Document:

exv10w172

EXHIBIT
10.172

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REINSURANCE AGREEMENT

Reinsurance Agreement (“Agreement”) by and between Peerless Insurance Company, a New
Hampshire stock insurance company (the “Reinsurer”) and Insurance Company of Illinois,
an Illinois insurance company (the “Company”).

In consideration of the mutual promises and agreements contained herein, the parties
hereby agree as follows:

1. EFFECTIVE DATE

     This Agreement is effective as of 12:01 a.m. on January 1, 2010 (the “Effective
Date”), and shall remain in force unless modified by mutual agreement or terminated as
provided herein.

2. CESSIONS AND ACCEPTANCES

     2.1. The Company cedes to the Reinsurer and the Reinsurer accepts one hundred
percent (100%) of the Company’s Net Retained Insurance Liability under its policies
issued through the Liberty Mutual Agency Markets strategic business unit of Liberty
Mutual Group.

     2.2. The Company cedes to the Reinsurer and the Reinsurer accepts one hundred
percent (100%) of the Company’s Net Premiums Written in accordance with Article 6 herein
under its policies issued through the Liberty Mutual Agency Markets strategic business
unit of Liberty Mutual Group.

3. OBLIGATIONS OF ASSUMING COMPANY

     3.1. Subject to the terms and conditions of this Agreement, the Company shall cede
to
the Reinsurer and the Reinsurer shall accept from the Company a 100% quota share
participation
in the Net Retained Insurance Liability of the Company on each and every risk
insured under:

	 	3.1.1.	 	all policies issued by the Company and attaching prior to the
“Effective Date”; and
	 
	 	3.1.2.	 	all new and renewal policies issued by the Company and attaching
after the Effective Date.

     3.2. The term “policies” as used herein means the Company’s binders, policies and
contracts providing insurance and reinsurance of every kind and class, including
any fidelity or
surety bond, by the Company. A policy written on an installment premium, reporting
form or
continuous basis shall be considered renewed as of the end of each annual period
commencing
with the inception date of the policy.

4. DEFINITIONS

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     4.1. The term “Net Retained Insurance Liability” as used herein means the remaining portion
of the Company’s gross liability on each risk reinsured under this Agreement after deducting
recoveries from all reinsurance, other than the reinsurance provided hereunder..

     4.2. The term “Net Premiums Written” as used herein means gross premiums and additional
premium less return premiums and less premiums ceded on all reinsurance other than the reinsurance
provided hereunder..

     4.3. The term “Net Expenses” as used herein shall mean underwriting expenses as reported in
the Company’s statutory quarterly and annual statements, plus policyholders’ dividends and agents’
balances charged-off less finance and service charges not included in premium.

5. TERMINATION

     This Agreement may be terminated by (i) either party giving the other at least 90 days advance
written notice of such party’s intent to terminate on a prospective basis, provided that the party
terminating the Agreement will also send written notice of the termination to the Illinois Director
of Insurance at least 90 days prior to the effective date of termination; or (ii) otherwise by
mutual agreement. Unless otherwise agreed to by the parties, the Reinsurer shall remain liable
hereunder with respect to all cessions in force on the effective date of termination.

6. REINSURANCE PREMIUMS

     6.1 The Company shall promptly pay to the Reinsurer, by transfer of cash, agents’ balances and
investments at statutory book value, an amount equal to the Company’s statutory reserves, as of the
Effective Date, for unearned premiums, loss and loss adjustment expenses and IBNR, including all
other underwriting expense reserves, on the business reinsured under Article 3.1.1.

     6.2 The Company shall pay to the Reinsurer 100% of the Company’s Net Premiums Written during
the period this Agreement is in effect, less the ceding commission allowed in Article 7, in respect
of its Net Retained Insurance Liability on the business reinsured under Article 3.1.2.

7. COMMISSION

     The Reinsurer shall allow a ceding commission to the Company on the premiums ceded under this
Agreement pursuant to Article 4.2. in an amount equal to the Net Expenses of the Company as
defined in Article 4.3.

