EXHIBIT 10.56


 


RISK SHARING TERM SHEET FOR

AEQUICAP INSURANCE COMPANY AND

AEQUICAP PROPERTY & CASUALTY INSURANCE COMPANY

Summary of Terms Dated June 22, 2007


 


 


	
  Company:

  	
  Aequicap Property & Casualty Insurance Company
  (APC)

  
	
   

  	
   

  
	
  Program Manager:

  	
  Aequicap Program Administrators, Inc (APA)

  3000 West Cypress Creek Road

  Fort Lauderdale, Fl 33309-1710

  
	
   

  	
   

  
	
   

  	
  Joseph A. Matteis, ARM - President

  
	
   

  	
   

  
	
  Term:

  	
  Effective July 1, 2007

  
	
   

  	
   

  
	
  Subject Business:

  	
  Workers Compensation (statutory limits)

  Commercial Automobile Liability (trucking)

  
	
   

  	
   

  
	
  Authority:

  	
  Limited to the following states: FL

  
	
   

  	
   

  
	
  Management Company:

  	
  CastlePoint Management (CPM)

  120 Broadway, 30th floor

  New York, New York 10271

  
	
   

  	
   

  
	
  Estimated:

  	
  $50,000,000 maximum DWP for workers compensation

  
	
  Annual Premium:

  	
  $50,000,000 maximum DWP for commercial automobile

  
	
   

  	
   

  
	
  Direct Written Premium (“DWP”):

  	
  Company’s Direct Written Premium related to Subject
  Business.

  
	
   

  	
   

  
	
  Applicable Reinsurance Treaties:

  	
  Must be approved by CastlePoint Management

  
	
   

  	
   

  
	
  BB & T:

  	
  For the purposes of this agreement, BB&T was
  calculated based upon an estimate of 6.5°% of DWP for workers compensation
  and 2% of DWP for commercial automobile liability, which shall be paid by
  Company.

  
	
   

  	
   

  
	
  Reinsurance Agreement

  	
   

  
	
   

  	
   

  
	
  Type:

  	
  Quota Share Reinsurance

  
	
   

  	
   

  
	
  Reinsured:

  	
  Aequicap Property & Casualty Insurance Company

  
	
   

  	
   

  
	
  Reinsurer:

  	
  CastlePoint Insurance Company (CPIC)

  
	
   

  	
   

  
	
  Subject Premium:

  	
  DWP less the cost of any excess reinsurance

  



 

















 


	
  Limit:

  	
  $1,000,000

  
	
   

  	
   

  
	
  Cession:

  	
  100%

  
	
   

  	
   

  
	
  Workers Compensation Commission:

  	
  Calculation based upon DWP Income

  
	
   

  	
   

  
	
   

  	
  Minimum

  	
  19.5% plus BB&T @ 63% Loss Ratio

  
	
   

  	
   

  	
   

  
	
   

  	
  Provisional

  	
  22.5% plus BB&T @ 60% Loss Ratio

  
	
   

  	
   

  	
   

  
	
   

  	
  Maximum

  	
  25.5% plus BB&T @ 57% Loss Ratio

  
	
   

  	
   

  
	
   

  	
  Additionally, there will be a profit commission at a
  rate of .5 to 1 for loss ratios between 55% and 50%.

  
	
   

  	
   

  
	
   

  	
  Commissions are subject to annual adjustments using
  CPM IBNR factors.

  
	
   

  	
   

  
	
   

  	
  Unallocated Loss Adjustment Expense included in
  commission.

  
	
   

  	
   

  
	
  Commercial Automobile Commission:

  	
  Calculation based upon DWP Income

  
	
   

  	
   

  
	
   

  	
  Minimum

  	
  21.5% plus BB&T @ 64% Loss Ratio

  
	
   

  	
   

  	
   

  
	
   

  	
  Provisional

  	
  24% plus BB&T @ 61.5% Loss Ratio

  
	
   

  	
   

  	
   

  
	
   

  	
  Maximum

  	
  29.5% plus BB&T @ 56% Loss Ratio

  
	
   

  	
   

  
	
   

  	
  Commissions are subject to annual adjustments using
  CPM IBNR factors.

  
	
   

  	
   

  
	
   

  	
  Unallocated Loss Adjustment Expense included in
  commission.

  
	
   

  	
   

  
	
  Collateral:

  	
  Company may require APC to provide LOC or New York
  Regulation 114 compliant Trust Account for difference between provisional and
  minimum commission at each calendar quarter end.

  
	
   

  	
   

  
	
  Loss Ratio:

  	
  Defined as Loss and Allocated Loss Adjustment
  Expense (unallocated loss adjustment expense included in commission)

  
	
   

  	
   

  
	
  Expense Constant:

  	
  Half of expense constant to be included as part of
  DWP

  
	
   

  	
   

  
	
  Loss Control Fee:

  	
  To be retained by APA (maximum fee of $150 per unit)

  
	
   

  	
   

  
	
  Warranty:

  	
  That there is reinsurance in place on APC’s behalf
  for a minimum of $19 million excess of $1 million for workers compensation

  
	
   

  	
   

  
	
  Retrocession:

  	
  CPIC and APC shall retrocede and AIC will accept a
  20% pro rata share of this agreement

  



 

















 


	
  Third Party Administrator:

  	
  Aequicap Claims Services, Inc

  



 


Accepted and agreed as of the date written below


Aequicap Insurance Company


 


	
  By

  	
  /s/ James E. Roberts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  James E. Roberts

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
  Date:

  	
  6/22/2007

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Accepted and agreed as of the date written below

  	
   

  
	
  Aequicap Property & Casualty Insurance Company

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By

  	
  /s/ James E. Roberts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  James E. Roberts

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
  Date:

  	
  6/22/2007

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  CastlePoint Management Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By

  	
  /s/ Gregory T. Doyle

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Gregory T. Doyle

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
  Date:

  	
  June 22, 2007