Document:

exhibit1035xq321

          EFFECTIVE: JULY 1, 2021                                                                                                                                                                            FIN_5166.4                           NET QUOTA SHARE REINSURANCE AGREEMENT   NO. FIN_5166.4         EFFECTIVE: JULY 1, 2021         between          FEDNAT INSURANCE COMPANY   Sunrise, Florida      and         SWISS REINSURANCE AMERICA CORPORATION   Armonk, New York                                                      _______________________      Certain identified information has been omitted from this exhibit because it is not material   and would be competitively harmful if publicly disclosed.  Redactions are indicated by [***].     
          EFFECTIVE: JULY 1, 2021                                                                                                                                                                            FIN_5166.4      NET QUOTA SHARE REINSURANCE AGREEMENT    NO. FIN_5166.4   ARTICLE  CONTENTS       PAGE          PREAMBLE         1   I   BUSINESS COVERED        1   II   EFFECTIVE DATE AND TERMINATION      3   III   TERRITORY         4   IV   RETENTION         4   V   DEFINITIONS         4   VI   EXCLUSIONS         9   VII   SPECIAL ACCEPTANCE      11   VIII   INTERNATIONAL TRADE CONTROLS       AND ECONOMIC SANCTIONS     11   IX   REINSURANCE PREMIUM     11   X   SLIDING SCALE COMMISSION    12   XI   LOSSES, LOSS ADJUSTMENT EXPENSES           AND SALVAGES      14     XII   REPORTS AND REMITTANCES     14   XIII   ACCESS TO RECORDS      17   XIV   TAXES        18   XV   OFFSET        18   XVI   DISPUTE RESOLUTION      18   XVII   INSOLVENCY       20   XVIII   AMENDMENTS      20      SIGNATURES       21      ATTACHMENTS: INSOLVENCY FUNDS EXCLUSION CLAUSE    POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE    POLLUTION AND SEEPAGE EXCLUSION CLAUSE    NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE -       REINSURANCE - U.S.A.    NUCLEAR INCIDENT EXCLUSION CLAUSE - REINSURANCE - NO. 4    POLLUTION LIABILITY EXCLUSION CLAUSE - REINSURANCE    NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY -       REINSURANCE - U.S.A.    TERRORISM EXCLUSION CLAUSE (USA) – REINSURANCE (PROPERTY)    TERRORISM EXCLUSION CLAUSE (USA) – REINSURANCE (CASUALTY)               

 

          EFFECTIVE: JULY 1, 2021                                   1.  FIN_5166.4           NET QUOTA SHARE REINSURANCE AGREEMENT   NO. FIN_5166.4   (hereinafter referred to as the "Agreement")      between      FEDNAT INSURANCE COMPANY   Sunrise, Florida    (hereinafter referred to as the "Company")      and      SWISS REINSURANCE AMERICA CORPORATION   Armonk, New York   (hereinafter referred to as the "Reinsurer")         ARTICLE I - BUSINESS COVERED      A. By this Agreement the Company obligates itself to cede to the Reinsurer and the   Reinsurer obligates itself to accept from the Company a 20% Quota Share   participation of the Company's Ultimate Net Liability for Policies in force as of July   1, 2021, and new and renewal Policies becoming effective on or after July 1, 2021,   as respects losses occurring on or after July 1, 2021, subject to Paragraph B.  This   Quota Share is subject to the maximum cession limits set forth below:      1. Property Business      $[***] each risk (20% share of the Company's Ultimate Net Liability of $[***]),   but in no event shall the Reinsurer's liability from all risks in any one Loss   Occurrence exceed $[***] (20% of $[***]).  It is understood that the   Company's $[***] limit reflects their portion of the retention under the   Company's Catastrophe Excess of Loss Reinsurance Agreement of July 1,   2021 ("Common Agreement") which also reinsures Monarch National   Insurance Company and Maison Insurance Company (neither of which are   subject to this Agreement).  Should the event from which a Loss Occurrence   hereunder arises also include losses sustained by Monarch National   Insurance Company and/or Maison Insurance Company under the   Common Agreement, the $[***] limit addressed in this paragraph could be   reduced proportionately to reflect the Company’s retained share of the total   losses under the retention of the Common Agreement.      Notwithstanding the limits stated above, the Reinsurer's liability shall not   exceed $[***] (20% of $[***]) as respects all Loss Occurrences taking place   during the term of this Agreement.         2. Casualty Business        
          EFFECTIVE: JULY 1, 2021                                   2.  FIN_5166.4           $[***] each Policy each Loss Occurrence (20% share of the Company's   Ultimate Net Liability of $[***].)          B. The cession percentage set forth in Paragraph A. of this Article may be adjusted up   to three times during the Agreement Year, subject to the following:        1. The Company has provided the Reinsurer no less than 45 day's written   notice prior to the end of any calendar quarter during the Agreement Year,   of its desire to adjust the cession percentage prospectively.        2. The adjusted cession percentage shall not be less than 2% nor greater than   20%.       3. The cession adjustment is to take effect as respects in force, new and   renewal business on a prospective basis on the last day of the calendar   quarter in which such notice was given as respects Loss Occurrences taking   place on or after such date;       4. Such cession adjustment shall be at the election of the Company only if the   Loss Ratio from Agreement inception through the end of the quarter in which   such notice was given is less than or equal to 30%.      5. If such Loss Ratio is greater than 30%, any such cession adjustment must   be mutually agreed by both parties.       6. Mutual agreement of the parties to any cession adjustment is evidenced by   addendum to this Agreement signed by both parties.      For purposes of this Paragraph B., "Loss Ratio" shall mean the actual ratio of   Incurred Losses to Earned Premiums from Agreement inception to the end of the   calendar quarter for which calculation is being made.  The terms "Incurred Losses"   and "Earned Premiums" shall be defined as they are under Article X - Sliding Scale   Commission, provided however, as respects Incurred Losses, there will be no   Incurred But Not Reported ("IBNR") losses included.        C.  Loss Adjustment Expenses and any loss arising under this Agreement with respect   to Loss In Excess of Policy Limits and Extra Contractual Obligations, as defined   herein, shall be recovered in the same proportion as the contractual loss   recoverable hereunder; provided such contractual loss plus Loss Adjustment   Expenses, Loss In Excess of Policy Limits and Extra Contractual Obligations shall   never exceed the maximum cession limits set forth under Paragraph A. above.   D. This Agreement is solely between the Company and the Reinsurer, and nothing   contained in this Agreement shall create any obligations or establish any rights   against the Reinsurer in favor of any person or entity not a party hereto.      E. The performance of obligations by both parties under this Agreement shall be in   accordance with a fiduciary standard of good faith and fair dealing.        

 

          EFFECTIVE: JULY 1, 2021                                   3.  FIN_5166.4           F. Under this Agreement, the indemnity for reinsured loss applies only to the following   Property and Casualty Business except as excluded under Article VI - Exclusions   of this Agreement.      PROPERTY LINES OF BUSINESS      Homeowners (Section I only)   Dwelling Fire (Section I only)      CASUALTY LINES OF BUSINESS      Homeowners (Section II only)    Dwelling Fire (Section II only)         ARTICLE II - EFFECTIVE DATE AND TERMINATION      A. This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July   1, 2021, and shall terminate at 12:01 a.m., Eastern Standard Time on July 1, 2022.      B. Upon termination of this Agreement:       1. All reinsurance hereunder shall be automatically cancelled as of the date of   termination and the Reinsurer shall be released of all liability as respects   losses occurring on or after the date of termination.  The Reinsurer shall   return to the Company the unearned premiums on the business in force   hereunder at the date of termination, less the commission allowed thereon.    2. Alternatively, at the Company's option, and provided written notice of the   Company's election of such option is given to the Reinsurer by certified mail,   electronic mail or by a courier service each producing evidence of receipt   by the Reinsurer prior to the date of termination, this Agreement will   terminate on a "Run-off" basis and the Reinsurer shall be liable for losses   occurring on or after to the date of termination for all Policies covered   hereunder and in force at the date of termination of this Agreement until   their natural expiry, cancellation or next anniversary of such business,   whichever first occurs; but in no case shall the Reinsurer be liable for losses   occurring more than 12 months after the termination date unless the   Company is required by statute or regulation to continue coverage on a   Policy.  In such case, the Reinsurer shall continue to be liable for losses   occurring subsequent to the date of termination until the earliest date on   which the Company may cancel such Policy.  The Reinsurer shall return to   the Company the unearned premiums, if any, less commissions applicable,   for the unexpired periods.         ARTICLE III – TERRITORY       As respects Property Business, this Agreement applies to risks located in Florida.        
          EFFECTIVE: JULY 1, 2021                                   4.  FIN_5166.4           As respects Casualty Business, the Agreement applies to Policies issued by the Company   within Florida and shall apply to losses covered hereunder wherever occurring.         ARTICLE IV - RETENTION      A. The Company warrants that it shall retain net for its own account and not reinsure   in any way, 60% of its Ultimate Net Liability.  In addition to the initial cession of 20%   of its Ultimate Net Liability to the Reinsurer pursuant to this Agreement, it is   understood that the Company is also reinsuring an additional 20% of its Ultimate   Net Liability for the Business Covered as follows:  (i) a 10% cession pursuant to an   additional Quota Share Agreement with the Reinsurer in effect from November 15,   2020 to November 15, 2021, and (ii) a 10% cession through additional reinsurance   procured through the broker market.      B. In the event there is a cession adjustment pursuant to Paragraph B. of Article I –   Business Covered, the Company's net retention shall be revised to reflect the   difference between the revised cession percentage and 100% as of the effective   date of the change.         ARTICLE V – DEFINITIONS      A. AGREEMENT YEAR       "Agreement Year" shall mean the 12-month period commencing July 1, 2021 and   continuing through June 30, 2022.      B. DECLARATORY JUDGMENT EXPENSES      "Declaratory Judgment Expenses" shall mean all legal expenses incurred in the   representation of the Company in litigation brought to determine the Company's   defense and/or indemnification obligations that are allocable to any specific claim   or loss applicable to Policies subject to this Agreement.  In addition, the Company   shall promptly notify the Reinsurer of any Declaratory Judgment Expenses subject   to this Agreement.      C. EXTRA CONTRACTUAL OBLIGATIONS      1. "Extra Contractual Obligations" are defined as those liabilities not covered   under any other provision of this Agreement and which arise from the   handling of any claim on business covered hereunder, such liabilities arising   because of, but not limited to, the following: failure by the Company to settle   within the Policy limit, or by reason of alleged or actual negligence, fraud or   bad faith in rejecting an offer of settlement or in the preparation of the   defense or in the trial of any action against its insured or in the preparation   or prosecution of an appeal consequent upon such action.        

