Document:

Exhibit 10.7

Safety
Insurance Group, Inc.

2002
Management Omnibus Incentive Plan, as Amended

 

Table
of Contents

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	 
	
  ARTICLE 1
  Establishment, Objectives, and Duration

  	
   

  	
  1

  
	 
	
  ARTICLE 2
  Definitions

  	
   

  	
  1

  
	 
	
  ARTICLE 3
  Administration

  	
   

  	
  5

  
	 
	
  ARTICLE 4 Shares
  Subject to the Plan and Maximum Awards

  	
   

  	
  5

  
	 
	
  ARTICLE 5
  Eligibility and Participation

  	
   

  	
  6

  
	 
	
  ARTICLE 6 Options

  	
   

  	
  7

  
	 
	
  ARTICLE 7 Stock
  Appreciation Rights

  	
   

  	
  8

  
	 
	
  ARTICLE 8
  Restricted Stock

  	
   

  	
  10

  
	 
	
  ARTICLE 9
  Termination of Service

  	
   

  	
  11

  
	 
	
  ARTICLE 10
  Restrictions on Shares

  	
   

  	
  12

  
	 
	
  ARTICLE 11
  Performance Measures

  	
   

  	
  12

  
	 
	
  ARTICLE 12
  Beneficiary Designation

  	
   

  	
  13

  
	 
	
  ARTICLE 13
  Rights of Participants

  	
   

  	
  13

  
	 
	
  ARTICLE 14
  Change in Control

  	
   

  	
  13

  
	 
	
  ARTICLE 15
  Amendment, Modification, and Termination

  	
   

  	
  14

  
	 
	
  ARTICLE 16
  Withholding

  	
   

  	
  15

  
	 
	
  ARTICLE 17
  Indemnification

  	
   

  	
  15

  
	 
	
  ARTICLE 18
  Successors

  	
   

  	
  15

  
	 
	
  ARTICLE 19 Legal
  Construction

  	
   

  	
  16

  
				

 

 i

Safety
Insurance Group, Inc.

2002
Management Omnibus Incentive Plan, as Amended

ARTICLE 1

Establishment, Objectives, and Duration

1.1          Establishment of the Plan. 
Safety Insurance Group, Inc., a corporation organized and existing under
Delaware law (hereinafter referred to as the “Company”), hereby establishes an
incentive compensation plan to be known as the “Safety Insurance Group, Inc.
2002 Management Omnibus Incentive Plan, as amended” (hereinafter referred to as
the “Plan”), as set forth in this document. 
The Plan permits the grant of Nonqualified Stock Options, Incentive
Stock Options, Stock Appreciation Rights, and Restricted Stock.

The Plan first became effective when approved
by the Board on June 25, 2002.  The Plan,
as amended, will become effective on May 19, 2006 if it is approved by the
stockholders at the 2006 annual meeting. 
The Plan shall remain in effect as provided in Section 1.3 hereof.

1.2          Objectives of the Plan. 
The objectives of the Plan are to optimize the profitability and growth
of the Company through incentives which are consistent with the Company’s goals
and which link the personal interests of Participants to those of the Company’s
shareholders; to provide Participants with an incentive for excellence in
individual performance; and to promote teamwork among Participants.

The Plan is further intended to provide flexibility to
the Company in its ability to motivate, attract, and retain the services of
Participants who make significant contributions to the Company’s success and to
allow Participants to share in the success of the Company.

1.3          Duration of the Plan. 
The Plan shall remain in effect, subject to the right of the Board to
amend or terminate the Plan at any time pursuant to Article 15 hereof, until
all Shares subject to it shall have been purchased or acquired according to the
Plan’s provisions.

ARTICLE 2

Definitions

Whenever used in the Plan, the following terms shall
have the meanings set forth below, and, when the meaning is intended, the
initial letter of the word shall be capitalized:

  
 
 

2.1          “Affiliate” means any person or entity which, at the time of
reference, directly, or indirectly through one or more intermediaries, controls
or is controlled by the Company.

2.2          “Award” means, individually or collectively, a grant under
this Plan of Nonqualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights, or Restricted Stock.

2.3          “Award Agreement” means an agreement entered into by the
Company and each Participant setting forth the terms and provisions applicable to
Awards granted under the Plan.

2.4          “Board” means the Board of Directors of the Company.

2.5          “Cause” means (i) the willful engaging by the Participant in
misconduct that is demonstrably injurious to the Company (monetarily or
otherwise), as determined by the Board in its sole discretion, (ii) the
Participant’s conviction of, or pleading guilty or nolo contendere to, a felony
involving moral turpitude, (iii) the Participant’s violation of any
confidentiality, non-solicitation, or non-competition covenant to which the
Participant is subject, or (iv) the Participant’s poor performance, as
determined by the Board, based on reasonable business objectives, after written
notice from the Company and a reasonable opportunity to correct such poor
performance.

2.6          “Change in Control” will be deemed to have occurred as of
the first day any of the following events occurs:

(a)           the
closing of any merger, combination, consolidation or similar business
transaction involving the Company in which the holders of Shares immediately
prior to such closing are not the holders, directly or indirectly, of a
majority of the ordinary voting securities of the surviving Person in such
transaction immediately after such closing;

(b)           the
closing of any sale or transfer by the Company of all or substantially all of
its assets to an acquiring Person in which the holders of Shares immediately
prior to such closing are not the holders of a majority of the ordinary voting
securities of the acquiring Person immediately after such closing; or

(c)           the
closing of any sale by the holders of Shares of an amount of Shares that equals
or exceeds a majority of the Shares immediately prior to such closing to a
Person in which the holders of the Shares immediately prior to such closing are
not the holders of a majority of the ordinary voting securities of such Person
immediately after such closing.

2.7          “Code” means the Internal Revenue Code of 1986, as amended
from time to time.

2.8          “Committee” means the Compensation Committee of the Board,
as specified in Article 3 herein, or such other Committee appointed by the
Board to administer the Plan with respect to grants of Awards.

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2.9          “Company” means Safety Insurance Group, Inc., a corporation
organized and existing under Delaware law, and any successor thereto as
provided in Article 19 herein.

2.10        “Consultant” means an independent contractor who is
performing consulting services for one or more entities in the Group and who is
not an employee of any entity in the Group.

2.11        “Director” means a member of the Board or a member of the
board of directors of an Affiliate.

2.12        “Disability” shall have the meaning ascribed to such term in
the long-term disability plan maintained by the Company, or if no such plan
exists, at the discretion of the Committee.

2.13        “Employee” means any employee of the Group, including any
employees who are also Directors. 
Nonemployee Directors and Consultants shall not be considered Employees
under this Plan.

2.14        “Exchange Act” means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.

2.15        “Exercise Price” means the price at which a Share may be
purchased by a Participant pursuant to an Option.

2.16        “Fair Market Value” shall be determined in good faith by the
Committee.

2.17        “Freestanding SAR” means an SAR that is granted
independently of any Options, as described in Article 7 herein.

2.18        “Good Reason” means, with respect to an Employee, (a) a
material reduction in an Employee’s authority, perquisites, position or
responsibilities (other than such a reduction in perquisites which affects all
of the Company’s senior executives on a substantially equal or proportionate
basis), (b) the relocation of the Employee’s primary place of business or the
relocation of the Employee to another Company (or Affiliate) office more than
75 miles from the location of the Employee’s principal office, or, if
applicable, (c) the Employee’s employer’s willful, material violation of its
obligations under his or her employment agreement, in each case, after 60 days
prior written notice to the Employee’s employer and its board of directors and
the Employee’s employer’s failure thereafter to cure such reduction or
violation.

2.19        “Group” means the Company and the Affiliates.

2.20        “Incentive Stock Option” or “ISO”
means an option to purchase Shares granted under Article 6 herein and which is
designated as an Incentive Stock Option intended to meet the requirements of
Code Section 422.

2.21        “Named Executive Officer” means a Participant who, as of the
date of vesting and/or payout of an Award, as applicable, is one of the group
of “covered

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employees,” as defined in the regulations
promulgated under Code Section 162(m), or any successor statute.

2.22        “Nonemployee Director” shall have the meaning ascribed to
such term in Rule 16b-3 of the Exchange Act.

2.23        “Nonqualified Stock Option” or “NQSO”
means an option to purchase Shares granted under Article 6 herein and which is
not intended to meet the requirements of Code Section 422.

2.24        “Option” means an Incentive Stock Option or a Nonqualified
Stock Option, as described in Article 6 herein.

2.25        “Outside Director” shall have the meaning ascribed to such
term under the regulations promulgated with respect to Code Section 162(m).

2.26        “Participant” means a current or former Employee, Director,
or Consultant who has outstanding an Award granted under the Plan.

2.27        “Performance-Based Exception” means the performance-based
exception from the tax deductibility limitations of Code Section 162(m).

2.28        “Period of Restriction” means the period during which the
transfer of Shares of Restricted Stock is limited in some way (based on the
passage of time, the achievement of performance goals, or upon the occurrence
of other events as determined by the Committee, at its discretion), and the
Shares are subject to a substantial risk of forfeiture, as provided in Article
8 herein.

2.29        “Person” shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a “group,” as defined in Section 13(d) thereof.

2.30        “Restricted Stock” means an Award granted to a Participant
pursuant to Article 8 herein.

2.31        “Shares” means the shares of common stock of the Company,
par value $0.01 per share, subject to adjustment pursuant to Section 4.2
herein.

2.32        “Stock Appreciation Right” or “SAR”
means an Award, granted alone or in connection with a related Option,
designated as an SAR, pursuant to the terms of Article 7 herein.

2.33        “Tandem SAR” means an SAR that is granted in connection with
a related Option pursuant to Article 7 herein.

2.34        “Termination of Service” means, if an Employee, termination
of employment with all entities in the Group, if a Director, termination of
service on the Board and the board of directors of any Affiliate, as applicable,
and if a Consultant, termination of the consulting relationship with all
entities in the Group.

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ARTICLE 3

Administration

3.1          The Committee.  The
Plan shall be administered by the Committee. 
To the extent the Company deems it to be necessary or desirable with
respect to any Awards made hereunder, the members of the Committee may be
limited to Nonemployee Directors or Outside Directors, who shall be appointed
from time to time by, and shall serve at the discretion of, the Board.

3.2          Authority of the Committee. 
Except as limited by law or by the Articles of Incorporation or the
By-laws of the Company, and subject to the provisions herein, the Committee
shall have full power to select the persons who shall participate in the Plan;
determine the sizes and types of Awards; determine the terms and conditions of
Awards in a manner consistent with the Plan; construe and interpret the Plan
and any agreement or instrument entered into under the Plan as they apply to
Participants; establish, amend, or waive rules and regulations for the Plan’s
administration as they apply to Participants; and (subject to the provisions of
Article 15 herein) amend the terms and conditions of any outstanding Award to
the extent such terms and conditions are within the discretion of the Committee
as provided in the Plan.  Further, the
Committee shall make all other determinations which may be necessary or
advisable for the administration of the Plan, as the Plan applies to
Participants.  As permitted by law, the
Committee may delegate its authority as identified herein.

3.3          Decisions Binding. 
All determinations and decisions made by the Committee pursuant to the
provisions of the Plan and all related orders and resolutions of the Board
shall be final, conclusive and binding on all persons, including the Company,
its shareholders, Affiliates, Participants, and their estates and
beneficiaries.

ARTICLE 4

Shares Subject to the Plan and Maximum Awards

4.1          Number of Shares Available for Grants.

(a)           Subject
to Section 4.2 herein, the maximum number of Shares that may be issued pursuant
to Awards under the Plan shall be 2,500,000. 
Shares underlying lapsed or forfeited Awards of Restricted Stock shall
not be treated as having been issued pursuant to an Award under the Plan.  Shares withheld from an Award of Restricted
Stock to satisfy tax withholding obligations shall be counted as Shares issued
pursuant to an Award under the Plan. 
Shares that are potentially deliverable under an Award that expires or
is canceled, forfeited, settled in cash or otherwise settled without the
delivery of Shares shall not be treated as having been issued under the
Plan.  Shares that are withheld to
satisfy the Exercise Price of an Option or tax withholding obligations related
to an Option or SAR shall not be deemed to be Shares issued under the Plan.

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(b)           Unless
the Committee determines that Code Section 162(m) will not apply to an Award,
or that an Award should not be designed to comply with the Performance-Based
Exception, the following limitations shall apply to grants of Awards under the
Plan:

(1)           Options:  The maximum
aggregate number of Shares with respect to which Options may be granted in any
one calendar year to any one Participant shall be 1,250,000;

(2)           SARs:  The maximum
aggregate number of Shares with respect to which Stock Appreciation Rights may
be granted in any one calendar year to any one Participant shall be 1,250,000;
and

(3)           Restricted Stock:  The
maximum aggregate number of Shares of Restricted Stock that may be granted in
any one calendar year to any one Participant shall be 1,250,000.

4.2          Adjustments in Authorized Shares.  In the event of any change in corporate
capitalization, such as a stock split or a stock dividend, or a corporate
transaction, such as any merger, consolidation, separation, including a
spin-off, or other distribution of stock or property of the Company, any
reorganization (whether or not such reorganization comes within the definition
of such term in Code Section 368) or any partial or complete liquidation of the
Company, an adjustment shall be made to the number and kind of Shares which may
be delivered pursuant to Section 4.1, to the number, kind and/or price of
Shares subject to outstanding Awards granted under the Plan, and to the
individual Award limitations set forth in subsections 4.1(b)(1) through
4.1(b)(3), as may be determined to be appropriate and equitable by the
Committee, in its sole discretion, to prevent dilution or enlargement of
rights; provided, however, that the number of Shares subject to any Award shall
always be rounded to the nearest whole number, with one-half (1⁄2) of a Share
rounded up to the next whole number.

ARTICLE 5

Eligibility and Participation

5.1          Eligibility.  Persons
eligible to participate in this Plan include all Employees, Directors and Consultants
of the Group, as determined by the Committee.

5.2          Actual Participation. 
Subject to the provisions of the Plan, the Committee may, from time to
time, select from all eligible Employees, Directors and Consultants those to
whom Awards shall be granted and shall determine the nature and amount of each
Award.

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ARTICLE 6

Options

6.1          Grant of Options. 
Subject to the terms and provisions of the Plan, Options may be granted
to Participants in such number (subject to Article 4 herein), and upon such
terms, and at any time and from time to time as shall be determined by the
Committee; provided, however, that ISOs may be granted only to Employees.

6.2          Award Agreement.  Each
Option grant shall be evidenced by an Award Agreement that shall specify the
Exercise Price, the duration of the Option, the number of Shares to which the
Option pertains, and such other provisions as the Committee shall
determine.  The Award Agreement also
shall specify whether the Option is intended to be an ISO or an NQSO.

6.3          Exercise Price.  The
Exercise Price for each grant of an Option under this Plan shall be at least
equal to one hundred percent (100%) of the Fair Market Value of a Share on the
date the Option is granted.  However, in
the case of an ISO granted to a Participant who, at the time the Option is
granted, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any subsidiary, the Exercise
Price for each grant of an Option shall be not less than one hundred ten percent
(110%) of the Fair Market Value of a Share on the date the Option is
granted.  The Exercise Price will be
subject to adjustment in accordance with the provisions of Section 4.2 of the
Plan.

6.4          Duration of Options. 
Each Option granted to a Participant shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that no
Option shall be exercisable later than the tenth (10th) anniversary date of its
grant.  However, in the case of an ISO
granted to a Participant who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any subsidiary, such Option shall not be exercisable
after the expiration of five (5) years from the date such Option is granted or
such shorter term as the Committee may determine.

6.5          Exercise of Options. 
Options granted under this Article 6 shall be exercisable at such times
and be subject to such restrictions and conditions as set forth in the Award
Agreement and as the Committee shall in each instance approve, which need not
be the same for each grant or for each Participant.

6.6          Payment.

(a)           Options
granted under this Article 6 shall be exercised by the delivery of a written
notice of exercise to the Company, setting forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full payment for
the Shares.

(b)           The Exercise Price of any Option shall be
payable to the Company in full (i) in cash or its equivalent, (ii) if permitted
by the Committee, by tendering

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previously acquired Shares having an aggregate Fair Market Value at the
time of exercise equal to the total Exercise Price (provided that the Shares,
other than Shares purchased by the Participant on the open market, must have
been held by the Participant for at least six (6) months prior to their
tender), or (iii) by a combination of (i) and (ii).

(c)           If
the Company’s shares are publicly traded, an Option may be exercised by means
of a cashless exercise with the assistance of a broker or by any other means
permitted by the Committee in accordance with such terms and conditions as the
Committee, in its sole discretion, shall determine to be consistent with the
Plan’s purpose and applicable law.

(d)           Subject
to any governing rules or regulations, as soon as practicable after receipt of
a written notification of exercise of an Option, provisions for full payment
therefor and satisfaction or provision for satisfaction of any tax withholding
or other obligations, the Company shall (i) deliver to the Participant, in the
Participant’s name or the name of the Participant’s designee, a Share
certificate or certificates in an appropriate amount based upon the number of
Shares purchased under the Option, or (ii) cause to be issued in the
Participant’s name or the name of the Participant’s designee, in book-entry
form, an appropriate number of Shares based upon the number of Shares purchased
under the Option.

6.7          Nontransferability of Options.

(a)           Incentive Stock Options. 
No ISO granted under the Plan may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, during the lifetime of a
Participant, all ISOs granted to such Participant under the Plan shall be
exercisable only by such Participant.

(b)           Nonqualified Stock Options. 
Except as otherwise provided in a Participant’s Award Agreement, no NQSO
granted under the Plan may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution.  Further,
except as otherwise provided in a Participant’s Award Agreement, during the
lifetime of a Participant, all NQSOs granted to such Participant under the Plan
shall be exercisable only by such Participant.

