Document:

exv4w44

 

Exhibit 4.44

This Guarantee is dated October 21, 2004 between:

By Converium AG (“Guarantor”) to and in favor of the Insureds (as defined below) of Converium
Ruckversicherung (Deutschland) AG (the “Company”)

Preamble

	 	A.  	The Company is the direct 100% subsidiary of the Guarantor and is considered by the
Guarantor to be wholly integral to the Guarantor’s current group identity and future
strategy.
	 
	 	B.  	The Company is registered with the Commercial Register in Cologne, HRB 706. No
authorization by the supervisory authority (BAFin) has been necessary. However, the Company
is subject to indirect supervision under German Insurance Supervisory Law (VAG).
	 
	 	C.  	The Guarantor has agreed to enter into this Guarantee for the benefit of the Company’s
Insureds. This Guarantee is a guarantee of payment, not of collection, and is unconditional,
other than as expressly stated herein.

It is agreed as follows:

	1.  	Interpretation

	1.1  	 	In this Guarantee,
	 
	 	   	“Insured” means the person(s) named in a Policy as being the beneficiary of that Policy and any
legal successor of such person who is entitled to become the beneficiary of the Policy in
substitution for such person.
	 
	 	   	“Policy” means a policy, slip or other agreement pursuant to which the Company insures or
reinsures any person.
	 
	 	   	“Rating Agency” means Standard & Poor’s a division of McGraw-Hill Companies of 20 Canada Square,
Canary Wharf, London E14 5LH.

	2.  	Guarantee
	 
	   	The Guarantor hereby undertakes, on and subject to the terms of this Guarantee which shall be
governed by article 112 of the Swiss Code of Obligations, that whenever:

	 	a)  	(i) the Company does not pay any amount which is due and payable under a Policy to
an Insured pursuant to that Policy within 20 days’ after receipt of a written request therefor
by the Company; or (ii) in the case the Company refuses, in good faith, to make any such
payment as per para. (i) above, such payment is, based on a final judgment or decision of a
competent court or administration, adjudicated to be made by the Company to the Insured; or

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	 	b)  	any payment made by the Company to the Insured pursuant to a Policy is repaid
to the Company or its legal representative by the Insured based on a final judgment or
decision of a competent court or administration rendered in connection with the Company’s
insolvency or bankruptcy
	 
	 	   	the Guarantor shall, on receipt of a notice or demand in writing from the Insured, pay that
amount as if the Guarantor instead of the Company were expressed to be the principal obligor.

	3.  	Term of Guarantee

	3.1  	 	Termination. This Guarantee shall continue until terminated by not less than 90 days
written notice given to the Company, copied to the Rating Agency and published by the Rating
Agency or the Guarantor and shall thereupon be of no further force or effect in respect of
any Policies issued or renewed on or after the date of termination.
	 
	3.2  	 	Continuation. The termination of this Guarantee in accordance with clause 3.1 shall not
affect the Guarantor’s liability in respect of any Policies issued or renewed by the Company
prior to the date of such termination, in respect of which Policies this Guarantee is a
continuing guarantee and will extend to all sums payable by the Company under those
Policies.

	4.  	No greater Liability

	4.1  	 	The Guarantor shall have no greater liability to any Insured than the Company and shall
be entitled to rely on all rights of the Company under the terms of the Policy but the
Guarantor shall not re-investigate the Insured’s entitlement to payment in circumstances
where a payment from the Company has already been determined in compliance with the
Company’s claims determination process to be due and payable under the Policy, except where
the Company is in administration, liquidation, receivership or subject to some similar form
of insolvency arrangement in which a non-connected party is responsible for the management
of the Company.
	 
	4.2  	 	Under no circumstances shall the Guarantor be liable to make any payment under this
Guarantee with respect to any payment under a Policy not due and payable by the Company at
the time of a request for payment from the Guarantor.

	5.  	Subrogation & Recovery
	 
	   	The Guarantor shall be entitled to require the Insured, as a condition precedent of payment, to
execute documentation reasonably required by the Guarantor to ensure that the Guarantor has all
(i) rights of or akin to subrogation against the Company with respect to the amounts payable or
paid by the Guarantor and/or (ii) rights of recovery which would have been available to the
Company pursuant to the Policy or any associated documentation in the event that the claim had
been paid by the Company but otherwise waives its right to subrogation until the amount due to
the relevant Insured is paid in full.

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	6.  	Payment
	 
	   	Subject to and on the terms of this Guarantee, the Guarantor, upon notice or demand in writing
from an Insured, clearly identifying (either in that written demand or separately and requiring
no particular form of words) the Insured’s intention to rely on its rights as a third party
beneficiary under this Guarantee, will promptly remit to the Insured, in cleared funds in the
currency required by the terms of the Policy, amounts due for payment by the Company to the
Insured, in the circumstances stated in clause 2 and subject to the terms and conditions of this
Guarantee.
	 
	7.  	Waiver of Set Off
	 
	   	All payments owed by the Guarantor under this Guarantee shall be made without set-off or
counterclaim.
	 
	8.  	Gross-Up for Taxation
	 
	   	All payments by the Guarantor under this Guarantee shall be made free and clear of and without
deduction for or on account of any present or future taxes or duties of whatever nature imposed
on or levied from the Guarantor by or on behalf of any competent authority having power to tax,
except to the extent that the Guarantor is required by law or regulation to deduct such taxes or
duties. In that event, the Guarantor will pay such additional amounts as will result (after
deduction of the taxes or duties) in the payment to the Insured of the amount which would
otherwise have been payable to the Insured by the Company.
	 
	9.  	Representations
	 
	   	The Guarantor represents on the date of this Guarantee and on each date that this Guarantee is
outstanding that:

	 	a)  	This Guarantee constitutes the legal, valid and binding obligations of the Guarantor;
	 
	 	b)  	this Guarantee is within the powers of the Guarantor;
	 
	 	c)  	this Guarantee has been duly authorised by the Guarantor;

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	 	d)  	this Guarantee does not and will not breach any instrument, agreement or undertaking by
which the Guarantor or any of its assets is bound and where such breach would have a
material adverse effect on its ability to perform its obligations under this Guarantee;
	 
	 	e)  	this Guarantee does not and will not violate any applicable law, rule or regulation by
which the Guarantor or any of its assets is bound and where such breach would have a
material adverse effect on its ability to perform its obligations under this Guarantee;
	 
	 	f)  	all consents and authorisations necessary in relation to this
Guarantee have been obtained and are in force; and
	 
	 	g)  	the Guarantor’s obligations under this Guarantee rank pari-passu with the unsecured debt
obligations (other than subordinated obligations, if any, which rank below the Guarantor’s
obligations under this Guarantee) of the Guarantor.

	10.  	Third Party Rights

	10.1  	 	Each Insured in respect of whom a Policy is issued during the continuance in force of
this Guarantee shall be a beneficiary of this Guarantee for so long as the Company continues
to have a liability to such Insured under such Policy.
	 
	10.2  	 	The Company is not a beneficiary of this Guarantee.
	 
	10.3  	 	No other party other than the Guarantor, Company or Insured has any rights under or in
respect of this Guarantee.

	11.  	Transfers & Succession

	11.1  	 	By the Guarantor. The Guarantor may not assign, transfer, novate or dispose of any of, or
any interest in, its rights and/or obligations under this Guarantee but this Guarantee shall
continue in force and be binding on any successor of the Guarantor.
	 
	11.2  	 	By the Company. The Company may not assign, transfer, novate or dispose of any of, or any
interest in, its rights and/or obligations under this Guarantee.
	 
	11.3  	 	By the Insured. No Insured may assign, transfer, novate or dispose of any of, or any
interest in its rights and/or obligations under this Guarantee except that, if the Policy
pursuant to which such rights arise expressly permits such transfer and such transfer has
been made on or prior to the date on which the Company became liable to make a payment to
the Insured under that Policy, the Insured may transfer its rights under this Guarantee to
the transferee of the Policy rights.

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	12.  	Amendment

	12.1  	 	Amendment. This Guarantee may only be amended by a written instrument signed by the
authorised signatories of the Guarantor and the Company, which shall not take effect earlier
than the expiry of 90 days from the date on which the Rating Agency receives notice of the
amendment.
	 
	12.2  	 	No prior effect. No amendment shall have the effect of avoiding, reducing or limiting the
rights under this Guarantee of an Insured whose Policy was issued or renewed prior to the
date of such amendment.

	13.  	Notices

	13.1  	 	Giving of notices
	 
	 	   	All notices or other communications under or in connection with this Guarantee shall be in
writing and delivered by both (a) either fax or e-mail and (b) by a method of personal, postal or
courier delivery which includes the acknowledgement of receipt. Any such notice will be deemed to
be received at the earliest business day on which the notice is in fact received during normal
business hours in the place of receipt (or if received other than on a business day or in
business hours, on the next such business day.)
	 
	13.2  	 	Addresses for notices
	 
	 	   	The address and facsimile number of the Company is:

	 	 	 	 	 	 	 	 	 
	 
	 	Converium Ruckversicherung (Deutschland) AG	 	 	 	 
	 
	 	Clever Strasse 36	 	 	 	 	 	 
	 
	 	D-50668 Cologne	 	 	 	 	 	 
	 
	 	Germany	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Facsimile No:	 	+49 221 539 2022	 	 	 	 
	 
	 	For the attention of:	 	Chief Executive Officer	 	 	 	 

	 	   	The address and facsimile number of the Guarantor is:

	 	 	 	 	 	 	 	 	 
	 
	 	Converium AG	 	 	 	 	 	 
	 
	 	General Guisan-Quai 26	 	 	 	 	 	 
	 
	 	P.O. Box	 	 	 	 	 	 
	 
	 	CH-8022 Zurich	 	 	 	 	 	 
	 
	 	Switzerland	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Facsimile No:	 	+41 1 639 9090	 	 	 	 
	 
	 	For the attention of:	 	General Legal Counsel	 	 	 	 

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The address and facsimile number of the Rating Agency is:

	 	 	 	 	 	 	 	 	 
	 
	 	Standard & Poor’s	 	 	 	 	 	 
	 
	 	20 Canada Square	 	 	 	 	 	 
	 
	 	Canary Wharf	 	 	 	 	 	 
	 
	 	London E14 5LH	 	 	 	 	 	 
	 
	 	U.K.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Facsimile No:	 	+44 020 7176 7003	 	 	 	 
	 
	 	For the attention of:	 	The Standard & Poor’s analyst for Converium	 	 

	 	   	Or such other addresses or facsimile numbers as may be notified by the party named above to the
other parties named above by notice given in accordance with the provisions of this clause.

	13.3  	 	Notice of Demand
	 
	 	   	An Insured may make a demand under this Guarantee by giving written notice to the Guarantor and
the Company in accordance with the requirements of clause 13.

	14  	Governing Law and Jurisdiction

	14.1  	 	Governing law. This Guarantee is governed by Swiss law.
	 
	14.2  	 	Courts. Each of the parties hereto irrevocably agrees for the benefit of the other that
the commercial court (Handelsgericht) of the Canton of Zurich, Switzerland, shall have
exclusive jurisdiction to hear and determine any suit, action or proceedings, and to settle
any disputes, which may arise out of or in connection with this Guarantee.

This Guarantee has been entered into on the date stated at the beginning of this Guarantee.

For Converium AG:

	 	 	 
	/s/ BENJAMIN GENTSCH
	 	/s/ DIRK LOHMANN
	 	 	 
	Benjamin Gentsch
	 	Dirk Lohmann
	Vice-Chairman of the Board of Directors
	 	Chairman of the Board of Directors
	& Executive Vice-President
	 	& Chief Executive Officer
	Specialty Lines
	 	 

For Converium Rückversicherung (Deutschland) AG:

	 	 	 
	/s/ FRANK SCHAAR
	 	/s/ EWALD STEPHAN
	 	 	 
	Frank Schaar
	 	Ewald Stephan
	Chief Executive Officer
	 	Chief Financial Officer

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EXHIBIT 4.45

DATED 7TH JANUARY 2005

GLOBAL AEROSPACE UNDERWRITING MANAGERS LIMITED

- and -

GLOBAL AEROSPACE, INC.

- and -

MÜNCHENER RÜCKVERSICHERUNGS-

GESELLSCHAFT AKTIENGESELLSCHAFT

IN MÜNCHEN

- and -

NATIONAL INDEMNITY COMPANY

- and -

CONVERIUM AG

FRONTING AND ADMINISTRATION

AGREEMENT RELATING TO THE GLOBAL

AEROSPACE UNDERWRITERS POOL

 
 
 
 
 

 

 

CONTENTS

	 	 	 	 	 	 	 
	CLAUSE	 	 	 	PAGE
	1.
	 	DEFINITIONS

	 	 	4	 
	2.
	 	APPOINTMENT OF GLOBAL AND GAI TO WRITE FRONTING INSURANCE

	 	 	9	 
	3.
	 	CONVERIUM’S REINSURANCE AND INDEMNITY OBLIGATIONS

	 	 	13	 
	4.
	 	DUTIES & WAIVERS

	 	 	15	 
	5.
	 	PREMIUMS AND POOL PAYMENTS

	 	 	17	 
	6.
	 	OVERRIDING COMMISSION

	 	 	18	 
	7.
	 	CLAIMS

	 	 	19	 
	8.
	 	ACCOUNTS AND INFORMATION

	 	 	20	 
	9.
	 	RELATIONSHIP BETWEEN THE PARTIES

	 	 	21	 
	10.
	 	TERMINATION

	 	 	21	 
	11.
	 	CONFIDENTIALITY

	 	 	25	 
	12.
	 	UNDERTAKINGS

	 	 	26	 
	13.
	 	MUNICH RE SECURITY

	 	 	27	 
	14.
	 	NATIONAL INDEMNITY SECURITY

	 	 	31	 
	15.
	 	DISPUTE RESOLUTION

	 	 	36	 
	16.
	 	LETTERS OF CREDIT AND AUTHORITY

	 	 	36	 
	17.
	 	SET-OFF

	 	 	37	 
	18.
	 	REGULATORY MATTERS

	 	 	37	 
	19.
	 	WAIVER OF OBLIGATIONS

	 	 	37	 
	20.
	 	AMENDMENT AND REPRESENTATIONS

	 	 	37	 
	21.
	 	ASSIGNMENT

	 	 	38	 
	22.
	 	NOTICES AND COMMUNICATIONS

	 	 	38	 
	23.
	 	GOVERNING LAW AND ARBITRATION

	 	 	39	 
	24.
	 	COSTS

	 	 	40	 
	25.
	 	ENFORCEABILITY

	 	 	40	 
	26.
	 	RELATIONSHIP WITH POOL MEMBERS’ AGREEMENT

	 	 	40	 
	27.
	 	NO RIGHTS UNDER CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

	 	 	41	 
	28.
	 	COUNTERPARTS

	 	 	41	 

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	CLAUSE	 	 	 	PAGE
	SCHEDULE 1 AMOUNT AND BASIS OF CALCULATION OF OVERRIDING COMMISSION	 	 	42	 
	SCHEDULE 2 MUNICH RE GROUP FRONTING	 	 	43	 
	SCHEDULE 3 NATIONAL INDEMNITY GROUP FRONTING	 	 	45	 
	SCHEDULE 4 MR STATEMENT DISPUTE RESOLUTION MECHANISM	 	 	48	 
	SCHEDULE 5 NIC STATEMENT DISPUTE RESOLUTION MECHANISM	 	 	50	 
	SCHEDULE 6 DISPUTE MECHANISM IN RELATION TO RESERVE CALCULATIONS	 	 	52	 
	ANNEXURE 1 FORM OF DEED OF ADHERENCE FOR USE BY SUBSIDIARIES OF GLOBAL AND GAI	 	 	56	 

2

 

THIS FRONTING AND ADMINISTRATION AGREEMENT is made on 7th January 2005 between:

	(1)	 	CONVERIUM AG, a company incorporated in Switzerland whose registered office is at General
Guisan-Quai 26, 8022 Zürich, Switzerland (Converium);
	 
	(2)	 	MÜNCHENER RÜCKVERSICHERUNGS-GESELLSCHAFT AKTIENGESELLSCHAFT IN MÜNCHEN, whose registered
office is at Königinstraße, 107, 80802 München, Germany (Munich Re);
	 
	(3)	 	NATIONAL INDEMNITY COMPANY, a company incorporated in Nebraska, United States of America,
whose registered office is at 3024 Harney Street, Omaha, Nebraska, USA 68131 (National
Indemnity);
	 
	(4)	 	GLOBAL AEROSPACE UNDERWRITING MANAGERS LIMITED (registered number 2512067) whose registered
office is at Fitzwilliam House, 10 St. Mary Axe, London EC3A 8EQ (Global); and
	 
	(5)	 	GLOBAL AEROSPACE, INC. (formerly known as ASSOCIATED AVIATION UNDERWRITERS, INC.) a Delaware
corporation (GAI).