 

          EFFECTIVE: JULY 1, 2021                                   5.  FIN_5166.4           2. The date on which an Extra Contractual Obligation is incurred by the   Company shall be deemed, in all circumstances, to be the date of the   original accident, casualty, disaster or loss occurrence.      3. However, coverage hereunder as respects Extra Contractual Obligations   shall not apply where the loss has been incurred due to the fraud of a   member of the Board of Directors or a corporate officer of the Company   acting individually or collectively or in collusion with any individual or   corporation or any other organization or party involved in the presentation,   defense or settlement of any claim covered hereunder.      4. Recoveries, collectibles or retention from any other form of insurance or   reinsurance including deductibles or self-insured retention which protect the   Company against Extra Contractual Obligations, whether collectible or not,   shall inure to the benefit of the Reinsurer and shall be deducted from the   total amount of Extra Contractual Obligations for purposes of determining   the loss hereunder.      5. If any provision of this paragraph shall be rendered illegal or unenforceable   by the laws, regulations or public policy of any jurisdiction, such provision   shall be considered void in such jurisdiction, but this shall not affect the   validity or enforceability of any other provision of this Article or the   enforceability of such provision in any other jurisdiction.      D. GROSS PREMIUMS WRITTEN       "Gross Premiums Written" shall mean the Company's written premiums for subject   business less return premiums.      E. LOSS ADJUSTMENT EXPENSES      "Loss Adjustment Expenses" shall mean all expenses paid by the Company in   connection with the investigation, settlement, defense or litigation, including court   costs and post-judgment interest, of any claim or loss which is the subject matter   of Policies covered under this Agreement and shall include Declaratory Judgment   Expenses.  However, "Loss Adjustment Expenses" shall not include the salaries   and expenses of Company employees, office expenses, and other overhead   expenses.            F. LOSS IN EXCESS OF POLICY LIMITS      1. "Loss in Excess of Policy Limits" is defined as loss in excess of the limit of   the original Policy, such loss in excess of the limit having been incurred   because of failure by the Company to settle within the Policy limit or by   reason of alleged or actual negligence, fraud or bad faith in rejecting an offer   of settlement or in the preparation of the defense or in the trial of any action   against its insured or in the preparation or prosecution of an appeal   consequent upon such action.     
          EFFECTIVE: JULY 1, 2021                                   6.  FIN_5166.4              2. However, this paragraph shall not apply where the loss has been incurred   due to fraud by a member of the Board of Directors or a corporate officer of   the Company acting individually or collectively or in collusion with any   individual or corporation or any other organization or party involved in the   presentation, defense or settlement of any claim covered hereunder.      3. For the purposes of this paragraph, the word "loss" shall mean any amounts   which the Company would have been contractually liable to pay had it not   been for the limit of the original Policy.      4. With respect to coverage provided under this paragraph, recoveries from   any insurance or reinsurance other than this Agreement, whether collectible   or not, shall be deducted to arrive at the amount of the Company's Ultimate   Net Liability.      G. LOSS OCCURRENCE   As respects Property Business covered under this Agreement:   1. 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 state of Florida.  However, the duration and extent of any one Loss   Occurrence shall be limited to all individual losses sustained by the   Company occurring during any period of 168 consecutive hours arising out   of and directly occasioned by the same event except that the term "Loss   Occurrence" shall be further defined as follows:   a. As regards windstorm, other than Named Windstorms, hail, tornado,   hurricane, cyclone, including ensuing collapse and water damage,   all individual losses sustained by the Company occurring during any   period of 120 consecutive hours arising out of and directly   occasioned by the same event.    b. As regards riot, riot attending a strike, civil commotion, vandalism   and malicious mischief, all individual losses sustained by the   Company, occurring during any period of 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.   c. As regards earthquake (the epicentre of which need not necessarily   be within the territorial confines referred to in the opening paragraph   of this Article) and fire following directly occasioned by the   earthquake, only those individual fire losses which commence     

 

          EFFECTIVE: JULY 1, 2021                                   7.  FIN_5166.4           during the period of 168 consecutive hours may be included in the   Company's Loss Occurrence.   d. As regards Freeze, only individual losses directly occasioned by   collapse, breakage of glass and water damage (including but not   limited to those caused by freezing and/or melting of ice, snow and   sleet, or ice damming on a structure or bursting of frozen pipes and   tanks) may be included in the Company's Loss Occurrence.   2. For all Loss Occurrences the Company may choose the date and time when   any such period of consecutive hours commences provided that it is not   earlier than the date and time of the occurrence of the first recorded   individual loss sustained by the Company arising out of that disaster,   accident or loss and provided that only one such period of 168 consecutive   hours shall apply with respect to one event except for those Loss   Occurrences referred to in a. and b. above, where only one such period of   72 consecutive hours shall apply with respect to one event, regardless of   the duration of the event.   3. 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.   As respects Casualty Business covered under this Agreement:   "Loss Occurrence" shall mean any accident or occurrence or series of accidents or   occurrences arising out of any one event and happening within the term and scope   of this Agreement.       H. NAMED WINDSTORMS       "Named Windstorms" shall mean a storm and all other atmospheric perils arising   out of such storm that are identified and named as a Tropical Storm or Hurricane   by the National Hurricane Center of the National Weather Service, operated by the   National Oceanographic Administration of the U.S. Government ("NHC").  The   duration of such Named Windstorm shall be deemed to be as follows:      1. Beginning at the time a Named Windstorm warning is issued by the NHC   for any part of each state in which the Company writes the business   reinsured hereunder;      2. Continuing for the time period which the Named Windstorm conditions exist   anywhere in such state; and      3. Ending 72 hours following termination of the last Named Windstorm warning   by NHC for any part of such state.     
          EFFECTIVE: JULY 1, 2021                                   8.  FIN_5166.4              I. POLICIES      "Policies" shall mean each of the Company's binders, policies and contracts of   insurance on the business covered hereunder.      J. RISK      The Company shall be the sole judge of what constitutes one risk provided,   however, that:      1. A risk shall never be less than all insurable values within exterior walls and   under one roof regardless of fire divisions, the number of Policies involved,   and whether there is a single, multiple or unrelated named insureds involved   in such risk.      2. When two or more buildings are situated at the same general location, the   Company shall identify on its records at the time of acceptance by the   Company, those individual buildings and all insurable values contained   therein that are considered to constitute each risk.  If such identification is   not made, each building and all insurable values contained therein shall be   considered to be a separate risk.      3. A risk shall be determined from the standpoint of the predominant peril and   such peril shall be noted in the Company's records.      K. ULTIMATE NET LIABILITY      "Ultimate Net Liability" shall mean the remaining portion of the Company's gross   liability on each Policy reinsured under this Agreement after deducting recoveries   from all other reinsurance, whether specific or general and whether collectible or   not. For avoidance of doubt, it is understood that recoveries under the Company's   Property Per Risk Excess of Loss Contract shall inure to the benefit of this   Agreement.         ARTICLE VI - EXCLUSIONS      I. AS RESPECTS PROPERTY BUSINESS COVERED UNDER THIS AGREEMENT      THIS AGREEMENT DOES NOT COVER:         A. THE FOLLOWING GENERAL CATEGORIES      1. All Lines of Business not specifically listed in Article I - Business   Covered.      2. Reinsurance assumed.        

 

          EFFECTIVE: JULY 1, 2021                                   9.  FIN_5166.4           3. Ex-gratia Payments.      4. Loss or damage occasioned by war, invasion, revolution,   bombardment, 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.      5. Insolvency Funds as per the attached Insolvency Funds Exclusion   Clause, which is made part of this Agreement.      6. Pool, Syndicate and Association business as per the attached   Pools, Associations and Syndicates Exclusion Clause, which is   made part of this Agreement.      7. Any statutory or regulatory fine or penalty imposed upon the   Company on account of any unfair trade or claim practice.       B. THE FOLLOWING PERILS      1. Flood and/or Earthquake when written on a stand-alone basis.      2. Pollution and Seepage as per the attached Pollution and Seepage   Exclusion Clause which is made part of this Agreement.      3. Nuclear Incident Exclusion Clauses which are attached and made   part of this Agreement:      a. Nuclear Incident Exclusion Clause - Physical Damage -   Reinsurance - U.S.A.   b. Nuclear Incident Exclusion Clause - Reinsurance - No. 4.      4. a. Loss, damage or expense of whatsoever nature caused   directly or indirectly by any of the following, regardless of any   other cause or event contributing concurrently or in any other   sequence to the loss: nuclear reaction or radiation, or   radioactive contamination, however caused.      b. However, if nuclear reaction or radiation, or radioactive   contamination results in fire it is specifically agreed herewith   that this Agreement will pay for such fire loss or damage   subject to all of the terms, conditions and limitations of this   Agreement.      c. This exclusion shall not apply to loss, damage or expense   originating from and occurring at risks using radioactive   isotopes in any form where the nuclear exposure is not   considered by the Company to be the primary hazard.     
          EFFECTIVE: JULY 1, 2021                                   10.  FIN_5166.4           5. Terrorism as per the attached Terrorism Exclusion Clause (USA) –   Reinsurance (Property), which is made part of this Agreement.   6. Loss, damage or expense of whatsoever nature arising from Named   Windstorms.      II. AS RESPECTS CASUALTY BUSINESS COVERED UNDER THIS AGREEMENT      THIS AGREEMENT DOES NOT COVER:      1. All Lines of Business not specifically listed in Article I - Business Covered.      2. Ex-gratia payments.      3. Loss or damage caused directly or indirectly by: (a) enemy attack by armed   forces including action taken by military, naval or air forces in resisting an   actual or an immediately impending enemy attack; (b) invasion; (c)   insurrection; (d) rebellion; (e) revolution; (f) intervention; (g) civil war; and   (h) usurped power.      4. Reinsurance assumed by the Company.      5. Business derived from any Pool, Association, including Joint Underwriting   Association, Syndicate, Exchange, Plan, Fund or other facility directly as a   member, subscriber or participant, or indirectly by way of reinsurance or   assessments.       6. Pollution Liability as per the attached Pollution Liability Exclusion Clause -   Reinsurance.      7. Insolvency Funds as per the attached Insolvency Funds Exclusion Clause.      8. Nuclear Incident Exclusion Clauses which are attached and made part of   this Agreement:      a. Nuclear Incident Exclusion Clause - Liability - Reinsurance - U.S.A.   b. Nuclear Incident Exclusion Clause - Reinsurance - No. 4.      9. Any statutory or regulatory fine or penalty imposed upon the Company on   account of any unfair trade or claim practice.   10. Terrorism as per the attached Terrorism Exclusion Clause (USA) –   Reinsurance (Casualty), which is made part of this Agreement.      11. Any actual or alleged liability whatsoever for any claim or claims in respect   of loss or losses, directly or indirectly arising out of, resulting from, or in   consequence of asbestos, in whatever form or quantity.         

 

          EFFECTIVE: JULY 1, 2021                                   11.  FIN_5166.4              ARTICLE VII - SPECIAL ACCEPTANCE      Risks and/or Policies which are beyond the terms, conditions or limitations of this   Agreement may be submitted to the Reinsurer for special acceptance hereunder; and such   risks and/or Policies, if accepted in writing by the Reinsurer, shall be subject to all of the   terms, conditions and limitations of this Agreement, except as modified by the special   acceptance.  Premiums and losses derived from any special acceptance shall be included   with other data for purposes of this Agreement.         ARTICLE VIII - INTERNATIONAL TRADE CONTROLS AND ECONOMIC SANCTIONS      No Reinsurer shall be deemed to provide cover and no Reinsurer shall be liable to pay any   claim or pay any benefit hereunder to the extent that the provision of such cover, payment   of such claim or provision of such benefit would expose that Reinsurer to any sanction,   prohibition or restriction under United Nations resolutions or the trade or economic   sanctions, laws or regulations of any jurisdiction applicable to that Reinsurer.         ARTICLE IX - REINSURANCE PREMIUM         A. The Company shall cede to the Reinsurer 20% of the Company's unearned   premiums on its Ultimate Net Liability in force as of July 1, 2021 on the business   covered hereunder.   B. The Company shall cede to the Reinsurer 20% of the Company's Gross Premiums   Written applicable to new and renewal Policies becoming effective on or after July   1, 2021, with respect to its Ultimate Net Liability on the business covered   hereunder.       C. The Reinsurer will allow the Company an allowance for other reinsurance equal to   [***]% of the premiums ceded under Paragraphs A. and B. above.  Other   reinsurance includes but is not limited to Property Per Risk Reinsurance, Florida   Hurricane Catastrophe Mandatory Coverage Layer and Property Catastrophe   Excess of Loss Reinsurance.      D. In the event there is a cession adjustment pursuant to Paragraph B. of Article I –   Business Covered, the percentage of the Company's Gross Premiums Written to   be ceded to the Reinsurer commencing on the effective date of such cession   change shall be the newly revised cession percentage and any resulting difference   in unearned premiums shall be debited or credited to the appropriate party.      
          EFFECTIVE: JULY 1, 2021                                   12.  FIN_5166.4              ARTICLE X – SLIDING SCALE COMMISSION       A. The Reinsurer shall make to the Company a provisional commission allowance of   [***]% of the Gross Premiums Written ceded hereunder.  Such provisional   commission allowance shall also apply to the Company's unearned premiums   ceded hereunder as respects business in force as of July 1, 2021.  The Company   shall debit the Reinsurer with the provisional commission allowance; such   provisional commission shall be adjusted as provided hereafter.  On all return   premiums the Company shall return to the Reinsurer the provisional commission   allowance of [***]%. Such commission allowance includes provision for all   brokerage and commission, premium taxes of all kinds, all board, bureau and   exchange assessments and any other expenses whatsoever except Loss   Adjustment Expenses.        B. The adjusted commission allowance which the Reinsurer shall make to the   Company shall be in accordance with the following formula and computed and paid   on Earned Premiums.  All intermediate and final calculations shall be rounded to   two decimal places.   If the actual ratio of Incurred The adjusted commission   Losses to Earned Premiums is: shall be:    [***]% or less [***]% Maximum   Higher than [***]% but [***]% less [***]% of    not exceeding [***]% the difference between     the actual loss ratio     and [***]%   [***]% or higher [***]% Minimum   C.  The term "Incurred Losses" means all losses and Loss Adjustment Expenses paid   less recoveries, including salvage and subrogation, during the current Period for which   computation is being made plus all losses and Loss Adjustment Expenses outstanding   at the end of the current Period plus a reserve for IBNR losses at the end of the current   Period, as determined by the Company, less all losses and Loss Adjustment   Expenses outstanding and IBNR, determined by the Company, at the close of the   preceding period.   D. The term "Earned Premiums" means the total of the Gross Premiums Written, ceded   during the current Period plus the unearned premiums as respects premiums in force   at the beginning of such Period, less the unearned premiums at the close of the   current Period, provided that in the event of a Run-off termination, only those   unearned premiums applicable to any  unexpired periods shall be deducted.     Said unearned premiums to be calculated on an actual daily basis or in accordance   with the Company's methodology, as agreed.   E. The term "Period" means the actual time covered by each adjustment of commission.     