ARTICLE 7

Stock Appreciation Rights

7.1          Grant of SARs.

(a)           Subject
to the terms and conditions of the Plan, SARs may be granted to Participants at
any time and from time to time as shall be determined by the Committee.  The Committee may grant Freestanding SARs,
Tandem SARs, or any combination of these forms of SAR.

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(b)           The
Committee shall have complete discretion in determining the number of SARs
granted to each Participant (subject to Article 4 herein) and, consistent with
the provisions of the Plan, in determining the terms and conditions pertaining
to such SARs.

(c)           The
grant price of a Freestanding SAR shall equal the Fair Market Value of a Share
on the date of grant of the SAR.  The
grant price of Tandem SARs shall equal the Exercise Price of the related
Option.

7.2          Exercise of Tandem SARs.

(a)           Tandem
SARs may be exercised for all or part of the Shares subject to the related
Option upon the surrender of the right to exercise the equivalent portion of
the related Option.  A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.

(b)           Notwithstanding
any other provision of this Plan to the contrary, with respect to a Tandem SAR
granted in connection with an ISO: (i) the Tandem SAR will expire no later than
the expiration of the underlying ISO; (ii) the value of the payout with respect
to the Tandem SAR may be for no more than one hundred percent (100%) of the
difference between the Exercise Price of the underlying ISO and the Fair Market
Value of the Shares subject to the underlying ISO at the time the Tandem SAR is
exercised; and (iii) the Tandem SAR may be exercised only when the Fair
Market Value of the Shares subject to the ISO exceeds the Exercise Price of the
ISO.

7.3          Exercise of Freestanding SARs.  Freestanding SARs may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes
upon them and sets forth in the Award Agreement.

7.4          SAR Agreement.  Each
SAR grant shall be evidenced by an Award Agreement that shall specify the grant
price, the term of the SAR, and such other provisions as the Committee shall
determine.

7.5          Term of SARs.  The
term of an SAR granted under the Plan shall be determined by the Committee, in
its sole discretion; provided, however, that such term shall not exceed ten
(10) years.

7.6          Payment of SAR Amount. 
Upon exercise of an SAR, a Participant shall be entitled to receive
payment from the Company in an amount determined by multiplying:

(a)           the
difference between the Fair Market Value of a Share on the date of exercise
over the grant price; by

(b)           the
number of Shares with respect to which the SAR is exercised.

At the discretion of the Committee, the payment upon
SAR exercise may be in cash, in Shares of equivalent value, or in some
combination thereof.

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7.7          Nontransferability of SARs. 
Except as otherwise provided in a Participant’s Award Agreement, no SAR
granted under the Plan may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution.  Further,
except as otherwise provided in a Participant’s Award Agreement, during the
lifetime of a Participant, all SARs granted to such Participant under the Plan
shall be exercisable only by such Participant.

ARTICLE 8

Restricted Stock

8.1          Grant of Restricted Stock. 
Subject to the terms and provisions of the Plan, the Committee, at any
time and from time to time, may grant Shares of Restricted Stock to
Participants in such amounts as the Committee shall determine.

8.2          Restricted Stock Agreement. 
Each Restricted Stock grant shall be evidenced by an Award Agreement
that shall specify the Period(s) of Restriction, the number of Shares of
Restricted Stock granted, and such other provisions as the Committee shall
determine.

8.3          Transferability. 
Except as provided in this Article 8, the Shares of Restricted Stock
granted herein may not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated until the end of the applicable Period of Restriction
established by the Committee and specified in the Award Agreement, or upon
earlier satisfaction of any other conditions, as specified by the Committee in
its sole discretion and set forth in the Award Agreement.  During the lifetime of a Participant, all
rights with respect to the Restricted Stock granted to such Participant under
the Plan shall be available only to such Participant.

8.4          Restrictions.

(a)           Subject
to the terms hereof, the Committee shall impose such conditions and/or
restrictions on any Shares of Restricted Stock granted pursuant to the Plan as
it may deem advisable and as are set forth in the Award Agreement including,
without limitation, a requirement that Participants pay a stipulated purchase
price for each Share of Restricted Stock, restrictions based upon the
achievement of specific performance goals (Company-wide, divisional, and/or
individual), time-based restrictions on vesting following the attainment of the
performance goals, and/or restrictions under applicable federal or state
securities laws.

(b)           The
Company shall retain the certificates representing Shares of Restricted Stock
in the Company’s possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied.

(c)           Except
as otherwise provided in this Article 8, Shares of Restricted Stock covered by
each Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after the last day of the applicable Period of
Restriction.

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8.5          Voting Rights.  During
the Period of Restriction, subject to any limitations imposed under the By-laws
of the Company, Participants holding Shares of Restricted Stock granted
hereunder may exercise full voting rights with respect to those Shares.

8.6          Dividends and Other Distributions.  Subject to the Committee’s right to determine
otherwise at the time of grant, during the Period of Restriction, Participants
holding Shares of Restricted Stock granted hereunder may receive or be credited
with regular dividends paid with respect to the underlying Shares while they
are so held.  The Committee may apply any
restrictions to the dividends that the Committee deems appropriate and as are
set forth in the Award Agreement. 
Without limiting the generality of the preceding sentence, if the grant
or vesting of Restricted Stock awarded to a Named Executive Officer is designed
to comply with the requirements of the Performance-Based Exception, the
Committee may apply any restrictions it deems appropriate to the payment of dividends
declared with respect to such Restricted Stock, such that the dividends and/or
the Restricted Stock maintain eligibility for the Performance-Based Exception.

ARTICLE 9

Termination of Service

Each Award
Agreement shall set forth the extent to which the Participant shall have the
right to exercise Options and SARs, and receive unvested Shares of Restricted
Stock, following Termination of Service with the Group.  Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Award Agreement
entered into with each Participant, need not be uniform among all Awards issued
pursuant to the Plan, and may reflect distinctions based on the reasons for
Termination of Service; provided, however, that the following shall automatically
apply to the extent different provisions are not set forth in a Participant’s
Award Agreement:

(a)           If
the Termination of Service is by the Company for Cause, by a Nonemployee
Director or Consultant for any reason, or by an Employee without Good Reason,
all previously unexercised Options and SARs shall expire and all unvested
Restricted Stock shall be forfeited upon the date of Termination of Service.

(b)           If
the Participant is an Employee and the Termination of Service is by the
Participant for Good Reason, all previously unexercised Options and SARs may be
exercised for a period of three (3) months after the date of the Participant’s
Termination of Service and all unvested Restricted Stock shall be forfeited as
of such date.

(c)           If
the Termination of Service is a result of the Participant’s death or
Disability, all previously unexercised Options and SARs may be exercised for a
period of 12 months after the date of the Participant’s Termination of Service
and all unvested Restricted Stock shall vest.

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(d)           If
the Termination of Service is by the Company for any reason other than Cause or
the Participant’s Disability, all previously unexercised Options and SARs may
be exercised for a period of three (3) months after the date of the Participant’s
Termination of Service and all unvested Restricted Stock which was not granted
during the year in which such Termination of Service occurs shall vest.  Any Restricted Stock granted during the year
of Termination of Service shall be forfeited.

ARTICLE 10

Restrictions on Shares

All Shares
acquired pursuant Awards granted hereunder, and Participants’ right to exercise
Options and SARS and/or receive Shares upon exercise or vesting of an Award,
shall be subject to all applicable restrictions contained in the Company’s By-laws,
shareholders agreement or insider trading policy, and any other restrictions
imposed by the Committee, including, without limitation, restrictions under
applicable securities laws, under the requirements of any stock exchange or
market upon which such Shares are then listed and/or traded, and restrictions
under any blue sky or state securities laws applicable to such Shares.

ARTICLE 11

Performance Measures

If Awards under the Plan are subject to Code Section
162(m) and the Committee determines that such Awards should be designed to
comply with the Performance-Based Exception, the performance measure(s), the
attainment of which determine the degree of payout and/or vesting, to be used
for purposes of such Awards shall be chosen from among earnings per share,
economic value added, market share (actual or targeted growth), net income
(before or after taxes), operating income, return on assets (actual or targeted
growth), return on capital (actual or targeted growth), return on equity
(actual or targeted growth), return on investment (actual or targeted growth),
gross or net underwriting results, revenue (actual or targeted growth), share
price, stock price growth, total shareholder return, or such other performance
measures as are approved by the Committee and the Company’s shareholders.

The Committee shall have the discretion to adjust the
determinations of the degree of attainment of the pre-established performance
goals; provided, however, that Awards which are designed to qualify for the
Performance-Based Exception, and which are held by Named Executive Officers,
may not be adjusted upward (the Committee shall retain the discretion to adjust
such Awards downward).

In the event that applicable tax laws change to permit
the Committee to alter the governing performance measures without obtaining
shareholder approval of such changes, the Committee shall have sole discretion
to make such changes without obtaining shareholder approval.  In addition, Awards that are not intended to
qualify for the Performance-Based Exception may be based on these or such other
performance measures as the Committee may determine.

 12
 
 

ARTICLE 12

Beneficiary Designation

Subject to the terms and conditions of the Plan and
applicable Award Agreement, each Participant may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death
before he or she receives any or all of such benefit.  Each such designation shall revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Company, and will be effective only when filed by the Participant in writing
during the Participant’s lifetime with the party chosen by the Company, from
time to time, to administer the Plan.  In
the absence of any such designation, benefits remaining unpaid at the
Participant’s death shall be paid to the Participant’s estate.

ARTICLE 13

Rights of Participants

13.1        Continued Service. 
Nothing in the Plan shall:

(a)           interfere
with or limit in any way the right of the Company to terminate any Participant’s
employment, service as a Director, or service as a Consultant with the Group at
any time, or

(b)           confer
upon any Participant any right to continue in the service of any member of the
Group as an Employee, Director or Consultant.

13.2        Participation. 
Participation is determined by the Committee. No person shall have the
right to be selected to receive an Award under the Plan, or, having been so
selected, to be selected to receive a future Award.

ARTICLE 14

Change in Control

14.1        Treatment of Outstanding Awards.  Upon the occurrence of a Change in Control,
unless otherwise specifically prohibited under applicable laws, or by the rules
and regulations of any governing governmental agencies or national securities
exchanges:

(a)           any
and all Options and SARs granted hereunder shall become immediately
exercisable; and

(b)           any
restriction periods and restrictions imposed on Restricted Stock shall lapse.

14.2        Termination, Amendment, and Modifications of Change-in-Control
Provisions.  Notwithstanding
any other provision of this Plan or any Award Agreement

 13
 
 

provision, the provisions of this Article 14
may not be terminated, amended, or modified on or after the date of a Change in
Control to affect adversely any Award theretofore granted under the Plan
without the prior written consent of the Participant with respect to said
Participant’s outstanding Awards; provided, however, that the Board, upon
recommendation of the Committee, may terminate, amend, or modify this Article
14 at any time and from time to time prior to the date of a Change in Control.

ARTICLE 15

Amendment, Modification, and Termination

15.1        Amendment, Modification, and Termination.  The Board may at any time and from time to
time, alter, amend, suspend or terminate the Plan or any Award hereunder in
whole or in part; provided, however, that no amendment which requires
shareholder approval in order for the Plan to continue to comply with any
applicable tax or securities or the rules of any securities exchange on which
the securities of the Company are listed, shall be effective unless such
amendment shall be approved by the requisite vote of shareholders of the
Company entitled to vote thereon; provided further that no such shall
alteration, amendment, suspension or termination shall adversely affect any
Award hereunder without the consent of the Participant to whom such Award shall
have been made.

15.2        Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events.  The
Committee may make adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in Section 4.2 hereof)
affecting the Company or the financial statements of the Company or of changes
in applicable laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan; provided that no such adjustment shall be
authorized to the extent that such authority would be inconsistent with the
Plan’s meeting the requirements, if applicable, of Code Section 162(m), as
amended from time to time.

15.3        Compliance with Code Section 162(m).  At all times when Code Section 162(m) is
applicable, all Awards granted under this Plan to Named Executive Officers, or
to Participants who will likely become Named Executive Officers at the time of
vesting or payment, shall be awarded and administered to comply with the
requirements of Code Section 162(m), unless the Committee determines that such
compliance is not desired.  In addition,
if changes are made to Code Section 162(m) or the regulations promulgated
thereunder to permit greater flexibility with respect to any Award or Awards
available under the Plan, the Committee may, subject to this Article 15, make
any adjustments it deems appropriate.

 14
 
 

ARTICLE 16

Withholding

16.1        Tax Withholding.  The
Company shall have the power and the right to deduct or withhold, or require a
Participant to remit to the Company, an amount (in cash or Shares) sufficient
to satisfy any taxes required by federal, state, or local law or regulation to
be withheld with respect to any taxable event arising as a result of this Plan.

16.2        Share Withholding. 
Participants may elect, subject to the approval of the Committee, to
satisfy all or part of such withholding requirement by having the Company
withhold Shares having a Fair Market Value equal to the amount to be withheld
up to the minimum statutory total tax withholding rate (or such other rate that
will not result in a negative accounting impact).  All such elections shall be irrevocable, made
in writing, signed by the Participant, and shall be subject to any restrictions
or limitations that the Committee, in its sole discretion, deems appropriate.

ARTICLE 17

Indemnification

Each person who is or shall have been a member of the
Committee, or of the Board, shall be indemnified and held harmless by the
Company to the fullest extent permitted by applicable law against and from any
loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof, with
the Company’s approval, or paid by him or her in satisfaction of any judgment
in any such action, suit, or proceeding against him or her, provided he or she
shall give the Company an opportunity, at its own expense, to handle and defend
the same before he or she undertakes to handle and defend it on his or her own
behalf.  The foregoing right of
indemnification is subject to the person having been successful in the legal
proceedings or having acted in good faith and what is reasonably believed to be
a lawful manner in the Company’s best interests.  The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company’s Articles of Incorporation or Bylaws, as a
matter of law, or otherwise, or any power that the Company may have to
indemnify them or hold them harmless.

ARTICLE 18

Successors

All obligations of the Company under the Plan with
respect to Awards granted hereunder shall be binding on any successor to the
Company, whether the existence of

 15
 
 

such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.

ARTICLE 19

Legal Construction

19.1        Gender and Number. 
Except where otherwise indicated by the context, any masculine term used
herein also shall include the feminine; the plural shall include the singular
and the singular shall include the plural.

19.2        Severability.  In the
event any provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of
the Plan, and the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included.

19.3        Requirements of Law. 
The granting of Awards and the issuance of Shares under the Plan shall
be subject to, and may be made contingent upon satisfaction of, all applicable
laws, rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.

19.4        Governing Law.  To the
extent not preempted by federal law, the Plan, and all agreements hereunder,
shall be construed in accordance with and governed by the laws of the state of
New York, excluding any conflicts or choice of law rule or principle that might
otherwise refer construction or interpretation of this Plan to the substantive
law of another jurisdiction.

19.5        Code Section 409A Compliance.  To the extent applicable, it is intended that
this Plan and any Awards granted hereunder comply with the requirements of
Section 409A of the Code and any related regulations or other guidance
promulgated with respect to such Section by the U.S. Department of the Treasury
or the Internal Revenue Service (“Section 409A”).  Any provision that would cause the Plan or
any Award granted hereunder to fail to satisfy Section 409A shall have no force
or effect until amended to comply with Section 409A, which amendment may be
retroactive to the extent permitted by Section 409A.

 16Exhibit 10.29

Excess
Catastrophe

Reinsurance Contract 

Effective: January 1, 2006

issued to

Safety Insurance
Company

and

Safety Indemnity Insurance Company 

both of Boston, Massachusetts

 

[GRAPHIC]

Excess
Catastrophe

Reinsurance Contract

Effective: January 1, 2006

issued to

Safety Insurance Company

and

Safety Indemnity Insurance Company 

both of Boston, Massachusetts

Third Excess Catastrophe
Reinsurance

	
  Reinsurers

  	
   

  	
  Participations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  American Agricultural
  Insurance Company

  	
   

  	
  0.900

  	
  %

  
	
  American Re-Insurance
  Company, A Delaware Corporation

  	
   

  	
  3.000

  	
   

  
	
  Aspen Insurance UK
  Limited

  	
   

  	
  4.000

  	
   

  
	
  Catlin Insurance
  Company Ltd.

  	
   

  	
  1.500

  	
   

  
	
  Da Vinci Reinsurance
  Ltd.

  	
   

  	
  2.400

  	
   

  
	
  Endurance Specialty
  Insurance Ltd.

  	
   

  	
  3.500

  	
   

  
	
  Folksamerica
  Reinsurance Company

  	
   

  	
  3.000

  	
   

  
	
  Harbor Point Services
  Inc. (for Federal Insurance Company)

  	
   

  	
  5.000

  	
   

  
	
  Hannover Re (Bermuda),
  Ltd.

  	
   

  	
  6.500

  	
   

  
	
  Montpelier Reinsurance
  Limited

  	
   

  	
  5.000

  	
   

  
	
  Odyssey America
  Reinsurance Corporation

  	
   

  	
  3.000

  	
   

  
	
  Partner Reinsurance Company

  	
   

  	
  4.500

  	
   

  
	
  Platinum Underwriters
  Reinsurance, Inc.

  	
   

  	
  4.500

  	
   

  
	
  Renaissance
  Reinsurance, Ltd.