Whereas:

(A)     An aviation and aerospace underwriting pool (the Pool) has been established between certain
insurance and reinsurance companies including Converium, Munich Re, National Indemnity, Global and
GAI in respect of risks written after the date of the Pool Members’ Agreement (as hereinafter
defined) and attaching on or after 1 January 2003, and in respect of which inter alia Converium
appoints each of Global and GAI as its agents for writing insurance and reinsurance in respect of
certain risks and to provide administration and management services in respect of the Pool.

(B)     Converium intends to appoint National Indemnity and Munich Re (or members of their Groups) to
provide fronting insurance for Converium in respect of Relevant Risks which incept in the Period
(all terms as hereinafter defined). The intention is that in respect of each risk which would be
written in the name of Converium under the terms of the Pool Members’ Agreement, National Indemnity
or a member of its Group will front 50 per cent. of such risk and Munich Re or a member of its
Group will front 50 per cent. of such risk. In certain jurisdictions where there is currently
fronting in place in respect of National Indemnity’s or Munich Re’s participation in the Pool, the
fronter (being those persons listed in column 4 of Part II of Schedule 2 and Schedule 3) has agreed
to extend the fronting that is currently in place so that it covers (in each case) 50 per cent of
each risk in such jurisdiction which would be written in the name of Converium under the Pool
Members’ Agreement.

(C)     Accordingly, this Agreement constitutes a Fronting Arrangement for the purposes of the Pool
Members’ Agreement and sets out the basis on which (1) National Indemnity and Munich Re or members
of their Groups set out in Part I of Schedule 2 or Part I of Schedule 3 will appoint Global and GAI
to underwrite,

3

 

administer and manage such Relevant Risks and (2) all business written in the name of National
Indemnity and Munich Re or members of their Groups set out in Part I of Schedule 2 or Part I of
Schedule 3 under this Agreement will be fully reinsured by Converium.

Now it is hereby agreed as follows:

	1.	 	Definitions
	 
	1.1	 	Unless otherwise defined in this Agreement and unless the context otherwise requires, all words
and phrases shall have the meaning ascribed to them in the Pool Members’ Agreement.

Agent means both, or each of, Global and GAI as the context requires;

Agreement means this Agreement as amended from time to time;

Business means the business of writing Fronting Insurance Contracts as agent for National
Indemnity, Munich Re or members of their Groups set out in Part I of Schedule 2 or Part I of
Schedule 3 in their capacity as fronting insurers for Converium and managing such business on
behalf of National Indemnity, Munich Re or members of their Groups set out in Part I of Schedule 2
or Part I of Schedule 3 and doing such other things ancillary or incidental thereto in any such
case as may from time to time be permitted or required by or pursuant to this Agreement and for the
avoidance of doubt, Business excludes that portion of any risk reflecting the participation of
National Indemnity, Munich Re or members of their Groups set out in Part I of Schedule 2 or Part I
of Schedule 3 under the Pool Members’ Agreement and that portion of any risk which is written on
behalf of Munich Re or National Indemnity by the persons set out in column 4 of Part II of Schedule
2 or Schedule 3 respectively;

Business Day means any day (not being a Saturday or Sunday) on which banks are open for the
transaction of general banking business in London;

Confidential Information means:

	(a)	 	all information obtained by a party as a result of negotiating and entering into this
Agreement;
	 
	(b)	 	all financial or other information received by a party pursuant to this Agreement in respect
of Global or GAI;
	 
	(c)	 	all financial or other information received by a party pursuant to this Agreement in respect
of Converium;
	 
	(d)	 	all financial or other information received by a party pursuant to this Agreement in respect
of National Indemnity or Munich Re; and
	 
	(e)	 	information as to the terms of this Agreement or of any agreement referred to in it and
information relating to the performance by any party of its obligations under this Agreement
or any agreement referred to in it;

4

 

Claim means, in relation to any Reinsured Risk, the notification, by the insured (or as
applicable reinsured) of an actual or potential claim under such Reinsured Risk and, for the
avoidance of doubt, a Claim shall be deemed to have been made where there is a settlement,
compromise, commutation and/or policy buy back entered into by or on behalf of National Indemnity,
Munich Re or members of their Groups set out in Part I of Schedule 2 or Part I of Schedule 3 in
relation to the Reinsured Risks (or any of them);

Claims-Related Extra Contractual Obligation means any liability on the part of National
Indemnity, Munich Re or members of their Groups set out in Part I of Schedule 2 or Part I of
Schedule 3 (or amount agreed to be paid by or on behalf of National Indemnity, Munich Re or members
of their Groups set out in Part I of Schedule 2 or Part I of Schedule 3 in respect of potential or
alleged liability on the part of National Indemnity, Munich Re or members of their Groups set out
in Part I of Schedule 2 or Part I of Schedule 3) which has arisen in connection with or which
relates in any way to the conduct of a claim and/or the conduct of the Business where such
liability (or potential or alleged liability) has arisen because of or relates in any way to any
Reinsured Risk in respect of which a Fronting Insurance Contract has been written in such person’s
name save to the extent that any Claims-Related Extra Contractual Obligation results from fraud of
National Indemnity or a member of its Group, or Munich Re or a member of its Group;

duly authorised means:

	(a)	 	in the United Kingdom, duly authorised to carry on general insurance business under the
Financial Services and Markets Act 2000; and
	 
	(b)	 	in any other jurisdiction, duly authorised, licensed or otherwise approved or permitted,
under the laws of the applicable jurisdiction, to underwrite or carry on general insurance
business covering Specified Risks in accordance with the relevant laws or regulations of such
jurisdiction;

Fronting Insurance Contract means a contract of insurance and/or reinsurance which is written
by Global or GAI (as the case may be) pursuant to this Agreement on behalf of National Indemnity or
Munich Re or the relevant member of such person’s Group (solely in its capacity as fronting insurer
for Converium) in respect of the proportion of the Relevant Risks set out in Clause 2.3(b)
attaching during the Period provided that Fronting Insurance Contracts shall not relate to the
percentage of each policy issued under the Pool Members’ Agreement representing Munich Re’s or
National Indemnity’s interest under the Pool Members’ Agreement;

Group means in relation to a company, that company and any company which is a holding company
of that company or a subsidiary of that company or of such holding company;

holding company has the meaning ascribed thereto by Section 736 of the Companies Act 1985;

Incurred Position means, in relation to Converium, such amount as may be determined in
accordance with Clause 15 as being the greater of:

5

 

	(a)	 	written premiums in relation to the relevant Reinsured Risks less any (i) reinsurance
premiums ceded in respect of reinsurance taken out in accordance with the Pool Business Plan
(as defined in the Pool Members’ Agreement) as amended from time to time or otherwise taken
out by the Agents on behalf of the Members of the Pool as a whole; (ii) original commissions
in relation to such Reinsured Risks; and (iii) taxes on the premiums relating to such
Reinsured Risks, ((a) less each of (i), (ii) and (iii) being the Net Premiums) multiplied by
150 per cent;
	 
	(b)	 	120 per cent. of outstanding claims attributable to relevant Reinsured Risks (including
reserves for claims incurred but not reported maintained by National Indemnity or Munich Re or
the relevant member of such person’s Group (as the case may be) in respect of relevant
Reinsured Risks) written in the name of National Indemnity or Munich Re or the relevant member
of such person’s Group; or
	 
	(c)	 	$50 million plus the Net Premiums in relation to the relevant Reinsured Risks;

provided that:

	 	(i)	 	if this Agreement is terminated pursuant to Clause 10.1(i) the
references to “150” and “120” above shall be read as “100” save that nothing in
this proviso shall be construed to reduce the Incurred Position below the
minimum percentage which is required to allow Munich Re, National Indemnity or
the relevant member of its Group to receive credit for the Reinsurance to which
the security relates under the laws of the jurisdiction in which such person is
domiciled; and
	 
	 	(ii)	 	proviso (i) above shall only apply during such periods as
Standard & Poor’s financial strength rating of Converium is
A– or above (or if
such rating is not available, such comparable rating as may be reasonably agreed
between Converium, Munich Re and National Indemnity). Converium shall make such
additional deposits to the MR Fund and the NICO Fund in the event that Standard
& Poor’s financial strength rating of Converium falls below
A– subsequent to
termination of this Agreement under Clause 10.1(i) so as to comply with the
requirements of Clause 13 or Clause 14 (as appropriate) without regard to
proviso (i) above;

Letter of Credit means a clean, unconditional and irrevocable Letter of Credit issued on
behalf of Converium by a bank with a credit rating by Standard and Poors of AA or above (or if such
rating is not available, such other comparable rating as may be reasonably agreed between the
person in whose favour such Letter of Credit is written and Converium) for the benefit of National
Indemnity or Munich Re (or the applicable member of such person’s Group) (as the case may be) in an
amount to be determined from time to time in accordance with Clause 13 or Clause 14 (as
appropriate) provided that the bank issuing any Letter of Credit must be one that would permit (a)
National Indemnity or the relevant member of its Group to receive credit for the Reinsurance to
which that Letter of Credit relates under the laws of the jurisdiction in which such person is
domiciled; or (b) Munich Re or the relevant

6

 

member of its Group to receive credit for the Reinsurance to which that Letter of Credit relates
under the laws of Germany;

Letter of Credit Notice means a notice issued by National Indemnity or Munich Re (as the case
may be) from time to time requiring Converium to either: (a) arrange or cause to be arranged the
issue and/or delivery of a Letter of Credit and/or to increase the amount of any such Letter of
Credit; or (b) deposit additional funds in the MR Fund or the NICO Fund;

Net Premiums has the meaning given to it in the definition of Incurred Position;

Overriding Commission means the overriding commission payable in accordance with Clause 6, the
amount of which shall be calculated in accordance with Schedule 1;

Period means the period beginning at 12:01 pm BST on 16 September 2004 and ending at 12.01
a.m. BST on 30 September 2005;

Pool Members’ Agreement means the Agreement between GAI, Global and various insurance
companies and reinsurance companies including National Indemnity, Munich Re and Converium dated 27
November 2002 for the formation of an aviation and aerospace underwriting pool under the management
of Global and GAI;

Premium shall have the meaning given to it in Clause 5.1;

profit shall mean, subject to the provisions of Schedule 4 or Schedule 5, for the purposes of
Clauses 13.5, 13.12 to 13.14, 14.5 and 14.12 to 14.14:

	(a)	 	the written premiums in respect of the relevant Reinsured Risks;
	 
	 	 	LESS
	 
	(b)	 	paid claims in respect of the relevant Reinsured Risks as at 31 December 2008;
	 
	 	 	LESS
	 
	(c)	 	outstanding claims which have been notified to Global or AAU or any of their subsidiaries in
relation to relevant Reinsured Risks as at 31 December 2008;
	 
	 	 	LESS
	 
	(d)	 	the reserves held for incurred but not reported claims in respect of relevant Reinsured Risks
as at 31 December 2008 by Munich Re or National Indemnity or a relevant number of such
person’s group, calculated by Munich Re or National Indemnity (or such person’s respective
appointee) (as appropriate) in accordance with actuarial best practice and guidance produced
by relevant actuarial bodies in the relevant country (and subject to the dispute resolution
mechanism in Clause 6),

in the case of (a) to (c) as produced by Global’s computer systems;

7

 

Regulatory Action means:

	(a)	 	any order of a court of competent jurisdiction;
	 
	(b)	 	any order made, decision given or final view expressed by a competent national,
supranational, governmental or regulatory authority or agency; or
	 
	(c)	 	any enactment of a legislative body;
	 
	(i)	 	which prohibits or restricts to a material extent the carrying on of the Business or the
arrangements contemplated by this Agreement; or
	 
	(ii)	 	in consequence of which any of the parties would incur fines or a liability in damages
were this Agreement to be performed in accordance with its terms;

Reinsurance has the meaning given to it in Clause 3;

Reinsured Risks means that percentage of any and all contracts of insurance, reinsurance or
retrocession written by either Agent in the name of Munich Re, National Indemnity (or members of
their Groups set out in Part I of Schedule 2 or Part I of Schedule 3) solely in its capacity as
fronting insurer for Converium under, pursuant to or in connection with (or purportedly under,
pursuant to or in connection with) this Agreement (as such contracts may be amended from time to
time) and irrespective of whether the acceptance of such contract was within the scope of the
authority granted to the Agent by Munich Re or National Indemnity or members of their Groups set
out in Part I of Schedule 2 or Part I of Schedule 3 under the terms of this Agreement or within the
scope of (or in accordance with the terms of) the Pool Members’ Agreement and Reinsured Risk shall
be construed accordingly. For the avoidance of doubt, Reinsured Risks shall not include the
percentage of each policy issued under the Pool Members’ Agreement representing Munich Re’s or
National Indemnity’s interest under the Pool Members’ Agreement;

Relevant Risks means Specified Risks relating to those countries set out in Part I of Schedule
2 in the case of Munich Re and the members of its Group and Part I of Schedule 3 in the case of
National Indemnity and the members of its Group, which are insurance or reinsurance risks;

Respective Proportion has the meaning given to it in the Pool Members’ Agreement;

Specified Risks means aerospace, aviation and all related and incidental insurance and
reinsurance risks;

subsidiary and wholly-owned subsidiary shall have the meanings given thereto in Section 736 of
the Companies Act 1985; and

Taxation means all forms of taxation and statutory, governmental, state, provincial, local
governmental or municipal impositions, duties, contribution and levies and all penalties, charges,
costs and interest relating thereto.

8

 

1.2     References to Recitals, Clauses, Schedules and parties are, except where otherwise provided, to
Recitals, Clauses, Schedules or parties to this Agreement. The Schedules form part of this
Agreement and have the same force and effect as if set out in the body of this Agreement.

1.3     References to a statutory provision include such provision and any regulations made in
pursuance thereof as from time to time modified or re-enacted whether before or after the date of
this Agreement so far as such modification or re-enactment applies or is capable of applying to any
transactions entered into pursuant to this Agreement or to which this Agreement relates and (so far
as the same may be relevant) shall include any statutory provisions or regulations which such
provisions or regulations have directly or indirectly replaced.

1.4     The headings and index hereto are inserted for convenience only and shall not affect the
construction of this Agreement.

1.5     References to Converium, Munich Re (and any member of its Group), National Indemnity (and any
member of its Group) or to the Agents or any of them mean and include their respective successors
in title and permitted assigns.

1.6     Where the context so admits, references to the singular shall be deemed to include the plural
and vice versa.

1.7     References to Schedule 2 or Schedule 3 shall be to that Schedule as amended in accordance with
the terms of Schedule 2 or Schedule 3 (respectively) at the relevant time.

	2.	 	Appointment of Global and GAI to write Fronting Insurance

2.1     Each of Munich Re and National Indemnity (for itself and as agent for each member of its Group
set out in Part I of Schedule 2 or Part I of Schedule 3 respectively) hereby severally appoints
each of Global and GAI to act as agent for it or such member of its Group as is set out in Part I
of Schedule 2 or Part I of Schedule 3 in the relevant jurisdiction indicated in those Schedules
(which appointment each of Global and GAI hereby accepts and acknowledges):

	(a)	 	to underwrite and/or bind and/or effect Fronting Insurance Contracts in the name of each of
such persons in accordance with the terms of this Agreement; and
	 
	(b)	 	to administer the Fronting Insurance Contracts and any reinsurance of them including (without
limitation) providing those services specified in paragraphs 1.2 and 2 of Schedule 3 of the
Pool Members’ Agreement in relation to the Fronting Insurance Contracts

provided that the appointments pursuant to this Clause 2.1 shall be deemed to have taken effect on
16 September 2004.

2.2     Each of the Agents in performing its services under this Agreement shall act as agent (and
describe itself as acting as agent) for Munich Re or the relevant member

9

 

of its Group when acting pursuant to its appointment by Munich Re or a member of its Group or
National Indemnity or the relevant member of its Group when acting pursuant to its appointment by
National Indemnity or a member of its Group.

2.3     The appointment by each of Munich Re and National Indemnity and the relevant members of their
Groups of each of Global and GAI to act as its agent to underwrite and/or bind and/or effect
Fronting Insurance Contracts in the name of Munich Re or National Indemnity or the relevant member
of its Group is limited to the negotiation and/or underwriting and/or binding and/or effecting of
Fronting Insurance Contracts:

	(a)	 	in those countries set out against such person’s name in Part I of Schedule 2 or Part I of
Schedule 3;
	 
	(b)	 	in respect of the percentage set out against such person’s name in Part I of Schedule 2 or
Part I of Schedule 3 of Converium’s Respective Proportion of the Relevant Risk;
	 
	(c)	 	which are bound and/or effected prior to the expiration of the Period;
	 
	(d)	 	which incept in the Period (provided that where a policy relating to a Relevant Risk was
written prior to the Period and is cancelled but re-written on the same terms save for the
fact that Converium is replaced as an underwriter by Munich Re and National Indemnity for the
Period, such policy shall be deemed to incept in the Period);
	 
	(e)	 	the period of which does not, in any case, exceed 12 months plus odd time not exceeding 15
months in all;
	 
	(f)	 	the terms of which, where written on a risks attaching basis, do not allow for any risks to
attach where the period of such risks exceeds 12 months plus odd time not exceeding 15 months
in all;
	 
	(g)	 	which are in respect of Relevant Risks; and
	 
	(h)	 	which are within the scope of the insurance and reinsurance contracts the Agents are
authorised to write under the Pool Members’ Agreement.

