2 or Part I of Schedule 3 of Converium’s RespectiveProportion of the Relevant Risk;
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 (c) which are bound and/or effected prior to theexpiration of the Period;  (d) which incept in the Period (provided that where a policy relatingto a Relevant Risk was written prior to the Period and is cancelled butre-written on the same terms save for the fact that Converium is replaced asan underwriter by Munich Re and National Indemnity for the Period, such policyshall be deemed to incept in the Period);  (e) the period of which does not, in any case, exceed 12 months plusodd time not exceeding 15 months in all;  (f) the terms of which, where written on a risks attaching basis, donot allow for any risks to attach where the period of such risks exceeds 12months plus odd time not exceeding 15 months in all;  (g) which are in respect of Relevant Risks; and  (h) which are within the scope of the insurance and reinsurancecontracts the Agents are authorised to write under the Pool Members’ Agreement.2.4 Global shall not have any entitlement whatsoever to remuneration from Munich Re, NationalIndemnity or the members of their Groups and none of Munich Re, National Indemnity or the membersof their Groups shall have any obligation whatsoever to remunerate the Agents in respect of theassumption and performance of the Agents’ obligations under this Agreement.2.5 Either Agent may (subject to prior notification of Converium, Munich Re and National Indemnity)appoint a wholly-owned subsidiary of Global, which has been appointed pursuant to Clause 10 of thePool Members’ Agreement, for the purposes of providing all or some of the services under thisAgreement in relation to such part of the Business as the board of directors of the relevant Agentmay determine and shall give prior notice of such appointment to each of Converium, Munich Re andNational Indemnity. Such subsidiary shall, as soon as reasonably practicable, become a party tothis Agreement by executing a Deed of Adherence in the form (or substantially in the form) set outin Annexure 1.2.6 The appointment by Munich Re, National Indemnity or the relevant member of their Group of therelevant Agent as its agent under Clause 2.1 shall be extended to the subsidiary, as if referencesto Globalwere references to such subsidiary, in each case in relation only to such services and/orto such parts of the Business as is determined by the board of directors of the relevant Agent.2.7 Any appointment of a subsidiary under Clause 2.5 shall terminate upon such subsidiary ceasingto be a wholly-owned subsidiary of Global.**2A.  Extension of National Indemnity and Munich Re Fronting Lines**
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2A.1 Munich Re’s Respective Proportion of Specified Risks written in thejurisdictions set out in of Schedule 2 is fronted by the companyset out opposite such jurisdiction in of Schedule 2 (togetherthe ***MR Fronters).***Munich Re agrees to use its reasonable endeavours to amend its agreements withthe MR Fronters so that each MR Fronter also writes fifty per cent (50%) of Converium’s RespectiveProportion of Specified Risks in the jurisdiction set out opposite it in of Schedule 2 (the MR ***Converium Risks***),which shall then be 100% quota share reinsured byMunich Re.2A.2 Converium agrees that to the extent MR Converium Risks are written by the MR Fronters onterms previously agreed with Converium in writing and provided that Munich Re and each member ofits Group pays to Converium all amounts received by it from the MR Fronters in relation to themfronting Converium Risks it will:(a) pay overriding commissions previously notified to and agreed by Converium in writing due to theMR Fronters in respect of the Converium Risks;(b) provide any security previously notified to and agreed by Converium in writing required by theMR Fronters in relation to the Converium Risks (which security shall be provided from the MR Fundpro rata to the applicable exposure); and(c) reinsure Munich Re’s reinsurance of the MR Converium Risks on an equivalent basis to thatset out in Clause 3.2A.3 Converium shall pay Munich Re commission (the ***MR Fronted Commission)***for reinsuring the Converium Risks on the basis set out in Clauses2A.4 to 2A.6.2A.4 The amount of MR Fronted Commission payable by Converium shall be calculated by reference tothe total gross premium income written by the Agents in the period in question in respect of eachMR Converium Risk after deduction of (i) any original commission or taxes on premiums payablethereunder but before the deduction of amounts, if any, payable to the Agents under the terms ofthe Pool Members’ Agreement and (ii) any premiums payable by the Agents for reinsurance inrelation to the Pool (such amount being referred to as the ***MR Relevant Net Premium Income).***2A.5 The amount of MR Fronted Commission payable by Converium to Munich Re shall be calculated bymultiplying the MR Relevant Net Premium Income attributable to MR Converium Risks covered bypolicies written by MR Fronters by 1 per cent. (or by such percentage as may be agreed from timeto time between Munich Re and Converium in writing).2A.6 The amount of MR Fronted Commission attributable to any calendar quarter shall be due andpayable on (i) the last business day of the immediately following calendar quarter, or (ii) thedate on which a cash distribution is paid by the Agents to Converium under the Pool Members’Agreement with respect to business written in such calendar quarter, whichever is earlier and shallbe deducted by Munich Re from the MR Fund on that date.
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2A.7 National Indemnity’s Respective Proportion of Specified Risks written in thejurisdictions set out in of Schedule 3 is fronted by thecompany set out opposite such jurisdiction in  of Schedule 3(together the ***NIC Fronters**).* National Indemnity agrees to use its reasonable endeavours to amendits agreements with the NIC Fronters so that each NIC Fronter also writes fifty per cent (50%) ofConverium’s Respective Proportion of Specified Risks in the jurisdiction set out opposite it inof Schedule 3(Part 1, Schedules 2 and 3)) (the ***NIC ConveriumRisks**),*which shall then be reinsured by National Indemnity.2A.8 Converium agrees that to the extent the NIC Converium Risks are written by the NIC Fronterson terms previously agreed with Converium in writing and provided that National Indemnity and eachmember of its Group pays to Converium all amounts received by it from the NIC Fronters in relationto them fronting NIC Converium Risks it will:(a) pay overriding commissions previously notified to and agreed by Converium in writing due to theNIC Fronters in respect of the NIC Converium Risks;(b) provide any security previously notified to and agreed by Converium in writing required by theNIC Fronters in relation to the NIC Converium Risks (which security shall be provided from the NICFund pro rata to the applicable exposure); and(c) reinsure National Indemnity’s reinsurance of the NIC Converium Risks on an equivalent basis tothat set out in Clause 3.2A.9Converium shall pay National Indemnity commission (the ***NIC Fronted Commission**)*for reinsuringthe NIC Converium Risks on the basis set out in Clauses 2A.10 to 2A.12.2A.10 The amount of NIC Fronted Commission payable by Converium shall be calculated by referenceto the total gross premium income written by the Agents in the period in question in respect ofeach NIC Converium Risk after deduction of (i) any original commission or taxes on premiums payablethereunder but before the deduction of amounts, if any, payable to the Agents under the terms ofthe Pool Members’ Agreement and (ii) any premiums payable by the Agents for reinsurance in relationto the Pool (such amount being referred to as the ***NIC Relevant Net Premium Income**).*2A.11 The amount of NIC Fronted Commission payable by Converium to National Indemnity shall becalculated by multiplying the NIC Relevant Net Premium Income attributable to NIC Converium Riskscovered by policies written by NIC Fronters by 1 per cent, (or by such percentage as may be agreedfrom time to time between National Indemnity and Converium in writing).2A.12 The amount of NIC Fronted Commission attributable to any calendar quarter shall be due andpayable on (i) the last business day of the immediately following calendar quarter, or (ii) thedate on which a cash distribution is paid by the Agents to Converium under the Pool Members’Agreement with respect to business written in
