exv10w2






EXHIBIT 10.2




PHILADELPHIA INSURANCE COMPANY

PHILADELPHIA INDEMNITY INSURANCE

both of Bala Cynwyd, Pennsylvania

And any additional company established or acquired by the Company




CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	ARTICLE	 	 	 	PAGE
	I

	 	BUSINESS COVERED
	 	 	1	 
	II

	 	COMMENCEMENT AND TERMINATION
	 	 	2	 
	III

	 	SPECIAL TERMINATION
	 	 	2	 
	IV

	 	DEFINITIONS
	 	 	3	 
	 

	 	     Extended Reporting Period Coverage
	 	 	3	 
	 

	 	     Gross Net Earned Premium Income
	 	 	4	 
	 

	 	     Insured
	 	 	4	 
	 

	 	     Loss Occurrence
	 	 	4	 
	 

	 	     Policy or Policies
	 	 	4	 
	 

	 	     Act(s) of Terrorism
	 	 	4	 
	 

	 	     Ultimate Net Loss
	 	 	5	 
	V

	 	LOSS IN EXCESS OF POLICY LIMITS
	 	 	6	 
	VI

	 	EXTRA CONTRACTUAL OBLIGATIONS
	 	 	6	 
	VII

	 	TERRITORY (BRMA 51A)
	 	 	7	 
	VIII

	 	EXCLUSIONS
	 	 	7	 
	IX

	 	SPECIAL PROVISION
	 	 	9	 
	X

	 	SPECIAL ACCEPTANCES
	 	 	9	 
	XI

	 	COVERAGE
	 	 	10	 
	XII

	 	REINSTATEMENT
	 	 	10	 
	XIII

	 	REINSURANCE PREMIUM
	 	 	11	 
	XIV

	 	NOTICE OF LOSS AND LOSS SETTLEMENTS
	 	 	11	 
	XV

	 	AGENCY AGREEMENT
	 	 	12	 
	XVI

	 	SALVAGE AND SUBROGATION
	 	 	12	 
	XVII

	 	ERRORS AND OMISSIONS (BRMA 14C)
	 	 	12	 
	XVIII

	 	OFFSET
	 	 	12	 
	XIX

	 	CURRENCY (BRMA 12A)
	 	 	12	 
	XX

	 	TAXES (BRMA 50C)
	 	 	13	 
	XXI

	 	FEDERAL EXCISE TAX (BRMA 17A)
	 	 	13	 
	XXII

	 	UNAUTHORIZED REINSURANCE (BRMA 55A)
	 	 	13	 
	XXIII

	 	NET RETAINED LINES
	 	 	15	 
	XXIV

	 	THIRD PARTY RIGHTS (BRMA 52C)
	 	 	15	 
	XXV

	 	SEVERABILITY
	 	 	16	 
	XXVI

	 	GOVERNING LAW (BRMA 71A)
	 	 	16	 






 









 






	 	 	 	 	 	 	 
	ARTICLE	 	 	 	PAGE
	XXVII

	 	ACCESS TO RECORDS
	 	 	16	 
	XXVIII

	 	INSOLVENCY
	 	 	16	 
	XXIX

	 	ARBITRATION
	 	 	17	 
	XXX

	 	CONFIDENTIALITY
	 	 	18	 
	XXXI

	 	SERVICE OF SUIT
	 	 	18	 
	XXXII

	 	TERRORISM RISK INSURANCE ACT OF 2002
	 	 	20	 
	XXXIII

	 	ENTIRE AGREEMENT
	 	 	20	 
	XXXIV

	 	MODE OF EXECUTION
	 	 	20	 
	XXXV

	 	INTERMEDIARY
	 	 	21	 
	 

	 	Exhibit A	 	 	 	 
	 

	 	Nuclear Incident Exclusion Clause — Liability — Reinsurance — U.S.A.	 	 	 	 
	 

	 	Nuclear Incident Exclusion Clause — Liability — Reinsurance — Canada

War Exclusion	 	 	 	 






 









 






CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)




between




PHILADELPHIA INSURANCE COMPANY

PHILADELPHIA INDEMNITY INSURANCE

both of Bala Cynwyd, Pennsylvania

And any additional company established or acquired by the Company

(the “Company”)




and



THE SUBSCRIBING REINSURER(S) EXECUTING THE

INTERESTS AND LIABILITIES AGREEMENT(S)

ATTACHED HERETO

(the “Reinsurer”)




ARTICLE I




BUSINESS COVERED





	A.	 	By this Contract the Reinsurer agrees to reinsure the net excess liability of the Company
under its Policies in force at the effective time and date hereof or issued or renewed after
that time and date by or on behalf of the Company and classified by the Company as Casualty
and Liability, which is defined as insurance which is classified in the NAIC Annual Statement
as commercial multiple peril (liability portion coverages), other liability — occurrence and
claims made, commercial and private passenger automobile liability, commercial umbrella
liability, and professional liability lines of business. The business covered under this
Article includes business written by the Company’s Commercial and Specialty Lines Divisions.
It is understood and agreed that, as respects Policies on a claims-made or losses-discovered
basis, any Extended Reporting Period Coverage provided thereunder shall be reinsured
hereunder, provided the date of loss is during the term of this Contract.
	 
	B.	 	Furthermore, it is agreed that the Company may add other Casualty and Liability product lines
of business to the scope of this Contract with prior written approval of the Reinsurer.
	 
	C.	 	The classes of business reinsured under this Contract are deemed to include:






	 	1.	 	Coverages required for non-resident drivers under the motor vehicle financial
responsibility law or the motor vehicle compulsory insurance law or any similar law of
any state or province, following the provisions of the Company’s Policies when they
include or are deemed to include so-called “Out of State Insurance” provisions;
	 
	 	2.	 	Coverages required under Section 30 of the Motor Carrier Act of 1980 and/or any
amendments thereto.




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ARTICLE II




COMMENCEMENT AND TERMINATION





	A.	 	This Contract shall become effective at 12:01 a.m., Eastern Standard Time, January 1, 2008 as
respects losses occurring at or after that time and date, and shall continue in effect until
12:01 a.m., Eastern Standard Time, January 1, 2009.
	 
	B.	 	The Reinsurer shall cease to be liable for Loss Occurrences after the time and date of
expiration of this Contract but shall remain liable for Ultimate Net Loss incurred by the
Company with respect to Loss Occurrences under the Company’s Policies with the date of loss
prior to the termination date of this Contract.
	 
	C.	 	The Company shall have the option to elect run-off coverage for Policies in force at the
expiration of this Contract. If the Company chooses to run off liability, the Company will
notify the Reinsurer prior to January 31, 2009. If run-off of liability is chosen, the
Reinsurer shall continue to be liable for Ultimate Net Loss incurred by the Company under all
Policies in force at the time and date of expiration until each Policy’s next anniversary,
renewal or expiration, but in no event shall the Reinsurer’s liability continue for more than
12 months after the expiration date plus odd time, not to exceed a total of 18 months. The
premium for the run-off coverage shall be the expiring rate from the attached Schedule A
applied to the unearned subject premium for the Policies in force as of December 31, 2008.





ARTICLE III




SPECIAL TERMINATION





	A.	 	The Company may terminate this Contract at any time by the giving of 10 days’ notice in
writing to the Reinsurer upon the happening of any one of the following circumstances:






	 	1.	 	A State Insurance Department or other legal authority orders the Reinsurer to cease
writing business; or
	 
	 	2.	 	The Reinsurer 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,
trustee in bankruptcy or other agent known by whatever name, to take possession of its
assets or control of its operations; or
	 
	 	3.	 	The Reinsurer’s policyholders’ surplus has been reduced by whichever is greater,
either 25% of the amount of surplus at the inception of this Contract or 25% of the
amount at the latest anniversary, or has lost any part of or has reduced its paid in
capital; or
	 
	 	4.	 	The Reinsurer has become merged with, acquired or controlled by any company,
corporation or individual(s) not controlling the party’s operations at the inception of
this Contract; however, this subparagraph A4 shall not apply where the acquiring or
surviving company, corporation, or individuals have a Standard & Poor’s Insurer




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	 	 	 	Financial Strength Rating equal to or higher than an “A-” and/or an A.M. Best’s rating
equal to or higher than an “A-” following such change in acquisition, merger or control;
or






	 	5.	 	The Reinsurer has reinsured its entire liability under this Contract without the
terminating party’s prior written consent; or
	 
	 	6.	 	The Reinsurer ceases writing new or renewal business; or
	 
	 	7.	 	The Reinsurer has been assigned an A.M. Best’s rating of less than “A-” or a
Standard & Poor’s Insurer Financial Strength Rating of less than “A-”.






	B.	 	Notwithstanding any other termination provision of this Contract, if this Contract is
terminated under the provisions of this Article, the Company shall have the right to terminate
liability for losses occurring subsequent to termination of this Contract. In such event, the
Reinsurer shall return the unearned portion, if any, less any commission allowed thereon, of
premiums paid hereunder and the minimum premium provisions, if any, shall be waived.
	 