2.4     Neither Global nor GAI shall have any entitlement whatsoever to remuneration from Munich Re,
National Indemnity or the members of their Groups and none of Munich Re, National Indemnity or the
members of their Groups shall have any obligation whatsoever to remunerate the Agents in respect of
the assumption and performance of the Agents’ obligations under this Agreement.

2.5     Either Agent may (subject to prior notification of Converium, Munich Re and National Indemnity)
appoint a wholly-owned subsidiary of Global, which has been appointed pursuant to Clause 10 of the
Pool Members’ Agreement, for the purposes of providing all or some of the services under this
Agreement in relation to such part of the Business as the board of directors of the relevant Agent
may determine and shall give prior notice of such appointment to each of Converium, Munich Re and

10

 

National Indemnity. Such subsidiary shall, as soon as reasonably practicable, become a party to
this Agreement by executing a Deed of Adherence in the form (or substantially in the form) set out
in Annexure 1.

2.6     The parties acknowledge the Agents have appointed Global Aerospace Canada Limited (GAC) for the
purpose of providing services under this Agreement relating to policies written in Canada and the
Agents agree to procure that GAC enters into a Deed of Adherence.

2.7     The appointment by Munich Re, National Indemnity or the relevant member of their Group of the
relevant Agent as its agent under Clause 2.1 shall be extended to the subsidiary, as if references
to Global, GAI or the Agents, as the case may be, were references to such subsidiary, in each case
in relation only to such services and/or to such parts of the Business as is determined by the
board of directors of the relevant Agent.

2.8     Any appointment of a subsidiary under Clause 2.5 shall terminate upon such subsidiary ceasing
to be a wholly-owned subsidiary of Global.

	2A. Extension of National Indemnity and Munich Re Fronting Lines

2A.1     Munich Re’s Respective Proportion of Specified Risks written in the jurisdictions set out in
Part II of Schedule 2 is fronted by the company set out opposite such jurisdiction in Part II of
Schedule 2 (together the MR Fronters). Munich Re agrees to use its reasonable endeavours to amend
its agreements with the MR Fronters so that each MR Fronter also writes fifty per cent (50%) of
Converium’s Respective Proportion of Specified Risks in the jurisdiction set out opposite it in
Part II of Schedule 2 (the Converium Risks) (which shall then be 100% quota share reinsured by
Munich Re).

2A.2     Converium agrees that to the extent Converium Risks are written by the MR Fronters on terms
previously agreed with Converium in writing and provided that Munich Re and each member of its
Group pays to Converium all amounts received by it from the MR Fronters in relation to them
fronting Converium Risks it will:

(a)     pay overriding commissions previously notified to and agreed by Converium in writing due to the
MR Fronters in respect of the Converium Risks;

(b)     provide any security previously notified to and agreed by Converium in writing required by the
MR Fronters in relation to the Converium Risks (which security shall be provided from the MR Fund
pro rata to the applicable exposure); and

(c)     reinsure Munich Re’s reinsurance of the Converium Risks on an equivalent basis to that set out
in Clause 3.

2A.3     Converium shall pay Munich Re commission (the MR Fronted Commission) for reinsuring the
Converium Risks on the basis set out in Clauses 2A.4 to 2A.6.

2A.4     The amount of MR Fronted Commission payable by Converium shall be calculated by reference to
the total gross premium income written by the Agents in

11

 

the period in question in respect of each Converium Risk after deduction of (i) any original
commission or taxes on premiums payable thereunder but before the deduction of amounts, if any,
payable to the Agents under the terms of the Pool Members’ Agreement and (ii) any premiums payable
by the Agents for reinsurance in relation to the Pool (such amount being referred to as the MR
Relevant Net Premium Income).

2A.5     The amount of MR Fronted Commission payable by Converium to Munich Re shall be calculated by
multiplying the MR Relevant Net Premium Income attributable to Converium Risks covered by policies
written by MR Fronters by 1 per cent. (or by such percentage as may be agreed from time to time
between Munich Re and Converium in writing).

2A.6     The amount of MR Fronted Commission attributable to any calendar quarter shall be due and
payable on (i) the last business day of the immediately following calendar quarter, or (ii) the
date on which a cash distribution is paid by the Agents to Converium under the Pool Members’
Agreement with respect to business written in such calendar quarter, whichever is earlier and shall
be deducted by Munich Re from the MR Fund on that date.

2A.7     National Indemnity’s Respective Proportion of Specified Risks written in the jurisdictions set
out in Part II of Schedule 3 is fronted by the company set out opposite such jurisdiction in Part
II of Schedule 3 (together the NIC Fronters). National Indemnity agrees to use its reasonable
endeavours to amend its agreements with the NIC Fronters so that each NIC Fronter also writes fifty
per cent (50%) of Converium’s Respective Proportion of Specified Risks in the jurisdiction set out
opposite it in Part II of Schedule 3 (the NIC Converium Risks) (which shall then be reinsured by
National Indemnity).

2A.8     Converium agrees that to the extent the NIC Converium Risks are written by the NIC Fronters on
terms previously agreed with Converium in writing and provided that National Indemnity and each
member of its Group pays to Converium all amounts received by it from the NIC Fronters in relation
to them fronting NIC Converium Risks it will:

(a)     pay overriding commissions previously notified to and agreed by Converium in writing due to the
NIC Fronters in respect of the NIC Converium Risks;

(b)     provide any security previously notified to and agreed by Converium in writing required by the
NIC Fronters in relation to the NIC Converium Risks (which security shall be provided from the NIC
Fund pro rata to the applicable exposure); and

(c)     reinsure National Indemnity’s reinsurance of the NIC Converium Risks on an equivalent basis to
that set out in Clause 3.

2A.9     Converium shall pay National Indemnity commission (the NIC Fronted Commission) for reinsuring
the NIC Converium Risks on the basis set out in Clauses 2A.10 to 2A.12.

12

 

2A.10     The amount of NIC Fronted Commission payable by Converium shall be calculated by reference to
the total gross premium income written by the Agents in the period in question in respect of each
NIC Converium Risk after deduction of (i) any original commission or taxes on premiums payable
thereunder but before the deduction of amounts, if any, payable to the Agents under the terms of
the Pool Members’ Agreement and (ii) any premiums payable by the Agents for reinsurance in relation
to the Pool (such amount being referred to as the NIC Relevant Net Premium Income).

2A.11     The amount of NIC Fronted Commission payable by Converium to National Indemnity shall be
calculated by multiplying the NIC Relevant Net Premium Income attributable to NIC Converium Risks
covered by policies written by NIC Fronters by 1 per cent. (or by such percentage as may be agreed
from time to time between National Indemnity and Converium in writing).

2A.12     The amount of NIC Fronted Commission attributable to any calendar quarter shall be due and
payable on (i) the last business day of the immediately following calendar quarter, or (ii) the
date on which a cash distribution is paid by the Agents to Converium under the Pool Members’
Agreement with respect to business written in such calendar quarter, whichever is earlier and shall
be deducted by National Indemnity from the NICO Fund on that date.

	3.	 	Converium’s Reinsurance and Indemnity Obligations

3.1     Immediately upon, and with effect from, the acceptance and/or binding of a Reinsured Risk by
the Agents (or either of them), Munich Re or the relevant member of its Group and National
Indemnity or the relevant member of its Group shall cede to Converium and Converium agrees to
accept by way of reinsurance the quota share percentage set out against such person’s name in Part
I of Schedule 2 or Part I of Schedule 3 of Converium’s Respective Proportion of the Relevant Risk
(the total amount ceded pursuant to this Clause 3.1 shall be the Reinsurance and the amount ceded
in relation to a particular Reinsured Risk by a particular entity shall be the Reinsurance relating
to that Reinsured Risk). Such cession and acceptance shall be effected immediately and
automatically on, and with effect from, the acceptance and/or binding of the Reinsured Risk in
question.

3.2     In consideration of Munich Re and National Indemnity agreeing to enter into this Agreement,
Converium agrees to reinsure and indemnify Munich Re, National Indemnity or the relevant member of
its Group, without limit in time or amount, in respect of the Ultimate Net Loss of Munich Re,
National Indemnity or the relevant member of its Group in respect of, or relating to, each
Reinsured Risk in respect of which a Fronting Insurance Contract is written in such person’s name.
This Agreement shall only apply to the portion of a risk reflecting Converium’s participation in
the Pool Members’ Agreement and in respect of Munich Re, National Indemnity and each member of such
person’s Group shall only apply to the portion of such risk actually fronted by such person.

3.3     The term Ultimate Net Loss, as used herein, shall mean all amounts paid or agreed to be paid
(including by way of set-off, release or any other form of consideration) by Munich Re, National
Indemnity or the relevant member of such

13

 

person’s Group listed in Part I of Schedule 2 or Part I of Schedule 3 (or the Agent(s) on behalf of
Munich Re, National Indemnity or the relevant member of such person’s Group listed in Part I of
Schedule 2 or Part I of Schedule 3) in respect of or in relation to Claims and/or Claims-Related
Extra Contractual Obligations relating, in any way, to a Reinsured Risk (or any or all Reinsured
Risks) and shall include, without limit, all adjustment expenses arising from the evaluation,
assessment, investigation and/or settlement of claims other than the salaries of employees and
office expenses of Munich Re or any member of its Group (in the case of Ultimate Net Losses
relating to Munich Re or any member of its Group) or National Indemnity or any member of its Group
(in the case of Ultimate Net Losses relating to National Indemnity or any member of its Group)
provided that Converium shall be entitled to all amounts physically received by way of
recoveries/salvages. It is further understood and agreed that:

	(a)	 	any of Munich Re, National Indemnity or the relevant member of such person’s Group listed in
Part I of Schedule 2 or Part I of Schedule 3 shall be entitled to recover any part of its
Ultimate Net Loss once that has been ascertained without having to wait until its total
Ultimate Net Loss has been ascertained; and
	 
	(b)	 	for the avoidance of doubt, notwithstanding any other provision of this Agreement, it is
understood and agreed that neither Munich Re, National Indemnity nor the relevant member of
such person’s Group listed in Part I of Schedule 2 or Part I of Schedule 3 shall be required
to actually pay (in the sense of making a physical disbursement of money or monies worth) any
amounts in respect of which indemnity is claimed in order to trigger Converium’s indemnity
obligations hereunder.

3.4     If the terms of any reinsurance taken out by the Agents for the benefit of Munich Re, National
Indemnity or a member of such person’s Group in relation to the Pool (a Pool Reinsurance) cover
part or all of any Relevant Risk, the Reinsurance provided for in this Clause 3 shall not extend to
such part of that Relevant Risk provided that to the extent the Agents are not able to recover
under the Pool Reinsurance the Ultimate Net Loss in respect of such Relevant Risk for any reason
other than as a result of a negligent or fraudulent act by Munich Re, National Indemnity or a
member of such person’s Group (provided that for the avoidance of doubt a negligent or fraudulent
act by the Agent or any person appointed by the Agent to act as agent of Munich Re or National
Indemnity shall not be deemed a negligent or fraudulent act by Munich Re, National Indemnity or a
member of such person’s Group for the purposes of this clause unless the Agent was instructed to
undertake such act by Munich Re or National Indemnity or a member of such person’s Group (other
than by instruction approved by Converium), Converium shall reinsure such Ultimate Net Loss
pursuant to this Clause 3.

3.5     The Agents, Munich Re and National Indemnity shall (and shall procure that each relevant member
of such person’s Group shall) take such reasonable action as is necessary to allow the Agents to
make a successful claim under any relevant Pool Reinsurance.

14

 

3.6     Converium shall, in all respects, follow the fortunes of Munich Re or National Indemnity or the
member of such person’s group in whose name the relevant Fronting Insurance Contract is written in
relation to all matters falling within the scope of the Reinsurance and the Reinsurance shall be
construed in such a way as to give effect to the parties’ intention that, to the greatest extent
permissible by law:

	(a)	 	Munich Re, National Indemnity and the members of their Groups should retain no economic
interest in the Reinsured Risks after the application of this Reinsurance; and
	 
	(b)	 	the economic fortunes of Converium in relation to the Reinsured Risks should exactly mirror
those of Munich Re or National Indemnity or the member of such person’s Group in whose name
the relevant Fronting Insurance Contract is written.

3.7     Accordingly, and without prejudice to the generality of Clause 3.6, Converium shall be
unconditionally bound to follow all settlements, compromises, commutations, policy buy-backs or
other agreements of any nature whatsoever entered into, or agreed, on behalf of Munich Re, National
Indemnity or the members of their Groups by the Agents in relation to the Fronting Insurance
Contracts including any and all ex gratia payments without regard to the question of whether Munich
Re, National Indemnity or the members of their Groups had any liability whatsoever (whether
arguable or otherwise) in respect of such settlements, compromises, etc.

3.8     The parties acknowledge and agree that the obligations of Converium to indemnify:

	(a)	 	Munich Re or a member of its Group in whose name the relevant Fronting Insurance Contract is
written under this Agreement shall not in any way be affected by any actual or alleged
breaches by the Agents or National Indemnity of the terms of this Agreement, the Pool Members’
Agreement or of any duties (whether in contract tort or equity) owed by the Agents or National
Indemnity to Converium or Munich Re or the members of their Groups.
	 
	(b)	 	National Indemnity or a member of its Group in whose name the relevant Fronting Insurance
Contract is written under this Agreement shall not in any way be affected by any actual or
alleged breaches by the Agents or Munich Re of the terms of this Agreement, the Pool Members’
Agreement or of any duties (whether in contract tort or equity) owed by the Agents or Munich
Re to Converium or National Indemnity or the members of their Groups.

	4.	 	Duties & Waivers

4.1     Converium acknowledges and agrees that this Agreement is being entered into by the parties
solely as a Fronting Arrangement for the purposes of the Pool Members’ Agreement in order to
facilitate the participation by Converium in the underwriting of risks pursuant to the Pool
Members’ Agreement and that, but for Converium having a BBB+ rating from Standard & Poor’s Rating
Services, Converium would in any event have participated directly in such risks pursuant to the

15

 

terms of the Pool Members’ Agreement. Accordingly, subject to Clause 4.3, Converium agrees:

	(a)	 	that it has been afforded the opportunity to conduct its own investigations and due diligence
in relation to all matters relevant and/or material to this Agreement and the Pool Members’
Agreement (including the Reinsurance and the Reinsured Risks);
	 
	(b)	 	that neither Munich Re, National Indemnity nor the member of such person’s Group in whose
name a Fronting Insurance Contract is written nor its agents nor any person acting on its
behalf assumes, shall accept, and owe, any duty of care, whether in contract or in tort, nor
fiduciary duties to Converium in relation to any matters falling within the scope of this
Agreement or the Reinsurance and none of Munich Re, National Indemnity or the member of such
person’s Group in whose name a Fronting Insurance Contract is written shall accept, or have,
any vicarious liability for any acts or omissions of the Agents in relation thereto;
	 
	(c)	 	to waive any duty of disclosure on the part of Munich Re, National Indemnity or any member of
such person’s Group in whose name a relevant Fronting Insurance Contract is written and/or its
agents and/or any other person acting on behalf of Munich Re, National Indemnity or the member
of such person’s Group in whose name the relevant Fronting Insurance Contract is written in
relation to the Reinsurance and/or the subject-matter of this Agreement (including, but not
limited to, each and every Reinsured Risk and/or the cession thereof);
	 
	(d)	 	to acknowledge and accept the validity of each Fronting Insurance Contract underwritten by an
Agent on behalf of Munich Re, National Indemnity or the members of their Groups set out in
Part I of Schedule 2 and Part I of Schedule 3 for the benefit of Converium pursuant to (or in
purported pursuance of) this Agreement;
	 
	(e)	 	to waive and/or otherwise exclude any right (or remedy) that it might have, whether now or in
the future, to seek or otherwise claim damages in respect of, or to avoid, rescind or
otherwise challenge the validity of any Fronting Insurance Contract and/or the Reinsurance
and/or the cession of, any Reinsured Risk on any grounds including:

	 	(i)	 	misrepresentation and/or non-disclosure of material facts
(whether innocent, or negligent); and/or
	 
	 	(ii)	 	any breach (or alleged breach) of any duty of utmost good faith
by Munich Re, National Indemnity or the members of their Groups set out in Part
I of Schedule 2 and Part I of Schedule 3 (or any person acting on behalf of
Munich Re, National Indemnity or the members of their Groups set out in Schedule
2 or Schedule 3); and

	(f)	 	save to the extent otherwise provided for in this Agreement, Converium shall indemnify and
keep indemnified Munich Re, National Indemnity or the

16

 

	 	 	members of their Groups set out in Part I of Schedule 2 and Part I of Schedule 3 in respect
of any claim, loss or liability of any kind (including without limitation any liability to
the Agents (or either of them) under the Pool Members’ Agreement) in respect of or in
connection with the conduct (or purported conduct) of the Business.

