exv10w16






Exhibit 10.16



Property Catastrophe Excess of Loss

Reinsurance Contract

No. 2009250




Effective: January 1, 2009



between



PEERLESS INSURANCE COMPANY

Keene, New Hampshire



and



The reinsurers subscribing to the respective

Interests and Liabilities Agreements attached to

and forming part of this Contract



					
	 
	Effective: January 1, 2009
	 	 
	 	2009 Property Catastrophe
Excess of Loss Contract —
$825m x $500m






 









 






PROPERTY CATASTROHE EXCESS OF LOSS REINSURANCE CONTRACT




	 	 	 	 	 	 	 	 	 
	Clause	 	Article Number	 	Page
	 
	 	 	 	 	 	 	 	 
	Access To Records (LM-00100-2008.08.25-A) (AM)
	 	 	17	 	 	 	13	 
	Agency Agreement (LM-02800-2006-04.12-A) (AM)
	 	 	30	 	 	 	25	 
	Arbitration (LM-00200-2008.06.27-A)
	 	 	19	 	 	 	14	 
	Assignment, Novation, or Transfer (LM-00300-2008.05.13-A)
	 	 	32	 	 	 	26	 
	Business Covered
	 	 	1	 	 	 	1	 
	Confidentiality Clause (LM-00400-2008.08.15-A)
	 	 	26	 	 	 	19	 
	Currency (LM-00500-2005.08.09-A)
	 	 	16	 	 	 	12	 
	Dividends and Taxes (LM-00600-2008.10.10-A)
	 	 	21	 	 	 	18	 
	Effective Date and Termination
	 	 	3	 	 	 	3	 
	Entire Agreement (LM-00701-2008.08.15-A)
	 	 	31	 	 	 	25	 
	Errors and Omissions (LM-00800-2005.06.02-A)
	 	 	18	 	 	 	14	 
	Exclusions
	 	 	2	 	 	 	2	 
	Extra Contractual Obligations (LM-00900-2007.03.28-A) (AM)
	 	 	5	 	 	 	5	 
	Federal Excise Tax (LM-01000-2008.08.15-A)
	 	 	22	 	 	 	18	 
	Florida Hurricane Catastrophe Fund (LM-02900-2006.04.14-P) (AM)
	 	 	9	 	 	 	8	 
	Federal Terrorism Excess Recovery (LM-01100-2008.08.06-A)
	 	 	34	 	 	 	26	 
	Governing Law (LM-01200-2008.09.18-A)
	 	 	25	 	 	 	19	 
	Insolvency (LM-01300-2008.07.25-A)
	 	 	20	 	 	 	17	 
	Interest Penalty (LM-01400-2008.08.24-A)
	 	 	14	 	 	 	10	 
	Loss Adjustment and Settlement (LM-01500-2006.09.07-A) (AM)
	 	 	12	 	 	 	9	 
	Loss in Excess of Original Policy Limits (LM-01600-2005.08.24-A) (AM)
	 	 	6	 	 	 	5	 
	Loss Occurrence
	 	 	7	 	 	 	6	 
	Net Retained Lines
	 	 	8	 	 	 	7	 
	Offset (LM-01700-2005.06.02-A)
	 	 	24	 	 	 	19	 
	Other Reinsurance
	 	 	10	 	 	 	8	 
	Reinsurer Claims Obligations (LM-03100-2008.07.21-A) (AM)
	 	 	28	 	 	 	21	 
	Salvage and Subrogation (LM-01800-2008.08.15-A) (AM)
	 	 	13	 	 	 	9	 
	Service of Suit (LM-01900-2008.07.17-A)
	 	 	23	 	 	 	18	 
	Severability (LM-02000-2005.06.02-A)
	 	 	27	 	 	 	20	 
	Special Conditions (LM-02100-2008.11.04-A) (AM)
	 	 	29	 	 	 	21	 
	Territory (LM-02201-2005.06.02-A-PCAT)
	 	 	11	 	 	 	8	 
	Third Parties (LM-02700-2005.09.27-A)
	 	 	33	 	 	 	26	 
	Ultimate Net Loss (LM-02403-2008.05.13-P) (AM)
	 	 	4	 	 	 	3	 
	Unauthorized Reinsurance (LM-02500-2008.090.24-A) (AM)
	 	 	15	 	 	 	11	 






Attachments:





	•	 	Exhibit A — Limit & Retention, Rate & Premium, Reports & Remittances, Reinstatement
	 
	•	 	Exhibit B — Limit & Retention, Rate & Premium, Reports & Remittances, Reinstatement
	 
	•	 	Exhibit C — Limit & Retention, Rate & Premium, Reports & Remittances, Reinstatement
	 
	•	 	Exhibit D — Limit & Retention, Rate & Premium, Reports & Remittances, Reinstatement






					
	 
	Effective: January 1, 2009
	 	 
	 	2009 Property Catastrophe
Excess of Loss Contract —
$825m x $500m





 









 








	•	 	Exhibit E — Limit & Retention, Rate & Premium, Reports & Remittances, Reinstatement
	 
	•	 	Exhibit F — Limit & Retention, Rate & Premium, Reports & Remittances, Reinstatement
	 
	•	 	Exhibit G — Limit & Retention, Rate & Premium, Reports & Remittances, Reinstatement
	 
	•	 	Exhibit H — Limit & Retention, Rate & Premium, Reports & Remittances, Reinstatement
	 
	•	 	Pools, Syndicates, Associations (LM-03300-2008.11.03-P)
	 
	•	 	War Risk Exclusion Clause
	 
	•	 	Nuclear Incident Exclusion Clause — Physical Damage Reinsurance (USA)
	 
	•	 	Nuclear Incident Exclusion Clause — Physical Damage Reinsurance (Canada)
	 
	•	 	Nuclear Energy Risks Exclusion Clause (Reinsurance) (1994) Worldwide Excluding U.S.A. & Canada)
	 
	•	 	Insolvency Funds Exclusion Clause
	 
	•	 	Terrorism Exclusion Clause (LM-02300-2008.08.15-P)
	 
	•	 	Mold Exclusion





					
	 
	Effective: January 1, 2009
	 	 
	 	2009 Property Catastrophe
Excess of Loss Contract —
$825m x $500m





 









 





Property Catastrophe Excess of Loss

Reinsurance Contract

No. 2009250

(hereinafter referred to as the “Contract”)




between



PEERLESS INSURANCE COMPANY

Keene, New Hampshire

(hereinafter referred to as the “Company”)



and



The reinsurers subscribing to the respective

Interests and Liabilities Agreements attached to

and forming part of this Contract

(hereinafter referred to as the “Subscribing Reinsurer”)



Article 1
— Business Covered



By this Contract the Subscribing Reinsurer agrees to reinsure the Company under its policies,
contracts and binders of insurance or reinsurance and/or any endorsements to any of the foregoing,
issued, accepted or held covered provisionally or otherwise, by and on behalf of the Company or
ceded directly or indirectly to the Company by an affiliate of the Company, or OneBeacon Insurance
Company for Policies subject to the rewritten Indemnity Reinsurance Agreement by and between the
Company and OneBeacon Insurance Company, (hereinafter each referred to as, a “Legal Entity” and,
collectively, the “Legal Entities”) for business identified as belonging to the Agency Markets
strategic business unit of the Liberty Mutual Group and in force at the effective date hereof or
issued or renewed on or after that date, and classified by the Company or a Legal Entity
as Property coverages (hereinafter referred to individually as “Policy” or collectively as
“Policies”) including but not limited to;




     Property coverages;




	 	•	 	Fire
	 
	 	•	 	Extended Coverage and Allied Lines,
	 
	 	•	 	Inland Marine (including Yachts),
	 
	 	•	 	Multiple Peril policies (Personal and Commercial),
	 
	 	•	 	Automobile Physical Damage (including Specialty Automobile and Garagekeepers’ Legal
Liability but excluding Collision),
	 
	 	•	 	Homeowners and Farmowners,
	 
	 	•	 	Burglary and Theft,
	 
	 	•	 	Earthquake and Flood (when added to a Fire Policy by endorsement or when part of an
Inland Marine or Multiple Peril Policy),
	 
	 	•	 	Miscellaneous Property Insurance,
	 
	 	•	 	Ocean Marine (for Policies written for Marinas, Boat Dealers and Yachts),
	 
	 	•	 	Water Damage Insurance,






					
	 
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subject to the terms, conditions and limitations set forth herein and in Exhibits A, B, C,
D, E, F, G and H attached to and forming part of this Contract.



Article 2 — Exclusions



This Contract does not apply to:





	A.	 	Treaty reinsurance assumed by the Company except for any agency reinsurance, or business
written by affiliates of the Company and reinsured internally within the companies that
comprise the Agency Markets Group and specifically any reinsurance transacted among or between
the companies that comprise the Agency Markets Group and the Company.
	 
	B.	 	Loss or damage as excluded in the Pools, Associations and Syndicates Exclusion Clause, as
attached hereto and forming part of this Contract.
	 
	C.	 	Loss or damage caused by flood except under Inland Marine Policies and except limited flood
coverage as provided for by multiple peril policies whether under the same Policy or a
separate Policy covering the same risk.
	 
	D.	 	Loss or damage as excluded in the War Risk Exclusion Clause, as attached hereto and forming
part of this Contract.
	 
	E.	 	Loss or damage excluded by the following Nuclear Incident Exclusion Clauses as attached
hereto and forming part of this Contract:






	 	(1)	 	Nuclear Incident Exclusion Clause — Physical Damage — Reinsurance — U.S.A. —
N.M.A. 1119.
	 
	 	(2)	 	Nuclear Incident Exclusion Clause — Physical Damage — Reinsurance — Canada —
N.M.A. 1980a.
	 
	 	(3)	 	Nuclear Energy Risks Exclusion Clause — 1994 — Reinsurance — (Worldwide
Excluding U.S.A. and Canada) — N.M.A. 1975a.






	F.	 	Loss or damage as excluded in the Insolvency Funds Exclusion Clause, as attached hereto and
forming part of this Contract.
	 
	G.	 	Policies classified as Insolvency or Financial Guarantee.
	 
	H.	 	Losses arising from seepage and pollution as per the Company’s policy exclusions. This
exclusion shall not apply, however, when the judicial entity having legal jurisdiction
invalidates the Company’s pollution exclusion, thereby obligating the Company for pollution
liability when such liability was intended to be excluded from coverage. Nevertheless, this
exclusion does not preclude any payment of the cost of the removal of debris of property
damaged by a loss otherwise covered hereunder.
	 
	I.	 	Losses in respect of overhead transmission and distribution lines and their supporting
structures, other than those on or within 300 meters (or 1,000 feet) of the insured premises.
It is understood and agreed that public utilities extension and/or suppliers extension and/or
contingent business interruption coverages are not subject to this exclusion, provided these
are not part of a transmitters’ or distributors’ Policy.






					
	 
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	J.	 	Terrorism-related losses excluded by the Terrorism Exclusion Clause, attached hereto and
forming part of this Contract.
	 
	K.	 	Mold but only as respects the Mold Exclusion as attached hereto and forming part of this
Contract.
	 
	L.	 	Equipment Breakdown Coverage.
	 
	M.	 	Aircraft hull.
	 
	N.	 	Motor Cargo (Legal Liability).
	 
	O.	 	Property coverages classified by the Company as “Casualty,” other than burglary, theft and
robbery when afforded under an Inland Marine Policy or under the Property insurance section of
a multiple peril policy.
	 
	P.	 	Business classified by the Company as Fidelity and Surety, except for Safe Deposit Box
Insurance.
	 
	Q.	 	Ocean Marine except for property Policies written for Marinas, Boat Dealers and Yachts.
	 
	R.	 	Liability in respect of growing and/or standing crops; however, this exclusion shall not
apply to nursery or greenhouse crops.





Article 3 — Effective Date and Termination





	A.	 	This Contract applies only to losses arising out of loss occurrences commencing during its
effective period. This Contract is effective at 12:01 a.m., January 1, 2009, Local Standard
Time, and shall end at 12:01 a.m., January 1, 2010, Local Standard Time.
	 
	B.	 	If this Contract should expire or terminate while a Loss Occurrence is in progress, the
Subscribing Reinsurer shall nevertheless be liable to the extent of its interest, subject to
the other conditions of this Contract, for all losses in the Loss Occurrence whether happening
before or after such expiration or termination, provided that no claim is made against such
Loss Occurrence on any renewal of this Contract.





Article 4 — Ultimate Net Loss (LM-02403-2008.05.13-P) (AM)





	A.	 	“Ultimate Net Loss” as used in this Contract shall mean: all amounts paid or due and
payable by the Company or a Legal Entity in the investigation, appraisal, adjustment,
settlement, litigation, defense or appeal, or payment of claims or judgments arising from each
and every loss, and/or loss occurrence for which the Company or a Legal Entity is or may be
found liable under the Policies, less salvages and subrogation recoveries, and amounts
recovered or recoverable under pooling agreements or other reinsurances, whether collectible
or not. “Ultimate Net Loss” includes, but is not limited to, the following paid or due and
payable amounts: Allocated Loss Adjustment Expenses, Unallocated Loss Adjustment Expenses
calculated at 7% of any loss, and all other costs of investigation or litigation. Extra
Contractual Obligations, as defined in the Extra Contractual Obligations Article, and Loss in
Excess of Original Policy Limits, as described in the Loss in Excess of Policy Limits Article,
shall be included in “Ultimate Net Loss,”







					
	 
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	 	 	provided that Extra Contractual Obligations and Loss in Excess of Original Policy Limits,
combined, shall not exceed 25% of “Ultimate Net Loss.”
	 
	B.	 	Nothing herein shall be construed to mean that losses under this Contract are not recoverable
until the Ultimate Net Loss has been ascertained.
	 
	C.	 	“Allocated Loss Adjustment Expense” as used herein shall mean any and all expenses paid or
due and payable by the Company or a Legal Entity in the investigation, appraisal, adjustment,
settlement, litigation, defense or appeal, or payment of claims or judgments arising from each
and every loss or loss occurrence for which the Company or a Legal Entity is or may be found
liable under the Policies, including but not limited to Claim-Specific Declaratory Judgment
Expenses, Attorneys’ Fees and Expenses, Field Employee Salaries and Expenses, defense costs,
court costs, supersedeas and appeal bond costs, Post or Prejudgment Interest or Delayed
Damages, and expenses of outside adjusters or other third party administrators.
	 
	D.	 	“Unallocated Loss Adjustment Expense” as used herein shall mean any and all expenses paid or
due and payable by the Company or a Legal Entity in the investigation, appraisal, adjustment,
settlement, litigation, defense or appeal, or payment of claims or judgments arising from each
and every loss or loss occurrence for which the Company or a Legal Entity is or may be found
liable under the Policies that do not constitute Allocated Loss Adjustment Expense.
	 
	E.	 	“Claim-Specific Declaratory Judgment Expenses” shall mean the fees and expenses incurred in
actions brought to determine whether the Company or a Legal Entity has a defense and/or
indemnification obligation for individual claims presented against Policies covered under this
Contract. Any Claim-Specific Declaratory Judgment Expense shall be deemed to have been fully
incurred on the same date as the insured’s original loss or loss occurrence (if any) giving
rise to the action, unless otherwise provided for within this Contract.
	 
	F.	 	“Attorneys’ Fees and Expenses” as used above, shall mean all fees and expenses of attorneys,
including but not limited to the fees and expenses of the Company’s or its affiliates’
in-house attorneys providing legal advice on coverage questions and/or defending the Company
or a Legal Entity in coverage litigation, and fees and expenses of staff counsel in the
defense of policyholder claims. Such Attorneys’ Fees and Expenses for in-house attorneys and
staff counsel shall be calculated at the rate for such attorneys plus the expenses incurred by
such attorneys, but excluding office expenses of the Company and its affiliates and salaries
and expenses of their other employees which constitute Unallocated Loss Adjustment Expense.
	 
	G.	 	“Post or Prejudgment Interest or Delayed Damages” shall mean interest or damages added to a
settlement, verdict, award, or judgment based on the period of time prior to or after the
settlement, verdict, award, or judgment whether or not expressly identified as such.
	 
	H.	 	“Field Employee Salaries and Expenses” as used above, shall mean a pro rata share of salaries
and expenses of the Company’s or its affiliates’ field employees according to the time
occupied in adjusting, defending, and settling such losses or loss occurrences, and of
expenses of all of the Company’s or its affiliates’ officers and employees incurred in
connection with the loss; except that salaries of officers and employees engaged in general
management of the Company or its affiliates and any office expense of the






					
	 
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	 	 	Company or its affiliates do not constitute Field Employee Salaries and Expenses, but rather
Unallocated Loss Adjustment Expense.





