Exhibit 10.7


 


COAST NATIONAL INSURANCE COMPANY

SECURITY NATIONAL INSURANCE COMPANY

BRISTOL WEST INSURANCE COMPANY

BRISTOL WEST CASUALTY INSURANCE COMPANY


 


QUOTA SHARE REINSURANCE AGREEMENT

Effective:  January 1, 2002


 


TABLE OF CONTENTS


 


	
  ARTICLE

  	
   

  	
  SUBJECT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
   

  	
  Business
  Covered

  	
   

  
	
  II

  	
   

  	
   

  	
  Term
  and Termination

  	
   

  
	
  III

  	
   

  	
   

  	
  Quota
  Share Participation

  	
   

  
	
  IV

  	
   

  	
   

  	
  Territory

  	
   

  
	
  V

  	
   

  	
   

  	
  Premium

  	
   

  
	
  VI

  	
   

  	
   

  	
  Limit
  of Liability

  	
   

  
	
  VII

  	
   

  	
   

  	
  Ceding
  Commission

  	
   

  
	
  VIII

  	
   

  	
   

  	
  Fee
  Income

  	
   

  
	
  IX

  	
   

  	
   

  	
  Commutation

  	
   

  
	
  X

  	
   

  	
   

  	
  Experience
  Account Balance

  	
   

  
	
  XI

  	
   

  	
   

  	
  Reports
  and Remittances

  	
   

  
	
  XII

  	
   

  	
   

  	
  Offset

  	
   

  
	
  XIII

  	
   

  	
   

  	
  Agency/Combined
  Results

  	
   

  
	
  XIV

  	
   

  	
   

  	
  Maximum
  Subject Net Premium

  	
   

  
	
  XV

  	
   

  	
   

  	
  Cancellation
  for Non-Payment

  	
   

  
	
  XVI

  	
   

  	
   

  	
  Cancellation
  for Change in Control

  	
   

  
	
  XVII

  	
   

  	
   

  	
  Special
  Termination

  	
   

  
	
  XVIII

  	
   

  	
   

  	
  Exclusions

  	
   

  
	
  XIX

  	
   

  	
   

  	
  Warranty

  	
   

  
	
  XX

  	
   

  	
   

  	
  Definitions

  	
   

  
	
  XXI

  	
   

  	
   

  	
  Loss
  Settlements

  	
   

  
	
  XXII

  	
   

  	
   

  	
  Net
  Retained Lines Clause

  	
   

  
	
  XXIII

  	
   

  	
   

  	
  No Third Party Rights

  	
   

  
	
  XXIV

  	
   

  	
   

  	
  Errors
  or Omissions

  	
   

  
	
  XXV

  	
   

  	
   

  	
  Insolvency
  Clause

  	
   

  
	
  XXVI

  	
   

  	
   

  	
  ECO
  and Excess Limits Liability

  	
   

  
	
  XXVII

  	
   

  	
   

  	
  Access to Records

  	
   

  
	
  XXVIII

  	
   

  	
   

  	
  Arbitration

  	
   

  
	
  XXIV

  	
   

  	
   

  	
  Governing
  Law

  	
   

  
	
  XXX

  	
   

  	
   

  	
  Entire
  Agreement/Interpretation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ATTACHMENTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Nuclear Incident Exclusion Clauses

  	
   

  
	
   

  	
   

  	
  Schedule A

  	
   

  
	
   

  	
   

  	
  Schedule B

  	
   

  



 


1

















 


QUOTA SHARE REINSURANCE AGREEMENT


 


between


 


COAST NATIONAL INSURANCE COMPANY (“Coast
National”)

SECURITY NATIONAL INSURANCE COMPANY (“Security National”)


BRISTOL WEST INSURANCE COMPANY (“Bristol”)

BRISTOL WEST CASUALTY INSURANCE COMPANY (“Bristol”)

(hereinafter called the “Company”)


 


and


 


THE PARTICIPANTS SUBSCRIBING TO THE
RESPECTIVE

INTERESTS AND LIABILITIES AGREEMENTS TO WHICH THIS AGREEMENT

IS ATTACHED

(hereinafter called the “Reinsurer”)


 


ARTICLE I


 


BUSINESS
COVERED


 


The Reinsurer hereby reinsures, subject to the limits and  terms and conditions contained herein;


 


A Quota Share
Percentage of the Company’s paid Ultimate Net Loss (“UNL”) of Loss Occurrences
on Policies attaching during the Term of this Agreement for Non-standard Auto
business (“Policies”).


 


ARTICLE II


 


TERM AND TERMINATION


 


This agreement
shall commence at 12:01 a.m. Eastern Standard Time, January 1, 2002,
except for Bristol which shall commence at 12:01 a.m. Eastern Standard Time,
July 1, 2002.  It shall remain in
effect until 11:59 p.m. December 31, 2004.


 


In the event of the cancellation/termination of this Agreement the
liability of the Reinsurer shall  cease
with respect to losses occurring after the effective date of
cancellation/termination date regardless of whether the Company is prohibited
by statute or otherwise to cancel or nonrenew the policy.


 


Special Terminations shall be in accordance with Article XVII
Paragraph 4.