	C.	 	Additionally, the Company, at its sole discretion, may elect to commute the Reinsurer’s
liabilities for loss and loss adjustment expenses, whether known and unknown, on Policies
covered under this Contract. In the event the Company and the Reinsurer cannot agree on the
capitalized value of the Reinsurer’s liabilities on the Policies covered under this Contract,
the two parties shall mutually appoint an actuary to resolve the matter of valuation. If the
two parties cannot agree on the appointment of an actuary, a selection process based on the
ARBITRATION ARTICLE will be employed. Payment by the Reinsurer of the amount ascertained will
constitute full and final release of the Reinsurer’s liabilities hereunder.





ARTICLE IV




DEFINITIONS





	A.	 	Extended Reporting Period Coverage
	 
	 	 	“Extended Reporting Period Coverage” as used herein shall mean
coverage for claims made after termination or expiration of the
Company’s Policy on losses that would have been covered under the
terminated or expired Policy had the claims been made during the
term of that Policy. All claims made against or reported to the
Company during an extended reporting period shall be deemed to have
been made against or reported to the Company on the last full day
of the Policy period to which the extended reporting period
applies. For purposes of this Contract, the date of loss for any
claim coming within Extended Reporting Period Coverage, whether
such coverage is automatically extended under the Policy or whether
a specific endorsement is issued, will be the termination or
expiration date of the Policy.




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	B.	 	Gross Net Earned Premium Income
	 
	 	 	“Gross Net Earned Premium Income,” as used in this Contract, shall
mean gross earned premium income during the term of this Contract
on business the subject of this Contract less earned premium income
paid for reinsurances, recoveries under which would inure to the
benefit of this Contract.
	 
	C.	 	Insured
	 
	 	 	“Insured,” as used in this Contract, shall have the same meaning as
this term or similar term in the Company’s Policies. However, in
the event of any ambiguity or dispute relating to this term, the
Company shall be the sole judge of what constitutes one Insured.
	 
	D.	 	Loss Occurrence






	 	1.	 	“Loss Occurrence,” as used in this Contract, shall mean any one disaster or
casualty or accident or loss or series of disasters or casualties or accidents or losses
arising out of or caused by one event, as defined within the Company’s Policies.
However, in the event of any ambiguity or dispute relating to this term, the Company
shall be the sole judge of what constitutes one Loss Occurrence.
	 
	 	2.	 	When two or more Policies, one or more (but not all) of which are on a claims-made
or losses-discovered basis, are involved in the same Loss Occurrence, the date of loss
for purposes of this Contract will be the actual date of loss; provided however that, if
the loss under the occurrence or accident Policies is reported more than five years after
December 31 of the year in which the loss occurred, the date of loss shall be the date
first established under the claims-made and losses-discovered Policies.
	 
	 	3.	 	When two or more Policies, all of which are on a claims-made or losses-discovered
basis, are involved in the same Loss Occurrence, the date of loss for purposes of this
Contract will be the date when the first insured involved had the claim made or
discovered the loss.






	E.	 	Policy or Policies
	 
	 	 	“Policy” or “Policies,” as used in this Contract, shall mean any
binder, policy, or contract of insurance or reinsurance issued,
accepted or held covered provisionally or otherwise, including any
extended reporting periods, by or on behalf of the Company.






	F.	 	Act(s) of Terrorism
	 
	 	 	“Act(s) of Terrorism,” as used in this Contract, shall mean






	 	1.	 	Any actual or threatened violent act or act harmful to human life, tangible or
intangible property or infrastructure directed towards or having the effect of (a)
influencing or protesting against any de jure or de facto government or policy thereof,
(b) intimidating, coercing or putting in fear a civilian population or section thereof
religious or political system of thought, perpetrated by a specific individual or group
directly or indirectly through agents acting on behalf of said individual or group or (c)




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	 	 	 	retaliating against any country for direct or vicarious support by that country or any
other government or political system.






	 	2.	 	Any act declared pursuant to the Terrorism Risk Insurance Act of 2002, as amended,
shall also be considered an “Act of Terrorism” for purposes of this Contract.






	G.	 	Ultimate Net Loss
	 
	 	 	“Ultimate Net Loss,” as used in this Contract, shall mean the actual
loss paid by the Company or for which the Company becomes liable to
pay, such loss shall include 90% of any Loss in Excess of Policy
Limits as defined in the LOSS IN EXCESS OF POLICY LIMITS ARTICLE, 90%
of any Extra Contractual Obligations as defined in the EXTRA
CONTRACTUAL OBLIGATIONS ARTICLE, ex-gratia payments subject to prior
approval, expenses of litigation and interest, claim-specific
declaratory judgment expenses, and all other loss expense of the
Company including subrogation, salvage, and recovery expenses (office
expenses and salaries of officials and employees not classified as
loss adjusters are not chargeable as expenses for purposes of this
paragraph), but salvages and all recoveries, including recoveries
under all reinsurances, which inure to the benefit of this Contract
(whether recovered or not), shall be first deducted from such loss to
arrive at the amount of liability attaching hereunder.
	 
	 	 	The phrase “ex-gratia payments” shall mean payments made as an
accommodation by the Company in settlement of a claim for which no
coverage exists under the Policy reinsured hereunder, subject to the
prior approval of the Reinsurer.
	 
	 	 	The phrase “claim-specific declaratory judgment expenses,” as used in
this Contract will mean all expenses incurred by the Company in
connection with declaratory judgment actions brought to determine the
Company’s defense and/or indemnification obligations that are
allocable to specific Policies and claims subject to this Contract.
Declaratory judgment expenses will be deemed to have been incurred by
the Company on the date of the original loss (if any) giving rise to
the declaratory judgment action.
	 
	 	 	All salvages, recoveries or payments recovered or received subsequent
to loss settlements hereunder shall be applied as if recovered or
received prior to the aforesaid settlement, and all necessary
adjustments shall be made by the parties hereto.
	 
	 	 	For purposes of this definition, the phrase “becomes liable to pay”
shall mean the existence of a judgment, which the Company does not
intend to appeal, or a release has been obtained by the Company, or
the Company has accepted a proof of loss.
	 
	 	 	Nothing in this clause shall be construed to mean that losses are not
recoverable hereunder until the Company’s Ultimate Net Loss has been
ascertained.




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ARTICLE V




LOSS IN EXCESS OF POLICY LIMITS





	A.	 	This Contract shall protect the Company, within the limits hereof, in connection with the
Ultimate Net Loss in excess of the limit of its original Policy, such loss in excess of the
limit having been incurred because of failure by it to settle within the Policy limit or by
reason of alleged or actual negligence, criminal act or fraud, or bad faith in rejecting an
offer of settlement or in the preparation of the defense or in the trial of any action against
its insured or reinsured or in the preparation or prosecution of an appeal consequent upon
such action.
	 
	B.	 	For the purpose of this Article, the word “loss” shall mean any amounts for which the Company
would have been contractually liable to pay had it not been for the limit of the original
Policy. However, this Article shall not apply where the loss has been incurred due to fraud
by a member of the Board of Directors or a corporate officer of the Company acting
individually or collectively or in collusion with any individual or corporation or any other
organization or party involved in the presentation, defense or settlement of any claim covered
hereunder.





ARTICLE VI




EXTRA CONTRACTUAL OBLIGATIONS





	A.	 	This Contract shall protect the Company within the limits hereof, where the Ultimate Net Loss
includes any Extra Contractual Obligations. The term “Extra Contractual Obligations” is
defined as those liabilities not covered under any other provision of this Contract and which
arise from the handling of any claim on business covered hereunder, such liabilities arising
because of, but not limited to, the following: failure by the Company to settle within the
Policy limit, or by reason of alleged or actual negligence, criminal act or fraud, or bad
faith in rejecting an offer of settlement or in the preparation of the defense or in the trial
of any action against its insured or reinsured or in the preparation or prosecution of an
appeal consequent upon such action.
	 
	B.	 	The date on which any Extra Contractual Obligation is incurred by the Company shall be
deemed, in all circumstances, to be the date of the original disaster and/or casualty.
	 
	C.	 	However, this Article shall not apply where the loss has been incurred due to fraud by a
member of the Board of Directors or a corporate officer of the Company acting individually or
collectively or in collusion with any individual or corporation or any other organization or
party involved in the presentation, defense or settlement of any claim covered hereunder.




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ARTICLE VII




TERRITORY (BRMA 51A)



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




ARTICLE VIII




EXCLUSIONS



This Contract does not cover and specifically excludes:





	A.	 	Pools, Associations or Syndicates, except losses from Assigned Risk Plans or similar plans,
are not excluded.
	 
	B.	 	Nuclear Incident pursuant to the “Nuclear Incident Exclusion Clause -
Liability — Reinsurance — U.S.A.” attached hereto.
	 