 

          EFFECTIVE: JULY 1, 2021                                   13.  FIN_5166.4           F. Within 90 days after the close of each Period, the Reinsurer shall calculate the   commission adjustment on the Earned Premiums during the Period. The first   adjustment of commission shall be made as of September 30, 2022, for the Period   from July 1, 2021, through June 30, 2022 and annually thereafter.  If the adjusted   commission on the Earned Premiums during the Period exceeds the provisional   commission already allowed on the Earned Premiums, the Reinsurer shall pay the   difference to the Company.  If the provisional commission already allowed on the   Earned Premiums exceeds the adjusted commission on the Earned Premiums, the   difference shall be refunded by the Company to the Reinsurer.  In addition, the   difference in commission adjustment shall be paid by the debtor party within 30 days   after the Company's verification of the Reinsurer's calculations.   G. In the event reserves for losses and Loss Adjustment Expenses used in any previous   calculation of adjusted commission shall have been underestimated or overestimated,   as proven by subsequent developments, such previous calculations shall be revised   at the request of either party.  The Company shall refund to the Reinsurer, or the   Reinsurer shall pay to the Company, such amount as will give effect to the revision(s).   H. After the first commission adjustment, as noted in Paragraph F. above, all   subsequent adjustments of commission shall be made every September 30th until the   expiration of all liability and the settlement of all losses covered under this   Agreement.         ARTICLE XI - LOSSES, LOSS ADJUSTMENT EXPENSES AND SALVAGES      A. The Reinsurer shall pay its pro rata share of losses including prejudgment interest   paid by the Company arising under Policies covered under this Agreement, subject   to Article I – Business Covered, and the Reinsurer shall benefit proportionately in   all recoveries, including salvage and subrogation.      B. The Reinsurer shall pay its pro rata share of Loss Adjustment Expenses paid by   the Company, subject to Article I – Business Covered.        C. The Company shall have the responsibility to investigate, defend or negotiate   settlements of all claims and lawsuits related to Policies written by the Company   and reinsured under this Agreement.  The Reinsurer, at its own expense, may   associate with the Company in the defense of any claim, suit or other proceeding   which involves or is likely to involve the reinsurance provided under this Agreement,   and the Company shall cooperate in every respect in the defense of any such claim,   suit or proceeding.          ARTICLE XII - REPORTS AND REMITTANCES      A. The Company shall provide the Reinsurer with a quarterly account and bordereaux,   as well as quarterly and annual reports, in accordance with the provisions set forth   in Paragraphs C., E., F., G. and H below.        
          EFFECTIVE: JULY 1, 2021                                   14.  FIN_5166.4           B. Portfolio Assumption - Within 45 days after July 1, 2021, the Company shall pay to   the Reinsurer the Reinsurer's pro rata share of the Company's unearned premium   reserve segregated by Line of Business on the business in force as of said date.         C. Quarterly Account - Within 30 days after the close of each calendar quarter, the   Company shall forward a quarterly account summarizing the following transactions   under this Agreement during such quarter:      1. Gross Premiums Written ceded segregated by Line of Business specifically   identifying the current cession rate in the event there has been a cession   change pursuant to Paragraph B. of Article I – Business Covered;       2. [***]% allowance for reinsurance;      3.  Provisional Commissions;       4. Loss and Loss Adjustment Expenses paid less recoveries, including   salvage and subrogation, segregated by Line of Business, by year of loss.       The balance due either party shall be paid within 45 days after the close of each for   the transactions during such quarter.      D. In respect of Paragraph C. above:      1. All quarterly Account Statements shall be sent to the Reinsurer at:      a. E-Mail/Word, Excel, PDF, or TIF Formats, or other scanned   documents:      [***], or   b. Standard Mail:      Swiss Reinsurance America Corporation   P.O. Box 74008504   Chicago, IL  60674-8504      2. All checks and supporting documentation shall be sent to the Reinsurer   through one of the options set forth below and shall identify the applicable   Reinsurer Agreement Number(s):        

 

          EFFECTIVE: JULY 1, 2021                                   15.  FIN_5166.4           a. WIRE TRANSFER      (i) All wires shall be sent to:      Bank of America   655 Grant Street   Concord, CA  94520   Account Name:  Swiss Reinsurance America Corporation   Account Address:  175 King Street Armonk, NY  10504   Account Number:  [***]   Wire ABA Number:  [***]    ACH ABA Number:  [***]   SWIFT:  [***]      (ii) All supporting documentation shall be sent to:        (a) E-Mail/Word, Excel, PDF, or TIF Formats, or other   scanned documents:      [***], or      (b) Standard Mail:      Swiss Reinsurance America Corporation   P.O. Box 74008504   Chicago, IL  60674-8504         b. COURIER OR OVERNIGHT CARRIER      Both checks and supporting documentation shall be sent to:   Bank of America Lockbox Services    Swiss Reinsurance America Corporation   540 West Madison Street, 4th Floor   Chicago, IL  60661   Re:  Lockbox 74008504      c. STANDARD MAIL      Both checks and supporting documentation shall be sent to:      Swiss Reinsurance America Corporation   P.O. Box 74008504   Chicago, IL  60674-8504      E. Premium Bordereau as respects each Policy covered under this Agreement - Within   30 days after the close of each quarter, the Company shall submit a premium   bordereau to the Reinsurer segregated by underwriting year, the following   information as respects each Policy covered under this Agreement:     
          EFFECTIVE: JULY 1, 2021                                   16.  FIN_5166.4              1. Name of Insured,      2. Policy Number,      3. Effective and Expiration Dates,      4. Line of Business.      F. Loss Bordereau as respects each Policy covered under this Agreement - Within 30   days after the close of each quarter, the Company shall submit a loss bordereau to   the Reinsurer segregating by underwriting year of loss the following information as   respects each loss covered under this Agreement:      1. Name of Insured,      2. Policy Number,      3. Policy Limits,      4. Effective and Expiration Dates,      5. Claim Number,      6. Date of Loss,         7. Line of Business.      G. Quarterly Report - The Company shall furnish the Reinsurer within 30 days after   the close of each quarter the following information as respects the business ceded   hereunder:      1. Unearned premium reserves segregated by Line of Business at the end of   the quarter and calculated on the actual daily basis or in accordance with   the Company's methodology, as agreed.      2. Estimated loss and Loss Adjustment Expense reserves outstanding at the   end of the quarter segregated by Line of Business, by year of loss.    H. Annual Report - The Company shall furnish the Reinsurer, within 45 days after the   termination date of this Agreement, and annually thereafter, a summary of the   business ceded hereunder:     

 

          EFFECTIVE: JULY 1, 2021                                   17.  FIN_5166.4           1. Gross Premiums Written ceded from inception to date, segregated by Line of   Business; provided that in the event there was a cession change under the   Agreement, pursuant to Paragraph B. of Article I- Business Covered, such report   shall provide separately the Gross Premiums Written ceded during the year as   respects the initial 20% cession and the Gross Premiums Written ceded during   the year as respects the revised cession percentage, specifically identifying the   new percentage.   2. Unearned premium reserves segregated by Line of Business;   3. Losses and Loss Adjustment Expenses paid, less recoveries, including salvage   and subrogation, from inception to date;   4. Losses and Loss Adjustment Expenses outstanding, segregated by Line of   Business;   5. IBNR, as determined by the Company, as of each June 30th.      ARTICLE XIII - ACCESS TO RECORDS      The Reinsurer or its duly authorized representatives shall have the right to examine, at the   offices of the Company at a reasonable time, during the currency of this Agreement or   anytime thereafter, all books and records of the Company relating to business which is the   subject of this Agreement.         ARTICLE XIV - TAXES      The Company shall be liable for all taxes on premiums paid to the Reinsurer under this   Agreement, except income or profit taxes of the Reinsurer, and shall indemnify and hold   the Reinsurer harmless for any such taxes which the Reinsurer may become obligated to   pay to any local, state or federal taxing authority.         ARTICLE XV - OFFSET      Each party to this Agreement together with their successors or assigns shall have and may   exercise, at any time, the right to offset any balance or balances due the other (or, if more   than one, any other).  Such offset may include balances due under this Agreement   regardless of whether such balances arise from premiums, losses or otherwise, and   regardless of capacity of any party, whether as assuming insurer and/or ceding insurer,   under the various agreements involved; provided however, that in the event of insolvency   of a party hereto, offsets shall only be allowed in accordance with the provisions of any   applicable Florida law, statute or regulation governing such offset.      
          EFFECTIVE: JULY 1, 2021                                   18.  FIN_5166.4                 ARTICLE XVI - DISPUTE RESOLUTION      Part I - Choice Of Law And Forum      Any dispute arising under this Agreement shall be resolved in the State of Florida, and the   laws of the State of Florida shall govern the interpretation and application of this   Agreement.      Part II - Mediation      If a dispute between the Company and the Reinsurer, arising out of the provisions of this   Agreement or concerning its interpretation or validity and whether arising before or after   termination of this Agreement has not been settled through negotiation, both parties agree   to try in good faith to settle such dispute by nonbinding mediation, before resorting to   arbitration.      Part III - Arbitration      A. Resolution of Disputes - As a condition precedent to any right of action arising   hereunder, any dispute not resolved by mediation between the Company and the   Reinsurer arising out of the provisions of this Agreement or concerning its   interpretation or validity, whether arising before or after termination of this   Agreement, shall be submitted to arbitration in the manner hereinafter set forth.      B. Composition of Panel - Unless the parties agree upon a single arbitrator within 15   days after the receipt of a notice of intention to arbitrate, all disputes shall be   submitted to an arbitration panel composed of two arbitrators and an umpire   chosen in accordance with Paragraph C. hereof.       C. Appointment of Arbitrators - The members of the arbitration panel shall be chosen   from disinterested persons with at least 10 years' experience in the insurance and   reinsurance business.  Unless a single arbitrator is agreed upon, the party   requesting arbitration (hereinafter referred to as the "claimant") shall appoint an   arbitrator and give written notice thereof by certified mail or by a courier service   producing evidence of receipt by the receiving party, to the other party (hereinafter   referred to as the "respondent") together with its notice of intention to arbitrate.    Within 30 days after receiving such notice, the respondent shall also appoint an   arbitrator and notify the claimant thereof by certified mail or by a courier service   producing evidence of receipt by the receiving party.  Before instituting a hearing,   the two arbitrators so appointed shall choose an umpire.  If, within 20 days after   the appointment of the arbitrator chosen by the respondent, the two arbitrators fail   to agree upon the appointment of an umpire, each of them shall nominate three   individuals to serve as umpire, of whom the other shall decline two and the umpire   shall be chosen from the remaining two by drawing lots.  The name of the individual   first drawn shall be the umpire.      D. Failure of Party to Appoint an Arbitrator - If the respondent fails to appoint an   arbitrator within 30 days after receiving a notice of intention to arbitrate, the     

 