  	
   

  	
  3.600

  	
   

  
	
  XL Re Ltd

  	
   

  	
  6.000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Through Benfield Limited

  	
   

  	
   

  	
   

  
	
  Amlin Bermuda Limited

  	
   

  	
  3.348

  	
   

  
	
  Lloyd’s Underwriters
  Per Signing Schedule(s)

  	
   

  	
  26.952

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Through Direct Market

  	
   

  	
   

  	
   

  
	
  Swiss Reinsurance
  America Corporation

  	
   

  	
  3.300

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  90.000% part of 100% share in the interests and liabilities of
  the “Reinsurer”

  	
   

  

 

 1
 

Fourth Excess
Catastrophe Reinsurance

	
  Reinsurers

  	
   

  	
  Participations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  American
  Agricultural Insurance Company

  	
   

  	
  0.900

  	
  %

  
	
  American
  Re-Insurance Company, A Delaware Corporation

  	
   

  	
  3.000

  	
   

  
	
  Aspen Insurance
  UK Limited

  	
   

  	
  2.500

  	
   

  
	
  Catlin Insurance
  Company Ltd.

  	
   

  	
  1.500

  	
   

  
	
  Da Vinci
  Reinsurance Ltd.

  	
   

  	
  2.000

  	
   

  
	
  Endurance
  Specialty Insurance Ltd.

  	
   

  	
  3.500

  	
   

  
	
  Folksamerica Reinsurance
  Company

  	
   

  	
  2.000

  	
   

  
	
  Harbor Point
  Services Inc. (for Federal Insurance Company)

  	
   

  	
  5.000

  	
   

  
	
  Hannover Re
  (Bermuda), Ltd.

  	
   

  	
  7.000

  	
   

  
	
  Montpelier
  Reinsurance Limited

  	
   

  	
  5.000

  	
   

  
	
  Odyssey America
  Reinsurance Corporation

  	
   

  	
  3.000

  	
   

  
	
  Partner
  Reinsurance Company

  	
   

  	
  4.500

  	
   

  
	
  Platinum
  Underwriters Reinsurance, Inc.

  	
   

  	
  3.500

  	
   

  
	
  Renaissance
  Reinsurance, Ltd.

  	
   

  	
  3.000

  	
   

  
	
  Swiss Re
  Underwriters Agency, Inc. (for Swiss Reinsurance America Corporation)

  	
   

  	
  5.500

  	
   

  
	
  XL Re Ltd

  	
   

  	
  6.000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Through
  Benfield Limited

  	
   

  	
   

  	
   

  
	
  Amlin Bermuda
  Limited

  	
   

  	
  3.015

  	
   

  
	
  Lloyd’s
  Underwriters Per Signing Schedule(s)

  	
   

  	
  24.885

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Through
  Direct Market

  	
   

  	
   

  	
   

  
	
  Swiss
  Reinsurance America Corporation

  	
   

  	
  4.200

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  90.000% part of 100% share in the interests and liabilities of
  the “Reinsurer”

  	
   

  

 

 2

Table of Contents

	
  Article

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Classes of Business Reinsured

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  Commencement and Termination

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  Territory (BRMA 51A)

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV

  	
   

  	
  Exclusions

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V

  	
   

  	
  Retention and Limit

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VI

  	
   

  	
  Reinstatement

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VII

  	
   

  	
  Definitions

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VIII

  	
   

  	
  Other Reinsurance

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IX

  	
   

  	
  Loss Occurrence

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  X

  	
   

  	
  Loss Notices and Settlements

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XI

  	
   

  	
  Salvage and Subrogation

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XII

  	
   

  	
  Reinsurance Premium

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIII

  	
   

  	
  Late Payments

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIV

  	
   

  	
  Offset (BRMA 36C)

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XV

  	
   

  	
  Access to Records (BRMA 1D)

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Net Retained Lines (BRMA 32E)

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XVII

  	
   

  	
  Liability of the Reinsurer

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Errors and Omissions (BRMA 14F)

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIX

  	
   

  	
  Currency (BRMA 12A)

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XX

  	
   

  	
  Taxes (BRMA 50B)

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXI

  	
   

  	
  Federal Excise Tax

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXII

  	
   

  	
  Unauthorized Reinsurers

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXIII

  	
   

  	
  Insolvency

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXIV

  	
   

  	
  Arbitration

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXV

  	
   

  	
  Service of Suit (BRMA 49C)

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXVI

  	
   

  	
  Governing Law

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXVII

  	
   

  	
  Agency Agreement

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXVIII

  	
   

  	
  Severability (BRMA 72E)

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXIX

  	
   

  	
  Intermediary (BRMA 23A)

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule A

  	
   

  	
   

  

 

Excess Catastrophe

Reinsurance Contract

Effective: January 1, 2006

issued to

Safety Insurance Company

and 

Safety Indemnity Insurance Company

both of Boston, Massachusetts 

(hereinafter referred to collectively as the
“Company”)

by

The Subscribing Reinsurer(s)
Executing the 

Interests and Liabilities Agreement(s)

Attached Hereto 

(hereinafter referred to as the “Reinsurer”)

Article I - Classes of Business Reinsured

By this Contract the Reinsurer agrees to reinsure the excess liability
which may accrue to the Company under its policies, contracts and binders of
insurance or reinsurance (hereinafter called “policies”) in force on the
effective date hereof or issued or renewed on or after that date, and
classified by the Company as Fire, Allied Lines, Homeowners Multiple Peril
(Section I only), Commercial Multiple Peril (Section I only), Inland Marine and
Automobile Physical Damage (not to include Collision coverage) business,
subject to the terms, conditions and limitations set forth herein and in
Schedule A attached to and forming part of this Contract.

Article II - Commencement and Termination

A.                      This
Contract shall become effective at 12:01 a.m., Eastern Standard Time, January
1, 2006, with respect to losses arising out of loss occurrences commencing at
or after that time and date, and shall remain in force until 12:01 a.m.,
Eastern Standard Time, January 1, 2007.

B.                        Notwithstanding
the provisions of paragraph A above, the Company may terminate a Subscribing
Reinsurer’s percentage share in this Contract at any time by giving written
notice to the Subscribing Reinsurer in the event any of the following
circumstances occur:

The Subscribing Reinsurer’s policyholders’ surplus at
the inception of this Contract has been reduced by more than 20.0% of the
amount of surplus 12 months prior to that date; or

 1
 

2.                         The
Subscribing Reinsurer’s policyholders’ surplus at any time during the term of
this Contract has been reduced by more than 20.0% of the amount of surplus at
the date of the Subscribing Reinsurer’s most recent financial statement filed
with regulatory authorities and available to the public as of the inception of
this Contract; or

3.                         The
Subscribing Reinsurer’s A.M. Best’s rating has been assigned or downgraded
below A- and/or Standard & Poor’s rating has been assigned or downgraded
below BBB+; or

4.                         The
Subscribing Reinsurer has become merged with, acquired by or controlled by any
other company, corporation or individual(s) not controlling the Subscribing
Reinsurer’s operations previously; or

5.                         A
State Insurance Department or other legal authority has ordered the Subscribing
Reinsurer to cease writing business; or

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

7.                         The
Subscribing Reinsurer has reinsured its entire liability under this Contract
without the Company’s prior written consent; or

8.                         The
Subscribing Reinsurer has ceased assuming new and renewal property treaty
reinsurance business.

C.                        If
this Contract is terminated or expires while a loss occurrence covered
hereunder is in progress, the Reinsurer’s liability hereunder shall, subject to
the other terms and conditions of this Contract, be determined as if the entire
loss occurrence had occurred prior to the termination or expiration of this
Contract, provided that no part of such loss occurrence is claimed against any
renewal or replacement of this Contract.

Article III - Territory (BRMA 51A)

The territorial limits of this Contract shall be identical with those
of the Company’s policies.

Article IV - Exclusions

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

Loss or damage occasioned by war, invasion,
hostilities, acts of foreign enemies, civil war, rebellion, insurrection, military
or usurped power, martial law or confiscation by order of any government or
public authority, but not excluding loss or damage which would be covered under
a standard form of policy containing a standard war exclusion clause.

 2
 

2.                         Nuclear
risks as defined in the “Nuclear Incident Exclusion Clause - Physical Damage -
Reinsurance” attached to and forming part of this Contract.

3.                         Liability
as a member, subscriber or reinsurer of any Pool, Syndicate or Association; and
any combination of insurers or reinsurers formed for the purpose of covering
specific perils, specific classes of business or for the purpose of insuring
risks located in specific geographical areas; but this exclusion shall not
apply to FAIR Plans or to SIR Pool, Franklin Pool, Coastal Pools, Beach Plans
or similar plans, however styled. It is understood and agreed, however, that
this reinsurance does not include any increase in liability to the Company
resulting from (a) the inability of any other participant in a FAIR Plan, SIR
Pool, Franklin Pool, Coastal Pool, Beach Plan or similar plan to meet its
liability, or (b) any claim against such a FAIR Plan, SIR Pool, Franklin Pool,
Coastal Pool, Beach Plan or similar plan, or any participant therein, including
the Company, whether by way of subrogation or otherwise, brought by or on
behalf of any insolvency fund.

4.                         Financial
guarantee and insolvency

5.                         Third
party liability

6.                         All
classes of business not specifically listed in the Classes of Business
Reinsured Article.

7.                         Reinsurance
assumed, except pro rata local agency reinsurance on specific risks.

8.                         Ex-gratia
payments.

9.                         Risks
excluded under the provisions of the “Total Insured Value Clause” attached to
and forming part of this Contract.

10.                   All
liability of the Company arising by contract, operation of law, or otherwise,
from its participation or membership, whether voluntary or involuntary, in any
insolvency fund. “Insolvency fund” includes any guaranty fund, insolvency fund,
plan, pool, association, fund or other arrangement, however denominated,
established or governed, which provides for any assessment of or payment or
assumption by the Company of part or all of any claim, debt, charge, fee or
other obligation of an insurer, or its successors or assigns, which has been
declared by any competent authority to be insolvent, or which is otherwise
deemed unable to meet any claim, debt, charge, fee or other obligation in whole
or in part.

11.                   Loss
or liability excluded under the “Terrorism Exclusion Clause” attached to and
forming part of this Contract.

12.                   Loss
and/or damage and/or costs and/or expenses arising from Seepage and/or
Pollution and/or Contamination, other than contamination from Smoke Damage.
Nevertheless, this exclusion does not preclude any payment of the cost of the
removal of debris of property damaged by a loss otherwise covered hereunder,
but subject always to a limit of 25.0% of the Company’s property loss under the
original policy.

 3
 

Article V - Retention and Limit

A.                      As
respects each excess layer of reinsurance coverage provided by this Contract,
the Company shall retain and be liable for the first amount of ultimate net
loss, shown as “Company’s Retention” for that excess layer in Schedule A
attached hereto, arising out of each loss occurrence. The Reinsurer shall then
be liable, as respects each excess layer, for the percentage, shown as “Reinsurer’s
Percentage” for that excess layer, of the amount by which such ultimate net
loss exceeds the Company’s applicable retention, but the liability of the
Reinsurer under each excess layer shall not exceed the percentage, shown as “Reinsurer’s
Percentage” for that excess layer, of the amount, shown as “Reinsurer’s Per
Occurrence Limit” for that excess layer in Schedule A attached hereto, as
respects any one loss occurrence.

B.                        No
claim shall be made under any excess layer of coverage provided by this
Contract in any one loss occurrence unless at least two risks insured or
reinsured by the Company are involved in such loss occurrence. For purposes
hereof, the Company shall be the sole judge of what constitutes “one risk.”

C.                        As
respects each excess layer of reinsurance coverage provided by this Contract,
the Company shall retain, net and unreinsured elsewhere, in addition to its
initial retention each loss occurrence, the percentage shown as “Company’s
Coreinsurance” for that excess layer in Schedule A attached hereto, as respects
any one loss occurrence.

Article VI - Reinstatement

A.                      In
the event all or any portion of the reinsurance under any excess layer of
reinsurance coverage provided by this Contract is exhausted by loss, the amount
so exhausted shall be reinstated immediately from the time the loss occurrence
commences hereon. For each amount so reinstated the Company agrees to pay
additional premium equal to the product of the following:

1.                         The
percentage of the occurrence limit for the excess layer reinstated (based on
the loss paid by the Reinsurer under that excess layer); times

2.                         The
earned reinsurance premium for the excess layer reinstated for the term of this
Contract (exclusive of reinstatement premium).

B.                        Whenever
the Company requests payment by the Reinsurer of any loss under any excess
layer hereunder, the Company shall submit a statement to the Reinsurer of
reinstatement premium due the Reinsurer for that excess layer. If the earned
reinsurance premium for any excess layer for the term of this Contract has not
been finally determined as of the date of any such statement, the calculation
of reinstatement premium due for that excess layer shall be based on the annual
deposit premium for that excess layer and shall be readjusted when the earned
reinsurance premium for that excess layer for the term of this Contract has
been finally determined. Any reinstatement premium shown to be due the
Reinsurer for any excess layer as reflected by any such statement (less prior
payments, if any, for that excess layer) shall be payable by the Company
concurrently with payment by the Reinsurer of the requested loss for that
excess layer. Any return reinstatement premium shown to be due the Company
shall be remitted by the Reinsurer as promptly as possible after receipt and
verification of the Company’s statement.

 4
 

C.                        Notwithstanding
anything stated herein, the liability of the Reinsurer under any excess layer
of reinsurance coverage provided by this Contract shall not exceed either of
the following:

1                            The
percentage, shown as “Reinsurer’s Percentage” for that excess layer, of the
amount, shown as “Reinsurer’s Per Occurrence Limit” for that excess layer in
Schedule A attached hereto, as respects loss or losses arising out of any one
loss occurrence; or

2                            The
percentage, shown as “Reinsurer’s Percentage” for that excess layer, of the
amount, shown as “Reinsurer’s Annual Limit” for that excess layer in Schedule A
attached hereto, in all during the term of this Contract.

Article VII - Definitions

A.                      “Ultimate
net loss” as used herein is defined as the sum or sums (including loss in
excess of policy limits, extra contractual obligations and loss adjustment
expense, as hereinafter defined) paid or payable by the Company in settlement
of claims and in satisfaction of judgments rendered on account of such claims,
after deduction of all salvage, all recoveries and all claims on inuring
insurance or reinsurance, whether collectible or not. Nothing herein shall be
construed to mean that losses under this Contract are not recoverable until the
Company’s ultimate net loss has been ascertained.

B.                        “Loss
in excess of policy limits” and “extra contractual obligations” as used herein
shall be defined as follows:

1                            “Loss
in excess of policy limits” shall mean 80.0% of any amount paid or payable by
the Company in excess of its policy limits, but otherwise within the terms of
its policy, such loss in excess of the Company’s policy limits having been
incurred because of, but not limited to, failure by the Company to settle
within the policy limits or by reason of the Company’s alleged or actual
negligence, fraud or bad faith in rejecting an offer of settlement or in the
preparation of the defense or in the trial of an action against its insured or
reinsured or in the preparation or prosecution of an appeal consequent upon
such an action.

2                            “Extra
contractual obligations” shall mean 80.0% of any punitive, exemplary,
compensatory or consequential damages paid or payable by the Company, not
covered by any other provision of this Contract and which arise from the
handling of any claim on business subject to this Contract, such liabilities
arising because of, but not limited to, failure by the Company to settle within
the policy limits or by reason of the Company’s alleged or actual negligence,
fraud or bad faith in rejecting an offer of settlement or in the preparation of
the defense or in the trial of an action against its insured or reinsured or in
the preparation or prosecution of an appeal consequent upon such an action. An
extra contractual obligation shall be deemed, in all circumstances, to have
occurred on the same date as the loss covered or alleged to be covered under
the policy.

The amount included in
ultimate net loss for any one loss occurrence as respects loss in excess of
policy limits and extra contractual obligations shall not exceed 25.0% of the
Company’s indemnity loss hereunder arising out of that loss occurrence.

 5
 

Notwithstanding anything stated herein, this Contract
shall not apply to any loss in excess of policy limits or any extra contractual
obligation incurred by the Company as a result of any fraudulent and/or
criminal act by any officer or director 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.

Savings Clause (Applicable only if the Subscribing
Reinsurer is domiciled in the State of New York): In no event shall coverage be
provided to the extent that such coverage is not permitted under New York law.

C                           “Loss
adjustment expense” as used herein shall mean expenses assignable to the
investigation, appraisal, adjustment, settlement, litigation, defense and/or
appeal of specific claims, regardless of how such expenses are classified for
statutory purposes. Loss adjustment expense shall include, but not be limited
to, interest on judgments, expenses of outside adjusters, and declaratory judgment
expenses or other legal expenses and costs incurred in connection with coverage
questions and legal actions connected thereto, but shall not include office
expenses or salaries of the Company’s regular employees not classified as loss
adjusters.

Article VIII - Other Reinsurance

A.                      The
Company shall maintain in force property per risk excess of loss reinsurance,
recoveries under which shall inure to the benefit of this Contract.

B                           The
Company shall be permitted to carry underlying property catastrophe excess of
loss reinsurance, recoveries under which shall inure solely to the benefit of
the Company and be entirely disregarded in applying all of the provisions of
this Contract.

Article IX - 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:

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.

2.                         As
regards riot, riot attending a strike, civil commotion, vandalism and malicious
mischief, all individual losses sustained by the Company occurring during any
period

 6
 

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 paragraph A 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 (including, but not limited to, those caused
by bursting frozen pipes and tanks) may be included in the Company’s “loss
occurrence.”

5.                         As
regards firestorms, brush fires and any other fires or series of fires,
irrespective of origin (except as provided in subparagraphs 2 and 3 above),
which spread through trees, grassland or other vegetation, all individual
losses sustained by the Company which occur during any period of 168
consecutive hours within 150-mile radius of any one fixed point selected by the
Company may be included in the Company’s “loss occurrence.” However, an
individual loss subject to this subparagraph cannot be included in more than
one “loss occurrence.”

B.                        Except
for those “loss occurrences,” referred to in subparagraphs 1 and 2 of paragraph
A above, 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.

