Document:

exv10w63

Exhibit 10.63

Alternative Market Workers’ Compensation

Excess of Loss Reinsurance Contract

Effective: July 1, 2009

issued to

Guarantee Insurance Company

Fort Lauderdale, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

 

Alternative Market Workers’ Compensation

Excess of Loss Reinsurance Contract

Effective: July 1, 2009

issued to

Guarantee Insurance Company

Fort Lauderdale, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

	 	 	 	 	 
	                              Reinsurers	 	Participations
	National Liability & Fire Insurance Company
	 	 	90.0	%
	ULLICO Casualty Company
	 	 	10.0	 
	 
	 	 	 	 
	Total
	 	 	100.0	%

 

Table of Contents

	 	 	 	 	 	 	 
	Article	 	 	Page
	I
	 	Business Covered

	 	 	1	 
	II
	 	Retention and Limit

	 	 	1	 
	III
	 	Term

	 	 	2	 
	IV
	 	Special Termination

	 	 	2	 
	V
	 	Territory

	 	 	3	 
	VI
	 	Exclusions

	 	 	4	 
	VII
	 	Special Acceptance

	 	 	6	 
	VIII
	 	Premium

	 	 	6	 
	IX
	 	Other Reinsurance

	 	 	7	 
	X
	 	Profit Commission

	 	 	7	 
	XI
	 	Reinstatement

	 	 	7	 
	XII
	 	Definitions

	 	 	8	 
	XIII
	 	Extra Contractual Obligations / Excess of Policy Limits

	 	 	10	 
	XIV
	 	Run-off Reinsurers

	 	 	11	 
	XV
	 	Net Retained Liability

	 	 	12	 
	XVI
	 	Original Conditions

	 	 	13	 
	XVII
	 	No Third Party Rights

	 	 	13	 
	XVIII
	 	Notice of Loss and Loss Settlements

	 	 	13	 
	XIX
	 	Mandatory Commutation

	 	 	13	 
	XX
	 	Sunset

	 	 	14	 
	XXI
	 	Late Payments

	 	 	15	 
	XXII
	 	Currency

	 	 	16	 
	XXIII
	 	Unauthorized Reinsurance

	 	 	16	 
	XXIV
	 	Taxes

	 	 	18	 
	XXV
	 	Access to Records

	 	 	18	 
	XXVI
	 	Confidentiality

	 	 	19	 
	XXVII
	 	Indemnification and Errors and Omissions

	 	 	19	 
	XXVIII
	 	Insolvency

	 	 	20	 
	XXIX
	 	Arbitration

	 	 	21	 
	XXX
	 	Service of Suit

	 	 	22	 
	XXXI
	 	Agency

	 	 	22	 
	XXXII
	 	Governing Law

	 	 	23	 
	XXXIII
	 	Entire Agreement

	 	 	23	 
	XXXIV
	 	Non-Waiver

	 	 	23	 
	XXXV
	 	Change in Administrative Practices

	 	 	23	 
	XXXVI
	 	Intermediary

	 	 	23	 
	XXXVII
	 	Mode of Execution

	 	 	24	 

 

Alternative Market Workers’ Compensation

Excess of Loss Reinsurance Contract

Effective: July 1, 2009

issued to

Guarantee Insurance Company

Fort Lauderdale, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(collectively, the “Company”)

by

The Subscribing Reinsurer(s) Identified

in the Interests and Liabilities Agreement(s)

Attached to and Forming Part of this Contract

(the “Reinsurer”)

Article I — Business Covered

This Contract is to indemnify the Company in respect of the liability that may accrue to the
Company as a result of loss or losses under Policies classified by the Company as Alternative
Workers’ Compensation (Section A) and/or Employers Liability (Section B), including losses arising
from the United States Longshore and Harbor Workers’ Compensation Act, Jones Act, Federal Employers
Liability Act, and any other Federal Act, in force at the effective date hereof or written or
renewed during the term of this Contract by or on behalf of the Company, subject to the terms and
conditions herein contained.

Article II — Retention and Limit

	A.	 	As respects Section A, the Reinsurer shall be liable in respect of each Loss Occurrence, for the
Ultimate Net Loss over and above an initial Ultimate Net Loss of $1,000,000, each Loss Occurrence,
subject to a limit of liability to the Reinsurer of $4,000,000 each Loss Occurrence, and subject
further to a limit of liability to the Reinsurer of $16,000,000 as respects all Loss Occurrences
subject to this Contract.
	 
	B.	 	As respects Section B:

	 	 1.	 	The Reinsurer shall be liable for the difference between $1,000,000 Ultimate Net
Loss in respect of each Loss Occurrence, and the following limits:

	 	a.	 	$100,000 Ultimate Net Loss for bodily injury per occurrence.
	 
	 	b.	 	$500,000 Ultimate
Net Loss for bodily injury per disease.
	 
	 	c.	 	$100,000 Ultimate Net Loss for bodily
injury per disease, per employee.

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	 	 2.	 	The maximum amount of recovery for Loss Occurrences subject to this Contract as
respects Section B is $3,000,000 in the aggregate.

	C.	 	If one Loss Occurrence involves losses allocated to this Contract and its predecessor or
successor contract, the Company’s retention for the Loss Occurrence shall be proportionate, with
the amount of Ultimate Net Loss to be retained by the Company for each contract being reduced to
that percentage which the Company’s Ultimate Net Loss attaching to each contract bears to the total
of all the Company’s Ultimate Net Loss in respect of the same Loss Occurrence. The limit of the
Reinsurer’s liability shall be calculated in the same manner.

Article III — Term

	A.	 	This Contract shall take effect at 12:01 a.m., Local Standard Time at the place of the loss,
July 1, 2009 applying to Loss Occurrences commencing at or after that time and date on Policies
written or renewed during the term of this Contract, and shall remain in effect until 12:01 a.m.,
Local Standard Time at the place of the loss, July 1, 2010.
	 
	B.	 	The Reinsurer shall have no liability for Loss Occurrences commencing at or after expiration or
termination (as provided in the Special Termination Article) of this Contract.
	 
	C.	 	However, upon mutual agreement between the Company and the Reinsurer, the Reinsurer shall remain
liable hereunder in respect of Policies in force prior to expiration or termination, until the
termination, natural expiration or renewal of such Policies, whichever occurs first.
In such event, the Company shall pay to the Reinsurer an additional premium equal to the
rate(s) set forth in the Rate and Premium Article, multiplied by the Gross Net Earned Premium
Income during the run-off period, payable within 30 days after the end of each quarter.
	 
	D.	 	In the event this Contract expires or terminates on a run-off basis, the Reinsurer’s liability
hereunder shall continue if the Company is required by statute or regulation to continue coverage,
until the earliest date on which the Company may cancel the Policy.

Article IV — Special Termination

	A.	 	The Company may terminate a Subscribing Reinsurer’s percentage share in this Contract at any
time by giving written notice to the Subscribing Reinsurer in the event of any of the following
circumstances:

	 	 1.	 	The Subscribing Reinsurer ceases underwriting operations.
	 
	 	 2.	 	A state insurance department or other legal authority orders the Subscribing
Reinsurer to cease writing business, or the Subscribing Reinsurer is placed under
regulatory supervision.
	 
	 	 3.	 	The Subscribing Reinsurer has become insolvent or has been placed into
liquidation or receivership (whether voluntary or involuntary), or there have been
instituted against it proceedings for the appointment of a receiver, liquidator,
rehabilitator,

Page 2

 

	 	 	 	conservator, trustee in bankruptcy, or other agent known by whatever name, to take possession
of its assets or control of its operations.
	 
	 	4.	 	The Subscribing Reinsurer’s policyholders’ surplus (or the equivalent under the
Subscribing Reinsurer’s accounting system) as reported in such financial statements of
the Subscribing Reinsurer as designated by the Company, has been reduced by 20.0% of the
amount thereof at any date during the prior 12-month period (including the period prior
to the inception of this Contract). This paragraph shall not apply should the Subscribing
Reinsurer continue to have an A.M. Best’s rating of “A+.”
	 
	 	5.	 	The Subscribing Reinsurer has merged with or has become acquired or controlled by
any company, corporation, or individual(s) not controlling the Subscribing Reinsurer’s
operations at the inception of this Contract.
	 
	 	6.	 	The Subscribing Reinsurer has retroceded its entire liability under this
Contract without the Company’s prior written consent.
	 
	 	7.	 	The Subscribing Reinsurer has been assigned an A.M. Best’s rating of less than
“A-” and/or an S&P rating of less than “BBB+.” However, as respects Underwriting Members
of Lloyd’s, London, a Lloyd’s Market Rating of less than “A-” by A.M. Best and/or less
than “BBB+” by S&P shall apply.

	B.	 	Termination shall be effected on a run-off or cut-off basis as set forth in the Term Article, at
the sole discretion of the Company. The reinsurance premium due the Subscribing Reinsurer hereunder
(including any minimum reinsurance premium) shall be pro rated based on the period of the
Subscribing Reinsurer’s participation hereon, and the Subscribing Reinsurer shall immediately
return any excess reinsurance premium received.
In the event that the Subscribing Reinsurer is terminated on a cut-off basis, the minimum
reinsurance premium shall be waived. Reinstatement premium, if any, shall be calculated based
on the Subscribing Reinsurer’s reinsurance premium earned during the period of the Subscribing
Reinsurer’s participation hereon.
	 
	C.	 	Additionally, in the event of any of the circumstances listed in paragraph A of this Article,
the Company shall have the option to commute the Subscribing Reinsurer’s liability for losses on
Policies covered by this Contract. In the event the Company and the Subscribing Reinsurer cannot
agree on the commutation amount, they shall appoint an actuary and/or appraiser to assess such
amount and shall share equally any expense of the actuary and/or appraiser. If the Company and the
Subscribing Reinsurer cannot agree on an actuary and/or appraiser, the Company and the Subscribing
Reinsurer each shall nominate three individuals, of whom the other shall decline two, and the final
appointment shall be made by drawing lots. Payment by the Subscribing Reinsurer of the amount of
liability ascertained shall constitute a complete and final release of both parties in respect of
liability arising from the Subscribing Reinsurer’s participation under this Contract.
	 
	D.	 	The Company’s option to require commutation under paragraph C above shall survive the
termination or expiration of this Contract.

Article V — Territory

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

Page 3

 

Article VI — Exclusions

This Contract shall not apply to and specifically excludes:

	 	1.	 	Assumed reinsurance, except 100% of business ceded by fronting insurance companies.
	 
	 	2.	 	Liability of the Company arising by contract, operation of law, or otherwise, from its
participation or membership, whether voluntary or involuntary, in any Insolvency Fund.
“Insolvency Fund” includes any guaranty fund, insolvency fund, plan, pool, association, fund
or other arrangement, howsoever denominated, established or governed, that provides for any
assessment of or payment or assumption by the Company of part or all of any claim, debt,
charge, fee, or other obligation of an insurer, or its successors or assigns, that has been
declared by any competent authority to be insolvent, or that is otherwise deemed unable to
meet any claim, debt, charge, fee or other obligation in whole or in part.
	 
	 	3.	 	Loss or liability accruing to the Company directly or indirectly from any insurance written
by or through any pool, association, or syndicate, including pools, associations, or
syndicates in which membership by the Company is required under any statutes or regulations.
	 
	 	4.	 	Loss or damage which is occasioned by war, invasion, hostilities, acts of foreign enemies,
civil war, rebellion, insurrection, military or usurped power, or martial law or confiscation
by order of any government or public authority. Nevertheless, this Exclusion shall not apply
to loss or damage occasioned by riots, strikes, civil commotion, vandalism, or malicious
damage.
	 
	 	5.	 	All loss or liability of the Company excluded by the “Nuclear Risk Exclusion” attached
hereto.
	 
	 	6.	 	Manufacturing, packaging, handling, shipping or storage of explosives, explosive substances
intended for use as an explosive, ammunitions, fuses, arms, or fireworks; however, this
exclusion shall not apply to the incidental packaging, handling or storage of same in
connection with the sale or transportation by owner operators of such substances.
	 
	 	7.	 	Loss arising from Professional Sports Teams. For the purpose of this Exclusion, “Professional
Sports Team” shall mean an organization of greater than 15 people (including athletes,
coaches, and staff) that exists for the purpose of competing in regularly scheduled sporting
events and whose members are receiving compensation from the organization at the time of the
Occurrence.
	 
	 	8.	 	Loss sustained by Commercial Airline Personnel on board the aircraft and arising while the
aircraft is In Flight. The following definitions shall apply to this Exclusion:

	 	a.	 	“Commercial Airline” shall mean an organization in the business of transporting passengers
and/or goods by aircraft;

Page 4

 

	 	b.	 	“Personnel” shall mean employees of the Commercial Airline acting within the scope of
their employment; and
	 
	 	c.	 	“In Flight” shall mean from the time the door(s) close for departure to the time the
door(s) open for arrival.

	 	9.	 	Liability arising out of, or resulting as a consequence of, insureds principally involved
in the manufacture, distribution, installation, testing, remediation, removal, storage,
disposal, sale, use of or exposure to asbestos.
	 
	 	10.	 	Railroads, except scenic railways, and access lines and industrial aid owner operations
when written as an incidental part of an insured’s overall operations.
	 
	 	11.	 	Chemical or petrochemical manufacturing.
	 
	 	12.	 	Underground mining.
	 
	 	13.	 	Loss arising from the intentional wrecking or demolition of buildings or structures in excess
of three stories.
	 
	 	14.	 	Losses arising from the United States Longshore and Harbor Workers’ Compensation Act, Jones
Act, Federal Employers Liability Act, Maritime Employers Liability Act, and any other federal act
if the payroll for such business is greater than 10.0% of the total payroll for the original
insured’s total operations including such business.
	 
	 	15.	 	Actual or alleged loss, liability, damage, injury, defense cost, cost or expense directly or
indirectly caused by, contributed to by, resulting from, arising out of or in connection with any
“acts of terrorism” as defined in the Terrorism Risk Insurance Act of 2002 (the “Act”), including
acts of war, invasion, acts of foreign enemies, hostilities or warlike operation (whether war be
declared or not), civil war, rebellion, revolution, insurrection, or civil commotion assuming the
proportions of or amounting to an uprising, military or usurped power, regardless of any other
cause or event contributing concurrently or in any sequence to the loss and regardless of the
location of the loss, liability, damage, injury, defense, cost or expense.
	 
	 	 	 	Also excluding actual or alleged loss, liability, damage, injury, defense cost or expense
directly or indirectly caused by, contributed to by, resulting from, arising out of or in
connection with any action taken in controlling, preventing, suppressing, retaliating against,
or responding to an act of terrorism as defined in the Act, regardless of the location of the
loss, liability, damage, injury, defense, cost or expense.
	 
	 	 	 	Notwithstanding the above and subject otherwise to the terms, conditions and limitations of
this Contract, this Contract will pay actual loss or damage caused by an act of terrorism
which does not meet the definition of “act of terrorism” as defined in the Act, but in no
event
will this Contract provide coverage for loss, damage, cost or expense directly or indirectly
caused by, contributed to by, resulting from, arising out of or in connection with biological,
chemical or nuclear explosion, pollution, contamination and/or fire following therefrom.
	 