          EFFECTIVE: JULY 1, 2021                                   19.  FIN_5166.4           claimant's arbitrator shall appoint an arbitrator on behalf of the respondent, such   arbitrator shall then, together with the claimant's arbitrator, choose an umpire as   provided in Paragraph C. of Part III of this Article.      E. Submission of Dispute to Panel – Within 30 days after the notice of appointment   of all arbitrators, the panel shall meet, and determine a timely period for discovery,   discovery procedures and schedules for hearings.      F. Procedure Governing Arbitration - All proceedings before the panel shall be   informal and the panel shall not be bound by the formal rules of evidence.  The   panel shall have the power to fix all procedural rules relating to the arbitration   proceeding. In reaching any decision, the panel shall give due consideration to the   customs and usages of the insurance and reinsurance business.      G. Arbitration Award - The arbitration panel shall render its decision within 60 days   after termination of the proceeding, which decision shall be in writing, stating the   reasons therefor.  The decision of the majority of the panel shall be final and   binding on the parties to the proceeding. In no event, however, will the panel be   authorized to award punitive, exemplary or consequential damages of whatsoever   nature in connection with any arbitration proceeding concerning this Agreement.      H. Cost of Arbitration - Unless otherwise allocated by the panel, each party shall bear   the expense of its own arbitrator and shall jointly and equally bear with the other   parties the expense of the umpire and the arbitration.         ARTICLE XVII - INSOLVENCY      A. In the event of insolvency of the Company, the reinsurance provided by this   Agreement shall be payable by the Reinsurer on the basis of the liability of the   Company as respects Policies covered hereunder, without diminution because of   such insolvency, directly to the Company or its liquidator, receiver, conservator or   statutory successor except as provided in Sections 4118(a)(1)(A) and 1114(c) of   the New York Insurance Law.      B. The Reinsurer shall be given written notice of the pendency of each claim or loss   which may involve the reinsurance provided by this Agreement within a reasonable   time after such claim or loss is filed in the insolvency proceedings.  The Reinsurer   shall have the right to investigate each such claim or loss and interpose, at its own   expense, in the proceedings where the claim or loss is to be adjudicated, any   defense which it may deem available to the Company, its liquidator, receiver,   conservator or statutory successor.  The expense thus incurred by the Reinsurer   shall be chargeable, subject to court approval, against the insolvent Company as   part of the expense of liquidation to the extent of a proportionate share of the benefit   which may accrue to the Company solely as a result of the defense undertaken by   the Reinsurer.      C. In addition to the offset provisions set forth in Article XV - Offset, any debts or   credits, liquidated or unliquidated, in favor of or against either party on the date of   the receivership or liquidation order (except where the obligation was purchased by     
          EFFECTIVE: JULY 1, 2021                                   20.  FIN_5166.4           or transferred to be used as an offset) are deemed mutual debts or credits and shall   be set off with the balance only to be allowed or paid.  Although such claim on the   part of either party against the other may be unliquidated or undetermined in   amount on the date of the entry of the receivership or liquidation order, such claim   will be regarded as being in existence as of such date and any claims then in   existence and held by the other party may be offset against it.      D. Nothing contained in this Article is intended to change the relationship or status of   the parties to this Agreement or to enlarge upon the rights or obligations of either   party hereunder except as provided herein.         ARTICLE XVIII - AMENDMENTS      This Agreement may be amended by mutual consent of the parties expressed in an   addendum; and such addendum, when executed by both parties, shall be deemed to be   an integral part of this Agreement and binding on the parties hereto.         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed   by their duly authorized representatives as of the following dates:         FEDNAT INSURANCE COMPANY            /s/ Michael Braun /s/ Ronald Jordan   Signature      Michael Braun    Signature      Ronald Jordan   Print Name      President    Print Name      CFO   Title Title      Date:      7/30/2021  Date:        7/30/2021                     

 

          EFFECTIVE: JULY 1, 2021                                   21.  FIN_5166.4           SWISS REINSURANCE AMERICA CORPORATION            /s/ Thomas Smith     /s/ Andrew Robertson         Date:      8/4/2021  Date:        8/4/2021                  
          EFFECTIVE: JULY 1, 2021                                   1.  FIN_5166.4                    SUPPLEMENT TO THE ATTACHMENTS         DEFINITION OF IDENTIFICATION TERMS USED WITHIN THE ATTACHMENTS      A. Wherever the term "Company" or "Reinsured" or "Reassured" or whatever other   term is used to designate the reinsured company or companies within the various   attachments to the reinsurance agreement, the term shall be understood to mean   Company or Reinsured or Reassured or whatever other term is used in the attached   reinsurance agreement to designate the reinsured company or companies.      B. Wherever the term "Agreement" or "Contract" or "Policy" or whatever other term is   used to designate the attached reinsurance agreement within the various   attachments to the reinsurance agreement, the term shall be understood to mean   Agreement or Contract or Policy or whatever other term is used to designate the   attached reinsurance agreement.      C. Wherever the term "Reinsurer" or "Reinsurers" or "Underwriters" or whatever other   term is used to designate the reinsurer or reinsurers in the various attachments to   the reinsurance agreement, the term shall be understood to mean Reinsurer or   Reinsurers or Underwriters or whatever other term is used to designate the   reinsuring company or companies.                                     

 

          EFFECTIVE: JULY 1, 2021                                   1.  FIN_5166.4              INSOLVENCY FUNDS EXCLUSION CLAUSE         This Agreement excludes all liability of the Company arising by contract, operation of law,   or otherwise from its participation or membership, whether voluntary or involuntary, in any   insolvency fund or from reimbursement of any person for any such liability.  "Insolvency   fund" includes any guaranty fund, insolvency fund, plan, pool, association, fund or other   arrangement, howsoever denominated, established or governed, which provides for any   assessment of or payment or assumption by any person of part or all of any claim, debt,   charge, fee, or other obligation of an insurer, or its successors or assigns, which has been   declared by any competent authority to be insolvent or which is otherwise deemed unable   to meet any claim, debt, charge, fee or other obligation in whole or in part.           
          EFFECTIVE: JULY 1, 2021                                     1.  FIN_5166.4         POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE   SECTION A   Excluding:   (a) All Business derived directly or indirectly from any Pool, Association or Syndicate which   maintains its own reinsurance facilities.   (b) Any Pool or Scheme (whether voluntary or mandatory) formed after March 1, 1968, for the   purpose of insuring Property whether on a country-wide basis or in respect of designated   areas.  This Exclusion shall not apply to so-called Automobile Insurance Plans or other Pools   formed to provide coverage for Automobile Physical Damage.   SECTION B   It is agreed that business, written by the Company for the same perils, which is known at the time   to be insured by or in excess of underlying amounts placed in the following Pools, Associations or   Syndicates, whether by way of insurance or reinsurance is excluded hereunder:    Industrial Risk Insurers (successor to Factory Insurance Association and Oil Insurance   Association); Associated Factory Mutuals.    Any Pool, Association or Syndicate formed for the purpose of writing Oil, Gas or Petro-   Chemical Plants and/or Oil or Gas Drilling Rigs.    United States Aircraft Insurance Group, Canadian Aircraft Insurance Group, Associated   Aviation Underwriters, American Aviation Underwriters.   SECTION B does not apply:   (a) Where the Total Insured Value over all interests of the risk in question is less than   $350,000,000.   (b) To interests traditionally underwritten as Inland Marine or Stock and/or Contents written on a   Blanket basis.   (c) To Contingent Business Interruption, except when the Company is aware that the key location   is known at the time to be insured in any Pool, Association or Syndicate named above.   (d) To risks as follows: Offices, Hotels, Apartments, Hospitals, Educational Establishments, Public   Utilities (other than Railroad Schedules) and Builders Risks on the classes of risks specified   in this subsection (d) only.                                   

 

          EFFECTIVE: JULY 1, 2021  1  FIN_5166.4           POLLUTION AND SEEPAGE EXCLUSION CLAUSE      This Reinsurance does not apply to:   1. Pollution, seepage, contamination or environmental impairment (hereinafter collectively   referred to as "pollution") insurances, however styled;   2. Loss or damage caused directly or indirectly by pollution, unless said loss or damage   follows as a result of a loss caused directly by a peril covered hereunder;   3. Expenses resulting from any governmental direction or request that material present in   or part of or utilized on an insured's property be removed or modified, except as provided   in 5. below;   4. Expenses incurred in testing for and/or monitoring pollutants;   5. Expenses incurred in removing debris, unless (A) the debris results from a loss caused   directly by a peril covered hereunder, and (B) the debris to be removed is itself covered   hereunder, and (C) the debris is on the insured's premises, subject, however, to a limit   of $5,000 plus 25% of (i) the property damage loss, any risk, any one location, any one   original insured, and (ii) any deductible applicable to the loss;   6. Expenses incurred to extract pollutants from land or water at the insured's premises   unless (A) the release, discharge, or dispersal of pollutants results from a loss caused   directly by a peril covered hereunder, and (B) such expenses shall not exceed $10,000;   7. Loss of income due to any increased period of time required to resume operations   resulting from enforcement of any law regulating the prevention, control, repair, clean-up   or restoration of environmental damage;   8. Claims under 5. and/or 6. above, unless notice thereof is given to the Company by the   insured within 180 days after the date of the loss occurrence to which such claims relate.   "Pollutants" means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke,   vapor, soot, fumes, acids, alkalis, chemicals and waste.  Waste includes materials to be recycled,   reconditioned or reclaimed.   Where no pollution exclusion has been accepted or approved by an insurance regulatory authority   for use in a policy that is subject to this Agreement or where a pollution exclusion that has been   used in a policy is overturned, either in whole or in part, by a court having jurisdiction, there shall be   no recovery for pollution under this Agreement unless said pollution loss or damage follows as a   result of a loss caused directly by a peril covered hereunder.   Nothing herein shall be deemed to extend the coverage afforded by this reinsurance to property or   perils specifically excluded or not covered under the terms and conditions of the original policy   involved.     
          EFFECTIVE: JULY 1, 2021  1               FIN_5166.4   P20-0134     7   NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE - U.S.A.         N.M.A. 1119   1. This Reinsurance does not cover any loss or liability accruing to the Reassured, directly or   indirectly, and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed   for the purpose of covering Atomic or Nuclear Energy risks.   2. Without in any way restricting the operation of paragraph 1. of this Clause, this Reinsurance   does not cover any loss or liability accruing to the Reassured, directly or indirectly, and whether   as Insurer or Reinsurer, from any insurance against Physical Damage (including business   interruption or consequential loss arising out of such Physical Damage) to:   I. Nuclear reactor power plants including all auxiliary property on the site, or   II. Any other nuclear reactor installation, including laboratories handling radioactive   materials in connection with reactor installations, and critical facilities as such, or   III. Installations for fabricating complete fuel elements or for processing substantial   quantities of "special nuclear material," and for reprocessing, salvaging, chemically   separating, storing or disposing of spent nuclear fuel or waste materials, or   IV. Installations other than those listed in paragraph 2. III. above using substantial   quantities of radioactive isotopes or other products of nuclear fission.   3. Without in any way restricting the operation of paragraphs 1. and 2. of this Clause, this   Reinsurance does not cover any loss or liability by radioactive contamination accruing to the   Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on   property which is on the same site as a nuclear reactor power plant or other nuclear installation   and which normally would be insured therewith, except that this paragraph 3. shall not operate:   (a) where the Reassured does not have knowledge of such nuclear reactor power plant   or nuclear installation, or   (b) where the said insurance contains a provision excluding coverage for damage to   property caused by or resulting from radioactive contamination, however caused.    However, on and after 1st January, 1960, this sub-paragraph (b) shall only apply   provided the said radioactive contamination exclusion provision has been approved   by the Governmental Authority having jurisdiction thereof.   4. Without in any way restricting the operation of paragraphs 1., 2. and 3. of this Clause, this   Reinsurance does not cover any loss or liability by radioactive contamination accruing to the   Reassured, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive   contamination is a named hazard specifically insured against.   5. It is understood and agreed this Clause shall not extend to risks using radioactive isotopes in   any form where the nuclear exposure is not considered by the Reassured to be the primary   hazard.   N.M.A. 1119     

 

          EFFECTIVE: JULY 1, 2021  2               FIN_5166.4   P20-0134     7   6. The term "special nuclear material" shall have the meaning given to it by the Atomic Energy   Act of 1954 or by any law amendatory thereof.   7. Reassured to be sole judge of what constitutes:   (a) substantial quantities, and   (b) the extent of installation, plant or site.   NOTE: - Without in any way restricting the operation of paragraph 1. hereof, it is understood and   agreed that   (a) all policies issued by the Reassured on or before 31st December, 1957 shall be free from   the application of the other provisions of this Clause until expiry date or 31st December,   1960 whichever first occurs whereupon all the provisions of this Clause shall apply,   (b) with respect to any risk located in Canada policies issued by the Reassured on or before   31st December, 1958 shall be free from the application of the other provisions of this   Clause until expiry date or 31st December, 1960 whichever first occurs whereupon all   the provisions of this Clause shall apply.           
          EFFECTIVE: JULY 1, 2021 1  FIN_5166.4           NUCLEAR INCIDENT EXCLUSION CLAUSE - REINSURANCE - NO. 4   1. This Reinsurance does not cover any loss or liability accruing to the Reassured as a member   of, or subscriber to, any association of insurers or reinsurers formed for the purpose of covering   nuclear energy risks or as a direct or indirect reinsurer of any such member, subscriber or   association.   2. Without in any way restricting the operations of Nuclear Incident Exclusion Clauses, - Liability,   - Physical Damage, - Boiler and Machinery and paragraph 1. of this Clause, it is understood   and agreed that for all purposes of the reinsurance assumed by the Reinsurer from the   Reinsured, all original insurance policies or contracts of the Reinsured (new, renewal and   replacement) shall be deemed to include the applicable existing Nuclear Clause and/or   Nuclear Exclusion Clause(s) in effect at the time and any subsequent revisions thereto as   agreed upon and approved by the Insurance Industry and/or a qualified Advisory or Rating   Bureau.     