	C.	 	Nuclear Incident pursuant to the “Nuclear Incident Exclusion Clause -
Liability — Reinsurance — Canada” attached hereto.
	 
	D.	 	Liability of the Company arising by contract, operation of law or
otherwise from its participation or membership, whether voluntary or
involuntary, in any insolvency fund. “Insolvency fund” includes any
guarantee fund, insolvency fund, plan, pool, association, fund or
other arrangement, howsoever denominated, established or governed,
which provides for any assessment of or payment or assumption by the
Company of part or all of any claim, debt, charge, fee or other
obligation of an insurer or its successors or assigns which has been
declared by any competent authority to be insolvent or which is
otherwise deemed unable to meet any claim, debt, charge, fee or other
obligation in whole or in part.
	 
	E.	 	Financial Guarantee or Insolvency, when written as such.
	 
	 	 	However, the liability of the Company under any bond covering losses
due to negligence of any person or failure of any person to faithfully
perform his duty or failure to account for and pay over money or other
property in his custody shall not be considered Financial Guarantee or
Insolvency.
	 
	 	 	Notwithstanding the foregoing, no claim is to attach hereto in respect
of any loss or losses arising as a result of:






	 	1.	 	The insolvency of any financial institution at which trust moneys are deposited or
insolvency of any person, firm or company, or
	 
	 	2.	 	The fall in the market value of investments unless such loss is the direct result
of a) a dishonest, fraudulent, criminal or negligent act on the part of the bonded person
or b) a dishonest, fraudulent or criminal act on the part of any other person or persons
or c) unless such loss is solely created by a physical damage loss to property other than




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	 	 	 	where such physical damage loss could have been recovered from a third party but for the
insolvency of such third party.






	 	 	The above shall not apply as respects claims made under the Company’s
Specialty Lines Division Policies.
	 
	F.	 	Pollution liability to the extent excluded in the Company’s original
Policies. However, this exclusion shall not apply:






	 	1.	 	When a judicial entity having legal jurisdiction invalidates the Company’s
Pollution exclusion, thereby obligating the Company for liability when such liability for
Pollution was intended to be excluded by the Company’s exclusion.
	 
	 	2.	 	In respect of any Policy written in a state whose insurance regulatory authorities
have prohibited the Company from including a Pollution liability exclusion in its
Policies.






	G.	 	Business classified by the Company as Primary Rental Liability and Supplemental Liability.
	 
	H.	 	Liability assumed by the Company under any form of treaty reinsurance; however, group intra-company reinsurance (if
applicable), local agency reinsurance accepted in the normal course of business and/or Policies written by another carrier
at the Company’s request and reinsured 100% by the Company, as well as Policies written for the captive of the Company’s
Insured, will not be excluded hereunder.
	 
	I.	 	Loss or liability excluded under the provisions of the “War Exclusion” attached hereto.
	 
	J.	 	Business classified by the Company as Nursing Home General Liability or Nursing Home Umbrella Liability.
	 
	K.	 	Workers’ Compensation.
	 
	L.	 	Loss or damage (including related cost and expense) directly or indirectly caused by,
contributed to by, resulting from, or arising out of or in connection with biological,
chemical, radioactive, or nuclear pollution or contamination exposure.




Should any judicial or regulatory entity having jurisdiction invalidate any exclusion in the
Company’s Policy that is also the subject of one or more of the exclusions herein (with exception
to exclusions A, B, C, D, E, H, I, and K as set forth above), then a loss for which the Company is
liable because of such invalidation shall not be excluded hereunder.



If the Company becomes bound on a risk specifically excluded in this Contract and if notice of such
is given by the Company to the Reinsurer within 30 days of the discovery by an underwriting or a
corporate officer of the Company, such reinsurance, as would have been afforded for the risk by
this Contract if the risk had not been excluded, shall nevertheless apply:





	 	(a)	 	to such risk with respect to occurrences taking place prior to the 31st day after
the discovery by an underwriting or a corporate officer of the Company of the existence
of the hazard which makes the exclusion applicable; or




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	 	(b)	 	until the Company is legally able to eliminate its liability under the policy.




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




ARTICLE IX




SPECIAL PROVISION



The Company will maintain the following reinsurance; and recoveries, if any, thereunder, shall
inure to the benefit of both the Company and the Reinsurer hereunder:





	1.	 	Casualty Excess of Loss reinsurance of $14,000,000 of Ultimate Net Loss in respect of each
Loss Occurrence or claims made, each Insured, in excess of the Company’s retention of
$2,000,000 Ultimate Net Loss, each Loss Occurrence or claims made, each Insured. Ultimate Net
Loss is inclusive of any primary Policy written by the Company and of Loss Adjustment Expense.
	 
	 	 	This inuring reinsurance excludes Policies with per claim or per occurrence limits of
$1,000,000 and less. However, when the Company writes a primary Policy and an umbrella Policy
for the same insured and the sum of the per claim or per occurrence limits of the two Policies
is greater than $1,000,000, this exclusion shall not apply to either Policy.
	 
	2.	 	Policies, subject to this Contract, with inuring coverage indicated in paragraph 1, above,
shall not exceed a combined limit for both the primary Policy and umbrella Policy of
$16,000,000 per claim or per occurrence.





ARTICLE X




SPECIAL ACCEPTANCES





	A.	 	Business not within the terms of this Contract may be submitted to the Reinsurer for special
acceptance and, if accepted by the Reinsurer, shall be subject to all of the terms of this
Contract, except as modified by the Special Acceptance.
	 
	B.	 	Renewal of Policies, which have previously received a Special Acceptance under prior
Contracts, are deemed to be covered hereunder.
	 
	C.	 	Further, should a Reinsurer become party to this Contract subsequent to the acceptance of any
business not normally covered hereunder, that Reinsurer will automatically accept the special
acceptances as being part of this Contract.




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ARTICLE XI




COVERAGE





	A.	 	As respects each excess layer hereunder, the Reinsurer shall be liable for 100% of the
Ultimate Net Loss in excess of the “Company’s Retention” for the excess layer, as stated in
Exhibit A attached hereto, as a result of any one Loss Occurrence. The Reinsurer’s liability
in respect of any one Loss Occurrence shall not exceed 100% of the “Reinsurer’s Limit, Each
Loss Occurrence” for the excess layer, as stated in Exhibit A attached hereto. The
Reinsurer’s liability arising out of Act(s) of Terrorism shall not exceed 100% of the
“Reinsurer’s Annual Limit for Act(s) of Terrorism for each layer, as stated in Exhibit A
attached hereto.
	 
	B.	 	The Reinsurer’s liability in respect of all losses occurring during any one Contract Year
shall not exceed 100% of the “Reinsurer’s Limit, All Loss Occurrences” for the excess layer,
as stated in Exhibit A attached hereto.





ARTICLE XII




REINSTATEMENT





	A.	 	As respects each excess layer hereunder, should all or any part of the Reinsurer’s limit of
liability for the excess layer be exhausted as a result of a Loss Occurrence, the sum so
exhausted shall be reinstated from the date the Loss Occurrence commenced.
	 
	B.	 	For each amount so reinstated for the excess layer, the Company agrees to pay an additional
premium at the time of the Reinsurer’s payment of the loss calculated in accordance with the
following formula:






	 	1.	 	The percentage of the “Reinsurer’s Limit, Each Loss Occurrence” for the excess
layer, as stated in Exhibit A attached hereto, exhausted by the Loss Occurrence.
	 
	 	2.	 	The reinsurance premium paid or payable for the excess layer for the term of this
Contract.






	 	 	The dollar amount resulting from the multiplication of subparagraphs B1 and B2 above shall
equal the reinstatement premium for the excess layer. If at the time of the Reinsurer’s
payment of a loss hereon, the reinsurance premium for the excess layer as calculated under
this Contract is unknown, the calculation of the reinstatement premium shall be based upon the
deposit premium for the excess layer, subject to adjustment when the reinsurance premium is
finally established.






	C.	 	Nevertheless, the Reinsurer’s liability hereunder shall not exceed the “Reinsurer’s Limit,
Each Loss Occurrence” for the excess layer, as stated in Exhibit A attached hereto, in respect
of any one Loss Occurrence, and shall be further limited to the “Reinsurer’s Limit, All Loss
Occurrences” for the excess layer, as stated in Exhibit A attached hereto, in respect of all
losses occurring during the term of this Contract.




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ARTICLE XIII




REINSURANCE PREMIUM





	A.	 	As premium for the reinsurance provided hereunder for each excess layer during each Contract
Year, the Company shall pay the Reinsurer the “Premium Rate” for the excess layer, as stated
in Exhibit A attached hereto, times its Net Earned Premium for the Contract Year, subject to
the “Minimum Premium” for the excess layer as stated in Exhibit A attached hereto.
	 