C.                        As
respects those “loss occurrences” referred to in subparagraphs 1 and 2 of
paragraph A above, if the disaster, accident or loss occasioned by the event is
of greater duration than 72 consecutive hours, then the Company may divide that
disaster, accident or loss into two or more “loss occurrences,” provided no two
periods overlap and no individual loss is included in more than one such period
and provided that no period commences earlier than the date and time of the
occurrence of the first recorded individual loss sustained by the Company
arising out of that disaster, accident or loss.

D.                       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.

E.                         Any
date change, including leap-year calculations, shall not in and of itself be
regarded as an event for purposes of this Contract.

1.                         This
includes any loss, damage, cost, claim or expense, whether preventative,
remedial or otherwise, directly or indirectly arising out of or relating to:

a.                          The
calculation, comparison, differentiation, sequencing or processing of data
involving a date change, including leap-year calculations, by any computer

 7
 

system, hardware, program or software and/or any
microchip, integrated circuit or similar device in computer equipment or
non-computer equipment, whether the property of the insured or not; or

b.                         Any
change, alteration or modification involving a date change, including leap-year
calculations, to any such computer system, hardware, program or software or any
microchip, integrated circuit or similar device in computer equipment or
non-computer equipment, whether the property of the insured or not.

This subparagraph shall apply regardless of any other
cause or event that contributes concurrently or in any sequence to the loss,
damage, cost, claim or expense.

However, this subparagraph shall not apply as respects
physical damage occurring at the insured’s premises arising out of the perils
covered under this Contract.

2.                         Notwithstanding
subparagraph 1 above, this Contract shall not cover any costs and expenses,
whether preventative, remedial or otherwise, arising out of or relating to
change, alteration or modification of any computer system, hardware, program or
software or any microchip, integrated circuit or similar device in computer or
non-computer equipment, whether the property of the insured or not.

F.                         Losses
arising, directly or indirectly, out of:

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

or

2.                         A
reduction in the functionality, availability or operation of

A computer system, hardware, program, software, data,
information repository, microchip, integrated circuit or similar device in
computer equipment or non-computer equipment, whether the property of the
policyholder of the Company or not, do not in and of themselves constitute an
event unless arising out of one or more of the following perils:

Fire, lightning, explosion, aircraft or vehicle
impact, falling objects, windstorm, hail, tornado, cyclone, hurricane,
earthquake, volcano, tsunami, flood, freeze or weight of snow.

Article X - Loss Notices and Settlements

A.                      Whenever
losses sustained by the Company appear likely to result in a claim hereunder,
the Company shall notify the Reinsurer, and the Reinsurer shall have the right
to participate in the adjustment of such losses at its own expense.

B.                        All
loss settlements made by the Company, provided they are within the terms of
this Contract, shall be binding upon the Reinsurer, and the Reinsurer agrees to
pay all amounts for which it may be liable upon receipt of reasonable evidence
of the amount paid (or scheduled to be paid, but no more than 10 days in
advance of the date of payment of claims) by the Company.

 8
 

Article XI - Salvage and
Subrogation

The Reinsurer shall be credited with salvage (i.e., reimbursement
obtained or recovery made by the Company, less the actual cost, excluding
salaries of officials and employees of the Company and sums paid to attorneys
as retainer, of obtaining such reimbursement or making such recovery) on
account of claims and settlements involving reinsurance hereunder. Salvage thereon
shall always be used to reimburse the excess carriers in the reverse order of
their priority according to their participation before being used in any way to
reimburse the Company for its primary loss. The Company hereby agrees to
enforce its rights to salvage or subrogation relating to any loss, a part of
which loss was sustained by the Reinsurer, and to prosecute all claims arising
out of such rights.

Article XII - Reinsurance
Premium

A.                      
As premium for each excess layer of reinsurance coverage provided by this
Contract, the Company shall pay the Reinsurer the greater of the following:

1.                         The
amount, shown as “Minimum Premium” for that excess layer in Schedule A attached
hereto (or a pro rata portion of the Subscribing Reinsurer’s share, in the event
that such Subscribing Reinsurer’s share under any excess layer is terminated
prior to January 1, 2007); or

2.                         The
percentage, shown as “Premium Rate” for that excess layer in Schedule A
attached hereto, of the Company’s net earned premium for the term of this
Contract

B.                        The
Company shall pay the Reinsurer an deposit premium for each excess layer of the
amount, shown as “Deposit Premium” for that excess layer in Schedule A attached
hereto, in four equal installments of the amount, shown as “Quarterly Deposit
Premium” for that excess layer in Schedule A attached hereto, on January 1,
April 1, July 1 and October 1 of 2006. In the event that a Subscribing
Reinsurer’s share under any excess layer hereof is terminated prior to January
1, 2007, no quarterly deposit installments for such layer(s) shall be due to
such Subscribing Reinsurer after the effective date of termination.

C.                        Within
60 days after the termination or expiration of this Contract, the Company shall
provide a report to the Reinsurer setting forth the premium due hereunder for
each excess layer, computed in accordance with paragraph A, and any additional
premium due the Reinsurer or return premium due the Company for each such
excess layer shall be remitted promptly.

D.                       
“Net earned premium” as used herein is defined as gross earned premium of the
Company for the classes of business reinsured hereunder, less the earned
portion of premiums ceded by the Company for reinsurance which inures to the
benefit of this Contract. For purposes of calculating net earned premium, 90.0%
of Homeowners Multiple Peril and 80.0% of Commercial Multiple Peril total basic
policy premium on indivisible premium policies shall be considered subject
premium.

 9
 

Article XIII - Late
Payments

A.                      The
provisions of this Article shall not be implemented unless specifically
invoked, in writing, by one of the parties to this Contract.

B.                        In
the event any premium, loss or other payment due either party is not received
by the Intermediary named in the Intermediary Article (BRMA 23A) (hereinafter
referred to as the “Intermediary”) by the payment due date, the party to whom
payment is due may, by notifying the Intermediary in writing, require the
debtor party to pay, and the debtor party agrees to pay, an interest penalty on
the amount past due calculated for each such payment on the last business day
of each month as follows:

1                            The
number of full days which have expired since the due date or the last monthly calculation,
whichever the lesser; times

2                            1/365ths
of the six-month United States Treasury Bill rate as quoted in The Wall Street Journal
on the first business day of the month for which the calculation is made; times

3                            The
amount past due, including accrued interest.

It is agreed that interest shall accumulate until payment of the original
amount due plus interest penalties have been received by the Intermediary.

C.                        The
establishment of the due date shall, for purposes of this Article, be
determined as follows:

1.                         As
respects the payment of routine deposits and premiums due the Reinsurer, the
due date shall be as provided for in the applicable section of this Contract.
In the event a due date is not specifically stated for a given payment, it
shall be deemed due 30 business days after the date of transmittal by the
Intermediary of the initial billing for each such payment.

2.                         Any
claim or loss payment due the Company hereunder shall be deemed due 30 business
days after the proof of loss or demand for payment is transmitted to the
Reinsurer. If such loss or claim payment is not received within the 30 business
days, interest will accrue on the payment or amount overdue in accordance with
paragraph B above, from the date the proof of loss or demand for payment was
transmitted to the Reinsurer.

3.                         As
respects any payment, adjustment or return due either party not otherwise
provided for in subparagraphs 1 and 2 of this paragraph, the due date shall be
as provided for in the applicable section of this Contract. In the event a due
date is not specifically stated for a given payment, it shall be deemed due 30
business days following transmittal of written notification that the provisions
of this Article have been invoked.

For purposes of interest calculations only, amounts due hereunder shall
be deemed paid upon receipt by the Intermediary.

D.                       Nothing
herein shall be construed as limiting or prohibiting a Subscribing Reinsurer
from contesting the validity of any claim, or from participating in the defense
of any claim or suit

 10
 

or prohibiting either party from contesting the validity of any payment
or from initiating any arbitration or other proceeding in accordance with the
provisions of this Contract. If the debtor party prevails in an arbitration or
other proceeding, then any interest penalties due hereunder on the amount in
dispute shall be null and void. If the debtor party loses in such proceeding,
then the interest penalty on the amount determined to be due hereunder shall be
calculated in accordance with the provisions set forth above unless otherwise
determined by such proceedings. If a debtor party advances payment of any
amount it is contesting, and proves to be correct in its contestation, either
in whole or in part, the other party shall reimburse the debtor party for any
such excess payment made plus interest on the excess amount calculated in
accordance with this Article.

E.                         Interest
penalties arising out of the application of this Article that are $100 or less
from any party shall be waived unless there is a pattern of late payments
consisting of three or more items over the course of any 12-month period.

Article XIV - Offset
(BRMA 36C)

The Company and the Reinsurer shall have the right to offset any
balance or amounts due from one party to the other under the terms of this
Contract. The party asserting the right of offset may exercise such right any
time whether the balances due are on account of premiums or losses or
otherwise.

Article XV - Access to
Records (BRMA  1D)

The Reinsurer or its designated representatives shall have access at
any reasonable time to all records of the Company which pertain in any way to
this reinsurance.

Article XVI - Net
Retained Lines (BRMA  32E)

A.                      This
Contract applies only to that portion of any policy which the Company retains
net for its own account (prior to deduction of any underlying reinsurance
specifically permitted in this Contract), and in calculating the amount of any
loss hereunder and also in computing the amount or amounts in excess of which
this Contract attaches, only loss or losses in respect of that portion of any
policy which the Company retains net for its own account shall be included.

B.                        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 reinsurer(s), whether specific or general, any amounts which may
have become due from such reinsurer(s), whether such inability arises from the
insolvency of such other reinsurer(s) or otherwise.

Article XVII - Liability
of the Reinsurer

A                       The
liability of the Reinsurer shall follow that of the Company in every case and
be subject in all respects to all the general and specific stipulations,
clauses, waivers and modifications of the Company’s policies and any
endorsements thereon. However, in no event shall this

 11
 

be construed in any way to provide coverage outside the terms and
conditions set forth in this Contract.

B.                        Nothing
herein shall in any manner create any obligations or establish any rights
against the Reinsurer in favor of any third party or any persons not parties to
this Contract.

Article XVIII - Errors and Omissions (BRMA 14F)

Inadvertent delays, errors or omissions made in connection with this
Contract or any transaction hereunder shall not relieve either party from any
liability which would have attached had such delay, error or omission not
occurred, provided always that such error or omission is rectified as soon as
possible after discovery.

Article XIX - Currency (BRMA 12A)

A.                      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.

B.                        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 XX - Taxes (BRMA 50B)

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 or the District of Columbia.

Article XXI - Federal Excise Tax

A.                      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.

B.                        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 XXII - Unauthorized Reinsurers

A.                      If
the Reinsurer is unauthorized in any state of the United States of America or
the District of Columbia, the Reinsurer agrees to fund its share of the Company’s
ceded United States

 12
 

outstanding loss and loss adjustment expense reserves (including all
case reserves plus any reasonable amount estimated to be unreported from known
loss occurrences) by:

Clean, irrevocable and unconditional letters of credit
issued and confirmed, if confirmation is required by the insurance regulatory
authorities involved, by a bank or banks meeting the NAIC Securities Valuation Office
credit standards for issuers of letters of credit and acceptable to said
insurance regulatory authorities; and/or

2.                         Escrow
accounts for the benefit of the Company; and/or

3.                         Cash
advances;

If, without such funding, a penalty would accrue to the Company on any
financial statement it is required to file with the insurance regulatory
authorities involved. The Reinsurer, at its sole option, may fund in other than
cash if its method and form of funding are acceptable to the insurance
regulatory authorities involved.

B.                        With
regard to funding in whole or in part by letters of credit, it is agreed that
each letter of credit will be in a form acceptable to insurance regulatory
authorities involved, will be issued for a term of at least one year and will
include an “evergreen clause,” which automatically extends the term for at
least one additional year at each expiration date unless written notice of
non-renewal is given to the Company not less than 30 days prior to said
expiration date. The Company and the Reinsurer further agree, notwithstanding
anything to the contrary in this Contract, that said letters of credit may be
drawn upon by the Company or its successors in interest at any time, without
diminution because of the insolvency of the Company or the Reinsurer, but only
for one or more of the following purposes:

1.                         To
reimburse itself for the Reinsurer’s share of losses and/or loss adjustment
expense paid under the terms of policies reinsured hereunder, unless paid in
cash by the Reinsurer;

2.                         To
reimburse itself for the Reinsurer’s share of any other amounts claimed to be
due hereunder, unless paid in cash by the Reinsurer;

3.                         To
fund a cash account in an amount equal to the Reinsurer’s share of any ceded
outstanding loss and loss adjustment expense reserves (including all case
reserves plus any reasonable amount estimated to be unreported from known loss
occurrences) funded by means of a letter of credit which is under non-renewal
notice, if said letter of credit has not been renewed or replaced by the Reinsurer
10 days prior to its expiration date;

4.                         To
refund to the Reinsurer any sum in excess of the actual amount required to fund
the Reinsurer’s share of the Company’s ceded outstanding loss and loss
adjustment expense reserves (including all case reserves plus any reasonable
amount estimated to be unreported from known loss occurrences), if so requested
by the Reinsurer.

In the event the amount drawn by the Company on any letter of credit is
in excess of the actual amount required for B(1) or B(3), or in the case of
B(2), the actual amount determined to be due, the Company shall promptly return
to the Reinsurer the excess amount so drawn.

 13
 

Article XXIII - Insolvency

A.                      In
the event of the insolvency of one or both of the reinsured companies, 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.

B.                        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 company.

C.                        It
is further understood and agreed that, in the event of the insolvency of one or
both of the reinsured companies, the reinsurance under this Contract shall be
payable directly by the Reinsurer to the company or to its liquidator, receiver
or statutory successor, except as provided by Section 4118(a) of the New York
Insurance Law or except (1) where this Contract specifically provides another
payee of such reinsurance in the event of the insolvency of the company or (2)
where the Reinsurer with the consent of the direct insured or insureds has
assumed such policy obligations of the company as direct obligations of the
Reinsurer to the payees under such policies and in substitution for the
obligations of the company to such payees.

Article XXIV - Arbitration

A.                      As
a condition precedent to any right of action hereunder, in the event of any
dispute or difference of opinion hereafter arising with respect to this
Contract, it is hereby mutually agreed that such dispute or difference of
opinion shall be submitted to arbitration. One Arbiter shall be chosen by the
Company, the other by the Reinsurer, and an Umpire shall be chosen by the two
Arbiters before they enter upon arbitration, all of whom shall be active or
retired disinterested executive officers of insurance or reinsurance companies
or Lloyd’s London Underwriters. In the event that either party should fail to choose
an Arbiter within 30 days following a written request by the other party to do
so, the requesting party may choose two Arbiters who shall in turn choose an
Umpire before entering upon arbitration. If the two Arbiters fail to agree upon
the selection of an Umpire within 30 days following their appointment, the two
Arbiters shall request the American Arbitration Association to appoint the
Umpire. If the American Arbitration Association fails to appoint the Umpire
within

 14
 

30 days after it has been requested to do so, either party may request
a justice of a Court of general jurisdiction of the state in which the
arbitration is to be held to appoint the Umpire.

B.                        Each
party shall present its case to the Arbiters within 30 days following the date
of appointment of the Umpire. The Arbiters shall consider this Contract as an
honorable engagement rather than merely as a legal obligation and they are
relieved of all judicial formalities and may abstain from following the strict
rules of law. The decision of the Arbiters shall be final and binding on both
parties; but failing to agree, they shall call in the Umpire and the decision
of the majority shall be final and binding upon both parties. Judgment upon the
final decision of the Arbiters may be entered in any court of competent
jurisdiction.

C.                        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 Article and
communications shall be made by the Company to each of the reinsurers constituting
one party, provided, however, that nothing herein 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 participating under
the terms of this Contract from several to joint.

D.                       Each
party shall bear the expense of its own Arbiter, and shall jointly  and equally bear with the other the
expense of the Umpire and of the arbitration. In the event that the two
Arbiters are chosen by one party, as above provided, the expense of the
Arbiters, the Umpire and the arbitration shall be equally divided between the
two parties.

E.                         Any
arbitration proceedings shall take place at a location mutually agreed upon by
the parties to this Contract, but notwithstanding the location of the
arbitration, all proceedings pursuant hereto shall be governed by the law of
the state in which the Company has its principal office.

Article XXV - Service of
Suit (BRMA 49C)

(Applicable if the Reinsurer is not domiciled in the United States of
America, and/or is not authorized in any State, Territory or District of the
United States where authorization is required by insurance regulatory
authorities)

A.                      It
is agreed that in the event the Reinsurer fails to pay any amount claimed to be
due hereunder, the Reinsurer, 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.

B.                        Further,
pursuant to any statute of any state, territory or district of the United
States which makes provision therefor, the Reinsurer hereby designates the
party named in its Interests and Liabilities Agreement, or if no party is named
therein, the Superintendent, Commissioner or Director of Insurance or other
officer specified for that purpose in the statute, or his successor or
successors in office, as its true and lawful attorney upon whom may be served
any lawful process in any action, suit or proceeding instituted by or on behalf
of the Company or any beneficiary hereunder arising out of this Contract.

 15
 

Article XXVI - Governing Law

This Contract shall be governed by and construed in
accordance with the law of the Commonwealth of Massachusetts.

Article XXVII - Agency Agreement

If more than one
reinsured company is named as a party to this Contract, the first named company
shall 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.

Article XXVIII - Severability (BRMA
72E)

If any provision of this
Contract shall be rendered illegal or unenforceable by the laws, regulations or
public policy of any state, such provision shall be considered void in such
state, but this shall not affect the validity or enforceability of any other
provision of this Contract or the enforceability of such provision in any other
jurisdiction.