Article 5 — Extra Contractual Obligations (LM-00900-2007.03.28-A) (AM)





	A.	 	This Contract shall protect the Company within the limits hereof for 90.0% of Extra
Contractual Obligations. “Extra Contractual Obligations” are defined as any actual or
potential liabilities not covered under any other provision of this Contract, arising from or
relating to any alleged or actual act, error or omission, whether intentional or otherwise, or
from any alleged or actual negligence, tortious conduct, reckless conduct, violations of
statutes or regulations governing the conduct of insurance companies and/or claims adjusters,
or bad faith in connection with: (i) the handling of any claim under the Policies covered by
this Contract, such liabilities arising because of, but not limited to, the following:
failure by the Company, a Legal Entity or by a third party claims administrator to settle
within the Policy limit, or by reason of alleged or actual negligence, fraud or bad faith of
the Company, a Legal Entity or by a third party claims administrator in rejecting an offer of
settlement, or in defending or prosecuting litigation, including appeals, arbitration, or any
alternative dispute resolution or settlement discussions involving any claim; or (ii) the
providing of or failure to provide any loss control or loss prevention services in connection
with any Policy hereunder.
	 
	B.	 	The date on which any Extra Contractual Obligation is incurred shall be deemed, in all
circumstances, to be the date of the original occurrence, loss occurrence, accident, casualty,
disaster, or loss, as selected by the Company.
	 
	C.	 	However, this Article shall not apply where the loss has been incurred due to any fraudulent
or criminal act directed against the Company or a Legal Entity by a member of the Board of
Directors or a corporate officer of the Company or a Legal Entity 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 6 — Loss In Excess of Original Policy Limits (LM-01600-2005.08.24-A) (AM)





	A.	 	This Contract shall protect the Company within the limits hereof, for 90.0% of any Loss in
excess of the original Policy limit where Loss in excess of the limit has been incurred
because of a failure by the Company, or a Legal Entity or by a third-party claims
administrator to settle within the Policy limit or by reason of alleged or actual negligence,
fraud, or bad faith in rejecting an offer of settlement or in defending or prosecuting
litigation, including appeals, arbitration, or any alternative dispute resolution or
settlement discussions involving any claim.
	 
	B.	 	However, the above paragraph shall not apply where the loss has been incurred due to any
fraudulent or criminal act directed against the Company or a Legal Entity by a member of the
Board of Directors or a corporate officer of the Company or a Legal Entity 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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	C.	 	With regard to excess of Policy limits, the word “Loss” shall mean any amounts for which
the Company or a Legal Entity would have been contractually liable to pay had it not been for
the limit of the original Policy. The date on which any Loss in excess of the original
Policy limit is incurred by the Company or a Legal Entity shall be deemed, in all
circumstances, to be the date of the original occurrence, accident, casualty, disaster, loss
occurrence or loss, as selected by the Company.





Article 7 — Loss Occurrence





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






	 	1.	 	As regards windstorm, hail, tornado, and cyclone including ensuing collapse and
water damage, all individual losses sustained by the Company or a Legal Entity
occurring during any period of 72 consecutive hours arising out of and directly
occasioned by the same event. However, as respects named hurricanes or tropical storms
within the 48 contiguous states and Canada, all individual losses sustained by the
Company or a Legal Entity occurring during any period of 168 consecutive hours arising
out of and directly occasioned by the same event. However, the event need not be
limited to one state or province or states or provinces contiguous thereto.
	 
	 	2.	 	As regards riot, riot attending a strike, civil commotion, vandalism and
malicious mischief, all individual losses sustained by the Company or a Legal Entity
occurring during any period of 72 consecutive hours within the area of one municipality
or county and the municipalities or counties contiguous thereto arising out of and
directly occasioned by the same event. The maximum duration of 72 consecutive hours
may be extended in respect of individual losses which occur beyond such 72 consecutive
hours during the continued occupation of an assured’s premises by strikers, provided
such occupation commenced during the aforesaid period.
	 
	 	3.	 	As regards earthquake (the epicenter of which need not necessarily be within
the territorial confines referred to in the introductory portion of this paragraph A),
inclusive of foreshocks and aftershocks assigned to the earthquake event by the U.S.
Geological Survey, and fire following directly occasioned by the earthquake, only those
individual fire losses which commence during the period of 168 consecutive hours may be
included in a Company’s or a Legal Entity’s “Loss Occurrence.”
	 
	 	4.	 	As regards “freeze,” only individual losses directly occasioned by collapse,
breakage of glass and water damage (caused by bursting of frozen pipes and tanks) may
be included in the Company’s or Legal Entity’s “Loss Occurrence.”
	 
	 	5.	 	As regards firestorms, brush fires and any other fires or series of fires,
irrespective of origin (except as provided in subparagraphs 2 and 3 above), which
spread through trees, grassland or other vegetation, all individual losses sustained by
the Company or a Legal Entity which commence during any period





					
	 
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	 	 	 	of 168 consecutive hours and within a 150-mile radius of any fixed point selected by
the Company may be included in the Company’s or a Legal Entity’s “Loss Occurrence.”
However, an individual loss subject to this subparagraph 5 cannot be included in
more than one “Loss Occurrence.”






	B.	 	For all “Loss Occurrences,” other than those referred to in subparagraph 2 of paragraph A
above, the Company may choose the date and time when any such period of consecutive hours
commences, provided that it is not earlier than the date and time of the occurrence of the
first recorded individual loss sustained by the Company or a Legal Entity arising out of that
disaster, accident or loss and provided that only one such period of 168 consecutive hours
shall apply with respect to one event except for any “Loss Occurrences” referred to in
subparagraph 1 of paragraph A above defined as occurring during any period of 72 consecutive
hours where only one such period of 72 consecutive hours shall apply with respect to one
event, regardless of the duration of the event.
	 
	C.	 	As respects those “Loss Occurrences” referred to in subparagraph 2 of paragraph A above, if
the disaster, accident or loss occasioned by the event is of greater duration than 72
consecutive hours, then the Company may divide that disaster, accident or loss into two or
more “Loss Occurrences,” provided no two periods overlap and no individual loss is included in
more than one such period, and provided that no period commences earlier than the date and
time of the occurrence of the first recorded individual loss sustained by the Company or a
Legal Entity arising out of that disaster, accident or loss.
	 
	D.	 	No individual losses occasioned by an event that would be covered by 72 hours clauses may be
included in any “Loss Occurrence” claimed under 168 hours provision.
	 
	E.	 	Losses directly or indirectly occasioned by:






	 	1.	 	loss of, alteration of, or damage to,
	 
	 	 	 	or
	 
	 	2.	 	a reduction in the functionality, availability or operation of a computer
system, hardware, program, software, data, information repository, microchip,
integrated circuit or similar device in computer equipment or non-computer equipment,
whether the property of the Policyholder or not, do not in and of themselves constitute
an event unless arising out of one or more of the following perils:
	 
	 	 	 	fire, lightning, explosion, aircraft or vehicle impact, falling objects,
windstorm, hail, tornado, cyclone, hurricane, earthquake, volcano, tsunami, flood,
freeze or weight of snow.





Article 8 — Net Retained Lines





	A.	 	This Contract applies only to such portion of any obligation that the Company retains net
for its own account (prior to the deduction of any underlying reinsurance specifically
permitted in this Contract). In calculating the amount of any loss hereunder and in computing
the amount in excess of which this Contract attaches only loss in respect of that portion of
any insurance, or reinsurance which the Company retains net shall be included.
	 
	B.	 	It is agreed that the amount of the Subscribing Reinsurer’s liability hereunder in respect of
any loss shall not be increased by reason of the inability of the Company to collect from any
other reinsurer, whether specific or general, any amount which may have





					
	 
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	 	 	become due from it whether such inability arises from the insolvency of such other reinsurer
or otherwise.
	 
	C.	 	Allocation of losses and expenses to Legal Entities other than the Company pursuant to
inter-company reinsurance among the Legal Entities and the Company shall be entirely
disregarded for all purposes of this Contract.





Article 9 — Florida Hurricane Catastrophe Fund (LM-02900-2006.04.14-P)(AM)





	A.	 	Any loss reimbursement the Company or a Legal Entity receives under the Florida Hurricane
Catastrophe Fund (“FHCF”) shall apply as follows:






	 	1.	 	Except as provided in subparagraph 2. below, any such loss reimbursement 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 one or more Loss Occurrences commencing during the term of this Contract
result(s) in recoveries made by the Company or a Legal Entity under this Contract and
the FHCF, and such recoveries, together with any other reinsurance recoveries made by
the Company applicable to said Loss Occurrence(s), exceed the amount permitted by
Florida law, any amount in excess thereof shall reduce the Ultimate Net Loss subject to
this Contract for the Loss Occurrence(s) to which the recoveries apply.






	B.	 	For purposes hereof, if a loss reimbursement received by the Company or a Legal Entity under
the FHCF is based on the Company’s or a Legal Entity’s losses in more than one Loss Occurrence
and the FHCF does not designate the amount allocable to each Loss Occurrence, the
reimbursement shall be prorated in the proportion that the Company’s and the Legal Entity’s
losses in each Loss Occurrence bear to the Company’s and the Legal Entity’s total losses
arising out of all Loss Occurrences to which the recovery applies.
	 
	C.	 	Any reimbursement premiums or emergency assessment paid or payable by the Company or the
Legal Entities under the FHCF shall be disregarded for purposes of determining subject premium
and Ultimate Net Loss under this Contract.





Article 10 — Other Reinsurance





	A.	 	It is understood and agreed that the Company may purchase underlying property per risk
excess of loss covers and facultative certificates which will inure to the benefit of this
Contract.
	 
	B.	 	The Company may have in force other excess catastrophe reinsurances, recoveries under which
shall inure solely to the benefit of the Company.





Article 11 — Territory (LM-02201-2005.06.02-A-PCAT)





	A.	 	This Contract is worldwide in scope and shall cover risks wherever located.
	 
	B.	 	It is specifically agreed that the retention of the Company shall apply to losses occurring
on property anywhere in the world.





					
	 
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Article 12 — Loss Adjustment and Settlement (LM-01500-2006.09.07-A) (AM)





	A.	 	The Company shall give notice, as soon as practicable, to the Subscribing Reinsurer of any
claim that it has reason to believe could involve this Contract. The Company shall keep the
Subscribing Reinsurer informed of significant developments likely to affect the cost of any
claim or claims hereunder.
	 
	B.	 	The Company or a Legal Entity may commence, continue, defend, settle, or withdraw from
actions, suits, or prosecutions and, generally, do all such things relating to any claim or
loss in which the Subscribing Reinsurer is interested as, in the Company’s or such Legal
Entity’s judgment, may be beneficial or expedient to the Company or such Legal Entity, as
applicable, and the Subscribing Reinsurer. The Company and the Legal Entities shall be the
sole judge as to what claims are covered under their Policies. All of the Ultimate Net Loss
and Loss Occurrences, as well as all loss settlements made and judgments paid by the Company
or a Legal Entity, provided they are within the terms of this Contract either under the strict
conditions of the Policies or by way of compromise, shall be unconditionally binding upon the
Subscribing Reinsurer, who agrees to pay all amounts for which it is liable immediately upon
reasonable evidence of the amount due being furnished to the Subscribing Reinsurer by the
Company. The true intent of this Contract is that the Subscribing Reinsurer shall, in every
case to which this Contract applies, follow the settlements of the Company and the Legal
Entities.





Article 13 — Salvage and Subrogation (LM-01800-2008.08.15-A) (AM)





	A.	 	The Subscribing Reinsurer shall be credited with its share of salvage and/or subrogation in
respect of claims and settlements under this Contract, less its share of recovery expense.
Unless the Company or a Legal Entity agrees to waive such rights in the settlement of a
disputed claim, or the Company and the Subscribing Reinsurer agree to the contrary, the
Company and the Legal Entities shall enforce the right to salvage and/or subrogation and shall
prosecute all claims arising out of such right. Should the Company or the Legal Entities
refuse or neglect to enforce this right, the Subscribing Reinsurer is hereby empowered and
authorized to institute appropriate action in the name of the Company or the Legal Entities,
as applicable.
	 
	B.	 	Amounts recovered from salvage and/or subrogation shall always be used to reimburse the
excess Subscribing Reinsurer (and the Company, should it carry a portion of excess coverage
net) in the reverse order of their participation in the loss before being used in any way to
reimburse the Company or a Legal Entity for its primary loss. If the amount recovered exceeds
the recovery expense, the recovery expense shall be borne by each party in proportion to its
benefit from the recovery. If the recovery expense exceeds the amount recovered, the amount
recovered (if any) shall be applied to the reimbursement of recovery expense and the remaining
expense, as well as any originally incurred loss expense, shall be added to the Ultimate Net
Loss. If no amount is recovered from salvage and/or subrogation, the expense incurred in
attempting such recovery shall be deemed loss expense and shall be added to the Ultimate Net
Loss.
	 
	C.	 	All salvage and/or subrogation recoveries obtained by either party, subsequent to payments
made by the Subscribing Reinsurer under this Contract, shall be applied as if obtained prior
to said payments and all necessary adjustments shall be made between the Company and the
Subscribing Reinsurer as soon as practicable after said salvage and/or subrogation recovery is
obtained.





					
	 
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	D.	 	The Company or a Legal Entity shall have the right, before the happening of the loss, to
waive its right of subrogation as to that loss.





Article 14 — Interest Penalty (LM-01400-2008.08.24-A)





	A.	 	The interest amounts provided for in this Article shall apply to the Subscribing Reinsurer
or to the Company in the following circumstances:






	 	1.	 	If a loss payment owed by the Subscribing Reinsurer to the Company is not
received within 45 calendar days following the date of presentation to the Subscribing
Reinsurer of information necessary to approve payment of the claim, and/or
	 
	 	2.	 	If any premium payment owed by the Company to the Subscribing Reinsurer is not
received within 45 calendar days following the date on which payment is due, and/or
	 
	 	3.	 	If any premium adjustment, agreed by either Party to the other, is not
received within 150 calendar days following the expiry or anniversary of this
Contract, and/or
	 
	 	4.	 	If any return of premiums, commissions, profit sharing, or any amounts not
provided in subparagraphs 1, 2, and 3 above, are not received in accordance with the
date specified in this Contract or if no date is specified, within 90 calendar days
following the date the debtor Party received the billing.






	B.	 	Failure by the Subscribing Reinsurer or Company to comply with their respective payment
obligations within the time periods as herein provided shall, as of that date, be subject to
an interest payment computed by multiplying the amount due by a variable rate consisting of
the U.S. Prime Rate as published in the Eastern Edition of The Wall Street Journal on
the first day of the calendar month in which the amount became past due, plus 2%. The
variable rate shall be adjusted monthly thereafter to equal the U.S. Prime Rate as published
in the Eastern Edition of The Wall Street Journal on the first day of each successive
month during which the amount due remains unpaid, plus 2%. The product shall then be
multiplied by 1/365 for each day after the due date that the amount due and the interest
amount remain unpaid. Any interest that occurs pursuant to this Article shall be calculated
by the Party to which it is owed.
	 
	C.	 	The validity of any claim or payment may be contested under the provisions of this Contract.
If the debtor Party prevails in an arbitration or any other proceeding with respect to the
amounts in dispute, there shall be no interest penalty due. If the creditor Party wholly or
partially prevails on any of the amounts in dispute, the interest penalty shall be awarded as
outlined above. Such interest penalty shall be calculated from the date the monies were due
and owing to the date of resolution of the arbitration or proceeding, and shall be payable as
of the date of resolution of the arbitration or proceeding.
	 
	D.	 	If a Subscribing Reinsurer advances the entire or partial payment of any claim it is
contesting, and wholly or partially prevails in the contest, the Company shall promptly
return the applicable amount of such payment. The arbitrator(s) hearing such dispute shall
determine if interest shall be added to the amount returned by the Company.





					
	 
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	E.	 	Any interest owing pursuant to this Article may be waived by the Party to which it is owed.
Further, any interest calculated pursuant to this Article that is $100 or less shall be
waived. Any waiver of any interest pursuant to this paragraph, however, shall not affect the
waiving Party’s right to claim and/or pursue interest for any other failure by the other
Party to make payment when due under this Article.





Article 15 — Unauthorized Reinsurance (LM-02500-2008.09.24-A) (AM)



(Applies only to a Subscribing Reinsurer who at the inception of the Contract or at any time
thereafter does not qualify for full credit with any insurance regulatory authority having
jurisdiction over the Company’s reserves.)





	A.	 	As regards Policies 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 adjustment expense paid by the Company or the Legal Entities but not
recovered from the Subscribing Reinsurer, plus reserves for losses incurred but not reported
as determined by the Company, as shown in the statement prepared by the Company (hereinafter
referred to as “ Subscribing Reinsurer Obligations”) by Letters of Credit, unless the Company
and the Subscribing Reinsurer otherwise agree, and/or the method of funding is determined by
applicable law, statute, or regulation.
	 
