Document:

exv10w4

 

Exhibit 10.4 Property Excess Of Loss Agreement of Reinsurance No. TP1600E with Swiss
Reinsurance America Corporation effective January 1, 2003

 

 

TABLE OF CONTENTS

to

AGREEMENT OF REINSURANCE

NO. 9034

between

PHILADELPHIA INDEMNITY COMPANY

PHILADELPHIA INSURANCE COMPANY

and

GENERAL REINSURANCE CORPORATION

	 	 	 	 	 
	 	 	 	 	    Page
	GENERAL ARTICLES	 
	Article I	 	
SCOPE OF AGREEMENT
	 	1
	Article II	 	
PARTIES TO THE AGREEMENT
	 	1
	Article III	 	
MANAGEMENT OF CLAIMS AND LOSSES
	 	2
	Article IV	 	
RECOVERIES
	 	2
	Article V	 	
TRIA INUREMENT
	 	2
	Article VI	 	
PREMIUM REPORTS AND REMITTANCES
	 	3
	Article VII	 	
ERRORS AND OMISSIONS
	 	3
	Article VIII	 	
SPECIAL ACCEPTANCES
	 	3
	Article IX	 	
RESERVES AND TAXES
	 	4
	Article X	 	
OFFSET
	 	4
	Article XI	 	
INSPECTION OF RECORDS
	 	4
	Article XII	 	
ARBITRATION
	 	4
	Article XIII	 	
INSOLVENCY OF THE COMPANY
	 	5
	EXHIBIT A - EXCESS OF LOSS REINSURANCE (Per Risk) of Property Business	 	 
	Section 1	 	
BUSINESS SUBJECT TO THIS EXHIBIT
	 	A-1
	Section 2	 	
COMMENCEMENT
	 	A-1
	Section 3	 	
LIABILITY OF THE REINSURER
	 	A-1
	Section 4	 	
DEFINITIONS
	 	A-2
	Section 5	 	
EXCLUSIONS
	 	A-5
	Section 6	 	
OTHER REINSURANCE
	 	A-8
	Section 7	 	
REINSURANCE PREMIUM
	 	A-9
	Section 8	 	
REPORTS AND REMITTANCES
	 	A-9
	Section 9	 	
AUTOMATIC REINSTATEMENT
	 	A-10
	Section 10	 	
TERMINATION
	 	A-11
	Section 11	 	
MORTGAGEE REINSURANCE ENDORSEMENT
	 	A-11
	EXHIBIT B - EXCESS OF LOSS REINSURANCE (Per Risk) of Property Business
(Coverage for Terrorism Only)	 	 
	Section 1	 	
BUSINESS SUBJECT TO THIS EXHIBIT
	 	B-1
	Section 2	 	
TERM
	 	B-1
	Section 3	 	
LIABILITY OF THE REINSURER
	 	B-1
	Section 4	 	
DEFINITIONS
	 	B-2
	Section 5	 	
EXCLUSIONS
	 	B-5
	Section 6	 	
REINSURANCE PREMIUM
	 	B-6
	Section 7	 	
REPORTS AND REMITTANCES
	 	B-6

GENERAL REINSURANCE CORPORATION

 

PROPERTY EXCESS OF LOSS

AGREEMENT OF REINSURANCE

NO. TP1600E

EFFECTIVE: JANUARY 1, 2003

between

PHILADELPHIA INDEMNITY COMPANY

PHILADELPHIA INSURANCE COMPANY

One Bala Plaza, Suite 100

Bala Cynwyd, Pennsylvania 19004

and

SWISS REINSURANCE AMERICA CORPORATION

Armonk, New York

 

 

PROPERTY EXCESS OF LOSS AGREEMENT OF REINSURANCE NO. TP1600E

	 	 	 	 	 	 	 	 	 
	ARTICLE	 	CONTENTS	 	PAGE
	
	 	
	 	

	 	 	 	 	PREAMBLE
	 	 	1	 
	 	I	 	 	SCOPE OF AGREEMENT
	 	 	1	 
	II	 	PARTIES TO THE AGREEMENT
	 	 	1	 
	III	 	COMMENCEMENT AND TERMINATION
	 	 	2	 
	IV	 	LIMIT AND RETENTION
	 	 	2	 
	 	V	 	 	DEFINITIONS
	 	 	3	 
	VI	 	OTHER REINSURANCE
	 	 	7	 
	VII	 	EXCLUSIONS
	 	 	7	 
	VIII	 	REINSURANCE PREMIUM
	 	 	10	 
	IX	 	REPORTS AND REMITTANCES
	 	 	10	 
	 	X	 	 	MANAGEMENT OF CLAIMS AND LOSSES
	 	 	11	 
	XI	 	RECOVERIES
	 	 	12	 
	XII	 	TERRORISM EXCESS RECOVERY
	 	 	12	 
	XIII	 	ERRORS AND OMISSIONS
	 	 	13	 
	XIV	 	SPECIAL ACCEPTANCES
	 	 	14	 
	 	XV	 	 	RESERVES AND TAXES
	 	 	14	 
	XVI	 	OFFSET
	 	 	14	 
	XVII	 	INSPECTION OF RECORDS
	 	 	14	 
	XVIII	 	ARBITRATION
	 	 	14	 
	XIX	 	INSOLVENCY OF THE COMPANY
	 	 	15	 
	 	 	 	 	SIGNATURES
	 	 	16	 

	 	 	 
	ATTACHMENTS:	 	
INSOLVENCY FUNDS EXCLUSION CLAUSE

NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE -

       REINSURANCE - U.S.A.

LARGE INSURABLE VALUES EXCLUSION CLAUSE

 

 

PROPERTY EXCESS OF LOSS

AGREEMENT OF REINSURANCE

NO. TP1600E

(hereinafter referred to as the “Agreement”)

between

PHILADELPHIA INDEMNITY COMPANY

PHILADELPHIA INSURANCE COMPANY

One Bala Plaza, Suite 100

Bala Cynwyd, Pennsylvania 19004

(hereinafter referred to as the “Company”)

and

SWISS REINSURANCE AMERICA CORPORATION

Armonk, New York

(hereinafter referred to as the “Reinsurer”)

In consideration of the promises set forth in this Agreement, the parties agree
as follows:

ARTICLE I – SCOPE OF AGREEMENT

	A.	 	As a condition precedent to the Reinsurer’s obligations under this
Agreement, the Company shall cede to the Reinsurer the business described
in this Agreement, and the Reinsurer shall accept such business as
reinsurance from the Company.
	 
	B.	 	This Agreement shall apply to Property Business written by the Company,
which is defined as insurance and classified in the NAIC form of annual
statement as fire, allied lines, inland marine, commercial multiple peril
(property coverages), homeowners multiple peril (property coverages) or
automobile physical damage (comprehensive and collision) when written on a
garage open lot basis, plate glass, and burglary and theft, except those
lines specifically excluded in the section entitled Exclusions, on Risks
wherever located in the United States of America, its territories and
possessions. On policies which provide coverage beyond these territorial
limits, the territorial limits of this Agreement shall be identical with
those of the Company’s policies.

ARTICLE II – PARTIES TO THE AGREEMENT

This Agreement is solely between the Company and the Reinsurer. When more than
one Company is named as a party to this Agreement, the first Company named
shall be the agent of the other companies as to all

 1. No. TP1600E

 

matters pertaining to this Agreement. Performance of the obligations of each
party under this Agreement shall be rendered solely to the other party.
However, if the Company becomes insolvent, the liability of the Reinsurer shall
be modified to the extent set forth in the article entitled Insolvency of the
Company. In no instance shall any insured of the Company or any claimant
against an insured of the Company have any rights under this Agreement.

ARTICLE III – COMMENCEMENT AND TERMINATION

	A.	 	This Agreement shall apply to new and renewal policies of the Company
becoming effective at and after 12:01 a.m., January 1, 2003, and to
policies of the Company in force at 12:01 a.m., January 1, 2003, with
respect to claims and losses resulting from Occurrences taking place at
and after the aforesaid time and date, and shall continue in force until
terminated in accordance with the provisions set forth in Paragraph B.
below.
	 
	B.	 	Either party may terminate this Agreement at any calendar quarter by
sending to the other, by registered mail to its principal office, notice
stating the time and date when, not less than 90 days after the date of
mailing of such notice, termination shall be effective. Upon termination
of this Agreement at the Company’s option:

	 	1.	 	The Reinsurer shall continue to be liable, with respect to
policies in force at the time and date of termination, for claims and
losses resulting from Occurrences taking place until the expiration,
cancellation, or next anniversary date, not to exceed one year, of
each such policy of the Company, whichever occurs first. The
reinsurance premium for policies in force at the time and date of
termination shall be calculated by applying the provisions of the
Article entitled Reinsurance Premium to the monthly earned premiums
that derive from the unearned premium applicable to policies in force
at the time and date of termination.
	 
	 	2.	 	The Reinsurer shall not be liable for any claims or losses
resulting from Occurrences taking place at and after the effective
time and date of termination.

Prior to the termination date, the Company shall advise the Reinsurer as to
which of the above options shall apply.

ARTICLE IV – LIMIT AND RETENTION

	A.	 	As respects one or more than one Line of Business covered under this
Agreement, the Company shall retain the first $10,000,000 of Net Loss as
respects each risk in any one Loss Occurrence. The Reinsurer shall then be
liable for the amount by which the Company’s Net Loss exceeds the
Company’s retention of $10,000,000, but the liability of

 2. No. TP1600E

 

	 	 	the Reinsurer shall never exceed $5,000,000 each risk any one Loss
Occurrence, nor shall the Reinsurer’s liability from all Risks in each
Occurrence exceed $15,000,000.
	 
	B.	 	It is understood that the liability of the Reinsurer shall not exceed
$5,000,000 with respect to all Net Loss and Adjustment Expenses combined
arising out of all loss or damage or indirectly arising out of, caused by
or resulting from all Terrorism Loss Occurrences taking place during each
calendar year regardless of any other cause or event contributing to such
loss or damage in any way or at any time, or whether such loss or damage
is accidental or intentional.
	 
	C.	 	Reinsurance of the Company’s retention, set forth above, shall not be
deducted in arriving at the Company’s Net Loss herein.

ARTICLE V – DEFINITIONS

	A.	 	Company Retention
	 
	 	 	This term shall mean the amount the Company and its underlying reinsurer
shall retain for their own account; however, this requirement shall be
satisfied if this amount is retained by the Company or its affiliated
companies under common management or common ownership.
	 
	B.	 	Net Loss
	 
	 	 	This term shall mean all payments by the Company within the terms and
limits of its policies in settlement of claims or losses, after deduction
of salvage and other recoveries and after deduction of amounts due from all
other reinsurance, except underlying reinsurance and catastrophe
reinsurance, whether collectible or not. This term shall include
Adjustment Expense. If the Company becomes insolvent, this definition
shall be modified to the extent set forth in the article entitled
Insolvency of the Company.
	 
	 	 	Notwithstanding the provisions of the article entitled Management of Claims
and Losses, this term shall also include 100% of Losses in Excess of Policy
Limits and 100% of Extra Contractual Obligations.
	 
	 	 	Nothing in this definition shall imply that losses are not recoverable
hereunder until the Company’s Net Loss has been finally ascertained.
	 