8. LOSSES. LOSS ADJUSTMENT EXPENSES AND SALVAGES

     8.1. The Company shall settle all loss claims under its policies and the Reinsurer shall pay
to the Company its pro rata share of such loss claims as payable by the Company.

2

 

     8.2. The Reinsurer shall also bear its pro rata share of allocated and unallocated loss
adjustment expenses as reported in the Company’s statutory quarterly and annual statements.

     8.3. The Reinsurer shall benefit pro rata in all salvages, discounts and other recoveries.

9. ACCOUNTS; DISBURSEMENTS: OFFSET

     The net amount owed by each company to the other under this Agreement shall be determined no
less frequently than on a quarterly basis; and such amount shall be paid on presentation of an
invoice covering settlement within 45 days after the end of the calendar quarter. Advances may be
made as needed to comply with statutory requirements. Reports of premiums and losses, and payment
of losses, shall be provided no less frequently than on a quarterly basis. Quarterly reports shall
consist of data showing premiums, losses, dividends, taxes and other expenses in such detail as to
enable each party to comply with statutory accounting practices. Each party shall have, and may
exercise at any time and from time to time, the right to offset any balance or balances, whether on
account of premiums, losses, expenses, assessments, taxes, dividends or otherwise, due from such
party to the other party under this Agreement or under any other agreement heretofore or hereafter
entered into by and between them, and may offset the same against any balance or balances due to
the former party from the latter party under the same or any other agreement between them. Further,
the Reinsurer may withhold funds due to the Company with interest credited at a rate equivalent to
the Three Month London Interbank Offered Rate (LIBOR) published in the Wall Street Journal at the
time such funds are withheld, plus 0.20% per annum. Company may demand payment of any funds
withheld from Company by Reinsurer, together with all interest accrued thereon, at any time with
thirty (30) days advance notice to Reinsurer. Under no circumstances may Reinsurer withhold funds
from Company under this provision for a period in excess of 90 days.

10. OTHER REINSURANCE

     10.1. Each party to this Agreement has the right to obtain additional reinsurance (“Other
Reinsurance”), whether treaty or facultative, on the risks covered under this Agreement. All Other
Reinsurance obtained by the Company shall apply before this Agreement, and the collectible
proceeds from such Other Reinsurance shall inure to the benefit of this Agreement. The obligations
of each company under this Agreement shall apply without regard to any amounts of Other
Reinsurance which are determined to be uncollectible.

     10.2 Except as otherwise agreed to between Company and Reinsurer, Company hereby assigns,
transfers and sets over to Reinsurer all Other Reinsurance obtained by Company, together with all
rights and privileges, claims, interests and title therein and all such Other Reinsurance shall be
reflected solely on the financial statements of Reinsurer.

11. ACCESS TO RECORDS

     Each party, by its designated representatives, shall have free access at any reasonable time
to all records of the other party which pertain to the reinsurance provided under this Agreement.

12. SUBROGATION

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     12.1. The Company hereby agrees to enforce such subrogation rights as it may obtain by virtue
of payments made under its policies, but in case it shall refuse or neglect to do so, the
Reinsurer is hereby authorized and empowered to bring any appropriate action to enforce such
rights.

     12.2. All subrogation recoveries, other recoveries, salvage or payments made subsequent to
the settlement of losses hereunder shall be applied as if made before such settlement and all
necessary adjustments to that end shall be made as soon as practicable.

     12.3. Each company shall have the right, before the happening of an occurrence, to waive its
right of subrogation.

13. INSOLVENCY

     In the event of the insolvency of the Company, the reinsurance under this Agreement shall be
payable by the Reinsurer on the basis of reported claims allowed in the liquidation proceedings,
subject to court approval, without diminution because of the insolvency of the Company. Payments
by the Reinsurer shall be made directly to the Company or to its domiciliary liquidator, receiver
or statutory successor, except:

1. where the policy specifically provides another payee of such reinsurance in the event of
the insolvency of the Company, and

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.