 


ARTICLE III


 


QUOTA SHARE
PARTICIPATION


 


The Quota Share Percentage for Policies attaching during Underwriting
Year 2002 for Coast National and Security National, shall be 28%.  The Quota Share Percentage for Policies
attaching during Underwriting Year 2002 for Bristol shall be 80%.  The Company has the option to cede from 25%
to 60% for Policies attaching during the Underwriting Years 2003 and 2004.  The Company shall notify the Reinsurer of
the actual percentage, in writing, no later then 30 Business Days before
January 1st, of each Underwriting Year.  In the event the Company fails to notify the
Reinsurer, as provided herein, the Quota Share Percentage shall be 25%.


 


2

















 


ARTICLE IV


 


TERRITORY


 


This Agreement covers policies on risks located in the states of the
United States in which the Company was writing business as of the effective
date of this Agreement.  This Agreement
will cover risks located in other states if agreed to by the Reinsurer in
writing.


 


ARTICLE V


 


PREMIUM


 


The Company shall
pay the Reinsurer its Quota Share Percentage of the Company’s Subject Net
premium written for the Business Covered hereinafter referred to as the “Ceded
Premium.”


 


ARTICLE VI


 


LIMIT OF LIABILITY


 


The maximum amount
recoverable for any one Underwriting Year shall be 150% of the Ceded Premium
for that Underwriting Year subject to the third paragraph of this Article.


 


The maximum amount
recoverable for a Catastrophic Loss Occurrence shall be the Quota Share
Percentage applicable of the product of .5% times the Subject Net Premium
written for the Underwriting Year in which the loss occurred.  The maximum amount recoverable for the
aggregate of Catastrophic Loss Occurrences shall be the Quota Share Percentage
applicable of the product of .4% times the Subject Net Premium written for the
term of this Agreement.  For the
avoidance of doubt, Terrorist Event shall be deemed a Catastrophic Loss
Occurrence.


 


Subject to the
foregoing, the Reinsurer’s initial liability shall be limited to 80% of the
aggregate Ceded Premium for the term of this agreement.  In the event the Loss Ratio is in excess of
90% the Reinsurer shall be liable for an additional 15% of the aggregate Ceded
Premium for the term of this agreement. 
For the avoidance of doubt the Company shall be liable for losses above
a Loss Ratio of 80% up to 90% and for those losses above a Loss Ratio of 105%.


 


ARTICLE VII


 


CEDING COMMISSION


 


The Company shall
receive a commission equal to 25% of Ceded Premium.  This includes all acquisition costs, taxes and all other expenses
of whatever nature, except loss adjustment expense.


 


Effective on the
commencement of any calendar quarter, by giving 30 Business Days prior written
notice, the Company has the option to increase or decrease the percent of
Ceding Commission.  In such event the
Fee Income percentage is increased or decreased by the same amount.


 


ARTICLE VIII


 


FEE INCOME


 


On the date that
the Ceded Premium is paid hereunder the Company shall pay the Reinsurer an
amount equal to 8% of Ceded Premium, or the percent applicable of Ceded Premium
if changed in accordance with the Ceding Commission Article.  For the avoidance of doubt this Fee Income
is not a part of Ceded Premium.


 


3

















 


ARTICLE IX


 


COMMUTATION


 


The Company may,
at its sole option, commute this Agreement on December 31st,
2004 or any December 31st thereafter by giving the Reinsurer 30
Business Days prior written notice.  In
such event, within 45 Business Days of Commutation the Reinsurer shall pay the
Company a Profit Commission equal to the Experience Account Balance as of the
end of the prior month, if positive. 
Such payment shall be made within 45 Business Days of the commutation
date.  Upon payment of the Profit
Commission the Company shall fully and finally release the Reinsurer from all
past, present or future liabilities under this agreement.


 


ARTICLE X


 


EXPERIENCE ACCOUNT
BALANCE


 


At the end of each
calendar quarter, the Reinsurer shall calculate and report to the Company an
Experience Account Balance as follows:


 


(a) Ceded Premium paid; plus


(b) Fee Income paid; less


(c )Ceding Commission; less


(d) Reinsurer’s Margin; less


(e) Ultimate Net Loss paid by the Reinsurer hereunder


 


ARTICLE XI


 


REPORTS AND
REMITTANCES


 


Within 30 Business
Days following the end of each calendar month, the Company shall provide a
written report (the “Loss Report”) to the Reinsurer, which shall include the
following data, in the aggregate as well as by each Relevant Company named:


 


1. Subject Net Premium written and Collected for the
month.


 


2. Cumulative Subject Net Premium written and
Collected.


 


3. Ceded Net Premium written and Collected for the
month.


 


4. Cumulative Ceded Net Premium written and Collected.


 


5. Ceded Ultimate Net Loss paid by the Company during
the quarter, separating Allocated Loss


Adjustment Expense and Unallocated Loss Adjustment
Expense.


 


6. Ceded Cumulative Ultimate Net Loss paid by the
Company, separating Allocated Loss


Adjustment Expense and Unallocated Loss Adjustment
Expense.


 


7. Ceded Ultimate Net Loss outstanding including
incurred but not reported amounts, separating


Allocated Loss Adjustment Expense and Unallocated Loss
Adjustment Expense.


 


8. Ceded unearned premium.


 


4

















 


The Reinsurer
shall pay losses owed hereunder within 30 Business Days of receiving the Loss
Report.


 


The Company shall
pay the ceded Collected Premium, net of Ceding Commission, plus Fee Income,
simultaneous with the sending of the Loss Report.