4.2     Unless the contrary is expressly stated, no terms of this Agreement and/or Reinsurance which
are expressed to be warranties (or which might be otherwise have been construed as warranties but
for this Clause 4.2) shall take effect as warranties within the meaning of the Marine Insurance Act
1906 (which for the purposes of information only provides, in general circumstances, for the
discharge of liability should a warranty be breached) but shall, instead, be construed and take
effect as innominate terms.

4.3     For the avoidance of doubt, however, nothing in this Clause 4 is intended to affect and/or
waive and/or otherwise exclude any rights or remedies which Converium might have, whether now or in
the future, arising out of, or relating to, fraud on the part of any of Munich Re, National
Indemnity or the members of their Groups set out in Part I of Schedule 2 and Part I of Schedule 3
themselves (as opposed to fraud of the Agents, or either of them, on behalf of Munich Re, National
Indemnity or the members of their Groups set out in Part I of Schedule 2 and Part I of Schedule 3),
provided that the parties agree that no fraud on the part of:

	(a)	 	National Indemnity or a member of its Group shall impact the obligations of Converium to
Munich Re or a member of its Group; and
	 
	(b)	 	Munich Re or a member of its Group shall impact the obligations of Converium to National
Indemnity.

	5.	 	Premiums and Pool Payments

5.1     Subject to Clause 6, each of Munich Re and National Indemnity agrees for itself and as agent
for each member of its Group set out in Part I of Schedule 2 and Part I of Schedule 3 respectively
that Converium shall be entitled to all amounts actually received by the Agents (or either of them)
in respect of premiums payable under the terms and conditions of the Reinsured Risks including, for
the avoidance of doubt, any and all adjustment and/or reinstatement premiums but after the
deduction of any commissions or brokerage or other deductions payable or to be deducted therefrom
(Premiums) provided that all amounts payable to Converium pursuant to Clause 7 of the Pool Members’
Agreement less all amounts payable by Converium under Clause 7.5 of the Pool Members’ Agreement
(and less all amounts due to National Indemnity or Munich Re, respectively, under Clause 6 as
Overriding Commission) shall be paid:

	(a)	 	as to fifty per cent directly to Munich Re in relation to Reinsurance Risks covered by
Fronting Insurance Contracts written in the name of Munich Re or a member of its Group set out
in Part I of Schedule 2 to be held as set out in Clause 13.2; or

17

 

	(b)	 	as to fifty per cent directly to National Indemnity (or such member of its Group listed in
Part I of Schedule 3 as National Indemnity shall advise Converium and the Agents) in relation
to Reinsurance Risks covered by Fronting Insurance Contracts written in the name of National
Indemnity or any member of its Group set out in Part I of Schedule 3 to be held as set out in
Clause 14.2.

5.2     The Agents shall hold such proportion of the Premiums that is equivalent to any Overriding
Commission payable (or potentially payable) by Converium to:

	(a)	 	Munich Re or any member of its Group and shall pay such amount to Munich Re in accordance
with Clause 6 and shall only pay the remaining amount as specified in Clause 5.1(a);
	 
	(b)	 	National Indemnity or any member of its Group and shall pay such amount to National Indemnity
(or such member of its Group listed in Part I of Schedule 3 as National Indemnity shall advise
Converium and the Agents in writing prior to such payment being made) in accordance with
Clause 6 and shall only pay the remaining amount as specified in Clause 5.1(b).

5.3     All amounts payable by Converium to the Agents pursuant to Clause 7 of the Pool Members’
Agreement shall be paid by Converium as to fifty per cent from the MR Fund and as to fifty per cent
from the NIC Fund, provided that Munich Re shall not be obligated to make any payment described in
Clauses 13.17(b) or (c) which would cause the MR Fund to be reduced below $50 million (or, if lower
and Clause 13.8 applies, the amount required to be held in the MR Fund pursuant to Clause 13.8) and
provided further that National Indemnity shall not be obligated to make any payment described in
Clauses 13.17(b) or (c) which would cause the NIC Fund to be reduced below $50 million (or, if
lower and Clause 13.8 applies, the amount required to be held in the NIC Fund pursuant to Clause
13.8). Any shortfall in amounts payable by Converium to the Agents pursuant to Clause 7 of the
Pool Members’ Agreement by reason of either of the foregoing provisos shall be paid by Converium.

	6.	 	Overriding Commission

6.1     In consideration of Munich Re and the members of its Group set out in Part I of Schedule 2
agreeing to front for Converium in respect of the Reinsured Risks, Converium agrees to pay
commission to Munich Re for itself and as agent for such member of its Group (Munich Re Overriding
Commission) in respect of each Reinsured Risk covered by Fronting Insurance Contracts written by
such persons.

6.2     In consideration of National Indemnity and the members of its Group set out in Part I of
Schedule 3 agreeing to front for Converium in respect of the Reinsured Risks, Converium agrees to
pay commission to National Indemnity (or such member of National Indemnity’s Group listed in Part I
of Schedule 3 as National Indemnity shall advise Converium and the Agents) for itself and as agent
for such members of its Group (NIC Overriding Commission and together with Munich Re Overriding
Commission, Overriding Commission) in respect of each Reinsured Risk covered by Fronting Insurance
Contracts written by such persons.

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6.3     Subject always to Clause 6.4, the relevant Agent shall calculate the amount of Overriding
Commission payable in respect of all Premiums written in respect of the relevant Reinsured Risks
and shall:

	(a)	 	deduct and withhold such amounts from the Premiums payable as set out in Clause 5.1; and
	 
	(b)	 	account for, and pay, such amounts to Munich Re or National Indemnity (or such member of its
Group listed in Part I of Schedule 3 as National Indemnity shall advise Converium and the
Agents in writing prior to such payment being made) in accordance with Schedule 1.

6.4     Converium’s obligation to pay Overriding Commission to Munich Re or National Indemnity shall be
discharged only by the actual receipt by Munich Re or National Indemnity (or such member of
National Indemnity’s Group listed in Part I of Schedule 3 as National Indemnity shall advise
Converium and the Agents) of the amounts due and not by the deduction or withholding by the Agents
(or any of them) of amounts calculated to be due in respect of Overriding Commission provided that
such payment obligation shall be discharged to the extent that the Overriding Commission (or part
thereof) payable to Munich Re or National Indemnity is set-off against monies due and payable by
Munich Re or National Indemnity to the relevant Agent in connection with the Pool. The receipt of
Overriding Commission by Munich Re or National Indemnity in respect of Fronting Insurance Contracts
written by members of such person’s Group shall discharge Converium’s obligations in respect
thereof and Converium shall not be concerned as to the application of such amounts.

	7.	 	Claims

7.1     The Agents shall manage and perform the administration of the Reinsured Risks and the
negotiation and settlement of Claims thereunder and, in doing so, shall act as agent of Munich Re,
National Indemnity (and the members of their Groups set out in Part I of Schedule 2 and Part I of
Schedule 3) and Converium.

7.2     Without prejudice to the generality of Clause 7.1, all decisions made by the Agents in relation
to the administration of the Reinsured Risks and the negotiation and/or settlement of Claims
thereunder shall be made as agents for Munich Re, National Indemnity (and the members of their
Groups set out in Part I of Schedule 2 and Part I of Schedule 3) and Converium and shall be deemed
to be in the knowledge of all of them (to the greatest extent permitted or allowable by law).

7.3     As between Converium and any of Munich Re, National Indemnity and the members of their Groups
set out in Part I of Schedule 2 and Part I of Schedule 3, Munich Re, National Indemnity and the
members of their Groups set out in Part I of Schedule 2 and Part I of Schedule 3 shall have no
obligation to provide or disburse funds in respect of any obligations arising under or in relation
to Reinsured Risks. Such funds shall be provided by Converium and, accordingly, Converium shall
ensure that, at all times, sufficient funds are provided to the Agents to enable all obligations
under or in relation to each Reinsured Risk to be met as and when they fall due.

19

 

7.4     Any and all funds provided by Converium pursuant to Clause 7.3 shall, until physically
disbursed to the relevant insured or reinsured under the relevant Reinsured Risk or claimant
against such insured, be held by the Agents as agent for Converium and payment of such funds by
Converium to the Agents shall not constitute a discharge of, or operate to discharge, the
obligations of Converium to Munich Re, National Indemnity or any members of their Groups set out in
Part I of Schedule 2 and Part I of Schedule 3 under the terms of the Reinsurance, which obligations
shall be discharged only by (and to the extent of):

	(a)	 	physical disbursements of relevant amounts to insureds and/or reinsureds under the Reinsured
Risks or claimant against such insured; and/or
	 
	(b)	 	physical disbursement to Munich Re, National Indemnity or any members of their Groups set out
in Part I of Schedule 2 and Part I of Schedule 3 of amounts due under the Reinsurance to
Munich Re, National Indemnity or any members of their Groups set out in Part I of Schedule 2
and Part I of Schedule 3.

	8.	 	Accounts and Information

8.1     Each Agent agrees to provide accounting and other information to Munich Re, National Indemnity
or Converium in the form and in the manner that may be reasonably required by Munich Re, National
Indemnity or Converium from time to time by giving notice as provided for in Clause 22.

8.2     Each of the Agents shall keep, in such forms as may be agreed from time to time with (a) Munich
Re and Converium in relation to Relevant Risks for which Munich Re or a member of its Group
provides Fronting Insurance Contracts or (b) National Indemnity and Converium in relation to
Relevant Risks for which National Indemnity or a member of its Group provides Fronting Insurance
Contracts, books, records, underwriting statistics and accounts of all transactions under this
Agreement.

8.3     Munich Re, National Indemnity or Converium may, subject to any confidentiality obligations of
either Agent, at all reasonable times and on reasonable notice appoint its officers, employees
agents, or auditors to inspect, examine and verify at the offices of either Agent (and to take
copies of such books and records) all such accounts, records, books, vouchers, correspondence and
papers relating to any of the functions performed by the relevant Agent under this Agreement
insofar as they relate to the affairs of Munich Re or the members of its Group set out in Part I of
Schedule 2 or National Indemnity or the members of its Group set out in Part I of Schedule 3 or
Converium or a member of its Group respectively, including without limitation the application of
any money belonging to them paid or received by the relevant Agent and the operation of bank
accounts of such persons by the relevant Agent pursuant to this Agreement, and each of the Agents
shall whenever reasonably required at any time during normal business hours give such officers,
employees, servants or agents access to its offices for such purposes.

8.4     Each of National Indemnity and Munich Re undertakes to agree to supply, to the extent
permissible under any applicable law or regulatory requirements, such

20

 

information as either Agent shall reasonably request from time to time in order to facilitate the
management of the Business or the arrangements referred to in Clause 2A (but shall not be obliged
to provide any information relating to any business of each of National Indemnity and Munich Re or
any member of its Group to the extent it does not relate to the Business or the arrangements
referred to in Clause 2A).

	9.	 	Relationship between the Parties

9.1     Nothing in this Agreement shall create or constitute a partnership between the parties hereto
or any of them nor, save as expressly provided herein, constitute any one the agent of another and
no party shall do or suffer anything to be done whereby it shall or may be represented that it is
the partner or agent of any other party hereto (save as aforesaid) unless such party is appointed
partner or agent of another party subject to the consent in writing of every other party to this
Agreement.

9.2     The relationship between the parties to this Agreement is as described in this Agreement.
Neither that relationship nor the services to be provided by Global or GAI nor any other matter
shall give rise to any fiduciary or equitable obligations which would hinder Global or GAI from
acting as contemplated under the terms of this Agreement.

	10.	 	Termination

10.1     For the purposes of this Clause 10, a Trigger Event shall be deemed to have occurred in
relation to a party if:

	(a)	 	it ceases to be duly authorised (or has any suspension, restriction or other limitation
imposed in respect of its authority, licence, approval or permission) in respect of Specified
Risks in the jurisdiction in which it is incorporated or has its principal place of business
(home jurisdiction);
	 
	(b)	 	it goes into liquidation whether compulsorily or voluntarily (otherwise than a voluntary and
solvent liquidation for the purpose of reconstruction or amalgamation pursuant to a scheme
previously agreed between the parties);
	 
	(c)	 	it enters into any composition with its creditors generally or suffers any similar action in
consequence of default by it in its obligations in respect of any indebtedness for borrowed
moneys;
	 
	(d)	 	an administration order shall be made in respect of such party;
	 
	(e)	 	it stops or threatens to stop payment or ceases or threatens to cease to carry on its
business (otherwise than in connection with or in pursuance of a winding-up for the purpose of
a reconstruction or amalgamation pursuant to a scheme previously agreed between the parties)
or is deemed for the purpose of Section 123 of the Insolvency Act 1986 to be unable to pay its
debts;
	 
	(f)	 	it has an administrative receiver or other receiver or other similar official appointed over
all (or substantially all) of its undertaking and assets;

21

 

	(g)	 	it suffers any action similar to any of the events described in Clauses 10.1(a) to (f) under
the laws of any competent jurisdiction;
	 
	(h)	 	it has its financial strength rating downgraded below BBB+ (or in the case of Converium BBB)
by Standard & Poor’s Rating Service (S&P) or if such rating is not available, below such
comparable rating as may be reasonably agreed between the parties, or it requests or agrees
that S&P should cease to rate it;
	 
	(i)	 	in relation to Converium, it has its financial strength rating upgraded to A- or above by S&P
or if such rating is not available, above such comparable rating as may be reasonably agreed
between the parties; or
	 
	(j)	 	Converium is subject to a change of control as defined in Clause 15.2 (f) of the Pool
Members’ Agreement.

10.2     In the event that a Trigger Event occurs in relation to any of Munich Re or a member of its
Group set out in Part I of Schedule 2 or National Indemnity or a member of its Group set out in
Part I of Schedule 3, the Agents or either of them may suspend entirely with immediate effect the
appointment by the relevant person (the defaulter) pursuant to Clause 2.1(a), in which case the
parties shall seek to agree a basis upon which such suspension might be lifted and the appointment
reinstated. From the time of any such suspension until the time such agreement is reached, Clause
10.3 shall apply.

10.3     If this Clause 10.3 applies (by reason of Clause 10.2 or 10.7), neither of the Agents shall
(nor shall they have any authority to):

	(a)	 	accept Fronting Insurance Contracts in the name of the defaulter or the person invoking this
Clause 10.3 pursuant to Clause 10.7 (as appropriate);
	 
	(b)	 	provide quotations or enter into (or continue) any negotiations relating to the possible
acceptance of, Fronting Insurance Contracts in the name of the defaulter or the person
invoking this Clause 10.3 pursuant to Clause 10.7 (as appropriate); or
	 
	(c)	 	agree any amendments to the terms of or otherwise agree any endorsements to any Fronting
Insurance Contract which would, or would be reasonably likely to, increase materially the
gross exposure of the defaulter under the Fronting Insurance Contract in question.

10.4     In the event that any of Munich Re, National Indemnity or a member of such person’s Group set
out in Part I of Schedule 2 or Part I of Schedule 3 ceases to be duly authorised (or has any
suspension, restriction or other limitation imposed in respect of its authority, licence, approval
or permission) in respect of any Relevant Risk in a jurisdiction set out against such person’s name
in Part I of Schedule 2 or Part I of Schedule 3 (an Applicable Territory) in circumstances where
Clause 10.1(a) does not apply to such person (a Non-Authorisation Event), then the appointment by
such person (the non-authorised person) pursuant to Clause 2.1(a) in relation to any relevant
Applicable Territory shall be suspended with immediate effect, in which case

22

 

the parties shall seek to agree the basis upon which such suspension might be lifted and the
relevant part of the appointment reinstated. From the time of any such suspension until the time
such agreement is reached, Clause 10.6 shall apply.

10.5     If Clause 10.4 applies, as an alternative to suspension pursuant to Clause 10.4, Munich Re or
National Indemnity shall have the right to appoint an alternate member of its respective Group
meeting the requirements of the Pool Members’ Agreement to replace a non-authorized person by
notice to Converium and Agents. If Munich Re or National Indemnity appoint an alternative pursuant
to this Clause 10.5, Munich Re or National Indemnity shall procure that the alternative member of
its Group shall enter into an agreement by which it agrees to be bound by this Agreement as if it
were the entity it replaces.