	 	 	 	In the event any portion of this exclusion is found to be invalid or unenforceable, the
remainder shall remain in full force and effect.

Page 5

 

	 	16.	 	Financial Guarantee and Insolvency.
	 
	 	17.	 	Risks with known occupational disease exposures per NCCI D&E codes.
	 
	 	18.	 	Construction of bridges, tunnels or dams.
	 
	 	19.	 	Firefighters and police officers.
	 
	 	20.	 	Trucks hauling explosives or ammunition (local or long distance hauling) — all
employees.
	 
	 	21.	 	Manufacturing, packing, handling, shipping or storage of natural or artificial fuel gases,
butane, propane, gasoline, or liquefied petroleum gas; however, this exclusion shall not apply to
the incidental packing, handling or storage of same in connection with the sale of such substances.
	 
	 	22.	 	Gas or oil burner installation NOC.
	 
	 	23.	 	Gasoline Service Stations tank installations.
	 
	 	24.	 	Blasting of rock.
	 
	 	25.	 	Sewer construction — all operations.
	 
	 	26.	 	Gas main, steam main, or water main construction or connection construction.
	 
	 	27.	 	Boat manufacturing — F classes.
	 
	 	28.	 	Banks and trust company employees of contracting agencies in bank service: guards, patrols,
messengers or armored car crews.
	 
	 	29.	 	Detective agencies.
	 
	 	30.	 	Patrol agencies only in regard to armed guard services.

Article VII — Special Acceptance

Business that is not within the scope of this Contract may be submitted to the Reinsurer for
special acceptance hereunder, and such business, if accepted by the Reinsurer shall be covered
hereunder, subject to the terms and conditions of this Contract, except as modified by the special
acceptance.

Article VIII — Premium

	A.	 	The Company shall pay the Reinsurer a deposit premium of $3,675,805 for the term of
this Contract, to be paid in the amount of $918,951.25 on September 30 and December 31,
2009, and March 31 and June 30, 2010.

Page 6

 

	B.	 	Within 90 days following the expiration of this Contract, the Company shall furnish to the
Reinsurer a statement of the Gross Net Earned Premium Income for the term of this Contract and
calculate a premium at a rate of 8.4% multiplied by the Company’s total Gross Net Earned Premium
Income for Sections A and B combined. Should the premium so calculated exceed the deposit premium
paid in accordance with paragraph A of this Article, the Company shall immediately pay the
Reinsurer the difference. Should the premium so calculated be less than the deposit premium paid in
accordance with paragraph A of this Article, the Reinsurer shall immediately pay the Company the
difference, subject to a minimum premium for the term of this Contract of $2,940,644.
	 
	C.	 	The Company shall furnish the Reinsurer with such information as may be required by the
Reinsurer for completion of its NAIC annual statements.

Article IX — Other Reinsurance

The Company is permitted to have other treaty reinsurance, recoveries under which shall inure
solely to the benefit of the Company and shall be entirely disregarded in applying all of the
provisions of this Contract.

Article X — Profit Commission

	A.	 	Anytime after 24 months from expiration and prior to 72 months from expiration of this Contract,
the Company may request payment of a 25.0% profit commission on the basis of a loss commutation
with full release of all current and future liabilities of the Reinsurer under the terms of the
Contract.
	 
	B.	 	The profit commission will be calculated on the basis of gross ceded reinsurance premium earned
less incurred losses including mutually agreed incurred but not reported losses.

Article XI — Reinstatement

(This Article shall apply only to Section A.)

	A.	 	Loss payments under this Contract shall reduce the limit of coverage afforded by the amounts
paid, but the limit of coverage shall be reinstated from the time of the occurrence of the loss.

	 	1.	 	As respects the first reinstatement, the Company agrees to pay an additional
premium calculated at pro rata of 25.0% of the Reinsurer’s premium for the term of this
Contract, being pro rata only as to the fraction of the Reinsurer’s limit of liability
hereunder (i.e., the fraction of $4,000,000) so reinstated.
	 
	 	2.	 	As respects the second reinstatement, the Company agrees to pay an additional
premium calculated at pro rata of 50.0% of the Reinsurer’s premium for the term of this
Contract, being pro rata only as to the fraction of the Reinsurer’s limit of liability
hereunder (i.e., the fraction of $4,000,000) so reinstated.
	 
	 	3.	 	The third reinstatement shall be without payment of additional premium.

Page 7

 

	 	 	 	Nevertheless, the Reinsurer’s liability hereunder shall not exceed the limits as provided in the
Retention and Limit Article.
	 
	B. 	 	 	If at the time of a loss settlement hereon the reinsurance premium, as calculated in
accordance with the Premium Article, is unknown, the above calculation of reinstatement
premium shall be based upon the deposit premium, subject to adjustment when the
reinsurance premium is finally established.

Article XII — Definitions

	A. 	1. 	 	“Ultimate Net Loss” means the actual loss paid by the Company or which the Company becomes
liable to pay, including structured settlements with claimants or outside insurers, such
loss to include Loss Adjustment Expense, Extra Contractual Obligations and Loss in Excess of
Policy Limits as defined in the Extra Contractual Obligations/Excess of Policy Limits
Article.
	 
	 	2.	 	Salvages and all recoveries (including amounts due under all reinsurances that
inure to the benefit of this Contract, whether recovered or not), shall be first
deducted from such loss to arrive at the amount of liability attaching hereunder.
	 
	 	3.	 	All salvages, recoveries or payments recovered or received subsequent to loss
settlement hereunder shall be applied as if recovered or received prior to the aforesaid
settlement, and all necessary adjustments shall be made by the parties hereto.
	 
	 	4.	 	Ultimate Net Loss shall not be reduced by the amount of any deductibles, whether
or not recovered by the Company. “Deductibles” shall mean any insurance plan, however
denominated, where the insured participates in, and is responsible for, reimbursing the
Company for losses up to a specified limit.
	 
	 	5.	 	The Company shall be deemed to be “liable to pay” a loss when a judgment has been
rendered that the Company does not plan to appeal, and/or the Company has obtained a
release, and/or the Company has accepted a proof of loss.
	 
	 	6.	 	Nothing in this clause shall be construed to mean that losses are not recoverable
hereunder until the Company’s “Ultimate Net Loss” has been ascertained.

	B.	 	“Loss Occurrence” means each and every disaster, casualty, accident, or loss or series of
disasters, casualties, accidents or losses arising out of one event. As respects a Loss Occurrence
involving Occupational Disease or Other Disease or Cumulative Trauma, the following shall apply:

	    	1.	 	Per Event Coverage. As respects losses arising from Occupational Disease or Other
Disease, regardless of the specific kind or class, suffered by employees of one or more
employers, all such losses sustained by the Company from one event shall, together with
losses not classified as Occupational Disease or Other Disease, be deemed to be a single
“Loss Occurrence.”
	 
	    	2.	 	Per Employee Coverage. As respects losses arising from Occupational Disease or
Other Disease or Cumulative Trauma suffered by a single employee, and not covered

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	 	 	 	under subparagraph (1) above, the date that the Loss Occurrence commences shall be determined
as follows:

	 	a.	 	If the case is compensable under the Workers’ Compensation Law, the date of the
beginning of the disability for which compensation is payable.
	 
	 	b.	 	If the case is not compensable under the Workers’ Compensation Law, the date that
disability due to said disease actually began.
	 
	 	c.	 	If the claim is made after employment has ceased, the date of cessation of such
employment.

	 	3.	 	Per Employer Coverage. As respects losses arising from Occupational Disease or
Other Disease or Cumulative Trauma of the same specific kind or class, suffered by
multiple employees of the same employer, and not covered under subparagraphs (1) or (2)
above, all such losses sustained by the Company within a Policy year shall be aggregated
and considered as constituting one “Loss Occurrence” hereunder and the inception date of
the Policy year in which losses occur shall be deemed to be the date
of the Loss Occurrence.

	C.	 	“Gross Net Earned Premium Income” means gross earned manual premium for Policies covered
hereunder adjusted for experience and schedule credit/debit modifications, State/NCCI safety credit
and other allowable credits, premium discount, deductible credits, expense constants and Policy
fees, less returns and cancellations and less the earned portion of premiums for Policies covered
hereunder ceded by the Company for reinsurance that inures to the benefit of this Contract, if any.
	 
	D.	 	“Loss Adjustment Expense” means costs and expenses incurred by the Company in connection with
the investigation, appraisal, adjustment, settlement, litigation, defense or appeal of a specific
claim or loss, or alleged loss, including but not limited to:

	 	1.	 	court costs;
	 
	 	2.	 	costs of supersedeas and appeal bonds;
	 
	 	3.	 	monitoring counsel expenses;
	 
	 	4.	 	legal expenses and costs incurred in connection with coverage questions and legal actions
connected thereto, including but not limited to declaratory judgment actions;
	 
	 	5.	 	post-judgment interest;
	 
	 	6.	 	pre-judgment interest, unless included as part of an award or judgment;
	 
	 	7.	 	a pro rata share of salaries and expenses of Company field employees, calculated in
accordance with the time occupied in adjusting such loss, and expenses of other Company
employees who have been temporarily diverted from their normal and customary duties and
assigned to the field adjustment of losses covered by this Contract; and
	 
	 	8.	 	subrogation, salvage and recovery expenses.

Page 9

 

	 	 	 	“Loss Adjustment Expense” does not include salaries and expenses of the Company’s employees, except
as provided in subparagraph (7) above, and office and other overhead expenses.
	 
	E.	 	 	“Policy(ies)” means any binder, policy, or contract of insurance or reinsurance issued, accepted
or held covered provisionally or otherwise, by or on behalf of the Company.
	 
	F.		 	“Occupational Disease,” “Other Disease” and “Cumulative Trauma” shall be defined by the
applicable state or federal statutes, regulations, or case law having jurisdiction over such
losses.

Article XIII — Extra Contractual Obligations / Excess of Policy Limits

	A.	 	 	This Contract shall cover 90.0% of any Extra Contractual Obligations, as provided in the
definition of Ultimate Net Loss. “Extra Contractual Obligations” shall be defined as those
liabilities not covered under any other provision of this Contract and that arise from the handling
of any claim on business covered hereunder, such liabilities arising because of, but not limited
to, the following: failure by the Company to settle within the Policy limit, or by reason of
alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the
preparation of the defense or in the trial of any action against its insured or reinsured or in the
preparation or prosecution of an appeal consequent upon such action.
	 
	B.	 	 	This Contract shall cover 90.0% of any Loss in Excess of Policy Limits, as provided in the
definition of Ultimate Net Loss. “Loss in Excess of Policy Limits” shall be defined as Loss in
excess of the Policy limit, having been incurred because of, but not limited to, failure by the
Company to settle within the Policy limit or by reason of alleged or actual negligence, fraud or
bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial
of any action against its insured or reinsured or in the preparation or prosecution of an appeal
consequent upon such action.
	 
	C.	 	 	An Extra Contractual Obligation and/or Loss in Excess of Policy Limits shall be deemed to have
occurred on the same date as the loss covered under the Company’s Policy, and shall constitute part
of the original loss.
	 
	D.	 	 	For the purposes of the Loss in Excess of Policy Limits coverage hereunder, the word “Loss”
means any amounts for which the Company would have been contractually liable to pay had it not been
for the limit of the original Policy.
	 
	E.	 	 	Loss Adjustment Expense in respect of Extra Contractual Obligations and/or Loss in Excess of
Policy Limits shall be covered hereunder in the same manner as other Loss Adjustment Expense.
	 
	F.	 	 	However, this Article shall not apply where the loss has been incurred due to final legal
adjudication of fraud of a member of the Board of Directors or a corporate officer of the Company
acting individually or collectively or in collusion with any individual or corporation or any other
organization or party involved in the presentation, defense or settlement of any claim covered
hereunder.
	 
	G.	 	 	In no event shall coverage be provided to the extent not permitted under law.

Page 10

 

Article XIV — Run-off Reinsurers

	A.	 	“Run-off Reinsurer” means any Subscribing Reinsurer that:

	 	1.	 	has been ordered by a state insurance department or other legal authority to cease writing
business, or has been placed under regulatory supervision or in rehabilitation; or
	 
	 	2.	 	has ceased reinsurance underwriting operations; or
	 
	 	3.	 	has transferred its claims-paying authority to an unaffiliated entity; or
	 
	 	4.	 	in any other way has assigned its interests or delegated its obligations under this
Contract to an unaffiliated entity.

	B.	 	Notwithstanding any other provision of this Contract, in the event that a Subscribing Reinsurer
becomes a Run-off Reinsurer at any time, the Company may elect, by giving written notice to the
Run-off Reinsurer at any time thereafter, that all or any of the following shall apply to the
Run-off Reinsurer’s participation hereunder:

	 	1.	 	If the Run-off Reinsurer does not pay a claim or raise a query concerning the
claim within 30 days of billing, it shall be estopped from denying such claim and must
pay immediately.
	 
	 	2.	 	If payment of any claim has been received from Subscribing Reinsurers
constituting at least 70.0% of the interests and liabilities of all Subscribing
Reinsurers that participated on this Contract and are active as of the due date; it
being understood that said date shall not be later than 90 days from the date of
transmittal by the Intermediary of the initial billing for each such payment, the
Run-off Reinsurer shall be estopped from denying such claim and must pay within 10 days
following transmittal to the Run-off Reinsurer of written notification of such payments.
For purposes of this subparagraph, a Subscribing Reinsurer shall be deemed to be active
if it is not a Run-off Reinsurer.
	 
	 	3.	 	Should the Run-off Reinsurer refuse to pay claims as required by subparagraphs B1
and/or B2 above, the interest penalty specified in the Late Payments Article shall be
increased by 0.5% for each 30 days that a payment is past due, subject to a maximum
increase of 7.0%.
	 
	 	4.	 	The Run-off Reinsurer’s liability for losses for Policies covered by this
Contract shall be commuted. In the event the Company and the Run-off Reinsurer cannot
agree on the commutation amount, they shall appoint an actuary and/or appraiser to
assess such amount and shall share equally any expense of the actuary and/or appraiser.
If the Company and the Run-off Reinsurer cannot agree on an actuary and/or appraiser,
the Company and the Run-off Reinsurer each shall nominate three individuals, of whom the
other shall decline two, and the final appointment shall be made by drawing lots.
Payment by the Run-off Reinsurer of the amount of liability ascertained shall constitute
a complete and final release of both parties under this Contract.

Page 11

 

	 	5.	 	The Run-off Reinsurer shall have no right of access to the Records of the Company
if the Run-off Reinsurer has denied payment of any claim hereunder or there is a pending
arbitration between the Company and the Run-off Reinsurer regarding any claim hereunder.
A reservation of rights shall be considered a denial of a claim.
	 
