Underlying Property Catastrophe Excess of Loss Reinsurance Contract



 Exhibit 10.6 

CONFIDENTIAL TREATMENT REQUESTED 
 BY
HERITAGE INSURANCE HOLDINGS, LLC 
 UNDERLYING PROPERTY CATASTROPHE EXCESS OF LOSS 

REINSURANCE CONTRACT 
 issued
to 
 HERITAGE PROPERTY & CASUALTY INSURANCE COMPANY 

St. Petersburg, Florida 

including any and/or all companies that are or may hereafter become affiliated therewith 

* [***]: Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions. 








 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  

 CATASTROPHE EXCESS OF LOSS AND AGGREGATE 

REINSURANCE CONTRACT 

TABLE OF CONTENTS 
  

							
	 Article
	  	Page	 
			
	ARTICLE 1	 	 BUSINESS COVERED
	  	 	1	  
			
	ARTICLE 2	 	 RETENTION AND LIMIT
	  	 	1	  
			
	ARTICLE 3	 	 TERM
	  	 	1	  
			
	ARTICLE 4	 	 SPECIAL TERMINATION
	  	 	1	  
			
	ARTICLE 5	 	 TERRITORY
	  	 	3	  
			
	ARTICLE 6	 	 EXCLUSIONS
	  	 	3	  
			
	ARTICLE 7	 	 PREMIUM
	  	 	4	  
			
	ARTICLE 8	 	 DEFINITIONS
	  	 	5	  
			
	ARTICLE 9	 	 EXTRA CONTRACTUAL OBLIGATIONS/EXCESS OF POLICY LIMITS
	  	 	7	  
			
	ARTICLE 10	 	 NET RETAINED LIABILITY
	  	 	8	  
			
	ARTICLE 11	 	 ORIGINAL CONDITIONS
	  	 	8	  
			
	ARTICLE 12	 	 NO THIRD PARTY RIGHTS
	  	 	9	  
			
	ARTICLE 13	 	 NOTICE OF LOSS AND LOSS SETTLEMENTS
	  	 	9	  
			
	ARTICLE 14	 	 CURRENCY
	  	 	9	  
			
	ARTICLE 15	 	 OBLIGATIONS AND COLLATERAL RELEASE
	  	 	9	  
			
	ARTICLE 16	 	 TAXES
	  	 	12	  
			
	ARTICLE 17	 	 ACCESS TO RECORDS
	  	 	12	  
			
	ARTICLE 18	 	 CONFIDENTIALITY
	  	 	12	  
			
	ARTICLE 19	 	 INDEMNIFICATION AND ERRORS AND OMISSIONS
	  	 	13	  
			
	ARTICLE 20	 	 INSOLVENCY
	  	 	14	  
			
	ARTICLE 21	 	 ARBITRATION
	  	 	15	  
			
	ARTICLE 22	 	 SERVICE OF SUIT
	  	 	16	  
			
	ARTICLE 23	 	 GOVERNING LAW
	  	 	17	  
			
	ARTICLE 24	 	 ENTIRE AGREEMENT
	  	 	17	  
			
	ARTICLE 25	 	 NON-WAIVER
	  	 	17	  
			
	ARTICLE 26	 	 MODE OF EXECUTION
	  	 	17	  


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

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 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  

 Attachments 

Pools, Associations and Syndicates Exclusion Clause 
 Total
Insured Value Exclusion Clause 
 Mold Exclusion 
 Nuclear
Incident Exclusion Clause - Physical Damage – Reinsurance - U.S.A. 
 Terrorism Exclusion (Property Treaty Reinsurance) N.M.A. 2930c 

Trust Agreement Requirements Clause 

  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

ii 








 UNDERLYING PROPERTY CATASTROPHE EXCESS OF LOSS 

REINSURANCE CONTRACT 
 (the
“Contract”) 
 issued to 

HERITAGE PROPERTY & CASUALTY INSURANCE COMPANY 

St. Petersburg, Florida 
 including
any and/or all companies that are or may hereafter become affiliated therewith 
 (collectively, the “Company”) 

by 
 OSPREYRE 

(the “Reinsurer”) 

ARTICLE 1 
 BUSINESS
COVERED 
 This Contract is to indemnify the Company in respect of the liability that may accrue to the Company as a result of loss or losses under
Policies classified by the Company as Florida Personal Lines Property, in force at the inception of this Contract, or written or renewed during the term of this Contract by or on behalf of the Company, subject to the terms and conditions herein
contained. 
 ARTICLE 2 

RETENTION AND LIMIT 
 The Reinsurer shall
be liable in respect of each Loss Occurrence, for the Ultimate Net Loss over and above an initial Ultimate Net Loss of $6,000,000 each Loss Occurrence, subject to an aggregate limit of liability to the Reinsurer of $3,000,000 for all Loss
Occurrences. 
 ARTICLE 3 

TERM 
 This Contract shall take effect at
12:01 a.m., Eastern Standard Time, June 1, 2013, and shall remain in effect until 12:01 a.m., Eastern Standard Time, June 1, 2014, applying to Loss Occurrences commencing during the term of this Contract. 

ARTICLE 4 
 SPECIAL
TERMINATION 
  

	A.	The Company may terminate the Reinsurer’s percentage share in this Contract at any time by giving written notice to the Reinsurer in the event of any of the following circumstances: 


 

	 	1.	The Reinsurer ceases underwriting operations. 









 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  


	 	2.	A state insurance department or other legal authority orders the Reinsurer to cease writing business, or the Reinsurer is placed under regulatory supervision. 


 

	 	3.	The Reinsurer has become insolvent or has been placed into liquidation or receivership (whether voluntary or involuntary), or there have been instituted against it proceedings for the appointment of a receiver,
liquidator, rehabilitator, conservator, trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations. 


 

	 	4.	The Reinsurer’s policyholders’ surplus (or the equivalent under the Reinsurer’s accounting system) as reported in such financial statements of the Reinsurer as designated by the Company, has been reduced
by 20% of the amount thereof at any date during the prior 12-month period (including the period prior to the inception of this Contract). 

  

	 	5.	The Reinsurer has merged with or has become acquired or controlled by any company, corporation, or individual(s) not controlling the Reinsurer’s operations at the inception of this Contract. 


 

	 	6.	The Reinsurer has retroceded its entire liability under this Contract without the Company’s prior written consent, except for retrocessions to members of the Reinsurer’s holding company group.