	B.	 	When funding by Letters of Credit, the Subscribing Reinsurer agrees to apply for and secure
timely delivery to the Company of clean, irrevocable, and unconditional Letters of Credit
issued by a bank that is a qualified U.S. financial institution 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. At
the Company’s request, the Subscribing Reinsurer will agree to provide separate Letters of
Credit for each Legal Entity. Such Letters of Credit shall be issued for a period of not less
than one year, and shall be automatically extended for one year from the date of expiration or
any future expiration date unless, 60 days prior to any expiration date, the issuing bank
shall notify the Legal Entity by certified mail that the issuing bank elects not to consider
the Letters 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, a
Legal Entity or any successor, by operation of law, of the Company or a Legal Entity,
including without limitation, any liquidator, rehabilitator, receiver, or conservator of the
Company, without diminution because of the insolvency of the Company, a Legal Entity or the
Subscribing Reinsurer for one or more of the following purposes:






	 	1.	 	To pay or reimburse the Company or a Legal Entity for:






	 	a.	 	The Subscribing Reinsurer’s share under this Contract of
premiums returned, but not yet recovered from the Subscribing Reinsurer, to the





					
	 
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	 	 	 	owners of Policies reinsured under this Contract on account of cancellations
of such Policies; and
	 
	 	b.	 	The Subscribing Reinsurer’s share, under this Contract, of
surrenders and benefits or losses paid by the Company or a Legal Entity, but
not yet recovered from the Subscribing Reinsurer, under the terms and
provisions of the Policies reinsured under this Contract; and
	 
	 	c.	 	Any other amounts necessary to secure the credit or reduction
from liability for reinsurance taken by the Company.






	 	2.	 	Where the Letters of Credit will expire without renewal or be reduced or
replaced by Letters of Credit for a reduced amount and where the Subscribing
Reinsurer’s entire obligations under this Contract remain unliquidated and
undischarged 10 days prior to the termination date, to withdraw amounts equal to the
Subscribing Reinsurer’s share of the liabilities, to the extent that the liabilities
have not yet been funded by the Subscribing Reinsurer and exceed the amount of any
reduced or replacement Letters of Credit, and deposit those amounts in a separate
account in the name of the Company in a qualified U.S. financial institution apart
from its general assets, in trust for such uses and purposes specified in above as may
remain after withdrawal and for any period after the termination date.






	D.	 	At annual intervals, or at the Company’s option, on a quarterly basis, the Company shall
prepare a specific statement of the Subscribing Reinsurer’s Obligations, for the sole purpose
of amending the Letters 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 Letters 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 Letters of Credit reducing the
amount of credit available by the amount of such excess credit.






	E.	 	Any and all disputes between the Company and any Subscribing Reinsurer or Reinsurers
(“Party”, individually, or “Parties”, collectively) arising out of, relating to, or concerning
this Article shall be resolved pursuant to the ARIAS-U.S. Newer Arbitrator Program. Unless
the Parties otherwise agree, the ARIAS Newer Arbitrator Program expedited proceeding with a
single Newer Arbitrator shall be used to resolve any such disputes.





Article 16 — Currency (LM-00500-2005.08.09-A)



Whenever a reference to a monetary currency appears in this Contract, it shall be construed to
mean United States Dollars (“USD”). All amounts paid or received by the Company in any other
currency shall be converted into United States Dollars at the rate of exchange on the date at which
it is entered on the books of the Company.







					
	 
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Article 17 — Access to Records (LM-00100-2008.08.25-A) (AM)





	A.	 	Except as otherwise provided in this Article, the Subscribing Reinsurer, or its duly
authorized representative, may upon reasonable prior written notice to the Company, at the
Subscribing Reinsurer’s own expense, examine at the offices of the Company or its affiliates,
during normal office hours, the Company’s or the Legal Entities’ Policy, accounting,
underwriting, or claim records and files, or any such additional relevant records and files,
as they exist in the Company’s or its affiliates’ possession or reasonable control, relating
to business ceded under this Contract. The Subscribing Reinsurer’s notice shall reasonably
describe the nature of the inspection that it wishes to conduct, the persons conducting the
inspection and, upon notice of available files from the Company, the files that it wishes to
review. Subject to the limitations expressed in this Article, this right of inspection shall
survive termination or expiration of this Contract and shall continue as long as either Party
has any rights or obligations under this Contract.
	 
	B.	 	The Company reserves the right to deny the Subscribing Reinsurer access to records or files
concerning any particular claim(s) if the Subscribing Reinsurer has not disputed liability for
payment of such claim(s), and payment of such claim(s) is(are) more than ninety (90) days
overdue according to the Company’s records. The Company shall, however, prior to an
arbitration demand that may be instituted by either Party, continue to respond to reasonable
specific requests for information and questions raised by the Subscribing Reinsurer concerning
such claims; and nothing in this Article shall restrict the right or ability of the
Subscribing Reinsurer to seek discovery of relevant information in a proceeding pursuant to
the Arbitration Article of this Contract.
	 
	C.	 	As a condition precedent to access to records under this Article, the Subscribing Reinsurer,
its personnel, and any authorized third party representative of the Subscribing Reinsurer
shall agree to the provisions of the Confidentiality Article of this Contract.
	 
	D.	 	The Company reserves the right to withhold any documents from the Subscribing Reinsurer: (1)
concerning Trade Secrets of the Company or its affiliates, (2) subject to the terms of a third
party non-disclosure agreement with the Company or its affiliates requiring third party
consent to disclosure, (3) subject to the Work-Product Privilege or Attorney-Client Privilege,
or (4) concerning individual private information that, as a matter of law, cannot be disclosed
by the Company or its affiliates (hereinafter referred to in the Contract as “Privileged
Documents”). The Company shall reasonably try to exempt the Subscribing Reinsurer from any
third party non-disclosure agreement or obtain consent from the third party to disclose to the
Subscribing Reinsurer.
	 
	E.	 	Notwithstanding the foregoing, the Company shall permit and not object to the Subscribing
Reinsurer’s access to Privileged Documents falling within subparagraph D.(3) above, in
connection with the underlying claim reinsured hereunder following final settlement or final
adjudication of the case or cases involving such claim, with prejudice against all claimants,
and all parties to such adjudications; provided that the Company, may defer release of such
Privileged Documents if there are subrogation, contribution, or other third party actions with
respect to that claim or case, which may jeopardize the Company’s or its affiliates’ defense
by release of such Privileged Documents. In the event that the Company shall seek to defer
release of such Privileged Documents or to withhold documents concerning Trade Secrets, it
will in consultation with the Subscribing Reinsurer take other steps as reasonably necessary
to provide the Subscribing Reinsurer with the information it reasonably requires to indemnify
the Company without





					
	 
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	 	 	causing a loss of such privileges or protections. The Subscribing Reinsurer, however, shall
not have access to Privileged Documents relating to any dispute between the Company and the
Subscribing Reinsurer.
	 
	F.	 	For purposes of this Article, “Trade Secrets” shall have the meaning provided in Section 1839
of the United States Economic Espionage Act of 1996. “Attorney—Client Privilege” shall mean
communications of a confidential nature between: (1) the Company or its affiliates, or anyone
retained by or in the control of the Company or its affiliates, or their in-house or outside
legal counsel, or anyone in the control of such legal counsel, and (2) any in-house or outside
legal counsel which relate to legal advice being sought by the Company or its affiliates
and/or which contains legal advice being provided to the Company or its affiliates.
“Work-Product Privilege” shall mean communications, written materials, and tangible things
prepared by or for in-house or outside counsel, or prepared by or for the Company or its
affiliates, in anticipation of or in connection with litigation, arbitration, or other dispute
resolution proceedings.





Article 18 — Errors and Omissions (LM-00800-2005.06.02-A)



Any inadvertent delay, omission, or error in complying with the terms and conditions of this
Contract 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 delay, omission, or
error is rectified upon discovery.




Article 19 — Arbitration (LM-00200-2008.06.27-A)





	A.	 	Disputes to be Arbitrated. With the exception of any dispute resolution
procedures that are otherwise contained in this Contract, any and all disputes between the
Company and any Subscribing Reinsurer or Reinsurers (“Party” individually or “Parties”
collectively) arising out of, relating to, or concerning this Contract, whether sounding in
contract or tort and whether arising during or after this Contract’s formation, or after its
termination, including disputes as to whether the Contract was validly formed or is voidable,
shall be submitted to the decision of an arbitration panel (“Panel”). The Panel shall
consist of an umpire and two party-appointed arbitrators unless a Party meets the
requirements of Paragraph C of this Article and demands arbitration pursuant thereto, in
which case the Panel would consist of an umpire only.
	 
	B.	 	Procedures. Except as provided herein, any arbitration shall be based upon the
Procedures for the Resolution of U.S. Insurance and Reinsurance Disputes, Regular Panel
Version, dated April 2004 (the “Procedures”), developed by the Insurance and Reinsurance
Dispute Resolution Task Force, subject to the following modifications:






	 	1.	 	Qualifications of the arbitrators and umpires shall be in accordance with
section 6.2 of the Procedures, except that other professionals who have worked for at
least 10 years for an insurer or reinsurer shall also be qualified to serve as an
arbitrator or umpire.
	 
	 	2.	 	The Parties hereby designate the umpire list maintained by ARIAS (U.S.) as the
list to be used in the event that section 6.7(a) of the Procedures is invoked.
	 
	 	3.	 	Unless otherwise mutually agreed, the members of the Panel shall be impartial
and disinterested. The members of the Panel may not be: (1) in the control of any
Party or its parent, affiliate, or agent, (2) a former director or officer of any





					
	 
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	 	 	 	Party or its parent, affiliate, or agent, or (3) a likely witness in the
arbitration. The requirement of impartiality means that all members of the Panel
shall have the same obligation to approach the Panel’s duties and decisions with
fairness and without consideration for the fact that Panel members may have been
appointed by one of the Parties. The requirement of impartiality does not mean that
any arbitrator can have no previous knowledge of or experience with respect to
issues involved in the dispute or disputes.
	 
	 	4.	 	The first sentence of Section 10.4 of the Procedures shall be replaced by the
following sentence: “The Panel shall require that each Party submit concise written
statements of position, including summaries of the facts and evidence a Party intends
to present, discussion of the applicable law and the basis for the requested Award or
denial of relief sought.”
	 
	 	5.	 	Once the Panel has been constituted, no Party (or anyone acting for a Party)
shall have any communications concerning the arbitration or any of the issues before
the Panel with any member of the Panel that is not also disclosed to all other Parties
and all members of the Panel. Each Panel member shall have a continuing duty to
disclose promptly to all Parties and all Panel members any violation of this
prohibition and the specifics of any improper communications that occurred. This
prohibition shall remain in place until all challenges to any arbitration awards and
decisions have been either waived or finally concluded.
	 
	 	6.	 	Section 11.1 of the Procedures shall be replaced by the following provision:
“The Parties may propound discovery seeking disclosure of such information and/or
documents relevant to the dispute or necessary for the proper resolution of the
dispute.”
	 
	 	7.	 	Position statements may be amended at any reasonable time, but not later than
the close of discovery, without a showing to the Panel that the amending Party could
not reasonably have raised the new claim or issue at an earlier time.
	 
	 	8.	 	The Panel shall hold an evidentiary hearing, if one is necessary, within one
year of the arbitration demand, unless the Parties otherwise agree. Should a Party
seek a reasonable extension to this time frame for good cause shown, the other Party’s
agreement shall not be unreasonably withheld.
	 
	 	9.	 	To the extent permitted by the law, the Panel shall have the authority to issue
subpoenas and other orders to enforce its decisions.
	 
	 	10.	 	The Panel may award reasonable attorneys’ fees and arbitration costs to the
prevailing Party, as determined by the Panel.
	 
	 	11.	 	Section 14.3 of the Procedures shall be replaced by the following provision:
“The Panel shall make a decision and issue an award with regard to the terms expressed
in this Contract, and the custom and practice of the property and casualty insurance
and reinsurance business. The Panel shall not be obligated to follow the strict rules
of law and evidence.”






	C.	 	Alternative Streamlined Procedures. Notwithstanding the foregoing provisions of this
Article, the Alternative Streamlined Procedures set forth in section 16 of the Procedures, as
modified by sections B3, B4, and B9 through B11 of this Article, shall apply in the event
that, in a consolidated proceeding or otherwise, the Party initiating arbitration is seeking
payment of a total amount that is no greater than one million dollars ($1,000,000), or the
currency equivalent thereof. Sections 16.1, 16.2, 16.3 and the second sentence of section
16.4 of the Alternative Streamlined Procedures shall not





					
	 
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	 	 	apply. The Parties agree to comply with section 6.7 of the Procedures to appoint a single
umpire, and hereby designate the umpire list maintained by ARIAS (U.S.) as the list to be
used in section 6.7(a).






	D.	 	Hearing Location. The hearing shall be held in Boston, Massachusetts, unless the
Parties mutually agree to a different location.
	 
	E.	 	Confirmation. Either Party may apply to a court of competent jurisdiction for an
order confirming any award of the Panel; a judgment of that court shall thereupon be entered
on any award. If the application for confirmation is contested and a judgment is issued,
confirming the award, then the Party against whom confirmation is sought shall pay the
attorneys’ fees incurred by the Party who applied for the confirmation and all court costs of
any such proceeding.
	 
	F.	 	Equitable Relief from a Court of Law. Nothing herein shall be construed to prevent
any participating Party from applying to a court of competent jurisdiction to issue a
restraining order or other equitable relief to maintain the “status quo” of the Parties
participating in the arbitration pending the decision and award by the Panel.
	 
	G.	 	Consolidated Proceedings.






	 	1.	 	Same contract, single Subscribing Reinsurer. Both the Company and any single
Subscribing Reinsurer on this Contract have the right to combine any and all disputes
between them that concern this Contract (including any renewal of this Contract or any
contract for which this Contract is a renewal) into a single arbitration proceeding
before a single Panel, except that the standard for determining whether a Party may add
a new issue, claim, or dispute to an arbitration proceeding shall be the standard for
amending a Position statement, as set forth in Paragraph B7 of this Article.
	 
	 	2.	 	Multiple contracts, single Subscribing Reinsurer.






	 	a.	 	Either the Company or any single Subscribing Reinsurer has the
right to combine any and all disputes between the Company and such single
Subscribing Reinsurer into one arbitration proceeding before a single Panel
where such disputes involve this Contract and any additional contracts between
the two Parties.
	 
	 	b.	 	Notwithstanding the foregoing, subject in each instance to the
mutual agreement of the Parties, new issues, claims, or disputes may be added
to such existing arbitration proceeding.






	 	3.	 	Same contract, multiple Reinsurers. At the Company’s option, if more than one
Subscribing Reinsurer is involved in arbitration relating to this Contract, where
there are common questions of law or fact and a possibility of conflicting awards or
inconsistent results, all such Reinsurers shall constitute and act as one Party for
purposes of this Article and communications shall be made by the Company to each of the
Reinsurers constituting the one Party; provided, however, that the Reinsurers shall
have the right to assert several, rather than joint defenses or claims, and to be
represented by separate counsel. This provision shall not change the liability of each
of the Reinsurers under the terms of this Contract from several to joint.






	H.	 	Choice of Law. The law set forth in the Governing Law Article shall apply to this
Arbitration Article. In addition, to the extent the Panel (or the umpire in an Alternative





					
	 
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	 	 	Streamlined Procedure) looks to applicable law, such Panel or umpire shall apply the law as
set forth in the Governing Law Article of this Contract.
	 
	I.	 	Survival of Article. This Article shall survive the termination or expiration of
this Contract.





Article 20 — Insolvency (LM-01300-2008.07.25-A)



(If more than one reinsured company is referenced within the definition of “Company” in the
Preamble to this Contract, this Article shall apply severally to each such company. Further, this
Article and the laws of the domiciliary state shall apply in the event of the insolvency of any
company intended to be covered hereunder. In the event of a conflict between any provision of this
Article and the laws of the domiciliary state of any company intended to be covered hereunder, that
domiciliary state’s laws shall prevail.)





	A.	 	In the event of the insolvency of the Company, reinsurance under this Contract shall be
payable, with reasonable provision for verification, on the basis of claims allowed against
the insolvent Company by any court of competent jurisdiction or by any liquidator, receiver,
conservator, or statutory successor of the Company having authority to allow such claims,
without diminution because of such insolvency or because such liquidator, receiver,
conservator, or statutory successor has failed to pay all or a portion of any claims. Such
payments by the Subscribing Reinsurer shall be made directly to the Company or its liquidator,
receiver, conservator, or statutory successor, except to the extent Section 4118(a) of the New
York Insurance Law applies, or except (1) where the Contract specifically provides another
payee of such reinsurance in the event of the insolvency of the Company, or (2) where the
Subscribing Reinsurer with the consent of the direct insured or insureds has assumed such
Policy obligations of the Company as direct obligations of the Subscribing Reinsurer to the
payees under such Policies and in substitution for the obligations of the Company to such
payees.
	 
