Document:

Aggregate Excess Catastrophe Reinsurance Agreement dated 6/1/2010

 EXHIBIT 10.15 

AGGREGATE EXCESS CATASTROPHE REINSURANCE AGREEMENT 

HOMEOWNERS CHOICE 

PROPERTY & CASUALTY INSURANCE COMPANY 

Clearwater, Florida 
 and 

any other insurance companies which are now or 

hereafter come under the ownership, control or management of 

Homeowners Choice, Inc. 

EFFECTIVE:    June 1, 2010 

EXPIRATION:  June 1, 2011 
  

 
  

 

	****	 Portions of this exhibit marked by **** have been omitted pursuant to a request for confidential treatment and have been filed separately with the Securities
and Exchange Commission. 

  

 AGGREGATE EXCESS CATASTROPHE REINSURANCE AGREEMENT 

TABLE OF CONTENTS 
  

					
	ARTICLE	    	            DESCRIPTION	  	PAGE
			
	 I
	    	 BUSINESS COVERED
	  	1  
	 II
	    	 TERM
	  	1  
	 III
	    	 EXCLUSIONS
	  	2  
	 IV
	    	 RETENTION AND LIMIT
	  	4  
	 V
	    	 INURING REINSURANCE
	  	5  
	 VI
	    	 REINSURANCE PREMIUM
	  	6  
	 VII
	    	 DEFINITIONS
	  	9  
	 VIII
	    	 LOSS OCCURRENCE DEFINITION
	  	10  
	 IX
	    	 ACCESS TO RECORDS
	  	12  
	 X
	    	 AGENCY (BRMA 73A)
	  	12  
	 XI
	    	 ARBITRATION
	  	12  
	 XII
	    	 COLLATERAL
	  	13  
	 XIII
	    	 COLLATERAL RELEASE
	  	13  
	 XIV
	    	 CONFIDENTIALITY
	  	15  
	 XV
	    	 CURRENCY (BRMA 12A)
	  	16  
	 XVI
	    	 ENTIRE AGREEMENT
	  	16  
	 XVII
	    	 ERRORS AND OMISSIONS (BRMA 14F)
	  	16  
	 XVIII
	    	 FEDERAL EXCISE TAX (BRMA 17D)
	  	16  
	 XIX
	    	 GOVERNING LAW (BRMA 71B)
	  	16  
	 XX
	    	 INSOLVENCY
	  	16  
	 XXI
	    	 LATE PAYMENTS
	  	17  
	 XXII
	    	 LIABILITY OF THE REINSURER
	  	18  
	 XXIII
	    	 LOSS NOTICE AND SETTLEMENTS
	  	18  
	 XXIV
	    	 NET RETAINED LINES(BRMA 32E)
	  	19  
	 XXV
	    	 NON-WAIVER
	  	19  
	 XXVI
	    	 NOTICES AND AGREEMENT EXECUTION
	  	19  
	 XXVII
	    	 OFFSET
	  	20  
	 XXVIII
	    	 OTHER REINSURANCE
	  	20  
	 XXIX
	    	 SALVAGE AND SUBROGATION
	  	20  
	 XXX
	    	 SERVICE OF SUIT (BRMA 49G)
	  	20  
	 XXXI
	    	 SEVERABILITY (BRMA 72E)
	  	21  
	 XXXII
	    	 TAXES
	  	21  
	 XXXIII
	    	 TERRITORY
	  	21  
	 XXXIV
	    	 INTERMEDIARY (BRMA 23A)
	  	21  

 ATTACHMENT: 

Schedule A – Collateral Collection Tables 

Nuclear Incident Exclusion Clause – Physical Damage – Reinsurance (USA) 

 
  

 

 AGGREGATE EXCESS CATASTROPHE REINSURANCE AGREEMENT 

issued to 
 HOMEOWNERS CHOICE 

 PROPERTY & CASUALTY INSURANCE COMPANY 

Clearwater, Florida 
 and 

any other insurance companies which are now or 

hereafter come under the ownership, control or management of 

Homeowners Choice, Inc. 
 (hereinafter
referred to collectively as the “Company”) 
 by 

The Subscribing Reinsurer(s) Executing the 

Interests and Liabilities Contract(s) 

Attached hereto 
 (hereinafter referred
to as the “Reinsurer”) 
 ARTICLE I – BUSINESS COVERED 

This Agreement is to indemnify the Company in respect of its net excess liability as a result of any loss or losses which may occur during the Term
of this Agreement under any policies, contracts and binders of insurance or reinsurance (hereinafter called “Policies”) in force at the effective date hereof or issued or renewed on or after that date, covering business classified by the
Company as the property perils of Homeowners and Dwelling, subject to the terms, conditions and limitations hereinafter set forth herein. 
 ARTICLE
II – TERM 
  

	A.	 This Agreement shall become effective at 12:01 a.m., Local Standard Time, June 1, 2010, 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., Local Standard Time, June 1, 2011. “Local Standard Time” as used herein shall mean local standard time at the location where the Loss Occurrence commences.

  

	B.	 If this Agreement 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 Agreement, be determined as if the entire Loss Occurrence had occurred prior to the termination or expiration of this Agreement, provided that no part of such Loss Occurrence is claimed against any renewal
or replacement of this Agreement. 

  

  

 
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	C.	 Notwithstanding the provisions of paragraph A above, the Company may reduce or terminate a Subscribing Reinsurer’s percentage share in this Agreement at
any time by giving written notice to the Subscribing Reinsurer in the event any of the following circumstances occur. The effective date of reduction or termination shall be the date selected by the Company, which may be a date that is retroactively
applied to the date of public announcement for subparagraphs 1 through 3 below or upon discovery for subparagraphs 4 through 6 below, subject to the condition that such selected date must be the last day of a calendar month:

  

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

 

	 	2.	 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 

  

	 	3.	 The Subscribing Reinsurer has reinsured its entire liability under this Agreement without the Company’s prior written consent, except that this provision
shall not apply to any inter-company reinsurance or inter-company pooling arrangements entered into by the Subscribing Reinsurer; or 

  

	 	4.	 The Subscribing Reinsurer has ceased assuming new or renewal property and casualty treaty reinsurance business; or 

 

	 	5.	 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. 

 ARTICLE III – EXCLUSIONS 

 

	A.	 This Agreement does not apply to and specifically excludes the following: 

 

	 	1.	 All excess of loss reinsurance assumed by the Company. 

  

	 	2.	 Reinsurance assumed by the Company under obligatory reinsurance agreements, except intercompany reinsurance between the Company and its affiliates and agency
reinsurance where the Policies involved are to be re-underwritten in accordance with the underwriting standards of the Company and reissued as policies of the Company at the next anniversary or expiration date. 

 

	 	3.	 Financial guarantee and insolvency. 

  

  

 
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	 	4.	 All Accident and Health, Fidelity and Surety, Boiler and Machinery, Workers’ Compensation, and Credit business. 

 

	 	5.	 Flood and/or earthquake when written as such for stand alone Policies where flood and/or earthquake is the only named peril. 

 

	 	6.	 Nuclear risks as defined in the “Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance (U.S.A.)” attached to and forming part of this
Agreement. 

  

	 	7.	 Loss or damage caused by or resulting from 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, but this exclusion shall not apply to loss or damage covered under a standard Policy with a standard War Exclusion Clause. 

 

	 	8.	 Loss or liability from any Pool, Association or Syndicate and any assessment or similar demand for payment related to the Florida Hurricane Catastrophe Fund
or Citizens Property Insurance Corporation. 

  

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

  

	 	10.	 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% of the Company's property loss under the applicable original policy.

  

	 	11.	 Loss, damage, cost or expense arising out of an act of terrorism involving the use of any biological, chemical, nuclear or radioactive agent, material, device
or weapon. 

  

	 	12.	 All liability arising out of mold, spores and/or fungus, but this exclusion shall not apply to those losses which follow as a direct result of a loss caused
by a peril otherwise covered hereunder. 

  

	B.	 With the exception of subparagraphs 3, 6, 7 and 11 of paragraph A above, should any judicial, regulatory or legislative entity having legal jurisdiction
invalidate any exclusion on the Company’s Policy, any amount of loss for which the Company is liable because of such invalidation will not be excluded hereunder. 

 

  

 
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	C.	 The Company may submit to the Reinsurer, for special acceptance hereunder, business not covered by this Agreement. Within seven days of receipt of such
request, each Subscribing Reinsurer shall accept such request, ask for additional information, or reject the request. If a Subscribing Reinsurer fails to respond to a special acceptance request within seven days, the Subscribing Reinsurer shall be
deemed to have agreed to the special acceptance. If said business is accepted by the Reinsurer, it will be subject to the terms of this Agreement, except as such terms are modified by such acceptance. Any special acceptance business covered under
the reinsurance agreement being replaced by this Agreement will be automatically covered hereunder. Further, in the event a Subscribing Reinsurer becomes a party to this Agreement subsequent to the special acceptance of any business not normally
covered hereunder, the Subscribing Reinsurer shall automatically accept the same as being a part of this Agreement. 

 ARTICLE IV
– RETENTION AND LIMIT 
  

	A.	 Coverage A - Section 1: The Company shall retain and be liable for the first $17,250,000 of Ultimate Net Loss arising out of each Loss Occurrence. The
Reinsurer shall then be liable for ****% of the amount by which such Ultimate Net Loss exceeds the Company’s retention, but the liability of the Reinsurer shall not exceed ****% of $29,000,000 as respects any one Loss Occurrence, nor shall it
exceed ****% of $29,000,000 as respects all Loss Occurrences commencing during the term of this Agreement. 

Coverage A - Section 2: The Company shall retain and be liable for the first $75,000,000 of Ultimate Net Loss arising out of each
Loss Occurrence. The Reinsurer shall then be liable for the amount by which such Ultimate Net Loss exceeds the Company’s retention, but the liability of the Reinsurer shall not exceed $58,000,000 as respects any one Loss Occurrence. 

 

	B.	 Coverage B: The Company shall retain and be liable for the first $8,500,000 of Subject Excess Ultimate Net Loss in the aggregate as respects all Loss
Occurrences commencing during the Term of this Agreement. The Reinsurer shall then be liable for the amount by which such Subject Excess Ultimate Net Loss exceeds the Company’s aggregate retention, but the liability of the Reinsurer shall not
exceed $58,000,000 in the aggregate as respects all Loss Occurrences commencing during the Term of this Agreement. 

“Subject Excess Ultimate Net Loss” as used herein is defined as the amount by which the Company’s Ultimate Net Loss
arising out of any one Loss Occurrence exceeds $2,000,000, but said amount shall not exceed $58,000,000 as respects any one Loss Occurrence. 

It is understood that as respects this Coverage B, the Company may maintain in force excess reinsurance, recoveries under which
shall inure solely to the Company’s benefit and be entirely disregarded in applying all of the provisions of this Agreement. 
  

  

 
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	****	 Omitted pursuant to a request for confidentiality and filed separately with the Securities and Exchange Commission. 

	C.	 Coverage C: As respects any Loss Occurrence involving a peril not covered by the Florida Hurricane Catastrophe Fund Optional Limited Apportionment Companies
Coverage Layer, the Company shall retain and be liable for $7,250,000 of Ultimate Net Loss as respects such Loss Occurrence. The Reinsurer shall then be liable for the amount by which such Ultimate Net Loss exceeds the Company’s retention, but
the liability of the Reinsurer shall not exceed $10,000,000 as respects any one Loss Occurrence, nor shall it exceed $20,000,000 as respects all Loss Occurrences commencing during the Term of this Agreement. 

 

	D.	 Notwithstanding the provisions of paragraphs A, B and C above, the liability of the Reinsurer under Coverage A - Section 2, Coverage B and Coverage C combined
shall not exceed $58,000,000 in the aggregate as respects all Loss Occurrences commencing during the Term of this Agreement. 

  

	E.	 Notwithstanding the provisions above, no claim shall be made hereunder as respects losses arising out of Loss Occurrences commencing during the Term of this
Agreement 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 V – INURING REINSURANCE 
  

	A.	 The Company shall maintain property catastrophe excess of loss reinsurance, recoveries under which shall inure to the benefit of Coverage B of this Agreement,
for the following layers: 

  

	 	1.	 $29,000,000 in excess of $17,250,000 any one Loss Occurrence, subject to no reinstatements of the limit; 

 

	 	2.	 $28,750,000 in excess of $46,250,000 any one Loss Occurrence, subject to an annual limit of $57,500,000; and 

 

	B.	 The Company shall provisionally purchase mandatory and optional coverage from the Florida Hurricane Catastrophe Fund (FHCF) with the following limits and
retentions: 

  

	 	1.	 100% of $10,000,000 excess of $7,250,000 any one Loss Occurrence (optional Limited Apportionment Companies coverage); 

 

	 	2.	 90% of $198,000,000 excess of $75,000,000 (mandatory layer); and 

 

	 	3.	 90% of $93,000,000 excess of $273,000,000 (optional Temporary Increase in Coverage Limit). 

The provisional limit and retention above may increase or decrease in accordance with the provisions of the reimbursement contract
between the Company and the State Board of Administration of the State of Florida (SBA). 
  

  

 
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 Any loss reimbursement paid or payable to the Company for the mandatory and for the
optional Temporary Increase in Coverage Limit layers provided by the FHCF, and resulting from Loss Occurrences commencing during the Term of this Agreement, shall inure to the benefit of this Agreement. Any loss reimbursement paid or payable to the
Company for the optional Limited Apportionment Companies layer provided by the FHCF shall inure to the benefit of Coverage B of this Agreement. Further, any FHCF loss reimbursement shall be deemed paid to the Company in accordance with the
reimbursement contract between the Company and the SBA at the full payout level set forth therein. It is further deemed that any loss reimbursement shall not be reduced by any reduction or exhaustion of the actual claims-paying capacity of the FHCF
and that the FHCF fund balance is deemed funded to the fullest extent allowable by Florida statute. 
 Prior to final
calculation of the Company’s FHCF retention and payout for the mandatory and optional layers provided by the reimbursement contract between the Company and the SBA, the Reinsurer’s liability hereunder will provisionally be calculated based
on the projected FHCF payout and in accordance with paragraph B above. Following the FHCF’s final calculation of the payout for the coverage layers provided by the reimbursement contract, the Ultimate Net Loss under this Agreement will be
recalculated. If, as a result of such calculation, the loss to the Reinsurer under any excess layer or Coverage Section in any one Loss Occurrence is less than the amount previously paid by the Reinsurer under the excess layer or Coverage Section,
the Company shall promptly remit the difference to the Reinsurer. If the loss to the Reinsurer under any excess layer in any one Loss Occurrence is greater than the amount previously paid by the Reinsurer, the Reinsurer shall promptly remit the
difference to the Company. For purposes of both the provisional and final calculation of Reinsurer liability referenced above, it is deemed that any FHCF loss reimbursement shall not be reduced by any reduction or exhaustion of the actual
claims-paying capacity of the FHCF and that the FHCF fund balance is deemed funded to the fullest extent allowable by Florida statute. 

If an FHCF reimbursement amount is based on the Company’s losses in more than one Loss Occurrence commencing during the Term of
this Agreement, and the FHCF does not designate the amount allocable to each Loss Occurrence, the FHCF reimbursement amount shall be prorated in the proportion that the Company’s losses in each Loss Occurrence bear to the Company’s total
losses arising out of all Loss Occurrences to which the FHCF reimbursement applies. 
 ARTICLE VI – REINSURANCE PREMIUM 

 

	A.	 As respects the reinsurance provided under Coverage A - Section 2, Coverage B and Coverage C, the following shall apply: 

 

	 	1.	 As premium hereunder, the Company shall pay the Reinsurer the greater of the following: 

 

	 	a.	 $**** (or a pro rata portion thereof in the event this Agreement is terminated); or 

 

  

 
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	****	 Omitted pursuant to a request for confidentiality and filed separately with the Securities and Exchange Commission. 

	 	b.	 In the event the Company’s total insured value as of September 30, 2010 is greater than $****, $**** plus ****% multiplied by 50% of the difference
between $**** and the Company’s total insured value as of September 30, 2010. In the event the Company’s total insured value as of September 30, 2010 is less than $****, $**** less ****% multiplied by 50% of the difference
between $**** and the Company’s total insured value as of September 30, 2010. 

  

	 	2.	 The Company shall pay the Reinsurer a deposit premium of $**** in three equal installments of $**** on June 1, September 1 and December 1,
2010 and in one adjusted deposit installment. The adjusted deposit installment shall be computed in accordance with subparagraph 3 below and is due on April 1, 2011. However, if this Agreement is terminated, no deposit premium installments
shall be due after the effective date of termination; 

  

	 	3.	 “Adjusted deposit installment” as used herein shall mean: 

 

	 	a.	 The premium due hereunder, computed in accordance with subparagraph 1 above; less 

 

	 	b.	 The first, second and third installments paid in accordance with subparagraph 2 above. 

 

	 	4.	 In the event this Agreement is terminated in accordance with the provisions of paragraph C of the Term Article, the reinsurance premium due hereunder shall be
prorated based on the period of the Reinsurer’s participation hereunder; 

  

	 	5.	 No later than April 1, 2011 (or as promptly as possible following termination in the event this Agreement is terminated prior to April 1, 2011), the
Company shall provide a report to the Reinsurer setting forth the premium due hereunder, computed in accordance with subparagraph 1 or 4 above (as applicable) and the adjusted deposit installment, computed in accordance with subparagraph 3 above. In
the event this Contract is terminated prior to April 1, 2011, any additional premium due the Reinsurer or return premium due the Company shall be remitted promptly. 