 


In the event of
late payments on any of the foregoing by either party interest shall accrue at
an effective annual yield of 6% for the overdue period (the  “Interest”).


 


Within 30 Business
Days following the end of each calendar quarter, the Company shall provide a
written report to the Reinsurer that shall include Actuarial Data as mutually
agreed.


 


ARTICLE XII


 


OFFSET


 


Each party hereto
shall have, and may exercise at any time and from time to time, the right to
offset any undisputed balance or balances, whether on account of premiums or on
account of losses, due from such party to the other (or, if more than one, any
other) party hereto under this Agreement or under any other reinsurance
agreement heretofore or hereafter entered into by and between them, and may
offset the same against any undisputed balance or balances due to the former
from the latter under the same or any other reinsurance agreement between them,
and the party asserting the right of offset shall have and may exercise such
right whether any undisputed balance or balances due to such party from the
other are on account of premiums or on account of losses and regardless of the
capacity, whether as assuming insurer or as ceding insurer, in which each party
acted under the agreement or, if more than one, the different agreements
involved.


 


For the avoidance
of doubt the Reinsurer’s liability shall be reduced by any amounts owed to the
Reinsurer by any Relevant Company.


 


ARTICLE XIII


 


AGENCY/COMBINED
RESULTS


 


It is agreed that
Coast National shall be the agent for the Company authorized to receive any
payments due the Company and/or any communication relating to this
Agreement.  Any payments made to Coast
National by the Reinsurer or communications given to Coast National by the
Reinsurer shall discharge the Reinsurer as to all Relevant Companies in this
Agreement.  All calculations, including
but not limited to, Loss Corridor, Limit of Liability, Experience Account
Balance shall be on the combined sum of all Relevant Companies that are
included as Company.


 


ARTICLE XIV


 


MAXIMUM SUBJECT
NET PREMIUM


 


It is agreed that
the Maximum Subject Net Premium written for the Company for Underwriting Years
2002, 2003 and 2004, shall equal $400,000,000, 
$575,000,000  and  $650,000,000 respectively.


 


It is agreed that
the Maximum Subject Net Premium for Security National for Underwriting Years
2002, 2003 and 2004, shall equal $50,000,000, 
$65,000,000  and $80,000,000  respectively.


 


It is agreed that
the Maximum Subject Net Premium written in the state of Texas for Underwriting
Years 2002,  2003 and 2004, shall equal
$20,000,000,  $35,000,000  and 
$45,000,000 respectively.


 


5

















 


In the event the
aforementioned maximum Subject Net Premiums written for any individual
Underwriting Year are exceeded, the Quota Share Percentage applicable shall be
the quotient of (1) the product of (A) the Quota Share Percentage otherwise
applicable times (B) the maximum Subject Net Premium written, divided by (2)
the Subject Net Premium written.


 


ARTICLE XV


 


CANCELLATION FOR
NON-PAYMENT


 


If the Company
fails to pay Ceded Premium when due to the Reinsurer, the Reinsurer shall
promptly notify the Company in writing of the balance due.  If the Company fails to remit payment within
thirty (30) Business Days including interest at a rate of 6% per annum on the
balance, then the Reinsurer shall have the right to cancel the agreement on a
run-off basis for Policies attaching prior to cancellation and the Limit of
Liability shall be reduced to Ceded Premium paid, plus Fee Income paid, net of Ceding
Commission, less Reinsurer’s Margin, effective on the last day for which
payment was received.


 


ARTICLE XVI


 


CANCELLATION FOR
CHANGE IN CONTROL


In the event of a
Change in Control, in accordance with Schedule B, the Reinsurer or the
Company has the option to cancel coverage for the Relevant Company at the end
of the calendar quarter in which the Change in Control occurred, or any
subsequent quarter, on a cut-off basis. 
For the avoidance of doubt, in the event of such cancellation, the
Reinsurer shall have no further liability under or related to this Agreement to
the Relevant Company after the cancellation date.  Provided however that within 45 Business Days of such
cancellation, the Reinsurer shall pay the Relevant Company a Profit Commission
equal to the positive Experience Account Balance as of the end of the prior
month of the Relevant Company, if any. 
The payment shall be reflected in the Experience Account Balance as
Ultimate Net Loss paid and/or return premium paid by the Reinsurer.


 


Furthermore, in
the event this option is elected and after the cut-off of business for the
Relevant Company or Relevant Companies, the combined surplus of the remaining
Companies would be less than 50% of the combined surplus of all Relevant
Companies as of December 31, 2001, the Reinsurer or the Companies has the
option to cancel the entire agreement, at the end of such quarter or any
subsequent quarter, on a cut-off basis. 
For the avoidance of doubt, in the event of such cancellation, the
Reinsurer shall have no further liability under or related to this Agreement to
the Company.  In such event within 45
Business Days of such cancellation, the Reinsurer shall pay the Company a
Profit Commission equal to the positive Experience Account Balance, as of the
end of the prior month, if any.


 


ARTICLE XVII


 


SPECIAL
TERMINATION


 


1. This agreement
shall automatically terminate without the need for any action by any party
hereto in the event that any other party should at any time become insolvent,
or suffer any impairment of contributed capital, or file a petition in
bankruptcy, or enter liquidation, rehabilitation, or voluntary supervision, or
have a receiver appointed.