	C.	 	Adjustment Expense
	 
	 	 	This term shall mean expenditures by the Company within the terms of its
policies in the direct defense of claims and in connection with Losses in
Excess of Policy Limits and in connection with Extra Contractual
Obligations and as allocated to an individual claim or

 3. No. TP1600E

 

	 	 	loss (other than for office expenses and for the salaries and expenses of
employees of the Company or of any subsidiary or related or wholly owned
company of the Company) made in connection with the disposition of a claim,
loss, or legal proceeding including investigation, negotiation, and legal
expenses; court costs; prejudgment interest; and postjudgment interest.
	 
	 	 	Notwithstanding the provisions of the article entitled Management of Claims
and Loses, this term shall also be deemed to include any expenses incurred
by the Company in bringing or in defending a declaratory judgment action
brought to determine the Company’s obligations to its insured with respect
to a specific claim under a policy (or coverage part thereof) reinsured
hereunder. However, the amount of any declaratory judgment expense that
may be included in computation of Adjustment Expense shall not exceed the
lesser of the amount of insurance under the policy or the Reinsurer’s Limit
of Liability for each Risk under this Agreement.
	 
	 	 	The date on which a declaratory judgment expense is incurred by the Company
shall be deemed, in all circumstances, to be the date of the original
Occurrence.
	 
	D.	 	Losses in Excess of Policy Limits and Extra Contractual Obligations

	 	1.	 	The term “Loss in Excess of Policy Limits” shall mean a payment
made to a third party claimant in excess of policy limit which the
Company is legally obligated to pay resulting from an action taken by
the insured or assignee arising from a third party claimant being
awarded an amount in excess of the Company’s policy limit as a result
of the Company’s failure to settle within the policy limit of the
Company’s alleged or actual negligence 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 in the preparation or
prosecution of an appeal consequent upon such action.
	 
	 	2.	 	The term “Extra Contractual Obligation” shall mean a loss which
the Company is legally obligated to pay, which is not covered under
any other provision of this Agreement and which arises from the
Company’s handling of any claim on the policies reinsured hereunder
which have limits of liability greater than the Company Retention.

	 	 	The date on which a Loss in Excess of Policy Limits or an Extra Contractual
Obligation is incurred by the Company shall be deemed, in all
circumstances, to be the date of the original Occurrence.
	 
	 	 	There shall be no coverage hereunder where the Loss in Excess of the Policy
Limit or the Extra Contractual Obligation has been incurred due to the
fraud or criminal conduct of a member of the Board of Directors, a
corporate officer of the Company, or any other employee of the Company,
acting individually or collectively or in collusion

 4. No. TP1600E

 

	 	 	with any individual or corporation or any other organization or party
involved in the investigation, defense or settlement of any claim covered
hereunder.
	 
	 	 	Any insurance or reinsurance, whether collectible or not, which indemnifies
or protects the Company against claims which are the subject matter of this
definition and any contribution, subrogation, or recovery shall inure to
the benefit of the Reinsurer and shall be deducted to arrive at the amount
of the Company’s Net Loss.
	 
	E.	 	Risk
	 
	 	 	The Company shall establish what constitutes one Risk, provided:

	 	1.	 	A Building and its contents, including time element coverages,
shall never be considered more than one Risk;
	 
	 	2.	 	When two or more Buildings and their contents are situated at the
same general location, the Company shall identify on its records at
the time of acceptance by the Company those individual Buildings and
their contents that are considered to constitute each Risk; if such
identification is not made, all of the Buildings and their contents
situated at the same general location shall be considered one Risk.

	F.	 	Building
	 
	 	 	This term shall mean each separately roofed structure enclosed within
exterior walls.
	 
	G.	 	Loss Occurrence

	 	A.	 	The term “Loss Occurrence” shall mean 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
which 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:
	 

	 	1.	 	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 72
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.

 5. No. TP1600E

 

	 	2.	 	As regards riot, riot attending a strike, civil
commotion, vandism and malicious mischief, all individual losses
sustained by the Company, occurring during any period of 72
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 72 consecutive hours may be extended in respect of
individual losses which occur beyond such 72 consecutive hours
during the continued occupation of an assured’s premises by
strikers, provided such occupation commenced during the aforesaid
period.
	 
	 	3.	 	As regards earthquake (the epicentre of which need not
necessarily be within the territorial confines referred to in the
opening paragraph of this Article) and fire following directly
occasioned by the earthquake, only those individual fire losses
which commence during the period of 168 consecutive hours may be
included in the Company’s Loss Occurrence.
	 
	 	4.	 	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.
	 
	 	5.	 	As regards Terrorism, all individual losses sustained by
the Company occurring during any period of 72 consecutive hours
arising out of and directly occasioned by the same event. Should
such an event of Terrorism give rise to other perils which, in an
unbroken chain of causation, have occasioned the losses, the cause
of the losses is understood to be that event of Terrorism.

	 	a.	 	“Terrorism,” for purposes of this Agreement,
shall mean any actual or threatened violent act or act
harmful to human life, tangible or intangible property or
infrastructure directed towards or having the effect of (i)
influencing or protesting against any de jure or de facto
government or policy thereof, (ii) intimidating, coercing or
putting in fear a civilian population or section thereof for
the purpose of establishing or advancing a specific
ideological, religious or political system of thought,
perpetrated by a specific individual or group directly or
indirectly through agents acting on behalf of said individual
or group or (iii) retaliating against any country for direct
or vicarious support by that country of any other government
or political system.
	 
	 	b.	 	Any act declared pursuant to the Terrorism Risk
Insurance Act of 2002 shall also be considered “Terrorism”
for purposes of this Agreement.

 6. No. TP1600E

 

	 	B.	 	For all Loss Occurrences 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 and provided that only one such period of
168 consecutive hours shall apply with respect to one event except for
those Loss Occurrences referred to in 1., 2. and 5. above, where only
one such period of 72 consecutive hours shall apply with respect to
one event, regardless of the duration of the event.
	 
	 	C.	 	No individual losses occasioned by an event that would be covered
by 72 hours clauses may be included in any Loss Occurrence claimed
under the 168 hours provision.

	H.	 	Company’s Subject Earned Premium
	 
	 	 	This term shall mean the premium earned by the Company on the business
reinsured hereunder, after deduction from such earned premium of the
portion paid for reinsurance which inures to the benefit of the Reinsurer.

ARTICLE VI – OTHER REINSURANCE

The obligations of the Company to reinsure business falling within the scope of
this Agreement and of the Reinsurer to accept such reinsurance are mandatory
and no other reinsurance (either facultative or treaty) is permitted, except as
provided for below.

The Company may purchase facultative excess of loss reinsurance or facultative
share reinsurance within the liability of the Reinsurer, if, in the
underwriting judgment of the Company, the Reinsurer will be benefited thereby.
In no event, however, shall the amount required with respect to the Company
Retention be reduced.

Recoveries from catastrophe reinsurance shall be deemed not to reduce the
amount required with respect to the Company Retention.

ARTICLE VII – EXCLUSIONS

This Exhibit shall not apply to:

	A.	 	Reinsurance assumed by the Company other than reinsurance of primary
business assumed from affiliated companies;
	 
	B.	 	Nuclear incident per the Nuclear Incident Exclusion Clause – Physical
Damage – Reinsurance attached hereto;
	 
	C.	 	“Self-insurance” or “self-insured obligations”, howsoever styled, of the
Company, its affiliates or subsidiaries, or any insurance

 7. No. TP1600E

 

	 	 	wherein the Company, its affiliates or subsidiaries, are named as the
insured party, either alone or jointly with some other party,
notwithstanding that no legal liability may arise in respect thereof by
reason of the fact that the Company, its affiliates or subsidiaries, may
not be obligated by law to pay a claim to itself, its affiliates or
subsidiaries;
	 
	D.	 	Any loss or liability accruing to the Company directly or indirectly from
any insurance written by or through any pool or association including
pools or associations in which membership by the Company is required under
any statutes or regulations;
	 
	E.	 	Any liability of the Company arising from its participation or membership
in any insolvency fund;
	 
	F.	 	Any loss or damage which is occasioned by war, including undeclared or
civil war, warlike action by a military force, including action in
hindering or defending against an actual or expected attack, by any
government, sovereign or other authority using military personnel or other
agents; or insurrection, rebellion, revolution, usurped power or action
taken by governmental authority in hindering or defending against any of
these; however, this exclusion shall not apply to any policy which
contains a standard war exclusion;
	 
	G.	 	Risks written on a layered basis, whether primary or excess of loss, or
policies written with a deductible or franchise of more than $500,000;
however, this exclusion shall not apply to policies which provide a
percentage deductible or franchise in connection with windstorm,
earthquake or flood;
	 
	H.	 	Pollution to the extent excluded in the Company’s policies.
Nevertheless, if the insured elects to purchase any “buy back” or
additional coverage options, such options shall not be covered hereunder;
	 
	I.	 	Insurance against earthquake, except when written in conjunction with
fire and otherwise eligible perils;
	 
	J.	 	Insurance on growing crops;
	 
	K.	 	Insurance against flood, waves, tidal waves, overflow of any body of
water, or their spray, all whether driven by wind or not, except when
written in conjunction with fire and otherwise eligible perils;
	 
	L.	 	Business classified as fidelity, however this exclusion shall not apply
to crime and fidelity with limits no greater than $1,000,000 when written
as such;
	 
	M.	 	Credit insurance;
	 
	N.	 	Business classified as boiler and machinery;

 8. No. TP1600E

 

	O.	 	Mortgage impairment insurance and similar kinds of insurance, howsoever
styled, providing coverage to an insured with respect to its mortgagee
interest in property or its owner interest in foreclosed property;
	 
	P.	 	Difference in conditions insurance and similar kinds of insurance,
howsoever styled;
	 
	Q.	 	Risks which have a total insurable value of more than $250,000,000;
however, this exclusion shall not apply if the Company writes 100% of the
Risk;
	 
	R.	 	Losses with respect to overhead transmission and distribution lines and
their supporting structures, other than those on or within 1,000 feet of
the insured premises. However, public utilities extension and/or
suppliers extension and/or contingent business interruption coverage are
not subject to this exclusion, provided these are not part of a
transmitters’ or distributors’ policy.
	 
	S.	 	Offshore property Risks;
	 
	T.	 	Inland marine business with respect to the following:

	 	1.	 	Cargo insurance when written as such with respect to ocean
vessels;
	 
	 	2.	 	Faulty film, tape, processing and editing insurance and cast
insurance;
	 
	 	3.	 	Drilling rigs for natural fuels;
	 
	 	4.	 	Furriers’ customers policies;
	 
	 	5.	 	Insurance on livestock under so-called “mortality policies”,
	 
	 	6.	 	Mining equipment while underground;
	 
	 	7.	 	Registered mail and armored car insurance;

	U.	 	Loss of, damage to, or failure of, or consequential loss resulting
therewith (including but not limited to earnings and extra expense) of
satellites, spacecraft, and launch vehicles, including cargo and freight
carried therein, in all phases of operation (including but not limited to
pre-launch, launch, and in-orbit).
	 
	V.	 	Ex-gratia payments made by the Company, however this exclusion shall not
apply if the Reinsurer give its prior approval.
	 