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such calendar quarter, whichever is earlier and shall be deducted by NationalIndemnity from the NICO Fund on that date.**3.  Converium’s Reinsurance and Indemnity Obligations**3.1 Immediately upon, and with effect from, the acceptance and/or binding of a Reinsured Riskby the Agents (or either of them), Munich Re or the relevant member of its Group and NationalIndemnity or the relevant member of its Group shall cede to Converium and Converium agrees toaccept by way of reinsurance the quota share percentage set outagainst such person’s name in Part Iof Schedule 2 or Part I of Schedule 3 of Converium’s Respective Proportion of the Relevant Risk(the total amount ceded pursuant to this Clause 3.1 shall be the ***Reinsurance***and the amount cededin relation to a particular Reinsured Risk by a particular entity shall be the ***Reinsurance relatingto that Reinsured Risk).***Such cession and acceptance shall be effected immediately andautomatically on, and with effect from, the acceptance and/or binding of the Reinsured Risk inquestion.3.2 In consideration of Munich Re and National Indemnity agreeing to enter into this Agreement,Converium agrees to reinsure and indemnify Munich Re, National Indemnity or the relevant member ofits Group, without limit in time or amount, in respect of the Ultimate Net Loss of Munich Re,National Indemnity or the relevant member of its Group in respect of, or relating to, eachReinsured Risk in respect of which a Fronting Insurance Contract is written in such person’s name.This Agreement shall only apply to the portion of a risk reflecting Converium’sparticipation in the Pool Members’ Agreement and in respect of Munich Re, National Indemnity andeach member of such person’s Group shall only apply to the portion of such risk actually fronted bysuch person.3.3 The term ***Ultimate Net Loss,***as used herein, shall mean all amounts paid or agreed to be paid(including by way of set-off, release or any other form of consideration) by Munich Re, NationalIndemnity or the relevant member of such person’s Group listed in Part I of Schedule 2 or Part I ofSchedule 3 (or the Agent(s) on behalf of Munich Re, National Indemnity or the relevant member ofsuch person’s Group listed in Part I of Schedule 2 or Part I of Schedule 3) in respect of or inrelation to Claims and/or Claims-Related Extra Contractual Obligations relating, in any way, to aReinsured Risk (or any or all Reinsured Risks) and shall include, without limit, all adjustmentexpenses arising from the evaluation, assessment, investigation and/or settlement of claims otherthan the salaries of employees and office expenses of Munich Re or any member of its Group (in thecase of Ultimate Net Losses relating to Munich Re or any member of its Group) or National Indemnityor any member of its Group (in the case of Ultimate Net Losses relating to National Indemnity orany member of its Group) provided that Converium shall be entitled to all amounts physicallyreceived by way of recoveries/salvages. It is further understood and agreed that: (a) any of Munich Re, National Indemnity or the relevant member ofsuch person’s Group listed in Part I of Schedule 2 or Part I of Schedule 3 shallbe entitled to recover any part of its Ultimate Net
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   Loss once that has been ascertained without having to waituntil its total Ultimate Net Loss has been ascertained; and  (b) for the avoidance of doubt, notwithstanding any other provisionof this Agreement, it is understood and agreed that neither Munich Re, NationalIndemnity nor the relevant member of such person’s Group listed in Part I ofSchedule 2 or Part I of Schedule 3 shall be required to actually pay (in thesense of making a physical disbursement of money or monies worth) any amountsin respect of which indemnity is claimed in order to trigger Converium’sindemnity obligations hereunder.3.4 If the terms of any reinsurance taken out by the Agents for the benefit of Munich Re, NationalIndemnity or a member of such person’s Group in relation to the Pool (a ***Pool Reinsurance)***coverpart or all of any Relevant Risk, the Reinsurance provided for in this Clause 3 shall not extend tosuch part of that Relevant Risk provided that to the extent the Agents are not able to recoverunder the Pool Reinsurance the Ultimate Net Loss in respect of such Relevant Risk for any reasonother than as a result of a negligent or fraudulent act by Munich Re, National Indemnity or amember of such person’s Group (provided that for the avoidance of doubt a negligent or fraudulentact by the Agent or any person appointed by the Agent to act as agent of Munich Re or NationalIndemnity shall not be deemed a negligent or fraudulent act by Munich Re, National Indemnity or amember of such person’s Group for the purposes of this clause unless the Agent was instructed toundertake such act by Munich Re or National Indemnity or a member of such person’s Group (otherthan by instruction approved by Converium), Converium shall reinsure such Ultimate Net Losspursuant to this Clause 3.3.5 The Agents, Munich Re and National Indemnity shall (and shall procure that each relevant memberof such person’s Group shall) take such reasonable action as is necessary to allow the Agents tomake a successful claim under any relevant Pool Reinsurance.3.6 Converium shall, in all respects, follow the fortunes of Munich Re or National Indemnity or themember of such person’s group in whose name the relevant Fronting Insurance Contract is written inrelation to all matters falling within the scope of the Reinsurance and the Reinsurance shall beconstrued in such a way as to give effect to the parties’ intention that, to the greatest extentpermissible by law: (a) Munich Re, National Indemnity and the members of their Groupsshould retain no economic interest in the Reinsured Risks after the applicationof this Reinsurance; and  (b) the economic fortunes of Converium in relation to the ReinsuredRisks should exactly mirror those of Munich Re or National Indemnity or themember of such person’s Group in whose name the relevant Fronting InsuranceContract is written.3.7 Accordingly, and without prejudice to the generality of Clause 3.6, Converium shall beunconditionally bound to follow all settlements, compromises, commutations,
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policy buy-backs or other agreements of any nature whatsoever entered into, or agreed, onbehalf of Munich Re, National Indemnity or the members of their Groups by the Agents in relationto the Fronting Insurance Contracts including any and all ex gratia payments without regard to thequestion of whether Munich Re, National Indemnity or the members of their Groups had any liabilitywhatsoever (whether arguable or otherwise) in respect of such settlements, compromises, etc.3.8 The parties acknowledge and agree that the obligations of Converium toindemnify: (a) Munich Re or a member of its Group in whose name the relevantFronting Insurance Contract is written under this Agreement shall not in any waybe affected by any actual or alleged breaches by the Agents or NationalIndemnity of the terms of this Agreement, the Pool Members’ Agreement or of anyduties (whether in contract tort or equity) owed by the Agents or NationalIndemnity to Converium or Munich Re or the members of their Groups.  (b) National Indemnity or a member of its Group in whose name therelevant Fronting Insurance Contract is written under thisAgreement shall not in any way be affected by any actual or alleged breaches bythe Agents or Munich Re of the terms of this Agreement, the Pool Members’Agreement or of any duties (whether in contract tort or equity) owed by theAgents or Munich Re to Converium or National Indemnity or the members of theirGroups.**4.****Duties****&****Waivers**4.1 Converium acknowledges and agrees that this Agreement is being entered into by theparties solely as a Fronting Arrangement for the purposes of the Pool Members’ Agreement in orderto facilitate the participation by Converium in the underwriting of risks pursuant to the PoolMembers’ Agreement and that, but for Converium having a BBB+ rating from Standard & Poor’s RatingServices, Converium would in any event have participated directly in such risks pursuant to theterms of the Pool Members’ Agreement. Accordingly, subject to Clause 4.3, Converium agrees: (a) that it has been afforded the opportunity to conduct its owninvestigations and due diligence in relation to all matters relevant and/ormaterial to this Agreement and the Pool Members’ Agreement (including theReinsurance and the Reinsured Risks);  (b) that neither Munich Re, National Indemnity nor the member of suchperson’s Group in whose name a Fronting Insurance Contract is writtennor its agents nor any person acting on its behalf assumes, shall accept, andowe, any duty of care, whether in contract or in tort, nor fiduciary duties toConverium in relation to any matters falling within the scope of this Agreementor the Reinsurance and none of Munich Re, National Indemnity or the
