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Exhibit 10.38
 SURETY QUOTA SHARE TREATY
 Effective: January, 1, 2007
  CONTINENTAL CASUALTY COMPANY
  WESTERN SURETY COMPANY
   ARTICLE 1  BUSINESS COVERED
   ARTICLE 2  TERM AND CANCELLATION




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ARTICLE 3  TERRITORY
  ARTICLE 4  ORIGINAL CONDITIONS
   ARTICLE 5  DEFINITIONS
 A.
    
    As respects the use of Company within this Agreement, it is understood and agreed that
Company shall mean the insurance companies owned directly or indirectly by CNA Financial
Corporation which are affiliated with, controlled by or under common management of CNA, with
the exception of the life insurance companies and their respective subsidiaries.B.
    
    The term Extra Contractual Obligations as used in this Agreement shall mean those
liabilities not covered under any other provision of this Agreement and which arise from the
handling of any claim on business covered hereunder, such liabilities arising because of, but
not limited to, the following: failure by the Company to settle within the Policy limit, or by
reason of alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement
or in preparation of the defense or in the trial of any action against its insured or
reinsured or in the preparation or prosecution of an appeal consequent upon such action.C.
    
    The term(s) Loss and Losses as used in this Agreement shall mean that amount incurred by
the Company in respect of any settlements, awards, or judgments (including interest where
classified as loss) incurred in connection with any Policy reinsured hereunder after deduction
for all recoveries, salvages, subrogations and other reinsurances, whether said reinsurances
are recovered or not. The Reinsurer and Company agree that the convention to be followed when
determining when a loss is incurred is that the date of notice of the actual event of loss or
default shall be the date the loss is incurred, except that when the date of notice of the
actual event of loss or default occurs after the expiration of a Policy then the date
immediately preceding the date the Policy expires shall be deemed to be the date the loss is
incurred.D.
    
    The term Loss Expenses as used in this Agreement shall mean all expenses incurred by the
Company in the investigation, appraisal, adjustment, litigation and/or defense of claims under
the business reinsured hereunder, including court costs, interest accrued prior to final
judgment if included as expense on reinsured Policies, interest accrued after final judgment,
but excluding internal office expenses, salaries, per diem, and




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other remuneration of regular Company employees unless diverted from their normal duties
to handle such Loss.E.
    
    The term Net Premiums Written as used in this Agreement shall mean the gross written
premiums on Policies written, renewed or assumed during the term of this Agreement on business
the subject of this Agreement, less cancellation and return premiums and less premiums ceded
on all other reinsurance which inures to the benefit of this Agreement on business the subject
of this Agreement.F.
    
    The term Net Liability as used in this Agreement shall mean the remaining portion of the
Companys gross liability on each Policy reinsured under this Agreement after deduction of all
reinsurance which inures to the benefit of this Agreement.G.
    
    The term(s) Policy and Policies as used in this Agreement shall mean the Companys
binders, riders, policies, endorsements, bonds and contracts providing insurance and
reinsurance on the Surety Business covered under this Agreement.H.
    
    The term Surety Business as used in this Agreement means the issuance, writing or
underwriting of policies or licenses with respect to the following: (i) bonds required by
statutes or ordinances guaranteeing the payment of certain taxes and fees and providing
consumer protection as a condition to granting licenses to engage in various trades or
professions, (ii) bonds required by statutes, courts or legal documents for the protection of
those on whose behalf a fiduciary acts, (iii) bonds required by statutes or ordinances to
guarantee the lawful and faithful performance of the duties of office by public officials,
(iv) bonds required by statutes to protect against improper actions by notaries public, and
(v) bonds which secure the payment and/or performance of an obligation under a written
contract; but it shall not include, without limitation, financial guaranty bonds and the
issuance, writing or underwriting of bonds and licenses which cover Losses arising from
employee dishonesty.
 ARTICLE 6  PREMIUM
  ARTICLE 7  CEDING COMMISSION




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ARTICLE 8  LOSS SETTLEMENTS & NOTICES
       ARTICLE 9  EXCESS OF ORIGINAL POLICY LIMITS




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ARTICLE 10  EXTRA CONTRACTUAL OBLIGATIONS
    ARTICLE 11  REPORTS AND REMITTANCES
 A.
    
    Within 30 calendar days following the end of each calendar quarter, the Company or its
representatives shall report to the Reinsurer:
 1.
    
    Net Premium Written accounted for during the quarter;2.
    
    The ceding commission applicable to the above as provided for in this
Agreement;3.
    
    Losses and Loss Expenses paid during the quarter, less inuring reinsurance;4.
    
    Subrogation, salvage, or other recoveries credited during the quarter;5.
    