	W.	 	Mobile homes unless written as part of a commercial multiple peril
policy.

 9. No. TP1600E

 

	X.	 	Large Insurable Values as per the attached Large Insurable Values
Exclusion Clause, which is made part of this Agreement.

If the Company is bound without knowledge of or contrary to the instructions of
the Company’s supervisory underwriting personnel, or any business falling
within the scope of one or more of the exclusions set forth in this section,
these exclusions, except A. through F., H., J., L., M. and O. shall suspend
with respect to such business until 60 days after an underwriting supervisor of
the Company acquires knowledge of such business.

ARTICLE VIII – REINSURANCE PREMIUM

	A.	 	The Company shall pay to the Reinsurer a premium for the reinsurance
provided hereunder at a rate of 1.23%. Such rate shall be applied to the
Company’s Subject Earned Premium for the calendar year under calculation.
	 
	B.	 	The term “Subject Earned Premium” as used herein is equal to the sum of
the Net Premiums Written on the business covered hereunder during the
period under consideration, plus the unearned premium reserve as respects
premiums in force at the beginning of such period, less the unearned
premium reserve as respects premiums in force at the end of the period,
said unearned premium is to be calculated on an actual daily basis or in
accordance with the Company’s methodology, as agreed.
	 
	C.	 	The term “Net Premiums Written” shall mean gross premiums written less
returns, allowances and reinsurances which inure to the benefit of the
Reinsurer.
	 
	D.	 	The following percentages of the Company’s premium shall be allocated to
the business covered under this Agreement: 100% Businessowners.

ARTICLE IX – REPORTS AND REMITTANCES

	A.	 	Reinsurance Premium
	 
	 	 	Within 25 days after the close of each calendar quarter, the Company shall
render to the Reinsurer a report of the reinsurance premium for the quarter
with respect to the Company’s Subject Earned Premium during the quarter,
summarizing the reinsurance premium by line of insurance; and the amount
due the Reinsurer shall be remitted with 25 days after the close of the
quarter.
	 
	B.	 	Claims and Losses
	 
	 	 	The Company shall report promptly to the Reinsurer, but within no more than
25 days after the Company becomes aware of the claim or

 10. No. TP1600E

 

	 	 	loss, each claim or loss which, in the Company’s opinion, may involve the
reinsurance afforded by this Agreement. The Company shall also report
promptly to the Reinsurer, but within no more than the 25 day time period
stipulated above, any action alleging Extra Contractual Obligations against
the Company or any declaratory judgment action brought by or against the
Company on the business reinsured hereunder. The Company shall advise the
Reinsurer of the estimated amount of Net Loss and Adjustment Expense in
connection with each such claim or loss and of any subsequent changes in
such estimates.
	 
	 	 	Promptly upon receipt of a definitive statement of Net Loss and Adjustment
Expense from the Company, but within no more than 25 days after receipt of
such statement, the Reinsurer shall pay to the Company the Reinsurer’s
portion of Net Loss and the Reinsurer’s portion of Adjustment Expense, if
any. The Company shall report to the Reinsurer any subsequent changes in
the amount of Net Loss and/or Adjustment Expense, and the amount due either
party shall be remitted promptly, but within no more than 25 days after
receipt of such report.
	 
	C.	 	P.C.S. Catastrophe Bulletins
	 
	 	 	The Company shall furnish to the Reinsurer, upon request, the following
information with respect to each catastrophe set forth in the Catastrophe
Bulletins published by the Property Claim Services:

	 	1.	 	The preliminary estimates of the amount recoverable from the
Reinsurer;
	 
	 	2.	 	The Reinsurer’s portion of claims, losses, and Adjustment
Expenses paid less salvage recovered during each calendar quarter;
	 
	 	3.	 	The Reinsurer’s portion of reserves for claims, losses, and
Adjustment Expenses at the end of each calendar quarter.

	D.	 	General
	 
	 	 	In addition to the reports required by (a), (b), and (c) above, the Company
shall furnish such other information as may be required by the Reinsurer
for the completion of the Reinsurer’s quarterly and annual statements and
internal records.
	 
	 	 	All reports shall be rendered on forms or in format acceptable to the
Company and the Reinsurer.

ARTICLE X – MANAGEMENT OF CLAIMS AND LOSSES

The Company shall investigate and settle or defend all claims and losses. When
requested by the Reinsurer, the Company shall permit the

 11. No. TP1600E

 

Reinsurer, at the expense of the Reinsurer, to be associated with the Company
in the defense or settlement of any claim, loss, or legal proceeding which
involves or is likely to involve the Reinsurer. All payments of claims or
losses by the Company within the terms and limits of its polices which are
within the limits set forth in the Article entitled Limits and Retention shall
be binding on the Reinsurer, subject to the terms of this Agreement.

ARTICLE XI – RECOVERIES

The Company shall pay to or credit the Reinsurer with the Reinsurer’s portion
of any recovery obtained from salvage, subrogation, or other insurance.
Adjustment Expense for recoveries shall be deducted from the amount recovered.
However, if the Adjustment Expense incurred in obtaining recoveries exceeds the
amount recovered, if any, the excess Adjustment Expense shall be apportioned
between the parties in proportion to the liability of each party for the loss
before the recovery was obtained.

The Reinsurer shall be subrogated to the rights of the Company to the extent of
its loss payments to the Company. The Company agrees to enforce its rights of
salvage, subrogation, and its rights against insurers or to assign these rights
to the Reinsurer.

If the reinsurance hereunder is on a share basis, the recoveries shall be
apportioned between the parties in the same ratio as the amounts of their
liabilities bear to the loss. If the reinsurance hereunder is on an excess
basis, recoveries shall be distributed to the parties in an order inverse to
that in which their liabilities accrued.

ARTICLE XII – TERRORISM EXCESS RECOVERY

	A.	 	For purposes of this Article:

	 	1.	 	“Act” shall mean the Terrorism Risk Insurance Act of 2002, any
amendments thereto and any regulations promulgated thereunder.
	 
	 	2.	 	“Affiliate,” “Insured Losses,” and “Program Year” shall have the
meanings provided in the Act.
	 
	 	3.	 	“Company” shall include the Company and all affiliates.

	B.	 	To the extent that an Insured Loss is otherwise payable hereunder, the
reinsurance provided by this Agreement shall apply only to the portion of
liability, loss, cost and/or expense retained by the Company net of any
federal assistance pursuant to the Act. This reinsurance shall not apply
to any fines, civil penalties or surcharges assessed pursuant to the Act.

 12. No. TP1600E

 

	C.	 	The respective liability of the Reinsurer and of the Company for Insured
Losses in any Program Year under this Agreement shall each be reduced by
the ratio that the financial assistance available to the Company under the
Act for that Program Year bears to the Company’s total Insured Losses for
the same Program Year.
	 
	D.	 	The parties recognize that, for any Program Year, the Reinsurer may
without waiver of the foregoing Paragraphs make payments for Insured
Losses which, together with available financial assistance under the Act
and the Company retentions and/or deductibles hereunder, exceed the
Company’s Insured Losses. In such event, the Reinsurer’s proportional
share of all such excess recovery (hereafter “Reinsurer’s Excess Share”)
shall inure to the benefit of the Reinsurer. All excess recovery
described in this Paragraph shall be allocated to the Reinsurer and the
Company in proportion to the respective liability of each for Insured
Losses, net of federal assistance under the Act, salvage, subrogation and
other similar recoveries, as applicable.
	 
	E.	 	In the event of a Reinsurer’s Excess Share, the Company shall:

	 	1.	 	Promptly pay the Reinsurer’s Excess Share to the Reinsurer; or
	 
	 	2.	 	Upon request of the Reinsurer at any time and at the Reinsurer’s
sole discretion, instead assign to the Reinsurer its rights to recover
directly from the federal government any portion of Reinsurer’s Excess
Share not already paid to the Reinsurer. The Company shall cooperate
with and assist the Reinsurer, at its own expense, to the extent
reasonably necessary for the Reinsurer to exercise those rights. If
the Reinsurer is unable, for any reason, to exercise any right
assigned to it by the Company pursuant to this Article, the Company
shall pay the Reinsurer’s Excess Share to the Reinsurer as if no
assignment had taken place.

	F.	 	In the event of an Insured Loss, the Company shall provide the Reinsurer
with a monthly report detailing claim settlement activities and financial
assistance under the Act. Calculations for each Program Year shall
continue to be made until the settlement of all Insured Losses covered
hereunder. To the extent that the Company allocates Insured Losses and/or
federal assistance under the Act among affiliates, claims, contracts or
otherwise in any manner which impacts the reinsurance provided hereunder,
the Company shall apply a reasonable allocation method acceptable to the
Reinsurer.

ARTICLE XIII – ERRORS AND OMISSIONS

The Reinsurer shall not be relieved of liability because of an error or
accidental omission of the Company in reporting any claim or loss or any
business reinsured under this Agreement, provided that the error or omission is
rectified promptly after discovery. The Reinsurer shall be

 13. No. TP1600E

 

obligated only for the return of the premium paid for business reported but not
reinsured under this Agreement.

ARTICLE XIV – SPECIAL ACCEPTANCES

Business not within the terms of this Agreement may be submitted to the
Reinsurer for special acceptance and, if accepted by the Reinsurer, shall be
subject to all of the terms of this Agreement except as modified by the special
acceptance.

ARTICLE XV – RESERVES AND TAXES

The Reinsurer shall maintain the required reserves as to the Reinsurer’s
portion of unearned premium, if any, claims, losses, and Adjustment Expense.

The Company shall be liable for all premium taxes on premium ceded to the
Reinsurer under this Agreement. If the Reinsurer are obligated to pay any
premium taxes on this premium, the Company shall reimburse the Reinsurer,
however, the Company shall not be required to pay taxes twice on the same
premium.

ARTICLE XVI – OFFSET

The Company or the Reinsurer may offset any balance, whether on account of
premium, commission, claims or loses, Adjustment Expense, salvage, or
otherwise, due from one party to the other under this Agreement or under any
other agreement heretofore or hereafter entered into between the Company and
the Reinsurer.

ARTICLE XVII – INSPECTION OF RECORDS

The Company shall allow the Reinsurer to inspect, at reasonable times, the
records of the Company relevant to the business reinsured under this Agreement,
including the Company’s files concerning claims, losses, or legal proceedings
which involve or are likely to involve the Reinsurer. The Reinsurer’s right of
inspection shall continue after the termination of this Agreement.

ARTICLE XVIII – ARBITRATION

All unresolved differences of opinion between the Company and the Reinsurer
relating to this Agreement, including its formation and validity, shall be
submitted to arbitration consisting of one arbitrator chosen by the Company,
one arbitrator chosen by the Reinsurer(s), and a third arbitrator chosen by the
first two arbitrators.

 14. No. TP1600E

 

The party demanding arbitration shall communicate its demand for arbitration to
the other party by registered or certified mail, identifying the nature of the
dispute and the name of its arbitrator, and the other party shall then be bound
to name its arbitrator within 30 days after receipt of the demand.

Failure or refusal of the other party to so name its arbitrator shall empower
the demanding party to name the second arbitrator. If the first two
arbitrators are unable to agree upon a third arbitrator after the second
arbitrator is named, each arbitrator shall name three candidates, two of whom
shall be declined by the other arbitrator, and the choice shall be made between
the two remaining candidates by drawing lots. The arbitrators shall be
impartial and shall be active or retired officers of property or casualty
insurance or reinsurance companies.