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   member of such person’s Group in whose name a Fronting InsuranceContract is written shall accept, or have, any vicarious liability for anyacts or omissions of the Agents in relation thereto;  (c) to waive any duty of disclosure on the part of Munich Re,National Indemnity or any member of such person’s Group in whose name a relevantFronting Insurance Contract is written and/or its agents and/or any other personacting on behalf of Munich Re, National Indemnity or the member of such person’sGroup in whose name the relevant Fronting Insurance Contract is written inrelation to the Reinsurance and/or the subject-matter of this Agreement(including, but not limited to, each and every Reinsured Risk and/or the cessionthereof);  (d) to acknowledge and accept the validity of each Fronting InsuranceContract underwritten by an Agent on behalf of Munich Re, National Indemnity orthe members of their Groups set out in Part I of Schedule 2 and Part I ofSchedule 3 for the benefit of Converium pursuant to (or in purportedpursuance of) this Agreement;  (e) to waive and/or otherwise exclude any right (or remedy) that itmight have, whether now or in the future, to seek or otherwise claim damages inrespect of, or to avoid, rescind or otherwise challenge the validity of anyFronting Insurance Contract and/or the Reinsurance and/or the cession of, anyReinsured Risk on any grounds including; (i) misrepresentation and/or non-disclosure of material facts (whetherinnocent, or negligent); and/or  (ii) any breach (or alleged breach) of any duty of utmost good faith byMunich Re, National Indemnity or the members of their Groups set out in Part I ofSchedule 2 and Part I of Schedule 3 (or any person acting on behalf of Munich Re,National Indemnity or the members of their Groups set out in Schedule 2 orSchedule 3); and (f) save to the extent otherwise provided for in this Agreement,Converium shall indemnify and keep indemnified Munich Re, National Indemnity orthe members of their Groups set out in Part I of Schedule 2 and Part I ofSchedule 3 in respect of any claim, loss or liability of any kind (includingwithout limitation any liability to the Agents (or either of them) under thePool Members’ Agreement) in respect of or in connection with the conduct (orpurported conduct) of the Business.4.2 Unless the contrary is expressly stated, no terms of this Agreement and/or Reinsurance whichare expressed to be warranties (or which might be otherwise have been construed as warranties butfor this Clause 4.2) shall take effect as warranties
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within the meaning of the Marine Insurance Act 1906 (which for the purposes of informationonly provides, in general circumstances, for the discharge of liability should a warranty bebreached) but shall, instead, be construed and take effect as innominate terms.4.3 For the avoidance of doubt, however, nothing in this Clause 4 is intended to affect and/orwaive and/or otherwise exclude any rights or remedies which Converium might have, whether now orin the future, arising out of, or relating to, fraud on the part of any of Munich Re, NationalIndemnity or the members of their Groups set out in Part I of Schedule 2 and Part I of Schedule 3themselves (as opposed to fraud of the Agents, or either of them, on behalf of Munich Re, NationalIndemnity or the members of their Groups set out in Part I of Schedule 2 and Part I of Schedule3), provided that the parties agree that no fraud on the part of: (a) National Indemnity or a member of its Group shall impact theobligations of Converium to Munich Re or a member of its Group;and  (b) Munich Re or a member of its Group shall impact the obligationsof Converium to National Indemnity.**5.  Premiums and Pool Payments**5.1 Subject to Clause 6, each of Munich Re and National Indemnity agrees for itself and asagent for each member of its Group set out in Part I of Schedule 2 and Part I of Schedule 3respectively that Converium shall be entitled to all amounts actually received by the Agents (oreither of them) in respect of premiums payable under the terms and conditions of the ReinsuredRisks including, for the avoidance of doubt, any and all adjustment and/or reinstatement premiumsbut after the deduction of any commissions or brokerage or other deductions payable or to bededucted therefrom ***(Premiums)***provided that all amounts payable to Converium pursuant to Clause 7of the Pool Members’ Agreement less all amounts payable by Converium under Clause 7.5 of the PoolMembers’ Agreement (and less all amounts due to National Indemnity or Munich Re, respectively,under Clause 6 as Overriding Commission) shall be paid: (a) as to fifty percent directly to National Indemnity (or suchmember of its Group listed in Part I of Schedule 3 as National Indemnity shalladvise Converium and the Agents) in relation to Reinsurance Risks covered byFronting Insurance Contracts written in the name of National Indemnity or anymember of its Group set out in Part I of Schedule 3 to be held as set out inClause 14.2.5.2 The Agents shall hold such proportion of the Premiums that is equivalent to any OverridingCommission payable (or potentially payable) by Converium to: (a) Munich Re or any member of its Group and shall pay such amount toMunich Re in accordance with Clause 6 and shall only pay to Converium theremaining amount;
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 (b) National Indemnity or any member of its Group and shall pay such amountto National Indemnity (or such member of its Group listed in Part I of Schedule3 as National Indemnity shall advise Converium and the Agents in writing priorto such payment being made) in accordance with Clause 6 and shall only pay theremaining amount as specified in Clause 5.1 (a).5.3 All amounts payable by Converium to the Agents pursuant to Clause 7 of the Pool Members’Agreement shall, except in the case where the MR Fund contains sufficient monies, when the amountsshall be paid as to fifty per cent from the MR Fund, be paid by Converium as to fifty per centdirectly to the Agents and as to fifty per cent from the NIC Fund, provided that NationalIndemnity shall not be obligated to make any payment described in Clauses 14.17(b) or (c) whichwould cause the NIC Fund to be reduced below $8, 600,000.00 million (or, if lower and Clause 14.8applies, the amount required to be held in the NIC Fund pursuant to Clause 14.8). Any shortfall inamounts payable by Converium to the Agents pursuant to Clause 7 of the Pool Members’ Agreement byreason of either of the foregoing provisos shall be paid by Converium.**6.****Overriding Commission**6.1 In consideration of Munich Re and the members of its Group set out in Part I of Schedule2 agreeing to front for Converium in respect of the Reinsured Risks, Converium agrees to paycommission to Munich Re for itself and as agent for such member of its Group ***(Munich Re OverridingCommission)***in respect of each Reinsured Risk covered by Fronting Insurance Contracts written bysuch persons.6.2 In consideration of National Indemnity and the members of its Group set out in Part I ofSchedule 3 agreeing to front for Converium in respect of the Reinsured Risks, Converium agrees topay commission to National Indemnity (or such member of NationalIndemnity’s Group listed in Part Iof Schedules as National Indemnity shall advise Converium and the Agents) for itself and as agentfor such members of its Group ***(NIC******Overriding Commission***and together with Munich Re OverridingCommission, ***Overriding Commission)***in respect of each Reinsured Risk covered by Fronting InsuranceContracts written by such persons.6.3 Subject always to Clause 6.4, the relevant Agent shall calculate the amount of OverridingCommission payable in respect of all Premiums written in respect of the relevant Reinsured Risksand shall: (a) deduct and withhold such amounts from the Premiums payable as setout in Clause 5.1; and  (b) account for, and pay, such amounts to Munich Re or NationalIndemnity (or such member of its Group listed in Part I of Schedule 3 asNational Indemnity shall advise Converium and the Agents in writing prior tosuch payment being made) in accordance with Schedule 1.
