Document:

exv10w68

Exhibit 10.68

RECIPROCAL CLAIMS SERVICE AGREEMENT

     THIS RECIPROCAL CLAIMS SERVICES AGREEMENT is made as of the 14th day of
February, 2000, by and among Liberty Mutual Insurance Company on behalf of itself and on behalf of
LM Insurance Corporation, First Liberty Insurance Corporation, Liberty Mutual Fire Insurance
Company and Liberty Insurance Corporation; the Peerless Insurance Company, on behalf of itself and
on behalf of the Netherlands Insurance Company; Employers Insurance of Wausau A Mutual Company on
behalf of itself and on behalf of the Wausau Underwriters Insurance Company; and any other company
that is part of or added to the Liberty Mutual Group for which surety business is underwritten by
Liberty Bond Services (the “Member Companies”).

     WHEREAS as the result of certain merger activities, the Member Companies have combined their
surety and fidelity underwriting operations under the leadership and direction of Liberty Bond
Services, a division of Liberty Mutual Insurance Company (“LBS”); and

     WHEREAS, the Member Companies have determined that the combination of their surety and
fidelity claim operations (the “Combined Claim Operations”) under the direction of LBS is also in
the best interest of the Member Companies.

     NOW, THEREFORE, and for the purposes aforesaid, and for good and valuable consideration am
intending to be legally bound hereby, the Member Companies hereby agree as follows:

	 	1.	 	LBS shall direct and supervise the Combined Claims Operations of the Member
Companies to facilitate
a regional fidelity and surety claim operation.
	 
	 	2.	 	In order to facilitate the Combined Claims Operations, LBS shall direct the
Member Companies to
transfer certain fidelity and surety claim files (the
“Transferred Files”) among the
Member Companies.
	 
	 	3.	 	Each Member Company hereby nominates and appoints every other Member Company as
its
authorized agent, and grants each such Member Company the authority to act in its name
and stead in
connection with the Transferred Files. Each Member Company shall provide surety claims
investigation, management, handling and settlement services to the transferring Member
Company in
accordance with direction and supervision of LBS and, in such capacity, shall serve as
the trustee and
fiduciary of the transferring Member Company.
	 
	 	4.	 	Pursuant to the direction and instruction of LBS, each Member Company shall
designate and appoint
staff members of LBS and other Member Companies as their attorney-in-fact authorized to
make,
execute, seal, acknowledge and deliver on behalf of the transferring Member Company any
and all
undertakings, bonds, recognizances and other surety obligations necessary to perform
surety claims
investigation, management, handling and settlement services, subject to levels of
authority determined
by their respective position within the various departments, as determined by LBS.

 

 

	 	5.	 	With regard to any Transferred Files, the designated and appointed staff members within each
Member
Company may represent themselves as the authorized representative of the transferring Member
Company on all surety claim correspondence.
	 
	 	6.	 	With regard to any Transferred File received from another Member Company, the receiving
Member
Company shall fully investigate the assigned surety claim, assert rights, claims or defenses,
enforce the
indemnity rights, execute surety claim documents, establish claim reserves, obtain settlement
documents and release loss and expense payments as necessary in order to provide surety claims
management, handling, investigation and settlement services on behalf of the transferring Member
Company.
	 
	 	7.	 	The receiving Member Company shall keep LBS and the transferring Member Company fully advised
of the status of each Transferred File pursuant to reporting guidelines established by LBS.
	 
	 	8.	 	Each Member Company shall continue to be responsible for payment of their own unallocated
loss adjustment expenses incurred while performing surety claim activities
on behalf of itself or on
behalf
of a transferring Member Company. Allocated loss adjustment expenses as well as any losses
incurred
in connection with the Transferred Files shall remain the responsibility of the transferring
Member Company. Each Member Company shall remit any contract funds, salvage funds or
collateral security of whatsoever kind or nature that may be recovered in connection with a
Transferred File to the transferring Member Company.
	 
	 	9.	 	The Member Companies acknowledge that during the course and performance of this Agreement,
each
shall have access to confidential and proprietary documents, property and information of the
other
member companies and their customers, including without limitation, computer systems, source
codes,
object codes and software, marketing plans, proposals and techniques, operational plans and
details,
pricing information, accounting information, records and systems, financial information,
management
and personnel reports and customer lists and information. Each party acknowledges that all of
such
information is proprietary to the member/owner thereof and constitutes trade secrets within the
meaning of such term, under applicable law. Each Member Company shall receive all such trade
secrets and proprietary information in confidence and agrees with respect thereto:

	 	 	 	 	 	 	 	 	 

	 

	 	 	 	 	 	a.
	 	to keep strictly confidential; and
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	b.
	 	not to disclose any trade secrets to any third party; and
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	c.
	 	Not to use any of said trade secrets for any purpose whatsoever other
than as directed by LBS for the performance of this Agreement.

	 	10.	 	This Agreement may be modified at any time and at the sole and absolute discretion of LBS.
The
Agreement shall continue from month to month at the sole and absolute discretion of LBS. Should
LBS
determine that it is in the best Interest of the Member Companies to modify or terminate this

 

 

	 	 	 	Agreement, then it shall provide each Member Company with notice of its intention to
modify or terminate the Agreement. Upon receipt of a notice of termination, the Member
Company shall return to the transferring Member Company, the original Transferred files
as well as any and all other documents, information or records of whatever kind or nature
it may then possess or control in connection with the Transferred Files.
	 