  

	B.	Termination shall be effected on a cut-off basis and the Reinsurer shall have no liability with respect to Loss Occurrences commencing after termination. The reinsurance premium due the Reinsurer hereunder shall be
prorated based on the period of the Reinsurer’s participation hereon, and the Reinsurer shall immediately return any excess reinsurance premium received. 

  

	C.	Additionally, in the event of any of the circumstances listed in paragraph A of this Article, the Company shall have the option to commute the Reinsurer’s liability for losses on Policies covered by this Contract.
In the event the Company and the Reinsurer cannot agree on the commutation amount, they shall appoint an actuary and/or appraiser to assess such amount and shall share equally any expense of the actuary and/or appraiser. If the Company and the
Reinsurer cannot agree on an actuary and/or appraiser, the Company and the Reinsurer each shall nominate three individuals, of whom the other shall decline two, and the final appointment shall be made by drawing lots. Payment by the Reinsurer of the
amount of liability ascertained shall constitute a complete and final release of both parties in respect of liability arising from the Reinsurer’s participation under this Contract. 


 

	D.	The Company’s option to require commutation under paragraph C above shall survive the termination or expiration of this Contract. 


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

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 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  

 ARTICLE 5 

TERRITORY 
 The territorial limits of this
Contract shall be identical with those of the Company’s Policies. 
 ARTICLE 6 

EXCLUSIONS 
 This Contract does not apply
to and specifically excludes the following: 
  

	 	1.	All excess of loss reinsurance assumed by the Company. 

  

	 	2.	Reinsurance assumed by the Company under obligatory reinsurance agreements, except agency reinsurance where the Policies involved are to be reunderwritten in accordance with the underwriting standards of the Company and
reissued as Company Policies at the next anniversary or expiration date. 

  

	 	3.	Financial guarantee and insolvency business. 

  

	 	4.	Third party liability and medical payments business. 

  

	 	5.	Losses excluded by the attached “Pools, Associations and Syndicates Exclusion Clause.” 

  

	 	6.	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, however 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. 

  

	 	7.	Risks excluded under the provisions of the attached “Total Insured Value Exclusion Clause.” 

  

	 	8.	All Accident and Health, Fidelity and Surety, Boiler and Machinery, Workers’ Compensation and Credit business. 

  

	 	9.	All Ocean Marine business. 

  

	 	10.	Fidelity, unless written as part of a multiple peril Policy. 

  

	 	11.	All aviation, aerospace and satellite business. 

  

	 	12.	All railroad business. 


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

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 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  


	 	13.	All insurances on growing or standing crops. 

  

	 	14.	Flood and/or earthquake, when written as such. 

  

	 	15.	Difference in Conditions insurances and similar kinds of insurances, however styled, insofar as they may provide coverage for losses from the following causes: 


 

	 	a.	Flood, surface water, waves, tidal water or tidal waves, overflow of streams or other bodies of water or spray from any of the foregoing, all whether wind-driven or not, except when covering property in transit; or


  

	 	b.	Earthquake, landslide, subsidence or other earth movement or volcanic eruption, except when covering property in transit. 

  

	 	16.	Mortgage Impairment insurances and similar kinds of insurances, however styled. 

  

	 	17.	Loss or damage caused by or resulting from war, invasion, hostilities, acts of foreign enemies, civil war, rebellion, insurrection, military or usurped power, or martial law or confiscation by order of any government or
public authority, but this exclusion shall not apply to loss or damage covered under a standard Policy with a standard War Exclusion Clause. 

  

	 	18.	Nuclear risks as defined in the attached “Nuclear Incident Exclusion Clause Physical Damage- Reinsurance (U.S.A.).” 

  

	 	19.	Loss arising from pollution or environment impairment. 

  

	 	20.	Losses in respect of overhead transmission and distribution lines and their supporting structures other than those on or within 150 meters (or 500 feet) of the insured premises. It is understood and agreed that public
utilities extension and/or suppliers extension and/or contingent business interruption coverages are not subject to this exclusion, provided that these are not part of a transmitters’ or distributors’ Policy. 


 

	 	21.	Loss as excluded under the provisions of the attached “Tenorism Exclusion (Property Treaty Reinsurance)-N.M.A. 2930c.” 

  

	 	22.	Mold as defined in the attached “Mold Exclusion.” 

  

	 	23.	All assessments from Citizens Property Insurance Corporation and the Florida Hurricane Catastrophe Fund. 


ARTICLE 7 
 PREMIUM

  

	A.	The Company shall pay the Reinsurer a reinsurance premium of $[***] for the term of this Contract, to be paid in full by June 1, 2013. 


 

	B.	The Company shall furnish the Reinsurer with such information as may be required by the Reinsurer for completion of its financial statements. 


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

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 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  

 ARTICLE 8 

DEFINITIONS 
  

					
	A.	 	1.	 	“Ultimate Net Loss” means the actual loss paid by the Company or which the Company becomes liable to pay, such loss to include Loss Adjustment Expense, 90% of any Extra Contractual Obligation and 90% of any Loss in Excess
of Policy Limits as defined in the Extra Contractual Obligations/Excess of Policy Limits Article.

  

	 	2.	Salvages and all recoveries (including amounts due from all reinsurances that inure to the benefit of this Contract, whether recovered or not), shall be first deducted from such loss to arrive at the amount of liability
attaching hereunder. 

  

	 	3.	All salvages, recoveries or payments recovered or received subsequent to loss settlement hereunder shall be applied as if recovered or received prior to the aforesaid settlement, and all necessary adjustments shall be
made by the parties hereto. 

  

	 	4.	The Company shall be deemed to be “liable to pay” a loss when a judgment has been rendered that the Company does not plan to appeal, and/or the Company has obtained a release, and/or the Company has accepted a
proof of loss. 

  

	 	5.	Nothing in this clause shall be construed to mean that losses are not recoverable hereunder until the Company’s “Ultimate Net Loss” has been ascertained. 


 

	B.	“Loss Adjustment Expense” means costs and expenses incurred by the Company in connection with the investigation, appraisal, adjustment, settlement, litigation, defense or appeal of a specific claim or loss, or
alleged loss, including but not limited to: 

  

	 	1.	court costs; 

  

	 	2.	costs of supersedeas and appeal bonds; 

  

	 	3.	monitoring counsel expenses; 

  

	 	4.	legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto, including but not limited to declaratory judgment actions; 


 

	 	5.	post judgment interest; 

  

	 	6.	pre judgment interest, unless included as part of an award or judgment; 


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

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 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  


	 	7.	a pro rata share of salaries and expenses of Company field employees, calculated in accordance with the time occupied in adjusting such loss, and expenses of other Company employees who have been temporarily diverted
from their normal and customary duties and assigned to the field adjustment of losses covered by this Contract; and 

  

	 	8.	subrogation, salvage and recovery expenses. 