 

          EFFECTIVE: JULY 1, 2021 1  FIN_5166.4           POLLUTION LIABILITY EXCLUSION CLAUSE - REINSURANCE   This Reinsurance excludes:   (1) Any loss occurrence arising out of the actual, alleged or threatened discharge, dispersal,   release or escape of pollutants:   a) At or from premises owned, rented or occupied by an original assured; or   b) At or from any site or location used for the handling, storage, disposal, processing   or treatment of waste; or   c) Which are at any time transported, handled, stored, treated, disposed of, or   processed as waste; or   d) At or from any site or location on which any original assured is performing   operations:   (i) If the pollutants are brought on or to the site or location in connection  with   such operations; or   (ii) If the operations are to test for, monitor, clean up, remove, contain, treat,   detoxify or neutralize the pollutants.   (2) Any liability, loss, cost or expense arising out of any governmental direction or request to   test for, monitor, clean up, remove, contain, treat, detoxify or neutralize pollutants.   "Pollutants" means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke,   vapor, soot, fumes, acids, alkalis, chemicals and waste.  Waste includes materials to be recycled,   reconditioned or reclaimed.   Subparagraphs a) and d)(i) of paragraph (1) of this exclusion do not apply to loss occurrences   caused by heat, smoke or fumes from a hostile fire. As used herein, "hostile fire" means one which   becomes uncontrollable or breaks out from where it was intended to be.   "Original assured" as used herein means all insureds as defined in the policy issued by the   Company.     
   EFFECTIVE: JULY 1, 2021  1  FIN_5166.4             NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - U.S.A.    N.M.A. 1590         1. This reinsurance does not cover any loss or liability accruing to the Reassured as a member   of, or subscriber to, any association of insurers or reinsurers formed for the purpose of covering   nuclear energy risks or as a direct or indirect reinsurer of any such member, subscriber or   association.   2. Without in any way restricting the operation of paragraph 1. of this Clause it is understood and   agreed that for all purposes of this reinsurance all the original policies of the Reassured (new,   renewal and replacement) of the classes specified in Clause II. in this paragraph 2. from the   time specified in Clause III. in this paragraph 2. shall be deemed to include the following   provision (specified as the Limited Exclusion Provision):       LIMITED EXCLUSION PROVISION*      I. It is agreed that the policy does not apply under any liability  coverage, to injury,   sickness, disease, death or destruction, bodily injury or property damage with   respect to which an insured under the policy is also an insured under a nuclear   energy liability policy issued by Nuclear Energy Liability Insurance Association,   Mutual Atomic Energy Liability Underwriters or Nuclear Insurance Association of   Canada, or would be an insured under any such policy but for its termination upon   exhaustion of its limit of liability.     II. Family Automobile Policies (liability only), Special Automobile Policies (private   passenger automobiles, liability only), Farmers Comprehensive Personal Liabilities   Policies (liability only), Comprehensive Personal Liability Policies (liability only) or   policies of a similar nature; and the liability portion of combination forms related to   the four  classes of policies stated above, such as the Comprehensive Dwelling   Policy and the applicable types of Homeowners Policies.    III. The inception dates and thereafter of all original policies as described in II. above,   whether new, renewal or replacement, being policies which either   (a) become effective on or after 1st May, 1960, or   (b) become effective before that date and contain the Limited Exclusion   Provision set out above; provided this paragraph 2. shall not be applicable to   Family Automobile Policies, Special Automobile Policies, or policies or   combination policies of a similar nature, issued by the Reassured on New   York risks, until 90 days following approval of the Limited Exclusion Provision   by the Governmental Authority having jurisdiction thereof.   3. Except for those classes of policies specified in Clause II. of paragraph 2. and without in any   way restricting the operation of paragraph 1. of this Clause, it is understood and agreed that   for all purposes of this reinsurance the original liability policies of the Reassured (new, renewal   and replacement) affording the following coverages:   2012 JULY 1     

 

   EFFECTIVE: JULY 1, 2021  2  FIN_5166.4             Owners, Landlords and Tenants Liability, Contractual Liability, Elevator Liability, Owners or   Contractors (including railroad) Protective Liability, Manufacturers and Contractors Liability,   Product Liability, Professional and Malpractice Liability, Storekeepers Liability, Garage   Liability, Automobile Liability (including Massachusetts Motor Vehicle or Garage Liability)    shall be deemed to include with respect to such coverages, from the time specified in Clause   V. of this paragraph 3., the following provision (specified as the Broad Exclusion Provision):       BROAD EXCLUSION PROVISION*    It is agreed that the policy does not apply:     I. Under any Liability Coverage to injury, sickness, disease, death or destruction,   bodily injury or property damage   (a) with respect to which an insured under the policy is also an insured under   nuclear energy liability policy issued by Nuclear Energy Liability Insurance   Association, Mutual Atomic Energy Liability Underwriters or Nuclear   Insurance Association of Canada, or would be an insured under any such   policy but for its termination upon exhaustion of its limit of liability; or    (b) resulting from the hazardous properties of nuclear material and with   respect to which (1) any person or organization is required to maintain   financial protection pursuant to the Atomic Energy Act of 1954, or any law   amendatory thereof, or (2) the insured is, or had this policy not been issued   would be, entitled to indemnity from the United States of America, or any   agency thereof, under any agreement entered into by the United States of   America, or any agency thereof, with any person or organization.    II. Under any Medical Payments Coverage, or under any Supplementary Payments   Provision relating to immediate medical or surgical relief, first aid, to expenses   incurred with respect to bodily injury, sickness, disease or death, bodily injury   resulting from the hazardous properties of nuclear material and arising out of the   operation of a nuclear facility by any person or organization.   III. Under any Liability Coverage, to injury, sickness, disease, death or destruction,   bodily injury or property damage resulting from the hazardous properties of nuclear   material, if   (a) the nuclear material (1) is at any nuclear facility owned by, or operated by   or on behalf of, an insured or (2) has been discharged or dispersed   therefrom;   (b) the nuclear material is contained in spent fuel or waste at any time   possessed, handled, used, processed, stored, transported or disposed of   by or on behalf of an insured; or     
   EFFECTIVE: JULY 1, 2021  3  FIN_5166.4            (c) the injury, sickness, disease, death or destruction, bodily injury or   property damage arises out of the furnishing by an insured of services,   materials, parts or equipment in connection with the planning, construction,   maintenance, operation or use of any nuclear facility, but if such facility is   located within the United States of America, its territories, or possessions   or Canada, this exclusion (c) applies only to injury to or destruction of   property at such nuclear facility, property damage to such nuclear facility   and any property thereat.    IV. As used in this endorsement:    "hazardous properties" include radioactive, toxic or explosive properties; "nuclear   material" means source material, special nuclear material or byproduct material;   "source material," "special nuclear material," and "byproduct material" have the   meanings given them in the Atomic Energy Act of 1954 or in any law amendatory   thereof; "spent fuel" means any fuel element or fuel component, solid or liquid,   which has been used or exposed to radiation in a nuclear reactor; "waste" means   any waste material (1) containing byproduct material other than the tailings or   wastes produced by the extraction or concentration of uranium or thorium from any   ore processed for its source material content and (2) resulting from the operation   by any person or organization of any nuclear facility included within the definition of   nuclear facility under paragraph (a) or (b) thereof; "nuclear facility" means   (a) any nuclear reactor,   (b) any equipment or device designed or used for (1) separating the isotopes   of uranium or plutonium, (2) processing or utilizing spent fuel, or (3)   handling, processing or packaging waste,   (c) any equipment or device used for the processing, fabricating or alloying of   special nuclear material if at any time the total amount of such material in   the custody of the insured at the premises where such equipment or device   is located consists of or contains more than 25 grams of plutonium or   uranium 233 or any combination thereof, or more than 250 grams of   uranium 235,   (d) any structure, basin, excavation, premises or place prepared or used for   the storage or disposal of waste   and includes the site on which any of the foregoing is located, all operations   conducted on such site and all premises used for such operations; "nuclear reactor"   means any apparatus designed or used to sustain nuclear fission in a self-   supporting chain reaction or to contain a critical mass of fissionable material; with   respect to injury to or destruction of property, the word "injury" or   "destruction" includes all forms of radioactive contamination of property;   "property damage" includes all forms of radioactive contamination of property.     V. The inception dates and thereafter of all original policies affording coverages   specified in this paragraph 3., whether new, renewal or replacement, being policies   which become effective on or after 1st May, 1960, provided this paragraph 3. shall   not be applicable to   (i)  Garage and Automobile Policies issued by the Reassured     on New York risks, or     

 

   EFFECTIVE: JULY 1, 2021  4  FIN_5166.4            (ii) Statutory liability insurance required under Chapter 90, General Laws of   Massachusetts,    until 90 days following approval of the Broad Exclusion Provision by the   Governmental Authority having jurisdiction thereof.   4. Without in any way restricting the operations of paragraph 1. of this Clause, it is understood   and agreed that paragraphs 2. and 3. above are not applicable to original liability policies of   the Reassured in Canada, and that with respect to such policies, this Clause shall be deemed   to include the Nuclear Energy Liability Exclusion Provisions adopted by the Canadian   Underwriters' Association or the Independent Insurance Conference of Canada.      *NOTE: The words printed in BOLD TYPE in the Limited Exclusion Provision and in the Broad   Exclusion Provision shall apply only in relation to original liability policies which include a   Limited Exclusion Provision or a Broad Exclusion Provision containing those words.         
   EFFECTIVE: JULY 1, 2021  1  FIN_5166.4            TERRORISM EXCLUSION CLAUSE (USA) – REINSURANCE (PROPERTY)         Notwithstanding any provision to the contrary within this Agreement or any endorsement   thereto, this reinsurance Agreement does not cover any loss, damage or expense of   whatsoever nature directly or indirectly caused by, resulting from, arising out of or in   connection with any act of terrorism in the United States of America, regardless of any   other cause contributing concurrently or in any other sequence to the loss, damage or   expense.   For the purpose of this exclusion, terrorism means any actual or threatened violent act or   act harmful to human life, tangible or intangible property or infrastructure, directed towards   or having the effect of (a) influencing or protesting against any de jure or de facto   government or policy thereof or (b) intimidating, coercing or putting in fear a civilian   population or section thereof.   In any action, suit or other proceedings where the reinsurer alleges that by reason of this   exclusion a loss, damage or expense is not covered by this reinsurance Agreement, the   burden of proving that such loss, damage or expense is covered shall be upon the   Company.         TERRUSA-PROP        

 

   EFFECTIVE: JULY 1, 2021  1  FIN_5166.4                  TERRORISM EXCLUSION CLAUSE (USA) – REINSURANCE (CASUALTY)         Notwithstanding any provision to the contrary within this Agreement or any endorsement   thereto, this reinsurance Agreement does not cover any liability, loss, cost or expense of   whatsoever nature directly or indirectly caused by, resulting from, arising out of or in   connection with any act of terrorism in the United States of America, regardless of any   other cause contributing concurrently or in any other sequence to the liability, loss, cost or   expense.   For the purpose of this exclusion, terrorism means any actual or threatened violent act or   act harmful to human life, tangible or intangible property or infrastructure, directed towards   or having the effect of (a) influencing or protesting against any de jure or de facto   government or policy thereof or (b) intimidating, coercing or putting in fear a civilian   population or section thereof.   In any action, suit or other proceedings where the reinsurer alleges that by reason of this   exclusion a liability, loss, cost or expense is not covered by this reinsurance Agreement,   the burden of proving that such liability, loss, cost or expense is covered shall be upon the   Company.         TERRUSA-CASexhibit1036xq321