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6.4 Converium’s obligation to pay Overriding Commission to Munich Re or NationalIndemnity shall be discharged only by the actual receipt by Munich Re or National Indemnity (orsuch member of National Indemnity’s Group listed in Part I of Schedule 3 as National Indemnityshall advise Converium and the Agents) of the amounts due and not by the deduction or withholdingby the Agents (or any of them) of amounts calculated to be due in respect of Overriding Commissionprovided that such payment obligation shall be discharged to the extent that the OverridingCommission (or part thereof) payable to Munich Re or National Indemnity is set-off against moniesdue and payable by Munich Re or National Indemnity to the relevant Agent in connection with thePool. The receipt of Overriding Commission by Munich Re or National Indemnity in respect ofFronting Insurance Contracts written by members of such person’s Group shall discharge Converium’sobligations in respect thereof and Converium shall not be concerned as to the application of suchamounts.**7.****Claims**7.1 The Agents shall manage and perform the administration of the Reinsured Risks and thenegotiation and settlement of Claims thereunder and, in doing so, shall act as agent of Munich Re,National Indemnity (and the members of their Groups set out in Part I of Schedule 2 and Part I ofSchedule 3) and Converium.7.2 Without prejudice to thegenerality of Clause 7.1, all decisions made by the Agents in relationto the administration of the Reinsured Risks and the negotiation and/or settlement of Claimsthereunder shall be made as agents for Munich Re, National Indemnity (and the members of theirGroups set out in Part I of Schedule 2 and Part I of Schedule 3) and Converium and shall be deemedto be in the knowledge of all of them (to the greatest extent permitted or allowable by law).7.3 As between Converium and any of Munich Re, National Indemnity and the members of their Groupsset out in Part I of Schedule 2 and Part I of Schedule 3, Munich Re, National Indemnity and themembers of their Groups set out in Part I of Schedule 2 and Part I of Schedule 3 shall have noobligation to provide or disburse funds in respect of any obligations arising under or in relationto Reinsured Risks. Such funds shall be provided by Converium and, accordingly, Converium shallensure that, at all times, sufficient funds are provided to the Agents to enable all obligationsunder or in relation to each Reinsured Risk to be met as and when they fall due.7.4 Any and all funds provided by Converium pursuant to Clause 7.3 shall, until physicallydisbursed to the relevant insured or reinsured under the relevant Reinsured Risk or claimantagainst such insured, be held by the Agents as agent for Converium and payment of such funds byConverium to the Agents shall not constitute a discharge of, or operate to discharge, theobligations of Converium to Munich Re, National Indemnity or any members of their Groups set out inPart I of Schedule 2 and Part I of Schedule 3 under the terms of the Reinsurance, which obligationsshall be discharged only by (and to the extent of): (a) physical disbursements of relevant amounts to insureds and/orreinsureds under the Reinsured Risks or claimant against such insured; and/or
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 (b) physical disbursement to Munich Re, National Indemnity or any members oftheir Groups set out in Part I of Schedule 2 and Part I of Schedule 3 ofamounts due under the Reinsurance to Munich Re, National Indemnity or anymembers of their Groups set out in Part I of Schedule 2 and Part I of Schedule3.**8.  Accounts and Information**8.1 Each Agent agrees to provide accounting and other information to Munich Re, NationalIndemnity or Converium in the form and in the manner that may be reasonably required by Munich Re,National Indemnity or Converium from time to time by giving notice as provided for in Clause 22.8.2 Each of the Agents shall keep, in such forms as may be agreed from time to time with (a) MunichRe and Converium in relation to Relevant Risks for which Munich Re or a member of its Groupprovides Fronting Insurance Contracts or (b) National Indemnity and Converium in relation toRelevant Risks for which National Indemnity or a member of its Group provides Fronting InsuranceContracts, books, records, underwriting statistics and accounts of all transactions under thisAgreement.8.3 Munich Re, National Indemnity or Converium may, subject to any confidentialityobligations of either Agent, at all reasonable times and on reasonable notice appoint its officers,employees agents, or auditors to inspect, examine and verify at the offices of either Agent (and totake copies of such books and records) all such accounts, records, books, vouchers, correspondenceand papers relating to any of the functions performed by the relevant Agent under this Agreementinsofar as they relate to the affairs of Munich Re or the members of its Group set out in Part I ofSchedule 2 or National Indemnity or the members of its Group set out in Part I of Schedule 3 orConverium or a member of its Group respectively, including without limitation the application ofany money belonging to them paid or received by the relevant Agent and the operation of bankaccounts of such persons by the relevant Agent pursuant to this Agreement, and each of the Agentsshall whenever reasonably required at any time during normal business hours give such officers,employees, servants or agents access to its offices for such purposes.8.4 Each of National Indemnity and Munich Re undertakes to agree to supply, to the extentpermissible under any applicable law or regulatory requirements, such information as either Agentshall reasonably request from time to time in order to facilitate the management of the Business orthe arrangements referred to in Clause 2A (but shall not be obliged to provide any informationrelating to any business of each of National Indemnity and Munich Re or any member of its Group tothe extent it does not relate to the Business or the arrangements referred to in Clause 2A).**9.  Relationship between the Parties**9.1 Nothing in this Agreement shall create or constitute a partnership between the partieshereto or any of them nor, save as expressly provided herein, constitute any one the agent ofanother and no party shall do or suffer anything to be done whereby it shall or may be representedthat it is the partner or agent of any other party hereto