 


2. The Reinsurer
may terminate this agreement effective December 31, 2003 if the estimated
Loss Ratio from Inception through September 30, 2003 is greater than
85%.  If the Reinsurer elects to
exercise this option, it will notify the Company on or before November 15,
2003.  In the event the Company does not
agree with the estimated inception to date Loss Ratio it will notify the
Reinsurer within 5 days of receipt of the Notice of Cancellation of its desire
to have an independent actuary, appointed jointly, to determine the Loss
Ratio.  In the event the independent
actuary’s estimated inception to date Loss Ratio is less than 85% the
cancellation notice shall be rescinded.


 


6

















 


3. The Reinsurer
may terminate this agreement in the event the Company’s combined Policyholders
Surplus, as reported in their annual or quarterly statement in accordance with
statutory accounting policies and procedures, falls below 70% of the Company’s
combined Policyholders Surplus as of December 31, 2001.  However, in the event the Company’s combined
Policyholders Surplus increases to 80% of the Company’s combined Policyholders
Surplus as of December 31, 2001 prior to the effective date of
cancellation, the cancellation notice shall be rescinded.


 


4.  If termination is effective under paragraph
3, 30 Business Days notice shall be given. 
For termination under either paragraph 1, 2 or 3, the Reinsurer has the
option to run-off or cut off the in-force business.  In the event the Reinsurer elects to cut off the in-force
business it shall return the unearned Ceded Premium, net of Ceding Commission,
minus the net unpaid portion of the unearned Ceded Premium and it shall not be
liable for any losses occurring after the effective date of cancellation.


 


ARTICLE XVIII


 


EXCLUSIONS


 


A. Any loss or
liability accruing to the Company directly or indirectly from any insurance
written by or through and Pool or Association including Pools or Associations
in which membership by the Company is required under any statutes or
regulations (other than assigned risk automobile plans).


 


B.  War Risks as excluded by War Risk Exclusion
Clauses appearing in original policies.


 


C.  Assumed Reinsurance of any kind, except
policies written in Texas on County Mutual paper and reinsured by a Relevant
Company.


 


D.  Business excluded by the attached Nuclear
Incident Exclusion Clauses.


 


E.  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.


 


ARTICLE XIX


 


WARRANTY


 


The Company
warrants that it shall retain the Loss Corridor net and unreinsured, with the
exception of contract T2-2001-5417 between Inter-Ocean of Ireland Limited and
Coast National and Security National, effective January 1, 2001 and
expiring December 31, 2003, or a subsequent agreement thereto, provided
that the terms of such subsequent agreement have been reviewed and approved by
the Reinsurer in writing (such approval shall not be unreasonably
withheld).  Notwithstanding the foregoing,
the Company shall retain the Quota Share Percentage of Ultimate Net Loss in the
Loss Corridor that would otherwise be ceded net and unreinsured.


 


7

















 


ARTICLE XX


 


DEFINITIONS


 


Business Day shall
mean a day when banks in New York are open for business.


 


Ultimate Net Loss
shall mean Loss Payment and shall include Allocated Loss Adjustment Expenses,
plus Unallocated Loss Adjustment Expenses subject to a limit of 10% of Ceded
Premium, plus 80% of the Reinsurer’s Quota Share Percentage of the first $3,000,000
of Extra Contractual Obligations and or Excess Limits Liability.


 


Allocated Loss
Adjustment Expense and Unallocated Loss Adjustment Expense shall be in
accordance with statutory accounting rules, as described in the NAIC Annual
Statement Instructions.


 


Subject Net
Premiums shall mean the premium charged the insured, net of return premium, on
the Business Covered.   The Reinsurer
acknowledges that the current operating procedures of the Company results in no
uncollectable premium.  In the event
that these operating procedures produce uncollectable premium, the amount of
uncollectable premium shall not exceed 1% of the otherwise Subject Net
Premiums.


 


Collected Premium
shall mean the Subject Net Premium paid by the Insured.


 


Underwriting Year shall mean
the 12-month period from January 1 until December 31, both days
inclusive, except that for Bristol where, the first Underwriting Year shall be
the period from July 1, 2002 until December 31, 2002.  For the avoidance of doubt, all premiums on
all Policies attaching during such period and the loss liability on those
Policies shall be included for purposes of any calculation hereunder related to
any Underwriting Year.


 


Loss Ratio shall
mean the Company’s ceded Ultimate Net Loss plus incurred but not reported
divided by the ceded Subject Net Premium on the Business Covered.  This calculation shall be in the aggregate
and not for each individual Underwriting Year and shall include the Ultimate
Net Loss in the Loss Corridor.


 


Loss Corridor
shall mean the ceded Ultimate Net Loss retained by the Company (ie: Ultimate
Net Loss otherwise recoverable) from and including 80% to 90% of ceded Subject
Net Premium.


 


Catastrophic Loss
Occurrence shall mean a loss from the same occurrence involving more than one
risk.


 


The definition of
occurrence shall be as defined in the Company’s catastrophe reinsurance
agreement however shall include a Terrorist Event as defined in the
Schedule A attached.


 


Reinsurer’s Margin
shall mean 3% of Ceded Premium.


 


Relevant Company
shall mean an individual company named as part of Company.