	B.	 	The Company shall pay the Reinsurer the “Deposit Premium” for the excess layer, as stated in
Exhibit A attached hereto, in “Quarterly Installments,” as stated in Exhibit A attached
hereto, on January 1, April 1; July 1; and October 1, 2008.
	 
	C.	 	Within 90 days after the end of each Contract Year, the Company shall provide a report to the
Reinsurer setting forth the premium due hereunder for each excess layer during the Contract
Year, computed in accordance with paragraph A, and any additional premium due the Reinsurer or
return premium due the Company shall be remitted promptly.





ARTICLE XIV




NOTICE OF LOSS AND LOSS SETTLEMENTS





	A.	 	The Company will advise the Reinsurer promptly of all claims which in the opinion of the
Company may involve the Reinsurer and of all subsequent developments on these claims which may
materially affect the position of the Reinsurer, such advices to include any claim for which
the amount incurred is 50% or more of the Company’s retention.






	B.	 	The Reinsurer agrees to abide by the loss settlements of the Company provided that
retroactive extension of Policy terms or coverages made voluntarily by the Company and not in
response to court decisions (whether such court decision is against the Company or other
companies affording the same or similar coverages) will not be covered under this Contract.






	C.	 	When so requested, the Company will afford the Reinsurer an opportunity to be associated with
the Company, at the expense of the Reinsurer, in the defense of any claim or suit or
proceeding involving this reinsurance, and the Company will cooperate in every respect in the
defense of such claim, suit or proceeding.






	D.	 	The Reinsurer will pay its share of loss settlements within 15 days upon receipt and
verification of proof of loss from the Company.




 Page 11 









 











ARTICLE XV




AGENCY AGREEMENT



If more than one reinsured company is named as a party to this Contract, the first named company
will be deemed the agent of the other reinsured companies for purposes of sending or receiving
notices required by the terms and conditions of this Contract and for purposes of remitting or
receiving any monies due any party.




ARTICLE XVI




SALVAGE AND SUBROGATION



The Reinsurer shall be credited with salvage or subrogation recoveries (i.e., reimbursement
obtained or recovery made by the Company, less loss adjustment expense incurred in obtaining such
reimbursement or making such recovery) on account of claims and settlements involving reinsurance
hereunder. Salvage and subrogation recoveries thereon shall always be used to reimburse the excess
carriers in the reverse order of their priority according to their participation before being used
in any way to reimburse the Company for its primary loss. In the event that there are no
recoveries or the expenses exceed the amount of recovery, salvage or other related expenses shall
be treated and paid by the Reinsurer as part of Ultimate Net Loss.




ARTICLE XVII




ERRORS AND OMISSIONS (BRMA 14C)



Any inadvertent delay, omission or error shall not be held to relieve either party hereto from any
liability which would attach to it hereunder if such delay, omission or error had not been made,
provided such omission or error is rectified upon discovery.




ARTICLE XVIII




OFFSET



The Company and the Reinsurer, each at its option, may offset any balance or balances, whether on
account of premiums, claims and losses, loss expenses or salvages due from one party to the other
under this Contract; provided, however, that in the event of the insolvency of a party hereto,
offsets shall only be allowed in accordance with applicable statutes and regulations.




ARTICLE XIX




CURRENCY (BRMA 12A)





	A.	 	Whenever the word “Dollars” or the “$” sign appears in this Contract, they shall be construed
to mean United States Dollars and all transactions under this Contract shall be in United
States Dollars.




 Page 12 









 












	B.	 	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 XX




TAXES (BRMA 50C)



In consideration of the terms under which this Contract is issued, the Company will not claim a
deduction in respect 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, the District of Columbia or
Canada.




ARTICLE XXI




FEDERAL EXCISE TAX (BRMA 17A)



(Applicable to those subscribing reinsurers, excepting Underwriters at Lloyd’s London and other
subscribing reinsurers exempt from Federal Excise Tax, who are domiciled outside the United States
of America.)





	A.	 	The subscribing reinsurer has agreed to allow for the purpose of paying the Federal Excise
Tax the applicable percentage of the premium payable hereon (as imposed under Section 4371 of
the Internal Revenue Code) to the extent such premium is subject to the Federal Excise Tax.






	B.	 	In the event of any return of premium becoming due hereunder the subscribing reinsurer will
deduct the applicable percentage from the return premium payable hereon and the Company or its
agent should take steps to recover the tax from the United States Government.





ARTICLE XXII




UNAUTHORIZED REINSURANCE (BRMA 55A)



(Applies only to a subscribing reinsurer who does not qualify for full credit with any insurance
regulatory authority having jurisdiction over the Company’s reserves.)





	A.	 	As regards Policies or bonds issued by the Company coming within the scope of this Contract,
the Company agrees that when it shall file with the insurance regulatory authority or set up
on its books reserves for unearned premium and losses covered hereunder which it shall be
required by law to set up, it will forward to the subscribing reinsurer a statement showing
the proportion of such reserves which is applicable to the subscribing reinsurer. The
subscribing reinsurer hereby agrees to fund such reserves in respect of unearned premium,
known outstanding losses that have been reported to the subscribing reinsurer and allocated
Loss Adjustment Expense relating thereto, losses and allocated Loss




 Page 13 









 






	 	 	Adjustment Expense paid by the Company but not recovered from the subscribing reinsurer, plus
reserves for losses incurred but not reported, as shown in the statement prepared by the
Company (hereinafter referred to as “subscribing reinsurer’s obligations”) by funds withheld,
cash advances or a Letter of Credit. The subscribing reinsurer shall have the option of
determining the method of funding provided it is acceptable to the insurance regulatory
authorities having jurisdiction over the Company’s reserves.






	B.	 	When funding by a Letter of Credit, the subscribing reinsurer agrees to apply for and secure
timely delivery to the Company of a clean, irrevocable and unconditional Letter of Credit
issued by a bank and containing provisions acceptable to the insurance regulatory authorities
having jurisdiction over the Company’s reserves in an amount equal to the subscribing
reinsurer’s proportion of said reserves. Such Letter of Credit shall be issued for a period of
not less than one year, and shall be automatically extended for one year from its date of
expiration or any future expiration date unless 30 days (60 days where required by insurance
regulatory authorities) prior to any expiration date the issuing bank shall notify the Company
by certified or registered mail that the issuing bank elects not to consider the Letter of
Credit extended for any additional period.






	C.	 	The subscribing reinsurer and Company agree that the Letters of Credit provided by the
subscribing reinsurer pursuant to the provisions of this Contract may be drawn upon at any
time, notwithstanding any other provision of this Contract, and be utilized by the Company or
any successor, by operation of law, of the Company including, without limitation, any
liquidator, rehabilitator, receiver or conservator of the Company for the following purposes,
unless otherwise provided for in a separate Trust Agreement:






	 	1.	 	To reimburse the Company for the subscribing reinsurer’s obligations, the payment
of which is due under the terms of this Contract and which has not been otherwise paid;
	 
	 	2.	 	To make refund of any sum which is in excess of the actual amount required to pay
the subscribing reinsurer’s obligations under this Contract;
	 
	 	3.	 	To fund an account with the Company for the subscribing reinsurer’s obligations.
Such cash deposit shall be held in an interest bearing account separate from the
Company’s other assets, and interest thereon not in excess of the prime rate shall accrue
to the benefit of the subscribing reinsurer;
	 
	 	4.	 	To pay the subscribing reinsurer’s share of any other amounts the Company claims
are due under this Contract.






	 	In the event the amount drawn by the Company on any Letter of Credit is in excess of the
actual amount required for subparagraph 1 or 3, or in the case of subparagraph 4, the actual
amount determined to be due, the Company shall promptly return to the subscribing reinsurer
the excess amount so drawn. All of the foregoing shall be applied without diminution because
of insolvency on the part of the Company or the subscribing reinsurer.






	D.	 	The issuing bank shall have no responsibility whatsoever in connection with the propriety of
withdrawals made by the Company or the disposition of funds withdrawn, except to




 Page 14 









 






	 	 	ensure that withdrawals are made only upon the order of properly authorized representatives of
the Company.






	E.	 	At annual intervals, or more frequently as agreed but never more frequently than quarterly,
the Company shall prepare a specific statement of the subscribing reinsurer’s obligations, for
the sole purpose of amending the Letter of Credit, in the following manner:






	 	1.	 	If the statement shows that the subscribing reinsurer’s obligations exceed the
balance of credit as of the statement date, the subscribing reinsurer shall, within 30
days after receipt of notice of such excess, secure delivery to the Company of an
amendment to the Letter of Credit increasing the amount of credit by the amount of such
difference.
	 
	 	2.	 	If, however, the statement shows that the subscribing reinsurer’s obligations are
less than the balance of credit as of the statement date, the Company shall, within 30
days after receipt of written request from the subscribing reinsurer, release such excess
credit by agreeing to secure an amendment to the Letter of Credit reducing the amount of
credit available by the amount of such excess credit.