	 	11.	 	Each of the parties and signatories to this Agreement represents and warrants
that they have the full right, power, legal capacity and authority to enter into and
perform the parties’ respective obligations hereunder and that such obligations shall
be binding upon such party without the requirement of the approval or consent of any
other person or entity in connection herewith. Each person signing this Agreement on
behalf of an entity represents and warrants that he has the full right, power, legal
capacity, and authority to sign this Agreement on behalf of such entity

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
above described.

	 	 	 	 	 	 	 

	 	 	LIBERTY MUTUAL INSURANCE COMPANY
	 	 	On behalf of itself and
on behalf of LM Insurance Corporation, The First Liberty
Insurance Corporation, Liberty Mutual Fire Insurance
Company and Liberty Insurance Corporation
	 

	 	 	 	 	 	 
	 

	 	By:
	 	/s/	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Title Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	PEERLESS INSURANCE COMPANY
	 	 	On behalf of itself and on behalf of The Netherlands Insurance Co.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Title Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	EMPLOYERS INSURANCE OF WAUSAU
	 	 	A MUTUAL COMPANY on behalf of itself and on behalf of
Wausau Underwriters Insurance Company
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Title Vice President	 	 
	 
	 	 	 	 	 	 

 

 

AMENDMENT NO. 1

(the “Amendment”)

TO

RECIPROCAL CLAIMS SERVICE AGREEMENT

(the “Agreement”)

by and between

LIBERTY MUTUAL INSURANCE COMPANY on behalf of itself and on behalf of LM Insurance Corporation,
First Liberty Insurance Corporation, Liberty Mutual Fire Insurance Company and Liberty Insurance
Corporation; the Peerless Insurance Company, on behalf of itself and on behalf of the Netherlands
Insurance Company, and Employers Insurance of Wausau A Mutual Company, now known as Employers
Insurance Company of Wausau on behalf of itself and on behalf of the Wausau Underwriters Insurance
Company (hereinafter together called the “Parties”).

WHEREAS, the Parties entered into the Agreement for provision of various services, effective
February 14, 2000.

WHEREAS, the Parties deem it necessary to amend certain provisions of the Agreement with respect to
settlement of amounts due between them.

NOW, THEREFORE, the Parties hereto agree to amend the Agreement, as follows: Section 12 of
the Agreement is added as follows:

“12. Amounts owing between the parties shall be settled between the parties on
a quarterly basis and payments of amounts owing shall be made within 45 days
after the end of the calendar quarter.”

 

 

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment No. 1 to the Agreement, effective
as of the 31st day of December, 2007 to be executed by their respective duly authorized officers.

Liberty Mutual Insurance Company

on behalf of itself and on behalf of LM Insurance Corporation

The First Liberty Insurance Corporation,

Liberty Mutual Fire Insurance Company

and Liberty Insurance Corporation

	 	 	 	 	 

	/s/ John D. Doyle	 	 
	 	 	 
	By:

	 	John D. Doyle	 	 
	Its:

	 	Vice President and Comptroller	 	 

Peerless Insurance Company

on behalf of itself and on behalf of The Netherlands Insurance Company

	 	 	 	 	 

	/s/ James F. Dore	 	 
	 	 	 
	By:

	 	James F. Dore	 	 
	Its:

	 	Chief Financial Officer	 	 

Employers Insurance of Wausau A Mutual Company, now known as

Employers Insurance Company of Wausau on behalf of itself and on behalf of

Wausau Underwriters Insurance Company

	 	 	 	 	 

	/s/ J. Stanley Hoffert	 	 
	 	 	 
	By:

	 	J. Stanley Hoffert	 	 
	Its:

	 	Vice President — General Counsel
and Secretaryexv10w69

Exhibit 10.69

SERVICE AGREEMENT

between

EMPLOYERS INSURANCE COMPANY OF WAUSAU

WAUSAU BUSINESS INSURANCE COMPANY

WAUSAU GENERAL INSURANCE COMPANY

WAUSAU UNDERWRITERS INSURANCE COMPANY

and other companies now or may become part of the

member group of the Wausau Insurance Companies

and

PEERLESS INSURANCE COMPANY

 

Dated: April 1, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	Article	 	 	 	 	 	 	 	 
	ARTICLE I	 	 	 	 	 	 
	 	 	APPOINTMENT; REGULATORY APPROVALS	 	 	4	 
	 

	 	Section 1.1
	 	Appointments
	 	 	4	 
	 

	 	Section 1.2
	 	Regulatory Approvals
	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II	 	 	 	 	 	 
	 	 	SERVICES PROVIDED BY WAUSAU	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III	 	 	 	 	 	 
	 	 	PERFORMANCE ON SERVICES	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV	 	 	 	 	 	 
	 	 	COMPANY’S RESPONSIBILITIES	 	 	7	 
	 

	 	Section 4.1
	 	Duty to Oversee
	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE V	 	 	 	 	 	 
	 	 	BOOKS AND RECORDS	 	 	7	 
	 

	 	Section 5.1
	 	Books and Records Maintained by Wausau
	 	 	7	 
	 

	 	Section 5.2
	 	Property of PIC
	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI	 	 	 	 	 	 
	 	 	THE RELATIONSHIP BETWEEN WAUSAU AND PEERLESS	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII	 	 	 	 	 	 
	 	 	SERVICE FEES AND EXPENSES	 	 	9	 
	 

