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Third Excess Reinstatement Premium Protection
Reinsurance Contract
Effective: June 1, 2007
  
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Table of Contents
 Article
    
    
    
    PageI
    
    Coverage
    
    
    1II
    
    Commencement and Termination
    
    
    1III
    
    Concurrency of Conditions
    
    
    3IV
    
    Reinsurance Premium
    
    
    3V
    
    Loss Notices and Settlements
    
    
    4VI
    
    Late Payments
    
    
    4VII
    
    Offset (BRMA 36D)
    
    
    5VIII
    
    Access to Records (BRMA 1D)
    
    
    5IX
    
    Errors and Omissions (BRMA 14F)
    
    
    6X
    
    Currency (BRMA 12A)
    
    
    6XI
    
    Taxes (BRMA 50B)
    
    
    6XII
    
    Federal Excise Tax
    
    
    6XIII
    
    Funding Requirements
    
    
    6XIV
    
    Insolvency
    
    
    8XV
    
    Arbitration
    
    
    9XVI
    
    Service of Suit
    
    
    10XVII
    
    Agency Agreement
    
    
    10XVIII
    
    Governing Law
    
    
    10XIX
    
    Confidentiality
    
    
    10XX
    
    Severability
    
    
    11XXI
    
    Intermediary (BRMA 23A)
    
    
    11Schedule A
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Third Excess Reinstatement Premium Protection
Reinsurance Contract
Effective: June 1, 2007
  hereinafter referred to collectively as the
  hereinafter referred to as the
 Article I  Coverage
  Article II  Commencement and Termination
 A.
    
    This Contract shall become effective at 12:01 a.m., Local Standard Time at the location where
the loss occurrence commences, June 1, 2007, with respect to reinstatement premium payable by
the Company under the provisions of the Underlying Contract as a result of losses arising out
of loss occurrences commencing at or after that time and date, and shall remain in force until
12:01 a.m., Local Standard Time at the location where the loss occurrence commences, June 1,
2008.B.
    
    Notwithstanding the provisions of paragraph A above, if any of the following events occur on
or after the date lines are bound and, with the timing exceptions as qualified by
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1.
    
    The Subscribing Reinsurers surplus as regards policyholders or the foreign
equivalent thereto after the date lines are bound for this Contract has been reduced by
more than 25.0% of the amount of surplus or foreign equivalent 12 months prior to that
date; or2.
    
    The Subscribing Reinsurers surplus as regards policyholders or the foreign
equivalent thereto at any time between the date lines are bound and the date of
termination of this Contract has been reduced by more than 25.0% of the amount of surplus
or foreign equivalent at the date of the Subscribing Reinsurers most recent financial
statement filed with regulatory authorities and available to the public as of the date
lines are bound for this Contract; or3.
    
    The Subscribing Reinsurers A.M. Bests rating has been assigned or downgraded
below A- (inclusive of Not Rated ratings) and/or Standard & Poors rating has been
assigned or downgraded below BBB+; or4.
    
    The Subscribing Reinsurer has become merged with, acquired by or controlled by any
other company, corporation or unaffiliated individual(s) not controlling the Subscribing
Reinsurers operations previously; or5.
    
    A State Insurance Department or other legal authority has ordered the Subscribing
Reinsurer to cease writing business; or6.
    
    The Subscribing Reinsurer has become insolvent or has been placed into liquidation
or receivership (whether voluntary or involuntary) or proceedings have been instituted
against the Subscribing Reinsurer for the appointment of a receiver, liquidator,
rehabilitator, conservator or trustee in bankruptcy, or other agent known by whatever
name, to take possession of its assets or control of its operations; or7.
    
    The Subscribing Reinsurer has reinsured its entire liability under this Contract
without the Companys prior written consent (except for inter-company pooling
arrangements); or8.
    
    The Subscribing Reinsurer has ceased assuming new or renewal property or casualty
treaty reinsurance business.
  a.
    
    The last day of the month prior to the date of any public announcement or
discovery; orb.
    
    The date of any public announcement or discovery; or
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c.
    
    The last day of any month after the date of any public announcement or
discovery; ord.
    
    The date of the Companys written notice to the Subscribing Reinsurer
advising of the termination; ore.
    
    The date of notice provided by the Subscribing Reinsurer (should the
Subscribing Reinsurer elect to provide one).
 C.
    