ARTICLE XXIII




NET RETAINED LINES





	A.	 	This Contract applies only to that portion of any insurances or reinsurances covered by this
Contract, which the Company retains net for its own account and, in calculating the amount of
any loss hereunder and also in computing the amount in excess of which this Contract attaches,
only loss or losses in respect of that portion of any insurances or reinsurances which the
Company retains net for its own account shall be included.






	B.	 	The amount of the Reinsurer’s liability hereunder in respect of any loss or losses shall not
be increased by reason of the inability of the Company to collect from any other reinsurers,
whether specific or general, any amounts which may have become due from them whether such
inability arises from the insolvency of such other reinsurers or otherwise.





ARTICLE XXIV




THIRD PARTY RIGHTS (BRMA 52C)



This Contract is solely between the Company and the Reinsurer, and in no instance shall any other
party have any rights under this Contract except as expressly provided otherwise in the INSOLVENCY
ARTICLE.




 Page 15 









 








ARTICLE XXV




SEVERABILITY



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




ARTICLE XXVI




GOVERNING LAW (BRMA 71A)



This Contract shall be governed as to performance, administration and interpretation by the laws of
the State of Pennsylvania exclusive of that state’s rules with respect to conflicts of law, except
as to rules with respect to credit for reinsurance in which case the applicable rules of all states
shall apply.




ARTICLE XXVII




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 through its designated representatives, all books, records and
papers of the Company in connection with any reinsurance hereunder or claims in connection
herewith. Rights of access to records shall survive the termination or expiration of this
Contract.




ARTICLE XXVIII




INSOLVENCY





	A.	 	In the event of the insolvency of the Company, this reinsurance shall be payable directly to
the Company or to its liquidator, receiver, conservator or statutory successor, with
reasonable provision for verification, on the basis of the liability of the Company without
diminution because of the insolvency of the Company or because the liquidator, receiver,
conservator or statutory successor of the Company has failed to pay all or a portion of any
claim. It is agreed, however, that 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 Company indicating the Policy or bond reinsured which claim would involve a
possible liability on the part of the Reinsurer within a reasonable time after such claim is
filed in the conservation or liquidation proceeding or in the receivership, and that 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 that
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,




 Page 16 









 






	 	 	subject to the approval of the Court, against the Company as part of the expense of
conservation or 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.






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






	C.	 	It is further agreed that, in the event of the insolvency of the Company, the reinsurance
under this Contract shall be payable directly by the Reinsurer to the Company or its
liquidator, receiver, conservator, or statutory successor, except as provided by Section
4118(a) of the New York Insurance Law or except 1) where this Contract specifically provides
another payee of such reinsurance in the event of the insolvency of the Company or 2) where
the Reinsurer with the consent of the direct insured or insureds has assumed such Policy
obligations of the Company as direct obligations of the Reinsurer to the payee under such
Policies and in substitution for the obligations of the Company to such payees.






	D.	 	In the event of the insolvency of any company or companies listed in the designation of
“Company” under this Contract, this Article shall apply only to the insolvent company or
companies.





ARTICLE XXIX




ARBITRATION





	A.	 	As a condition precedent to any right of action hereunder, any irreconcilable dispute between
the parties to this Contract will be submitted for decision to a board of arbitration composed
of two arbitrators and an umpire meeting in Bala Cynwyd, Pennsylvania.






	B.	 	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.






	C.	 	The members of the board of arbitration shall be active or former, disinterested officials of
insurance or reinsurance companies or Underwriters at Lloyd’s, London, not under the control
or management of either party to this Contract. Each party shall appoint its arbitrator, and
the two arbitrators shall choose an umpire before instituting the hearing. If the respondent
fails to appoint its arbitrator within 4 weeks after being requested to do so by the claimant,
the latter shall also appoint the second arbitrator.






	D.	 	If the two arbitrators are unable to agree upon the umpire within 30 days of their
appointment, the umpire shall be selected by a judge of any court of competent jurisdiction.






	E.	 	The claimant shall submit its initial brief within 45 days from appointment of the umpire.
The respondent shall submit its brief within 45 days thereafter, and the claimant may submit a
reply brief within 30 days after filing of the respondent’s brief.




 Page 17 









 












	F.	 	The board shall make its decision with regard to the custom and usage of the insurance and
reinsurance business. The board shall issue its decision in writing based upon a hearing in
which evidence may be introduced without following strict rules of evidence but in which
cross-examination and rebuttal shall be allowed. The board shall make its decision within 60
days following the termination of the hearings unless the parties consent to an extension.
The majority decision of the board shall be final and binding upon all parties to the
proceeding. Judgment may be entered upon the award of the board in any court having
jurisdiction.






	G.	 	If more than one reinsurer is involved in the same dispute, all such reinsurers shall
constitute and act as one party for purposes of this clause, and communications shall be made
by the Company to each of the reinsurers constituting the one party provided, however, that
nothing therein 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 reinsurers under the
terms of this Contract from several to joint.






	H.	 	Each party shall bear the expense of its own arbitrator and shall jointly and equally bear
with the other party the expense of the umpire. The remaining costs of the arbitration
proceedings shall be allocated by the board.





ARTICLE XXX




CONFIDENTIALITY



The Reinsurer, except with the express prior written consent of the Company, shall not directly or
indirectly communicate, disclose or divulge to any third party, any knowledge or information that
may be acquired either directly or indirectly as a result of the inspection of the Company’s books,
records and papers. The restrictions, as outlined in this Article, shall not apply to
communication or disclosures that the Reinsurer is required to make to its statutory auditors,
parent company, retrocessionaires, potential retrocessionaires, legal counsel, arbitrators involved
in any arbitration procedures under this Contract or disclosures required upon subpoena or other
duly-issued order of a court or other governmental agency or regulatory authority.




ARTICLE XXXI




SERVICE OF SUIT



(This Article is applicable if the subscribing reinsurer is not domiciled in the United States of
America and/or is not authorized in any State, Territory or District of the United States where
authorization is required by insurance regulatory authorities. This Article is not intended to
conflict with or override the obligation of the parties to arbitrate their disputes in accordance
with the ARBITRATION ARTICLE.)





	A.	 	In the event of the failure of the subscribing reinsurer to pay any amount claimed to be due
hereunder, the subscribing 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 the subscribing




 Page 18 









 






	 	 	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. The subscribing reinsurer, once the appropriate court is selected, whether such court
is the one originally chosen by the Company and accepted by subscribing reinsurer or is
determined by removal, transfer, or otherwise, as provided for above, shall comply with all
requirements necessary to give said court jurisdiction and, in any suit instituted against it
upon this Contract, and shall abide by the final decision of such court or of any appellate
court in the event of an appeal.






	B.	 	Service of process in such suit may be made upon the agent for the service of process
(“agent”) named below, depending on the jurisdiction where the Company chooses to bring suit:






	 	1.	 	If the suit is brought in the State of California, the law firm of Mendes and
Mount, 445 South Figueroa Street, 38th Floor, Los Angeles, California 90071
shall be authorized and directed to accept service of process on behalf of the
subscribing reinsurer in any such suit;
	 
	 	2.	 	If the suit is brought in the State of New York, the law firm of Mendes and Mount,
750 Seventh Avenue, New York, New York 10019 shall be authorized and directed to accept
service of process on behalf of the subscribing reinsurer in any such suit;
	 
	 	3.	 	If the suit is brought in any state other than California or New York, either of
the agents described in subparagraphs 1 or 2 above shall be authorized and directed to
accept service of process on behalf of the subscribing reinsurer in any such suit; or
	 
	 	4.	 	If the subscribing reinsurer has designated an agent in the subscribing reinsurer’s
Interests and Liabilities Agreement attached hereto, then that agent shall be authorized
and directed to accept service of process on behalf of the subscribing reinsurer in any
suit. However, if an agent is designated in the subscribing reinsurer’s Interests and
Liabilities Agreement and the agent is not located in California as respects a suit
brought in California or New York as respects a suit brought in New York, in keeping with
the laws of the states of California and New York which require that service be made on
an agent located in the respective state if a suit is brought in that state, the
applicable office of Mendes and Mount stipulated in subparagraphs 1 and 2 above must be
used for service of suit unless the provisions of paragraph C of this Article apply.






	C.	 	Further, pursuant to any statute of any state, territory or district of the United States
that makes provision therefor, the subscribing 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 its true and lawful attorney upon whom
may be served any lawful process in any action, suit or proceedings instituted by or on behalf
of the Company or any beneficiary hereunder arising out of this Contract, 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.