	 	6.	 	In the event that either party demands arbitration of a dispute between the
Company and the Run-off Reinsurer, and the amount in dispute is less than $100,000,
unless the arbitration notice includes a demand for rescission of this Contract,
notwithstanding the terms of the Arbitration Article, the dispute shall be resolved by a
sole arbitrator and the following procedures shall apply:

	 	a.	 	The sole arbitrator shall be chosen by mutual agreement of the parties within 15
business days after the demand for arbitration. If the parties have not chosen an
arbitrator within the 15 business days after the receipt of the arbitration notice, the
arbitrator shall be chosen in accordance with the Neutral Arbitrator Selection Procedure
modified for a single arbitrator, established by the AIDA Reinsurance and Insurance
Arbitration Society — U.S. (ARIAS) and in force on the date the arbitration is demanded.
The nominated arbitrator must be available to read any written submissions and hear
testimony within 60 calendar days of being chosen.
	 
	 	b.	 	Within 10 business days after the arbitrator has been appointed, the parties shall be
notified of deadlines for the submission of briefs and documentary evidence, as
determined by the arbitrator. There shall be no discovery or hearing unless the parties
agree to engage in limited discovery and/or a hearing. Also, the arbitrator can
determine, without the consent of the parties, that a limited hearing is necessary.
	 
	 	c.	 	The arbitrator shall render a decision no later than 10 business days from the later
of the date on which the briefs are submitted or the close of the hearing, if any. The
decision of the arbitrator shall be in writing and shall be final and binding.

	C.	 	The Company’s waiver of any rights provided in this Article is not a waiver of that right or
other rights at a later date.

Article XV — Net Retained Liability

	A.	 	This Contract applies only to that portion of any loss that the Company and/or its agents
retains net for its own account (prior to deduction of any reinsurance that inures solely to the
benefit of the Company).
	 
	B.	 	The amount of the Reinsurer’s liability hereunder in respect of any loss or losses shall not be
increased by reason of the inability of the Company to collect from any other reinsurer(s), whether
specific or general, any amounts that may have become due from such reinsurer(s), whether such
inability arises from the insolvency of such other reinsurer(s) or otherwise.

Page 12

 

Article XVI — Original Conditions

All reinsurance under this Contract shall be subject to the same terms, conditions, waivers and
interpretations, and to the same modifications and alterations as the respective Policies of the
Company. However, in no event shall this be construed in any way to provide coverage outside the
terms and conditions set forth in this Contract.

Article XVII — No Third Party Rights

This Contract is solely between the Company and the Reinsurer, and in no instance shall any
insured, claimant or other third party have any rights under this Contract except as may be
expressly provided otherwise herein.

Article XVIII — Notice of Loss and Loss Settlements

	A.	 	The Company shall advise the Reinsurer promptly of all losses that, in the opinion of the
Company, may result in a claim hereunder and of all subsequent developments thereto that may
materially affect the position of the Reinsurer.
	 
	B.	 	The Company alone and at its full discretion shall adjust, settle or compromise all claims and
losses.
	 
	C.	 	As respects losses subject to this Contract, all loss settlements made by the Company, whether
under strict Policy terms or by way of compromise, and any Extra Contractual Obligations and/or
Loss in Excess of Policy Limits, shall be binding upon the Reinsurer, and the Reinsurer agrees to
pay or allow, as the case may be, its share of each such settlement immediately upon receipt of
proof of loss.

Article XIX — Mandatory Commutation

	A.	 	Not later than 84 months after the effective date of this Contract, the Company shall advise the
Reinsurer of the amount of all Ultimate Net Loss for all claims from business covered from any Loss
Occurrence, both reported and unreported, both paid and not finally settled, that is the subject of
this Contract. The Company and the Reinsurer or their respective representatives shall, within 60
days thereafter by mutual agreement, determine and capitalize (i.e., reduce to a net present value)
the total of such Ultimate Net Loss for each Loss Occurrence.
	 
	B.	 	If the mutually agreed capitalized value of the Ultimate Net Loss for any Loss Occurrence is in
excess of the Company’s retention for that Loss Occurrence, the Reinsurer shall pay the Company the
amount, subject to the coverage provided under this Contract, of capitalized Ultimate Net Loss in
excess of the Company’s retention for that Loss Occurrence less any amounts of Ultimate Loss
previously paid by the Reinsurer to the Company for that Loss Occurrence.
	 
	C.	 	If mutual agreement cannot be reached, then any difference shall be settled by an appraisal made
by a panel of three actuaries, one to be chosen by each party and the third by the two so chosen.
If either party refuses or neglects to appoint an actuary within 30 days of a

Page 13

 

	 	 	written request from the other party to appoint an actuary, the other party may appoint two
actuaries. If the two actuaries fail to agree on the selection of a third actuary within 30 days of
their appointment, each of them shall name two, of whom the other shall decline one and the
decision shall be made by drawing lots.
	 
	D.	 	All the actuaries shall be regularly engaged in the valuation of Workers’ Compensation claims
and shall be Fellows of the Casualty Actuarial Society or Members of the American Academy of
Actuaries. None of the actuaries shall be under the control of either party to this Contract.
	 
	E.	 	Each party shall submit its case to its chosen actuary within 30 days of the appointment of the
third actuary. The decision in writing of any two appointed actuaries, when filed with the parties
hereto, shall be final and binding on all parties participating in the appraisal and judgment may
be entered hereon in any court of competent jurisdiction.
	 
	F.	 	The expense of the actuaries and of their appraisal shall be equally divided between the Company
and the Reinsurer.
	 
	G.	 	Payment of the profit commission by the Reinsurer to the Company or payment by Reinsurer of the
amount of capitalized Ultimate Net Loss in excess of the Company’s retention for any Loss
Occurrence less any amounts of Ultimate Net Loss previously paid by the Reinsurer to the Company
for that Loss Occurrence, whether determined by mutual agreement or by the appraisal procedure set
forth above, shall constitute a complete and final release of both parties as respects such claims
and as respects any future claimants arising out of any Loss Occurrence so commuted. If the
capitalized Ultimate Net Loss for any Loss Occurrence is determined to be below the Company’s
retention, whether by mutual agreement or the appraisal procedure set forth above, such
determination shall constitute a complete and final release of both parties as respects such claims
and as respects any future claimants arising out of such Loss Occurrence.

Article XX — Sunset

Notwithstanding the provisions of paragraph C of the Indemnification and Errors and Omissions
Article of this Contract, coverage hereunder shall apply only to Loss Occurrences notified by
Company to the Reinsurer, with full particulars, within 84 months from the effective date of this
Contract. Notice of an event shall include:

	 	1.	 	The approximate time and location of the Loss Occurrence.
	 
	 	2.	 	The date of loss as established under this Contract.
	 
	 	3.	 	The names of any original insureds that have been identified by the Company, at the time of
notice, as being involved in the Loss Occurrence.
	 
	 	4.	 	The current indemnity, medical and expense reserves delineated by the original insured.
	 
	 	5.	 	The total payments made by the Company, delineated by original insured.

Page 14

 

Article XXI — Late Payments

	A.	In the event any payment due either party is not received by the payment due date, the party to
whom payment is due may, by notifying the other party in writing, require the debtor party to pay,
and the debtor party agrees to pay, an interest penalty on the amount past due calculated for each
such payment on the last business day of each month as follows:

	 	1.	 	The number of full days that have expired since the overdue date or the last
monthly calculation, whichever the lesser; times
	 
	 	2.	 	1/365th of the sum of the six-month United States Treasury Bill rate as quoted in
The Wall Street Journal on the first business day of the month for which the calculation
is made, plus 1.0%; times
	 
	 	3.	 	The amount past due, including accrued interest.

	 	 	Interest shall accumulate until payment of the original amount due plus interest penalties has
been received by the party to whom payment is due.
	 
	B.	 	The due date shall, for purposes of this Article, be determined as follows:

	 	1.	 	Payments from the Reinsurer to the Company shall be due on the date on which the
demand for payment (including delivery of bordereaux or quarterly or monthly reports) is
received by the Reinsurer, and shall be overdue 30 days thereafter.
	 
	 	2.	 	Payments from the Company to the Reinsurer shall be due on the dates specified
within this Contract. Payments shall be overdue 30 days thereafter except for the first
installment of premium, if applicable, which shall be overdue 60 days from inception or
30 days from final line-signing, whichever the later. Reinstatement premium, if
applicable, shall have as a due date the date when the Company receives payment for the
claim giving rise to such reinstatement premium, and payment shall be overdue 30 days
thereafter. In the event a due date is not specifically stated for a given payment, the
overdue date shall be 30 days following the date of billing.

	C.	 	If the information contained in the Company’s demand for payment is insufficient or not in
accordance with the conditions of this Contract, then within 30 days the Reinsurer shall request
from the Company all additional information necessary to validate its claim and the payment due
date as defined in paragraph B shall be deemed to be the date upon which the Reinsurer received the
requested additional information. This paragraph is only for the purpose of establishing when a
payment is overdue, and shall not alter the provisions of the Notice of Loss and Loss Settlements
Article or other pertinent contractual stipulations.
	 
	D.	 	Should the Reinsurer dispute a claim presented by the Company and the timeframes set out in
paragraph B be exceeded, interest as stipulated in paragraph A shall be payable for the entire
overdue period, but only for the amount of the final settlement with the Reinsurer.

Page 15

 

	E.	 	In the event arbitration is necessary to settle a dispute, the panel shall have the authority to
make a determination awarding interest to the prevailing party. Interest, if any, awarded by the
panel shall supersede the interest amounts outlined herein.
	 
	F.	 	Any interest owed pursuant to this Article may be waived by the party to which it is owed.
Waiver of such interest, however, shall not affect the waiving party’s rights to other
interest amounts due as a result of this Article.
	 
	G.	 	For purposes of this Article, reinsuring Underwriting Members of Lloyd’s, London, shall be
considered to be one entity.

Article XXII — Currency

	A.	 	Where the word “Dollars” and/or the sign “$” appear in this Contract, they shall mean United
States Dollars.
	 
	B.	 	For purposes of this Contract, where the Company receives premiums or pays losses in currencies
other than United States Dollars, such premiums or losses shall be converted into United States
Dollars at the actual rates of exchange at the time of receipt or payment by the Company.

Article XXIII — Unauthorized Reinsurance

	A.	 	This Article applies only to a Subscribing Reinsurer who does not qualify for full credit with
any insurance regulatory authority having jurisdiction over the Company’s reserves.
	 
	B.	 	The Company agrees, in respect of its Policies or bonds falling within the scope of this
Contract, that when it files with its insurance regulatory authority, or sets up on its books
liabilities as required by law, it shall forward to the Reinsurer a statement showing the
proportion of such liabilities applicable to the Reinsurer. The “Reinsurer’s Obligations” shall be
defined as follows:

	 	1.	 	unearned premium (if applicable);
	 
	 	2.	 	known outstanding losses that have been reported to the Reinsurer and Loss
Adjustment Expense relating thereto;
	 
	 	3.	 	losses and Loss Adjustment Expense paid by the Company but not recovered from the
Reinsurer;
	 
	 	4.	 	losses incurred but not reported and Loss Adjustment Expense relating thereto.

	C.	 	The Reinsurer’s Obligations shall be funded by funds withheld, cash advances, Trust Agreement or
a Letter of Credit (LOC). The Reinsurer shall have the option of determining the method of funding
provided it is acceptable to the insurance regulatory authorities having jurisdiction over the
Company’s reserves.

Page 16

 

	D.	 	When funding by an LOC, the Reinsurer agrees to apply for and secure timely delivery to the
Company of a clean, irrevocable and unconditional LOC issued by a bank and containing provisions
acceptable to the insurance regulatory authorities having jurisdiction over the Company’s reserves
in an amount equal to the Reinsurer’s Obligations. Such LOC shall be issued for a period of not
less than one year, and shall be automatically extended for one year from its date of expiration or
any future expiration date unless 30 days (or such other time period as may be required by
insurance regulatory authorities), prior to any expiration date the issuing bank shall notify the
Company by certified or registered mail that the issuing bank elects not to consider the LOC
extended for any additional period.
	 
	E.	 	The Reinsurer and the Company agree that any funding provided by the Reinsurer pursuant to the
provisions of this Contract may be drawn upon at any time, notwithstanding any other provision of
this Contract, and be utilized by the Company or any successor, by operation of law, of the Company
including, without limitation, any liquidator, rehabilitator, receiver or conservator of the
Company, for the following purposes, unless otherwise provided for in a separate Trust Agreement:

	 	1.	 	to reimburse the Company for the Reinsurer’s Obligations, the payment of which is due
under the terms of this Contract and that has not been otherwise paid;
	 
	 	2.	 	to make refund of any sum that is in excess of the actual amount required to pay the
Reinsurer’s Obligations under this Contract (or in excess of 102% of the Reinsurer’s
Obligations, if funding is provided by a Trust Agreement);
	 
	 	3.	 	to fund an account with the Company for the Reinsurer’s Obligations. Such cash deposit
shall be held in an interest bearing account separate from the Company’s other assets, and
interest thereon not in excess of the prime rate shall accrue to the benefit of the
Reinsurer. Any taxes payable on accrued interest shall be paid out of the assets in the
account that are in excess of the Reinsurer’s Obligations (or in
excess of 102% of the
Reinsurer’s Obligations, if funding is provided by a Trust Agreement). If the assets are
inadequate to pay taxes, any taxes due shall be paid by the Reinsurer;
	 
	 	4.	 	to pay the Reinsurer’s share of any other amounts the Company claims are due under this
Contract.

	F.	 	If the amount drawn by the Company is in excess of the actual amount required for E(1) or E(3),
or in the case of E(4), the actual amount determined to be due, the Company shall promptly return
to the Reinsurer the excess amount so drawn. All of the foregoing shall be applied without
diminution because of insolvency on the part of the Company or the Reinsurer.
	 
	G.	 	The issuing bank shall have no responsibility whatsoever in connection with the propriety of
withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that
withdrawals are made only upon the order of properly authorized representatives of the Company.
	 
	H.	 	At annual intervals, or more frequently at the discretion of the Company, but never more
frequently than quarterly, the Company shall prepare a specific statement of the Reinsurer’s

Page 17

 

	 	 	Obligations for the sole purpose of amending the LOC or other method of funding, in the following
manner:

	 	1.	 	If the statement shows that the Reinsurer’s Obligations exceed the balance of the LOC as of
the statement date, the Reinsurer shall, within 30 days after receipt of the statement,
secure delivery to the Company of an amendment to the LOC increasing the amount of credit by
the amount of such difference. Should another method of funding be used, the Reinsurer shall,
within the time period outlined above, increase such funding by the amount of such
difference.
	 
	 	2.	 	If, however, the statement shows that the Reinsurer’s Obligations are less than the balance
of the LOC (or that 102% of the Reinsurer’s Obligations are less than the trust account
balance if funding is provided by a Trust Agreement), as of the statement date, the Company
shall, within 30 days after receipt of written request from the Reinsurer, release such excess
credit by agreeing to secure an amendment to the LOC reducing the amount of credit available
by the amount of such excess credit. Should another method of funding be used, the Company
shall, within the time period outlined above, decrease such funding by the amount of such
excess.

