Document:

exv10w190

EXHIBIT
10.190

LIBERTY MUTUAL INSURANCE COMPANY

LIBERTY MUTUAL FIRE INSURANCE COMPANY

LIBERTY MUTUAL (BERMUDA) LTD.

LIBERTY INSURANCE CORPORATION

LIBERTY NORTHWEST INSURANCE CORPORATION

WORKERS’ COMPENSATION AND GENERAL LIABILITY

SEVENTH EXCESS OF LOSS REINSURANCE CONTRACT

PREAMBLE

The Reinsurers hereby reinsure the Company to the extent and on the terms and conditions and
subject to the exceptions, exclusions and limitations hereinafter set forth.

ARTICLE 1 — EXHIBITS COVERED

The Company shall reinsure with the Reinsurers and the Reinsurers shall accept reinsurance
from the Company as set forth in Exhibits “A” and “B”, which are attached hereto and made part of
this Contract, such Exhibits being entitled for purposes of identification as follows:

EXHIBIT “A” — Excess of Loss Reinsurance of General Liability

EXHIBIT “B” — Excess of Loss Reinsurance of Workers’ Compensation

ARTICLE 2 — RETENTION BY COMPANY

This Contract applies only to such portion of any obligation of the Company as the Company
retains net for its own account, and in calculating the amount of any loss hereunder and in
computing the amount or amounts in excess of which this Contract attaches only loss or losses in
respect to that portion of any obligation which the Company retains net for its own account shall
be included.

It is agreed that the amount or amounts of the Reinsurers’ liability hereunder in respect of any
losses shall not be increased by reason of the inability of the Company to collect from any other
Reinsurers whether specific or general, any amount or amounts which may have become due from them
whether such inability arises from the insolvency of such other Reinsurers or otherwise.

 

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ARTICLE 3 — REINSURANCE PREMIUM

	(A)	 	The Reinsurers’ premium for the reinsurance provided
under this Contract shall be computed by the application of a rate of .033% to the Company’s
gross net written premium income on the business covered under Exhibits “A” and “B” subject
to a deposit premium of $1,843,000 and a minimum premium of $1,474,000 for the combined
Seventh Excess of Loss Layer provided under Exhibits “A”
and “B”.
	 
	(B)	 	The deposit premium as provided for in (A) above shall be payable to Reinsurers in four equal
quarterly installments of $460,750 on January 1, March 31, June 30 and September 30, 1987.
The Company shall undertake to furnish Reinsurers at the conclusion of this Contract, a report
of the gross net written premium income during the Contract year. If the developed
reinsurance premium for the Seventh Excess of Loss Reinsurance under Exhibits “A” and “B”
computed in accordance with the provisions of (A) above is greater than the deposit premium
paid, the additional premium shall be promptly paid to the Reinsurers. If the premium due
Reinsurers is less than the deposit premium paid, a refund shall be due and payable to the
Company subject to a minimum premium of $1,474,000.
	 
	(C)	 	The term “gross net written premium income” shall mean gross premiums written by the Company
on the business covered hereunder less return premiums for cancellations and reductions and
less premiums on reinsurance which inures to the benefit of the Reinsurers. No deduction
shall be made for dividends declared, paid or credited to policyholders of the Company.

ARTICLE 4 — SUBROGATION

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

The expense of any subrogation proceedings brought by the Company or the Reinsurers to enforce such
rights shall be apportioned between the Company and the Reinsurers in the ratio of their respective
interests in the total subrogation recovery but in the event there is a failure to make a

 

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subrogation recovery the expense of the proceedings shall be apportioned between the Company and
the Reinsurers in the ratio of their respective interests in the total loss.

All subrogation recoveries made by either party subsequent to payments made by the Reinsurers under
this Contract shall be applied as if made prior to said payments and
all necessary adjustments
shall be made between the Company and the Reinsurers as soon as practicable after said subrogation
recovery is made.

The Company shall have the right, before the happening of the loss to waive its right of
subrogation.

ARTICLE 5 — CLAIMS AGAINST REINSURERS

The Company shall give immediate notice to Reinsurers of any claim which they have reason to
believe could involve this Contract. The Company shall keep the Reinsurers informed of all
developments likely to affect the cost of any claim or claims hereunder.

The Company may commence, continue, defend, settle or withdraw from actions, suits or prosecutions
and generally do all such things relating to any claim or loss in which the Reinsurers are
interested as, in the Company’s judgement, may be beneficial or expedient to both parties. All
claim settlements made by the Company, provided that in the Company’s judgement, same are within
the terms of the original policies and within the terms of this Contract, shall be unconditionally
binding upon Reinsurers.

The share of the Reinsurers in any claim settlement shall be payable by the Reinsurers to the
Company upon reasonable evidence of the amount paid being given by the Company.

Until all liability attaching to this Contract has been finally settled the Company shall forward
to the Reinsurers as soon as practicable after the end of the year, a list of outstanding known
losses to this Contract as of December 31st in such year, showing the estimated cost of each loss.

ARTICLE 6 — STRUCTURED SETTLEMENTS

In the event of a settlement of a loss by agreement of the Company to make or fund periodic
payments, the Company may, at its option:

	1.	 	Recover from Reinsurers in accordance with the terms of

 

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	 	 	this Contract as periodic payments are made by the Company.

	2.	 	Settle the structured settlement loss with Reinsurers (releasing Reinsurers from further
liability) at an amount determined as follows:

	 	a.	 	The cost of an annuity or reinsurance cover to fund the periodic payments where
such an annuity or reinsurance cover has been purchased from an unaffiliated entity with
an A+ Best rating following competitive negotiations; or
	 
	 	b.	 	A figure agreed upon by the Reinsurers as representative of a competitive market
price for such annuity or reinsurance cover as would be purchased from an A+ Best-rated
Company where the Company elects to make provision for funding the periodic payments
through (an affiliated entity) means other than provided in (a) above.

In any event, where annuities are used in settlements, and there is a return of funds to the
Company due to, for example, a reversionary trust with the demise of a claimant, such return of
funds shall be treated as recovery and subject to Article 4 of this Contract.

Notwithstanding the above, it is agreed that the Reinsurers shall remain liable until all the
obligations of the Company for a loss covered under this Contract through an annuity, or otherwise,
have been satisfied.

ARTICLE 7 — TAX CLAUSE

In consideration of the terms under which this Contract is issued, the Company undertakes not
to claim any deduction in respect of the premium hereon when making tax returns, other than Income
or Profits tax returns to any State or to the District of Columbia.

ARTICLE 8 — FEDERAL EXCISE TAX

Federal Excise Tax (applies only to those Reinsurers, except Underwriters at Lloyds’, London
and other Reinsurers exempt from the Federal Excise Tax, who are domiciled outside the United
States of America.)

	A.	 	The Reinsurers have agreed to allow, for the purpose of paying the Federal Excise Tax, 1% of
the premium payable

 

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	 	 	hereon to the extent such premium is subject to Federal Excise Tax.
	 
	B.	 	In the event of any return premium becoming due
hereunder, the Reinsurers will deduct 1% from the amount of the return and the Company or its
Reinsurance Broker should take steps to recover the Tax from the United States Government.

ARTICLE 9 — PAYMENTS UNDER THIS CONTRACT

All amounts due to either party hereunder shall be payable in United States currency.

ARTICLE 10 — ACCESS TO RECORDS

The Reinsurers or their duly appointed representatives shall at reasonable times, have free
access to all books and records of the Company and of its agents or attorneys for the purpose of
obtaining any further information concerning this reinsurance or the subject matter hereof.

ARTICLE 11 — INSOLVENCY CLAUSE

The reinsurance provided by this Contract shall be payable by the Reinsurers directly to the
Company or to its liquidator, receiver or statutory successor on the basis of the liability of the
Company under the contracts reinsured without diminution because of
the insolvency of the Company.
In the event of the insolvency of the Company, the liquidator or receiver or statutory successor of
the Company shall give written notice of the pendency of each claim against the Company on a policy
or bond reinsured within a reasonable time after such claim is filed in the insolvency proceeding;
and during the pendency of such claim, the Reinsurers may investigate such claim and interpose, at
their own expense, in the proceeding where such claim is to be adjudicated any defense or defenses
which it may deem available to the Company, its liquidator or receiver or statutory successor. The
expense thus incurred by the Reinsurers shall be chargeable, subject to court approval, against the
Company as a part of the expense of liquidation to the extent of such proportionate share of the
benefit as shall accrue to the Company solely as a result of the defense undertaken by the
Reinsurers.

The reinsurance shall be payable as hereinbefore in the above paragraph provided except
as otherwise provided by

 

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Section 4118 (relating to Fidelity and Surety Risks) of the Insurance Law of New York or
except (a) where the Contract specifically provides another payee of such reinsurance in the event
of the insolvency of the Company and (b) where the Reinsurers with the consent of the direct
Insured or insureds have assumed such policy obligations of the Company as direct obligations of
the Reinsurers to the payees under such policies and in substitution for the obligations of the
Company to such payees.

ARTICLE 12 — ARBITRATION

As a condition precedent to any right of action hereunder, any dispute arising out of this
Contract shall be submitted to the decision of a board of arbitration composed of two arbitrators
and an umpire, meeting in Boston, Massachusetts unless otherwise agreed.

The members of the board of arbitration shall be active or retired disinterested officials of
insurance or reinsurance companies, or Lloyds Underwriters. Each party shall appoint its
arbitrator and the two arbitrators shall choose an umpire before instituting the hearing. In the
event that either party should fail to choose an arbitrator within thirty (30) days following a
written request by the other party to enter upon arbitration, the requesting party may choose two
arbitrators who shall in turn choose an umpire before entering upon arbitration. In the event the
two arbitrators fail to agree on an umpire either party shall have the right to submit the matter
to the American Arbitration Association in effect at that time.

Each party shall present its case to the arbitrators within sixty (60) days following the date of
their appointment. The board shall make its decision with regard to the custom and usage of the
insurance and reinsurance business. The board shall issue its decision in writing based upon 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 within 60 days
following the termination of the hearings unless the parties consent to an extension. The majority
decision of the board shall be final and binding upon all parties to the proceeding. Judgement may
be entered upon the award of the board in any court having jurisdiction thereof.

If more than one Reinsurer is involved in the same dispute, all such Reinsurers shall constitute
and act as one party for purposes of this clause and communications shall be made

 

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by the Company to each of the Reinsurers constituting the one party, provided, however, that
nothing therein 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 under the terms of
this Contract from several to Joint.

Each party shall bear the expense of its own arbitrator and shall jointly and equally bear with the
other party the expense of the umpire. The remaining costs of the arbitration proceedings shall be
allocated by the board.

ARTICLE 13 — OFFSET CLAUSE

Each party hereto shall have the right to offset any balance or balances, whether on account
of premiums or on account of losses, due from one party to any other party under this Contract
against any balance or balances currently due and payable to the one party from the other party
under this Contract.

ARTICLE 14 — ADVANCES

If the Reinsurer is unauthorized in any State of the United States of America or the District
of Columbia where authorization is required by insurance regulatory authorities, the Reinsurer will
fund (provided particulars are received forty-five days prior to the date funding is required by
the Company) outstanding losses by either cash advances, escrow accounts for the benefit of the
Company, Letters of Credit, or a combination thereof, if a penalty would accrue to the Company on
its statement without such funding. The Reinsurers shall have the sole option of determining the
method of funding referred to above provided it is acceptable to the insurance regulatory
authorities involved.

LOSS RESERVES: (U.S. Dollar Reinsurance Letter of Credit) (Applies only to those
Reinsurers who are domiciled outside the United States of America who cannot qualify for credit by
the State having jurisdiction over the Company’s loss reserves).

As regards policies or bonds issued by the Company coming within the scope of this Contract, the
Company agrees that when it shall file with the Insurance Department or set up on its books
reserves for losses covered hereunder which it shall be required to set up by law it will forward
to the Reinsurers a statement showing the proportion of such loss

 

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reserves which is applicable to them. The Reinsurers hereby agree that they will apply for and
secure delivery to the Company a clean irrevocable Letter of Credit
issued by Citibank N.A. in an
amount equal to Reinsurers’ proportion of said loss reserves. Under no circumstances shall any
amount relating to reserves in respect of Incurred But Not Reported losses be included in the
amount of the Letter of Credit.

The Company undertakes to use and apply any amounts which it may draw upon such Credit pursuant to
the terms of the Contract under which the Letter of Credit is held, and for the following purposes
only:

	A.	 	To pay the Reinsurers’ share or to reimburse the Company for the Reinsurers’ share of any
liability for loss reinsured by this Contract.
	 
	B.	 	To make refund of any sum which is in excess of the actual amount required to pay Reinsurers’
share of any liability reinsured by this Contract.

Citibank
N.A. shall have no responsibility whatsoever in connection with the propriety of
withdrawals made by the Company or the disposition of funds withdrawn, except to see that
withdrawals are made only upon the order of properly authorized representatives of the Company.

ARTICLE 15 — SERVICE OF SUIT

This Article applies to other than authorized Reinsurers and to Reinsurers domiciled outside
the United States of America.