   21\F7V1120         Excess Catastrophe Reinsurance Contract   Effective:  June 1, 2021      FedNat Insurance Company   Sunrise, Florida   and   Monarch National Insurance Company   Sunrise, Florida   and   Maison Insurance Company   Baton Rouge, Louisiana   Baton Rouge, Louisiana                                                                                                   _______________________      Certain identified information has been omitted from this exhibit because it is not material and   would be competitively harmful if publicly disclosed.  Redactions are indicated by [***].           
   21\F7V1120         Table of Contents         Article Page    1 Classes of Business Reinsured 1    2 Commencement and Termination 1    3 Territory 3    4 Exclusions 3    5 Retention and Limit 4    6 Florida Hurricane Catastrophe Fund 5    7 Other Reinsurance 5    8 Definitions 5    9 Loss Occurrence 6    10 Loss Notices and Settlements 8    11 Cash Call 9    12 Salvage and Subrogation 9    13 Reinsurance Premium 9    14 Sanctions 9    15 Late Payments 10    16 Offset 11    17 Severability of Interests and Obligations 11    18 Access to Records 12    19 Liability of the Reinsurer 12    20 Net Retained Lines (BRMA 32E) 12    21 Errors and Omissions (BRMA 14F) 12    22 Currency (BRMA 12A) 13    23 Taxes (BRMA 50B) 13    24 Federal Excise Tax (BRMA 17D) 13    25 Reserves 13    26 Insolvency 15    27 Arbitration 15    28 Service of Suit (BRMA 49C) 16    29 Severability (BRMA 72E) 17    30 Governing Law (BRMA 71B) 17    31 Confidentiality 17    32 Non-Waiver 18    33 Agency Agreement (BRMA 73A) 18    34 Notices and Contract Execution 18    35 Intermediary 19     Schedule A 1     

 

   21\F7V1120   Page 1      Excess Catastrophe Reinsurance Contract   Effective: June 1, 2021      entered into by and between       FedNat Insurance Company   Sunrise, Florida   and   Monarch National Insurance Company   Sunrise, Florida   and   Maison Insurance Company   Baton Rouge, Louisiana    (hereinafter collectively referred to as the "Company" except   to the extent individually referred to)      and      The Subscribing Reinsurer(s) Executing the   Interests and Liabilities Agreement(s)   Attached Hereto   (hereinafter referred to as the "Reinsurer")            Article 1 - Classes of Business Reinsured   By this Contract the Reinsurer agrees to reinsure the excess liability which may accrue to the   Company under its policies in force at the effective time and date hereof or issued or renewed at   or after that time and date, and classified by the Company as Property business, including but   not limited to, Dwelling Fire, Inland Marine, Mobile Home, Commercial and Homeowners   business (including any business assumed from Citizens Property Insurance Corporation),   subject to the terms, conditions and limitations set forth herein and in Schedule A attached   hereto.         Article 2 - Commencement and Termination   A. This Contract shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2021,   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, July 1, 2021.      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 (or its equivalent under the   Subscribing Reinsurer's accounting system) at the inception of this Contract has been   reduced by 20.0% or more of the amount of surplus (or the applicable equivalent)   12 months prior to that date; or     
   21\F7V1120   Page 2          2. The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the   Subscribing Reinsurer's accounting system) at any time during the term of this   Contract has been reduced by 20.0% or more of the amount of surplus (or the   applicable equivalent) 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, or has announced its intention to become,   merged with, acquired by or controlled by any other entity 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,   receivership, supervision, administration, winding-up or under a scheme of   arrangement, or similar proceedings (whether voluntary or involuntary) or proceedings   have been instituted against the Subscribing Reinsurer for the appointment of a   receiver, liquidator, rehabilitator, supervisor, administrator, 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 or renewal property or casualty   treaty reinsurance business; or       9. The Subscribing Reinsurer has hired an unaffiliated runoff claims manager that is   compensated on a contingent basis or is otherwise provided with financial incentives   based on the quantum of claims paid; or       10. The Subscribing Reinsurer has failed to comply with the funding requirements set forth   in the Reserves Article.      C. The "term of this Contract" as used herein shall mean the period from 12:01 a.m., Eastern   Standard Time, June 1, 2021 to 12:01 a.m., Eastern Standard Time, July 1, 2021.    However, if this Contract is terminated, the "term of this Contract" as used herein shall   mean the period from 12:01 a.m., Eastern Standard Time, June 1, 2021 to the effective   time and date of termination.      D. 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     

 

   21\F7V1120   Page 3      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 3 - Territory   The territorial limits of this Contract shall be identical with those of the Company's policies.         Article 4 - Exclusions   A. This Contract does not apply to and specifically excludes the following:       1. Reinsurance assumed by the Company under obligatory reinsurance agreements,   except business assumed by the Company from Citizens Property Insurance   Corporation.       2. Hail damage to growing or standing crops.       3. Business rated, coded or classified as Flood insurance or which should have been   rated, coded or classified as such.       4. Business rated, coded or classified as Mortgage Impairment and Difference in   Conditions insurance or which should have been rated, coded or classified as such.       5. Title insurance and all forms of Financial Guarantee, Credit and Insolvency.       6. Aviation, Ocean Marine, Boiler and Machinery, Fidelity and Surety, Accident and   Health, Animal Mortality and Workers Compensation and Employers Liability.       7. Errors and Omissions, Malpractice and any other type of Professional Liability   insurance.        8. Loss and/or damage and/or costs and/or expenses arising from seepage and/or   pollution and/or contamination, other than contamination from smoke.  Nevertheless,   this exclusion does not preclude payment of the cost of removing debris of property   damaged by a loss otherwise covered hereunder, subject always to a limit of 25.0% of   the Company's property loss under the applicable original policy.       9. Loss or liability as excluded under the provisions of the "War Exclusion Clause"   attached to and forming part of this Contract.       10. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause - Physical   Damage - Reinsurance (U.S.A.)" attached to and forming part of this Contract.       11. Loss or liability excluded by the Pools, Associations and Syndicates Exclusion Clause   (Catastrophe) attached to and forming part of this Contract and any assessment or   similar demand for payment related to the FHCF or Citizens Property Insurance   Corporation.        
   21\F7V1120   Page 4       12. Loss or 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.       13. Losses in the respect of overhead transmission and distribution lines other than those   on or within 150 meters (or 500 feet) of the insured premises.       14. Mold, unless resulting from a peril otherwise covered under the policy involved.       15. Loss or liability as excluded under the provisions of the "Terrorism Exclusion" attached   to and forming part of this Contract.       16. All property loss, damage, destruction, erasure, corruption or alteration of Electronic   Data from any cause whatsoever (including, but not limited to, Computer Virus) or loss   of use, reduction in functionality, cost, expense or whatsoever nature resulting   therefrom, unless resulting from a peril otherwise covered under the policy involved.        "Electronic Data" as used herein means facts, concepts and information converted to   a form usable for communications, interpretation or processing by electronic and   electromechanical data processing or electronically-controlled equipment and includes   programs, software and other coded instructions for the processing and manipulation   of data or the direction and manipulation of such equipment.         "Computer Virus" as used herein means a set of corrupting, harmful or otherwise   unauthorized instructions or code, including a set of maliciously-introduced,   unauthorized instructions or code, that propagate themselves through a computer   system network of whatsoever nature.        However, in the event that a peril otherwise covered under the policy results from any   of the matters described above, this Contract, subject to all other terms and   conditions, will cover physical damage directly caused by such listed peril.         Article 5 - 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 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   amount, shown as "Reinsurer's Per Occurrence Limit" for that excess layer in Schedule A   attached hereto, as respects any one loss occurrence, nor shall the liability of the Reinsurer     

 

   21\F7V1120   Page 5      under each excess layer exceed the amount, shown as "Reinsurer's Term Limit" for that   excess layer in Schedule A attached hereto in all for the term of this Contract.      B. Notwithstanding the provisions above, no claim shall be made hereunder as respects   losses arising out of loss occurrences commencing during the term of this Contract 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."         Article 6 - Florida Hurricane Catastrophe Fund   The Company has purchased 90.0% of the FHCF mandatory layer of coverage and shall be   deemed to inure to the benefit of this Contract. Loss adjustment expense recoveries paid by the   FHCF in excess of the actual loss adjustment expense paid by the Company shall inure to the   benefit of the Company and shall not reduce the amount of ultimate net loss hereunder.    Further, any FHCF loss reimbursement shall be deemed to be paid to the Company in   accordance with the FHCF reimbursement contract at the full payout level set forth therein and   will be deemed not to be reduced by any reduction or exhaustion of the FHCF's claims-paying   capacity as respects the mandatory FHCF coverage.         Article 7 - Other Reinsurance   The Company shall be permitted to carry other 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 8 - Definitions   A. "Loss adjustment expense," regardless of how such expenses are classified for statutory   reporting purposes, as used in this Contract shall mean all costs and expenses allocable to   a specific claim that are incurred by the Company in the investigation, appraisal,   adjustment, settlement, litigation, defense or appeal of a specific claim, including court   costs and costs of supersedeas and appeal bonds, and including a) pre-judgment interest,   unless included as part of the award or judgment; b) post-judgment interest; c) legal   expenses and costs incurred in connection with coverage questions and legal actions   connected thereto, including Declaratory Judgment Expense; and d) expenses and a pro   rata share of salaries of the Company field employees, and expenses of other Company   employees who have been temporarily diverted from their normal and customary duties and   assigned to the field adjustment of losses covered by this Contract.       Loss adjustment expense as defined above does not include unallocated loss adjustment   expense.  Unallocated loss adjustment expense includes, but is not limited to, salaries and   expenses of employees, other than in (d) above, and office and other overhead expenses.        
   21\F7V1120   Page 6      B. "Loss in excess of policy limits" and "extra contractual obligations" as used in this Contract   shall mean:       1. "Loss in excess of policy limits" shall mean 90.0% 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.  Any loss in excess of policy limits that is made in connection   with this Contract shall not exceed 25.0% of the actual catastrophe loss.       2. "Extra contractual obligations" shall mean 90.0% 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.  Any extra contractual obligations that are made in   connection with this Contract shall not exceed 25.0% of the actual catastrophe loss.       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.      C. "Policies" as used in this Contract shall mean all policies, contracts and binders of   insurance or reinsurance.      D. "Ultimate net loss" as used in this Contract shall mean the sum or sums (including loss in   excess of policy limits, extra contractual obligations and loss adjustment expense, as   defined herein) 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.         Article 9 - 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     

 