10.6     If this Clause 10.6 applies (by reason of Clause 10.4), neither of the Agents shall (nor shall
they have any authority to):

	(a)	 	accept Fronting Insurance Contracts in the name of the non-authorised person in or relating
to the Applicable Territory in question;
	 
	(b)	 	provide quotations for, or enter into (or continue) any negotiations relating to the possible
acceptance of, Fronting Insurance Contracts in the name of the non-authorised person relating
to the Applicable Territory in question; or
	 
	(c)	 	agree any amendments to the terms of or otherwise agree any endorsements to any Fronting
Insurance Contract in the name of the non-authorised person previously written (and which
relates to the Applicable Territory in question) which would, or would be reasonably likely
to, increase materially the gross exposure of the non-authorised person under the Fronting
Insurance Contract in question.

	10.7	 	In the event that:

	(a)	 	Converium ceases lawfully to be able to reinsure any Fronting Insurance Contracts;
	 
	(b)	 	Converium’s participation in the arrangements established by the Pool Members’ Agreement is
terminated; or
	 
	(c)	 	a Trigger Event occurs in relation to Converium,

then any person making an appointment pursuant to Clause 2.1(a) shall be able to suspend all
appointments or, Converium or either Agent shall be entitled, by written notice to the other
parties, to suspend all appointments pursuant to Clause 2.1(a) in which case the parties shall seek
to agree the basis upon which such suspension might be lifted and the relevant part of the
appointment reinstated. From the time of any such suspension until the time such agreement is
reached, Clause 10.3 shall apply.

10.8     For the avoidance of doubt, the Agents’ administrative obligations under Clause 2.1(b) and
their duties of management and administration of the Reinsured Risks and the negotiation and
settlement of Claims under Clause 7 shall not cease by

23

 

reason of the suspension or termination, in whole or in part, of an appointment pursuant to Clause
2.1(a) (except to the extent that continuing to perform the administrative obligations would be
inconsistent with such suspension or termination or that the parties so agree).

10.9     Each party shall notify the other parties upon becoming aware of a Trigger Event in relation
to any of Munich Re, National Indemnity or the members of their Groups set out in Part I of
Schedule 2 or Part I of Schedule 3 or Converium at any time.

10.10     Each of Munich Re and National Indemnity shall notify the other parties upon becoming aware
that the Non-Authorisation Event under Clause 10.4 applies to it or any member of its Group set out
in Part I of Schedule 2 or Part I of Schedule 3 at any time.

10.11     Converium shall notify the other parties upon becoming aware that Clause 10.7(a), (b) or (c)
applies to it, at any time.

10.12     Suspension and/or termination of the appointment pursuant to Clause 2.1(a) in whatever manner
shall in no way affect or limit any accrued rights which any party to this Agreement may have
against the others pursuant to this Agreement or any rights expressly stated to survive termination
of this Agreement.

10.13     Except to the extent that any of (a) Munich Re or (b) National Indemnity, and Converium agree
otherwise (such agreement to be in writing and notified to the Agents), neither the Reinsurance,
nor the obligations of any of Munich Re, National Indemnity or the members of their Groups set out
in Part I of Schedule 2 or Part I of Schedule 3 or Converium, shall terminate if this Agreement or
any part of it is terminated or suspended.

10.14     The appointment of the Agents (or either of them) pursuant to Clause 2.1(a) shall terminate
automatically at any time when a termination of the appointment of the Agent(s) to provide services
under the Pool Members’ Agreement takes effect. Neither Munich Re nor any member of its Group,
National Indemnity or any member of its Group nor Converium shall be required to make any payment
to the Agents (or either of them) in the event of such a termination save as provided for in the
Pool Members’ Agreement.

10.15     The appointment pursuant to Clause 2.1 may not be terminated save as expressly provided for
in this Agreement.

10.16     For the avoidance of doubt, the occurrence of a Trigger Event or a Non-Authorisation Event
shall not constitute a breach of this Agreement and, save in the case of fraud, a person to which a
Trigger Event applies shall have no liability pursuant to this Agreement, whether in damages or
otherwise, arising from or in connection with any such event, apart from any loss suffered by the
Agents and/or Converium (excluding indirect, special or consequential loss or loss of profit,
goodwill or business opportunity) directly resulting from a failure by a person to which a Trigger
Event applies to notify Global that such an event applies to it in

24

 

accordance with Clause 10.8 or 10.9 (as the case may be) and the Agents continue to write insurance
business on behalf of such person under this Agreement.

	11.	 	Confidentiality

11.1     Every party hereto shall hold in confidence and shall not divulge to any other party or any
third party any Confidential Information nor make any public or press announcement regarding this
Agreement or matters connected herewith except as provided in Clause 11.2, 11.3, 11.4 or (as the
case may be) Clause 11.5.

11.2     Notwithstanding the provisions of Clause 11.1, any party may disclose Confidential
Information:

	(a)	 	in respect of any party to any other party with the prior written consent of the first party;
	 
	(b)	 	with the consent of the other parties (such consent not to be unreasonably withheld or
delayed);
	 
	(c)	 	if and to the extent required by law or for the purpose of any judicial proceedings;
	 
	(d)	 	if and to the extent required or permitted by this Agreement;
	 
	(e)	 	if and to the extent required by any securities exchange or regulatory or governmental body
or tax authority to which that party or a member of its Group is subject, wherever situated;
	 
	(f)	 	to any member of its Group and to its officers and employees or those of such member, in any
such case to the extent that such person needs to know such information in order to manage or
monitor its business or in the performance of his or its duties;
	 
	(g)	 	to its professional advisers, auditors and bankers; or
	 
	(h)	 	if and to the extent the information has come into the public domain through no fault of that
party.
	 
	11.3	 	Notwithstanding Clause 11.1:

	(a)	 	each Agent shall, be entitled to provide extracts of this Agreement to such banks, reinsurers
and brokers and other managing agents of reinsurers in the ordinary course of business as it
reasonably deems necessary for the purpose of carrying out the Business;
	 
	(b)	 	any party may give a copy of this Agreement, or a summary of it, to any insurance company
which is a member of any insurance pool constituted by the Pool Members’ Agreement but not a
party hereto.

25

 

11.4     Each party shall procure that any person to whom Confidential Information is disclosed
pursuant to Clauses 11.2(f) or (g) complies with the restrictions set out in this Clause 11 as if
such person were a party to this Agreement.

11.5     The provisions of this Clause 11 shall remain in full force and effect notwithstanding the
termination of this Agreement and each party shall remain bound by the provisions of this Clause 11
for only a period of five years following cessation by both Agents of the provision of any services
to Munich Re or National Indemnity (or any member of such person’s Group) pursuant to this
Agreement.

11.6     Neither Global nor GAI shall be obliged to disclose to any other party or, in making any
decision or taking any action in relation to the Business or the management thereof, to take into
consideration information the disclosure of which by Global or (as the case may be) by GAI to any
other party would or might be a breach of duty or confidence to any other person excluding the
details of any cover written and any other information which another party requires to be in
compliance with applicable law.

	12.	 	Undertakings

12.1     Global and GAI shall use all reasonable care and skill in the performance of their respective
obligations under this Agreement and shall comply with all applicable laws relating thereto.

12.2     Each of Munich Re and National Indemnity severally agrees, warrants and undertakes to each of
the Agents and Converium that (i) it and each member of its Group listed in Part I of Schedule 2 or
Part I of Schedule 3 (respectively) has (and so long as the appointment of the relevant Agent
remains in force under this Agreement shall continue to have) power to employ each of the Agents;
(ii) it and each member of its Group listed in Part I of Schedule 2 or Part I of Schedule 3
(respectively) has and will have all necessary consents, powers and authorities to authorise each
of the Agents to act as its agent as contemplated by this Agreement; (iii) it has all necessary
consents, powers and authorities to enter into this Agreement in accordance with its terms; and
(iv) it has been validly appointed by each member of its Group listed in Part I of Schedule 2 or
Part I of Schedule 3 (respectively) as agent for the purposes of making the appointment on behalf
of such person in Clause 2.1 and any other purpose necessary pursuant to this Agreement.

12.3     Converium agrees, warrants and undertakes to each of the Agents, Munich Re and National
Indemnity that it has (and so long as the appointment of the relevant Agent remains in force under
the Pool Members’ Agreement shall continue to have) power to employ each of the Agents and has and
will have all necessary consents, powers and authorities: (i) to enter into this Agreement in
accordance with its terms (including, without limitation, the Reinsurance); and (ii) to authorise
each of the Agents to act as its agent as contemplated by this Agreement.

12.4     Subject to Munich Re or National Indemnity being fully reimbursed or indemnified (under Clause
3 or otherwise) by Converium for any loss or liability it may incur, Munich Re or National
Indemnity hereby undertakes to ratify (and to procure that any relevant member of its Group
ratifies) every act performed or thing

26

 

done by each of the Agents which shall hereafter be performed or done in exercise or purported
exercise of the powers conferred or to be conferred upon the relevant Agent by this Agreement
provided only that such acts are in accordance with the terms of this Agreement and within the
scope of the authority granted to the Agents hereunder.

12.5     Each of Munich Re and National Indemnity represents and warrants to the Agents and National
Indemnity that those members of its Group marked * in Part I of Schedule 2 or Part I of Schedule 3
is duly authorised to write all Relevant Risks in the United Kingdom and undertakes to take all
reasonable steps to ensure such authorisations are maintained during the duration of this
Agreement.

12.6     Each of Munich Re and National Indemnity undertakes to notify the Agents and Converium in
writing as soon as reasonably practicable of any changes as to the authorisations (whether in
relation to any Applicable Territory or the United Kingdom) which it or the members of its Group
listed in Part I of Schedule 2 or Part I of Schedule 3 has, or expects to obtain, from time to
time.

	13.	 	Munich Re Security

13.1     Converium shall on or before the date five Business Days from the date of this Agreement (or
such later date as Munich Re may specify) pay to Munich Re the sum of $50 million to be held on the
basis set out in Clause 13.3.

13.2     Any amounts paid pursuant to Clause 5.1(a), 13.1, 13.4, 13.6 or 13.9 (or because of the
definition of Incurred Position) shall be paid to the account of Munich Re notified to Converium in
writing by Munich Re from time to time.

13.3     The amounts held pursuant to Clause 13.2 shall be known as the MR Fund. Such amounts shall be
held by Munich Re as trustee for Converium provided that Munich Re shall be entitled to make
payments from such account in order to pay amounts which are due:

	(a)	 	or claimed to be due under Reinsured Risks in respect of which Fronting Insurance Contracts
have been written by it or members of its Group;
	 
	(b)	 	to it or members of its Group from Converium under the terms of the Reinsurance;
	 
	(c)	 	to it or members of its Group from Converium in respect of Overriding Commission; and/or
	 
	(d)	 	pursuant to Clause 2A.

13.4     At any time prior to 31 December 2008 that the MR Fund (together with the amount of any claims
paid by the Agents or Munich Re in relation to the Reinsured Risks) is less than the fifty per cent
(50%) of the Incurred Position, within ten Business Days of receiving notice from Munich Re or the
Agents (or, if later, the date on which the Incurred Position is determined in accordance with
Schedule 6), Converium shall pay to Munich Re such additional amount as shall be required for the
MR Fund to equal fifty per cent (50%) of the Incurred Position.

27

 

13.5     Munich Re shall pay to Converium within ten Business Days of 31 March 2009 (or, if later, the
date on which the profit is determined in accordance with Schedule 4), the profit arising on any
Fronting Insurance Contracts written by Munich Re or any member of its Group calculated on the
basis set out in Clause 13.12. Nothing in this Clause 13.5 shall be construed to require Munich Re
to pay any amount which would cause the MR Fund to be less than the greater of (a) and (b) below:

	(a)	 	the sum of:

	 	(i)	 	100 per cent. of outstanding claims reserves, including reserves
for claims incurred but not reported, maintained by Munich Re or the relevant
member of its Group in accordance with applicable law or regulation in respect
of relevant Reinsured Risks written in the name of such person (the MR
Reserves); plus
	 
	 	(ii)	 	the greater of:

	 	(A)	 	$50 million; and
	 
	 	(B)	 	20% of the MR Reserves; or

	(b)	 	the minimum amount which is required to allow Munich Re or such member of its Group to
receive credit for the Reinsurance of the Fronting Insurance Contracts written by it under the
laws of the jurisdiction in which such person is domiciled.

The greater of (a) or (b) above shall be referred to as the Post Profit Incurred Position.

13.6     At any time after 31 December 2008 but prior to 31 December 2012 that the MR Fund is less than
the Post Profit Incurred Position, within ten Business Days of receiving notice from Munich Re or
Agents (or, if later, the date on which the Post Profit Incurred Position is determined in
accordance with Schedule 6), Converium shall pay to Munich Re such additional amount as shall be
required for the MR Fund to equal the Post Profit Incurred Position.

13.7     Munich Re shall pay to Converium within ten Business Days of 31 March 2013 (or, if later,
within ten Business Days of the date on which the MR Reserves are determined in accordance with
Schedule 6 for that date), the amount required to reduce the MR Fund to the greater of:

	(a)	 	the MR Reserves; or
	 
	(b)	 	the minimum amount which is required to allow Munich Re or such member of its Group to
receive credit for the Reinsurance of the Fronting Insurance Contracts written by it under the
laws of the jurisdiction in which such person is domiciled.

13.8     At any time after 31 March 2013 that the MR Fund is less than the greater of:

28

 

	(a)	 	the MR Reserves; or
	 
	(b)	 	the minimum amount required to allow Munich Re or such member of its Group to receive credit
for the Reinsurance of the Fronting Insurance Contracts written by it under the laws of the
jurisdiction in which such person is domiciled,

Munich Re may serve a Letter of Credit Notice which shall state the amount of additional security
required to increase the MR Fund to the greater of (a) and (b) above.

13.9     Within ten Business Days of receipt of notice pursuant to Clause 13.8 (or, if later, the date
on which the MR Reserves are determined in accordance with Schedule 6), Converium may either:

	(a)	 	arrange or cause to be arranged the issue and delivery to Munich Re of a Letter of Credit in
the amount set out in the Letter of Credit Notice for the benefit of Munich Re; or
	 
	(b)	 	deposit the required additional funds in the MR Fund.

If Converium elects to provide a Letter of Credit in response to the Letter of Credit Notice,
Converium shall, if practicable and if agreed by Munich Re, be entitled to provide the necessary
security by increasing, or causing to be increased, the amount of any existing Letter of Credit by
the amount of the Letter of Credit Notice rather than by issuing and delivering, or causing to be
issued and delivered, a new Letter of Credit). For the avoidance of doubt, nothing in this Clause
shall be construed as limiting the number of Letter of Credit Notices that may be served from time
to time by Munich Re.

13.10     Within ten Business Days of the end of each quarter following 31 December 2012, Munich Re
shall pay to Converium the amount, if any, by which the MR Fund exceeds the greater of:

	(a)	 	the MR Reserves; and
	 
	(b)	 	the amount required to allow Munich Re or such member of its Group to receive credit for the
Reinsurance of the fronting Insurance Contracts written by it under the laws of the
jurisdiction in which such person is domiciled.

13.11     In applying Clauses 13.8, 13.9 and 13.10, all currencies shall be converted to US$ at the
relevant exchange rate used by (or to be used by) the Agents for the purpose of the audited
accounts produced for the Pool for the year most recently ended. Clauses 13.4 through 13.10 may be
terminated by the agreement Munich Re and Converium without the consent of the other parties.

13.12     Global shall, by no later than 31 March 2009 deliver to Munich Re and Converium its
calculation of the profit attributable to the Fronting Insurance Contracts written by Munich Re and
the members of its Group calculated on a basis consistent with that used for the purposes of the
audited accounts produced for the Pool in the

29

 

year ended on 31 December 2008 (the MR Statement). The MR Statement shall be accompanied by
sufficient information to allow Munich Re and Converium to understand how the profit set out in the
MR Statement has been calculated and the basis upon which it has been calculated (including without
limitation the calculation of the MR IBNR). The process in Clause 15.1 and Schedule 4 shall apply
in relation to the MR Statement.

	13.13	 	In determining profit, Global shall:
	 
	(a)	 	calculate each of the items in (a) to (d) inclusive of the definition of profit using each of
US$, Canadian $, € and GBP by allocating all relevant premiums, claims and reserves to one
only of such currencies in accordance with Global’s current practice, for the avoidance of
doubt profit shall be paid out in each of the four currencies; and
	 
	(b)	 	use the incurred but not reported reserves as reported by Munich Re and applicable members of
its Group for the Reinsured Risks (the MR IBNR).

13.14     If the calculation of profit in any of the four currencies shows a loss, then Global shall
calculate the total profit attributable to the Fronting Insurance Contracts in US$ by converting to
US$ at the relevant exchange rate used by the Agents for the purpose of the audited accounts
produced for the Pool for the year ended 31 December 2008 (the Exchange Rate) (such amount being
the Total $ Distribution).