The arbitrators shall adopt their own rules and procedures and are relieved
from judicial formalities. In addition to considering the rules of law and the
customs and practices of the insurance and reinsurance business, the
arbitrators shall make their award with a view to effecting the intent of this
Agreement.

The decision of the majority of the arbitrators shall be in writing and shall
be final and binding upon the parties.

Each party shall bear the cost of its own arbitrator and shall jointly and
equally bear with the other party the expense of the third arbitrator and other
costs of the arbitration. In the event both arbitrators are chosen by one
party, the fees of all arbitrators shall be equally divided between the
parties.

The arbitration shall be held at the times and places agreed upon by the
arbitrators.

ARTICLE XIX – INSOLVENCY OF THE COMPANY

In the event of the insolvency of the Company, the reinsurance proceeds will be
paid to the Company or the liquidator, with reasonable provision for
verification, on the basis of the claim allowed in the insolvency proceeding
without diminution by reason of the inability of the Company to pay all or part
of the claim, except as otherwise specified in the statutes of any state having
jurisdiction of the insolvency proceedings or except where the Agreement, or
other written agreement, specially provides another payee of such reinsurance
in the event of insolvency.

The Reinsurer shall be given written notice of the pendency of each claim
against the Company of the policy(ies) reinsured hereunder within a reasonable
time after such claim is filed in the insolvency proceedings. The Reinsurer
shall have the right to investigate each such claim and to interpose, at their
own expense, in the proceeding where such claim is to be adjudicated, any
defenses which they may deem available to the Company or its liquidator. The
expense thus incurred

 15. No. TP1600E

 

by the Reinsurer shall be chargeable, subject to court approval, against the
insolvent Company as part of the expense of liquidation to the extent of a
proportionate share of the benefit which may accrue to the Company solely as a
result of the defense undertaken by the Reinsurer.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate, by their duly authorized representatives as of the
following dates:

In Bala Cynwyd, Pennsylvania, this 18th day of AUGUST, 2003.

	 	 	 
	ATTEST:	 	
PHILADELPHIA INDEMNITY COMPANY

PHILADELPHIA INSURANCE COMPANY
	 	 	 
	FLORENCE R. MCCALLUM	 	
CHRISTOPHER J. MAGUIRE
	
	 	

	And in Armonk, New York, this	 	
8th day of AUGUST, 2003.
	 	 	 
	ATTEST:	 	
SWISS REINSURANCE AMERICA CORPORATION
	 	 	 
	PETER THOMSON	 	
MATTHIAS WEBER
	
	 	

	Member of Management	 	
Member of Senior Management

BH: jh

PHIL IDEMN-1600E

 16. No. TP1600E

 

SUPPLEMENT TO THE ATTACHMENTS

	 	 	DEFINITION OF IDENTIFICATION TERMS USED WITHIN THE ATTACHMENTS
	 
	A.	 	Wherever the term “Company” or “Reinsured” or “Reassured” or whatever
other term is used to designate the reinsured company or companies within
the various attachments to the reinsurance agreement, the term shall be
understood to mean Company or Reinsured or Reassured or whatever other
term is used in the attached reinsurance agreement to designate the
reinsured company or companies.
	 
	B.	 	Wherever the term “Agreement” or “Contract” or “Policy” or whatever other
term is used to designate the attached reinsurance agreement within the
various attachments to the reinsurance agreement, the term shall be
understood to mean Agreement or Contract or Policy or whatever other term
is used to designate the attached reinsurance agreement.
	 
	C.	 	Wherever the term “Reinsurer” or “Reinsurers” or “Underwriters” or
whatever other term is used to designate the reinsurer or reinsurers in
the various attachments to the reinsurance agreement, the term shall be
understood to mean Reinsurer or Reinsurers or Underwriters or whatever
other term is used to designate the reinsuring company or companies.

INSOLVENCY FUNDS EXCLUSION CLAUSE

This Agreement excludes 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 or from reimbursement of any
person for any such liability. “Insolvency fund” includes any guaranty fund,
insolvency fund, plan, pool, association, fund or other arrangement, howsoever
denominated, established or governed, which provides for any assessment of or
payment or assumption by any person 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.

 

 

NUCLEAR INCIDENT EXCLUSION CLAUSE -
PHYSICAL DAMAGE - REINSURANCE - U.S.A.

N.M.A. 1119

	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 operation of paragraphs 1. and 2. of
this Clause, 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 the Reassured does not have knowledge of such
nuclear reactor power plant or nuclear installation, or
	 
	 	(b)	 	where the 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.

- 1 -

 

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

- 2 -

N.M.A. 1119

 

LARGE INSURABLE VALUES EXCLUSION CLAUSE

(Applies to Loss Occurrences involving an event of Terrorism)

This Agreement does not cover Policies issued to a company or group of
companies where the sum of:

	1.	 	total full values, whether insured or not, for all buildings and
contents, and
	 
	2.	 	total sums insured for Business Interruption and/or Extra Expenses,

exceeds a limit of $500,000,000 each location at the time when reinsurance
coverage would have attached, but for this exclusion.exv10w5

 

Exhibit 10.5 Casualty Excess of Loss Reinsurance Contract with American Re-Insurance
Company, Converium Reinsurance (North America) Inc., Endurance
Specialty Insurance
Limited, Liberty Mutual Insurance Company effective January 1, 2003

 

 

PHILADELPHIA INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

PHILADELPHIA INDEMNITY INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

MOBILE USA INSURANCE COMPANY, INC.

Pinellas Park, Florida

LIBERTY AMERICAN INSURANCE COMPANY

Pinellas Park, Florida

And any additional company established or acquired by the Company

CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT

PREPARED BY

WILLIS RE INC.

 

 

PHILADELPHIA INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

PHILADELPHIA INDEMNITY INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

MOBILE USA INSURANCE COMPANY, INC.

Pinellas Park, Florida

LIBERTY AMERICAN INSURANCE COMPANY

Pinellas Park, Florida

And any additional company established or acquired by the Company

CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT

	 	 	 	 	 
	 	 	Contract
	Reinsurers	 	Participation
	
	 	

	American Re-Insurance Company
	 	 	25.00	%
	Converium Reinsurance (North America) Inc.
	 	 	35.00	%
	Endurance Specialty Insurance Limited
	 	 	20.00	%
	Liberty Mutual Insurance Company
	 	 	20.00	%
	Total
	 	 	100.00	%

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 
	ARTICLE	 	 	 	 	PAGE
	
	 	 	 	 	

	 	I	 	 	BUSINESS COVERED
	 	 	1	 
	II	 	AMOUNT OF COVERAGE AND RETENTION
	 	 	2	 
	III	 	ADDITIONAL CONDITIONS
	 	 	2	 
	IV	 	TERM
	 	 	3	 
	 	V	 	 	TERRITORY
	 	 	3	 
	VI	 	EXCLUSIONS
	 	 	4	 
	VII	 	PREMIUM
	 	 	5	 
	VIII	 	REINSTATEMENT
	 	 	6	 
	IX	 	DEFINITIONS
	 	 	6	 
	 	 	 	 	 	“Ultimate Net Loss”
	 	 	6	 
	 	 	 	 	 	“Policy” or “Policies”
	 	 	7	 
	 	 	 	 	 	“Gross Net Earned Premium Income”
	 	 	7	 
	 	X	 	 	NET RETAINED LINES
	 	 	7	 
	XI	 	CURRENCY
	 	 	8	 
	XII	 	UNAUTHORIZED REINSURANCE
	 	 	8	 
	XIII	 	TAXES
	 	 	10	 
	XIV	 	FEDERAL EXCISE TAX
	 	 	10	 
	XV	 	NOTICE OF LOSS AND LOSS SETTLEMENTS
	 	 	10	 
	XVI	 	LOSS IN EXCESS OF POLICY LIMITS
	 	 	11	 
	XVII	 	EXTRA CONTRACTUAL OBLIGATIONS
	 	 	11	 
	XVIII	 	ERRORS
AND OMISSIONS
	 	 	11	 
	XIX	 	ACCESS TO RECORDS
	 	 	12	 
	XX	 	OFFSET
	 	 	12	 
	XXI	 	ARBITRATION
	 	 	12	 
	XXII	 	SERVICE OF SUIT
	 	 	13	 
	XXIII	 	INSOLVENCY
	 	 	14	 
	XXIV	 	CONFIDENTIALITY
	 	 	15	 
	XXV	 	GOVERNING LAW
	 	 	15	 
	XXVI	 	SEVERABILITY
	 	 	15	 
	XXVII	 	THIRD PARTY RIGHTS
	 	 	15	 
	XXVIII	 	AGENCY AGREEMENT
	 	 	15	 
	XXIX	 	INTERMEDIARY
	 	 	16	 
	 	 	 	 	Nuclear
Incident Exclusion Clause - Liability - Reinsurance - U.S.A.
	 	 	 	 
	 	 	 	 	Nuclear
Incident Exclusion Clause - Liability - Reinsurance - Canada
	 	 	 	 
	 	 	 	 	Terrorism Exclusion Endorsement (Reinsurance) N.M.A. 2921 (Amended)
	 	 	 	 
	 	 	 	 	Terrorism Risk Insurance Act Of 2002
	 	 	 	 

 

 

CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)

between

PHILADELPHIA INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

PHILADELPHIA INDEMNITY INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

MOBILE USA INSURANCE COMPANY, INC.

Pinellas Park, Florida

LIBERTY AMERICAN INSURANCE COMPANY

Pinellas Park, Florida

And any additional company established or acquired by the Company

(the “Company”)

and

THE SUBSCRIBING REINSURER EXECUTING THE

INTERESTS AND LIABILITIES AGREEMENT

ATTACHED TO THIS CONTRACT

(the “Reinsurer”)

ARTICLE I

BUSINESS COVERED

This Contract is to indemnify the Company in respect of the net excess
liability as a result of any loss or losses, which may occur during the term of
this Contract under any Policies in force at the effective time and date hereof
or issued or renewed after that time and date by or on behalf of the Company
and classified by the Company as Casualty, Fidelity, Professional Liability
and/or Fiduciary Liability. It is understood and agreed, as respects Policies
on a claims-made or losses-discovered basis, any extended reporting period
coverages provided thereunder shall be reinsured hereunder, provided the date
of loss is during the term of this Contract.

With respect to business classified by the Company as Professional Liability
and written out of the Company’s Specialty Lines Division, the following
product lines of business, as defined by the Company, shall be covered under
the scope of this Contract:

	 	Directors and Officers Liability for For-Profit and Not-For-Profit risks

Miscellaneous Errors and Omissions Liability

Lawyers Professional Liability

Accountants Professional Liability

Page 1

 

	 	Dentists Professional Liability

Insurance Agents Professional Liability

Miscellaneous Medical Professional Liability

Employment Practices Liability

Furthermore, it is agreed that the Company may add other Professional Liability
product lines of business to the scope of this Contract with prior approval of
the Reinsurer.