Article
XXIX - Intermediary (BRMA 23A)

Benfield Inc. is hereby
recognized as the Intermediary negotiating this Contract for all business
hereunder. All communications (including but not limited to notices,
statements, premium, return premium, commissions, taxes, losses, loss
adjustment expense, salvages and loss settlements) relating thereto shall be
transmitted to the Company or the Reinsurer through Benfield Inc. Payments by
the Company to the Intermediary shall be deemed to constitute payment to the
Reinsurer. Payments by the Reinsurer to the Intermediary 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 Company by its duly authorized representative
has executed this Contract as of the date undermentioned at:

Boston, Massachusetts, this 9th day of Jan. in the year 2006.

	
  

  	
  /s/ [Illegible]

  	
   

  
	
   

  	
  Safety Insurance Company

  
	
   

  	
  Safety Indemnity Insurance Company

  

 

 16

Schedule
A

Excess
Catastrophe

Reinsurance Contract

Effective: January 1, 2006

issued to

Safety
Insurance Company

and

Safety Indemnity Insurance Company

both of Boston, Massachusetts

	
  

  	
   

  	
  Third 

  Excess

  	
   

  	
  Fourth 

  Excess

  	
   

  
	
  Company’s Coreinsurance

  	
   

  	
  10.0

  	
  %

  	
  10.0

  	
  %

  
	
  Reinsurer’s Percentage

  	
   

  	
  90.0

  	
  %

  	
  90.0

  	
  %

  
	
  Company’s Retention

  	
   

  	
  $

  	
  30,000,000

  	
   

  	
  $

  	
  60,000,000

  	
   

  
	
  Reinsurer’s Per
  Occurrence Limit

  	
   

  	
  $

  	
  30,000,000

  	
   

  	
  $

  	
  190,000,000

  	
   

  
	
  Reinsurer’s Annual
  Limit

  	
   

  	
  $

  	
  60,000,000

  	
   

  	
  $

  	
  380,000,000

  	
   

  
	
  Minimum Premium

  	
   

  	
  $

  	
  1,980,000

  	
   

  	
  $

  	
  4,940,000

  	
   

  
	
  Adjustable Premium Rate

  	
   

  	
  2.226

  	
  %

  	
  5.553

  	
  %

  
	
  Deposit Premium

  	
   

  	
  $

  	
  2,475,000

  	
   

  	
  $

  	
  6,175,000

  	
   

  
	
  Quarterly Deposit Premium

  	
   

  	
  $

  	
  618,750

  	
   

  	
  $

  	
  1,543,750

  	
   

  

The figures listed above
for each excess layer shall apply to each Subscribing Reinsurer in the
percentage share for that excess layer as expressed in its Interests and
Liabilities Agreement attached hereto.

Nuclear Incident Exclusion Clause - Physical Damage -
Reinsurance (U.S.A.)

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:

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

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

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

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

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

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

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

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

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

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

7.                          Reassured
to be sole judge of what constitutes:

(a)                    substantial
quantities, and

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

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

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

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

Total
Insured Value Exclusion Clause

It is the mutual
intention of the parties to exclude risks, other than Offices, Hotels,
Apartments, Hospitals, Educational Establishments and Public Utilities (except
Railroad Schedules), and Builders Risks on the above classes, where at the time
of cession, the Total Insured Value over all interests exceeds $250,000,000.
However, the Company shall be protected hereunder, subject to the other terms
and conditions of this Contract, if subsequent to cession being made, the
Company becomes acquainted with the true facts of the case and discovers that
the mutual intention has been inadvertently breached; on condition that the
Company shall at the first opportunity, and certainly by next anniversary of
the original policy, exclude the risk in question.

It is agreed that this
mutual intention does not apply to Contingent Business Interruption or to interests
traditionally underwritten as Inland Marine or to Stock and/or Contents written
on a blanket basis except where the Company is aware that the Total Insured
Value of $250,000,000 is already exceeded for buildings, machinery, equipment
and direct use and occupancy at the key location.

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

Terrorism
Exclusion Clause

A.                      Notwithstanding
any provision to the contrary within this Contract or any addendum thereto, it
is agreed that this Contract excludes loss, damage, cost or expense directly or
indirectly caused by, contributed to by, resulting from, arising out of or in
connection with any “act of terrorism,” as defined in the Terrorism Risk
Insurance Act of 2002, as amended by the Terrorism Risk Insurance Extension Act
of 2005 (together the “Terrorism Act”), on primary or excess property and
casualty insurance issued by the Company, regardless of any other cause or
event contributing concurrently or in any sequence to the loss.

B.                        Notwithstanding
the above and subject otherwise to the terms, conditions and limitations of
this Contract, this Contract will pay actual loss or damage caused by any act
of terrorism which does not meet the definition of “insured loss” set forth in
the Terrorism Act or meets the definition of “insured loss” as set forth in the
Terrorism Act, but results in loss under a policy that is not included in “property
and casualty insurance” as defined in the Terrorism Act, provided, in either
case, (1) such loss or damage occurs in a line of insurance otherwise covered
by this Contract, and (2) in no event will this Contract provide coverage for
loss, damage, cost or expense directly or indirectly caused by, contributed to
by, resulting from, or arising out of or in connection with biological,
chemical, radioactive or nuclear explosion, pollution, contamination and/or
fire following thereon.

Interests
and Liabilities Agreement

of

American Agricultural Insurance Company

Indianapolis, Indiana

(hereinafter referred to as the “Subscribing
Reinsurer”)

with respect to the

Excess Catastrophe 

Reinsurance Contract 

Effective: January 1, 2006

issued to and duly executed by

Safety Insurance Company

and

Safety Indemnity Insurance Company

both of Boston, Massachusetts

The Subscribing Reinsurer hereby accepts the
following percentage shares in the interests and liabilities of the “Reinsurer”
as set forth in the attached Contract captioned above:

0.900%                of the Third Excess Catastrophe
Reinsurance

0.900%                of the Fourth Excess Catastrophe
Reinsurance

This Agreement shall become
effective at 12:01 a.m., Eastern Standard Time, January 1, 2006 and shall
continue in force until 12:01 a.m., Eastern Standard Time, January 1, 2007,
unless earlier terminated in accordance with the provisions of the attached
Contract.

The Subscribing Reinsurer’s share in the
attached Contract shall be separate and apart from the shares of the other
reinsurers, and shall not be joint with the shares of the other reinsurers it
being understood that the Subscribing
Reinsurer shall in no event participate in the interests and
liabilities of the other reinsurers.

In
Witness Whereof, the Subscribing
Reinsurer by  its duly
authorized representative has executed this Agreement as of the date
undermentioned at:

Columbus, Ohio, this 12th day of January in the year 2006.

	
   

  	
  /s/ Virgil R. Maxwell

  
	
   

  	
  American Agricultural Insurance Company

  
	
   

  	
   

  
	
   

  	
   

  	
  Virgil R. Maxwell

  Vice President-Domestic Underwriting

  

 

Interests and Liabilities
Agreement

of

American Re-Insurance Company

A Delaware Corporation

(hereinafter referred to as the “Subscribing
Reinsurer”)

with respect to the

Excess Catastrophe

Reinsurance Contract

Effective: January 1, 2006

issued to and duly executed by

Safety Insurance Company

and

Safety Indemnity Insurance Company

both of Boston, Massachusetts

The Subscribing Reinsurer hereby accepts the
following percentage shares in the interests and liabilities of the “Reinsurer”
as set forth in the attached Contract captioned above:

3.000%      of
the Third Excess Catastrophe Reinsurance

3.000%      of the Fourth Excess
Catastrophe Reinsurance

This Agreement shall
become effective at 12:01 a.m., Eastern Standard Time, January 1, 2006, and
shall continue in force until 12:01 a.m., Eastern Standard Time, January 1,
2007, unless earlier terminated in accordance with the provisions of the
attached Contract.

The Subscribing Reinsurer’s share in the
attached Contract shall be separate and apart from the shares of the other
reinsurers, and shall not be joint with the shares of the other reinsurers, it
being understood that the Subscribing Reinsurer
shall in no event participate in the interests and liabilities of
the other reinsurers.

In
Witness Whereof, the Subscribing
Reinsurer by its duly authorized representative has executed this
Agreement as of the date undermentioned at:

Princeton, New Jersey,
this 2nd day of March in the year 2006.

	
   

  	
  /s/ Illegible

  
	
   

  	
  American Re-Insurance Company, A Delaware
  Corporation

  

 

Interests and Liabilities
Agreement

of

Aspen Insurance UK Limited

London, England

(hereinafter referred to as  the “Subscribing Reinsurer”)

with respect to the

Excess Catastrophe

Reinsurance Contract

Effective: January 1, 2006

issued to and duly executed by

Safety Insurance Company

and

Safety Indemnity Insurance Company

both of Boston, Massachusetts

The Subscribing Reinsurer hereby
accepts the following percentage shares in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above:

4.000%      of the Third Excess Catastrophe
Reinsurance

2.500%      of the Fourth Excess
Catastrophe Reinsurance

This Agreement shall
become effective at 12:01 a.m., Eastern Standard Time, January 1, 2006, and
shall continue in force until 12:01 a.m., Eastern Standard Time, January 1,
2007, unless earlier terminated in accordance with the provisions of the
attached Contract.

The Subscribing Reinsurer’s share in the
attached Contract shall be separate and apart from the shares of the other
reinsurers, and shall not be joint with the shares of the other reinsurers, it
being understood that the Subscribing
Reinsurer shall in no event participate in the interests and
liabilities of the other reinsurers.

In
Witness Whereof, the Subscribing Reinsurer by its duly
authorized representative has executed this Agreement as of the date
undermentioned at:

Hamilton, Bermuda, this 13th day of January in the year 2006.

	
   

  	
  /s/ Illegible

  
	
   

  	
  Aspen Insurance UK Limited

  

 

Interests
and Liabilities Agreement

of

Catlin Insurance
Company Ltd.

Hamilton, Bermuda

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to
the

Excess
Catastrophe

Reinsurance
Contract

Effective:
January 1, 2006

issued to and duly
executed by

Safety Insurance Company

and

Safety Indemnity
Insurance Company

both of Boston,
Massachusetts

The Subscribing Reinsurer hereby
accepts the following percentage shares in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above:

1.500%   of the
Third Excess Catastrophe Reinsurance

1.500%   of the
Fourth Excess Catastrophe Reinsurance

This Agreement shall
become effective at 12:01 a.m., Eastern Standard Time, January 1, 2006, and
shall continue in force until 12:01 a.m., Eastern Standard Time, January 1,
2007, unless earlier terminated in accordance with the provisions of the
attached Contract.

The Subscribing Reinsurer’s share in the
attached Contract shall be separate and apart from the shares of the other
reinsurers, and shall not be joint with the shares of the other reinsurers, it
being understood that the Subscribing
Reinsurer shall in no event participate in the interests and
liabilities of the other reinsurers.

In
Witness Whereof, the Subscribing
Reinsurer by its duly authorized representative has executed this
Agreement as of the date undermentioned at:

Hamilton, Bermuda, this
12th day of January in the year 2006

	
  

  	
  /s/ Illegible

  
	
   

  	
  Catlin Insurance Company Ltd.

  

 

Catlin
Inusrance

Company
Ltd.

All amendments,
[Illegible] and claims to be agreed.

Interests
and Liabilities Agreement

of

Federal Insurance
Company

Indianapolis,
Indiana

through

Harbor Point
Services Inc.

Bernardsville, New
Jersey

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to
the

Excess
Catastrophe

Reinsurance
Contract

Effective:
January 1, 2006

issued to and duly
executed by

Safety Insurance
Company

and

Safety Indemnity
Insurance Company

both of Boston,
Massachusetts

The Subscribing Reinsurer hereby  accepts the following percentage shares
in the interests and liabilities of the “Reinsurer” as set forth in the
attached Contract captioned above:

5.000%   of the Third Excess Catastrophe Reinsurance

5.000%   of the Fourth Excess
Catastrophe Reinsurance

This Agreement shall
become effective at 12:01 a.m., Eastern Standard Time, January 1, 2006, and
shall continue in force until 12:01 a.m., Eastern Standard Time, January 1,
2007, unless earlier terminated in accordance with the provisions of the
attached Contract.

The Subscribing Reinsurer’s share in the
attached Contract shall be separate and apart from the shares of the other
reinsurers, and shall not be joint with the shares of the other reinsurers, it
being understood that the Subscribing
Reinsurer shall in no event participate in the interests and
liabilities of the other reinsurers.

In
Witness Whereof, the Subscribing
Reinsurer by its duly authorized representative has executed this
Agreement as of the date undermentioned at:

Bernardsville, New
Jersey, this 13th day of January in the year 2006.

	
  

  	
  /s/ Julia D. Hassan

  
	
   

  	
  Harbor Point Services Inc. (for and on behalf of
  Federal Insurance

  Company) Julia D. Hassan

  

Reference Nos.: T806
& T807

Interests
and Liabilities Agreement

of

Da Vinci Reinsurance Ltd.

Hamilton, Bermuda

(hereinafter
referred to as the “Subscribing Reinsurer”)

with respect to
the

Excess
Catastrophe

Reinsurance
Contract

Effective:
January 1, 2006

issued to and duly
executed by

Safety Insurance
Company

and

Safety Indemnity
Insurance Company

both of Boston,
Massachusetts

The Subscribing Reinsurer hereby accepts the
following percentage shares in the interests and liabilities of the “Reinsurer”
as set forth in the attached Contract captioned above:

2.400%   of the Third Excess Catastrophe Reinsurance

2.000%   of the Fourth Excess
Catastrophe Reinsurance

This Agreement shall
become effective at 12:01 a.m., Eastern Standard Time, January 1, 2006, and
shall continue in force until 12:01 a.m., Eastern Standard Time, January 1,
2007, unless earlier terminated in accordance with the provisions of the
attached Contract.

The Subscribing Reinsurer’s share in the
attached Contract shall be separate and apart from the shares of the other
reinsurers, and shall not be joint with the shares of the other reinsurers, it
being understood that the Subscribing
Reinsurer shall in no event participate in the interests and
liabilities of the other reinsurers.

In
Witness Whereof, the Subscribing
Reinsurer by its duly authorized representative has executed this
Agreement as of the date undermentioned at:

Hamilton, Bermuda, this
12th day of January in the year 2006

	
  

  	
  /s/ Illegible

  
	
   

  	
  Da Vinci Reinsurance Ltd.

  

 

DAVINCI
REINSURANCE LTD.

UNDERWRITTEN
BY RENAISSANCE U/W MGRS.

Interests
and Liabilities Agreement

of

Endurance Specialty
Insurance Ltd.

Hamilton, Bermuda

(hereinafter
referred to as the “Subscribing Reinsurer”)

with respect to the

Excess Catastrophe

Reinsurance Contract

Effective:
January 1, 2006

issued to and duly
executed by

Safety Insurance Company

and

Safety Indemnity
Insurance Company 

both of Boston,
Massachusetts

The Subscribing
Reinsurer hereby accepts the following percentage shares in the
interests and liabilities of the “Reinsurer” as set forth in the attached
Contract captioned above:

3.500%   of the Third Excess Catastrophe Reinsurance

3.500%   of the Fourth Excess
Catastrophe Reinsurance

This Agreement shall
become effective at 12:01 a.m., Eastern Standard Time, January 1, 2006, and
shall continue in force until 12:01 a.m., Eastern Standard Time, January 1,
2007, unless earlier terminated in accordance with the provisions of the
attached Contract.

The Subscribing
Reinsurer’s share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the
interests and liabilities of the other reinsurers.

In Witness Whereof,
the Subscribing Reinsurer by its duly
authorized representative has executed this Agreement as of the date
undermentioned at:

Hamilton, Bermuda, this
12th day of January in the year 2006.

	
   

  	
  /s/ Illegible

  
	
   

  	
  Endurance
  Specialty Insurance Ltd.

  

 

Interests
and Liabilities Agreement

of

Folksamerica Reinsurance
Company

New York, New York

(hereinafter
referred to as the “Subscribing Reinsurer”)

with respect to
the

Excess Catastrophe

Reinsurance Contract

Effective:
January 1, 2006

issued to and duly
executed by

Safety Insurance Company

and

Safety Indemnity
Insurance Company

both of Boston,
Massachusetts

The Subscribing
Reinsurer hereby accepts the following percentage shares in the
interests and liabilities of the “Reinsurer” as set forth in the attached
Contract captioned above:

3.000%   of the Third Excess Catastrophe Reinsurance

2.000%   of the Fourth Excess
Catastrophe Reinsurance

This Agreement shall
become effective at 12:01 a.m., Eastern Standard Time, January 1, 2006, and
shall continue in force until 12:01 a.m., Eastern Standard Time, January 1,
2007, unless earlier terminated in accordance with the provisions of the
attached Contract.

The Subscribing
Reinsurer’s share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the
interests and liabilities of the other reinsurers.

In Witness Whereof,
the Subscribing Reinsurer by its duly
authorized representative has executed this Agreement as of the date
undermentioned at:

New York, New York, this
31 day of January in the year 2006.

	
   

  	
  /s/ Robert Kuehn

  
	
   

  	
  Vice President

  
	
   

  	
  Folksamerica
  Reinsurance Company

  

 

Interests
and Liabilities Agreement

of

Hannover Re (Bermuda),
Ltd.

Hamilton, Bermuda

(hereinafter
referred to as the “Subscribing Reinsurer”)

with respect to
the

Excess Catastrophe

Reinsurance Contract

Effective:
January 1, 2006

issued to and duly
executed by

Safety Insurance Company

and

Safety Indemnity
Insurance Company

both of Boston,
Massachusetts

The Subscribing
Reinsurer hereby accepts the following percentage shares in the
interests and liabilities of the “Reinsurer” as set forth in the attached
Contract captioned above:

6.500%   of the Third Excess Catastrophe Reinsurance
UX 305 3203 06

7.000%   of the Fourth Excess
Catastrophe Reinsurance UX 305 7204 06

This Agreement shall
become effective at 12:01 a.m., Eastern Standard Time, January 1, 2006, and
shall continue in force until 12:01 a.m., Eastern Standard Time, January 1,
2007, unless earlier terminated in accordance with the provisions of the
attached Contract.