     The domiciliary liquidator, receiver or statutory successor of an insolvent Company shall give
written notice to the Reinsurer of the pendency of each claim against the insolvent Company on the
contract reinsured within a reasonable time after the claim is filed in the liquidation proceeding.
During the pendency of the claim, the Reinsurer shall have the right to investigate the claim and
interpose in the proceeding where the claim is to be adjudicated, at the Reinsurer’s expense, any
defenses that the Reinsurer considers available to the Company, its liquidator, receiver or
statutory successor. Subject to court approval, the expense thus incurred by the Reinsurer shall be
chargeable against the insolvent Company as part of the expense of liquidation, to the extent of a
proportionate share of the benefit which may accrue to the Company solely as a result of the
defense undertaken by the Reinsurer. If two or more assuming insurers are involved in the same
claim and a majority in interest elect to interpose a defense to the claim, the expense must be
apportioned as though the expense had been incurred by the Company.

14. ARBITRATION

     As a condition precedent to any right of action hereunder, any dispute arising out of this
Agreement shall be submitted to a board of arbitration composed of three arbiters, one arbiter to

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be appointed by each of the parties and the two so appointed shall select the third arbiter. The
board shall meet in Boston, Massachusetts, unless otherwise agreed. The claimant shall submit its
initial brief within 20 days after the appointment of the last arbiter. The respondent shall
submit its brief within 20 days after receipt of the claimant’s brief. The claimant may submit a
reply brief within 10 days after receipt of the respondent’s brief. The board shall issue its
decision following a hearing in which evidence may be introduced without following strict rules of
evidence but in which cross examination and rebuttal shall be allowed. The board shall make its
decision having regard for the custom and usage of the property-assuming insurance and reinsurance
business and within 60 days after the end of the hearing, unless the parties agree otherwise. A
decision by a majority of the board shall be final and binding upon the parties. The board shall
not authorize any punitive, exemplary or consequential damages between the parties. Judgment may
be entered upon the decision of the board in any court of competent jurisdiction. Each party shall
bear the expenses of its own arbiter and its own legal and expert fees and expenses, and the
parties shall equally bear any other expenses of the arbitration proceedings.

15. ERRORS AND OMISSIONS

     Any inadvertent error or omission shall not be held to relieve any party hereto from any
liability which would attach to it hereunder if such error or omission had not been made. Any such
error or omission shall be rectified as soon as may be reasonably practicable after discovery.

16. REINSURANCE FOLLOWS ORIGINAL POLICIES

     It is the intention of the parties that the fortunes of the policies shall affect the Company
and the Reinsurer in every respect; and the Reinsurer’s reinsurance under this Agreement shall be
subject to the same terms, rates, conditions, waivers, modifications, alterations and
cancellations as the Company’s policies.

17. EXTRA CONTRACTUAL OBLIGATIONS

     17.1. This Agreement shall protect the Company for any “Extra Contractual Obligations,” which
constitute those liabilities not covered under any other provision of this Agreement and which
arise from the handling of any claim on business covered hereunder. These include, but are not
limited to, the following: failure by the Company to settle within the policy limit, or by reason
of alleged or actual negligence, bad faith or fraud 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.

     17.2. The date on which any Extra Contractual Obligation is incurred by the Company shall be
deemed to be the date of the original occurrence giving rise to the loss.

18. CURRENCY

     All transactions under this Agreement shall be made in United States dollars.

19. TERRITORY

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     The reinsurance provided under this Agreement shall be coextensive with the territory of the
policies reinsured hereunder.