In the event of the failure of the Reinsurers to pay any amount claimed to be due hereunder, the
Reinsurers agree that, at the request of the Company, the Reinsurer will submit to the jurisdiction
of any court of competent jurisdiction in any State of the United States, will comply with all
requirements necessary to give such court Jurisdiction, and will abide by the final decision of
such court, or of any Appellate court in the event of an appeal, with all relevant matters to be
determined in accordance with the law and practice of such court. Nothing in this Article
constitutes or should be understood to constitute a waiver of the Reinsurers’ 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.

 

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It is further agreed that pursuant to any statute of any state, territory, or district of the
United States which makes provision therefor, the Reinsurers hereby designate 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 arising out of this Contract instituted by or
on behalf of the Company or any beneficiary hereunder.

Further, it is agreed that service of process in such suit when instituted in the State of New York
may be made upon the firm of Mendes and Mount, Three Park Avenue, New York, New York 10016, and the
firm of Mendes and Mount is hereby authorized to accept service of process on behalf of the
Reinsurers in any such suit instituted in the State of New York, and upon request of the Company to
give a written undertaking to the Company that it will enter a general appearance on the
Reinsurers’ behalf in the event such a suit shall be instituted in the State of New York.

ARTICLE 16 — ERRORS AND OMISSIONS

Any inadvertent delay, omission or error shall not be held to relieve either party hereto from
any liability which would attach to it hereunder if such delay, omission or error had not been
made, provided such delay, omission or error is rectified upon discovery. However, this Article
shall not override the application of the loss reporting provision as set forth in Article 17.

ARTICLE 17 — COMMENCEMENT AND TERMINATION

This Contract applies only to losses during its effective period and reported to Reinsurers by
12:01 a.m., January 1, 1993. This Contract is effective 12:01 a.m., January 1, 1987, Standard Time
in Boston, Massachusetts and shall continue in effect until 12:01 a.m., January 1, 1988, Standard
Time in Boston, Massachusetts. This Contract may be cancelled only by mutual consent, or if
required by law or administrative order.

 

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ARTICLE 18 — REINSURANCE INTERMEDIARY DESIGNATION

Holborn Agency Corporation, 90 John Street, New York, New York 10038 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 thereto shall be
transmitted to the Company or the Reinsurers through Holborn Agency Corporation. Payments by the
Company to the Intermediary shall be deemed to constitute payment to the Reinsurers. Payments by
the Reinsurers to the Intermediary shall be deemed to constitute payment to the Company only to the
extent that such payments are actually received by the Company.

ARTICLE 19 — INTERPRETATION

The validity and interpretation of this Contract and of each Article and part thereof shall be
governed by the Law of the Commonwealth of Massachusetts.

 

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EXHIBIT A

EXCESS OF LOSS REINSURANCE OF GENERAL LIABILITY

SECTION 1 — COVERAGE

The Reinsurers hereby reinsure the Company, subject to the provisions and conditions herein
contained, in respect of liability which may accrue to the Company under any contracts of insurance
or reinsurance (hereinafter referred to as obligations of the Company), but excluding liability in
connection with the following class of business or contracts:

	A.	 	Workers’ Compensation and Employers’ Liability insurance, but this exclusion shall not apply
to Workers’ Compensation or Employers’ Liability coverage given under public liability
policies written by the Company (other than Umbrella Excess Liability policies).
	 
	B.	 	Bankers’ and Brokers’ Insurances or reinsurance issued by the Company meaning contracts
issued to banks, trust companies, building and loan companies, safe deposit companies,
investment companies, including investment trusts, finance companies, credit unions, stock or
security, brokers, or to similar financial institutions, insuring them against loss from the
following hazards:

	 	 	 	Infidelity of employees and/or partners;
	 
	 	 	 	Unfaithful performance of duties by employees and/or partners;
	 
	 	 	 	Loss of property in transit;
	 
	 	 	 	Forgery or alteration of negotiable or other paper;
	 
	 	 	 	Burglary, robbery, theft, false pretenses or fraud;
	 
	 	 	 	Mysterious disappearance or misplacement of property;
	 
	 	 	 	Loss of property from safe deposit boxes or other depositories;
	 
	 	 	 	Damage to or destruction of money or securities; 

Counterfeiting of currencies
or securities.

	C.	 	Motor Vehicle Physical Damage Insurance, but this exclusion shall not apply to Motor
Vehicle Property Damage Liability Insurance.
	 
	D.	 	Credit Insurance and/or Financial Guarantee.
	 
	E.	 	Fire Insurance, including the coverages ordinarily written under Extended Coverage
Endorsements.

 

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	F.	 	Liability arising from asbestos as respects manufacturing, removal, installation, storage,
mining, handling or transport.
	 
	G.	 	Business ceded to and assumed from the Pollution Liability Insurance Association.
	 
	H.	 	Liability covering bodily injury or property damage
under policies written or renewed on or after January 1, 1986 and arising out of the actual,
alleged or threatened discharge, dispersal, release or escape of pollutants:

	 	(a)	 	at or from premises owned, rented or occupied by the named insured;
	 
	 	(b)	 	at or from any site or location used by or for the named insured or others
for the handling, storage, disposal, processing or treatment of waste;
	 
	 	(c)	 	which are at any time transported, handled, stored, treated, disposed of, or
processed as waste by or for the named insured or any person or organization for whom
the named insured may be legally responsible; or
	 
	 	(d)	 	at or from any site or location on which the named insured or any contractor or
subcontractors working directly or indirectly on behalf of the named insured are
performing operations:

	 	(1)	 	if the pollutants are brought on or to the site or location in
connection with such operations; or
	 
	 	(2)	 	if the operations are to test for, monitor, clean up, remove,
contain, treat, detoxify or neutralize the pollutants.

	 	 	Any loss, cost or expense arising out of any governmental direction or request that the named
insured test for, monitor, cleanup, remove, contain, treat, detoxify or neutralize
pollutants.
	 
	 	 	Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including
smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to
be recycled, reconditioned or reclaimed.

 

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	 	 	However, it is further agreed that this Exclusion does not apply to the ownership,
maintenance or use of automobiles covered under the Company’s original policies.
	 
	I.	 	Group Health, Disability, Hospital or Surgical
Insurance, but this exclusion shall not apply to any loss due to two or more persons insured
under one or more Group policies suffering bodily injuries, including death resulting
therefrom, as a result of one accident or series of accidents arising out of one event.
	 
	J.	 	Livestock Mortality Insurance.
	 
	K.	 	Surety business, but this exclusion shall not apply to faithful performance bonds or public
official bonds; provided, however, that the Reinsurers shall not be liable for any loss
resulting from the insolvency of any firm, company, corporation or bank with which a
guaranteed official has deposited funds in the course of his duties.
	 
	L.	 	Insurance covering the liability of owners or operators of aircraft carrying passengers for
hire, for injuries to such passengers.
	 
	M.	 	Contracts of insurance written on any cost-plus plan which provides for payment of the
full amount of all losses, however great, by the policyholder. This exclusion shall not
apply to contracts of insurance, premiums for which are determined by a retrospective
rating plan which provides for a specific maximum premium or a formula for determination
of a maximum premium.
	 
	N.	 	Contracts of liability insurance covering injuries to persons or property arising out of the
rail operations of Class 1 railroads; but this exclusion shall not apply to railroad
Protective Liability policies issued at the request of the Company’s policyholders doing work
for or on the premises of such railroads.
	 
	O.	 	Liability under any Insolvency Fund arising by contract, operation of law or otherwise,
whether voluntary or involuntary. “Insolvency Fund” includes any guaranty fund, insolvency
fund, plan, pool, association, fund or other arrangement, howsoever denominated, established
or governed; which provides for any assessment of or payment or assumption by the Company of
part or all of any claim, debt, charge, fee, or other obligation of an insurer, or its
successors, or assigns, which has been

 

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	 	 	declared by any competent authority to be insolvent, or which has been otherwise deemed
unable to meet any claim, debt, charge, fee or other obligation in whole or in part.
	 
	P.	 	Reinsurance Assumed except for intra-company reinsurance between the members of the Group.
	 
	Q.	 	This Contract is subject to the Nuclear Incident
Exclusion Clause — Liability — Reinsurance attached hereto.

SECTION 2 — LIMIT OF LIABILITY

Reinsurers shall be liable for the ultimate net loss in excess of the sum of $75,000,000 of
ultimate net loss each and every loss in respect of business the subject matter of this Exhibit,
subject to a limit of $25,000,000 on account of each and every loss.

Notwithstanding Reinsurers’ liability on each and every loss as set forth above, Reinsurers’
liability shall further be limited to $50,000,000 on account of all losses recoverable under this
Exhibit during the term of this Contract.

It is hereby warranted or so deemed that the Company’s maximum limit of liability per insured shall
be $15,000,000 for bodily injury and property damage separately.

It is also agreed that subrogation expense incurred shall be paid in addition to the applicable
limits of liability set forth in this Section 2, on the basis provided in Article 4 of the
Contract.

For purposes of this Exhibit, it is agreed that the Company’s limit of liability under any and all
policies of Personal Accident Insurance (individual and group) covering any one individual shall be
considered as not exceeding $300,000 subject to this Contract. Subject to the limits set forth in
this Section 2, it is agreed that the Company is reinsured hereunder for the excess of the amounts
set forth in this Section 2 of ultimate net loss any one loss or series or losses arising out of
one event involving more than one person covered under such policies issued by the Company.

 

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SECTION 3 — REINSTATEMENT

In the event of the whole or any portion of the coverage hereunder being exhausted by a loss,
the amount so exhausted is automatically reinstated from the time of the loss and the Company shall
pay the Reinsurers an additional premium calculated at pro rata of the annual premium for the
classes of business covered under this Exhibit being pro rata as to the fraction of the face value
hereunder (being $25,000,000).

The additional premium as set forth above shall be calculated and paid by the Company to the
Reinsurers as soon as possible following a request by the Company for a loss payment and receipt
thereof from Reinsurers.

Notwithstanding anything contained herein to the contrary, the Reinsurers’ liability under this
Exhibit shall not exceed $25,000,000 for any one loss nor $50,000,000 in all during the term of
this Contract.

SECTION 4 — ULTIMATE-NET-LOSS

The term “Ultimate Net Loss” as used in this Exhibit shall mean the amount actually paid by
the Company (including loss adjustment expenses, attorneys’ fees and other costs of investigation
or litigation) in settlement of or payment of claims or judgements arising from each and every loss
for which the Company is or may be found liable under its contracts of insurance or reinsurance,
less salvages and subrogation recoveries and amounts recovered or recoverable under pooling
agreements or other reinsurances, whether collectible, or not; provided, however, that in the
event of the insolvency of the Company, “Ultimate Net Loss” shall mean the amount of loss
(including loss adjustment expenses, attorneys’ fees and other costs of investigation or
litigation) which the Company has incurred or for which it is liable, and payment by the Reinsurers
shall be made to the liquidator, receiver or statutory successor of the Company in accordance with
the provisions of Article 11 of this Contract. Salaries and expenses of employees of the Company
shall not be included in ascertaining ultimate net loss.

This Contract shall protect the Company within the limits hereof in connection with any loss for
which the Company may be legally liable to pay in excess of the limit of its original policy, where
loss in excess of the limit has been incurred because of its failure to settle within the policy
limit or by reason of alleged or actual negligence, fraud or

 

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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.

However, the above paragraph shall not apply where the loss has been incurred due to the 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.

With regard to excess of policy limits, the word “loss” shall mean any amounts for which the
Company would have been contractually liable to pay had it not been for the limit of the original
policy.

It is agreed that the Company may carry underlying limits of indemnity
recoveries under which shall
inure to the sole benefit of the Company and shall be disregarded in computing the net excess loss
in excess of which this Contract attaches.

SECTION 5 — DEFINITIONS

	1.	 	The term “each and every loss” as used in this Exhibit is defined as follows according to
the class or risk involved:

	 	A.	 	All Classes or Risks Covered
Hereunder (other than those defined in
paragraphs B and C below)
	 
	 	 	 	All injuries to persons and all losses of injury to or destruction of property
resulting from each accident or loss, or from each series of accidents or losses
proximately arising out of one event. An event shall mean an individual accident or
happening, or singular act, error or omission, which shall be identified as to time
and place and be limited in time and place.
	 
	 	 	 	Where the company’s original policies provide for aggregate limits of liability, the
Company is permitted to extract from such aggregate policy(ies) Limits of Liability
the amount of loss sustained by them arising from any one event in order that such
loss may be added to the Company’s losses from other policies for the same event in
order to determine the Ultimate Net Loss.

 

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	 	B.	 	Products and Completed Operations
	 
	 	 	 	With respect to liability insurance coverage written subject to aggregate limits of
liability on a policy year basis, each and every accident or loss shall mean the cumulative
amount of all losses proceeding from one event. For the purposes of this paragraph, all
losses having a common origin and traceable to the same cause, omission, or mistake
occurring during any one policy year shall be considered one event. Where the Company
issues more than one such policy to the same policyholder such policies shall together be
treated as though they were one policy. Losses under such policies shall for the purposes of
this reinsurance contract be deemed to have occurred in the calendar year in which the
inception date of the policy falls, except that as respects such policies issued for a
period in excess of twelve months, losses for the first twelve month period shall be deemed
to have occurred in the calendar year in which the inception date of the policy falls and
losses for each succeeding twelve month period or part thereof shall be deemed to have
occurred in the calendar year in which the anniversary date of the policy starting such
period falls.
	 