The Subscribing
Reinsurer’s share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers it being understood that the Subscribing Reinsurer shall in no event participate in the
interests and liabilities of the other reinsurers.

In any action, suit or
proceeding to enforce the Subscribing Reinsurer’s obligations under the
attached Contract, service of process may be made upon Mendes & Mount, 750
Seventh Avenue, New York, New York 10019.

In Witness Whereof,
the Subscribing Reinsurer by its duly
authorized representative has executed this Agreement as of the date
undermentioned at:

Hamilton, Bermuda, this
12th day of January in the year
               .

	
   

  	
  /s/ Illegible

  
	
   

  	
  Hannover Re
  (Bermuda), Ltd.

  

 

Hannover re

Hannover Re
(Bermuda), Ltd.

Hannover re®

Hannover Re
(Bermuda), Ltd.

Interests
and Liabilities Agreement

of

Montpelier Reinsurance
Limited

Hamilton, Bermuda

(hereinafter
referred to as the “Subscribing Reinsurer”)

with respect to
the

Excess Catastrophe

Reinsurance Contract

Effective:
January 1, 2006

issued to and duly
executed by

Safety Insurance Company

and

Safety Indemnity
Insurance Company

both of Boston,
Massachusetts

The Subscribing
Reinsurer hereby accepts the following percentage shares in the
interests and liabilities of the “Reinsurer” as set forth in the attached
Contract captioned above:

5.000%   of the Third Excess Catastrophe Reinsurance 

5.000%   of the Fourth Excess
Catastrophe Reinsurance

This Agreement shall
become effective at 12:01 a.m., Eastern Standard Time, January 1, 2006, and
shall continue in force until 12:01 a.m., Eastern Standard Time, January 1,
2007, unless earlier terminated in accordance with the provisions of the
attached Contract.

The Subscribing
Reinsurer’s share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the
interests and liabilities of the other reinsurers.

In Witness Whereof,
the Subscribing Reinsurer by its duly
authorized representative has executed this Agreement as of the date
undermentioned at:

Hamilton, Bermuda, this
13th day of January in the year 2006.

	
   

  	
  MONTPELIER

  
	
   

  	
  Montpelier
  Reinsurance Limited

  

 

Interests
and Liabilities Agreement 

of

Odyssey America
Reinsurance Corporation

Stamford, Connecticut

(hereinafter
referred to as the “Subscribing Reinsurer”)

with respect to
the

Excess Catastrophe

Reinsurance Contract

Effective:
January 1, 2006

issued to and duly
executed by

Safety Insurance Company

and

Safety Indemnity
Insurance Company 

both of Boston,
Massachusetts

The Subscribing
Reinsurer hereby accepts the following percentage shares in the
interests and liabilities of the “Reinsurer” as set forth in the attached
Contract captioned above:

3.000%   of the Third Excess Catastrophe Reinsurance

3.000%   of the Fourth Excess
Catastrophe Reinsurance

This Agreement shall
become effective at 12:01 a.m., Eastern Standard Time, January 1, 2006, and
shall continue in force until 12:01 a.m., Eastern Standard Time, January 1,
2007, unless earlier terminated in accordance with the provisions of the
attached Contract.

The Subscribing
Reinsurer’s share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the
interests and liabilities of the other reinsurers.

In Witness Whereof,
the Subscribing Reinsurer by its duly
authorized representative has executed this Agreement as of the date
undermentioned at:

Stamford, Connecticut,
this 24th day of  January in the year
2006.

	
   

  	
  /s/ Illegible

  
	
   

  	
  Odyssey America
  Reinsurance Corporation

  

 

Interests and Liabilities
Agreement

of

Partner Reinsurance Company

Pembroke Parish, Bermuda 

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Excess Catastrophe

Reinsurance Contract

Effective: January 1, 2006

issued to and duly executed by

Safety Insurance Company

and

Safety Indemnity Insurance Company

both of Boston, Massachusetts

The Subscribing Reinsurer hereby  accepts the following percentage shares
in the interests and liabilities of the “Reinsurer” as set forth in the attached
Contract captioned above:

4.500%           of the Third Excess Catastrophe
Reinsurance

4.500%           of
the Fourth Excess Catastrophe Reinsurance

This Agreement shall become effective at 12:01 a.m., Eastern Standard
Time, January 1, 2006 and shall continue in force until 12:01 a.m., Eastern
Standard Time, January 1, 2007, unless earlier terminated in accordance with
the provisions of the attached Contract.

The Subscribing Reinsurer’s share
in the attached Contract shall be separate and apart from the shares of the
other reinsurers, and shall not be joint with the shares of the other
reinsurers, it being understood that the Subscribing
Reinsurer shall  in no
event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by  its duly authorized representative has
executed this Agreement as of the date undermentioned at:

Pembroke Parish, Bermuda, this 16th day of January in the year 2006.

	
  

  	
  /s/ Illegible

  
	
   

  	
  Partner Reinsurance Company

  

 

Interests
and Liabilities Agreement

of

Platinum Underwriters
Reinsurance, Inc.

Baltimore, Maryland 

(hereinafter referred to as the “Subscribing
Reinsurer”)

with respect to the

Excess
Catastrophe 

Reinsurance Contract 

Effective: January 1, 2006

issued to and duly
executed by

Safety Insurance Company

and

Safety Indemnity Insurance Company 

both of Boston, Massachusetts

The Subscribing Reinsurer hereby  accepts the following percentage shares
in the interests and liabilities of the “Reinsurer” as set forth in the attached
Contract captioned above:

4.500%           of
the Third Excess Catastrophe Reinsurance

3.500%           of the Fourth Excess
Catastrophe Reinsurance

This Agreement shall become effective at 12:01 a.m., Eastern Standard
Time, January 1, 2006, and shall continue in force until 12:01 a.m., Eastern
Standard Time, January 1, 2007, unless earlier terminated in accordance with
the provisions of the attached Contract.

The Subscribing Reinsurer’s share
in the attached Contract shall be separate and apart from the shares of the other
reinsurers, and shall not be joint with the shares of the other reinsurers, it
being understood that the Subscribing
Reinsurer shall in no event participate in the interests and
liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by  its duly authorized representative has
executed this Agreement as of the date undermentioned at:

New York, New York, this 11 day of January in the year 2006.

	
  

  	
  /s/ Illegible

  
	
   

  	
  Platinum Underwriters Reinsurance, Inc.

  

 

Interests
and Liabilities Agreement

of

Renaissance Reinsurance,
Ltd.

Hamilton, Bermuda 

(hereinafter referred to as the “Subscribing
Reinsurer”)

with respect to the

Excess
Catastrophe 

Reinsurance Contract 

Effective: January 1, 2006

issued to and duly executed
by

Safety Insurance Company

and

Safety Indemnity Insurance Company 

both of Boston, Massachusetts

The Subscribing Reinsurer hereby
accepts the following percentage shares in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above:

3.600%           of
the Third Excess Catastrophe Reinsurance 

3.000%           of the Fourth Excess
Catastrophe Reinsurance

This Agreement shall become effective at 12:01 a.m., Eastern Standard
Time, January 1, 2006, and shall continue in force until 12:01 a.m., Eastern
Standard Time, January 1, 2007, unless earlier terminated in accordance with
the provisions of the attached Contract.

The Subscribing Reinsurer’s share
in the attached Contract shall be separate and apart from the shares of the
other reinsurers, and shall not be joint with the shares of the other
reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and
liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly
authorized representative has executed this Agreement as of the date
undermentioned at:

Hamilton, Bermuda, this 12th day of January in the year 2006.

	
  

  	
  /s/ Illegible

  
	
   

  	
  Renaissance Reinsurance, Ltd.

  

 

Interests
and Liabilities Agreement

of

Swiss Reinsurance America
Corporation 

Armonk, New York

through

Swiss Re Underwriters Agency, Inc.

Calabasas, California

(hereinafter referred to as the “Subscribing
Reinsurer”)

with respect to the

Excess
Catastrophe

Reinsurance Contract

Effective: January 1, 2006

issued to and duly
executed by

Safety Insurance Company

and

Safety Indemnity Insurance Company

both of Boston, Massachusetts

The Subscribing Reinsurer hereby
accepts the following percentage shares in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above:

	
  0%

  	
   

  	
  of the Third Excess Catastrophe Reinsurance

  
	
  5.500%

  	
   

  	
  of the Fourth Excess Catastrophe Reinsurance

  

 

This Agreement shall become effective at 12:01 a.m., Eastern Standard
Time, January 1, 2006, and shall continue in force until 12:01 a.m., Eastern
Standard Time, January 1, 2007, unless earlier terminated in accordance with
the provisions of the attached Contract.

The Subscribing Reinsurer’s share
in the attached Contract shall be separate and apart from the shares of the
other reinsurers, and shall not be joint with the shares of the other
reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and
liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly
authorized representative has executed this Agreement as of the date
undermentioned at:

Calabasas, California, this 26th day of January in the year 2006.

	
  

  	
  /s/ Illegible

  
	
   

  	
  Swiss Re Underwriters Agency, Inc. 

  (for Swiss Reinsurance America Corporation)

  

 

Interests
and Liabilities Agreement

of

XL Re Ltd

Hamilton, Bermuda

(hereinafter referred to as the “Subscribing
Reinsurer”)

with respect to the

Excess
Catastrophe 

Reinsurance Contract 

Effective: January 1, 2006

issued to and duly
executed by

Safety Insurance Company

and

Safety Indemnity Insurance Company 

both of Boston. Massachusetts

The Subscribing Reinsurer hereby
accepts the following percentage shares in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above:

6.000%           of
the Third Excess Catastrophe Reinsurance

6.000%           of
the Fourth Excess Catastrophe Reinsurance

This Agreement shall become effective at 12:01 a.m., Eastern Standard
Time, January 1, 2006, and shall continue in force until 12:01 a.m., Eastern
Standard Time, January 1, 2007, unless earlier terminated in accordance with
the provisions of the attached Contract.

The Subscribing Reinsurer’s share
in the attached Contract shall be separate and apart from the shares of the
other reinsurers, and shall not be joint with the shares of the other
reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and
liabilities of the other reinsurers.

In  Witness
Whereof, the Subscribing
Reinsurer by its duly authorized representative has executed this
Agreement as of the date undermentioned at:

Hamilton, Bermuda, this 8th day of February in the year 2006.

	
  

  	
  /s/ Illegible

  
	
   

  	
  XL Re Ltd.

  

 

Interests
and Liabilities Agreement

of

Amlin Bermuda Limited

Hamilton, Bermuda 

(hereinafter referred to as the “Subscribing
Reinsurer”)

with respect to the

Excess
Catastrophe 

Reinsurance Contract 

Effective: January 1, 2006

issued to and duly
executed by

Safety Insurance Company

and

Safety Indemnity Insurance Company 

both of Boston, Massachusetts

The Subscribing Reinsurer hereby
accepts the following percentage shares in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above:

3.348%           of the Third Excess Catastrophe
Reinsurance

3.015%           of
the Fourth Excess Catastrophe Reinsurance

This Agreement shall become effective at 12:01 a.m., Eastern Standard
Time, January 1, 2006, and shall continue in force until 12:01 a.m., Eastern
Standard Time, January 1, 2007, unless earlier terminated in accordance with
the provisions of the attached Contract.

The Subscribing Reinsurer’s share
in the attached Contract shall be separate and apart from the shares of the
other reinsurers, and shall not be joint with the shares of the other
reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and
liabilities of the other reinsurers.

In Witness Whereof, the Subscribing
Reinsurer by its  duly
authorized representative has executed this Agreement as of the date
undermentioned at:

Hamilton, Bermuda, this 1st day of February in the year 2006

	
  

  	
  /s/ Illegible

  
	
   

  	
  Amlin Bermuda Limited

  

 

Interests
and Liabilities Agreement

of

Certain Underwriting
Members of Lloyd’s

shown in the Signing Schedules attached hereto

(hereinafter referred to as the “Subscribing
Reinsurer”)

with respect to the

Excess
Catastrophe 

Reinsurance Contract 

Effective: January 1, 2006

issued to and duly
executed by

Safety Insurance Company

and

Safety Indemnity Insurance Company 

both of Boston, Massachusetts

The Subscribing Reinsurer hereby
accepts the following percentage shares in the Interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above:

26.952%         of
the Third Excess Catastrophe Reinsurance

24.885%         of
the Fourth Excess Catastrophe Reinsurance

The Agreement shall become effective at 12:01 a.m., Eastern Standard
Time, January 1, 2006, and shall continue in force until 12:01 a.m., Eastern
Standard Time, January 1, 2007, unless earlier terminated in accordance with
the provisions of the attached Contract.

The Subscribing Reinsurer’s share
in the attached Contract shall be separate and apart from the shares of the
other reinsurers, and shall not be joint with the shares of the other
reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and
liabilities of the other reinsurers.

In any action, suit or proceeding to enforce the Subscribing Reinsurer’s obligations under
the attached Contract, service of process may be made upon Mendes & Mount,
750 Seventh Avenue, New York, New York 10019.

Signed for and on behalf of the Subscribing
Reinsurer in the Signing Schedules attached hereto.

Signing Schedule

attaching to and forming part of the

Interests and Liabilities
Agreement

of

Certain Underwriting Members of Lloyd’s

with respect to the

Excess Catastrophe

Reinsurance Contract

Effective: January 1, 2006

issued to and duly executed by

Safety Insurance Company

as defined in the above captioned Contract

Contract Number: B 1108 2006 S3P1123

3rd Excess Limits: USD 30,000,000 excess of USD
30,000,000

Signing Schedule

attaching to and forming part of the

Interests and Liabilities
Agreement

of

Certain Underwriting Members of Lloyd’s

with respect to the

Excess Catastrophe

Reinsurance Contract

Effective: January 1,
2006

issued to and duly executed by

Safety Insurance Company

as defined in the above captioned Contract

Contract Number: B 1108 2006 S3P1123

4th Excess Limits: USD 190,000,000 excess of USD
60,000,000

Excess Catastrophe

Reinsurance Contract

Effective: January 1, 2006

Issued to

Safety Insurance Company

and

Safety Indemnity Insurance Company

both of Boston, Massachusetts

Table of Contents

	
  Article

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  Classes of Business Reinsured

  	
   

  	
  1

  
	
  II

  	
   

  	
  Commencement and Termination

  	
   

  	
  1

  
	
  III

  	
   

  	
  Territory (BRMA 51A)

  	
   

  	
  2

  
	
  IV

  	
   

  	
  Exclusions

  	
   

  	
  2

  
	
  V

  	
   

  	
  Retention and Limit

  	
   

  	
  4

  
	
  VI

  	
   

  	
  Reinstatement

  	
   

  	
  4

  
	
  VII

  	
   

  	
  Definitions

  	
   

  	
  5

  
	
  VIII

  	
   

  	
  Other Reinsurance

  	
   

  	
  6

  
	
  IX

  	
   

  	
  Loss Occurrence

  	
   

  	
  6

  
	
  X

  	
   

  	
  Loss Notices and Settlements

  	
   

  	
  8

  
	
  XI

  	
   

  	
  Salvage and Subrogation

  	
   

  	
  9

  
	
  XII

  	
   

  	
  Reinsurance Premium

  	
   

  	
  9

  
	
  XIII

  	
   

  	
  Late Payments

  	
   

  	
  10

  
	
  XIV

  	
   

  	
  Offset (BRMA 36C)

  	
   

  	
  11

  
	
  XV

  	
   

  	
  Access to Records (BRMA 1D)

  	
   

  	
  11

  
	
  XVI

  	
   

  	
  Net Retained Lines (BRMA 32E)

  	
   

  	
  11

  
	
  XVII

  	
   

  	
  Liability of the Reinsurer

  	
   

  	
  11

  
	
  XVIII

  	
   

  	
  Errors and Omissions (BRMA 14F)

  	
   

  	
  12

  
	
  XIX

  	
   

  	
  Currency (BRMA 12A)

  	
   

  	
  12

  
	
  XX

  	
   

  	
  Taxes (BRMA 50B)

  	
   

  	
  12

  
	
  XXI

  	
   

  	
  Federal Excise Tax

  	
   

  	
  12

  
	
  XXII

  	
   

  	
  Unauthorized Reinsurers

  	
   

  	
  12

  
	
  XXIII

  	
   

  	
  Insolvency

  	
   

  	
  14

  
	
  XXIV

  	
   

  	
  Arbitration

  	
   

  	
  14

  
	
  XXV

  	
   

  	
  Service of Suit (BRMA 49C)

  	
   

  	
  15

  
	
  XXVI

  	
   

  	
  Governing Law

  	
   

  	
  16

  
	
  XXVII

  	
   

  	
  Agency Agreement

  	
   

  	
  16

  
	
  XXVIII

  	
   

  	
  Severability (BRMA 72E)

  	
   

  	
  16

  
	
  XXIX

  	
   

  	
  Intermediary (BRMA 23A)

  	
   

  	
  16

  
	
   

  	
   

  	
  Schedule A

  	
   

  	
   

  

 

Excess
Catastrophe

Reinsurance Contract

Effective: January 1, 2006

issued to

Safety Insurance Company

and

Safety Indemnity Insurance Company

both of Boston, Massachusetts

(hereinafter referred to collectively as the
“Company”)

by

The Subscribing
Reinsurer(s) Executing the

Interests and Liabilities Agreement(s)

Attached Hereto

(hereinafter referred to as the “Reinsurer”)

Article I - Classes of Business Reinsured

By this Contract the Reinsurer agrees to reinsure the excess liability
which may accrue to the Company under its policies, contracts and binders of
insurance or reinsurance (hereinafter called “policies”) in force on the
effective date hereof or issued or renewed on or after that date, and
classified by the Company as Fire, Allied Lines, Homeowners Multiple Peril
(Section I only), Commercial Multiple Peril (Section I only), Inland Marine and
Automobile Physical Damage (not to include Collision coverage) business,
subject to the terms, conditions and limitations set forth herein and in
Schedule A attached to and forming part of this Contract.