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(save as aforesaid) unless such party is appointed partner or agent of another partysubject to the consent in writing of every other party to this Agreement.9.2 The relationship between the parties to this Agreement is as described in this Agreement.Neither that relationship nor the services to be provided by Global nor any other matter shallgive rise to any fiduciary or equitable obligations which would hinder Global from acting ascontemplated under the terms of this Agreement.**10.****Termination**10.1 For the purposes of this Clause 10, a ***Trigger Event***shall be deemed to have occurredin relation to a party if: (a) it ceases to be duly authorised (or has any suspension,restriction or other limitation imposed in respect of its authority, licence,approval or permission) in respect of Specified Risks in the jurisdiction inwhich it is incorporated or has its principal place of business ***(homejurisdiction);***  (b) it goes into liquidation whether compulsorily or voluntarily(otherwise than a voluntary and solvent liquidation for the purpose ofreconstruction or amalgamation pursuant to a scheme previously agreed betweenthe parties);  (c) it enters into any composition with its creditors generally orsuffers any similar action in consequence of default by it in its obligations inrespect of any indebtedness for borrowed moneys;  (d) an administration order shall be made in respect of such party;  (e) it stops or threatens to stop payment or ceases or threatens tocease to carry on its business (otherwise than in connection with or inpursuance of a winding-up for the purpose of a reconstruction oramalgamation pursuant to a scheme previously agreed between the parties) or isdeemed for the purpose of Section 123 of the Insolvency Act 1986 to be unable topay its debts;  (f) it has an administrative receiver or other receiver or othersimilar official appointed over all (or substantially all) of its undertakingand assets;  (g) it suffers any action similar to any of the events described inClauses 10.1(a) to (f) under the laws of any competentjurisdiction;  (h) it has its financial strength rating downgraded below BBB+ (orin the case of Converium BBB) by Standard & Poor’s Rating Service ***(S&P)***or ifsuch rating is not available, below such
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   comparable rating as may be reasonably agreed between the parties,or it requests or agrees that S&P should cease to rate it;  (i) Converium is subject to a change of control as defined inClause 15.2(f) of the Pool Members’ Agreement.10.2 In the event that a Trigger Event occurs in relation to any of Munich Re or a member of itsGroup set out in Part I of Schedule 2 or National Indemnity or a member of its Group set out inPart I of Schedule 3, the Agents or either of them may suspend entirely with immediate effect theappointment by the relevant person (the ***defaulter)***pursuant to Clause 2.1(a), in which case theparties shall seek to agree a basis upon which such suspension might be lifted and the appointmentreinstated. From the time of any such suspension until the time such agreement is reached, Clause10.3 shall apply.10.3 If this Clause 10.3 applies (by reason of Clause 10.2 or 10.7), neither of the Agents shall(nor shall they have any authority to): (a) accept Fronting Insurance Contracts in the name of the defaulteror the person invoking this Clause 10.3 pursuant to Clause 10.7 (asappropriate);  (b) provide quotations or enter into (or continue) any negotiationsrelating to the possible acceptance of, Fronting Insurance Contractsin the name of the defaulter or the person invoking this Clause 10.3 pursuant toClause 10.7 (as appropriate); or  (c) agree any amendments to the terms of or otherwise agree anyendorsements to any Fronting Insurance Contract which would, or would bereasonably likely to, increase materially the gross exposure of the defaulterunder the Fronting Insurance Contract in question.10.4 In the event that any of Munich Re, National Indemnity or a member of such person’s Group setout in Part I of Schedule 2 or Part I of Schedule 3 ceases to be duly authorised (or has anysuspension, restriction or other limitation imposed in respect of its authority, licence, approvalor permission) in respect of any Relevant Risk in a jurisdiction set out against such person’s namein Part I of Schedule 2 or Part I of Schedule 3 (an ***Applicable Territory)***in circumstances whereClause 10.1(a) does not apply to such person (a ***Non-Authorisation Event),***then the appointment bysuch person (the ***non-authorised person)***pursuant to Clause 2.1(a) in relation to any relevantApplicable Territory shall be suspended with immediate effect, in which case the parties shall seekto agree the basis upon which such suspension might be lifted and the relevant part of theappointment reinstated. From the time of any such suspension until the time such agreement isreached, Clause 10.6 shall apply.10.5 If Clause 10.4 applies, as an alternative to suspension pursuant to Clause 10.4, Munich Re orNational Indemnity shall have the right to appoint an alternate member of its respective Groupmeeting the requirements of the Pool Members’ Agreement to replace a non-authorized person bynotice to Converium and Agents. If Munich Re or
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National Indemnity appoint an alternative pursuant to this Clause 10.5, Munich Re orNational Indemnity shall procure that the alternative member of its Group shall enter into anagreement by which it agrees to be bound by this Agreement as if it were the entity it replaces.10.6 If this Clause 10.6 applies (by reason of Clause 10.4), neither of the Agents shall (nor shallthey have any authority to): (a) accept Fronting Insurance Contracts in the name ofthe non-authorised person in or relating to the Applicable Territory inquestion;  (b) provide quotations for, or enter into (or continue) anynegotiations relating to the possible acceptance of, FrontingInsurance Contracts in the name of the non-authorised person relating to theApplicable Territory in question; or  (c) agree any amendments to the terms of or otherwise agree anyendorsements to any Fronting Insurance Contract in the name of thenon-authorised person previously written (and which relates to the ApplicableTerritory in question) which would, or would be reasonably likely to, increasematerially the gross exposure of the non-authorised person under the FrontingInsurance Contract in question.10.7 In the event that: (a) Converium ceases lawfully to be able to reinsure any FrontingInsurance Contracts;  (b) Converium’s participation in the arrangements established by thePool Members’ Agreement is terminated; or  (c) a Trigger Event occurs in relation to Converium,then any person making an appointment pursuant to Clause 2.1 (a) shall be able to suspend allappointments or, Converium or either Agent shall be entitled, by written notice to the otherparties, to suspend all appointments pursuant to Clause 2. l(a) in which case the parties shallseek to agree the basis upon which such suspension might be lifted and the relevant part of theappointment reinstated. From the time of any such suspension until the time such agreement isreached, Clause 10.3 shall apply.10.8 For the avoidance of doubt, the Agents’ administrative obligations under Clause 2. l(b) andtheir duties of management and administration of the Reinsured Risks and the negotiation andsettlement of Claims under Clause 7 shall not cease by reason of the suspension or termination, inwhole or in part, of an appointment pursuant to Clause 2.1 (a) (except to the extent thatcontinuing to perform the administrative obligations would be inconsistent with such suspension ortermination or that the parties so agree).