 

	B.	 As respects the reinsurance provided under Coverage A - Section 1, the following shall apply: 

 

	 	1.	 As premium hereunder, the Company shall pay the Reinsurer the greater of the following: 

 

	 	a.	 $**** (or a pro rata portion thereof in the event this Agreement is terminated); or 

 

  

 
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	****	 Omitted pursuant to a request for confidentiality and filed separately with the Securities and Exchange Commission 

	 	b.	 In the event the Company’s total insured value as of September 30, 2010 is greater than $****, $**** plus ****% multiplied by 50% of the difference
between $**** and the Company’s total insured value as of September 30, 2010. In the event the Company’s total insured value as of September 30, 2010 is less than $****, $**** less ****% multiplied by 50% of the difference
between $**** and the Company’s total insured value as of September 30, 2010. 

  

	 	2.	 The Company shall pay the Reinsurer a deposit premium of $**** in three equal installments of $**** on June 1, September 1 and December 1
of 2010 and in one adjusted deposit installment. The adjusted deposit installment shall be computed in accordance with subparagraph 3 below and is due on April 1, 2011. However, if this Agreement is terminated, no deposit premium installments
shall be due after the effective date of termination. 

  

	 	3.	 “Adjusted deposit installment” as used herein shall mean: 

 

	 	a.	 The premium due hereunder, computed in accordance with subparagraph 1 above; less 

 

	 	b.	 The first, second and third installments paid in accordance with subparagraph 2 above. 

 

	 	4.	 If the Company elects to reduce or terminate a Subscribing Reinsurer’s participation percentage in accordance with paragraph C of the Term Article, the
Minimum Premium shall not apply. Further, the earned reinsurance premium as otherwise determined in accordance with the provisions of subparagraph 1 above shall be replaced with the following: 

 

	 	a.	 In the event a loss occurs prior to the effective date of reduction or termination and the Reinsurer’s liability for such Loss Occurrence exceeds $****,
the reinsurance premium for the Term of this Agreement shall equal $**** times the ratio the loss recoverable bears to ****% of $****. 

  

	 	b.	 In the event no loss occurs prior to the effective date of reduction or termination or a loss occurs whereby the Reinsurer’s liability for such loss
occurrence is less than $****, the reinsurance premium for the Term of this Agreement shall equal the pro rata portion of the reinsurance premium otherwise due hereunder based on the proportion the Term of this Agreement bears to the original
12-month term of this Agreement. 

  

	 	5.	 No later than April 1, 2011 (or as promptly as possible following termination in the event this Agreement is terminated prior to April 1, 2011), the
Company shall provide a report to the Reinsurer setting forth the premium due hereunder, computed in accordance with subparagraph 1 or 4 above (as applicable) and the adjusted deposit installment, computed in accordance with subparagraph 3

  

  

 
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	****	 Omitted pursuant to a request for confidentiality and filed separately with the Securities and Exchange Commission. 

	 	 
above. In the event this Contract is terminated prior to April 1, 2011, any additional premium due the Reinsurer or return premium due the Company shall be remitted promptly.

  

	C.	 The Company shall furnish the Reinsurer with such information as the Reinsurer may require to complete its Annual Convention Statement.

 ARTICLE VII – DEFINITIONS 
  

	A.	 The term “Ultimate Net Loss” as used herein shall be defined as the sum or sums (including Loss in Excess of Policy Limits, Extra Contractual
Obligations and Loss Adjustment Expense, as hereinafter defined) paid or payable by the Company in settlement of claims and in satisfaction of judgments rendered on account of such claims after deduction of all salvage, all recoveries, and all
claims on inuring insurance or reinsurance, whether collectible or not. Nothing herein shall be construed to mean that losses under this Agreement are not recoverable until the Company’s Ultimate Net Loss has been ascertained.

  

	B.	 The terms “Loss in Excess of Policy Limits” and “Extra Contractual Obligations” as used herein shall be defined as follows:

  

	 	1.	 “Loss in Excess of Policy Limits” shall mean 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.

  

	 	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 Agreement and which arise from the handling of any claim on business subject to this Agreement, 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.

 Notwithstanding anything stated herein, this Agreement 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. 
  

  

 
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 Further, any Loss in Excess of Policy Limits and/or Extra Contractual Obligations that
are made in connection with this Agreement shall not exceed 25.0% of the contractual loss under all Policies involved in the Loss Occurrence as respects any one Coverage Section or any one excess layer under Coverage A hereunder. 

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

	C.	 The term “Loss Adjustment Expense” as used herein shall be defined as expenses assignable to the investigation, appraisal, adjustment, settlement,
litigation, defense, and/or appeal of claims, regardless of how such expenses are classified for statutory reporting purposes. Loss Adjustment Expense shall include, but not be limited to, interest on judgments, expenses of outside adjusters,
expenses and a pro rata share of salaries of the Company’s field employees and expenses of other employees of the Company who have been temporarily diverted from their normal and customary duties and assigned to the adjustment of losses covered
by this Agreement, expenses of the Company’s officials incurred in connection with losses covered by this Agreement, and Declaratory Judgment Expenses or other legal expenses and costs incurred in connection with coverage questions and legal
actions connected thereto. Loss Adjustment Expense shall not include normal office expenses or salaries of the Company’s officials. 

  

	D.	 The term “Declaratory Judgment Expense” as used herein shall be defined as the Company’s own costs and legal expense incurred in direct
connection with declaratory judgment actions brought to determine the Company’s defense and/or indemnification obligations that are assignable to specific claims arising out of Policies reinsured by this Agreement, regardless of whether the
declaratory judgment action is successful or unsuccessful. Any Declaratory Judgment Expense shall be deemed to have been fully incurred by the Company on the same date as the original loss (if any) giving rise to the action.

  

	E.	 “Term of this Agreement” as used herein shall be defined as the period from 12:01 a.m., Local Standard Time, June 1, 2010 through 12:01 a.m.,
Local Standard Time, June 1, 2011. However, if this Agreement is terminated, “Term of this Agreement” as used herein shall mean the period from 12:01 a.m., Local Standard Time, June 1, 2010 until the effective time and date of
termination. 

 ARTICLE VIII – LOSS OCCURRENCE DEFINITION 

 

	A.	 The term “Loss Occurrence” shall mean the sum of all individual losses directly occasioned by any one disaster, accident or loss or series of
disasters, accidents or losses arising out of one event which occurs within the area of one state of the United States or province of Canada and states or provinces contiguous thereto and to one another. However, the duration and extent of any one
Loss Occurrence shall be limited to all individual losses sustained by the Company occurring during any period of 168 

 

  

 
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consecutive hours arising out of and directly occasioned by the same event except that the term Loss Occurrence shall be further defined as follows: 

 

	 	1.	 As regards windstorm, hail, tornado, hurricane, cyclone, including ensuing collapse and water damage, all individual losses sustained by the Company occurring
during any period of 96 consecutive hours arising out of and directly occasioned by the same event. However, the event need not be limited to one state or province or states or provinces contiguous thereto. 

 

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

  

	 	3.	 As regards earthquake (the epicenter of which need not necessarily be within the territorial confines referred to in the opening paragraph of this Article)
and fire following directly occasioned by the earthquake, only those individual fire losses which commence during the period of 168 consecutive hours may be included in the Company’s Loss Occurrence. 

 

	 	4.	 As regards freeze, only individual losses directly occasioned by collapse, breakage of glass and water damage (caused by bursting of frozen pipes and tanks)
may be included in the Company’s Loss Occurrence. 

  

	 	5.	 As regards firestorms, brush fires and any other fires or series of fires, irrespective of origin (except as provided in subparagraphs 2 and 3 above), which
spread through trees, grassland or other vegetation, all individual losses sustained by the Company which occur during any period of 168 consecutive hours within 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 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 any Loss Occurrence referred to in subparagraph 1 or 2 of paragraph A above where only one such period of 96 consecutive hours shall apply with respect to one event, regardless of the duration of the event. 

 

	C.	 No individual losses occasioned by an event that would be covered by the 96 hours clauses may be included in any Loss Occurrence claimed under the 168 hours
provision. 

  

  

 
 Page 11 of 22 

 

 

 ARTICLE IX – ACCESS TO RECORDS 

The Reinsurer or its designated representatives shall have access to the books and records of the Company on matters relating to this reinsurance at
all reasonable times, and at the location where such books and records are maintained in the ordinary course of business, for the purpose of obtaining information concerning this Agreement or the subject matter thereof. Notification of a request for
inspection of records shall be sent to the Company by the Reinsurer in written form, and shall normally be given four weeks in advance. Notwithstanding the above, the Reinsurer 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. 
 ARTICLE X – AGENCY (BRMA 73A) 

If more than one reinsured company is named as a party to this Agreement, 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 Agreement, and for purposes of remitting or receiving any monies due any party. 

ARTICLE XI – 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
Agreement, 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 of London Underwriters. In the event that either party should fail to choose an Arbiter within
30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration. If the two Arbiters fail to agree upon the selection of an Umpire
within 30 days following their appointment, the two Arbiters shall request the American Arbitration Association to appoint the Umpire. If the American Arbitration Association fails to appoint the Umpire within 30 days after it has been requested to
do so, either party may request a justice of a Court of general jurisdiction of the state in which the arbitration is to be held to appoint the Umpire. 

 

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

  

	C.	 If more than one reinsurer is involved in the same dispute, all such reinsurers shall constitute and act as one party for purposes of this Article and
communications shall be made by the Company to each of the reinsurers constituting one party, provided, 

  

  

 
 Page 12 of 22 

 

 

	 	 
however, that nothing herein shall impair the rights of such reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the reinsurers
participating under the terms of this Agreement 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 in Clearwater, Florida; however, the location may be changed if mutually agreed upon by the parties of this
Agreement. Notwithstanding the location of arbitration, all proceedings pursuant hereto shall be governed by the law of the State of Florida. 

ARTICLE XII – COLLATERAL 
  

	A.	 As promptly as possible following execution of this Agreement, the Reinsurer (as Grantor) shall enter into a Trust Agreement (the “Trust Agreement”)
with the Company (as Beneficiary) and the trustee, pursuant to which the Reinsurer shall provide collateral in the form of eligible Assets deposited and held in a Trust Account, with such Assets having a market value greater than or equal to
$52,950,144 (the “Collateral”) less earned premium (net of brokerage and applicable federal excise tax). It is understood that deposit premium paid in accordance with the Reinsurance Premium Article shall be deposited into the Trust
Account. 

  

	B.	 The Company agrees that if the Reinsurer makes indemnity payment(s) to the Company under this Agreement, the Reinsurer may withdraw Assets from the Trust
Account, reducing the market value of Assets in the Trust Account to an amount at least equal to the unused Reinsurance Limit, in accordance with the provisions of the Trust Agreement. 

 

	C.	 The Trust Fund may be drawn upon by the Company at any time and the Assets may be used at the Company’s option in accordance with the provisions of
Section 3 of the Trust Agreement. 

  

	D.	 Except as provided in the Collateral Release Article, the Company agrees to release the Assets in the Trust Account required under this Article as promptly as
provided in the Trust Agreement. 

 ARTICLE XIII – COLLATERAL RELEASE 

 

	A.	 At the expiration or termination of this Agreement, if the Trust has not yet been terminated, the Company shall calculate for each Coverage Section, on a
monthly basis, how much, if any, of the collateral shall be released from the Trust, as follows: 

  

	 	1.	 For each potentially covered Loss Occurrence, the Company shall multiply the Loss Amount (being equal to the sum of losses and Loss Adjustment Expenses paid
plus reserves for losses and Loss Adjustment Expense outstanding plus 

  

  

 
 Page 13 of 22 

 

 

	 	 
reserves for losses incurred but not reported) by the appropriate Buffer Loss Factor from the table below, based upon the type of Loss Occurrence and the number of months which have elapsed since
the event. The product of this calculation shall be defined as the Buffered Loss Amount ("BLA"). 

  

							
	  	  	Buffer Loss Factor
Table
	  

Number of
Calendar
Months Since
Date of Loss
Occurrence
	  	 Windstorm*

/Brushfire
	  	 Earthquake

and Fire
 Following
	  	Other
	     0 to 3
	  	200%	  	300%	  	250%
	     > 3 to 6

	  	150%	  	200%	  	175%
	     > 6 to 9

	  	125%	  	175%	  	150%
	
    > 9 to 12
	  	110%	  	150%	  	130%
	
    > 12 to 15
	  	105%	  	125%	  	115%
	
    > 15 to 18
	  	100%	  	120%	  	110%
	     Thereafter
	  	100%	  	100%	  	100%

	 	*	 For the purpose of this Article, the term “Windstorm” shall include Hurricane, 

	 	              Rainstorm,	 Storm, Tempest, Tornado, Cyclone, Typhoon and Hail. 

  

	 	2.	 As respects Coverage A – Section 1, the BLA will be reduced by the $17,500,000 retention and any inuring reinsurance recoveries to compute its
contribution to the Presumed Coverage A – Section 1 Ultimate Net Loss. The Presumed Coverage A – Section 1 Ultimate Net Loss will equal the sum of these contributions. The Presumed Coverage A – Section 1 Ceded Loss will
be defined as the lesser of ****% of the Presumed Coverage A – Section 1 Ultimate Net Loss and the Coverage A – Section 1 limit of ****% of $29,000,000. 

 

	 	3.	 As respects Coverage A – Section 2, the BLA will be reduced by the $75,000,000 retention and any inuring reinsurance recoveries to compute its
contribution to the Presumed Coverage A – Section 2 Ultimate Net Loss. The Presumed Coverage A – Section 2 Ultimate Net Loss will equal the sum of these contributions. The Presumed Coverage A – Section 2 Ceded Loss will
be defined as the lesser of the Presumed Coverage A – Section 2 Ultimate Net Loss and the Coverage A – Section 2 limit of $58,000,000. 

 

	 	4.	 As respects Coverage B, the BLA will be reduced by all inuring reinsurance recoveries, including Coverages A and C of this Agreement, and by the $2,000,000
deductible per Loss Occurrence to compute its contribution to the Presumed Coverage B Ultimate Net Loss. The Presumed Coverage B Ultimate Net Loss will equal the sum of these contributions. The Presumed Coverage B Ceded Loss will be defined as the
Presumed Coverage B Ultimate Net Loss minus the 

  

  

 
 Page 14 of 22 

 

 

  

	****	 Omitted pursuant to a request for confidentiality and filed separately with the Securities and Exchange Commission 

	 	 
aggregate retention of $8,500,000, subject to a minimum of nil and a maximum of $58,000,000. 

  

	 	5.	 As respects Coverage C, as respects potentially covered Loss Occurrences covered under Coverage C, the BLA will be reduced by all inuring reinsurance
recoveries, and by the $7,250,000 retention. The Presumed Coverage C Ultimate Net Loss will equal the sum of these contributions. The Presumed Coverage C Ceded Loss will be defined as the lesser of the Presumed Coverage C Ultimate Net Loss and the
Coverage C occurrence limit of $10,000,000, subject to an annual limit of $20,000,000. 

  

	 	6.	 The Presumed Total Ceded Loss will equal the lesser of the Agreement limit of $87,000,000 and the sum of the Presumed Coverage A – Section 1 Ceded
Loss, Presumed Coverage A – Section 2 Ceded Loss, Presumed Coverage B Ceded Loss and Presumed Coverage C Ceded Loss. An amount equal to the Presumed Total Ceded Loss less losses paid by the Reinsurer under this Agreement shall be retained
in the Trust and any excess in the Trust shall be released to the Reinsurer. 

  

	 	7.	 Notwithstanding the aforementioned, at December 31, 2010, the parties agree to consider the release of collateral. The intention is to release collateral
for all limits for which there is essentially no possibility of loss from past or future events before the expiration of this Contract. All collateral securing what the parties agree are unreachable limits will be released within three business
days. 

  

	B.	 So long as there is any security on deposit in the Trust, the Company shall perform the calculation set forth above within 10 business days after the end of
each month and deliver a report substantially in the form of the Collateral Calculation Table attached to this Agreement to the Reinsurer and the Trustee named in the Trust Agreement. Collateral will be adjusted monthly based on this calculation. To
the extent the calculation indicates that collateral may be reduced, the delivery of the report to the Trustee will constitute a directive to return excess collateral to the Reinsurer. In the event the calculation indicates additional collateral is
required, the Reinsurer will have 10 business days from receipt of the report to deposit the required collateral into the Trust. 

ARTICLE XIV – CONFIDENTIALITY 

The Reinsurer agrees to regard the terms of this Agreement and any confidential, proprietary information relating thereto as confidential and shall
affect the same prudence and care afforded to its own confidential, proprietary information. The Reinsurer further agrees that it shall not disclose any of such information to any third party without the prior written consent of the Company except
as may be required by applicable law or regulation, or by legal process (including without limitation as may be required by United States Federal tax law or regulation), or to the auditors, professional advisors, accountants, retrocessionaires,
directors or officers with a reasonable need to know such information. This Article is not intended to restrict or limit the conduct of the Reinsurer’s current or proposed business. 

 

  

 
 Page 15 of 22 

 

 

 ARTICLE XV – CURRENCY (BRMA 12A) 

 

	A.	 Whenever the word “Dollars” or the “$” sign appears in this Agreement, they shall be construed to mean United States Dollars and all
transactions under this Agreement 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 XVI – ENTIRE AGREEMENT 

This written Agreement constitutes the entire agreement between the parties hereto with respect to the business being reinsured hereunder, and there
are no understandings between the parties hereto other than as expressed in this Agreement. Any change or modification to this Agreement will be made by amendment to this Agreement and signed by the parties hereto. 