Article XXIV — Taxes

	A.	 	In consideration of the terms under which this Contract is issued, the Company
undertakes not to claim any deduction of the premium hereon when making Canadian tax
returns or when making tax returns, other than Income or Profits Tax returns, to any state
or territory of the United States of America or to the District of Columbia.

	 
	B.	 	1. 	 Each Subscribing Reinsurer has agreed to allow, for the purpose of paying the Federal Excise
Tax, the applicable percentage of the premium payable hereon (as imposed under the Internal
Revenue Code) to the extent such premium is subject to Federal Excise Tax.

	 	2. 	 	 In the event of any return of premium becoming due hereunder, the Subscribing
Reinsurer shall deduct the applicable percentage of the premium from the amount of the
return, and the Company or its agent should take steps to recover the Tax from the U.S.
Government.

Article XXV — Access to Records

The Reinsurer or its duly authorized representatives shall have the right to visit the offices of
the Company to inspect, examine, audit, copy and verify any of the Policy, accounting or claim
files (“Records”) relating to business reinsured under this Contract during regular business hours
after giving five working days’ prior notice. This right shall be exercisable during the term of
this Contract or after the expiration of this Contract. Notwithstanding the above, the Reinsurer
shall not have any right of access to the Records of the Company if it is not current in all
undisputed payments due the Company.

Page 18

 

Article XXVI — Confidentiality

	A.	 	The Reinsurer hereby acknowledges that the documents, information and data provided to it by the
Company, whether directly or through an authorized agent, in connection with the placement and
execution of this Contract (“Confidential Information”) are proprietary and confidential to the
Company. Confidential Information shall not include documents, information or data that the
Reinsurer can show:

	 	1.	 	are publicly known or have become publicly known through no unauthorized act of the
Reinsurer;
	 
	 	2.	 	have been rightfully received from a third person without obligation of confidentiality;
or
	 
	 	3.	 	were known by the Reinsurer prior to the placement of this Contract without an obligation
of confidentiality.

	B.	 	Absent the written consent of the Company, the Reinsurer shall not disclose any Confidential
Information to any third parties, including any affiliated companies, except:

	 	1.	 	when required by retrocessionaires subject to the business ceded to this Contract;
	 
	 	2.	 	when required by regulators performing an audit of the Reinsurer’s records and/or
financial condition; or
	 
	 	3.	 	when required by external auditors performing an audit of the Reinsurer’s records in the
normal course of business.

	 	 	Further, the Reinsurer agrees not to use any Confidential Information for any purpose not related
to the performance of its obligations or enforcement of its rights under this Contract.
	 
	C.	 	Notwithstanding the above, in the event that the Reinsurer is required by court order, other
legal process or any regulatory authority to release or disclose any or all of the Confidential
Information, the Reinsurer agrees to provide the Company with written notice of same at least 10
days prior to such release or disclosure and to use its best efforts to assist the Company in
maintaining the confidentiality provided for in this Article.
	 
	D.	 	The provisions of this Article shall extend to the officers, directors and employees of the
Reinsurer and its affiliates, and shall be binding upon their successors and assigns.
	 
	 	 	Article XXVII — Indemnification and Errors and Omissions

	A.	 	The Reinsurer is reinsuring, to the amount herein provided, the obligations of the Company under
any original insurance or reinsurance. The Company shall be the sole judge as to:

	 	1.	 	what shall constitute a claim or loss covered under any original insurance or
reinsurance written by the Company;
	 
	 	2.	 	the Company’s liability thereunder;

Page 19

 

	 	3.	 	the amount or amounts that it shall be proper for the Company to pay thereunder.

	B.	 	The Reinsurer shall be bound by the judgment of the Company as to the obligation(s) and
liability(ies) of the Company under any original insurance or reinsurance.
	 
	C.	 	Except for the conditions as provided for in the Sunset Article of this Contract, any
inadvertent error, omission or delay in complying with the terms and conditions of this Contract
shall not be held to relieve either party hereto from any liability that would attach to it
hereunder if such error, omission or delay had not been made, provided such error, omission or
delay is rectified immediately upon discovery.

Article XXVIII — Insolvency

	A.	 	If more than one reinsured company is referenced within the definition of “Company” in the
Preamble to this Contract, this Article will apply severally to each such company. Further, this
Article and the laws of the domiciliary state will apply in the event of the insolvency of any
company covered hereunder. In the event of a conflict between any provision of this Article and
the laws of the domiciliary state of any company covered hereunder, that domiciliary state’s laws
will prevail.
	 
	B.	 	In the event of the insolvency of the Company, this reinsurance (or the portion of any risk or
obligation assumed by the Reinsurer, if required by applicable law) shall be payable directly to
the Company, or to its liquidator, receiver, conservator or statutory successor, either: (1) on the
basis of the liability of the Company, or (2) on the basis of claims filed and allowed in the
liquidation proceeding, whichever may be required by applicable statute, without diminution because
of the insolvency of the Company or because the liquidator, receiver, conservator or statutory
successor of the Company has failed to pay all or a portion of any claim. It is agreed, however,
that the liquidator, receiver, conservator or statutory successor of the Company shall give written
notice to the Reinsurer of the pendency of a claim against the Company indicating the Policy or
bond reinsured, which claim would involve a possible liability on the part of the Reinsurer within
a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the
receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim
and interpose, at its own expense, in the proceeding where such claim is to be adjudicated any
defense or defenses that it may deem available to the Company or its liquidator, receiver,
conservator or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable,
subject to the approval of the court, against the Company as part of the expense of conservation or
liquidation to the extent of a pro rata share of the benefit that may accrue to the Company solely
as a result of the defense undertaken by the Reinsurer.
	 
	C.	 	Where two or more reinsurers are involved in the same claim and a majority in interest elect to
interpose defense to such claim, the expense shall be apportioned in accordance with the terms of
this reinsurance Contract as though such expense had been incurred by the Company.
	 
	D.	 	As to all reinsurance made, ceded, renewed or otherwise becoming effective under this Contract,
the reinsurance shall be payable as set forth above by the Reinsurer to the Company or to its
liquidator, receiver, conservator or statutory successor, (except as provided by Section
4118(a)(1)(A) of the New York Insurance Law, provided the conditions of 1114(c) of such law have
been met, if New York law applies) or except (1) where the

Page 20

 

	 	   	Contract specifically provides another payee in the event of the insolvency of the Company, or
(2) where the Reinsurer, with the consent of the direct insured or insureds, has assumed such
Policy obligations of the Company as direct obligations of the Reinsurer to the payees under
such Policies and in substitution for the obligations of the Company to such payees. Then, and
in that event only, the Company, with the prior approval of the certificate of assumption on
New York risks by the Superintendent of Insurance of the State of New York, or with the prior
approval of such other regulatory authority as may be applicable, is entirely released from
its obligation and the Reinsurer shall pay any loss directly to payees under such Policy.

Article XXIX — Arbitration

	A.	 	Any dispute arising out of the interpretation, performance or breach of this Contract, including
the formation or validity thereof, shall be submitted for decision to a panel of three arbitrators.
Notice requesting arbitration will be in writing and sent certified registered mail, return receipt
requested.
	 
	B.	 	One arbitrator shall be chosen by each party and the two arbitrators shall, before instituting
the hearing, choose an impartial third arbitrator who shall preside at the hearing. If either party
fails to appoint its arbitrator within 30 days after being requested to do so by the other party,
the latter, after 10 days’ notice by certified or registered mail of its intention to do so, may
appoint the second arbitrator.
	 
	C.	 	If the two arbitrators are unable to agree upon the third arbitrator within 30 days of their
appointment, the third arbitrator shall be selected by the American Arbitration Association.
	 
	D.	 	All arbitrators shall be disinterested active or former executives of insurance or reinsurance
companies or Underwriters at Lloyd’s, London, with expertise or experience in the area being
arbitrated. If a member of the panel dies, becomes disabled or is otherwise unwilling or unable to
serve, a substitute shall be selected in the same manner as the departing member was chosen and the
arbitration shall continue.
	 
	E.	 	Within 45 days after notice of appointment of all arbitrators, the panel shall meet and
determine timely periods for briefs, discovery procedures and schedules for hearings.
	 
	F.	 	The panel shall be relieved of all judicial formality and shall not be bound by the strict rules
of procedure and evidence. Notwithstanding anything to the contrary in this Contract, the
arbitrators may at their discretion, consider underwriting and placement information provided by
the Company to the Reinsurer, as well as any correspondence exchanged by the parties that is
related to this Contract. Unless the panel agrees otherwise, arbitration shall take place in Fort
Lauderdale, Florida, but the venue may be changed when deemed by the panel to be in the best
interest of the arbitration proceeding. The decision of any two arbitrators when rendered in
writing shall be final and binding. The panel is empowered to grant interim relief, as it may deem
appropriate.
	 
	G.	 	The panel shall make its decision considering the custom and practice of the applicable
insurance and reinsurance business within 60 days following the termination of the hearings.
Judgment upon the award may be entered in any court having jurisdiction thereof.

Page 21

 

	H.	 	Each party shall bear the expense of its own arbitrator and shall jointly and equally
bear with the other party the cost of the third arbitrator. The remaining costs of the
arbitration shall be allocated by the panel. The panel may, at its discretion, award such
further costs and expenses as it considers appropriate, including but not limited to
attorneys’ fees, to the extent permitted by law.

Article XXX — Service of Suit

	A.	 	This Article applies only to those Subscribing Reinsurers not domiciled in the United States of
America, and/or not authorized in any state, territory and/or district of the United States of
America where authorization is required by insurance regulatory authorities.
	 
	B.	 	This Article shall not be read to conflict with or override the obligations of the parties to
arbitrate their disputes as provided for in the Arbitration Article. This Article is intended as an
aid to compelling arbitration or enforcing such arbitration or arbitral award, not as an
alternative to the Arbitration Article for resolving disputes arising out of this Contract.
	 
	C.	 	In the event of the failure of the Reinsurer to pay any amount claimed to be due hereunder, the
Reinsurer, at the request of the Company, shall submit to the jurisdiction of a court of competent
jurisdiction within the United States. Nothing in this Article constitutes or should be understood
to constitute a waiver of the Reinsurer’s rights to commence an action in any court of competent
jurisdiction in the United States, to remove an action to a United States District Court, or to
seek a transfer of a case to another court as permitted by the laws of the United States or of any
state in the United States. The Reinsurer, once the appropriate court is selected, whether such
court is the one originally chosen by the Company and accepted by Reinsurer or is determined by
removal, transfer, or otherwise, as provided for above, shall comply with all requirements
necessary to give said court jurisdiction and, in any suit instituted against the Reinsurer upon
this Contract, shall abide by the final decision of such court or of any appellate court in the
event of an appeal.
	 
	D.	 	Service of process in such suit may be made upon Messrs. Mendes and Mount, 750 Seventh Avenue,
New York, New York 10019-6829, or another party specifically designated in the applicable Interests
and Liabilities Agreement attached hereto. The above-named are authorized and directed to accept
service of process on behalf of the Reinsurer in any such suit.
	 
	E.	 	Further, pursuant to any statute of any state, territory or district of the United States that
makes provision therefor, the Reinsurer hereby designates the Superintendent, Commissioner or
Director of Insurance, or other officer specified for that purpose in the statute, or his successor
or successors in office, as its true and lawful attorney upon whom may be served any lawful process
in any action, suit or proceeding instituted by or on behalf of the Company or any beneficiary
hereunder arising out of this Contract, and hereby designates the above-named as the person to whom
the said officer is authorized to mail such process or a true copy thereof.

Article XXXI — Agency

For purposes of sending and receiving notices and payments required by this Contract, Guarantee
Insurance Company shall be deemed the agent of all other reinsured Companies

Page 22

 

referenced in this Contract. In no event, however, shall any reinsured Company be deemed the agent
of another with respect to the terms of the Insolvency Article.

Article XXXII — Governing Law

This Contract shall be governed as to performance, administration and interpretation by the laws of
the State of Florida, exclusive of conflict of law rules. However, with respect to credit for
reinsurance, the rules of all applicable states shall apply.

Article XXXIII — Entire Agreement

This Contract sets forth all of the duties and obligations between the Company and the Reinsurer
and supersedes any and all prior or contemporaneous written agreements with respect to matters
referred to in this Contract. The Contract may not be modified or changed except by an amendment to
this Contract in writing signed by both parties.

Article XXXIV — Non-Waiver

The failure of the Company or the Reinsurer to insist on compliance with this Contract or to
exercise any right or remedy hereunder shall not constitute a waiver of any rights or remedy
contained herein nor stop either party from thereafter demanding full and complete compliance nor
prevent either party from exercising such rights or remedy in the future.

Article XXXV — Change in Administrative Practices

The Company undertakes not to introduce any change in its established acceptance and underwriting
policy in respect of the business covered hereunder without prior approval of the Reinsurer.

Article XXXVI — Intermediary

Aon Benfield Inc., or one of its affiliated corporations duly licensed as a reinsurance
intermediary, is hereby recognized as the Intermediary negotiating this Contract for all business
hereunder. All communications (including but not limited to notices, statements, premiums, return
premiums, commissions, taxes, losses, Loss Adjustment Expense, salvages and loss settlements)
relating to this Contract will be transmitted to the Company or the Reinsurer through the
Intermediary. All payments in connection with this Contract shall be made directly between the
Company and the Reinsurer. In the event of any such payment being made through the Intermediary,
payments by the Company to the Intermediary will be deemed payment to the Reinsurer, and payments
by the Reinsurer to the Intermediary will be deemed payment to the Company only to the extent that
such payments are actually received by the Company.

Page 23

 

Article XXXVII — Mode of Execution

	A.	 	This Contract may be executed by:

	 	1.	 	an original written ink signature of paper documents;
	 
	 	2.	 	an exchange of facsimile copies showing the original written ink signature of
paper documents;
	 
	 	3.	 	electronic signature technology employing computer software and a digital
signature or digitizer pen pad to capture a person’s handwritten signature in such a
manner that the signature is unique to the person signing, is under the sole control of
the person signing, is capable of verification to authenticate the signature and is
linked to the document signed in such a manner that if the data is changed, such
signature is invalidated.

	B.	 	The use of any one or a combination of these methods of execution shall constitute a
legally binding and valid signing of this Contract. This Contract may be executed in one or
more counterparts, each of which, when duly executed, shall be deemed an original.

In Witness Whereof, the Company by its duly authorized representative has executed this
Contract as of the date undermentioned at:

Fort Lauderdale, Florida, this 1 day of October in the year 2009.