 “Loss Adjustment Expense” does not
include salaries and expenses of the Company’s employees, except as provided in subparagraph (7) above, and office and other overhead expenses. 
  

					
	C.	 	1.	 	“Loss Occurrence” means the sum of all individual losses directly occasioned by any one disaster, accident or loss or series of disasters, accidents or losses arising out of one event that occurs within the area of one
state of the United States or province of Canada and states or provinces contiguous thereto and to one another. However, the duration and extent of any one “Loss Occurrence” shall be limited to all individual losses sustained by the
Company occurring during any period of 168 consecutive hours arising out of and directly occasioned by the same event except that the term “Loss Occurrence” shall be further defined as follows:

  

	 	a.	As regards windstorm, hail, tornado, hurricane, cyclone, including ensuing collapse and water damage, all individual losses sustained by the Company occurring during any period of 96 consecutive hours arising out of and
directly occasioned by the same event. However, the event need not be limited to one state or province or states or provinces contiguous thereto. 

  

	 	b.	As regards riot, riot attending a strike, civil commotion, vandalism and malicious mischief, all individual losses sustained by the Company occurring during any period of 96 consecutive hours within the area of one
municipality or county and the municipalities or counties contiguous thereto arising out of and directly occasioned by the same event. The maximum duration of 96 consecutive hours may be extended in respect of individual losses that occur beyond
such 96 consecutive hours during the continued occupation of an assured’s premises by strikers, provided such occupation commenced during the aforesaid period. 


 

	 	c.	As regards earthquake (the epicenter of which need not necessarily be within the territorial confines referred to above) and fire following directly occasioned by the earthquake, those earthquake losses and individual
fire losses that commence during the period of 168 consecutive hours may be included in the Company’s “Loss Occurrence.” 

  

	 	d.	As regards “freeze,” only individual losses directly occasioned by collapse, breakage of glass and water damage (caused by bursting of frozen pipes and tanks) may be included in the Company’s “Loss
Occurrence.” 


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

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 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  


	 	2.	The Company may choose the date and time when any such period of consecutive hours commences provided that it is not earlier than the date and time of the occurrence of the first recorded individual loss sustained by
the Company arising out of that disaster, accident or loss. 

  

	 	3.	Only one period of consecutive hours shall apply with respect to one event, except that, as respects those “Loss Occurrences” referred to in subparagraph (1)(b) above, if the disaster, accident or loss
occasioned by the event is of greater duration than 96 consecutive hours, then the Company may divide that disaster, accident or loss into two or more “Loss Occurrences” provided no two periods overlap and no individual loss is included in
more than one such period and provided that no period commences earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss. 


 

	 	4.	Losses arising from a combination of two or more perils as a result of the same event shall be considered as having arisen from one “Loss Occurrence.” Notwithstanding the foregoing, the hourly limitations as
stated above shall not be exceeded as respects the applicable perils, and no single “Loss Occurrence” shall encompass a time period greater than 168 consecutive hours. 


 

	 	5.	Losses directly or indirectly occasioned by: 

  

	 	a.	Loss of, alteration of, or damage to; or 

  

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

  

	D.	“Policy” means any binder, policy, or contract of insurance or reinsurance issued, accepted or held covered provisionally or otherwise, by or on behalf of the Company. 


ARTICLE 9 
 EXTRA
CONTRACTUAL OBLIGATIONS/EXCESS OF POLICY LIMITS 
  

	A.	 This Contract shall cover Extra Contractual Obligations, as provided in the definition of Ultimate Net Loss. “Extra Contractual Obligations”
shall be defined as those liabilities 



  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

7 









 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  


	 	
not covered under any other provision of this Contract and that 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 the preparation of the defense or in the trial of any action against its
insured or reinsured or in the preparation or prosecution of an appeal consequent upon such action. 

  

	B.	This Contract shall cover Loss in Excess of Policy Limits, as provided in the definition of Ultimate Net Loss. “Loss in Excess of Policy Limits” shall be defined as Loss in excess of the Policy limit, having
been incurred because of, but not limited to, 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 the preparation of the defense or in
the trial of any action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such action. 

  

	C.	An Extra Contractual Obligation and/or Loss in Excess of Policy Limits shall be deemed to have occurred on the same date as the loss covered under the Company’s Policy, and shall constitute part of the original
loss. 

  

	D.	For the purposes of the Loss in Excess of Policy Limits coverage hereunder, the word “Loss” shall mean any amounts for which the Company would have been contractually liable to pay had it not been for the
limit of the original Policy. 

  

	E.	Loss Adjustment Expense in respect of Extra Contractual Obligations and/or Loss in Excess of Policy Limits shall be covered hereunder in the same manner as other Loss Adjustment Expense. 


 

	F.	However, this Article shall not apply where the loss has been incurred due to final legal adjudication of fraud of a member of the Board of Directors or a corporate officer of the Company acting individually or
collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense or settlement of any claim covered hereunder. 


 

	G.	In no event shall coverage be provided to the extent not permitted under law. 

 ARTICLE 10

 NET RETAINED LIABILITY 
 This
Contract applies only to that portion of any loss that the Company retains net for its own account (prior to deduction of any reinsurance that inures solely to the benefit of the Company). 

ARTICLE 11 
 ORIGINAL
CONDITIONS 
 All reinsurance under this Contract shall be subject to the same terms, conditions, waivers and interpretations, and to the same
modifications and alterations as the respective Policies of the Company. However, in no event shall this be construed in any way to provide coverage outside the terms and conditions set forth in this Contract. 

  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

8 









 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  

 ARTICLE 12 

NO THIRD PARTY RIGHTS 
 This Contract is
solely between the Company and the Reinsurer, and in no instance shall any insured, claimant or other third party have any rights under this Contract except as may be expressly provided otherwise herein. 

ARTICLE 13 
 NOTICE OF
LOSS AND LOSS SETTLEMENTS 
  

	A.	The Company shall advise the Reinsurer promptly of all losses that, in the opinion of the Company, may result in a claim hereunder and of all subsequent developments thereto that may materially affect the position of
the Reinsurer. 