ARTICLE XVII – ERRORS AND OMISSIONS (BRMA 14F) 

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

ARTICLE XVIII – 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 XIX – GOVERNING
LAW (BRMA 71B) 
 This Agreement shall be governed by and construed in accordance with the laws of the State of Florida.

 ARTICLE XX – 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

  

  

 
 Page 16 of 22 

 

 

	 	 
Company has failed to pay all or a portion of any claim. It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the
Reinsurer of the pendency of a claim against the Company indicating the policy or bond reinsured which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or
liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses
that it may deem available to the Company or its liquidator, receiver, conservator or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the Court, against the Company as part of the
expense of conservation or liquidation to the extent of a pro rata share of the benefit which may accrue to the Company solely as a result of the defense undertaken by the Reinsurer. 

 

	B.	 Where two or more reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be
apportioned in accordance with the terms of this Agreement 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 Agreement 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 Agreement 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 XXI – LATE PAYMENTS

  

	A.	 The interest penalties provided for in this Article shall apply to the Reinsurer or to the Company in the following circumstances:

  

	 	1.	 Payments due from the Reinsurer to the Company shall have as a due date the date on which the agreed proof of loss is received by the Reinsurer, and shall be
overdue 30 days thereafter. Payment to the Intermediary is deemed to be payment to the Company for purposes of this Article. 

  

	 	2.	 Payments due from the Company to the Reinsurer shall have as a due date the date specified in this Agreement. Payments shall be overdue 30 days thereafter.
Premium adjustments shall be overdue 30 days following the due date set forth under the terms of this Agreement. 

  

	 	3.	 The Company shall provide a copy of the original insured’s proof of loss, and a copy of the claim adjuster’s report(s) or other evidence of
indemnification for losses exceeding the excess limit on an incurred basis. If, subsequent to receipt of this evidence, the information contained therein is insufficient or not in

  

  

 
 Page 17 of 22 

 

 

	 	 
accordance with the contractual conditions, then the payment due date as defined in paragraph A shall be deemed to be the date upon which the Reinsurer received additional information necessary
to approve payment of the claim or the claim is presented in an acceptable manner. Interest as stipulated in paragraph D shall be payable should a disputed claim be ultimately settled and if the period set out in paragraph A is exceeded, but only to
the extent that the final loss payment exactly tracks with the original proof of loss. 

  

	 	4.	 Overdue amounts shall bear simple interest from the overdue date at the 90-day United States Treasury Bill rate set forth by the Federal Reserve Board for the
first Monday of the calendar month in which the amount becomes overdue, as published in the Federal Reserve Statistical Release. If the interest generated for 100% in respect of any overdue payment as outlined in paragraph A or B is $500 or less,
then the interest penalty shall be waived. 

  

	 	5.	 For the purposes of this Article, reinsuring Lloyd’s Underwriters shall be viewed as one entity. The provisions set forth herein shall not be applicable
until the creditor party shall have manifested to the debtor party its intent to invoke the terms of this Article. 

 ARTICLE XXII
– 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, interpretations 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
Agreement. 

  

	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 Agreement. 

 ARTICLE XXIII – LOSS NOTICE AND SETTLEMENTS 

 

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

  

	B.	 All loss settlements made by the Company, provided they are within the terms of this Agreement, shall be binding upon the Reinsurer, and the Reinsurer agrees
to pay all amounts for which it may be liable upon receipt of reasonable evidence of the amount paid (or scheduled to be paid within 14 days) by the Company. Notwithstanding the foregoing, and subject to the provisions set forth under paragraph B of
the Exclusions Article, should any judicial, regulatory, or legislative entity having legal jurisdiction require that the Company be liable for any amounts that are otherwise outside the terms of the Company’s original Policies, the Reinsurer
agrees that such amounts shall be subject always to the terms and conditions of this Agreement. 

  

  

 
 Page 18 of 22 

 

 

 ARTICLE XXIV – NET RETAINED LINES (BRMA 32E) 

 

	A.	 This Agreement 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 Agreement), and in calculating the amount of any loss hereunder and also in computing the amount or amounts in excess of which this Agreement 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 XXV – NON-WAIVER 
 The
failure of the Company or the Reinsurer to insist on compliance with this Agreement or to exercise any right or remedy hereunder shall not constitute a waiver of any rights or remedies contained herein nor stop either party from thereafter demanding
full and complete compliance nor prevent either party from exercising such rights or remedies in the future. 
 ARTICLE XXVI – NOTICES AND
AGREEMENT EXECUTION 
  

	A.	 Whenever a notice, statement, report or any other written communication is required by this Agreement, 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. 

  

	B.	 The use of any of the following shall constitute a valid execution of this Agreement 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 Agreement, 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 Agreement may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original. 

 

  

 
 Page 19 of 22 

 

 

 ARTICLE XXVII – OFFSET 

The Company and the Reinsurer, each at its option, may offset any balance or balances, whether on account of premiums, claims and losses, Loss
Adjustment Expenses or salvages due from one party to the other under this Agreement or under any other reinsurance agreement heretofore or hereafter entered into between the Company and the Reinsurer, whether acting as assuming reinsurer or as
ceding company; provided, however, that in the event of the insolvency of a party hereto, offsets shall only be allowed in accordance with applicable statutes and regulations. 

ARTICLE XXVIII – 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 Agreement. 
 ARTICLE XXIX – 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 a 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 and
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. Should the Company neglect or
refuse to enforce such rights, the Reinsurer is hereby empowered and authorized to institute the appropriate action in the name of the Company, at the Reinsurer’s expense. 

ARTICLE XXX – SERVICE OF SUIT (BRMA 49G) 

(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.	 This Article will not be read to conflict with or override the obligations of the parties to arbitrate their disputes as provided for in the Arbitration
Article. This Article is intended as an aid to compelling arbitration or enforcing such arbitration or arbitral award, not as an alternative to the Arbitration Article for resolving disputes arising out of this Agreement.

  

	B.	 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 

 

  

 
 Page 20 of 22 

 

 

	 	 
by the laws of the United States or of any state in the United States. The Reinsurer, once the appropriate Court is accepted by the Reinsurer or is determined by removal, transfer or otherwise,
as provided for above, will comply with all requirements necessary to give said Court jurisdiction and, in any suit instituted against any of the Subscribing Reinsurers upon this Agreement, will abide by the final decision of such Court or of any
Appellate Court in the event of an appeal. 

  

	C.	 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 Contract, 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 or her 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 Agreement. 

ARTICLE XXXI – SEVERABILITY (BRMA 72E) 

If any provision of this Agreement 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 Agreement or the enforceability of such provision in any other jurisdiction. 

ARTICLE XXXII – TAXES 
 In
consideration of the terms under which this Agreement 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 XXXIII – TERRITORY 

The liability of the Reinsurer shall be limited to losses under Policies covering property located within the territorial limits of the State of
Florida; but this limitation shall not apply to moveable property if the Company’s Policies provide coverage when said moveable property is outside the aforementioned territorial limits. 

ARTICLE XXXIV – INTERMEDIARY (BRMA 23A) 

TigerRisk Partners LLC is hereby recognized as the Intermediary negotiating this Agreement for all business hereunder. All communications
(including, but not limited to, notices, statements, premium, return premium, commissions, taxes, losses, Loss Adjustment Expense, salvages and loss settlements) relating thereto shall be transmitted to the Company or the Reinsurer through TigerRisk
Partners LLC, 7601 France Avenue South, Suite 200, Edina, MN 55435. Payments by the Company to the Intermediary shall be deemed to constitute payment to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed to constitute
payment to the Company only to the extent that such payments are actually received by the Company. 
  

  

 
 Page 21 of 22 

 

 

 IN WITNESS WHEREOF, the Company by its duly authorized representative has executed this
Agreement as of the date undermentioned at: 
 Clearwater, Florida, this
                             day of
                                         
                                         
                   2010. 
  

	
	  

	 HOMEOWNERS CHOICE PROPERTY & CASUALTY

	 INSURANCE COMPANY (for and on behalf of the “Company”)

 

  

 
 Page 22 of 22 

 

 

 SCHEDULE A – COLLATERAL COLLECTION TABLES 

attached to the 
 AGGREGATE EXCESS
CATASTROPHE REINSURANCE AGREEMENT 
 issued to 

HOMEOWNERS CHOICE 

PROPERTY & CASUALTY INSURANCE COMPANY 

Coverage A – Section 1 
  

																			
	  	 	Collateral
 Release Calculation as of [INSERT REPORTING PERIOD]
	Line  
No.  
	 	Col 1  	  	Col. 2	  	Col. 3	  	Col. 4	  	Col. 5	  	Col. 6	  	Col. 7	  	Col. 8	  	Col. 9
	  	 	
Date  

of Loss  
Event  
	  	Description	  	Loss Amount  	  	Buffer  
Loss  
Factor  	  	
Buffer Loss  

1Amount  

(Col. 3 x Col. 4)  
	  	
Inuring  
Reinsurance  

Coverage  
	  	
Buffered Loss  
Amount, net of  
Inuring  
Reinsurance  

(Col. 5 - Col. 6)  
	  	 Less:  

$17,250,000  
Retention  
	  	
Balance1

(Col. 7 – Col. 8)

	  

1A
	 	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	  

1B
	 	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	  

1C
	 	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	  

1D
	 	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	  

1E
	 	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	  

1F
	 	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 2
	 	 Presumed Section A Ultimate Net Loss (sum of Col. 9)
	  	 
	 3
	 	 Presumed Section A Ceded Loss – ****% of Line
2
 NOTE: If the amount equals ****% of $29,000,000 or more, insert policy limit of ****% of $29,000,000. If amount is less than
Zero, insert Zero.
	  	 

  

 

	1
	 If the Balance is zero or a negative number, put zero since such Loss Occurrence does not contribute to the aggregate loss.

  
  

 

 Coverage A – Section 2 

 

																			
	  	  	Collateral
 Release Calculation as of [INSERT REPORTING PERIOD]
	Line  
No.  
	  	Col 1  	  	Col. 2	  	Col. 3	  	Col. 4  	  	Col. 5	  	Col. 6	  	Col. 7	  	Col. 8	  	Col. 9
	  	  	
Date  

of Loss  
Event  
	  	Description	  	Loss Amount  	  	Buffer  
Loss  
Factor  	  	
Buffer Loss  

2Amount  

(Col. 3 x Col. 4)  
	  	
Inuring  
Reinsurance  

Coverage  
	  	
Buffered Loss  
Amount, net of  
Inuring  
Reinsurance  

(Col. 5 - Col. 6)  
	  	 Less:  

$75,000,000  
Retention  
	  	
Balance1

(Col. 7 – Col. 8)

	  

1A
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	  

1B
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	  

1C
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	  

1D
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	  

1E
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	  

1F
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 4
	  	 Presumed Section A Ultimate Net Loss (sum of Col. 9)
	  	 
	 5
	  	 Presumed Section A Ceded Loss - 100% of Line 4

NOTE: If the amount equals $58,000,000 or more, insert policy limit of $58,000,000. If amount is less than Zero, insert
Zero.
	  	 

  

 

	2	 If the Balance
is zero or a negative number, put zero since such Loss Occurrence does not contribute to the aggregate loss. 

  

 
  

 Coverage B 
  

																			
	  	  	Collateral
 Release Calculation as of [INSERT REPORTING PERIOD]
	Line 
 
No.  	  	Col 1  	  	Col. 2	  	Col. 3	  	Col. 4	  	Col. 5	  	Col. 6	  	Col. 7	  	Col. 8	  	Col. 9
	  	  	
Date  

of Loss  
Event  
	  	Description	  	Loss Amount  	  	Buffer  
Loss  
Factor  	  	
Buffer Loss  
Amount  

(Col. 3 x Col. 4)  
	  	
Inuring  
Reinsurance  

Coverage  
(including  
Sections A &
C)  
	  	
Buffered Loss  
Amount, net of  
Inuring  
Reinsurance  

(Col. 5 - Col. 6)  
	  	 Less:  

Flat  
Deductible of  
$2,000,000  
	  	
Balance

(Col. 7 – Col. 8)

	  

1A
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 ($2,000,000)  

 
	  	 
	  

1B
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 ($2,000,000)  

 
	  	 
	  

1C
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 ($2,000,000)  

 
	  	 
	  

1D
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 ($2,000,000)  

 
	  	 
	  

1E
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 ($2,000,000)  

 
	  	 
	  

1F
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 ($2,000,000)  

 
	  	 
	
6
	  	 Presumed Section B Ultimate Net Loss (sum of Col. 9)
	  	 
	 7

	  	 Less: Aggregate Retention
	  	($8,500,000)
	 8

	  	 Presumed Section B Ceded Loss - 100% of Line 6 minus Line 7.

 NOTE: If the amount equals $58,000,000 or more, insert policy limit of $58,000,000. If amount is less than Zero, insert Zero.

	  	 

  

 
  

 

 Coverage C 
  

																			
	  	  	Collateral
 Release Calculation as of [INSERT REPORTING PERIOD]
	Line 
 
No.  	  	Col 1  	  	Col. 2	  	Col. 3	  	Col. 4	  	Col. 5	  	Col. 6	  	Col. 7	  	Col. 8	  	Col. 9
	  	  	
Date  

of Loss  
Event  
	  	Description	  	Loss Amount  	  	Buffer  
Loss  
Factor  	  	
Buffer Loss  
Amount  

(Col. 3 x Col. 4)  
	  	
Inuring  
Reinsurance  

Coverage  
	  	
Buffered Loss  
Amount, net of  
Inuring  
Reinsurance  

(Col. 5 - Col. 6)  
	  	 Less:  

$7,250,000  
Retention  
	  	
Balance, capped
at $10,000,000

(Col. 7 – Col. 8)

	  

1A
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 ($7,250,000)  

 
	  	 
	  

1B
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 ($7,250,000)  

 
	  	 
	  

1C
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 ($7,250,000)  

 
	  	 
	  

1D
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 ($7,250,000)  

 
	  	 
	  

1E
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 ($7,250,000)  

 
	  	 
	  

1F
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 ($7,250,000)  

 
	  	 
	
9
	  	 Presumed Section C Ultimate Net Loss (sum of Col. 9)
	  	 
	 10

	  	 Presumed Section C Ceded Loss - 100% of Line 9

NOTE: If the amount equals $20,000,000 or more, insert policy limit of $20,000,000
	  	 
	  

11
	  	 Presumed Total Ceded Loss – Line 3 plus Line 5 plus Line 8 plus Line 10, no greater than $87,000,000

	  	 
	  

12
	  	 Losses paid under this Agreement
	  	 
	  

13
	  	 Reinsurer’s Obligation
	  	 
	  

14
	  	 Collateral in the trust
	  	 
	  

15
	  	 Collateral Adjustment
	  	 

  

 
  

 
  

 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 35BReimbursement Contrat effective  6/1/2010

 Exhibit 10.19 

 

					
	

	  	 STATE BOARD OF ADMINISTRATION

OF FLORIDA
  

1801 HERMITAGE BOULEVARD

TALLAHASSEE, FLORIDA 32308

(850) 488-4406
  

POST OFFICE BOX 13300

32317-3300
	  	 CHARLIE CRIST
  

GOVERNOR
 AS
CHAIRMAN
  
 ALEX SINK

CHIEF FINANCIAL OFFICER

AS TREASURER
  

BILL McCOLLUM

ATTORNEY GENERAL

AS SECRETARY
  

ASH WILLIAMS

EXECUTIVE DIRECTOR & CIO

		  	  
 REIMBURSEMENT CONTRACT

 
 Effective: June 1, 2010

(Contract)
  

between
  
	  	
	HOMEOWNERS CHOICE PROPERTY AND CASUALTY INSURANCE COMPANY
		  	 Clearwater, FL

(Company)
  

NAIC # 12944
  

and
	  	

 THE STATE BOARD OF ADMINISTRATION OF THE STATE OF FLORIDA (SBA) 

WHICH ADMINISTERS THE FLORIDA HURRICANE CATASTROPHE FUND (FHCF) 

PREAMBLE 
 The Legislature of the State
of Florida has enacted Section 215.555, Florida Statutes “Statute”, which directs the SBA to administer the FHCF. This Contract, consisting of the principal document entitled Reimbursement Contract, addressing the mandatory FHCF
coverage, and Addenda, is subject to the Statute and to any administrative rule adopted pursuant thereto, and is not intended to be in conflict therewith. All provisions in the principle document are equally applicable to each Addenda unless
specifically superseded by one of the Addenda. 
 In consideration of the promises set forth in this Contract, the parties agree as follows:

 ARTICLE I - SCOPE OF AGREEMENT 

As a condition precedent to the SBA’s obligations under this Contract, the Company, an Authorized Insurer or an entity writing Covered Policies under
Section 627.351, Florida Statutes, in the State of Florida, shall report to the SBA in a specified format the business it writes which is described in this Contract as Covered Policies. 