	 	 	 	 	 
	 

	 	 	 	/s/ Charles Schuver
	 

	 	 	 	 
	 

	 	 	 	Guarantee Insurance Company (for and on behalf of the “Company”)

Page 24

 

NUCLEAR RISK EXCLUSION

This Contract does not apply to “Ultimate Net Loss” arising from, whether directly or
indirectly, whether proximate or remote:

	 	a)	 	Any Nuclear Facility, Nuclear Hazard or Nuclear Reactor;
	 
	 	b)	 	Any Nuclear Material, Radioactive Material, Nuclear Reaction, Nuclear
Radiation or radioactive contamination, all whether controlled or uncontrolled;
or
	 
	 	c)	 	Any Nuclear Material, Radioactive Material, Nuclear Reaction, Nuclear
Radiation or radioactive contamination, all whether controlled or uncontrolled,
caused directly or indirectly by, contributed to or aggravated by an Event;
	 
	 	d)	 	Any Spent Fuel or Waste;
	 
	 	e)	 	Any Fissionable Substance; or

	 
	 	 f)	 	Any nuclear device or bomb.

As used in this exclusion:

“Fissionable Substance” means any prescribe substance that is, or from which can be obtained, a
substance capable of releasing atomic energy by nuclear fission.

“Nuclear Facility” means:

any Nuclear Reactor;

any apparatus designed or used to sustain nuclear fission in a self-supporting chain
reaction or to contain a critical mass of plutonium, thorium and uranium or any one or
more of them;

any equipment or device designed or used for (i) separating the isotopes of plutonium,
thorium and uranium or any one or more of them, (ii) processing or utilizing spent
fuel, or (iii) handling, processing or packaging Waste;

any equipment or device used for the processing, fabricating or alloying of Special
Nuclear Material if at any time the total amount of such material in the custody of the
insured at the premises where such equipment or device is located consists of or contains
more than 25 grams of plutonium or uranium 233 or any combination thereof, or more than
250 grams of uranium 235;

any equipment or device used for the processing, fabricating or alloying of plutonium,
thorium or uranium enriched in the isotope uranium 233 or in the isotope uranium 235, or
any one or more of them if at any time the total amount of such material in the custody of
the insured at the premises where such equipment or device is located consists of or
contains more than 25 grams of plutonium or uranium 233 or any combination thereof, or
more than 250 grams of uranium 235;

any structure, basin, excavation, premises or place prepared or used for the storage
or disposal of Waste or Radioactive Material, and includes the site on which any of
the

Page 1 of 2

 

foregoing is located, all operations conducted on such site and all premises used for such
operations.

“Nuclear Hazard” means the radioactive, toxic, explosive or other hazardous properties
of Radioactive Material or Nuclear Material.

“Nuclear Material” means Source Material, Special Nuclear Material or Byproduct Material.

“Nuclear Reactor” means any apparatus designed or used to sustain nuclear fission in a
self-supporting chain reaction or to contain a critical mass of fissionable material.

“Radioactive Material” means uranium, thorium, plutonium, neptunium, their respective
derivatives and compounds, radioactive isotopes of other elements and any other substances that
the Atomic Energy Control Board may, by regulation, designate as being prescribed substances
capable of releasing atomic energy, or as being requisite for the production, use or
application of atomic energy.

“Source Material,” “Special Nuclear Material,” and “Byproduct Material” have the meanings given
them in the Atomic Energy Act of 1954 or in any law amendatory thereof.

“Spent Fuel” means any fuel element or fuel component, solid or liquid, which has been used or
exposed to radiation in the Nuclear Reactor.

“Waste” means any waste material (i) containing Byproduct Material and (ii) resulting from
the operation by any person or organization of any Nuclear Facility.

Page 2 of 2

 

Interests and Liabilities Agreement

of

National Liability & Fire Insurance Company

Stamford, Connecticut

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Alternative Market Workers’ Compensation

Excess of Loss Reinsurance Contract

Effective: July 1, 2009

issued to and duly executed by

Guarantee Insurance Company

Fort Lauderdale, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

The Subscribing Reinsurer hereby accepts a 90.0% share in the interests and liabilities of
the “Reinsurer” as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Local Standard Time at the place of the loss,
July 1, 2009, and shall remain in force until 12:01 a.m., Local Standard Time at the place of the
loss, July 1, 2010, unless earlier terminated in accordance with the provisions of the attached
Contract.

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

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

Stamford,
Connecticut, this
8th day of October in the year 2009.

	 	 	 	 	 
	 

	 	 	 	/s/ Peter [ILLEGIBLE]
	 

	 	 	 	 
	 

	 	 	 	National Liability & Fire Insurance Company

 

Interests and Liabilities Agreement

entered into by and between

Guarantee Insurance Company

Fort Lauderdale, Florida
 including any and/or all companies that are or may hereafter become affiliated therewith

(collectively, the “Company”)

and

ULLICO Casualty Company

A Delaware Corporation 
(hereinafter referred to as the “Subscribing Reinsurer”)

It Is Hereby Agreed that the Subscribing Reinsurer shall have a 10.0% share in the interests and
liabilities of the “Reinsurer” as set forth in the attached Contract entitled:

Alternative Market Workers’ Compensation

Excess of Loss Reinsurance Contract

Effective: July 1, 2009

It Is Further Agreed that this Agreement shall become effective at 12:01 a.m., Local Standard Time
at the place of the loss, July 1, 2009, and shall remain in force until 12:01 a.m., Local Standard
Time at the place of the loss, July 1, 2010, unless earlier terminated in accordance with the
provisions of the attached Contract.

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

It Is Also Agreed that as respects the Subscribing Reinsurer’s percentage share in the attached
Contract, subparagraph 7 of paragraph A of Article IV — Special Termination — shall be deleted from
the Contract.

In Witness Whereof, the parties hereto by their respective duly authorized representatives
have executed this Agreement as of the dates undermentioned at:

Fort Lauderdale, Florida, this
2nd day of December
in the year 2009.

	 	 	 	 	 
	 

	 	 	 	/s/ Charles Schuver
	 

	 	 	 	 
	 

	 	 	 	Guarantee Insurance Company (for and on behalf of the “Company”)

Washington, D.C., this 7th day of December in the year
2009.

	 	 	 	 	 
	 

	 	 	 	/s/ [Illegible]
	 

	 	 	 	 
	 

	 	 	 	ULLICO Casualty Company

[A]exv10w66

Exhibit 10.66

Workers’ Compensation Quota Share

Reinsurance Contract

Effective: July 1, 2009

issued to

Guarantee Insurance Company

Fort Lauderdale, Florida

and

any other insurance companies and/or affiliates which are now or

hereafter come under the ownership, control or management of

Guarantee Insurance Company

 

 

Workers’ Compensation Quota Share

Reinsurance Contract

Effective: July 1, 2009

issued to

Guarantee Insurance Company

Fort Lauderdale, Florida

and

any other insurance companies and/or affiliates which are now or

hereafter come under the ownership, control or management of

Guarantee Insurance Company

Coverage A

	 	 	 	 	 
	Reinsurer
	 	Participation
	Swiss Reinsurance America Corporation

	 	 		 25.0%
	 
	 	 	 	 
	Total

	 	 	 	25.0% part of 
100% share in 
the interests and 
liabilities of the 
“Reinsurer”

Coverage B

	 	 	 	 	 
	Reinsurer
	 	Participation
	Swiss Reinsurance America Corporation

	 	 		 25.0 %
	 
	 	 	 	 
	Total

	 	 	 	25.0% part of 
100% share in 
the interests and
 liabilities of the
 “Reinsurer”

 

 

Table of Contents

	 	 	 	 	 	 
	 	Article	 	 	Page
	 	 
	 	Preamble	 	1
	 	I
	 	Classes of Business Reinsured	 	1
	 	II
	 	Commencement and Termination	 	2
	 	III
	 	Territory (BRMA 51A)	 	3
	 	IV
	 	Exclusions	 	3
	 	V
	 	Special Acceptances	 	6
	 	VI
	 	Retention and Limit	 	7
	 	VII
	 	Loss Occurrence	 	8
	 	VIII
	 	Loss in Excess of Policy Limits/ECO	 	8
	 	IX
	 	Other Reinsurance	 	9
	 	X
	 	Claims and Loss Adjustment Expense	 	9
	 	XI
	 	Annuities at Company's Option	 	10
	 	XII
	 	Commutation	 	11
	 	XIII
	 	Salvage and Subrogation	 	11
	 	XIV
	 	Original Conditions	 	12
	 	XV
	 	Commission	 	12
	 	XVI
	 	Reports and Remittances	 	12
	 	XVII
	 	Late Payments	 	13
	 	XVIII
	 	Offset (BRMA 36B)	 	14
	 	XIX
	 	Access to Records (BRMA 1D)	 	14
	 	XX
	 	Errors and Omissions (BRMA 14F)	 	14
	 	XXI
	 	Currency (BRMA 12A)	 	15
	 	XXII
	 	Taxes (BRMA 50B)	 	15
	 	XXIII
	 	Federal Excise Tax (BRMA 17D)	 	15
	 	XXIV
	 	Reserves	 	15
	 	XXV
	 	Insolvency	 	17
	 	XXVI
	 	Arbitration	 	18
	 	XXVII
	 	Agency Agreement (BRMA 73A)	 	19
	 	XXVIII
	 	Severability (BRMA 72E)	 	19
	 	XXIX
	 	Service of Suit (BRMA 49C)	 	19
	 	XXX
	 	Confidentiality	 	19
	 	XXXI
	 	Governing Law (BRMA 71B)	 	20
	 	XXXII
	 	Entire Agreement	 	20
	 	XXXIII
	 	Notices and Contract Execution	 	20
	 	XXXIV
	 	Intermediary	 	21

 

 

Workers’ Compensation Quota Share

Reinsurance Contract

Effective: July 1, 2009

issued to

Guarantee Insurance Company

Fort Lauderdale, Florida

and

any other insurance companies and/or affiliates which are now or

hereafter come under the ownership, control or management of

Guarantee Insurance Company

(hereinafter referred to collectively as the “Company”)

by

The Subscribing Reinsurer(s) Executing the

Interests and Liabilities Agreement(s)

Attached Hereto

(hereinafter referred to as the “Reinsurer”)

Preamble

	A.	 	In the event any affiliated companies are to be reinsured hereunder, whenever the word
“Company” is used in this Contract, such term shall be held to include any or all of the
affiliated companies which are or may hereafter be under common control, provided that
notice be given to the Reinsurer of any such newly affiliated companies which may
hereafter come under common control as soon as practicable with full particulars as to how
such affiliation is likely to affect this Contract. In the event of either party maintaining
that
such affiliation calls for alteration in existing terms, and an agreement for alteration not
being arrived at, then the business of such newly affiliated company is covered at existing
terms only for a period of 45 days after notice by either party that it does not wish to cover
such business.
	 
	B.	 	The retention of the Company and the liability of the Reinsurer and all other benefits
accruing to the Company as provided in this Contract or any amendments hereto, shall
apply to the affiliated companies comprising the Company as a group and not separately to
each of the affiliated companies.

Article I — Classes of Business Reinsured

	A.	 	By this Contract the Company obligates itself to cede to the Reinsurer and the
Reinsurer obligates itself to accept quota share reinsurance of the Company’s gross liability
under policies, contracts and binders of insurance or reinsurance (hereinafter called
“policies”) in force at the effective date hereof or issued or renewed on or after that date,
and classified by the Company as Traditional Workers’ Compensation (including, but not limited
to,

Page 1

 

	 	 	business further classified by the Company as Preferred Agency Captives) and/or Employers
Liability business (including losses arising from the United States Longshore and Harbor
Workers’ Compensation Act, Jones Act, Federal Employers Liability Act, and any other Federal
act), subject to the terms, conditions and limitations hereinafter set forth.
	 
	B.	 	The liability of the Reinsurer with respect to each cession hereunder shall commence
obligatorily and simultaneously with that of the Company, subject to the terms, conditions and
limitations hereinafter set forth.

Article II — Commencement and Termination

	A.	 	This Contract shall become effective at 12:01 a.m., Local Standard Time where the policy is
issued, July 1, 2009, with respect to losses arising out of loss occurrences commencing at
or after that time and date, and shall remain in force until 12:01 a.m., Local Standard Time
where the policy is issued, July 1, 2010.
	 
	B.	 	At the sole option of the Company, this Contract may be terminated at any time by the
Company giving the Reinsurer 45 days prior written notice.
	 
	C.	 	Notwithstanding the provisions of paragraph A above, the Company may terminate a
Subscribing Reinsurer’s percentage share in this Contract at any time by giving written
notice to the Subscribing Reinsurer in the event any of the following circumstances occur:

	 	1.	 	The Subscribing Reinsurer’s policyholders’ surplus (or its equivalent under the
Subscribing Reinsurer’s accounting system) at the inception of this Contract has been
reduced by more than 20.0% of the amount of surplus (or the applicable equivalent) 12
months prior to that date; or
	 
	 	2.	 	The Subscribing Reinsurer’s policyholders’ surplus (or its equivalent under the
Subscribing Reinsurer’s accounting system) at any time during the term of this Contract
has been reduced by more than 20.0% of the amount of surplus (or the applicable
equivalent) at the date of the Subscribing Reinsurer’s most recent financial statement
filed with regulatory authorities and available to the public as of the inception of this
Contract; or
	 
	 	3.	 	The Subscribing Reinsurer’s A.M. Best’s rating has been assigned or downgraded
below A- and/or Standard & Poor’s rating has been assigned or downgraded below BBB+;
or
	 
	 	4.	 	The Subscribing Reinsurer has become merged with, acquired by or controlled by any
other entity or individual(s) not controlling the Subscribing Reinsurer’s operations at
the inception of this Contract; or
	 
	 	5.	 	A State Insurance Department or other legal authority has placed the Subscribing
Reinsurer under regulatory supervision or has ordered the Subscribing Reinsurer to
cease writing business; or
	 
	 	6.	 	The Subscribing Reinsurer has become insolvent or has been placed into liquidation,
receivership, supervision, administration, winding-up or under a scheme of arrangement,
or similar proceedings (whether voluntary or involuntary) or proceedings

Page 2

 

	 	 	 	have been instituted against the Subscribing Reinsurer for the appointment of a receiver,
liquidator, rehabilitator, supervisor, administrator, conservator or trustee in
bankruptcy, or other agent known by whatever name, to take possession of its assets or
control of its operations; or
	 
	 	7.	 	The Subscribing Reinsurer has reinsured its entire liability under this Contract
with an unaffiliated entity or entities without the Company’s prior written consent; or
	 
	 	8.	 	The Subscribing Reinsurer has ceased assuming new or renewal property or casualty
treaty reinsurance business; or
	 
	 	9.	 	The Subscribing Reinsurer has hired an unaffiliated runoff claims manager that is
compensated on a contingent basis or is otherwise provided with financial incentives
based on the quantum of claims paid.

	D.	 	Unless otherwise mutually agreed, reinsurance hereunder on business in force on the
effective date of termination or expiration shall remain in full force and effect until
expiration,
cancellation or next premium anniversary of such business, whichever first occurs, but in no
event beyond 12 months, plus odd time, following the effective date of termination or
expiration.
	 