13.15     If Clause 13.14 applies, the amount of any distribution pursuant to Clause 13.5 (using the
Exchange Rate to calculate the amount of the distribution) shall be limited to the Total $
Distribution and the distribution in one or more of the currencies not in deficit shall be reduced
to ensure that the Total $ Distribution is not exceeded (the distribution of currencies in which
there was a profit shall be reduced by an equal percentage so that the distribution equals the
Total $ Distribution at the Exchange Rate).

13.16     Global shall, by no later than 31 March 2013 deliver to Munich Re and Converium its
calculation of outstanding reserves on claims reported on Reinsured Risks and Munich Re’s
calculation of outstanding reserves on incurred but not reported claims on Reinsured Risks as of
the prior 31 December together with the actuarial calculation of those reserves and sufficient
information to allow Converium, the Agents and Munich Re to understand how the reserves were set.
This process shall be repeated within 90 days of the end of each calendar quarter so long as Clause
13.10 remains in effect.

13.17     The amounts required to be held in the MR Fund shall be reduced by:

	(a)	 	fifty per cent of the amount of the Letter of Credit established by Converium pursuant to
Clause 15.5(c)(iii) (or, with the consent of Munich Re Clause 15.5(c)(iv)) of the Pool
Members’ Agreement which relates to the Reinsured Risks;

30

 

	(b)	 	fifty per cent of any amount paid by (or on behalf of) Converium towards the fund held by the
Agents on behalf of the Pool in relation claims on business written during the Period; and
	 
	(c)	 	fifty per cent of the amount of any reinsurance premiums paid by (or on behalf of) Converium
in relation to reinsurance taken out by the Agents in relation to the business of the Pool
written during the Period,

provided that the MR Fund shall not be reduced below $50 million (or, if lower and Clause 13.8
applies, the amount required to be held in the MR Fund pursuant to Clause 13.8) as a result of the
operation of Clauses 13.17(b) or (c).

13.18     Munich Re shall pay to Converium an amount equal to the interest which is deemed to have
accrued on the MR Fund in the quarter to 31 March, 30 June, 30 September and 31 December in each
year within two Business Days of such date. The amount of such interest shall be calculated on a
daily basis. Interest shall accrue on the amounts in the MR Fund in each quarter at a rate equal
to the “yield on the three years US Treasury Notes” on the first Business Day after the 31 March,
30 June, 30 September or 31 December ending the previous quarter as shown in the Wall Street
Journal for the close of that first Business Day of the calendar quarter. For the purposes of the
foregoing sentence, the “three years US Treasury Yield” shall mean the annual yield on the U. S.
Treasury Bond or Note maturing on the day nearest the third anniversary of that first Business Day
of that calendar quarter. If there are two bonds or notes that are equally near the third
anniversary, the annual yield of the instruments will be averaged.

13.19     References in this Clause 13 to reserves for claims incurred but not reported shall mean the
amount of such reserves required to be kept in accordance with actuarial best practice in the
relevant jurisdiction and the guidance produced by relevant actuarial bodies. Converium shall be
provided with sufficient information at all times to understand how such reserves have been
calculated and the basis on which they have been calculated. Converium may challenge the
calculation of any such reserve as set out in Schedule 6 and until such dispute is resolved in
accordance with Schedule 6, the provision of this Clause 13 for which the reserves were provided
shall have no effect.

	14.	 	National Indemnity Security

14.1     Converium shall on or before the date five Business Days from the date of this Agreement (or
such later date as National Indemnity may specify) pay to National Indemnity the sum of $50 million
to be held on the basis set out in Clause 14.3.

14.2     Any amounts paid pursuant to Clauses 5.1(b), 14.1, 14.4, 14.6 or 14.9 or because of the
definition of Incurred Position, shall be paid to the account of National Indemnity notified to
Converium in writing by National Indemnity from time to time.

14.3     The amounts held pursuant to Clause 14.2 shall be known as the NICO Fund. Such amounts shall
be held by National Indemnity as trustee for Converium provided that National Indemnity shall be
entitled to make payments from such account in order to pay amounts which are due:

31

 

	(a)	 	or claimed to be due under Reinsured Risks in respect of which Fronting Insurance Contracts
have been written by it or members of its Group;
	 
	(b)	 	to it or members of its Group from Converium under the terms of the Reinsurance;
	 
	(c)	 	to it or members of its Group from Converium in respect of Overriding Commission; and/or
	 
	(d)	 	pursuant to Clause 2A.

14.4     At any time prior to 31 December 2008 that the NICO Fund together with the amount of any
claims paid by the Agents or National Indemnity in relation to the Reinsured Risks is less than
fifty per cent (50%) of the Incurred Position, within ten Business Days of receiving notice from
National Indemnity or the Agents (or, if later, the date on which the Incurred Position is
determined in accordance with Schedule 6), Converium shall pay to National Indemnity such
additional amount as shall be required for the NICO Fund to equal fifty per cent (50%) of the
Incurred Position.

14.5     National Indemnity shall pay to Converium within ten Business Days of 31 March 2009 (or, if
later, the date on which the profit is determined in accordance with Schedule 5), the profit
arising on any Fronting Insurance Contracts written by National Indemnity or any member of its
Group calculated on the basis set out in Clause 14.12. Nothing in this clause shall be construed
to require National Indemnity to pay any amount which would cause the NICO Fund to be less than the
greater of (a) and (b) below:

	(a)	 	the sum of:

	 	(i)	 	100 per cent. of outstanding claims reserves, including reserves
for claims incurred but not reported maintained by National Indemnity or the
relevant member of its Group in accordance with applicable laws in respect of
relevant Reinsured Risks written in the name of the relevant person (the NIC
Reserves); plus
	 
	 	(ii)	 	the greater of:

	 	(A)	 	$50 million; and
	 
	 	(B)	 	20% of the NIC Reserves; and

	(b)	 	the minimum amount which is required to allow National Indemnity or such member of its Group
to receive credit for the Reinsurance of the Fronting Insurance Contracts written by it under
the laws of the jurisdiction in which each person is domiciled.

The greater of (a) or (b) above shall be referred to as the NIC Post Profit Incurred Position.

32

 

14.6     At any time after 31 December 2008 but prior to 31 December 2012 that the NICO Fund is less
than the NIC Post Profit Incurred Position, within ten Business Days of receiving notice from
National Indemnity or Agents (or, if later, the date on which the Poor Profit Incurred Position is
determined in accordance with Schedule 6), Converium shall pay to National Indemnity such
additional amount as shall be required for the NICO Fund to equal the Post Profit Incurred
Position.

14.7     National Indemnity shall pay to Converium within ten Business Days of 31 March 2013 (or, if
later, within ten Business Days of the date on which the NIC Reserves are determined in accordance
with Schedule 6 for that date), an amount as shall be required to reduce the NIC Fund to the
greater of:

	(a)	 	the NIC Reserves; or
	 
	(b)	 	the minimum amount which is required to allow National Indemnity or such member of its Group
to receive credit for the Reinsurance of the Fronting Insurance Contracts written by it under
the laws of the jurisdiction in which such person is domiciled.

14.8     At any time after 31 March 2013 that the NICO Fund is less than the greater of:

	(a)	 	the NIC Reserves; or
	 
	(b)	 	the minimum amount required to allow National Indemnity or such member of its Group to
receive credit for the Reinsurance of the Fronting Insurance Contracts written by it under the
laws of the jurisdiction in which such person is domiciled,

National Indemnity may serve a Letter of Credit Notice which shall state the amount of additional
security required to increase the NICO Fund to the greater of (a) and (b) above.

14.9     Within ten Business Days of receipt of a notice pursuant to Clause 14.8 (or, if later, the
date on which the NIC Reserves are determined in accordance with Schedule 6), Converium may either:

	(a)	 	arrange or cause to be arranged the issue and delivery to National Indemnity of a Letter of
Credit in the amount set out in the Letter of Credit Notice for the benefit of National
Indemnity; or
	 
	(b)	 	deposit the required additional funds in the NICO Fund.

If Converium elects to provide a Letter of Credit in response to the Letter of Credit Notice,
Converium shall, if practicable and if agreed by NICO, be entitled to provide the necessary
security by increasing, or causing to be increased, the amount of any existing Letter of Credit by
the amount of the Letter of Credit Notice rather than by issuing and delivering, or causing to be
issued and delivered, a new Letter of Credit). For the avoidance of doubt, nothing in this Clause
shall be construed as limiting the number of Letter of Credit Notices that may be served from time
to time by NICO.

33

 

14.10     Within ten Business Days of the end of each quarter following 31 December 2012, National
Indemnity shall pay to Converium the amount, if any, by which the NICO Fund exceeds the greater of:

	(a)	 	the NIC Reserves; and
	 
	(b)	 	the amount required to allow National Indemnity or such member of its Group to receive credit
for the Reinsurance of the Fronting Insurance Contracts written by it under the laws of the
jurisdiction in which such person is domiciled.

14.11     In applying Clauses 14.8, 14.9 and 14.10, all currencies shall be converted to US$ at the
relevant exchange rate used by (or to be used by) the Agents for the purpose of the audited
accounts produced for the Pool for the year most recently ended. Clauses 14.4 through 14.10 may be
terminated by National Indemnity and Converium without the consent of the other parties.

14.12     Global shall, by no later than 31 March 2009 deliver to National Indemnity and Converium its
calculation of the profit attributable to the Fronting Insurance Contracts written by National
Indemnity and the members of its Group calculated on a basis consistent with that used for the
purposes of the audited accounts produced for the Pool in the three years ended on 31 December 2008
(the NIC Statement). The National Indemnity Statement shall be accompanied by sufficient
information to allow National Indemnity and Converium to understand how the profit set out in the
NIC Statement has been calculated and the basis upon which it has been calculated (including
without limitation the calculation of the NIC IBNR). The process in Clause 15.2 and Schedule 5
shall apply in relation to the NIC Statement.

14.13     In determining profit, Global shall:

	(a)	 	calculate each of the items in (a) to (d) inclusive of the definition of profit using each of
US$, Canadian $, € and GBP by allocating all relevant premiums, claims and reserves to one
only of such currencies in accordance with Global’s current practice, for the avoidance of
doubt profit shall be paid out in each of the four currencies; and
	 
	(b)	 	use the incurred but not reported reserves as reported by National Indemnity and applicable
members of its Group for the Reinsured Risks (the NIC IBNR).

14.14     If the calculation of profit in any of the four currencies shows a loss, then Global shall
calculate the total profit attributable to the Fronting Insurance Contracts in US$ by converting to
US$ at the relevant exchange rate used by the Agents for the purpose of the audited accounts
produced for the Pool for the year ended 31 December 2008 (the Exchange Rate) (such amount being
the Total $ Distribution).

14.15     If Clause 14.14 applies, the amount of any distribution pursuant to Clause 14.5 (using the
Exchange Rate to calculate the amount of the distribution) shall be limited to the Total $
Distribution and the distribution in one or more of the currencies not in deficit shall be reduced
to ensure that the Total $ Distribution is not exceeded (the

34

 

distribution of currencies in which there was a profit shall be reduced by an equal percentage so
that the distribution equals the Total $ Distribution at the Exchange Rate).

14.16     Global shall, by no later than 31 March 2013 deliver to National Indemnity and Converium its
calculation of outstanding reserves on claims reported on Reinsured Risks and National Indemnity’s
calculation of outstanding reserves on incurred but not reported claims on Reinsured Risks as of
the prior 31 December together with the actuarial calculation of those reserves and sufficient
information to allow Converium, the Agents and National Indemnity to understand how the reserves
were set. This process shall be repeated within 90 days of the end of each calendar quarter so
long as Clause 14.10 remains in effect.

14.17     The amounts required to be held in the NIC Fund shall be reduced by:

	(a)	 	fifty percent of the amount of the Letter of Credit established by Converium pursuant to
Clause 15.5(c)(iii) (or, with the consent of NIC Clause 15.5(c)(iv)) of the Pool Members’
Agreement which relates to the Reinsured Risks;
	 
	(b)	 	fifty per cent of any amount paid by (or on behalf of) Converium towards the fund held by the
[Agents on behalf of the] Pool in relation claims on business written during the Period; and
	 
	(c)	 	fifty per cent of the amount of any reinsurance premiums paid by (or on behalf of) Converium
in relation to reinsurance taken out by the Agents in relation to the business of the Pool
written during the Period

provided that the NIC Fund shall not be reduced below $50 million (or if lower and Clause 14.8
applies, the amount required to be held in the NIC Fund pursuant to Clause 14.8) as a result of the
operation of Clauses 14.17(b) or (c).

14.18     National Indemnity shall pay to Converium an amount equal to the interest which is deemed to
have accrued on the NIC Fund in the quarter to 31 March, 30 June, 30 September and 31 December in
each year within two Business Days of such date. The amount of such interest shall be calculated
on a daily basis. Interest shall accrue on the amounts in the NIC Fund in each quarter at a rate
equal to the “yield on the three years US Treasury Notes” on the first Business Day after the 31
March, 30 June, 30 September or 31 December ending the previous quarter as shown in the Wall Street
Journal for the close of that first Business Day of the calendar quarter. For the purposes of the
foregoing sentence, the “three years US Treasury Yield” shall mean the annual yield on the U.S.
Treasury Bond or Note maturing on the day nearest the third anniversary of that first Business Day
of that calendar quarter. If there are two bonds or notes that are equally near the third
anniversary, the annual yield of the instruments will be averaged.

14.19     References in this Clause 14 to reserves for claims incurred but not reported shall mean the
amount of such reserves required to be kept in accordance with actuarial best practice in the
relevant jurisdiction and guidance produced by relevant actuarial bodies in the jurisdiction.
Converium shall be provided with sufficient information at all times to understand how such
reserves have been calculated and the

35

 

basis on which they have been calculated. Converium may challenge the calculation of any such
reserve as set out in Schedule 6 and until such dispute is resolved in accordance with Schedule 6,
the provision of this Clause 14 for which the reserves were provided shall have no effect.

	15.	 	Dispute Resolution

15.1     Within thirty (30) days of receipt of Global’s calculations under Clause 13, either Converium
or Munich Re may challenge Global’s calculations under Clause 13. In that event, the dispute shall
be settled as provided in Schedule 6 or in the case of the calculation of profit, Schedule 4.

15.2     Within thirty (30) days of receipt of Global’s calculations under Clause 14, either Converium
or National Indemnity may challenge Agents’ calculations under Clause 14. In that event, the
dispute shall be settled as provided in Schedule 6 or in the case of the calculation of profit,
Schedule 5.

	16.	 	Letters of Credit and Authority

16.1     Notwithstanding any other provision of this Agreement, National Indemnity or Munich Re may, at
any time, draw down upon any Letter of Credit provided by or on behalf Converium pursuant to Clause
13 or Clause 14, in order to:

	(a)	 	fund the payment of amounts due or claimed to be due under Reinsured Risks in respect of
which Fronting Insurance Contracts have been written by it or members of its Group;
	 
	(b)	 	pay any amounts which are due to it or any member of its Group from Converium under the terms
of the Reinsurance; and/or
	 
	(c)	 	pay any amounts which are due to it or any member of its Group from Converium in respect of
Overriding Commission.

16.2     Any bank issuing a Letter of Credit relating to this Agreement shall be unconditionally
obliged to accede to any request made by or on behalf of Munich Re or National Indemnity (as
appropriate) to draw down on such Letter of Credit provided only that such bank is satisfied that
such request is made by, or with the proper authority of, Munich Re or National Indemnity (as
appropriate) and/or its authorised representatives (who shall not include the Agents or any
replacements).

16.3     Each of Munich Re and National Indemnity hereby grants the Agents (or either of them)
authority to act as their respective agents in taking all necessary action on its behalf to
exercise its rights under Clauses 13 and 14, including (without limitation) the service of a Letter
of Credit Notice, but nothing herein shall be construed as granting the Agents any authority with
respect to disputes under Clauses 15.1 or 15.2 or Schedules 4, 5 or 6.

36

 

	17.	 	Set-off

17.1     National Indemnity may set off any amount due to it from Converium against any amount owed by
National Indemnity or any member of its Group to Converium under this Agreement.

17.2     Munich Re may set off any amount due to it from Converium against any amount owed by Munich Re
or any member of its Group to Converium under this Agreement.

	18.	 	Regulatory Matters

18.1     The parties shall co-operate with each other to ensure that all information necessary or
desirable for making (or responding to any requests for further information following) any
regulatory notification or filing made in respect of this Agreement, or any agreement, arrangement
or concerted practice of which it forms part, is supplied to the party dealing with such
notification or filing and that they are properly, accurately and promptly made.

18.2     The parties will each procure that any other registrations, filings and/or submissions
required under the laws or regulations of any jurisdiction in respect of the Agreement or any
Fronting Insurance Contract are made.