20. UNAUTHORIZED REINSURANCE

     20.1. Notwithstanding any other provision of this Agreement to the contrary, if the Reinsurer
becomes unauthorized in any State of the United States of America or the District of Columbia or
any other jurisdiction where authorization is required by insurance regulatory authorities in
order for the Company to obtain credit on its statutory annual statements for the reinsurance
being provided hereunder, the Reinsurer will establish such escrow accounts, trust accounts for
the benefit of the Company, letters of credit, funds withheld by the Company, or a combination
thereof as required by applicable law or regulation to permit the Company to obtain credit for
such reinsurance upon the request of the Company if a penalty would accrue to the Company on its
statutory annual statement without such funding. The Reinsurer shall have the option of
determining the method of funding to be utilized.

     20.2. The Reinsurer shall promptly notify the Company of any loss of license or authorization
or other change or condition which may affect the ability of the Company to obtain credit for such
reinsurance.

21. GOVERNMENTAL APPROVAL

     This Agreement is conditional upon obtaining any required approval of applicable governmental
insurance regulatory authorities.

22. ENTIRE AGREEMENT; NO PROFIT GUARANTEE

     This Agreement represents the entire agreement and understanding among the parties with
respect to the subject matter hereof. No other oral or written agreements or contracts relating to
the risks reinsured hereunder currently exist or are contemplated to be legally binding among the
parties. This Agreement provides no guarantee of profit, directly or indirectly, from the
Reinsurer to the Company or from the Company to the Reinsurer. This Agreement may be executed in
multiple counterparts, each of which, when so executed and delivered shall be an original, but
such counterparts shall together constitute one and the same instrument and agreement.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered
by their duly authorized officers, as of the Effective Date.

	 	 	 	 	 
	PEERLESS INSURANCE COMPANY

 	 	 
	/s/ Michael J. Fallon
 	 	 
	Name:  	Michael J. Fallon 	 	 
	Title:  	Chief Financial Officer and Treasurer	 	 
	Signature Date:	 January 29, 2010	 	 
	 
	INSURANCE COMPANY OF ILLINOIS

 	 	 
	/s/ Michael J. Fallon
 	 	 
	Name:  	Michael J. Fallon 	 	 
	Title:  	Chief Financial Officer and Treasurer	 	 
	Signature Date:	 January 29, 2010	 	 
	 

7exv10w173

EXHIBIT
10.173

100% QUOTA SHARE

REINSURANCE AGREEMENT

Reinsurance Agreement (“Agreement”) by and between Peerless Insurance Company, a New Hampshire
stock insurance company (the “Reinsurer”) and Liberty Mutual Mid-Atlantic Insurance Company, a
Pennsylvania mutual insurance company (the “Company”).

In consideration of the mutual promises and agreements contained herein, the parties hereby agree
as follows:

1. EFFECTIVE DATE

     This Agreement is effective as of 12:01 a.m. on January 1, 2010 (the “Effective
Date”), and shall remain in force unless modified by mutual agreement or terminated as
provided herein.

2. CESSIONS AND ACCEPTANCES

     2.1. The Company cedes to the Reinsurer and the Reinsurer accepts one hundred percent
(100%) of the Company’s Net Retained Insurance Liability under its policies issued through
the Liberty Mutual Agency Markets strategic business unit of Liberty Mutual Group.

     2.2. The Company cedes to the Reinsurer and the Reinsurer accepts one hundred percent
(100%) of the Company’s Net Premiums Written in accordance with Article 6 herein under its
policies issued through the Liberty Mutual Agency Markets strategic business unit of Liberty Mutual Group.

3. OBLIGATIONS OF ASSUMING COMPANY

     3.1. Subject to the terms and conditions of this Agreement, the Company shall cede to
the Reinsurer and the Reinsurer shall accept from the Company a 100% quota share
participation in the Net Retained Insurance Liability of the Company on each and every risk
insured under:

	 	3.1.1.	 	all policies issued by the Company and attaching prior to the
“Effective Date”; and
	 
	 	3.1.2.	 	all new and renewal policies issued by the Company and attaching after the Effective Date.

     3.2. The term “policies” as used herein means the Company’s binders, policies and
contracts providing insurance and reinsurance of every kind and class, including any
fidelity or surety bond, by the Company. A policy written on an installment premium,
reporting form or continuous basis shall be considered renewed as of the end of each annual
period commencing with the inception date of the policy.