	E.	 	Notwithstanding the provisions of paragraph C above, if the Company is prohibited or
precluded by the appropriate regulatory authorities, or by law (in those states where
applicable and enforced), from arranging mid-term cancellation or non-renewal of any
policies subject to this Contract beyond their natural expiry, the Reinsurer agrees to extend
coverage under this Contract until such policies may be terminated or non-renewed by the
Company.
	 
	F.	 	“Term of this Contract” as used herein shall mean the period from 12:01 a.m., Local
Standard Time where the policy is issued, July 1, 2009, until 12:01 a.m., Local Standard
Time where the policy is issued, July 1, 2010. However, if this Contract is terminated,
“term of this Contract” as used herein shall mean the period from 12:01 a.m., Local Standard
Time where the policy is issued, July 1, 2009, through the effective date of termination if
this Contract is terminated on a “cutoff” basis, or through the end of the runoff period if
this
Contract is terminated on a “runoff” basis.

Article III — Territory (BRMA 51A)

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

Article IV — Exclusions

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

	 	1.	 	Assumed reinsurance, except 100% of business ceded by fronting insurance
companies.
	 
	 	2.	 	Liability of the Company arising by contract, operation of law, or otherwise, from
its participation or membership, whether voluntary or involuntary, in any insolvency
fund.

Page 3

 

	 	 	 	“Insolvency fund” includes any guaranty fund, insolvency fund, plan, pool, association,
fund or other arrangement, howsoever denominated, established or governed, that provides
for any assessment of or payment or assumption by the Company of part or all of any
claim, debt, charge, fee, or other obligation of an insurer, or its successors or
assigns, that has been declared by any competent authority to be insolvent, or that is
otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in whole
or in part.
	 
	 	3.	 	Loss or liability accruing to the Company directly or indirectly from any insurance
written by or through any pool, association, or syndicate, including pools, associations,
or syndicates in which membership by the Company is required under any statutes or
regulations.
	 
	 	4.	 	Loss or damage which is occasioned by war, invasion, hostilities, acts of foreign
enemies, civil war, rebellion, insurrection, military or usurped power, or martial law or
confiscation by order of any government or public authority. Nevertheless, this exclusion
shall not apply to loss or damage occasioned by riots, strikes, civil commotion,
vandalism, malicious damage, and acts of terrorism.
	 
	 	5.	 	All loss or liability of the Company excluded by the “Nuclear Risk Exclusion”
attached hereto.
	 
	 	6.	 	Manufacturing, packaging, handling, shipping or storage of explosives, explosive
substances intended for use as an explosive, ammunitions, fuses, arms, or fireworks.
However, this exclusion shall not apply to the incidental packaging, handling or storage
of same in connection with the sale or transportation by owner operators of such
substances.
	 
	 	7.	 	Loss arising from professional sports teams. For the purpose of this exclusion,
“professional sports team” shall mean an organization of more than 15 people (including
athletes, coaches, and staff) that exists for the purpose of competing in regularly
scheduled sporting events and whose members are receiving compensation from the
organization at the time of the loss occurrence.
	 
	 	8.	 	Loss sustained by commercial airline personnel on board the aircraft and arising
while the aircraft is in flight. The following definitions shall apply to this
exclusion:

	 	a.	 	“Commercial airline” shall mean an organization in the business of
transporting
passengers and/or goods by aircraft;
	 
	 	b.	 	“Personnel” shall mean employees of the commercial airline acting
within the
scope of their employment; and
	 
	 	c.	 	“In flight” shall mean from the time the door(s) close for departure to
the time the
door(s) open for arrival.

	 	9.	 	Liability arising out of, or resulting as a consequence of, insureds principally
involved
in the manufacture, distribution, installation, testing, remediation, removal, storage,
disposal, sale, use of or exposure to asbestos.

Page 4

 

	 	10.	 	Railroads, except scenic railways, and access lines and industrial aid owner
operations when written as an incidental part of an insured’s overall operations.
	 
	 	11.	 	Chemical or petrochemical manufacturing.
	 
	 	12.	 	Underground mining.
	 
	 	13.	 	Loss arising from the intentional wrecking or demolition of buildings or
structures in excess of three stories.
	 
	 	14.	 	Losses arising from the United States Longshore and Harbor Workers’ Compensation Act,
Jones Act, Federal Employers Liability Act, Maritime Employers Liability Act, and any
other Federal act if the payroll for such business is greater than 10.0% of the total
payroll for the original insured’s total operations including such business.
	 
	 	15.	 	Financial Guarantee and Insolvency.
	 
	 	16.	 	Risks with known occupational disease exposures per NCCI D&E codes.
	 
	 	17.	 	Construction of bridges, tunnels or dams.
	 
	 	18.	 	Firefighters and police officers.
	 
	 	19.	 	Trucks hauling explosives or ammunition (local or long distance hauling) -
all employees.
	 
	 	20.	 	Manufacturing, packing, handling, shipping or storage of natural or artificial fuel
gases, butane, propane, gasoline, or liquefied petroleum gas. However, this exclusion
shall not apply to the incidental packing, handling or storage of same in connection with
the sale of such substances.
	 
	 	21.	 	Gas or oil burner installation NOC.
	 
	 	22.	 	Gasoline service stations tank installations.
	 
	 	23.	 	Blasting of rock.
	 
	 	24.	 	Sewer construction — all operations.
	 
	 	25.	 	Gas main, steam main, or water main construction or connection construction.
	 
	 	26.	 	Boat manufacturing — F classes.
	 
	 	27.	 	Banks and trust company employees of contracting agencies in bank service:
guards, patrols, messengers or armored car crews.
	 
	 	28.	 	Detective agencies.
	 
	 	29.	 	Patrol agencies only in regard to armed guard services.
	 
	 	30.	 	Alternative Market business including professional employer organizations.

Page 5

 

	 	31.	 	All loss, damage, cost, or expense directly or indirectly caused by,
contributed to by, resulting from, or arising out of or in connection with any act of
terrorism involving biological, chemical, radioactive or nuclear explosion, pollution,
contamination and/or fire following thereon.

	B.	 	If the Company is bound, without the knowledge and contrary to the instructions of the
Company’s supervisory underwriting personnel, on any business falling within the scope of
one or more of the exclusions set forth in paragraph A, the exclusion shall be suspended
with respect to such business until 30 days after an underwriting supervisor of the Company
acquires knowledge thereof. Notwithstanding the foregoing, if the Company is prevented
from canceling a policy within such period by applicable statute or regulation, such policy
shall be covered hereunder until the earliest date on which the Company may cancel.
	 
	 	 	It is understood and agreed that the provisions of this paragraph B shall not apply to the
exclusions set forth in subparagraphs 1, 2, 3, 4, 5, 9, 15, 16, 30 and 31 of paragraph A
above.
	 
	C.	 	If the Company is required to accept an assigned risk which conflicts with one or more of
the exclusions set forth in paragraph A, reinsurance shall apply, but in no event shall the
Reinsurer’s liability exceed the limits set forth in the Retention and Limit Article.

Article V — Special Acceptances

	A.	 	From time to time the Company may request a special acceptance of reinsurance falling
outside the scope of the provisions of this Contract. Within 15 days of receipt of such a
request, each Subscribing Reinsurer shall accept such request, ask for additional
information, or reject the request. Any reinsurance that is specially accepted by the
Reinsurer shall be covered under this Contract and shall be subject to the terms hereof,
except as such terms shall be modified by the special acceptance. If a Subscribing
Reinsurer fails to respond to a special acceptance request within 15 days, the Subscribing
Reinsurer will be deemed to have agreed to the special acceptance.
	 
	B.	 	If Subscribing Reinsurers with total percentage shares in the interests and liabilities of
the
Reinsurer of 50.0% or greater agree to a special acceptance, such special acceptance shall
be binding on all Subscribing Reinsurers with respect to their respective shares. If such
percentage agreement is not achieved, such special acceptance shall be made to this
Contract only with respect to the interests and liabilities of each Subscribing Reinsurer that
agrees to the special acceptance.
	 
	C.	 	In the event a reinsurer becomes a party to this Contract subsequent to one or more special
acceptances hereunder, the new reinsurer shall automatically accept such special
acceptance(s) as being covered hereunder. Further, if one or more Subscribing Reinsurers
under this Contract agreed to special acceptance(s) under the contract being replaced by
this Contract, such special acceptance(s) shall be automatically covered hereunder with
respect to the interests and liabilities of such Subscribing Reinsurer(s).

Page 6

 

Article VI — Retention and Limit

	A.	 	Coverage A: As respects Preferred Agency Captive business, the Company shall cede to
the Reinsurer and the Reinsurer agrees to accept 100% of the Company’s gross liability.
Notwithstanding the foregoing, the Company’s ceded net earned premium from Preferred
Agency Captive business subject hereto shall not exceed $18,000,000 during the term of
this Contract. Furthermore, as respects Preferred Agency Captive business, the Company
shall retain at least a 25.0% part of 100% share, net and unreinsured, in the interests and
liabilities of the Reinsurer.
	 
	B.	 	Coverage B: As respects business subject to this Contract other than Preferred Agency
Captive business, the Company shall cede to the Reinsurer and the Reinsurer agrees to
accept 100% of the Company’s gross liability. Notwithstanding the foregoing, the Company
shall retain at least a 7.0% part of 100% share, net and unreinsured, in the interests and
liabilities of the Reinsurer as respect business originating in the states of Florida, Georgia
and New Jersey; and at least a 25.0% part of 100% share, net and unreinsured, in the
interests and liabilities of the Reinsurer as respect business originating in states other than
Florida, Georgia and New Jersey.
	 
	C.	 	Notwithstanding the provisions of paragraphs A and B above, the liability of the Reinsurer
shall not exceed $500,000 (inclusive of any self-insured retentions under policies covered
hereunder) as respects all losses and loss adjustment expense arising out of any one loss
occurrence, nor shall it exceed $1,000,000 as respects all losses arising out of acts of
terrorism commencing during the term of this Contract.
	 
	D.	 	“Net earned premium” as used herein is defined as gross earned premium of the Company
for the classes of business reinsured hereunder, less the earned portion of premiums ceded
by the Company for reinsurance which inures to the benefit of this Contract.
	 
	 	 	For purposes of calculating net earned premium, premium ceded by the Company for reinsurance
which inures to the benefit of this Contract is deemed to be equal to 11.0% of the gross
earned premium of the Company for the classes of business reinsured hereunder.
	 
	E.	 	“Act of terrorism” as used herein shall mean either:

	 	1.	 	Any act of any person or persons either acting on behalf of or in connection with
any organization or group with activities directed towards overthrowing, intimidating,
coercing or influencing any government de jure or de facto or its populace or its
economic, political or social systems, by force, violence, weapons of mass destruction,
the destruction, disruption or subversion of communication and information system
infrastructures and/or its content thereof, or sabotage, and/or threat therefrom; or
	 
	 	2.	 	An act of terrorism that is certified by the Secretary of Treasury, in
concurrence with the Secretary of State and the Attorney General of the United States.

	 	 	Notwithstanding the above, in the event of a loss occurrence which arises out of an act of
workplace violence and is not consistent with the provisions of subparagraph 1 or 2 of this
paragraph E, such loss shall be covered hereunder, subject to the provisions of the Retention
and Limit Article and all other provisions of this Contract and shall not be considered an act
of terrorism. Further, any loss occurrence which is not or cannot be

Page 7

 

	 	 	determined, classified or certified in accordance with the provisions of subparagraph 1 or 2 of
this paragraph E, shall be covered hereunder and not considered an act of terrorism.

Article VII — Loss Occurrence

	A.	 	“Loss occurrence” as used herein is defined as an accident or occurrence or a series of
accidents or occurrences arising out of or caused by one event. However, as respects
losses resulting from occupational or industrial disease or cumulative trauma suffered by
employees of an insured for which the employer is liable as a result of a sudden and
accidental event not exceeding 72 hours in duration, all such losses shall be considered
one loss occurrence and may be combined with losses not classified as occupational or
industrial disease or cumulative trauma that arise out of the same event, and the
combination of such losses shall be considered as one loss occurrence within the meaning
hereof.
	 
	B.	 	“Occupational or industrial disease” as used herein shall mean any abnormal condition that
fulfills all of the following conditions:

	 	1.	 	It is not traceable to a definite compensable accident occurring during the
employee’s past or present employment;
	 
	 	2.	 	It has been caused by exposure to a disease producing agent or agents present in
the worker’s occupational environment; and
	 
	 	3.	 	It has resulted in disability or death.

	C.	 	“Cumulative trauma” as used herein shall mean an injury that fulfills all of the
following
conditions:

	 	1.	 	It is not traceable to a definite compensable accident occurring during the
employee’s past or present employment;
	 
	 	2.	 	It has occurred from, and has been aggravated by, a repetitive
employment-related activity; and
	 
	 	3.	 	It has resulted in disability or death.

Article VIII — Loss in Excess of Policy Limits/ECO

	A.	 	In the event the Company pays or is held liable to pay an amount of loss in excess of its
policy limit, but otherwise within the terms of its policy (hereinafter called “loss in excess
of policy limits”) or any punitive, exemplary, compensatory or consequential damages, other
than loss in excess of policy limits (hereinafter called “extra contractual obligations”)
because of alleged or actual bad faith, negligence or fraud on its part in rejecting an offer
of settlement within policy limits, or in the preparation of the defense or in the trial of an
action against its insured or reinsured, or in the preparation or prosecution of an appeal
consequent upon such an action, or in otherwise handling a claim under a policy subject to this
Contract, 90.0% of the loss in excess of policy limits and/or the extra contractual

Page 8

 

		 	obligations shall be added to the Company’s loss, if any, under the policy involved, and the
sum thereof shall be subject to the provisions of the Retention and Limit Article.
	 
	B.	 	An extra contractual obligation shall be deemed to have occurred on the same date as the
loss covered or alleged to be covered under the policy.
	 
	C.	 	Notwithstanding anything stated herein, this Contract shall not apply to any loss in excess
of policy limits or any extra contractual obligation incurred by the Company as a result of
any fraudulent and/or criminal act by any officer or director of the Company acting
individually or collectively or in collusion with any individual or corporation or any other
organization or party involved in the presentation, defense or settlement of any claim
covered hereunder.
	 
	D.	 	Recoveries from any form of insurance or reinsurance which protects the Company against
claims the subject matter of this Article shall inure to the benefit of this Contract.
	 
	E.	 	Savings Clause (Applicable only if the Subscribing Reinsurer is domiciled in the State of
New York): In no event shall coverage be provided to the extent that such coverage is not
permitted under New York law.

Article IX — Other Reinsurance

The Company shall be permitted to carry excess of loss reinsurance, recoveries under which shall
inure to the benefit of this Contract.

Article X — Claims and Loss Adjustment Expense

	A.	 	Losses shall be reported by the Company in summary form as hereinafter provided, but the
Company shall notify the Reinsurer immediately when a specific case involves unusual
circumstances or large loss possibilities. The Reinsurer shall have the right to
participate, at its own expense, in the defense of any claim or suit or proceeding involving this
reinsurance.
	 