Article II - Commencement and Termination

A.       This Contract
shall become effective at 12.01 a.m., Eastern Standard Time, January 1, 2006,
with respect to losses arising out of loss occurrences commencing at or after that
time and date, and shall remain in force until 12:01 a.m., Eastern Standard
Time, January 1, 2007.

B.        Notwithstanding
the provisions of paragraph A above, the Company may terminate a Subscribing
Reinsurer’s percentage share in this Contract at any time by giving written
notice to the Subscribing Reinsurer in the event any of the following
circumstances occur:

1.        The
Subscribing Reinsurer’s policyholders’ surplus at the inception of this
Contract has been reduced by more than 20.0% of the amount of surplus 12 months
prior to that date; or

 1
 

2.        The
Subscribing Reinsurer’s policyholders’ surplus at any time during the term of
this Contract has been reduced by more than 20.0% of the amount of surplus at
the date of the Subscribing Reinsurer’s most recent financial statement filed
with regulatory authorities and available to the public as of the inception of
this Contract; or

3.        The
Subscribing Reinsurer’s A.M. Best’s rating has been assigned or downgraded
below A- and/or Standard & Poor’s rating has been assigned or downgraded
below BBB+; or

4.        The
Subscribing Reinsurer has become merged with, acquired by or controlled by any
other company, corporation or individual(s) not controlling the Subscribing
Reinsurer’s operations previously; or

5.        A
State Insurance Department or other legal authority has ordered the Subscribing
Reinsurer to cease writing business; or

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

7.        The
Subscribing Reinsurer has reinsured its entire liability under this Contract
without the Company’s prior written consent; or

8.        The
Subscribing Reinsurer has ceased assuming new and renewal property treaty
reinsurance business.

C.        If this
Contract is terminated or expires while a loss occurrence covered hereunder is
in progress, the Reinsurer’s liability hereunder shall, subject to the other
terms and conditions of this Contract, be determined as if the entire loss
occurrence had occurred prior to the termination or expiration of this
Contract, provided that no part of such loss occurrence is claimed against any
renewal or replacement of this Contract.

Article III - Territory (BRMA 51A)

The territorial limits of this Contract shall be identical with those
of the Company’s policies.

Article IV - Exclusions

This Contract does not apply to and specifically excludes the following

1.        Loss
or damage occasioned by war, invasion, hostilities, acts of foreign enemies,
civil war, rebellion, insurrection, military or usurped power, martial law or
confiscation by order of any government or public authority, but not excluding
loss or damage which would be covered under a standard form of policy
containing a standard war exclusion clause.

 2
 

2.        Nuclear
risks as defined in the “Nuclear Incident Exclusion Clause - Physical Damage -
Reinsurance” attached to and forming part of this Contract.

3.        Liability
as a member, subscriber or reinsurer of any Pool, Syndicate or Association; and
any combination of insurers or reinsurers formed for the purpose of  covering specific perils, specific
classes of business or for the purpose of insuring risks located in specific
geographical areas; but this exclusion shall not apply to FAIR Plans or to SIR
Pool, Franklin Pool, Coastal Pools, Beach Plans or similar plans, however
styled. It is understood and agreed, however, that this reinsurance does not
include any increase in liability to the Company resulting from (a) the
inability of any other participant in a FAIR Plan, SIR Pool, Franklin Pool,
Coastal Pool, Beach Plan or similar plan to meet its liability, or (b) any
claim against such a FAIR Plan, SIR Pool, Franklin Pool, Coastal Pool, Beach
Plan or similar plan, or any participant therein, including the Company,
whether by way of subrogation or otherwise, brought by or on behalf of any
insolvency fund.

4.        Financial
guarantee and insolvency.

5.        Third
party liability.

6.        All
classes of business not specifically listed in the Classes of Business
Reinsured Article.

7.        Reinsurance
assumed, except pro rata local agency reinsurance on specific risks.

8.        Ex-gratia
payments.

9.        Risks
excluded under the provisions of the “Total Insured Value Clause” attached to
and forming part of this Contract.

10.      All
liability of the Company arising by contract, operation of law, or otherwise,
from its participation or membership, whether voluntary or involuntary, in any
insolvency fund. “Insolvency fund” includes any guaranty fund, insolvency fund,
plan, pool, association, fund or other arrangement, however denominated,
established or governed, which provides for any assessment of or payment or
assumption by the Company of  part
or all of any claim, debt, charge, fee or other obligation of an insurer, or
its successors or assigns, which has been declared by any competent authority
to be insolvent, or which is otherwise deemed unable to meet any claim, debt,
charge, fee or other obligation in whole or in part.

11.      Loss
or liability excluded under the “Terrorism Exclusion Clause” attached to and
forming part of this Contract.

12.      Loss
and/or damage and/or costs and/or expenses arising from Seepage and/or
Pollution and/or Contamination, other than contamination from Smoke Damage.
Nevertheless, this exclusion does not preclude any payment of the cost of the
removal of debris of property damaged by a loss otherwise covered hereunder,
but subject always to a limit of 25.0% of the Company’s property loss under the
original policy.

 3
 

Article V - Retention and Limit

A.       As respects
each excess layer of reinsurance coverage provided by this Contract, the
Company shall retain and be liable for the first amount of ultimate net loss,
shown as “Company’s Retention” for that excess layer in Schedule A attached
hereto, arising out of each loss occurrence. The Reinsurer shall then be liable,
as respects each excess layer, for the percentage, shown as “Reinsurer’s
Percentage” for that excess layer, of the amount by which such ultimate net
loss exceeds the Company’s applicable retention, but the liability of the
Reinsurer under each excess layer shall not exceed the percentage, shown as “Reinsurer’s
Percentage” for that excess layer, of the amount, shown as “Reinsurer’s Per
Occurrence Limit” for that excess layer in Schedule A attached hereto, as
respects any one loss occurrence.

B.        No claim
shall be made under any excess layer of coverage provided by this Contract in
any one loss occurrence unless at least two risks insured or reinsured by the
Company are involved in such loss occurrence. For purposes hereof, the Company
shall be the sole judge of what constitutes “one risk.”

C.        As respects
each excess layer of reinsurance coverage provided by this Contract, the
Company shall retain, net and unreinsured elsewhere, in addition to its initial
retention each loss occurrence, the percentage shown as “Company’s
Coreinsurance” for that excess layer in Schedule A attached hereto, as respects
any one loss occurrence.

Article VI - Reinstatement

A.       In the event
all or any portion of the reinsurance under any excess layer of reinsurance
coverage provided by this Contract is exhausted by loss, the amount so
exhausted shall be reinstated immediately from the time the loss occurrence
commences hereon. For each amount so reinstated the Company agrees to pay
additional premium equal to the product of the following:

1.        The
percentage of the occurrence limit for the excess layer reinstated (based on
the loss paid by the Reinsurer under that excess layer); times

2.        The
earned reinsurance premium for the excess layer reinstated for the term of this
Contract (exclusive of reinstatement premium).

B.        Whenever the
Company requests payment by the Reinsurer of any loss under any excess layer
hereunder, the Company shall submit a statement to the Reinsurer of
reinstatement premium due the Reinsurer for that excess layer. If the earned
reinsurance premium for any excess layer for the term of this Contract has not
been finally determined as of the date of any such statement, the calculation
of reinstatement premium due for that excess layer shall be based on the annual
deposit premium for that excess layer and shall be readjusted when the earned
reinsurance premium for that excess layer for the term of this Contract has
been finally determined. Any reinstatement premium shown to be due the
Reinsurer for any excess layer as reflected by any such statement (less prior
payments, if any, for that excess layer) shall be payable by the Company
concurrently with payment by the Reinsurer of the requested loss for that
excess layer. Any return reinstatement premium shown to be due the Company
shall be remitted by the Reinsurer as promptly as possible after receipt and
verification of the Company’s statement.

 4
 

C.        Notwithstanding
anything stated herein, the liability of the Reinsurer under any excess layer
of reinsurance coverage provided by this Contract shall not exceed either of
the following:

1.        The
percentage, shown as “Reinsurer’s Percentage for that excess layer, of the
amount, shown as “Reinsurer’s Per Occurrence Limit” for that excess layer in
Schedule A attached hereto, as respects loss or losses arising out of any one
loss occurrence; or

2.        The
percentage, shown as “Reinsurer’s Percentage” for that excess layer, of the
amount, shown as “Reinsurer’s Annual Limit” for that excess layer in Schedule A
attached hereto, in all during the term of this Contract.

Article VII - Definitions

A.       “Ultimate net
loss” as used herein is defined as the sum or sums (including loss in excess of
policy limits, extra contractual obligations and loss adjustment expense, as
hereinafter defined) paid or payable by the Company in settlement of claims and
in satisfaction of judgments rendered on account of such claims, after
deduction of all salvage, all recoveries and all claims on inuring insurance or
reinsurance, whether collectible or not. Nothing herein shall be construed to
mean that losses under this Contract are not recoverable until the Company’s
ultimate net loss has been ascertained.

B.        “Loss in
excess of policy limits” and “extra contractual obligations” as used herein
shall be defined as follows:

1.        “Loss
in excess of policy limits” shall mean 80.0% of any amount paid or payable by
the Company in excess of its policy limits, but otherwise within the terms of
its policy, such loss in excess of the Company’s policy limits having been
incurred because of, but not limited to, failure by the Company to settle
within the policy limits or by reason of the Company’s alleged or actual
negligence, fraud or bad faith in rejecting an offer of settlement or in the
preparation of the defense or in the trial of an action against its insured or
reinsured or in the preparation or prosecution of an appeal consequent upon
such an action.

2.        “Extra
contractual obligations” shall mean 80.0% of any punitive, exemplary,
compensatory or consequential damages paid or payable by the Company, not
covered by any other provision of this Contract and which arise from the
handling of any claim on business subject to this Contract, such liabilities
arising because of, but not limited to, failure by the Company to settle within
the policy limits or by reason of the Company’s alleged or actual negligence,
fraud or bad faith in rejecting an offer of settlement or in the preparation of
the defense or in the trial of an action against its insured or reinsured or in
the preparation or prosecution of an appeal consequent upon such an action. An
extra contractual obligation shall be deemed, in all circumstances, to have
occurred on the same date as the loss covered or alleged to be covered under
the policy.

The amount included in ultimate net loss for any one
loss occurrence as respects loss in excess of policy limits and extra
contractual obligations shall not exceed 25.0% of the Company’s indemnity loss
hereunder arising out of that loss occurrence.

 5
 

Notwithstanding anything stated herein, this Contract
shall not apply to any loss in excess of policy limits or any extra contractual
obligation incurred by the Company as a result of any fraudulent and/or
criminal act by any officer or director 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.

Savings Clause (Applicable only if the Subscribing
Reinsurer is domiciled in  the State
of New York): In no event shall coverage be provided to the extent that such
coverage is not permitted under New York law.

C.        “Loss
adjustment expense” as used herein shall mean expenses assignable to the
investigation, appraisal, adjustment, settlement, litigation, defense and/or
appeal of specific claims, regardless of how such expenses are classified for
statutory purposes. Loss adjustment expense shall include, but not be limited
to, interest on judgments, expenses of outside adjusters, and declaratory
judgment expenses or other legal expenses and costs incurred in connection with
coverage questions and legal actions connected thereto, but shall not include
office expenses or salaries of the Company’s regular employees not classified
as loss adjusters.

Article VIII - Other
Reinsurance

A.       The Company
shall maintain in force property per risk excess of loss reinsurance,
recoveries under which shall inure to the benefit of this Contract.

B.        The Company
shall be permitted to carry underlying property catastrophe excess of loss
reinsurance, recoveries under which shall inure solely to the benefit of the
Company and be entirely disregarded in applying all of the provisions of this
Contract.

Article IX - 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.

2.        As
regards riot, riot attending a strike, civil commotion, vandalism and malicious
mischief, all individual losses sustained by the Company occurring during any
period

 6
 

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 paragraph A 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 (including, but not limited to, those caused
by bursting frozen pipes and tanks) may be included in the Company’s “loss
occurrence.”

5.        As
regards firestorms, brush fires and any other fires or series of fires, irrespective
of origin (except as provided in subparagraphs 2 and 3 above), which spread
through trees, grassland or other vegetation, all individual losses sustained
by the Company which occur during any period of 168 consecutive hours within
150-mile radius of any one fixed point selected by the Company may be included
in the Company’s “loss occurrence.” However, an individual loss subject to this
subparagraph cannot be included in more than one “loss occurrence.”

B.        Except for
those “loss occurrences,” referred to in subparagraphs 1 and 2 of paragraph A
above, 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.

C.        As respects
those “loss occurrences” referred to in subparagraphs 1 and 2 of paragraph A
above, if the disaster, accident or loss occasioned by the event is of greater
duration than 72 consecutive hours, then the Company may divide that disaster,
accident or loss into two or more “loss occurrences,” provided no two periods
overlap and no individual loss is included in more than one such period and
provided that no period commences earlier than the date and time of the
occurrence of the first recorded individual loss sustained by the Company
arising out of that disaster, accident or loss.

D.        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.

E.        Any date
change, including leap-year calculations, shall not in and of itself be
regarded as an event for purposes of this Contract.

This includes any loss, damage, cost, claim or
expense, whether preventative, remedial or otherwise, directly or indirectly
arising out of or relating to:

a.         The
calculation, comparison, differentiation, sequencing or processing of data
involving a date change, including leap-year calculations, by any computer

 7
 

system, hardware, program or software and/or any
microchip, integrated circuit or similar device in computer equipment or
non-computer equipment, whether the property of the insured or not; or

b.        Any
change, alteration or modification involving a data change, including leap-year
calculations, to any such computer system, hardware, program or software or any
microchip, integrated circuit or similar device in computer equipment or
non-computer equipment, whether the property of the insured or not.

This subparagraph shall apply regardless of any other
cause or event that contributes concurrently or in any sequence to the loss,
damage, cost, claim or expense.

However, this subparagraph shall not apply as respects
physical damage occurring at the insured’s premises arising out of the perils
covered under this Contract.

2.        Notwithstanding
subparagraph 1 above, this Contract shall not cover any costs and expenses,
whether preventative, remedial or otherwise, arising out of or relating to
change, alteration or modification of any computer system, hardware, program or
software or any microchip, integrated circuit or similar device in computer or
non-computer equipment, whether the property of the insured or not.

F.        Losses
arising, directly or indirectly, out of:

1.         Loss of,
alteration of, or damage to:

or

2.         A reduction in the
functionality availability or operation of

A computer system, hardware, program, software, data,
information repository, microchip, integrated circuit or similar device in
computer equipment or non-computer equipment, whether the property of the
policyholder of the Company or not, do not in and of themselves constitute an
event unless arising out of one or more of the following perils:

Fire, lightning, explosion, aircraft or vehicle
impact, falling objects, windstorm, hail, tornado, cyclone, hurricane,
earthquake, volcano, tsunami, flood, freeze or weight of snow.

Article X - Loss Notices
and Settlements

A.       Whenever
losses sustained by the Company appear likely to result in a claim hereunder,
the Company shall notify the Reinsurer, and the Reinsurer shall have the right
to participate in the adjustment of such losses at its own expense.

B.        All loss
settlements made by the Company, provided they are within the terms of this
Contract, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay
all amounts for which it may be liable upon receipt of reasonable evidence of
the amount paid (or scheduled to be paid, but no more than 10 days in advance
of the date of payment of claims) by the Company.

 8
 

Article XI - Salvage and Subrogation

The Reinsurer shall be credited with salvage (i.e., reimbursement
obtained or recovery made by the Company, less the actual cost, excluding
salaries of officials and employees of the Company and sums paid to attorneys
as retainer, of obtaining such reimbursement or making such recovery) on
account of claims and settlements involving reinsurance hereunder. Salvage
thereon shall always be used to reimburse the excess carriers in the reverse
order of their priority according to their participation before being used in
any way to reimburse the Company for its primary loss. The Company hereby
agrees to enforce its rights to salvage or subrogation relating to any loss, a
part of which loss was sustained by the Reinsurer, and to prosecute all claims
arising out of such rights.

Article XII - Reinsurance Premium

A.       As premium
for each excess layer of reinsurance coverage provided by this Contract, the
Company shall pay the Reinsurer the greater of the following:

1         The
amount, shown as “Minimum Premium” for that excess layer in Schedule A attached
hereto (or a pro rata portion of the Subscribing Reinsurer’s share, in the
event that such Subscribing Reinsurer’s share under any excess layer is
terminated prior to January 1, 2007); or

2         The
percentage, shown as “Premium Rate” for that excess layer in Schedule A
attached hereto, of the Company’s net earned premium for the term of this
Contract.

B.        The Company
shall pay the Reinsurer an deposit premium for each excess layer of the amount,
shown as “Deposit Premium” for that excess layer in Schedule A attached hereto,
in four equal installments of the amount, shown as “Quarterly Deposit Premium”
for that excess layer in Schedule A attached hereto, on January 1, April 1,
July 1 and October 1 of 2006. In the event that a Subscribing Reinsurer’s share
under any excess layer hereof is terminated prior to January 1, 2007, no
quarterly deposit installments for such layer(s) shall be due to such
Subscribing Reinsurer after the effective date of termination.

C.        Within 60
days after the termination or expiration of this Contract, the Company shall
provide a report to the Reinsurer setting forth the premium due hereunder for
each excess layer, computed in accordance with paragraph A, and any additional
premium due the Reinsurer or return premium due the Company for each such
excess layer shall be remitted promptly.