	B.	 	It is agreed, however, that the liquidator, receiver, conservator, or statutory successor of
the insolvent Company shall give written notice to the Subscribing Reinsurer of the pendency
of a claim against the insolvent Company on the Policy or Policies reinsured within a
reasonable time after such claim is filed in the insolvency proceeding and that during the
pendency of such claim the Subscribing Reinsurer may investigate such claim and interpose, at
its own expense, in the proceeding where such claim is to be adjudicated, any defense or
defenses which it may deem available to the Company or its liquidator, receiver, conservator,
or statutory successor. The expense thus incurred by the Subscribing Reinsurer shall be
chargeable, subject to court approval, against the insolvent Company as part of the expense of
liquidation to the extent of a proportionate share of the benefit, which may accrue to the
Company solely as a result of the defense undertaken by the Subscribing Reinsurer.
	 
	C.	 	Where two or more Reinsurers are involved in the same claim and a majority in interest elects
to interpose defense to such claim, the expense shall be apportioned in accordance with the
terms of this Contract as though such expense had been incurred by the insolvent Company.





					
	 
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Article 21 — Dividends and Taxes (LM-00600-2008.10.10-A)



In consideration of the terms of this Contract, the Company shall not claim any deduction in
respect of any amount paid as dividends or as reinsurance premium when making tax returns, other
than income or profits tax returns, to any State or to the District of Columbia.




Article 22 — Federal Excise Tax (LM-01000-2008.08.15-A)





	A.	 	This Article is applicable to any Subscribing Reinsurer who is domiciled outside of the
United States of America, except for any Subscribing Reinsurer exempt from Federal Excise Tax.
A Subscribing Reinsurer that claims exempt status from Federal Excise Tax shall provide to
the Company, upon its request, proof that the exempt status adequately satisfies the demands
of the U.S. Internal Revenue Service, Department of the Treasury, or its successor and/or
other applicable U.S. government authority.
	 
	B.	 	Each Subscribing Reinsurer shall allow the applicable percentage of the premium payable
hereon (as imposed under Section 4371 of the Internal Revenue Code) for the purpose of paying
Federal Excise Tax to the extent such premium is subject to such tax.
	 
	C.	 	In the event of any return of premium, the Subscribing Reinsurer shall deduct the aforesaid
percentage from the return premium payable hereon and the Company or its agent shall recover
such tax from the United States Government.





Article 23 — Service of Suit (LM-01900-2008.07.17-A)



(This article applies to unauthorized Reinsurers and to Reinsurers who are domiciled outside
the United States of America.)





	A.	 	This Service of Suit Article will not be read to conflict with or override the obligations of
the parties to arbitrate their disputes as provided for in the Arbitration Article. This
Article is intended as an aid to compelling arbitration or enforcing such arbitration or
arbitral award, not as an alternative to the Arbitration Article for resolving disputes
arising out of this Contract.
	 
	B.	 	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, will 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
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 Reinsurers, once the appropriate Court is selected, whether such
court is the one originally chosen by the Company and accepted by the Subscribing Reinsurers
or is determined by removal, transfer, or otherwise, as provided for above, will comply with
all requirements necessary to give said Court jurisdiction and, in any suit instituted against
any of them upon this Contract, will abide by the final decision of such Court or of any
Appellate Court in the event of an appeal.
	 
	C.	 	Service of process in such suit may be made upon Mendes & Mount, LLP, 750 Seventh Avenue, New
York, NY 10019-6829.





					
	 
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	D.	 	The above-named are authorized and directed to accept service of process on behalf of the
Subscribing Reinsurer in any such suit. Further, pursuant to any statute of any state,
territory, or district of the United States that makes provision therefore, the Subscribing
Reinsurer hereby designates the Superintendent, Commissioner, or Director of Insurance, or
other officer specified for that purpose in the statute, or their successor(s) in office, as
their 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 designate the above-named as the person to whom the said
officer is authorized to mail such process or a true copy thereof.





Article 24 — Offset (LM-01700-2005.06.02-A)



Each Party to this Contract together with their successors or assigns shall have and may
exercise, at any time, the right to offset any balance(s) due the other (or, if more than one, any
other). Such offset may include balances due under this Contract, and any other contracts between
the Parties, whether such balances arises from premium, losses, or otherwise, and regardless of the
capacity of any Party, whether as assuming and/or ceding insurer, under the various reinsurance
contracts involved, provided however, that in the event of insolvency of a Party hereto, offsets
shall only be allowed in accordance with the provisions of the applicable law, statute, or
regulation governing such offset.




Article 25 — Governing Law (LM-01200-2008.09.18-A)



The validity and interpretation of this Contract shall be governed by and construed in
accordance with the law of the Commonwealth of Massachusetts, without regard to conflicts of law
principles.




Article 26 — Confidentiality (LM-00400-2008.08.15-A)





	A.	 	Confidential Information. The submission materials, and any Policy, financial,
underwriting, accounting, and claims information, data statements, representations, and other
materials provided by the Company or its affiliates and received by the Subscribing Reinsurer
in the course of an audit, inspection, or otherwise, represent confidential or proprietary
information (“Confidential Information”). This Confidential Information is intended for the
sole use of the Subscribing Reinsurer (and its retrocessionaires, respective auditors,
accountants, and legal counsel) as may be necessary in analyzing and/or accepting a
participation in and/ or executing its responsibilities under or related to this Contract.
The Subscribing Reinsurer acknowledges and agrees that with respect to any review of
Confidential Information by the Subscribing Reinsurer, and/or discussion of Confidential
Information, the Company and its affiliates do not waive and do not intend to waive any
available privilege or protection. The review of Confidential Information by the Subscribing
Reinsurer and/or discussion of Confidential Information with the Company or its affiliates
shall not destroy, waive, or otherwise impair the proprietary and/or protected status of any
Confidential Information or any information revealed in such discussion with the personnel of
the Company or its affiliates, whether reviewed by and/or discussed with the Subscribing
Reinsurer intentionally or inadvertently, nor does the review of the Confidential Information
and/or discussion of
Confidential Information with the Company or its affiliates constitute an estoppel or





					
	 
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	 	 	waiver of the Company’s or its affiliates’ rights to assert the attorney-client or work-product
privileges, or any other applicable privilege or protection over certain documents contained
in the Company’s or its affiliates’ files and/or certain information.
	 
	B.	 	The Company and the Subscribing Reinsurer agree that no confidentiality obligations will
apply to Confidential Information to the extent such Confidential Information: (1) is or
becomes available to the public, other than as a result of impermissible disclosure by the
Subscribing Reinsurer, (2) was or became available lawfully to the Subscribing Reinsurer from
a source, other than the Company, its affiliates or their personnel, that is not subject to a
confidentiality obligation, (3) was developed independently by the Subscribing Reinsurer prior
to disclosure by the Company, its affiliates, or their personnel, as demonstrated by the
Subscribing Reinsurer’s records, or (4) is required to be disclosed by law, regulation, court,
or regulatory agency action, subject to the Third-Party Demand paragraph of this article.
	 
	C.	 	The Subscribing Reinsurer agrees to preserve all confidentiality and privilege pertaining to
all Confidential Information provided by the Company and all knowledge and information gained
through its review of Confidential Information or discussions with the personnel of the
Company or its affiliates. The Subscribing Reinsurer further agrees not to disclose any such
Confidential Information to any other person or entity, except as such disclosure may be
necessary to its retrocessionaires, accountants, attorneys, auditors, actuaries or third party
catastrophe modelers or as otherwise required by law. The Subscribing Reinsurer agrees that
no Confidential Information is to be copied and/or removed from the Company’s or its
affiliates’ premises without the express permission of the Company.
	 
	D.	 	Third-Party Demand. Should the Subscribing Reinsurer receive a third-party demand
pursuant to subpoena, summons, or court or governmental order, to disclose Confidential
Information (including Non-Public Personally Identifiable Information) that has been provided
by the Company or its affiliates, the Subscribing Reinsurer shall make commercially reasonable
efforts to notify the Company promptly upon receipt of the demand and prior to disclosure of
the Confidential Information and provide the Company a reasonable opportunity to object to the
disclosure. If the Company timely objects to the release of the Confidential Information, the
Subscribing Reinsurer will comply with the reasonable requests of the Company in connection
with the Company’s efforts to resist release of the Confidential Information. The Company
shall bear the cost of resisting the release of the Confidential Information.
	 
	E.	 	Survival. The Parties agree that the obligations contained in this Article shall
survive the expiration or termination of this Contract.





Article 27 — Severability (LM-02000-2005.06.02-A)



If any provision of this Contract shall be rendered illegal or unenforceable by the laws,
regulations or public policy 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.




					
	 
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Article 28 — Reinsurer Claims Obligations (LM-03100-2008.07.21-A) (AM)



It is understood and agreed that the Subscribing Reinsurer will fulfill its obligations under
the Loss Adjustment and Settlement Article, until all claims have been reported and settled.
Without first obtaining the Company’s written consent, the Subscribing Reinsurer will not, either
directly or as the result of an action of a parent company or an affiliated entity, invoke any U.S.
or foreign statute, legislation, or jurisprudence that purports to enable the Subscribing
Reinsurer to require the Company or a Legal Entity to settle their claims liabilities, including
but not limited to any estimated or undetermined claims liabilities, under this Contract on an
accelerated basis. If the Subscribing Reinsurer has provided collateral relating to this Contract
and the Subscribing Reinsurer attempts to require the Company or a Legal Entity to settle their
claims liabilities on an accelerated basis, the Company shall have the right to utilize or to draw
upon Letters of Credit or other collateral, under the terms of this Contract, or as otherwise
agreed between the Subscribing Reinsurer and the Company. This Article does not prevent the
Company and the Subscribing Reinsurer from settling any claims liabilities using a commutation
process that is agreeable to both Parties. This Article shall in no way affect the rights and
obligations of the Company and the Subscribing Reinsurer under the Insolvency Article.




Article 29 — Special Conditions (LM-02100-2008.11.04-A) (AM)





	A.	 	This Article applies only in the event that:






	 	1.	 	A State Insurance Department or other legal authority orders the Subscribing
Reinsurer to cease writing business or has imposed upon it any other restrictions on or
conditions relating to the Subscribing Reinsurer’s license or conduct of business in
any jurisdiction; or
	 
	 	2.	 	The Subscribing Reinsurer has become insolvent or has been placed into
liquidation or receivership (whether voluntary or involuntary), or there have 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 Subscribing Reinsurer’s policyholders’ surplus or equity has been reduced
by 25% or more from the amount on the effective date of this Contract, or has been
reduced by 25% or more in any period of twelve (12) months or less after the effective
date of this Contract; or
	 
	 	4.	 	As respects Subscribing Reinsurers domiciled outside the United States other
than Lloyd’s syndicates, such Subscribing Reinsurer’s Shareholder Funds, Net Worth or
Capital & Surplus has been reduced by 25% or more from the amount on the effective date
of this Contract, or has been reduced by 25% or more in any period of twelve (12)
months or less after the effective date of this Contract; or
	 
	 	5.	 	As respects Subscribing Reinsurers who are Lloyd’s syndicates, such
Subscribing Reinsurer’s Stamp Capacity or Funds at Lloyd’s has been reduced by 25% or
more from the amount on the effective date of this Contract or has been reduced by 25%
or more in any period of twelve (12) months or less after the effective date of this
Contract; or
	 
	 	6.	 	The Subscribing Reinsurer has entered into a definitive agreement to become
merged with, acquired, or controlled by any company, corporation, or










					
	 
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	 	 	 	individual(s) not controlling the Subscribing Reinsurer’s operations at the inception of this Contract;
or
	 
	 	7.	 	The Subscribing Reinsurer’s A.M. Best’s financial strength rating has been
assigned or downgraded below A- or Standard and Poor’s financial strength rating has
been assigned or downgraded below A-; or
	 
	 	8.	 	As respects Subscribing Reinsurers who are subject to an Authorized Control
Level Risk-Based Capital Requirement, the Subscribing Reinsurer fails to maintain its
surplus at a level of at least 200% of the Subscribing Reinsurer’s Authorized Control
Level Risk-Based Capital; or
	 
	 	9.	 	The Subscribing Reinsurer announces intentions to cease underwriting
operations; or
	 
	 	10.	 	The Subscribing Reinsurer voluntarily ceases underwriting operations; or
	 
	 	11.	 	The Subscribing Reinsurer has reinsured its entire liability under this Contract; or
	 
	 	12.	 	The Subscribing Reinsurer, directly or through the actions of a parent company
or an affiliated entity, has or has attempted to assign, novate or transfer the
Subscribing Reinsurer’s rights and/or obligations under this Contract, including any
attempted transfer of rights and/or obligations under any U.S. or foreign statute,
legislation or jurisprudence, without the Company’s prior written consent; or
	 
	 	13.	 	The Subscribing Reinsurer, directly or through the actions of a parent company
or an affiliated entity, has invoked any U.S. or foreign statute, legislation or
jurisprudence which purports to enable the Subscribing Reinsurer to require the Company
to settle its claims liabilities, including but not limited to any estimated or
undetermined claims liabilities under this Contract, on an accelerated basis. This
does not include any attempt to enforce a settlement of claims liabilities under a
commutation process to which the parties have agreed.






	B.	 	If one or more of the circumstances in Paragraph A (1) through (13) occur (a “Trigger
Event”), the Subscribing Reinsurer shall provide the Company with written notice within five
(5) business days from the happening of a Trigger Event. Following its receipt of notice of a
Trigger Event from the Subscribing Reinsurer, the Company may terminate this Contract, upon
thirty (30) days written notice to the Subscribing Reinsurer.
	 
	C.	 	Irrespective of the Subscribing Reinsurer’s failure to provide the Company with timely
written notice of the happening of a Trigger Event, upon occurrence of a Trigger Event, the
Company may terminate this Contract at any time, upon thirty (30) days written notice to the
Subscribing Reinsurer. No failure or delay by the Company in exercising its option under this
section will operate as a waiver thereof.
	 
	D.	 	Termination under this Article can be made after the date of expiration of this Contract.
	 
	E.	 	If this Contract is terminated under this Article, this Contract shall remain in full force
and effect as respects the Company’s and the Subscribing Reinsurer’s respective rights and
obligations, prior to the effective date and time of termination. The coverage afforded by
this Contract shall cease as of the date and time of termination and the Subscribing
Reinsurer shall return the unearned premium, if any, within fifteen (15) days of the
termination date. If coverage hereunder terminates while a claim covered
by this Contract is in progress, the Subscribing Reinsurer shall be liable,
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	 	 	conditions hereof, for its proportion of the entire claim,
provided the event giving rise to the claim started before such termination.






	F.	1.	 	If the Company elects to terminate this
Contract under this Article, the Company may
also elect to commute this Contract. Such
election to commute shall be made either
within the written thirty (30) day notice to
the Subscribing Reinsurer of the Company’s
intention to terminate this Contract, or by
written notice thereafter. If the Company
elects to commute, the Subscribing Reinsurer
has the option to provide security for its
Obligations (as defined herein), as an
alternative to commutation. The Subscribing
Reinsurer shall notify the Company of its
decision to provide security for its
Obligations under this Contract within
fifteen (15) business days of the receipt of
written notice of the Company’s election to
commute. If the Subscribing Reinsurer
elects to provide security for its
Obligations, the Company shall provide the
Subscribing Reinsurer with a written
statement of the Subscribing Reinsurer’s
share of all paid recoverables, case
reserves, loss adjustment expenses, incurred
but not reported losses, reserves for
unearned premium, and ceding commissions due
under this Contract prior to the effective
date and time of termination (collectively
“Obligations”). Within fifteen (15) days of
the Subscribing Reinsurer’s receipt of such
statement, the Subscribing Reinsurer shall
fund all Obligations by securing clean,
irrevocable, and unconditional Letters of
Credit, payable exclusively to the Company
and issued by a bank acceptable to the
Company. At the Company’s request, the
Subscribing Reinsurer shall agree to provide
separate Letters of Credit for each Legal
Entity. Any Letters of Credit provided by
the Subscribing Reinsurer under the
Unauthorized Reinsurance Article of this
Contract also constitutes funding under this
Article.






	 	2.	 	Any Letters of Credit secured by the Subscribing Reinsurer shall be issued for
a period of not less than one year, and shall be automatically extended for one year
from their dates of expiration or any future expiration dates, unless sixty (60) days
prior to any expiration date the issuing bank shall notify the Company or a Legal
Entity, as applicable, by certified mail that the issuing bank elects not to extend any
Letter of Credit for any additional period.
	 