 Page 19 









 











ARTICLE XXXII




TERRORISM RISK INSURANCE ACT OF 2002





	A.	 	Any financial assistance the Company receives under the Terrorism Risk Insurance Act of 2002,
including the Terrorism Risk Insurance Extension Act of 2005, and any other extensions or
amendments thereto (“TRIA”) shall apply as follows:






	 	1.	 	Except as provided in subparagraph 2 below, any such financial assistance shall
inure solely to the benefit of the Company and shall be entirely disregarded in applying
all of the provisions of this Contract.
	 
	 	2.	 	If losses occurring hereunder result in recoveries made by the Company both under
this Contract and under TRIA, and such recoveries, together with any other reinsurance
recoveries made by the Company applicable to said losses, exceed the amount permitted by
TRIA, any amount in excess thereof shall reduce the Ultimate Net Loss subject to this
Contract for the losses to which the TRIA financial assistance applies.






	B.	 	Nothing herein shall be construed to mean that losses under this Contract are not recoverable
until the Company has received financial assistance under TRIA.





ARTICLE XXXIII




ENTIRE AGREEMENT



This Contract shall constitute the entire agreement between the parties with respect to the
business reinsured by this Contract, except that any other contract expressly disclosed in this
Contract or in any exhibit or document attached to this Contract shall also be included within
such entire agreement. Notwithstanding the foregoing, this Article shall not be construed as
limiting in any way the admissibility of evidence regarding the formation, interpretation
purpose, or intent of this Contract.




ARTICLE XXXIV




MODE OF EXECUTION



This Contract may be executed either by an original written ink signature of paper documents, by an
exchange of facsimile copies showing the original written ink signature of paper documents, or by
electronic signature by either party employing appropriate software technology as to satisfy the
parties at the time of execution that the version of the document agreed to by each party shall
always be capable of authentication and satisfy the same rules of evidence as written signatures.
The use of any one or a combination of these methods of execution shall constitute a legally
binding and valid signing of this Contract. This Contract may be executed in one or more
counterparts, each of which, when duly executed, shall be deemed an original.




 Page 20 









 








ARTICLE XXXV




INTERMEDIARY



Willis Re Inc., Two Liberty Place, 50 South 16th Street, Suite 2500, Philadelphia,
Pennsylvania 19102, is hereby recognized as the intermediary negotiating this Contract and through
whom all communications relating thereto shall be transmitted to the Company or the Reinsurer.
However, all communications concerning accounts, claim information, funds and inquiries related
thereto shall be transmitted to the Company or the Reinsurer through Willis Re Inc., 5420
Millstream Road, Suite 200, P.O. Box 3000, McLeansville, North Carolina, 27301-3000. Payments by
the Company to Willis Re Inc. shall be deemed to constitute payment to the Reinsurer and payments
by the Reinsurer to Willis Re Inc. shall be deemed to constitute payment to the Company only to the
extent that such payments are actually received by the Company.



IN WITNESS WHEREOF, the Company by its duly authorized representative has executed this Contract as
of the date specified below:




Signed this 30th day of April, 2008.




PHILADELPHIA INSURANCE COMPANY

PHILADELPHIA INDEMNITY INSURANCE COMPANY




By /s/ Christopher J. Maguire




Printed Name Christopher J. Maguire




Title EVP & COO




By Executive Vice President & Chief Operating Officer




 Page 21 









 





EXHIBIT A




CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT



issued to



PHILADELPHIA INSURANCE COMPANY

PHILADELPHIA INDEMNITY INSURANCE

both of Bala Cynwyd, Pennsylvania




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	93984001-08	 	93984002-08	 	93984003-08
	 	 	First Excess	 	Second Excess	 	Third Excess
	Company’s Retention
	 	$	2,000,000	 	 	$	5,000,000	 	 	$	10,000,000	 
	 
	Reinsurer’s Limit, Each Loss Occurrence
	 	$	3,000,000	 	 	$	5,000,000	 	 	$	10,000,000	 
	 
	Reinsurer’s Annual Limit, Act(s) of
Terrorism
	 	$	3,000,000	 	 	$	5,000,000	 	 	$	10,000,000	 
	 
	Reinsurer’s Limit, All Loss Occurrences
	 	$	6,000,000	 	 	$	10,000,000	 	 	$	20,000,000	 
	 
	Deposit Premium
	 	$	855,978	 	 	$	850,560	 	 	$	1,218,956	 
	 
	Quarterly Installments
	 	$	213,995	 	 	$	212,640	 	 	$	304,739	 
	 
	Premium Rate
	 	 	0.0790	%	 	 	0.0785	%	 	 	0.1125	%
	 
	Minimum Premium
	 	$	684,782	 	 	$	680,448	 	 	$	975,165	 






EXHIBIT A




 









 





NUCLEAR INCIDENT EXCLUSION CLAUSE — LIABILITY — REINSURANCE — U.S.A.



(1) This reinsurance does not cover any loss or liability accruing to the Reassured as a member of,
or subscriber to, any association of insurers or reinsurers formed for the purpose of covering
nuclear energy risks or as a direct or indirect reinsurer of any such member, subscriber or
association.



(2) Without in any way restricting the operation of paragraph (1) of this Clause it is understood
and agreed that for all purposes of this reinsurance all the original policies of the Reassured
(new, renewal and replacement) of the classes specified in Clause II of this paragraph (2) from the
time specified in Clause III in this paragraph (2) shall be deemed to include the following
provision (specified as the Limited Exclusion Provision):




Limited Exclusion Provision.*





	I.	 	It is agreed that the policy does not apply under any liability coverage,

to           (injury, sickness, disease, death or destruction,

              (bodily injury or property damage
	 	 	with respect to which an insured under the policy is also an insured under a nuclear energy
liability policy issued by Nuclear Energy Liability Insurance Association, Mutual Atomic
Energy Liability Underwriters or Nuclear Insurance Association of Canada, or would be an
insured under any such policy but for its termination upon exhaustion of its limit of
liability.
	 
	II.	 	Family Automobile Policies (liability only), Special Automobile Policies (private passenger
automobiles, liability only), Farmers Comprehensive Personal Liability Policies (liability
only), Comprehensive Personal Liability Policies (liability only) or policies of a similar
nature; and the liability portion of combination forms related to the four classes of policies
stated above, such as the Comprehensive Dwelling Policy and the applicable types of Homeowners
Policies.
	 
	III.	 	The inception dates and thereafter of all original policies as described in II above, whether
new, renewal or replacement, being policies which either






          (a) become effective on or after 1st May, 1960, or




          (b) become effective before that date and contain the Limited Exclusion Provision set
out above; provided this paragraph (2) shall not be applicable to Family Automobile
Policies, Special Automobile Policies, or policies or combination policies of a similar
nature, issued by the Reassured on New York risks, until 90 days following approval of the
Limited Exclusion Provision by the Governmental Authority having jurisdiction thereof.


(3) Except for those classes of policies specified in Clause II of paragraph (2) and without in any
way restricting the operation of paragraph (1) of this Clause, it is understood and agreed that for
all purposes of this reinsurance the original liability policies of the Reassured (new, renewal and
replacement) affording the following coverages:





Owners, Landlords and Tenants Liability, Contractual Liability, Elevator Liability, Owners
or Contractors (including railroad) Protective Liability, Manufacturers and Contractors
Liability, Product Liability, Professional and Malpractice Liability, Storekeepers
Liability, Garage Liability, Automobile Liability (including Massachusetts Motor Vehicle or
Garage Liability)


shall be deemed to include, with respect to such coverages, from the time specified in Clause V of
this paragraph (3), the following provision (specified as the Broad Exclusion Provision):




Broad Exclusion Provision.*




It is agreed that the policy does not apply:





	I.	 	Under any Liability Coverage, to (injury, sickness, disease, death or destruction

           (bodily injury or property damage






(a) with respect to which an insured under the policy is also an insured under a nuclear
energy liability policy issued by Nuclear Energy Liability Insurance Association, Mutual
Atomic Energy Liability Underwriters or Nuclear Insurance Association of Canada, or would be
an insured under any such policy but for its termination upon exhaustion of its limit of
liability; or


(b) resulting from the hazardous properties of nuclear material and with respect to which
(1) any person or organization is required to maintain financial protection pursuant to the
Atomic Energy Act of 1954, or any law amendatory thereof, or (2) the insured is, or had this
policy not been issued would be, entitled to indemnity from the United States of America, or
any agency thereof, under any agreement entered into by the United States of America, or any
agency thereof, with any person or organization.




	II.	 	Under any Medical Payments Coverage, or under any Supplementary Payments Provision

relating to       (immediate medical or surgical relief,

                         (first aid,
             
to expenses incurred with respect

              to      (bodily injury, sickness, disease or death

                       (bodily injury






resulting from the hazardous properties of nuclear material and arising out of the operation
of a nuclear facility by any person or organization.