   21\F7V1120   Page 7      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 a named storm, all individual losses sustained by the Company occurring   during any period (a) from and after 12:00 a.m. Eastern Standard Time on the date a   watch, warning, advisory, or other bulletin (whether for wind, flood or otherwise) for   such named storm is first issued by the National Hurricane Center ("NHC") or its   successor or any other division of the National Weather Service ("NWS"),   (b) continuing for a time period thereafter during which such named storm continues,   regardless of its category rating or lack thereof and regardless of whether the watch,   warning, or advisory or other bulletin remains in effect for such named storm and   (c) ending 96 hours following the issuance of the last watch, warning or advisory or   other bulletin for such named storm or related to such named storm by the NHC or its   successor or any other division of the NWS.  "Named storm" shall mean any storm or   storm system that has been declared by the NHC or its successor or any other   division of the NWS to be a named storm at any time, which may include, by way of   example and not limitation, hurricane, wind, gusts, typhoon, tropical storm, hail, rain,   tornados, cyclones, ensuing flood, storm surge, water damage, fire following, sprinkler   leakage, riots, vandalism, and collapse, and all losses and perils (including, by way of   example and not limitation, those mentioned previously in this sentence) in each case   arising out of, caused by, occurring during, occasioned by or resulting from such storm   or storm system, including by way of example and not limitation the merging of one or   more separate storm(s) or storm system(s) into a combined storm surge event.    However, the named storm need not be limited to one state or province or states or   provinces contiguous thereto.       2. As regards storm or storm systems that are not a named storm, including, by way of   example and not limitation, ensuing wind, gusts, typhoon, tropical storm, hail, rain,   tornados, cyclones, ensuing flood, storm surge, fire following, sprinkler leakage, riots,   vandalism, collapse and water damage, all individual losses sustained by the   Company occurring during any period of 144 consecutive hours arising out of, caused   by, occurring during, occasioned by or resulting from the same event.  However, the   event need not be limited to one state or province or states or provinces contiguous   thereto.       3. As regards riot, riot attending a strike, civil commotion, vandalism and malicious   mischief, all individual losses sustained by the Company occurring during any period   of 96 consecutive hours within the area of one municipality or county and the   municipalities or counties contiguous thereto arising out of and directly occasioned by   the same event.  The maximum duration of 96 consecutive hours may be extended in   respect of individual losses which occur beyond such 96 consecutive hours during the   continued occupation of an assured's premises by strikers, provided such occupation   commenced during the aforesaid period.       4. As regards earthquake (the epicenter of which need not necessarily be within the   territorial confines referred to in the introductory portion of this paragraph) and fire   following directly occasioned by the earthquake, only those individual fire losses which     
   21\F7V1120   Page 8      commence during the period of 168 consecutive hours may be included in the   Company's loss occurrence.       5. As regards freeze, only individual losses directly occasioned by collapse, breakage of   glass and water damage (caused by bursting frozen pipes and tanks) may be included   in the Company's loss occurrence.       6. As regards firestorms, brush fires and any other fires or series of fires, irrespective of   origin (except as provided in subparagraphs 3 and 4 above), all individual losses   sustained by the Company which commence during any period of 168 consecutive   hours within the area of one state of the United States or province of Canada and   states or provinces contiguous thereto and to one another may be included in the   Company's loss occurrence.      B. For all loss occurrences hereunder, the Company may choose the date and time when any   such period of consecutive hours commences, 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 or series of disasters, accidents,   or losses.  Furthermore:       1. For all loss occurrences other than those referred to in subparagraphs A.1., A.2., and   A.3. above, only one such period of 168 consecutive hours shall apply with respect to   one event.       2. As regards those loss occurrences referred to in subparagraphs A.1. and A.2., only   one such period of consecutive hours (as set forth therein) shall apply with respect to   one event, regardless of the duration of the event.         3. As regards those loss occurrences referred to in subparagraph A.3. above, if the   disaster, accident, or loss or series of disasters, accidents, or losses occasioned by   the event is of greater duration than 96 consecutive hours, then the Company may   divide that disaster, accident, or loss or series of disasters, accidents, or losses into   two or more loss occurrences, provided that no two periods overlap and no individual   loss is included in more than one such period.      C. It is understood that losses arising from a combination of two or more perils as a result of   the same event may be considered as having arisen from one loss occurrence.    Notwithstanding the foregoing, the hourly limitations as stated above shall not be exceeded   as respects the applicable perils, and no single loss occurrence shall encompass a time   period greater than 168 consecutive hours, except as regards those loss occurrences   referred to in subparagraphs A.1., A.4. and A.6. above.         Article 10 - Loss Notices and Settlements   A. Whenever losses sustained by the Company are reserved by the Company for an amount   greater than 50.0% of the Company's respective retention under any excess layer   hereunder and/or appear likely to result in a claim under such excess layer, the Company   shall notify the Subscribing Reinsurers under that excess layer and shall provide updates     

 

   21\F7V1120   Page 9      related to development of such losses.  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 and the terms of the original policy (with the exception of loss in excess of policy   limits or extra contractual obligations coverage, if any, under 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 by the Company.         Article 11 - Cash Call   Notwithstanding the provisions of the Loss Notices and Settlements Article, upon the request of   the Company, the Reinsurer shall pay any amount with regard to a loss settlement or   settlements that are scheduled to be made (including any payments projected to be made)   within the next 20 days by the Company, subject to receipt by the Reinsurer of a satisfactory   proof of loss.  Such agreed payment shall be made within 10 days from the date the demand for   payment was transmitted to the Reinsurer.         Article 12 - 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, if, in the Company's opinion, it is economically reasonable to   do so.         Article 13 - Reinsurance Premium   As premium for reinsurance coverage provided by this Contract, the Company shall pay an   amount, shown as "Reinsurance Premium" for that excess layer in Schedule A attached hereto   payable at the inception of this Contract.         Article 14 - Sanctions   Neither the Company nor any Subscribing Reinsurer shall be liable for premium or loss under   this Contract if it would result in a violation of any mandatory sanction, prohibition or restriction   under United Nations resolutions or the trade or economic sanctions, laws or regulations of the   European Union, United Kingdom or United States of America that are applicable to either party.           
   21\F7V1120   Page 10      Article 15 - 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 (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 charge 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 charges 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 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 10 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 10 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 a "cash call" made in accordance with the Cash Call Article, payment   shall be deemed due 10 days after the demand for payment is transmitted to the   Reinsurer.  If such loss or claim payment is not received within the 10 days, interest   shall accrue on the payment or amount overdue in accordance with paragraph B   above, from the date the demand for payment was transmitted to the Reinsurer.       4. As respects any payment, adjustment or return due either party not otherwise   provided for in subparagraphs 1, 2, and 3 of this paragraph C, 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 10 days following   transmittal of written notification that the provisions of this Article have been invoked.        

 

   21\F7V1120   Page 11       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,   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 charges due   hereunder on the amount in dispute shall be null and void.  If the debtor party loses in such   proceeding, then the interest charge 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 charges arising out of the application of this Article that are $1,000 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 16 - Offset   The Company and the Reinsurer may offset any balance or amount due from one party to the   other under this Contract or any other contract heretofore or hereafter entered into between the   Company and the Reinsurer, whether acting as assuming reinsurer or ceding company.  The   provisions of this Article shall not be affected by the insolvency of either party.         Article 17 - Severability of Interests and Obligations   The rights, duties and obligations set forth below shall apply as if this Contract were a separate   contract between the Subscribing Reinsurers and each named reinsured company:       A. Balances payable by any Subscribing Reinsurer to or from any reinsured party under the   Contract shall not serve to offset any balances recoverable to, or from, any other reinsured   party to the Contract and balances payable shall be separated by named reinsured   company and paid directly to the appropriate named reinsured company's bank account.      B. Balances recoverable by any Subscribing Reinsurer to or from any reinsured party under   the Contract shall not serve to offset any balances payable to, or from, any other reinsured   party to the Contract.      C. Reports and remittances made to the Reinsurer in accordance with the applicable articles   of the Contract are to be in sufficient detail to identify both the Reinsurer's loss obligations   due to each named reinsured company and each named reinsured company's premium   remittance under the report.       D. In the event of the insolvency of any of the parties to the Contract, offset shall be only   allowed in accordance with the laws of the insolvent party's state of domicile.     
   21\F7V1120   Page 12         E. Nothing in this Article shall be construed to provide a separate retention, Reinsurer's limit of   liability any one loss occurrence or Reinsurer's annual limit of liability for each named   reinsured company.         Article 18 - Access to Records   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, provided the Reinsurer   gives the Company at least 15 days prior notice of request for such access.  However, a   Subscribing Reinsurer or its designated representatives shall not have any right of access to the   records of the Company if it is not current in all undisputed payments due the Company.    "Undisputed" as used herein shall mean any amount that the Subscribing Reinsurer has not   contested in writing to the Company specifying the reason(s) why the payments are disputed.           Article 19 - 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   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 20 - 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 21 - 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     

 

   21\F7V1120   Page 13      delay, error or omission not occurred, provided always that such error or omission is rectified as   soon as possible after discovery.         Article 22 - 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 23 - 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 24 - Federal Excise Tax (BRMA 17D)   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 25 - Reserves   A. The Reinsurer agrees to fund its share of amounts, including but not limited to, the   Company's ceded unearned premium and outstanding loss and loss adjustment expense   reserves (including all case reserves plus any reasonable amount estimated to be   unreported from known loss occurrences) (hereinafter referred to as "Reinsurer's   Obligations") by:       1. 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        
   21\F7V1120   Page 14       3. Cash advances;       if the Reinsurer:       1. Is unauthorized in any state of the United States of America or the District of Columbia   having jurisdiction over the Company and 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; or       2. Has an A.M. Best Company's rating equal to or below B++ at the inception of this   Contract.       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 unearned premiums returned to   insureds on account of policy cancellations, unless paid in cash by the Reinsurer;       2. 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;       3. To reimburse itself for the Reinsurer's share of any other amounts claimed to be due   hereunder, unless paid in cash by the Reinsurer;       4. To fund a cash account in an amount equal to the Reinsurer's share of amounts,   including but not limited to, the Reinsurer's Obligations as set forth above, 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;       5. To refund to the Reinsurer any sum in excess of the actual amount required to fund   the Reinsurer's share of amounts, including but not limited to, the Reinsurer's   Obligations as set forth above, 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), B(2) or B(4), or in the case of B(3), the actual amount   determined to be due, the Company shall promptly return to the Reinsurer the excess   amount so drawn.           

 

   21\F7V1120   Page 15      Article 26 - Insolvency   A. In the event of the insolvency of the Company, this reinsurance shall be payable directly to   the Company or to its liquidator, receiver, conservator or statutory successor on the basis of   the liability of the Company without diminution because of the insolvency of the Company or   because the liquidator, receiver, conservator or statutory successor of the Company has   failed to pay all or a portion of any claim.  It is agreed, however, that the liquidator, receiver,   conservator or statutory successor of the Company shall give written notice to the   Reinsurer of the pendency of a claim against the Company indicating the policy or bond   reinsured which claim would involve a possible liability on the part of the Reinsurer within a   reasonable time after such claim is filed in the conservation or liquidation proceeding or in   the receivership, and that during the pendency of such claim, the Reinsurer may investigate   such claim and interpose, at its own expense, in the proceeding where such claim is to be   adjudicated, any defense or defenses that it may deem available to the Company or its   liquidator, receiver, conservator or statutory successor.  The expense thus incurred by the   Reinsurer shall be chargeable, subject to the approval of the Court, against the Company   as part of the expense of conservation or liquidation to the extent of a pro rata share of the   benefit which may accrue to the Company solely as a result of the defense undertaken by   the Reinsurer.      B. Where two or more Subscribing 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 the Company, 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 27 - 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, each Arbiter shall nominate three candidates within 10 days thereafter, two of   whom the other shall decline, and the decision shall be made by drawing lots.        
   21\F7V1120   Page 16      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 Subscribing Reinsurer is involved in the same dispute, all such   Subscribing Reinsurers shall, at the option of the Company, constitute and act as one party   for purposes of this Article and communications shall be made by the Company to each of   the Subscribing Reinsurers constituting one party, provided, however, that nothing herein   shall impair the rights of such Subscribing Reinsurers to assert several, rather than joint,   defenses or claims, nor be construed as changing the liability of the Subscribing 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 28 - 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.        

 

   21\F7V1120   Page 17         Article 29 - 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 30 - Governing Law (BRMA 71B)   This Contract shall be governed by and construed in accordance with the laws of the State of   Florida.         Article 31 - Confidentiality   A. The Reinsurer hereby acknowledges that the documents, information and data provided to   it by the Company, whether directly or through an authorized agent, in connection with the   placement and execution of this Contract, including all information obtained through any   audits and any claims information between the Company and the Reinsurer, and any   submission or other materials relating to any renewal (hereinafter referred to as   "Confidential Information") are proprietary and confidential to the Company.        B. Except as provided for in paragraph C below, the Reinsurer shall not disclose any   Confidential Information to any third parties, including but not limited to the Reinsurer's   subsidiaries and affiliates, other insurance companies and their subsidiaries and affiliates,   underwriting agencies, research organizations, any unaffiliated entity engaged in modeling   insurance or reinsurance data, and statistical rating organizations.        C. Confidential Information may be used by the Reinsurer only in connection with the   performance of its obligations or enforcement of its rights under this Contract and will only   be disclosed when required by (1) retrocessionaires subject to the business ceded to this   Contract, (2) regulators performing an audit of the Reinsurer's records and/or financial   condition, (3) external auditors performing an audit of the Reinsurer's records in the normal   course of business, or (4) the Reinsurer's legal counsel; provided that the Reinsurer   advises such parties of the confidential nature of the Confidential Information and their   obligation to maintain its confidentiality.  The Company may require that any third-party   representatives of the Reinsurer agree, in writing, to be bound by this Confidentiality Article   or by a separate written confidentiality agreement, containing terms no less stringent than   those set forth in this Article.  If a third-party representative of the Reinsurer is not bound, in   writing, by this Confidentiality Article or by a separate written confidentiality agreement, the   Reinsurer shall be responsible for any breach of this provision by such third-party   representative of the Reinsurer.      D. Notwithstanding the above, in the event that the Reinsurer is required by court order, other   legal process or any regulatory authority to release or disclose any or all of the Confidential   Information, the Reinsurer agrees to provide the Company with written notice of same at   least 10 days prior to such release or disclosure, to the extent legally permissible, and to     
   21\F7V1120   Page 18      use its best efforts to assist the Company in maintaining the confidentiality provided for in   this Article.      E. Any disclosure of Non-Public Personally Identifiable Information shall comply with all state   and federal statutes and regulations governing the disclosure of Non-Public Personally   Identifiable Information.  "Non-Public Personally Identifiable Information" shall be defined as   this term or a similar term is defined in any applicable state, provincial, territory, or federal   law.  Disclosing or using this information for any purpose not authorized by applicable law is   expressly forbidden without the prior consent of the Company.      F. The parties agree that any information subject to privilege, including the attorney-client   privilege or attorney work product doctrine (collectively "Privilege") shall not be disclosed to   the Reinsurer until, in the Company's opinion, such Privilege is deemed to be waived or   otherwise compromised by virtue of its disclosure pursuant to this Contract.  Furthermore,   the Reinsurer shall not assert that any Privilege otherwise applicable to the Confidential   Information has been waived or otherwise compromised by virtue of its disclosure pursuant   to this Contract.        G. The provisions of this Article shall extend to the officers, directors and employees of the   Reinsurer and its affiliates, and shall be binding upon their successors and assigns.         Article 32 - Non-Waiver   The failure of the Company or Reinsurer to insist on compliance with this Contract or to exercise   any right, remedy or option hereunder shall not:  (1) constitute a waiver of any rights contained   in this Contract, (2) prevent the Company or Reinsurer from thereafter demanding full and   complete compliance, (3) prevent the Company or Reinsurer from exercising such remedy in   the future, nor (4) affect the validity of this Contract or any part thereof.         Article 33 - Agency Agreement (BRMA 73A)   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 34 - Notices and Contract Execution   A. Whenever a notice, statement, report or any other written communication is required by this   Contract, unless otherwise specified, such notice, statement, report or other written   communication may be transmitted by certified or registered mail, nationally or   internationally recognized express delivery service, personal delivery, electronic mail, or   facsimile.  With the exception of notices of termination, first class mail is also acceptable.        