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10.9 Each party shall notify the other parties upon becoming aware of a Trigger Event inrelation to any of Munich Re, National Indemnity or the members of their Groups set out in Part Iof Schedule 2 or Part I of Schedule 3 or Converium at any time.10.10 Each of Munich Re and National Indemnity shall notify the other parties upon becoming awarethat the Non-Authorisation Event under Clause 10.4 applies to it or any member of its Group set outin Part I of Schedule 2 or Part I of Schedule 3 at any time.10.11 Converium shall notify the other parties upon becoming aware that Clause10.7(a), (b) or (c) applies to it, at any time.10.12 Suspension and/or termination of the appointment pursuant to Clause 2.1 (a) in whatevermanner shall in no way affect or limit any accrued rights which any party to this Agreement mayhave against the others pursuant to this Agreement or any rights expressly stated to survivetermination of this Agreement.10.13 Except to the extent that any of (a) Munich Re or (b) National Indemnity, and Converium agreeotherwise (such agreement to be in writing and notified to the Agents), neither the Reinsurance,nor the obligations of any of Munich Re, National Indemnity or the members of their Groups set outin Part I of Schedule 2 or Part I of Schedule 3 or Converium, shall terminate if this Agreement orany part of it is terminated or suspended.10.14 The appointment of the Agents (or either of them) pursuant to Clause 2.1 (a) shall terminateautomatically at any time when a termination of the appointment of the Agent(s) to provide servicesunder the Pool Members’ Agreement takes effect. Neither Munich Re nor any member of its Group,National Indemnity or any member of its Group nor Converium shall be required to make any paymentto the Agents (or either of them) in the event of such a termination save as provided for in thePool Members’ Agreement.10.15 The appointment pursuant to Clause 2.1 may not be terminated save as expressly provided forin this Agreement.10.16 For the avoidance of doubt, the occurrence of a Trigger Event or a Non-AuthorisationEvent shall not constitute a breach of this Agreement and, save in the case of fraud, a person towhich a Trigger Event applies shall have no liability pursuant to this Agreement, whether indamages or otherwise, arising from or in connection with any such event, apart from any losssuffered by the Agents and/or Converium (excluding indirect, special or consequential loss or lossof profit, goodwill or business opportunity) directly resulting from a failure by a person to whicha Trigger Event applies to notify Global that such an event applies to it in accordance with Clause10.8 or 10.9 (as the case may be) and the Agents continue to write insurance business on behalf ofsuch person under this Agreement.
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**11.****Confidentiality**11.1 Every party hereto shall hold in confidence and shall not divulge to any other party orany third party any Confidential Information nor make any public or press announcement regardingthis Agreement or matters connected herewith except as provided in Clause 11.2, 11.3,11.4 or (asthe case may be) Clause 11.5.11.2 Notwithstanding the provisions of Clause 11.1, any party may disclose ConfidentialInformation: (a) in respect of any party to any other party with the prior writtenconsent of the first party;  (b) with the consent of the other parties (such consent not to beunreasonably withheld or delayed);  (c) if and to the extent required by law or for the purpose of anyjudicial proceedings;  (d) if and to the extent required or permitted by this Agreement;  (e) if and to the extent required by any securities exchange orregulatory or governmental body or tax authority to which that party or a memberof its Group is subject, wherever situated;  (f) to any member of its Group and to its officers and employees orthose of such member, in any such case to the extent that such person needs toknow such information in order to manage or monitor its business or in theperformance of his or its duties;  (g) to its professional advisers, auditors and bankers; or  (h) if and to the extent the information has come into thepublic domain through no fault of that party.11.3 Notwithstanding Clause 11.1: (a) each Agent shall, be entitled to provide extracts of thisAgreement to such banks, reinsurers and brokers and other managing agents ofreinsurers in the ordinary course of business as it reasonably deems necessaryfor the purpose of carrying out the Business;  (b) any party may give a copy of this Agreement, or a summary of it,to any insurance company which is a member of any insurance pool constituted bythe Pool Members’ Agreement but not a party hereto.11.4 Each party shall procure that any person to whom Confidential Information is disclosedpursuant to Clauses 11.2(f) or (g) complies with the restrictions set out in this Clause 11 as ifsuch person were a party to this Agreement.
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11.5 The provisions of this Clause 11 shall remain in full force and effect notwithstandingthe termination of this Agreement and each party shall remain bound by the provisions of thisClause 11 for only a period of five years following cessation by both Agents of the provision ofany services to Munich Re or National Indemnity (or any member of such person’s Group) pursuant tothis Agreement.11.6 Neither Global nor GAI shall be obliged to disclose to any other party or, in making anydecision or taking any action in relation to the Business or the management thereof, to take intoconsideration information the disclosure of which by Global or (as the case may be) by GAI to anyother party would or might be a breach of duty or confidence to any other person excluding thedetails of any cover written and any other information which another party requires to be incompliance with applicable law.**12.****Undertakings**12.1 Global shall use all reasonable care and skill in the performance of their respectiveobligations under this Agreement and shall comply with all applicable laws relating thereto.12.2 Each of Munich Re and National Indemnity severally agrees, warrants and undertakes to each ofthe Agents and Converium that (i) it and each member of its Group listed in Part I of Schedule 2 orPart I of Schedule 3 (respectively) has (and so long as the appointment of the relevant Agentremains in force under this Agreement shall continue to have) power to employ each of the Agents;(ii) it and each member of its Group listed in Part I of Schedule 2 or Part I of Schedule 3(respectively) has and will have all necessary consents, powers and authorities to authorise eachof the Agents to act as its agent as contemplated by this Agreement; (iii) it has all necessaryconsents, powers and authorities to enter into this Agreement in accordance with its terms; and(iv) it has been validly appointed by each member of its Group listed in Part I of Schedule 2 orPart I of Schedule 3 (respectively) as agent for the purposes of making the appointment on behalfof such person in Clause 2.1 and any other purpose necessary pursuant to this Agreement.12.3 Converium agrees, warrants and undertakes to the Agent, Munich Re and National Indemnity thatit has (and so long as the appointment of the Agent remains in force under the Pool Members’Agreement shall continue to have) power to employ the Agent and has and will have all necessaryconsents, powers and authorities: (i) to enter into this Agreement in accordance with its terms(including, without limitation, the Reinsurance); and (ii) to authorise the Agent to act as itsagent as contemplated by this Agreement.12.4 Subject to Munich Re or National Indemnity being fully reimbursed or indemnified (under Clause3 or otherwise) by Converium for any loss or liability it may incur, Munich Re or NationalIndemnity hereby undertakes to ratify (and to procure that any relevant member of its Groupratifies) every act performed or thing done by each of the Agents which shall hereafter beperformed or done in exercise or purported exercise of the powers conferred or to be conferred uponthe Agent by this Agreement provided only that such acts are in accordance with the terms of thisAgreement and within the scope of the authority granted to the Agent hereunder.