	 	C.	 	Fidelity and Forgery
	 
	 	 	 	All losses resulting from any fraudulent or dishonest act or omission or series thereof on
the part of any one person or of several persons acting in collusion (whether employees or
not) and irrespective of the number of the Company’s obligations involved; provided, that
in the case of any loss involving two or more persons acting in collusion, losses resulting
from separate acts or omissions on the part of each such person shall be included as part of
such loss.

	 	1.	 	It is agreed that each and every loss commencing prior to midnight on the date
of termination of this Contract and discovered not later than three years after such
termination (excluding only any loss prior to midnight on the effective date of this
Contract) shall be recoverable under this Contract.
	 
	 	2.	 	It is further agreed that each and every loss resulting from a series of acts
or omissions, some prior to and some subsequent to midnight on

 

Page 18 of 26

	 	 	 	the effective date of this Contract, shall be disregarded.

	 	 	 	As regards losses arising under policies and/or contracts covering on a “losses
discovered” or “claims made during” basis (that is to say policies and/or contracts in
which the date of discovery of the loss, or the date the claim is made against the
insured or is first notified to the Company, determines under which policy and/or
contract the loss is collectible), such losses are covered hereunder and the date of
the discovery of such loss or the date such claim is made or first notified shall be
deemed to be the date of loss for the purposes of this Contract, provided that the
date of the discovery of the loss or the date the claim is made or first notified
falls within the period covered by this Contract.
	 
	 	 	 	For the purposes of the foregoing the date of first discovery of a “loss” or the date
the claim is first made against an insured or first notified to the Company shall be
the date applicable to the entire loss and/or claim and the Reinsurers shall be liable
for their proportion of the entire loss and/or claim irrespective of the expiry date
of this Contract and provided that such first discovery date or first date such claim
is made or notified falls within the period of this Contract.

	2.	 	The term “Date of Loss” as used in this Exhibit is defined as follows:
	 
	 	 	For the purposes of this Contract when “claims-made” and/or “losses discovered” and/or
“occurrence” and/or “accident” policies are involved in the same loss with other
“claims-made” and/or “losses discovered” and/or “occurrence” and/or “accident” policies, the
date of loss shall be determined as follows:

	 	1.	 	If an “occurrence” or “accident” policy is identified as being involved then the
date of loss shall be the date as determined under the occurrence or accident policy, or
	 
	 	2.	 	If no “occurrence” or “accident” policy is identified as being involved, then the
date of the loss will be the date the first claim is made or discovered under a
“claims-made” or “losses discovered” policy. If an occurrence policy is identified
after date of loss is established under

 

Page 19 of 26

	 	 	 	(2), the date of loss shall not be changed. Only one date of loss may be established
for any event.

	 	 	Coverage hereunder shall only apply to those claims which are reported to the Reinsurers
within four years from the date the loss is first reported to Reinsurers by the Company and
no liability shall attach hereunder for any claim or claims not notified within this period.

SECTION 6 — EXTRA CONTRACTUAL OBLIGATIONS

This Contract shall protect the Company within the limits hereof for 80% of Extra Contractual
Obligations, where the ultimate net loss includes any Extra Contractual Obligations. “Extra
Contractual Obligations” are defined as those liabilities not covered under any other provision of
this Contract and which 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.

The date on which any Extra Contractual Obligation is incurred by the Company shall be
deemed, in all circumstances, to be the date of the original accident, casualty, disaster or
loss.

However, this Section shall not apply where the loss has been incurred due to the 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.

This Exhibit A is attached to and forms part of the Workers’ Compensation and General
Liability Seventh Excess of Loss Reinsurance Contract issued to LIBERTY MUTUAL INSURANCE COMPANY,
LIBERTY MUTUAL FIRE INSURANCE COMPANY, LIBERTY MUTUAL (BERMUDA) LTD., LIBERTY INSURANCE CORPORATION
AND LIBERTY NORTHWEST INSURANCE CORPORATION.

 

Page 20 of 26

EXHIBIT B

EXCESS OF LOSS REINSURANCE OF WORKERS’ COMPENSATION

SECTION 1 — COVERAGE

The Reinsurers hereby reinsure the Company in respect of the liability of the Company, under
(1) policies (the premium for which is classified by the Company, for internal purposes, as
“Workers’ Compensation” or “Employers’ Liability”) by which the Company Insures the liability of
employers under law or contract which imposes liability upon such employer for injury, sickness or
disease, including death resulting therefrom, sustained by his employees, and (2) Employers
Liability coverage provided under Umbrella Excess Liability policies.

SECTION 2 — LIMITS OF LIABILITY

The Reinsurers shall be liable for the ultimate net loss in excess of the sum of $75,000,000
of ultimate net loss each and every loss in respect of business the subject matter of this Exhibit,
subject to a limit of $25,000,000 on account of each and every loss.

Notwithstanding Reinsurers’ liability on each and every loss as set forth above, Reinsurers’
liability shall further be limited to $50,000,000 on account of all losses recoverable under this
Exhibit during the term of this Contract.

It is also agreed that subrogation expense incurred shall be paid in addition to the applicable
limits of liability set forth in this Section 2, on the basis provided in Article 4 of the
Contract.

SECTION 3 — REINSTATEMENT

In the event of the whole or any portion of the coverage hereunder being exhausted by a loss,
the amount so exhausted is automatically reinstated from the time of the loss and the Company shall
pay the Reinsurers an additional premium calculated at pro rata of the annual premium for the
classes of business covered under this Exhibit being pro rata as to the fraction of the face value
hereunder (being $25,000,000).

 

Page 21 of 26

The additional premium as set forth above shall be calculated and paid by the Company to the
Reinsurers as soon as possible following a request by the Company for a loss payment and receipt
thereof from Reinsurers.

Notwithstanding anything contained herein to the contrary, the Reinsurers’ liability under this
Exhibit shall not exceed $25,000,000 for any one loss nor $50,000,000 in all during the term of
this Contract.

SECTION 4 — ULTIMATE-NET-LOSS

The term “ultimate net loss” as used in this Exhibit means the amount actually paid by the
Company (including but not limited to medical losses, interests, costs and allocated claim expense)
in respect of claims arising from any one accident or occurrence, for which the Company is or may
be found liable, after making proper deductions for amounts paid or due under other reinsurance
(whether collectible or not), subrogation recoveries, overpayments collected, and refunds to the
Company from the New York Aggregate Trust Fund, second injury funds and other such funds;
provided, however, that in the event of the insolvency of the Company, “ultimate net loss” as used
in this Exhibit means the amount of loss (including but not limited to medical losses, interests,
costs and allocated claim expense) in respect of claims arising from any one accident or occurrence
which the Company has incurred or for which it is liable, and payment by the Reinsurers shall be
made to the liquidator, receiver or statutory successor of the Company in accordance with the
provisions of Article 11 of this Contract. Expenses for salaried employees of the Company incurred
in litigation and the investigation or adjustment of claims or suits and subrogation expense
referred to in Article 4 shall be disregarded in ascertaining ultimate net loss.

This Contract shall protect the Company within the limit hereof in connection with any loss for
which the Company may be legally liable to pay in excess of the limit of its original policy, where
loss in excess of the limit has been incurred because of its failure 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 in the preparation or prosecution of an appeal consequent upon such action.

However, the above paragraph shall not apply where the loss has been incurred due to the fraud of a
member of the Board

 

Page 22 of 26

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.

With regard to excess of policy limits, the word “loss” shall mean any amounts for which the
Company would have been contractually liable to pay had it not been for the limit of the original
policy.

It is agreed that the Company may carry underlying limits of indemnity recoveries under which shall
inure to the sole benefit of the Company and shall be disregarded in computing the net excess loss
in excess of which this Contract attaches.

SECTION 5 — EXCLUSIONS

This Exhibit does not apply:

	A.	 	To excess of loss reinsurance contracts.
	 
	B.	 	To the following occupations, employments or risks (except when not disclosed to the Company,
when incidental to a nonexcluded risk (the company to be the sole judge of what is incidental)
or when insured through voluntary or statutory pools or assigned risk plans):

	 	1.	 	The navigation and operation of vessels on the high seas in foreign
commerce;
	 
	 	2.	 	Underground coal mining;
	 
	 	3.	 	Fireworks manufacturing;
	 
	 	4.	 	Fuse manufacturing;
	 
	 	5.	 	Explosive risks, viz

	 	(a)	 	Manufacture of any explosive substance intended
for use as an explosive;
	 
	 	(b)	 	Manufacture of any product, other than
Fireworks and Fuses, in which any such explosive substance is an
ingredient;
	 
	 	(c)	 	The loading of any such explosive substance into
containers for use as explosive objects, propellant charges or detonating
devices, and the incidental storage thereof;
	 
	 	(d)	 	Handling transportation or storage of any such
explosive substance intended solely for war purposes.

 

Page 23 of 26

	C.	 	To any loss which the Company is entitled to recover the full amount under an insurance
policy written on a cost-plus plan, that is to say, a plan which provides for the payment of
the full amount of all losses, however great, by the policyholder. This exclusion does not
apply to bar recovery from the Reinsurers with respect to losses under retrospectively-rated
policies.
	 
	D.	 	Liability under any Insolvency Fund arising by contract, operation of law or otherwise,
whether voluntary or involuntary. “Insolvency Fund” includes any guaranty fund, insolvency
fund, plan, pool, association, fund or other arrangement, howsoever denominated, established
or governed, which provides for any assessment of or payment or assumption by the Company of
part or all of any claim debt, charge, fee or other obligation of an insurer, or its
successors, or assigns, which has been declared by any competent authority to be insolvent, or
which has been otherwise deemed unable to meet any claim, debt, charge, fee or other
obligation in whole or in part.

SECTION 6 — DEFINITIONS

As used in this Exhibit the following terms shall have the meanings stated herein:

	A.	 	“Policies”. Policies, contracts, endorsements or binders, including but not limited to those
by which the Company undertakes to offer and pay “voluntary compensation” benefits, those by
which the Company undertakes to make payments to augment compensation benefits those by which
the Company affords reinsurance or excess insurance to Workers’ Compensation or Employers’
Liability risks and those by which the Company undertakes to participate in voluntary or
statutory pools or assigned-risk plans.
	 
	B.	 	“Explosive Substance”. Any substance manufactured for the express purpose of exploding as
differentiated from commodities used industrially and which are only incidentally explosive
stuffs.
	 
	C.	 	“Loss.” An accident or loss or series of accidents or losses arising out of one event. An
“event” shall mean an individual accident or happening or singular act, error or omission,
which shall be identified in time and place and limited in time and place. With respect to
disease or death resulting therefrom, the terms loss and series of losses shall mean the claim
or series of

 

Page 24 of 26

	 	 	claims occasioned by the disease or diseases having a common cause or origin. The Company shall be
the sole judge of what constitutes disease or diseases having a common cause or origin. The
Company shall assign the claim or series of claims to a policy year of coverage under any one
policy or renewal thereof and will be bound by the following principles:

	 	1.	 	If the liability is placed solely upon the employer or insurer as of the date the
claimant’s disability commences or becomes manifest and that date is within a period of
coverage under an applicable policy issued by the Company, the loss shall be deemed to have
been sustained by the Company at such date.
	 
	 	2.	 	If assignment is not made on the basis stated in the preceding subparagraph the claim
is to be assigned to the policy year of the date of claimant’s last injurious exposure
during a period of coverage under an applicable policy issued by the Company.

	 	 	Notwithstanding anything to the contrary above set forth, it is agreed that the date of the loss
for the purpose of this reinsurance shall be deemed to be the inception, anniversary or renewal
date of the Company’s original policy. Losses under a policy in-force at January 1, 1987 shall be
assigned to this Contract to the extent such losses are not assignable to the 1986 Contract year.
	 
	 	 	Notwithstanding the foregoing, where a policyholder requests that it be issued two or more policies
in circumstances where applicable manual rules permit the issuance of a single policy such policies
shall be regarded as a single policy for purposes of assigning disease claims to a policy year
coverage.
	 
	 	 	“Policy year” shall mean each separate original policy period of not exceeding twelve months
commencing at the inception, anniversary or renewal date on or after the inception of this
Contract.

 

Page 25 of 26

SECTION 7 — EXTRA CONTRACTUAL OBLIGATIONS

This Contract shall protect the Company within the limits hereof for 80% of Extra Contractual
Obligations, where the ultimate net loss includes any Extra Contractual Obligations. “Extra
Contractual Obligations” are defined as those Liabilities not covered under any other provision of
this Contract and which 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.

The date on which any Extra Contractual Obligation is incurred by the Company shall be
deemed, in all circumstances, to be the date of the original accident, casualty, disaster or
loss.

However, this Section shall not apply where the loss has been incurred due to the 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.