	 	3.	 	The Subscribing Reinsurer and the Company agree that the Letters of Credit
provided by the Subscribing Reinsurer, pursuant to the provisions of this Article,
may be drawn upon at any time, notwithstanding any other provision of this Contract,
and be utilized by the Company, a Legal Entity or any successor, by operation of law,
of the Company or a Legal Entity, including without limitation, any liquidator,
rehabilitator, receiver, or conservator of the Company or a Legal Entity, without
diminution because of the insolvency of the Company or a Legal Entity, or the
Subscribing Reinsurer for one or more of the following purposes:






	 	a.	 	To pay or reimburse the Company or a Legal Entity for:






	 	i.	 	The Subscribing Reinsurer’s share under this
Contract of premiums returned, but not yet recovered from the
Subscribing Reinsurer, to the owners of Policies reinsured under this
Contract due to cancellations of such Policies; and
	 
	 	ii.	 	The Subscribing Reinsurer’s share, under this
Contract, of surrenders and benefits or liabilities paid by the
Company or a Legal Entity, but not yet recovered from the Subscribing
Reinsurer, under the terms and provisions of the Policies reinsured
under this Contract; and









					
	 
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	 	iii.	 	Any other amounts necessary to secure the
credit or reduction from liability for reinsurance taken by the
Company or a Legal Entity.






	 	b.	 	Where the Letters of Credit will expire without renewal or be
reduced or replaced by Letters of Credit for a reduced amount and where the
Subscribing Reinsurer’s Obligations under this Contract remain unliquidated
and undischarged ten (10) days prior to the expiration of the Letter of
Credit, to withdraw amounts equal to the Subscribing Reinsurer’s Obligations,
to the extent that the liabilities have not yet been funded by the
Subscribing Reinsurer and exceed the amount of any reduced or replacement
Letters of Credit.
	 
	 	c.	 	If the Company has concluded that the issuing bank’s
financial condition is such that the value of the security represented by the
Letter of Credit may be in jeopardy, the Company or a Legal Entity, as
applicable, may withdraw amounts equal to the Subscribing Reinsurer’s
Obligations.
	 
	 	d.	 	If the Company or a Legal Entity draws on the Letter of
Credit to obtain a cash advance, under paragraphs F.3.b or F.3.c, the Company
or the Legal Entity, as applicable, will hold the amount of the cash advance
so obtained in trust in the name of the Company in any qualified United
States financial institution as defined by the Insurance Law of the Company’s
or Legal Entity’s domiciliary state, solely to secure the Obligations and for
the use and purposes enumerated above. The Company or the Legal Entity, as
applicable, will return any balance to the Subscribing Reinsurer upon the
complete and final liquidation and discharge of all of the Subscribing
Reinsurer’s Obligations to the Company under this Contract or in the event
the Subscribing Reinsurer provides alternative or replacement security
consistent with the terms hereof and acceptable to the Company.






	G.	 	If the Company elects to commute this Contract and the Subscribing Reinsurer does not fund
its Obligations under this Contract, then:






	 	1.	 	The Company shall submit a statement of valuation showing the Subscribing
Reinsurer’s liabilities for loss(es), whether reported or unreported, comprising the
sum total of the present value of the ceded: (a) case reserves and allocated loss
adjustment expense, (b) projected ultimate losses, (c) any unearned premium reserve,
and (d) undiscounted outstanding paid claims (hereinafter the “Commutation Losses”),
on Policies covered by this Contract as of the effective date and time of
termination. If the Subscribing Reinsurer agrees with the statement of valuation,
the Subscribing Reinsurer shall pay the amount requested within ten (10) days of
receipt of the statement of valuation.
	 
	 	2.	 	In the event the Company and the Subscribing Reinsurer cannot agree on the
statement of valuation of the Subscribing Reinsurer’s liability under such Policies,
either party may request in writing that the differences be settled by a panel of
three actuaries. Each party shall appoint an actuary to assess such liability within
fifteen (15) days after receipt of the written request for commutation. Upon such
appointment, the two actuaries shall appoint a third actuary. If the two actuaries
fail to agree on the third actuary within thirty (30) days of their appointment, each
of them shall nominate three individuals, of whom the other shall decline two, and
the final decision shall be made by drawing lots.








					
	 
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	 	3.	 	The actuaries shall then investigate and Capitalize such Commutation Loss(es)
within thirty (30) days. As used herein, “Capitalize” shall mean to determine the
present value of Commutation Losses, without regard to the Subscribing Reinsurer’s
ability to pay such losses. The panel shall meet in Boston, Massachusetts, unless
the Company and the Subscribing Reinsurer agree otherwise.






	 	a.	 	All actuaries shall be disinterested in the outcome of the
commutation and shall be Fellows of the Society of Actuaries/Fellows of the
Casualty Actuarial Society. Except as stated below, the expense of the
actuaries and of the commutation shall be equally divided between the parties
of the commutation.
	 
	 	b.	 	The decision in writing of the actuaries, when filed with the
parties hereto, shall be final and binding, except that if the Company does
not agree with the Capitalized value of the Commutation Loss(es), the Company
shall have no obligation to commute. In the event the Company does not agree
with the Capitalized value of the Commutation Loss(es) and does not move
forward with commutation, the Company will pay the expense of the actuaries
including reasonable expense of the actuary appointed by the Subscribing
Reinsurer.
	 
	 	c.	 	If the Contract is commuted, payment by the Subscribing
Reinsurer to the Company or any other third party mutually agreed upon by the
Subscribing Reinsurer and the Company shall constitute a complete and final
release of the Subscribing Reinsurer in respect to its liability under this
Contract.






	 	4.	 	The commutation process described in this Article shall not be subject to any
other dispute resolution process, including but not limited to the Arbitration Article
of this Contract.





Article 30 — Agency Agreement (LM-02800-2006.04.12A) (AM)



If more than one reinsured company is named as a Party to this Contract, Peerless Insurance
Company shall 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 31 — Entire Agreement (LM-00701-2008.08.15-A)



This Contract shall constitute the entire agreement between the Company and the Subscribing
Reinsurer with respect to the subject matter of this Contract and shall supersede all prior
understandings, negotiations and discussions, whether oral or written, by or between the Company
and the Subscribing Reinsurer relating to the subject matter hereof. There are no general or
specific warranties, representations or other agreements by or among the Company and the
Subscribing Reinsurer in connection with entering into this Contract except as specially set forth
in this Contract. Notwithstanding the foregoing, this Contract may be amended or modified only by
a writing signed by both the Company and the Subscribing Reinsurer






					
	 
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Article 32 — Assignment, Novation, or Transfer (LM-00300-2008.05.13-A)



This Contract shall be binding upon and inure to the benefit of the Company and the
Subscribing Reinsurer and their respective successors and assigns; provided, however, that this
Contract may not be assigned, novated or transferred, including any attempted transfer of
rights and/or obligations under any U.S. or foreign statute, legislation or jurisprudence, by
either the Company or the Subscribing Reinsurer, or as the result of the action(s) of a parent
company or an affiliated entity of either, without the prior written consent of the other. In
the event of any assignment, novation or transfer, the assignor, novator or transferor shall
remain liable under this Contract, and further guarantees the performance of all obligations of
any assignee, novatee or transferee under this Contract. Notwithstanding the foregoing, the
Company may assign this Contract to an insurance entity controlling, controlled by or under
common control with the Company, without the Subscribing Reinsurer’s written consent.




Article 33 — Third Parties (LM-02700-2005.09.27-A)



This Contract shall not be deemed to give any right or remedy to any third party whatsoever
unless said right or remedy is specifically granted to such third party by the terms of this
Contract.




Article 34 — Federal Terrorism Excess Recovery (LM-01100-2008.08.06-A)





	A.	 	Any loss reimbursement the Company receives from the United States Government under the
Terrorism Risk Insurance Act of 2002, as amended by the Terrorism Risk Insurance Extension Act
of 2005 and as further amended by the Terrorism Risk Insurance Program Reauthorization Act of
2007 (“TRIA”) as a result of Loss Occurrence(s) commencing during the term of this Contract
shall apply as follows:
	 
	B.	 	Except as provided below, any loss reimbursement under TRIA shall inure solely to the benefit
of the Company and shall be entirely disregarded in applying all of the provisions of this
Contract.
	 
	C.	 	If one or more Loss Occurrence(s) commencing during the term of this Contract result(s) in
reinsurance recoveries to the Company under this Contract and reimbursement under TRIA, and
such amounts, together with any other reinsurance recoveries to the Company for said Loss
Occurrence(s), exceed the total amount of “Insured Losses” to the Company, any amount in
excess thereof shall be held by the Company. The Company shall then reimburse the Subscribing
Reinsurer a portion of such excess recovery in an amount equal to the proportion that the
Subscribing Reinsurer’s payment under this Contract bears to the total treaty reinsurance
recoveries to the Company for Insured Losses for said Loss Occurrence(s). Provided, however,
that in no event shall such reimbursement exceed the amount paid by the Subscribing Reinsurer
to the Company under this Contract.
	 
	D.	 	For purposes hereof, if a loss reimbursement received by the Company under TRIA is based on
the Company’s Insured Losses in more than one Loss Occurrence and neither the Secretary of the
Treasury nor his delegatee specifies the amount of loss allocable to each respective Loss
Occurrence, the reimbursement shall be pro-rated in the proportion that the Company’s Insured
Losses in each Loss Occurrence bears to the








					
	 
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$825m x $500m















 












	 	 	Company’s total Insured Losses resulting from all Loss Occurrences to which the
reimbursement applies.
	 
	E.	 	For purposes of this Article, “Insured Loss (es)” shall have the same meaning as set forth in
Section 102(5) of TRIA.









					
	 
	Effective: January 1, 2009
	 	Page 27 of 54
	 	2009 Property Catastrophe
Excess of Loss Contract —
$825m x $500m
















 











Exhibit A




First Property Catastrophe Excess of Loss



SECTION 1— LIMIT AND RETENTION





	A.	 	No claim shall be made in any one Loss Occurrence unless at least two risks insured or
reinsured by the Company are involved in such loss occurrence. For purposes hereof, the
Company shall be the sole judge of what constitutes one risk.
	 
	B.	 	The Subscribing Reinsurer shall be liable in each and every Loss Occurrence, for the Ultimate
Net Loss above an initial net loss to the Company of $500,000,000 provided, however, that the
Subscribing Reinsurer shall not be liable for more than $100,000,000 of each and every such
Loss Occurrence.





SECTION 2 — PREMIUM





	 	 	The Company shall pay to the Subscribing Reinsurer a premium calculated by applying to
the Subject Earned Premium income of the Company and the Legal
Entities, a rate of 0.3033%
for business identified as belonging to the Agency Markets strategic business unit as
defined in Article I — Business Covered.





SECTION 3 — REPORTS AND REMITTANCE





	A.	 	The Company shall pay to the Subscribing Reinsurer a minimum
and deposit premium of $10,500,00
remitted in semi-annual installments of $5,250,000 on January 1 and July 1, 2009. In
the event this Contract is terminated prior to January 1, 2010, the minimum premium shall be
prorated and no deposit premium installments shall be due after the effective date of
termination.
	 
	B.	 	As soon as practical after the termination or expiration of this Contract, the Company shall
render to the Subscribing Reinsurer a statement of the premium due as provided in Section 2 -
PREMIUM and if such developed premium is greater than the minimum and deposit premium
stipulated herein the additional premium shall be paid to the Subscribing Reinsurer forthwith.
	 
	C.	 	The term Subject Earned premium shall mean the premiums earned by the Company or the Legal
Entities, on classes of property business covered under this Contract, times the rates below.
No deduction shall be made for dividends declared, paid or credited to policyholders of the
Company or the Legal Entities.





	 	 	 	 	 
	ASLOB	 	Percentage
	Fire
	 	 	100	%
	Allied Lines
	 	 	100	%
	Homeowners
	 	 	60	%
	Farmowners
	 	 	60	%
	Commercial Multiple Peril

(Property)
	 	 	100	%






					
	 
	Effective: January 1, 2009
	 	Page 28 of 54
	 	2009 Property Catastrophe
Excess of Loss Contract —
$825m x $500m
















 






	 	 	 	 	 
	ASLOB	 	Percentage
	Inland Marine
	 	 	100	%
	Earthquake
	 	 	100	%
	Auto Physical Damage

(Private Passenger and
Commercial)
	 	 	25	%
	Burglary & Theft
	 	 	100	%
	Estimated Subject Earned Premium:
	 	$	3,115,974,059	 






SECTION 4 — REINSTATEMENT





	A.	 	It is hereby understood and agreed that each claim hereon reduces the amount of indemnity
from the time of the Loss Occurrence by the sum paid, but any amount so exhausted is hereby
automatically reinstated from the time of the Loss Occurrence.
	 
	B.	 	One reinstatement will be provided at an additional premium calculated at 100% of the
developed premium hereon, but pro rata as to the fraction of the face value of this Contract
(i.e., the fraction of $100,000,000) reinstated. Such reinstatement premium shall be payable
simultaneously with each loss settlement.
	 
	C.	 	Nevertheless, the liability of the Subscribing Reinsurer hereunder shall never exceed
$100,000,000 in respect of any one Loss Occurrence nor $200,000,000 in all during the period
of this Contract.
	 
	D.	 	If at the time of a loss settlement hereon the developed premium is unknown, the above
calculation of reinstatement premium shall be based upon the deposit premium, subject to
adjustment when the developed premium is finally established.








					
	 
	Effective: January 1, 2009
	 	Page 29 of 54
	 	2009 Property Catastrophe
Excess of Loss Contract —
$825m x $500m
















 











Exhibit B




Second Property Catastrophe Excess of Loss



SECTION 1— LIMIT AND RETENTION





	A.	 	No claim shall be made in any one Loss Occurrence unless at least two risks insured or
reinsured by the Company are involved in such loss occurrence. For purposes hereof, the
Company shall be the sole judge of what constitutes one risk.
	 
	B.	 	The Subscribing Reinsurer shall be liable in each and every Loss Occurrence, for the Ultimate
Net Loss above an initial net loss to the Company of $600,000,000 provided, however, that the
Subscribing Reinsurer shall not be liable for more than $100,000,000 of each and every such
Loss Occurrence.





SECTION 2 — PREMIUM





	 	 	The Company shall pay to the Subscribing Reinsurer a premium calculated by applying to
the Subject Earned Premium income of the Company and the Legal
Entities, a rate of 0.2527%
for business identified as belonging to the Agency Markets strategic business unit as
defined in Article I — Business Covered.





SECTION 3 — REPORTS AND REMITTANCE





	A.	 	The Company shall pay to the Subscribing Reinsurer a minimum
and deposit premium of $8,750,000
remitted in semi-annual installments of $4,375,000 on January 1 and July 1, 2009.
In the event this Contract is terminated prior to January 1, 2010, the minimum premium shall
be prorated and no deposit premium installments shall be due after the effective date of
termination.
	 
	B.	 	As soon as practical after the termination or expiration of this Contract, the Company shall
render to the Subscribing Reinsurer a statement of the premium due as provided in Section 2 -
PREMIUM and if such developed premium is greater than the minimum and deposit premium
stipulated herein the additional premium shall be paid to the Subscribing Reinsurer forthwith.
	 
	C.	 	The term Subject Earned premium shall mean the premiums earned by the Company or the Legal
Entities, on classes of property business covered under this Contract, times the rates below.
No deduction shall be made for dividends declared, paid or credited to policyholders of the
Company or the Legal Entities.





	 	 	 	 	 
	ASLOB	 	Percentage
	Fire
	 	 	100	%
	Allied Lines
	 	 	100	%
	Homeowners
	 	 	60	%
	Farmowners
	 	 	60	%
	Commercial Multiple Peril

(Property)
	 	 	100	%
	Inland Marine
	 	 	100	%
	Earthquake
	 	 	100	%







					
	 
	Effective: January 1, 2009
	 	Page 30 of 54
	 	2009 Property Catastrophe
Excess of Loss Contract —
$825m x $500m















 






	 	 	 	 	 
	ASLOB	 	Percentage
	Auto Physical Damage

(Private Passenger and
Commercial)
	 	 	25	%
	Burglary & Theft
	 	 	100	%
	Estimated Subject Earned Premium:
	 	$	3,115,974,059	 






SECTION 4 — REINSTATEMENT





	A.	 	It is hereby understood and agreed that each claim hereon reduces the amount of indemnity
from the time of the Loss Occurrence by the sum paid, but any amount so exhausted is hereby
automatically reinstated from the time of the Loss Occurrence.
	 
	B.	 	One reinstatement will be provided at an additional premium calculated at 100% of the
developed premium hereon, but pro rata as to the fraction of the face value of this Contract
(i.e., the fraction of $100,000,000) reinstated. Such reinstatement premium shall be payable
simultaneously with each loss settlement.
	 
	C.	 	Nevertheless, the liability of the Subscribing Reinsurer hereunder shall never exceed
$100,000,000 in respect of any one Loss Occurrence nor $200,000,000 in all during the period
of this Contract.
	 