The terms of this Contract shall determine the rights and obligations of the parties. This Contract provides reimbursement to the Company under certain
circumstances, as described herein, and does not provide or extend insurance or reinsurance coverage to any person, firm, corporation or other entity. The SBA shall reimburse the Company for its Ultimate Net Loss on Covered Policies, which were in
force 
  

					
		  	1	  	 FHCF-2010K

Rule 19-8.010 F.A.C.

 
and in effect at the time of the loss, in excess of the Company’s Retention as a result of each Loss Occurrence commencing during the Contract Year, to the extent funds are available, all as
hereinafter defined. 
 ARTICLE II - PARTIES TO THE CONTRACT 

This Contract is solely between the Company and the SBA which administers the FHCF. In no instance shall any insured of the Company or any claimant
against an insured of the Company, or any other third party, have any rights under this Contract, except as provided in Article XIV. The SBA will only disburse funds to the Company, except as provided for in Article XIV of this Contract. The Company
shall not, without the prior approval of the Office of Insurance Regulation, sell, assign, or transfer to any third party, in return for a fee or other consideration any sums the FHCF pays under this Contract or the right to receive such sums.

 ARTICLE III - TERM 
 This
Contract shall apply to Loss Occurrences which commence during the period from 12:00:01 a.m., Eastern Time, June 1, 2010, to 12:00 midnight Eastern Time, May 31, 2011 (Contract Year). 

The Company must designate a coverage level, make the required selections, and return this fully executed Contract (two originals) to the FHCF
Administrator so that the Contract is received by the FHCF Administrator no later than 5 p.m., Central Time, June 1, 2010. Failure to do so may result in a referral to the Office of Insurance Regulation within the Department of Financial
Services for administrative action. Furthermore, the Company’s coverage level under this Contract will be deemed as follows: 
  

	(1)	For Companies that are a member of a National Association of Insurance Commissioners (NAIC) group, the same coverage level selected by the other Companies of the same
NAIC group shall be deemed. If executed Contracts for none of the members of an NAIC group have been received by the FHCF Administrator, the coverage level from the prior Contract Year shall be deemed. 

 

	(2)	For Companies that are not a member of an NAIC group under which other Companies are active participants in the FHCF, the coverage level from the prior Contract Year
shall be deemed. 

  

	(3)	For New Participants, as that term is defined in Article V(21), that are a member of an NAIC group, the same coverage level selected by the other Companies of the same
NAIC group shall be deemed. 

  

	(4)	For New Participants that are not a member of an NAIC group under which other Companies are active participants in the FHCF, the 45%, 75% or 90% coverage levels may be
selected providing that the FHCF Administrator receives executed Contracts within 30 calendar days of the effective date of the first Covered Policy, otherwise, the 45% coverage level shall be deemed. 

Pursuant to the terms of this Contract, the SBA shall not be liable for Loss Occurrences which commence after the effective time and date of expiration
or termination. Should this Contract expire or terminate while a Loss Occurrence covered hereunder is in progress, the SBA shall be responsible for such Loss Occurrence in progress in the same manner and to the same extent it would have been
responsible had the Contract expired the day following the conclusion of the Loss Occurrence in progress. 
 ARTICLE IV - LIABILITY OF THE
FHCF 
  

	(1)	The SBA shall reimburse the Company, with respect to each Loss Occurrence commencing during the Contract Year for the “Reimbursement Percentage” elected, this
percentage times the amount of Ultimate Net Loss paid by the Company in excess of the Company’s Retention, as adjusted pursuant to Article V(28), plus 5% of the reimbursed losses for Loss Adjustment Expense Reimbursement.

  

	(2)	The Reimbursement Percentage will be 45% or 75% or 90%, at the Company’s option as elected under Article XVIII. 

 

					
		  	2	  	 FHCF-2010K

Rule 19-8.010 F.A.C.

	(3)	The aggregate liability of the FHCF with respect to all Reimbursement Contracts covering this Contract Year shall not exceed the limit set forth under
Section 215.555(4)(c)1., Florida Statutes. For specifics regarding loss reimbursement calculations, see section (3)(c) of Article X herein. 

  

	(4)	Upon the occurrence of a Covered Event, the SBA shall evaluate the potential losses to the FHCF and the FHCF’s capacity at the time of the event. The initial
Projected Payout Multiple used to reimburse the Company for its losses shall not exceed the Projected Payout Multiple as calculated based on the capacity needed to provide the FHCF’s mandatory coverage and the Additional Coverage Option (up to
$10 million) pursuant to Section 215.555(4)(b)4., Florida Statutes, as provided under Addendum No. 1. to this Contract. The SBA shall make adjustments to the Projected Payout Multiple in order to reimburse the optional Temporary Coverage
Limit (TICL) Options coverage based on the SBA’s ongoing evaluation of potential losses and capacity. If it appears that the Estimated Claims-Paying Capacity may be exceeded, the SBA shall reduce the projected payout factors or multiples for
determining each participating insurer’s projected payout uniformly among all insurers to reflect the Estimated Claims-Paying Capacity. 

  

	(5)	Reimbursement amounts shall not be reduced by reinsurance paid or payable to the Company from other sources. 

 

	(6)	After the end of the calendar year, the SBA shall notify insurers of the estimated Borrowing Capacity and the Balance of the Fund as of December 31. In May and
October of each year, the SBA shall publish in the Florida Administrative Weekly a statement of the FHCF’s estimated Borrowing Capacity, estimated Claims-Paying Capacity, and the projected Balance of the Fund as of December 31.

  

	(7)	The obligation of the SBA with respect to all Contracts covering a particular Contract Year shall not exceed the Balance of the Fund as of December 31 of that
Contract Year, together with the maximum amount the SBA is able to raise through the issuance of revenue bonds or through other means available to the SBA under Section 215.555, Florida Statutes, up to the limit in accordance with
Section 215.555(4)(c)1., Florida Statutes. The obligations and the liability of the SBA are more fully described in Rule 19-8.013, Florida Administrative Code (F.A.C.). 

ARTICLE V - DEFINITIONS 
  

	(1)	Actual Claims-Paying Capacity of the FHCF 

This term means the sum of the Balance of the Fund as of December 31 of a Contract Year, plus any reinsurance purchased by the FHCF,
plus the amount the SBA is able to raise through the issuance of revenue bonds, or through other means available by law to the SBA, up to the limit in accordance with Section 215.555(4)(c)1. and (6), Florida Statutes. 

 

	(2)	Actuarially Indicated 

This term means, with respect to Premiums paid by Companies for reimbursement provided by the FHCF, an amount determined in accordance
with the definition provided in Section 215.555(2)(a), Florida Statutes. 
  

	(3)	Additional Living Expense (ALE) 

ALE losses covered by the FHCF are not to exceed 40 percent of the insured value of a Residential Structure or its contents based on the
coverage provided in the policy. Fair rental value, loss of rents, or business interruption losses are not covered by the FHCF. 
  

	(4)	Administrator 

This term means the entity with which the SBA contracts to perform administrative tasks associated with the operations
of the FHCF. The Administrator is Paragon Strategic Solutions Inc., 8200 Tower, 5600 West
83rd Street, Suite 1100, Minneapolis, Minnesota 55437. The
telephone number is (800) 689-3863, and the facsimile number is (800) 264-0492. 
  

	(5)	Authorized Insurer 

 This
term is defined in Section 624.09(1), Florida Statutes. 
  

					
		  	3	  	 FHCF-2010K

Rule 19-8.010 F.A.C.

	(6)	Borrowing Capacity 

 This
term means the amount of funds which are able to be raised by the issuance of revenue bonds or through other financing mechanisms, less bond issuance expenses and reserves. 

 

	(7)	Citizens Property Insurance Corporation (Citizens) 

This term means the entity formed under Section 627.351(6), Florida Statutes and refers to both Citizens Property Insurance
Corporation High Risk Account and Citizens Property Insurance Corporation Personal Lines and Commercial Lines Accounts. 
  

	(8)	Contract 

 This term means
this Reimbursement Contract for the current Contract Year. 
  

	(9)	Covered Event 

 This term
means any one storm declared to be a hurricane by the National Hurricane Center which causes insured losses in Florida. A Covered Event begins when a hurricane causes damage in Florida while it is a hurricane and continues throughout any subsequent
downgrades in storm status by the National Hurricane Center regardless of whether the hurricane makes landfall. Any storm, including a tropical storm, which does not become a hurricane is not a Covered Event. 

 

	(10)	Covered Policy or Covered Policies 

  

	 	(a)	Covered Policy, as defined in Section 215.555(2)(c), Florida Statutes, is further clarified to mean only that portion of a binder, policy or contract of insurance
that insures real or personal property located in the State of Florida to the extent such policy insures a Residential Structure, as defined in definition (27) herein, or the contents of a Residential Structure, located in the State of Florida.

  

	 	(b)	Due to the specialized nature of the definition of Covered Policies, Covered Policies are not limited to only one line of business in the Company’s annual
statement required to be filed by Section 624.424, Florida Statutes. Instead, Covered Policies are found in several lines of business on the Company’s annual statement. Covered Policies will at a minimum be reported in the Company’s
statutory annual statement as: 

  

	 	1.	Fire 

  

	 	2.	Allied Lines 

  

	 	3.	Farmowners Multiple Peril 

  

	 	4.	Homeowners Multiple Peril 

  

	 	5.	Commercial Multiple Peril (non liability portion, covering condominiums and apartments) 

 

	 	6.	Inland Marine 

 Note that where
particular insurance exposures, e.g. mobile homes, are reported on an annual statement is not dispositive of whether or not the exposure is a Covered Policy. 
  

	 	(c)	This definition applies only to the first-party property section of a policy pertaining strictly to the structure, its contents, appurtenant structures, or ALE
coverage. 

  

	 	(d)	Covered Policy also includes any collateral protection insurance policy covering personal residences which protects both the borrower’s and the lender’s
financial interest, in an amount at least equal to the coverage for the dwelling in place under the lapsed homeowner’s policy, if such policy can be accurately reported as required in Section 215.555(5), Florida Statutes. A Company will be
deemed to be able to accurately report data if the required data, as specified in the Premium Formula adopted in Section 215.555(5), Florida Statutes, is available. 

 

	 	(e)	See Article VI of this Contract for specific exclusions. 

  

	(11)	Deductible Buy-Back Policies 

This term means a specific policy that provides coverage to a policyholder for some portion of the policyholder’s deductible under a
policy issued by another insurer. 
  

					
		  	4	  	 FHCF-2010K

Rule 19-8.010 F.A.C.

	(12)	Estimated Claims-Paying Capacity of the FHCF 

This term means the sum of the projected Balance of the Fund as of December 31 of a Contract Year, plus any reinsurance purchased by
the FHCF, plus the most recent estimate of the Borrowing Capacity of the FHCF, determined pursuant to Section 215.555(4)(c), Florida Statutes. 
  

	(13)	Excess Policies 

 This
term, for the purposes of this Contract, means a policy that provides insurance protection for large commercial property risks that provides a layer of coverage above a primary layer (which is insured by a different insurer) that acts much the same
as a very large deductible. 
  

	(14)	Florida Department of Financial Services (Department) 

This term means the Florida regulatory agency, created pursuant to Section 20.121, Florida Statutes, which is charged with regulating
the Florida insurance market and administering the Florida Insurance Code. 
  

	(15)	Florida Insurance Code 

This term means those chapters identified in Section 624.01, Florida Statutes, which are designated as the Florida Insurance Code.

  

	(16)	Formula or the Premium Formula 

This term means the Formula approved by the SBA for the purpose of determining the Actuarially Indicated Premium to be paid to the FHCF.
The Premium Formula is defined as an approach or methodology which leads to the creation of premium rates. The resulting rates are therefore incorporated as part of the Premium Formula. The formula, shall, pursuant to Section 215.555(5)(b),
Florida Statutes, include a cash build-up factor in the amount specified therein. 
  

	(17)	Fund Balance or Balance of the Fund as of December 31 

These terms mean the amount of assets available to pay claims, not including any bonding proceeds, resulting from Covered Events which
occurred during the Contract Year. 
  

	(18)	Insurer Group 

 For
purposes of the coverage option election in Section 215.555(4)(b), Florida Statutes, Insurer Group means the group designation assigned by the National Association of Insurance Commissioners (NAIC) for purposes of filing consolidated financial
statements. A Company is a member of a group as designated by the NAIC until such Company is assigned another group designation or is no longer a member of a group recognized by the NAIC. 

 

	(19)	Loss Occurrence 

 This
term means the sum of individual insured losses incurred under Covered Policies resulting from the same Covered Event. “Losses” means direct incurred losses under Covered Policies and excludes Loss Adjustment Expenses. 

 

	(20)	Loss Adjustment Expense Reimbursement 

  

	 	(a)	Loss Adjustment Expense Reimbursement shall be 5% of the reimbursed losses under this Contract as provided in Article IV, pursuant to Section 215.555(4)(b)l.,
Florida Statutes. 

  

	 	(b)	To the extent that loss reimbursements are limited to the Payout Multiple applied to each Company, the 5% Loss Adjustment Expense is included in the total Payout
Multiple applied to each Company. 

  

	(21)	New Participant(s) 

 This
term means all Companies which begin writing Covered Policies on or after the beginning of the Contract Year. A Company that removes exposure from either Citizens entity, as that term is defined in (7) above, pursuant to an assumption agreement
effective on or after June 1 and had written no other Covered Policies before June 1 is also considered a New Participant. 
  

	(22)	Office of Insurance Regulation 

This term means that office within the Department of Financial Services and which was created in Section 20.121(3), Florida Statutes.

  

	(23)	Payout Multiple 

 This
term means the multiple as calculated in accordance with Section 215.555(4)(c), Florida Statutes, which is derived by dividing the single season Claims-Paying Capacity of the FHCF by 

 

					
		  	5	  	 FHCF-2010K

Rule 19-8.010 F.A.C.

 
the total aggregate industry Reimbursement Premium for the FHCF for the Contract Year billed as of December 31 of the Contract Year. The final Payout Multiple is determined once
Reimbursement Premiums have been billed as of December 31 and the amount of bond proceeds has been determined. 
  

	(24)	Premium 

 This term means
the same as Reimbursement Premium. 
  

	(25)	Projected Payout Multiple 

The Projected Payout Multiple is used to calculate a Company’s projected payout pursuant to Section 215.555(4)(d)2., Florida
Statutes. The Projected Payout Multiple is derived by dividing the estimated single season Claims-Paying Capacity of the FHCF by the estimated total aggregate industry Reimbursement Premium for the FHCF for the Contract Year. The Company’s
Reimbursement Premium as paid to the SBA for the Contract Year is multiplied by the Projected Payout Multiple to estimate the Company’s coverage from the FHCF for the Contract Year. 

 

	(26)	Reimbursement Premium 

This term means the Premium determined by multiplying each $1,000 of insured value reported by the Company in accordance with
Section 215.555(5)(b), Florida Statutes, by the rate as derived from the Premium Formula, as described in Rule 19-8.028, F.A.C. 
  

	(27)	Residential Structures 

This term means dwelling units, including the primary structure and appurtenant structures insured under the same policy and any other
structures covered under endorsements associated with a policy covering a residential structure. Covered Residential Structures do not include any structures listed under Article VI herein or structures used solely for non-residential
purposes. 
  

	(28)	Retention 

 The
Company’s Retention means the amount of hurricane losses under Covered Policies which must be incurred by the Company before it is eligible for reimbursement from the FHCF. 

 

	 	(a)	When the Company experiences covered losses from one or two Covered Events during the Contract Year, the Company’s full Retention shall be applied to each of the
Covered Events. 

  

	 	(b)	When the Company experiences covered losses from more than two Covered Events during the Contract Year, the Company’s full Retention shall be applied to each of
the two Covered Events causing the largest covered losses for the Company. For each other Covered Event resulting in covered losses, the Company’s Retention shall be reduced to one-third of its full Retention and applied to all other Covered
Events. 

  

	 	1.	All reimbursement of covered losses for each Covered Event shall be based on the Company’s full Retention until December 31 of the Contract Year. Adjustments
to reflect a reduction to one-third of the full Retention shall be made on or after December 31 of the Contract Year provided the Company reports its losses as specified in this Contract. 

 

	 	2.	Adjustments to the Company’s Retention shall be based upon its paid and outstanding losses as reported on the Company’s Proof of Loss Reports but shall not
include incurred but not reported losses. The Company’s Proof of Loss Reports shall be used to determine which Covered Events constitute the Company’s two largest Covered Events, and the reduction to one-third of the full Retention shall
be applied to all other Covered Events for the Contract Year. After this initial determination, any subsequent adjustments shall be made by the SBA only if the quarterly loss reports reveal that loss development patterns have resulted in a change in
the order of Covered Events entitled to the reduction to one-third of the full Retention. 

  

	 	(c)	The Company’s full Retention is established in accordance with the provisions of Section 215.555(2)(e), Florida Statutes, and shall be determined by
multiplying the Retention Multiple by the Company’s Reimbursement Premium for the Contract Year. 

  

	 	(d)	Once the Company’s limit of coverage has been exhausted, the Company will not be entitled to further reimbursements. 

 

					
		  	6	  	 FHCF-2010K

Rule 19-8.010 F.A.C.

	(29)	Retention Multiple 

  

	 	(a)	The Retention Multiple is applied to the Company’s Reimbursement Premium to determine the Company’s Retention. The Retention Multiple for the 2010/2011
Contract Year shall be equal to $4.5 billion, adjusted based upon the reported exposure for the 2008/2009 Contract Year to reflect the percentage growth in exposure to the FHCF since 2004, divided by the estimated total industry Reimbursement
Premium at the 90% reimbursement percentage level for the Contract Year as determined by the SBA. 