SECTION 8 — COMMUTATION

Within 48 months from the expiration of this Contract the Company shall submit a statement to
the Reinsurers listing amounts paid and reserved for all Workers’ Compensation claims under this
Contract. This statement shall form the basis of an agreed value for all such losses. The amounts
of reserves contained therein shall be calculated in accordance with the following criteria:

	 	1.	 	Mortality assumptions will be calculated from the latest available United States
census tables as follows:

	 	 	 	Survivor Benefits — Total Females 
	 
	 	 	 	Disability Benefits — Total Males

	 	2.	 	The annual interest discount percentage shall be an average (rounded to the
nearest one-half percentage

 

Page 26 of 26

	 	 	 	point) of the before-tax yields of the Company’s investment purchases for the three
latest available calendar years.

	 	3.	 	Remarriage expectations will be in accordance with the assumptions used by the
National Council on Compensation Insurance in its statistical tables.
	 
	 	4.	 	For all future medical costs, and annuity
calculation shall be based upon the Company’s evaluation of long term
medical care and rehabilitation requirements, using an annual discount of 0% and
an annual escalation of 0%.

The above criteria shall not apply to losses with future escalation of indemnity benefits as
described below:

	 	1.	 	Annuity values for “index-linked” benefits shall be calculated based upon an
annual discount of 0% and an annual escalation of 0%.
	 
	 	2.	 	For “index-linked” benefits, remarriage
expectations will not be used.

Except as may be mutually agreed for specific losses, these calculations shall be considered the
final and agreed value of all known workers’ compensation losses for the period of this Contract.
A resulting payment, if any, shall be accepted by the Company in full settlement of the Reinsurers’
liability for all such losses. In the event that a workers’ compensation loss is not reported to
the Company until after the Company’s statement has been submitted, immediate notice of such loss
shall be given to the Reinsurers in order that an agreed present value may be determined.

SECTION 9 — MAXIMUM LIMIT ANY ONE INDIVIDUAL

Notwithstanding the provisions contained herein it shall be understood that any loss
recoverable hereon shall be limited to $5,000,000 any one individual for the purposes of
determining the ultimate net loss. This maximum limit does not apply to Employers’ Liability
coverage.

This
Exhibit B is attached to and forms part of the Workers’ Compensation and General
Liability Seventh Excess of Loss Reinsurance Contract issued to LIBERTY MUTUAL INSURANCE COMPANY,
LIBERTY MUTUAL FIRE INSURANCE COMPANY, LIBERTY MUTUAL (BERMUDA) LTD., LIBERTY INSURANCE CORPORATION
AND LIBERTY NORTHWEST INSURANCE CORPORATION.

 

 

NUCLEAR INCIDENT EXCLUSION CLAUSE — LIABILITY — REINSURANCE

	(1)	 	This Agreement does not cover any loss or liability accruing
to the Reassured as a
member of, or subscriber to, any association of insurers or reinsurers formed for the purpose
of covering nuclear energy risks or as a direct or indirect reinsurer of any such member,
subscriber or association.
	 
	(2)	 	Without in any way restricting the operation of paragraph (1) of this Clause it is understood
and agreed that for all purposes of this Agreement all the original policies of the Reassured
(new, renewal and replacement) of the classes specified in Clause II of this paragraph (2)
from the time specified in Clause III in this paragraph (2) shall be deemed to include the
following provision (specified as the Limited Exclusion Provision):
	 
	 	 	Limited Exclusion Provision.

	 	I.	 	It is agreed that the policy does not apply under any liability coverage, to
injury, sickness, disease, death or destruction with respect to which an insured under
the policy is also an insured under a nuclear energy liability policy issued by Nuclear
Energy Liability Insurance Association, Mutual Atomic Energy Liability Underwriters or
Nuclear Insurance Association of Canada, or would be an insured under any such policy
but for its termination upon exhaustion of its limit of liability.
	 
	 	II.	 	Family Automobile Policies (liability only), Special Automobile Policies
(private passenger automobiles, liability only), Farmers Comprehensive Personal
Liability Policies (liability only), Comprehensive Personal Liability Policies (liability only) or policies of a similar nature; and the liability
portion of combination forms related to the four classes of policies stated above, such as the
Comprehensive Dwelling Policy and the applicable types of Homeowners Policies.
	 
	 	III.	 	The inception dates and thereafter of all original policies as described
in II above, whether new, renewal or replacement, being policies which either

	 	(a)	 	become effective on or after 1st May, 1960, or
	 
	 	(b)	 	become effective before that date and contain the Limited
Exclusion Provision set out above;

	 	 	 	provided this paragraph (2) shall not be applicable to Family Automobile
Policies, Special Automobile Policies, or policies or combination policies of a
similar nature, issued by the Reassured on New York risks, until 90 days
following approval of the Limited Exclusion Provision by the Governmental
Authority having jurisdiction thereof.

 

-2-

	(3)	 	Except for those classes of policies specified in clause II of paragraph (2) and without
in any way restricting the operation of paragraph (1) of this Clause, it is understood and
agreed that for all purposes of this Agreement the original liability policies of the
Reassured (new, renewal and replacement) affording the following coverages:

	 	 	 	Owners, Landlords and Tenants Liability, Contractual Liability, Elevator Liability,
Owners or Contractors (including railroad) Protective Liability, Manufacturers and
Contractors Liability, Product Liability, Professional and Malpractice Liability,
Storekeepers Liability, Garage Liability, Automobile Liability (including
Massachusetts Motor Vehicle or Garage Liability)

	 	 	shall be deemed to include, with respect to such coverages, from the time specified in Clause
V of this paragraph (3), the following provision (specified as the Broad Exclusion
Provision):
	 
	 	 	Broad Exclusion Provision.
	 
	 	 	It is agreed that the policy does not apply:

	 	I.	 	Under any Liability Coverage, to injury, sickness, disease, death or
destruction

	 	(a)	 	with respect to which an insured under the policy is also an
insured under a nuclear energy liability policy issued by Nuclear Energy
Liability Insurance Association, Mutual Atomic Energy Liability Underwriters or
Nuclear Insurance Association of Canada, or would be an insured under any such
policy but for its termination upon exhaustion of its limit of liability; or
	 
	 	(b)	 	resulting from the hazardous properties of nuclear material
and with respect to which (1) any person or organization is required to
maintain financial protection pursuant to the Atomic Energy Act of 1954, or
any law amendatory thereof, or (2) the insured is, or had this policy not
been issued would be, entitled to indemnity from the United States of
America, or any agency thereof, under any agreement entered into by the
United States of America, or any agency thereof, with any person or
organization.

	 	II.	 	Under any Medical Payments Coverage, or under any Supplementary Payments
Provision relating to immediate medical or surgical relief, to expenses incurred
with respect to bodily injury, sickness, disease or death resulting from the
hazardous properties of nuclear material and arising out of the operation of a
nuclear facility by any person or organization.
	 
	 	III.	 	Under any Liability Coverage, to injury, sickness, disease, death or
destruction resulting from the hazardous properties of nuclear material, if

	 	(a)	 	the nuclear material (1) is at any nuclear facility owned
by, or operated by or on behalf of, an insured or (2) has been discharged
or dispersed therefrom;

 

-3-

	 	(b)	 	the nuclear material is contained in spent fuel or waste at
any time possessed, handled, used, processed, stored, transported or disposed of by or
on behalf of an insured; or
	 
	 	(c)	 	the injury, sickness, disease, death or destruction arises out of the
furnishing by an insured of services, materials, parts or
equipment in connection with the planning, construction, maintenance, operation or
use of any nuclear facility, but if such facility is located within the United States
of America, its territories or possessions or Canada, this exclusion (c) applies only
to injury to or destruction of property at such nuclear facility.

	 	IV.	 	As used in this endorsement:
	 
	 	 	 	“hazardous properties” include radioactive, toxic or explosive properties; “nuclear material”
means source material, special nuclear material or byproduct material; “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 a
nuclear reactor; “waste” means Any waste material (1) containing byproduct material other
than the tailings or wastes produced by the extraction or concentration of uranium or thorium
from any ore processed primarily for its source material content and (2) resulting from the
operation by any person or organization of any nuclear facility included within the
definition of nuclear facility under paragraph (a) or (b) thereof; “nuclear facility” means

	 	(a)	 	any nuclear reactor,
	 
	 	(b)	 	any equipment or device designed or used for (1) separating the isotopes of
uranium or plutonium, (2) processing or utilising spent fuel, or (3) handling,
processing or packaging waste,
	 
	 	(c)	 	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,
	 
	 	(d)	 	any structure, basin, excavation, premises or place prepared or used for the
storage or disposal of waste,

	 	 	 	and includes the site on which any of the foregoing is located, all operations conducted on
such site and all premises used for such operations; “nuclear reactor” seans any apparatus
designed or used to sustain nuclear fission in a self-supporting chain reaction or to contain
a critical mass of fissionable material.
	 
	 	 	 	With respect to injury to or destruction of property, the word “injury” or “destruction”
includes all forms of radioactive contamination of property.

 

-4-

	 	V.	 	The inception dates and thereafter of all original policies affording
coverages specified in this paragraph (3), whether new, renewal or
replacement, being policies which either

	 	(a)	 	become effective on or after 1st May, 1960, or
	 
	 	(b)	 	become effective before that date and contain the Broad
Exclusion Provision set out above;

	 	 	 	provided this paragraph (3) shall not be applicable to

	 	(i)	 	Garage and Automobile Policies issued by the
Reassured on New York risks, or
	 
	 	(ii)	 	statutory liability insurance required under Chapter
90, General Laws of Massachusetts,

	 	 	until 90 days following approval of the Broad Exclusion Provision by the
Governmental Authority having jurisdiction thereof.
	 
	 	 	It is further provided that original liability policies affording coverages
described in this paragraph (3), (other than those policies and coverages
described in (i) and (ii) above), which become effective before 1st May, 1960,
and do not contain the Broad Exclusion Provision set out above, but which contain
the Broad Exclusion Provision set out in N.M.A. 1118, shall be construed as if
incorporating such portions of the Broad Exclusion Provision set out above as are
more liberal to the holders of such policies.

	(4)	 	Without in any way restricting the operation of paragraph (1) of this clause it is
understood and agreed that original liability policies of the Reassured for those classes of
policies

	 	(a)	 	described in Clause II of paragraph (2) effective
before 1st June, 1958, or
	 
	 	(b)	 	described in paragraph (3) effective before 1st March, 1958,

	 	 	shall be free until their natural expiry dates or 1st June, 1963, whichever first occurs,
from the application of the other provisions of this Clause.
	 
	(5)	 	Without in any way restricting the operation of paragraph (1) of this Clause, it is
understood and agreed that paragraphs (2) and (3) above are not applicable to original
liability policies of the Reassured in Canada and that with respect to such policies this
Clause shall be deemed to include the Nuclear Energy Liability Exclusion Provisions actually
used on such policies by the Reassured; provided that if the Reassured shell fail to include
such Exclusion Provisions in any such policy where it is legally permitted to do so, such
policy shall be deemed to include such Exclusion Provisions.

 

LIBERTY MUTUAL INSURANCE COMPANY

LIBERTY MUTUAL FIRE INSURANCE COMPANY

LIBERTY MUTUAL (BERMUDA) LTD.

LIBERTY INSURANCE CORPORATION

LIBERTY NORTHWEST INSURANCE CORPORATION

WORKERS’ COMPENSATION AND GENERAL LIABILITY

SEVENTH EXCESS OF LOSS REINSURANCE CONTRACT

INTERESTS AND LIABILITIES AGREEMENT

It is hereby mutually agreed by and between LIBERTY MUTUAL INSURANCE COMPANY and LIBERTY
MUTUAL FIRE INSURANCE COMPANY, both of Boston, Massachusetts, LIBERTY MUTUAL (BERMUDA) LTD.,
Hamilton, Bermuda, LIBERTY INSURANCE CORPORATION, A Delaware Corporation, and LIBERTY NORTHWEST
INSURANCE CORPORATION, Portland, Oregon (hereinafter called the “Company”) of the one part and the
undersigned Reinsurer (hereinafter called the “Reinsurer”) of the other part, that the Reinsurer
shall have a 1.00% share in the terms and conditions as set forth in the document attached hereto.
The share of the Reinsurer shall be separate and apart from the shares of the other Reinsurers and
shall not be joint with those of the other Reinsurers and the Reinsurer shall in no event
participate in the Interests and Liabilities of the other Reinsurers.

The Company shall pay to the Reinsurer their share of all premiums due or which may become due to
the Reinsurer in accordance with the provisions of the attached document.

This Contract shall be effective as of 12:01 a.m., standard Time, January 1, 1987 and shall remain
in effect in accordance with the provisions of the attached document.

IN WITNESS WHEREOF, the parties hereto, by their respective duly authorized officers, have executed
this Agreement as of the dates undermentioned.

In Indianapolis, Indiana this 5th day of May 1988 for and on behalf of:

AMERICAN UNION INSURANCE COMPANY OF NEW YORK

	 	 	 	 	 
	 	 	 
	 	By:  	/s/
 	 
	 	Title: 	       ASST. VICE PRESIDENTexv10w191

EXHIBIT 10.191

LIBERTY MUTUAL INSURANCE COMPANY

LIBERTY MUTUAL FIRE INSURANCE COMPANY

LIBERTY MUTUAL (BERMUDA) LTD.