	D.	 	If at the time of a loss settlement hereon the developed premium is unknown, the above
calculation of reinstatement premium shall be based upon the deposit premium, subject to
adjustment when the developed premium is finally established.








					
	 
	Effective: January 1, 2009
	 	Page 31 of 54
	 	2009 Property Catastrophe
Excess of Loss Contract —
$825m x $500m















 











Exhibit C




Third Property Catastrophe Excess of Loss



SECTION 1— LIMIT AND RETENTION





	A.	 	No claim shall be made in any one Loss Occurrence unless at least two risks insured or
reinsured by the Company are involved in such loss occurrence. For purposes hereof, the
Company shall be the sole judge of what constitutes one risk.
	 
	B.	 	The Subscribing Reinsurer shall be liable in each and every Loss Occurrence, for the Ultimate
Net Loss above an initial net loss to the Company of $700,000,000 provided, however, that the
Subscribing Reinsurer shall not be liable for more than $100,000,000 of each and every such
Loss Occurrence.





SECTION 2 — PREMIUM





	 	 	The Company shall pay to the Subscribing Reinsurer a premium calculated by applying to
the Subject Earned Premium income of the Company and the Legal
Entities, a rate of 0.2311%
for business identified as belonging to the Agency Markets strategic business unit as
defined in Article I — Business Covered.





SECTION 3 — REPORTS AND REMITTANCE





	A.	 	The Company shall pay to the Subscribing Reinsurer a minimum
and deposit premium of $8,000,000
remitted in semi-annual installments of $4,000,000 on January 1 and July 1, 2009. In
the event this Contract is terminated prior to January 1, 2010, the minimum premium shall be
prorated and no deposit premium installments shall be due after the effective date of
termination.
	 
	B.	 	As soon as practical after the termination or expiration of this Contract, the Company shall
render to the Subscribing Reinsurer a statement of the premium due as provided in Section 2 -
PREMIUM and if such developed premium is greater than the minimum and deposit premium
stipulated herein the additional premium shall be paid to the Subscribing Reinsurer forthwith.
	 
	C.	 	The term Subject Earned premium shall mean the premiums earned by the Company or the Legal
Entities, on classes of property business covered under this Contract, times the rates below.
No deduction shall be made for dividends declared, paid or credited to policyholders of the
Company or the Legal Entities.





	 	 	 	 	 
	ASLOB	 	Percentage
	Fire
	 	 	100	%
	Allied Lines
	 	 	100	%
	Homeowners
	 	 	60	%
	Farmowners
	 	 	60	%
	Commercial Multiple Peril

(Property)
	 	 	100	%
	Inland Marine
	 	 	100	%
	Earthquake
	 	 	100	%







					
	 
	Effective: January 1, 2009
	 	Page 32 of 54
	 	2009 Property Catastrophe
Excess of Loss Contract —
$825m x $500m















 






	 	 	 	 	 
	ASLOB	 	Percentage
	Auto Physical Damage

(Private Passenger and
Commercial)
	 	 	25	%
	Burglary & Theft
	 	 	100	%
	Estimated Subject Earned Premium:
	 	$	3,115,974,059	 






SECTION 4 — REINSTATEMENT





	A.	 	It is hereby understood and agreed that each claim hereon reduces the amount of indemnity
from the time of the Loss Occurrence by the sum paid, but any amount so exhausted is hereby
automatically reinstated from the time of the Loss Occurrence.
	 
	B.	 	One reinstatement will be provided at an additional premium calculated at 100% of the
developed premium hereon, but pro rata as to the fraction of the face value of this Contract
(i.e., the fraction of $100,000,000) reinstated. Such reinstatement premium shall be payable
simultaneously with each loss settlement.
	 
	C.	 	Nevertheless, the liability of the Subscribing Reinsurer hereunder shall never exceed
$100,000,000 in respect of any one Loss Occurrence nor $200,000,000 in all during the period
of this Contract.
	 
	D.	 	If at the time of a loss settlement hereon the developed premium is unknown, the above
calculation of reinstatement premium shall be based upon the deposit premium, subject to
adjustment when the developed premium is finally established.







					
	 
	Effective: January 1, 2009
	 	Page 33 of 54
	 	2009 Property Catastrophe
Excess of Loss Contract —
$825m x $500m















 











Exhibit D




Fourth Property Catastrophe Excess of Loss



SECTION 1— LIMIT AND RETENTION





	A.	 	No claim shall be made in any one Loss Occurrence unless at least two risks insured or
reinsured by the Company are involved in such loss occurrence. For purposes hereof, the
Company shall be the sole judge of what constitutes one risk.
	 
	B.	 	The Subscribing Reinsurer shall be liable in each and every Loss Occurrence, for the Ultimate
Net Loss above an initial net loss to the Company of $800,000,000 provided, however, that the
Subscribing Reinsurer shall not be liable for more than $100,000,000 of each and every such
Loss Occurrence.





SECTION 2 — PREMIUM





	 	 	The Company shall pay to the Subscribing Reinsurer a premium calculated by applying to
the Subject Earned Premium income of the Company and the Legal
Entities, a rate of 0.2022%
for business identified as belonging to the Agency Markets strategic business unit as
defined in Article I — Business Covered.





SECTION 3 — REPORTS AND REMITTANCE





	A.	 	The Company shall pay to the Subscribing Reinsurer a minimum
and deposit premium of $7,000,000
remitted in semi-annual installments of $3,500,000 on January 1 and July 1, 2009. In
the event this Contract is terminated prior to January 1, 2010, the minimum premium shall be
prorated and no deposit premium installments shall be due after the effective date of
termination.
	 
	B.	 	As soon as practical after the termination or expiration of this Contract, the Company shall
render to the Subscribing Reinsurer a statement of the premium due as provided in Section 2 -
PREMIUM and if such developed premium is greater than the minimum and deposit premium
stipulated herein the additional premium shall be paid to the Subscribing Reinsurer forthwith.
	 
	C.	 	The term Subject Earned premium shall mean the premiums earned by the Company or the Legal
Entities, on classes of property business covered under this Contract, times the rates below.
No deduction shall be made for dividends declared, paid or credited to policyholders of the
Company or the Legal Entities.





	 	 	 	 	 
	ASLOB	 	Percentage
	Fire
	 	 	100	%
	Allied Lines
	 	 	100	%
	Homeowners
	 	 	60	%
	Farmowners
	 	 	60	%
	Commercial Multiple Peril

(Property)
	 	 	100	%








					
	 
	Effective: January 1, 2009
	 	Page 34 of 54
	 	2009 Property Catastrophe
Excess of Loss Contract —
$825m x $500m















 






	 	 	 	 	 
	ASLOB	 	Percentage
	Inland Marine
	 	 	100	%
	Earthquake
	 	 	100	%
	Auto Physical Damage

(Private Passenger and
Commercial)
	 	 	25	%
	Burglary & Theft
	 	 	100	%
	Estimated Subject Earned Premium:
	 	$	3,115,974,059	 






SECTION 4 — REINSTATEMENT





	A.	 	It is hereby understood and agreed that each claim hereon reduces the amount of indemnity
from the time of the Loss Occurrence by the sum paid, but any amount so exhausted is hereby
automatically reinstated from the time of the Loss Occurrence.
	 
	B.	 	One reinstatement will be provided at an additional premium calculated at 100% of the
developed premium hereon, but pro rata as to the fraction of the face value of this Contract
(i.e., the fraction of $100,000,000) reinstated. Such reinstatement premium shall be payable
simultaneously with each loss settlement.
	 
	C.	 	Nevertheless, the liability of the Subscribing Reinsurer hereunder shall never exceed
$100,000,000 in respect of any one Loss Occurrence nor $200,000,000 in all during the period
of this Contract.
	 
	D.	 	If at the time of a loss settlement hereon the developed premium is unknown, the above
calculation of reinstatement premium shall be based upon the deposit premium, subject to
adjustment when the developed premium is finally established.








					
	 
	Effective: January 1, 2009
	 	Page 35 of 54
	 	2009 Property Catastrophe
Excess of Loss Contract —
$825m x $500m















 











Exhibit E




Fifth Property Catastrophe Excess of Loss



SECTION 1— LIMIT AND RETENTION





	A.	 	No claim shall be made in any one Loss Occurrence unless at least two risks insured or
reinsured by the Company are involved in such loss occurrence. For purposes hereof, the
Company shall be the sole judge of what constitutes one risk.
	 
	B.	 	The Subscribing Reinsurer shall be liable in each and every Loss Occurrence, for the Ultimate
Net Loss above an initial net loss to the Company of $900,000,000 provided, however, that the
Subscribing Reinsurer shall not be liable for more than $100,000,000 of each and every such
Loss Occurrence.





SECTION 2 — PREMIUM





	 	 	The Company shall pay to the Subscribing Reinsurer a premium calculated by applying to
the Subject Earned Premium income of the Company and the Legal
Entities, a rate of 0.1849%
for business identified as belonging to the Agency Markets strategic business unit as
defined in Article I — Business Covered.





SECTION 3 — REPORTS AND REMITTANCE





	A.	 	The Company shall pay to the Subscribing Reinsurer a minimum
and deposit premium of $6,400,000
remitted in semi-annual installments of $3,200,000 on January 1 and July 1, 2009.
In the event this Contract is terminated prior to January 1, 2010, the minimum premium shall
be prorated and no deposit premium installments shall be due after the effective date of
termination.
	 
	B.	 	As soon as practical after the termination or expiration of this Contract, the Company shall
render to the Subscribing Reinsurer a statement of the premium due as provided in Section 2 -
PREMIUM and if such developed premium is greater than the minimum and deposit premium
stipulated herein the additional premium shall be paid to the Subscribing Reinsurer forthwith.
	 
	C.	 	The term Subject Earned premium shall mean the premiums earned by the Company or the Legal
Entities, on classes of property business covered under this Contract, times the rates below.
No deduction shall be made for dividends declared, paid or credited to policyholders of the
Company or the Legal Entities.





	 	 	 	 	 
	ASLOB	 	Percentage
	Fire
	 	 	100	%
	Allied Lines
	 	 	100	%
	Homeowners
	 	 	60	%
	Farmowners
	 	 	60	%
	Commercial Multiple Peril

(Property)
	 	 	100	%
	Inland Marine
	 	 	100	%
	Earthquake
	 	 	100	%








					
	 
	Effective: January 1, 2009
	 	Page 36 of 54
	 	2009 Property Catastrophe
Excess of Loss Contract —
$825m x $500m















 






	 	 	 	 	 
	ASLOB	 	Percentage
	Auto Physical Damage

(Private Passenger and
Commercial)
	 	 	25	%
	Burglary & Theft
	 	 	100	%
	Estimated Subject Earned Premium:
	 	$	3,115,974,059	 






SECTION 4 — REINSTATEMENT





	A.	 	It is hereby understood and agreed that each claim hereon reduces the amount of indemnity
from the time of the Loss Occurrence by the sum paid, but any amount so exhausted is hereby
automatically reinstated from the time of the Loss Occurrence.
	 
	B.	 	One reinstatement will be provided at an additional premium calculated at 100% of the
developed premium hereon, but pro rata as to the fraction of the face value of this Contract
(i.e., the fraction of $100,000,000) reinstated. Such reinstatement premium shall be payable
simultaneously with each loss settlement.
	 
	C.	 	Nevertheless, the liability of the Subscribing Reinsurer hereunder shall never exceed
$100,000,000 in respect of any one Loss Occurrence nor $200,000,000 in all during the period
of this Contract.
	 
	D.	 	If at the time of a loss settlement hereon the developed premium is unknown, the above
calculation of reinstatement premium shall be based upon the deposit premium, subject to
adjustment when the developed premium is finally established.






					
	 
	Effective: January 1, 2009
	 	Page 37 of 54
	 	2009 Property Catastrophe
Excess of Loss Contract —
$825m x $500m















 











Exhibit F




Sixth Property Catastrophe Excess of Loss



SECTION 1— LIMIT AND RETENTION





	A.	 	No claim shall be made in any one Loss Occurrence unless at least two risks insured or
reinsured by the Company are involved in such loss occurrence. For purposes hereof, the
Company shall be the sole judge of what constitutes one risk.
	 
	B.	 	The Subscribing Reinsurer shall be liable in each and every Loss Occurrence, for the Ultimate
Net Loss above an initial net loss to the Company of $1,000,000,000 provided, however, that
the Subscribing Reinsurer shall not be liable for more than $100,000,000 of each and every
such Loss Occurrence.





SECTION 2 — PREMIUM





	 	 	The Company shall pay to the Subscribing Reinsurer a premium calculated by applying to
the Subject Earned Premium income of the Company and the Legal
Entities, a rate of 0.1661%
for business identified as belonging to the Agency Markets strategic business unit as
defined in Article I — Business Covered.





SECTION 3 — REPORTS AND REMITTANCE





	A.	 	The Company shall pay to the Subscribing Reinsurer a minimum
and deposit premium of $5,750,000
remitted in semi-annual installments of $2,875,000 on January 1 and July 1, 2009. In
the event this Contract is terminated prior to January 1, 2010, the minimum premium shall be
prorated and no deposit premium installments shall be due after the effective date of
termination.
	 
	B.	 	As soon as practical after the termination or expiration of this Contract, the Company shall
render to the Subscribing Reinsurer a statement of the premium due as provided in Section 2 -
PREMIUM and if such developed premium is greater than the minimum and deposit premium
stipulated herein the additional premium shall be paid to the Subscribing Reinsurer forthwith.
	 
	C.	 	The term Subject Earned premium shall mean the premiums earned by the Company or the Legal
Entities, on classes of property business covered under this Contract, times the rates below.
No deduction shall be made for dividends declared, paid or credited to policyholders of the
Company or the Legal Entities.





	 	 	 	 	 
	ASLOB	 	Percentage
	Fire
	 	 	100	%
	Allied Lines
	 	 	100	%
	Homeowners
	 	 	60	%
	Farmowners
	 	 	60	%
	Commercial Multiple Peril

(Property)
	 	 	100	%
	Inland Marine
	 	 	100	%






					
	 
	Effective: January 1, 2009
	 	Page 38 of 54
	 	2009 Property Catastrophe
Excess of Loss Contract —
$825m x $500m















 






	 	 	 	 	 
	ASLOB	 	Percentage
	Earthquake
	 	 	100	%
	*Auto Physical Damage

(Private Passenger and
Commercial)
	 	 	25	%
	Burglary & Theft
	 	 	100	%
	Estimated Subject Earned Premium:
	 	$	3,115,974,059	 






SECTION 4 — REINSTATEMENT





	A.	 	It is hereby understood and agreed that each claim hereon reduces the amount of indemnity
from the time of the Loss Occurrence by the sum paid, but any amount so exhausted is hereby
automatically reinstated from the time of the Loss Occurrence.
	 
	B.	 	One reinstatement will be provided at an additional premium calculated at 100% of the
developed premium hereon, but pro rata as to the fraction of the face value of this Contract
(i.e., the fraction of $100,000,000) reinstated. Such reinstatement premium shall be payable
simultaneously with each loss settlement.
	 
	C.	 	Nevertheless, the liability of the Subscribing Reinsurer hereunder shall never exceed
$100,000,000 in respect of any one Loss Occurrence nor $200,000,000 in all during the period
of this Contract.
	 
	D.	 	If at the time of a loss settlement hereon the developed premium is unknown, the above
calculation of reinstatement premium shall be based upon the deposit premium, subject to
adjustment when the developed premium is finally established.






					
	 
	Effective: January 1, 2009
	 	Page 39 of 54
	 	2009 Property Catastrophe
Excess of Loss Contract —
$825m x $500m















 











Exhibit G




Seventh Property Catastrophe Excess of Loss



SECTION 1— LIMIT AND RETENTION





	A.	 	No claim shall be made in any one Loss Occurrence unless at least two risks insured or
reinsured by the Company are involved in such loss occurrence. For purposes hereof, the
Company shall be the sole judge of what constitutes one risk.
	 
	B.	 	The Subscribing Reinsurer shall be liable in each and every Loss Occurrence, for the Ultimate
Net Loss above an initial net loss to the Company of $1,100,000,000 provided,
however, that the Subscribing Reinsurer shall not be liable for more than $100,000,000 of
each and every such Loss Occurrence.





SECTION 2 — PREMIUM





	 	 	The Company shall pay to the Subscribing Reinsurer a premium calculated by applying to
the Subject Earned Premium income of the Company and the Legal
Entities, a rate of 0.1560%
for business identified as belonging to the Agency Markets strategic business unit as
defined in Article I — Business Covered.