  

	B.	The Company alone and at its full discretion shall adjust, settle or compromise all claims and losses. 

  

	C.	As respects losses subject to this Contract, all loss settlements made by the Company, whether under strict Policy terms or by way of compromise, and any Extra Contractual Obligations and/or Loss in Excess of Policy
Limits, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay or allow, as the case may be, its share of each such settlement immediately upon receipt of proof of loss. 


ARTICLE 14 
 CURRENCY

  

	A.	Where the word “Dollars” and/or the sign “$” appear in this Contract, they shall mean United States Dollars. 

  

	B.	For purposes of this Contract, where the Company receives premiums or pays losses in currencies other than United States Dollars, such premiums or losses shall be converted into United States Dollars at the actual rates
of exchange at which these premiums or losses are entered in the Company’s books. 

 ARTICLE 15 

OBLIGATIONS AND COLLATERAL RELEASE 
  

					
	A.	 	1.	 	The Reinsurer agrees to establish a Trust Account for its Obligations (as defined herein) hereunder, pursuant to that certain Trust Agreement by and between the Reinsurer, the Company, and Bank of America dated as of the date
hereof(the “Trust Agreement”). The Trust Account shall be funded pursuant to the provisions hereof. Collateral deposited in the Trust Account may be withdrawn on


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

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 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  


					
		 		 	the terms set forth herein and in the Trust Agreement. Whatever method of Funding is chosen by the Reinsurer and agreed to by the Company, the Funding must comply at all times with the Florida Insurance Laws and Regulations in order
for the Company to receive full statutory financial statement credit for the Reinsurer’s Obligations.

  

	 	2.	At any time after December 1, 2013, if the Company in its commercially reasonable judgment believes that no event has occurred that may result in a claim hereunder, the Company agrees to release the Assets held in
the Trust Account to the Reinsurer as soon as practicable. 

  

	B.	The term “Obligations” shall mean for so long as the Reinsurer remains liable under the terms of the Contract, 100% of the limit of the Reinsurer’s liability hereunder less any unpaid premium (net of
brokerage and Federal Excise Tax as applicable) and amounts previously paid by the Reinsurer in respect of claims under this Contract. 

  

	C.	If, at the expiration of this Contract, the Company, in its commercially reasonable judgment, believes that an event has occurred that may result in a claim hereunder, the Company and Reinsurer agree to maintain
collateral in the Trust Account only to the extent necessary to pay the Reinsurer’s Obligations for its share of actual and possible claims for each such Loss Occurrence as determined by the following procedure: 


 

	 	1.	If the parties hereto enter into a reinsurance agreement upon expiration of this Contract, for each such Loss Occurrence, the Ultimate Net Loss shall be determined as the aggregate of the following, as reflected on the
books and records of the Company as of the Contract expiration date: 

  

	 	a.	losses and Loss Adjustment Expense paid by the Company, but not recovered from the Reinsurer; 

  

	 	b.	reserves for losses reported and outstanding; 

  

	 	c.	reserves for losses incurred but not reported; and 

  

	 	d.	reserves for Loss Adjustment Expense 

  

	 	2.	If the parties hereto do not enter into a reinsurance agreement upon expiration of this Contract, the Ultimate Net Loss for each such Loss Occurrence (if not otherwise finally determined pursuant to the terms of this
Contract) shall be deemed equal to the amount as determined in subparagraph (1) above measured as of the applicable determination date (as specified in Section D below), multiplied by a factor, based upon the number of months (with any partial
month rounded up to the nearest whole month) which have elapsed on such determination date since expiration of the Contract, as follows: 

  

	 	a.	From 0 to 12 months from expiration of the Contract, 150%, else; b. From 13 to 24 months from expiration of the Contract, 125%, else; 


 

	 	b.	From 25 to 36 months from expiration of the Contract, 110%; and 

  

	 	c.	From 37 to 67 months from expiration of the Contract, 100%. 


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

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 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  

 As of 67 months after expiration of this Contract (the “Reporting Period”), the
amount determined in subparagraph (1) above for such date shall be considered the definitive Ultimate Net Loss for each such Loss Occurrence for which and the Company and the Reinsurer agree to commute this Contract with final settlement on
that basis. 
  

	D.	The procedure for determining the amount of collateral required to pay the Reinsurer’s Obligations for its share of actual and possible claims, described in subparagraphs C(1) and C(2) above, shall be followed each
and every time, in the opinion of the Company, there are materially new estimates regarding its losses, and each quarter-end, until all the Reinsurer’s Obligations have been extinguished or the Reporting Period is over, whichever is earlier.
Furthermore, the information to be used for the determinations described in C(1) and C(2) above shall be as reflected on the Company’s official books and records. Furthermore if so requested by the Reinsurer, the Company shall provide the
information listed in C(1) and (C)(2) above, broken down into subsections (a)-(d) and accompanied by a written explanation of its estimates within seven Business Days of such request. 


 

	E.	The Company agrees to release from the Trust Account all collateral in excess of the amount required to pay the Reinsurer’s Obligations for its share of actual and possible claims, as determined by the above
procedure, within seven Business Days of the date of such determination. “Business Day” shall be defined as a day (other than a Saturday or a Sunday) on which banks are open for commercial business in Hamilton, Bermuda, and in New York,
New York, U.S.A. 

  

	F.	In the event that collateral has been released from the Trust Account, but at a later date it is determined by the procedure above that such collateral should be present in the Trust Account, the Reinsurer shall, within
10 Business Days of such determination, deposit additional assets until the Trust Account balance is equal — to the amount of actual and possible claims; however, the Reinsurer shall never be
liable to deposit assets in the Trust Account in excess of its Obligations as defined above. If the Trust Account is funded and maintained and the Trust Agreement is performed according to the terms and conditions of this Contract and the Trust
Agreement, the Company agrees and acknowledges that there shall only be recourse to the Segregated Account assets, and in the event of the exhaustion of the Segregated Account assets there shall be no recourse by any party for any claims, payments,
other expenses or fees whatsoever, howsoever arising pursuant to this Contract, to the assets which are allocated to any other segregated account of the Reinsurer or to the general account of the Reinsurer. 