    Outstanding loss reserves.
 The positive balance of (1) less (2) less (3) plus (4) shall be remitted by the Company to
the Reinsurer within 15 calendar days after the date of such report. Any balance shown to
be due the Company shall be remitted by the Reinsurer within 15 calendar days after receipt
of such report.B.
    
    Annually the Company or its representatives shall furnish the Reinsurer with such information
as the Reinsurer may require to complete its Annual Convention Statement.C.
    
    The Reinsurer shall maintain the required reserves as to the Reinsurers portion of claims
and Losses hereunder. In the event the Company is required to provide collateral for Losses
that the Reinsurer is liable for hereunder, upon mutual consent, the Reinsurer shall provide
funding for such collateral in a manner acceptable to both parties. All interest earned on
such funding provided by the Reinsurer shall first be credited to the Company up to the actual
cost of establishing the collateral mechanism, after which all interest shall be credited to
the Reinsurer on a quarterly basis. Upon final payment of all claims or balances associated
with such Loss or at such time as all claims associated




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with such Loss are closed by the Company, any funding balance shall be returned promptly to
the Reinsurer.
 ARTICLE 12  OFFSET
  ARTICLE 13  CURRENCY
   ARTICLE 14  ACCESS TO RECORDS




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ARTICLE 15  ERRORS AND OMISSIONS
  ARTICLE 16  TAXES
  ARTICLE 17  INSOLVENCY




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ARTICLE 18  AMENDMENTS
  ARTICLE 19  ARBITRATION




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ARTICLE 20  CHOICE OF LAW
  ARTICLE 21  NOTICES
  
  
 ARTICLE 22  ENTIRE AGREEMENT
  ARTICLE 23  FUNDING OF RESERVES
  A.
    
    As regards policies issued by the Company coming within the scope of this Agreement, 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 shall forward to the Reinsurer a statement showing the
proportion of such reserves which is applicable to the Reinsurer. The Reinsurer hereby agrees
to fund such reserves in respect of unearned premium, known outstanding losses that have been
reported to the Reinsurer and loss expense relating thereto, losses and loss expenses paid by
the Company but not recovered from the Reinsurer, plus reserves for losses and loss expenses
incurred but not reported, as shown in the statement prepared by the Company (hereinafter
referred to as Reinsurers Obligations) by cash advances, Trust Agreement or a Letter of
Credit. The Reinsurer shall have the option of determining the method of funding provided it
is acceptable to the insurance regulatory authorities having jurisdiction over the Companys
reserves and provided that the issuing bank (i) is approved by the NAIC Securities Valuation
Office for Letters of Credit and (ii) if applicable, has been




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assigned a Credit Rating by the LACE Financial Corporation of C or above for both Letters of
Credit and Trust Agreements.B.
    
    When funding by a Letter of Credit, the Reinsurer agrees to apply for and secure timely
delivery to the Company of a clean, irrevocable and unconditional Letter of Credit issued by a
bank consented to by the Company with such consent not being unreasonably withheld, and
containing provisions acceptable to the insurance regulatory authorities having jurisdiction
over the Companys reserves in an amount equal to the Reinsurers Obligations. Such Letter of
Credit shall be issued for a period of not less than one year, and shall be automatically
extended for one year from its date of expiration or any future expiration date unless 60
calendar days (90 calendar days where required by insurance regulatory authorities) prior to
any expiration date the issuing bank shall notify the Company by certified or registered mail
that the issuing bank elects not to consider the Letter of Credit extended for any additional
period. At any time subsequent to the issuance of the Letter of Credit or establishment of
the Trust Agreement, the Company may withdraw its consent to the use of an issuing bank, with
such withdrawal right to be exercised in the Companys reasonable discretion, and the
Reinsurer shall move the collateral to another Company-approved issuing bank in accordance
with the provisions of paragraph A.C.
    
    The Reinsurer and Company agree that the Letters of Credit, or other method of funding,
provided by the Reinsurer pursuant to the provisions of this Article may be drawn upon at any
time, notwithstanding any other provision of this Agreement, and be utilized by the Company or
any successor, by operation of law, of the Company including, without limitation, any
liquidator, rehabilitator, receiver or conservator of the Company for the following purposes:
 1.
    
    to reimburse the Company for the Reinsurers Obligations, the payment of which is due
under the terms of this Agreement and which has not been otherwise paid;2.
    
    to make refund of any sum which is in excess of the actual amount required to pay the
Reinsurers Obligations under this Agreement;3.
    
    to fund an account with the Company for the Reinsurers Obligations. Such cash deposit
shall be held in an interest bearing account separate from the Companys other assets, and
interest thereon not in excess of the prime rate shall accrue to the benefit of the
Reinsurer;4.
    
    to pay the Reinsurers share of any other amounts the Company claims are due under this
Agreement.
 D.
    