    If this Contract is terminated or expires while a loss occurrence covered hereunder is in
progress, the Reinsurers liability hereunder shall, subject to the other terms and conditions
of this Contract, be determined as if the entire loss occurrence had occurred prior to the
termination or expiration of this Contract, provided that no part of such loss occurrence is
claimed against any renewal or replacement of this Contract.
 Article III  Concurrency of Conditions
 A.
    
    It is agreed that this Contract will follow the terms, conditions, exclusions, definitions,
warranties and settlements of the Company under the Underlying Contract which are not
inconsistent with the provisions of this Contract.B.
    
    The Company shall advise the Reinsurer of any material changes in the Underlying Contract
which may affect the liability of the Reinsurer under this Contract.
 Article IV  Reinsurance Premium
 A.
    
    As premium for the reinsurance provided hereunder, the Company shall pay the Reinsurer
0.00606298% of the sum of the Companys aggregate total insured value and 25.0% of USIC of
Florida, Inc.s aggregate total insured value for policies that include wind coverage in force
on September 30, 2007, subject to a minimum premium of $307,200.B.
    
    The Company shall pay the Reinsurer an annual deposit premium of $384,000 in four equal
installments of $96,000 on June 1, September 1 and December 1 of 2007 and March 1 of 2008.C.
    
    Within 45 days after the expiration of this Contract, the Company shall provide a report to
the Reinsurer setting forth the premium due hereunder, computed in accordance with paragraph A
above, and any additional premium due the Reinsurer or return premium due the Company shall be
remitted promptly.D.
    
    In the event a Subscribing Reinsurers participation in this Contract is terminated under the
provisions of paragraph B of the Commencement and Termination Article, no deposit premium
installment shall be due after the effective date of termination and the adjusted premium
shall be calculated by dividing the number of days the Subscribing Reinsurer participated on
this Contract by the number of days of the original term of this Contract, and multiplying the
quotient thereof by the Subscribing Reinsurers percentage share of the final reinsurance
premium calculated in accordance with paragraph A above. Any premium paid to the Subscribing
Reinsurer in excess of the adjusted premium shall be returned to the Company as promptly as
possible after the effective date of termination.
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Article V  Loss Notices and Settlements
 A.
    
    Whenever reinstatement premium settlements made by the Company under the Underlying Contract
appear likely to result in a claim hereunder, the Company shall notify the Reinsurer. The
Company will advise the Reinsurer of all subsequent developments relating to such claims that,
in the opinion of the Company, may materially affect the position of the Reinsurer.B.
    
    All reinstatement premium settlements made by the Company under the Underlying Contract,
provided they are within the terms of the Underlying Contract and within the terms of this
Contract, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for
which it may be liable upon receipt of reasonable evidence of the amount paid (or scheduled to
be paid within 14 days) by the Company.
 Article VI  Late Payments
 A.
    
    The provisions of this Article shall not be implemented unless specifically invoked, in
writing, by one of the parties to this Contract.B.
    
    In the event any premium, loss or other payment due either party is not received by the
intermediary named in the Intermediary Article (BRMA 23A) (hereinafter referred to as the
Intermediary) by the payment due date, the party to whom payment is due may, by notifying
the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to
pay, an interest penalty on the amount past due calculated for each such payment on the last
business day of each month as follows:
 1.
    
    The number of full days which have expired since the due date or the last monthly
calculation, whichever the lesser, times2.
    
    1/365ths of the six-month United States Treasury Bill Rate as quoted in The Wall
Street Journal on the first business day of the month for which the calculation is made;
times3.
    
    The amount past due, including accrued interest.
  C.
    
    The establishment of the due date shall, for purposes of this Article, be determined as
follows:
 1.
    
    As respects the payment of routine deposits and premiums due the Reinsurer, the due
date shall be as provided for in the applicable section of this Contract. In the event a
due date is not specifically stated for a given payment, it shall be deemed due 30 days
after the date of transmittal by the Intermediary of the initial billing for each such
payment.
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2.
    
    Any claim or loss payment due the Company hereunder shall be deemed due 10 business
days after the proof of loss or demand for payment is transmitted to the Reinsurer. If
such loss or claim payment is not received within the 10 days, interest will accrue on
the payment or amount overdue in accordance with paragraph B above, from the date the
proof of loss or demand for payment was transmitted to the Reinsurer.3.
    