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

11 









 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  


	G.	At the end of the Reporting Period, the Reinsurer’s Obligations for its share of all claims will be settled based on losses and Loss Adjustment Expense paid by the Company up to that point, and the case reserves
for losses reported and outstanding plus reserves for Loss Adjustment Expense and losses incurred but not reported at that point, upon which the Company agrees to terminate the Trust Account, and all remaining security will be released and all
liability under this Contract will be extinguished. The value of the outstanding losses, losses incurred but not reported and Loss Adjustment Expense shall be mutually agreed, or failing agreement, the final determination of all liabilities
hereunder shall be referred to Arbitration. Following the above procedures, the Reinsurer and the Company agree to commute this Contract. 


ARTICLE 16 
 TAXES

  

	A.	In consideration of the terms under which this Contract is issued, the Company undertakes not to claim any deduction of the premium hereon when making Canadian tax returns or when making tax returns, other than Income
or Profits Tax returns, to any state or territory of the United States of America or to the District of Columbia. 

  

					
	B.	 	1.	 	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 the Internal Revenue Code) to the extent such premium is subject to
Federal Excise Tax.

  

	 	2.	In the event of any return of premium becoming due hereunder, the Reinsurer shall deduct the applicable percentage of the premium from the amount of the return, and the Company or its agent should take steps to recover
the Tax from the U.S. Government. 

 ARTICLE 17 

ACCESS TO RECORDS 
 The Reinsurer or its
duly authorized representatives shall have the right to visit the offices of the Company to inspect, examine, audit, and verify any of the policy, accounting or claim files (“Records”) relating to business reinsured under this Contract
during regular business hours after giving five working days’ prior notice. This right shall be exercisable during the term of this Contract or after the expiration of this Contract. Notwithstanding the above, the Reinsurer shall not have any
right of access to the Records of the Company if it is not current in all undisputed payments due the Company. 
 ARTICLE 18 

CONFIDENTIALITY 
  

	A.	The Reinsurer hereby acknowledges that the documents, information and data provided to it by the Company, whether directly or through an authorized agent, in connection with the placement and execution of this Contract
(“Confidential Information”) are proprietary and confidential to the Company. Confidential Information shall not include documents, information or data that the Reinsurer can show: 


 

	 	1.	are publicly known or have become publicly known through no unauthorized act of the Reinsurer; 


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

12 









 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  


	 	2.	have been rightfully received from a third person without obligation of confidentiality; 

  

	 	3.	were known by the Reinsurer prior to the placement of this Contract without an obligation of confidentiality; or 

  

	 	4.	were independently developed by the Reinsurer. 

  

	B.	Absent the written consent of the Company, the Reinsurer shall not disclose any Confidential Information to any third parties, except: 


 

	 	1.	when required by retrocessionaires subject to the business ceded to this Contract; 

  

	 	2.	when required by regulators performing an audit of the Reinsurer’s records and/or financial condition; or 

  

	 	3.	when required by external auditors performing an audit of the Reinsurer’s records in the normal course of business. 

  

	C.	Notwithstanding the above, in the event that the Reinsurer is required by court order, other legal process or any regulatory authority to release or disclose any or all of the Confidential Information, the Reinsurer
agrees to provide the Company with written notice of same promptly and to use reasonable efforts to assist the Company in maintaining the confidentiality provided for in this Article. 


 

	D.	The provisions of this Article shall extend to the officers, directors and employees of the Reinsurer and its affiliates, and shall be binding upon their successors and assigns. 


ARTICLE 19 

INDEMNIFICATION AND ERRORS AND OMISSIONS 
  

	A.	The Reinsurer is reinsuring, subject to the terms and conditions of this Contract, the obligations of the Company under any Policy. The Company shall be the sole judge as to: 


 

	 	1.	what shall constitute a claim or loss covered under any Policy; 

  

	 	2.	the Company’s liability thereunder; 

  

	 	3.	the amount or amounts that it shall be proper for the Company to pay thereunder. 


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

13 









 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  


	B.	The Reinsurer shall be bound by the judgment of the Company as to the obligation(s) and liability(ies) of the Company under any Policy. 


 

	C.	Any inadvertent error, omission or delay in complying with the terms and conditions of this Contract shall not be held to relieve either party hereto from any liability that would attach to it hereunder if such error,
omission or delay had not been made, provided such error, omission or delay is rectified immediately upon discovery. 


ARTICLE 20 
 INSOLVENCY

  

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

  

	B.	In the event of the insolvency of the Company, this reinsurance (or the portion of any risk or obligation assumed by the Reinsurer, if required by applicable law) shall be payable directly to the Company, or to its
liquidator, receiver, conservator or statutory successor, either: (1) on the basis of the liability of the Company, or (2) on the basis of claims filed and allowed in the liquidation proceeding, whichever may be required by applicable
statute, 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 that may accrue to the Company solely as a result of the defense undertaken
by the Reinsurer. 

  

	C.	 As to all reinsurance made, ceded, renewed or otherwise becoming effective under this Contract, the reinsurance shall be payable as set forth above by
the Reinsurer to the Company or to its liquidator, receiver, conservator or statutory successor, (except as provided by Section 4118(a)(1)(A) of the New York Insurance Law, provided the conditions of 1114(c) of such law have been met, if New
York law applies) or except (1) where the Contract specifically provides another payee in the event of the insolvency of 



  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

14 









 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  


	 	
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. 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
Financial Services of the State of New York, or with the prior approval of such other regulatory authority as may be applicable, is entirely released from its obligation and the Reinsurer shall pay any loss directly to payees under such Policy.


 ARTICLE 21 

ARBITRATION 
  

	A.	Any dispute ansmg 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 shall be in writing and sent certified or registered mail, return receipt requested. 

  

	B.	One arbitrator shall be chosen by each party and the two arbitrators shall then choose an impartial third arbitrator who shall preside at the hearing. If either party fails to appoint its arbitrator within 30 days after
being requested to do so by the other party, the latter, after 10 days’ prior notice by certified or registered mail of its intention to do so, may appoint the second arbitrator. 


 

	C.	If the two arbitrators do not agree on a third arbitrator within 60 days of their appointment, the third arbitrator shall be chosen in accordance with the procedures for selecting the third arbitrator in force on the
date the arbitration is demanded, established by the AIDA Reinsurance and Insurance Arbitration Society- U.S. (ARIAS). The arbitrators shall be persons knowledgeable about insurance and reinsurance who have no personal or financial interest in the
result of the arbitration. If a member of the panel dies, becomes disabled or is otherwise unwilling or unable to serve, a substitute shall be selected in the same manner as the departing member was chosen and the arbitration shall continue.