LIBERTY INSURANCE CORPORATION

LIBERTY NORTHWEST INSURANCE CORPORATION

WORKERS’ COMPENSATION AND GENERAL LIABILITY 

 SIXTH EXCESS OF LOSS REINSURANCE CONTRACT

PREAMBLE

The Reinsurers hereby reinsure the Company to the extent and on the terms and conditions and
subject to the exceptions, exclusions and limitations hereinafter set forth.

ARTICLE 1 — EXHIBITS COVERED

The Company shall reinsure with the Reinsurers and the Reinsurers shall accept reinsurance from the
Company as set forth in Exhibits “A” and “B”, which are attached hereto and made part of this
Contract, such Exhibits being entitled for purposes of identification as follows:

	 	EXHIBIT “A”	 	— Excess of Loss Reinsurance of General Liability
	 
	 	EXHIBIT “B” 	 	— Excess of Loss Reinsurance of Workers’ Compensation

ARTICLE 2 — RETENTION BY COMPANY

This Contract applies only to such portion of any obligation of the Company as the Company retains
net for its own account, and in calculating the amount of any loss hereunder and in computing the
amount or amounts in excess of which this Contract attaches only loss or losses in respect to that
portion of any obligation which the Company retains net for its own account shall be included.

It is agreed that the amount or amounts of the Reinsurers’ liability hereunder in respect of any
losses shall not be increased by reason of the inability of the Company to collect from any other
Reinsurers whether specific or general, any amount or amounts which may have become due from them
whether such inability arises from the insolvency of such other Reinsurers or otherwise.

 

Page 2 of 26

ARTICLE 3 — REINSURANCE PREMIUM

	(A)	 	The Reinsurers’ premium for the reinsurance provided under this Contract shall be computed
by the application of a rate of .0349% to the Company’s gross net written premium income on
the business covered under Exhibits “A” and “B” subject to a deposit premium of $2,123,000 and
a minimum premium of $1,698,000 for the combined Sixth Excess of Loss Layer provided under
Exhibits “A” and “B”.
	 
	(B)	 	The deposit premium as provided for in (A) above shall be payable to Reinsurers in four equal
quarterly installments of $530,750 on January 1, March 31, June 30 and September 30, 1988.
The Company shall undertake to furnish Reinsurers at the conclusion of this Contract, a report
of the gross net written premium income during the Contract year. If the developed
reinsurance premium for the Sixth Excess of Loss Reinsurance under Exhibits “A” and “B”
computed in accordance with the provisions of (A) above is greater than the deposit premium
paid, the additional premium shall be promptly paid to the Reinsurers. If the premium due
Reinsurers is less than the deposit premium paid, a refund shall be due and payable to the
Company subject to a minimum premium of $1,698,000.
	 
	(C)	 	The term “gross net written premium income” shall mean gross premiums written by the Company
on the business covered hereunder less return premiums for cancellations and reductions and
less premiums on reinsurance which inures to the benefit of the Reinsurers. No deduction
shall be made for dividends declared, paid or credited to policyholders of the Company.

ARTICLE 4 — SUBROGATION

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

The expense of any subrogation proceedings brought by the Company or the Reinsurers to enforce such
rights shall be apportioned between the Company and the Reinsurers in the ratio of their respective
interests in the total subrogation recovery but in the event there is a failure to make a

 

Page 3 of 26

subrogation recovery the expense of the proceedings shall be apportioned between the Company and
the Reinsurers in the ratio of their respective interests in the total loss.

All subrogation recoveries made by either party subsequent to payments made by the Reinsurers under
this Contract shall be applied as if made prior to said payments and all necessary adjustments
shall be made between the Company and the Reinsurers as soon as practicable after said subrogation
recovery is made.

The Company shall have the right, before the happening of the loss to waive its right of
subrogation.

ARTICLE 5 — CLAIMS AGAINST REINSURERS

The Company shall give immediate notice to Reinsurers of any claim which they have reason to
believe could involve this Contract. The Company shall keep the Reinsurers informed of all
developments likely to affect the cost of any claim or claims hereunder.

The Company may commence, continue, defend, settle or withdraw from actions, suits or prosecutions
and generally do all such things relating to any claim or loss in which the Reinsurers are
interested as, in the Company’s Judgement, may be beneficial or expedient to both parties. All
claim settlements made by the Company, provided that in the Company’s Judgement, same are within
the terms of the original policies and within the terms of this Contract, shall be unconditionally
binding upon Reinsurers.

The share of the Reinsurers in any claim settlement shall be payable by the Reinsurers to the
Company upon reasonable evidence of the amount paid being given by the Company.

Until all liability attaching to this Contract has been finally settled the Company shall forward
to the Reinsurers as soon as practicable after the end of the year, a list of outstanding known
losses to this Contract as of December 31st in such year, showing the estimated cost of each loss.

ARTICLE 6 — STRUCTURED SETTLEMENTS

In the event of a settlement of a loss by agreement of the Company to make or fund periodic
payments, the Company may, at its option:

	1.	 	Recover from Reinsurers in accordance with the terms of

 

Page 4 of 26

	 	 	this Contract as periodic payments are made by the Company.
	 
	2.	 	Settle the structured settlement loss with Reinsurers (releasing Reinsurers from further
liability) at an amount determined as follows:

	 	a.	 	The cost of an annuity or reinsurance cover to fund the periodic payments where
such an annuity or reinsurance cover has been purchased from an unaffiliated entity with
an A+ Best rating following competitive negotiations; or
	 
	 	b.	 	A figure agreed upon by the Reinsurers as representative of a competitive market
price for such annuity or reinsurance cover as would be purchased from an A+ Best-rated
Company where the Company elects to make provision for funding the periodic payments
through (an affiliated entity) means other than provided in (a) above.

In any event, where annuities are used in settlements, and there is a return of funds to the
Company due to, for example, a reversionary trust with the demise of a claimant, such return of
funds shall be treated as recovery and subject to Article 4 of this Contract.

Notwithstanding the above, it is agreed that the Reinsurers shall remain liable until all the
obligations of the Company for a loss covered under this Contract through an annuity, or otherwise,
have been satisfied.

ARTICLE 7 — TAX CLAUSE

In consideration of the terms under which this Contract is issued, the Company undertakes not to
claim any deduction in respect of the premium hereon when making tax returns, other than Income or
Profits tax returns to any State or to the District of Columbia.

ARTICLE
8 — FEDERAL EXCISE TAX

Federal Excise Tax (applies only to those Reinsurers, except Underwriters at Lloyds’, London and
other Reinsurers exempt from the Federal Excise Tax, who are domiciled outside the United States of
America.)

	A.	 	The Reinsurers have agreed to allow, for the purpose of paying the Federal Excise Tax, 1%
of the premium payable

 

Page 5 of 26

	 	 	hereon to the extent such premium is subject to Federal Excise Tax.
	 
	B.	 	In the event of any return premium becoming due hereunder, the Reinsurers will deduct 1% from
the amount of the return and the Company or its Reinsurance Broker should take steps to recover the
Tax from the United States Government.

ARTICLE 9 — PAYMENTS UNDER THIS CONTRACT

All amounts due to either party hereunder shall be payable in United States currency.

ARTICLE 10 — ACCESS TO RECORDS

The Reinsurers or their duly appointed representatives shall at reasonable times, have free access
to all books and records of the Company and of its agents or attorneys for the purpose of obtaining
any further information concerning this reinsurance or the subject matter hereof.

ARTICLE 11 — INSOLVENCY CLAUSE

The reinsurance provided by this Contract shall be payable by the Reinsurers directly to the
Company or to its liquidator, receiver or statutory successor on the basis of the liability of the
Company under the contracts reinsured without diminution because of the insolvency of the Company.
In the event of the insolvency of the Company, the liquidator or receiver or statutory successor of
the Company shall give written notice of the pendency of each claim against the Company on a policy
or bond reinsured within a reasonable time after such claim is filed in the insolvency proceeding;
and during the pendency of such claim, the Reinsurers may investigate such claim and interpose, at
their own expense, in the proceeding where such claim is to be adjudicated any defense or defenses
which it may deem available to the Company, its liquidator or receiver or statutory successor. The
expense thus incurred by the Reinsurers shall be chargeable, subject to court approval, against the
Company as a part of the expense of liquidation to the extent of such proportionate share of the
benefit as shall accrue to the Company solely as a result of the defense undertaken by the
Reinsurers.

The reinsurance shall be payable as hereinbefore in the above paragraph provided except as
otherwise provided by

 

Page 6 of 26

Section 4118 (relating to Fidelity and Surety Risks) of the Insurance Law of New York or except (a)
where the Contract specifically provides another payee of such reinsurance in the event of the
insolvency of the Company and (b) where the Reinsurers with the consent of the direct insured or
insureds have assumed such policy obligations of the Company as direct obligations of the
Reinsurers to the payees under such policies and in substitution for the obligations of the Company
to such payees.

ARTICLE 12 — ARBITRATION

As a condition precedent to any right of action hereunder, any dispute arising out of this Contract
shall be submitted to the decision of a board of arbitration composed of two arbitrators and an
umpire, meeting in Boston, Massachusetts unless otherwise agreed.

The members of the board of arbitration shall be active or retired disinterested officials of
insurance or reinsurance companies, or Lloyds Underwriters. Each party shall appoint its
arbitrator and the two arbitrators shall choose an umpire before instituting the hearing. In the
event that either party should fail to choose an arbitrator within thirty (30) days following a
written request by the other party to enter upon arbitration, the requesting party may choose two
arbitrators who shall in turn choose an umpire before entering upon arbitration. In the event the
two arbitrators fail to agree on an umpire either party shall have the right to submit the matter
to the American Arbitration Association in effect at that time.

Each party shall present its case to the arbitrators within sixty (60) days following the date of
their appointment. The board shall make its decision with regard to the custom and usage of the
insurance and reinsurance business. The board shall issue its decision in writing based upon 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 within 60 days
following the termination of the hearings unless the parties consent to an extension. The majority
decision of the board shall be final and binding upon all parties to the proceeding. Judgement may
be entered upon the award of the board in any court having jurisdiction thereof.

If more than one Reinsurer is involved in the same dispute, all such Reinsurers shall constitute
and act as one party for purposes of this clause and communications shall be made

 

Page 7 of 26

by the Company to each of the Reinsurers constituting the one party, provided, however, that
nothing therein 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 under the terms of
this Contract from several to joint.

Each party shall bear the expense of its own arbitrator and shall jointly and equally bear with the
other party the expense of the umpire. The remaining costs of the arbitration proceedings shall be
allocated by the board.

ARTICLE
13 — OFFSET CLAUSE

Each party hereto shall have the right to offset any balance or balances, whether on account of
premiums or on account of losses, due from one party to any other party under this Contract against
any balance or balances currently due and payable to the one party from the other party under this
Contract.

ARTICLE
14 — ADVANCES

If the Reinsurer is unauthorized in any State of the United States of America or the District of
Columbia where authorization is required by insurance regulatory authorities, the Reinsurer will
fund (provided particulars are received forty-five days prior to the date funding is required by
the Company) outstanding losses by either cash advances, escrow accounts for the benefit of the
Company, Letters of Credit, or a combination thereof, if a penalty would accrue to the Company on
its statement without such funding. The Reinsurers shall have the sole option of determining the
method of funding referred to above provided it is acceptable to the insurance regulatory
authorities involved.

LOSS RESERVES: (U.S. Dollar Reinsurance Letter of Credit) (Applies only to those
Reinsurers who are domiciled outside the United States of America who cannot qualify for credit by
the State having jurisdiction over the Company’s loss reserves).

As regards policies or bonds issued by the Company coming within the scope of this Contract, the
Company agrees that when it shall file with the Insurance Department or set up on its books
reserves for losses covered hereunder which it shall be required to set up by law it will forward
to the Reinsurers a statement showing the proportion of such loss

 

Page 8 of 26

reserves which is applicable to them. The Reinsurers hereby agree that they will apply for and
secure delivery to the Company a clean irrevocable Letter of Credit issued by Citibank N. A in an
amount equal to Reinsurers’ proportion of said loss reserves. Under no circumstances shall any
amount relating to reserves in respect of Incurred But Not Reported losses be included in the
amount of the Letter of Credit.

The Company undertakes to use and apply any amounts which it may draw upon such Credit pursuant to
the terms of the Contract under which the Letter of Credit is held, and for the following purposes
only:

	A.	 	To pay the Reinsurers’ share or to reimburse the Company for the Reinsurers’ share of any
liability for loss reinsured by this Contract.
	 
	B.	 	To make refund of any sum which is in excess of the actual amount required to pay Reinsurers’
share of any liability reinsured by this Contract.

Citibank
N. A shall have no responsibility whatsoever in connection with the propriety of
withdrawals made by the Company or the disposition of funds withdrawn, except to see that
withdrawals are made only upon the order of properly authorized representatives of the Company.