    As respects any payment, adjustment or return due either party not otherwise
provided for in subparagraphs 1 and 2 of this paragraph C, the due date shall be as
provided for in the applicable section of this Contract. In the event a due date is not
specifically stated for a given payment, it shall be deemed due 10 business days
following transmittal of written notification that the provisions of this Article have
been invoked.
  D.
    
    Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from
contesting the validity of any claim, or from participating in the defense of any claim or
suit, or prohibiting either party from contesting the validity of any payment or from
initiating any arbitration or other proceeding in accordance with the provisions of this
Contract. If the debtor party prevails in an arbitration or other proceeding, then any
interest penalties due hereunder on the amount in dispute shall be null and void. If the
debtor party loses in such proceeding, then the interest penalty on the amount determined to
be due hereunder shall be calculated in accordance with the provisions set forth above unless
otherwise determined by such proceedings. If a debtor party advances payment of any amount it
is contesting, and proves to be correct in its contestation, either in whole or in part, the
other party shall reimburse the debtor party for any such excess payment made plus interest on
the excess amount calculated in accordance with this Article.E.
    
    Interest penalties arising out of the application of this Article that are $100 or less from
any party shall be waived unless there is a pattern of late payments consisting of three or
more items over the course of any 12-month period.
 Article VII  Offset (BRMA 36D)
  Article VIII  Access to Records (BRMA 1D)
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Article IX  Errors and Omissions (BRMA 14F)
  Article X  Currency (BRMA 12A)
 A.
    
    Whenever the word Dollars or the $ sign appears in this Contract, they shall be construed
to mean United States Dollars and all transactions under this Contract shall be in United
States Dollars.B.
    
    Amounts paid or received by the Company in any other currency shall be converted to United
States Dollars at the rate of exchange at the date such transaction is entered on the books of
the Company.
 Article XI  Taxes (BRMA 50B)
  Article XII  Federal Excise Tax
 A.
    
    The Reinsurer has agreed to allow for the purpose of paying the Federal Excise Tax the
applicable percentage of the premium payable hereon as imposed under Section 4371 of the
Internal Revenue Code to the extent such premium is subject to the Federal Excise Tax.B.
    
    In the event of any return of premium becoming due hereunder the Reinsurer will deduct the
applicable percentage from the return premium payable hereon and the Company or its agent
should take steps to recover the tax from the United States Government.
 Article XIII  Funding Requirements
 A.
    
    The Reinsurer agrees to fund, within 30 days of the Companys request, subject to receipt of
satisfactory information from the Company, its share of the Companys ceded unearned premium
and outstanding loss reserves (being the sum of all reinstatement premiums paid by the Company
under the Underlying Contract but not yet recovered from the Reinsurer, plus the Companys
reserves for reinstatement premiums due under the Underlying Contract, if any, determined as
of the date that this paragraph A first applies to the Reinsurer according to the provisions
of subparagraph (a) and/or (b) below) by:
 1.
    
    Clean, irrevocable and unconditional letters of credit issued and confirmed, if
confirmation is required by the insurance regulatory authorities involved, by a bank or
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banks meeting the NAIC Securities Valuation Office credit standards for issuers of
letters of credit and acceptable to said insurance regulatory authorities; and/or
 2.
    
    Escrow accounts for the benefit of the Company; and/or3.
    
    Cash advances;
  a.
    
    Is unauthorized in any state of the United States of America or the
District of Columbia having jurisdiction over the Company and if, without such
funding, a penalty would accrue to the Company on any financial statement, including
but not limited to quarterly filings, it is required to file with the insurance
regulatory authorities involved; orb.
    
    Has an A.M. Bests rating below A- (inclusive of Not Rated ratings)
and/or a Standard & Poors rating below BBB+. However, this funding requirement
will not apply to authorized reinsurers who at inception are rated A or higher by
A.M. Best and have a policyholders surplus of $2,000,000,000 or more.
   B.
    
    With regard to funding in whole or in part by letters of credit, it is agreed that each
letter of credit will be in a form acceptable to insurance regulatory authorities involved,
will be issued for a term of at least one year and will include an evergreen clause, which
automatically extends the term for at least one additional year at each expiration date unless
written notice of non-renewal is given to the Company not less than 60 days prior to said
expiration date or longer where required by insurance regulatory authorities. The Company and
the Reinsurer further agree, notwithstanding anything to the contrary in this Contract, that
said letters of credit may be drawn upon by the Company or its successors in interest at any
time, without diminution because of the insolvency of the Company or the Reinsurer, but only
for one or more of the following purposes:
 1.
    