  

	D.	Within 30 days after all arbitrators have been appointed, the panel shall meet and determine timely periods for briefs, discovery procedures and schedules of hearings. 


 

	E.	The panel shall be relieved of all judicial formality and shall not be bound by the strict rules of procedure and evidence. Notwithstanding anything to the contrary in this Contract, the arbitrators may at their
discretion, consider underwriting and placement information provided by the Company to the Reinsurer, as well as any correspondence exchanged by the parties that is related to this Contract. The arbitration shall take place in St. Petersburg,
Florida, or at such other place as the parties shall agree. The decision of any two arbitrators shall be in writing and shall be final and binding. The panel is empowered to grant interim relief as it may deem appropriate. 


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

15 









 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  


	F.	The panel shall interpret this Contract as an honorable engagement rather than as merely a legal obligation and shall make its decision considering the custom and practice of the applicable insurance and reinsurance
business as promptly as possible after the hearings. Judgment upon an award may be entered in any court having jurisdiction thereof. 

  

	G.	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 allocated by the panel.
The panel may, at its discretion, award such further costs and expenses as it considers appropriate, including but not limited to attorneys’ fees, to the extent permitted by law. 


ARTICLE 22 
 SERVICE OF
SUIT 
  

	A.	This Article applies only if the Reinsurer is not domiciled in the United States of America, and/or not authorized in any state, territory and/or district of the United States of America where authorization is required
by insurance regulatory authorities. 

  

	B.	This Article shall not be read to conflict with or override the obligations of the parties to arbitrate their disputes as provided for in the Arbitration Article. This Article is intended as an aid to compelling
arbitration or enforcing such arbitration or arbitral award, not as an alternative to the Arbitration Article for resolving disputes arising out of this Contract. 


 

	C.	In the event of the failure of the Reinsurer to perform its obligations hereunder, the Reinsurer, at the request of the Company, shall submit to the jurisdiction of a court of competent jurisdiction within the United
States. Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer’s rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States
District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. The Reinsurer, once the appropriate court is selected, whether such court is the one originally
chosen by the Company and accepted by the Reinsurer or is determined by removal, transfer, or otherwise, as provided for above, shall comply with all requirements necessary to give said court jurisdiction and, in any suit instituted against the
Reinsurer upon this Contract, shall abide by the final decision of such court or of any appellate court in the event of an appeal. 

  

	D.	Service of process in such suit may be made upon Messrs. Mendes and Mount, 750 Seventh Avenue, New York, New York 10019-6829. The above-named are authorized and directed to accept service of process on behalf of the
Reinsurer in any such suit. 

  

	E.	Further, pursuant to any statute of any state, territory or district of the United States that makes provision therefor, the Reinsurer hereby designates the Superintendent, Commissioner or Director of Insurance, or
other officer specified for that purpose in the statute, or his successor or successors in office, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the Company
or any beneficiary hereunder arising out of this Contract, and hereby designates the above-named as the person to whom the said officer is authorized to mail such process or a true copy thereof. 


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

16 









 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  

 ARTICLE 23 

GOVERNING LAW 
 This Contract shall be
governed as to performance, administration and interpretation by the laws of the State of Florida, exclusive of conflict of law rules. However, with respect to credit for reinsurance, the rules of all applicable states shall apply. 

ARTICLE 24 
 ENTIRE
AGREEMENT 
 This Contract sets forth all of the duties and obligations between the Company and the Reinsurer and supersedes any and all prior or
contemporaneous written agreements with respect to matters referred to in this Contract. This Contract may not be modified or changed except by an amendment to this Contract in writing signed by both parties. 

ARTICLE 25 
 NON-WAIVER

 The failure of the Company or the Reinsurer to insist on compliance with this Contract or to exercise any right or remedy hereunder shall not
constitute a waiver of any rights contained in this Contract nor prevent either party from thereafter demanding full and complete compliance nor prevent either party from exercising such remedy in the future. 

ARTICLE 26 
 MODE OF
EXECUTION 
  

	A.	This Contract may be executed by: 

  

	 	1.	an original written ink signature of paper documents; 

  

	 	2.	an exchange of facsimile copies showing the original written ink signature of paper documents; 

  

	 	3.	electronic signature technology employing computer software and a digital signature or digitizer pen pad to capture a person’s handwritten signature in such a manner that the signature is unique to the person
signing, is under the sole control of the person signing, is capable of verification to authenticate the signature and is linked to the document signed in such a manner that if the data is changed, such signature is invalidated. 


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

17 









 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  


	B.	The use of any one or a combination of these methods of execution shall constitute a legally binding and valid signing of this Contract. This Contract may be executed in one or more counterparts, each of which, when
duly executed, shall be deemed an original. 


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

18 








 IN WITNESS WHEREOF, the parties have caused this Contract to be executed by their duly authorized
representative(s) this 1st day of June, in the year of 2013. 
 HERITAGE PROPERTY & CASUALTY INSURANCE COMPANY 

including any and/or all companies that are or may hereafter become affiliated therewith 

/s/ Authorized Signatory 
  

UNDERLYING PROPERTY CATASTROPHE EXCESS OF LOSS 

REINSURANCE CONTRACT 








 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  

 And on this 1st day of June, in the year of 2013. 

OSPREYRE 
 /s/ Authorized
Signatory 
 HERITAGE PROPERTY & CASUALTY INSURANCE COMPANY 

UNDERLYING PROPERTY CATASTROPHE EXCESS OF LOSS 

REINSURANCE CONTRACT 

  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

2 









 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  

 POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE 

Section A: 
 This Contract excludes: 

 

	 	a.	All business derived directly or indirectly from any Pool, Association or Syndicate which maintains its own reinsurance facilities. 

  


	 	b.	Any Pool or Scheme (whether voluntary or mandatory) formed after March 1, 1968 for the purpose of insuring property, whether on a country-wide basis or in respect of designated areas. This exclusion shall not apply
to so-called Automobile Insurance Plans or other Pools formed to provide coverage for Automobile Physical Damage. 

 Section B: 

 

	1.	This Contract excludes business written by the Company for the same perils, which is known at the time to be insured by, or in excess of underlying amounts placed in, any Pool, Association or Syndicate, whether by way
of insurance or reinsurance, formed for the purpose of writing any of the following: 

 Oil, Gas or Petro-Chemical Plants 

Oil or Gas Drilling Rigs and/or 

Aviation Risks 
  

	2.	The exclusion under paragraph 1 of this Section B does not apply: 

  

	 	a.	Where the Total Insured Value over all interests of the risk in question is less than $[***]. 