	 	Section 7.1
	 	Fees and Expenses
	 	 	9	 
	 

	 	Section 7.2
	 	Cost Recovery by Wausau
	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII	 	 	 	 	 	 
	 	 	INDEMNIFICATION	 	 	9	 
	 

	 	Section 8.1
	 	Indemnification by Wausau
	 	 	9	 
	 

	 	Section 8.2
	 	Indemnification by PIC
	 	 	9	 
	 

	 	Section 8.3
	 	Indemnification Procedure
	 	 	9	 
	 

	 	Section 8.4
	 	Insurance
	 	 	10	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IX	 	 	 	 	 	 
	 	 	TERMINATION	 	 	10	 
	 

	 	Section 9.1
	 	Mutual Agreement.
	 	 	10	 
	 

	 	Section 9.2
	 	Termination by Wausau
	 	 	10	 
	 

	 	Section 9.3
	 	Termination by PIC
	 	 	10	 
	 

	 	Section 9.4
	 	Return of Books and Records by PIC
	 	 	11	 
	 

	 	Section 9.5
	 	No Prejudice
	 	 	11	 
	 

	 	Section 9.6
	 	Transition Period
	 	 	11	 

2

 

	 	 	 	 	 	 	 	 	 
	Article	 	 	 	 	 	 	 	 
	ARTICLE X	 	 	 	 	 	 
	 	 	CONFIDENTIALITY	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XI	 	 	 	 	 	 
	 	 	MISCELLANEOUS	 	 	11	 
	 

	 	Section 11.1
	 	Assignment
	 	 	11	 
	 

	 	Section 11.2
	 	Amendments and Waivers
	 	 	11	 
	 

	 	Section 11.3
	 	Entire
	 	 	12	 
	 

	 	Section 11.4
	 	Governing Law
	 	 	12	 
	 

	 	Section 11.5
	 	Notices
	 	 	12	 
	 

	 	Section 11.6
	 	No Third Party Beneficiaries
	 	 	13	 
	 

	 	Section 11.7
	 	Counterparts
	 	 	13	 
	 

	 	Section 11.8
	 	Interpretation
	 	 	13	 
	 

	 	Section 11.9
	 	Legal Enforceability
	 	 	13	 
	 

	 	Section 11.10
	 	Specific Performance
	 	 	13	 

3

 

SERVICE AGREEMENT

     THIS
SERVICE AGREEMENT, dated and effective as of April 1, 2006 (hereinafter referred to
as this “Service Agreement”), is made and entered into by and between Employers Insurance Company
of Wausau (“EICOW”), Wausau Business Insurance Company (“WBIC”), Wausau General Insurance Company
(“WGIC”) and Wausau Underwriters Insurance Company (“WUIC”), each a Wisconsin insurer (collectively
“Wausau”), and Peerless Insurance Company, a New Hampshire insurance company (“PIC”).

WITNESSETH

     WHEREAS, Wausau is a member of the Liberty Mutual Group, a group of insurers and associated
companies engaged in the transaction of insurance and other related enterprises (the “Liberty
Group”); and

     WHEREAS, PIC is also a member of the Liberty Group engaged in the transaction of property and
casualty insurance business in the United States; and

     WHEREAS, the parties believe it is mutually beneficial to have Wausau provide certain
management services for and on behalf of PIC.

     NOW, THEREFORE, in consideration of the mutual promises and undertakings hereinafter set
forth, the parties do agree as follows:

ARTICLE I

APPOINTMENT; REGULATORY APPROVALS

     Section 1.1 Appointment. PIC hereby appoints Wausau as a contractor to provide PIC with the
Services (as defined herein), on the terms and subject to the conditions set forth herein. Wausau
hereby accepts such appointment, on such terms and subject to such conditions.

     Section 1.2 Regulatory Approvals. It shall be a condition to the effectiveness of this Service
Agreement that PIC shall have obtained approval of this Service Agreement from those state
insurance departments or other regulatory authorities, the approval of which is required, in the
reasonable judgment of the parties, for the effectiveness of this Service Agreement.

ARTICLE II

SERVICES PROVIDED BY WAUSAU

     At the direction of the management of PIC, Wausau shall provide services requested by PIC and
agreed to by Wausau (the “Services”), including without limitation:

               (a) Policy and Underwriting Services: including as requested by PIC (i) premium
calculation; (ii) the provision of quotes (iii) the issuance of policies and
certificates; (iv) the modification and amendment of existing policies; (v) the termination,
cancellation, rescission, renewal, non-renewal, and replacement of policies; (vi) compliance with
underwriting file maintenance, record retention and reconciliation requirements in conformity with
this Service Agreement or as otherwise agreed by the

4

 

parties; and (vii) generally, all such other acts or things as are reasonably necessary or
otherwise required in connection with the underwriting of Wausau insurance policies requested by
PIC.

