EX-10.77






EXHIBIT 10.77




February 23, 2009




VIA FACSIMILE




Brookfield US Corporation

Three World Financial Center

200 Vesey Street, 11th Floor

New York, NY 10281-1021

Facsimile: (212) 417-7262

Attention: Bruce Robertson





	 	 	 	Re: Stock Purchase Agreement (the “Agreement”), dated as of August 27,
2008, by and among CastlePoint Reinsurance Company, Ltd. (“Purchaser”),
HIG, Inc. (the “Company”) and Brookfield US Corporation (“Seller”)





Dear Bruce:




     In our recent conversations, we discussed the mutual desirability of agreeing prior to closing
on (i) certain significant line items solely for purposes of the closing date balance sheet process
under Section 3.3 of the Agreement, and (ii) the other amendments to the Agreement set
forth below.



     Consistent with these discussions and based upon the information provided by Representatives
of Seller and the Company to Purchaser at and following our meeting in New York on February 9,
2009, in accordance with Section 12.4 of the Agreement, Purchaser, Seller and the Company
hereby agree as follows:




	1.	 	Section 3.1 of the Agreement is hereby amended to delete the reference to
“$27,000,000” and insert in lieu thereof “$31,500,000.” Section 3.2 of the Agreement
is hereby amended to delete the reference to “Twenty-Seven Million Dollars ($27,000,000)” and
insert in lieu thereof “$31,500,000.” The term “Closing Date” in Section 3.2 and
Section 3.3 of the Agreement shall mean December 31, 2008 (and shall not mean the date
on which the Closing actually occurs); provided, however, that the first
reference to Closing Date in Section 3.3(a) shall mean the date on which the Closing occurs.






	2.	 	Section 4.3(a) of the Agreement is hereby amended to delete the reference to
“February 27, 2009” and insert in lieu thereof “March 27, 2009.”






	3.	 	Attached hereto as Schedule 1 to this letter agreement is a pro forma balance sheet
on which certain line items are marked with an asterisk. The amounts set forth next to each
line item designated with an asterisk on Schedule 1 hereto shall be the amounts set
forth on the Closing Date Balance Sheet for each such line item and such amounts shall not be




 









 






	 	 	disputed by either party in connection with determining the Final Closing Book Value. For
the avoidance of doubt and notwithstanding anything in this letter agreement or the
Agreement to the contrary, for purposes of determining the Final Closing Book Value, the
parties agree that any net income or loss for the period from January 1, 2009 through the
Closing Date, including (for greater clarity) any change in assets or liabilities resulting
from the earning or incurring of such net income or loss, shall not be taken into account.
The parties agree and acknowledge that the amounts set forth next to each line item not
designated with an asterisk on Schedule 1 hereto can and may differ in the Estimated
Closing Book Value, the Closing Date Balance Sheet and the Notice of Balance Sheet
Disagreement in accordance with the terms of the Agreement.






	4.	 	The Company shall cause the Insurance Subsidiaries to request that the applicable insurance
regulatory authorities extend their respective filing deadlines with respect to the annual
audited statutory statements for the year ended December 31, 2008, for each of the Insurance
Subsidiaries (the “2008 SAP Statements”) to March 15, 2009, and Purchaser hereby
consents to the making of such requests by the Insurance Subsidiaries. Purchaser further
agrees that the financial statements (including the 2008 SAP Statements) required to be
provided by the Company to Purchaser pursuant to Section 8.13 of the Agreement for the
fiscal year and quarter ended December 31, 2008, shall not be required to be provided to
Purchaser until two (2) Business Days following the filing of the 2008 SAP Statements with the
applicable regulatory authorities.