  

	 	b.	To interests traditionally underwritten as Inland Marine and/or Stock and/or Contents written on a Blanket basis. 

  

	 	c.	To Contingent Business Interruption, except when the Company is aware that the key location is known at the time to be insured in any Pool, Association or Syndicate named above, other than as provided for under
subparagraph (a). 

 Section C: 
  

	1.	Nevertheless the Reinsurer specifically agrees that liability accruing to the Company from its participation in Residual Market Mechanisms, including but not limited to the following, for all perils otherwise protected
hereunder shall not be excluded herefrom: 

  

	 	a.	So-called “Beach and Windstorm Plans” and so-called “Coastal Pools”; 

  

	 	b.	All “FAIR Plan” and “Rural Risk Plan” business; 

  

	 	c.	California Earthquake Authority (“CEA”) or any similar entity. 


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

3 









 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  


	2.	However, this reinsurance does not include any increase in such liability resulting from: 

  

	 	a.	The inability of any other participant in such Residual Market Mechanisms to meet its liability; 

  

	 	b.	Any claim against a Residual Market Mechanism or any participant therein, including the Company, whether by way of subrogation or otherwise, brought by or on behalf of any insolvency fund (as defined in the Exclusions
Article); 

  

	 	c.	Any assessment or surcharge levied on the policyholder and therefore not a liability of the Company; 

  

	 	d.	The Company’s initial capital contribution to the CEA; 

  

	 	e.	Any assessments, other than interim and regular assessments, from a Residual Market Mechanism included in subparagraph 1(c) above. 

  

	3.	The Company may include in Ultimate Net Loss for any Loss Occurrence covered hereunder only the liability attributable to that Loss Occurrence. If the relevant entity does not specify what portion of an assessment is
attributable to each Loss Occurrence, the Company may include in Ultimate Net Loss in respect of each Loss Occurrence a percentage of the Company’s assessments from the relevant entity related to the calendar year in which the Loss Occurrence
commenced, regardless of when assessed, such percentage to be determined by dividing the relevant entity’s losses arising from the Loss Occurrence by its total losses for the calendar year. 


 

	4.	The Company will deduct from Ultimate Net Loss amounts received as recoupment of any assessment that has been included in the Ultimate Net Loss, provided the recoupment is directly allocable to the assessment
(“itemized recoupment”). The Company shall use commercially reasonable efforts to recoup such assessment. Any amount received as an itemized recoupment of any assessment (whether under this Contract or any predecessor contract), and
therefore deductible from Ultimate Net Loss, shall not be included in the subject premium of this Contract. 

 However, if a
state levies assessments but does not allow itemized recoupment from policyholders, instead allowing the Company to file an overall increased rate, any such premium increased thereby shall not be deemed to be a recoupment that is deductible from
Ultimate Net Loss. Any recoupment received as part of a general premium rate increase, not specifically itemized, shall be included as part of the subject premium of this Contract or a successor contract, as applicable. 

  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

4 








  

NOTES: Wherever used herein the terms: 
  

			
	“Company”	  	shall be understood to mean “Company”, “Reinsured”, “Reassured” or whatever other term is used in the attached reinsurance document to designate the reinsured company or companies.
		
	“Agreement”	  	shall be understood to mean “Agreement”, “Contract”, “Policy” or whatever other term is used to designate the attached reinsurance document.
		
	“Reinsurers”	  	shall be understood to mean “Reinsurers”, “Underwriters” or whatever other term is used in the attached reinsurance document to designate the reinsurer or reinsurers.









 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  

 TOTAL INSURED VALUE EXCLUSION CLAUSE 

 

	A.	It is the mutual intention of the parties to exclude risks, other than Offices, Hotels, Apartments, Hospitals, Educational Establishments and Public Utilities (except Railroad Schedules), and Builders Risks on the above
classes, where at the time of cession, the Total Insured Value over all interests exceeds $[***]. However, the Company shall be protected hereunder, subject to the other terms and conditions of this Contract, if subsequent to cession being made, the
Company becomes acquainted with the true facts of the case and discovers that the mutual intention has been inadvertently breached; on condition that the Company shall at the first opportunity, and certainly by next anniversary of the original
Policy, exclude the risk in question. 

  

	B.	It is agreed that this mutual intention does not apply to Contingent Business Interruption or to interests traditionally underwritten as Inland Marine or to Stock and/or Contents written on a blanket basis except where
the Company is aware that the Total Insured Value of $[***] is already exceeded for buildings, machinery, equipment and direct use and occupancy at the key location. 


 

	C.	It is understood and agreed that this Clause shall not apply hereunder where the Company writes 100% of the risk. 


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

2 









 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  

 MOLD EXCLUSION 

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

	a.	any supervision, instruction, recommendations, warnings, or advice given or which should have been given in connection with the above; and 


 

	b.	any obligation to share damages with or repay someone else who must pay damages because of such injury or damage. 


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

Losses resulting from the above causes do not in and of themselves constitute an event. 

However, this exclusion shall not apply if the above causes of loss arise out of one or more of the perils otherwise covered under this Contract. 

  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

3 









 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  

 NUCLEAR INCIDENT EXCLUSION CLAUSE- PHYSICAL DAMAGE- 

REINSURANCE- U.S.A. 
  

	1.	This Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed for the purpose of covering
Atomic or Nuclear Energy risks. 

  

	2.	Without in any way restricting the operation of paragraph (1) of this clause, this Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or
Reinsurer, from any insurance against Physical Damage (including business interruption or consequential loss arising out of such Physical Damage) to: 

  

	 	I.	Nuclear reactor power plants including all auxiliary property on the site, or 

  

	 	II.	Any other nuclear reactor installation, including laboratories handling radioactive materials in connection with reactor installations, and “critical facilities” as such, or 


 

	 	III.	Installations for fabricating complete fuel elements or for processing substantial quantities of “special nuclear material”, and for reprocessing, salvaging, chemically separating, storing or disposing of
“spent” nuclear fuel or waste materials, or 

  

	 	IV.	Installations other than those listed in paragraph (2) III above using substantial quantities of radioactive isotopes or other products of nuclear fission. 