  

	 	(b)	The Retention Multiple as determined under (29)(a) above shall be adjusted to reflect the reimbursement percentage elected by the Company under this Contract as
follows: 

  

	 	1.	If the Company elects a 90% reimbursement percentage, the adjusted Retention Multiple is 100% of the amount determined under (29)(a) above;

  

	 	2.	If the Company elects a 75% reimbursement percentage, the adjusted Retention Multiple is 120% of the amount determined under (29)(a) above; or

  

	 	3.	If the Company elects a 45% reimbursement percentage, the adjusted Retention Multiple is 200% of the amount determined under (29)(a) above.

  

	(30)	Ultimate Net Loss 

  

	 	(a)	This term means all losses of the Company under Covered Policies in force at the time of a Covered Event, as defined under (9) above, prior to the application of
the Company’s FHCF Retention, as defined under (28) above, and reimbursement percentage, and excluding loss adjustment expense, arising from each Loss Occurrence during the Contract Year, provided, however, that the Company’s loss
shall be determined in accordance with the deductible level written under the policy sustaining the loss. 

  

	 	(b)	Salvages and all other recoveries, excluding reinsurance recoveries, shall be first deducted from such loss to arrive at the amount of liability attaching hereunder.

  

	 	(c)	All salvages, recoveries or payments recovered or received subsequent to a loss settlement under this Contract shall be applied as if recovered or received prior to the
aforesaid settlement and all necessary adjustments shall be made by the parties hereto. 

  

	 	(d)	Nothing in this clause shall be construed to mean that losses under this Contract are not recoverable until the Company’s Ultimate Net Loss has been ascertained.

  

	 	(e)	The SBA shall be subrogated to the rights of the Company to the extent of its reimbursement of the Company. The Company agrees to assist and cooperate with the SBA in
all respects as regards such subrogation. The Company further agrees to undertake such actions as may be necessary to enforce its rights of salvage and subrogation, and its rights, if any, against other insurers as respects any claim, loss, or
payment arising out of a Covered Event. 

 ARTICLE VI – EXCLUSIONS 

This Contract does not provide reimbursement for: 
  

	(1)	Any losses not defined as being within the scope of a Covered Policy. 

  

	(2)	Any policy which excludes wind or hurricane coverage. 

  

	(3)	Any Excess Policy or Deductible Buy-Back Policy that requires individual ratemaking. 

 

	(4)	Any policy for Residential Structures, as defined in Article V(27) herein, that provides a layer of coverage underneath an Excess Policy, as defined in Article V(13)
herein, issued by a different insurer. 

  

	(5)	Any liability of the Company attributable to losses for fair rental value, loss of rent or rental income, or business interruption. 

 

	(6)	Any collateral protection policy that does not meet the definition of Covered Policy as defined in Article V(10)(d) herein. 

 

	(7)	Any reinsurance assumed by the Company. 

  

	(8)	Any exposure for hotels, motels, timeshares, shelters, camps, retreats, and any other rental property used solely for commercial purposes. 

 

					
		  	7	  	 FHCF-2010K

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	(9)	Any exposure for homeowner associations if no habitational structures are insured under the policy. 

 

	(10)	Any exposure for homes and condominium structures or units that are non-owner occupied and rented for six (6) or more rental periods by different parties during
the course of a twelve (12) month period. 

  

	(11)	Commercial healthcare facilities and nursing homes; however, a nursing home which is an integral part of a retirement community consisting primarily of habitational
structures that are not nursing homes will not be subject to this exclusion. 

  

	(12)	Any exposure under commercial policies covering only appurtenant structures or structures that do not function as a habitational structure (e.g. a policy covering only
the pool of an apartment complex). 

  

	(13)	Personal contents in a commercial storage facility (including jewelry in an off-premises vault) covered under a policy that covers only those personal contents.

  

	(14)	Policies covering only Additional Living Expense. 

  

	(15)	Any exposure for barns or barns with apartments. 

  

	(16)	Any exposure for builders risk coverage or new residential structures still under construction. 

 

	(17)	Any exposure for recreational vehicles, golf carts, or boats (including boat related equipment) requiring licensing and written on a separate policy or endorsement.

  

	(18)	Any liability of the Company for extra contractual obligations or liabilities in excess of original policy limits. 

 

	(19)	Any losses paid in excess of a policy’s hurricane limit in force at the time of each Covered Event, including individual coverage limits (i.e., building,
appurtenant structures, contents, and additional living expense). This exclusion includes overpayments of a specific individual coverage limit even if total payments under the policy are within the aggregate policy limit. 

 

	(20)	 Any losses paid under a policy for Additional Living Expense, written as a time element coverage, in excess of the Additional Living Expense exposure
reported for that policy under the Data Call for the applicable Contract Year (unless policy limits have changed effective after
June 30th of the Contract Year).

  

	(21)	Any losses for which the Company’s claims files do not adequately support. Claim file support shall be deemed adequate if in compliance with the Records Retention
Requirements outlined on the Form FHCF-L1B (Proof of Loss Report) applicable to the Contract Year. 

  

	(22)	Any exposure for, or losses attributable to, loss assessment coverage. 

  

	(23)	Losses in excess of the sum of the Balance of the Fund as of December 31 of the Contract Year and the amount the SBA is able to raise through the issuance of
revenue bonds or by the use of other financing mechanisms, up to the limit pursuant to Section 215.555(4)(c), Florida Statutes. 

  

	(24)	Any liability assumed by the Company from Pools, Associations, and Syndicates. Exception: Covered Policies assumed from Citizens under the terms and conditions of an
executed assumption agreement between the Authorized Insurer and Citizens are covered by this Contract. 

  

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

  

	(26)	Any liability of the Company for loss or damage caused by or resulting from nuclear reaction, nuclear radiation, or radioactive contamination from any cause, whether
direct or indirect, proximate or remote, and regardless of any other cause or event contributing concurrently or in any other sequence to the loss. 

 

					
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	(27)	The FHCF does not provide coverage for water damage which is generally excluded under property insurance contracts and has been defined to mean flood, surface water,
waves, tidal water, overflow of a body of water, storm surge, or spray from any of these, whether or not driven by wind. 

  

	(28)	Specialized Fine Arts Risks as defined in Rule 19-8.028(4)(d), F.A.C. 

ARTICLE VII - MANAGEMENT OF CLAIMS AND LOSSES 

The Company shall investigate and settle or defend all claims and losses. All payments of claims or losses by the Company within the terms and limits of
the appropriate coverage parts of Covered Policies shall be binding on the SBA, subject to the terms of this Contract, including the provisions in Article XIII relating to inspection of records and examinations. 

ARTICLE VIII - LOSS REIMBURSEMENT ADJUSTMENTS 
  

	(1)	Offsets 

 The SBA reserves
the right to offset amounts payable to the SBA from the Company, including amounts payable under previous Contract Years and the Company’s full premium for the current Contract Year (regardless of installment due dates), against any
reimbursement or advance amounts due and payable to the Company from the SBA as a result of the liability of the SBA. 
  

	(2)	Reimbursement Adjustments 

Section 2l5.555(4)(d) and (e), Florida Statutes, provides the SBA with the right to seek the return of excess loss reimbursements
which have been paid to the Company along with interest thereon. Excess loss reimbursements are those payments made to the Company by the SBA that are in excess of the Company’s coverage under the Contract Year. Excess loss reimbursements may
result from adjustments to the Projected Payout Multiple or the Payout Multiple, incorrect exposure (Data Call) submissions or resubmissions, incorrect calculations of Reimbursement Premiums or Retentions, incorrect Proof of Loss Reports, incorrect
calculation of reinsurance recoveries, or subsequent readjustment of policyholder claims, including subrogation and salvage, or any combination of the foregoing. The Company will be sent an invoice showing the due date for adjustments along with the
interest due thereon through the due date. The applicable interest rate for interest credits, and for interest charges for adjustments beyond the Company’s control, will be the average rate earned by the SBA for the FHCF for the first four
months of the Contract Year. The applicable interest rate for interest charges on excess loss reimbursements due to adjustments resulting from incorrect exposure submissions or Proof of Loss Reports will accrue at this rate plus 5%. All interest
will continue to accrue if not paid by the due date. 
 ARTICLE IX - REIMBURSEMENT PREMIUM 

 

	(1)	The Company shall, in a timely manner, pay the SBA its Reimbursement Premium for the Contract Year. The Reimbursement Premium for the Contract Year shall be calculated
in accordance with Section 215.555, Florida Statutes, with any rules promulgated thereunder, and with Article X(2). 

  

	(2)	 Since the calculation of the Actuarially Indicated Premium assumes that the Companies will pay their Reimbursement Premiums timely, interest charges
will accrue under the following circumstances. A Company may choose to estimate its own Premium installments. However, if the Company’s estimation is less than the provisional Premium billed, an interest charge will accrue on the difference
between the estimated Premium and the final Premium. If a Company estimates its first installment, the Administrator shall bill that estimated Premium as the second installment as well, which will be considered as an estimate by the Company. No
interest will accrue regarding any provisional Premium if paid as billed by the FHCF’s Administrator, except in the case of an estimated second installment as set forth in this Article. Also, if a Company makes an estimation that is higher than
the provisional Premium billed but is less than the final Premium, interest will not 

  

					
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accrue. If the Premium payment is not received from a Company when it is due, an interest charge will accrue on a daily basis until the payment is received. Interest will also accrue on Premiums
resulting from submissions or resubmissions finalized after December 1 of the Contract Year. An interest credit will be applied for any Premium which is overpaid as either an estimate or as a provisional Premium. Interest shall not be credited
past December 1 of the Contract Year. The applicable interest rate for interest credits will be the average rate earned by the SBA for the FHCF for the first four months of the Contract Year. The applicable interest rate for interest charges
will accrue at this rate plus 5%. 

 ARTICLE X - REPORTS AND REMITTANCES 

 

	(1)	Exposures 

  

	 	(a)	If the Company writes Covered Policies before June 1 of the Contract Year, the Company shall report to the SBA, unless otherwise provided in Rule 19-8.029, F.A.C.,
no later than the statutorily required date of September 1 of the Contract Year, by ZIP Code or other limited geographical area as specified by the SBA, its insured values under Covered Policies as of June 30 of the Contract Year as
outlined in the annual reporting of insured values form, FHCF-D1A (Data Call) adopted for the Contract Year under Rule 19-8.029, F.A.C., and other data or information in the format specified by the SBA. 

 

	 	(b)	If the Company first begins writing Covered Policies on or after June 1 but prior to December 1 of the Contract Year, the Company shall report to the SBA, no
later than March 1 of the Contract Year, by ZIP Code or other limited geographical area as specified by the SBA, its insured values under Covered Policies as of December 31 of the Contract Year as outlined in the Supplemental Instructions
for New Participants section of the Data Call adopted for the Contract Year under Rule 19-8.029, F.A.C., and other data or information in the format specified by the SBA. 

 

	 	(c)	If the Company first begins writing Covered Policies on December 1 through and including May 31 of the Contract Year, the Company shall not report its
exposure data for the Contract Year to the SBA. 

  

	 	(d)	The requirement that a report is due on a certain date means that the report shall be in the physical possession of the FHCF’s Administrator in Minneapolis no
later than 5 p.m. on the due date. If the applicable due date is a Saturday, Sunday or legal holiday, then the actual due date will be the day immediately following the applicable due date which is not a Saturday, Sunday or legal holiday. For
purposes of the timeliness of the submission, neither the United States Postal Service postmark nor a postage meter date is in any way determinative. Reports sent to the SBA in Tallahassee, Florida, will be returned to the sender. Reports not in the
physical possession of the FHCF’s Administrator by 5 p.m., Central Time, on the applicable due date are late. 

  

	 	(e)	Pursuant to the provisions of Section 215.557, Florida Statutes, the reports of insured values under Covered Policies by ZIP Code submitted to the SBA pursuant to
Section 215.555, Florida Statutes, are confidential and exempt from the provisions of Section 119.07(1), Florida Statutes, and Section 24(a), Art. I of the State Constitution. 

 

	(2)	Reimbursement Premium 

  

	 	(a)	 If the Company writes Covered Policies before June 1 of the Contract Year, the Company shall pay the FHCF its Reimbursement Premium in
installments due on or before August 1, October 1, and December 1 of the Contract Year in amounts to be determined by the FHCF. However, if the Company’s Reimbursement Premium for the prior Contract Year was less than
$5,000, the Company’s full provisional Reimbursement Premium, in an amount equal to the Reimbursement Premium paid in the prior year, shall be due in full on or before August 1 of the Contract Year. The Company will be invoiced for amounts
due, if any, beyond the provisional Reimbursement Premium payment, on or before December 1 of the Contract Year. In addition, 

 

					
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if control of the Company has been transferred through any legal or regulatory proceeding to a state regulator or court appointed receiver or rehabilitator (referred to in the aggregate as
“State action”), the full annual provisional Reimbursement Premium as billed and any outstanding balances will be due and payable on August 1, or the date that such State action occurs after August 1 of the Contract Year. Such
acceleration will not apply when the receiver or rehabilitator provides a letter of assurance to the FHCF that the Company will have the resources to pay the premium in installments in accordance with the contractual provisions.

  

	 	(b)	A New Participant that first begins writing Covered Policies on or after June 1 but prior to December 1 of the Contract Year shall pay the FHCF a provisional
Reimbursement Premium of $1,000 upon execution of this Contract. The Administrator shall calculate the Company’s actual Reimbursement Premium for the period based on its actual exposure as of December 31 of the Contract Year, as reported
on or before March 1 of the Contract Year. To recognize that New Participants have limited exposure during this period, the actual Premium as determined by processing the Company’s exposure data shall then be divided in half, the
provisional Premium shall be credited, and the resulting amount shall be the total Premium due for the Company for the remainder of the Contract Year. However, if that amount is less than $1,000, then the Company shall pay $1,000. The Premium
payment is due no later than May 1 of the Contract Year. The Company’s Retention and coverage will be determined based on the total Premium due as calculated above. 

 

	 	(c)	A New Participant that first begins writing Covered Policies on or after December 1 through and including May 31 of the Contract Year shall pay the FHCF a
Reimbursement Premium of $1,000 upon execution of this Contract. 

  

	 	(d)	The requirement that the Reimbursement Premium is due on a certain date means that the Premium shall be in the physical possession of the FHCF no later than 5 p.m.,
Eastern Time, on the due date applicable to the particular installment. If remitted by check to the FHCF’s Post Office Box, the check shall be physically in the Post Office Box 550261, Tampa, FL 33655- 0261, as set out on the invoice sent to
the Company. If remitted by check by hand delivery, the check shall be physically on the premises of the FHCF’s bank in Tampa, Florida, as set out on the invoice sent to the Company. If remitted electronically, the wire transfer shall have been
completed to the FHCF’s account at its bank in Tampa, Florida, as set out on the invoice sent to the Company. If the applicable due date is a Saturday, Sunday or legal holiday, then the actual due date will be the day immediately following the
applicable due date which is not a Saturday, Sunday or legal holiday. For purposes of the timeliness of the remittance, neither the United States Postal Service postmark nor a postage meter date is in any way determinative. Premium checks sent to
the SBA in Tallahassee, Florida, or to the FHCF’s Administrator in Minneapolis, Minnesota, will be returned to the sender. Reimbursement Premiums not in the physical possession of the FHCF by 5 p.m., Eastern Time, on the applicable due date are
late. 

  

	 	(e)	Except as required by Section 215.555(7)(c), Florida Statutes, or as described in the following sentence, Reimbursement Premiums, together with earnings thereon,
received in a given Contract Year will be used only to pay for losses attributable to Covered Events occurring in that Contract Year or for losses attributable to Covered Events in subsequent Contract Years and will not be used to pay for past
losses or for debt service on revenue bonds. Pursuant to Section 215.555(6)(a)1., Florida Statutes, Reimbursement Premiums and earnings thereon may be used for payments relating to revenue bonds in the event Emergency Assessments are
insufficient. If Reimbursement Premiums or earnings thereon are used for debt service on revenue bonds, then the amount of the Reimbursement Premiums or earnings thereon so used shall be returned, without interest, to the Fund when Emergency
Assessments or other legally available funds remain available after making payment relating to the revenue bonds and any other purposes for which Emergency Assessments were levied. 

 

					
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	(3)	Claims and Losses 

  

	 	(a)	In General 

  

	 	1.	Claims and losses resulting from Loss Occurrences commencing during the Contract Year shall be reported by the Company and reimbursed by the FHCF as provided herein and
in accordance with the Statute, this Contract, and any rules adopted pursuant to the Statute. For a Company participating in a quota share primary insurance agreement(s) with Citizens Property Insurance Corporation High Risk Account, Citizens and
the Company shall report only their respective portion of losses under the quota share primary insurance agreement(s). Pursuant to Section 215.555(4)(c), Florida Statutes, the SBA is obligated to pay for losses not to exceed the Actual
Claims-Paying Capacity of the FHCF, up to the limit in accordance with Section 215.555(4)(c)1., Florida Statutes, for any one Contract Year. 

  

	 	2.	If the Company is in non-compliance with Section 215.555, Florida Statutes for any Contract Year, including deadlines for sending in Contracts, addendums or
attachments to Contracts, Data Call submissions or resubmissions, loss reports, or in responding to SBA exam requirements, the SBA reserves the right to withhold reimbursements or advances until such time the Company becomes compliant.