    To reimburse itself for the Reinsurers share of reinstatement premiums paid by the
Company under the terms of the Underlying Contract, unless paid in cash by the Reinsurer;2.
    
    To reimburse itself for the Reinsurers share of any other amounts claimed to be
due hereunder, unless paid in cash by the Reinsurer;3.
    
    To fund a cash account in an amount equal to the Reinsurers share of any ceded
unearned premium and/or outstanding loss reserves funded by means of a letter of credit
which is under non-renewal notice, if said letter of credit has not been renewed or
replaced by the Reinsurer 10 days prior to its expiration date;
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4.
    
    To refund to the Reinsurer any sum in excess of the actual amount required to fund
the Reinsurers share of the Companys ceded unearned premium and/or outstanding loss
reserves, if so requested by the Reinsurer; and5.
    
    To reimburse itself for the Reinsurers portion of the unearned reinsurance premium
paid to the Reinsurer hereunder.
  Article XIV  Insolvency
 A.
    
    In the event of the insolvency of one or more of the reinsured companies, this reinsurance
shall be payable directly to the company or to its liquidator, receiver, conservator or
statutory successor on the basis of the liability of the company without diminution because of
the insolvency of the company or because the liquidator, receiver, conservator or statutory
successor of the company has failed to pay all or a portion of any claim. It is agreed,
however, that the liquidator, receiver, conservator or statutory successor of the company
shall give written notice to the Reinsurer of the pendency of a claim against the company
indicating the policy or bond reinsured which claim would involve a possible liability on the
part of the Reinsurer within a reasonable time after such claim is filed in the conservation
or liquidation proceeding or in the receivership, and that during the pendency of such claim,
the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding
where such claim is to be adjudicated, any defense or defenses that it may deem available to
the company or its liquidator, receiver, conservator or statutory successor. The expense thus
incurred by the Reinsurer shall be chargeable, subject to the approval of the Court, against
the company as part of the expense of conservation or liquidation to the extent of a pro rata
share of the benefit which may accrue to the company solely as a result of the defense
undertaken by the Reinsurer.B.
    
    Where two or more reinsurers are involved in the same claim and a majority in interest elect
to interpose defense to such claim, the expense shall be apportioned in accordance with the
terms of this Contract as though such expense had been incurred by the company.C.
    
    It is further understood and agreed that, in the event of the insolvency of one or more of
the reinsured companies, the reinsurance under this Contract shall be payable directly by the
Reinsurer to the company or to its liquidator, receiver or statutory successor, except as
provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract
specifically provides another payee of such reinsurance in the event of the insolvency of the
company or (2) where the Reinsurer with the consent of the direct insured or insureds has
assumed such policy obligations of the company as direct obligations of the Reinsurer to the
payees under such policies and in substitution for the obligations of the company to such
payees.
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Article XV  Arbitration
 A.
    
    As a condition precedent to any right of action hereunder, any dispute or difference between
the Company and any Reinsurer relating to the interpretation or performance of this Contract,
including its formation or validity, or any transaction under this Contract, whether arising
before or after termination, shall be submitted to arbitration.B.
    
    If more than one reinsurer is involved in the same dispute, all such reinsurers shall
constitute and act as one party for purposes of this Article provided that communication shall
be made by the Company to each of the reinsurers constituting the one party, and provided,
however, that nothing therein shall impair the rights of such reinsurers to assert several,
rather than joint, defenses or claims, nor be construed as changing the liability of the
Reinsurer under the terms of this Contract from several to joint.C.
    
    Upon written request of any party, each party shall choose an arbitrator and the two chosen
shall select a third arbitrator. If either party refuses or neglects to appoint an arbitrator
within 30 days after receipt of the written request for arbitration, the requesting party may
appoint a second arbitrator. If the two arbitrators fail to agree on the selection of a third
arbitrator within 30 days of their appointment, the Company shall petition the American
Arbitration Association to appoint the third arbitrator. If the American Arbitration
Association fails to appoint the third arbitrator within 30 days after it has been requested
to do so, either party may request a justice of a court of general jurisdiction of the state
in which the arbitration is to be held to appoint the third arbitrator. All arbitrators shall
be active or retired officers of insurance or reinsurance companies, or Lloyds London
Underwriters, and disinterested in the outcome of the arbitration. Each party shall submit
its case to the arbitrators within 30 days of the appointment of the third arbitrator.D.
    