 

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

  

	 	(a)	where Reassured does not have knowledge of such nuclear reactor power plant or nuclear installation, or 

  

	 	(b)	where said insurance contains a provision excluding coverage for damage to property caused by or resulting from radioactive contamination, however caused. However on and after 1st January 1960 this sub-paragraph
(b) shall only apply provided the said radioactive contamination exclusion provision has been approved by the Governmental Authority having jurisdiction thereof. 


 

	4.	Without in any way restricting the operations of paragraphs (1), (2) and (3) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or
indirectly, and whether as Insurer or Reinsurer, when such radioactive contamination is a named hazard specifically insured against. 


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

4 









 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  


	5.	It is understood and agreed that this clause shall not extend to risks using radioactive isotopes in any form where the nuclear exposure is not considered by the Reassured to be the primary hazard. 


 

	6.	The term “special nuclear material” shall have the meaning given it in the Atomic Energy Act of 1954 or by any law amendatory thereof. 


 

	7.	Reassured to be sole judge of what constitutes: 

  

	 	(a)	substantial quantities, and 

  

	 	(b)	the extent of installation, plant or site. 

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

	 	(a)	all policies issued by the Reassured on or before 31st December 1957 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs
whereupon all the provisions of this Clause shall apply. 

  

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

 12/12/57 

NMA 1119 
  

 
 NOTES: Wherever used herein the terms: 

 

			
	“Reassured”	  	shall be understood to mean “Company”, “Reinsured”, “Reassured” or whatever other term is used in the attached reinsurance document to designate the reinsured company or companies.
		
	“Agreement”	  	shall be understood to mean “Agreement”, “Contract”, “Policy” or whatever other term is used to designate the attached reinsurance document.
		
	“Reinsurers”	  	shall be understood to mean “Reinsurers”, “Underwriters” or whatever other term is used in the attached reinsurance document to designate the reinsures or reinsurers.


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

5 









 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  

 TERRORISM EXCLUSION (PROPERTY TREATY REINSURANCE) N.M.A. 2930C 

Notwithstanding any provision to the contrary within this reinsurance agreement or any endorsement thereto, it is agreed that this reinsurance agreement
excludes loss, damage, cost or expense directly or indirectly caused by, contributed to by, resulting from, or arising out of or in connection with any act of terrorism, as defined herein, regardless of any other cause or event contributing
concurrently or in any other sequence to the loss. 
 An act of terrorism includes any act, or preparation in respect of action, or threat of action
designed to influence the government de jure or de facto of any nation or political division thereof, or in pursuit of political, religious, ideological, or similar purposes to intimidate the public or a section of the public of any nation by any
person or group(s) of persons whether acting alone or on behalf of or in connection with any organization(s) or government(s) de jure or de facto, and which: 
  

	(i)	involves violence against one or more persons; or 

  

	(ii)	involves damage to property; or 

  

	(iii)	endangers life other than that of the person committing the action; or 

  

	(iv)	creates a risk to health or safety of the public or a section of the public; or 

  

	(v)	is designed to interfere with or to disrupt an electronic system. 

 This reinsurance agreement also excludes
loss, damage, cost or expense directly or indirectly caused by, contributed to by, resulting from, or arising out of or in connection with any action in controlling, preventing, suppressing, retaliating against, or responding to any act of
terrorism. 
 Notwithstanding the above and subject otherwise to the terms, conditions, and limitations of this reinsurance agreement, in respect only of
personal lines this reinsurance agreement will pay actual loss or damage (but not related cost or expense) caused by any act of terrorism provided such act is not directly or indirectly caused by, contributed to by, resulting from, or arising out of
or in connection with biological, chemical, radioactive, or nuclear pollution or contamination or explosion. 
 NMA2930c 

22111/02 

  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

6 









 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  

 TRUST AGREEMENT REQUIREMENTS CLAUSE 

 

	A.	Except as provided in paragraph B of this Clause, if the Reinsurer satisfies its funding obligations under the Obligations and Collateral Release Article by providing a Trust Agreement, the Reinsurer shall ensure that
the Trust Agreement: 

  

	 	1.	Requires the Reinsurer to establish a trust account for the benefit of the Company, and specifies what the Trust Agreement is to cover; 


 

	 	2.	Stipulates that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash (United States legal tender), certificates of deposit (issued by a United
States bank and payable in United States legal tender), and investments of the types permitted by the regulatory authorities having jurisdiction over the Company’s reserves, or any combination of the three, provided that the investments are
issued by an institution that is not the parent, subsidiary or affiliate of either the Reinsurer or the Company; 

  

	 	3.	Requires the Reinsurer, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all shares, obligations or any other assets requiring
assignments, in order that the Company, or the trustee upon the direction of the Company, may whenever necessary negotiate these assets without consent or signature from the Reinsurer or any other entity; 


 

	 	4.	Requires that all settlements of account between the Company and the Reinsurer be made in cash or its equivalent; and 

  

	 	5.	Provides that assets in the trust account shall be withdrawn only as permitted in this Contract, without diminution because of the insolvency of the Company or the Reinsurer. 


 

	B.	If a ceding insurer is domiciled in California and the Reinsurer satisfies its funding obligations under the Obligations and Collateral Release Article by providing a Trust Agreement, the Reinsurer shall ensure that the
Trust Agreement: 

  

	 	1.	Provides that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash in United States dollars, certificates of deposit issued by a United States
financial institution as defined in California Insurance Code Section 922.7(a) and payable in United States dollars, and investments permitted by the California Insurance Code, or any combination of the above. 


 

	 	2.	Provides that investments in or issued by an entity controlling, controlled by or under common control with either the grantor or the beneficiary of the trust shall not exceed 5% of total investments. 



  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

7 









 CONFIDENTIAL TREATMENT REQUESTED 

BY HERITAGE INSURANCE HOLDINGS, LLC 
  


	 	3.	Requires the Reinsurer, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all shares, obligations or any other assets requiring
assignments, in order that the ceding insurer, or the trustee upon the direction of the ceding insurer, may, whenever necessary, negotiate these assets without consent or signature from the Reinsurer or any other entity. 


 

	 	4.	Provides that assets in the trust account shall be withdrawn only as permitted in this Contract, without diminution because of the insolvency of the ceding insurer or the Reinsurer. 


 

	C.	If there are multiple ceding insurers that collectively comprise the Company, “regulatory authorities” as referenced in subparagraph A(2) above, shall mean the individual ceding insurer’s domestic
regulator. 


  
 * [***]: Certain information in this
document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 

8