ARTICLE
15 — SERVICE OF SUIT

This Article applies to other than authorized Reinsurers and to Reinsurers domiciled outside the
United States of America.

In the event of the failure of the Reinsurers to pay any amount claimed to be due hereunder, the
Reinsurers agree that, at the request of the Company, the Reinsurer will submit to the jurisdiction
of any court of competent jurisdiction in any State of the United States, will comply with all
requirements necessary to give such court Jurisdiction, and will abide by the final decision of
such court, or of any Appellate court in the event of an appeal, with all relevant matters to be
determined in accordance with the law and practice of such court. Nothing in this Article
constitutes or should be understood to constitute a waiver of the Reinsurers’ 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.

 

Page 9 of 26

It is further agreed that pursuant to any statute of any state, territory, or district of the
United States which makes provision therefor, the Reinsurers hereby designate 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 arising out of this Contract instituted by or
on behalf of the Company or any beneficiary hereunder.

Further, it is agreed that service of process in such suit when instituted in the State of New York
may be made upon the firm of Mendes and Mount, Three Park Avenue, New York, New York 10016, and the
firm of Mendes and Mount is hereby authorized to accept service of process on behalf of the
Reinsurers in any such suit instituted in the State of New York, and upon request of the Company to
give a written undertaking to the Company that it will enter a general appearance on the
Reinsurers’ behalf in the event such a suit shall be instituted in the State of New York.

ARTICLE 16 — ERRORS AND OMISSIONS

Any inadvertent delay, omission or error shall not be held to relieve either party hereto from any
liability which would attach to it hereunder if such delay, omission or error had not been made,
provided such delay, omission or error is rectified upon discovery. However, this Article shall
not override the application of the loss reporting provision as set forth in Article 17.

ARTICLE 17 — COMMENCEMENT AND TERMINATION

This Contract applies only to losses during its effective period and reported to Reinsurers by
12:01 a.m., January 1, 1994. This Contract is effective 12:01 a.m., January 1, 1988, Standard Time
in Boston, Massachusetts and shall continue in effect until 12:01 a.m., January 1, 1989, Standard
Time in Boston, Massachusetts. This Contract may be cancelled only by mutual consent, or if
required by law or administrative order.

 

Page 10 of 26

ARTICLE 18 — REINSURANCE INTERMEDIARY DESIGNATION

Holborn Agency Corporation, 90 John Street, New York, New York 10038 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 thereto shall be transmitted to the
Company or the Reinsurers through Holborn Agency Corporation. Payments by the Company to the
Intermediary shall be deemed to constitute payment to the Reinsurers. Payments by the Reinsurers to
the Intermediary shall be deemed to constitute payment to the Company only to the extent that such
payments are actually received by the Company.

ARTICLE 19 — INTERPRETATION

The validity and interpretation of this Contract and of each Article and part thereof shall be
governed by the Law of the Commonwealth of Massachusetts.

 

Page 11 of 26

EXHIBIT A

EXCESS OF LOSS REINSURANCE OF GENERAL LIABILITY

SECTION 1 — COVERAGE

The Reinsurers hereby reinsure the Company, subject to the provisions and conditions herein
contained, in respect of liability which may accrue to the Company under any contracts of insurance
or reinsurance (hereinafter referred to as obligations of the Company), but excluding liability in
connection with the following class of business or contracts:

	A.	 	Workers’ Compensation and Employers’ Liability insurance, but this exclusion shall not apply
to Workers’ Compensation or Employers’ Liability coverage given under public liability
policies written by the Company (other than Umbrella Excess Liability policies).
	 
	B.	 	Bankers’ and Brokers’ insurances or reinsurance issued by the Company meaning contracts
issued to banks, trust companies, building and loan companies, safe deposit companies,
investment companies, including investment trusts, finance companies, credit unions, stock or
security, brokers, or to similar financial institutions, insuring them against loss from the
following hazards:

Infidelity of employees and/or partners;

Unfaithful performance of duties by employees and/or partners;

Loss of property in transit;

Forgery or alteration of negotiable or other paper;

Burglary, robbery, theft, false pretenses or fraud;

Mysterious disappearance or misplacement of property;

Loss of property from safe deposit boxes or other depositories;

Damage to or destruction of money or securities;

Counterfeiting of currencies or securities.

	C.	 	Motor Vehicle Physical Damage Insurance, but this exclusion shall not apply to Motor
Vehicle Property Damage Liability Insurance.
	 
	D.	 	Credit Insurance and/or Financial Guarantee.
	 
	E.	 	Fire Insurance, including the coverages ordinarily written under Extended Coverage
Endorsements.

 

Page 12 of 26

	F.	 	Liability arising from asbestos as respects manufacturing, removal, Installation, storage,
mining, handling or transport.
	 
	G.	 	Business ceded to and assumed from the Pollution Liability Insurance Association.
	 
	H.	 	Liability covering bodily injury or property damage under policies written or
renewed on or after January 1, 1987 and arising out of the actual, alleged or
threatened discharge, dispersal, release or escape of pollutants:

	 	(a)	 	at or from premises owned, rented or occupied by the named insured;
	 
	 	(b)	 	at or from any site or location used by or for the named insured or others
for the handling, storage, disposal, processing or treatment of waste;
	 
	 	(c)	 	which are at any time transported, handled, stored, treated, disposed of, or
processed as waste by or for the named insured or any person or organization for whom
the named insured may be legally responsible; or
	 
	 	(d)	 	at or from any site or location on which the named insured or any contractor or
subcontractors working directly or indirectly on behalf of the named insured are
performing operations:

	 	(1)	 	if the pollutants are brought on or to the site or location in
connection with such operations; or
	 
	 	(2)	 	if the operations are to test for, monitor, clean up, remove,
contain, treat, detoxify or neutralize the pollutants.

	 	 	Any loss, cost or expense arising out of any governmental direction or request that the
named insured test for, monitor, cleanup, remove, contain, treat, detoxify or neutralize
pollutants.
	 
	 	 	Pollutants mean any solid, liquid, gaseous or thermal irritant or contaminant, including
smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to
be recycled, reconditioned or reclaimed.

 

Page 13 of 26

	 	 	However, it is further agreed that this Exclusion does not apply to the ownership,
maintenance or use of automobiles covered under the Company’s original policies.
	 
	I.	 	Group Health, Disability, Hospital or Surgical Insurance, but this exclusion shall not apply
to any loss due to two or more persons insured under one or more Group policies suffering
bodily injuries, including death resulting therefrom, as a result of one accident or series of
accidents arising out of one event.
	 
	J.	 	Livestock Mortality Insurance.
	 
	K.	 	Surety business, but this exclusion shall not apply to faithful performance bonds or public
official bonds; provided, however, that the Reinsurers shall not be liable for any loss
resulting from the insolvency of any firm, company, corporation or bank with which a
guaranteed official has deposited funds in the course of his duties.
	 
	L.	 	Insurance covering the liability of owners or operators of aircraft carrying passengers for
hire, for injuries to such passengers.
	 
	M.	 	Contracts of insurance written on any cost-plus plan which provides for payment of the
full amount of all losses, however great, by the policyholder. This exclusion shall not
apply to contracts of insurance, premiums for which are determined by a retrospective
rating plan which provides for a specific maximum premium or a formula for determination
of a maximum premium.
	 
	N.	 	Contracts of liability insurance covering injuries to persons or property arising out of the
rail operations of Class 1 railroads; but this exclusion shall not apply to railroad
Protective Liability policies issued at the request of the Company’s policyholders doing work
for or on the premises of such railroads.
	 
	O.	 	Liability under any Insolvency Fund arising by contract, operation of law or otherwise,
whether voluntary or involuntary. “Insolvency Fund” includes any guaranty fund, insolvency
fund, plan, pool, association, fund or other arrangement, howsoever denominated, established
or governed; which provides for any assessment of or payment or assumption by the Company of
part or all of any claim, debt, charge, fee, or other obligation of an insurer, or its
successors, or assigns, which has been

 

Page 14 of 26

	 	 	declared by any competent authority to be insolvent, or which has been otherwise deemed
unable to meet any claim, debt, charge, fee or other obligation in whole or in part.
	 
	P.	 	Reinsurance Assumed except for intra-company reinsurance between the members of the Group.
	 
	Q.	 	This Contract is subject to the Nuclear Incident
Exclusion Clause — Liability — Reinsurance attached hereto.

SECTION 2 — LIMIT OF LIABILITY

Reinsurers shall be liable for the ultimate net loss in excess of the sum of $55,000,000 of
ultimate net loss each and every loss in respect of business the subject matter of this Exhibit,
subject to a limit of $20,000,000 on account of each and every loss.

Notwithstanding Reinsurers’ liability on each and every loss as set forth above, Reinsurers’
liability shall further be limited to $40,000,000 on account of all losses recoverable under this
Exhibit during the term of this Contract.

It is hereby warranted or so deemed that the Company’s maximum limit of liability per insured shall
be $15,000,000 for bodily injury and property damage separately.

It is also agreed that subrogation expense incurred shall be paid in addition to the applicable
limits of liability set forth in this Section 2, on the basis
provided in Article 4 of the
Contract.

For purposes of this Exhibit, it is agreed that the Company’s limit of liability under any and all
policies of Personal Accident Insurance (individual and group) covering any one individual shall be
considered as not exceeding $300,000 subject to this Contract. Subject to the limits set forth in
this Section 2, it is agreed that the Company is reinsured hereunder for the excess of the amounts
set forth in this Section 2 of ultimate net loss any one loss or series or losses arising out of
one event involving more than one person covered under such policies issued by the Company.

 

Page 15 of 26

SECTION 3 — REINSTATEMENT

In the event of the whole or any portion of the coverage hereunder being exhausted by a loss, the
amount so exhausted is automatically reinstated from the time of the loss and the Company shall pay
the Reinsurers an additional premium calculated at pro rata of the annual premium for the classes
of business covered under this Exhibit being pro rata as to the fraction of the face value
hereunder (being $20,000,000).

The additional premium as set forth above shall be calculated and paid by the Company to the
Reinsurers as soon as possible following a request by the Company for a loss payment and receipt
thereof from Reinsurers.

Notwithstanding anything contained herein to the contrary, the Reinsurers’ liability under this
Exhibit shall not exceed $20,000,000 for any one loss nor $40,000,000 in all during the term of
this Contract.

SECTION 4 — ULTIMATE-NET-LOSS

The term “Ultimate Net Loss” as used in this Exhibit shall mean the amount actually paid by the
Company (including loss adjustment expenses, attorneys’ fees and other costs of investigation or
litigation) in settlement of or payment of claims or judgements arising from each and every loss
for which the Company is or may be found liable under its contracts of insurance or reinsurance,
less salvages and subrogation recoveries and amounts recovered or recoverable under pooling
agreements or other reinsurances, whether collectible, or not; provided, however, that in the
event of the insolvency of the Company, “Ultimate Net Loss” shall mean the amount of loss
(including loss adjustment expenses, attorneys’ fees and other costs of investigation or
litigation) which the Company has incurred or for which it is liable, and payment by the Reinsurers
shall be made to the liquidator, receiver or statutory successor of the Company in accordance with
the provisions of Article 11 of this Contract. Salaries and expenses of employees of the Company
shall not be included in ascertaining ultimate net loss.

This Contract shall protect the Company within the limits hereof in connection with any loss for
which the Company may be legally liable to pay in excess of the limit of its original policy, where
loss in excess of the limit has been incurred because of its failure to settle within the policy
limit or by reason of alleged or actual negligence, fraud or

 

Page 16 of 26

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.

However, the above paragraph shall not apply where the loss has been incurred due to the 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.

With regard to excess of policy limits, the word “loss” shall mean any amounts for which the
Company would have been contractually liable to pay had it not been for the limit of the original
policy.

It is agreed that the Company may carry underlying limits of indemnity recoveries under which shall
inure to the sole benefit of the Company and shall be disregarded in computing the net excess loss
in excess of which this Contract attaches.

SECTION 5 — DEFINITIONS

	1.	 	The term “each and every loss” as used in this Exhibit is defined as follows according to
the class or risk involved:

	 	A.	 	All Classes or Risks Covered
Hereunder (other than those defined in
paragraphs B and C below)
	 
	 	 	 	All injuries to persons and all losses of injury to or destruction of property
resulting from each accident or loss, or from each series of accidents or losses
proximately arising out of one event. An event shall mean an individual accident or
happening, or singular act, error or omission, which shall be identified as to time
and place and be limited in time and place.
	 
	 	 	 	Where the Company’s original policies provide for aggregate limits of liability, the
Company is permitted to extract from such aggregate policy(ies) Limits of Liability
the amount of loss sustained by them arising from any one event in order that such
loss may be added to the Company’s losses from other policies for the same event in
order to determine the Ultimate Net Loss.