4. DEFINITIONS

1

 

     4.1. The term “Net Retained Insurance Liability” as used herein means the
remaining portion of the Company’s gross liability on each risk reinsured under this
Agreement after deducting recoveries from all reinsurance, other than the reinsurance
provided hereunder. .

     4.2. The term “Net Premiums Written” as used herein means gross premiums and
additional premium less return premiums and less premiums ceded on all reinsurance other
than the reinsurance provided hereunder. .

     4.3. The term “Net Expenses” as used herein shall mean underwriting expenses as
reported in the Company’s statutory quarterly and annual statements, plus policyholders’
dividends and agents’ balances charged-off less finance and service charges not included in
premium.

5. TERMINATION

     This Agreement may be terminated by (i) either party giving the other at least
120 days advance written notice of such party’s intent to terminate on a prospective basis,
provided that the party terminating the Agreement will also send written notice of the
termination to the Department of Insurance if required by law; or (ii) otherwise by mutual
agreement. Unless otherwise agreed to by the parties, the Reinsurer shall remain liable
hereunder with respect to all cessions in force on the effective date of termination.

6. REINSURANCE PREMIUMS

     6.1 The Company shall promptly pay to the Reinsurer, by transfer of cash, agents’
balances and investments at statutory book value, an amount equal to the Company’s
statutory reserves, as of the Effective Date, for unearned premiums, loss and loss
adjustment expenses and IBNR, including all other underwriting expense reserves, on the
business reinsured under Article 3.1.1.

     6.2 The Company shall pay to the Reinsurer 100% of the Company’s Net Premiums Written
during the period this Agreement is in effect, less the ceding commission allowed in
Article 7, in respect of its Net Retained Insurance Liability on the business reinsured
under Article 3.1.2.

7. COMMISSION

     The Reinsurer shall allow a ceding commission to the Company on the premiums ceded
under this Agreement pursuant to Article 4.2. in an amount equal to the Net Expenses of the
Company as defined in Article 4.3.

8. LOSSES, LOSS ADJUSTMENT EXPENSES AND SALVAGES

     8.1. The Company shall settle all loss claims under its policies and the Reinsurer
shall pay to the Company its pro rata share of such loss claims as payable by the Company.

2

 

     8.2. The Reinsurer shall also bear its pro rata share of allocated and
unallocated loss adjustment expenses as reported in the Company’s statutory quarterly and
annual statements.

     8.3. The Reinsurer shall benefit pro rata in all salvages, discounts and other recoveries.

9. ACCOUNTS; DISBURSEMENTS; OFFSET

     The net amount owed by each company to the other under this Agreement shall be
determined no less frequently than on a quarterly basis; and such amount shall be paid on
presentation of an invoice covering settlement within 45 days after the end of the calendar
quarter. Advances may be made as needed to comply with statutory requirements. Reports of
premiums and losses, and payment of losses, shall be provided no less frequently than on a
quarterly basis. Quarterly reports shall consist of data showing premiums, losses,
dividends, taxes and other expenses in such detail as to enable each party to comply with
statutory accounting practices. Each party shall have, and may exercise at any time and
from time to time, the right to offset any balance or balances, whether on account of
premiums, losses, expenses, assessments, taxes, dividends or otherwise, due from such party
to the other party under this Agreement or under any other agreement heretofore or
hereafter entered into by and between them, and may offset the same against any balance or
balances due to the former party from the latter party under the same or any other
agreement between them. Further, the Reinsurer may withhold funds due to the Company with
interest credited at a rate equivalent to the Three Month London Interbank Offered Rate
(LIBOR) published in the Wall Street Journal at the time such funds are withheld, plus
0.20% per annum. Company may demand payment of any funds withheld from Company by
Reinsurer, together with all interest accrued thereon, at any time with thirty (30) days
advance notice to Reinsurer. Under no circumstances may Reinsurer withhold funds from
Company under this provision for a period in excess of 180 days.