               (b) Claims Management Services: including (i) receipt, processing, settlement and payment of
claims under the policies and contracts of insurance issued by Wausau pursuant to requests from PIC
(the “Portfolio”); (ii) acknowledgement of the receipt of notices received from policyholders in
connection with any claims; (iii) investigation of any claim, as necessary, to determine its
validity and compensability, including verification of coverage and status information and
utilization of any relevant documents and/or information made available to Wausau and advice to the
appropriate person of the results of such investigation; (iv) notification to policyholders of
declined claims and the reasons for such declinations; (v) response to any inquiry, compliant or
request received from any policyholder, agent, broker, regulator or other interested party
pertaining to or regarding any such claim, and recordation of such complaints in complaint logs to
be maintained by Wausau; (vi) to the extent required by law, provision to policyholders of reports
on taxable benefits, and the amounts withheld on account of FICA, federal, state and/or local
income taxes, both as payments of benefits are made, and as of the end of each calendar or fiscal
year; (vii) compliance with claims file maintenance, record retention and reconciliation
requirements in conformity with the standards for performance set forth in this Service Agreement
or as otherwise agreed by the parties; (viii) engagement and direction, as necessary, of attorneys,
consultants or other professionals in connection with the processing, defense and handling or any
such claims; (ix) defense or disputed claims; (x) delivery of notices and other communications to
policyholders; and (xi) generally, all such other acts and things as are reasonably necessary or
otherwise required in the administration of all such claims relating to the Portfolio;

               (c) Reinsurance Recovery Support Services: including identification, documentation, and
evaluation of amounts due under the terms of any existing policies, contracts, treaties, binders or
facultative certificates of insurance or reinsurance relating to the Portfolio; and provide
supporting information for any action, suit or proceeding (arbitral or otherwise) relating to such
recovery efforts;

               (d) Ancillary Insurance Services Relating to the Portfolio: including (i)
agreement to policy wordings and endorsements to existing policies in the ordinary course of
business; (ii) processing of policy cancellations, non-renewals and endorsements; (iii)
collections of premiums due under PIC policies, audits and remittances; (iv) administrative
support of retrospectively rated policies;

               (e) General Financial, Accounting, Tax, Credit, and Auditing Services for
Portfolio Policies: including (i) preparation of accounting records and processing of accounting
transactions; (ii) expense and cost allocation services; (iii) credit and collection
services; and (iv) preparation of such financial and other reports, plans, analyses, and
projections as are requested from time to time by PIC;

               (f) Litigation Services: including the commencement, continuation, defense, compromise,
settlement, withdrawal, or abandonment of any action, suit, or proceeding (arbitral or otherwise)
not covered by any other provision in this Article including subrogation, loss transfer and loss
prevention services for Portfolio;

5

 

               (g) Portfolio Management Information Systems Service: including assistance relating to data
processing systems or other computer related services or provision of such services to PIC, as
required, provided that any such services shall be furnished only in accordance with and subject
to the limitations of any applicable license agreements;

               (h) Actuarial Services: including (i) evaluation of reserve adequacy; (ii) assistance in
provision for preparation of actuarial certifications; (iii) pricing; and (iv) general consultation
and other actuarial services usually provided in the ordinary course of business;

               (i) Agent
and Broker-Related Services: including (i) appointments, background checks and
maintenance of agent and broker records and lists; (ii) payment of commissions; (iii)
management and recovery of agent and broker balances; (iv) transmittal to agents and brokers
of all required communications, all as related to the Portfolio, including, but not limited to,
rate revision notices and agents’ and brokers’ compensation calculation and support as related to
the Portfolio; (v) oversight of licensing, disciplinary and other regulatory issues; and (vi)
resolution of disputes with agents and brokers;

               (j) Regulatory Communications Services: including (i) responses to inquiries,
complaints, requests or proceedings received from or initiated by regulators and governmental
authorities; (ii) required filings with regulators; (iii) delivery of reports or
communications and notices from regulators to PIC; and (iv) participation in and responses to
financial and market conduct examinations;

               (k) Management Reporting Services: including establishment and/or maintenance of management
reporting systems as requested;

               (l) Accounts Receivable Services: including the identification, documentation, evaluation,
assertion, billing and collection of amounts due PIC, and the commencement, continuation, defense,
compromise, settlement, withdrawal or abandonment of any action, suit or proceeding (arbitral or
otherwise) related to such collections;

               (m) Internal Communication Services: including (i) notification to PIC of
significant communications, notices and inquiries affecting PIC; and (ii) provision to PIC of all
relevant information reasonably requested by PIC, including without limitation financial,
regulatory, statistical, and tax information;

               (n) Licensing: including preparation of application or renewals of any and all certificates of
authority and licenses required or appropriate for the business of PIC;

               (o) General Business Services: including all services required by PIC in the ordinary course
of its business, which are not included among the services specified elsewhere in this Article; and

               (p) Additional Services; Curtailed Services. If PIC requires from Wausau additional services
that are not otherwise contemplated under this Service Agreement, the parties shall negotiate in
good faith to reach a mutually acceptable

6

 

arrangement under which such additional services shall be provided by Wausau. Such arrangements
shall provide for PIC to provide reasonable compensation to Wausau for such additional services. If
PIC curtails its requirement that Wausau provide certain of the services that are contemplated
under this Service Agreement, the parties shall negotiate in good faith to reach a mutually
acceptable arrangement under which such curtailed services shall no longer be provided by Wausau.
Such arrangement shall provide for PIC no longer to provide compensation to Wausau for such
curtailed services.