ARTICLE II

AMOUNT OF COVERAGE AND RETENTION

The Reinsurer will be liable for $10,000,000 of Ultimate Net Loss in respect of
each Loss Occurrence, each Insured in excess of the Company’s retention of
$1,000,000 Ultimate Net Loss each Loss Occurrence, each Insured. With respect
to the Company’s Directors and Officers Liability Policies that contain more
than one coverage part, the amount of coverage and retention hereunder shall
apply separately to each coverage part.

The term “Loss Occurrence” and the term “Insured” as used herein shall have the
same meaning as in the Company’s Policies. However, in the event of any
ambiguity or dispute relating to these terms, the Company shall be the sole
judge of what constitutes one Loss Occurrence and one Insured.

ARTICLE III

ADDITIONAL CONDITIONS

	A.	 	The Company will include as part of their original Policies a Mold
exclusion for business classified as Architects and Engineers, Property
Managers and Real Estate, as determined by the Company. However, this
provision will not apply wherever the Company’s exclusion has not been
filed and approved.
	 
	B.	 	The Company may issue up to $120,000,000 of aggregate limit in respect of
any new and renewal Policies classified by the Company as Public Directors
and Officers Liability insurance for insured companies with a market
capitalization at the time of binding that is more than $200,000,000 but
no greater than $500,000,000. Any such Policy that, if written, would
make the total aggregate limit greater than $120,000,000 shall be
submitted to the lead Reinsurer for acceptance into the Contract.
Furthermore, any such Policies with market capitalization’s that are
greater than $500,000,000 at the time of binding shall be submitted to the
lead Reinsurer for acceptance into the Contract. Upon expiration of the
Contract, the Company shall submit to the Reinsurer a bordereaux detailing
all the Public Directors and Officers Liability Policies that were written
during the term of the Contract.
	 
	C.	 	Business classified by the Company as Specialty Lines Excess shall be
limited to a maximum of 3.5% of the total Gross Net Earned Premium Income
subject to this Contract. In the event the Company’s premium attributable
to Specialty Lines Excess business

Page 2

 

	 	 	exceeds 3.5% of the total Gross Net Earned Premium Income, that business in
excess of 3.5% shall be ceded to the Contract at pro rata premium less a
ceding commission of 27.5%. Any Policies that are Specially Accepted in
accordance with paragraph B, above, shall not be subject to this condition.
	 
	D.	 	Business classified by the Company as First Party Cyber-Liability, when
written as such in conjunction with Miscellaneous Professional Liability
Policies, shall be sub-limited in the Company’s original Policies to
$1,000,000 or so deemed.
	 
	E.	 	New and renewal Policies classified by the Company as Miscellaneous
Professional Liability shall contain a sub-limit of $250,000 for
Copyright, Patent and Trademark coverages, when written as such, or so
deemed. However, this provision will not apply wherever the Company is
not permitted to do so by the applicable regulatory authority(ies).

ARTICLE IV

TERM

The term of this Contract shall be from 12:01 a.m., Eastern Standard Time,
January 1, 2003, to 12:01 a.m., Eastern Standard Time, January 1, 2004.

The Reinsurer shall cease to be liable for Loss Occurrences after the time and
date of expiration of this Contract but shall remain liable for Ultimate Net
Loss incurred by the Company with respect to Loss Occurrences under the
Company’s Policies with the date of loss prior to the termination date of this
Contract.

The Company shall have the option to elect run-off coverage for Policies in
force at the expiration of this Contract. If the Company chooses to run off
liability, the Reinsurer shall continue to be liable for Ultimate Net Loss
incurred by the Company under all Policies in force at the time and date of
expiration until each Policy’s next anniversary, renewal or expiration, but in
no event shall the Reinsurer’s liability continue for more than 12 months after
the expiration date plus odd time, not to exceed a total of 18 months. The
premium for said run-off coverage shall be the Contract rate applied to the
Gross Net Earned Premium Income for subject Policies for such run-off period.
The premium, based on the run-off period, shall be payable quarterly in
advance. The maximum recoverable limit under this Contract for the run-off
period will be 200% of the ceded earned premium for the run-off coverage and
shall be in addition to the Reinsurer’s liability in respect to all Loss
Occurrences during the term of this Contract.

ARTICLE V

TERRITORY

This Contract shall cover wherever the Company’s original Policies cover.

Page 3

 

ARTICLE VI

EXCLUSIONS

This Contract does not cover and specifically excludes:

	A.	 	Policies with per claim or per occurrence limits of $1,000,000 and less.
	 
	 	 	When the Company writes a primary Policy and an umbrella Policy for the
same Insured, and the sum of the per claim or per occurrence limits of the
two Policies is greater than $1,000,000, this exclusion shall not apply to
either Policy.
	 
	B.	 	Pools, Associations or Syndicates, except losses from Assigned Risk Plans
or similar plans are not excluded.
	 
	C.	 	Nuclear Incident pursuant to the “Nuclear Incident Exclusion Clause -
Liability - Reinsurance - U.S.A.” attached hereto.
	 
	D.	 	Nuclear Incident pursuant to the “Nuclear Incident Exclusion Clause -
Liability - Reinsurance - Canada” attached hereto.
	 
	E.	 	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
guarantee fund, insolvency fund, plan, pool, association, fund or other
arrangement, howsoever denominated, established or governed, which
provides for any assessment of or payment or assumption by the Company of
part or all of any claim, debt, charge, fee or other obligation of an
insurer or its successors or assigns which has been declared by any
competent authority to be insolvent or which is otherwise deemed unable to
meet any claim, debt, charge, fee or other obligation in whole or in part.
	 
	F.	 	Financial Guarantee or Insolvency, when written as such.
	 
	 	 	However, the liability of the Company under any bond covering losses due to
negligence of any person or failure of any person to faithfully perform his
duty or failure to account for and pay over money or other property in his
custody shall not be considered Financial Guarantee or Insolvency.
	 
	 	 	Notwithstanding the foregoing, no claim to attach hereto in respect of any
loss or losses arising as a result of:

	 	1.	 	The insolvency of any financial institution at which trust moneys
are deposited or insolvency of any person, firm or company, or
	 
	 	2.	 	The fall in the market value of investments unless such loss is
the direct result of a) a dishonest, fraudulent, criminal or negligent
act on the part of the bonded person or b) a dishonest, fraudulent or
criminal act on the part of any other person or persons or c) unless
such loss is solely created by a physical damage loss to property
other than

Page 4

 

	 	 	 	where such physical damage loss could have been recovered from a third
party but for the insolvency of such third party.

	 	 	The above shall not apply as respects claims made under Specialty Lines
Division Policies issued by the Company.
	 
	G.	 	Pollution liability to the extent excluded in the Company’s original
Policies. However, this exclusion shall not apply:

	 	1.	 	When a judicial entity having legal jurisdiction invalidates the
Company’s Pollution exclusion, thereby obligating the Company for
liability when such liability for Pollution was intended to be
excluded by the Company’s exclusion.
	 
	 	2.	 	In respect of any Policy written in a state whose insurance
regulatory authorities have prohibited the Company from including a
Pollution liability exclusion in its Policies.

	H.	 	Fidelity business, except when written in conjunction with a Director’s
and Officers’ Liability Policy.
	 
	I.	 	Business classified by the Company as Primary Rental Liability and
Supplemental Liability.
	 
	J.	 	Liability assumed by the Company under any form of treaty reinsurance;
however, group intra-company reinsurance (if applicable), local agency
reinsurance accepted in the normal course of business and/or Policies
written by another carrier at the Company’s request and reinsured 100% by
the Company, as well as Policies written for the captive of the Company’s
insured, will not be excluded hereunder.
	 
	K.	 	Terrorism pursuant to the “Terrorism Exclusion Endorsement (Reinsurance)
N.M.A. 2921 (Amended)” attached hereto.
	 
	L.	 	Any losses arising out of tobacco or tobacco products, when written as
such.
	 
	M.	 	Any losses arising out of latex or latex products, when written as such.
	 
	N.	 	New and renewal business classified by the Company as Nursing Home or
Assisted Living General Liability or Professional Liability. However,
this exclusion shall not apply if the Company is required to offer renewal
to any insured(s) by the applicable regulatory authority(ies).

ARTICLE VII

PREMIUM

The premium to be paid by the Company to the Reinsurer for reinsurance provided
by this Contract shall be calculated by applying a rate of 6.60% to the Gross
Net Earned Premium

Page 5

 

Income accounted for by the Company during the term of this Contract on all
business the subject matter hereof, subject to a minimum premium of
$20,000,000.

The Company shall pay to the Reinsurer an annual deposit premium of $25,053,600
payable in quarterly installments of $6,263,400 due April 1; July 1; and
October 1, 2003; and January 1, 2004.

Within 90 days following the expiration of this Contract, the Company shall
render to the Reinsurer a statement of premium due in accordance with the first
paragraph of this Article. An adjustment of premium shall thereupon be made in
accordance with the statement submitted by the Company.

ARTICLE VIII

REINSTATEMENT

Each loss hereon reduces the amount of indemnity hereunder, but the amount so
exhausted shall be reinstated from the date the Loss Occurrence commenced.

	A.	 	The first three full reinstatements shall be without payment of
additional premium.
	 
	B.	 	Subsequently, three reinstatements have been agreed at an additional
premium, each calculated pro rata by applying, to 20% of the premium
earned hereon, the percentage the amount reinstated bears to $10,000,000.
	 
	C.	 	Thereafter, three successive full reinstatements shall be allowed without
payment of additional premium.

Nevertheless, the Reinsurer’s liability hereunder shall never be more than
$100,000,000 in respect of all Loss Occurrences during the term of this
Contract.

ARTICLE IX

DEFINITIONS

	A.	 	“Ultimate Net Loss"
	 
	 	 	Shall mean the actual loss paid by the Company or for which the Company
becomes liable to pay, such loss shall include 100% of any Loss in Excess
of Policy Limits as defined in the LOSS IN EXCESS OF POLICY LIMITS ARTICLE,
100% of any Extra Contractual Obligations as defined in the EXTRA
CONTRACTUAL OBLIGATIONS ARTICLE, ex-gratia payments subject to prior
approval, expenses of litigation and interest, claim-specific declaratory
judgment expenses, and all other loss expense of the Company including
subrogation, salvage, and recovery expenses (office expenses and salaries
of officials and employees not classified as loss adjusters are not
chargeable as expenses for purposes of this paragraph), but salvages and
all recoveries, including recoveries under all reinsurances,

Page 6

 

	 	 	which 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.
	 
	 	 	The phrase “ex-gratia payments” shall mean payments made as an
accommodation by the Company in settlement of a claim for which no coverage
exists under the Policy reinsured hereunder, subject to the prior approval
of the Reinsurer.
	 
	 	 	The phrase “claim-specific declaratory judgment expenses,” as used in this
Contract will mean all expenses incurred by the Company in connection with
declaratory judgment actions brought to determine the Company’s defense
and/or indemnification obligations that are allocable to specific Policies
and claims subject to this Contract. Declaratory judgment expenses will be
deemed to have been incurred by the Company on the date of the original
loss (if any) giving rise to the declaratory judgment action.
	 
	 	 	All salvages, recoveries or payments recovered or received subsequent to
loss settlements 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.
	 
	 	 	For purposes of this definition, the phrase “becomes liable to pay” shall
mean the existence of a judgment, which the Company does not intend to
appeal, or a release has been obtained by the Company, or the Company has
accepted a proof of loss.
	 