  

	 	(b)	Loss Reports 

  

	 	1.	At the direction of the SBA, the Company shall report its projected Ultimate Net Loss from each Loss Occurrence to provide information to the SBA in determining any
potential liability for possible reimbursable losses under the Contract on the Interim Loss Report, Form FHCF-L1A, adopted for the Contract Year under Rule 19-8.029, F.A.C. Interim Loss Reports (including subsequent Interim Loss Reports if required
by the SBA) will be due in no less than fourteen days from the date of the notice from the SBA that such a report is required. 

  

	 	2.	FHCF loss reimbursements will be issued based on Ultimate Net Loss information reported by the Company on the Proof of Loss Report, Form FHCF-L1B, adopted for the
Contract Year under Rule 19-8.029, F.A.C. 

  

	 	a.	To qualify for reimbursement, the Proof of Loss Report must have the original signatures of two executive officers authorized by the Company to sign the report.

  

	 	b.	The Company must also submit a detailed claims listing (as outlined on the Proof of Loss Report) at the same time it submits its first Proof of Loss Report for a
specific Covered Event that qualifies the Company for reimbursement under that Covered Event, and should be prepared to supply a detailed claims listing for any subsequent Proof of Loss Report upon request. 

 

	 	c.	While a Company may submit a Proof of Loss Report requesting reimbursement at any time following a Loss Occurrence, all Companies shall submit a mandatory Proof of Loss
Report for each Loss Occurrence no earlier than December 1 and no later than December 31 of the Contract Year during which the Covered Event(s) occurs using the most current data available, regardless of the amount of Ultimate Net Loss or
the amount of loss reimbursements or advances already received. Reports may be faxed only if the Company does not qualify for a reimbursement. 

  

	 	d.	For the Proof of Loss Reports due by December 31 of the Contract Year, and the required subsequent quarterly and annual reports required under subparagraphs 3. and
4. below, the Company shall submit its Proof of Loss Reports by each quarter-end or year-end using the most current data available. However, the date of such data shall not be more than sixty days prior to the applicable quarter-end or year-end
date. 

  

	 	3.	Updated Proof of Loss Reports for each Loss Occurrence are due quarterly thereafter until all claims and losses resulting from a Loss Occurrence are fully discharged
including any adjustments to such losses due to salvage or other recoveries, or the Company has received its full coverage under the Contract Year in which the Loss Occurrence(s) occurred. Guidelines follow: 

 

	 	a.	Quarterly Proof of Loss Reports are due by March 31 from an insurer whose losses exceed, or are expected to exceed, 50% of its FHCF Retention for a specific Loss
Occurrence(s). 

  

					
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	 	b.	Quarterly Proof of Loss Reports are due by June 30 from an insurer whose losses exceed, or are expected to exceed, 75% of its FHCF Retention for a specific Loss
Occurrence(s). 

  

	 	c.	Quarterly Proof of Loss Reports are due by September 30 and quarterly thereafter from an insurer whose losses exceed, or are expected to exceed, its FHCF Retention
for a specific Loss Occurrence(s). 

 If the Company’s Retention must be recalculated as the result of an
exposure resubmission, and if the recalculated Retention changes the FHCF’s reimbursement obligations, then the Company shall submit additional Proof of Loss Reports for recalculation of the FHCF’s obligations. 

 

	 	4.	Annually after December 31 of the Contract Year, all Companies shall submit a mandatory year-end Proof of Loss Report for each Loss Occurrence, as applicable,
using the most current data available. This Proof of Loss Report shall be filed no earlier than December 1 and no later than December 31 of each year and shall continue until the earlier of the commutation process described in
(3)(d) below or until all claims and losses resulting from the Loss Occurrence are fully discharged including any adjustments to such losses due to salvage or other recoveries. 

 

	 	5.	The SBA, except as noted below, will determine and pay, within 30 days or as soon as practicable after receiving Proof of Loss Reports, the reimbursement amount due
based on losses paid by the Company to date and adjustments to this amount based on subsequent quarterly information. The adjustments to reimbursement amounts shall require the SBA to pay, or the Company to return, amounts reflecting the most recent
determination of losses. 

  

	 	a.	The SBA shall have the right to consult with all relevant regulatory agencies to seek all relevant information, and shall consider any other factors deemed relevant,
prior to the issuance of reimbursements. 

  

	 	b.	The SBA shall require commercial self-insurance funds established under Section 624.462, Florida Statutes, to submit contractor receipts to support paid losses
reported on a Proof of Loss Report, and the SBA may hire an independent consultant to confirm losses, prior to the issuance of reimbursements. 

  

	 	c.	The SBA shall have the right to conduct a claims examination prior to the issuance of any advances or reimbursements submitted by Companies that have been placed under
regulatory supervision by a State or where control has been transferred through any legal or regulatory proceeding to a state regulator or court appointed receiver or rehabilitator. 

 

	 	6.	All Proof of Loss Reports received will be compared with the FHCF’s exposure data to establish the facial reasonableness of the reports. The SBA may also review
the results of current and prior Contract Year exposure and loss examinations to determine the reasonableness of the reported losses. Except as noted in paragraph 4. above, Companies meeting these tests for reasonableness will be scheduled for
reimbursement. Companies not meeting these tests for reasonableness will be handled on a case-by-case basis and will be contacted to provide specific information regarding their individual book of business. The discovery of errors in a
Company’s reported exposure under the Data Call may require a resubmission of the current Contract Year Data Call which, as the Data Call impacts the Company’s premium, retention, and coverage for the Contract Year, will be required before
the Company’s request for reimbursement or an advance will be fully processed by the Administrator. 

  

					
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	 	(c)	Loss Reimbursement Calculations 

  

	 	1.	In general, the Company’s paid Ultimate Net Losses must exceed its full FHCF Retention for a specific Covered Event before any reimbursement is payable from the
FHCF for that Covered Event. As described in Article V(28)(b), Retention adjustments will be made on or after December 31 of the Contract Year. No interest is payable on additional payments to the Company due to this type of Retention
adjustment. Each Company sustaining reimbursable losses will receive the amount of reimbursement due under the Contract up to the amount of the Company’s payout. If more than one Covered Event occurs in any one Contract Year, any reimbursements
due from the FHCF shall take into account the Company’s Retention for each Covered Event. However, the Company’s reimbursements from the FHCF for all Covered Events occurring during the Contract Year shall not exceed, in aggregate, the
Projected Payout Multiple or Payout Multiple, as applicable, times the individual Company’s Reimbursement Premium for the Contract Year. 

  

	 	2.	In determining reimbursements under this Contract, the SBA shall reimburse each of the Companies, including entities created pursuant to Section 627.351(6),
Florida Statutes, for the amount (if any) of reimbursement due under the individual Company’s Contract, but not to exceed for all Loss Occurrences, an amount equal to the Projected Payout Multiple or the Payout Multiple, as applicable, times
the individual Company’s Reimbursement Premium for the Contract Year. 

  

	 	3.	Reserve established. When a Covered Event occurs in a subsequent Contract Year when reimbursable losses are still being paid for a Covered Event in a previous Contract
Year, the SBA will establish a reserve for the outstanding reimbursable losses for the previous Contract Year, based on the length of time the losses have been outstanding, the amount of losses already paid, the percentage of incurred losses still
unpaid, and any other factors specific to the loss development of the Covered Events involved. 

  

	 	(d)	Commutation 

  

	 	1.	Not less than 36 months or more than 60 months after the end of the Contract Year, the SBA shall initiate the commutation process. While the Company may request that
the SBA consider beginning the commutation process earlier, doing so shall be at the discretion of the SBA. 

  

	 	a.	If the Company’s most recently submitted Proof of Loss Report(s) indicate that it has no losses resulting from a Loss Occurrence(s) during the Contract Year, the
FHCF’s obligations will end 30 days following notice by the SBA of the intent to close out the Company’s loss reporting for the Contract Year. If the Company determines that it does have losses to report, the Company must submit an
up-to-date Proof of Loss Report(s), along with an explanation of why the losses had not been previously reported, within 30 days following the notice by the SBA. After closure by the FHCF, the company will not be reimbursed for any losses for the
Contract Year regardless of circumstances or information discovered following such closure. 

  

	 	b.	If the Company has submitted a Proof of Loss Report(s) indicating that it does have losses resulting from a Loss Occurrence(s) during the Contract Year, the SBA shall
initiate the commutation process by requiring the Company to submit within 30 days an updated, current Proof of Loss Report(s) for each Loss Occurrence during the Contract Year. The Proof of Loss Report(s) must include all paid losses as well as all
outstanding losses, including incurred but not reported, which are not finally settled and which may be reimbursable losses under this Contract, and must be accompanied by a copy of a written opinion on the present value of the outstanding losses by
the Company’s certifying actuary. Failure of the Company to provide an updated current Proof of Loss Report(s) and an opinion by the date requested by the SBA shall result in referral to the Office of Insurance Regulation for a violation of the
Contract. 

  

	 	2.	Determining the present value of outstanding claims and losses. 

  

					
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	 	a.	If the Company exceeds or expects to exceed its Retention, the Company and the SBA or their respective representatives shall attempt, by mutual agreement, to agree upon
the present value of all outstanding claims and losses, both reported and incurred but not reported, resulting from Loss Occurrences during the Contract Year. Payment by the SBA of its portion of any amount or amounts so mutually agreed and
certified by the Company’s certifying actuary shall constitute a complete and final release of the SBA in respect of all claims and losses, both reported and unreported, under this Contract. 

 

	 	b.	If agreement on present value cannot be reached within 60 days, the Company and the SBA may mutually appoint an actuary, adjuster, or appraiser to investigate and
determine such claims or losses. If both parties then agree, the SBA shall pay its portion of the amount so determined to be the present value of such claims or losses. 

 

	 	c.	If the parties fail to agree, then any difference shall be settled by a panel of three actuaries, one to be chosen by each party and the third by the two so chosen. If
either party does not appoint an actuary within 30 days, the other party may appoint two actuaries. If the two actuaries fail to agree on the selection of a third actuary within 30 days of their appointment, each of them shall name two, of whom the
other shall decline one and the decision shall be made by drawing lots. All the actuaries shall be regularly engaged in the valuation of property claims and losses and shall be members of the Casualty Actuarial Society and of the American Academy of
Actuaries. None of the actuaries shall be under the control of either party to this Contract. Each party shall submit its case to its actuary within 30 days of the appointment of the third actuary. The decision in writing of any two actuaries, when
filed with the parties hereto, shall be final and binding on both parties. 

  

	 	d.	The reasonable and customary expense of the actuaries and of the commutation (as a result of b. and c. above) shall be equally divided between the two parties. Said
commutation shall take place in Tallahassee, Florida, unless some other place is mutually agreed upon by the Company and the SBA. 

  

	 	3.	If at any point during the commutation process information which indicates an increase in the Company’s reimbursable losses is provided by the Company or
discovered as a result of an examination by the SBA, the SBA may suspend the time frame for the commutation process. After such suspension, the SBA shall determine when it is appropriate to resume the commutation process. 

 

	(4)	Advances 

  

	 	(a)	In accordance with Section 215.555(4)(e), Florida Statutes, the SBA may make advances for loss reimbursements as defined herein, at market interest rates, to the
Company in accordance with Section 215.555(4)(e), Florida Statutes. An advance is an early reimbursement which allows the Company to continue to pay claims in a timely manner. Advances will be made based on the Company’s paid and reported
outstanding losses for Covered Policies (excluding all incurred but not reported [IBNR] losses) as reported on a Proof of Loss Report, and shall include Loss Adjustment Expense Reimbursement as calculated by the FHCF. In order to be eligible for an
advance, the Company must submit its exposure data for the Contract Year as required under paragraph (1) of this Article. Except as noted below, advances, if approved, will be made as soon as practicable after the SBA receives a written
request, signed by two officers of the Company, for an advance of a specific amount and any other information required for the specific type of advance under subparagraphs (c) and (e) below. All reimbursements due to a Company shall be
offset against any amount of outstanding advances plus the interest due thereon. 

  

	 	(b)	 For advances or excess advances, which are advances that are in excess of the amount to which the Company is entitled, the market interest rate shall
be the prime rate as published in the Wall Street Journal on the first business day of the Contract Year. This rate will be adjusted annually on the first business day of each subsequent Contract Year, regardless of whether the Company

  

					
		  	15	  	 FHCF-2010K

Rule 19-8.010 F.A.C.

	 	 
executes subsequent Contracts. In addition to the prime rate, an additional 5% interest charge will apply on excess advances. All interest charged will commence on the date the SBA issues a check
for an advance and will cease on the date upon which the FHCF has received the Company’s Proof of Loss Report(s) for the Covered Event(s) for which the Company qualifies for reimbursement(s). If such reimbursement(s) are less than the amount of
outstanding advance(s) issued to the Company, interest will continue to accrue on the outstanding balance of the advance(s) until subsequent Proof of Loss Reports qualify the Company for reimbursement under any Covered Event equal to or exceeding
the amount of any outstanding advance(s). Interest shall be billed on a periodic basis. If it is determined that the Company received funds in excess of those to which it was entitled, the interest as to those sums will not cease on the date of the
receipt of the Proof of Loss Report but will continue until the Company reimburses the FHCF for the overpayment. 

  

	 	(c)	If the Company has an outstanding advance balance as of December 31 of this or any other Contract Year, the Company is required to have an actuary certify
outstanding and incurred but not reported losses as reported on the applicable December Proof of Loss Report. 

  

	 	(d)	The specific type of advances enumerated in the Section 215.555, Florida Statutes, follow. 

 

	 	1.	Advances to Companies to prevent insolvency, as defined under Article XIV of this Contract. 

 

	 	a.	Section 215.555(4)(e)1., Florida Statutes, provides that the SBA shall advance to the Company amounts necessary to maintain the solvency of the Company, up to 50
percent of the SBA’s estimate of the reimbursement due to the Company. 

  

	 	b.	In addition to the requirements outlined in subparagraph (4) (a) above, the requirements for an advance to a Company to prevent insolvency are that the
Company demonstrates it is likely to qualify for reimbursement and that the immediate receipt of moneys from the SBA is likely to prevent the Company from becoming insolvent, and the Company provides the following information:

  

	 	i.	Current assets; 

  

	 	ii.	Current liabilities other than liabilities due to the Covered Event; 

  

	 	iii.	Current surplus as to policyholders; 

  

	 	iv.	Estimate of other expected liabilities not due to the Covered Event; and 

  

	 	v.	Amount of reinsurance available to pay claims for the Covered Event under other reinsurance treaties. 

 

	 	c.	The SBA’s final decision regarding an application for an advance to prevent insolvency shall be based on whether or not, considering the totality of the
circumstances, including the SBA’s obligations to provide reimbursement for all Covered Events occurring during the Contract Year, granting an advance is essential to allowing the entity to continue to pay additional claims for a Covered Event
in a timely manner. 

  

	 	2.	Advances to entities created pursuant to Section 627.351(6), Florida Statutes. 

 

	 	a.	Section 215.555(4)(e)2., Florida Statutes, provides that the SBA may advance to an entity created pursuant to Section 627.351(6), Florida Statutes, up to 90%
of the lesser of the SBA’s estimate of the reimbursement due or the entity’s share of the actual aggregate Reimbursement Premium for that Contract Year, multiplied by the current available liquid assets of the FHCF.

  

	 	b.	In addition to the requirements outlined in subparagraph (4)(a) above, the requirements for an advance to entities created pursuant to Section 627.351(6),
Florida Statutes are that the entity must demonstrate to the SBA that the advance is essential to allow the entity to pay claims for a Covered Event. 

  

	 	3.	Advances to limited apportionment companies. 

Section 215.555(4)(e)3., Florida Statutes, provides that the SBA may advance the amount of estimated reimbursement payable to
limited apportionment companies. 
  

					
		  	16	  	 FHCF-2010K

Rule 19-8.010 F.A.C.

	 	(e)	In determining whether or not to grant an advance and the amount of an advance, the SBA: 

 

	 	1.	Shall determine whether its assets available for the payment of obligations are sufficient and sufficiently liquid to fulfill its obligations to other Companies prior
to granting an advance; 

  

	 	2.	Shall review and consider all the information submitted by such Companies; 

 

	 	3.	Shall review such Companies’ compliance with all requirements of Section 215.555, Florida Statutes; 

 

	 	4.	Shall consult with all relevant regulatory agencies to seek all relevant information; 

 

	 	5.	Shall review the damage caused by the Covered Event and when that Covered Event occurred; 

 

	 	6.	Shall consider whether the Company has substantially exhausted amounts previously advanced; and 

 

	 	7.	Shall consider any other factors deemed relevant. 

  

	 	8.	Shall require commercial self-insurance funds established under section 624.462, Florida Statutes, to submit a copy of written estimates of expenses in support of the
amount of advance requested. 

  

	 	(f)	Any amount advanced by the SBA shall be used by the Company only to pay claims of its policyholders for the Covered Event or Covered Events which have precipitated the
immediate need to continue to pay additional claims as they become due. 

  

	(5)	Delinquent Payments 

Failure to submit a payment when due is a violation of the terms of this Contract and Section 215.555, Florida Statutes. Interest on
late payments shall be due as set forth in Article VIII(2) and Article IX(2) of this Contract. 
  

	(6)	Inadequate Data Submissions 

If exposure data or other information required to be reported by the Company under the terms of this Contract is not received by the FHCF
in the format specified by the FHCF or is inadequate to the extent that the FHCF requires resubmission of data, the Company will be required to pay the FHCF a resubmission fee of $1,000 for resubmissions that are not a result of an examination by
the SBA. If a resubmission is necessary as a result of an examination report issued by the SBA, the first resubmission fee will be $2,000. If the Company’s examination-required resubmission is inadequate and the SBA requires an additional
resubmission(s), the resubmission fee for each subsequent resubmission shall be $2,000. A resubmission of exposure data may delay the processing of the Company’s request for reimbursement or an advance. 