	19.	 	Waiver of Obligations

19.1     Waiver by any party of any default by any other party in the performance of any obligation of
such other party hereunder shall not affect such party’s rights in respect of any other default nor
any subsequent default of the same or of a different kind nor shall any delay or omission of any
party to exercise any right arising from any default affect or prejudice that party’s rights as to
the same or any future default. Waiver by one party of any default by any other party shall not
constitute a waiver of such default on the part of or on behalf of any other party.

19.2     Subject to Clause 19.3, no claim shall be made by Converium against any officer, employee,
agent or sub-contractor of either Agent in respect of any matter arising in respect of this
Agreement, save in the case of criminal actions or omissions, fraud or wilful misconduct.

19.3     Clause 19.2 shall not preclude the Agents from making claims against any of its agents or
sub-contractors on behalf of Converium, National Indemnity or Munich Re or the members of their
Groups.

	20.	 	Amendment and Representations

20.1     Any amendment to any term of this Agreement shall be in writing and signed by the authorised
representatives of the parties hereto provided that rights and obligations between Converium and
(a) Munich Re or (b) National Indemnity may be amended by written agreement between Converium and
such person.

37

 

20.2     This Agreement sets out the entire agreement and understanding between the parties in relation
to the Business and the arrangements in Clause 2A. It is agreed that no party has entered into
this Agreement in reliance upon, or been induced to enter into this Agreement by, any
representation, warranty or undertaking of any other party hereto (whether express or implied and
whether pursuant to statute or otherwise) which is not set out in this Agreement and to the extent
that it may have done so, it hereby waives (on behalf of itself and the members of its Group) all
rights, remedies and claims it may have in respect thereto. A party may claim in contract for
breach of warranty under this Agreement but shall otherwise have no claim or remedy in respect of
misrepresentation (whether negligent or otherwise, and whether made prior to, and/or in, this
Agreement) or untrue statement made by any other party provided that this Clause 20.2 shall not
exclude any liability for, or remedy in respect of, any fraud including, without limitation,
fraudulent misrepresentation by any party (or (where relevant) any member of its Group).

	21.	 	Assignment

No party shall sell, transfer or encumber all or any of its rights or obligations under this
Agreement without the prior written consent of all the other parties.

	22.	 	Notices and Communications

22.1     Notices under this Agreement shall be sent to a party at its address and for the attention of
the individual set out in Clause 22.3 provided that a party may change its notice details on giving
notice to the other parties of the change in accordance with this Clause 22. That notice shall
only be effective on the date falling five clear Business Days after the notification has been
received or such later date as may be specified in the notice.

22.2     All notices or other communications required for the purposes of this Agreement shall be in
English and shall be given or sent by hand, facsimile, first class post or airmail to the parties
and shall be deemed to be received: (i) if given by hand, at the time of delivery; or (ii) if sent
by facsimile; at the time when the sender receives from the recipient facsimile machine or from the
addressee of the notice confirmation of receipt of the whole of the facsimile; or (iii) if sent by
first class post, 24 hours after posting; or (iv) if sent by airmail, 6 clear Business Days after
the date of posting.

22.3     Notices under this Agreement shall be sent to the following addresses or facsimile numbers for
the attention of the person indicated:

	 	 	 	 	 
	Party	 	Title of individual/address	 	Facsimile Number
	National Indemnity
(for itself or as
agent for any
member of its
Group)

	 	Attention: General Counsel

100 First Stamford Place

Stamford, CT,

USA 06092
	 	+1-203-363-5221

38

 

	 	 	 	 	 
	Party	 	Title of individual/address	 	Facsimile Number
	Munich Re
(for itself or as
agent for any
member of its
Group)

	 	Attention: Hartmut Hesse

(Head of Aviation and Space)

Königinstraße 107

80802 München

Germany
	 	+49-89- 3891 - 4278
	 
	 	 	 	 
	Converium

	 	Attention: Chris Bell/Christian Felderer

General Guisan – Quai 26

8022, Zurich

Switzerland
	 	+41-1-639-9066
	 
	 	 	 	 
	Global

	 	Attention: Company Secretary

Fitzwilliam House

10 St. Mary Axe

London EC3A 8EQ
	 	+44 20 7369 2840
	 
	 	 	 	 
	GAI

	 	Attention: Company Secretary

51 John F Kennedy Parkway

Short Hills

New Jersey 07078

USA
	 	+1 973 379 0923

22.4     Different persons may be authorised to give or receive instructions for different purposes,
and such persons may include officers of corporations other than the parties hereto, authorised in
that regard by the board of the relevant party. A certified copy of a resolution of the board of
Munich Re, National Indemnity or Converium or the relevant member of such person’s Group (or with
respect to National Indemnity and members of its Group, the Executive Committee of the board of
such entity) may be received and accepted by either Agent as conclusive evidence of the authority
of any person to act and may be considered in full force and effect until receipt of written notice
to the contrary.

	23.	 	Governing Law and Arbitration

23.1     This Agreement and the relationship between the parties shall be governed by and interpreted
in accordance with the law of England and Wales.

23.2     Save as set out in Schedules 4, 5 and 6 each party to this Agreement irrevocably agrees that
the courts of England are to have exclusive jurisdiction to settle any dispute (including claims
for set-off and counterclaims) which may arise in connection with the validity, effect,
interpretation or performance of, or the legal relationships established by, this Agreement or
otherwise in connection with this Agreement and for such purposes irrevocably submits to the
jurisdiction of such courts.

39

 

23.3     All parties agree that a final judgment or order of any court referred to in Clause 23.2 in
connection with this Agreement is conclusive and binding on it and may be entered against it in the
courts of any other jurisdiction.

	24.	 	Costs

24.1     Each party shall be responsible for the legal and other professional charges and expenses
(including Value Added Tax) incurred by it in connection with the preparation and negotiation of
this Agreement.

24.2     Any costs and expenses which arise pursuant to the terms of the Pool Members Agreement solely
as a result of the operation of this Agreement and which would not have arisen had the Pool Members
Agreement been effected on the basis existing prior to this Agreement shall be paid by Converium.

	25.	 	Enforceability

25.1     If any provision of this Agreement or any part thereof:

	(a)	 	purports to exclude or restrict or limit any liability and such exclusion or restriction or
limitation is prohibited or rendered void or unenforceable by any legislation to which it is
subject; or
	 
	(b)	 	is itself prohibited or rendered void or unenforceable by any legislation to which it is
subject,

then the exclusion, restriction or limitation or the provision or part thereof in question shall be
so prohibited or rendered void or unenforceable to the extent to which it is thus prohibited or
rendered void or unenforceable and no further and the validity or enforceability of any other part
of this Agreement shall not thereby be affected.

	26.	 	Relationship with pool members’ agreement

26.1     This Agreement shall constitute a Fronting Arrangement for the purposes of the Pool Members’
Agreement and save as set out in this Agreement Converium shall effect all payments under Clause
9.1(f) (subject to Clauses 9.1(g) and (h)) of the Pool Members’ Agreement as if it is a Nominating
Insurer.

26.2     Subject to Clause 26.3, as between Converium and the Agents, the terms of this Agreement are
without prejudice to their rights and obligations under the Pool Members’ Agreement.

26.3     Converium acknowledges that the terms of the Indemnity (as defined in Clause 20 of the Pool
Members’ Agreement) shall apply (mutatis mutandis) to any claims, losses, expenses and liabilities
properly made against or incurred by Indemnified Directors (as defined therein) in the purported
execution of and discharge of their duties with respect to the performance of services under this
Agreement.

40

 

26.4     Converium acknowledges that Clause 4.2 of the Pool Members’ Agreement shall apply to any
losses, liabilities or expenses of either Agent (or a wholly-owned subsidiary of Global appointed
pursuant to Clause 2.5) under this Agreement.

	27.	 	No Rights Under Contracts (Rights of Third Parties) Act 1999

A person who is not a party to this Agreement is not intended to have any right under the Contracts
(Rights of Third Parties) Act 1999 to enforce any of its terms, save in respect of Clause 26.3
conferring the rights and benefits of indemnities on the Indemnified Directors and Clause 19.2
conferring rights and benefits on employees, agents or sub-contractors of either Agent (each such
party being for the purposes of this Clause 27 a Third Party), which shall be enforceable by such
persons by way of proceedings in the courts specified in Clause 23 subject to and in accordance
with the Contracts (Rights of Third Parties) Act 1999, and Clauses 26.3 and 19.2 and this Clause 27
shall not be varied by the parties to this Agreement without the consent of each relevant Third
Party. Any other provision of this Agreement may be varied or revoked without such consent.

	28.	 	Counterparts

This Agreement may be executed in any number of counterparts and by the parties to it on separate
counterparts, each of which is an original but all of which together constitute one and the same
instrument.

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SCHEDULE 1

AMOUNT AND BASIS OF CALCULATION OF OVERRIDING

COMMISSION

	1.	 	Introductory

This Schedule sets out further terms and principles applicable to the calculation and payment of
Overriding Commission in accordance with Clause 6.

	2.	 	Procedure And Amounts

2.1     The amount of Overriding Commission payable by Converium shall be calculated by reference to
the total gross premium income written by the Agents in the period in question in respect of each
Reinsured Risk after deduction of any (i) original commission or taxes on premiums payable
thereunder but before the deduction of amounts, if any, payable to the Agents under the terms of
the Pool Members’ Agreement and (ii) any premiums payable for reinsurance in relation to the Pool
[by the Agents] (such amount being referred to as the Relevant Net Premium Income).

2.2     The amount of Overriding Commission payable by Converium to National Indemnity shall be
calculated by multiplying the Relevant Net Premium Income attributable to Reinsured Risks covered
by Fronting Insurance Contracts written by National Indemnity or members of its Group by 5 per
cent. (or by such percentage as may be agreed from time to time between National Indemnity and
Converium).

2.3     The amount of Overriding Commission payable by Converium to Munich Re shall be calculated by
multiplying the Relevant Net Premium Income attributable to Reinsured Risks covered by Fronting
Insurance Contracts written by Munich Re or members of its Group by 5 per cent. (or by such
percentage as may be agreed from time to time between Munich Re and Converium).

2.4     Subject to Clause 6.2, the amount of Overriding Commission attributable to any calendar quarter
shall be due and payable on (i) the last business day of the immediately following calendar
quarter, or (ii) the date on which a cash distribution is paid by the Agents to Converium under the
Pool Members’ Agreement with respect to business written in such calendar quarter, whichever is
earlier and shall be deducted by National Indemnity from the NICO Fund or by Munich Re from the MR
Fund on that date.

42

 

SCHEDULE 2

MUNICH RE GROUP FRONTING

Part I

Munich Re Group Fronters

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	4. Member of Munich Re	 	 
	 	 	 	 	 	 	Group in whose name	 	5. Percentage of
	 	 	 	 	 	 	Fronting Insurance Contracts	 	Converium’s
	1. Agent Accepting Business	 	2. Jurisdiction	 	3. Business	 	should be written	 	Respective Proportion
	GAI

	 	All States of the
United States
except
Massachusetts
	 	US National Accounts
	 	GR LK
	 	 	50	 
	 
	 	 	 	 	 	 	 	 	 	 
	GAI

	 	Massachusetts
	 	US National Accounts
	 	AAIC
	 	 	50	 
	 
	 	 	 	 	 	 	 	 	 	 
	GAI

	 	The District of
Columbia, and all
States of the
United States
except Connecticut
and Maine
	 	US GA
	 	AAIC
	 	 	50	 
	 
	 	 	 	 	 	 	 	 	 	 
	Global

	 	Worldwide, subject
to licensing
regulations
	 	Business written in

the UK
	 	GRLK
	 	 	50	 
	 
	 	 	 	 	 	 	 	 	 	 
	GAC

	 	Canada, subject to
licensing
regulations
	 	Canadian risks
	 	Temple
	 	 	50	 

GR LK means Great Lakes Reinsurance (UK) plc

AAIC means American Alternative Insurance Company

Temple means Temple Insurance Company

43

 

Part II

Jurisdictions in which Munich Re is fronted

	 	 	 	 	 	 	 
	1. Agent Accepting Business	 	2. Jurisdiction	 	3. Business	 	4. Fronter for Munich Re
	GAI

	 	Connecticut and
Maine
	 	USGA
	 	Tokio Marine and
Nichido Fire
Insurance Company
Ltd (Tokio)
	 
	 	 	 	 	 	 
	GAC

	 	Canada
	 	Canadian Risks
	 	Royal and Sun
Alliance Insurance
Company of Canada
(RSAI)

The companies, jurisdictions and business listed in columns 2-4 respectively of this Schedule
(Parts I and II) may be amended or added to with the written agreement (in such person’s absolute
discretion) of Converium, Global and Munich Re provided that the amendment would not result in a
Trigger Event occurring, and that all relevant Fronting Insurance Contracts written after the date
of the agreement are written in the name of the replacement companies, jurisdictions and business.

44

 

SCHEDULE 3

NATIONAL INDEMNITY GROUP FRONTING

Part I

National Indemnity Group Fronters

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	4. Member of National Indemnity	 	 
	 	 	 	 	 	 	Group in whose name	 	5. Percentage of
	 	 	 	 	 	 	Fronting Insurance Contracts	 	Converium’s
	1. Agent Accepting Business	 	2. Jurisdiction	 	3. Business	 	should be written	 	Respective Proportion
	GAI

	 	Nebraska
	 	US National Accounts
	 	NICS
	 	 	50	 
	 
	 	 	 	 	 	 	 	 	 	 
	GAI

	 	New Jersey
	 	US National Accounts
	 	NIC
	 	 	50	 
	 
	 	 	 	 	 	 	 	 	 	 
	GAI

	 	All States of the
United States,
except Nebraska and
New Jersey, and
Washington DC and
Puerto Rico
	 	US National Accounts
	 	NFM
	 	 	50	 
	 
	 	 	 	 	 	 	 	 	 	 
	GAI

	 	Hawaii, Louisiana,

Massachusetts, New

York, Oregon
	 	US GA Accounts
	 	CISCO
	 	 	50	 
	 
	 	 	 	 	 	 	 	 	 	 
	GAI

	 	Florida
	 	US GA
	 	NICSO
	 	 	50	 
	 
	 	 	 	 	 	 	 	 	 	 
	GAI

	 	New Jersey
	 	US GA
	 	USLIC
	 	 	50	 
	 
	 	 	 	 	 	 	 	 	 	 
	GAI

	 	All other states of
the United States
and Washington DC
	 	US GA
	 	NIC
	 	 	50	 
	 
	 	 	 	 	 	 	 	 	 	 
	Global

	 	Worldwide, subject
to licencing
restrictions
	 	Business written in

the UK
	 	BHII
	 	 	50	 

45

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	4. Member of National Indemnity	 	 
	 	 	 	 	 	 	Group in whose name	 	5. Percentage of
	 	 	 	 	 	 	Fronting Insurance Contracts	 	Converium’s
	1. Agent Accepting Business	 	2. Jurisdiction	 	3. Business	 	should be written	 	Respective Proportion
	GAI

	 	Canada
	 	Canadian Risks
	 	NLF
	 	 	50	 

 

NFM means National Fire and Marine Insurance Company

NICS means National Indemnity Company of the South

NIC means National Indemnity Company

CISCO means Central States Indemnity Company of Omaha

NICSO means National Indemnity Company of the South

BHII means Berkshire Hathaway International Insurance Ltd.

NLF means National Liability and Fire Insurance Company

The companies, jurisdictions and business listed in columns 2-4 respectively of this Schedule
(Parts I and II) may be amended or added to with the written agreement (in such person’s absolute
discretion) of Converium, Global and NIC provided that the amendment would not result in a Trigger
Event occurring, and that all relevant Fronting Insurance Contracts written after the date of the
agreement are written in the name of the replacement companies, jurisdictions and business.

46

 

Part II

Jurisdictions in which National Indemnity is fronted

	 	 	 	 	 	 	 
	1. Agent Accepting Business	 	2. Jurisdiction	 	3. Business	 	4.
Fronter for National Indemnity
	Global

	 	Mexico, Ecuador,
Colombia and
Venezuela written
in the UK
	 	Business written in
the UK
	 	RSAI
	 
	 	 	 	 	 	 
	Global

	 	US Surplus lines

(except where
written in BHII)
	 	Business written in
the UK
	 	The Marine
Insurance Company
Limited

47

 

SCHEDULE 4

MR STATEMENT DISPUTE RESOLUTION MECHANISM

1.     Each of Munich Re or Converium may request from the Agents such additional information as it
reasonably requires to confirm whether it agrees with the MR Statement and the Agents or Munich Re
shall provide such information, to the extent they have it or are entitled to it, promptly and in
any case within 5 Business Days of the request.