ARTICLE III

PERFORMANCE OF SERVICES

     Wausau shall employ and utilize its personnel assigned to it within the Liberty Mutual Group
to perform the Services under this Service Agreement; provided, however, that Wausau may retain
such legal, financial, actuarial and other advisors and service providers, including other members
of the Liberty Group and other companies otherwise affiliated with the Liberty Mutual Insurance
Company (“Affiliates”), as Wausau reasonably deems necessary in its reasonable discretion to
perform the Services in compliance with the terms and conditions of this Service Agreement. Wausau
shall act in good faith, in a commercially reasonably manner, and in accordance with customary
industry standards and applicable laws for the provision of the Services. Certain performance
targets and general guidelines are set forth in the attached Schedule III.

ARTICLE IV

PIC’S RESPONSIBILITIES

     Section 4.1 Duty to Oversee; Ultimate Responsibility; Hold Harmless. All Services provided by
Wausau to PIC shall be subject to oversight by the Board of Directors of PIC (the “Board”). PIC
shall direct and control the business which is being carried out by Wausau on behalf of PIC,
including the control and direction of Wausau personnel in the performance of the Services on
behalf of PIC.

ARTICLE V

BOOKS AND RECORDS

     Section 5.1 Books and Records Maintained by Wausau; Inspection Rights.
Wausau shall maintain at its principal administrative offices and (except as otherwise
provided in paragraph (b) of this Article) retain for applicable periods, consistent with PIC’s
current policies and procedures or as required by law, books and records relating to the Portfolio
and the Services provided hereunder (the “Books and Records”). PIC, insurance regulatory
authorities and their respective designated representatives shall have the right to inspect the
Books and Records upon reasonable notice during Wausau’s normal business hours.

     Section 5.2 Property of PIC; Return After Termination; Inspection Rights.
Wausau acknowledges and agrees that the Books and Records are and shall remain the property of
PIC. Wausau shall promptly return the Books and Records to PIC upon the termination of this Service
Agreement in accordance with Article IX; provided, however, that in the event that a dispute arises
between PIC and Wausau, Wausau shall have the right at any time after the termination of this
Service Agreement and with reasonable
prior notice to inspect the Books and Records returned to PIC insofar as the Books and Records
relate to such dispute, and to make copies thereof or extracts

7

 

therefrom; and provided, further, that nothing in this Article V shall supersede, preclude or
otherwise limit any discovery rights otherwise available to Wausau or PIC.

ARTICLE VI

THE RELATIONSHIP BETWEEN WAUSAU AND PIC

     PIC and Wausau agree that:

               (a) PIC and Wausau are not partners or joint ventures with each other, and nothing
herein shall be construed so as to make them partners or joint ventures with each other, or to
impose any liability as such on either of them. Wausau shall perform its duties hereunder as an
independent contractor and not as an employee or agent of PIC. Except as expressly granted in this
Service Agreement or otherwise by the other party in writing, or as may be required by law, or as
is necessary to perform the Services to be provided hereunder, no party shall have any authority,
express or implied, to act on behalf of the other party or its subsidiaries or, with respect to
Wausau, its Affiliates.

               (b) During the term of this Service Agreement, Wausau and Affiliates shall not be prohibited
or otherwise limited from engaging in any aspect of the insurance or reinsurance business on behalf
of or with respect to persons other than PIC.

               (c) The services provided by Wausau shall not violate, conflict with, or result in the breach
of any (i) charter document of PIC, (ii) statute, law, rule, regulation, judgment, decree, order or
permit of any governmental authority, or (iii) material agreement to which PIC is a party or by
which it is bound.

               (d) Wausau shall hold any premiums or other amounts collected by it with respect to the
Portfolio in a fiduciary capacity for the benefit of PIC, and shall immediately deposit such
premiums or other amounts in a fiduciary account with a banking institution acceptable to PIC.
Funds held in such account shall be remitted to PIC, or transferred to an Account established
pursuant to the preceding paragraph of this Service Agreement, as directed by PIC.

               (e) Each party agrees to notify the other party within a reasonable time upon receipt of any
written or oral communication from any state insurance department or any other government or
regulatory department or agency of such department’s or agency’s intention to proceed with any
administrative action, such as a hearing, fine, license suspension or revocation or similar action,
against Wausau or PIC, which administrative action relates in any way to Wausau’s or PIC’s
performance under this Service Agreement or which otherwise relates to the Portfolio.

               (f) In the event that PIC or Wausau or both are made parties to, or threatened with, any
legal or regulatory proceeding arising out of or in connection with the Services or the Portfolio,
it is agreed that they will promptly notify and cooperate fully with each other to defend, settle,
compromise or otherwise resolve such legal or regulatory proceeding consistent with the intent of
this Service Agreement.

               (g) Wausau shall reasonably cooperate with PIC in connection with the provision of the
Services under this Service Agreement. Notwithstanding

8

 

anything in this Service Agreement to the contrary, PIC shall retain the ultimate authority to make
all decisions with respect to the Services.

ARTICLE VII

SERVICE FEES AND EXPENSES

     Section 7.1 Fees and Expenses. Charges, fees and expenses to be charged by Wausau and paid by
PIC hereunder for services rendered until December 31, 2007 are set forth in the attached Schedule
7.1 — 2006 — 2007. Thereafter successive Schedules 7.1 will be negotiated and agreed by the parties
and attached hereto.

