ACCORDANCE WITH THE
FOLLOWING CLAUSES ATTACHED HERETO:
1.
NUCLEAR INCIDENT EXCLUSION CLAUSE -
PHYSICAL DAMAGE -REINSURANCE - U.S.A. - NMA 1119;
2.
NUCLEAR INCIDENT EXCLUSION CLAUSE -
LIABILITY - REINSURANCE - U.S.A. - NMA 1590;
B.
WAR RISKS, IN ACCORDANCE WITH BRMA CLAUSE
56B;
C.
INSOLVENCY, IN ACCORDANCE WITH BRMA
CLAUSE 20A;
D.
Liability assumed by the Company as a
member of any pool, association or syndicate, in accordance with BRMA Clause
40A;
E.
Earthquake when written as such;
F.
Liability arising out of ownership,
maintenance or use of any aircraft or flight operations;
G.
Professional Liability, when written as
such, however not to exclude when written as part of a package Policy or when
written in conjunction with other Policies issued by the Company;
H.
Insolvency and Financial Guarantee;
6
I.
Any acquisitions of companies or
books of business outside of the normal course of business ("agent rollovers")
without the prior written consent of the Reinsurer hereon;
J.
Asbestos liabilities of any nature;
K.
Pollution liabilities of any nature;
L.
Assumed reinsurance with the exception
of inter-affiliate reinsurance.
ARTICLE VI
REINSURANCE COVERAGE
A.
UPON THE CONTRIBUTION OF CAPITAL TO
REINSURER BY ITS PARENT IN THE AMOUNT OF AT LEAST $156 MILLION, THE COMPANY
SHALL AUTOMATICALLY AND OBLIGATORILY CEDE TO THE REINSURER, AND THE REINSURER
SHALL BE OBLIGATED TO ACCEPT AS ASSUMED REINSURANCE, A 30% QUOTA SHARE PORTION
OF THE NET LIABILITIES WITH RESPECT TO SUCH POLICIES, SUBJECT TO ADJUSTMENT AS
SET FORTH BELOW. THE COMPANY MAY, IN ITS SOLE DISCRETION, CHANGE THE QUOTA SHARE
PARTICIPATION OF THE REINSURER, FROM TIME TO TIME, AS OF ANY SIX MONTH
ANNIVERSARY DATE OF THE EFFECTIVE DATE OF THIS AGREEMENT UPON NOT LESS THAN
NINETY (90) DAYS PRIOR WRITTEN NOTICE TO THE REINSURER; PROVIDED, HOWEVER THAT
THE QUOTA SHARE PARTICIPATION OF THE REINSURER SHALL AT ALL TIMES DURING THE
TERM OF THIS AGREEMENT BE A MINIMUM OF 25% AND A MAXIMUM OF 45%, AND PROVIDED
FURTHER THAT THE QUOTA SHARE PARTICIPATION OF THE REINSURER DOES NOT EXCEED $150
MILLION FOR THE 12 MONTH PERIOD ENDED MARCH 31, 2007, WITH SUCH MAXIMUM AMOUNT
SUBJECT TO A 25% GROWTH FACTOR PER YEAR THEREAFTER. IF THE REINSURER'S QUOTA
SHARE PARTICIPATION MAXIMUM OF $150 MILLION (SUBJECT TO THE GROWTH FACTOR) IS
ATTAINED IN ANY TWELVE MONTH PERIOD ENDED MARCH 31, THEN THE QUOTA SHARE
PARTICIPATION PERCENTAGE, WHICH SHALL APPLY TO ALL PREMIUMS AND LOSSES ON A
PRO-RATED BASIS FOR SUCH PERIOD, SHALL BE DECREASED FOR THAT 12 MONTH PERIOD
EVEN IF SUCH PARTICIPATION IS BELOW 25%. EACH SUCH CHANGE SHALL APPLY TO
POLICIES ISSUED OR RENEWED AFTER THE EFFECTIVE DATE OF SUCH CHANGE.
NOTWITHSTANDING THE FOREGOING, IF THE COMPANY WRITES BUSINESS OF THE TYPE THAT
IT HAS HISTORICALLY NOT WRITTEN OR WRITES MORE THAN 25% OF ITS GROSS WRITTEN
PREMIUMS OUTSIDE THE STATE OF NEW YORK IN ANY 12 MONTH PERIOD ENDING ON THE
ANNIVERSARY DATE OF THIS AGREEMENT, THEN THE REINSURER HAS THE RIGHT TO REFUSE
TO REINSURE SUCH BUSINESS THAT THE COMPANY HAS NOT