 


ARTICLE XXI


 


LOSS SETTLEMENTS


 


The Company alone and at its full discretion shall adjust, settle or
compromise all claims and losses.  All
such adjustments, settlements, and compromises, including ex gratia payments,
shall be binding on the Reinsurer in proportion to its participation.  Ex gratia payments include only those
payments made to settle a loss or claim covered under the Company’s underlying
insurance policy for purposes of avoiding the costs of a lawsuit. Under no
circumstances will the Company make a payment for a claim or loss not covered
under the Company’s underlying insurance policy. The Company shall likewise at
its sole discretion commence, continue, defend, compromise, settle or withdraw
from actions, suits or proceedings and generally do all such matters and things
relating to any claim or loss as in its judgment may be beneficial or
expedient, and all payments made and costs and expenses incurred in connection
therewith or in taking legal


 


8

















 


advice therefore.  The Reinsurer
shall receive credit for their pro-rata share of all salvage and subrogation
received by the Company.  In the event
the Company shall fail or neglect to do so, the Reinsurer is hereby authorized
and empowered to bring any appropriate action in the name of the Company to
enforce any rights of subrogation.


 


ARTICLE XXII


 


NET RETAINED LINES
CLAUSE


 


This Agreement
applies only to that portion of any insurance or reinsurance which the company
retains net for its own account. 
Notwithstanding the foregoing, it is understood that the stop loss
outlined in Article XIX Warranty, shall not inure to the benefit of this
Agreement.


 


ARTICLE XXIII


 


NO THIRD PARTY
RIGHTS


 


No parties, other
than the Company and the Reinsurer, shall have any rights under this Agreement
unless specifically stated herein.


 


ARTICLE XXIV


 


ERRORS OR
OMISSIONS


 


Any inadvertent
delay, omission or error shall not 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
immediately upon discovery.


 


ARTICLE XXV


 


INSOLVENCY CLAUSE


 


In the event of
the insolvency of the Company, this reinsurance shall be payable directly to
the Company, or to its liquidator, receiver, conservator or statutory successor
immediately upon demand 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 Reinsurers of the
pendency of a claim against the Company which would involve a possible
liability on the part of the Reinsurers, indicating the policy or bond
reinsured, within a reasonable time after such claim is filed in the
conservation or liquidation proceeding or in the receivership.  It is further agreed that during the
pendency of such claim the Reinsurers may investigate such claim and interpose,
at their own expense, in the proceeding where such claim is to be adjudicated,
any defense or defenses that they may deem available to the Company or its
liquidator, receiver, conservator, or statutory successor.  The expense thus incurred by the Reinsurers
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 Reinsurers.


 


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 the Agreement as though such expense had been incurred by the
Company.


 


9

















 


The reinsurance shall be payable by the Reinsurers to the Company or to
its liquidator, receiver, conservator, or statutory successor, except as proved
by Section 4118 (a) (1) (A) and 1114 (c) of the New York Insurance Law or
except (a) where the Agreement specifically provides another payee of such
reinsurance in the event of the insolvency of the Company, or (b) where the
Reinsurers with the consent  of the
direct insured or insureds have voluntarily assumed under such policies and in
substitution for the obligations of the Company to the payees.  Then, and in that event only, the Company,
with the prior approval of the certificate of assumption on New York risks by
the Superintendent of Insurance of the State of New York, is entirely released
from its obligation and the Reinsurers pay any loss directly to payees under
such policy.


 


ARTICLE XXVI


 


EXTRA CONTRACTUAL
OBLIGATIONS AND EXCESS LIMITS LIABILITY


 


This Agreement
will extend to cover any claims-related extra contractual obligations and/or
excess limits liability arising because of, but not limited to, the following:


 


A. Failure of the Company to agree to pay a claim
within the policy limits or to provide a defense against such claims.


 


B. Actual or alleged bad faith, fraud, or negligence
in investigating or handling a claim or in rejecting an offer of settlement.


 


C. Negligence or breach of duty in the preparation of
the defense or the conduct of a trial or the preparation or prosecution of any
appeal and/or subrogation and/or any subsequent action resulting therefrom.


 


“Extra contractual
obligation” as used in this Agreement will mean those liabilities not covered
under any other provision of this Agreement for which the Company is liable to
its insured or a third-party claimant, or that the Company paid as its share of
a claims-related extra contractual obligation awarded against one or more of
its co-insurers.


 


“Excess limits
liability” as used in this Agreement will mean any amount for which the Company
would have been contractually liable to pay had it not been for the limits of
the reinsured policy.


 


There will be no
recovery hereunder where the extra contractual obligation or excess limits
liability has been incurred due to fraud committed by a member of the board of
directors or a corporate officer of the Company, acting individually,
collectively, or in collusion with a member of the board of directors, a
corporate officer, or a partner of any other corporation, partnership, or
organization involved in the defense or settlement of a claim on behalf of the
Company.


 


The date on which
any extra contractual obligation and/or excess limits liability is incurred by
the Company will be deemed, in all circumstances, to be the date of the
original loss.  Nothing in this
Article will be construed to create a separate or distinct loss apart from
the original covered loss that gave rise to the extra contractual obligations
and/or excess limits liability discussed in the preceding paragraphs.  The Reinsurers’ liability as respects extra
contractual obligations and/or excess limits liability under the Agreement will
be in addition to the indemnification coverage set.