     Section 7.2 Cost Recovery By Wausau. Notwithstanding anything herein to the
contrary, Wausau shall be entitled to receive from PIC, the amount of Wausau’s full actual cost of
providing the services hereunder, and therefore, if the Base Service Fee and/or Separately Billed
Service charges do not equal Wausau’s full actual cost of providing the services in those
categories in any calendar year during the term hereof, then PIC shall pay Wausau the amount such
deficiency for that calendar year as an additional fee hereunder.

ARTICLE VIII

INDEMNIFICATION

     Section 8.1 Indemnification by Wausau. Notwithstanding anything to the contrary in this
Service Agreement, Wausau shall indemnify PIC and its directors, officers, employees and agents
against all claims, losses and reasonable costs and expenses (including, but not limited to,
reasonable attorneys’ fees and costs) arising out of any action or inaction taken or omitted to be
taken by Wausau or its agents, employees or subcontractors in connection with its obligations under
this Service Agreement.

     Section 8.2 Indemnification by PIC. Notwithstanding anything to the contrary in this Service
Agreement, PIC shall indemnify Wausau and its directors, officers, employees and agents against all
claims, losses and reasonable costs and expenses (including, but not limited to, reasonable
attorneys’ fees and costs) arising out of any action or inaction taken or omitted to be taken by
PIC or its agents, employees or subcontractors in connection with its obligations under this
Service Agreement.

     Section 8.3 Indemnification Procedure. Any payment to be made under this Article VIII shall be
made within twenty (20) Business Days (as defined herein) of the delivery of notice of an
uncontested claim for indemnification or, in the case of a contested claim, within twenty (20)
Business Days of final determination of the amount for which indemnification will be made
hereunder. Any amount not paid within such twenty (20) Business Day period shall bear simple
interest at the 30-Day C.P. Rate from the twentieth (20th) day until the date
of payment. As used in this Service Agreement, the term “Business Day” shall mean any day that is
not a Saturday or Sunday or a day on which the principal place of business of Wausau is closed or a
day on which banking institutions in the City of Boston are generally authorized or obligated by
law or executive order to close.

     Section 8.4 Insurance. Each party agrees to maintain at its own expense during the term of
this Service Agreement reasonable amounts of the following types of

9

 

insurance: workers compensation and employees liability, general liability, business
automobile liability, professional liability and fidelity bonds.

ARTICLE IX

TERMINATION

     Section 9.1 Mutual Agreement. This Service Agreement may be terminated by mutual consent of
Wausau and PIC.

     Section 9.2 Termination by Wausau. This Service Agreement may be terminated by the Board of
Directors of Wausau:

               (a) (i) upon ninety (90) days written notice, or (ii) upon forty-five (45) days’ written
notice by Wausau if (1) PIC becomes insolvent or files a voluntary petition in bankruptcy,
rehabilitation or liquidation, or makes an assignment for the benefit of creditors, or (2) if a
committee of creditors or other representatives is appointed to represent its business or an
involuntary petition in bankruptcy, rehabilitation or liquidation is filed against it, and PIC
fails within thirty (30) days following the appointment of such committee or representative to
cause the discharge of such committee or representatives or the dismissal of such petition, except
to the extent that the receiver, liquidator or trustee confirms a part or all of the services to
be provided by Wausau under this Service Agreement and continues to make payment in accordance
with Article VII for the services so confirmed; or

               (b) upon written notice by Wausau if PIC fails to make payment of any fees or expenses in
accordance with Article VII and such failure has not been cured within thirty (30) days after the
date such payment was due.

     Section 9.3 Termination by PIC. This Service Agreement may be terminated by the Board of
Directors of PIC (i) upon ninety (90) days written notice,
(ii) upon forty-five (45) days’ written
notice if (1) Wausau becomes insolvent or files a voluntary petition in bankruptcy or liquidation,
or makes an assignment for the benefit of creditors, or (2) if a committee of creditors or other
representatives is appointed to represent its business or any involuntary petition in bankruptcy
or liquidation is filed against it, and Wausau files within thirty (30) days following the
appointment of such committee or representative to cause the discharge of such committee or
representatives or the dismissal of such petition, or (iii) Wausau materially breaches the terms
and conditions of this Service Agreement and such breach has not been cured within forty-five (45)
days following written notice by PIC setting forth the breach.

     Section 9.4 Return of Books and Records to PIC. In the event of termination of this Service
Agreement by PIC, (i) PIC shall promptly arrange, at its sole cost, for the return to PIC or
transfer to another party of all of the Books and Records of PIC provided to Wausau, and (ii) Wausau shall cooperate fully with PIC in such return or transfer.

     Section 9.5 No Prejudice. The termination of this Service Agreement shall be without
prejudice to any rights or liabilities of any party hereunder which shall have accrued prior to
such termination, and shall not affect any provisions of this Service Agreement that are expressly
or by necessary implication intended to survive such termination.

10

 

     Section 9.6 Transition Period. In the event of termination of this Service Agreement, Wausau
shall continue to provide the Services for a period that is reasonably necessary to enable the
performance of the Services to be transferred to another party.