 

	(7)	Delinquent Submissions 

Failure to submit an exposure submission, resubmission, loss reports, or commutation documentation when due is a violation of the terms of
this Contract and Section 215.555, Florida Statutes. 
 ARTICLE XI - TAXES 

In consideration of the terms under which this Contract is issued, the Company agrees to make no deduction in respect of the Premium herein when making
premium tax returns to the appropriate authorities. Should any taxes be levied on the Company in respect of the Premium herein, the Company agrees to make no claim upon the SBA for reimbursement in respect of such taxes. 

ARTICLE XII - ERRORS AND OMISSIONS 
 Any
inadvertent delay, omission, or error on the part of the SBA shall not be held to relieve the Company from any liability which would attach to it hereunder if such delay, omission, or error had not been made. 

 

					
		  	17	  	 FHCF-2010K

Rule 19-8.010 F.A.C.

 ARTICLE XIII - INSPECTION OF RECORDS 

The Company shall allow the SBA to inspect, examine, and verify, at reasonable times, all records of the Company relating to the Covered Policies under
this Contract, including Company files concerning claims, losses, or legal proceedings regarding subrogation or claims recoveries which involve this Contract, including premium, loss records and reports involving exposure data or losses under
Covered Policies. This right by the SBA to inspect, examine, and verify shall survive the completion and closure of an exposure examination or loss examination file and the termination of the Contract. The Company shall have no right to re-open an
exposure or loss reimbursement examination once closed and the findings have been accepted by the Company; any re-opening shall be at the sole discretion of the SBA. If the FHCF Finance Corporation has issued revenue bonds and relied upon the
exposure and loss data submitted and certified by the Company as accurate to determine the amount of bonding needed, the SBA may choose not to require, or accept, a resubmission if the resubmission will result in additional reimbursements to the
Company. The SBA may require any discovered errors, inadvertent omissions, and typographical errors associated with the data reporting of insured values, discovered prior to the closing of the file and acceptance of the examination findings by the
Company, to be corrected to reflect the proper values. The Company shall retain its records in accordance with the requirements for records retention regarding exposure reports and claims reports outlined herein, and in any administrative rules
adopted pursuant to Section 215.555, Florida Statutes. Companies writing covered collateral protection policies, as defined in definition (10)(d) of Article V herein, must be able to provide documentation that the policy covers personal
residences, protects both the borrower’s and lender’s interest, and that the coverage is in an amount at least equal to the coverage for the dwelling in place under the lapsed homeowner’s policy. 

 

	(1)	Examination Requirements for Exposure Verification 

The Company shall retain complete and accurate records, in policy level detail, of all exposure data submitted to the SBA in any Contract
Year until the SBA has completed its examination of the Company’s exposure submissions. The Company shall also retain complete and accurate records of any completed exposure examination for any Contract Year in which the Company incurred losses
until the completion of the loss reimbursement examination for that Contract Year. The records to be retained shall include the exam file which supports the exposure reported to the SBA and any other information which would allow for a complete
examination of the Company’s reported exposure data. The exam file shall be prepared according to the SBA Exam File Specifications outlined in the Data Call. The Company must also have available, at the time of the examination, a copy of its
underwriting manual, a copy of its rating manual, and staff to respond to the questions of the SBA or its agents. The Company is also required to retain declarations pages and policy applications to support reported exposure. To meet the requirement
that the application must be retained, the Company may retain either the actual application or may retain the actual application in an electronic format. A complete list of records to be retained is set forth in Form FHCF-EAP1, adopted for the
Contract Year under Rule 19-8.030, F.A.C. 
  

	(2)	Examination Requirements for Loss Reports 

The Company shall retain complete and accurate records of all reported losses and/or advances submitted to the SBA until the SBA has
completed its examination of the Company’s reimbursable losses. The records to be retained are set forth as part of the Proof of Loss Report, Form FHCF-L1B, adopted for the Contract Year under Rule 19-8.029, F.A.C., and Form FHCF-LAP1, adopted
for the Contract Year under Rule 19-8.030, F.A.C. The Company must also retain the required exposure exam file for the Contract Year in which the loss occurred, and must have available any other information which would allow for a complete
examination of the Company’s losses. 
  

	(3)	Examination Procedures 

  

	 	(a)	 The FHCF will send an examination notice to the Company providing the commencement date of the examination, the site of the examination, any
accommodation requirements of the examiner, and the reports and data which must be assembled by the Company and forwarded 

 

					
		  	18	  	 FHCF-2010K

Rule 19-8.010 F.A.C.

	 	 
to the FHCF upon request. The Company shall be prepared to choose one location in which to be examined, unless otherwise specified by the SBA. 

 

	 	(b)	The reports and data are required to be forwarded to the FHCF as set forth in an examination notice letter. The information is then forwarded to the examiner. If the
FHCF receives accurate and complete records as requested, the examiner will contact the Company to inform the Company as to what policies or other documentation will be required once the examiner is on site. Any records not required to be provided
to the examiner in advance shall be made available at the time the examiner arrives on site. Any records to support reported losses which are provided after the examiner has left the work-site will, at the SBA’s discretion, result in an
additional examination of exposure and/or loss records or an extension or expansion of the examination already in progress. All costs associated with such additional examination or with the extension or expansion of the original examination shall be
borne by the Company. 

  

	 	(c)	At the conclusion of the examiner’s work and the management review of the examiner’s report, findings, recommendations, and work papers, the FHCF will forward
a preliminary draft of the examination report to the Company and require a response from the Company by a date certain as to the examination findings and recommendations. 

 

	 	(d)	If the Company accepts the examination findings and recommendations, and there is no recommendation for additional information, the examination report will be finalized
and the exam file closed. 

  

	 	(e)	If the Company disputes the examiner’s findings, the areas in dispute will be resolved by a meeting or a conference call between the Company and FHCF management.

  

							
		 	(f)	 	1.	 	If the recommendation of the examiner is to resubmit the Company’s exposure data for the Contract Year in question, then the FHCF will send the Company a letter outlining the
process for resubmission and including a deadline to resubmit. The resubmission will include a data file to be submitted to the FHCF’s Administrator and an exam file to be submitted to the offices of the SBA. The resubmission is also required
to be accompanied by a detailed written description of the specific changes made to the resubmitted data. Once the resubmission is received by the FHCF’s Administrator, the FHCF’s Administrator calculates a revised Reimbursement Premium
for the Contract Year which has been examined. The SBA shall then review the resubmission with respect to the examiner’s findings, and accept the resubmission or contact the Company with any questions regarding the resubmission. Once the SBA
has accepted the resubmission as a sufficient response to the examiner’s findings, the FHCF’s Administrator will send the Company an invoice for any Reimbursement Premium and interest due or to refund Reimbursement Premium, as the case may
be. Once the resubmission has been approved, the exam file is closed.
				
		 		 	2.	 	If the recommendation of the examiner is either to resubmit the Company’s exposure data for the Contract Year in question or giving the option to pay the estimated Premium
difference, then the FHCF will send the Company a letter outlining the process for resubmission or for paying the estimated Premium difference and including a deadline for the resubmission or the payment to be received by the FHCF’s
Administrator. If the Company chooses to resubmit, the same procedures outlined in Article XIII(3)(f)2. apply.

  

	 	(g)	 If the recommendation of the examiner is to update the Company’s Proof of Loss Report(s) for the Contract Year under review, the FHCF will send
the Company a letter outlining the process for submitting the Proof of Loss Report(s) and including a deadline to file. The updated Proof of Loss Report(s) will be submitted to the FHCF’s Administrator with a copy of the Proof of Loss Report(s)
and a supporting detailed claims listing to be submitted to the offices of the SBA. The report is required to be accompanied by a detailed written description of the specific changes made. Once the Proof of Loss Report(s) is received by the FHCF
Administrator, the FHCF’s Administrator will calculate a revised reimbursement. The SBA shall then review the submitted Proof of Loss Report(s) with respect to the examiner’s

  

					
		  	19	  	 FHCF-2010K

Rule 19-8.010 F.A.C.

	 	 
findings, and accept the Proof of Loss Report(s) as filed or contact the Company with any questions. Once the SBA has accepted the corrected Proof of Loss Report(s) as a sufficient response to
the examiner’s findings, the FHCF’s Administrator will send the Company an invoice for any overpayments and interest due. Once the Proof of Loss Report(s) is approved, the exam file is closed. 

 

	 	(h)	If the Company continues to dispute the examiner’s findings and/or recommendations and no resolution of the disputed matters is obtained through discussions
between the Company and FHCF management, then the process within the SBA is at an end and further administrative remedies may be pursued under Chapter 120, Florida Statutes. 

 

	 	(i)	The examiner’s list of errors is made available in the examination report sent to the Company. Given that the examination was based on a sample of the
Company’s policies or claims rather than the whole universe of the Company’s Covered Policies or reported claims, the error list is not intended to provide a complete list of errors but is intended to indicate what information needs to be
reviewed and corrected throughout the Company’s book of Covered Policy business or claims information to ensure more complete and accurate reporting to the FHCF. 

 

	(4)	Costs of the Examinations 

The costs of the examinations shall be borne by the SBA. However, in order to remove any incentive for a Company to delay preparations for
an examination, the SBA shall be reimbursed by the Company for any examination expenses incurred in addition to the usual and customary costs, which additional expenses were incurred as a result of the Company’s failure, despite proper notice,
to be prepared for the examination or as a result of a Company’s failure to provide requested information. All requested information must be complete and accurate. The Company shall be notified of any administrative remedies which may be
obtained under Chapter 120, Florida Statutes. 
 ARTICLE XIV - INSOLVENCY OF THE COMPANY 

Company shall notify the FHCF immediately upon becoming insolvent. Except as otherwise provided below, no covered loss reimbursements will be made until
the FHCF has completed and closed its examination of the insolvent Company’s losses, unless an agreement is entered into by the court appointed receiver specifying that all data and computer systems required for FHCF exposure and loss
examinations will be maintained until completion of the Company’s exposure and loss examinations. Except as otherwise provided below, in order to account for potential erroneous reporting, the SBA shall hold back 25% of requested loss
reimbursements until the exposure and loss examinations for the Company are completed. Only those losses supported by the examination will be reimbursed. Pursuant to Section 215.555(4)(g), Florida Statutes, the FHCF is required to pay the
“net amount of all reimbursement moneys” due an insolvent insurer to the Florida Insurance Guaranty Association (FIGA) for the benefit of Florida policyholders. For the purpose of this Contract, a Company is insolvent when an order of
liquidation with a finding of insolvency has been entered by a court of competent jurisdiction. In light of the need for an immediate infusion of funds to enable policyholders of insolvent companies to be paid for their claims, the SBA may enter
into agreements with FIGA allowing exposure and loss examinations to take place immediately without the usual notice and response time limitations and allowing the FHCF to make loss reimbursements (net of any amounts payable to the SBA from the
Company or FIGA) to FIGA before the examinations are completed and before the response time expires for claims filing by reinsurers and financial institutions, which have a priority interest in those funds pursuant to Section 215.555(4)(g),
Florida Statutes. Such agreements must ensure the availability of the necessary records and adequate security must be provided so that if the FHCF determines that it overpaid FIGA on behalf of the Company, or if claims are filed by reinsurers or
financial institutions having a priority interest in these funds, that the funds will be repaid to the FHCF by FIGA with in a reasonable time. 
  

					
		  	20	  	 FHCF-2010K

Rule 19-8.010 F.A.C.

 ARTICLE XV - TERMINATION 

The FHCF and the obligations of both parties under this Contract can be terminated only as may be provided by law or applicable rules. 

ARTICLE XVI - VIOLATIONS 
 Pursuant to
the provisions of Section 215.555(10), Florida Statutes, any violation of the terms of this Contract by the Company constitutes a violation of the Insurance Code of the State of the Florida. Pursuant to the provisions of
Section 215.555(11), Florida Statutes, the SBA is authorized to take any action necessary to enforce any administrative rules adopted pursuant to Section 215.555, Florida Statutes, and the provisions and requirements of this Contract.

 ARTICLE XVII - APPLICABLE LAW 
  

	(1)	Applicable Law: This Contract shall be governed by and construed according to the laws of the State of Florida in respect of any matter relating to or arising
out of this Contract. 

  

	(2)	Notice of Rights: Pursuant to Chapter 120, Florida Statutes, and the Uniform Rules of Procedure, codified as Chapters 28-101 through 28-111, F.A.C., a person
whose substantial interests are affected by a decision of the SBA regarding the FHCF may request a hearing within 21 days shall have waived his or her right to a hearing. The hearing may be a formal hearing or an informal hearing pursuant to the
provisions of Sections 120.569 and 120.57, Florida Statutes. The petition must be filed (received) in the office of the Agency Clerk, General Counsel’s Office, State Board of Administration of Florida, P.O. Box 13300, Tallahassee, FL 32317-3300
or 1801 Hermitage Blvd., Suite 100, Tallahassee, FL 32308, within the 21 day period. 

  

					
		  	21	  	 FHCF-2010K

Rule 19-8.010 F.A.C.

 ARTICLE XVIII - REIMBURSEMENT CONTRACT ELECTIONS Reimbursement Percentage 

For purposes of determining reimbursement (if any) due the Company under this Contract and in accordance with the Statute, the Company has the option to
elect a 45% or 75% or 90% reimbursement percentage under this Contract. If the Company is a member of an NAIC group, all members must elect the same reimbursement percentage, and the individual executing this Contract on behalf of the Company, by
placing his or her initials in the box under (a) below, affirms that the Company has elected the same reimbursement percentage as all members of its NAIC group. If the Company is an entity created pursuant to Section 627.351, Florida
Statutes, the Company must elect the 90% reimbursement percentage. The Company shall not be permitted to change its reimbursement percentage during the Contract Year. The Company shall be permitted to change its reimbursement percentage at the
beginning of a new Contract Year, but may not reduce its reimbursement percentage if a Covered Event required the issuance of revenue bonds, until the bonds have been fully repaid. 

 

			
	IMPORTANT NOTE:	 	The FHCF has issued revenue bonds as a result of its liabilities for Covered Events under the Contract Year effective June 1, 2005. As those bonds have not been fully
repaid, the Company may not select a Reimbursement Percentage that is less than its selection under the prior Contract Year effective June 1, 2009.

The Reimbursement Percentage elected by the Company for the prior Contract Year effective June 1, 2009 was as follows: Homeowners Choice Property
and Casualty Insurance Company - 90% 
  

	(a)	NAIC Group Affirmation: Initial the following box if the Company is part of an NAIC Group: 

 

 

  

	(b)	Reimbursement Percentage Election: The Company hereby elects the following Reimbursement Percentage for the Contract Year from 12:00:01 a.m., Eastern Time,
June 1, 2010, to 12:00 a.m., Eastern Time, May 31, 2011, (the individual executing this Contract on behalf of the Company shall place his or her initials in the box to the left of the percentage elected for the Company):

 

 

 Reporting Exposure for a Single Structure, with a Mix of Commercial Habitational and Commercial Non-Habitational
Exposure, Written on a Commercial Policy 
 This section is applicable to all Companies which either have exposure for single structures
with a mix of commercial habitational and commercial non-habitational exposure written under a Commercial Policy, or have the authority to write such policies. If the Company does not have the authority to write this type of exposure, this section
does not apply; initial the N/A box on the next page, which completes this ARTICLE. If the Company does write, or has the authority to write, this type of exposure, please read and complete the remainder of this ARTICLE.

  

					
		  	22	  	 FHCF-2010K

Rule 19-8.010 F.A.C.

 Commercial-Residential Class Code 

If a single structure is used for both habitational and non-habitational purposes and the structure has a commercial-residential class code (based on a
classification plan on file with and reviewed by the Administrator), the entire exposure for the structure should be reported to the FHCF under the Data Call, and the FHCF will reimburse losses for the entire structure as well. 

Commercial Non-Residential/Business Class Code 

If a single structure is used for both habitational and non-habitational purposes and the structure has a commercial non-residential or business class
code (based on a classification plan on file with and reviewed by the Administrator), the habitational portion of that structure should be identified and reported to the FHCF under the Data Call. 

However, in recognition of the unusual nature of commercial structures with incidental habitational exposure and the hardship some companies may face in
having to carve out such incidental habitational exposure, as well as the losses to such structures, the FHCF will accommodate these companies by allowing them to exclude the entire exposure for the single structure from their Data Call submission,
providing the following two conditions are met: 
  

	(1)	The decision to not carve out and report the incidental habitational exposure shall apply to all such structures insured by the Company; and 

 

	(2)	If the incidental habitational exposure is not reported to the FHCF, the Company agrees it shall not report losses to the structure and the FHCF shall not reimburse any
losses to the structure. 

 Initial the CARVING box below if the Company is able to carve out and report its incidental
habitational exposure, OR, if this requirement presents a hardship, the Company must communicate its decision to not carve out and to not report the incidental exposure by having the individual executing this Contract on behalf of the Company
placing his or her initials in the NOT CARVING box below. If the Company does not currently write such policies, but has the authority to write such policies after the start date of this Contract, the decision to carve or not carve out the
incidental habitational exposure must be indicated below. 