 


10

















 


ARTICLE XXVII


 


ACCESS TO RECORDS


 


The Reinsurer or
its designated representative shall have access to the books and records of the
Company at all reasonable times for the purpose of obtaining information, which
pertains in any way to this reinsurance. 
This clause shall survive termination of this Agreement.


 


ARTICLE XXVIII


 


ARBITRATION


 


As a condition precedent to any right of action hereunder, any dispute
arising out of the interpretation, performance, or breach of this Contract,
including the formation or validity thereof, shall be submitted for decision to
a panel of three arbitrators.  Notice
requesting arbitration will be in writing and sent certified or registered
mail, return receipt requested.


 


Each party shall choose one arbitrator and the two arbitrators shall,
before instituting the hearing, choose an impartial third arbitrator who shall
preside at the hearing.  If either party
fails to appoint the arbitrator within thirty (30) days after being requested
to do so by the other party, the latter, after ten (10) days notice by
certified or registered mail of its intention to do so, may appoint the second
arbitrator.


 


If the two arbitrators are unable to agree upon the third arbitrator
within thirty (30) days of their appointment, the third arbitrator will be
chosen by ARIAS US.  All arbitrators
shall be disinterested active or former executives officers of insurance or
reinsurance companies or Underwriters at Lloyd’s London.


 


Within thirty (30) days after notice of appointment of all arbitrators,
the panel shall meet and determine timely periods for briefs, discovery
procedures and schedules for hearings. 
The panel shall be relieved of all judicial formality and shall not be
bound by the strict rules of procedure and evidence.  Unless the panel agrees otherwise, the arbitration will take
place in New York, but the venue may be changed when deemed by the panel to be
to be in the best interest of the arbitration proceeding.   The decision rendered by a majority of the
arbitrators shall be final and binding on both parties.  The panel shall make its decision
considering the custom and practice of the applicable insurance and reinsurance
business as promptly as possible following the termination of the
hearings.  Judgment upon the award may
be entered in any court having jurisdiction thereof.


 


Each party shall bear the expense of its own arbitrator and shall
jointly and equally bear with the other party the cost of the third
arbitrator.  The remaining costs of the
arbitration shall be divided equally between the parties.


 


If more than one reinsurer is involved in the same dispute, all such
reinsurers shall constitute and act as one party for purposes of this clause,
and communications shall be made by the Company to each of the reinsurers
constituting the one party provided, however, that nothing therein shall impair
the rights of such reinsures to assert several rather than joint defenses or
claims, nor be construed as changing the liability of the reinsurers under the
terms of this contract from several to joint.


 


ARTICLE XXIV


 


GOVERNING LAW


 


This agreement
shall be interpreted and governed by the laws of New York without regard to
that jurisdiction’s rules with respect to conflicts of laws.


 


11

















 


ARTICLE XXX


 


ENTIRE
AGREEMENT/INTERPRETATION


 


With respect to the business
being reinsured hereunder, “i” this Agreement constitutes the entire agreement
between the parties, and “ii” there are no understandings or agreements between
the parties other than those expressed in this Agreement.  Any change to or modification of this
Agreement will be made by written amendment to this Agreement and signed by the
parties hereto.


 


This Agreement is
between sophisticated parties, each of which has reviewed the Agreement and is
fully knowledgeable about its terms and conditions.  The parties therefore agree that this Agreement shall be construed
without regard to the authorship of the language and without any presumption or
rule of construction in favor of either of them.


 


 


12

















 


U.S.A.


 


NUCLEAR INCIDENT EXCLUSION CLAUSE – LIABILITY
– REINSURANCE


 


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


 


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


 


Limited
Exclusion Provision. *


 


I.                                         It is agreed
that the policy does not apply under any liability coverage, to (injury,
sickness, disease, death or destruction*) (bodily injury or property
damage) with respect to which an insured under the policy is also an insured
under a nuclear energy liability policy issued by Nuclear Energy Liability
Insurance Association, Mutual Atomic Energy Liability Underwriters or Nuclear
Insurance Association of Canada, or would be an insured under any such policy
but for its termination upon exhaustion of its limit of liability.


II.                                     Family Automobile
Policies (liability only), Special Automobile Policies (private passenger
automobiles, liability only), Farmers Comprehensive Personal Liability Policies
(liability only), Comprehensive Personal Liability Policies (liability only) or
policies of a similar nature; and the liability portion of combination forms
related to the four classes of policies stated above, such as the Comprehensive
Dwelling Policy and the applicable types of Homeowners Policies.


III.                                 The inception dates
and thereafter of all original policies as described in II above, whether new,
renewal or replacement, being policies which either


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


(b)   become
effective before that date and contain the Limited Exclusion 


Provision set out above;


provided this paragraph (2) shall not be applicable to Family
Automobile Policies, Special Automobile Policies, or policies or combination
policies of a similar nature, issued by the Reassured on New York risks, until
90 days following approval of the Limited Exclusion Provision by the
Governmental Authority having jurisdiction thereof.


 












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


 


13

















 


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


 


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


 


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


 


Broad
Exclusion Provision. *


 


It is agreed that the policy does not apply:


 


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


 


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


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


 


II.             Under any Medical Payments Coverage, or
under any Supplementary Payments Provision relating to (intermediate medical or surgical
relief   (first aid, to
expenses incurred with respect to (bodily injury, sickness, disease or death   (bodily injury   resulting from the hazardous properties of nuclear material and
arising out of the operation of a nuclear facility by any person or
organization.