    The parties hereby waive all objections to the method of selection of the arbitrators, it
being the intention of both sides that all the arbitrators be chosen from those submitted by
the parties.E.
    
    The arbitrators shall have the power to determine all procedural rules for the holding of the
arbitration including but not limited to inspection of documents, examination of witnesses and
any other matter relating to the conduct of the arbitration. The arbitrators shall interpret
this Contract as an honorable engagement and not as merely a legal obligation; they are
relieved of all judicial formalities and may abstain from following the strict rules of law.
The arbitrators may award interest and costs. Each party shall bear the expense of its own
arbitrator and shall share equally with the other party the expenses of the third arbitrator
and of the arbitration.F.
    
    The decision in writing of the majority of the arbitrators shall be final and binding upon
both parties. Judgment may be entered upon the final decision of the arbitrators in any court
having jurisdiction. The arbitration shall take place in Pinellas Park, Florida, unless
otherwise mutually agreed between the Company and the Reinsurer.G.
    
    This Article shall remain in full force and effect in the event any other provision of this
Contract shall be found invalid or non-binding.H.
    
    All time limitations stated in this Article may be amended by mutual consent of the parties,
and will be amended automatically to the extent made necessary by any circumstances beyond the
control of the parties.
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Article XVI  Service of Suit
  A.
    
    It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due
hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of
any court of competent jurisdiction within the United States. Nothing in this Article
constitutes or should be understood to constitute a waiver of the Reinsurers rights to
commence an action in any court of competent jurisdiction in the United States, to remove an
action to a United States District Court, or to seek a transfer of a case to another court as
permitted by the laws of the United States or of any state in the United States.B.
    
    Further, pursuant to any statute of any state, territory or district of the United States
which makes provision therefore, the Reinsurer hereby designates the party named in its
Interests and Liabilities Agreement, or if no party is named therein, the Superintendent,
Commissioner or Director of Insurance or other officer specified for that purpose in the
statute, or his successor or successors in office, as its true and lawful attorney upon whom
may be served any lawful process in any action, suit or proceeding instituted by or on behalf
of the Company or any beneficiary hereunder arising out of this Contract.
 Article XVII  Agency Agreement
  Article XVIII  Governing Law
  Article XIX  Confidentiality
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Article XX  Severability
  Article XXI  Intermediary (BRMA 23A)
  In Witness Whereof
  Liberty American Insurance Group, Inc. (for and on behalf of the "Company")/s/ T. Bruce MeyerT. Bruce Meyer, Pres. & CEO(Print name and title) 07\M2U1141
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Schedule A
 Third Excess Reinstatement Premium Protection
Reinsurance Contract
Effective: June 1, 2007
  
 ThirdExcessCompanys Retention
    
    $
    16,000,000Reinsurers Per Occurrence Limit
    
    $
    8,000,000Reinsurers Term Limit
    
    $
    16,000,000Minimum Premium
    
    $
    1,280,000Adjustment Rate
    
    
    0.025262
    %Deposit Premium
    
    $
    1,600,000Quarterly Deposit Premium
    
    $
    400,000
  07\M2U1141
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Interests and Liabilities Agreement
  hereinafter referred to as the Subscribing Reinsurer
  Third Excess Reinstatement Premium Protection
Reinsurance Contract
Effective: June 1, 2007
  
 Subscribing Reinsurer
  Subscribing Reinsurers Subscribing Reinsurer
 In Witness Whereof Subscribing Reinsurer
  Montpelier Reinsurance LimitedBy
    /s/ Paul HopwoodPaul Hopwood,SVP & NA Treaty Underwriter 07IL\M2U1141
    
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Interests and Liabilities Agreement
  hereinafter referred to as the Subscribing Reinsurer"
  Third Excess Reinstatement Premium Protection
Reinsurance Contract
Effective: June 1, 2007
  
 Subscribing Reinsurer
  Subscribing Reinsurers Subscribing Reinsurer
 Subscribing Reinsurers
 Subscribing Reinsurer
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Third Excess Reinstatement Premium Protection
Reinsurance Contract
Effective: June 1, 2007
  
 Reinsurers
    
    ParticipationsMontpelier Reinsurance Limited
    
    
    33.0
    %Through Benfield LimitedLloyds Underwriters Per Signing Schedule
    
    
    67.0Total
    
    
    100.0
    %
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