ARTICLE X

CONFIDENTIALITY

               (a) As used in this Agreement, the term (“Confidential Information” shall mean any and all
information concerning the business, property, operations, policies of insurance, software,
finances, claims information, practices and procedures, policyholder/client data, underwriting
information, and reinsurance arrangements (including summaries, analyses, studies, or other
compilations of such information) of PIC derived in connection with the provision of the Services
by Wausau, except such information which is or becomes available to the public other than as a
result of disclosure by Wausau or its Affiliates or the directors, officers, employees, agents, or
representatives, of any of them, and shall include not only written information but also
information stored or transferred orally, visually, electronically, or by an other means.

               (b) Wausau will hold all Confidential Information confidential and will not disclose any
Confidential Information to any party which is not an Affiliate, except as may be required to
provide the Services, as authorized in advance by PIC in writing or otherwise, or as may be
required by law, in which case Wausau shall promptly provide notice to PIC that such Confidential
Information has been so required by law so that PIC may seek a protective order or other
appropriate remedy. Wausau will use its commercially reasonable best efforts (but without
out-of-pocket costs or expenses) to obtain or assist PIC in obtaining such protective order or
other appropriate remedy.

ARTICLE XI

MISCELLANEOUS

     Section 11.1 Assignment. None of the parties hereto shall assign or transfer or permit the
assignment or transfer of this Service Agreement without the prior written consent of the other,
which consent shall not be unreasonably withheld. All such assignments shall be subject to all
necessary regulatory approvals.

     Section 11.2 Amendments and Waivers. This Service Agreement may not be amended, and none of
its provisions may be modified, except expressly by a written instrument signed by the parties
hereto. No failure or delay of a party in exercising any power or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. No waiver by a party of any
provision of this Service Agreement or consent to any departure therefrom shall in any event be
effective unless the same shall be in writing and signed by such party, and then such waiver or
consent shall be effective only in the specific instance and for the specific purpose for which it
is given.

     Section 11.3 Entire Agreement. This Service Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes

11

 

all other prior negotiations, commitments, agreements, and understandings, both written and oral,
between the parties or any of them with respect to the subject matter hereof.

     Section 11.4 Governing Law. This Service Agreement shall be deemed to have been made under and
governed by the laws of the State of Wisconsin, except for the portion of such laws having to do
with conflicts of law.

     Section 11.5 Notices. All notices and other communications under this Service Agreement shall
be in writing and shall be delivered personally, or sent by confirmed facsimile transmission or
nationally recognized overnight delivery service. Any such notice or other communication shall be
deemed given upon actual delivery in each case to the following addresses:

	 	 	 	 	 

	 

	 	(a)
	 	If to Wausau to:
	 
	 	 	 	 
	 

	 	 	 	Chief Financial Officer
	 

	 	 	 	Employers Insurance Company of Wausau
	 

	 	 	 	2000 Westwood Drive
	 

	 	 	 	Wausau, WI 54401
	 

	 	 	 	Telecopy No.: (715) 842-6800
	 
	 	 	 	 
	 

	 	 	 	With a copy to:
	 
	 	 	 	 
	 

	 	 	 	Employers Insurance Company of Wausau
	 

	 	 	 	2000 Westwood Drive
	 

	 	 	 	Attention: General Counsel
	 

	 	 	 	Wausau, WI 54401
	 

	 	 	 	Telecopy No.: (715) 842-6800
	 
	 	 	 	 
	 

	 	(b)
	 	If to PIC to:
	 
	 	 	 	 
	 

	 	 	 	Peerless Insurance Company
	 

	 	 	 	c/o James Dore, CFO, Liberty Mutual Agency Markets
	 

	 	 	 	Liberty Mutual Insurance Company
	 

	 	 	 	175 Berkeley Street
	 

	 	 	 	Boston, MA 02116-5066
	 

	 	 	 	Telecopy No.: (617) 574-5664
	 
	 	 	 	 
	 

	 	 	 	With a copy to:
	 
	 	 	 	 
	 

	 	 	 	Edmund Kenealy, Vice President and General Counsel
	 

	 	 	 	Liberty Mutual Agency Markets
	 

	 	 	 	Liberty Mutual Insurance Company
	 

	 	 	 	175 Berkeley Street
	 

	 	 	 	Boston, MA 02116-5066
	 

	 	 	 	Telecopy No.: (617)574-5557

     Section 11.6 No Third Party Beneficiaries. Nothing in this Service Agreement is intended to
confer any rights or remedies under or by reason of this Service Agreement on any parties other
than Wausau, PIC, a party entitled to identification under Article VIII and their respective heirs,
executors, successors, and assignees. Nothing in this

12

 

Service Agreement is intended to relieve or discharge the obligations or liability of any
third parties to Wausau or PIC. No provision of this Service Agreement shall give any third parties
any right of subrogation or action over or against Wausau or PIC.

     Section 11.7 Counterparts. This Service Agreement may be executed in two or more counterparts,
each of which shall be deemed to be original, but all of which shall constitute one and the same
instrument.

     Section 11.8 Interpretation. The descriptive headings are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or interpretation of,
this Service Agreement.

     Section 11.9 Legal Enforceability. Any term or provision of this Service Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Service Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Service Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, that provision
shall be interpreted to be only so broad as is enforceable.

     Section 11.10 Specific Performance. Each of the parties hereto acknowledges and agrees that in
the event of a breach of this Service Agreement, each non-breaching party would be irreparably and
immediately harmed and could not be made whole by monetary damages. It is accordingly agreed that
the parties hereto (i) will waive, in any action for specific performance, the defense of adequacy
of a remedy at law, and (ii) shall be entitled, in addition to any other remedy to which they may
be entitled at law or in equity, to compel specific performance of this Service Agreement in any
action instituted in any court of the United States or any state thereof having subject matter
jurisdiction.