	B.	 	All loss settlements made by the Company, whether under strict policy conditions or by way
of compromise, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay or
allow, as the case may be, its proportion of each such settlement in accordance with the
Reports and Remittances Article. It is agreed, however, that if the Reinsurer’s share of any
loss is equal to or greater than $500,000, the Reinsurer will pay its share of said loss as
promptly as possible after receipt of reasonable evidence of the amount paid (or scheduled
to be paid) by the Company.
	 
	C.	 	Notwithstanding the provisions of paragraph B above, any ex-gratia settlement made by the
Company on a loss subject to this Contract shall be binding on the Reinsurer, provided the
Company has submitted the settlement to the Reinsurer and received the Reinsurer’s
agreement to the settlement. If the ex-gratia settlement is accepted by the Reinsurer, it
shall be subject to the terms of this Contract.
	 
	 	 	“Ex-gratia settlements,” as used in this Contract, shall mean all settlements of losses not
covered under the express terms of the policies, and which are primarily motivated by a

Page 9

 

	 	 	customer business relationship. “Ex-gratia settlements” will not include settlements of
losses which arise from court decisions or other judicial acts or orders.
	 
	D.	 	In the event of a claim under a policy subject hereto, the Reinsurer shall be liable for
its proportionate share of loss adjustment expense incurred by the Company in connection
therewith, and shall be credited with its proportionate share of any recoveries of such
expense.
	 
	E.	 	“Loss adjustment expense” as used herein shall mean costs and expenses incurred by the
Company in connection with the investigation, appraisal, adjustment, settlement, litigation,
defense or appeal of a specific claim or loss, or alleged loss, including but not limited to:

	 	1.	 	Court costs;
	 
	 	2.	 	Costs of supersedeas and appeal bonds;
	 
	 	3.	 	Monitoring counsel expenses;
	 
	 	4.	 	Legal expenses and costs incurred in connection with coverage questions and legal
actions connected thereto, including but not limited to declaratory judgment actions;
	 
	 	5.	 	Post-judgment interest;
	 
	 	6.	 	Pre-judgment interest, unless included as part of the award or judgment;
	 
	 	7.	 	Expenses and a pro rata share of salaries of Company field employees, calculated in
accordance with the time occupied in adjusting such loss, and expenses of other Company
employees who have been temporarily diverted from their normal and customary duties and
assigned to the field adjustment of losses covered by this Contract; and
	 
	 	8.	 	Subrogation, salvage and recovery expenses.

	 	 	Loss adjustment expense does not include salaries and expenses of the Company’s
employees (except as provided in subparagraph 7 above), office or other overhead
expenses.

Article XI — Annuities at Company’s Option

	A.	 	Whenever the Company is required, or elects, to purchase an annuity or to negotiate a
structured settlement, either in satisfaction of a judgment or in an out-of-court settlement or
otherwise, the cost of the annuity or the structured settlement, as the case may be, shall be
deemed part of the Company’s loss.
	 
	B.	 	The terms “annuity” or “structured settlement” shall be understood to mean any insurance
policy, lump sum payment, agreement or device of whatever nature resulting in the
payment of a lump sum by the Company in settlement of any or all future liabilities which
may attach to it as a result of a loss occurrence.

Page 10

 

	C.	 	In the event the Company purchases an annuity which inures in whole or in part to the
benefit of the Reinsurer, it is understood that the liability of the Reinsurer is not
released thereby. In the event the Company is required to provide benefits not provided
by the annuity for whatever reason, the Reinsurer shall pay its proportional share of any
loss.

Article XII — Commutation

	A.	 	This Article will only take effect should the parties hereto mutually agree to commute one or
any number of the Workers’ Compensation losses under this Contract. There will be no
obligation on the part of either party to so commute.
	 
	B.	 	Should the Company become liable for any loss hereunder, and be required to make
periodic payments to or otherwise set up on its books reserves for such loss, at any time
after seven years following the effective time and date of this Contract and upon mutual
agreement of the Company and the Reinsurer, said loss (including loss adjustment
expense) may be commuted. If the value of said loss, including amounts falling to the
share of the Reinsurer, cannot be agreed upon by the parties to this Contract, said value
may be determined by employing one of the following:

	 	1.	 	A present value calculation based on the following criteria:

	 	a.	 	In respect of all unindexed benefits, the present value calculation shall
be determined based upon an annual discount equal to the five-year U.S. Treasury
note rate at the time of commutation;
	 
	 	b.	 	In respect of all future medical costs, the present value calculation
shall be based upon the Company’s evaluation of long term medical care and rehabilitation
requirements, using an annual discount equal to the five-year U.S. Treasury note
rate at the time of commutation, and an annual escalation equal to the Medical
Care Consumer Price Index (CPI-MC) at the time of commutation;
	 
	 	c.	 	Where applicable, impaired life expectancy, survivors’ life expectancy,
as well as remarriage probability shall be reflected in the calculation by employing tables
required by statute.

	 	2.	 	The Company may determine the present value by purchasing (or obtaining a
quotation for) an annuity from any A.M. Best’s Class VIII IIA+II rated or better annuity
writer, with an AAA rating by Standard & Poor’s.

	C.	 	The Reinsurer’s proportion of the amount determined will be considered its total liability
for such loss and the lump sum payment thereof shall constitute a complete release of both
parties from liability hereunder for the commuted losses.
	 
	D.	 	This Article shall survive the termination or expiration of this Contract.

Article XIII — Salvage and Subrogation

The Reinsurer shall be credited with its proportionate share of salvage (i.e., reimbursement
obtained or recovery made by the Company, less the actual cost, excluding salaries of officials

Page 11

 

and employees of the Company and sums paid to attorneys as retainer, of obtaining such
reimbursement or making such recovery) on account of claims and settlements involving
reinsurance hereunder. The Company hereby agrees to enforce its rights to salvage or
subrogation relating to any loss, a part of which loss was sustained by the Reinsurer, and to
prosecute all claims arising out of such rights if, in the Company’s opinion, it is
economically reasonable to do so.

Article XIV — Original Conditions

	A.	 	All reinsurance under this Contract shall be subject to the same rates, terms, conditions,
waivers and interpretations, and to the same modifications and alterations as the respective
policies of the Company. However, in no event shall this be construed in any way to
provide coverage outside the terms and conditions set forth in this Contract. The Reinsurer
shall be credited with its exact proportion of the net earned premium received by the
Company.
	 
	B.	 	Nothing herein shall in any manner create any obligations or establish any rights against
the Reinsurer in favor of any third party or any persons not parties to this Contract.

Article XV — Commission

	A.	 	The Reinsurer shall allow the Company a 25.0% commission on all premiums ceded to the
Reinsurer hereunder prior to any deductions for the earned portion of premiums ceded by
the Company for reinsurance that inures to the benefit of this Contract. The Company shall
allow the Reinsurer return commission on return premiums at the same rate.
	 
	B.	 	It is expressly agreed that the ceding commission allowed the Company includes provision
for all dividends, commissions, taxes, assessments, and all other expenses of whatever
nature, except loss adjustment expense.

Article XVI — Reports and Remittances

	A.	 	Within 30 days after the end of each month, the Company shall report to the Reinsurer:

	 	1.	 	Ceded net earned premium for the month;
	 
	 	2.	 	Commission calculated in accordance with the Commission Article;
	 
	 	3.	 	Ceded losses and loss adjustment expense paid during the month (net of any
recoveries during the month under the “cash call” provisions of the Claims and Loss
Adjustment Expense Article);
	 
	 	4.	 	Ceded outstanding loss reserves as of the end of the month.

	 	 	The positive balance of (1) less (2) less (3) shall be remitted by the Company with its report.
Any balance shown to be due the Company shall be remitted by the Reinsurer as promptly as
possible, but in no event later than 15 days, after receipt and verification of the Company’s
report.

Page 12

 

	B.	 	Annually, the Company shall furnish the Reinsurer with such information as the
Reinsurer may require to complete its Annual Convention Statement.

Article XVII — Late Payments

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

	 	1.	 	The number of full days which have expired since the due date or the last
monthly calculation, whichever the lesser; times
	 
	 	2.	 	1/365ths of the sum of 1.0% and the U.S. prime rate as quoted in The Wall
Street Journal on the first day of the month for which the calculation is made;
times
	 
	 	3.	 	The amount past due, including accrued interest.

	 	 	It is agreed that interest shall accumulate until payment of the original amount due plus
interest penalties have been received by the Intermediary.
	 
	C.	 	If the interest rate provided under this Article exceeds the maximum interest rate allowed by
any applicable law or is held unenforceable by an arbitrator or a court of competent
jurisdiction, such interest rate shall be modified to the highest rate permitted by the
applicable law, and all remaining provisions of this Article and Contract shall remain in full
force and effect without being impaired or invalidated in any way.
	 
	D.	 	The establishment of the due date shall, for purposes of this Article, be determined as
follows:

	 	1.	 	As respects any routine payment, adjustment or return due either party, the due
date shall be as provided for in the applicable section of this Contract. In the event
a due date is not specifically stated for a given payment, it shall be deemed due 30 days
after the date of transmittal by the Intermediary of the initial billing for each such
payment.
	 
	 	2.	 	As respects a “cash call” made in accordance with the last sentence of paragraph B
of the Claims and Loss Adjustment Expense Article, payment shall be deemed due 20 days
after the proof of loss or demand for payment is transmitted to the Reinsurer. If such
loss or claim payment is not received within the 20 days, interest will accrue on the
payment or amount overdue in accordance with paragraph B above, from the date the proof
of loss or demand for payment was transmitted to the Reinsurer.

Page 13

 

	 	3.	 	As respects any payment, adjustment or return due either party not otherwise
provided for in subparagraphs 1 and 2 of this paragraph, the due date shall be deemed
as 30 days following transmittal of written notification that the provisions of this
Article have been invoked.

	 	 	For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon
receipt by the Intermediary.
	 
	E.	 	Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from
contesting the validity of any claim, or from participating in the defense of any claim or
suit, or prohibiting either party from contesting the validity of any payment or from initiating any
arbitration or other proceeding in accordance with the provisions of this Contract. If the
debtor party prevails in an arbitration or other proceeding, then any interest penalties due
hereunder on the amount in dispute shall be null and void. If the debtor party loses in such
proceeding, then the interest penalty on the amount determined to be due hereunder shall
be calculated in accordance with the provisions set forth above unless otherwise
determined by such proceedings. If a debtor party advances payment of any amount it is
contesting, and proves to be correct in its contestation, either in whole or in part, the other
party shall reimburse the debtor party for any such excess payment made plus interest on
the excess amount calculated in accordance with this Article.
	 
	F.	 	Interest penalties arising out of the application of this Article that are $1,000 or less
from any party shall be waived unless there is a pattern of late payments consisting of three or
more items over the course of any 12-month period.

Article XVIII — Offset (BRMA 36B)

The Company and the Reinsurer may offset any balance or amount due from one party to the other
under this Contract or any other contract heretofore or hereafter entered into between the Company
and the Reinsurer, whether acting as assuming reinsurer or ceding company. However, in the event of
the insolvency of any party hereto, offset shall only be allowed in accordance with applicable law.

Article XIX — Access to Records (BRMA 1D)

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

Article XX — Errors and Omissions (BRMA 14F)

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

Page 14

 

Article XXI — Currency (BRMA 12A)

	A.	 	Whenever the word “Dollars” or the “$” sign appears in this Contract, they shall be
construed to mean United States Dollars and all transactions under this Contract shall be in
United States Dollars.
	 
	B.	 	Amounts paid or received by the Company in any other currency shall be converted to
United States Dollars at the rate of exchange at the date such transaction is entered on the
books of the Company.

Article XXII — Taxes (BRMA 50B)

In consideration of the terms under which this Contract is issued, the Company will not claim a
deduction in respect of the premium hereon when making tax returns, other than income or profits
tax returns, to any state or territory of the United States of America or the District of Columbia.

Article XXIII — Federal Excise Tax (BRMA 17D)

	A.	 	The Reinsurer has agreed to allow for the purpose of paying the Federal Excise Tax the
applicable percentage of the premium payable hereon (as imposed under Section 4371 of
the Internal Revenue Code) to the extent such premium is subject to the Federal Excise
Tax.
	 
	B.	 	In the event of any return of premium becoming due hereunder the Reinsurer will deduct
the applicable percentage from the return premium payable hereon and the Company or its
agent should take steps to recover the tax from the United States Government.

Article XXIV — Reserves

	A.	 	The Reinsurer agrees to fund its share of the Company’s ceded outstanding loss and
loss adjustment expense reserves (including incurred but not reported loss reserves) by:

	 	1.	 	Clean, irrevocable and unconditional letters of credit issued or confirmed, if
confirmation is required by the regulatory authorities involved, by a bank or banks
meeting the NAIC Securities Valuation Office credit standards for issuers of letters of
credit and acceptable to the Company; and/or
	 
	 	2.	 	Escrow accounts for the benefit of the Company; and/or
	 
	 	3.	 	Cash advances;

	 	 	if the Reinsurer is unauthorized in any state of the United States of America or the District
of Columbia having jurisdiction over the Company and if, without such funding, a penalty would
accrue to the Company on any financial statement it is required to file with the insurance
regulatory authorities involved.

Page 15

 

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

	 	1.	 	To reimburse itself for the Reinsurer’s share of losses and/or loss adjustment
expense paid under the terms of policies reinsured hereunder, unless paid in cash by the
Reinsurer;
	 
	 	2.	 	To reimburse itself for the Reinsurer’s share of any other amounts claimed to be
due hereunder, unless paid in cash by the Reinsurer;
	 
	 	3.	 	To fund a cash account in an amount equal to the Reinsurer’s share of any
ceded outstanding loss and loss adjustment expense reserves (including incurred but
not reported loss reserves) funded by means of a letter of credit which is under
non-renewal notice, if said letter of credit has not been renewed or replaced by the
Reinsurer 10 days prior to its expiration date;
	 
	 	4.	 	To refund to the Reinsurer any sum in excess of the actual amount required to
fund the Reinsurer’s share of the Company’s ceded outstanding loss and loss adjustment
expense reserves (including incurred but not reported loss reserves), if so requested
by the Reinsurer.

	 	 	In the event the amount drawn by the Company on any letter of credit is in excess of the
actual amount required for B(1) or B(3), or in the case of B(2), the actual amount
determined to be due, the Company shall promptly return to the Reinsurer the excess amount
so drawn.
	 
	C.	 	If, during the term of a letter of credit, the issuing bank no longer meets the credit
standards set forth in paragraph A above, the Reinsurer agrees to replace such letter of credit within
15 days with a form of funding that meets the requirements set forth in paragraph A above.
	 
	D.	 	If a Subscribing Reinsurer fails to fulfill its funding obligation (if any) under this
Article, the Company may, at its option, require the Subscribing Reinsurer to pay, and the Subscribing
Reinsurer agrees to pay, an interest charge on the funding obligation calculated on the last
business day of each month as follows:

	 	1.	 	The number of full days that have expired since December 31 of the calendar year in
which the funding was required; times
	 
	 	2.	 	1/365ths of the sum of 1.0% and the U.S. prime rate as quoted in The Wall
Street Journal on the first day of the month for which the calculation is made;
times

Page 16

 

	 	3.	 	The greater of (a) the funding obligation, less the amount, if any, funded by the
Subscribing Reinsurer prior to December 31 of the calendar year in which the funding was
required or (b) $5,000.