	 	 	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.	 	“Policy” or “Policies"
	 
	 	 	Shall mean any binder, policy, or contract of insurance or reinsurance
issued, accepted or held covered provisionally or otherwise, including any
extended reporting periods, by or on behalf of the Company.
	 
	C.	 	“Gross Net Earned Premium Income"
	 
	 	 	Shall mean gross earned premium income during the term of this Contract on
business the subject of this Contract less earned premium income paid for
reinsurances, recoveries under which would inure to the benefit of this
Contract.

ARTICLE X

NET RETAINED LINES

This Contract applies only to that portion of any insurances or reinsurances
covered by this Contract, which the Company retains net for its own account
and, in calculating the amount of any loss hereunder and also in computing the
amount in excess of which this Contract attaches, only loss or losses in
respect of that portion of any insurances or reinsurances which the Company
retains net for its own account shall be included.

Page 7

 

The Company reserves the right to maintain reinsurance agreement(s) in respect
of its net retention under this Contract, and recoveries under said
reinsurance(s) shall be entirely disregarded in determining the Ultimate Net
Loss hereunder.

The amount of the Reinsurer’s liability hereunder in respect of any loss or
losses shall not be increased by reason of the inability of the Company to
collect from any other reinsurers, whether specific or general, any amounts
which may have become due from them whether such inability arises from the
insolvency of such other reinsurers or otherwise.

ARTICLE XI

CURRENCY

Whenever the word “Dollars” or the “$” sign appears in this Contract, they
shall be construed to mean United States Dollars and all transactions under
this Contract shall be in United States Dollars. Amounts paid or received by
the Company in any other currency shall be converted to United States Dollars
at the rate of exchange at the date such transaction is entered on the books of
the Company.

ARTICLE XII

UNAUTHORIZED REINSURANCE

(Applies only to a Reinsurer who does not qualify for full credit with any
insurance regulatory authority having jurisdiction over the Company’s
reserves.)

As regards Policies or bonds issued by the Company coming within the scope of
this Contract, the Company agrees that when it shall file with the insurance
regulatory authority or set up on its books reserves for losses covered
hereunder which it shall be required by law to set up, it will 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 known outstanding losses that have been reported to the Reinsurer
and allocated loss adjustment expense relating thereto, losses and allocated
loss adjustment expense paid by the Company but not recovered from the
Reinsurer, plus reserves for losses incurred but not reported, as shown in the
statement prepared by the Company (hereinafter referred to as “Reinsurer’s
Obligations”) by funds withheld, cash advances 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.

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 and containing provisions acceptable to the
insurance regulatory authorities having jurisdiction over the Company’s
reserves in an amount equal to the Reinsurer’s proportion of said reserves.
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 30 days (60 days where required by insurance
regulatory authorities) prior to any expiration date the issuing

Page 8

 

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.

The Reinsurer and Company agree that the Letters of Credit provided by the
Reinsurer pursuant to the provisions of this Contract may be drawn upon at any
time, notwithstanding any other provision of this Contract, 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, unless otherwise provided for in a
separate Trust Agreement:

	(a)	 	to reimburse the Company for the Reinsurer’s Obligations, the payment of
which is due under the terms of this Contract and which has not been
otherwise paid;
	 
	(b)	 	to make refund of any sum which is in excess of the actual amount
required to pay the Reinsurer’s Obligations under this Contract;
	 
	(c)	 	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;
	 
	(d)	 	to pay the Reinsurer’s share of any other amounts the Company claims are
due under this Contract.

In the event the amount drawn by the Company on any Letter of Credit is in
excess of the actual amount required for (a) or (c) or, in the case of (d), 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.

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.

At annual intervals or more frequently as agreed, but never more frequently
than quarterly, the Company shall prepare a specific statement of the
Reinsurer’s Obligations, for the sole purpose of amending the Letter of Credit,
in the following manner:

	(a)	 	If the statement shows that the Reinsurer’s Obligations exceed the
balance of credit as of the statement date, the Reinsurer shall, within 30
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.
	 
	(b)	 	If, however, the statement shows that the Reinsurer’s Obligations are
less than the balance of credit as of the statement date, the Company
shall, within 30 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.

Page 9

 

ARTICLE XIII

TAXES

In consideration of the terms under which this Contract is issued, the Company
will not claim a deduction in respect of the premium hereon when making tax
returns, other than income or profits tax returns, to any state or territory of
the United States of America, the District of Columbia or Canada.

ARTICLE XIV

FEDERAL EXCISE TAX

(Applicable to those Reinsurers, excepting Underwriters at Lloyd’s London and
other Reinsurers exempt from Federal Excise Tax, who are domiciled outside the
United States of America.)

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
Section 4371 of the Internal Revenue Code) to the extent such premium is
subject to the Federal Excise Tax.

In the event of any return of premium becoming due hereunder, the Reinsurer
will deduct the applicable percentage from the return premium payable hereon,
and the Company or its agent should take steps to recover the tax from the
United States Government.

ARTICLE XV

NOTICE OF LOSS AND LOSS SETTLEMENTS

The Company will advise the Reinsurer promptly of all claims which in the
opinion of the Company may involve the Reinsurer and of all subsequent
developments on these claims which may materially affect the position of the
Reinsurer, such advices to include any claim for which the reserve is 50% or
more of the Company’s retention.

The Reinsurer agrees to abide by the loss settlements of the Company provided
that retroactive extension of Policy terms or coverages made voluntarily by the
Company and not in response to court decisions (whether such court decision is
against the Company or other companies affording the same or similar coverages)
will not be covered under this Contract.

When so requested, the Company will afford the Reinsurer an opportunity to be
associated with the Company, at the expense of the Reinsurer, in the defense of
any claim or suit or proceeding involving this reinsurance, and the Company
will cooperate in every respect in the defense of such claim, suit or
proceeding.

The Reinsurer will pay its share of loss settlements within 15 days upon
receipt and verification of proof of loss from the Company.

Page 10

 

ARTICLE XVI

LOSS IN EXCESS OF POLICY LIMITS

This Contract shall protect the Company, within the limits hereof, in
connection with the Ultimate Net Loss in excess of the limit of its original
Policy, such loss in excess of the limit having been incurred because of
failure by it to settle within the Policy limit or by reason of alleged or
actual negligence, criminal act or 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.

For the purpose of this Article, 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. However, this Article shall not apply
where the loss has been incurred due to fraud by 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.

ARTICLE XVII

EXTRA CONTRACTUAL OBLIGATIONS

This Contract shall protect the Company within the limits hereof, where the
Ultimate Net Loss includes any Extra Contractual Obligations. The term “Extra
Contractual Obligations” is defined as those liabilities not covered under any
other provision of this Contract 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, criminal act or 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.

The date on which any Extra Contractual Obligation is incurred by the Company
shall be deemed, in all circumstances, to be the date of the original disaster
and/or casualty.

However, this Article shall not apply where the loss has been incurred due to
fraud by 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.

ARTICLE XVIII

ERRORS AND OMISSIONS

Any inadvertent delay, omission or error shall not be held to relieve either
party hereto from any liability, which would attach to it hereunder, if such
delay, omission or error had not been made, providing such delay, omission or
error is rectified upon discovery.

Page 11

 

ARTICLE XIX

ACCESS TO RECORDS

The Company shall place at the disposal of the Reinsurer at all reasonable
times, and the Reinsurer shall have the right to inspect through its designated
representatives, all books, records and papers of the Company in connection
with any reinsurance hereunder or claims in connection herewith. Rights of
access to records shall survive the termination or expiration of this Contract.

ARTICLE XX

OFFSET

The Company and the Reinsurer, each at its option, may offset any balance or
balances, whether on account of premiums, claims and losses, loss expenses or
salvages due from one party to the other under this Contract; provided,
however, that in the event of the insolvency of a party hereto, offsets shall
only be allowed in accordance with applicable statutes and regulations.

ARTICLE XXI

ARBITRATION

As a condition precedent to any right of action hereunder, any irreconcilable
dispute between the parties to this Contract will be submitted for decision to
a board of arbitration composed of two arbitrators and an umpire meeting in
Bala Cynwyd, Pennsylvania.

Arbitration shall be initiated by the delivery of a written notice of demand
for arbitration by one party to the other within a reasonable time after the
dispute has arisen.

The members of the board of arbitration shall be active or former,
disinterested officials of insurance or reinsurance companies or Underwriters
at Lloyd’s, London, not under the control or management of either party to this
Contract. Each party shall appoint its arbitrator, and the two arbitrators
shall choose an umpire before instituting the hearing. If the respondent fails
to appoint its arbitrator within 4 weeks after being requested to do so by the
claimant, the latter shall also appoint the second arbitrator.

If the two arbitrators are unable to agree upon the umpire within 30 days of
their appointment, the umpire shall be selected by a judge of any court of
competent jurisdiction.

The claimant shall submit its initial brief within 45 days from appointment of
the umpire. The respondent shall submit its brief within 45 days thereafter,
and the claimant may submit a reply brief within 30 days after filing of the
respondent’s brief.

The board shall make its decision with regard to the custom and usage of the
insurance and reinsurance business. The board shall issue its decision in
writing based upon a hearing in which

Page 12

 

evidence may be introduced without following strict rules of evidence but in
which cross-examination and rebuttal shall be allowed. The board shall make
its decision within 60 days following the termination of the hearings unless
the parties consent to an extension. The majority decision of the board shall
be final and binding upon all parties to the proceeding. Judgment may be
entered upon the award of the board in any court having jurisdiction.

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

Each party shall bear the expense of its own arbitrator and shall jointly and
equally bear with the other party the expense of the umpire. The remaining
costs of the arbitration proceedings shall be allocated by the board.

ARTICLE XXII

SERVICE OF SUIT

(This Article only applies to reinsurers domiciled outside of the United States
and/or unauthorized in any state, territory, or district of the United States
having jurisdiction over the Company).

It is agreed that in the event of the failure of the Reinsurer hereon to pay
any amount claimed to be due hereunder, the Reinsurer hereon, at the request of
the Company, will 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.

It is further agreed that service of process in such suit may be made upon
Mendes and Mount, 750 Seventh Avenue, New York, New York 10019, and that in any
suit instituted the Reinsurer will abide by the final decision of such court or
of any appellate court in the event of an appeal.

The above-named are authorized and directed to accept service of process on
behalf of the Reinsurer in any such suit and/or upon the request of the Company
to give a written undertaking to the Company that they will enter a general
appearance upon the Reinsurer’s behalf in the event such a suit shall be
instituted.

Further, pursuant to any statute of any state, territory or district of the
United States which makes provision therefor, the Reinsurer hereon 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

Page 13

 

hereunder arising out of this Contract of reinsurance 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.

ARTICLE XXIII

INSOLVENCY

In the event of the insolvency of the Company, this reinsurance shall be
payable directly to the Company or to its liquidator, receiver, conservator or
statutory successor on the basis of the liability of the Company without
diminution because of the insolvency of the Company or because the liquidator,
receiver, conservator or statutory successor of the Company has failed to pay
all or a portion of any claim. It is agreed, however, that the liquidator,
receiver, conservator or statutory successor of the Company shall give written
notice to the 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, which may accrue to the Company solely as a result of the defense
undertaken by the Reinsurer.