Page 1 of 2




 









 






	III.	 	Under any Liability Coverage to      (injury, sickness, disease, death or destruction




(bodily injury or property damage





resulting from the hazardous properties of nuclear material, if




(a) the nuclear material (1) is at any nuclear facility owned by, or operated by or on
behalf of, an insured or (2) has been discharged or dispersed therefrom;




(b) the nuclear material is contained in spent fuel or waste at any time possessed,
handled, used, processed, stored, transported or disposed of by or on behalf of an
insured; or




(c) the      (injury, sickness, disease, death or destruction




                (bodily injury or property damages




arises out of the furnishing by an insured of services, materials, parts or
equipment in connection with the planning, construction, maintenance, operation or
use of any nuclear facility, but if such facility is located within the United
States of America, its territories, or possessions or Canada, this exclusion (c)
applies only to




(injury to or destruction of property at such nuclear facility

(property damage to such nuclear facility and any property thereat.




	IV.	 	As used in this endorsement:
	 
	 	 	“Hazardous properties” include radioactive, toxic or explosive properties; “nuclear
material” means source material, special nuclear material or byproduct material; “source
material,” “special nuclear material,” and “byproduct material” have the meanings given them
in the Atomic Energy Act of 1954 or in any law amendatory thereof; “spent fuel” means any
fuel element or fuel component, solid or liquid, which has been used or exposed to radiation
in a nuclear reactor; “waste” means any waste material (1) containing byproduct material and
(2)resulting from the operation by any person or organization of any nuclear facility
included within the definition of nuclear facility under paragraph (a) or (b) thereof;
“nuclear facility” means






(a) any nuclear reactor,




(b) any equipment or device designed or used for (1) separating the isotopes of
uranium or plutonium, (2) processing or utilizing spent 

      fuel, or (3) handling,
processing or packaging waste,





(c) any equipment or device used for the processing, fabricating or alloying of
special nuclear material if at any time the total amount of
       such material in the
custody of the insured at the premises where such equipment or device is located
consists of 

      or contains more than 25 grams of plutonium or uranium 233 or any
combination thereof, or more than 250 grams of uranium 235,




(d) any structure, basin, excavation, premises or place prepared or used for the
storage or disposal of waste,
and includes the site on which any of the foregoing is located, all operations conducted on
such site and all premises used for such operations; “nuclear reactor” means any apparatus
designed or used to sustain nuclear fission in a self-supporting chain reaction or to
contain a critical mass of fissionable material;

(With respect to injury to or destruction of property, the word “injury” or “destruction”

(“property damage” includes all forms of radioactive contamination of property

(includes all forms of radioactive contamination of property.




	V.	 	The inception dates and thereafter of all original policies affording coverages specified in
this paragraph (3), whether new, renewal or replacement, being policies which become effective
on or after 1st May, 1960, provided this paragraph (3) shall not be applicable to






(i) Garage and Automobile Policies issued by the Reassured on New York risks, or




(ii) statutory liability insurance required under Chapter 90, General Laws of Massachusetts,

                until 90 days following approval of the Broad Exclusion Provision by the
Governmental Authority having jurisdiction thereof.


(4) Without in any way restricting the operation of paragraph (1) of this Clause, it is understood
and agreed that paragraphs (2) and (3) above are not applicable to original liability policies of
the Reassured in Canada and that with respect to such policies this Clause shall be deemed to
include the Nuclear Energy Liability Exclusion Provisions adopted by the Canadian Underwriters’
Association of the Independent Insurance Conference of Canada.





 




*NOTE: The words printed in italics in the Limited Exclusion Provision and in the
Broad Exclusion Provision shall apply only in relation to
  original liability
policies which include a Limited Exclusion Provision or a Broad Exclusion Provision
containing those words.



21/9/67

N.M.A. 1590




Page 2 of 2




 









 





NUCLEAR INCIDENT EXCLUSION CLAUSE — LIABILITY — REINSURANCE — CANADA





	1.	 	This Agreement does not cover any loss or liability accruing to the Reinsured as a member of,
or subscriber to, any association of insurers or reinsurers formed for the purpose of covering
nuclear energy risks or as a direct or indirect reinsurer of any such member, subscriber, or
association.






	2.	 	Without in any way restricting the operation of paragraph 1 of his clause it is agreed that
for all purposes of this Agreement all the original liability contracts of the Reinsured,
whether new, renewal or replacement, of the following classes, namely,
	 
	 	 	Personal Liability.

Farmers’ Liability.

Storekeepers’ Liability.
	 
	 	 	which become effective on or after 31st December 1984, shall be deemed to include, from their
inception dates and thereafter, the following provision:
	 
	 	 	Limited Exclusion Provision.
	 
	 	 	This Policy does not apply to bodily injury or property damage with respect to which the
Insured is also insured under a contract of nuclear energy liability insurance (whether the
Insured is unnamed in such contract and whether or not it is legally enforceable by the
Insured) issued by the Nuclear Insurance Association of Canada or any other group or pool of
insurers or would be an Insured under any such policy but for its termination upon exhaustion
of its limits of liability.
	 
	 	 	With respect to property, loss of use of such property shall be deemed to be property damage.






	3.	 	Without in any way restricting the operation of paragraph 1 of this clause it is agreed that
for all purposes of this Agreement all the original liability contracts of the Company,
whether new, renewal or replacement, of any class whatsoever (other than Personal Liability,
Farmers’ Liability, Storekeepers’ Liability or Automobile Liability contracts), which become
effective on or after 31st December 1984, shall be deemed to include, from their inception
dates and thereafter, the following provision:
	 
	 	 	Broad Exclusion Provision.
	 
	 	 	It is agreed that this Policy does not apply:






	 	(a)	 	to liability imposed by or arising under The Nuclear Liability Act; nor
	 
	 	(b)	 	to bodily injury or property damage with respect to which an Insured under this
Policy is also insured under a contract of nuclear energy liability insurance (whether the
Insured is unnamed in such contract and whether or not it is legally enforceable by the
Insured) issued by the Nuclear Insurance Association of Canada or any other insurer or
group or pool of insurers or would be an Insured under any such policy but for its
termination upon exhaustion of its limit of liability; nor
	 
	 	(c)	 	to bodily injury or property damage resulting directly or indirectly from the nuclear
energy hazard arising from:






	 	(i)	 	the ownership, maintenance, operation or use of a nuclear facility by or on
behalf of an Insured;
	 
	 	(ii)	 	the furnishing by an Insured of services, materials, parts or equipment in
connection with the planning, construction, maintenance, operation or use of any
nuclear facility; and
	 
	 	(iii)	 	the possession, consumption, use, handling, disposal or transportation of
fissionable substances or of other radioactive material (except radioactive isotopes,
away from a nuclear facility, which have reached the final stage of fabrication so as
to be usable for any scientific, medical, agricultural, commercial or industrial
purpose) used, distributed, handled or sold by an Insured.





Page 1 of 2




 









 




As used in this Policy:





	1.	 	The term “nuclear energy hazard” means the radioactive, toxic, explosive or other hazardous
properties of radioactive material;
	 
	2.	 	The term “radioactive material” means uranium, thorium, plutonium, neptunium, their
respective derivatives and compounds, radioactive isotopes of other elements and any other
substances that the Atomic Energy Control Board may, by regulation, designate as being
prescribed substances capable of releasing atomic energy, or as being requisite for the
production, use or application of atomic energy;
	 
	3.	 	The term “nuclear facility” means:






	 	(a)	 	any apparatus designed or used to sustain nuclear fission in a self-supporting chain
reaction or to contain a critical mass of plutonium, thorium and uranium or any one or
more of them;
	 
	 	(b)	 	any equipment or device designed or used for (i) separating the isotopes of
plutonium, thorium and uranium or any one or more of them, (ii) processing or utilizing
spent fuel, or (iii) handling, processing or packaging waste;
	 
	 	(c)	 	any equipment or device used for the processing, fabricating or alloying of
plutonium, thorium or uranium enriched in the isotope uranium 233 or in the isotope
uranium 235, or any one or more of them if at any time the total amount of such material
in the custody of the Insured at the premises where such equipment or device is located
consists of or contains more than 25 grams of plutonium or uranium 233 or any combination
thereof, or more than 250 grams of uranium 235;
	 
	 	(d)	 	any structure, basin, excavation, premises or place prepared or used for the storage
or disposal of waste radioactive material; and includes the site on which any of the
foregoing is located, together with all operations conducted thereon and all premises used
for such operations.






	4.	 	The term “fissionable substance” means any prescribed substance that is, or from which can be
obtained, a substance capable of releasing atomic energy by nuclear fission.
	 
	5.	 	With respect to property, loss of use of such property shall be deemed to be property damage.





N.M.A. 1979a

01/04/96




Page 2 of 2




 









 





WAR EXCLUSION



As regards interests which at time of loss or damage are on shore, no liability shall attach hereto
in respect of any loss or damage which is occasioned by war, invasion, hostilities, acts of foreign
enemies, civil war, rebellion, insurrection, military or usurped power, or martial law or
confiscation by order of any government or public authority.