D.        “Net earned
premium” as used herein is defined as gross earned premium of the Company for
the classes of business reinsured hereunder, less the earned portion of
premiums ceded by the Company for reinsurance which inures to the benefit of
this Contract. For purposes of calculating net earned premium, 90.0% of
Homeowners Multiple Peril and 80.0% of Commercial Multiple Peril total basic
policy premium on indivisible premium policies shall be considered subject
premium.

 9
 

Article XIII - Late Payments

A.       The
provisions of this Article shall not be implemented unless specifically
invoked, in writing, by one of the parties to this Contract.

B.        In the event
any premium, loss or other payment due either party is not received by the
intermediary named in the Intermediary Article (BRMA 23A) (hereinafter referred
to as the “Intermediary”) by the payment due date, the party to whom payment is
due may, by notifying the Intermediary in writing, require the debtor party to
pay, and the debtor party agrees to pay, an interest penalty on the amount past
due calculated for each such payment on the last business day of each month as
follows:

1.        The
number of full days which have expired since the due date or the last monthly
calculation, whichever the lesser; times

2.        1/365ths
of the six-month United States Treasury Bill rate as quoted in The Wall Street
Journal on the first business day of the month for which the calculation is
made; times

3.        The
amount past due, including accrued interest.

It is agreed that interest shall accumulate until payment of the
original amount due plus interest penalties have been received by the
Intermediary.

C.        The
establishment of the due date shall, for purposes of this Article, be
determined as follows:

As respects the payment of routine deposits and
premiums due the Reinsurer, the due date shall be as provided for in the
applicable section of this Contract. In the event a due date is not
specifically stated for a given payment, it shall be deemed due 30 business
days after the date of transmittal by the Intermediary of the initial billing
for each such payment.

2.        Any
claim or loss payment due the Company hereunder shall be deemed due 30 business
days after the proof of loss or demand for payment is transmitted to the
Reinsurer. If such loss or claim payment is not received within the 30 business
days, interest will accrue on the payment or amount overdue in accordance with
paragraph B above, from the date the proof of loss or demand for payment was
transmitted to the Reinsurer.

3.        As
respects any payment, adjustment or return due either party not otherwise
provided for in subparagraphs 1 and 2 of this paragraph, the due date shall be
as provided for in the applicable section of this Contract. In the event a due
date is not specifically stated for a given payment, it shall be deemed due 30
business days following transmittal of written notification that the provisions
of this Article have been invoked.

For purposes of interest calculations only, amounts due hereunder shall
be deemed paid upon receipt by the Intermediary.

D.        Nothing
herein shall be construed as limiting or prohibiting a Subscribing Reinsurer
from contesting the validity of any claim, or from participating in the defense
of any claim or suit,

 10
 

or prohibiting either party from contesting the validity of any payment
or from initiating any arbitration or other proceeding in accordance with the
provisions of this Contract. If the debtor party prevails in an arbitration or
other proceeding, then any interest penalties due hereunder on the amount in
dispute shall be null and void. If the debtor party loses in such proceeding,
then the interest penalty on the amount determined to be due hereunder shall be
calculated in accordance with the provisions set forth above unless otherwise
determined by such proceedings. If a debtor party advances payment of any
amount it is contesting, and proves to be correct in its contestation, either
in whole or in part, the other party shall reimburse the debtor party for any
such excess payment made plus interest on the excess amount calculated in
accordance with this Article.

E.        Interest
penalties arising out of the application of this Article that are $100 or less
from any party shall be waived unless there is a pattern of late payments
consisting of three or more items over the course of any 12-month period.

Article XIV - Offset (BRMA 36C)

The Company and the Reinsurer shall have the right to offset any
balance or amounts due from one party to the other under the terms of this
Contract. The party asserting the right of offset may exercise such right any
time whether the balances due are on account of premiums or losses or
otherwise.

Article XV - Access to Records (BRMA 1D)

The Reinsurer or its designated representatives shall have access at
any reasonable time to all records of the Company which pertain in any way to
this reinsurance.

Article XVI - Net Retained Lines (BRMA 32E)

A.       This Contract
applies only to that portion of any policy which the Company retains net for
its own account (prior to deduction of any underlying reinsurance specifically
permitted in this Contract), and in calculating the amount of any loss
hereunder and also in computing the amount or amounts in excess of which this
Contract attaches, only loss or losses in respect of that portion of any policy
which the Company retains net for its own account shall be included.

B.        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 reinsurer(s), whether specific or general, any amounts which may have
become due from such reinsurer(s), whether such inability arises from the
insolvency of such other reinsurer(s) or otherwise.

Article XVII - Liability of the Reinsurer

A.       The liability
of the Reinsurer shall follow that of the Company in every case and be subject
in all respects to all the general and specific stipulations, clauses, waivers
and modifications of the Company’s policies and any endorsements thereon.
However, in no event shall this

 11
 

be construed in any way to provide coverage outside the terms and
conditions set forth in this Contract.

B.        Nothing
herein shall in any manner create any obligations or establish any rights
against the Reinsurer in favor of any third party or any persons not parties to
this Contract.

Article XVIII - Errors
and Omissions (BRMA 14F)

Inadvertent delays, errors or omissions made in connection with this
Contract or any transaction hereunder shall not relieve either party from any
liability which would have attached had such delay, error or omission not
occurred, provided always that such error or omission is rectified as soon as
possible after discovery.

Article XIX - Currency
(BRMA 12A)

A.       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.

B.        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 XX - Taxes (BRMA
50B)

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 or the District of Columbia.

Article XXI - Federal
Excise Tax

A.       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.

B.        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 XXII -
Unauthorized Reinsurers

A.       If the
Reinsurer is unauthorized in any state of the United States of America or the
District of Columbia, the Reinsurer agrees to fund its share of the Company’s
ceded United States

 12
 

outstanding loss and loss adjustment expense reserves (including all
case reserves plus any reasonable amount estimated to be unreported from known
loss occurrences) by:

Clean, irrevocable and unconditional letters of credit
issued and confirmed. If confirmation is required by the insurance regulatory
authorities involved, by a bank or banks meeting the NAIC Securities Valuation
Office credit standards for issuers of letters of credit and acceptable to said
insurance regulatory authorities: and/or

2.        Escrow
accounts for the benefit of the Company; and/or

3.        Cash
advances;

If, without such funding, a penalty would accrue to the Company on any
financial statement it is required to file with the insurance regulatory
authorities involved. The Reinsurer, at its sole option, may fund in other than
cash if its method and form of funding are acceptable to the insurance
regulatory authorities involved.

B.        With regard
to funding in whole or in part by letters of credit, it is agreed that each
letter of credit will be in a form acceptable to insurance regulatory
authorities involved, will be issued for a term of at least one year and will
include an “evergreen clause,” which automatically extends the term for at
least one additional year at each expiration date unless written notice of
non-renewal is given to the Company not less than 30 days prior to said
expiration date. The Company and the Reinsurer further agree, notwithstanding
anything to the contrary in this Contract, that said letters of credit may be
drawn upon by the Company or its successors in interest at any time, without
diminution because of the insolvency of the Company or the Reinsurer, but only
for one or more of the following purposes:

1.        To
reimburse itself for the Reinsurer’s share of losses and/or loss adjustment
expense paid under the terms of policies reinsured hereunder, unless paid in
cash by the Reinsurer;

2.        To
reimburse itself for the Reinsurer’s share of any other amounts claimed to be
due hereunder, unless paid in cash by the Reinsurer;

3.        To
fund a cash account in an amount equal to the Reinsurer’s share of any ceded
outstanding loss and loss adjustment expense reserves (including all case
reserves plus any reasonable amount estimated to be unreported from known loss
occurrences) funded by means of a letter of credit which is under non-renewal
notice, if said letter of credit has not been renewed or replaced by the
Reinsurer 10 days prior to its expiration date;

4.        To
refund to the Reinsurer any sum in excess of the actual amount required to fund
the Reinsurer’s share of the Company’s ceded outstanding loss and loss
adjustment expense reserves (including all case reserves plus any reasonable
amount estimated to be unreported from known loss occurrences), if so requested
by the Reinsurer.

In the event the amount drawn by the Company on any letter of credit is
in excess of the actual amount required for B(1) or B(3), or in the case of
B(2), the actual amount determined to be due, the Company shall promptly return
to the Reinsurer the excess amount so drawn.

 13
 

Article XXIII -
Insolvency

A.       In the event
of the insolvency of one or both of the reinsured companies, 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.

B.        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 company.

C.        It is
further understood and agreed that, in the event of the insolvency of one or
both of the reinsured companies, the reinsurance under this Contract shall be
payable directly by the Reinsurer to the company or to its liquidator, receiver
or statutory successor, except as provided by Section 4118(a) of the New York
Insurance Law or except (1) where this Contract specifically provides another
payee of such reinsurance in the event of the insolvency of the company or (2)
where the Reinsurer with the consent of the direct insured or insureds has
assumed such policy obligations of the company as direct obligations of the
Reinsurer to the payees under such policies and in substitution for the
obligations of the company to such payees.

Article XXIV - Arbitration

A.       As a
condition precedent to any right of action hereunder, in the event of any
dispute or difference of opinion hereafter arising with respect to this
Contract, it is hereby mutually agreed that such dispute or difference of
opinion shall be submitted to arbitration. One Arbiter shall be chosen by the
Company, the other by the Reinsurer, and an Umpire shall be chosen by the two
Arbiters before they enter upon arbitration, all of whom shall be active or
retired disinterested executive officers of insurance or reinsurance companies
or Lloyd’s London Underwriters. In the event that either party should fail to
choose an Arbiter within 30 days following a written request by the other party
to do so, the requesting party may choose two Arbiters who shall in turn choose
an Umpire before entering upon arbitration. If the two Arbiters fail to agree
upon the selection of an Umpire within 30 days following their appointment, the
two Arbiters shall request the American Arbitration Association to appoint the
Umpire. If the American Arbitration Association fails to appoint the Umpire
within

 14
 

30 days after it has been requested to do so, either party may request
a justice of a Court of general jurisdiction of the state in which the
arbitration is to be held to appoint the Umpire.

B.        Each party
shall present its case to the Arbiters within 30 days following the date of appointment
of the Umpire. The Arbiters shall consider this Contract as an honorable
engagement rather than merely as a legal obligation and they are relieved of
all judicial formalities and may abstain from following the strict rules of
law. The decision of the Arbiters shall be final and binding on both parties;
but failing to agree, they shall call in the Umpire and the decision of the
majority shall be final and binding upon both parties. Judgment upon the final
decision of the Arbiters may be entered in any court of competent jurisdiction.

C.        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 Article and communications
shall be made by the Company to each of the reinsurers constituting one party,
provided, however, that nothing herein 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 participating under the terms
of this Contract from several to joint.

D.        Each party
shall bear the expense of its own Arbiter, and shall jointly and equally bear
with the other the expense of the Umpire and of the arbitration. In the event
that the two Arbiters are chosen by one party, as above provided, the expense
of the Arbiters, the Umpire and the arbitration shall be equally divided
between the two parties.

E.        Any
arbitration proceedings shall take place at a location mutually agreed upon by
the parties to this Contract, but notwithstanding the location of the
arbitration, all proceedings pursuant hereto shall be governed by the law of
the state in which the Company has its principal office.

Article XXV - Service of Suit (BRMA 49C)

(Applicable if the Reinsurer is not domiciled in the United States of
America, and/or is not authorized in any State, Territory or District of the
United States where authorization is required by insurance regulatory
authorities)

A.       It is agreed
that in the event the Reinsurer fails to pay any amount claimed to be due
hereunder, the Reinsurer, 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.

B.        Further,
pursuant to any statute of any state, territory or district of the United
States which makes provision therefor, the Reinsurer hereby designates the
party named in its Interests and Liabilities Agreement, or if no party is named
therein, the Superintendent, Commissioner or Director of Insurance or other
officer specified for that purpose in the statute, or his successor or
successors in office, as its true and lawful attorney upon whom may be served
any lawful process in any action, suit or proceeding instituted by or on behalf
of the Company or any beneficiary hereunder arising out of this Contract.

 15
 

Article XXVI - Governing Law

This Contract shall be governed by and construed in accordance with the
law of the Commonwealth of Massachusetts.

Article XXVII - Agency Agreement

If more than one reinsured company is named as a party to this
Contract, the first named company shall 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.

Article XXVIII - Severability (BRMA 72E)

If any provision of this Contract shall be rendered illegal or
unenforceable by the laws, regulations or public policy of any state, such
provision shall be considered void in such state, but this shall not affect the
validity or enforceability of any other provision of this Contract or the
enforceability of such provision in any other jurisdiction.

Article XXIX - Intermediary (BRMA 23A)

Benfield Inc. is hereby recognized as the Intermediary negotiating this
Contract for all business hereunder. All communications (including but not
limited to notices, statements, premium, return premium, commissions, taxes,
losses, loss adjustment expense, salvages and loss settlements) relating
thereto shall be transmitted to the Company or the Reinsurer through Benfield
Inc. Payments by the Company to the Intermediary shall be deemed to constitute
payment to the Reinsurer. Payments by the Reinsurer to the Intermediary 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 Company by
its duly authorized representative has executed this Contract as of the date
undermentioned at:

Boston, Massachusetts,  this 9th day of Jan. in the year 2006.

	
  

  	
  /s/ Illegible

  
	
   

  	
  Safety Insurance Company

  
	
   

  	
  Safety Indemnity Insurance Company

  

 

 16

Schedule A

Excess Catastrophe 

Reinsurance Contract  

Effective: January 1, 2006

issued to

Safety Insurance
Company

and

Safety Indemnity Insurance Company 

both of Boston, Massachusetts

	
   

  	
   

  	
  Third

  Excess

  	
   

  	
  Fourth

  Excess

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Company’s
  Coreinsurance

  	
   

  	
  10.0

  	
  %

  	
  10.0

  	
  %

  
	
  Reinsurer’s
  Percentage

  	
   

  	
  90.0

  	
  %

  	
  90.0

  	
  %

  
	
  Company’s
  Retention

  	
   

  	
  $

  	
  30,000,000

  	
   

  	
  $

  	
  60,000,000

  	
   

  
	
  Reinsurer’s Per
  Occurrence Limit

  	
   

  	
  $

  	
  30,000,000

  	
   

  	
  $

  	
  190,000,000

  	
   

  
	
  Reinsurer’s
  Annual Limit

  	
   

  	
  $

  	
  60,000,000

  	
   

  	
  $

  	
  380,000,000

  	
   

  
	
  Minimum Premium

  	
   

  	
  $

  	
  1,980,000

  	
   

  	
  $

  	
  4,940,000

  	
   

  
	
  Adjustable
  Premium Rate

  	
   

  	
  2.226

  	
  %

  	
  5.553

  	
  %

  
	
  Deposit Premium

  	
   

  	
  $

  	
  2,475,000

  	
   

  	
  $

  	
  6,175,000

  	
   

  
	
  Quarterly Deposit
  Premium

  	
   

  	
  $

  	
  618,750

  	
   

  	
  $

  	
  1,543,750

  	
   

  

 

The figures listed above for each excess layer shall apply to each
Subscribing Reinsurer in the percentage share for that excess layer as
expressed in its Interests and Liabilities Agreement attached hereto.

Nuclear Incident
Exclusion Clause - Physical Damage - Reinsurance (U.S.A.)

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

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

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

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

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

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

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

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

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

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

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

8.         The term “special
nuclear material” shall have the meaning given it in the Atomic Energy Act of
1964 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.

Total Insured Value
Exclusion Clause

It is the mutual intention of the parties to exclude risks, other than
Offices, Hotels, Apartments, Hospitals, Educational Establishments and Public
Utilities (except Railroad Schedules), and Builders Risks on the above classes,
where at the time of cession, the Total Insured Value over all interests
exceeds $250,000,000. However, the Company shall be protected hereunder,
subject to the other terms and conditions of this Contract, if subsequent to
cession being made, the Company becomes acquainted with the true facts of the
case and discovers that the mutual intention has been inadvertently breached;
on condition that the Company shall at the first opportunity, and certainly by
next anniversary of the original policy, exclude the risk in question.

It is agreed that this mutual intention does not apply to Contingent
Business interruption or to interests traditionally underwritten as Inland
Marine or to Stock and/or Contents written on a blanket basis except where the
Company is aware that the Total Insured Value of $250,000,000 is already
exceeded for buildings, machinery, equipment and direct use and occupancy at
the key location.

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

Terrorism Exclusion
Clause

A.       Notwithstanding
any provision to the contrary within this Contract or any addendum thereto, it
is agreed that this Contract excludes loss, damage, cost or expense directly or
indirectly caused by, contributed to by, resulting from, arising out of or in
connection with any “act of terrorism,” as defined in the Terrorism Risk
Insurance Act of 2002, as amended by the Terrorism Risk Insurance Extension Act
of 2005 (together the “Terrorism Act”), on primary or excess property and
casualty insurance issued by the Company, regardless of any other cause or
event contributing concurrently or in any sequence to the loss.

B.        Notwithstanding
the above and subject otherwise to the terms, conditions and limitations of
this Contract, this Contract will pay actual loss or damage caused by any act
of terrorism which does not meet the definition of “insured loss” set forth in
the Terrorism Act or meets the definition of “insured loss” as set forth in the
Terrorism Act, but results in loss under a policy that is not included in “property
and casualty insurance” as defined in the Terrorism Act, provided, in either
case, (1) such loss or damage occurs in a line of insurance otherwise covered
by this Contract, and (2) in no event will this Contract provide coverage for
loss, damage, cost or expense directly or indirectly caused by, contributed to
by, resulting from, or arising out of or in connection with biological, chemical,
radioactive or nuclear explosion, pollution, contamination and/or fire
following thereon.

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