10. OTHER REINSURANCE

     10.1. Each party to this Agreement has the right to obtain additional reinsurance
(“Other Reinsurance”), whether treaty or facultative, on the risks covered under this
Agreement. All Other Reinsurance obtained by the Company shall apply before this Agreement,
and the collectible proceeds from such Other Reinsurance shall inure to the benefit of this
Agreement. The obligations of each company under this Agreement shall apply without regard
to any amounts of Other Reinsurance which are determined to be uncollectible.

     10.2 Except as otherwise agreed to between Company and Reinsurer, Company
hereby assigns, transfers and sets over to Reinsurer all Other Reinsurance obtained by
Company, together with all rights and privileges, claims, interests and title therein and
all such Other Reinsurance shall be reflected solely on the financial statements of
Reinsurer.

11. ACCESS TO RECORDS

     Each party, by its designated representatives, shall have free access at any
reasonable time to all records of the other party which pertain to the reinsurance provided
under this Agreement.

12. SUBROGATION

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     12.1. The Company hereby agrees to enforce such subrogation rights as it may
obtain by virtue of payments made under its policies, but in case it shall refuse or
neglect to do so, the Reinsurer is hereby authorized and empowered to bring any appropriate
action to enforce such rights.

     12.2. All subrogation recoveries, other recoveries, salvage or payments made
subsequent to the settlement of losses hereunder shall be applied as if made before such
settlement and all necessary adjustments to that end shall be made as soon as practicable.

     12.3. Each company shall have the right, before the happening of an occurrence, to
waive its right of subrogation.

13. INSOLVENCY

     In the event of the insolvency of the Company, the reinsurance under this Agreement
shall be payable by the Reinsurer on the basis of reported claims allowed in the
liquidation proceedings, subject to court approval, without diminution because of the
insolvency of the Company. Payments by the Reinsurer shall be made directly to the Company
or to its domiciliary liquidator, receiver or statutory successor, except:

1. where the policy specifically provides another payee of such reinsurance in the
event of the insolvency of the Company, and

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.

     The domiciliary liquidator, receiver or statutory successor of an insolvent Company
shall give written notice to the Reinsurer of the pendency of each claim against the
insolvent Company on the contract reinsured within a reasonable time after the claim is
filed in the liquidation proceeding. During the pendency of the claim, the Reinsurer shall
have the right to investigate the claim and interpose in the proceeding where the claim is
to be adjudicated, at the Reinsurer’s expense, any defenses that the Reinsurer considers
available to the Company, its liquidator, receiver or statutory successor. Subject to court approval, the expense thus incurred by the Reinsurer shall be
chargeable against the insolvent Company as part of the expense of liquidation, to the
extent of a proportionate share of the benefit which may accrue to the Company solely as a
result of the defense undertaken by the Reinsurer. If two or more assuming insurers are
involved in the same claim and a majority in interest elect to interpose a defense to the
claim, the expense must be apportioned as though the expense had been incurred by the
Company.

14. ARBITRATION

     As a condition precedent to any right of action hereunder, any dispute arising out of
this Agreement shall be submitted to a board of arbitration composed of three arbiters, one
arbiter to

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be appointed by each of the parties and the two so appointed shall select the third arbiter.
The board shall meet in Boston, Massachusetts, unless otherwise agreed. The claimant shall submit
its initial brief within 20 days after the appointment of the last arbiter. The respondent shall
submit its brief within 20 days after receipt of the claimant’s brief. The claimant may submit a
reply brief within 10 days after receipt of the respondent’s brief. The board shall issue its
decision following a hearing in which evidence may be introduced without following strict rules of
evidence but in which cross examination and rebuttal shall be allowed. The board shall make its
decision having regard for the custom and usage of the property-assuming insurance and reinsurance
business and within 60 days after the end of the hearing, unless the parties agree otherwise. A
decision by a majority of the board shall be final and binding upon the parties. The board shall
not authorize any punitive, exemplary or consequential damages between the parties. Judgment may be
entered upon the decision of the board in any court of competent jurisdiction. Each party shall
bear the expenses of its own arbiter and its own legal and expert fees and expenses, and the
parties shall equally bear any other expenses of the arbitration proceedings.