This War Exclusion Clause shall not, however, apply to interests which at time of loss or damage
are within the territorial limits of the United States of America (comprising the fifty States of
the Union and the District of Columbia, its territories and possessions, including the Commonwealth
of Puerto Rico and including Bridges between the United States of America and Mexico provided they
are under United States ownership), Canada, St. Pierre and Miquelon, provided such interests are
insured under original policies, endorsements or binders containing a standard war or hostilities
or warlike operations exclusion clause.



Nevertheless, this clause shall not be construed to apply to loss or damage occasioned by riots,
strikes, civil commotion, vandalism, malicious damage.




 









 








INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)




of




ALLIED WORLD ASSURANCE COMPANY, LTD.

(the “Subscribing Reinsurer”)




with respect to the




CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)




issued to




PHILADELPHIA INSURANCE COMPANY

PHILADELPHIA INDEMNITY INSURANCE

both of Bala Cynwyd, Pennsylvania

And any additional company established or acquired by the Company

(the “Company”)



The Subscribing Reinsurer shall have the following share(s) in the interests and liabilities of the
“Reinsurer” as set forth in the Contract attached hereto and executed by the Company:



30.00% of the First Casualty Excess of Loss Reinsurance Layer

 0.00% of the Second Casualty Excess of Loss Reinsurance Layer

 0.00% of the Third Casualty Excess of Loss Reinsurance Layer




NOTE: 0.00% means no share.



This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1, 2008, and shall
continue in force until 12:01 a.m., Eastern Standard Time, January 1, 2009, unless earlier
terminated in accordance with the attached Contract.



The share of the Subscribing Reinsurer in the interests and liabilities of the “Reinsurer” shall be
several and not joint with the share of any other subscribing reinsurer. In no event shall the
Subscribing Reinsurer participate in the interests and liabilities of the other subscribing
reinsurers.



IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized representative has executed
this Agreement as of the date specified below:



Signed this 11th day of March, 2008.




ALLIED WORLD ASSURANCE COMPANY, LTD.




By Robert Moreno




 









 





INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)




of




HANNOVER RUCKVERSICHERUNG AG

(the “Subscribing Reinsurer”)




with respect to the




CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)




issued to




PHILADELPHIA INSURANCE COMPANY

PHILADELPHIA INDEMNITY INSURANCE

both of Bala Cynwyd, Pennsylvania

And any additional company established or acquired by the Company

(the “Company”)



The Subscribing Reinsurer shall have the following share(s) in the interests and liabilities of the
“Reinsurer” as set forth in the Contract attached hereto and executed by the Company:



20.00% of the First Casualty Excess of Loss Reinsurance Layer

20.00% of the Second Casualty Excess of Loss Reinsurance Layer

20.00% of the Third Casualty Excess of Loss Reinsurance Layer



This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1, 2008, and shall
continue in force until 12:01 a.m., Eastern Standard Time, January 1, 2009, unless earlier
terminated in accordance with the attached Contract.



The share of the Subscribing Reinsurer in the interests and liabilities of the “Reinsurer” shall be
several and not joint with the share of any other subscribing reinsurer. In no event shall the
Subscribing Reinsurer participate in the interests and liabilities of the other subscribing
reinsurers.



IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized representative has executed
this Agreement as of the date specified below:



Signed this 11 day of February, 2008.




HANNOVER RUCKVERSICHERUNG AG




By Axel Trieloff




 









 





INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)




of




HARBOR POINT REINSURANCE U. S., INC.

(the “Subscribing Reinsurer”)




with respect to the




CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)




issued to




PHILADELPHIA INSURANCE COMPANY

PHILADELPHIA INDEMNITY INSURANCE

both of Bala Cynwyd, Pennsylvania

And any additional company established or acquired by the Company

(the “Company”)



The Subscribing Reinsurer shall have the following share(s) in the interests and liabilities of the
“Reinsurer” as set forth in the Contract attached hereto and executed by the Company:



 5.00% of the First Casualty Excess of Loss Reinsurance Layer

20.00% of the Second Casualty Excess of Loss Reinsurance Layer

10.00% of the Third Casualty Excess of Loss Reinsurance Layer



This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1, 2008, and shall
continue in force until 12:01 a.m., Eastern Standard Time, January 1, 2009, unless earlier
terminated in accordance with the attached Contract.



The share of the Subscribing Reinsurer in the interests and liabilities of the “Reinsurer” shall be
several and not joint with the share of any other subscribing reinsurer. In no event shall the
Subscribing Reinsurer participate in the interests and liabilities of the other subscribing
reinsurers.



IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized representative has executed
this Agreement as of the date specified below:



Signed this 25th day of February, 2008.




HARBOR POINT REINSURANCE U. S., INC.




By William Pentony




 









 





INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)




of




LIBERTY MUTUAL INSURANCE COMPANY

(the “Subscribing Reinsurer”)




with respect to the




CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)




issued to




PHILADELPHIA INSURANCE COMPANY

PHILADELPHIA INDEMNITY INSURANCE

both of Bala Cynwyd, Pennsylvania

And any additional company established or acquired by the Company

(the “Company”)



The Subscribing Reinsurer shall have the following share(s) in the interests and liabilities of the
“Reinsurer” as set forth in the Contract attached hereto and executed by the Company:



5.00% of the First Casualty Excess of Loss Reinsurance Layer

0.00% of the Second Casualty Excess of Loss Reinsurance Layer

5.00% of the Third Casualty Excess of Loss Reinsurance Layer




NOTE: 0.00% means no share.



This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1, 2008, and shall
continue in force until 12:01 a.m., Eastern Standard Time, January 1, 2009, unless earlier
terminated in accordance with the attached Contract.



The share of the Subscribing Reinsurer in the interests and liabilities of the “Reinsurer” shall be
several and not joint with the share of any other subscribing reinsurer. In no event shall the
Subscribing Reinsurer participate in the interests and liabilities of the other subscribing
reinsurers.



IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized representative has executed
this Agreement as of the date specified below:



Signed this 8th day of April, 2008.




LIBERTY MUTUAL INSURANCE COMPANY




By Dennis Mekemson




 









 





INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)




of




PLATINUM UNDERWRITERS REINSURANCE, INC.

(the “Subscribing Reinsurer”)




with respect to the




CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)




issued to




PHILADELPHIA INSURANCE COMPANY

PHILADELPHIA INDEMNITY INSURANCE

both of Bala Cynwyd, Pennsylvania

And any additional company established or acquired by the Company

(the “Company”)



The Subscribing Reinsurer shall have the following share(s) in the interests and liabilities of the
“Reinsurer” as set forth in the Contract attached hereto and executed by the Company:



 0.00% of the First Casualty Excess of Loss Reinsurance Layer

10.00% of the Second Casualty Excess of Loss Reinsurance Layer

 7.50% of the Third Casualty Excess of Loss Reinsurance Layer




NOTE: 0.00% means no share.



This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1, 2008, and shall
continue in force until 12:01 a.m., Eastern Standard Time, January 1, 2009, unless earlier
terminated in accordance with the attached Contract.



The share of the Subscribing Reinsurer in the interests and liabilities of the “Reinsurer” shall be
several and not joint with the share of any other subscribing reinsurer. In no event shall the
Subscribing Reinsurer participate in the interests and liabilities of the other subscribing
reinsurers.



IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized representative has executed
this Agreement as of the date specified below:



Signed this 11th day of February, 2008.




PLATINUM UNDERWRITERS REINSURANCE, INC.




By Jeff Gearheart




 









 





INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)




of


TRANSATLANTIC REINSURANCE COMPANY

(the “Subscribing Reinsurer”)




with respect to the




CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)




issued to




PHILADELPHIA INSURANCE COMPANY

PHILADELPHIA INDEMNITY INSURANCE

both of Bala Cynwyd, Pennsylvania

And any additional company established or acquired by the Company

(the “Company”)



The Subscribing Reinsurer shall have the following share(s) in the interests and liabilities of the
“Reinsurer” as set forth in the Contract attached hereto and executed by the Company:



0.00% of the First Casualty Excess of Loss Reinsurance Layer

10.00% of the Second Casualty Excess of Loss Reinsurance Layer

17.50% of the Third Casualty Excess of Loss Reinsurance Layer




NOTE: 0.00% means no share.



This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1, 2008, and shall
continue in force until 12:01 a.m., Eastern Standard Time, January 1, 2009, unless earlier
terminated in accordance with the attached Contract.



The share of the Subscribing Reinsurer in the interests and liabilities of the “Reinsurer” shall be
several and not joint with the share of any other subscribing reinsurer. In no event shall the
Subscribing Reinsurer participate in the interests and liabilities of the other subscribing
reinsurers.



IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized representative has executed
this Agreement as of the date specified below:



Signed this 20th day of March, 2008.




TRANSATLANTIC REINSURANCE COMPANY




By Brenda J. Jansen