 

   21\F7V1120   Page 19      B. The use of any of the following shall constitute a valid execution of this Contract or any   amendments thereto:       1. Paper documents with an original ink signature;       2. Facsimile or electronic copies of paper documents showing an original ink signature;   and/or       3. Electronic records with an electronic signature made via an electronic agent.  For the   purposes of this Contract, the terms "electronic record," "electronic signature" and   "electronic agent" shall have the meanings set forth in the Electronic Signatures in   Global and National Commerce Act of 2000 or any amendments thereto.      C. This Contract may be executed in one or more counterparts, each of which, when duly   executed, shall be deemed an original.         Article 35 - Intermediary   Aon Benfield Inc., or one of its affiliated corporations duly licensed as a reinsurance   intermediary, is hereby recognized as the Intermediary negotiating this Contract for all business   hereunder.  All communications (including but not limited to notices, statements, premiums,   return premiums, commissions, taxes, losses, loss adjustment expense, salvages and loss   settlements) relating to this Contract will be transmitted to the Company or the Reinsurer   through the Intermediary.  Payments by the Company to the Intermediary will be deemed   payment to the Reinsurer.  Payments by the Reinsurer to the Intermediary will be deemed   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 representatives has executed this   Contract as of the dates specified below:      This         11th                  day of         June                                       in the year    2021             .      FedNat Insurance Company      /s/ Michael Braun              This         11th                  day of         June                                       in the year    2021             .      Monarch National Insurance Company      /s/ Michael Braun             
   21\F7V1120   Page 20      This         11th                  day of         June                                       in the year    2021             .      Maison Insurance Company      /s/ Douglas Raucy                

 

   21\F7V1120   Schedule A         Schedule A   Excess Catastrophe Reinsurance Contract   Effective:  June 1, 2021      FedNat Insurance Company   Sunrise, Florida   and   Monarch National Insurance Company   Sunrise, Florida   and   Maison Insurance Company   Baton Rouge, Louisiana         First   Excess   Company's Retention $25,000,000   Reinsurer's Per Occurrence Limit $70,000,000   Reinsurer's Term Limit 70,000,000   Reinsurance Premium [***]      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.     
   21\F7V1120      War Exclusion Clause            As regards interests which at time of loss or damage are on shore, no liability shall attach hereto   in respect of any loss or damage which is occasioned by war, invasion, hostilities, acts of   foreign enemies, civil war, rebellion, insurrection, military or usurped power, or martial law or   confiscation by order of any government or public authority.        

 

   21\F7V1120      Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance (U.S.A.)         1. This Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as   Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or Nuclear   Energy risks.      2. Without in any way restricting the operation of paragraph (1) of this Clause, this Reinsurance does not cover any loss   or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any insurance   against Physical Damage (including business interruption or consequential loss arising out of such Physical Damage)   to:       I. Nuclear reactor power plants including all auxiliary property on the site, or       II. Any other nuclear reactor installation, including laboratories handling radioactive materials in connection with   reactor installations, and "critical facilities" as such, or       III. Installations for fabricating complete fuel elements or for processing substantial quantities of "special nuclear   material," and for reprocessing, salvaging, chemically separating, storing or disposing of "spent" nuclear fuel or   waste materials, or       IV. Installations other than those listed in paragraph (2) III above using substantial quantities of radioactive isotopes   or other products of nuclear fission.      3. Without in any way restricting the operations of paragraphs (1) and (2) hereof, this Reinsurance does not cover any   loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or   Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear   installation and which normally would be insured therewith except that this paragraph (3) shall not operate       (a) where Reassured does not have knowledge of such nuclear reactor power plant or nuclear installation, or       (b) where said insurance contains a provision excluding coverage for damage to property caused by or resulting   from radioactive contamination, however caused.  However on and after 1st January 1960 this sub-paragraph (b)   shall only apply provided the said radioactive contamination exclusion provision has been approved by the   Governmental Authority having jurisdiction thereof.      4. Without in any way restricting the operations of paragraphs (1), (2) and (3) hereof, this Reinsurance does not cover any   loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or   Reinsurer, when such radioactive contamination is a named hazard specifically insured against.      5. It is understood and agreed that this Clause shall not extend to risks using radioactive isotopes in any form where the   nuclear exposure is not considered by the Reassured to be the primary hazard.      6. The term "special nuclear material" shall have the meaning given it in the Atomic Energy Act of 1954 or by any law   amendatory thereof.      7. Reassured to be sole judge of what constitutes:       (a) substantial quantities, and       (b) the extent of installation, plant or site.      Note.-Without in any way restricting the operation of paragraph (1) hereof, it is understood and agreed that       (a) all policies issued by the Reassured on or before 31st December 1957 shall be free from the application of the   other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the   provisions of this Clause shall apply.       (b) with respect to any risk located in Canada policies issued by the Reassured on or before 31st December 1958   shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960   whichever first occurs whereupon all the provisions of this Clause shall apply.      12/12/57   N.M.A. 1119   BRMA 35B     
   21\F7V1120   Page 1 of 2      Pools, Associations and Syndicates Exclusion Clause   (Catastrophe)         It is hereby understood and agreed that:      A. This Contract excludes loss or liability arising from:       1. Business derived directly or indirectly from any pool, association, or syndicate which   maintains its own reinsurance facilities.  This subparagraph 1 shall not apply with   respect to:       a. Residual market mechanisms created by statute.  This Contract shall not extend,   however, to afford coverage for liability arising from the inability of any other   participant or member in the residual market mechanism to meet its obligations,   nor shall this Contract extend to afford coverage for liability arising from any   claim against the residual market mechanism brought by or on behalf of any   insolvency fund (as defined in the Insolvency Fund Exclusion Clause   incorporated in this Contract).  For the purposes of this Clause, the California   Earthquake Authority shall be deemed to be a "residual market mechanism."       b. Inter-agency or inter-government joint underwriting or risk purchasing   associations (however styled) created by or permitted by statute or regulation.       2.  Those perils insured by the Company that the Company knows, at the time the risk is   bound, to be insured by or in excess of amounts insured or reinsured by any pool,   association or syndicate formed for the purpose of insuring oil, gas, or petro-chemical   plants; oil or gas drilling rigs; and/or aviation risks.  This subparagraph 2 shall not   apply:       a. If the total insured value over all interests of the risk is less than $250,000,000.       b. To interests traditionally underwritten as Inland Marine or Stock or Contents   written on a blanket basis.       c. To Contingent Business Interruption liability, except when it is known to the   Company, at the time the risk is bound, that the key location is insured by or   through any pool, association or syndicate formed for the purpose of insuring oil,   gas, or petro-chemical plants; oil or gas drilling rigs; and/or aviation risks; unless   the total insured value over all interests of the risk is less than $250,000,000.      B. With respect to loss or liability arising from the Company's participation or membership in   any residual market mechanism created by statute, the Company may include in its ultimate   net loss only amounts for which the Company is assessed as a direct consequence of a   covered loss occurrence, subject to the following provisions:       1. Recovery is limited to perils otherwise protected hereunder.       2. In the event the terms of the Company's participation or membership in any such   residual market mechanism permit the Company to recoup any such direct     

 

   21\F7V1120   Page 2 of 2      assessment attributed to a loss occurrence by way of a specific policy premium   surcharge or similar levy on policyholders, the amount received by the Company as a   result of such premium surcharge or levy shall reduce the Company's ultimate net loss   for such loss occurrence.       3. The result of any rate increase filing permitted by the terms of the Company's   participation or membership in any such residual market mechanism following any   assessment shall have no effect on the Company's ultimate net loss for any covered   loss occurrence.       4. The result of any premium tax credit filing permitted by the terms of the Company's   participation or membership in any such residual market mechanism following any   assessment shall reduce the Company's ultimate net loss for any covered loss   occurrence.       5. The Company may not include in its ultimate net loss any amount resulting from an   assessment that, pursuant to the terms of the Company's participation or membership   in the residual market mechanism, the Company is required to pay only after such   assessment is collected from the policyholder.       6. The ultimate net loss hereunder shall not include any monies expended to purchase or   retire bonds as a consequence of being a member of a residual market mechanism   nor any fines or penalties imposed on the Company for late payment.       7. If, however, a residual market mechanism only provides for assessment based on an   aggregate of losses in any one contract or plan year of said mechanism, then the   amount of that assessment to be included in the ultimate net loss for any one loss   occurrence shall be determined by multiplying the Company's share of the aggregate   assessment by a factor derived by dividing the Company's ultimate net loss (net of the   assessment) with respect to the loss occurrence by the total of all of its ultimate net   losses (net of assessments) from all loss occurrences included by the mechanism in   determining the assessment.       8/1/2012              
   21\F7V1120      Terrorism Exclusion   (Property Treaty Reinsurance)            Notwithstanding any provision to the contrary within this Contract or any amendment thereto, it   is agreed that this Contract excludes loss, damage, cost or expense directly or indirectly caused   by, contributed to by, resulting from or arising out of or in connection with any act of terrorism,   as defined herein, regardless of any other cause or event contributing concurrently or in any   other sequence to the loss.      An act of terrorism includes any act, or preparation in respect of action, or threat of action   designed to influence the government de jure or de facto of any nation or any political division   thereof, or in pursuit of political, religious, ideological or similar purposes to intimidate the public   or a section of the public of any nation by any person or group(s) of persons whether acting   alone or on behalf of or in connection with any organization(s) or government(s) de jure or   de facto, and which:       1. Involves violence against one or more persons, or       2. Involves damage to property; or       3. Endangers life other than the person committing the action; or       4. Creates a risk to health or safety of the public or a section of the public; or       5. Is designed to interfere with or disrupt an electronic system.      This Contract also excludes loss, damage, cost or expense directly or indirectly caused by,   contributed to by, resulting from or arising out of or in connection with any action in controlling,   preventing, suppressing, retaliating against or responding to any act of terrorism.      Notwithstanding the above and subject otherwise to the terms, conditions, and limitations of this   Contract, in respect only of personal lines, this Contract will pay actual loss or damage (but not   related cost and expense) caused by any act of terrorism provided such act is not directly or   indirectly caused by, contributed to by, resulting from or arising out of or in connection with   radiological, biological, chemical, or nuclear pollution or contamination.        

 

   21\F7V1120      The Interests and Liabilities Agreements, constituting 31 pages in total, have been omitted from   this exhibit because such agreements are not material and would be competitively harmful if   publicly disclosed.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00336-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00336-of-00352.parquet"}]]