    In the event the amount drawn by the Company on any Letter of Credit, or other method of
funding, is in excess of the actual amount required for in Paragraphs C.1. or C.3. above, or
in the case of Paragraph C.4. above, the actual amount determined to be due, the Company shall
promptly return to the Reinsurer the excess amount so drawn. All of the foregoing shall be
applied without diminution because of insolvency on the part of the Company or the Reinsurer.E.
    
    The issuing bank shall have no responsibility whatsoever in connection with the propriety of
withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that
withdrawals are made only upon the order of properly authorized representatives of the
Company.




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F.
    
    At quarterly intervals, or less frequently as agreed but never less frequently than annually,
the Company shall prepare a specific statement of the Reinsurers Obligations, for the sole
purpose of amending the Letter of Credit or other method of funding, in the following manner:
 1.
    
    If the statement shows that the Reinsurers Obligations exceed the balance of the
Letter of Credit as of the statement date, the Reinsurer shall, within 15 calendar days
after receipt of notice of such excess, secure delivery to the Company of an amendment to
the Letter of Credit increasing the amount of credit by the amount of such difference.
Should another method of funding be used, the Reinsurer shall, within the time period
outlined above, increase such funding by the amount of such difference.2.
    
    If, however, the statement shows that the Reinsurers Obligations are less than the
balance of the Letter of Credit as of the statement date, the Company shall, within 15
calendar days after receipt of written request from the Reinsurer, release such excess
credit by agreeing to secure an amendment to the Letter of Credit reducing the amount of
credit available by the amount of such excess credit. Should another method of funding be
used, the Company shall, within the time period outlined above, decrease such funding by
the amount of such excess.3.
    
    If the Reinsurer does not agree with the statement of the Reinsurers Obligations as
furnished by the Company, a mutually agreed upon independent national actuarial firm shall
be engaged to evaluate the Reinsurers Obligations covered under this Agreement and such
evaluation shall be binding upon the parties hereof. Such cost shall be shared equally
between the Company and the Reinsurer. If the parties fail to agree on the selection of an
independent national actuarial firm, each of the parties shall name two, of whom the other
shall decline one, and the final decision shall be made by drawing lots. As respects the
terms of this paragraph, any actuarial firm selected by drawing lots shall be disinterested
in the outcome of the calculation and the employee of same engaged to evaluate the
Reinsurers Obligations hereunder shall not be under the influence of either party hereto
and shall be a Fellow of the Casualty Actuarial Society. It is agreed by the parties
hereto that the Arbitration Article of this Agreement shall not apply to the resolution of
disputes arising under the terms of this paragraph. The evaluation by the independent
national actuarial firm shall be binding on the Company and the Reinsurer.
 G.
    
    The Reinsurer shall be responsible for all costs and fees associated with the establishment
and maintenance of any cash advance, Letter of Credit and/or Trust Agreement mandated by the
provisions of this Article.
 ARTICLE 24  CONTINGENT COLLATERAL




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1.
    
    has been assigned an A.M. Bests insurer financial strength rating below A- or a Standard &
Poors insurer financial strength rating below A- (a Standard & Poors Insurance Solvency
International rating of less than BBB shall apply as respects alien Reinsurers other than
Underwriting Members of Lloyds, London, and a Lloyds Syndicate Assessment (LSA) rating of
less than three shall apply as respects Underwriting Members of Lloyds London); or2.
    
    has suffered a surplus as regards policyholders loss of more than 25% (twenty-five percent)
from either the inception of this Agreement or the date of the filing of the Reinsurers most
recent financial statement with the authorities having jurisdiction over the Reinsurer,3.
    
    ceases writing new or renewal assumed reinsurance business,
  a.
    
    the amount of loss and loss expense paid by the Company but not recovered from the Reinsurer;b.
    
    reserves for loss and loss expense reported and outstanding;c.
    
    reserves for loss and loss expense incurred but not reported; andd.
    
    if applicable, unearned premium.




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ARTICLE 25  SERVICE OF SUIT




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ARTICLE 26  SEVERABILITY
   ARTICLE 27  HONORABLE UNDERTAKING
  ARTICLE 28  SPECIAL PROVISION
  A.
    
    should the ownership, control or management of the Company or the Reinsurer be altered or
changed, in whole or in part, in such a way that receipt or payment of funds or any other
contemplated transaction under this Agreement would be prohibited by United States of America
statute, regulation and/or other applicable law, orB.
    
    should the Company or the Reinsurer become subject to restrictions imposed by the United
States government, so that receipt or payment of funds or any other contemplated transaction
under this Agreement would be prohibited by United States of America statute, regulation
and/or other applicable law,
  ARTICLE 29  CONFIDENTIALITY




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IN WITNESS WHEREOF
  CONTINENTAL CASUALTY COMPANY
 
 
 
  WESTERN SURETY COMPANY