Where two or more reinsurers are involved in the same claim and a majority in
interest elect to interpose defense to such claim, the expense shall be
apportioned in accordance with the terms of this Contract as though such
expense had been incurred by the insolvent Company.

In the event of the insolvency of the Company, the reinsurance under this
Contract shall be payable directly by the Reinsurer to the Company or to its
liquidator, receiver, conservator or statutory successor, except as provided by
Section 4118(a) of the New York Insurance Law or except (a) where this Contract
specifically provides another payee of such reinsurance in the event of the
insolvency of the Company or (b) 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.

Should the Company go into liquidation or should a receiver be appointed, all
amounts due either Company or Reinsurer under this or any other agreement,
whether by reason of premium, losses or otherwise under this Contract, shall be
subject to the right of offset at any time and from time to time and, upon the
exercise of the same, only the net balance shall be due.

In the event of the insolvency of any company or companies included in the
designation of “Company,” this clause will apply only to the insolvent company
or companies.

Page 14

 

ARTICLE XXIV

CONFIDENTIALITY

The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly communicate, disclose or divulge to any third
party, any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company’s books, records and
papers. The restrictions, as outlined in this Article, shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, parent company, retrocessionaires, potential
retrocessionaires, legal counsel, arbitrators involved in any arbitration
procedures under this Contract or disclosures required upon subpoena or other
duly-issued order of a court or other governmental agency or regulatory
authority.

ARTICLE XXV

GOVERNING LAW

This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Pennsylvania, exclusive of the rules
with respect to conflicts of law, except as to rules with respect to credit for
reinsurance, in which case the applicable rules of all states shall apply.

ARTICLE XXVI

SEVERABILITY

If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.

ARTICLE XXVII

THIRD PARTY RIGHTS

This Contract is solely between the Company and the Reinsurer, and in no
instance shall any other party have any rights under this Contract except as
expressly provided otherwise in the INSOLVENCY ARTICLE.

ARTICLE XXVIII

AGENCY AGREEMENT

If more than one reinsured company is named as a party to this Contract, the
first named company will be deemed the agent of the other reinsured companies
for purposes of sending or receiving notices required by the terms and
conditions of this Contract and for purposes of remitting or receiving any
monies due any party.

Page 15

 

ARTICLE XXIX

INTERMEDIARY

Willis Re Inc., 11 Penn Center, Suite 2700, 1835 Market Street, Philadelphia,
Pennsylvania 19103, is hereby recognized as the intermediary negotiating this
Contract and through whom all communications relating thereto shall be
transmitted to the Company or the Reinsurer. However, all communications
concerning accounts, claim information, funds and inquiries related thereto
shall be transmitted to the Company or the Reinsurer through Willis Re Inc.,
5420 Millstream Road, Suite 200, P.O. Box 3000, McLeansville, North Carolina,
27301-3000. Payments by the Company to Willis Re Inc. shall be deemed to
constitute payment to the Reinsurer and payments by the Reinsurer to Willis Re
Inc. shall be deemed to constitute payment to the Company only to the extent
that such payments are actually received by the Company.

IN WITNESS WHEREOF, the Reinsured by its duly authorized representative has
executed this Agreement as of the date specified below:

Signed this 17th day of July, 2003.

PHILADELPHIA INSURANCE COMPANY

PHILADELPHIA INDEMNITY INSURANCE COMPANY

MOBILE USA INSURANCE COMPANY, INC.

LIBERTY AMERICAN INSURANCE COMPANY

By Christopher J. Maguire

Page 16

 

NUCLEAR INCIDENT EXCLUSION CLAUSE
- LIABILITY - REINSURANCE - U.S.A.

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

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

Limited Exclusion Provision.*

	I.	 	It is agreed that the policy does not apply under any liability coverage,
	 	 	to        (injury, sickness, disease, death or destruction,
	 	 	            (bodily injury or property damage
	 
	 	 	with respect to which an insured under the policy is also an insured
under a nuclear energy liability policy issued by Nuclear Energy
Liability Insurance Association, Mutual Atomic Energy Liability
Underwriters or Nuclear Insurance Association of Canada, or would be an
insured under any such policy but for its termination upon exhaustion of
its limit of liability.
	 
	II.	 	Family Automobile Policies (liability only), Special Automobile Policies
(private passenger automobiles, liability only), Farmers Comprehensive
Personal Liability Policies (liability only), Comprehensive Personal
Liability Policies (liability only) or policies of a similar nature; and
the liability portion of combination forms related to the four classes of
policies stated above, such as the Comprehensive Dwelling Policy and the
applicable types of Homeowners Policies.
	 
	III.	 	The inception dates and thereafter of all original policies as described
in II above, whether new, renewal or replacement, being policies which
either

	 	(a)	 	become effective on or after 1st May, 1960, or
	 
	 	(b)	 	become effective before that date and contain the Limited
Exclusion Provision set out above; provided this paragraph

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

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

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

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

Broad Exclusion Provision.*

It is agreed that the policy does not apply:

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

	 	 	(a)    with respect to which an insured under the policy is also an insured
under a nuclear energy liability policy issued by Nuclear Energy
Liability Insurance Association, Mutual Atomic Energy Liability
Underwriters or Nuclear Insurance Association of Canada, or would be an
insured under any such policy but for its termination upon exhaustion of
its limit of liability; or
	 
	 	 	(b)    resulting from the hazardous properties of nuclear material and with
respect to which (1) any person or organization is required to maintain
financial protection pursuant to the Atomic Energy Act of 1954, or any
law amendatory thereof, or (2) the insured is, or had this policy not
been issued would be, entitled to indemnity from the United States of
America, or any agency thereof, under any agreement entered into by the
United States of America, or any agency thereof, with any person or
organization.
	 
	II.	 	Under any Medical Payments Coverage, or under any Supplementary Payments Provision
	 	 	relating to        (immediate medical or surgical relief,
	 	 	               
            (first aid,
	 	 	to expenses incurred with respect
	 	 	to            (bodily injury, sickness, disease or death
	 	 	                (bodily injury

	 	 	resulting from the hazardous properties of nuclear material and arising
out of the operation of a nuclear facility by any person or organization.

Page 1 of 2

 

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

	 	 	resulting from the hazardous properties of nuclear material, if
	 

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

	 	(b)	 	the nuclear material is contained in spent fuel or waste at
any time possessed, handled, used, processed, stored, transported or
disposed of by or on behalf of an insured; or
	 
	 	(c)	 	the        (injury, sickness, disease, death or destruction
	 	 	 	            (bodily injury or property damages
	 
	 	 	 	arises out of the furnishing by an insured of services, materials,
parts or equipment in connection with the planning, construction,
maintenance, operation or use of any nuclear facility, but if such
facility is located within the United States of America, its
territories, or possessions or Canada, this exclusion (c) applies
only to
	 	 	 	            (injury to or destruction of property at such nuclear facility
	 	 	 	            (property damage to such nuclear facility and any property threat.

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

	 	(a)	 	any nuclear reactor,
	 
	 	(b)	 	any equipment or device designed or used for (1) separating
the isotopes of uranium or plutonium, (2) processing or utilizing
spent fuel, or (3) handling, processing or packaging waste,
	 
	 	(c)	 	any equipment or device used for the processing, fabricating
or alloying of special nuclear material if at any time the total
amount of such material in the custody of the insured at the
premises where such equipment or device is located consists of or
contains more than 25 grams of plutonium or uranium 233 or any
combination thereof, or more than 250 grams of uranium 235,
	 
	 	(d)	 	any structure, basin, excavation, premises or place prepared
or used for the storage or disposal of waste,

	 	 	and includes the site on which any of the foregoing is located, all
operations conducted on such site and all premises used for such
operations; “nuclear reactor” means any apparatus designed or used to
sustain nuclear fission in a self-supporting chain reaction or to contain
a critical mass of fissionable material;
	 
	 	 	(With respect to injury to or destruction of property, the word “injury”
or “destruction”
	 	 	(“property damage” includes all forms of radioactive contamination of
property
	 	 	(includes all forms of radioactive contamination of property.
	 
	V.	 	The inception dates and thereafter of all original policies affording
coverages specified in this paragraph (3), whether new, renewal or
replacement, being policies which become effective on or after 1st May,
1960, provided this paragraph (3) shall not be applicable to

	 	(i)	 	Garage and Automobile Policies issued by the Reassured on New York
risks, or
	 
	 	(ii)	 	statutory liability insurance required under Chapter 90, General Laws
of Massachusetts,
	 
	 	 	 	until 90 days following approval of the Broad Exclusion Provision
by the Governmental Authority having jurisdiction thereof.

(4)      Without in any way restricting the operation of paragraph (1) of this
Clause, it is understood and agreed that paragraphs (2) and (3) above are not
applicable to original liability policies of the Reassured in Canada and that
with respect to such policies this Clause shall be deemed to include the
Nuclear Energy Liability Exclusion Provisions adopted by the Canadian
Underwriters’ Association of the Independent Insurance Conference of Canada.

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

21/9/67

N.M.A. 1590

Page 2 of 2

 

NUCLEAR INCIDENT EXCLUSION CLAUSE
- LIABILITY - REINSURANCE - CANADA

	1.	 	This Agreement does not cover any loss or liability accruing to the
Reinsured as a member of, or subscriber to, any association of insurers or
reinsurers formed for the purpose of covering nuclear energy risks or as a
direct or indirect reinsurer of any such member, subscriber, or
association.
	 
	2.	 	Without in any way restricting the operation of paragraph 1 of his clause
it is agreed that for all purposes of this Agreement all the original
liability contracts of the Reinsured, whether new, renewal or replacement,
of the following classes, namely,

         Personal Liability.

         Farmers’ Liability.

         Storekeepers’ Liability.

	 	 	which become effective on or after 31st December 1984, shall be deemed to
include, from their inception dates and thereafter, the following provision:
	 
	 	 	Limited Exclusion Provision.
	 
	 	 	This Policy does not apply to bodily injury or property damage with respect
to which the Insured is also insured under a contract of nuclear energy
liability insurance (whether the Insured is unnamed in such contract and
whether or not it is legally enforceable by the Insured) issued by the
Nuclear Insurance Association of Canada or any other group or pool of
insurers or would be an Insured under any such policy but for its
termination upon exhaustion of its limits of liability.
	 
	 	 	With respect to property, loss of use of such property shall be deemed to be
property damage.
	 
	3.	 	Without in any way restricting the operation of paragraph 1 of this
clause it is agreed that for all purposes of this Agreement all the
original liability contracts of the Company, whether new, renewal or
replacement, of any class whatsoever (other than Personal Liability,
Farmers’ Liability, Storekeepers’ Liability or Automobile Liability
contracts), which become effective on or after 31st December 1984, shall
be deemed to include, from their inception dates and thereafter, the
following provision:
	 
	 	 	Broad Exclusion Provision.
	 