	5.	 	Without limiting paragraph 3 above and except as required by applicable Law, prior to the
Closing (provided that the Closing occurs before the filing of the 2008 SAP Statements),
Seller agrees (i) to continue to set loss and loss adjustment expense reserves (including
incurred but not reported loss reserves) in the Ordinary Course of Business and (ii) without
the written consent of Purchaser, not to release any loss or loss adjustment expense reserves
(including incurred but not reported loss reserves) other than to pay claims in the Ordinary
Course of Business. In accordance with the foregoing and for purposes of greater clarity,
Purchaser hereby agrees and acknowledges that Seller, the Company and the Insurance
Subsidiaries shall, in connection with the filing of the 2008 SAP Statements (if the Closing
has not yet occurred), (X) set loss and loss adjustment expense reserves (including incurred
but not reported loss reserves) and (Y) release any loss or loss adjustment expense reserves
(including incurred but not reported loss reserves), as they determine to be appropriate;
provided, that any such setting or releasing of any loss and loss adjustment expense
reserves (including incurred but not reported loss reserves) shall be in accordance with the
terms of the Agreement, SAP and applicable Law.






	6.	 	Upon execution of this letter agreement, Seller and the Company shall cause Hermitage to
satisfy the investment requirements under Section 1402 of the New York Insurance Law to enable
Hermitage to complete the amendment of its charter to duplicate the powers of the subsidiaries
of Tower Group, Inc.






	7.	 	Provided that the Closing occurs prior to the filing of the 2008 SAP Statements, at the
Closing the Company shall set its loss and loss adjustment expense reserves as directed 




 









 






	 	 	by
Purchaser and confirmed by Purchaser’s outside actuary. The parties agree and acknowledge
that such setting of the loss and loss adjustment expense reserves by the Company shall have
no effect on the Purchase Price.





     The parties acknowledge and agree that nothing in this letter agreement shall constitute a
waiver of any rights of any party under the Agreement (other than the waiver of the right to
dispute the amounts set forth next to each line item designated with an asterisk on Schedule
1 hereto as set forth in paragraph 3 above), including the waiver of any breach of any
provision of the Agreement or the failure of any condition precedent under the Agreement.



     This letter agreement and Schedule 1 hereto, the Confidentiality Agreement and the
Agreement, together with the Schedules and Exhibits thereto and any certificates, documents,
instruments and writings that are delivered pursuant thereto, constitute the entire understanding
and agreement of the parties in respect of the subject matter hereof and thereof.



     Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the
Agreement.



     Except for the amendments provided for herein, all other provisions of the Agreement shall
continue in full force and effect and be binding upon the parties hereto.



     This letter agreement may be executed in multiple counterparts, each counterpart when so
executed and delivered, including by facsimile, constituting an original, but all such counterparts
together shall constitute one and the same instrument.



     If the foregoing correctly sets forth our understanding, please indicate your acceptance of
the terms hereof by signing and returning to us an executed counterpart hereof, whereupon this
letter agreement shall constitute a binding agreement among us and shall constitute an amendment to
the Agreement in accordance with Section 12.4 thereof.



	 	 	 	 	 
	 	PURCHASER:



CASTLEPOINT REINSURANCE COMPANY, LTD.

 	 
	 	By:  	/s/ Joel S. Weiner
 	 
	 	 	Name:  	Joel S. Weiner 	 
	 	 	Title:  	Senior Vice President and
Chief Financial Officer 	 
	 



Agreed and accepted as of the date

first above written:




COMPANY:




HIG, INC.




 









 





	 	 	 	 	 
	 	 	 
	By:  	                   /s/ Aleks Novakoviz
 	 	 
	 	Name:  	Aleks Novakoviz 	 	 
	 	Title:  	VP 	 	 
	 
	SELLER:



BROOKFIELD US CORPORATION

 	 	 
	By:  	/s/ Aleks Novakoviz
 	 	 
	 	Name:  	Aleks Novakoviz 	 	 
	 	Title:  	VP 	 	 
	 




	cc: 	 	 Roger A. Brown, Esq.

Senior Counsel, Tower Group, Inc.

D. Gilbert Friedlander, Esq.

Weil, Gotshal & Manges LLP

Elliot S. Orol, Esq.

General Counsel, Tower Group, Inc.

John M. Schwolsky, Esq.

Dewey & LeBoeuf LLP