SECTION 3 — REPORTS AND REMITTANCE





	A.	 	The Company shall pay to the Subscribing Reinsurer a minimum and deposit premium of
$5,400,000 remitted in semi-annual installments of $2,700,000 on January 1 and July 1,
2009. In the event this Contract is terminated prior to January 1, 2010, the minimum premium
shall be prorated and no deposit premium installments shall be due after the effective date of
termination.
	 
	B.	 	As soon as practical after the termination or expiration of this Contract, the Company shall
render to the Subscribing Reinsurer a statement of the premium due as provided in Section 2 -
PREMIUM and if such developed premium is greater than the minimum and deposit premium
stipulated herein the additional premium shall be paid to the Subscribing Reinsurer forthwith.
	 
	C.	 	The term Subject Earned premium shall mean the premiums earned by the Company or the Legal
Entities, on classes of property business covered under this Contract, times the rates below.
No deduction shall be made for dividends declared, paid or credited to policyholders of the
Company or the Legal Entities.





	 	 	 	 	 
	ASLOB	 	Percentage
	Fire
	 	 	100	%
	Allied Lines
	 	 	100	 
	Homeowners
	 	 	60	%
	Farmowners
	 	 	60	%
	Commercial Multiple Peril

(Property)
	 	 	100	%
	Inland Marine
	 	 	100	%
	Earthquake
	 	 	100	%







					
	 
	Effective: January 1, 2009
	 	Page 40 of 54
	 	2009 Property Catastrophe
Excess of Loss Contract —
$825m x $500m















 






	 	 	 	 	 
	ASLOB	 	Percentage
	*Auto Physical Damage

(Private Passenger and
Commercial)
	 	 	25	%
	Burglary & Theft
	 	 	100	%
	Estimated Subject Earned Premium:
	 	$	3,115,974,059	 






SECTION 4 — REINSTATEMENT





	A.	 	It is hereby understood and agreed that each claim hereon reduces the amount of indemnity
from the time of the Loss Occurrence by the sum paid, but any amount so exhausted is hereby
automatically reinstated from the time of the Loss Occurrence.
	 
	B.	 	One reinstatement will be provided at an additional premium calculated at 100% of the
developed premium hereon, but pro rata as to the fraction of the face value of this Contract
(i.e., the fraction of $100,000,000) reinstated. Such reinstatement premium shall be payable
simultaneously with each loss settlement.
	 
	C.	 	Nevertheless, the liability of the Subscribing Reinsurer hereunder shall never exceed
$100,000,000 in respect of any one Loss Occurrence nor $200,000,000 in all during the period
of this Contract.
	 
	D.	 	If at the time of a loss settlement hereon the developed premium is unknown, the above
calculation of reinstatement premium shall be based upon the deposit premium, subject to
adjustment when the developed premium is finally established.






					
	 
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Exhibit H




Eighth Property Catastrophe Excess of Loss



SECTION 1— LIMIT AND RETENTION





	A.	 	No claim shall be made in any one Loss Occurrence unless at least two risks insured or
reinsured by the Company are involved in such loss occurrence. For purposes hereof, the
Company shall be the sole judge of what constitutes one risk.
	 
	B.	 	The Subscribing Reinsurer shall be liable in each and every Loss Occurrence, for the Ultimate
Net Loss above an initial net loss to the Company of $1,200,000,000 provided, however, that
the Subscribing Reinsurer shall not be liable for more than $125,000,000 of each and every
such Loss Occurrence.





SECTION 2 — PREMIUM





	 	 	The Company shall pay to the Subscribing Reinsurer a premium calculated by applying to
the Subject Earned Premium income of the Company and the Legal
Entities, a rate of 0.1769%
for business identified as belonging to the Agency Markets strategic business unit as
defined in Article I — Business Covered.





SECTION 3 — REPORTS AND REMITTANCE





	A.	 	The Company shall pay to the Subscribing Reinsurer a minimum
and deposit premium of $6,125,000
remitted in semi-annual installments of $3,062,500 on January 1 and July 1, 2009. In
the event this Contract is terminated prior to January 1, 2010, the minimum premium shall be
prorated and no deposit premium installments shall be due after the effective date of
termination.
	 
	B.	 	As soon as practical after the termination or expiration of this Contract, the Company shall
render to the Subscribing Reinsurer a statement of the premium due as provided in Section 2 -
PREMIUM and if such developed premium is greater than the minimum and deposit premium
stipulated herein the additional premium shall be paid to the Subscribing Reinsurer forthwith.
	 
	C.	 	The term Subject Earned premium shall mean the premiums earned by the Company or the Legal
Entities, on classes of property business covered under this Contract, times the rates below.
No deduction shall be made for dividends declared, paid or credited to policyholders of the
Company or the Legal Entities.





	 	 	 	 	 
	ASLOB	 	Percentage
	Fire
	 	 	100	%
	Allied Lines
	 	 	100	%
	Homeowners
	 	 	60	%
	Farmowners
	 	 	60	%
	Commercial Multiple Peril

(Property)
	 	 	100	%
	Inland Marine
	 	 	100	%







					
	 
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	ASLOB	 	Percentage
	Earthquake
	 	 	100	%
	Auto Physical Damage

(Private Passenger and
Commercial)
	 	 	25	%
	Burglary & Theft
	 	 	100	%
	Estimated Subject Earned Premium:
	 	$	3,115,974,059	 






SECTION 4 — REINSTATEMENT





	A.	 	It is hereby understood and agreed that each claim hereon reduces the amount of indemnity
from the time of the Loss Occurrence by the sum paid, but any amount so exhausted is hereby
automatically reinstated from the time of the Loss Occurrence.
	 
	B.	 	One reinstatement will be provided at an additional premium calculated at 100% of the
developed premium hereon, but pro rata as to the fraction of the face value of this
Contract (i.e., the fraction of $125,000,000) reinstated. Such reinstatement premium shall
be payable simultaneously with each loss settlement.
	 
	C.	 	Nevertheless, the liability of the Subscribing Reinsurer hereunder shall never exceed
$125,000,000 in respect of any one Loss Occurrence nor $250,000,000 in all during the period
of this Contract.
	 
	D.	 	If at the time of a loss settlement hereon the developed premium is unknown, the above
calculation of reinstatement premium shall be based upon the deposit premium, subject to
adjustment when the developed premium is finally established.








					
	 
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Pools, Associations and Syndicates Exclusion (LM-03300-2008.11.03-P)




Section A:



Excluding:





	 	(a)	 	All business derived directly or indirectly from any Pool, Association or Syndicate
which maintains its own reinsurance facilities.
	 
	 	(b)	 	Any Pool or Scheme (whether voluntary or mandatory) formed after March 1, 1968 for
the purpose of insuring property whether on a country-wide basis or in respect of
designated areas. This exclusion shall not apply to so-called Automobile Insurance Plans
or other Pools formed to provide coverage for Automobile Physical Damage.





Section B:



It is agreed that business written by the Company for the same perils, which is known at the
time to be insured by, or in excess of underlying amounts placed in the following Pools,
Associations or Syndicates, whether by way of insurance or reinsurance, is excluded hereunder:





	 	 	 	Industrial Risk Insurers,

Associated Factory Mutuals,

Improved Risk Mutuals,

Any Pool, Association or Syndicate formed for the purpose of writing Oil, Gas or
Petro-Chemical Plants and/or Oil or Gas Drilling Rigs,

United States Aircraft Insurance Group,

Canadian Aircraft Insurance Group,

Associated Aviation Underwriters,

American Aviation Underwriters.




Section B does not apply:





	 	(a)	 	Where the Total Insured Value over all interests of the risk in question is less than
$250,000,000.
	 
	 	(b)	 	To interests traditionally underwritten as Inland Marine or stock and/or contents
written on a blanket basis.
	 
	 	(c)	 	To Contingent Business Interruption, except when the Company is aware that the key
location is known at the time to be insured in any Pool, Association or Syndicate named
above, other than as provided for under Section B (a).
	 
	 	(d)	 	To risks as follows:
	 
	 	 	 	Offices, Hotels, Apartments, Hospitals, Educational Establishments, Public Utilities
(other than railroad schedules) and builder’s risks on the classes of risks specified in
this subsection (d) only.




Where this clause attaches to Catastrophe Excesses, the following Section C is added:




Section C:



Nevertheless the Reinsurer specifically agrees that liability accruing to the Company from its
participation in residual market mechanisms including but not limited to:





	 	(1)	 	Any so-called “Coastal Pools,” including but not limited to:
	 
	 	 	 	Alabama Insurance Underwriting Association

Connecticut FAIR Plan

Delaware FAIR Plan

Georgia Underwriting Association

Louisiana Citizens Property Insurance Corporation

Mississippi Windstorm Underwriting Association

New Jersey Insurance Underwriting Association







					
	 	 	 	 	 
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New York Property Insurance Underwriting Association

North Carolina Insurance Underwriting Association

Pennsylvania FAIR Plan

South Carolina Windstorm and Hail Underwriting Association

Texas Windstorm Insurance Association

Virginia Property Insurance Association




AND





	 	(2)	 	All “Fair Plan” and “Rural Risk Plan” business




AND





	 	(3)	 	Citizens Property Insurance Corporation (“CPIC”) and the California Earthquake
Authority (“CEA”)




for all perils otherwise protected hereunder shall not be excluded, except, however, that this
reinsurance does not include any increase in such liability resulting from:





	 	(i)	 	The inability of any other participant in such “Coastal Pool” and/or “Fair Plan”
and/or “Rural Risk Plan” and/or Residual Market Mechanisms to meet its liability.
	 
	 	(ii)	 	Any claim against such “Coastal Pool” and/or “Fair Plan” and/or “Rural Risk Plan”
and/or Residual Market Mechanisms, or any participant therein, including the Company,
whether by way of subrogation or otherwise, brought by or on behalf of any insolvency fund
(as defined in the Insolvency Fund Exclusion Clause incorporated in this Contract).





Section D:





	 	(1)	 	Notwithstanding Section C above, in respect of the CEA, where an assessment is made
against the Company by the CEA, the Company may include in its Ultimate Net Loss only that
assessment directly attributable to each separate loss occurrence covered hereunder. The
Company’s initial capital contribution to the CEA shall not be included in the Ultimate
Net Loss.
	 
	 	(2)	 	Notwithstanding Section C above, in respect of CPIC, where an assessment is made
against the Company by CPIC, the maximum loss that the Company may include in the Ultimate
Net Loss in respect of any loss occurrence hereunder shall not exceed the lesser of:






	 	(a)	 	The Company’s assessment from CPIC for the accounting year in which the
loss occurrence commenced, or
	 
	 	(b)	 	The product of the following:






	 	(i)	 	The Company’s percentage participation in CPIC for the
accounting year in which the loss occurrence commenced; and
	 
	 	(ii)	 	CPIC’s total losses in such loss occurrence.






	 	(3)	 	Notwithstanding Section C above, where an assessment is made against the Company by
any such “Coastal Pool” and/or “Fair Plan” and/or “Rural Risk Plan” and/or Residual Market
Mechanism, the Company may include in its Ultimate Net Loss only that assessment directly
attributable to each separate loss occurrence covered hereunder which is not otherwise
recoverable or recoupable by the Company




Any assessments for accounting years subsequent to that in which the loss occurrence commenced may
not be included in the Ultimate Net Loss hereunder. Moreover, notwithstanding Section C above, in
respect of CPIC, the Ultimate Net Loss hereunder shall not include any monies expended to purchase
or retire bonds as a consequence of being a member of CPIC. For the purposes of this Contract, the
Company may not include in the Ultimate Net Loss any assessment or any percentage assessment levied
by CPIC to meet the obligations of an insolvent insurer member or other party, or to meet any
obligations arising from the deferment by CPIC of the collection of monies.







					
	 	 	 	 	 
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War Risk Exclusion Clause



The Reinsurers shall not be liable for loss or damage caused directly or indirectly by (1)
hostile or warlike action in time of peace or war, including action hindering, combating or
defending against an actual, impending or expected attack, (a) by any government or sovereign power
(de jure or de facto) or by any authority maintaining or using military, naval or air forces; or
(b) by military, naval or air forces, it being understood that any discharge, explosion or use of
any weapon of war employing atomic fission or radioactive force shall be conclusively presumed to
be such a hostile or warlike action by such government power, authority or forces; (2)
insurrection, rebellion, revolution, civil war, usurped power, or action taken by governmental
authority in hindering, combating or defending against such an occurrence.



The War Risk Exclusion Clause shall not apply to interest insured under Policies, endorsements or
binders containing a standard war or hostilities or warlike operations exclusion clause.







					
	 	 	 	 	 
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Nuclear Incident Exclusion Clause — Physical Damage — Reinsurance

(U.S.A.)





	1.	 	This Reinsurance does not cover any loss or liability accruing to the Reassured, directly or
indirectly and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed
for the purpose of covering Atomic or Nuclear Energy risks.
	 
	2.	 	Without in any way restricting the operation of paragraph (1) of this Clause, this
Reinsurance does not cover any loss or liability accruing to the Reassured, directly or
indirectly and whether as Insurer or Reinsurer, from any insurance against Physical Damage
(including business interruption or consequential loss arising out of such Physical Damage)
to:






	 	I.	 	Nuclear reactor power plants including all auxiliary property on the site, or
	 
	 	II.	 	Any other nuclear reactor installation, including laboratories
handling radioactive materials in connection with reactor
installations, and “critical facilities” as such, or
	 
	 	III.	 	Installations for fabricating complete fuel elements or for
processing substantial quantities of “special nuclear material,” and
for reprocessing, salvaging, chemically separating, storing or
disposing of “spent” nuclear fuel or waste materials, or
	 
	 	IV.	 	Installations other than those listed in paragraph (2) III above
using substantial quantities of radioactive isotopes or other
products of nuclear fission.






	3.	 	Without in any way restricting the operations of paragraphs (1) and (2) hereof, this
Reinsurance does not cover any loss or liability by radioactive contamination accruing to the
Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on
property which is on the same site as a nuclear reactor power plant or other nuclear
installation and which normally would be insured therewith except that this paragraph (3)
shall not operate






	 	(a)	 	where Reassured does not have knowledge of such nuclear reactor power plant or
nuclear installation, or
	 
	 	(b)	 	where said insurance contains a provision excluding coverage for damage to property
caused by or resulting from radioactive contamination, however caused. However on and
after 1st January 1960 this sub-paragraph (b) shall only apply provided the said
radioactive contamination exclusion provision has been approved by the Governmental
Authority having jurisdiction thereof.






	4.	 	Without in any way restricting the operations of paragraphs (1), (2) and (3) hereof, this
Reinsurance does not cover any loss or liability by radioactive contamination accruing to the
Reassured, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive
contamination is a named hazard specifically insured against.
	 
	5.	 	It is understood and agreed that this Clause shall not extend to risks using radioactive
isotopes in any form where the nuclear exposure is not considered by the Reassured to be the
primary hazard.
	 
	6.	 	The term “special nuclear material” shall have the meaning given it in the Atomic Energy Act
of 1954 or by any law amendatory thereof.
	 
	7.	 	Reassured to be sole judge of what constitutes:






	 	(a)	 	substantial quantities, and
	 
	 	(b)	 	the extent of installation, plant or site.




Note.-Without in any way restricting the operation of paragraph (1) hereof, it is understood and
agreed that





	 	(a)	 	all policies issued by the Reassured on or before 31st December 1957 shall be free
from the application of the other provisions of this Clause until expiry date or 31st
December 1960 whichever first occurs whereupon all the provisions of this Clause shall
apply.
	 
	 	(b)	 	with respect to any risk located in Canada policies issued by the Reassured on or
before 31st December 1958 shall be free from the application of the other provisions of
this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all
the provisions of this Clause shall apply.





12/12/57

N.M.A. 1119

BRMA 35B






					
	 	 	 	 	 
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Nuclear Incident Exclusion Clause — Physical Damage — Reinsurance

(Canada)





	1.	 	This Agreement does not cover any loss or liability accruing to the Reinsured, directly or
indirectly, and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers
formed for the purpose of covering Atomic or Nuclear Energy risks.
	 
	2.	 	Without in any way restricting the operation of paragraph 1 of this clause, this Agreement
does not cover any loss or liability accruing to the Reinsured, directly or indirectly, and
whether as Insurer or Reinsurer, from any insurance against Physical Damage (including
business interruption or consequential loss arising out of such Physical Damage) to:






	 	(a)	 	nuclear reactor power plants including all auxiliary property on the site, or
	 
	 	(b)	 	any other nuclear reactor installation, including laboratories handling radioactive
materials in connection with reactor installations, and critical facilities as such, or
	 
	 	(c)	 	installations for fabricating complete fuel elements or for processing substantial
quantities of radioactive materials, and for reprocessing, salvaging, chemically
separating, storing or disposing of spent nuclear fuel or waste materials, or
	 
	 	(d)	 	installations other than those listed in (c) above using substantial quantities of
radioactive isotopes or other products of nuclear fission.