	 	 	It is agreed that interest shall accumulate until the full interest charge amount as
provided for in this paragraph and the funding obligation are paid.
	 
	 	 	If the interest rate provided under this Article exceeds the maximum interest rate allowed by
any applicable law or is held unenforceable by an arbitrator or a court of competent
jurisdiction, such interest rate shall be modified to the highest rate permitted by the
applicable law, and all remaining provisions of this Article and Contract shall remain in full
force and effect without being impaired or invalidated in any way.
	 
	E.	 	At annual intervals, or more frequently as agreed, but never more frequently than
quarterly, the Company shall prepare a specific statement of the Reinsurer’s share of the
Company’s ceded outstanding loss and loss adjustment expense reserves (including incurred but
not reported loss reserves) for the sole purpose of amending the letter of credit, in the
following manner:

	 	1.	 	If the statement shows that the Reinsurer’s share of the Company’s ceded
outstanding loss and loss adjustment expense reserves (including incurred but not
reported loss reserves) exceeds the balance of credit as of the statement date, the
Reinsurer shall, within 30 days after receipt of notice of such excess, secure delivery
to the Company of an amendment to the letter of credit increasing the amount of credit by
the amount of such difference.
	 
	 	2.	 	If, however, the statement shows that the Reinsurer’s share of the Company’s ceded
outstanding loss and loss adjustment expense reserves (including incurred but not
reported loss reserves) is less than the balance of credit as of the statement date, the
Company shall, within 30 days after receipt of written request from the Reinsurer,
release such excess credit by agreeing to secure an amendment to the letter of credit
reducing the amount of credit available by the amount of such excess credit.

Article XXV — Insolvency

	A.	 	In the event of the insolvency of one or more of the reinsured companies, this
reinsurance shall be payable directly to the company or to its liquidator, receiver,
conservator or statutory successor on the basis of the liability of the company without
diminution because of the insolvency of the company or because the liquidator, receiver,
conservator or statutory successor of the company has failed to pay all or a portion of any
claim. It is agreed, however, that the liquidator, receiver, conservator or statutory
successor of the company shall give written notice to the Reinsurer of the pendency of a claim
against the company indicating the policy or bond reinsured which claim would involve a
possible liability on the part of the Reinsurer within a reasonable time after such claim is
filed in the conservation or liquidation proceeding or in the receivership, and that during
the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own
expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that
it may deem available to the company or its liquidator, receiver, conservator or statutory
successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to the
approval of the Court, against the company as part of the expense of conservation or

Page 17

 

	 	 	liquidation to the extent of a pro rata share of the benefit which may accrue to the company
solely as a result of the defense undertaken by the Reinsurer.
	 
	B.	 	Where two or more reinsurers are involved in the same claim and a majority in interest elect
to interpose defense to such claim, the expense shall be apportioned in accordance with
the terms of this Contract as though such expense had been incurred by the company.
	 
	C.	 	It is further understood and agreed that, in the event of the insolvency of one or more of
the reinsured companies, the reinsurance under this Contract shall be payable directly by the
Reinsurer to the company or to its liquidator, receiver or statutory successor, except as
provided by Section 4118(a) of the New York Insurance Law or except (1) where this
Contract specifically provides another payee of such reinsurance in the event of the
insolvency of the company or (2) where the Reinsurer with the consent of the direct insured
or insureds has assumed such policy obligations of the company as direct obligations of the
Reinsurer to the payees under such policies and in substitution for the obligations of the
company to such payees.

Article XXVI — Arbitration

	A.	 	As a condition precedent to any right of action hereunder, in the event of any dispute or
difference of opinion hereafter arising with respect to this Contract, it is hereby mutually
agreed that such dispute or difference of opinion shall be submitted to arbitration. One
Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall
be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active
or retired disinterested executive officers of insurance or reinsurance companies or Lloyd’s
London Underwriters. In the event that either party should fail to choose an Arbiter within
30 days following a written request by the other party to do so, the requesting party may
choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration. If
the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their
appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of
whom the other shall decline, and the decision shall be made by drawing lots.
	 
	B.	 	Each party shall present its case to the Arbiters within 60 days following the date of
appointment of the Umpire. The Arbiters shall consider this Contract as an honorable
engagement rather than merely as a legal obligation and they are relieved of all judicial
formalities and may abstain from following the strict rules of law. The decision of the
Arbiters shall be final and binding on both parties; but failing to agree, they shall call in
the Umpire and the decision of the majority shall be final and binding upon both parties.
Judgment upon the final decision of the Arbiters may be entered in any court of competent
jurisdiction.
	 
	C.	 	If more than one reinsurer is involved in the same dispute, all such reinsurers may
constitute and act as one party for purposes of this Article and communications shall be
made by the Company to each of the reinsurers constituting one party, provided, however,
that nothing herein shall impair the rights of such reinsurers to assert several, rather than
joint, defenses or claims, nor be construed as changing the liability of the reinsurers
participating under the terms of this Contract from several to joint.
	 
	D.	 	Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with
the other the expense of the Umpire and of the arbitration. In the event that the two

Page 18

 

	 	 	Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the
Umpire and the arbitration shall be equally divided between the two parties.
	 
	E.	 	Any arbitration proceedings shall take place at a location mutually agreed upon by the
parties to this Contract, but notwithstanding the location of the arbitration, all
proceedings pursuant hereto shall be governed by the law of the State of Florida.

Article XXVII — Agency Agreement (BRMA 73A)

If more than one reinsured company is named as a party to this Contract, the first named company
shall be deemed the agent of the other reinsured companies for purposes of sending or receiving
notices required by the terms and conditions of this Contract, and for purposes of remitting or
receiving any monies due any party.

Article XXVIII — Severability (BRMA 72E)

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

Article XXIX — Service of Suit (BRMA 49C)

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

	A.	 	It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due
hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of a
court of competent jurisdiction within the United States. Nothing in this Article
constitutes or should be understood to constitute a waiver of the Reinsurer’s rights to commence an
action in any court of competent jurisdiction in the United States, to remove an action to a
United States District Court, or to seek a transfer of a case to another court as permitted by
the laws of the United States or of any state in the United States.
	 
	B.	 	Further, pursuant to any statute of any state, territory or district of the United States
which makes provision therefor, the Reinsurer hereby designates the party named in its Interests
and Liabilities Agreement, or if no party is named therein, the Superintendent,
Commissioner or Director of Insurance or other officer specified for that purpose in the
statute, or his successor or successors in office, as its true and lawful attorney upon whom
may be served any lawful process in any action, suit or proceeding instituted by or on
behalf of the Company or any beneficiary hereunder arising out of this Contract.

Article XXX — Confidentiality

The Reinsurer, except with the express prior written consent of the Company, shall not directly or
indirectly, communicate, disclose or divulge to any third party, any knowledge or information

Page 19

 

that may be acquired either directly or indirectly as a result of the inspection of the
Company’s books, records and papers. The restrictions as outlined in this Article shall not
apply to communication or disclosures that the Reinsurer is required to make to auditors, both
internal and external, outside actuaries, consultants, retrocessionaires, legal counsel,
arbitrators involved in any arbitration procedures under this Contract or disclosures required
upon subpoena or other duly issued order of a court or other governmental agency or regulatory
authority; however, such third parties are to be informed of these confidentiality restrictions
by the Reinsurer. The Reinsurer shall not share, communicate or otherwise disseminate the
Company’s confidential information obtained by virtue of its subscription to this Contract with
any employees (either of the Reinsurer or any affiliate) associated with its direct insurance
operations.

Article XXXI — Governing Law (BRMA 71B)

This Contract shall be governed by and construed in accordance with the laws of the State of
Florida.

Article XXXII — Entire Agreement

This Contract sets forth all of the duties and obligations between the Company and the Reinsurer
and supersedes any and all prior or contemporaneous written agreements with respect to matters
referred to in this Contract. This Contract may not be modified or changed except by an
amendment to this Contract in writing signed by both parties.

Article XXXIII — Notices and Contract Execution

	A.	 	Whenever a notice, statement, report or any other written communication is required by this
Contract, unless otherwise specified, such notice, statement, report or other written
communication may be transmitted by certified or registered mail, nationally or
internationally recognized express delivery service, personal delivery, electronic mail, or
facsimile. With the exception of notices of termination, first class mail is also
acceptable.
	 
	B.	 	The use of any of the following shall constitute a valid execution of this Contract or
any amendments thereto:

	 	1.	 	Paper documents with an original ink signature;
	 
	 	2.	 	Facsimile or electronic copies of paper documents showing an original ink
signature; and/or
	 
	 	3.	 	Electronic records with an electronic signature made via an electronic agent.
For the purposes of this Contract, the terms “electronic record,” “electronic signature”
and “electronic agent” shall have the meanings set forth in the Electronic Signatures in
Global and National Commerce Act of 2000 or any amendments thereto.

	C.	 	This Contract may be executed in one or more counterparts, each of which, when duly
executed, shall be deemed an original.

Page 20

 

Article XXXIV — Intermediary

Aon Benfield Inc., or one of its affiliated corporations duly licensed as a reinsurance
intermediary, is hereby recognized as the Intermediary negotiating this Contract for all business
hereunder. All communications (including but not limited to notices, statements, premiums, return
premiums, commissions, taxes, losses, loss adjustment expense, salvages and loss settlements)
relating to this Contract will be transmitted to the Company or the Reinsurer through the
Intermediary. Payments by the Company to the Intermediary will be deemed payment to the Reinsurer.
Payments by the Reinsurer to the Intermediary will be deemed payment to the Company only to the
extent that such payments are actually received by the Company.

In Witness Whereof, the Company by its duly authorized representative has executed this
Contract as of the date undermentioned at:

Fort
Lauderdale, Florida, this 6th day of November in the year 2009.

	 	 	 	 	 
	 	 	 
	 	
/s/ Charles Schuver
 	 
	 	Guarantee Insurance Company (for and on behalf of the “Company”) 	 
	 	     Charles K Schuver

     Chief Underwriting Officer 	 
	 

Page 21

 

NUCLEAR RISK EXCLUSION

This Contract does not apply to loss arising from, whether directly or indirectly, whether
proximate or remote:

	 	a)	 	Any Nuclear Facility, Nuclear Hazard or Nuclear Reactor;
	 
	 	b)	 	Any Nuclear Material, Radioactive Material, Nuclear Reaction, Nuclear
Radiation or radioactive contamination, all whether controlled or uncontrolled;
or
	 
	 	c)	 	Any Nuclear Material, Radioactive Material, Nuclear Reaction, Nuclear
Radiation or radioactive contamination, all whether controlled or uncontrolled,
caused directly or indirectly by, contributed to or aggravated by an Event;
	 
	 	d)	 	Any Spent Fuel or Waste;
	 
	 	e)	 	Any Fissionable Substance; or
	 
	 	f)	 	Any nuclear device or bomb.

As used in this Exclusion:

	 	 	“Fissionable Substance” means any prescribe substance that is, or from which can be obtained, a
substance capable of releasing atomic energy by nuclear fission.
	 
	 	 	“Nuclear Facility” means:

	 	 	 	any Nuclear Reactor;
	 
	 	 	 	any apparatus designed or used to sustain nuclear fission in a self-supporting chain
reaction or to contain a critical mass of plutonium, thorium and uranium or any one or
more of them;
	 
	 	 	 	any equipment or device designed or used for (i) separating the isotopes of plutonium,
thorium and uranium or any one or more of them, (ii) processing or utilizing spent
fuel, or (iii) handling, processing or packaging Waste;
	 
	 	 	 	any equipment or device used for the processing, fabricating or alloying of Special
Nuclear Material if at any time the total amount of such material in the custody of the
insured at the premises where such equipment or device is located consists of or contains
more than 25 grams of plutonium or uranium 233 or any combination thereof, or more than
250 grams of uranium 235;
	 
	 	 	 	any equipment or device used for the processing, fabricating or alloying of plutonium,
thorium or uranium enriched in the isotope uranium 233 or in the isotope uranium 235, or
any one or more of them if at any time the total amount of such material in the custody of
the insured at the premises where such equipment or device is located consists of or
contains more than 25 grams of plutonium or uranium 233 or any combination thereof, or
more than 250 grams of uranium 235;
	 
	 	 	 	any structure, basin, excavation, premises or place prepared or used for the storage
or disposal of Waste or Radioactive Material, and includes the site on which any of
the

Page 1 of 2

 

	 	 	 	foregoing is located, all operations conducted on such site and all premises used for such
operations.

	 	 	“Nuclear Hazard” means the radioactive, toxic, explosive or other hazardous properties
of Radioactive Material or Nuclear Material.
	 
	 	 	“Nuclear Material” means Source Material, Special Nuclear Material or Byproduct Material.
	 
	 	 	“Nuclear Reactor” means any apparatus designed or used to sustain nuclear fission in a
self-supporting chain reaction or to contain a critical mass of fissionable material.
	 
	 	 	“Radioactive Material” means uranium, thorium, plutonium, neptunium, their respective
derivatives and compounds, radioactive isotopes of other elements and any other substances that
the Atomic Energy Control Board may, by regulation, designate as being prescribed substances
capable of releasing atomic energy, or as being requisite for the production, use or
application of atomic energy.
	 
	 	 	“Source Material,” “Special Nuclear Material,” and “Byproduct Material” have the meanings given
them in the Atomic Energy Act of 1954 or in any law amendatory thereof.
	 
	 	 	“Spent Fuel” means any fuel element or fuel component, solid or liquid, which has been used or
exposed to radiation in the Nuclear Reactor.
	 
	 	 	“Waste” means any waste material (i) containing Byproduct Material and (ii) resulting from
the operation by any person or organization of any Nuclear Facility.

Page 2 of 2

 

Interests and Liabilities Agreement

of

Swiss Reinsurance America Corporation

Armonk, New York

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Workers’ Compensation Quota Share

Reinsurance Contract

Effective: July 1, 2009

issued to and duly executed by

Guarantee Insurance Company

Fort Lauderdale, Florida

and

any other insurance companies and/or affiliates which are now or

hereafter come under the ownership, control or management of

Guarantee Insurance Company

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

25.0% of Coverage A

25.0% of Coverage B

This Agreement shall become effective at 12:01 a.m., Local Standard Time where the policy is
issued, July 1, 2009, and shall remain in force until 12:01 a.m., Local Standard Time where the
policy is issued, July 1, 2010.

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

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

Schaumburg,
Illinois, this 12th day of November in the year 2009.

	 	 	 	 	 
	 	 	 
	 	
/s/ Jeff  [ILLEGIBLE]  Vice President
 	 
	 	Swiss Reinsurance America Corporation 	 
	 	By: Swiss Re Underwriters Agency Inc., its authorized representative 	 
	 

POR 1023255

[A]

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