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12.5 Each of Munich Re and National Indemnity represents and warrants to the Agents andNational Indemnity that those members of its Group marked * in Part I of Schedule 2 or Part I ofSchedule 3 is duly authorised to write all Relevant Risks in the United Kingdom and undertakesto take all reasonable steps to ensure such authorisations are maintained during the durationof this Agreement.12.6 Each of Munich Re and National Indemnity undertakes to notify the Agent and Converium inwriting as soon as reasonably practicable of any changes as to the authorisations (whether inrelation to any Applicable Territory or the United Kingdom) which it or the members of its Grouplisted in Part I of Schedule 2 or Part I of Schedule 3 has, or expects to obtain, from time totime.**13.****Munich Re Security**13.1Converium shall on or before the 3rd January 2007 (or such later date asMunich Re may specify) pay to Munich Re the sum of $ 8, 600,00.00 million, or arrange or cause tobe arranged the issue and delivery to Munich Re of a Loc in the same sum, to be held on the basisset out in Clause 13.3.13.2 Any amounts paid or LOC’s issued and delivered pursuant to Clauses , 13.1, 13.4, 13.6 or 13.9(or because of the definition of Incurred Position) shall be paid to the account of Munich Renotified to Converium in writing by Munich Re from time to time.13.3 The amounts held pursuant to Clause 13.2 shall be known as the ***MR Fund.***Such amounts shall beheld by Munich Re as trustee for Converium provided that Munich Re shall be entitled to makepayments from such account and /or LOC(s), as the case may be, in order to pay amounts which aredue: (a) or claimed to be due under Reinsured Risks in respect of whichFronting Insurance Contracts have been written by it or members of its Group;  (b) to it or members of its Group from Converium under the terms ofthe Reinsurance;  (c) to it or members of its Group from Converium in respect ofOverriding Commission; and/or  (d) pursuant to Clause 2A.13.4 At any time prior to 31 December 2010 that the MR Fund (together with the amount of any claimspaid by the Agents or Munich Re in relation to the Reinsured Risks) is less than the fifty per cent(50%) of the Incurred Position, within ten Business Days of receiving notice from Munich Re or theAgents (or, if later, the date on which the Incurred Position is determined in accordance withSchedule 6), Converium shall pay to Munich Re such additional amount, or arrange or cause to bearranged the issue and delivery to Munich Re of a Loc in such amount, or increase or cause to beincreased any existing Loc in the MR Fund by such additional amount as
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shall be required for the MR Fund to equal fifty per cent (50%) of the Incurred Position.13.5 Munich Re shall pay to Converium within ten Business Days of 31 March 2011 (or, if later, thedate on which the profit is determined in accordance with Schedule 4), the profit arising on anyFronting Insurance Contracts written by Munich Re or any member of its Group calculated on thebasis set out in Clause 13.12, or allow any LOC or LOC’s that has or have been issued and deliveredto Munich Re in accordance with Clauses, 13.1, 13,4, 13.6 or 13.9 (or because of the definition ofIncurred Position) to be reduced, in the aggregate, by an amount equivalent to such profit.Nothing in this Clause 13.5 shall be construed to require Munich Re to pay any amount or reduce theLOC’s delivered to Munich Re in accordance with and pursuant to Converium’s obligations under thisAgreement that would cause the MR Fund to be less than the greater of (a) and (b) below: (a) the sum of: (i) 100 per cent. of outstanding claims reserves, including reserves forclaims incurred but not reported, maintained by Munich Re or the relevant memberof its Group in accordance with applicable law or regulation in respect ofrelevant Reinsured Risks written in the name of such person (the ***MR Reserves);***plus  (ii) the greater of: (A) $8,600,000.00 million; and  (B) 20% of the MR Reserves; or (b) the minimum amount which is required to allow Munich Re or suchmember of its Group to receive credit for the Reinsurance of the FrontingInsurance Contracts written by it under the laws of the jurisdiction in whichsuch person is domiciled.The greater of (a) or (b) above shall be referred to as the ***Post Profit Incurred Position.***13.6 At any time after 31 December 2010 but prior to 31 December 2014 that the MR Fund is less thanthe Post Profit Incurred Position, within ten Business Days of receiving notice from Munich Re orAgents (or, if later, the date on which the Post Profit Incurred Position is determined inaccordance with Schedule 6), Converium shall pay to Munich Re such additional amount as shall berequired for the MR Fund to equal the Post Profit Incurred Position.13.7 Munich Re shall pay to Converium, or allow any LOC or LOC’s that has or have been issued anddelivered to Munich Re in accordance with clauses, 13.1, 13.4, 13.6 or 13.9 (or because of thedefinition of Incurred Position) to be reduced, in the aggregate, by an equivalent amount, withinten Business Days of 31 March 2015 (or, if later, within ten Business Days of the date on which theMR Reserves are
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determined in accordance with Schedule 6 for that date), the amount required toreduce the MR Fund to the greater of:(a) the MR Reserves; or(b) the minimum amount which is required to allow Munich Re or such memberof its Group to receive credit for the Reinsurance of the FrontingInsurance Contracts written by it under the laws of the jurisdiction inwhich such person is domiciled.13.8 At any time after 31 March 2015 that the MR Fund is less than the greater of: (a) the MR Reserves; or  (b) the minimum amount required to allow Munich Re or suchmember of its Group to receive credit for the Reinsurance of the FrontingInsurance Contracts written by it under the laws of the jurisdiction in whichsuch person is domiciled,Munich Re may serve a Letter of Credit Notice which shall state the amount of additionalsecurity required to increase the MR Fund to the greater of (a) and (b) above.13.9 Within ten Business Days of receipt of notice pursuant to Clause 13.8 (or, if later, thedate on which the MR Reserves are determined in accordance with Schedule 6), Converium mayeither: (a) arrange or cause to be arranged the issue and delivery toMunich Re of a Letter of Credit in the amount set out in the Letter of CreditNotice for the benefit of Munich Re; or  (b) deposit the required additional funds in the MR Fund.If Converium elects to provide a Letter of Credit in response to the Letter of Credit Notice,Converium shall, if practicable and if agreed by Munich Re, be entitled to provide thenecessary security by increasing, or causing to be increased, the amount of any existingLetter of Credit by the amount of the Letter of Credit Notice rather than by issuing anddelivering, or causing to be issued and delivered, a new Letter of Credit). For the avoidanceof doubt, nothing in this Clause shall be construed as limiting the number of Letter of CreditNotices that may be served from time to time by Munich Re.13.10 Within ten Business Days of the end of each quarter following 31 December 2014, Munich Reshall pay to Converium the amount, if any, by which the MR Fund exceeds the greater of: (a) the MR Reserves; and
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 (b) the amount required to allow Munich Re or such member of its Group toreceive credit for the Reinsurance of the fronting Insurance Contracts writtenby it under the laws of the jurisdiction in which such person is domiciled.13.11 Inapplying Clauses 13.8, 13.9 and 13.10, all currencies shall be converted to US$ at therelevant exchange rate used by (or to be used by) the Agents for the purpose of the auditedaccounts produced for the Pool for the year most recently ended. Clauses 13.4 through 13.10 may beterminated by the agreement Munich Re and Converium without the consent of the other parties.13.12 Global shall, by no later than 31 March 2011 deliver to Munich Re and Converium itscalculation of the profit attributable to the Fronting Insurance Contracts written by Munich Re andthe members of its Group calculated on a basis consistent with that used for the purposes of theaudited accounts produced for the Pool in the year ended on 31 December 2010 (the ***MR Statement).***The MR Statement shall be accompanied by sufficient information to allow Munich Re and Converium tounderstand how the profit set out in the MR Statement has been calculated and the basis upon whichit has been calculated (including without limitation the calculation of the MR IBNR). The processin Clause 15.1 and Schedule 4 shall apply in relation to the MR Statement.13.13 In determining profit, Global shall: (a) calculate each of the items in (a) to (d) inclusive of thedefinition of profit using each of US$, Canadian $, € and GBP by allocating allrelevant premiums, claims and reserves to one only of such currencies inaccordance with Global’s current practice, for the avoidance of doubt profitshall be paid out in each of the four currencies; and  (b) use the incurred but not reported reserves as reported by MunichRe and applicable members of its Group for the Reinsured Risks (the***MR IBNR).***13.14 If the calculation of profit in any of the four currencies shows a loss, then Global shallcalculate the total profit attributable to the Fronting InsuranceContracts in US$ by converting toUS$ at the relevant exchange rate used by the Agents for the purpose of the audited accountsproduced for the Pool for the year ended 31 December 2010 (the ***Exchange Rate)***(suchamount being the ***Total $ Distribution).***13.15 If Clause 13.14 applies, the amount of any distribution pursuant to Clause 13.5 (using theExchange Rate to calculate the amount of the distribution) shall be limited to the Total $Distribution and the distribution in one or more of the currencies not in deficit shall be reducedto ensure that the Total $ Distribution is not exceeded (the distribution of currencies in whichthere was a profit shall be reduced by an equal percentage so that the distribution equals theTotal $ Distribution at the Exchange Rate).