	3.	 	Without in any way restricting the operation of paragraphs 1 and 2 of this clause, this
Agreement does not cover any loss or liability by radioactive contamination accruing to the
Reinsured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on
property which is on the same site as a nuclear reactor power plant or other nuclear
installation and which normally would be insured therewith, except that this paragraph 3 shall
not operate:






	 	(a)	 	where the Reinsured does not have knowledge of such nuclear reactor power plant or
nuclear installation, or
	 
	 	(b)	 	where the said insurance contains a provision excluding coverage for damage to
property caused by or resulting from radioactive contamination, however caused.






	4.	 	Without in any way restricting the operation of paragraphs 1, 2 and 3 of this clause, this
Agreement does not cover any loss or liability by radioactive contamination accruing to the
Reinsured, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive
contamination is a named hazard specifically insured against.
	 
	5.	 	This clause shall not extend to risks using radioactive isotopes in any form where the
nuclear exposure is not considered by the Reinsured to be the primary hazard.
	 
	6.	 	The term “radioactive material” means uranium, thorium, plutonium, neptunium, their
respective derivatives and compounds, radioactive isotopes of other elements and any other
substances which may be designated by or pursuant to any law, act or statute, or any law
amendatory thereof as being prescribed substances capable of releasing atomic energy, or as
being requisite for the production, use or application of atomic energy.
	 
	7.	 	Reinsured to be sole judge of what constitutes:






	 	(a)	 	substantial quantities, and
	 
	 	(b)	 	the extent of installation, plant or site.






	8.	 	Without in any way restricting the operation of paragraphs 1, 2, 3 and 4 of this clause, this
Agreement does not cover any loss or liability accruing to the Reinsured, directly or
indirectly, and whether as Insurer or Reinsurer, caused:






	 	(1)	 	by any nuclear incident, as defined in or pursuant to the Nuclear Liability Act or
any other nuclear liability act, law or statute, or any law amendatory thereof or nuclear
explosion, except for ensuing loss or damage which results directly from fire, lightning
or explosion of natural, coal or manufactured gas;
	 
	 	(2)	 	by contamination by radioactive material.






	NOTE: 	 	 Without in any way restricting the operation of paragraphs 1, 2, 3 and 4 of this clause,
paragraph 8 of this clause shall only apply to all original contracts of the Reinsured,
whether new, renewal or replacement, which become effective on or after December 31, 1992.




N.M.A. 1980a (1/4/96)







					
	 	 	 	 	 
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Nuclear Energy Risks Exclusion Clause (Reinsurance) (1994)

(Worldwide Excluding U.S.A. & Canada)



This agreement shall exclude Nuclear Energy Risks whether such risks are written directly
and/or by way of reinsurance and/or via Pools and/or Associations.



For all purposes of this agreement Nuclear Energy Risks shall mean all first party and/or third
party insurances or reinsurances (other than Workers’ Compensation and Employers’ Liability) in
respect of:-





	 	(I)	 	All Property on the site of a nuclear power station.
	 
	 	 	 	Nuclear Reactors, reactor buildings and plant and equipment therein on any site other
than a nuclear power station.
	 
	 	(II)	 	All Property, on any site (including but not limited to the sites referred to in (I)
above) used or having been used for:-






	 	(a)	 	The generation of nuclear energy; or
	 
	 	(b)	 	The Production, Use or Storage of Nuclear Material.






	 	(III)	 	Any other Property eligible for insurance by the relevant local Nuclear Insurance Pool
and/or Association but only to the extent of the requirements of that local Pool and/or
Association.
	 
	 	(IV)	 	The supply of goods and services to any of the sites, described in (I) to (III) above,
unless such insurances or reinsurances shall exclude the perils of irradiation and
contamination by Nuclear Material.




Except as undernoted, Nuclear Energy Risks shall not include:-





	 	(i)	 	Any insurance or reinsurance in respect of the construction or erection or
installation or replacement or repair or maintenance or decommissioning of Property as
described in (I) to (III) above (including contractors’ plant and equipment);
	 
	 	(ii)	 	Any Machinery Breakdown or other Engineering insurance or reinsurance not coming
within the scope of (i) above;




Provided always that such insurance or reinsurance shall exclude the perils of irradiation and
contamination by Nuclear Material.



However, the above exemption shall not extend to:-





	 	(1)	 	The provision of any insurance or reinsurance whatsoever in respect of:-






	 	(a)	 	Nuclear Material;
	 
	 	(b)	 	Any Property in the High Radioactivity Zone or Area of any Nuclear
Installation as from the introduction of Nuclear Material or — for reactor
installations — as from fuel loading or first criticality where so agreed with the
relevant local Nuclear Insurance Pool and/or Association.






	 	(2)	 	The provision of any insurance or reinsurance for the undernoted perils:-






	 	•	 	Fire, lightning, explosion;
	 
	 	•	 	Earthquake;
	 
	 	•	 	Aircraft and other aerial devices or articles dropped therefrom;
	 
	 	•	 	Irradiation and radioactive contamination;
	 
	 	•	 	Any other peril insured by the relevant local Nuclear Insurance Pool and/or Association;






	 	 	 	in respect of any other Property not specified in (1) above which directly involves the
Production, Use or Storage of Nuclear Material as from the introduction of Nuclear
Material into such Property.







					
	 	 	 	 	 
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Definitions:



“Nuclear Material” means:-





	 	(i)	 	Nuclear fuel, other than natural uranium and depleted uranium, capable of producing
energy by a self-sustaining chain process of nuclear fission outside a Nuclear Reactor,
either alone or in combination with some other material; and
	 
	 	(ii)	 	Radioactive Products or Waste.




“Radioactive Products or Waste” means any radioactive material produced in, or any material made
radioactive by exposure to the radiation incidental to the production or utilization of nuclear
fuel, but does not include radioisotopes which have reached the final stage of fabrication so as to
be usable for any scientific, medical, agricultural, commercial or industrial purpose.



“Nuclear Installation” means:-





	 	(i)	 	Any Nuclear Reactor;
	 
	 	(ii)	 	Any factory using nuclear fuel for the production of Nuclear Material, or any factory
for the processing of Nuclear Material, including any factory for the reprocessing of
irradiated nuclear fuel; and
	 
	 	(iii)	 	Any facility where Nuclear Material is stored, other than storage incidental to the
carriage of such material.




“Nuclear Reactor” means any structure containing nuclear fuel in such an arrangement that a
self-sustaining chain process of nuclear fission can occur therein without an additional source of
neutrons.



“Production, Use or Storage of Nuclear Material” means the production, manufacture, enrichment,
conditioning, processing, reprocessing, use, storage, handling and disposal of Nuclear Material.



“Property” shall mean all land, buildings, structures, plant, equipment, vehicles, contents
(including but not limited to liquids and gases) and all materials of whatever description whether
fixed or not.



“High Radioactivity Zone or Area” means:-





	 	(i)	 	For nuclear power stations and Nuclear Reactors, the vessel or structure which
immediately contains the core (including its supports and shrouding) and all the contents
thereof, the fuel elements, the control rods and the irradiated fuel store; and
	 
	 	(ii)	 	For non-reactor Nuclear Installations, any area where the level of radioactivity
requires the provision of a biological shield.




N.M.A. 1975(a)






					
	 	 	 	 	 
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Insolvency Funds Exclusion Clause



This Contract excludes all 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 guaranty 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.












					
	 	 	 	 	 
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TERRORISM EXCLUSION (LM-02300-2008.08.15-P)



This Contract does not apply to and specifically excludes terrorism-related losses as follows:





	A.	 	For risks located in the United States of America, its territories and possessions, and at
the premises of any United States mission:






	 	1.	 	This Contract shall not cover “Insured Losses” resulting directly or indirectly
from a “Certified Act of Terrorism” under the terms of the Terrorism Risk Insurance Act
of 2002, as amended by the Terrorism Risk Insurance Extension Act of 2005 and as amended
by the Terrorism Risk Insurance Program Reauthorization Act of 2007 hereafter (“TRIA”).
	 
	 	2.	 	Notwithstanding the above and subject otherwise to the terms, conditions and
limitations of this Contract, this Contract shall pay insured physical loss or damage
incurred as a direct and immediate consequence of an Act of Terrorism (as defined herein)
including fire following thereon occurring within the United States (as defined in TRIA)
that is planned and committed exclusively by a citizen or citizens of the United States
and provided such citizen or citizens are not acting on behalf of or under the direction
of any foreign person or foreign interest, and further provided such Act of Terrorism is
not directly or indirectly caused by, contributed to by, resulting from, or arising out
of or in connection with biological, chemical, radioactive or nuclear pollution,
contamination or explosion.






	 	 	 	“Act of Terrorism” as used in this paragraph A shall mean any violent act or act
that is dangerous to human life, property, or infrastructure; that results in
physical loss or damage; that is committed by an individual or individuals acting on
behalf of any person or interest as part of an effort to coerce the civilian
population of the United States or to influence the policy or affect the conduct of
the United States government by coercion.






	B.	 	For risks located within the United Kingdom, this Contract shall not cover:






	 	1.	 	Loss, destruction, or damage in Great Britain (being England, Wales, and Scotland)
occasioned by or happening through or as a direct or indirect consequence of an Act of
Terrorism.
	 
	 	2.	 	Loss, destruction, or damage in Northern Ireland within the meaning of the Northern
Ireland (Emergency Provisions) Act 1973 or successors thereof.






	 	 	In the event of an occurrence giving rise to a loss or losses payable by the Company not being
certified by Her Majesty’s government or Her Majesty’s Treasury or any successor relevant
Authority to have been an Act of Terrorism and solely by reason thereof the Company is unable
to recover such loss or losses in whole or in part from Pool Reinsurance Company Limited, the
Subscribing Reinsurer accepts that this subparagraph B.1. above does not apply to such loss or
losses.






					
	 	 	 	 	 
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	 	 	For the purpose of this paragraph B:
	 
	 	 	“Act of Terrorism” means an act of persons acting on behalf of or in connection with any
organization that carries out activities directed towards the overthrowing or influencing by
force or violence of Her Majesty’s government in the United Kingdom.
	 
	 	 	This paragraph B shall not, however, apply to goods in transit or goods in temporary storage
while in transit.
	 
	 	 	Notwithstanding the above and subject otherwise to the terms, conditions and limitations of
this Contract, this Contract shall pay actual physical loss or damage caused by an Act of
Terrorism (as defined in this paragraph) occurring and resulting in actual physical loss or
damage, provided such Act of Terrorism is not directly or indirectly caused by, contributed to
by, resulting from, or arising out of or in connection with biological, chemical, radioactive
or nuclear pollution, contamination or explosion.
	 
	C.	 	For risks located in all other sovereignties not subject to paragraphs A or B above:
	 
	 	 	Loss or damage, directly or indirectly, caused by, contributed to by, resulting from, or
arising out of or in connection with any Act of Terrorism, as defined in this paragraph C,
regardless of any other cause or event contributing concurrently or in any other sequence to
the loss.
	 
	 	 	For the purpose of this paragraph C:
	 
	 	 	“Act of Terrorism” shall mean any violent act or act that is dangerous to human life, property,
or infrastructure that results in physical loss or damage that is committed by an individual or
individuals acting on behalf of any person or interest as part of an effort to coerce the
civilian population of any nation or to influence the policy or affect the conduct of the
government of any such sovereign nation by coercion.
	 
	 	 	Where an occurrence falling within the definition of Act of Terrorism in this paragraph C,
involving risks insured or reinsured in Consorcio, Gareat, Extremus, the Australian Terrorism
Pool (or any similar scheme formed during the term of this Contract) gives rise to a loss or
losses payable by the Company and such occurrence is not certified by the individual authority
acting respectively for Consorcio, Gareat, Extremus, the Australian Terrorism Pool (or any
similar scheme formed during the term of this Contract) having responsibility to make such
judgment, or any successor authority, as an Act of Terrorism, the Subscribing Reinsurer accepts
that this exclusion does not apply to such loss(es).
	 
	 	 	Notwithstanding the above and subject otherwise to the terms, conditions and limitations of
this Contract, this Contract shall pay actual physical loss or damage caused by an Act of
Terrorism (as defined in this paragraph) occurring and resulting in actual physical loss or
damage, provided such Act of Terrorism is not directly or indirectly caused by, contributed to
by, resulting from, or arising out of or in connection with biological, chemical, radioactive
or nuclear pollution, contamination or explosion.








					
	 	 	 	 	 
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	 	 	 	Excess of Loss Contract —
	 
	 	 	 	$825m x $500m









 









 








Mold Exclusion



This Contract does not apply to loss or liability in any way or to any extent arising out of
the actual or alleged presence or actual, alleged or threatened presence of fungi including, but
not limited to, mold, mildew, mycotoxins, microbial volatile organic compounds or other “microbial
contamination.” This includes:





	 	1)	 	Any supervision, instruction, recommendations, warnings, or advice given or which
should have been given in connection with the above; and
	 
	 	2)	 	Any obligation to share damages with or repay someone else that must pay damages
because of such injury or damage.




For purposes of this exclusion, “microbial contamination” means any contamination, either airborne
or surface, which arises out of or is related to the presence of fungi, mold, mildew, mycotoxins,
microbial volatile organic compounds or spores, including, without limitation, Penicillium,
Aspergillus, Fusarium, Aspergillus Flavus and Stachybotrys chartarum.



Notwithstanding the foregoing, this exclusion shall not apply to losses or liability arising out of
one or more of the following perils:





Fire, lightning, explosion, aircraft or vehicle impact, falling objects, windstorm, hail,
tornado, cyclone, hurricane, earthquake, volcano, tsunami, flood, freeze or weight of snow.




					
	 	 	 	 	 
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INTERESTS AND LIABILITIES AGREEMENT




(hereinafter referred to as the “Agreement”)



to the



PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT

$825,000,000 XS $500,000,000

(hereinafter referred to as the “Contract”)



between



PEERLESS INSURANCE COMPANY

(hereinafter referred to as the “Company”)



and



LIBERTY MUTUAL INSURANCE COMPANY

(hereinafter referred to as the “Subscribing Reinsurer”)


It is hereby agreed by and between the Company on the one part and the Subscribing Reinsurer
on the other part that the Subscribing Reinsurer’s share in the interests and liabilities of the
reinsurers as set forth in the attached Property Compensation Excess of Loss Reinsurance Contract
No. 2009250, effective 12:01 a.m., Local Standard Time, January 1, 2009, to which this Agreement is
attached shall be for:




	 	 	 	 

	Exhibit A — First Excess of Loss
	— 	 100.00%
	Exhibit B — Second Excess of Loss
	— 	 100.00%
	Exhibit C — Third Excess of Loss
	— 	 100.00%
	Exhibit D — Fourth Excess of Loss
	— 	 100.00%
	Exhibit E — Fifth Excess of Loss
	— 	 100.00%
	Exhibit F — Sixth Excess of Loss
	— 	 100.00%
	Exhibit G — Seventh Excess of Loss  
	— 	 100.00%
	Exhibit H — Eighth Excess of Loss
	— 	 100.00%





The share of the Subscribing Reinsurer in the interests and liabilities of all reinsurers
participating in said Contract shall be separate and apart from the shares of such other reinsurers
to the said Contract. The interests and liabilities of the Subscribing Reinsurer shall not be
joint with those of the other reinsurers and in no event shall the Subscribing Reinsurer
participate in the interests and liabilities of the any other reinsurers participating in said
Contract.




					
	 	 	 	 	 
	Property Catastrophe Excess Of Loss Reinsurance Contract	 	 
	Effective: 01/01/2009	 	 	 	 
	Contract No. 2009250
	 	Page 1 of 2
	 	 






 









 





IN WITNESS WHEREOF, the parties hereto have caused this Agreement and the attached Property
Catastrophe Excess of Loss Reinsurance Contract $825,000,000 xs $500,000,000 to be executed in
duplicate by their respective duly authorized officers;



In Keene, New Hampshire, this 3rd day of March, 2009, for and on
behalf of:




	 	 	 	 	 
	PEERLESS INSURANCE COMPANY

 	 	 
	Signature  	/s/ Nancy c. Callender
 	 	 
	 	Name  	Nancy C. Callender  	 	 
	 	Title  	Agency Markets AVP-Manager-Reinsurance Management 	 	 
	 


And in Boston, Massachusetts, this 30th day of April, 2009, for and on behalf of:




	 	 	 	 	 
	LIBERTY MUTUAL INSURANCE COMPANY

 	 	 
	Signature  	/s/ Elaine Caprio Brady
 	 	 
	 	Name  	Elaine Caprio Brady 	 	 
	 	Title  	Vice President 	 	 
	 



					
	 	 	 	 	 
	Property Catastrophe Excess Of Loss Reinsurance Contract	 	 
	Effective: 01/01/2009	 	 	 	 
	Contract No. 2009250
	 	Page 2 of 2