 


III.         Under any Liability Coverage to (injury,
sickness, disease, death or destruction  (bodily injury or property damage   resulting from the hazardous properties of nuclear material, if


 


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


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


 


14

















 


(c)   the
(injury,
sickness, disease, death or destruction (bodily injury or property
damage arises out of the furnishing by an insured of services, materials, parts
or equipment in connection with the planning, construction, maintenance,
operation or use of any nuclear facility, but if such facility is located
within the United States of America, its territories, or possessions or Canada,
this exclusion (c) applies only to (injury to or destruction of property at such nuclear
facility  (property damage to
such nuclear facility and any property thereat.


 


IV. 
As used in this endorsement:


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


(a)          any nuclear reactor,


(b)         any equipment or device designed or used for
(1) separating the isotopes of uranium or plutonium, (2) processing or
utilizing spent fuel, or (3) handling, processing or packaging waste,


(c)          any equipment or device used for the
processing, fabricating or alloying of special nuclear material if at any time
the total amount of such material in the custody of the insured at the premises
where such equipment or device is located consists of or contains more than 25
grams of plutonium or uranium 233 or any combination thereof, or more than 250
grams of uranium 235,


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


(With respect to injury to or destruction of property, the word
“injury” or “destruction”, “property damage” includes
all forms of radioactive contamination of property. Includes all forms of radioactive
contamination of property.)


 


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


 


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


(ii)     statutory liability insurance
required under Chapter 90, General Laws of Massachusetts, until 90 days
following approval of the Broad Exclusion Provision by the Governmental
Authority having jurisdiction thereof.


 


(4)           Without in any way
restricting the operation of paragraph (1) of this Clause, it is understood and
agreed that paragraphs (2) and (3) above are not applicable to original
liability


 


15

















 


policies of the Reassured in Canada and that with respect to such
policies this Clause shall be deemed to include the Nuclear Energy Liability
Exclusion Provisions adopted by the Canadian Underwriters’ Association of the
Independent Insurance Conference of Canada.


 


16

















 


U.S.A.


 


NUCLEAR INCIDENT
EXCLUSION CLAUSE – PHYSICAL DAMAGE – REINSURANCE


 


(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.


 


17

















 


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.


 


18

















 


Schedule A


 


For purposes of this Agreement, “Terrorist Event” shall mean a
disaster, accident, casualty or loss or series of disasters, accidents,
casualties or losses arising out of an event or series of related events,
regardless of time, space or geography, that:


 


1.               directly result in loss or loss expense
that would otherwise by covered by this Agreement,


2.               occur in time of either peace or war,


3.               occur on land, on sea, in the air, in
space, or any combination thereof, and


4.               are directly caused by, conducted by,
engaged in, or coordinated by any hostile or unfriendly person or persons,
organization, group, sub-group, power, authority or force, whether
governmental, quasi-governmental, military, quasi-military, civilian, ethnic,
religious, quasi-religious, or otherwise,


 


and that are directly occasioned by, directly caused by, directly
result from, directly arise from, or directly relate to:


 


1.               any war, civil war, religious war,
ethnic war, racial war, or tribal war, whether declared or undeclared, whether
recognized or unrecognized, whether solemn, public, perfect, mixed, or private;


 


2.               any war, warlike, hostile or unfriendly
acts, actions or activities against a government of any country, any political
sub-division or public authority thereof, or any of its religious, public or
private organizations, businesses or citizens;


 


3.               any terroristic or violent acts, actions
or activities against a government of any country, any political sub-division
or public authority thereof, or any of its religious, public or private
organizations, businesses or citizens;


 


4.               any invasion of any country, any
political sub-division, public authority, territory or part thereof;


 


5.               any acts, actions or activities of
foreign enemies, whether governmental, quasi-governmental, ethnic, religious,
quasi-religious, or otherwise against a government of a country, any political
sub-division or public authority thereof, of any of its religious, public or private
organizations, businesses or citizens;


 


6.               any acts, actions or activities of
rebellion, insurrection, or revolution against a government of any country or
any political sub-division or public authority thereof;


 


7.               any acts, actions or activities of
military power, usurped power or martial law;


 


8.               any confiscation by act or order of any
governmental or quasi-governmental authority or activities;


 


9.               defending, hindering, or combating
against an actual, expected or impending acts, actions, activities or attacks
caused by, resulting from or occasioned by any of the above.


 


The term “acts, actions, or activities” as used herein shall include
but not be limited to:


 


1.               murder or infliction of bodily injury,


 


2.               hostage taking, hi-jacking or
kid-napping,


 


3.               extortion, theft of robbery,


 


19

















 


4.               causing any fire of flood,


 


5.               infecting, interfering with or
disrupting any (a) communication or information system (including the release
or insertion of any virus, worm, or Trojan horse into any communication or
information system), or (b) supply of water, power, oil, gas or other
fundamental resource,


 


6.               use of any weapon or explosive including
bombs or bombing,


 


7.               use of release of any contaminant,
pollutant, biological, chemical, gaseous, poisonous or other hazardous
materials or weapons that may harm or endanger any person, property, animals or
the environment,


 


8.               seizure, blockage, damage to, or
destruction of public or private property including governmental and
infrastructure facilities,


 


9.               seizure, blockage, damage to, or
destruction of any means of public or private transport including subways,
buses, trains, planes, ships, boats, ferries, and all other aircraft and
watercraft, or


 


10.         seizure, blockage, damage to, or destruction
of tunnels, roads, streets and highways, or other places of public use, or


 


11.         threatening to commit any of the above acts,
actions, or activities.