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13.16 Global shall, by no later than 31 March 2015 deliver to Munich Re and Converiumits calculation of outstanding reserves on claims reported on Reinsured Risks and Munich Re’scalculation of outstanding reserves on incurred but not reported claims on Reinsured Risks as ofthe prior 31 December together with the actuarial calculation of those reserves and sufficientinformation to allow Converium, and Munich Re to understand how the reserves were set. Thisprocess shall be repeated within 90 days of the end of each calendar quarter so long as Clause13.10 remains in effect.13.17 The amounts required to be held in the MR Fund shall be reduced by: (a) fifty per cent of the amount of any Letter of Credit establishedby Converium pursuant to Clause 15.5(c)(iii) (or, with the consent of Munich ReClause 15.5(c)(iv)) of the Pool Members’ Agreement which relates to theReinsured Risks;  (b) fifty per cent of any amount paid by (or on behalf of) Converiumtowards the fund held by the Agents on behalf of the Pool in relation claims onbusiness written during the Period; and  (c) fifty per cent of the amount of any reinsurance premiums paid by(or on behalf of) Converium in relation to reinsurance taken out by the Agentsin relation to the business of the Pool written during the Period,provided that the MR Fund shall not be reduced below $8,600,000.00 million (or, if lower andClause 13.8 applies, the amount required to be held in the MR Fundpursuant to Clause 13.8) as aresult of the operation of Clauses 13.17(b) or (c).13.18 To the extent that the MR Fund consists of monies Munich Re shall pay to Converium an amountequal to the interest which is deemed to have accrued on that part of the MR Fund in the quarter to31 March, 30 June, 30 September and 31 December in each year within two Business Days of such date.The amount of such interest shall be calculated on a daily basis. Interest shall accrue on theamounts in the MR Fund in each quarter at a rate equal to the “yield on the one year US TreasuryNotes” on the first Business Day after the 31 March, 30 June, 30 September or 31 December endingthe previous quarter as shown in the ***Wall Street Journal***for the close of that first Business Dayof the calendar quarter. For the purposes of the foregoing sentence, the “one year US TreasuryYield” shall mean the annual yield on the U. S. Treasury Bond or Note maturing on the day nearestthe first anniversary of that first Business Day of that calendar quarter. If there are two bondsor notes that are equally near the third anniversary, the annual yield of the instruments will beaveraged. No interest shall be paid by Munich Re to Converium in respect of any LOC issued anddelivered to Munich Re in accordance with and pursuant to Converium’s obligations under thisAgreement.13.19 References in this Clause 13 to reserves for claims incurred but not reported shall mean theamount of such reserves required to be kept in accordance with actuarial best practice in therelevant jurisdiction and the guidance produced by relevant actuarial bodies. Converium shall beprovided with sufficient information at
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all times to understand how such reserves have been calculated and the basis on whichthey have been calculated. Converium may challenge the calculation of any such reserve as set outin Schedule 6 and until such dispute is resolved in accordance with Schedule 6, the provision ofthis Clause 13 for which the reserves were provided shall have no effect.**14.****National Indemnity Security**14.1 Converium shall on or before 3rd January 2007 (or such later date as National Indemnitymay specify) pay to National Indemnity the sum of $8,600,000.00 million to be held on the basis setout in Clause 14.3.14.2 Any amounts paid pursuant to Clauses 5.1(a), 14.1, 14.4, 14.6 or 14.9 or because of thedefinition of Incurred Position, shall be paid to the account of National Indemnity notified toConverium in writing by National Indemnity from time to time.14.3 Theamounts held pursuant to Clause 14.2 shall be known as the ***NICOFund.***Such amounts shall be held by National Indemnity as trustee for Converium provided that NationalIndemnity shall be entitled to make payments from such account in order to pay amounts which aredue: (a) or claimed to be due under Reinsured Risks in respect of whichFronting Insurance Contracts have been written by it or members of its Group;  (b) to it or members of its Group from Converium under the terms ofthe Reinsurance;  (c) to it or members of its Group from Converium in respect ofOverriding Commission; and/or  (d) pursuant to Clause 2A.14.4 At any time prior to 31 December 2010 that the NICO Fund together with the amount of anyclaims paid by the Agents or National Indemnity in relation to the Reinsured Risks is less thanfifty per cent (50%) of the Incurred Position, within ten Business Days of receiving notice fromNational Indemnity or the Agents (or, if later, the date on which the Incurred Position isdetermined in accordance with Schedule 6), Converium shall pay to National Indemnity suchadditional amount as shall be required for the NICO Fund to equal fifty per cent (50%) of theIncurred Position.14.5 National Indemnity shall pay to Converium within ten Business Days of 31 March 2011 (or, iflater, the date on which the profit is determined in accordance with Schedule 5), the profitarising on any Fronting Insurance Contracts written by National Indemnity or any member of itsGroup calculated on the basis set out in Clause 14.12. Nothing in this clause shall be construed torequire National Indemnity to pay any amount which would cause the NICO Fund to be less than thegreater of (a) and (b) below: (a) the sum of:
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 (i) 100 per cent, of outstanding claims reserves, including reserves for claimsincurred but not reported maintained by National Indemnity or the relevant memberof its Group in accordance with applicable laws in respect of relevant ReinsuredRisks written in the name of the relevant person (the ***NIC Reserves);***plus  (ii) the greater of: (A) $8,600,000.00 million; and