 

 

 By initialing the CARVING or NOT CARVING box above, the Company is making an irrevocable decision for the
corresponding Contract Year Data Call submission and any subsequent resubmissions. 
  

			
	Important Note:	 	Since this election will impact your Data Call submission, please share this decision with the individual(s) responsible for compiling your Data Call
submission.

 Additional Living Expense (ALE)Written as Time Element Coverage 

If your Company writes Covered Policies that provide ALE coverage on a time element basis (i.e. coverage is based on a specific period of time as opposed
to a stated dollar limit), you must initial the ‘Yes – Time Element ALE’ box below. If your Company does not write time element ALE coverage, initial ‘No – Time Element ALE’ box below. 

 

 

  

					
		  	23	  	 FHCF-2010K

Rule 19-8.010 F.A.C.

 ARTICLE XIX - SIGNATURES 

Approved by: 
  

							
	Florida Hurricane Catastrophe Fund	  	
	By:	  	State Board of Administration of the State of Florida	  		  	
				
	By:	  	
 

	  	July 2, 2010	  	
		  	Ashbel C. Williams	  	Date	  	
		  	Executive Director	  		  	
		
	Approved as to legality:	  	
				
	By:	  	
 

	  	July 2, 2010	  	
		  	Gary Moreland	  	Date	  	
		  	 Assistant General Counsel

FL Bar ID#0702765
	  		  	
			
		  	Homeowners Choice Property and Casualty Insurance Company	  	
			
		  	 FRANCIS X. McCAHILL, III
	  	
		  	Typed/Printed Name and Title	  	
				
	By:	  	
 

	  	5/27/10	  	
		  	Signature	  	Date	  	

  

					
		  	24	  	 FHCF-2010K

Rule 19-8.010 F.A.C.

					
	

	  	 STATE BOARD OF ADMINISTRATION

OF FLORIDA
  

1801 HERMITAGE BOULEVARD

TALLAHASSEE, FLORIDA 32308

(850) 488-4406
  

POST OFFICE BOX 13300

32317-3300
	  	 CHARLIE CRIST
  

GOVERNOR
 AS
CHAIRMAN
  
 ALEX SINK

CHIEF FINANCIAL OFFICER

AS TREASURER
  

BILL McCOLLUM

ATTORNEY GENERAL

AS SECRETARY
  

ASH WILLIAMS

EXECUTIVE DIRECTOR & CIO

	  	  
	  	  
	  	  

  

			
	ATTENTION:	 	THIS ADDENDUM MUST BE COMPLETED, SIGNED, AND
		 	RETURNED BY ALL COMPANIES ELIGIBLE FOR COVERAGE
		 	UNDER THIS ADDENDUM REGARDLESS OF CHOICE TO ACCEPT
		 	OR REJECT THIS OPTIONAL COVERAGE

ADDENDUM NO. 1 

to 

REIMBURSEMENT CONTRACT 

Effective: June 1, 2010 

(Contract) 

between 
  

					
		 	HOMEOWNERS CHOICE PROPERTY AND CASUALTY INSURANCE	 	

		 	COMPANY	 
		 	Clearwater, FL	 
		 	(Company)	 
		 	  
 NAIC # 12944
	 
		 	  
 and
	 

 THE STATE BOARD OF ADMINISTRATION OF THE STATE OF FLORIDA (SBA) WHICH ADMINISTERS
THE FLORIDA HURRICANE CATASTROPHE FUND (FHCF) 
 It is Hereby Agreed, effective at 12:00:01 a.m., Eastern Time, June 1, 2010,
that this Contract shall be amended as follows: 
 ADDITIONAL COVERAGE OPTION (up to $10 million) PURSUANT TO SECTION 215.555(4)(b)4.,
FLORIDA STATUTES. 
 Pursuant to Section 215.555(4)(b)4., Florida Statutes, certain Companies may select additional FHCF reimbursement
coverage of up to $10 million dollars. The additional premium to be charged for this additional reimbursement coverage shall be 50 percent of the additional reimbursement coverage provided, which shall include one prepaid full reinstatement. The
additional premium shall be due and payable in three equal installments on August 1, 2010, on October 1, 2010, and on December 1, 2010. 

The minimum retention level that must be retained associated with this additional coverage layer is 30 percent of the insurer's surplus as of
December 31, 2009, for each Covered Event. For an insurer which began writing property insurance in 2010 and did not have a surplus as of 

 

					
		  	1	  	 FHCF-2010K-1

Rule 19-8.010, F.A.C.

 
December 31, 2009, surplus shall be deemed to be the surplus reported to the Office of Insurance Regulation at the time the insurer received its Certificate of Authority. This coverage is
designed to apply a retention that triggers coverage prior to the insurer reaching its retention under the mandatory coverage level. The SBA will determine and pay, within 30 days or as soon as practicable after receiving Proof of Loss Reports, the
reimbursement amount due under this optional coverage based on losses paid by the Company. 
 The reimbursement percentage applicable to this
additional coverage shall be 100 percent, which includes reimbursement for loss adjustment expense as provided under the Reimbursement Contract. Once the limit of coverage under this option is exhausted, the insurer's retention under the mandatory
coverage will apply. 
 This additional reimbursement coverage shall be in addition to all other coverage provided by the SBA under the
Company's Reimbursement Contract and shall be in addition to the claims-paying capacity of the FHCF as defined in Section 215.555(4)(c)1., Florida Statutes, but only with respect to those insurers that select the additional coverage option.
Coverage provided in this additional coverage option shall otherwise be consistent with terms and conditions as relates to the Reimbursement Contract including, but not limited to, definitions, coverage for Covered Policies as defined, exclusions,
loss reporting, and examination procedures. 
 While this additional coverage shall not reduce, overlap, or duplicate coverage otherwise
provided for in the Reimbursement Contract or offset any co-payments, the amount of coverage selected herein is irrevocable. Any amount of additional coverage selected herein that would in effect overlap FHCF coverage otherwise provided for in the
Reimbursement Contract, or any other Addenda to the Reimbursement Contract, shall be deemed by the FHCF to shift above the highest level of coverage otherwise provided by the FHCF. 

The claims-paying capacity with respect to all other participating insurers, including eligible Companies that do not select the additional coverage
option, shall be limited to their reimbursement premium's proportionate share of the actual claims-paying capacity as defined in Section 215.555(4)(c)1., Florida Statutes and as provided for under the terms of the Reimbursement Contract, plus
any coverage provided under any other Addenda to the Reimbursement Contract. 
 The optional coverage provided in this Addendum expires on
May 31, 2011. To be eligible for this optional coverage, the Company must return a fully executed Addendum No. 1 (two originals) no later than 5 p.m., Central Time, June 1, 2010. A Company failing to meet the applicable deadline shall
not be eligible for optional coverage under Addendum No. 1 for the 2010 Contract Year. Furthermore, there shall be no coverage under this Addendum for any Loss Occurrence, as defined in Article V of the Contract and under which the Company
would be eligible for reimbursements under the Contract, that occurs prior to the FHCF receiving the fully executed Addendum No. 1 (original copies). 

New Participants, as defined in Article V of the Contract, must return a fully executed Addendum No. 1 (two originals) within thirty days of writing
its first Covered Policy and prior to a Loss Occurrence under which the company would be eligible for reimbursements under the Contract. A Company failing to meet the applicable deadline shall not be eligible for optional coverage under Addendum
No. 1 for the 2010 Contract Year. 
 ALL COMPANIES EXECUTING A REIMBURSEMENT CONTRACT AND ELIGIBLE FOR THIS ADDITIONAL COVERAGE MUST
INDICATE BELOW THE AMOUNT OF ADDITIONAL COVERAGE SELECTED, IF ANY. 
  

					
		  	2	  	 FHCF-2010K-1

Rule 19-8.010, F.A.C.

 If your Company does not wish to purchase the additional coverage under this Addendum, print “No
Coverage” on the line below and initial the box. 

 

 

 If your Company is eligible for the coverage under this Addendum and elects to purchase this coverage, indicate the amount
of additional coverage up to $10 million (there is no additional coverage available in excess of $10 million) on the line below: 
 $ 10,000,000

 IF THIS ADDENDUM NO. 1 IS RETURNED WITHOUT THE BLANK SPACE IMMEDIATELY ABOVE FILLED IN WITH A DOLLAR AMOUNT, IT SHALL BE DEEMED BY THE STATE
BOARD OF ADMINISTRATION TO BE A CHOICE TO REJECT THE ADDITIONAL COVERAGE. 
  

	
	
 

	Homeowners Choice Property and Casualty Insurance Company

 

							
	By:	  	 FRANCIS X. McCAHILL, III
	  	5/27/10	  	
		  	Name/Title	  	Date	  	

 Approved by: 

Florida Hurricane Catastrophe Fund 
 By: State
Board of Administration of the State of Florida 
  

							
	By:	  	
 

	  	7/2/10	  	
		  	Ashbel C. Williams	  	Date	  	
		  	Executive Director & CIO	  		  	

 Approved as to legality: 
  

							
	By:	  	
 

	  	7/2/10	  	
		  	Gary Moreland	  	Date	  	
		  	Assistant General Counsel	  		  	
		  	FL Bar ID#0702765	  		  	

  

					
		  	3	  	 FHCF-2010K-1

Rule 19-8.010, F.A.C.

					
	

	  	 STATE BOARD OF ADMINISTRATION

OF FLORIDA
  

1801 HERMITAGE BOULEVARD

TALLAHASSEE, FLORIDA 32308

(850) 488-4406
  

POST OFFICE BOX 13300

32317-3300
	  	 CHARLIE CRIST
  

GOVERNOR

AS CHAIRMAN
  

ALEX SINK

CHIEF FINANCIAL OFFICER

AS TREASURER
  

BILL McCOLLUM

ATTORNEY GENERAL

AS SECRETARY
  

ASH WILLIAMS

EXECUTIVE DIRECTOR & CIO

 

			
	ATTENTION:	 	THIS ADDENDUM MUST BE COMPLETED, SIGNED, AND RETURNED BY ALL COMPANIES EXECUTING A REIMBURSEMENT CONTRACT REGARDLESS OF CHOICE TO ACCEPT OR REJECT THIS OPTIONAL
COVERAGE

 ADDENDUM NO. 2 

to 

REIMBURSEMENT CONTRACT 

Effective: June 1, 2010 

(Contract) 

between 

HOMEOWNERS CHOICE PROPERTY AND CASUALTY INSURANCE 

COMPANY 

					
		  	 Clearwater, FL

(Company)
  

NAIC # 12944
  

and
  
	 	

 THE STATE BOARD OF ADMINISTRATION OF THE STATE OF FLORIDA (SBA) WHICH ADMINISTERS THE FLORIDA
HURRICANE CATASTROPHE FUND (FHCF) 
 It is Hereby Agreed, effective at 12:00:01 a.m., Eastern Time, June 1, 2010, that this
Contract shall be amended as follows: 
 TEMPORARY INCREASE IN COVERAGE LIMIT OPTIONS FOR ADDITIONAL COVERAGE PURSUANT TO SECTION
215.555(17), FLORIDA STATUTES. 
 Pursuant to Section 215.555(17), Florida Statutes, the Temporary Increase in Coverage Limit (TICL)
Options provision allows the Company to select additional FHCF reimbursement coverage above its mandatory FHCF coverage layer under the Reimbursement Contract. The optional coverage selections provided in this Addendum No. 2 expires on
May 31, 2011. Coverage provided under TICL shall otherwise be consistent with terms and conditions as relates to the Reimbursement Contract including, but not limited to, definitions, coverage for Covered Policies as defined, exclusions, loss
reporting, and examination procedures. 
  

					
		  	1	  	 FHCF-2010K-2

Rule 19-8.010, F.A.C.

 To be eligible for this optional coverage, the Company must return a fully executed Addendum No. 2 (two
originals) no later than 5 p.m., Central Time, June 1, 2010. New Participants, as defined in Article V of the Contract, must return a fully executed Addendum No. 2 (two originals) within thirty days of writing its first Covered Policy and
prior to a Loss Occurrence, as both terms are defined in Article V of the Contract, under which the company would be eligible for reimbursements under the Contract. 

Any Company failing to meet the applicable deadline shall not be eligible for optional coverage under Addendum No. 2. 

 

	I.	TICL Coverage 

 The
Company may purchase one of eight optional coverages above its mandatory FHCF coverage provided for in the FHCF Reimbursement Contract. The TICL options allow the Company to purchase its mandatory FHCF premium share of one of the eight optional
layers of coverage. The optional layers of coverage above the mandatory FHCF coverage are $8 billion, $7 billion, $6 billion, $5 billion, $4 billion, $3 billion, $2 billion, or $1 billion. 

The purchase of a TICL option increases the Company’s coverage under the Reimbursement Contract as calculated pursuant to
Section 215.555(4)(d)2., Florida Statutes. The Company’s increased coverage shall be the FHCF reimbursement premium multiplied by the TICL multiple. Each TICL coverage multiple shall be calculated by dividing $8 billion, $7 billion, $6
billion, $5 billion, $4 billion, $3 billion, $2 billion, or $1 billion by the aggregate mandatory FHCF premium under the Reimbursement Contract paid by all companies. 

In order to determine the Company’s total limit of coverage, the Company’s TICL coverage multiple is added to its regular Payout
Multiple under the Reimbursement Contract. The total of these two multiples shall represent a number that, when multiplied by an insurer’s mandatory FHCF reimbursement premium under the Reimbursement Contract, defines the Company’s total
limit of FHCF reimbursement coverage for the Contract Year under the Reimbursement Contract and Addendum No. 2. The SBA shall reimburse the Company for 45 percent, 75 percent, or 90 percent of its losses from each Covered Event in excess of the
Company’s FHCF Retention under the Reimbursement Contract, plus 5 percent of the reimbursed losses to cover loss adjustment expense, not to exceed the Company’s total limit of coverage as defined above. The percentage shall be the same as
the coverage level selected by the Company under its Reimbursement Contract. 
  

	II.	TICL Premium 

 The
Company’s TICL premium shall be determined as specified in Sections 215.555(5) and (17), Florida Statutes, as amended, and shall be due and payable in three installments on August 1, 2010, October 1, 2010, and December 1,
2010. 
  

					
		  	2	  	 FHCF-2010K-2

Rule 19-8.010, F.A.C.

	III.	Liability of the FHCF 

Pursuant to Section 215.555(17)(g), Florida Statutes, the liability of the FHCF with respect to all TICL addenda shall not exceed $8
billion and shall depend on the number of insurers that select the TICL optional coverage and the TICL coverage options selected. In no circumstance shall the liability of the FHCF exceed its actual claims-paying capacity as defined in
Section 215.555(2)(m), Florida Statutes. 
 The additional TICL capacity shall apply only to the additional coverage
provided under the TICL options and shall not otherwise affect any insurer's reimbursement from the FHCF if the insurer chooses not to select a TICL option to increase its limit of FHCF coverage. 

 

	IV.	Coordination of Coverage 

Reimbursement amounts under TICL shall not be reduced by reinsurance paid or payable to the Company from sources other than the FHCF.

 The TICL coverage shall be in addition to all other coverage provided by the FHCF under the Company's Reimbursement Contract
or other Addenda to the Reimbursement Contract, and shall be in addition to the claims-paying capacity of the FHCF as defined in Section 215.555(4)(c)1., Florida Statutes, but only with respect to those insurers that select the TICL coverage.

 The TICL coverage selected is irrevocable and shall not overlap or duplicate coverage otherwise provided for in the
Reimbursement Contract, or any Addenda to the Reimbursement Contract, or offset any co-payments or retention amounts. 
  

	V.	Addendum No. 2 TICL Coverage Election 

ALL COMPANIES EXECUTING A REIMBURSEMENT CONTRACT MUST INDICATE BELOW THE LEVEL OF OPTIONAL TICL COVERAGE SELECTED, IF ANY. IF THE COMPANY
FAILS TO MEET THE JUNE 1, 2010 DEADLINE OR MEETS THIS DEADLINE BUT FAILS TO SELECT AN OPTIONAL COVERAGE UNDER THIS ADDENDUM, IT SHALL BE DEEMED BY THE STATE BOARD OF ADMINISTRATION TO BE A CHOICE TO REJECT TICL COVERAGE. 

If your Company does not want to purchase any TICL coverage, print “No Coverage” on the line below and initial the box.

 

 

  

					
		  	3	  	 FHCF-2010K-2

Rule 19-8.010, F.A.C.

 By selecting an option below (initial the applicable box), the Company is selecting its proportionate share
based on its mandatory FHCF reimbursement premium to the total mandatory FHCF reimbursement premiums paid by all companies of the layer of optional coverage. 

 

 

  

	VI.	Signatures 

  

			
		 	
 

		 	 Homeowners Choice Property and Casualty Insurance Company

 

							
	By:	  	 FRANCIS X. McCAHILL, III
	  	5/27/10	  	
		  	Typed/Printed Name and Title	  	Date	  	

 Approved by: 

Florida Hurricane Catastrophe Fund 
 By: State
Board of Administration of the State of Florida 
  

							
	By:	  	
 

	  	July 2, 2010	  	
		  	Ashbel C. Williams	  	Date	  	
		  	Executive Director & CIO	  		  	

 Approved as to legality: 
  

							
	By:	  	
 

	  	July 2, 2010	  	
		  	Gary Moreland	  	Date	  	
		  	Assistant General Counsel, FL Bar ID#0702765	  		  	

  

					
		  	4	  	 FHCF-2010K-2

Rule 19-8.010, F.A.C.

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