 


Any loss and loss expense arising from any of the above is included
regardless of any other cause or event contributing concurrently or in any
sequence to the loss or event.  The
public declarations and descriptions, written or oral, of the senior officials
or leadership of the executive or legislative branch of any government or political
subdivision or public authority thereof directly or indirectly affected by any
of the above events, acts, actions, activities or conditions shall be
conclusively determinative of the existence or non-existence of any of the
above events, acts, actions, activities or conditions.


 


It shall not be a Terrorist Event if the Reinsured can
reasonably establish to the reasonable satisfaction of the Reinsurer that the
acts, actions, or activities were not conducted for the purposes of (i)
furthering the political, ideological, philosophical, racial, ethnic, social or
religious causes or objectives of the perpetrators, (ii) overthrowing or
influencing the actions or policies of any government, or (iii) intimidating or
putting the public or any part or section of the public in fear.


 


20

















 


Schedule B


 


A Change in Control shall be deemed to have occurred if (a)
KKR, its affiliates and the Management Group shall at any time not own, in the
aggregate, directly or indirectly, beneficially and of record, at least 35% of
the outstanding voting stock of any of the Reinsureds and/or (b) any person,
entity or group shall at any time have acquired direct or indirect beneficial
ownership of a percentage of the outstanding voting stock of any of the
Reinsureds that exceeds the percentage of such voting stock then beneficially
owned, in the aggregate, by KKR, its affiliates and
the Management Group, unless in the case of either (a) or (b) above,
KKR, its affiliates and the Management Group have, at such time, the right
or the ability by voting power, contract or otherwise to elect or designate for
election a majority of the board of directors of the relevant Reinsured.


 


KKR shall mean each of Kohlberg Kravis Roberts & Co., L.P. and KKR
Associates, L.P..  Management Group
shall mean, at any time, the Chairman of the Board, the President, any
Executive Vice President or Vice President, the Chief Financial Officer of
the relevant Reinsured.


 


21

















 


Interests and Liabilities Agreement

(hereinafter referred to as the “Agreement”)


 


to the


 


Quota Share Reinsurance Contract
(hereinafter referred to as the “Contract”)


 


It is hereby mutually agreed by


 


Coast National Insurance Company (“Coast
National”)
Anaheim, California


 


Security National Insurance Company
(“Security National”)
Davie, Florida


 


Bristol West Insurance Company (“Bristol”)
Philadelphia, Pennsylvania


and


Bristol West Casualty Insurance Company
(“Bristol”)
Independence, Ohio

(hereinafter together referred to as the “Subscribing Company”)


 


and


 


Chubb Atlantic Reinsurance Specialists Ltd.
on behalf of

Federal Insurance Company

Indianapolis, Indiana

(hereinafter referred to as the “Subscribing Reinsurer”)


 


Under the terms of the Agreement attached hereto, the Subscribing
Reinsurer shall have a 10% participation in the interest and liabilities of the
Reinsurer described in the attached Agreement.


 


Such participants shall be several and not joint with the participation
of other subscribing reinsurers, and under no circumstances shall the
Subscribing Reinsurer participate in the interests and liabilities, if any, of
the other subscribing reinsurers in said Agreement.


 


This Agreement shall commence at 12:01 a.m. Eastern Standard Time,
January 1, 2002, except for Bristol which shall commence at 12:01 a.m.
Eastern Standard Time, July 1, 2002. 
It shall remain in effect until 11:59 p.m. December 31, 2004,
unless terminated in accordance with the provisions of the attached Agreement.


 


22

















 


In Witness Whereof,
the party hereto have caused this Interests and Liabilities Agreement to be
signed in duplicate by their duly authorized representatives.


 


 


	
  Anaheim, California, this
                   
  day of                  
  in the year 2002.

  
	
   

  
	
   

  
	
   

  	
  /s/ Gregory J. Hammond

  	
   

  
	
   

  	
  Coast
  National Insurance Company

  
	
   

  
	
   

  
	
  Davie, Florida, this
                   
  day of
                   
  in the year 2002.

  
	
   

  
	
   

  
	
   

  	
  /s/ Gregory J. Hammond

  	
   

  
	
   

  	
  Security
  National Insurance Company

  
	
   

  
	
   

  
	
  Philadelphia, Pennsylvania, this
                   
  day of
                   
  in the year 2002.

  
	
   

  
	
   

  
	
   

  	
  /s/ Alexis S. Oster

  	
   

  
	
   

  	
  Bristol West
  Insurance Company

  
	
   

  
	
   

  
	
  Independence, Ohio, this
                   
  day of
                   
  in the year 2002.

  
	
   

  
	
   

  
	
   

  	
  /s/ Alexis S. Oster

  	
   

  
	
   

  	
  Bristol West
  Casualty Insurance Company

  
	
   

  
	
   

  
	
  Bermuda, this
                   
  day of
                   
  in the year 2002.

  
	
   

  
	
   

  
	
   

  	
  /s/ Jeb Rhoads

  	
   

  
	
   

  	
  Chubb Atlantic Reinsurance Specialists Ltd.

  on behalf of Federal Insurance Company 

  



 


23