2.     Munich Re or Converium may notify the Agents and Munich Re or Converium (as appropriate) in
writing (such notification being an Objection Notice) within thirty (30) days after receipt that is
disputes the MR Statement. Any notice indicating that Munich Re or Converium does not accept the
MR Statement shall only be valid for the purposes of this Agreement if it sets out the reasons why
the person serving the notice believes the MR Statement does not correctly state the profits
attributable to the Fronting Insurance Contracts written by Munich Re and the members of its Group
calculated in accordance with Clause 13 and specifies the adjustments which, in such person’s
opinion, should be made to the MR Statement. The validity of any such notice shall be a matter for
determination by the Independent Firm.

3.     If an Objection Notice is served in accordance with 2 above, then Munich Re and Converium shall
use all reasonable endeavours (in conjunction with the Agents):

	(a)	 	to meet and discuss the objections in the Objection Notice; and
	 
	(b)	 	to reach agreement upon the adjustments (if any) required to be made to the MR Statement,
within a period of five (5) Business Days after receipt by the Agents of the Objection Notice.

4.     If both Munich Re and Converium notify the Agents in writing that they are satisfied with the MR
Statement (either as originally submitted or after adjustments agreed between Munich Re and
Converium pursuant to 3 above) or if neither Munich Re or Converium gives a valid Objection Notice
within the thirty (30) day period referred to in 2 above, then the MR Statement (as so adjusted, if
applicable) shall be final and binding for the purposes of this agreement.

5.     If Converium and Munich Re do not reach agreement within five (5) Business Days of receipt by
the Agents of the Objection Notice, then the matters in dispute may be referred (on the application
of either the Converium or Munich Re) for determination by such firm of actuaries of international
standing as shall be agreed by Converium and Munich Re or, failing agreement, appointed by the
President for the time being of the Institute of Actuaries in England and Wales on the application
of Converium or Munich Re (the Independent Firm). Converium and Munich Re shall use all reasonable
endeavours to agree with the Independent Firm the precise terms of reference to apply to its role
as soon as reasonably practicable following a referral to the Independent Firm. Converium and
Munich Re shall procure that the Agents

48

 

comply with any reasonable requests of the Independent Firm. The following general terms of
reference and procedure shall apply in any event:

	(a)	 	Converium and Munich Re shall each prepare a written statement within five (5) days of the
formal appointment of the Independent Firm on the matters in dispute which (together with the
relevant supporting documents) shall be submitted to the Independent Firm for determination.
The matters in dispute shall be limited to the matters specified in the Objection Notice;
	 
	(b)	 	following delivery of their respective submissions, Converium, and Munich Re shall each have
the opportunity to comment once only on the other’s submissions by written comment delivered
to the Independent Firm not later than ten (10) days after receipt of the other’s submissions;
	 
	(c)	 	any response to a subsequent request by the Independent Firm for information from Converium,
Munich Re or the Agents shall be copied to Converium and Munich Re at the same time and,
unless otherwise directed by the Independent Firm, each person receiving a copy of the
information may, within ten (10) days after it receives such information, comment once only on
that information;
	 
	(d)	 	in giving its determination, the Independent Firm shall state what adjustments (if any) are
necessary, solely for the purposes of this agreement, to the MR Statement in respect of the
matters in dispute in order to comply with the requirements of this agreement and to determine
finally the MR Statement;
	 
	(e)	 	the Independent Firm shall determine (using its own legal advice as appropriate) any question
of the legal construction of this agreement but only insofar as it is relevant to the
determination of the MR Statement;
	 
	(f)	 	the Independent Firm shall act as an expert (and not as an arbitrator) in making any such
determination and any such determination (including any determination of any fact which it has
found it necessary to determine for the purposes of its determination) shall, in the absence
of manifest error, be final and binding on the parties; and
	 
	(g)	 	without prejudice to any other rights which they may respectively have under this agreement,
the parties expressly waive, to the extent permitted by law, any rights of recourse to the
courts they may otherwise have to challenge the Independent Firm’s determination;

6.     Converium and Munich Re shall each be responsible for their own costs in connection with the
preparation, review and agreement or determination of the MR Statement.

7.     The fees and expenses of the Independent Firm and the Agents shall be shared equally between
Converium and Munich Re or in such other proportions as the Independent Firm shall determine.

49

 

SCHEDULE 5

NIC STATEMENT DISPUTE RESOLUTION MECHANISM

1.     Each of National Indemnity or Converium may request from the Agents such additional information
as it reasonably requires to confirm whether it agrees with the NIC Statement and the Agents shall
provide such information, to the extent they have it or are entitled to it, promptly and in any
case within 5 Business Days of the request.

2     National Indemnity or Converium may notify the Agents and National Indemnity or Converium (as
appropriate) in writing (such notification being a NICO Objection Notice) within thirty (30) days
after receipt that it disputes the NIC Statement. Any notice indicating that National Indemnity or
Converium does not accept the NIC Statement shall only be valid for the purposes of this Agreement
if it sets out the reasons why the person serving the notice believes the NIC Statement does not
correctly state the profits attributable to the Fronting Insurance Contracts written by National
Indemnity and the members of its Group calculated in accordance with Clause 14 and specifies the
adjustments which, in such person’s opinion, should be made to the NIC Statement. The validity of
any such notice shall be a matter for determination by the Independent Firm.

3.     If a NICO Objection Notice is served in accordance with 2 above, then National Indemnity and
Converium shall use all reasonable endeavours (in conjunction with the Agents):

	(a)	 	to meet and discuss the objections in the Objection Notice; and
	 
	(b)	 	to reach agreement upon the adjustments (if any) required to be made to the NIC Statement,
within a period of five (5) Business Days after receipt by the Agents of the Objection Notice.

4.     If both National Indemnity and Converium notify the Agents in writing that they are satisfied
with the NIC Statement (either as originally submitted or after adjustments agreed between National
Indemnity and Converium pursuant to 3 above) or if neither National Indemnity or Converium gives a
valid Objection Notice within the thirty (30) day period referred to in 2 above, then the NIC
Statement (as so adjusted, if applicable) shall be final and binding for the purposes of this
agreement.

5.     If Converium and National Indemnity do not reach agreement within five (5) Business Days of
receipt by the Agents of the Objection Notice, then the matters in dispute may be referred (on the
application of either the Converium or National Indemnity) for determination by such firm of
actuaries of international standing as shall be agreed by Converium and National Indemnity or,
failing agreement, appointed by the President for the time being of the Institute of Actuaries in
England and Wales on the application of Converium or National Indemnity (the Independent Firm).
Converium and National Indemnity shall use all reasonable endeavours to agree with the Independent
Firm the precise terms of reference to apply to its role as soon as reasonably practicable
following a referral to the Independent Firm. Converium and National Indemnity shall procure that
the Agents comply with any

50

 

reasonable requests of the Independent Firm. The following general terms of reference and
procedure shall apply in any event:

	(a)	 	Converium and National Indemnity shall each prepare a written statement within five (5) days
of the formal appointment of the Independent Firm on the matters in dispute which (together
with the relevant supporting documents) shall be submitted to the Independent Firm for
determination. The matters in dispute shall be limited to the matters specified in the
Objection Notice;
	 
	(b)	 	following delivery of their respective submissions, Converium, and National Indemnity shall
each have the opportunity to comment once only on the other’s submissions by written comment
delivered to the Independent Firm not later than ten (10) days after receipt of the other’s
submissions;
	 
	(c)	 	any response to a subsequent request by the Independent Firm for information from Converium,
National Indemnity or the Agents shall be copied to Converium and National Indemnity at the
same time and, unless otherwise directed by the Independent Firm, each person receiving a copy
of the information may, within ten (10) days after it receives such information, comment once
only on that information;
	 
	(d)	 	in giving its determination, the Independent Firm shall state what adjustments (if any) are
necessary, solely for the purposes of this agreement, to the NIC Statement in respect of the
matters in dispute in order to comply with the requirements of this agreement and to determine
finally the NIC Statement;
	 
	(e)	 	the Independent Firm shall determine (using its own legal advice as appropriate) any question
of the legal construction of this agreement but only insofar as it is relevant to the
determination of the NIC Statement;
	 
	(f)	 	the Independent Firm shall act as an expert (and not as an arbitrator) in making any such
determination and any such determination (including any determination of any fact which it has
found it necessary to determine for the purposes of its determination) shall, in the absence
of manifest error, be final and binding on the parties; and
	 
	(g)	 	without prejudice to any other rights which they may respectively have under this agreement,
the parties expressly waive, to the extent permitted by law, any rights of recourse to the
courts they may otherwise have to challenge the Independent Firm’s determination;

6.     Converium and National Indemnity shall each be responsible for their own costs in connection
with the preparation, review and agreement or determination of the NIC Statement.

7.     The fees and expenses of the Independent Firm and the Agents shall be shared equally between
Converium and National Indemnity or in such other proportions as the Independent Firm shall
determine.

51

 

SCHEDULE 6

DISPUTE MECHANISM IN RELATION TO RESERVE CALCULATIONS

1.     Converium may dispute any calculation carried out by the Agents, Munich Re or National Indemnity
or any reserves figure provided by the Agents, Munich Re or National Indemnity and Munich Re or
National Indemnity may dispute any calculation carried out by the Agents as set out in this
Schedule.

2.     The disputing party may request from the person providing the information in dispute or any
other party such additional information as it reasonably requires and such person shall provide
such information, to the extent they have it or are entitled to it, promptly and in any case within
5 Business Days of the request.

3.     The disputing party may notify the person providing the information in dispute in writing (such
notification being an Objection Notice) within thirty (30) days after receipt that it disputes the
information. Any notice indicating that the disputing party does not accept the information shall
only be valid for the purposes of this Agreement if it sets out the reasons why the person serving
the notice believes the information has not been properly calculated in accordance with the
Agreement and specifies the adjustments which, in such person’s opinion, should be made to the
information. Ultimately, the validity of any such notice shall be a matter for determination by
the Independent Firm.

4.     If an Objection Notice is served in accordance with paragraph 3 above, then the disputing party
and the disputer shall use all reasonable endeavours (in conjunction with the Agents):

	(a)	 	to meet and discuss the objections in the Objection Notice; and
	 
	(b)	 	to reach agreement upon the adjustments (if any) required to be made to the information,
within a period of five (5) Business Days after receipt of the Objection Notice.

5.     If the disputing party and the disputer agree in writing that they are satisfied with the
information (either as originally submitted or after adjustments agreed between them above) then
the information (as so adjusted, if applicable) shall be final and binding for the purposes of this
agreement.

6.     The disputing party and the disputer do not reach agreement within five (5) Business Days of
receipt of the Objection Notice, then the matters in dispute may be referred (on the application of
either of them) for determination by such other firm of actuaries of international standing as
shall be agreed by them or, failing agreement, appointed by the President for the time being of the
Institute of Actuaries in England and Wales on the application of either of them (the Independent
Firm). The disputing party and the disputer shall use all reasonable endeavours to agree with the
Independent Firm the precise terms of reference to apply to its role as soon as reasonably
practicable following a referral to the Independent Firm. The disputing party and the disputer
shall procure that the Agents comply with any reasonable

52

 

requests of the Independent Firm. The following general terms of reference and procedure shall
apply in any event:

	(a)	 	the disputing party and the disputer shall each prepare a written statement within five (5)
days of the formal appointment of the Independent Firm on the matters in dispute which
(together with the relevant supporting documents) shall be submitted to the Independent Firm
for determination. The matters in dispute shall be limited to the matters specified in the
Objection Notice;
	 
	(b)	 	following delivery of their respective submissions, the disputing party and the disputer
shall each have the opportunity to comment once only on the other’s submissions by written
comment delivered to the Independent Firm not later than ten (10) days after receipt of the
other’s submissions;
	 
	(c)	 	any response to a subsequent request by the Independent Firm for information from the
disputing party and the disputer shall be copied to the other at the same time and, unless
otherwise directed by the Independent Firm, each person receiving a copy of the information
may, within ten (10) days after it receives such information, comment once only on that
information;
	 
	(d)	 	in giving its determination, the Independent Firm shall state what adjustments (if any) are
necessary, solely for the purposes of this agreement, to the information in respect of the
matters in dispute in order to comply with the requirements of this Agreement;
	 
	(e)	 	the Independent Firm shall determine (using its own legal advice as appropriate) any question
of the legal construction of this Agreement;
	 
	(f)	 	the Independent Firm shall act as an expert (and not as an arbitrator) in making any such
determination and any such determination (including any determination of any fact which it has
found it necessary to determine for the purposes of its determination) shall, in the absence
of manifest error, be final and binding on the parties; and
	 
	(g)	 	without prejudice to any other rights which they may respectively have under this agreement,
the parties expressly waive, to the extent permitted by law, any rights of recourse to the
courts they may otherwise have to challenge the Independent Firm’s determination;

7.     The disputing party and the disputer shall each be responsible for their own costs in connection
with the preparation, review and agreement or determination of the information.

8.     The fees and expenses of the Independent Firm and the Agents shall be shared equally between the
disputing party and the disputer or in such other proportions as the Independent Firm shall
determine.

53

 

In witness whereof this Agreement has been signed by and on behalf of the parties on the
day and year first before written.

	 	 	 
	SIGNED by

for and on behalf of

GLOBAL AEROSPACE
UNDERWRITING MANAGERS
LIMITED

	 	)

)

)

)

)

)
	 
	 	 
	SIGNED
by

for and on behalf of

GLOBAL AEROSPACE, INC.

	 	)

)

)

)
	 
	 	 
	SIGNED
by

and

duly authorised representatives of

MÜNCHENER RÜCKVERSICHERUNGS-GESELLSCHAFT

AKTIENGESELLSCHAFT

in MÜNCHEN

	 	)

)

)

)

)

)

)

)
	 
	 	 
	SIGNED
by Forrest N. Krutter, Secretary

and

for and on behalf of

NATIONAL INDEMNITY COMPANY

	 	)

)

)

)

54

 

	 	 	 
	SIGNED
by Christopher Bell

and

for and on behalf of

CONVERIUM AG

	 	)

)

)

)

55

 

ANNEXURE 1

FORM OF DEED OF ADHERENCE FOR USE BY SUBSIDIARIES OF

GLOBAL AND GAI

DEED OF ADHERENCE

THIS DEED is made the [               ] day of [               ], 20[ ] by

	(1)	 	[               ] (No.               ) whose registered office is at [               ] hereinafter called [New Subsidiary];
	 
	(2)	 	GLOBAL AEROSPACE UNDERWRITING MANAGERS LIMITED (registered number 2512067) whose registered
office is at Fitzwilliam House, 10 St. Mary Axe, London EC3 8EQ (Global);
	 
	(3)	 	GLOBAL AEROSPACE, INC. a Delaware company (GAI);
	 
	(4)	 	NATIONAL INDEMNITY COMPANY, a company incorporated in Nebraska, United States of America,
whose registered office is at 3024 Harney Street, Omaha, Nebraska, USA 68131 (National
Indemnity);
	 
	(5)	 	CONVERIUM AG, a company incorporated in Switzerland whose registered office is at General
Guisan-Quai 26, 8022 Zürich, Switzerland (Converium); and
	 
	(6)	 	MÜNCHENER RÜCKVERSICHERUNGS-GESELLSCHAFT AKTIENGESELLSCHAFT IN MÜNCHEN, whose registered
office is at Königinstraße, 107, 80802 München, Germany (Munich Re).

Whereas:

	(a)	 	[Global/GAI] has duly [incorporated] [acquired] [New Subsidiary] [to be] [as] its wholly
owned subsidiary in accordance with the provisions of the reinsurance fronting and
administration agreement made between Global, GAI, National Indemnity and Converium and Munich
Re dated • November 2004 as it may have been subsequently amended (the Agreement).
	 
	(b)	 	Under the provisions of Clause 2.5 of the Agreement, [New Subsidiary] shall become a party to
the Agreement by executing a Deed of Adherence in the form (or substantially in the form) set
out in Annexure 1 to the Agreement and this Deed is in such form.

Now this deed witnesseth as follows:

1.     Words and phrases defined in the Agreement shall, unless the context otherwise requires, have
the same meaning in this Deed.

56

 

2.     [New Subsidiary] agrees and undertakes to be bound by and to have the benefit of the Agreement
as if it were named therein as a party in its capacity as and being a subsidiary of [Global/GAI].

3.     [New Subsidiary], subject to and in accordance with Clause 2.5 of the Agreement, agrees to act
as agent for [XXX] on and in accordance with the terms of the Agreement including on and with
effect from [INSERT EFFECTIVE DATE].

4.     This Deed and the relationship between the parties shall be governed by and interpreted in
accordance with English law. For the benefit of the other parties hereto, each party to this Deed
irrevocably agrees that the Courts of England are to have exclusive jurisdiction to settle any
dispute which may arise in connection with this Deed and for any such purposes irrevocably submits
to the jurisdiction of such Courts.

In witness whereof this document has been executed as a Deed the day and year first before
written.

57

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