	 	 	It is agreed that this Policy does not apply:

	 	(a)	 	to liability imposed by or arising under The Nuclear Liability Act;
nor
	 
	 	(b)	 	to bodily injury or property damage with respect to which an
Insured under this Policy is also insured under a contract of nuclear
energy liability insurance (whether the Insured is unnamed in such
contract and whether or not it is legally enforceable by the Insured)
issued by the Nuclear Insurance Association of Canada or any other
insurer or group or pool of insurers or would be an Insured under any
such policy but for its termination upon exhaustion of its limit of
liability; nor
	 
	 	(c)	 	to bodily injury or property damage resulting directly or
indirectly from the nuclear energy hazard arising from:

	 	(i)	 	the ownership, maintenance, operation or use of a nuclear
facility by or on behalf of an Insured;
	 
	 	(ii)	 	the furnishing by an Insured of services, materials, parts
or equipment in connection with the planning, construction,
maintenance, operation or use of any nuclear facility; and
	 
	 	(iii)	 	the possession, consumption, use, handling, disposal or
transportation of fissionable substances or of other radioactive
material (except radioactive isotopes, away from a nuclear
facility, which have reached the final stage of fabrication so as
to be usable for any scientific, medical, agricultural, commercial
or industrial purpose) used, distributed, handled or sold by an
Insured.

Page 1 of 2

 

As used in this Policy:

	1.	 	The term “nuclear energy hazard” means the radioactive, toxic, explosive
or other hazardous properties of radioactive material;
	 
	2.	 	The term “radioactive material” means uranium, thorium, plutonium,
neptunium, their respective derivatives and compounds, radioactive
isotopes of other elements and any other substances that the Atomic Energy
Control Board may, by regulation, designate as being prescribed substances
capable of releasing atomic energy, or as being requisite for the
production, use or application of atomic energy;
	 
	3.	 	The term “nuclear facility” means:

	 	(a)	 	any apparatus designed or used to sustain nuclear fission in a
self-supporting chain reaction or to contain a critical mass of
plutonium, thorium and uranium or any one or more of them;
	 
	 	(b)	 	any equipment or device designed or used for (i) separating the
isotopes of plutonium, thorium and uranium or any one or more of them,
(ii) processing or utilizing spent fuel, or (iii) handling, processing
or packaging waste;
	 
	 	(c)	 	any equipment or device used for the processing, fabricating or
alloying of plutonium, thorium or uranium enriched in the isotope
uranium 233 or in the isotope uranium 235, or any one or more of them
if at any time the total amount of such material in the custody of the
Insured at the premises where such equipment or device is located
consists of or contains more than 25 grams of plutonium or uranium 233
or any combination thereof, or more than 250 grams of uranium 235;
	 
	 	(d)	 	any structure, basin, excavation, premises or place prepared or
used for the storage or disposal of waste radioactive material; and
includes the site on which any of the foregoing is located, together
with all operations conducted thereon and all premises used for such
operations.

	4.	 	The term “fissionable substance” means any prescribed substance that is,
or from which can be obtained, a substance capable of releasing atomic
energy by nuclear fission.
	 
	5.	 	With respect to property, loss of use of such property shall be deemed to
be property damage.

N.M.A. 1979a

01/04/96

Page 2 of 2

 

TERRORISM EXCLUSION ENDORSEMENT (REINSURANCE) N.M.A. 2921 (AMENDED)

Notwithstanding any provision to the contrary within this reinsurance or any
endorsement thereto it is agreed that this reinsurance excludes loss, damage,
cost or expense of whatsoever nature directly or indirectly caused by,
resulting from or in connection with any act of terrorism regardless of any
other cause or event contributing concurrently or in any other sequence to the
loss.

For the purpose of this endorsement an act of terrorism means an act, including
but not limited to the use of force or violence and/or the threat thereof, of
any person or group(s) of persons, whether acting alone or on behalf of or in
connection with any organization(s) or government(s), committed for political,
religious, ideological or similar purposes including the intention to influence
any government and/or to put the public, or any section of the public, in fear.

This endorsement also excludes loss, damage, cost or expense of whatsoever
nature directly or indirectly caused by, resulting from or in connection with
any action taken in controlling, preventing, suppressing or in any way relating
to any act of terrorism.

If the Reinsurers allege that by reason of this exclusion, any loss, damage,
cost or expense is not covered by this reinsurance the burden of proving the
contrary shall be upon the Reassured.

In the event any portion of this endorsement is found to be invalid or
unenforceable, the remainder shall remain in full force and effect.

Notwithstanding the above, this terrorism exclusion shall only apply to
liability losses arising directly from the following classes of business, when
written as such.

	 	 	 
	Class of Business	 	Coverage
	
	 	

	Airports (Including Any Related Services Or Operations)	 	
CGL/UMB
	Amusement Parks	 	
CGL/UMB
	Animal Feed Mills	 	
CGL/UMB
	Bridges and Tunnels	 	
CGL/UMB
	Buildings in which U.S. Government is Owner or Largest Tenant	 	
CGL/UMB
	Chemical Manufacturing, Wholesale Or Storage	 	
CGL/UMB
	Convention Centers	 	
CGL/UMB
	Concert Halls
3 1,000 person capacity	 	
CGL/UMB
	Dams	 	
CGL/UMB
	Drug Manufacturing	 	
CGL/UMB
	Electrical Generating Facilities	 	
CGL/UMB
	Explosives - Manufacture, Distribution Or Storage	 	
CGL/UMB
	Mass Transit Systems - Subways, Railways Etc.	 	
CGL/UMB
	Oil & Gas Pipelines	 	
CGL/UMB
	Oil Refineries & Storage Tank Farms	 	
CGL/UMB
	Pesticides, Herbicides, Insecticides - Manufacture	 	
CGL/UMB
	Ports (Including Any Related Services Or Operations)	 	
CGL/UMB
	Security Services	 	
CGL/UMB
	Stadiums and Sports Arenas	 	
CGL/UMB
	Telecommunications Services - Telephone, Radio, TV, Internet	 	
CGL/UMB
	Water & Sewage Treatment Plants	 	
CGL/UMB

However, the maximum liability to the Reinsurer for all Terrorism losses during
the term of this Contract shall be limited to $10,000,000.

 

 

TERRORISM RISK INSURANCE ACT OF 2002

	A.	 	Any financial assistance the Company receives under the Terrorism
Risk Insurance Act of 2002 (“TRIA”) shall apply as follows:

	 	1.	 	Except as provided in subparagraph 2 below, any such
financial assistance shall inure solely to the benefit of the
Company and shall be entirely disregarded in applying all of the
provisions of this Contract.
	 
	 	2.	 	If losses occurring hereunder result in recoveries made
by the Company both under this Contract and under TRIA, and such
recoveries, together with any other reinsurance recoveries made
by the Company applicable to said losses, exceed the amount
permitted by TRIA, any amount in excess thereof shall reduce the
Ultimate Net Loss subject to this Contract for the losses to
which the TRIA financial assistance applies.

	B.	 	Nothing herein shall be construed to mean that losses under this
Contract are not recoverable until the Company has received financial
assistance under TRIA.

 

 

INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)

of

AMERICAN RE-INSURANCE COMPANY

(the “Subscribing Reinsurer”)

with respect to the

CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)

issued to

PHILADELPHIA INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

PHILADELPHIA INDEMNITY INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

MOBILE USA INSURANCE COMPANY, INC.

Pinellas Park, Florida

LIBERTY AMERICAN INSURANCE COMPANY

Pinellas Park, Florida

(the “Company”)

The Subscribing Reinsurer shall have a 25.00% share in the interests and
liabilities of the “Reinsurer” as set forth in the Contract attached hereto and
executed by the Company.

This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1,
2003, and shall continue in force until 12:01 a.m., Eastern Standard Time,
January 1, 2004.

The share of the Subscribing Reinsurer in the interests and liabilities of the
“Reinsurer” shall be several and not joint with the share of any other
subscribing reinsurer. In no event shall the Subscribing Reinsurer participate
in the interests and liabilities of the other subscribing reinsurers.

IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date specified below:

Signed this 30th day of September, 2003.

AMERICAN RE-INSURANCE COMPANY

By: American Re Broker Market

By Jennifer G. Atallah

 

 

INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)

of

CONVERIUM REINSURANCE (NORTH AMERICA) INC.

(the “Subscribing Reinsurer”)

with respect to the

CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)

issued to

PHILADELPHIA INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

PHILADELPHIA INDEMNITY INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

MOBILE USA INSURANCE COMPANY, INC.

Pinellas Park, Florida

LIBERTY AMERICAN INSURANCE COMPANY

Pinellas Park, Florida

(the “Company”)

The Subscribing Reinsurer shall have a 35.00% share in the interests and
liabilities of the “Reinsurer” as set forth in the Contract attached hereto and
executed by the Company.

This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1,
2003, and shall continue in force until 12:01 a.m., Eastern Standard Time,
January 1, 2004.

The share of the Subscribing Reinsurer in the interests and liabilities of the
“Reinsurer” shall be several and not joint with the share of any other
subscribing reinsurer. In no event shall the Subscribing Reinsurer participate
in the interests and liabilities of the other subscribing reinsurers.

IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date specified below:

Signed this 17th day of September, 2003.

CONVERIUM REINSURANCE (NORTH AMERICA) INC.

By N. Weston, Vice President

 

 

INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)

of

ENDURANCE SPECIALTY INSURANCE LTD.

(the “Subscribing Reinsurer”)

with respect to the

CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)

issued to

PHILADELPHIA INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

PHILADELPHIA INDEMNITY INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

MOBILE USA INSURANCE COMPANY, INC.

Pinellas Park, Florida

LIBERTY AMERICAN INSURANCE COMPANY

Pinellas Park, Florida

(the “Company”)

The Subscribing Reinsurer shall have a 20.00% share in the interests and
liabilities of the “Reinsurer” as set forth in the Contract attached hereto and
executed by the Company.

This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1,
2003, and shall continue in force until 12:01 a.m., Eastern Standard Time,
January 1, 2004.

The share of the Subscribing Reinsurer in the interests and liabilities of the
“Reinsurer” shall be several and not joint with the share of any other
subscribing reinsurer. In no event shall the Subscribing Reinsurer participate
in the interests and liabilities of the other subscribing reinsurers.

IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date specified below:

Signed this 23rd day of August, 2003.

ENDURANCE SPECIALTY INSURANCE LTD.

By Dennis J. Stokes

 

 

INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)

of

LIBERTY MUTUAL INSURANCE COMPANY

(the “Subscribing Reinsurer”)

with respect to the

CASUALTY EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)

issued to

PHILADELPHIA INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

PHILADELPHIA INDEMNITY INSURANCE COMPANY

Bala Cynwyd, Pennsylvania

MOBILE USA INSURANCE COMPANY, INC.

Pinellas Park, Florida

LIBERTY AMERICAN INSURANCE COMPANY

Pinellas Park, Florida

(the “Company”)

The Subscribing Reinsurer shall have a 20.00% share in the interests and
liabilities of the “Reinsurer” as set forth in the Contract attached hereto and
executed by the Company.

This Agreement shall commence at 12:01 a.m., Eastern Standard Time, January 1,
2003, and shall continue in force until 12:01 a.m., Eastern Standard Time,
January 1, 2004.

The share of the Subscribing Reinsurer in the interests and liabilities of the
“Reinsurer” shall be several and not joint with the share of any other
subscribing reinsurer. In no event shall the Subscribing Reinsurer participate
in the interests and liabilities of the other subscribing reinsurers.

IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date specified below:

Signed this 13th day of August, 2003.

LIBERTY MUTUAL INSURANCE COMPANY

By Richard Steele, Assistant Secretary

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