 

Page 17 of 26

	 	B.	 	Products and Completed Operations
	 
	 	 	 	With respect to liability insurance coverage written subject to aggregate limits of
liability on a policy year basis, each and every accident or loss shall mean the cumulative
amount of all losses proceeding from one event. For the purposes of this paragraph, all
losses having a common origin and traceable to the same cause, omission, or mistake
occurring during any one policy year shall be considered one event. Where the Company
issues more than one such policy to the same policyholder such policies shall together be
treated as though they were one policy. Losses under such policies shall for the purposes of
this reinsurance contract be deemed to have occurred in the calendar year in which the
inception date of the policy falls, except that as respects such policies issued for a
period in excess of twelve months, losses for the first twelve month period shall be deemed
to have occurred in the calendar year in which the inception date of the policy falls and
losses for each succeeding twelve month period or part thereof shall be deemed to have
occurred in the calendar year in which the anniversary date of the policy starting such
period falls.
	 
	 	C.	 	Fidelity and Forgery
	 
	 	 	 	All losses resulting from any fraudulent or dishonest act or omission or series thereof on
the part of any one person or of several persons acting in collusion (whether employees or
not) and irrespective of the number of the Company’s obligations involved; provided, that in
the case of any loss involving two or more persons acting in collusion, losses resulting
from separate acts or omissions on the part of each such person shall be included as part of
such loss.

	 	1.	 	It is agreed that each and every loss commencing prior to midnight on the date
of termination of this Contract and discovered not later than three years after such
termination (excluding only any loss prior to midnight on the effective date of this
Contract) shall be recoverable under this Contract.
	 
	 	2.	 	It is further agreed that each and every loss resulting from a series of acts
or omissions, some prior to and some subsequent to midnight on

 

Page 18 of 26

	 	 	 	the effective date of this Contract shall be disregarded.

	 	 	 	As regards losses arising under policies and/or contracts covering on a “losses
discovered” or “claims made during” basis (that is to say policies and/or contracts in
which the date of discovery of the loss, or the date the claim is made against the
insured or is first notified to the Company, determines under which policy and/or
contract the loss is collectible), such losses are covered hereunder and the date of
the discovery of such loss or the date such claim is made or first notified shall
be deemed to be the date of loss for the purposes of this Contract, provided that the
date of the discovery of the loss or the date the claim is made or first notified
falls within the period covered by this Contract.
	 
	 	 	 	For the purposes of the foregoing the date of first discovery of a “loss” or the date
the claim is first made against an insured or first notified to the Company shall be
the date applicable to the entire loss and/or claim and the Reinsurers shall be liable
for their proportion of the entire loss and/or claim irrespective of the expiry date
of this Contract and provided that such first discovery date or first date such claim
is made or notified falls within the period of this Contract.

	2.	 	The term “Date of Loss” as used in this Exhibit is defined as follows:
	 
	 	 	For the purposes of this Contract when “claims-made” and/or “losses discovered” and/or
“occurrence” and/or “accident” policies are involved in the same loss with other
“claims-made” and/or “losses discovered” and/or “occurrence” and/or “accident” policies, the
date of loss shall be determined as follows:

	 	1.	 	If an “occurrence” or “accident” policy is identified as being involved then the
date of loss shall be the date as determined under the occurrence or accident policy, or
	 
	 	2.	 	If no “occurrence” or “accident” policy is identified as being involved, then the
date of the loss will be the date the first claim is made or discovered under a
“claims-made” or “losses discovered” policy. If an occurrence policy is identified
after date of loss is established under

 

Page 19 of 26

	 	 	 	(2), the date of loss shall not be changed. Only one date of loss may be
established for any event.

	 	 	 	Coverage hereunder shall only apply to those claims which are reported to the Reinsurers
within four years from the date the loss is first reported to Reinsurers by the Company and
no liability shall attach hereunder for any claim or claims not notified within this period.

SECTION 6 — EXTRA CONTRACTUAL OBLIGATIONS

This
Contract shall protect the Company within the limits hereof for 80% of Extra Contractual
Obligations, where the ultimate net loss includes any Extra Contractual Obligations. “Extra
Contractual Obligations” are defined as those liabilities not covered under any other provision of
this Contract and which 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.

The date on which any Extra Contractual Obligation is incurred by the Company shall be
deemed, in all circumstances, to be the date of the original accident, casualty, disaster or
loss.

However, this Section shall not apply where the loss has been incurred due to the 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.

This Exhibit A is attached to and forms part of the Workers’ Compensation and General Liability
Sixth Excess of Loss Reinsurance Contract issued to LIBERTY MUTUAL INSURANCE COMPANY, LIBERTY
MUTUAL FIRE INSURANCE COMPANY, LIBERTY MUTUAL (BERMUDA) LTD., LIBERTY INSURANCE CORPORATION AND
LIBERTY NORTHWEST INSURANCE CORPORATION.

 

Page 20 of 26

EXHIBIT B

EXCESS OF LOSS REINSURANCE OF WORKERS’ COMPENSATION

SECTION 1 — COVERAGE

The
Reinsurers hereby reinsure the Company in respect of the liability of
the Company, under (1) policies (the premium for which is classified by the Company, for internal purposes, as “Workers’
Compensation” or “Employers’ Liability”) by which the Company insures the liability of employers
under law or contract which imposes liability upon such employer for injury, sickness or disease,
including death resulting therefrom, sustained by his employees, and (2) Employers Liability
coverage provided under Umbrella Excess Liability policies.

SECTION 2 — LIMITS OF LIABILITY

The Reinsurers shall be liable for the ultimate net loss in excess of the sum of $55,000,000 of
ultimate net loss each and every loss in respect of business the subject matter of this Exhibit,
subject to a limit of $20,000,000 on account of each and every loss.

Notwithstanding Reinsurers’ liability on each and every loss as set forth above, Reinsurers’
liability shall further be limited to $40,000,000 on account of all losses recoverable under this
Exhibit during the term of this Contract.

It is also agreed that subrogation expense incurred shall be paid in addition to the applicable
limits of liability set forth in this Section 2, on the basis
provided in Article 4 of the
Contract.

SECTION 3 — REINSTATEMENT

In the event of the whole or any portion of the coverage hereunder being exhausted by a loss, the
amount so exhausted is automatically reinstated from the time of the loss and the Company shall pay
the Reinsurers an additional premium calculated at pro rata of the annual premium for the classes
of business covered under this Exhibit being pro rata as to the fraction of the face value
hereunder (being $20,000,000).

 

Page 21 of 26

The additional premium as set forth above shall be calculated and paid by the Company to the
Reinsurers as soon as possible following a request by the Company for a loss payment and receipt
thereof from Reinsurers.

Notwithstanding anything contained herein to the contrary, the Reinsurers’ liability under this
Exhibit shall not exceed $20,000,000 for any one loss nor $40,000,000 in all during the term of
this Contract.

SECTION 4 — ULTIMATE-NET-LOSS

The term “ultimate net loss” as used in this Exhibit means the amount actually paid by the Company
(including but not limited to medical losses, interests, costs and allocated claim expense) in
respect of claims arising from any one accident or occurrence, for which the Company is or may be
found liable, after making proper deductions for amounts paid or due under other reinsurance
(whether collectible or not), subrogation recoveries, overpayments collected, and refunds to the
Company from the New York Aggregate Trust Fund, second injury funds and other such funds;
provided, however, that in the event of the insolvency of the Company, “ultimate net loss” as used
in this Exhibit means the amount of loss (including but not limited to medical losses, interests,
costs and allocated claim expense) in respect of claims arising from any one accident or occurrence
which the Company has incurred or for which it is liable, and payment by the Reinsurers shall be
made to the liquidator, receiver or statutory successor of the Company in accordance with the
provisions of Article 11 of this Contract. Expenses for salaried employees of the Company incurred
in litigation and the investigation or adjustment of claims or suits and subrogation expense
referred to in Article 4 shall be disregarded in ascertaining ultimate net loss.

This Contract shall protect the Company within the limit hereof in connection with any loss for
which the Company may be legally liable to pay in excess of the limit of its original policy, where
loss in excess of the limit has been incurred because of its failure 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 in the preparation or prosecution of an appeal consequent upon such action.

However, the above paragraph shall not apply where the loss has been incurred due to the fraud of a
member of the Board

 

Page 22 of 26

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.

With regard to excess of policy limits, the word “loss” shall mean any amounts for which the
Company would have been contractually liable to pay had it not been for the limit of the original
policy.

It is agreed that the Company may carry underlying limits of indemnity recoveries under which
shall inure to the sole benefit of the Company and shall be disregarded in computing the net excess
loss in excess of which this Contract attaches.

SECTION 5 — EXCLUSIONS

This Exhibit does not apply:

	A.	 	To excess of loss reinsurance contracts.
	 
	B.	 	To the following occupations, employments or risks (except when not disclosed to the Company,
when incidental to a nonexcluded risk (the company to be the sole Judge of what is incidental)
or when insured through voluntary or statutory pools or assigned risk
plans):

	 	1.	 	The navigation and operation of vessels on the high seas in foreign
commerce;
	 
	 	2.	 	Underground coal mining;
	 
	 	3.	 	Fireworks manufacturing;
	 
	 	4.	 	Fuse manufacturing;
	 
	 	5.	 	Explosive risks, viz

	 	(a)	 	Manufacture of any explosive substance intended
for use as an explosive;
	 
	 	(b)	 	Manufacture of any product, other than Fireworks
and Fuses, in which any such explosive substance is an ingredient;
	 
	 	(c)	 	The loading of any such explosive substance into containers
for use as explosive objects, propellant charges or detonating devices, and
the incidental storage thereof;
	 
	 	(d)	 	Handling transportation or storage of any such explosive
substance intended solely for war purposes.

 

Page 23 of 26

	C.	 	To any loss which the Company is entitled to recover the full amount under an insurance
policy written on a cost plus plan, that is to say, a plan which provides for the payment of
the full amount of all losses, however great, by the policyholder. This exclusion does not
apply to bar recovery from the Reinsurers with respect to losses under retrospectively-rated
policies.
	 
	D.	 	Liability under any Insolvency Fund arising by contract, operation of law or otherwise,
whether voluntary or involuntary. “Insolvency Fund” includes any guaranty fund, insolvency
fund, plan, pool, association, fund or other arrangement, howsoever denominated, established
or governed, which provides for any assessment of or payment or assumption by the Company of
part or all of any claim debt, charge, fee or other obligation of an insurer, or its
successors, or assigns, which has been declared by any competent authority to be insolvent, or
which has been otherwise deemed unable to meet any claim, debt, charge, fee or other
obligation in whole or in part.

SECTION 6 — DEFINITIONS

As used in this Exhibit the following terms shall have the meanings stated herein:

	A.	 	“Policies”. Policies, contracts, endorsements or binders, including but not limited to those
by which the Company undertakes to offer and pay “voluntary compensation” benefits, those by
which the Company undertakes to make payments to augment compensation benefits those by which
the Company affords reinsurance or excess insurance to Workers’ Compensation or Employers’
Liability risks and those by which the Company undertakes to participate in voluntary or
statutory pools or assigned-risk plans.
	 
	B.	 	“Explosive Substance”. Any substance manufactured for the express purpose of exploding as
differentiated from commodities used industrially and which are only incidentally explosive
stuffs.
	 
	C.	 	“Loss.” An accident or loss or series of accidents or losses arising out of one event. An
“event” shall mean an individual accident or happening or singular act, error or omission,
which shall be identified in time and place and limited in time and place. With respect to
disease or death resulting therefrom, the terms loss and series of losses shall mean the claim
or series of

 

Page 24 of 26

	 	 	claims occasioned by the disease or diseases having a common cause or origin. The Company shall be
the sole judge of what constitutes disease or diseases having a common cause or origin. The
Company shall assign the claim or series of claims to a policy year of coverage under any one
policy or renewal thereof and will be bound by the following principles:

	 	1.	 	If the liability is placed solely upon the employer or insurer as of the date the
claimant’s disability commences or becomes manifest and that date is within a period of
coverage under an applicable policy issued by the Company, the loss shall be deemed to have
been sustained by the Company at such date.
	 
	 	2.	 	If assignment is not made on the basis stated in the preceding subparagraph the claim
is to be assigned to the policy year of the date of claimant’s last injurious exposure
during a period of coverage under an applicable policy issued by the Company.

	 	 	Notwithstanding anything to the contrary above set forth, it is agreed that the date of the loss
for the purpose of this reinsurance shall be deemed to be the inception, anniversary or renewal
date of the Company’s original policy. Losses under a policy in-force at January 1, 1988 shall be
assigned to this Contract to the extent such losses are not assignable to the 1987 Contract year.
	 
	 	 	Notwithstanding the foregoing, where a policyholder requests that it be issued two or more policies
in circumstances where applicable manual rules permit the issuance of a single policy such policies
shall be regarded as a single policy for purposes of assigning disease claims to a policy year
coverage.
	 
	 	 	“Policy year” shall mean each separate original policy period of not exceeding twelve months
commencing at the inception, anniversary or renewal date on or after the inception of this
Contract.

 

Page 25 of 26

SECTION 7 — EXTRA CONTRACTUAL OBLIGATIONS

This
Contract shall protect the Company within the limits hereof for 80% of Extra Contractual
Obligations, where the ultimate net loss includes any Extra Contractual Obligations. “Extra
Contractual Obligations” are defined as those Liabilities not covered under any other provision of
this Contract and which 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.