15. ERRORS AND OMISSIONS

     Any inadvertent error or omission shall not be held to relieve any party hereto from
any liability which would attach to it hereunder if such error or omission had not been
made. Any such error or omission shall be rectified as soon as may be reasonably
practicable after discovery.

16. REINSURANCE FOLLOWS ORIGINAL POLICIES

     It is the intention of the parties that the fortunes of the policies shall affect the
Company and the Reinsurer in every respect; and the Reinsurer’s reinsurance under this
Agreement shall be subject to the same terms, rates, conditions, waivers, modifications,
alterations and cancellations as the Company’s policies.

17. EXTRA CONTRACTUAL OBLIGATIONS

     17.1. This Agreement shall protect the Company for any “Extra Contractual
Obligations,” which constitute those liabilities not covered under any other provision of
this Agreement and which arise from the handling of any claim on business covered hereunder. These include, but are not limited to, the following: failure by the
Company to settle within the policy limit, or by reason of alleged or actual negligence,
bad faith or fraud 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.

     17.2. The date on which any Extra Contractual Obligation is incurred by the Company
shall be deemed to be the date of the original occurrence giving rise to the loss.

18. CURRENCY

     All transactions under this Agreement shall be made in United States dollars.

19. TERRITORY

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     The reinsurance provided under this Agreement shall be coextensive with the
territory of the policies reinsured hereunder.

20. UNAUTHORIZED REINSURANCE

     20.1. Notwithstanding any other provision of this Agreement to the contrary, if the
Reinsurer becomes unauthorized in any State of the United States of America or the District
of Columbia or any other jurisdiction where authorization is required by insurance
regulatory authorities in order for the Company to obtain credit on its statutory annual
statements for the reinsurance being provided hereunder, the Reinsurer will establish such
escrow accounts, trust accounts for the benefit of the Company, letters of credit, funds
withheld by the Company, or a combination thereof as required by applicable law or
regulation to permit the Company to obtain credit for such reinsurance upon the request of
the Company if a penalty would accrue to the Company on its statutory annual statement
without such funding. The Reinsurer shall have the option of determining the method of
funding to be utilized.

     20.2. The Reinsurer shall promptly notify the Company of any loss of license or
authorization or other change or condition which may affect the ability of the Company to
obtain credit for such reinsurance.

21. GOVERNMENTAL APPROVAL

     This Agreement is conditional upon obtaining any required approval of applicable
governmental insurance regulatory authorities.

22. ENTIRE AGREEMENT; NO PROFIT GUARANTEE

     This Agreement represents the entire agreement and understanding among the parties
with respect to the subject matter hereof. No other oral or written agreements or contracts
relating to the risks reinsured hereunder currently exist or are contemplated to be legally binding among the parties. This Agreement provides no guarantee of profit,
directly or indirectly, from the Reinsurer to the Company or from the Company to the
Reinsurer. This Agreement may be executed in multiple counterparts, each of which, when so
executed and delivered shall be an original, but such counterparts shall together
constitute one and the same instrument and agreement.

6

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered
by their duly authorized officers, as of the Effective Date.

PEERLESS INSURANCE COMPANY

	 	 	 	 	 
	/s/ Michael J. Fallon
 	 	 
	Name:  	Michael J. Fallon 	 	 
	Title:  	Chief Financial Officer and Treasurer 	 	 

Signature Date: January 29, 2010

LIBERTY MUTUAL MID-ATLANTIC INSURANCE COMPANY

	 	 	 	 	 
	/s/ John D. Doyle
 	 	 
	Name:  	John D. Doyle 	 	 
	Title:  	Vice President 	 	 

Signature Date: January 29, 2010

7

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