     IN WITNESS WHEREOF, this Service Agreement has been duly executed.

EMPLOYERS INSURANCE COMPANY OF WAUSAU

WAUSAU BUSINESS INSURANCE COMPANY

WAUSAU GENERAL INSURANCE COMPANY

WAUSAU UNDERWRITERS INSURANCE COMPANY

			
	By:	 	/s/ Scott Names 

			
	Name:	 	Scott Names 

			
	Title:	 	CFO 

PEERLESS INSURANCE COMPANY

			
	By:	 	/s/ James F. Dore 

			
	Name:	 	James F. Dore 

			
	Title:	 	CFO 

      

13

 

April 1, 2006

Schedule III

Performance Targets & Guidelines

     Wausau intends, as general guidelines and performance targets, to perform certain named
services under this Service Agreement as follows:

     (1) New Business Quotes; To be sent out by Wausau within three (3) business days after receipt
by Wausau of complete application information and rating data, and all applicable state
appointments are in place,

     (2) Renewal Quotes; To be sent out by Wausau thirty (30) days prior to effective date, or
earlier as required by applicable state law or regulation,

     (3) New and Renewal Business; Policy to be issued within thirty (30) days after receipt by
Wausau of complete sold notification and any mandatory file documentation, such as executed TRIA or
UIM forms,

     (4) Endorsements; To be sent out within twenty (20) business days of receipt by Wausau of
complete information necessary for that endorsement.

     Wausau agrees to continue to work toward achieving these targeted performance guidelines,
which are additionally subject to delay due to force majeure, and other extenuating circumstances.

 

 

Schedule 7.1

2006 — 2007

     Fees, charges and expenses payable by PIC to Wausau for the service period April 1,
2006 to December 31, 2007 are set forth below. Amounts payable hereunder
will be direct charges between the parties.

	I.	 	Base Service Fee — 9.4% of Written Premium for the business serviced subject to this Service
Agreement, except Base Service Fee shall be 10% of Written Premium for business retroceded by PIC
to Summit Holding Southeast Inc. and/or its subsidiaries. The Base Service Fees covers:

	 	•	 	Underwriting services
	 
	 	•	 	Policy issuance services
	 
	 	•	 	Direct billing services
	 
	 	•	 	State filing services
	 
	 	•	 	Other services as agreed by parties

	II.	 	Separately Billed Services:

	 	•	 	Agency Appointments — $92 per agency, $92 per agent after initial
appointment transition by Wausau.
	 
	 	•	 	Background checks — $39 per agency, $39 per agent
	 
	 	•	 	Premium audit survey — $77 per hour for physical audits
	 
	 	•	 	Inspection — (Choicepoint) — actual amount invoiced approximately
$95 per report
	 
	 	•	 	Other services as agreed by parties

	III.	 	Other Charges and Expenses — billed at full external cost or out-of-pocket expense incurred or
paid by Wausau.

	 	•	 	Uncollectible premiums (at full write-off)
	 
	 	•	 	Collection costs (incurred as requested by PIC/Regional Cos.)
	 
	 	•	 	Commissions
	 
	 	•	 	Premium tax & assessments
	 
	 	•	 	Loss based assessments
	 
	 	•	 	Other services as agreed by parties

 

 

AMENDMENT NO. 1

(the “Amendment”)

TO

SERVICE AGREEMENT

(the “Agreement”)

by and between

EMPLOYERS INSURANCE COMPANY OF WAUSAU, WAUSAU BUSINESS
INSURANCE COMPANY, WAUSAU GENERAL INSURANCE COMPANY and
WAUSAU UNDERWRITERS INSURANCE COMPANY (collectively “Wausau”) and PEERLESS INSURANCE COMPANY
(“PIC”) (hereinafter together called the
“Parties”).

WHEREAS, the Parties entered into the Agreement for Wausau to provide various
services, effective April 1, 2006.

WHEREAS, the Parties deem it necessary to amend certain provisions of the Agreement
with respect to settlement of amounts due, between them.

NOW, THEREFORE, the Parties hereto agree to amend the Agreement, as follows:
Section 7.3 of the Agreement is added as follows:

“7.3 Accounts and Disbursements. Amounts owing between the parties shall be
settled between the parties on a quarterly basis and payments of amounts owing
shall be made within 45 days after the end of the calendar quarter.”

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment No. 1 to the
Agreement, effective as of the 31st day of December, 2007 to be executed by their
respective duly authorized officers.

	 	 	 	 	 	 	 	 	 

	Employers Insurance Company of Wausau	 	 	 	 	 	 
	Wausau Business Insurance Company	 	 	 	 	 	 
	Wausau General Insurance Company	 	 	 	 	 	 
	Wausau Underwriters Insurance Company	 	 	 	Peerless Insurance Company
	 
	 	 	 	 	 	 	 	 
	/s/ J. Stanley Hoffert	 	 	 	/s/ James F Dore
	 	 	 	 	 
	By:

	 	J. Stanley Hoffert
	 	 	 	By:
	 	James F Dore
	Its:

	 	Vice President — General Counsel
and Secretary
	 	 	 	Its:
	 	Chief Financial Officer

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