The date on which any Extra Contractual Obligation is incurred by the Company shall be
deemed, in all circumstances, to be the date of the original accident, casualty, disaster or
loss.

However, this Section shall not apply where the loss has been incurred due to the 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.

SECTION 8 — COMMUTATION

Within 48 months from the expiration of this Contract the Company shall submit a statement to the
Reinsurers listing amounts paid and reserved for all Workers’ Compensation claims under this
Contract. This statement shall form the basis of an agreed value for all such losses. The amounts
of reserves contained therein shall be calculated in accordance with the following criteria:

	 	1.	 	Mortality assumptions will be calculated from the latest available United
States census tables as follows:

Survivor Benefits — Total Females

Disability Benefits — Total Males

	 	2.	 	The annual interest discount percentage shall be an average (rounded to the
nearest one-half percentage

 

Page 26 of 26

	 	 	 	point) of the before-tax yields of the Company’s investment purchases for the three
latest available calendar years.
	 
	 	3.	 	Remarriage expectations will be in accordance with the assumptions used by the
National Council on Compensation Insurance in its statistical tables.
	 
	 	4.	 	For all future medical costs, and annuity calculation shall be based
upon the Company’s evaluation of long term medical care and rehabilitation
requirements, using an annual discount of 0% and an annual escalation of 0%.

The above criteria shall not apply to losses with future escalation of indemnity benefits as
described below:

	 	1.	 	Annuity values for “index-linked” benefits shall be calculated based upon an
annual discount of 0% and an annual escalation of 0%.
	 
	 	2.	 	For “index-linked” benefits, remarriage expectations will not be used.

Except as may be mutually agreed for specific losses, these calculations shall be considered the
final and agreed value of all known workers’ compensation losses for the period of this Contract.
A resulting payment, if any, shall be accepted by the Company in full settlement of the Reinsurers’
liability for all such losses. In the event that a workers’ compensation loss is not reported to
the Company until after the Company’s statement has been submitted, immediate notice of such loss
shall be given to the Reinsurers in order that an agreed present value may be determined.

SECTION 9 — MAXIMUM LIMIT ANY ONE INDIVIDUAL

Notwithstanding the provisions contained herein it shall be understood that any loss recoverable
hereon shall be limited to $5,000,000 any one individual for the purposes of determining the
ultimate net loss. This maximum limit does not apply to Employers’ Liability coverage.

This Exhibit B is attached to and forms part of the Workers’ Compensation and General Liability
Sixth Excess of Loss Reinsurance Contract issued to LIBERTY MUTUAL INSURANCE COMPANY, LIBERTY
MUTUAL FIRE INSURANCE COMPANY, LIBERTY MUTUAL (BERMUDA) LTD., LIBERTY INSURANCE CORPORATION AND
LIBERTY NORTHWEST INSURANCE CORPORATION.

 

 

NUCLEAR INCIDENT EXCLUSION CLAUSE — LIABILITY — REINSURANCE

	(1)	 	This Agreement does not cover any loss or liability accruing to the Reassured as a member of,
or subscriber to, any association of insurers or reinsurers formed for the purpose of covering
nuclear energy risks or as a direct or indirect reinsurer of any such member, subscriber or
association.
	 
	(2)	 	Without in any way restricting the operation of paragraph (1) of this Clause it is understood
and agreed that for all purposes of this Agreement all the original policies of the Reassured
(new, renewal and replacement) of the classes specified in Clause II of this paragraph (2)
from the time specified in Clause III in this paragraph (2) shall be deemed to include the
following provision (specified as the Limited Exclusion Provision):
	 
	 	 	Limited Exclusion Provision.

	 	I.	 	It is agreed that the policy does not apply under any liability coverage, to
injury, sickness, disease, death or destruction with respect to which an insured under
the policy is also an insured under a nuclear energy liability policy issued by Nuclear
Energy Liability Insurance Association, Mutual Atomic Energy Liability Underwriters or
Nuclear Insurance Association of Canada, or would be an insured under any such policy
but for its termination upon exhaustion of its limit of liability.
	 
	 	II.	 	Family Automobile Policies (liability only), Special Automobile Policies
(private passenger automobiles, liability only), Farmers Comprehensive Personal
Liability Policies (liability only), Comprehensive Personal Liability Policies (
liability only) or policies of a similar nature; and the liability portion of
combination forms related to the four classes of policies stated above, such as the
Comprehensive Dwelling Policy and the applicable types of Homeowners Policies.
	 
	 	III.	 	The inception dates and thereafter of all original policies as described
in II above, whether new, renewal or replacement, being policies which either

	 	(a)	 	become effective on or after 1st May, 1960, or
	 
	 	(b)	 	become effective before that date and contain the Limited
Exclusion Provision set out above;

	 	 	 	provided this paragraph (2) shall not be applicable to Family Automobile
Policies, Special Automobile Policies, or policies or combination policies of a
similar nature, issued by the Reassured on New York risks, until 90 days
following approval of the Limited Exclusion Provision by the Governmental
Authority having jurisdiction thereof.

 

-2-

	(3)	 	Except for those classes of policies specified in clause II of paragraph (2) and
without in any way restricting the operation of paragraph (1) of this Clause, it is
understood and agreed that for all purposes of this Agreement the original liability policies
of the Reassured (new, renewal and replacement) affording the following coverages:

	 	 	 	Owners, Landlords and Tenants Liability, Contractual Liability, Elevator Liability,
Owners or Contractors (including railroad) Protective Liability, Manufacturers and
Contractors Liability, Product Liability, Professional and Malpractice Liability,
Storekeepers Liability, Garage Liability, Automobile Liability (including
Massachusetts Motor Vehicle or Garage Liability)

	 	 	shall be deemed to include, with respect to such coverages, from the time specified in
Clause V of this paragraph (3), the following provision (specified as the Broad Exclusion
Provision):
	 
	 	 	Broad Exclusion Provision.
	 
	 	 	It is agreed that the policy does not apply:

	 	I.	 	Under any Liability Coverage, to injury, sickness, disease, death
or destruction

	 	(a)	 	with respect to which an insured under the policy is also an
insured under a nuclear energy liability policy issued by Nuclear Energy
Liability Insurance Association, Mutual Atomic Energy Liability Underwriters or
Nuclear Insurance Association of Canada, or would be an insured under any such
policy but for its termination upon exhaustion of its limit of liability; or
	 
	 	(b)	 	resulting from the hazardous properties of nuclear material
and with respect to which (1) any person or organization is required to
maintain financial protection pursuant to the Atomic Energy Act of 1954, or
any law amendatory thereof, or (2) the insured is, or had this policy not
been issued would be, entitled to indemnity from the United States of
America, or any agency thereof, under any agreement entered into by the
United States of America, or any agency thereof, with any person or
organization.

	 	II.	 	Under any Medical Payments Coverage, or under any Supplementary Payments
Provision relating to immediate medical or surgical relief, to expenses incurred
with respect to bodily injury, sickness, disease or death resulting from the
hazardous properties of nuclear material and arising out of the operation of a
nuclear facility by any person or organization.
	 
	 	III.	 	Under any Liability Coverage, to injury, sickness, disease, death or
destruction resulting from the hazardous properties of nuclear material, if

	 	(a)	 	the nuclear material (1) is at any nuclear facility owned
by, or operated by or on behalf of, an insured or (2) has been discharged
or dispersed therefrom;

 

-3-

	 	(b)	 	the nuclear material is contained in spent fuel or waste at any time possessed,
handled, used, processed, stored, transported or disposed of by or on behalf of an insured;
or
	 
	 	(c)	 	the injury, sickness, disease, death or destruction arises out of the
furnishing by an insured of services, materials, parts or equipment in connection with
the planning, construction, maintenance, operation or use of any nuclear facility, but
if such facility is located within the United States of America, its territories or
possessions or Canada, this exclusion (c) applies only to injury to or destruction of
property at such nuclear facility.

	 	IV.	 	As used in this endorsement:
	 
	 	 	 	“hazardous properties” include radioactive, toxic or explosive properties; “nuclear material”
means source material, special nuclear material or byproduct material; “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 a
nuclear reactor; “waste” means any waste material (1) containing byproduct material other
than the tailings or wastes produced by the extraction or concentration of uranium or thorium
from any ore processed primarily for its source material content and (2) resulting from the
operation by any person or organization of any nuclear facility included within the
definition of nuclear facility under paragraph (a) or (b) thereof; “nuclear facility” means

	 	(a)	 	any nuclear reactor,
	 
	 	(b)	 	any equipment or device designed or used for (1) separating the isotopes of
uranium or plutonium, (2) processing or utilizing spent fuel, or (3) handling,
processing or packaging waste,
	 
	 	(c)	 	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,
	 
	 	(d)	 	any structure, basin, excavation, premises or place prepared or used for the
storage or disposal of waste,

	 	 	 	and includes the site on which any of the foregoing is
located, all operations conducted on such site and all premises used for such operations; “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.
	 
	 	 	 	With respect to injury to or destruction of property, the word “injury” or “destruction”
includes all forms of radioactive contamination of property.

 

-4-

	 	V.	 	The inception dates and thereafter of all original policies
affording coverages specified in this paragraph (3), whether new, renewal
or replacement, being policies which either

	 	(a)	 	become effective on or after 1st May, 1960, or
	 
	 	(b)	 	become effective before that date and contain the
Broad Exclusion Provision set out above;

	 	 	 	provided this paragraph (3) shall not be applicable to

	 	(i)	 	Garage and Automobile Policies issued by the
Reassured on New York risks, or
	 
	 	(ii)	 	statutory liability insurance required under
Chapter 90, General Laws of Massachusetts,

	 	 	 	until 90 days following approval of the Broad Exclusion Provision by the
Governmental Authority having jurisdiction thereof.
	 
	 	 	 	It is further provided that original liability policies affording coverages
described in this paragraph (3), (other than those policies and coverages
described in (i) and (ii) above), which become effective before 1st May,
1960, and do not contain the Broad Exclusion Provision set out above, but
which contain the Broad Exclusion Provision set out in N.M.A. 1118, shall be
construed as if incorporating such portions of the Broad Exclusion Provision
set out above as are more liberal to the holders of such policies.

	(4)	 	Without in any way restricting the operation of paragraph (1) of this clause it is understood
and agreed that original liability policies of the Reassured, for those classes of policies

	 	(a)	 	described in Clause II of paragraph (2) effective
before 1st June, 1958, or
	 
	 	(b)	 	described in paragraph (3) effective before 1st March, 1958,

	 	shall be free until their natural expiry dates or 1st June, 1963, whichever first occurs,
from the application of the other provisions of this Clause.

	(5)	 	Without in any way restricting the operation of paragraph (1) of this Clause, it is
understood and agreed that paragraphs (2) and (3) above are not applicable to original
liability policies of the Reassured in Canada and that with respect to such policies this
Clause shall be deemed to include the Nuclear Energy Liability Exclusion Provisions actually
used on such policies by the Reassured; provided that if the Reassured shall fail to include
such Exclusion Provisions in any such policy where it is legally permitted to do so, such
policy shall be deemed to include such Exclusion Provisions.

 

 

LIBERTY MUTUAL INSURANCE COMPANY

LIBERTY MUTUAL FIRE INSURANCE COMPANY

LIBERTY MUTUAL (BERMUDA) LTD.

LIBERTY INSURANCE CORPORATION

LIBERTY NORTHWEST INSURANCE CORPORATION

WORKERS’ COMPENSATION AND GENERAL LIABILITY

SIXTH EXCESS OF LOSS REINSURANCE CONTRACT

INTERESTS AND LIABILITIES AGREEMENT

It is hereby mutually agreed by and between LIBERTY MUTUAL INSURANCE COMPANY and LIBERTY MUTUAL
FIRE INSURANCE COMPANY, both of Boston, Massachusetts, LIBERTY MUTUAL (BERMUDA) LTD., Hamilton,
Bermuda, LIBERTY INSURANCE CORPORATION, A Delaware Corporation, and LIBERTY NORTHWEST INSURANCE
CORPORATION, Portland, Oregon (hereinafter called the “Company”) of the one part and the
undersigned Reinsurer (hereinafter called the “Reinsurer”) of the other part, that the Reinsurer
shall have a 1.00% share in the terms and conditions as set forth in the document attached hereto.
The share of the Reinsurer shall be separate and apart from the shares of the other Reinsurers and
shall not be joint with those of the other Reinsurers and the Reinsurer shall in no event
participate in the Interests and Liabilities of the other Reinsurers.

The Company shall pay to the Reinsurer their share of all premiums due or which may become due to
the Reinsurer in accordance with the provisions of the attached document.

This Contract shall be effective as of 12:01 a.m., Standard Time, January 1, 1988 and shall remain
in effect in accordance with the provisions of the attached document.

IN WITNESS WHEREOF, the parties hereto, by their respective duly authorized officers, have executed
this Agreement as of the dates undermentioned.

In Indianapolis, Indiana this 25th day of April, 1988, for and on behalf of:

	 	 	 	 	 
	 	AMERICAN UNION INSURANCE COMPANY OF NEW YORK

 	 
	 	 	By:  	/s/
 	 
	 	 	Title: 	 ASST. VICE PRESIDENT

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